CHARACTERISTICS OF GEM OF THE STOCK EXCHANGE OF HONG KONG LIMITED (THE "STOCK EXCHANGE")

GEM has been positioned as a market designed to accommodate small and mid-sized companies to which a higher investment risk may be attached than other companies listed on the Stock Exchange. Prospective investors should be aware of the potential risks of investing in such companies and should make the decision to invest only after due and careful consideration.

Given that the companies listed on GEM are generally small and mid-sized companies, there is a risk that securities traded on GEM may be more susceptible to high market volatility than securities traded on the Main Board and no assurance is given that there will be a liquid market in the securities traded on GEM.

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

This report, for which the directors (the "Directors") of AL Group Limited (the "Company") collectively and individually accept full responsibility, includes particulars given in compliance with the Rules Governing the Listing of Securities on the GEM of The Stock Exchange of Hong Kong Limited (the "GEM Listing Rules") for the purpose of giving information with regard to the Company and its subsidiaries (together, the "Group"). The Directors, having made all reasonable enquiries, confirm that to the best of their knowledge and belief the information contained in this report is accurate and complete in all material aspects and not misleading or deceptive, and there are no other matters the omission of which would make any statement herein or this report misleading.

02	Corporate Information
04	CEO's Statement
07	Management Discussion and Analysis
18	Biographical Details of the Directors
	of the Company and Senior Management
23	Report of the Directors
36	Corporate Governance Report
52	Independent Auditor's Report
59	Consolidated Statement of Profit or Loss
	and Other Comprehensive Income
60	Consolidated Statement of Financial Position
61	Consolidated Statement of Changes in Equity
62	Consolidated Statement of Cash Flows
64	Notes to the Consolidated Financial Statements
144	Five Years Financial Summary

CORPORATE INFORMATION

Executive Directors

Mr. Lam Chung Ho, Alastair (Chairman) Mr. Kwan Tek Sian (Chief Executive Officer) Mr. Wong Kang Man

Independent Non-executive Directors

Mr. Tse Chi Shing Mr. Tse Wai Hei Mr. Tam Chak Chi

Authorised Representatives

Mr. Kwan Tek Sian Mr. Leung Louis Ho Ming

Compliance Officer

Mr. Kwan Tek Sian

Registered Office

Cricket Square, Hutchins Drive P.O. Box 2681 Grand Cayman KY1-1111 Cayman Islands

Principal Place of Business in Hong Kong

Unit A, 2/F, Sing Ho Finance Building 166–168 Gloucester Road, Wan Chai Hong Kong

Independent Auditors

CCTH CPA Limited

Audit Committee

Mr. Tse Chi Shing (Chairman) Mr. Tse Wai Hei Mr. Tam Chak Chi

Remuneration Committee

Mr. Tse Chi Shing (Chairman) Mr. Kwan Tek Sian Mr. Tse Wai Hei

Nomination Committee

Mr. Lam Chung Ho, Alastair (Chairman) Mr. Tse Chi Shing Mr. Tam Chak Chi

Company Secretary

Mr. Leung Louis Ho Ming

CORPORATE INFORMATION (CONTINUED)

Principal Bankers

Bank of Communications (Hong Kong) Limited Shanghai Commercial Bank Limited The Bank of East Asia, Limited Wing Lung Bank Limited

Principal Share Registrar and Transfer Office

Conyers Trust Company (Cayman) Limited Cricket Square, Hutchins Drive P.O. Box 2681 Grand Cayman KY1-1111 Cayman Islands

Hong Kong Branch Share Registrar and Transfer Office

Tricor Investor Services Limited Level 54, Hopewell Centre 183 Queen's Road East Hong Kong

Stock Code

8360

Company Website

www.AL-Grp.com

CEO's STATEMENT (CONTINUED)

Dear Shareholders,

On behalf of the board of directors (the "Board") of AL Group Limited (the "Company"), I am pleased to present the annual report of the Company and its subsidiaries (collectively referred to as the "Group") for the year ended 31 December 2020 (the "Year").

In 2020, the global economic environment encountered full of challenges and uncertainties, which impacted the overall business conditions and increased volatility in the financial and housing market in Hong Kong. Due to keen competition in the market, decreased revenue amid of the coronavirus disease 2019 ("COVID-19") pandemic, our management had been monitoring cost of the Group. The Group also recorded a decrease in the impairment loss on interests in associates. As a result, the Group reported a decrease in attributable loss for owners of the Company. Looking forward, during this unprecedented time of global chaos due to the COVID-19 pandemic, we will closely monitor potential impact of COVID-19 outbreak on the Group's businesses and will keep evaluating the impact as situation continues to evolve and further information may become available.

Business and Financial Review

For the Year, our total revenue amounted to approximately HK\$67.1 million, which represented a decrease of approximately 53.0% over 2019. Excluding projects relating to maintenance and aftersales service, our number of projects for the Year increased by 1.6% over 2019. As a result, the average revenue per project (excluding projects relating to maintenance and aftersales service) decreased by approximately 54.1% over 2019 to approximately HK\$1.02 million. Our gross profit for the Year amounted to approximately HK\$15.1 million, representing a decrease of approximately 16.8% over 2019. Gross profit margin in 2020 increased from approximately 12.7% in 2019 to approximately 22.6%. The increase in gross profits margin was mainly due to in view of the unstable economic condition and adverse business environment, and the COVID-19 pandemic, the management of the Group implements extensive control of cost on the projects and was able to negotiate with contractors for lowering their cost which contributes to a better margin for the Group.

The Group recorded a loss attributable to owners of the Company of approximately HK\$38.0 million for the Year represented a decrease of approximately 32.6% over 2019. Besides the effects of the decreased revenue and decreased operating expenses, the loss for the Year was primarily attributable to decrease in impairment loss on interests in associates, decrease in impairment loss on goodwill and increase in finance cost due to an increase in the interest rate of the promissory note by the Group in 2020 and increase in borrowings. The Group continued to be awarded projects in 2021 by existing and new customers who valued the Group's reputation, proven track record and experience in the industry. The Group has a number of projects in the pipeline that were built up since 2019 which will come online and contribute to the total revenue in 2021 and beyond. As at the date of this report, our Group has secured a number of projects with total project sum of approximately HK\$77.6 million for which no work has commenced prior to 31 December 2020.

CEO's STATEMENT (CONTINUED)

Social Responsibilities and Corporate Branding

On top of business, we believe that returning society through social participation and contribution is a form of showing corporate citizenship. We are delighted that our staffs are inspired towards social concerns and green initiatives in their daily work life. During the year, we are glad that the Group was awarded the "Caring Company" logo by The Hong Kong Council of Social Service and "Happy Company" label granted by the Promoting Happiness Index Foundation.

Future Prospect

Covid safe environments will fuel demand for interior design services.

Given the unforeseen and unprecedented global chaos due to the COVID-19 pandemic, AL Group like most businesses has suffered financially. However, with the development of effective vaccines, the need for interior design services looks promising for the year as workers return back to their offices. The work environment needs to be modified for the new world and the reality for our society is that some covid safe protocols will become a permanent part of our lives. There is a lot of innovation in workplace design occurring all over the world and in a city such as Hong Kong (one of the most highly dense cities) the need to reinvent the work space will be essential. A sense of competitiveness has kicked off between banks, insurance companies and now IT companies that want to adapt to the changing social, corporate and regulatory environment. A key part of our strategy in the coming year will be attracting the best talent coupled with our ongoing commitment towards acquiring covid safe practices and technology. Many of our existing clients and new clients want their workplace environment as a key part of their offer.

Appreciation and Positivity

The Group like many other companies will be severely affected by the resultant meltdown of global markets. The future viability of our company is dependent on our employees and their ability to be agile and dynamic with their changing working conditions. We would like to extend sympathies to any staff members, customers, suppliers and shareholders directly or indirectly affected by COVID-19. Looking forward, we will continue to work on our current projects so that we deliver our services as with the highest standards whilst concurrently exploring new revenue opportunities. We believe that the business disruption of COVID-19 has passed its peak and economic activity will now gradually improve over time.

AL Group Limited Kwan Tek Sian Chief Executive Officer and executive Director

Hong Kong, 30 March 2021

Market Overview

Since the marches and protests in HK in 2019 and the coronavirus outbreak in 2020, the management believe that in the near future the interior design and fit out industry will be increasingly challenging because of the unstable economic and political environment. In view of the good brand name and good customer experience provided by the Group, the management believes that the revenue of Group will be able to grow once the political environment becomes stable and the economy recovers in view of the reactivation of the revitalisation scheme for industrial buildings and continued trend in flexible workspace over the last couple of years.

As announced by the Chief Executive of Hong Kong Special Administrative Region of the People's Republic of China in her 2018 Policy Address, the revitalisation scheme for industrial buildings is reactivated to provide new incentives to the owners to convert old industrial buildings, and allow the provision of transitional housing within revitalised industrial buildings. On 1 February 2019, the Development Bureau announced that the owners are permitted to put individual units of industrial buildings, for an initial five-year period, to the following five specific non-industrial uses, without any temporary waiver or fee. These include: art studios, office (audio-visual recording studio), office (design and media production), office (used by "specified creative industries"), and research, design and development centre.

In view of the above policies announced by the government, our management remains positive about the interior design and fit out industry in Hong Kong in near future.

Business Overview

AL Group Limited (the "Company") together with its subsidiaries (collectively referred to as the "Group"), are principally engaged in the provision of interior design and fit out solutions as well as overall project management in Hong Kong. The Group's business was established in 1999 under the name of AL Design & Associates Limited ("AL Design"), which is a well-established interior design and fit out solutions provider in Hong Kong. The Group believes that its success is firmly rooted in its extensive experience and portfolio in interior design and fit out works as well as project management. The Group's services can be broadly categorised as (i) design and fit out and (ii) design only. In addition, the Group also provides maintenance and aftersales services which could cater for its customers' different requirements.

Excluding projects relating to maintenance and aftersales service, for the year ended 31 December 2020, the revenue decreased by approximately 53.0%, and our number of projects increased by 1.6% over 2019. As a result, the average revenue per project has decreased by approximately 54.1% over 2019 to approximately HK\$1.02 million.

The tables below summarised the number of on-going and completed projects and revenue, by type of service and customer, and the average revenue per project during the Year respectively and their comparative figures:

In terms of Number of Projects*

	For the year ended 31 December
	2020	2019	Change
Design and fit out/Design only Office Commercial Residential	41 8 16	48 12 4	(14.6)% (33.3)% 300.0%
Total	65	64	1.6%

In terms of Revenue*

	For the year ended 31 December
In HK\$' million	2020	2019	Change
Design and fit out/Design only Office Commercial Residential	55.3 5.6 5.7	81.8 57.6 2.4	(32.4)% (90.3)% 137.5%
Total	66.6	141.8	(53.0)%

Average Revenue per Project*

	For the year ended 31 December
In HK\$' million	2020	2019	Change
Revenue Number of projects Average revenue per project	66.6 65 1.02	141.8 64 2.22	(53.0)% 1.6% (54.1)%

* excluding those relating to maintenance and aftersales service

The Group continued to be awarded projects in 2021 by existing and new customers who valued the Group's reputation, proven track record and experience in the industry. The Group has a number of projects in the pipeline that were built up since 2019 which will come online and contribute to the total revenue in 2021 and beyond. As at the date of this report, our group has secured a number of projects with total project sum of approximately HK77.6 million for which no work has commenced prior to 31 December 2020.

In view of the keen competition in the market, the Group will explore the opportunities for new line of business and expand the core business into different markets. The Group will continue to leverage on our competitive advantages to strengthen the market position, improve the quality of the services and enhance the overall operational performance. The Group will seek for opportunities to sustain the growth and strengthen the corporate reputation to create more long-term values to the shareholders.

Financial Overview

	For the year ended 31 December
In HK\$' million	2020	2019
Revenue	67.1	142.7
Gross Profit (Note 1)	15.1	18.2
Gross Profit Margin	22.6%	12.7%
Adjusted EBITDA (Note 2)	(15.6)	(14.8)
Loss for the year attributable to owners of the Company	(38.0)	(56.4)

Note 1: The Group's gross profit represents revenue less subcontracting and materials costs.

Note 2: The Group's adjusted EBITDA represents earnings or losses before finance interest income and cost, other gains/losses, excluding written off and impairment loss on trade receivables, net, impairment loss on contract assets, income tax, depreciation of property, plant and equipment and right-of-use assets and share of profit less loss of associates (2019: finance interest income and cost, other gains/losses excluding impairment loss on trade receivables, net, income tax, depreciation of property, plant and equipment and right-of-use assets and share of profits less loss of associates). While adjusted EBITDA is commonly used in the interior design industry worldwide as an indicator of operating performance, leverage and liquidity, it is not presented as a measure of operating performance in accordance with Hong Kong Financial Reporting Standards and should not be considered as representing net cash flows from operating activities. The computation of the Group's adjusted EBITDA may not be comparable to similarly-titled measures of other companies.

For the year ended 31 December 2020, the Group had experienced a decrease in revenue as compared to 2019. The Group's revenue amounted to approximately HK\$67.1 million, representing a decrease of approximately 53.0% over 2019.

The Group's gross profit for the Year amounted to approximately HK\$15.1 million, representing a decrease of approximately 16.8% over 2019. Gross profit margin increased from approximately 12.7% to approximately 22.6%, The increase in gross profits margin was mainly due to in view of the unstable economic condition and adverse business environment, and the COVID-19 pandemic, the management of the Group implements extensive control of cost on the projects and was able to negotiate with contractors for lowering their cost which contributes to a better margin for the Group.

The Group's total operating expenses(Note 3) for the Year were approximately HK\$36.8 million when compared to approximately HK\$37.0 million in 2019, represented a decrease of approximately 0.5%. The decrease in total operating expenses was mainly due to the combined effect of: (i) decrease in staff costs as a result of salary decrements, (ii) decrease in provision of impairment loss on trade receivables; and (iii) increase in provision of impairment loss on contract assets.

Note 3: The Group's total operating expenses represented the aggregate of employee benefit expenses, rental expenses, written off and impairment loss on trade receivables, net, impairment loss on contract assets and other expenses as shown in the consolidated statement of profit or loss and other comprehensive income.

For the year ended 31 December 2020, the Group's adjusted EBITDA amounted to approximately HK\$-15.6 million as compared to approximately HK\$-14.8 million for 2019, caused by the decrease in total turnover for the Group's business.

The Group recorded a loss attributable to owners of the Company of approximately HK\$38.0 million for the Year when compared to approximately HK\$56.4 million for 2019, representing a decrease of approximately 32.6%. Besides the effects of the decrease in operating expenses and decrease in total turnover mentioned above, the loss for the Year was primarily attributable to the decrease in impairment loss on interests in associates, decrease in impairment loss on goodwill, and increase in finance cost due to the increase of interest rate of the promissory note by the Group and increase in borrowings during the Year.

Primo Group (BVI) Limited ("Primo") together with its subsidiary (the "Primo Group") is an associate of the Company in which the Company indirectly holds 49% of the entire issued share capital thereof. Primo is an investment holding company and holds 100% of the equity interest of Primocasa Interiors Limited ("Primocasa"), which is principally engaged in the provision of interior design and fit out solutions in Hong Kong. During the year ended 31 December 2020, the Company had recognised an impairment of HK\$17,325,000 (2019: HK\$34,362,000) on the investment in Primo (the "Primo Impairment").

Primo Group has been disposed on 31 December 2020.

The Company engaged B.I. Appraisals Limited ("B.I. Appraisals"), an independent qualified professional valuer, to conduct a valuation on the cash generating unit in relation to the 49% of the equity interest of Primo as at 30 June 2020. B.I. Appraisals is set up by experienced qualified professionals, such as Registered Business Valuer registered with the Hong Kong Business Valuation Forum and Registered Professional Surveyors in Hong Kong, with 30 years' solid experience in the field and is a multi-disciplinary professional group offering one-stop valuation or appraisal and propertyrelated professional services.

The factors leading to the Primo Impairment are as follows: (a) due to the shortfall between the actual revenue of Primocasa during the 6 months ended 30 June 2020, which was impacted by intense competition and the marches and protests in HK on the second half of 2019 and the COVID-19 pandemic, as compared with the budget previously prepared. After conducting an overall review of the profitability of the business undertaken by the Primo Group, the future estimated cash flows were revised downward for the 2020 impairment assessment; (b) the current market condition after the coronavirus outbreak recently and the future prospect and estimated cash flow and income of the Primo Group for the forthcoming year; (c) the valuation prepared by B.I. Appraisals on the cash generating unit in relation to the 49% of the equity interest of Primo; and (d) the value in use of the cash generating unit in relation to the 49% of the equity interest of Primo, compared with the carrying amount of the investment in Primo by the Group.

The key basis and assumptions adopted in the assessments by B.I. Appraisals and the Group included, but are not limited to, the following: (a) the financial projection of Primocasa for the 4.5 years ending 31 December 2024 (the "forecast period") has been prepared based on the business plan or historical performance of Primocasa; (b) the adopted discount rate is with reference to the public and statistical information (e.g. weighted average capital cost in the market) obtained from sources which are deemed to be reputable, accurate and reliable; and (c) there will be no major change in the political, legal, economic or financial conditions in the localities in which Primocasa operates or intends to operate, which would adversely affect the revenue attributable to and profitability of Primocasa.

Key value of inputs used in the discounted cash flow method under the income-based approach included gross margin of approximately 32%, settlement terms of receivables derived from the contract revenue was estimated to be approximately 30 days, long-term sustainable growth rate beyond the forecast period of approximately 2.5% and post-tax discount rate of approximately 11.7%.

Due to the net loss made by Primocasa for the 6 months ended 30 June 2020, the normalised profit level of Primocasa was uncertain and the financial performance of Primocasa as at 30 June 2020 might not represent a long-term profit level for the adoption of the market-based approach. Therefore, the market-based approach was not adopted in the valuation. Considering the definition of value in use according to HKAS 36 and with the financial projection of Primocasa as mentioned above, B.I. Appraisals had considered the adoption of the income-based approach in arriving at the value in use of Primocasa, as compared with the market-based approach used in the acquisition of Primo Group. The Directors are of the view that the valuation approach adopted by B.I. Appraisals is fair and reasonable.

Comparison between Business Objectives and Actual Business Progress

The following is a comparison between the Group's business plans as set out in the prospectus of the Company dated 29 June 2016 (the "Prospectus") and the Group's actual business progress up to 31 December 2020:

Business Plan Actual Business Progress up to 31 December 2020
— Recruiting high caliber talents and enhancing company strength	— The Group had hired several senior management members and general staff members in the departments of sales and marketing, design, project management, finance and administration since 2016 to cope with our business expansion.
	— The Group continued to offer competitive remuneration packages to retain the best available talents in order to achieve the positive growth of the Company.
	— The Group had replaced the computer equipment and upgraded the finance and design software.

	Business Plan		Actual Business Progress up to 31 December 2020
—	Developing a new line of business and financing potential business collaboration and/or acquisition of companies	—	The Group had hired a senior management member dedicated to the planning and execution of our Group's business expansion. Since 2016, the Group had made a few business trips to pitch for new business opportunities.
		—	On 6 November 2017, the Group acquired 60% interest of ACE as a result ACE is a non-wholly subsidiary of the Group.
		—	On 8 May 2020, the Group completed the acquisition of 100% interest of YTO Limited.
—	Expanding market coverage	—	The Group had relocated its office from Quarry Bay to Kwun Tong since 2016 with innovative design to further improve the Group's image and enhance good impression for our customers.
		—	The executive director of the Group had been the professional members of Hong Kong Interior Design Association and International Interior Design Association, as well as the associated member of International Facility Management Association since 2017 in order to expand the reach of potential customers.
—	Capturing larger design and fit out projects	—	Since 2017, the Group had paid out start-up costs to capture new larger design and fit out projects.
—	Increasing the effectiveness of marketing and brand recognition	—	The Group had advertised in interchange subways, office/commercial buildings TV network to increase public awareness. The Group had also made donations to various charitable organizations to enhance its corporate image.
		—	Since 2017, the Group had been awarded numerous

corporate awards from World Green Organisation, Hong Kong Management Association and Hong Kong Council

of Social Service to promote our brand.

Use of Listing Proceeds

The shares of the Company were listed on GEM of the Stock Exchange on 12 July 2016 (the "Listing Date") for which the Company issued 120,000,000 new shares at HK\$0.64 per share. The net listing proceeds received by the Company, after deducting underwriting fees and other related expenses, are approximately HK\$57.0 million. These proceeds are intended to be applied in the manner as described in the section headed "Future Plans and Use of Proceeds" in the Prospectus.

The future plan and scheduled use of proceeds as disclosed in the Prospectus were based on the best estimation of future market conditions made by the Group at the time of preparing the Prospectus, while the proceeds were applied with consideration of the actual development of business and market.

As at 31 December 2020, the Group does not anticipate any change to the plan as to the use of net listing proceeds. The unutilised net proceeds have been placed in the licensed banks in Hong Kong.

Use of net proceeds	Planned use of net proceeds (HK\$'000)	Approximate percentage of total net proceeds	Actual use of net proceeds (HK\$'000)	Unused net proceeds (HK\$'000)	Expected timeline for unutilised proceeds
Recruiting high caliber talents and enhancing company strength Developing a new line of business and financing potential business collaboration and/or acquisition	15,225	27%	15,225	—	—
of companies	13,587	24%	13,587	—	—
Expanding market coverage Capturing larger design and	10,788	19%	10,788	—	—
fit out projects Increasing the effectiveness of	6,840	12%	6,840	—	— On or before 31 December
marketing and brand recognition	4,860	8%	4,521	339	2021
General working capital	5,700	10%	5,700	—	—
Total	57,000	100%	56,661	339	—

As at 31 December 2020, the net listing proceeds has been applied and utilised as follows:

Fundraising Activities of the Group

On 17 August 2020, the Company entered into the placing agreement with All Evergreen Securities Limited ("All Evergreen") pursuant to which All Evergreen has conditionally agreed, as agent of the Company, to procure on a best effort basis to not less than six placees who and whose ultimate beneficial owners shall be independent third parties to subscribe for up to 141,400,000 placing shares at the placing price of HK\$0.037 per placing share. Completion of the said placing took place on 4 September 2020 and 141,400,000 placing shares were placed to not less than six placees at the placing price of HK\$0.037 per placing share.

The net proceeds, after deduction of all relevant expenses (including but not limited to placing commission, legal expenses and disbursements) incidental to the said placing, amounted to approximately HK\$5.2 million, of which all of the net proceeds was utilised for working capital purpose as at 31 December 2020. Details of the said placing are set out in the Company's announcements dated 17 August 2020 and 4 September 2020.

Liquidity, Financial Resources and Capital Structure

The Group practiced prudent financial management and maintained a fairly stable financial position during the Year. As of 31 December 2020, the Group had cash and cash equivalents of approximately HK\$24.6 million (31 December 2019: approximately HK\$22.1 million). The current ratio, being the ratio of current assets to current liabilities, was approximately 1.3 times as at 31 December 2020 (31 December 2019: approximately 1.4 times).

As at 31 December 2020, the Group had total liabilities of approximately HK\$111.6 million (31 December 2019: approximately HK\$116.5 million) which mainly comprise of trade and other payables, contract liabilities, amount due to non-controlling interest, lease liabilities, current income tax payable, deferred income tax liabilities and borrowings (31 December 2019: trade and other payables, contract liabilities, amount due to non-controlling interest, lease liabilities and borrowings) amounting to approximately HK\$63.5 million (31 December 2019: approximately HK\$68.7 million) and promissory note payable of approximately HK\$48.1 million (31 December 2019: HK\$47.8 million).

As at 31 December 2020, the gearing ratio, expressed as a percentage of interest-bearing debt (borrowings and promissory note payable) over total assets was approximately 75.0% (31 December 2019: 51.2%). The increase in gearing ratio was mainly resulted by the loss incurred by the Group this Year which decrease the total assets of the Group. The management will timely monitor the financial position of the Group and deleverage the gearing when appropriate.

The shares of the Company were listed on the GEM Board of the Stock Exchange on 12 July 2016. As at 31 December 2020, the Company's total number of issued shares was 872,400,000 (31 December 2019: 595,000,000) at HK\$0.01 each. The Company's capital comprises ordinary shares and capital reserves. The Group finances its working capital requirements mainly through a combination of our cash flows generated from operations, borrowings and proceeds from share offer.

Foreign Exchange Exposure

The Group's core business operation is in Hong Kong and its assets are principally in Hong Kong. Hence, the Group is not exposed to any significant foreign exchange risk as the majority of our business transactions are denominated in Hong Kong Dollar (being the functional currency of our Group) and there were only insignificant balances of financial assets that were denominated in foreign currency as at 31 December 2020.

The Group does not have a foreign currency hedging policy and will continue to monitor its foreign exchange exposure. The Group will consider hedging significant foreign currency exposure should the need arises.

Pledge of Assets

As at 31 December 2020, the Group did not have any pledged assets (31 December 2019: Nil).

Contingent Liabilities and Capital Commitments

Certain customers of design and fit out contracts undertaken by the Group require a group entity to issue guarantees for performance of contract works in the form of surety bonds.

As at 31 December 2020, the Group had paid a refundable deposit of HK\$588,000 (31 December 2019: HK\$706,000) and, together with certain directors of a subsidiary, had also given counter indemnities to an insurance company for a surety bond issued in favour of a customer by the insurance company amounted to HK\$1,960,000 (31 December 2019: HK\$2,354,000) which remained outstanding at the end of the reporting period. Where the Group fails to provide satisfactory performance to the customer, the customer may demand the insurance company to pay the sum stipulated in the surety bond and the Group may then become liable to compensate the insurance company accordingly.

Save as disclosed herein, the Group has no other material contingent liabilities (31 December 2019: Nil) and any material capital commitments as at 31 December 2020. (31 December 2019: Nil).

Future Plans for Material Investment and Capital Assets

The Group did not have any other plans for material investment and capital assets as at 31 December 2020.

Significant Investments Held

As at 31 December 2020, the Group held approximately HK\$1.4 million of equity investments which were classified as financial assets at fair value through other comprehensive income and financial assets at fair value through profit or loss, and interests in associates amounting to approximately HK\$0.6 million. Details of the significant listed equity investments are as follows:

	Notes	Place of incorporation	Loss on change in fair value HK\$'000	Market value HK\$'000	Approximate percentage of equity investment %	Approximate percentage to the total asset %	Approximate percentage to the interest in the respective investments as at 31 December 2020 %	Realised loss on investment HK\$'000
HSBC Holdings plc (0005.hk)	1	England	(533)	1,072	74.4	1.3	<0.01	—
Gain Plus Holdings Limited (9900.hk)	2	Cayman Islands	(121)	368	25.6	0.4	0.09	(478)
			(654)	1,440	100	1.7		(478)

Notes:

1. HSBC Holdings plc (HSBC) is the banking and financial services company. No dividend was received during the year. According to the latest published annual report of HSBC Holdings plc (HSBC), it had net asset value of approximately US\$204,995 million.
1. Gain Plus Holdings Limited is principally engaged in provision of building construction services and repair, maintenance, addition and alteration (RMAA) services in Hong Kong. No dividend was received during the year. According to the latest published interim report of Gain Plus Holdings Limited, it had an unaudited net asset value of approximately HK\$208,091,000.

In view of the recent volatile in the stock market, the Board will adopt cautious measures to manage the Group's investment portfolio with an aim to provide positive return to the Group in the near future.

On 18 December 2020, Sunny Stage Limited, a direct wholly-owned subsidiary of the Company had entered into an agreement with an independent third party to dispose 49% equity interest in Primo for a consideration of HK\$4.6 million (the "Disposal") which was fully settled as at the date of this report. Completion of the Disposal took place on 31 December 2020. Gain on disposal of Primo amounted to approximately HK\$237,000, being the excess of the proceeds from disposal over the carrying amount of the Group's interest in Primo. For details of the Disposal, please refer to the announcement of the Company dated 18 December 2020.

Save as disclosed herein and except for investment in subsidiaries, the Group did not have any significant investment in equity interest as at 31 December 2020.

Material Acquisitions and Disposals of Subsidiaries, Associates and Joint Ventures

On 29 April 2020, Fasty Aim Limited ("Fasty Aim"), a direct wholly-owned subsidiary of the Company and Ms. To Kit Yan Yuki (the "Vendor") entered into a sale and purchase agreement (the "Acquisition"), pursuant to which, Fasty Aim has conditionally agreed to acquire and the Vendor has conditionally agreed to sell the entire issued share capital of YTO Limited (the "Target Company") for a total consideration of HK\$4,480,000, which will be fully satisfied by the allotment and issue of 112,000,000 shares (the "Consideration Shares") of the Company, representing approximately 15.84% of the entire issued share capital of the Company as enlarged by the allotment and issue of the Consideration Shares. Completion of the transaction took place on 8 May 2020. For details of the Acquisition, please refer to the announcement of the Company dated 29 April 2020.

On 30 October 2020, Major Joyful Limited, a direct wholly-owned subsidiary of the Company entered into an agreement to acquired 40% equity interest in Ever Joy Ventures Limited, a company incorporated in Samoa and is principally engaged in investment holding (the "Acquisition"). Ever Joy Ventures Limited directly holds 60% equity interest in MF Living Limited. MF Living Limited is a company incorporated in Hong Kong and is principally engaged in the sale of face masks. Upon completion, Ever Joy Ventures Limited become an associate of the Company. For details, please refer to the announcement of the Company dated 30 October 2020.

Save as disclosed herein, the Group did not have any material acquisition and disposal of subsidiaries, associates and joint ventures during the year ended 31 December 2020.

Employees and Remuneration Policies

As at 31 December 2020, the Group had 40 employees (31 December 2019: 39 employees), including the Directors. Total staff costs (including Directors' emoluments) were approximately HK\$18.5 million for the Year as compared to approximately HK\$20.9 million for the year ended 31 December 2019. Such decrease was mainly due to the adjustment in remuneration because of the decrease in revenue.

Remuneration is determined with reference to qualifications, duties, contributions and years of experience and performance of individual employees.

In addition to salaries, our remuneration to employees also include sales commission, provident fund, medical coverage and discretionary bonuses. Level of remuneration is reviewed at least annually.

Significant Event after the Reporting Period

Details of events after the reporting period are set out in Note 44 of the consolidated financial statements. Save as disclosed elsewhere in this annual report, there was no significant event relevant to the business or financial performance of the Group that comes to the attention of the Directors after the year ended 31 December 2020.

Executive Directors

Mr. Lam Chung Ho, Alastair ("Mr. Lam"), aged 43, was appointed as the Chairman and an executive Director on 12 July 2017. He is the chairman of nomination committee.

Mr. Lam has been the executive director of State Path Capital Limited since 2016 and director of Bionic Vision Technologies Pty Limited since 2017 of which Mr. Kwan Tek Sian, an executive Director of the Company, is a director and an investor.

Mr. Lam started his career in his family business between 2002 and 2006 at Qualipak Manufacturing Limited, a then wholly-owned subsidiary of Qualipak International Holdings Limited, a company listed on the Stock Exchange of Hong Kong (stock code:1332). Mr. Lam was the founder of Synergy Group Holdings International Limited, a company listed on the Stock Exchange of Hong Kong (stock code:1539), where he served as a non-executive director between 14 December 2011 and 19 December 2016.

Mr. Lam graduated from the University of Wisconsin-Madison, Wisconsin, United States with a Bachelor's degree in Accounting and Business Administration in August 2001.

Mr. Kwan Tek Sian ("Mr. Kwan"), aged 45, was appointed as the Chief Executive Officer ("CEO") and an executive Director on 4 February 2020. He is a member of remuneration committee.

Mr. Kwan is the non-executive director and chairman of the board of directors of Bosa Technology Holdings (stock code: 8140) since 18 August 2017.

Since July 2018, Mr. Kwan has been re-designated to an executive director of JMC Technologies Pte. Limited, a Singapore-based company that is principally engaged in providing recruitment services and information technology solutions to multinational technology companies.

Mr. Kwan is a director and an investor of Bionic Vision Technologies Pty. Limited, a privately held Australian based company. Mr. Lam Chung Ho, Alastair, the Chairman of the Board and an executive Director of the Company, is also a director of Bionic Vision Technologies Pty. Limited develops visual prostheses to restore vision of the blind, in which Mr. Kwan owns shares through State Path Capital Limited, a joint venture company involved in investing in technology companies.

Mr. Kwan is beneficially interested in approximately 35.5% of the issued shares of PepCap Resources Inc. (Symbol: WAV.V), a capital pool company (as defined under the rules of the TSX Venture Exchange) which indirectly holds mining interests in Indonesia, and which shares are listed on TSX Venture Exchange.

Mr. Kwan obtained a bachelor degree in Science from Victoria University in Australia in May 1998, a master degree in Health Sciences from Victoria University in October 2000 and a graduate diploma in Law and Legal Studies from La Trobe University in October 2004.

Mr. Wong Kang Man ("Mr. Wong"), aged 37, was appointed as a non-executive Director on 10 March 2017 then has been re-designated as an executive Director on 6 November 2017.

Mr. Wong has more than 13 years of experience in electrical and manufacturing engineering and interior design. Mr. Wong is currently a director of ACE Architectural and Interior Design Limited (a non wholly-owned subsidiary of the Company), a company principally engaged in interior design business in Hong Kong. Since October 2012, Mr. Wong has been the director of sales & marketing at TSBE Design Consultant Limited, an interior design firm in Hong Kong. In August 2007, Mr. Wong joined Myron L Company based in San Diego, California USA, as an electrical engineer where over a period of five years had directed teams of over 150 workers and 10 engineers to work on electrical and product engineering projects.

Mr. Wong received a Bachelor of Science degree in Electrical Engineering from the University of California, San Diego USA, in May 2007.

Independent Non-executive Directors

Mr. Tse Chi Shing ("Mr. Tse"), aged 37, was appointed an independent non-executive Director of the Company on 12 January 2017. He is the chairman of the remuneration committee and the audit committee and a member of the nomination committee.

Mr. Tse has over 12 years of experience in accounting and auditing. He is currently the chief financial officer and company secretary of KOALA Financial Group Limited ("KOALA"), a company listed on the GEM of the Stock Exchange (stock code: 8226), where he is responsible for financial planning, financial control and accounting operations and also manages a full spectrum of company secretarial work for KOALA. Prior to joining to KOALA, Mr. Tse was with the audit firms of Mazars CPA Limited, HLB Hodgson Impey Cheng, and Choy Ng and Co. CPA.

Mr. Tse received a Bachelor of Arts degree (with Honours) in Accounting from the Hong Kong Polytechnic University in July 2006. He has been a member of the Hong Kong Institute of Certified Public Accountants (HKICPA) since January 2011.

Mr. Tse Wai Hei ("Mr. Tse W.H."), aged 50, was appointed as an independent non-executive Director of the Company on 30 November 2017. He is a member of audit committee and remuneration committee.

Mr. Tse W.H. has 32 years of experience specializing in mechanical engineering, publishing and printing services. Since 2008, Mr. Tse W.H. has worked in Komori Hong Kong Limited, a Japanesebased corporation principally engaged in manufacturing printing machines. He is currently a manager of the technical service department.

Mr. Tam Chak Chi ("Mr. Tam"), aged 44, was appointed as an independent non-executive Director of the Company on 28 September 2018. He is a member of audit committee and nomination committee.

Mr. Tam has more than 20 years of experience in providing accounting, auditing and financial services and has served various senior positions at various private and listed companies. He is currently an executive director of My Heart Bodibra Group Limited, a company listed on the GEM of the Stock Exchange (stock code: 8297) an independent non-executive director of Wealth Glory Holdings Limited, a company listed on the GEM of the Stock Exchange (stock code: 8269), and an independent non-executive director of Hong Kong Finance Investment Holding Group Limited, a company listed on the Main Board of the Stock Exchange (stock code: 0007), and a financial consultant of various private companies.

Mr. Tam holds a bachelor's degree of commerce from the University of Toronto. He is a fellow member of the Hong Kong Institute of Certified Public Accountants, a fellow member of the Taxation Institute of Hong Kong and a member of the American Institute of Certified Public Accountants.

Senior Management

Mr. Yau Chung Ping ("Mr. Yau"), aged 49, is a co-founder of the Group. He was appointed as a director of AL Design & Associates Limited ("AL Design") since its founding in October 1999. He was appointed as a Director on 1 February 2016 then redesignated as an executive Director and Chief Executive Officer of the Company on 25 February 2016. He resigned as an executive Director and Chief Executive Officer of the Company on 4 February 2020.

Mr. Yau currently serves as the Design director of AL Design. He is also involved with client development, new business initiatives and overall design and project management for AL Design's clients.

Mr. Yau has over 26 years of experience in interior design and project management in Hong Kong and China. In 1999, Mr. Yau co-founded AL Design with Ms. Sz. Over the 21 years at AL Design, Mr. Yau has directed his design team through a variety of projects in the field of interior design and project management covering the commercial, residential and retail sectors that reflect the brand and image of their corporate clients. He is committed to serving the community, contributing to numerous charities; and using environmentally friendly practices and materials wherever possible.

Mr. Yau received a Diploma in Interior and Environmental Design from the First Institute of Arts and Design in August 1994 and Fellowship from The Canadian Chartered Institute of Business Administration in 2016. He has been a professional member of the Hong Kong Interior Design Association since 2004 and International Interior Design Association in 2016. He is also an associated member of International Facility Management Association since 2017. In 2016, Mr. Yau is award "Outstanding Entrepreneur Award 2016" from CAPITAL Entrepreneur magazine.

Ms. Sz Kit ("Ms. Sz"), aged 50, is a co-founder of the Group. She was appointed as the director, Projects of AL Design, a wholly-owned subsidiary of the Company, since its founding in October 1999.

Ms. Sz has overall responsibilities for project management of the Group's business, including the management of opportunities and risks, human resource planning and deployment, quality control, progress of work against cost and deadline, and environmental and safety issues.

Ms. Sz has over 26 years of experience in interior design and project management in Hong Kong covering the residential, office, commercial, hospitality and government sectors. She started her career in 1993, initially as a draftsman and subsequently as an interior designer at Ming Yip Design Limited; and in 1997, joined FCS Interior Design Consultant Limited as an interior designer, with focus on the commercial office sector.

In 1999, Ms. Sz co-founded AL Design with Mr. Yau, an executive Director of the Company. Over the 21 years at AL Design, Ms. Sz has worked closely with Mr. Yau in building the business from scratch.

Ms. Sz received a diploma in Architecture and Urban Planning from the department of Architecture at Guangzhou University (China) in July 1991. She has been a professional member of the Hong Kong Interior Design Association since 2004.

Ms. Lau Yee Nga, Angela ("Ms. Lau"), aged 46, joined the Group in November 1999 when AL Design was founded. She is currently the director, Sales & Marketing of AL Design and is responsible for sales & marketing and new business development and achieving the Group's revenue and profit targets.

Ms. Lau started her career in 1996 as a Capacity Management Officer at Maersk Hong Kong Limited. The following year, in 1997, she joined FCS Interior Design Consultant Limited as a Marketing Executive. In 1999, Ms. Lau became a member of the founding team at AL Design, served initially as an Assistant Marketing Manager and subsequently rose through the ranks to become a Senior Manager, Sales & Marketing. Between the period June 2010 and January 2011, and May 2012 and October 2013, Ms. Lau was on a sabbatical leave. In January 2016, she was re-designated as the director, Sales & Marketing.

Ms. Lau received a Bachelor of Science degree (Honors) in Statistics from the Chinese University of Hong Kong in December 1996.

Ms. Chan Choi Yi ("Ms. Chan"), aged 51, joined the Group in August 2000, less than a year after AL Design was founded. She is currently the associate director, Human Resources & Administration of AL Design and is responsible for human resource planning & deployment and administration.

Ms. Chan started her career in 1989; was a Clerk at Bank of Communications Hong Kong Branch (1989–1992), a junior secretary at Stephen-Bensive Asia Ltd. (1992–1993), a secretary of Ricofield Company Limited (1993–1994), a secretary to Deputy Managing Director at Fuchuen Machinery and Equipment Company Limited (1994–1999), and a Secretary to Director at Hong Kong Darong (International) Co. Ltd. (1999).

Ms. Chan received a certificate in Secretaries from the Hong Kong Management Association in 1992, a certificate in Logistics Management from the School of Continuing Education Hong Kong Baptist University in 2001, and a certificate in Employment Ordinance from the Hong Kong Management Association in 2013.

Mr. Leung Louis Ho Ming ("Mr. Leung"), aged 38, joined the Group in September 2019. He is currently the company secretary and authorised representative of the Company.

Mr. Leung holds a bachelor degree of Science in Quantitative Finance from The Chinese University of Hong Kong in 2004. He has been a member of Hong Kong Institute of Certified Public Accountant since 2008 and has over 10 years of experience in accounting and auditing for Hong Kong listed and private companies.

REPORT OF THE DIRECTORS

The directors of the Company (the "Directors") are pleased to present their annual report together with the audited consolidated financial statements of the Group (the "Consolidated Financial Statements") for the year ended 31 December 2020.

Principal Activities and Business Review

The principal activity of the Group is the provision of integrated interior design and fit out management services in Hong Kong.

The business review of the Group for the Year together the future business development are set out in the section headed "Management Discussion and Analysis" on pages 7 to 17 of this annual report. This discussion form part of the report of directors.

Environmental Policies and Performance

Details of the key laws and regulations that have a significant impact on the Group's business, their keyscope and our compliance measures are outlined as the following table:

Laws and Regulations	Key scope	Compliance measures
Noise Control Ordinance (CAP. 400)	These provisions deal with noise emanating from places such as industrial, commercial, trade or business premises	The Group has signed framework agreement with subcontractors who acknowledged the ultimate responsibilities of laws and regulations compliance relating to their fit out work
Waste Disposal (Charges for Disposal of Construction Waste) Regulation (CAP. 354N)	Construction waste producers, such as construction contractors, renovation contractors or premises owners, prior to using government waste disposal facilities, need to open a billing account with the Environmental Protection Department and pay for the construction waste disposal charge	at our project locations. Our project team will monitor the day-to-day work of subcontractors and provide advice whenever there is potential risk of non compliance of laws and regulations.

A separate environmental, social and governance report is expected to be published on the website of the Stock Exchange and the Company no later than 3 months after the publication of this report.

Compliance with Laws and Regulations

The Group is principally engaged in providing integrated interior design and fit out management services in Hong Kong. Sufficient resources and training have been allocated and provided to ensure the on-going compliance with applicable laws and regulations. During the Year, the Board is not aware of any incidence of non-compliance with the relevant laws and regulations that have a significant impact on the Group's business where the Group is operating.

Relationship with key parties

The success of the Group also depends on the support from key parties which comprise customers, suppliers, employees and shareholders.

Customers

The Group's principal customers comprises business owners and residential property owners/tenants. The Group provides high standard and tailor-made design and fit out management to our customers, as well as strong maintenance and after-sales services to maintain a close relationship with our existing customers to encourage re-engagement and/or referral.

Suppliers

Good relationship with suppliers constitutes one of the essential elements of the Group's success. To achieve positive business growth, the Group maintains close relationship with its suppliers in order that fit out work can be completed with high efficiency and quality so as to further enhance our reputation in the market.

Employees

The Group focuses on the talents of our employees as our most valuable asset and provides a harmonious and professional working environment with flexibility for their creativity to fulfil the interior design projects.

The key objective of our human resource management is to recognise and reward performing staff by providing competitive remuneration packages and implementing an effective performance appraisal system with appropriate incentives, namely equal promotion opportunity.

Shareholders

The principal goal of the Group is to maximise the return to the shareholders of the Company. The Group will focus on our core business for achieving sustainable profit growth and rewarding the shareholders with dividend payouts taking into account the business development needs and financial health of the Group.

Principal Risks and Uncertainties

The business operations and results of the Group may be affected by various factors, some of which are external causes and some are inherent to the business. The Board is aware that the Group is exposed to various risks and the principal risks and uncertainties are summarised below:

Failure to obtain new contracts could materially affect our financial performance;
We rely on our management team in operating our business;
We rely on our ability to successfully meet customers' and end users' preference by delivering our interior design solutions in a timely manner;
We rely on the performance of our project management staff; and
We rely on our suppliers to complete certain projects and are subject to risk arising from the non-compliance, late performance or poor performance by such suppliers. Also, there is no assurance that these suppliers will be able to continue to provide services to us at fees acceptable to us.

Results and Appropriations

The results of the Group for the year are set out in the consolidated statement of profit or loss and other comprehensive income on page 59.

The Directors did not recommend the payment of a final dividend to shareholders of the Company for the Year (2019: Nil).

Five Years Financial Summary

A summary of the published results, assets and liabilities of the Group for the last five financial years is set out on page 144. This summary does not form part of the Consolidated Financial Statements.

Shares Issued in the Year

Details of the shares issued in the year ended 31 December 2020 are set out in note 32 to the Consolidated Financial Statements.

Equity-linked Agreements

On 29 April 2020, Fasty Aim, a direct wholly-owned subsidiary of the Company and Ms. To Kit Yan Yuki (the "Vendor") entered into a sale and purchase agreement (the "Acquisition"), pursuant to which, Fasty Aim has conditionally agreed to acquire and the Vendor has conditionally agreed to sell the entire issued share capital of YTO Limited for a total consideration of HK\$4.48 million, which will be fully satisfied by the allotment and issue of 112 million new shares of the Company. Completion of the transaction took place on 8 May 2020. For details of the Acquisition, please refer to the announcement of the Company dated 29 April 2020.

Save as disclosed herein and the share option scheme of the Company, no equity-linked agreements that will or may result in the Company issuing shares or that require the Company to enter into any agreements that will or may result in the Company issuing shares were entered into by the Company during the Year or subsisted at the end of the Year.

Pre-emptive Rights

There is no provision for the pre-emptive rights under the Company's Articles of Association, or the laws of the Cayman Islands, which would oblige the Company to offer new shares on a pro-rata basis to existing shareholders.

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

The Company has not redeemed any of its shares during the period from the Listing Date to 31 December 2020. Neither the Company nor any of its subsidiaries has purchased or sold any of the Company's shares during the period from the Listing Date to 31 December 2020.

Distributable Reserves

As at 31 December 2020, the Company's reserves available for distribution, calculated in accordance with the Companies Law, Chapter 22 (Law 3 of 1961, as consolidated and revised) of the Cayman Islands, amounted to HK\$nil (2019: HK\$nil). Details of the movement in reserve during the Year are set out in note 42 to the Consolidated Financial Statements.

Donations

During the Year, charitable and other donations made by the Group amounted to HK\$6,000 (2019: HK\$nil).

Major Customers and Suppliers

The percentages of purchases and sales for the Year attributable to the Group's major suppliers and customers are as follows:

—	the largest supplier	9.4%
—	five largest suppliers in aggregate	27.6%
Sales
—	the largest customer	8.9%
—	five largest customers in aggregate	35.9%

To the best knowledge of the directors, neither the directors, their associates, nor any shareholders, who owned more than 5% of the Company's issued share capital, had any beneficial interest in any of the Group's five largest customers or suppliers during the Year.

Directors and Directors' Service Contracts

The directors of the Company who held office during the Year and as at the date of this report were:

Executive Directors:

Mr. Yau Chung Ping (resigned on 4 February 2020) Mr. Lam Chung Ho, Alastair (Chairman) Mr. Wong Kang Man Mr. Kwan Tek Sian (appointed on 4 February 2020) (Chief Executive officer)

Independent Non-executive Directors:

Mr. Tse Chi Shing Mr. Tse Wai Hei Mr. Tam Chak Chi

Each of the executive Directors and independent non-executive Directors has entered into a service contract and/or letter of appointment with the Company for a fixed term of one year, subject to retirement by rotation and re-election at annual general meeting, and will continue thereafter until terminated in accordance with the terms of the service contract/letter of appointment.

In accordance with the Article 83(3) of Company's Articles of Association, any Director appointed by the Board to fill a casual vacancy shall hold office until the first general meeting of shareholders after his appointment and be subject to re-election at such meeting and any Director appointed by the Board as an addition to the existing Board shall hold office only until the next following annual general meeting of the Company and shall then be eligible for re-election.

In accordance with the Article 84(1) of Company's Articles of Association, at each annual general meeting one-third of the Directors for the time being shall retire from office by rotation.

Accordingly, Mr. Lam Chung Ho Alastair, Mr. Wong Kang Man, Mr. Kwan Tek Sian, Mr. Tse Chi Shing, Mr. Tse Wai Hei, and Mr. Tam Chak Chi being all Directors of the Company, shall retire from office at the forthcoming annual general meeting to be held on 18 June 2021 (the "AGM"). All of the retired directors, being eligible, offer themselves for re-election, at the AGM.

Apart from the foregoing, no Director proposed for re-election at the AGM has a service contract which is not determinable by the Company or any of its subsidiaries within one year without payment of compensation, other than statutory compensation.

Each of the independent non-executive Directors has made an annual confirmation of independence pursuant to Rule 5.09 of the GEM Listing Rules. The Company is of the view that all independent nonexecutive Directors meet the independence guidelines set out in Rule 5.09 of the GEM Listing Rules and are independent in accordance with the terms of the guidelines.

Biographical Details of Directors and Senior Management

The biographical details of the Directors and senior management of the Group are disclosed in the section headed "Biographical Details of the Directors and Senior Management" on pages 18 to 22 of this annual report.

Changes of Directors' Information under Rule 17.50A(1) of the GEM Listing Rules

Pursuant to Rule 17.50A(1) of the GEM Listing Rules, the Company is not aware of any change in the directors' information which are required to be discloses since the date of the 2020 interim report.

Management Contracts

Save for the service contract, no contracts concerning the management and administration of the whole or any substantial part of the business of the Company were entered into or existed during the Year.

Permitted Indemnity Provisions

Pursuant to Article 164 of the Articles of Association of the Company, the Directors, Secretary and other officers and every auditor for the time being of the Company and the liquidator or trustees (if any) for the time being acting in relation to any of the affairs of the Company and everyone of them, and everyone of their heirs, executors and administrators, shall be indemnified and secured harmless out of the assets and profits of the Company from and against all actions, costs, charges, losses, damages and expenses which they or any of them, their or any of their heirs, executors or administrators, shall or may incur or sustain by or by reason of any act done, concurred in or omitted in or about the execution of their duty, or supposed duty, in their respective offices or trusts; and none of them shall be answerable for the acts, receipts, neglects or defaults of the other or others of them or for joining in any receipts for the sake of conformity, or for any bankers or other persons with whom any moneys or effects belonging to the Company shall or may be lodged or deposited for safe custody, or for insufficiency or deficiency of any security upon which any moneys of or belonging to the Company shall be placed out on or invested, or for any other loss, misfortune or damage which may happen in the execution of their respective offices or trusts, or in relation thereto; provided that this indemnity shall not extend to any matter in respect of any fraud or dishonesty which may attach to any of said persons.

Such provision was in force during the Year. In addition, the Company has also maintained Directors and officers liability insurance during the Year.

Directors' Remuneration

The Directors' fees are subject to shareholders' approval at annual general meeting. Other emoluments are determined by the Board of the Company with reference to the recommendations by remuneration committee of the Company, directors' duties, responsibilities and performance and the results of the Group. The remuneration of Directors (including executive Directors and independent non-executive Directors) on named basics are set out in note 35 to the consolidated Financial Statements.

Directors' Material Interests in Transactions, Arrangements and Contracts that are Significant in Relation to the Company's Business

No transactions, arrangements or contracts that is significant in relation to the Group's business to which the Company or any of its subsidiaries was a party and in which a Director or an entity connected with a Director had, directly or indirectly, a material interest subsisted at the end of the Year or at any time during the Year.

Connected/Related Parties Transactions

Details of the related parties transactions undertaken in the normal course of business are set out in note 41 to the Consolidated Financial Statements. None of them constitutes a discloseable connected transaction or continuing connected transaction under Chapter 20 of the GEM Listing Rules.

Share Option Scheme

The Company has conditionally adopted the share option scheme ("Share Option Scheme"), which was approved by written resolutions passed by its sole Shareholder on 15 June 2016 and became unconditional on 12 July 2016. The terms of the Share Option Scheme are in accordance with the provisions of Chapter 23 of the GEM Listing Rules.

The purpose of the Share Option Scheme is to attract and retain the best available personnel, to provide additional incentive to employees (full-time and part-time), directors, consultants, advisers, distributors, contractors, suppliers, agents, customers, business partners or service providers of our Group and to promote the success of the business of our Group.

The Share Option Scheme is valid and effective for a period of 10 years from 12 July 2016, after which no further options will be granted or offered.

As at 1 January 2020, there was no option outstanding, granted, cancelled, exercised or lapsed.

On 9 October 2020, the Company had granted a total of 48,000,000 share options to 6 eligible participants of which 16,000,000 share options are granted to 2 employees and 32,000,000 share options are granted to 4 consultants to subscribe shares of HK\$0.01 each of the Company under the share option scheme at an exercise price of \$0.043 per share. The closing price of the Company's shares immediately before the date of grant is HK\$0.042. Exercise period of the share options granted is 9 October 2020 to 8 October 2030. HK\$1 is paid by each grantees upon acceptance of the share options.

During the year ended 31 December 2020, 24,000,000 of the share options held by the consultants had been exercised. In respect of the share options exercised during the year, the weighted average share price at the date of exercise is HK\$0.065 and the weighted average share price at the dates immediately before the exercise is HK\$0.066.

As at 31 December 2020, 16,000,000 share options held by the employees and the 8,000,000 share options held by the consultant are outstanding.

Details of the principal terms of the Share Option Scheme are set out in paragraph headed "13. Share Option Scheme" in section headed "Statutory and General Information" in Appendix IV to the prospectus dated 29 June 2016.

On 4 February 2021, 8,000,000 of the share options held by employee and 8,000,000 of the share options held by consultant had been exercised.

As at the date of this annual report, the total number of shares of the Company available for issue under the Scheme was 8,000,000 shares, representing approximately 0.9% of the number of issued share of the Company.

Apart from the aforesaid Share Option Schemes, at no time during the year ended 31 December 2020 was the Company or any associated corporation a party to any arrangement to enable the Directors to acquire benefits by means of the acquisition of shares in, or debentures of, the Company or any other body corporate, and none of the Directors, or their spouses or children under the age 18, had any right to subscribe for the shares in, or debentures of, the Company, or had exercise any such rights.

Directors and Chief Executive's Interests and/or Short Positions in the Shares, Underlying Shares and Debentures of the Company or any Specified Undertaking of the Company or any Other Associated Corporation

As at 31 December 2020, the interests and short positions of directors and chief executive of the Company in the shares, underlying shares or debentures of the Company or any of its associated corporations (within the meaning of Part XV of the Securities and Futures Ordinance (the "SFO")) which were notified to the Company and the Stock Exchange pursuant to Divisions 7 and 8 of Part XV of the SFO (including interests which they are taken or deemed to have under such provisions of the SFO) and required to be entered in the register maintained by the Company pursuant to Section 352 of the SFO or which were required, pursuant to Rules 5.48 to 5.67 of the GEM Listing Rules, to be notified to the Company and the Stock Exchange, were as follows:

Long position in the ordinary shares and underlying shares of the Company

(i) Interests in the associated corporation

Name of directors	Name of associated corporation	Capacity/Nature	No. of ordinary shares held	% of the issued voting shares of associate corporation
Mr. Wong Kang Man	ACE Architectural and Interior Design Limited	Interest in controlled corporation	3,500	35%

Save as disclosed above, as at 31 December 2020, none of the directors and chief executives of the Company had any interests and short positions in the shares, underlying shares and debentures of the Company and its associated corporations (within the meaning of 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 standards of dealing by directors as referred to in Rule 5.48 to 5.67 of the GEM Listing Rules.

Substantial Shareholder's Interests and/or Short Position in Shares and Underlying Shares of the Company

As at 31 December 2020, the interest of the persons, other than directors or chief executive of the Company, in the shares and underlying shares of the Company which were notified to the Company and the Stock Exchange pursuant to Divisions 2 and 3 of Part XV of the SFO and entered in the register maintained by the Company pursuant to Section 336 of the SFO, or otherwise notified to the Company were as follows:

Name of shareholders Capacity Number of ordinary shares held % of the Company's issued voting shares Climb Up Limited ("Climb Up") (Note 1) Beneficial owner 115,000,000 13.18% Mr. Wong Yu Ki Andy (Note 1) Interest in controlled corporation 115,000,000 13.18% Mr. Lam Lesile (Note 1) Interest in controlled corporation 115,000,000 13.18% Ms. To Kit Yan Yuki Beneficial owner 75,800,000 8.69% Jantix Management Limited ("Jantix Management") (Note 2) Beneficial owner 66,572,000 7.63% Mr. Liu Yu Kin (Note 2) Interested in controlled corporation 66,572,000 7.63%

Long position in the ordinary shares and underlying shares of the Company

Note1: 115,000,000 shares are owned by Climb Up. Climb Up is a company incorporated in the British Virgin Islands with limited liability. The entire share capital of Climb Up is owned as to 50% by Mr. Wong Yu Ki Andy and 50% by Mr. Lam Lesile.
Note 2: 66,572,000 shares are owned by Jantix Management. Jantix Management is a company incorporated in Hong Kong with limited liability. The entire share capital of Jantix Management is owned as to 100% by Mr. Liu Yu Kin.

Save as disclosed above, as at 31 December 2020, the Company had not been notified by any persons (other than directors or chief executive of the Company) who had interests or short positions in the shares or underlying shares of the Company which would fall under the provisions of Divisions 2 and 3 of Part XV of the SFO to be disclosed to the Company, or which were recorded in the register required to be kept by the Company under Section 336 of the SFO.

Directors' Interests in Competing Business

During the Year, none of the directors, or any of their respective close associates has engaged in any business that competes or may compete, either directly or indirectly, with the business of the Group or has any other conflict of interests with the Group, save for the followings:

Mr. Wong Kang Man ("Mr. Wong"), an executive Director of the Company, is a director of ACE Architectural and Interior Design Limited ("ACE"), which is a non-wholly owned subsidiary of the Group and ACE is principally engaged in the interior design business in Hong Kong. Such company has been operating independently and the respective board composition of such company is different and separate. In this respect, coupled with the diligence of the Independent Non-executive Directors, the Group was capable of carrying on its business independently of, and at arm's length from, the business of such company.

Sufficiency of Public Float

Based on information that is publicly available to the Company and within the knowledge of the directors of the Company as at the latest practicable date prior to the issue of this report, the Company has maintained the prescribed public float under the GEM Listing Rules of at least 25% of the Company's total number of issued shares which was held by the public.

Corporate Governance Report

Details of the Group's corporate governance practices can be found in the Corporate Governance Report contained on pages 36 to 51 in this annual report.

Closure of the Register of Members

The Register of Members of the Company will be closed from 15 June 2021 to 18 June 2021 (both days inclusive), during which period no transfers of shares will be registered. To determine the entitlement to attend and vote at the AGM of the Company, all transfer document, accompanied by the relevant share certificates, must be lodged with the Company's Branch Share Registrar in Hong Kong, Tricor Investor Services Limited, at Level 54, Hopewell Centre, 183 Queen's Road East, Hong Kong for registration not later than 4:30 pm on 11 June 2021.

Auditor

The Consolidated Financial Statements have been audited by CCTH CPA Limited, who retire and, being eligible, offer themselves for re-appointment. A resolution to re-appoint the retiring auditor is to be proposed at the AGM.

By order of the Board AL Group Limited

Kwan Tek Sian Chief Executive Officer and executive Director

Hong Kong, 30 March 2021

CORPORATE GOVERNANCE REPORT

Corporate Governance Principles and Practices

The Board and the management of the Company are committed to the maintenance of good corporate governance, practices and procedures. The Company believes that good corporate governance provides a solid foundation for the Group to manage business risks and is also one of the key factors leading to the success of the Company so as to balance the interests of shareholders, customers and employees. The Board is devoted to ongoing enhancements and review of the efficiency and effectiveness of such principles and practices to ensure that all of them are in line with corporate governance best practices.

During the Year, the Board considers that the Company has complied with all the corporate governance codes (the "CG Code") as set out in Appendix 15 to the GEM Listing Rules.

The Board of Directors

Composition and Responsibilities

Throughout the Year, the Board comprises six Directors. As at the date of this annual report, there are three executive Directors and three independent non-executive Directors of the Company. The composition of the Board is as follows:

Executive Directors

Mr. Yau Chung Ping (resigned on 4 February 2020) Mr. Lam Chung Ho, Alastair (Chairman) Mr. Wong Kang Man Mr. Kwan Tek Sian (appointed on 4 February 2020) (Chief Executive Officer)

Independent Non-executive Directors

Mr. Tse Chi Shing Mr. Tse Wai Hei Mr. Tam Chak Chi

On 4 February 2020, Mr. Yau Chung Ping resigned as an executive Director and the Chief Executive Officer of the Company as he needs to devote more time and dedication on his personal and other business commitments.

On 4 February 2020, the Company announced that Mr. Kwan Tek Sian has been appointed as an executive Director and the Chief Executive Officer of the Company.

The biographical details and responsibilities of the Directors as well as the senior management are set out in the section "Biographical Details of the Directors and Senior Management" on pages 18 to 22. The updated list of Directors and their role and function are published at the GEM website and the Company's website at www.AL-Grp.com.

Save as disclosed in the section headed "Biographical Details of the Directors and Senior Management" to this annual report, the Directors have no other financial, business, family or other material/relevant relationships with each other.

The Board is accountable to shareholders for the Company's performance and activities. While the Board is primarily overseeing and managing the Company's affairs, the Chairman of the Board help the Board to provide the Company with effective leadership and ensure the continuing effectiveness of the management team and the high standards of probity within the Company. The executive Directors constituting the senior management of the Company are delegated with responsibilities in the day-to-day management of the Company and make operational and business decisions within the control of and delegation framework of the Company. The independent non-executive Directors contribute valuable views and proposals for the Board's deliberation and decisions.

The Company has throughout the Year met the requirements of the GEM Listing Rules relating to the appointment of at least three independent non-executive Directors with at least one of them possessing appropriate professional qualifications, accounting or related financial management expertise. At all times during the Year, the independent non-executive Directors represent at least one-third of the Board.

Prior to their respective appointment, each of the independent non-executive Directors has submitted a written statement to the Stock Exchange confirming their independence and has undertaken to inform the Stock Exchange as soon as practicable if there is any subsequent change of circumstances which may affect their independence. The Company has also received a written confirmation from each of the independent non-executive Directors in respect of their independence for the Year. The Board considers that all independent non-executive Directors are being considered to be independent by reference to the factors stated in the GEM Listing Rules throughout the Year.

The roles of the Chairman and the Chief Executive Officer of the Company are separated. The primary role of the Chairman is to help the Board to provide the Company with effective leadership and ensure the continuing effectiveness of the management team and the high standards of probity within the Company. Chief Executive Officer of the Company, is being responsible for formulating the corporate strategies and meeting the overall business objectives of the Group.

Other matters reserved for the Board include consideration of dividend policy, approval of major investments, maintenance of an adequate system of internal controls and review of the corporate governance practices of the Group. Daily operations and administration are delegated to management teams.

Procedure for Seeking Independent Professional Advice by Directors

The Company has agreed to provide separate independent professional advice and sufficient resources to Directors and all Board Committees to assist them to discharge their duties in compliance with the GEM Listing Rules and CG Code. The Company will consider to develop written procedures to enable Directors and members of all Board Committees, upon reasonable request, to seek and be provided with independent professional advice in appropriate circumstances, at the Company's expense.

The Company has subscribed an insurance policy with an aim to indemnify its Directors and senior management from any losses, damages, liabilities and expenses arising from, including but not limited to, any proceedings brought against them during the performance of their duties pursuant to their respective services agreements entered into with the Company.

Board Meetings

The Board is scheduled to meet regularly at least four times a year at approximately quarterly intervals, to discuss the overall strategy as well as the operational and financial performance of the Company. Other Board meetings will be held when necessary. Such Board meetings involve the active participation, either in person or through other electronic means of communication, of a majority of Directors. The Directors make every effort to contribute to the formulation of policy, decision-making and the development of the Group's business.

For the year ended 31 December 2020, a total of six Board meetings were held. Apart from the meetings of the Board, remuneration committee, nomination committee and audit committee, written approval from the Board and Board committees had also been obtained by written resolutions on a number of matters.

Directors' Attendance at Board/Board Committee/General Meetings

Here below are details of all Directors' attendance at the board meetings, board committee meetings and general meetings held during the Year:

	Board Meeting	General Meeting	Audit Committee Meeting	Remuneration Committee Meeting	Nomination Committee Meeting
Executive Directors
Mr. Yau Chung Ping (note 1)	N/A	N/A	N/A	N/A	N/A
Mr. Lam Chung Ho, Alastair	6/6	1/1	N/A	N/A	2/2
Mr. Wong Kang Man	6/6	1/1	N/A	N/A	N/A
Mr. Kwan Tek Sian (note 2)	6/6	1/1	N/A	2/2	N/A
Independent Non-executive Directors
Mr. Tse Chi Shing	6/6	1/1	4/4	2/2	2/2
Mr. Tse Wai Hei	6/6	1/1	4/4	2/2	N/A
Mr. Tam Chak Chi	6/6	1/1	4/4	N/A	2/2

Note 1: Resigned on 4 February 2020

Note 2: Appointed on 4 February 2020

The Company was incorporated in Caymans Islands on 1 February 2016 and registered in Hong Kong on 10 March 2016 under Part 16 of the Companies Ordinance (Chapter 622 of the Laws of Hong Kong). At the annual general meeting, the chairman of the Board as well as chairmen of the nomination committee, remuneration committee and audit committee or, in their absence, other members of the respective committees shall attend to answer questions from shareholders at the annual general meeting.

Appropriate notices are given to all Directors in advance for attending regular and other board or board committee meetings. Meeting agendas and other relevant information are provided to the Directors in advance of board or board committee meetings. All Directors are consulted to include additional matters in the agenda for such meetings.

Directors have access to the advice and services of the Company Secretary with a view to ensuring that board procedures, and all applicable rules and regulations, are followed.

Both draft and final versions of the minutes will be sent to all Directors for their comment and records. Minutes of board and board committee meetings are kept by the Company Secretary and such minutes are open for inspection at any reasonable time on reasonable prior notice by any Director.

All directors are also entitled to have access to board papers and related materials. These papers and related materials are in a form and quality sufficient to enable the board to make informed decisions on matters placed before it. Queries raised by directors shall receive a prompt and full response by the management.

Appointment, Re-election and Removal

Each of the executive Directors and independent non-executive Directors has entered into a service contract and/or letter of appointment with the Company for a fixed term of one year and will continue thereafter until terminated in accordance with the terms of the service agreement. The aforesaid service contracts and/or the letters of appointment may be terminated by not less than one month's notice in writing served by either party on the other.

In accordance with the articles of association of the Company, at each annual general meeting onethird of the Directors for the time being shall retire from office by rotation provided that every Director shall be subject to retirement at an annual general meeting at least once every three years. Such retiring Directors shall be eligible for re-election at the annual general meeting.

Any Director appointed by the Board to fill a casual vacancy shall hold office until the first general meeting of shareholders after their appointment and be subject to re-election at such meeting and any Director appointed by the Board as an addition to the existing Board shall hold office only until the next following annual general meeting of the Company and shall then be eligible for re-election.

Confirmation of Independence

Code of Conduct for Securities Transactions by Directors

The Company has adopted a code of conduct regarding securities transactions by directors on terms no less exacting than the required standard of dealings set out in Rules 5.48 to 5.67 of the GEM Listing Rules. Having made specific enquiry of all Directors, all Directors confirmed that they had complied with the required standard of dealings and the code of conduct regarding securities transactions by directors adopted by the Company during the Year.

Induction and Continuous Professional Trainings of Directors

Each newly appointed Director has received formal, comprehensive and tailored induction on the first occasion of his/her appointment to ensure appropriate understanding of the business and operations of the Company and full awareness of director's responsibilities and obligations under the GEM Listing Rules and relevant statutory requirements.

The Directors have also been informed of the requirement under Code Provision A.6.5 of the CG Code as set out in Appendix 15 to the GEM Listing Rules regarding continuous professional development.

For the year ended 31 December 2020, all directors have participated in continuous professional development, by attending conferences, seminars and inhouse briefing, and reading materials relevant to their duties, responsibilities and the Group's business.

Board Committees

Audit Committee

The Company established an audit committee on 15 June 2016 with written terms of reference in compliance with Rule 5.28 of the GEM Listing Rules and the CG Code as set out in Appendix 15 to the GEM Listing Rules. The terms of reference of the audit committee was amended on 31 December 2018 and are available on the websites of the Company and the Stock Exchange.

The responsibility of the audit committee is to assist the Board in fulfilling its audit duties through the review and supervision of the Company's financial reporting, risk management and internal control principles and procedures, and to provide advice and comments to the Board. The members meet regularly with the external auditor and/or the Company's senior management for the review, supervision and discussion of the Company's financial reporting, risk management and internal control procedures and ensure that the board and the management have discharged their duties to have an effective risk management and internal control systems.

The composition of the audit committee during the Year and up to the date of this report is as follows:

Independent non-executive Directors:

Mr. Tse Chi Shing (Chairman) Mr. Tse Wai Hei Mr. Tam Chak Chi

None of the members of the audit committee is a former partner of the Company's existing auditing firm. Mr. Tse Chi Shing, who has appropriate professional qualifications and experience in accounting matters, was appointed as the Chairman of the Audit Committee.

During the Year, the audit committee held four meetings. Details of the attendance of the members of the audit committee in the said meetings are set out under the sub-heading "Directors' Attendance at Board/Board Committee/General Meetings" above.

The summary of work of the audit committee during the Year is as follows:

met with the external auditors, reviewed and made recommendations for the Board's approval on the annual, interim and quarterly reports of the Company;
recommended the re-appointment of CCTH CPA Limited as auditors, subject to the Shareholders' approval at the annual general meeting;
reviewed and approved audit fee; and
reviewed the effectiveness of the Company's risk management and internal control systems.

Remuneration Committee

The Company established the remuneration committee on 15 June 2016 with written terms of reference in compliance with the CG Code as set out in Appendix 15 to the GEM Listing Rules. The written terms of reference of the remuneration committee are available on the websites of the Company and the Stock Exchange.

The remuneration committee is responsible for formulating and making recommendations to the Board on the Company's emolument policy and on the establishment of a formal and transparent procedure for developing such policy. The Board expects the remuneration committee to exercise independent judgment and ensures that executive Directors do not participate in the determination of their own remuneration.

The composition of the remuneration committee during the Year and up to the date of this report is as follows:

Executive Directors:

Mr. Kwan Tek Sian (appointed on 4 February 2020) Mr. Yau Chung Ping (resigned on 4 February 2020)

Independent non-executive Directors:

Mr. Tse Chi Shing (Chairman) Mr. Tse Wai Hei

During the Year, the remuneration committee held two meetings. Details of the attendance of the members of the remuneration committee in the said meeting are set out under the sub-heading "Directors' Attendance at Board/Board Committee/General Meetings" above.

The summary of work of the remuneration committee during the Year is as follows:

reviewed and recommended to the Board on the Group's remuneration policy and strategy;
reviewed and recommended to the Board on the remuneration packages of the executive Directors and independent non-executive Directors of the Company; and
reviewed and recommended to the Board on the remuneration package of the senior management of the Company.

Nomination Committee

The Company established the nomination committee on 15 June 2016 with written terms of reference in compliance with the CG Code as set out in Appendix 15 to the GEM Listing Rules. The written terms of reference of the nomination committee was amended on 31 December 2018 and are available on the websites of the Company and the Stock Exchange.

The primary duties of the nomination committee include reviewing the structure, size and composition of the Board, identifying individuals suitably qualified to become Directors, assessing the independence of independent non-executive Directors, establishing and reviewing the diversity policy on the Board members, making disclosure of a Summary of the Board Diversity Policy and its review results in the corporate governance report annually and making recommendations to the Board on appointment and re-appointment of Directors.

The composition of the nomination committee is as follows:

Executive Director: Mr. Lam Chung Ho, Alastair (Chairman)

Independent non-executive Directors: Mr. Tse Chi Shing Mr. Tam Chak Chi

During the Year, the nomination committee held two meetings. Details of the attendance of the members of the nomination committee in the said meeting are set out under the sub-heading "Directors' Attendance at Board/Board Committee/General Meetings" above.

The summary of work of the nomination committee during the Year is as follows:

reviewed the existing Board's structure, size and composition;
reviewed the board diversity policy;
reviewed and assessed the independence of the independent non-executive Directors; and
made recommendations on the retiring Directors at the AGM of the Company.

Board Nomination Policy

The Company adopted a nomination policy for the nomination committee to identify individuals suitably qualified to become Board members and make recommendations to the Board on the selection of individuals nominated for directorships with reference to the formulated criteria. The Board is ultimately responsible for selection and appointment of new Directors.

The Board, through the delegation of its authority to the nomination committee, has used its best efforts to ensure that Directors appointed to the Board possess the relevant background, experience and knowledge in business, finance and management skills critical to the Group's business to enable the Board to make sound and well considered decisions. Collectively, they have competencies in areas which are relevant and valuable to the Group.

Nomination Procedure

The nomination committee shall assess whether any vacancy on the Board has been created or is expected on a regular basis or as required.

The nomination committee utilises various methods for identifying director candidates, including recommendations from Board members, management, and professional search firms. All director candidates, including incumbents and candidates nominated by Shareholders are evaluated by the nomination committee based upon the director qualifications. While director candidates will be evaluated on the same criteria through review of resume, personal interview and performance of background checks. The nomination committee retains the discretion to establish the relative weighting of such criteria, which may vary based on the composition, skill sets, age, gender and experiences of the collective Board rather than on the individual candidate for the purpose of diversity perspectives appropriate to the requirement of the Company's business.

Selection Criteria

The nomination committee will take into account whether a candidate has the qualifications, skills, experience and gender diversity that add to and complement the range of skills, experience and background of existing Directors by considering the highest personal and professional ethics and integrity of the director candidates, proven achievement and competence in the nominee's field and the ability to exercise sound business judgment, skills that are complementary to those of the existing Board, the ability to assist and support management and make significant contributions to the Company's success and such other factors as it may deem are in the best interests of the Company and its Shareholders.

The Company shall review and reassess the nomination policy and its effectiveness on a regular basis or as required.

Board diversity policy

The Company recognises the benefits of having diversity in the composition of the Board and adopted its own board diversity policy on 15 June 2016.

The Company noted that people from different backgrounds and with different professional and life experience are likely to approach problems in different ways and accordingly, members of the Board with diverse backgrounds will bring different concerns and questions to the table, and allow the Board to consider a wider range of options and solutions when deciding on corporate issues and formulating policies for the Group. In determining the Board's composition and selection of candidates to the Board, factors including but not limited to gender, age, cultural and educational background, ethnicity, professional experience, skills, industry knowledge and length of service will be considered. All Board appointments will be based on meritocracy, and candidates will be considered against the selection criteria, having regard for the benefits of diversity on the Board, the business model and specific needs of the Group. The ultimate decision will be based on merit and contribution that the selected candidates will bring to the Board.

The nomination committee has monitored the implementation of the board diversity policy since its adoption, and also reviewed it on an annual basis to ensure its effectiveness.

For the purpose of implementation of the board diversity policy, the following measurable objectives were adopted:

1. at least one-third of the members of the Board shall be independent non-executive Directors; and
1. at least one of the members of the Board shall have obtained accounting or other professional qualifications.

The Board has achieved the measurable objectives in the board diversity policy.

As at the date of this Annual Report, the Board comprises six Directors. Three of them are independent non-executive Directors, thereby promoting critical review and control of the management process. The Board is also characterised by significant diversity, whether considered in terms of gender, age, cultural and educational background, ethnicity, professional experience, skills, knowledge and length of service.

Corporate Governance Function

During the Year, the Board has reviewed the corporate governance practices of the Company with reference to the CG Code as set out in Appendix 15 to the GEM Listing Rules. The summary of their work of is as follows:

reviewed the Company's policies and practices on corporate governance and make recommendations;
reviewed and monitored the training and continuous professional development of Directors and senior management of the Group;
reviewed and monitored the Company's policies and practices on compliance with legal and regulatory requirements;
developed, reviewed and monitored the code of conduct and compliance manual applicable to employees of the Group and the Directors; and
reviewed the Company's compliance with CG Code and disclosure in the corporate governance report.

Policy on Payment of Dividends

The Company adopted a policy on payment of dividends (the "Dividend Policy"), which establishes an appropriate procedure on declaring and recommending the dividend payment of the Company.

The Company will declare and/or recommend the payment of dividends to Shareholders after considering the Company's ability to pay dividends, which will depend upon, among other things, its actual and expected financial results, cash flow, general business conditions and strategies, current and future operations, statutory, contractual and regulatory restrictions and so on. The Board has complete discretion on whether to pay a dividend, subject to Shareholders' approval, where applicable. Even if the Board decides to recommend and pay dividends, the form, frequency and amount will depend upon the operations and earnings, capital requirements and surplus, general financial condition, contractual restrictions and other factors of and affecting the Group. The Board may also consider declaring special dividends from time to time, in addition to the interim and/or final dividends.

The Company shall review and reassess the Dividend Policy and its effectiveness on a regular basis or as required.

Remuneration of Directors and Senior Management

Emolument Policy

The remuneration policy of the Group is to ensure the fairness and competitiveness of total remuneration. The emoluments of executive Directors are determined based on the skills, knowledge, individual performance as well as contributions, the scope of responsibility and accountability of such Directors, taking into consideration the Company's performance and prevailing market conditions. The remuneration policy of non-executive Directors and independent non-executive Directors is to ensure that they are adequately compensated for their efforts and time dedicated to the Company's affairs including their participation in respective Board committees. Their emoluments are determined with reference to their skills, experience, knowledge, duties and market trends.

Accountability and Audit

Financial Reporting

The Board acknowledges its responsibility for the preparation of the Consolidated Financial Statements for the year ended 31 December 2020 which give a true and fair view of the state of affairs of the Group in accordance with the statutory requirements and accounting standards and other financial disclosure requirement under the GEM Listing Rules. The financial results of the Group are announced in a timely manner in accordance with statutory and/or regulatory requirements.

The Directors are not aware of any material uncertainties relating to events or conditions that may cast significant doubt upon the Company's ability to continue as a going concern.

The statement by auditor about their reporting responsibilities is set out in the independent auditor's report on pages 52 to 58 of the Consolidated Financial Statements.

External Auditor's Remuneration

During the Year, the Company engaged CCTH CPA Limited as the external auditor. The fee in respect of audit services and non-audit services provided by CCTH CPA Limited for the year ended 31 December 2020 amounted to HK\$970,000 and HK\$150,000 respectively.

The audit committee has expressed its views to the Board that the level of fees paid/payable to the Company to the Company's external auditor for annual audit services is reasonable.

Risk Management and Internal Control Systems

Responsibility of the Board

The Board is committed to the maintenance of good corporate governance, practices and procedures, and implements an effective risk management and internal control systems of the Group. However, such systems are designed to manage rather than eliminate risk of failure to achieve business objective, and can only provide reasonable and not absolute assurance against material misstatement or loss.

Our Risk Management and Internal Control Framework

Risk Management and Risk Assessment

The Board has the overall responsibilities of the risk management and internal controls systems of the Group. With the support from the Audit Committee, the Board monitors the Group's risk exposures, oversees the actions of management and monitors the overall effectiveness of the risk management system on an ongoing basis.

Management is responsible for setting the appropriate tone from the top, performing risk assessments, and owning the design, implementation and maintenance of internal controls. Essential to the Group's risk management and internal control systems are policies and procedures that are documented and communicated to employees.

To provide sound and effective risk management, the Group has established a risk management system which includes the following key features:

An organisational structure for different responsible parties with defined authority, responsibilities and risk management roles;
The Board sets forth the proper risk management culture and risk appetite for the Group, evaluates and determines the level of risk that the Group should take and monitor regularly;
A Risk Management Policy has been established to provide a framework, which includes a risk assessment process, for the identification, analysis, evaluation, treatment, monitoring and reporting of the Group's key risks to support the achievement of the organisation's overall strategic objectives.

Risk assessment has been performed by management to evaluate the nature and extent of the risks to which the Group is willing to take in achieving its strategic objectives. During the risk assessment process, the Group has identified a number of key risks that may impact the Group's strategic objectives and to respond to the changes in the business and external environment. These risks are prioritised according to the likelihood of their occurrence and the significance of their impact on the business of the Group. Remedial measures are developed to manage these risks to an acceptable level. The results of risk assessment are reported to and discussed with the Board.

Internal Control

The Internal Audit Department is led by the Head of Internal Audit, who reports to the Audit Committee. The Internal Audit Department is primarily responsible for conducting reviews on the key operational processes and the related internal controls to ensure compliance with the Group's risk management and internal control policies and procedures.

An internal control review has been conducted during the year. During the process of the internal control review, the Internal Audit Department identified internal control deficiencies and weakness, proposed recommendations for improvements and remedial actions with management and process owners. No material internal control deficiencies and weaknesses have been identified but improvements in various areas of internal control procedures have been suggested. Management has taken certain immediate remedial actions accordingly and has planned to refine certain internal control procedures in due course. The result of the internal control review and management's remedial actions have also been reported to the Audit Committee.

Review of Risk Management and Internal Control Systems

Through the Audit Committee, the Board has conducted an annual review of the effectiveness of the risk management and internal control systems of the Group and considered the risk management and internal control systems effective and adequate. The review covers all material controls, including financial, operational and compliance controls, and risk management functions. The scope and quality of ongoing monitoring of risks and the internal control systems have been assessed. No significant areas of concern that may affect the Group to achieve strategic goals have been identified.

The Board has also reviewed and is satisfied with the adequacy of resources, qualifications and experience of staff of the Group's accounting, internal audit and financial reporting functions, and their training programmes and budget.

Inside Information

The Group has adopted and implemented its own disclosure policy aiming to provide a general guide to the directors and senior management of the Company in handling of confidential information and/or monitoring of information disclosure pursuant to applicable laws and regulations in compliance with the Listing Rules and Securities and Futures Ordinance ("SFO").

The disclosure policy provides the procedures and internal controls for the handling and dissemination of inside information by publication of the announcement to the websites of the Stock Exchange and the Company on a timely basis to enable the public, namely shareholders, institutional investors, potential investors and other stakeholders of the Company to access the latest information of the Group, unless such information falls within the safe harbours with the SFO. Briefing and training on the implementation of the disclosure policy have been provided to Directors, officers and senior management of the Group. In addition, the relevant policy has been uploaded to the intranet of the Company for easy access by all employees. The Board emphasises that only the authorised representatives registered in the Stock Exchange are authorised to speak on behalf of the Company.

Delegation by the Board

While at all times the Board retains full responsibility for guiding and monitoring the Company in discharging its duties, certain responsibilities are delegated to various board committees which have been established by the Board to deal with different aspects of the Company's affairs. Unless otherwise specified in their respective written terms of reference as approved by the Board, these board committees are governed by the Company's articles of association as well as the Board's policies and practices (in so far as the same are not in conflict with the provisions contained in the articles of association).

With the establishment of the Audit Committee, Remuneration Committee and Nomination Committee, the independent non-executive Directors will be able to effectively devote their time to perform the duties required by the respective board committees.

The Board has also delegated the responsibility of implementing its strategies and the day-to-day operation to the management of the Company under the leadership of the executive Directors. Clear guidance has been made as to the matters that should be reserved to the Board for its decision which include matters on, inter alia, capital, finance and financial reporting, internal controls, communication with shareholders, Board membership, delegation of authority and corporate governance.

Company Secretary

The Company appointed Mr. Leung Louis Ho Ming ("Mr. Leung"), as its company secretary on 13 September 2019.

The biographical details of Mr. Leung are set out under the section headed "Biographical Details of Directors and Senior Management" of this annual report. During the Year, Mr. Leung, undertook over 15 hours' professional training to update his skill and knowledge in compliance with the CG Code.

Changes in Constitutional Documents

Pursuant to Rule 17.102 of the GEM Listing Rules, the Company has published on the websites of the Company and the Stock Exchange its Memorandum and Articles of Association. During the Year, the shareholder has passed resolution on 15 June 2016 approving the adoption of amended and restated Memorandum and Articles of Association of the Company. Save as the aforesaid, there has been no changes in the constitutional documents of the Company.

Shareholders' Rights

The Way by Which Shareholders Can Convene Extraordinary General Meeting ("EGM")/ Put Forward Proposal

According to Article 58 of the Articles of Association of the Company, any one or more members holding at the date of deposit of the requisition not less than one-tenth of the paid up capital of the Company carrying the right of voting at general meetings of the Company shall at all times have the right, by written requisition to the Board or the secretary of the Company, to require an EGM to be called by the Board for the transaction of any business specified in such requisition; and such meeting shall be held within two (2) months after the deposit of such requisition. If within twenty-one (21) days of such deposit the Board fails to proceed to convene such meeting the requisitionist(s) himself (themselves) may do so in the same manner, and all reasonable expenses incurred by the requisitionist(s) as a result of the failure of the Board shall be reimbursed to the requisitionist(s) by the Company.

Article 85 of the Articles of Association provides that no person other than a Director retiring at the meeting shall, unless recommended by the Directors for election, be eligible for election as a Director at any general meeting unless a notice signed by a member (other than the person to be proposed) duly qualified to attend and vote at the meeting for which such notice is given of his intention to propose such person for election and also a notice signed by the person to be proposed of his willingness to be elected shall have been lodged at the head office or at the registration office provided that the minimum length of the period, during which such notice(s) are given, shall be at least seven (7) days and that (if the notices are submitted after the despatch of the notice of the general meeting appointed for such election) the period for lodgment of such notice(s) shall commence on the day after the despatch of the notice of the general meeting appointed for such election and end no later than seven (7) days prior to the date of such general meeting.

Accordingly, if a member of the Company wishes to propose a person other than a Director for election as a Director at the Company's general meeting ("Proposal"), he/she should lodge a written notice setting out the Proposal and his/her contact details to the head office and principal place of business of the Company.

The relevant procedures are set out in the circular to the shareholders which is sent together with this annual report and the Company's website at www.AL-Grp.com.

The Procedures for Sending Enquiries to the Board

Shareholders may send their enquiries and concerns in writing to the Board/company secretary by addressing them to the Company at our principal place of business in Hong Kong or by email through the Company's website.

Communication with Shareholders and Investors

The Company endeavors to maintain effective communications with the shareholders and potential investors of the Company.

Save as mentioned under the sub-heading "The Procedures for Sending Enquiries to the Board" above, in order to provide more relevant information to our shareholders, the Company has published all corporate information about the Group on its website at www.AL-Grp.com. It is a channel of the Company to communicate with the shareholders and potential investors with our latest corporate development. All our corporate communications, such as statutory announcement, circular and financial reports are available on the website for easy access by the shareholders and potential investors. In addition, the Company meets its shareholders at the annual general meeting so as to promote the development of the Company through mutual and efficient communications.

The forthcoming annual general meeting of the Company is scheduled to be held on Friday, 18 June 2021. At the annual general meeting, the chairman of the Board as well as chairmen of the nomination committee, remuneration committee and audit committee or, in their absence, other members of the respective committees shall attend to answer questions from shareholders at the annual general meeting. The representatives of the external auditors shall also present and available to answer questions at the meeting.

The notice of annual general meeting and the necessary information on issues to be considered in the annual general meeting will be set out in the circular to be dispatched to the shareholders of the Company in due course.

Hong Kong, 30 March 2021

INDEPENDENT AUDITOR'S REPORT

TO THE SHAREHOLDERS OF

AL GROUP LIMITED (Incorporated in the Cayman Islands with limited liability)

Opinion

We have audited the consolidated financial statements of AL Group Limited (the "Company") and its subsidiaries (collectively referred to as the "Group") set out on pages 59 to 143, which comprise the consolidated statement of financial position as at 31 December 2020, and the consolidated statement of profit or loss and other comprehensive income, the consolidated statement of changes in equity and the consolidated statement of cash flows for the year then ended, and notes to the consolidated financial statements, including a summary of significant accounting policies.

In our opinion, the consolidated financial statements give a true and fair view of the consolidated financial position of the Group as at 31 December 2020, and of its consolidated financial performance and its consolidated cash flows for the year then ended in accordance with Hong Kong Financial Reporting Standards ("HKFRSs") issued by the Hong Kong Institute of Certified Public Accountants ("HKICPA") and have been properly prepared in compliance with the disclosure requirements of the Hong Kong Companies Ordinance.

Basis for Opinion

We conducted our audit in accordance with Hong Kong Standards on Auditing ("HKSAs") issued by the HKICPA. Our responsibilities under those standards are further described in the Auditor's Responsibilities for the Audit of the Consolidated Financial Statements section of our report. We are independent of the Group in accordance with the HKICPA's Code of Ethics for Professional Accountants (the "Code"), and we have fulfilled our other ethical responsibilities in accordance with the Code. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.

Material Uncertainty Related to Going Concern

We draw attention to note 2 to the consolidated financial statements, that the Group incurred losses amounted to approximately HK\$42,211,000 for the year ended 31 December 2020, and that the Group's net liabilities amounted to approximately HK\$25,978,000 at that date. These conditions indicate that a material uncertainty exists that may cast significant doubt on the Group's ability to continue as a going concern. In light of all the measures and arrangements detailed in note 2 to the consolidated financial statements, the directors are of the opinion that the Group will be able to finance its future working capital and financial requirements. Our opinion is not modified in respect of this matter.

Key Audit Matters

Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of the consolidated financial statements of the current period. These matters were addressed in the context of our audit of the consolidated financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters.

Key Audit Matter How our audit addressed the key audit matter

Recognition of contract revenue

Refer to note 7 to the consolidated financial statements

The Group recorded revenue from design and fit out services for the year ended 31 December 2020 of approximately HK\$65.6 million.

Revenue are recognised according to the stage of completion of individual contracts, calculated on the proportion of total costs incurred up to the year end date compared to the estimated total costs of the relevant contract, on the basis that the stage of completion and the total costs of the design and fit out work can be measured reliably.

We have identified the recognition of contract revenue as key audit matter as management judgment is used to determine the stage of completion and estimate the costs to complete individual design and fit out projects in progress as at the year end date.

Our procedures in relation to management's recognition of contract revenue included:

We obtained an understanding of the basis and judgments of management for contract revenue recognition.
We selected, on a sample basis, design and fit out contracts and:
Checked the terms and conditions of the selected contracts to facilitate our understanding of the respective work nature and contractual relationship with the customers.
Checked correspondences with the customers, including the documents or communication evidence to evaluate the reasonableness of management's estimates on the budgeted total contract sum.

Key Audit Matter	How our audit addressed the key audit matter
	– Assessed management's determination of the stage of completion of the selected projects through inquiry with project managers, review of project status reports and, other correspondences with customers and performing site visits.
	– Considered the reasonableness of forecasted costs to completion and expected margins by comparing them to managements budgets and actual costs incurred for the projects as well as margins of similar projects. Furthermore, we assessed if historical estimates of project revenue and margin in the past years were reasonable based on amounts finally invoiced and settled.

Impairment assessment of trade receivables and contract assets

Refer to notes 22 and 24 to the consolidated financial statements

The Group had gross trade receivables and contract assets of approximately HK\$24.9 million and HK\$36.4 million respectively at 31 December 2020 with impairment loss of approximately HK\$9.2 million and HK\$7.2 million respectively recognised up to that date.

Management has performed impairment assessment of the trade receivables and contract assets based on information including ageing of the trade receivables, past repayment history, subsequent settlement status of receivable balance and contract assets, credit profile of the customers and on-going trading relationship with the relevant customers. Management also considered forwardlooking information that may impact the customers' ability to repay the outstanding balances and contract assets in order to estimate the expected c r e d i t l o s s e s f o r t h e i m p a i r m e n t assessment.

Our procedures in relation to management's impairment assessment on trade receivables and contract assets as at 31 December 2020 included:

We obtained an understanding of the key controls that the Group has implemented to manage and monitor its credit risk;
We made enquiry of management regarding the status of each of the significant trade receivables past due and contract assets which were not yet billed to customers as at year end, the Group's on-going business relationship with the relevant customers and past repayment history of the customers.

Key Audit Matter How our audit addressed the key audit matter

We focused on this area due to the magnitude of the trade receivables past due as at 31 December 2020 and the impairment assessment of trade receivables and contract assets under the expected credit losses model involved significant management judgments and estimates.

We checked, on a sample basis, the ageing analysis of the trade receivables as at 31 December 2020 to the underlying financial records;
We assessed the subsequent settlement of receivable balances and contract assets. Where settlement had not been received subsequent to the year end date, we obtained an understanding of the basis of management's judgments about the recoverability of the outstanding receivables and contract assets and evaluate the allowance for doubtful debts made by management for these individual balances.
W e c o r r o b o r a t e d e x p l a n a t i o n s f r o m management with supporting evidence, such as correspondence with customers, public search of the customers' profiles as we evaluated management's judgments.
We assessed the appropriateness of the expected credit loss positioning methodology, examining the key data inputs on a sample basis to assess their accuracy and completeness, and challenging the assumptions, including both historical and forward-looking information, used to determine the expected credit loss.

Other Information

The directors of the Company are responsible for the other information. The other information comprises all of the information included in the annual report other than the consolidated financial statements and our auditor's report thereon.

Our opinion on the consolidated financial statements does not cover the other information and we do not express any form of assurance conclusion thereon.

In connection with our audit of the consolidated financial statements, our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the consolidated financial statements or our knowledge obtained in the audit or otherwise appears to be materially misstated.

If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to report that fact. We have nothing to report in this regard.

Responsibilities of Directors and Audit Committee for the Consolidated Financial Statements

The directors of the Company are responsible for the preparation of the consolidated financial statements that give a true and fair view in accordance with HKFRSs issued by the HKICPA and the disclosure requirements of the Hong Kong Companies Ordinance, and for such internal control as the directors determine is necessary to enable the preparation of consolidated financial statements that are free from material misstatement, whether due to fraud or error.

In preparing the consolidated financial statements, the directors are responsible for assessing the Group's ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the directors either intend to liquidate the Group or to cease operations, or have no realistic alternative but to do so.

The audit committee are responsible for overseeing the Group's financial reporting process.

Auditor's Responsibilities for the Audit of the Consolidated Financial Statements

Our objectives are to obtain reasonable assurance about whether the consolidated financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor's report that includes our opinion. We report our opinion solely to you, as a body, and for no other purpose. We do not assume responsibility towards or accept liability to any other person for the contents of this report. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with HKSAs will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these consolidated financial statements.

As part of an audit in accordance with HKSAs, we exercise professional judgment and maintain professional scepticism throughout the audit. We also:

Identify and assess the risks of material misstatement of the consolidated financial statements, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.
Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Group's internal control.
Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by the directors.
Conclude on the appropriateness of the directors' use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Group's ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditor's report to the related disclosures in the consolidated financial statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditor's report. However, future events or conditions may cause the Group to cease to continue as a going concern.
Evaluate the overall presentation, structure and content of the consolidated financial statements, including the disclosures, and whether the consolidated financial statements represent the underlying transactions and events in a manner that achieves fair presentation.
Obtain sufficient appropriate audit evidence regarding the financial information of the entities or business activities within the Group to express an opinion on the consolidated financial statements. We are responsible for the direction, supervision and performance of the group audit. We remain solely responsible for our audit opinion.

We communicate with the audit committee regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that we identify during our audit.

We also provide the audit committee with a statement that we have complied with relevant ethical requirements regarding independence, and to communicate with them all relationships and other matters that may reasonably be thought to bear on our independence, and where applicable, actions taken to eliminate threats or safeguards applied.

From the matters communicated with the audit committee, we determine those matters that were of most significance in the audit of the consolidated financial statements of the current period and are therefore the key audit matters. We describe these matters in our auditor's report unless law or regulation precludes public disclosure about the matter or when, in extremely rare circumstances, we determine that a matter should not be communicated in our report because the adverse consequences of doing so would reasonably be expected to outweigh the public interest benefits of such communication.

CCTH CPA Limited Certified Public Accountants Hong Kong, 30 March 2021

Lee Chi Hang

Practising certificate number P01957

Unit 1510–17, 15/F, Tower 2, Kowloon Commerce Centre, No. 51 Kwai Cheong Road, Kwai Chung, New Territories, Hong Kong

CONSOLIDATED STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME

For the year ended 31 December 2020

		2020	2019
	Notes	HK\$'000	HK\$'000
Revenue	7	67,076	142,729
Other income	8	2,720	559
Other gains/(losses), net	9	(26,386)	(41,645)
Subcontracting and materials costs		(51,936)	(124,536)
Employee benefit expenses	10	(18,496)	(20,939)
Rental expenses		(20)	(381)
Other expenses	11	(9,667)	(10,598)
Operating loss		(36,709)	(54,811)
Finance income	12	5	16
Finance costs	13	(5,065)	(4,236)
Share of loss of associates		(464)	(1,303)
Loss before income tax		(42,233)	(60,334)
Income tax credit/(expense)	14	22	(431)
Loss for the year		(42,211)	(60,765)
Loss for the year attributable to:
Owners of the Company		(38,038)	(56,433)
Non-controlling interests		(4,173)	(4,332)
Loss for the year		(42,211)	(60,765)
Loss for the year		(42,211)	(60,765)
Other comprehensive expense
Items that will not be reclassified to profit or loss:
Loss on change in fair value of financial assets at fair
value through other comprehensive income		(533)	(100)
Other comprehensive expense for the year,
net of tax		(533)	(100)
Total comprehensive expense for the year,
net of tax		(42,744)	(60,865)
Total comprehensive expense for the year
attributable to:
Owners of the Company		(38,571)	(56,533)
Non-controlling interests		(4,173)	(4,332)
		(42,744)	(60,865)
		2020	2019
		HK cents	HK cents
Loss per share	16
Basic		(5.31)	(9.48)
Diluted		N/A	N/A

CONSOLIDATED STATEMENT OF FINANCIAL POSITION

As at 31 December 2020

		2020	2019
	Notes	HK\$'000	HK\$'000
Non-current assets
Property, plant and equipment	17	2,415	972
Right-of-use assets	18	1,445	2,910
Goodwill	19	1,115	—
Interests in associates	20	595	22,267
Financial assets at fair value through
other comprehensive income	21	1,072	1,605
Rental deposits	22	100	438
		6,742	28,192
Current assets
Trade and other receivables	22	24,236	26,700
Financial assets at fair value through profit or loss	23	368	1,979
Contract assets Amount due from an associate	24	29,228 —	43,889 20
Current income tax recoverable		423	703
Cash and bank balances	25	24,646	22,053
		78,901	95,344
Current liabilities
Trade and other payables	26	36,519	44,948
Contract liabilities	24	4,498	2,312
Amount due to non-controlling interest	27	5,600	5,600
Borrowings	28	16,200	15,500
Current income tax payable		91	—
Deferred income tax liabilities	29	119	—
		63,027	68,360
Net current assets		15,874	26,984
Total assets less current liabilities		22,616	55,176
Non-current liabilities
Promissory note payable	30	48,055	47,782
Lease liabilities	31	539	395
		48,594	48,177
Net (liabilities)/assets		(25,978)	6,999
Equity
Share capital	32	8,724	5,950
Reserves		(23,117)	8,461
Equity attributable to owners of the Company		(14,393)	14,411
Non-controlling interests		(11,585)	(7,412)
Total equity		(25,978)	6,999

The consolidated financial statements on pages 59 to 143 were approved and authorised for issue by the board of directors on 30 March 2021 and are signed on its behalf by:

Lam Chung Ho, Alastair Wong Kang Man Director Director

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

For the year ended 31 December 2020

				Attributable to owners of the Company
	Share capital HK\$'000	Share premium HK\$'000	Other reserve (Note 33) HK\$'000	Investment revaluation reserve HK\$'000	Share option reserve HK\$'000	Accumulated losses HK\$'000	Total HK\$'000	Non controlling interests HK\$'000	Total HK\$'000
At 1 January 2019	5,950	82,012	5,922	54	—	(22,994)	70,944	(3,080)	67,864
Loss for the year Other comprehensive expense for the year	— —	— —	— —	— (100)	— —	(56,433) —	(56,433) (100)	(4,332) —	(60,765) (100)
Total comprehensive expense for the year, net of tax	—	—	—	(100)	—	(56,433)	(56,533)	(4,332)	(60,865)
At 31 December 2019	5,950	82,012	5,922	(46)	—	(79,427)	14,411	(7,412)	6,999
At 1 January 2020	5,950	82,012	5,922	(46)	—	(79,427)	14,411	(7,412)	6,999
Loss for the year Other comprehensive expense for the year	— —	— —	— —	— (533)	— —	(38,038) —	(38,038) (533)	(4,173) —	(42,211) (533)
Total comprehensive expense for the year, net of tax	—	—	—	(533)	—	(38,038)	(38,571)	(4,173)	(42,744)
Recognition of equity-settled share-based payments Issue of shares:	—	—	—	—	1,050	—	1,050	—	1,050
– for cash	1,414	3,818	—	—	—	—	5,232	—	5,232
– for acquisition of subsidiary	1,120	1,344	—	—	—	—	2,464	—	2,464
– upon exercise of share options	240	1,354	—	—	(562)	—	1,032	—	1,032
Share issue expenses	—	(11)	—	—	—	—	(11)	—	(11)
At 31 December 2020	8,724	88,517	5,922	(579)	488	(117,465)	(14,393)	(11,585)	(25,978)

CONSOLIDATED STATEMENT OF CASH FLOWS

For the year ended 31 December 2020

	2020 HK\$'000	2019 HK\$'000
Operating activities
Loss before income tax	(42,233)	(60,334)
Adjustments for:
Depreciation of property, plant and equipment	846	1,262
Depreciation of right-of-use assets	2,575	2,227
Loss on disposal of property, plant and equipment	1	21
Loss on disposal of subsidiaries	9	—
Gain on disposal of associates	(237)	—
Loss/(gain) on change in fair value of financial assets at
fair value through profit or loss
– Net unrealised loss/(gain) on listed securities	121	(589)
– Net realised loss on disposal of listed securities	478	307
Dividend income from equity investment at fair value
through other comprehensive income	—	(101)
Finance income	(5)	(16)
Finance costs	5,065	4,236
Share of loss of associates	464	1,303
Impairment loss on interests in associates	17,325	34,362
Impairment loss on goodwill	—	2,436
Impairment loss on trade receivables, net	414	5,104
Impairment loss on contract assets	7,245	—
Trade receivable written off, net	1,012	—
Equity-settled share-based payments	1,050	—
Operating loss before working capital changes	(5,870)	(9,782)
Decrease/(increase) in trade and other receivables	10,082	(5,911)
Decrease in contract assets	7,416	10,423
Decrease/(increase) in amount due from an associate	20	(10)
Decrease in trade and other payables	(13,247)	(10,952)
(Decrease)/increase in contract liabilities	(197)	1,487
Increase in amount due to non-controlling interest	—	5,600
Cash used in operations	(1,796)	(9,145)
Income tax refunded	300	—
Net cash used in operating activities	(1,496)	(9,145)

The above consolidated statement of comprehensive income should be read in conjunction with the accompany notes.

CONSOLIDATED STATEMENT OF CASH FLOWS (CONTINUED)

For the year ended 31 December 2020

	Notes	2020 HK\$'000	2019 HK\$'000
Investment activities
Purchase of property, plant and equipment		(1,146)	(567)
Purchase of financial assets at fair value through profit or loss		—	(1,574)
Proceeds from disposal of financial assets at fair value
through profit or loss		1,012	3,669
Interest received		5	16
Dividend received from associates attributable to
pre-acquisition profits		—	3,200
Acquisition of associates		(480)	—
Acquisition of subsidiaries	37	480	—
Net cash (used in)/generated from investing activities		(129)	4,744
Financing activities
Proceeds from borrowings	39	700	9,100
Repayment of borrowings	39	—	(600)
Finance costs paid	39	(85)	(620)
Payment of lease liabilities	39	(2,650)	(2,107)
Issue of shares		6,264	—
Share issue expenses		(11)	—
Net cash generated from financing activities		4,218	5,773
Net increase in cash and cash equivalents		2,593	1,372
Cash and cash equivalents at beginning of the year		22,053	20,681
Cash and cash equivalents at end of the year		24,646	22,053
Analysis of cash and cash equivalent at end of the year Cash and bank balances		24,646	22,053

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

1 General Information

AL Group Limited (the "Company") was incorporated in the Cayman Islands on 1 February 2016 as an exempted company with limited liability under the Companies Law (2010 Revision) of the Cayman Islands. The address of the Company's registered office is Cricket Square, Hutchins Drive, P.O. Box 2681, Grand Cayman KY1-1111, Cayman Islands. The Company has established a place of business in Hong Kong located at Unit A, 2/F, Sing Ho Finance Building, 166-168 Gloucester Road, Wan Chai, Hong Kong.

The Company is an investment holding company and, together with its subsidiaries (collectively referred to as the "Group"), are principally engaged in the provision of interior design and fit out solutions services as well as overall project management in Hong Kong.

The shares of the Company (the "Share(s)") are listed on the GEM of The Stock Exchange of Hong Kong Limited (the "Stock Exchange").

These consolidated financial statements are presented in Hong Kong Dollars ("HK\$"), unless otherwise stated.

2 Basis of Preparation of Consolidated Financial Statements

The consolidated financial statements of the Company have been prepared in accordance with Hong Kong Financial Reporting Standards ("HKFRS") issued by the Hong Kong Institute of Certified Public Accountants. In addition, the consolidated financial statements include applicable disclosures required by the Rules Governing the Listing of Securities on the GEM of the Stock Exchange (the "GEM Listing Rules") and by the Hong Kong Companies Ordinance.

The consolidated financial statements have been prepared on a historical cost basis, except for certain financial assets which are measured at fair value at the end of each reporting period, as explained in the accounting policies set out in note 4.

Going Concern Basis

Notwithstanding that the Group incurred net loss of approximately HK\$42,211,000 for the year ended 31 December 2020, and the total liabilities of the Group at 31 December 2020, which includes promissory note payable amounted to HK\$48,055,000, exceed the Group's total assets at that date by approximately HK\$25,978,000, the directors of the Company considered it appropriate for the preparation of the consolidated financial statements on a going concern basis after taking into account the following circumstances and measures to be implemented:

(a) On 16 February 2021, an independent third party granted a stand-by revolving loan facilities of up to HK\$30,000,000 to the Group, which is available to draw down on or before 16 August 2021 and repayable after 12 months from the date of drawdown. The loan facility bears interest at 18% per annum. The directors of the Company believe that this loan facility is available for draw down as additional working capital of the Group, as and when needed.

2 Basis of Preparation of Consolidated Financial Statements (Continued)

Going Concern Basis (Continued)

(b) The Group is implementing various measures, such as optimising its overall sales network and undergoing effective cost control to improve the profit margin and operating cashflows of its business.
(c) The Group will also continue to seek for other alternative financing and bank borrowings to finance the settlement of its existing financial obligations and future operating and capital expenditures.

The directors of the Company are of the opinion that, taking into account the above-mentioned plans and measures, the Group will have sufficient working capital to finance its operations and to meet its financial obligations as and when they fall due within the next twelve months after 31 December 2020. Accordingly, the consolidated financial statements have been prepared on a going concern basis. Should the Group be unable to operate as a going concern, adjustments would have to be made to reduce the carrying amounts of the Group's assets to their net realisable amounts, to provide for further liabilities which might arise, and to reclassify noncurrent assets and non-current liabilities as current assets and current liabilities, respectively. The effect of these adjustments has not been reflected in the consolidated financial statements.

3 Application of New and Amendments to Hong Kong Financial Reporting Standards ("HKFRSs")

Amendments to HKFRSs that are mandatorily effective for the current year

In the current year, the Group has applied the Amendments to References to the Conceptual Framework in HKFRS Standards and the following amendments to HKFRSs issued by the Hong Kong Institute of Certified Public Accountants ("HKICPA") for the first time, which are mandatorily effective for the annual period beginning on or after 1 January 2020 for the preparation of the consolidated financial statements:

Amendments to HKFRS 3	Definition of a Business
Amendments to HKFRS 9,
HKAS 39 and HKFRS 7
Amendments to HKAS 1	Definition of Material
and HKAS 8

Interest Rate Benchmark Reform Definition of Material

Except as described below, the application of the Amendments to References to the Conceptual Framework in HKFRS Standards and the amendments to HKFRSs in the current year had no material impact on the Group's financial positions and performance for the current and prior years and/or on the disclosures set out in these consolidated financial statements.

3 Application of New and Amendments to Hong Kong Financial Reporting Standards ("HKFRSs") (Continued)

Impacts on application of Amendments to HKFRS 3

Definition of a Business

The Group has applied the amendments for the first time in the current year. The amendments clarify that while business usually have outputs, outputs are not required for an integrated set of activities and assets to qualify as a business. To be considered a business, an acquired set of activities and assets must include, at a minimum, an input and a substantive process that together significantly contribute to the ability to create outputs.

The amendments remove the assessment of whether market participants are capable of replacing any missing inputs or processes and continuing to produce outputs. The amendments also introduce additional guidance that helps to determine whether a substantive process has been acquired.

In addition, the amendments introduce an optional concentration test that permits a simplified assessment of whether an acquired set of activities and assets is not a business. Under the optional concentration test, the acquired set of activities and assets is not a business if substantially all of the fair value of the gross assets acquired is concentrated in a single identifiable asset or group of similar assets. The gross assets under assessment exclude cash and cash equivalents, deferred tax assets, and goodwill resulting from the effects of deferred tax liabilities. The election on whether to apply the optional concentration test is available on transaction-by-transaction basis.

The amendments had no impact on the consolidated financial statements of the Group but may impact future periods should the Group make any acquisition.

3 Application of New and Amendments to Hong Kong Financial Reporting Standards ("HKFRSs") (Continued)

New and amendments to HKFRSs in issue but not yet effective

The Group has not early applied the following new amendments to HKFRSs that have been issued but are not yet effective:

HKFRS 17	Insurance Contracts and related Amendments4
Amendments to HKFRS 3	Reference to the Conceptual Framework3
Amendments to HKFRS 9, HKAS 39, HKFRS 7, HKFRS 4 and HKFRS 16	Interest Rate Benchmark Reform – Phase 22
Amendments to HKFRS 10	Sale or Contribution of Assets between an Investor
and HKAS 28	and its Associate or Joint Venture5
Amendments to HKFRS 16	Covid-19 – Related Rent Concessions1
Amendments to HKAS 1	Classification of Liabilities as Current or Non-current4
Amendments to HKAS 16	Property, Plant and Equipment – Proceeds before Intended Use3
Amendments to HKAS 37	Onerous Contracts – Cost of Fulfilling a Contract3
Amendments to HKFRSs	Annual Improvements to HKFRS Standards 2018-20203

¹ Effective for annual periods beginning on or after 1 June 2020
² Effective for annual periods beginning on or after 1 January 2021
³ Effective for annual periods beginning on or after 1 January 2022
⁴ Effective for annual periods beginning on or after 1 January 2023
⁵ Effective date not yet determined

The directors of the Company anticipate that the application of all the new and amendments to HKFRSs that are not yet effective will have no material impact on the consolidated financial statements in the foreseeable future.

4 Summary of Significant Accounting Policies

The principal accounting policies adopted by the Group are set out below:

4.1 Consolidation

Subsidiaries

Subsidiaries are all entities (including structured entities) over which the Group has control. The Group controls an entity when the Group is exposed to, or has rights to, variable returns from its involvement with the entity and has the ability to affect those returns through its power to direct the activities of the entity. Subsidiaries are consolidated from the date on which control is transferred to the Group. They are deconsolidated from the date that control ceases.

(a) Business combinations or asset acquisitions

Optional concentration test

Effective from 1 January 2020, the Group can elect to apply an optional concentration test, on a transaction by-transaction basis, that permits a simplified assessment of whether an acquired set of activities and assets is not a business. The concentration test is met if substantially all of the fair value of the gross assets acquired is concentrated in a single identifiable asset or group of similar identifiable assets. The gross assets under assessment exclude cash and cash equivalents, deferred tax assets, and goodwill resulting from the effects of deferred tax liabilities. If the concentration test is met, the set of activities and assets is determined not to be a business and no further assessment is needed.

Asset acquisition

When the Group acquires a group of assets and liabilities that do not constitute a business, the Group identifies and recognises the individual identifiable assets acquired and liabilities assumed by allocating the purchase price first to financial assets/financial liabilities at the respective fair values, the remaining balance of the purchase price is then allocated to the other identifiable assets and liabilities on the basis of their relative fair values at the date of purchase. Such a transaction does not give rise to goodwill or bargain purchase gain.

Business combinations

Acquisitions of businesses are accounted for using the acquisition method. The consideration transferred in a business combination is measured at fair value, which is calculated as the sum of the acquisition-date fair values of the assets transferred by the Group, liabilities incurred by the Group to the former owners of the acquiree and the equity interests issued by the Group in exchange for control of the acquiree. Acquisition-related costs are generally recognised in profit or loss as incurred.

4.1 Consolidation (Continued)

Subsidiaries (Continued)

(a) Business combinations or asset acquisitions (Continued) Business combinations (Continued) At the acquisition date, the identifiable assets acquired and the liabilities assumed are recognised at their fair value, except that:
deferred tax assets or liabilities, and assets or liabilities related to employee benefit arrangements are recognised and measured in accordance with HKAS 12 Income Taxes and HKAS 19 Employee Benefits respectively;
liabilities or equity instruments related to share-based payment arrangements of the acquiree or share-based payment arrangements of the Group entered into to replace share-based payment arrangements of the acquiree are measured in accordance with HKFRS 2 Share-based Payment at the acquisition date (see the accounting policy below);
assets (or disposal groups) that are classified as held for sale in accordance with HKFRS 5 Non current Assets Held for Sale and Discontinued Operations are measured in accordance with that standard; and
lease liabilities are recognised and measured at the present value of the remaining lease payments (as defined in HKFRS 16) as if the acquired leases were new leases at the acquisition date, except for leases for which (a) the lease term ends within 12 months of the acquisition date; or (b) the underlying asset is of low value. Right-of-use assets are recognised and measured at the same amount as the relevant lease liabilities, adjusted to reflect favourable or unfavourable terms of the lease when compared with market terms.

4.1 Consolidation (Continued)

Subsidiaries (Continued)

(b) Changes in the Group's ownership interests in existing subsidiaries

Changes in the Group's ownership interests in existing subsidiaries that do not result in the Group losing control over the subsidiaries are accounted for as equity transactions. The carrying amounts of the Group's interests and the non-controlling interests are adjusted to reflect the changes in their relative interests in the subsidiaries. Any difference between the amount by which the non-controlling interests are adjusted and the fair value of the consideration paid or received is recognised directly in equity and attributed to owners of the Company.

When the Group loses control of a subsidiary, a gain or loss is recognised in profit or loss and is calculated as the difference between (i) the aggregate of the fair value of the consideration received and the fair value of any retained interest and (ii) the previous carrying amount of the assets (including goodwill), and liabilities of the subsidiary and any non-controlling interests. All amounts previously recognised in other comprehensive income in relation to that subsidiary are accounted for as if the Group had directly disposed of the related assets or liabilities of the subsidiary (i.e. reclassified to profit or loss or transferred to another category of equity as specified/permitted by applicable HKFRSs). The fair value of any investment retained in the former subsidiary at the date when control is lost is regarded as the fair value on initial recognition for subsequent accounting under HKFRS 9 or, when applicable, the cost on initial recognition of an investment in an associate or a joint venture.

4.2 Investments in subsidiaries

Investments in subsidiaries are accounted for in the Company's statement of financial position at cost less any identified impairment loss. The results of subsidiaries are accounted for by the Company on the basis of dividend received and receivable.

4.3 Investments in associates

An associate is an entity over which the Group has significant influence. Significant influence is the power to participate in the financial and operating policy decisions of the investee but is not control or joint control over those policies.

The results and assets and liabilities of associates are incorporated in these consolidated financial statements using the equity method of accounting. Under the equity method, an investment in associate is initially recognised in the consolidated statement of financial position at cost and adjusted thereafter to recognise the Group's share of the profit or loss and other comprehensive income of the associate. When the Group's share of losses of an associate exceeds the Group's interest in that associate (which includes any long-term interests that, in substance, form part of the Group's net investment in the associate), the Group discontinues recognising its share of further losses. Additional losses are recognised only to the extent that the Group has incurred legal or constructive obligations or made payments on behalf of the associate.

An investment in associate is accounted for using the equity method from the date on which the investee becomes an associate. On acquisition of the investment in an associate, any excess of the cost of the investment over the Group's share of the net fair value of the identifiable assets and liabilities of the investee is recognised as goodwill, which is included within the carrying amount of the investment. Any excess of the Group's share of the net fair value of the identifiable assets and liabilities over the cost of the investment, after reassessment, is recognised immediately in profit or loss in the period in which the investment is acquired.

When necessary, the entire carrying amount of the investment (including goodwill) is tested for impairment in accordance with HKAS 36 "Impairment of Assets" as a single asset by comparing its recoverable amount (higher of value in use and fair value less cost of disposal) with its carrying amount. Any impairment loss recognised forms part of the carrying amount of the investment. Any reversal of that impairment loss is recognised in accordance with HKAS 36 to the extent that the recoverable amount of the investment subsequently increases.

4.3 Investments in associates (Continued)

The Group discontinues the use of the equity method from the date when the investment ceases to be an associate. In addition, the Group accounts for all amounts previously recognised in other comprehensive income in relation to that associate on the same basis as would be required if that associate had directly disposed of the related assets or liabilities. Therefore, if a gain or loss previously recognised in other comprehensive income by that associate would be reclassified to profit or loss on the disposal of the related assets or liabilities, the Group reclassifies the gain or loss from equity to profit or loss (as a reclassification adjustment) when the equity method is discontinued.

When a group entity transacts with an associate of the Group, profit or loss resulting from the transactions with the associate are recognised in the Group's consolidated financial statements only to the extent of interests in the associate that are not related to the Group.

4.4 Segment reporting

Operating segments are reported in a manner consistent with the internal reporting provided to the chief operating decision-maker. The chief operating decision-maker, who is responsible for allocating resources and assessing performance of the operating segments, has been identified as the executive directors led by the Group's Chief Executive Officer ("CEO") that makes strategic decisions.

4.5 Foreign currency translation

(a) Functional and presentation currency

Items included in the financial statements of each of the Group's entities are measured using the currency of the primary economic environment in which the entity operates (the "functional currency"). The consolidated financial statements are presented in HK\$, which is the Company's functional and the Group's presentation currency.

4.5 Foreign currency translation (Continued)

(b) Transactions and balances

Foreign currency transactions are translated into the functional currency using the exchange rates at the dates of the transactions. Foreign exchange gains and losses resulting from the settlement of such transactions and from the translation of monetary assets and liabilities denominated in foreign currencies at year end exchange rates are generally recognised in profit or loss.

Foreign exchange gains and losses that relate to borrowings and cash and cash equivalents are presented in the consolidated statement of profit or loss and other comprehensive income within "finance income or expenses". All other foreign exchange gains and losses are presented in consolidated statement of profit or loss and other comprehensive income within "other gains/(losses), net".

Non-monetary items that are measured at fair value in a foreign currency are translated using the exchange rates at the date when the fair value was determined.

(c) Group companies

The results and financial position of all the Group entities (none of which has the currency of a hyperinflationary economy) that have a functional currency different from the presentation currency are translated into the presentation currency as follows:

(i) assets and liabilities are translated at the closing rate at the end of the reporting period;
(ii) income and expenses are translated at average exchange rates (unless this average rate is not a reasonable approximation of the cumulative effect of the rates prevailing on the transaction dates, in which case income and expenses are translated at the dates of the transactions); and
(iii) all resulting currency translation differences are recognised in other comprehensive income.

Goodwill and fair value adjustments arising on the acquisition of a foreign entity are treated as assets and liabilities of the foreign entity and translated at the closing rate.

4.6 Property, plant and equipment

Property, plant and equipment are stated at cost less depreciation. Cost includes expenditure that is directly attributable to the acquisition of the items.

Subsequent costs are included in the asset's carrying amount or recognised as a separate asset, as appropriate, only when it is probable that future economic benefits associated with the item will flow to the Group and the cost of the item can be measured reliably. The carrying amount of the replaced part is derecognised. All other repairs and maintenance are charged to profit or loss for the financial period in which they are incurred.

Depreciation is calculated using the straight-line method to write off the cost of assets to their residual values over their estimated useful lives, as follows:

Computer equipment	3 years
Leasehold improvements	5 years or remaining lease term,
	whichever is shorter
Office equipment	3 years
Furniture	5 years
Motor vehicles	5 years

The assets' residual values and useful lives are reviewed, and adjusted if appropriate, at the end of each reporting period.

An asset's carrying amount is written down immediately to its recoverable amount if the asset's carrying amount is greater than its estimated recoverable amount (Note 4.9).

Gain or loss on disposal of an asset is determined by comparing proceeds with carrying amount of the assets and are recognised within "other gains/(losses), net" (Note 9).

4.7 Intangible assets

Goodwill

Goodwill on acquisition of subsidiaries represents the excess of the consideration transferred, the amount of any non-controlling interest in the acquiree and the acquisitiondate fair value of any previous equity interest in the acquiree over the fair value of the identified net assets acquired.

For the purpose of impairment testing, goodwill acquired in a business combination is allocated to each of the cash-generating units ("CGUs"), or groups of CGUs, that is expected to benefit from the synergies of the combination. Each CGU or group of CGUs to which the goodwill is allocated represents the lowest level within the entity at which the goodwill is monitored for internal management purposes. Goodwill is monitored at the operating segment level.

4.7 Intangible assets (Continued)

Goodwill (Continued)

Goodwill impairment reviews are undertaken annually or more frequently if events or changes in circumstances indicate a potential impairment. The carrying value of the CGU containing the goodwill is compared to the recoverable amount, which is the higher of value in use and the fair value less costs of disposal. Any impairment is recognised immediately as an expense and is not subsequently reversed.

4.8 Leases

Definition of a lease

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

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

The Group as a lessee

Allocation of consideration to components of a contract

For a contract that contains a lease component and one or more additional lease or nonlease components, the Group allocates the consideration in the contract to each lease component on the basis of the relative stand-alone price of the lease component and the aggregate stand-alone price of the non-lease components, including contract for acquisition of ownership interests of a property which includes both leasehold land and non-lease building components, unless such allocation cannot be made reliably.

The Group also applies practical expedient not to separate non-lease components from lease component, and instead account for the lease component and any associated nonlease components as a single lease component.

As a practical expedient, leases with similar characteristics are accounted on a portfolio basis when the Group reasonably expects that the effects on the consolidated financial statements would not differ materially from individual leases within the portfolio.

4.8 Leases (Continued)

The Group as a lessee (Continued)

Short-term leases and leases of low-value assets

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

Right-of-use assets

The cost of right-of-use asset includes:

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

Right-of-use assets are measured at cost, less any accumulated depreciation and impairment losses, and adjusted for any remeasurement of lease liabilities.

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

When the Group obtains ownership of the underlying leased assets at the end of the lease term, upon exercising purchase options, the cost of the relevant right-of-use assets and the related accumulated depreciation and impairment loss are transferred to property, plant and equipment.

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

4.8 Leases (Continued)

The Group as a lessee (Continued)

Refundable rental deposits

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

Lease liabilities

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

The lease payments includes:

fixed payments (including in-substance fixed payments) less any lease incentives receivable;
variable lease payments that depend on an index or a rate, initially measured using the index or rate as at the commencement date;
amounts expected to be payable by the Group under residual value guarantees;
the exercise price of a purchase option if the Group is reasonably certain to exercise the option; and
payments of penalties for terminating a lease, if the lease term reflects the Group exercising an option to terminate the lease.

Variable lease payments that reflect changes in market rental rates are initially measured using the market rental rates as at the commencement date. Variable lease payments that do not depend on an index or a rate are not included in the measurement of lease liabilities and right-of-use assets, and are recognised as expense in the period in which the event or condition that triggers the payment occurs.

4.8 Leases (Continued)

The Group as a lessee (Continued)

Lease liabilities (Continued) After the commencement date, lease liabilities are adjusted by interest accretion and lease payments.

The Group remeasures lease liabilities (and makes a corresponding adjustment to the related right-of-use assets) whenever:

the lease term has changed or there is a change in the assessment of exercise of a purchase option, in which case the related lease liability is remeasured by discounting the revised lease payments using a revised discount rate at the date of reassessment.
the lease payments change due to changes in market rental rates following a market rent review in which cases the related lease liability is remeasured by discounting the revised lease payments using the initial discount rate.

The Group presents lease liabilities as a separate line item on the consolidated statement of financial position.

Lease modifications

The Group accounts for a lease modification as a separate lease if:

the modification increases the scope of the lease by adding the right to use one or more underlying assets; and
the consideration for the leases increases by an amount commensurate with the stand-alone price for the increase in scope and any appropriate adjustments to that stand-alone price to reflect the circumstances of the particular contract.

For a lease modification that is not accounted for as a separate lease, the Group remeasures the lease liability based on the lease term of the modified lease by discounting the revised lease payments using a revised discount rate at the effective date of the modification.

The Group accounts for the remeasurement of lease liabilities by making corresponding adjustments to the relevant right-of-use assets. When the modified contract contains a lease component and one or more additional lease or non-lease components, the Group allocates the consideration in the modified contract to each lease component on the basis of the relative stand-alone price of the lease component and the aggregate stand-alone price of the non-lease components.

4.9 Impairment of non-financial assets

Non-financial assets (other than goodwill) are tested for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. An impairment loss is recognised for the amount by which the asset's carrying amount exceeds its recoverable amount. The recoverable amount is the higher of an asset's fair value less costs of disposal and value in use. For the purposes of assessing impairment, assets are grouped at the lowest levels for which there are separately identifiable cash inflows which are largely independent of the cash inflows from other assets or groups of assets (cashgenerating units).

Where an impairment loss subsequent reverses, the carrying amount of the asset or cash-generating unit (other than goodwill) is increased to the revised estimate of its recoverable amounts, but so that the increased carrying amount does not exceed the carrying amount that would have been determined had no impairment loss been recognised for the asset (or a cash-generating unit) in prior years. A reversal of impairment loss is recognised immediately in profit or loss.

4.10 Financial instruments

Financial assets and financial liabilities are recognised when a group entity becomes a party to the contractual provisions of the instrument. All regular way purchases or sales of financial assets are recognised and derecognised on a trade date basis. Regular way purchases or sales are purchases or sales of financial assets that require delivery of assets within the time frame established by regulation or convention in the market place.

Financial assets and financial liabilities are initially measured at fair value except for trade receivables arising from contracts with customers which are initially measured in accordance with HKFRS 15. Transaction costs that are directly attributable to the acquisition or issue of financial assets and financial liabilities (other than financial assets or financial liabilities at fair value through profit or loss) are added to or deducted from the fair value of the financial assets or financial liabilities, as appropriate, on initial recognition. Transaction costs directly attributable to the acquisition of financial assets or financial liabilities at fair value through profit or loss are recognised immediately in profit or loss.

The effective interest method is a method of calculating the amortised cost of a financial asset or financial liability and of allocating interest income and interest expense over the relevant period. The effective interest rate is the rate that exactly discounts estimated future cash receipts and payments (including all fees and points paid or received that form an integral part of the effective interest rate, transaction costs and other premiums or discounts) through the expected life of the financial asset or financial liability, or, where appropriate, a shorter period, to the net carrying amount on initial recognition.

Interest income is included in the "finance income" line item in profit or loss.

4.10 Financial instruments (Continued)

Financial assets

Classification and subsequent measurement of financial assets Financial assets that meet the following conditions are subsequently measured at amortised cost:

the financial asset is held within a business model whose objective is to collect contractual cash flows; and
the contractual terms give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding.

Financial assets that meet the following conditions are subsequently measured at fair value through other comprehensive income ("FVTOCI"):

the financial asset is held within a business model whose objective is achieved by both collecting contractual cash flows and selling; and
the contractual terms give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding.

All other financial assets are subsequently measured at fair value through profit or loss ("FVTPL"), except that at the date of initial application/initial recognition of a financial asset the Group may irrevocably elect to present subsequent changes in fair value of an equity investment in other comprehensive income if that equity investment is neither held for trading nor contingent consideration recognised by an acquirer in a business combination to which HKFRS 3 "Business Combinations" applies.

In addition, the Group may irrevocably designate a financial asset that are required to be measured at the amortised cost or FVTOCI as measured at FVTPL if doing so eliminates or significantly reduces an accounting mismatch.

(i) Amortised cost and interest income

Interest income is recognised using the effective interest method for financial assets measured subsequently at amortised cost. Interest income is calculated by applying the effective interest rate to the gross carrying amount of a financial asset, except for financial assets that have subsequently become credit-impaired (see below). For financial assets that have subsequently become credit-impaired, interest income is recognised by applying the effective interest rate to the amortised cost of the financial asset from the next reporting period. If the credit risk on the credit- impaired financial instrument improves so that the financial asset is no longer credit-impaired, interest income is recognised by applying the effective interest rate to the gross carrying amount of the financial asset from the beginning of the reporting period following the determination that the asset is no longer credit impaired.

4.10 Financial instruments (Continued)

Financial assets (Continued)

Classification and subsequent measurement of financial assets (Continued)

(ii) Equity instruments designated as at FVTOCI

Investments in equity instruments at FVTOCI are subsequently measured at fair value with gains and losses arising from changes in fair value recognised in OCI and accumulated in the investment revaluation reserve; and are not subject to impairment assessment. The cumulative gain or loss will not be reclassified to profit or loss on disposal of the equity investments, and will continue to be held in the investment revaluation reserve.

Dividends from these investments in equity instruments are recognised in profit or loss when the Group's right to receive the dividends is established, unless the dividends clearly represent a recovery of part of the cost of the investment. Dividends are included in the "other income" line item in profit or loss.

Impairment of financial assets

The Group performs impairment assessment under expected credit loss ("ECL") model on financial assets which are subject to impairment under HKFRS 9 (including trade and other receivables, contract assets, rental deposits, amount due from an associate and bank balances). The amount of ECL is updated at each reporting date to reflect changes in credit risk since initial recognition.

Lifetime ECL represents the ECL that will result from all possible default events over the expected life of the relevant instrument. In contrast, 12m ECL represents the portion of lifetime ECL that is expected to result from default events that are possible within 12 months after the reporting date. Assessment are done based on the Group's historical credit loss experience, adjusted for factors that are specific to the debtors, general economic conditions and an assessment of both the current conditions at the reporting date as well as the forecast of future conditions.

The Group always recognises lifetime ECL for trade receivables and contract assets. The ECL on these assets are assessed individually for debtors with significant balances and collectively using a provision matrix with appropriate groupings.

For all other instruments, the Group measures the loss allowance equal to 12m ECL, unless when there has been a significant increase in credit risk since initial recognition, the Group recognises lifetime ECL. The assessment of whether lifetime ECL should be recognised is based on significant increases in the likelihood or risk of a default occurring since initial recognition.

4.10 Financial instruments (Continued)

Financial assets (Continued)

Impairment of financial assets (Continued)

(i) Significant increase in credit risk
In assessing whether the credit risk has increased significantly since initial recognition, the Group compares the risk of a default occurring on the financial instrument as at the reporting date with the risk of a default occurring on the financial instrument as at the date of initial recognition. In making this assessment, the Group considers both quantitative and qualitative information that is reasonable and supportable, including historical experience and forward-looking information that is available without undue cost or effort.

In particular, the following information is taken into account when assessing whether credit risk has increased significantly:

an actual or expected significant deterioration in the financial instrument's external (if available) or internal credit rating;
significant deterioration in external market indicators of credit risk, e.g. a significant increase in the credit spread, the credit default swap prices for the debtor;
existing or forecast adverse changes in business, financial or economic conditions that are expected to cause a significant decrease in the debtor's ability to meet its debt obligations;
an actual or expected significant deterioration in the operating results of the debtor; and
an actual or expected significant adverse change in the regulatory, economic, or technological environment of the debtor that results in a significant decrease in the debtor's ability to meet its debt obligations.

Irrespective of the outcome of the above assessment, the Group presumes that the credit risk has increased significantly since initial recognition when contractual payments are more than 30 days past due, unless the Group has reasonable and supportable information that demonstrates otherwise.

The Group regularly monitors the effectiveness of the criteria used to identify whether there has been a significant increase in credit risk and revises them as appropriate to ensure that the criteria are capable of identifying significant increase in credit risk before the amount becomes past due.

4.10 Financial instruments (Continued)

Financial assets (Continued)

Impairment of financial assets (Continued)

(ii) Definition of default

For internal credit risk management, the Group considers an event of default occurs when information developed internally or obtained from external sources indicates that the debtor is unlikely to pay its creditors, including the Group, in full (without taking into account any collaterals held by the Group).

Irrespective of the above, the Group considers that default has occurred when a financial asset is more than 90 days past due unless the Group has reasonable and supportable information to demonstrate that a more lagging default criterion is more appropriate.

(iii) Credit-impaired financial assets

A financial asset is credit-impaired when one or more events of default that have a detrimental impact on the estimated future cash flows of that financial asset have occurred. Evidence that a financial asset is credit- impaired includes observable data about the following events:

(a) significant financial difficulty of the issuer or the borrower;
(b) a breach of contract, such as a default or past due event;
(c) the lender(s) of the borrower, for economic or contractual reasons relating to the borrower's financial difficulty, having granted to the borrower a concession(s) that the lender(s) would not otherwise consider;
(d) it is becoming probable that the borrower will enter bankruptcy or other financial organisation; or
(e) the disappearance of an active market for that financial asset because of financial difficulties.
(iv) Write-off policy

The Group writes off a financial asset when there is information indicating that the counterparty is in severe financial difficulty and there is no realistic prospect of recovery, for example, when the counterparty has been placed under liquidation or has entered into bankruptcy proceedings, or in the case of trade receivables, when the amounts are over two years past due, whichever occurs sooner. Financial assets written off may still be subject to enforcement activities under the Group's recovery procedures, taking into account legal advice where appropriate. A write-off constitutes a derecognition event. Any subsequent recoveries are recognised in profit or loss.

4.10 Financial instruments (Continued)

Financial assets (Continued)

Impairment of financial assets (Continued)

(v) Measurement and recognition of ECL

The measurement of ECL is a function of the probability of default, loss given default (i.e. the magnitude of the loss if there is a default) and the exposure at default. The assessment of the probability of default and loss given default is based on historical data adjusted by forward-looking information. Estimation of ECL reflects an unbiased and probability-weighted amount that is determined with the respective risks of default occurring as the weights.

Generally, the ECL is the difference between all contractual cash flows that are due to the Group in accordance with the contract and the cash flows that the Group expects to receive, discounted at the effective interest rate determined at initial recognition.

Where ECL is measured on a collective basis or cater for cases where evidence at the individual instrument level may not yet be available, the financial instruments are grouped on the below basis:

Nature of financial instruments (i.e. the Group's trade and other receivables are each assessed as a separate group. Loans to related parties are assessed for expected credit losses on an individual basis);
Past-due status;
Nature, size and industry of debtors; and
External credit ratings where available.

The grouping is regularly reviewed by management to ensure the constituents of each group continue to share similar credit risk characteristics.

For financial guarantee contracts, the loss allowances are recognised at the higher of the amount of the loss allowance determined in accordance with HKFRS 9; and the amount initially recognised less, where appropriate, cumulative amount of income recognised over the guarantee period.

Interest income is calculated based on the gross carrying amount of the financial asset unless the financial asset is credit impaired, in which case interest income is calculated based on amortised cost of the financial asset.

The Group recognises an impairment gain or loss in profit or loss for all financial instruments by adjusting their carrying amount, with the exception of trade receivables where the corresponding adjustment is recognised through a loss allowance account.

4.10 Financial instruments (Continued)

Derecognition of financial assets

The Group derecognises a financial asset only when the contractual rights to the cash flows from the asset expire, or when it transfers the financial asset and substantially all the risks and rewards of ownership of the asset to another entity. If the Group neither transfers nor retains substantially all the risks and rewards of ownership and continues to control the transferred asset, the Group recognises its retained interest in the asset and an associated liability for amounts it may have to pay. If the Group retains substantially all the risks and rewards of ownership of a transferred financial asset, the Group continues to recognise the financial asset and also recognises a collateralised borrowing for the proceeds received.

On derecognition of a financial asset measured at amortised cost, the difference between the asset's carrying amount and the sum of the consideration received and receivable is recognised in profit or loss.

On derecognition of an investment in equity instrument which the Group has elected on initial recognition to measure at FVTOCI upon application of HKFRS 9, the cumulative gain or loss previously accumulated in the investment revaluation reserve is not reclassified to profit or loss, but is transferred to retained profits/accumulated losses.

Financial liabilities and equity instruments

Classification as debt or equity

Debt and equity instruments issued by a group entity are classified as either financial liabilities or as equity instruments in accordance with the substance of the contractual arrangements entered into and the definitions of a financial liability and an equity instrument.

Equity instruments

An equity instrument is any contract that evidences a residual interest in the assets of an entity after deducting all of its liabilities. Equity instruments issued by the Group are recognised at the proceeds received, net of direct issue costs.

Financial liabilities at amortised cost

Financial liabilities (including trade and other payables, amount due to non-controlling interest, borrowings and promissory note payable) are subsequently measured at amortised cost, using the effective interest method.

Derecognition of financial liabilities

The Group derecognises financial liabilities when, and only when, the Group's obligations are discharged, cancelled or have expired. The difference between the carrying amount of the financial liability derecognised and the consideration paid and payable is recognised in profit or loss.

4.11 Contract assets/contract liabilities

A contract asset represents the Group's right to consideration in exchange for goods or services that the Group has transferred to a customer that is not yet unconditional. It is assessed for impairment in accordance with HKFRS 9. In contrast, a receivable represents the Group's unconditional right to consideration, i.e. only the passage of time is required before payment of that consideration is due.

A contract liability represents the Group's obligation to transfer goods or services to a customer for which the Group has received consideration (or an amount of consideration is due) from the customer.

A contract asset and a contract liability relating to a contract are accounted for and presented on a net basis.

4.12 Cash and cash equivalents

For the purpose of presentation in the consolidated statement of cash flows, cash and cash equivalents includes cash on hand, other short-term, highly liquid investments with original maturities of three months or less that are readily convertible to known amounts of cash and which are subject to an insignificant risk of changes in value.

4.13 Current and deferred income tax

The income tax expense is the tax payable on the current period's taxable income based on the applicable income tax rate for each jurisdiction adjusted by changes in deferred tax assets and liabilities attributable to temporary differences and to unused tax losses.

Current income tax

The current income tax charge is calculated on the basis of the tax laws enacted or substantively enacted at the end of the reporting period in the countries where the Company's subsidiaries and associates operate and generate taxable income. Management periodically evaluates positions taken in tax returns with respect to situations in which applicable tax regulation is subject to interpretation. It establishes provisions where appropriate on the basis of amounts expected to be paid to the tax authorities.

4.13 Current and deferred income tax (Continued)

Deferred income tax

Deferred income tax is provided in full on temporary differences arising between the tax bases of assets and liabilities and their carrying amounts in the consolidated financial statements. However, deferred tax liabilities are not recognised if they arise from the initial recognition of goodwill. Deferred income tax is also not accounted for if it arises from initial recognition of an asset or liability in a transaction other than a business combination that at the time of the transaction affects neither accounting nor taxable profit or loss. Deferred income tax is determined using tax rates (and laws) that have been enacted or substantially enacted by the end of the reporting period and are expected to apply when the related deferred income tax asset is realised or the deferred income tax liability is settled.

Deferred tax assets are recognised only if it is probable that future taxable amounts will be available to utilise those temporary differences and losses.

Deferred tax liabilities and assets are not recognised for temporary differences between the carrying amount and tax bases of investments in foreign operations where the Company is able to control the timing of the reversal of the temporary differences and it is probable that the differences will not reverse in the foreseeable future.

Deferred tax assets and liabilities are offset when there is a legally enforceable right to offset current tax assets and liabilities and when the deferred tax balances relate to the same taxation authority. Current tax assets and tax liabilities are offset where the entity has a legally enforceable right to offset and intends either to settle on a net basis, or to realise the asset and settle the liability simultaneously.

Current and deferred tax is recognised in profit or loss, except to the extent that it relates to items recognised in other comprehensive income or directly in equity. In this case, the tax is also recognised in other comprehensive income or directly in equity, respectively.

4.14 Employee benefits

(a) Pension obligation

The Group operates a defined contribution plan. The scheme is generally funded through payments to insurance companies or trustee-administered funds.

A defined contribution plan is a pension plan under which the Group pays fixed contributions into a separate entity. The Group has no legal or constructive obligations to pay further contributions if the fund does not hold sufficient assets to pay all employees the benefits relating to employee service in the current and prior periods.

The Group pays contributions to publicly or privately administered pension insurance plans on a mandatory, contractual or voluntary basis. The Group has no further payment obligations once the contributions have been paid. The contributions are recognised as employee benefit expense when they are due. Prepaid contributions are recognised as an asset to the extent that a cash refund or a reduction in the future payments is available.

(b) Termination benefits

Termination benefits are payable when employment is terminated by the Group before the normal retirement date, or whenever an employee accepts voluntary redundancy in exchange for these benefits. The Group recognises termination benefits at the earlier of the following dates: (a) when the Group can no longer withdraw the offer of those benefits; and (b) when the entity recognises costs for a restructuring that is within the scope of HKAS 37 and involves the payment of termination benefits. In the case of an offer made to encourage voluntary redundancy, the termination benefits are measured based on the number of employees expected to accept the offer. Benefits falling due more than 12 months after the end of the reporting period are discounted to their present value.

(c) Employee leave entitlements

Employee entitlements to annual leave are recognised when they accrue to employees. A provision is made for the estimated liability for annual leave as a result of services rendered by employees up to the end of the reporting period. Employee entitlements to sick leave and maternity leave are not recognised until the time of leave.

4.14 Employee benefits (Continued)

(d) Share-based payments

Equity-settled share-based payments transactions Share options granted to employees

Equity-settled share-based payments to employees and others providing similar services are measured at the fair value of the equity instruments at the grant date.

The fair value of the equity-settled share-based payments determined at the grant date without taking into consideration all non-market vesting conditions is expensed on a straight-line basis over the vesting period, based on the Group's estimate of equity instruments that will eventually vest, with a corresponding increase in equity (share options reserve). At the end of each reporting period, the Group revises its estimate of the number of equity instruments expected to vest based on assessment of all relevant non-market vesting conditions. The impact of the revision of the original estimates, if any, is recognised in profit or loss such that the cumulative expense reflects the revised estimate, with a corresponding adjustment to the share option reserve. For share options that vest immediately at the date of grant, the fair value of the shares/share options granted is expensed immediately to profit or loss.

When share options are exercised, the amount previously recognised in share option reserve will be transferred to share capital and share premium respectively. When the share options are forfeited after the vesting date or are still not exercised at the expiry date, the amount previously recognised in share option reserve will be transferred to retained profits/accumulated losses.

Share options granted to non-employees

Equity-settled share-based payments transactions with parties other than employees are measured at the fair value of the goods or services received, except where that fair value cannot be estimated reliably, in which case they are measured at the fair value of the equity instruments granted, measured at the date the entity obtains the goods or the counterparty renders the service. The fair values of the goods or services received are recognised as expenses (unless the goods or services qualify for recognition as assets).

4.15 Provision

Provisions for environment restoration, restructuring costs and legal claims are recognised when the Group has a present legal or constructive obligation as a result of past events, it is probable that an outflow of resources will be required to settle the obligation, and the amount has been reliably estimated. Restructuring provisions comprise lease termination penalties and employee termination payments. Provisions are not recognised for future operating losses.

Where there are a number of similar obligations, the likelihood that an outflow will be required in settlement is determined by considering the class of obligations as a whole. A provision is recognised even if the likelihood of an outflow with respect to any one item included in the same class of obligations may be small.

Provisions are measured at the present value of the expenditures expected to be required to settle the obligation using a pre-tax rate that reflects current market assessments of the time value of money and the risks specific to the obligation. The increase in the provision due to passage of time is recognised as interest expense.

4.16 Revenue recognition

The Group recognises revenue when (or as) a performance obligation is satisfied, i.e. when "control" of the goods or services underlying the particular performance obligation is transferred to the customer.

A performance obligation represents goods or service (or a bundle of goods or services) that is distinct or a series of distinct goods or services that are substantially the same.

Control is transferred over time and revenue is recognised over time by reference to the progress towards complete satisfaction of the relevant performance obligation if one of the following criteria is met:

the customer simultaneously receives and consumes the benefits provided by the Group's performance as the Group performs;
the Group's performance creates and enhances an asset that the customer controls as the Group performs; or
the Group's performance does not create an asset with an alternative use to the Group and the Group has an enforceable right to payment for performance completed to date.

Otherwise, revenue is recognised at a point in time when the customer obtains control of the distinct goods or service.

4.16 Revenue recognition (Continued)

Contracts with multiple performance obligations (including allocation of transaction price) For contracts that contain more than one performance obligations, the Group allocates the transaction price to each performance obligation on a relative stand-alone selling price basis, except for the allocation of discounts and variable consideration.

The stand-alone selling price of the distinct goods or service underlying each performance obligation is determined at contract inception. It represents the price at which the Group would sell a promised goods or service separately to a customer. If a stand-alone selling price is not directly observable, the Group estimates it using appropriate techniques such that the transaction price ultimately allocated to any performance obligation reflects the amount of consideration to which the Group expects to be entitled in exchange for transferring the promised goods or services to the customer.

Input method

The progress towards complete satisfaction of a performance obligation is measured based on input method, which is to recognise revenue on the basis of the Group's efforts or inputs to the satisfaction of a performance obligation relative to the total expected inputs to the satisfaction of that performance obligation, that best depict the Group's performance in transferring control of goods or services.

4.17 Government grants and subsidies

Grants and subsidies from the government are recognised at their fair value where there is a reasonable assurance that the grant and subsidies will be received and the Group will comply with all attached conditions government grants and subsidies are recognised in profit or loss and are included in "other income".

4.18 Borrowing costs

Borrowing costs directly attributable to the acquisition, construction or production of qualifying assets, which are assets that necessarily take a substantial period of time to get ready for their intended use or sale, are added to the cost of those assets, until such time as the assets are substantially ready for their intended use or sale.

Investment income earned on the temporary investment of specific borrowings pending their expenditure on qualifying assets is deducted from the borrowing costs eligible for capitalisation.

All borrowing costs are recognised in profit or loss in the period in which they are incurred.

4.19 Dividend distribution

Dividend distribution to the Company's shareholders is recognised as a liability in the Group's consolidated financial statements in the period in which the dividends are approved by the Company's shareholders or directors, where appropriate.

5 Financial Instruments

5.1 Financial instruments by category

The financial assets and financial liabilities of the Group can be categorised as follows:

	Financial assets at fair value through profit or loss HK\$'000	Financial assets at fair value through other comprehensive income HK\$'000	Financial assets at amortised cost HK\$'000	Total HK\$'000
Financial assets
31 December 2020
Financial assets at fair value through other
comprehensive income	—	1,072	—	1,072
Financial assets at fair value through
profit or loss	368	—	—	368
Rental deposits	—	—	100	100
Contract assets	—	—	29,228	29,228
Trade and other receivables excluding
prepayments	—	—	22,181	22,181
Amount due from an associate	—	—	—	—
Cash and bank balances	—	—	24,646	24,646
	368	1,072	76,155	77,595
31 December 2019
Financial assets at fair value through other
comprehensive income	—	1,605	—	1,605
Financial assets at fair value through
profit or loss	1,979	—	—	1,979
Rental deposits	—	—	438	438
Trade and other receivables excluding
prepayments	—	—	23,634	23,634
Amount due from an associate	—	—	20	20
Cash and bank balances	—	—	22,053	22,053
	1,979	1,605	46,145	49,729

5.1 Financial instruments by category (Continued)

	Financial liabilities at amortised cost HK\$'000
Financial liabilities
31 December 2020
Trade and other payables excluding non-financial liabilities	10,927
Amount due to non-controlling interest	5,600
Borrowings	16,200
Promissory note payable	48,055
Lease liabilities	1,489
	82,271
31 December 2019
Trade and other payables excluding non-financial liabilities	19,763
Amount due to non-controlling interest	5,600
Borrowings	15,500
Promissory note payable	47,782
Lease liabilities	3,030
	91,675

5.2 Financial risk management

The Group's risk management is carried out by a central treasury department under policies approved by the board of directors. Group treasury identifies, evaluates and hedges financial risks in close co-operation with the Group's operating units. The board provides written principles for overall risk management, as well as policies covering specific areas, such as foreign exchange risk, interest rate risk, credit risk and investment of excess liquidity.

(a) Foreign exchange risk

Foreign currency risk refers to the risk that movement in foreign currency exchange rate which will affect the Group's financial results and its cash flows.

The management considers that the Group is not exposed to significant foreign currency risk as majority of its transactions are denominated in HK\$ (the functional currency of the respective group entities) and there were only insignificant balances of financial assets and liabilities denominated in foreign currency at the end of the reporting period.

The Group currently does not have a foreign currency hedging policy but the management monitors foreign exchange exposure and will consider hedging significant foreign currency exposure should the need arise.

5.2 Financial risk management (Continued)

(b) Price risk

Exposure

The Group's exposure to equity securities price risk arises from investments held by the Group and classified in the consolidated statement of financial position either as at fair value through other comprehensive income (Note 21) and at fair value through profit or loss (Note 23).

Sensitivity

The table below summarises the impact of increases/decreases of the share prices of the equity securities on the Group's equity. The analysis is based on the assumption that the share prices of the equity securities had increased or decreased by 5% with all other variables held constant.

	in loss for the year	Increase/(decrease)	Increase in investment revaluation reserve
Increase in 5% of share prices of equity securities	2020 HK\$'000	2019 HK\$'000	2020 HK\$'000	2019 HK\$'000
Financial assets at fair value through other comprehensive income	—	—	54	80
Financial assets at fair value through profit or loss	(18)	(99)	—	—

The Group's loss for the year would increase by approximately HK\$18,000 (2019: HK\$99,000 ) as a result of decrease in 5% of the share price of the equity securities classified as at fair value through profit or loss. Investment revaluation reserve would decrease by approximately HK\$54,000 (2019: HK\$80,000) as a result of decrease in 5% of the share price of the equity securities classified as at fair value through other comprehensive income.

5.2 Financial risk management (Continued)

(c) Credit risk

The Group is exposed to credit risk and the Group's credit risk exposures are primarily attributable to trade and other receivables, contract assets, rental deposits, amount due from an associate and cash deposits at banks.

Majority of the Group's bank deposits are placed in certain banks which are independently rated with a high credit rating. Management does not expect any losses from non-performance by this bank as it has no default history in the past.

The Group has large number of customers and has monitoring procedures to ensure that follow-up action is taken to recover overdue debts. In addition, the Group reviews the recoverability of these receivables at the end of each reporting period to ensure that adequate impairment losses are made for irrecoverable amounts.

The Group considers the probability of default upon initial recognition of asset and whether there has been a significant increase in credit risk on an ongoing basis throughout each reporting period. To assess whether there is a significant increase in credit risk, the Group compares the risk of a default occurring on the asset as at the reporting date with the risk of default as at the date of initial recognition. It considers available reasonable and supportive forwarding-looking information. Especially the following indicators are incorporated:

internal credit rating;
external credit rating;
actual or expected significant adverse changes in business, financial or economic conditions that are expected to cause a significant change to the customer's ability to meet its obligations;
actual or expected significant changes in the operating results of the debtor/ customer;
significant changes in the expected performance and behaviour of the customer, including changes in the payment status of customer in the Group and changes in the operating results of the customer.

5.2 Financial risk management (Continued)

(c) Credit risk (Continued)

(i) Amounts due from related parties

The Group uses four categories for those receivables which reflect their credit risk and how the loss provision is determined for each of those categories. These internal credit risk ratings are aligned to external credit ratings.

A summary of the assumptions underpinning the Group's expected credit loss model is as follows:

Category	Group's definition of categories	Basis for recognition of expected credit loss provision
Performing	Customers have a low risk of default and a strong capacity to meet contractual cash flows	12 months expected losses. Where the expected lifetime of an asset is less than 12 months, expected losses are measured at its expected lifetime
Underperforming	Receivables for which there is a significant increase in credit risk; significant increase in credit risk is presumed if interest and/or principal repayments are 30 days past due	Lifetime expected losses
Non-performing	Interest and/or principal repayments are 60 days past due	Lifetime expected losses
Write-off	Interest and/or principal repayments are two years past due and there is no reasonable expectation of recovery	Asset is written off

The Group accounts for its credit risk by appropriately providing for expected credit losses on a timely basis. In calculating the expected credit loss rates, the Group considers historical loss rates for each category of receivables and adjusts for forward looking macroeconomic data.

As at 31 December 2020, the internal credit rating of amounts due from related parties were performed. The Group has assessed that the expected credit loss rate for these receivables is immaterial under 12 months expected losses method. Thus no loss allowance for amounts due from related parties was recognised.

5.2 Financial risk management (Continued)

(c) Credit risk (Continued)

(ii) Trade and other receivables and contract assets

The Group applies the simplified approach to provide for expected credit losses for trade and other receivables and contract assets prescribed by HKFRS 9, which permits the use of the lifetime expected loss provision for all trade receivables and contract assets.

The Group has assessed that the expected loss rate for other receivables was immaterial. Thus no loss allowance for other receivables was recognised.

The loss allowance for trade receivables was determined as follows:

				More
	0-30	31-60	61-90	than 90
	days	days	days	days	Total
31 December 2020
Expected loss rate	1%	1.6%	15%	20%
Gross carrying amount
(HK\$'000)	3,977	1,195	171	6,889	12,232
Loss allowance (HK\$'000)	39	19	25	1,378	1,461
31 December 2019
Expected loss rate	1%	1.6%	15%	20%
Gross carrying amount
(HK\$'000)	6,454	950	2,439	8,714	18,557
Loss allowance (HK\$'000)	64	15	366	1,743	2,188

In view that the settlement of certain contract assets is in dispute and management of the Group considered that such contract assets may not be fully recoverable, accordingly, loss allowance on contract assets amounted to approximately HK\$7,245,000 (2019: Nil) was recognised in profit or loss in respect of the year.

The above expected credit losses also incorporated forward looking information.

5.2 Financial risk management (Continued)

(c) Credit risk (Continued)

(ii) Trade and other receivables (Continued)

The credit quality of the debtors is assessed based on their financial positions, past experience and other factors. The Group has policies in place to ensure credit terms are granted to reliable debtors. As at 31 December 2020, the Group had a concentration of credit risk given that the top 5 customers account for 71% (2019: 63%) of the Group's total year end trade receivables balance. However, the Group concludes that the credit risk in relation to these customers is not significant because they have no history of default in recent years. The Group's historical experience in collection of receivables falls within recorded allowance and the directors do not expect any major impairment on trade receivables, and receivables from other counterparties.

(iii) Cash at bank and bank deposits

The table below shows the details of bank deposit balances maintained at the end of the reporting period:

	Rating	2020 HK\$'000	2019 HK\$'000
Cash at banks and bank deposits	AA3-A3	24,631	N/A
Cash at banks and bank deposits	A2-A3	N/A	22,037

The rating represents long-term credit rating of the relevant banks provided by Moody's, an internationally recognised credit rating agency. A rating within the "A" category is judged to be upper-medium grade and are subject to low credit risk under the rating regime of Moody's. Accordingly, management of the Group considers that the credit risk on the bank balances and bank deposits is limited.

(d) Liquidity risk

Prudent liquidity risk management implies maintaining sufficient cash and cash equivalents.

The Group's primary cash requirements have been for additions of property, plant and equipment, and payment for purchases, operating expenses and repayment of borrowings. The Group mainly finances its working capital requirements through borrowings and internal resources. The Group monitors and maintains a level of cash and cash equivalents considered adequate by the directors to finance the Group's operations and mitigate the effects of fluctuations in cash flows.

5.2 Financial risk management (Continued)

(d) Liquidity risk (Continued)

The table below analyses the Group's financial liabilities into relevant maturity groupings based on the remaining period at the end of the reporting period to the contractual maturity date. The amounts disclosed in the table are the contractual undiscounted cash flows. The table includes interest and principal cash flows. To the extent that interest flows are floating rate, the undiscounted amount is derived from interest rate curves at end of the reporting period.

	On demand or within			Total undiscounted	Carrying
	one year HK\$'000	1-2 years HK\$'000	2-5 years HK\$'000	cash flows HK\$'000	amount HK\$'000
At 31 December 2020
Trade and other payables excluding
non-financial liabilities	10,927	—	—	10,927	10,927
Amount due to non-controlling interest	5,600	—	—	5,600	5,600
Borrowings	18,075	—	—	18,075	16,200
Promissory note payable	—	56,309	—	56,309	48,055
Lease liabilities	994	550	—	1,544	1,489
	35,596	56,859	—	92,455	82,271
At 31 December 2019
Trade and other payables excluding
non-financial liabilities	19,763	—	—	19,763	19,763
Amount due to non-controlling interest	5,600	—	—	5,600	5,600
Borrowings	16,556	—	—	16,556	15,500
Promissory note payable	—	56,309	—	56,309	47,782
Lease liabilities	2,715	398	—	3,113	3,030
	44,634	56,707	—	101,341	91,675

5.3 Capital risk management

The Group's objectives when managing capital are to safeguard the Group's ability to continue as a going concern in order to provide returns for shareholders and benefits for other stakeholders and to maintain an optimal capital structure to reduce the cost of capital.

The Group actively and regularly reviews and manages its capital structure to ensure optimal capital structure and shareholders returns, taking into consideration the future capital requirements of the Group and capital efficiency, prevailing and projected profitability, projected operating cash flows, projected capital expenditures and projected strategic investment opportunities.

The capital structure of the Group consists of net debts, which includes promissory note payable and borrowings less cash and bank balances, and equity attributable to owners of the Company, comprising issued share capital and reserves.

5.4 Fair value estimation

The carrying amounts of the Group's financial assets at amortised cost, including rental deposits, trade and other receivables, amount due from an associate, and cash and bank balances; and financial liabilities at amortised cost, including trade and other payables, amount due to non-controlling interest, borrowings and promissory note payable, approximate their fair values. The fair value of these financial assets and financial liabilities that are not traded in an active market is determined in accordance with generally accepted pricing models based on a discounted cash flow analysis, with the most significant inputs being the discount rate that reflect the credit risk of counterparties.

The carrying amounts of financial instruments measured at fair value at the end of the reporting period are categorised among the three levels of the fair value hierarchy defined in HKFRS 13 "Fair value measurement", with the fair value of each financial instrument categorised in its entirety based on the lowest level of input that is significant to that fair value measurement. The levels are defined as follows:

(i) Quoted prices (unadjusted) in active markets for identical assets or liabilities (Level 1).
(ii) Inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly (that is, as prices) or indirectly (that is, derived from prices) (Level 2).
(iii) Inputs for the asset or liability that are not based on observable market data (that is, unobservable inputs) (Level 3).

	Level 1 HK\$'000	Level 2 HK\$'000	Level 3 HK\$'000	Total HK\$'000
At 31 December 2020
Financial assets
Financial assets at fair value through
other comprehensive income
Equity securities listed
in Hong Kong	1,072	—	—	1,072
Financial assets at fair value
through profit or loss
Equity securities listed
in Hong Kong	368	—	—	368

5.4 Fair value estimation (Continued)

	Level 1 HK\$'000	Level 2 HK\$'000	Level 3 HK\$'000	Total HK\$'000
At 31 December 2019
Financial assets
Financial assets at fair value through other comprehensive income
Equity securities listed
in Hong Kong	1,605	—	—	1,605
Financial assets at fair value
through profit or loss
Equity securities listed
in Hong Kong	1,979	—	—	1,979

There were no transfers between Levels 1, 2 and 3 during the year.

The fair value of the equity securities listed in Hong Kong, which is categorised in Level 1, is based on quoted market prices at the end of the reporting period. The quoted market price used is the current bid price.

5.5 Offsetting financial assets and financial liabilities

No disclosure of the offsetting of financial assets and financial liabilities is made as there are no netting arrangements in place during the year.

6 Critical Accounting Estimates and Judgments

Estimates and judgments are continually evaluated and are based on historical experience and other factors, including expectations of future events that are believed to be reasonable under the circumstances.

The Group makes estimates and assumptions concerning the future. The resulting accounting estimates will, by definition, seldom equal the related actual results. The estimates and assumptions that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year are addressed below.

(a) Recognition of contract revenue

Revenue are recognised according to the stage of completion of individual contracts, calculated on the proportion of total costs at the end of the reporting period compared to the estimated total costs of the relevant contract, on the basis that the stage of contract completion and the total costs of the design and fit out work can be measured reliably.

Management assess the stage of completion of projects through the site visit of the project in progress at the year-end date. The Group reviews and revises the expected margin prepared for each contract as the contract progresses. Expected margins are prepared by the management on the basis of quotations from time to time provided by the major subcontractors, suppliers or vendors involved and the experience of the management. In order to keep the budget accurate and up-to-date, management conducts periodic reviews of the budgets of contracts by comparing the budgeted costs to complete and the actual amounts incurred for the projects. Such significant estimates may have an impact on the profit and loss recognised in each year.

(b) Impairment of trade and other receivables and contract assets

The Group applies the simplified approach to provide for expected credit loss in respect of trade receivables and contract assets. The provision rates are based on groupings of various debtors that have similar loss patterns and the Group's historical default rates (taking into consideration forward-looking information that is receivable and supportable available without undue costs or effort). At every reporting date, the historical observed default rates are reassessed and changes in the forward-looking information are considered. In addition, trade receivables and contract assets with significant balances and credit impaired are assessed for expected credit loss individually.

The provision for expected credit loss is sensitive to changes in estimates. Details of the Group's trade receivables and contract assets are disclosed in Notes 22 and 24 respectively.

6 Critical Accounting Estimates and Judgments (Continued)

(c) Useful lives and depreciation expenses for property, plant and equipment

Management determines the estimated useful lives and related depreciation charges for its property, plant and equipment. This estimate is based on historical experience of the actual useful lives of property, plant and equipment of similar nature and functions. Actual economic lives may differ from estimated useful lives. Periodic review could result in changes in useful lives and therefore depreciation expense in future periods.

(d) Impairment of investments in associates

The Group assesses whether there are any indications of impairment of associates at the end of each reporting period. Investments in associates are tested for impairment when there are indications that the carrying amounts may not be recoverable. An impairment exists when the carrying amount of an asset or a cash-generating unit exceeds its recoverable amount, which is the higher of its fair value less costs of disposal and its value in use. The calculation of the fair value less costs of disposal is based on available information from binding sales transaction in an arm's length transaction of similar assets or observable market prices less incremental costs for disposing of the asset. When value in use calculations are undertaken, management estimates the expected future cash flows from the asset or cash-generating unit and choose a suitable discount rate in order to calculate the present value of those cash flows. Impairment loss on investments in associates amounted to HK\$17,325,000 (2019: HK\$34,362,000) was recognised in profit or loss in respect of the year, details of which are set out in Note 20.

(e) Impairment of goodwill

Determining whether goodwill is impaired requires an estimation of the value in use of the cash-generating units to which goodwill has been allocated. The value in use calculation requires the directors to estimate the future cash flows expected to arise from the cashgenerating unit and a suitable discount rate in order to calculate present value. Where the actual future cash flows are less than expected, a material impairment loss may arise. No impairment loss on goodwill was recognised for the year ended 31 December 2020 (2019: HK\$2,436,000 was recognised in profit or loss in respect of that year), details of which are set out in Note 19.

7 Revenue and Segment Information

The executive directors of the Company, being the chief operating decision-makers, review the Group's internal reporting in order to assess performance and allocate resource. The Group focuses on provision of design, fit out and decoration services during the year. Information reported to the chief operating decision makers, for the purpose of resources allocation and performance assessment, focuses on the operating results of the Group as a whole as the Group's resources are integrated and no discrete operating segment financial information is available. Accordingly, no operating segment information is presented.

Revenue from major services

The Group's revenue represents income from major services (substantially all of which is recognised over time) as follows:

	2020 HK\$'000	2019 HK\$'000
Type of services
Design and fit out	65,643	139,797
Design	967	2,017
Maintenance and aftersales services	466	915
	67,076	142,729

Geographical information

The Group's geographical segments are classified according to the location of its customers. Segment revenue from external customers by location of customers during the year is as follows:

Revenue from external customers

	2020 HK\$'000	2019 HK\$'000
Hong Kong	67,076	142,729

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

7 Revenue and Segment Information (Continued)

Geographical information (Continued)

Information about major customers

Revenue from individual customers contributing over 10% of the revenue of the Group is as follows:

	2020 HK\$'000	2019 HK\$'000
Customer A	N/A*	52,150
Customer B	N/A*	17,456

* The revenue from customer A and customer B for the year ended 31 December 2020 did not exceed 10% of the total revenue of the Group for the year.

The Group's geographical segments are also classified by the location of assets. Information about the Group's non-current assets by geographical location are detailed as below:

Non-current assets

Note: Non-current assets excluded financial assets at fair value through other comprehensive income and rental deposits.

8 Other Income

	2020 HK\$'000	2019 HK\$'000
Dividend income from equity investments at fair value through other comprehensive income	—	101
Government grants and subsidies Sundry income	1,997 723	— 458
	2,720	559

AL GROUP LIMITED ANNUAL REPORT 2020 AL GROUP LIMITED 106 ANNUAL REPORT 2020 107

9 Other Gains/(Losses), net

Gain/(loss) on change in fair value of financial assets at fair value through profit or loss — Net unrealised (loss)/gain on listed securities (121) (478) — Net realised loss on disposal of listed securities (599) (18) Foreign exchange losses Impairment loss on goodwill (Note 19) — Impairment loss on interests in associates (Note 20) (17,325) Impairment loss on trade receivables, net (Note 22) (414) Impairment loss on contract assets (Notes 5.2(c)(ii) and 24) (7,245) (1,012) Trade receivables written off, net Loss on disposal of subsidiaries (Note 38) (9) Loss on disposal of property, plant and equipment (1) Gain on disposal of associates (Note 20(b)(iv)) 237 Other losses, net (26,386)	2020 HK\$'000	2019 HK\$'000
		589
		(307)
		282 (4) (2,436) (34,362) (5,104) — — — (21) —
		(41,645)

10 Employee Benefit Expenses

	2020 HK\$'000	2019 HK\$'000
Employee benefit expenses, including directors' remuneration Salaries and allowances Pension costs — defined contribution plans Equity-settled share-based payments Welfare and benefits	17,321 650 300 225	19,544 680 — 715
	18,496	20,939

(a) Pensions — defined contribution plans

The Group maintains one defined contribution pension scheme for its employees in Hong Kong under the Mandatory Provident Fund ("MPF"). The assets of this scheme are held separately from those of the Group under independently administered funds.

Under the MPF Scheme, each of the Group and its employees make monthly contributions to the scheme at 5% of the employee's relevant income, as defined in the Hong Kong Mandatory Provident Fund Scheme Ordinance. Both the Group's and the employee's contributions are subject to a cap of HK\$1,500 per month. The contributions are fully and immediately vested for the employees.

For the year ended 31 December 2020, the aggregate amounts of the Group's contributions to the aforementioned pension scheme is HK\$650,000 (2019: HK\$680,000).

10 Employee Benefit Expenses (Continued)

(b) Five highest paid individuals

The five individuals whose emoluments were the highest in the Group for the year included one (2019: one) director, whose emolument is reflected in the analysis shown in note 35. The emoluments paid/payable to the remaining four (2019: four) individuals for the year are as follows:

	2020 HK\$'000	2019 HK\$'000
Basic salaries and bonuses Pension costs — defined contribution plan	4,975 104	4,263 96
	5,079	4,359

The emoluments fell within the following band:

	2020 Number of individuals	2019 Number of individuals
Nil to HK\$1,000,000	—	1
HK\$1,000,001-HK\$1,500,000	4	3

11 Other Expenses

	2020 HK\$'000	2019 HK\$'000
Advertising costs	567	2,206
Auditor's remuneration
— Audit services	970	890
— Non audit services	150	150
Building management fee	202	213
Equity-settled share-based payments to consultants	750	—
Depreciation of property, plant and equipment	846	1,262
Depreciation of right-of-use assets	2,575	2,227
Donations	6	—
Legal and professional fees	1,235	1,272
Office relocation expenses	—	70
Travelling and entertainment	1,149	1,342
Other operating expenses	1,217	966
	9,667	10,598

12 Finance Income

	2020 HK\$'000	2019 HK\$'000
Interest income on bank deposits	5	16

13 Finance Costs

	2020 HK\$'000	2019 HK\$'000
Interest on promissory note payable (Note 30) Interest on borrowings Interest on lease liabilities	3,042 1,938 85	2,392 1,672 172
	5,065	4,236

14 Income Tax (Credit)/Expense

No provision for Hong Kong profits tax for the year ended 31 December 2020 has been made in the consolidated financial statements as the Group has no assessable profit for the year. Hong Kong profits tax of the prior year has been provided at the rate of 16.5% on the estimated assessable profits for that year.

	2020 HK\$'000	2019 HK\$'000
Current tax Current tax on profits for the year (Over)/under provision in prior years	— (20)	423 8
Current tax (credit)/expense Deferred income tax credit (Note 29)	(20) (2)	431 —
Income tax (credit)/expense	(22)	431

The income tax (credit)/expense can be reconciled to the loss before income tax per the consolidated statement of profit or loss and other comprehensive income, as follows:

	2020 HK\$'000	2019 HK\$'000
Loss before income tax	(42,233)	(60,334)
Tax calculated at Hong Kong profits tax rate
of 16.5% (2019: 16.5%)	(6,968)	(9,955)
Income not subject to tax	(807)	(780)
Expenses not deductible for tax purposes	6,169	8,986
Tax losses not recognised	1,604	2,337
Income tax at concessionary rate	—	(165)
(Over)/under provision in prior years	(20)	8
Income tax (credit)/expense	(22)	431

15 Dividends

The Board of Directors does not recommend the payment of a dividend in respect of the year (2019: Nil).

16 Loss Per Share

(a) Basic loss per share

Basic loss per share is calculated by dividing the loss for the year attributable to owners of the Company by the weighted average number of ordinary shares in issue during the financial year.

	2020	2019
Loss for the year attributable to owners of the Company (in HK\$'000)	(38,038)	(56,433)
Weighted average number of ordinary shares ('000)	715,991	595,000
Basic loss per share (in HK cents)	(5.31)	(9.48)

(b) Diluted loss per share

The calculation of diluted loss per share is based on the loss attributable to equity shareholders of the Company and the weighted average number of ordinary shares, as follows:

(i) Loss

2020	2019
HK\$'000	HK\$'000
(38,038)	(56,433)
—	—
N/A	N/A

(ii) Weighted average number of ordinary shares

	2020 '000	2019 '000
Weighted average number of ordinary shares for the purpose of basic loss per share Effect of exercise of share options	715,991 2,689	595,000 —
Weighted average number of ordinary shares for the purpose of diluted loss per share	N/A	N/A

16 Loss Per Share (Continued)

(b) Diluted loss per share (Continued)

Diluted loss per share for the year ended 31 December 2020 is not presented as the effects arising from exercise of the Company's share options granted are anti-dilutive.

No diluted loss per share is presented for the year ended 31 December 2019 as there were no potential ordinary shares in issue during that year.

17 Property, Plant and Equipment

	Computer equipment HK\$'000	Leasehold improvements HK\$'000	Office equipment HK\$'000	Furniture HK\$'000	Motor vehicles HK\$'000	Total HK\$'000
Cost
At 1 January 2019	2,215	2,659	391	513	537	6,315
Additions	7	465	—	95	—	567
Disposals	(4)	(592)	—	—	(537)	(1,133)
At 31 December 2019 and
1 January 2020	2,218	2,532	391	608	—	5,749
Acquisition of subsidiary (note 37(b))	—	—	—	10	1,134	1,144
Additions	7	394	150	—	595	1,146
Disposals	(296)	(2,057)	—	—	—	(2,353)
Disposal of subsidiary (note 38)	—	(10)	—	—	—	(10)
At 31 December 2020	1,929	859	541	618	1,729	5,676
Accumulated depreciation
At 1 January 2019	1,691	1,721	385	358	277	4,432
Depreciation charged for the year	324	785	6	67	80	1,262
Eliminated on disposals	(2)	(558)	—	—	(357)	(917)
At 31 December 2019 and
1 January 2020	2,013	1,948	391	425	—	4,777
Depreciation charged for the year	172	503	8	79	84	846
Eliminated on disposals	(296)	(2,056)	—	—	—	(2,352)
Disposal of subsidiary (note 38)	—	(10)	—	—	—	(10)
At 31 December 2020	1,889	385	399	504	84	3,261
Carrying amounts
At 31 December 2020	40	474	142	114	1,645	2,415
At 31 December 2019	205	584	—	183	—	972

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

18 Right-of-use Assets

	Leased
	properties HK\$'000
Cost
At 1 January 2019	2,942
Additions	2,195
At 31 December 2019 and 1 January 2020	5,137
Additions	1,143
Disposals	(2,942)
Disposal of a subsidiary (note 38)	(98)
At 31 December 2020	3,240
Accumulated depreciation
At 1 January 2019	—
Depreciation charged for the year	2,227
At 31 December 2019 and 1 January 2020	2,227
Depreciation charged for the year	2,575
Eliminated on disposals	(2,942)
Disposal of a subsidiary (note 38)	(65)
At 31 December 2020	1,795
Carrying amount
At 31 December 2020	1,445
At 31 December 2019	2,910

As at 31 December 2020, the Group leases office under non-cancellable operating lease for its operations. Lease contracts are entered into for fixed terms of one to two years. Lease terms are negotiated on an individual basis and contain a wide range of different terms and conditions. In determining the lease term and assessing the length of the non-cancellable period, the Group applies the definition of a contract and determines the period for which the contract is enforceable.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

19 Goodwill

	2020 HK\$'000	2019 HK\$'000
Cost
At 1 January	2,918	2,918
Arising from acquisition of subsidiary (Note 37(b))	1,115	—
Disposal of a subsidiary (Note 38)	(482)	—
At 31 December	3,551	2,918
Accumulated impairment losses
At 1 January	2,918	482
Impairment loss recognised (Note 9)	—	2,436
Derecognised on disposal of a subsidiary (Note 38)	(482)	—
At 31 December	2,436	2,918
Carrying Amount
At 31 December	1,115	—

An analysis of goodwill attributable to the relevant cash-generating units ("CGUs") is as follows:

	Design and fit out CGU HK\$'000
Carrying amount at 31 December 2018 and 1 January 2019	2,436
Impairment loss recognised for the year (Note 9)	(2,436)
Carrying amount at 31 December 2019 and 1 January 2020	—
Goodwill arising from acquisition of subsidiary (Note 37(b))	1,115
Impairment loss recognised for the year (Note 9)	—
Carrying amount at 31 December 2020	1,115

19 Goodwill (Continued)

Design and fit out CGU

The recoverable amount of the design and fit out CGU has been determined based on a value in use calculation using cash flow projections based on financial budgets covering a five-year period approved by senior management.

Key assumptions adopted in the preparation of cash flow projections used for value in use calculation were as follows:

	31 December 2020	31 December 2019
Compound annual growth rate of revenue in
– First year	10%	20%
– Second year	10%	15%
– Third to fifth year	5%	10%
Annual growth rate beyond the five-year period	2.5%	2.5%
Discount rate	12.7%	11.1%

The budget gross margin used for the preparation of the cash flow projections is based on the average gross margin achieved in the two prior years, with adjustments on Hong Kong inflation rate and industry reference.

The annual revenue growth rate for the first year is estimated by management based on projects carried forward from the current year and forecast projects expected to be secured by the Group subsequent to the reporting period, and past performance, industry forecast and its expectation of market development. The discount rate used is before tax and reflects specific risks relating to this CGU.

The values assigned to the key assumptions on inflation of materials price and discount rate are consistent with external information sources.

The directors believe that any reasonably change in the key assumptions on which the recoverable amount is based would not cause the carrying amount of the design and fit out CGU to exceed its recoverable amount, accordingly impairment loss on goodwill attributable to the related CGU is not required to be made in the consolidated financial statements (2019: impairment loss of goodwill amounted to HK\$2,436,000 was recognised).

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

20 Interests in Associates

	2020 HK\$'000	2019 HK\$'000
Unlisted associates Cost of investment	480	70,287
Share of post-acquisition profit/(losses) and other comprehensive expense	115	(1,353)
Impairment loss recognised	—	(46,667)
	595	22,267

Movements during the year are as follows:

	2020 HK\$'000	2019 HK\$'000
At 1 January	22,267	61,132
Acquisition of associates	480	—
Dividend from associate attributable to
pre-acquisition profits	—	(3,200)
Share of post-acquisition loss for the year	(464)	(1,303)
Impairment loss recognised (Note 9)	(17,325)	(34,362)
Disposal of associates	(4,363)	—
At 31 December	595	22,267

Particulars of the associates of the Group are as follows:

Name	Place of establishment/ registration and operations	2020	Proportion equity interest held by the Group 2019	held by the Group 2020	Proportion of voting rights 2019	Principal activities
Ever Joy Ventures Limited (Note a)	Samoa	40%	—	40%	—	Investment holding
MF Living Limited (Note a)	Hong Kong	24%	—	24%	—	Retailing of face masks
Primo Group (BVI) Limited (Note b)	BVI	—	49%	—	49%	Investment holding
Primocasa Interiors Limited (Note b)	Hong Kong	—	49%	—	49%	Provision of interior design and fit out solutions

All of these associates are accounted for using the equity method in these consolidated financial statements.

20 Interests in Associates (Continued)

Notes:

(a) Ever Joy Ventures Limited and its subsidiary, MF Living Limited On 30 October 2020, Major Joyful Limited, a wholly-owned subsidiary of the Company, entered into an agreement with an independent third party to acquire 40% of the issued shares in Ever Joy Ventures Limited ("Ever Joy") at the consideration of HK\$480,000. Ever Joy is an investment holding company and holds 60% equity interest in MF Living Limited ("MF Living"), which is principally engaged in retailing of face masks. Completion of the acquisition of 40% equity interest in Ever Joy took place on 2 November 2020.

Ever Joy and MF Living are not regarded as material associates of the Group and the financial information of these associates is not presented in the consolidated financial statements.

(b) Primo Group (BVI) Limited and its subsidiary, Primocasa Interiors Limited
(i) On 15 December 2017, a wholly-owned subsidiary of the Company entered into an agreement with an independent third party, under which the Group has agreed to acquire 49% equity interest in Primo Group (BVI) Limited ("Primo"), Primo is an investment holding company and holds 100% equity interest in Primocasa Interiors Limited ("Primocasa"), which is principally engaged in the provision of interior design and fit out solutions. Pursuant to the acquisition agreement, the aggregate consideration for the acquisition is HK\$75,000,000, which is to be satisfied by (i) allotment and issue of 115,000,000 new ordinary shares of Company of HK\$0.01 each, credited as fully paid, at an issue price of HK\$0.153 per share and (ii) issue by the Company of promissory note with the principal amount of HK\$57,405,000. Completion of the acquisition of 49% equity interest in Primo took place on 20 June 2018.
(ii) The cost of acquisition of 49% equity interest in Primo was estimated to be HK\$73,847,000 at date of acquisition, which includes (i) the fair value of the shares issued for the acquisition estimated to be HK\$17,825,000 by reference to the closing market price of the Company's ordinary shares of HK\$0.155 per share at the date of completion of acquisition; (ii) the fair value of the promissory note at the date of its issue estimated to be HK\$54,910,000 as valued by an external valuer using the effective interest rate of 5.26% per annum; (iii) other costs of acquisition amounted to HK\$752,000.
(iii) Management of the Group conducted a review of the profitability of the business undertaken by Primo and its subsidiary, Primocasa, and is of the view that it is appropriate to make impairment loss on the cost of investment in Primo amounted to HK\$17,325,000 (2019: HK\$34,362,000) for the year, which is calculated based on the recoverable amount of the investment in Primo on value in use basis, as determined by reference to the valuation conducted by an external valuer. The impairment loss of HK\$17,325,000 (2019: HK\$34,362,000), which was led by the revision of the future profitability of the business undertaken by Primo and Primocasa, arising from the continuous slowdown of luxury residential market, was recognised in profit or loss in respect of the year.
(iv) On 18 December 2020, a wholly-owned subsidiary entered into an agreement with an independent third party to dispose of 49% equity interest in Primo for a cash consideration of HK\$4,600,000. Completion of the disposal of Primo took place on 31 December 2020 and the Group had not retained equity interest in Primo after the disposal. Gain on disposal of Primo amounted to HK\$237,000, being the excess of the proceeds from disposal over the carrying amount of the Group's interest in Primo, was recognised in profit or loss and included in other gains/(losses), net (note 9). The proceeds from disposal of the associate of HK\$4,600,000 were not yet received by the Group up to the end of the reporting period and are included in other receivables (note 22).

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

20 Interests in Associates (Continued)

	31 December
	2019
	HK\$'000
Non-current assets	2,531
Current assets	18,976
Non-current liabilities	(1,097)
Current liabilities	(12,216)
Net assets	8,194

	31 December 2019 HK\$'000
Reconciliation to the Group's interest in the associates:
Proportion of the Group's ownership	49%
Group's share of net assets of the associates	4,015
Goodwill on acquisition	64,919
Impairment losses recognised	(46,667)
Carrying amount of the investment	22,267

21 Financial Assets at Fair Value Through Other Comprehensive Income

	2020 HK\$'000	2019 HK\$'000
Listed securities: Equity securities listed in Hong Kong	1,072	1,605

Movements of the financial assets at fair value through other comprehensive income during the year are as follows:

	2020 HK\$'000	2019 HK\$'000
As at 1 January	1,605	1,604
Additions arising from stock dividend	—	101
Loss on change in fair value recognised
in other comprehensive income	(533)	(100)
As at 31 December	1,072	1,605

22 Trade and Other Receivables

	2020 HK\$'000	2019 HK\$'000
Trade receivables Less: Provision for impairment of trade receivables	24,928 (9,208)	31,252 (9,059)
Trade receivables, net Prepayments, deposits and other receivables	15,720 8,616	22,193 4,945
Less: non-current portion: rental deposit	24,336 (100)	27,138 (438)
Current portion	24,236	26,700

The carrying amounts of trade receivables are denominated in HK\$.

The Group does not grant credit term to customers. At 31 December 2020 and 2019, the ageing analysis of the trade receivables (after impairment loss recognised) based on invoice date were as follows:

	2020 HK\$'000	2019 HK\$'000
1–30 days	3,938	6,390
31–60 days	1,176	935
61-90 days	146	2,073
More than 90 days	10,460	12,795
	15,720	22,193

The Group applies the simplified approach to provide for expected credit losses prescribed by HKFRS 9, which presents the use of the lifetime expected loss provision for trade receivables. To measure the expected credit losses, these receivables are estimated using a provision matrix based on the Group's historical credit loss experience, adjusted for factors that are specific to the debtors and an assessment of both the current and forecast general economic conditions at the reporting date. Further information about expected credit loss provision is set out in Note 5.2(c)(ii).

As of 31 December 2020, trade receivables of HK\$15,720,000 (2019: HK\$22,193,000) were past due but not considered to be impaired because there is no recent history of default regarding the relevant customers. Based on past experience, management of the Group are of the opinion that no provision for impairment is necessary in respect of these balances as there has not been a significant change in credit quality and the balances are still considered fully recoverable. As of 31 December 2020, trade receivables of HK\$9,208,000 (2019: HK\$9,059,000) were impaired, in which the management of the Group is of the opinion that other than the provision recognised for expected credit loss under the simplified approach of HK\$1,461,000 (2019: HK\$2,188,000) (note 5.2(c)(ii)), additional provision for loss allowance in aggregate amount of HK\$7,747,000 (2019: HK\$6,871,000) is considered appropriate to be made against receivable from a customer which is in dispute.

22 Trade and Other Receivables (Continued)

The individually impaired receivables mainly relate to design and fit out, which are in unexpectedly difficult economic situations. It was assessed that a portion of the receivables may be recoverable. The ageing of these receivables is as follows:

	2020 HK\$'000	2019 HK\$'000
1–30 days	39	64
31–60 days	19	15
61–90 days	25	366
More than 90 days	9,125	8,614
	9,208	9,059

Movement on the Group's allowance for impairment of trade receivables is as follows:

	2020 HK\$'000	2019 HK\$'000
At 1 January	9,059	4,319
Provision for impairment recognised, net (Note 9)	414	5,104
Trade receivables written off	(265)	(364)
At 31 December	9,208	9,059

Provision for impaired receivables has been included in other gains/(losses), net (Note 9). Amounts charged to the allowance account are generally written off, when there is no expectation of recovering additional cash.

The other classes within trade and other receivables do not contain impaired assets.

The maximum exposure to credit risk at the reporting date is the carrying value of each class of receivable mentioned above. The Group does not hold any collateral as security.

The Group's management closely monitors the credit quality of debtors and considers the debtors that are past due but not impaired to be of a good credit quality. Based on the payment pattern of the customers of the Group, debtors that are past due but not impaired are generally collectible.

Included in prepayments, deposits and other receivables are a deposit paid to an insurance company amounted to HK\$588,000 (2019: HK\$706,000) for surety bonds issued in favour of the Group (Note 36) and proceeds receivable from disposal of an associate amounted to HK\$4,600,000 (2019: Nil) (Note 20(b)(iv)). Subsequent to the end of the reporting period, the proceeds receivable of HK\$4,600,000 were fully received by the Group.

23 Financial Assets at Fair Value Through Profit or Loss

	2020 HK\$'000	2019 HK\$'000
Listed securities: Equity securities listed in Hong Kong	368	1,979

Financial assets at fair value through profit or loss, representing equity securities listed in Hong Kong, are all held for trading.

Loss on change in fair value of trading equity securities listed in Hong Kong amounted to HK\$599,000 (2019: gain HK\$282,000) is included in other gains/losses, net (Note 9).

Information about the Group's exposure to price risk is set out in Note 5.2(b). Details about the methods and assumptions used in determining fair value are set out in Note 5.4.

24 Contract Assets and Contract Liabilities

	2020 HK\$'000	2019 HK\$'000
Contract assets Design and fit out services Design services	36,428 45	42,820 1,069
Less: Impairment loss on contract assets recognised (Note 9)	36,473 (7,245) 29,228	43,889 — 43,889

	2020 HK\$'000	2019 HK\$'000
Contract liabilities Design and fit out services	4,498	2,312
	4,498	2,312

The contract assets primarily relate to the Group's right to consideration for work completed and not billed because the rights are conditioned on the Group's future performance of projects works satisfactorily passing inspection.

24 Contract Assets and Contract Liabilities (Continued)

Included in contract assets and contract liabilities are retentions held by customers for contract work amounted to HK\$7,371,000 (2019: HK\$6,745,000). Retention money is unsecured, interest free and expected to be received within the Group's normal operating cycle.

The Group applies the simplified approach to provide for expected credit losses prescribed by HKFRS 9, which represents the use of the lifetime expected loss provision for contract assets. The expected credit losses on these contract assets are estimated using a provision matrix based on the Group's historical credit loss experience, adjusted for factors that are specific to the customers and an assessment of both the current and forecast general economic conditions at the reporting date. Expected credit loss provision on contract assets amounted to approximately HK\$7,245,000 (2019: Nil) was made for the current year. Further information about the expected credit loss provision is set out in Note 5.2(c)(ii).

Movements on the Group's allowance for impairment of contract assets are as follows:

	HK\$'000
— 7,245	— —
7,245	—

As of 31 December 2020, contract assets with the carrying amount of HK\$29,228,000 (2019: HK\$43,889,000) were not considered to be impaired because there is no recent history of default regarding the relevant customers. Based on past experience, management of the Group are of the opinion that no provision for impairment is necessary in respect of these balances as there has not been a significant change in credit quality and the balances are still considered fully recoverable.

25 Cash and Bank Balances

	2020 HK\$'000	2019 HK\$'000
Cash at bank and in hand	24,646	22,053

The Group's cash and bank balances are denominated in the following currencies:

	2020 HK\$'000	2019 HK\$'000
HK\$ Renminbi	24,646 —	21,861 192
	24,646	22,053

26 Trade and Other Payables

	2020 HK\$'000	2019 HK\$'000
Trade payables	10,927	19,763
Accrued employee benefit expenses	1,288	2,999
Accrued interest on borrowings	3,162	1,224
Accrued interest on promissory note (Note 30)	2,769	—
Other accruals and payables	17,423	18,327
Lease liabilities (Note 31)	950	2,635
	36,519	44,948

The ageing analysis of the trade payables based on invoice date was as follows:

	2020 HK\$'000	2019 HK\$'000
Within 1 month	2,918	833
1 to 2 months	790	2,828
2 to 3 months	113	1,785
Over 3 months	7,106	14,317
	10,927	19,763

The trade payables are non-interest-bearing and are normally settled on terms of within 90 days.

27 Amount due to Non-Controlling Interest

The amount due to non-controlling interest is unsecured, interest free and repayable on demand.

28 Borrowings

	2020 HK\$'000	2019 HK\$'000
Borrowings repayable within one year	16,200	15,500

The Group's borrowings carried interest at 12% (2019: 12%) per annum. These borrowings are unsecured except that borrowing to the extent of HK\$7,000,000 (2019: HK\$7,000,000) are secured by personal guarantee from a director of a subsidiary of the Company.

29 Deferred Income Tax Liabilities

The analysis of deferred tax liabilities is as follows:

	2020 HK\$'000	2019 HK\$'000
Accelerated tax depreciation	119	—

Movement of deferred income tax liabilities is as follows:

	2020 HK\$'000	2019 HK\$'000
At 1 January	—	—
Acquisition of a subsidiary (Note 37(b)(ii))	121	—
Credited for the year (Note 14)	(2)	—
At 31 December	119	—

Deferred income tax assets have not been recognised in respect of unused tax losses amounting to HK\$34,404,000 (2019: HK\$24,699,000) due to unpredictability of future profit stream. These tax losses may be offset against future profits and may be carried forward indefinitely.

30 Promissory Note Payable

	2020 HK\$'000	2019 HK\$'000
Promissory note payable in the second to fifth years	48,055	47,782

Movements of the Company's promissory note payable are as follows:

	2020 HK\$'000	2019 HK\$'000
At 1 January Interest charge recognised for the year (Note 13) Interest payable included in other payables (Note 26)	47,782 3,042 (2,769)	45,390 2,392 —
At 31 December	48,055	47,782

On 20 June 2018, the Company issued the promissory note with the principal amount of HK\$57,405,000 as part of the consideration for the acquisition of 49% equity interest in Primo Group (BVI) Limited (Note 20(b)).

Pursuant to the terms of the promissory note, (i) the note is unsecured, carries interest at 3% per annum and is payable on 19 June 2020 (the "Initial Maturity Date"); (ii) at the sole discretion of the Company, the maturity may be extended to 19 June 2022 (the "Extended Maturity Date") and the promissory note carries interest at 8% per annum from the date following the Initial Maturity Date to the Extended Maturity Date; and (iii) the Company is also entitled to redeem, before the maturity dates, in full or in part with interest on the redeemed amount accrued up to the date of redemption by serving 3 days prior written notice.

The fair value of the promissory note at the issue date was estimated to be HK\$54,910,000, as valued by an external valuer, using the effective interest rate of 5.26% and on the basis that the promissory note was payable by the Company at the Initial Maturity Date of 19 June 2020.

During the prior year ended 31 December 2018, the Company redeemed part of the promissory note with the principal amount of HK\$11,250,000 for cash consideration of HK\$11,250,000. As at 31 December 2018, the promissory note with the principal amount of HK\$46,155,000 remained outstanding.

On 30 November 2019, it was agreed between the Company and the promissory note holder that the maturity date of the promissory note changed to the Extended Maturity Date and interest is charged at 8% per annum with effect from 31 December 2019.

During the years ended 31 December 2019 and 31 December 2020, the Company had not redeemed any of the promissory note. As at 31 December 2019 and 31 December 2020, the promissory note with the principal amount of HK\$46,155,000 remained outstanding.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

31 Lease Liabilities

	2020 HK\$'000	2019 HK\$'000
Lease liabilities payable: Within one year Within a period of more than one year but not more than two	950	2,635
years	539	395
Total lease liabilities payable	1,489	3,030
Less: Amount due for settlement within twelve months included in trade and other payables (Note 26)	(950)	(2,635)
Amount due for settlement after twelve months shown under non-current liabilities	539	395

32 Share Capital

	Par value HK\$	Number of ordinary shares '000	Nominal amount of ordinary shares HK\$'000
Authorised: At 1 January 2019, 31 December 2019 and 31 December 2020	0.01	10,000,000	100,000
	Par value HK\$	Number of ordinary shares '000	Nominal amount of ordinary shares HK\$'000
Issued and fully paid: At 1 January 2019, 31 December 2019 and 1 January 2020 Issue of shares on acquisition of a subsidiary (note a) Issue of shares on placement of shares (note b) Issue of shares on exercise of share options (note c)	0.01 0.01 0.01 0.01	595,000 112,000 141,400 24,000	5,950 1,120 1,414 240
At 31 December 2020	0.01	872,400	8,724

Notes:

(a) On 8 May 2020, a wholly-owned subsidiary of the Company completed the acquisition of 100% of the issued share capital of YTO Limited. The consideration for the acquisition was satisfied by the allotment and issue of 112,000,000 ordinary shares and issue of the Company, details of which are set out in note 37(b)(i).
(b) On 4 September 2020, the Company issued 141,400,000 ordinary shares at HK\$0.037 per share for a total cash consideration of approximately HK\$5,232,000 to provide additional working capital of the Company.
(c) On 20 November 2020 and 16 December 2020, the Company issued 16,000,000 and 8,000,000 shares upon the exercise of share options granted at the exercise price of HK\$0.043 per share, giving rise to a gross proceed of HK\$1,032,000.

33 Other Reserve

The Group

Other reserve of HK\$5,922,000 (2019: HK\$5,922,000) represented the excess of the combined capital of group subsidiaries acquired over the nominal value of the ordinary shares of the Company issued in exchange thereof in June 2016.

The Company

Other reserve of HK\$20,465,000 (2019: HK\$20,465,000) (note 42) represents the excess of the net assets value of group subsidiaries acquired over the nominal value of ordinary shares of the Company issued in exchange thereof in June 2016.

34 Share Option Scheme

The Company's share option scheme (the "Scheme") was conditionally adopted pursuant to a resolution passed by its sole shareholder on 15 June 2016 and become unconditional on 12 July 2016 for the purpose of attracting and retaining the best available personnel, to provide additional incentive to selected participants, including directors and eligible employees of the Group to promote the success of the business of the Group. The scheme adopted and became effective on 15 June 2016 for a period of 10 years.

The subscription price of the options granted is the highest of (i) the closing price of the Company's shares on the date of the offer of grant, which must be a business day; (ii) the average closing price of the Company's shares for the five trading days immediately preceding the date offer of grant; (iii) the nominal value of the share.

The maximum number of shares of the Company which may be issued upon exercise of all options granted under the Scheme or other schemes adopted by the Company must not in aggregate exceed 30% of its issued share capital of the Company from time to time. The total number of shares which may be issued upon exercise of all options to be granted under the Scheme and any other share option scheme of the Company must not exceed 10% of the shares in issue upon the date on which the shares are listed and permitted to be dealt in the Stock Exchange.

No share option was granted, exercised, lapsed or forfeited during the year ended 31 December 2019 and no share option remained outstanding as at that date.

34 Share Option Scheme (Continued)

During the year ended 31 December 2020, options to subscribe 48,000,000 shares at the exercise price of HK\$0.043 per share were granted and accepted by the grantees. These share options granted are fully exercisable at the date of acceptance.

Movements in the number of share options during the year ended 31 December 2020 are as follows:

	Weighted average exercise	Number of share options
	price	Employees	Others	Total
	HK\$	'000	'000	'000
At 1 January 2020	—	—	—	—
Granted during the year	0.043	16,000	32,000	48,000
Exercised during the year	0.043	—	24,000	24,000
At 31 December 2020	0.043	16,000	8,000	24,000
Exercisable at the end of the year	0.043	16,000	8,000	24,000

The exercise price and exercise period of the share options outstanding as at the end of the reporting period are as follows:

Exercise period	Exercise price per share	Number of options
	HK\$	'000
9 October 2020 to	0.043	24,000
8 October 2030

The fair value of the share options at the date of grant during the year ended 31 December 2020 is estimated to be HK\$1,050,000 using the binomial option pricing model. The variables and assumptions used in computing the fair value of the share options are based on the directors' best estimate. The value of an option varies with different variables of certain subjective assumptions.

34 Share Option Scheme (Continued)

Inputs into the model	Options granted on 9 October 2020
Risk-free rate	0.48%
Expected volatility	80.3%
Dividend yield	Nil
Expected life of options (year)	10
Share price of the Company's shares (HK\$ per share)	0.042

No other feature of the options granted was incorporated into the measurement of fair value.

Equity-settled share-based payments amounted to HK\$1,050,000 has been recognised in profit or loss in respect of the current year regarding to share options granted by the Company.

At the end of the reporting period, the Company had approximately 24,000,000 share options outstanding under the Scheme. The exercise in full of the outstanding share options would, under the present capital structure of the Company, result in the issue of approximately 24,000,000 additional ordinary shares of the Company which would give rise to the total proceeds of HK\$1,032,000.

Subsequent to the end of the reporting period, 16,000,000 shares under share options granted were exercised. Up to the date of approval of these consolidated financial statements, the Company had 8,000,000 share options outstanding under the Scheme, which represents approximately 0.9% of the Company's shares in issue as at that date.

35 Benefits and Interests of Directors

(a) Directors' emoluments

The remuneration of the directors for the year ended 31 December 2020 is set out below:

	Fees HK\$'000	Salaries HK\$'000	Discretionary bonus HK\$'000	Housing allowance HK\$'000	Contribution to retirement benefit scheme HK\$'000	Total HK\$'000
Executive directors
Mr. Yau Chung Ping (Note 1)	—	132	—	—	3	135
Mr. Lam Chung Ho, Alastair	—	66	—	—	9	75
Mr. Wong Kang Man	—	887	—	—	28	915
Mr. Kwan Tek Sian (Note 2)	—	44	—	—	8	52
Independent non-executive directors
Mr. Tse Chi Shing	177	—	—	—	—	177
Mr. Tse Wai Hei	177	—	—	—	—	177
Mr. Tam Chak Chi	177	—	—	—	—	177
	531	1,129	—	—	48	1,708

The remuneration of the directors for the year ended 31 December 2019 is set out below:

	Fees HK\$'000	Salaries HK\$'000	Discretionary bonus HK\$'000	Housing allowance HK\$'000	Contribution to retirement benefit scheme HK\$'000	Total HK\$'000
Executive directors
Mr. Yau Chung Ping (Note 1)	—	1,680	—	—	36	1,716
Mr. Lam Chung Ho, Alastair	—	240	—	—	12	252
Mr. Wong Kang Man	—	605	—	—	27	632
Independent non-executive directors
Mr. Tse Chi Shing	240	—	—	—	—	240
Mr. Tse Wai Hei	240	—	—	—	—	240
Mr. Tam Chak Chi	240	—	—	—	—	240
	720	2,525	—	—	75	3,320

Note 1: Mr. Yau Chung Ping resigned as executive director of the Company on 4 February 2020.

Note 2: Mr. Kwan Tek Sian was appointed the executive director of the Company on 4 February 2020.

35 Benefits and Interests of Directors (Continued)

(b) Directors' retirement benefits and termination benefits

None of the directors received any retirement benefits or termination benefits for the financial year (2019: Nil).

(c) Consideration provided to third parties for making available directors' services

During the year ended 31 December 2020, the Company does not pay consideration to any third parties for making available directors' services (2019: Nil).

(d) Information about loans, quasi-loans and other dealings in favour of directors, controlled bodies corporate by and controlled entities with such directors

As at 31 December 2020, there are no loans, quasi-loans and other dealing arrangements in favour of directors, controlled bodies corporate by and controlled entities with such directors (2019: Nil).

(e) Directors' material interests in transactions, arrangements or contracts

No significant transactions, arrangements and contracts in relation to the Group's business to which the Company was a party and in which a director of the Company had a material interest, whether directly or indirectly, subsisted at the end of the year or at any time during the financial year (2019: Nil).

36 Surety Bond

Certain customers of design and fit out contracts undertaken by the Group require a group entity to issue guarantees for performance of contract works in the form of surety bonds.

During the current year, the Group had paid a refundable deposit of HK\$588,000 (2019: 706,000) (Note 22) and, together with certain directors of a subsidiary, had also given counter indemnities to an insurance company for a surety bond issued in favour of a customer by the insurance company amounted to approximately HK\$1,960,000 (2019: HK\$2,354,000) which remained outstanding at the end of the reporting period. Where the Group fails to provide satisfactory performance to the customer, the customer may demand the insurance company to pay the sum stipulated in the surety bond and the Group may then become liable to compensate the insurance company accordingly.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

37 Acquisition of Subsidiaries

	2020 HK\$'000	2019 HK\$'000
Net cash inflow/(outflow) arising from acquisition of — YTO Limited (Note (b)(i)) — Overseas Travel Science and Technology Limited	1,436	—
(Note (b)(ii))	(956)	—
Net cash inflow from acquisition of subsidiaries	480	—

Notes:

(a) The Group has not acquired any subsidiaries during the year ended 31 December 2019.

(b) Acquisitions during the year ended 31 December 2020

(i) Acquisition of YTO Limited

On 29 April 2020, a wholly-owned subsidiary, Fasty Aim Limited ("Fasty Aim"), entered into a sale and purchase agreement with a third party for the acquisition of 100% equity interest in YTO Limited ("YTO") for a consideration of HK\$4,480,000. Completion of the acquisition took place on 8 May 2020 and the consideration for the acquisition was satisfied by the issue of 112,000,000 new shares of the Company. The fair value of the shares issued is estimated to HK\$2,464,000 at the date of issue, which is calculated based on the closing market price of the Company's share at the issue date.

YTO is principally engaged in provision of interior design and fit out solutions services in Hong Kong. The acquisition of YTO would allow the Group to expand its interior design and fit-out solution business.

The acquisition of YTO has been accounted for by business combination using the purchase method.

Acquisition related costs amounted HK\$202,000 have been recognised as expense in the current year, within the "other expenses" line item in the consolidated statement of profit or loss and other comprehensive income.

The effect of the acquisition is summarised as follows:

Consideration transferred:

	HK\$'000
Shares of the Company issued for acquisition, at fair value	2,464

37 Acquisition of Subsidiaries (Continued)

Notes: (Continued)

(b) Acquisitions during the year ended 31 December 2020 (Continued)

(i) Acquisition of YTO Limited (Continued)

	HK\$'000
Assets acquired and liabilities recognised at the date of acquisition
Property, plant and equipment	65
Trade and other receivables	4,114
Cash and bank balances	1,436
Trade and other payables	(1,792)
Contract liabilities	(2,383)
Current income tax payable	(91)
Total identifiable net assets acquired	1,349

The trade and other receivables acquired had gross contractual amount of HK\$4,114,000. No contractual cash flows from the receivables are expected not to be collected.

Goodwill arising on acquisition

	HK\$'000
Consideration transferred	2,464
Net assets acquired	(1,349)
Goodwill arising on acquisition	1,115

Goodwill arose on the acquisition of YTO because the acquisition may give prospective customers to the Group. These potential benefits are not recognised separately from goodwill because they do not meet the recognition criteria for identifiable intangible assets.

The goodwill arising on the acquisition is expected to be deductible for tax purposes.

An analysis of cash flows in respect of the acquisition of YTO is as follows:

	HK\$'000
Cash and bank balances acquired	1,436
Net inflow of cash and cash equivalents	1,436

37 Acquisition of Subsidiaries (Continued)

Notes: (Continued)

(b) Acquisitions during the year ended 31 December 2020 (Continued)

(i) Acquisition of YTO Limited (Continued)

Had the acquisition been completed on 1 January 2020, revenue for the year of the Group would have been HK\$69,265,000 and loss for the year of the Group would have been HK\$42,376,000. The pro forma information is for illustrative purposes only and is not necessarily an indication of revenue and results of operations of the Group that actually would been achieved had the acquisition been completed on 1 January 2020, nor is it intended to be a projection of those results.

In determining the 'pro-forma' revenue and profit/loss of the Group had YTO been acquired at the beginning of the current year, the directors of the Company have:

Calculated depreciation of plant and equipment acquired on the basis of the fair value arising in the initial accounting for the business combination rather than the carrying amounts recognised in the pre-acquisition financial statements; and
Determined borrowing costs based on the funding levels, credit ratings and debt/equity position of the Group after the business combination.

37 Acquisition of Subsidiaries (Continued)

Note: (Continued)

(b) Acquisitions during the year ended 31 December 2020 (Continued)

(ii) Acquisition of Overseas Travel Science and Technology Limited

On 18 December 2020, Major Joyful Limited ("Major Joyful"), a wholly owned subsidiary, entered into a deed of assignment (the "Assignment") with an independent third party (the "Assignor"). Pursuant to the terms of the Assignment, the Assignor has agreed to assign and transfer to Major Joyful, and Major Joyful has agreed to acquire from the Assignor, all of the Assignor's rights, interest, benefits and title in and to the debt amounted to approximately HK\$2,946,000 owed by Overseas Travel Science and Technology Limited ("Overseas Travel") at the cash consideration of approximately HK\$956,000.

At the same date of the Assignment, the 100% equity interest in Overseas Travel was transferred from the Assignor to Major Joyful for a consideration of HK\$1. The principal assets of Overseas Travel are motor vehicles.

The acquisition of Overseas Travel has been accounted for as acquisition of assets.

The effect of the acquisition is summarised as follows:

	HK\$'000
Cash consideration paid	956

The acquisition-related costs are insignificant and are included in other expenses.

	HK\$'000
Assets acquired and liabilities recognised at the date of acquisition
Property, plant and equipment (motor vehicles)	1,079
Other receivables	2
Other payables	(4)
Deferred tax liabilities	(121)
	956

The other receivables acquired had gross contractual amount of HK\$2,000. No contractual cash flows from the receivables are expected not to be collected.

Net cash outflow arising on acquisition

	HK\$'000
Cash consideration paid	(956)
Cash and bank balances	—
Net outflow of cash and cash equivalents	(956)

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

38 Disposal of Subsidiaries

On 1 June 2020, the Company disposed of 100% equity interest in a subsidiary, Earn Action Limited, for an aggregate cash consideration of US\$4 (equivalent to HK\$32). Earn Action Limited was engaged in investment holding and its subsidiary is inactive and holds a money lender licence.

An analysis of assets and liabilities over which control was lost:

	HK\$'000
Property, plant and equipment	—
Right-of-use assets	33
Goodwill	—
Trade and other receivables	10
Lease liabilities	(34)
Net assets disposed of	9

Loss on disposal of subsidiaries

HK\$'000
—
(9)
(9)

An analysis of cash flows from the disposal of subsidiaries is as follows:

	HK\$'000
Cash consideration received (less than HK\$1,000) Cash and bank balances disposed of	— —
Net cash flows from disposal of subsidiaries	—

39 Reconciliation of Liabilities Arising from Financing Activities

The table below details changes in the Group's liabilities arising from financing activities, including both cash and non-cash changes. Liabilities arising from financing activities are those for which cash flows were, or future cash flows will be, classified in the Group's statement of cash flows as cash flows from financing activities.

	Interest payable (included in other payables) HK\$'000	Borrowings HK\$'000	Promissory note payable HK\$'000	Lease liabilities HK\$'000	Total HK\$'000
At 1 January 2019	—	7,000	45,390	2,942	55,332
Financing cash inflows	—	9,100	—	—	9,100
Financing cash outflows	(620)	(600)	—	(2,107)	(3,327)
Interest charges for the year	1,844	—	2,392	—	4,236
Addition of lease liabilities arising from
right-of-use assets	—	—	—	2,195	2,195
At 31 December 2019 and 1 January 2020	1,224	15,500	47,782	3,030	67,536
Financing cash inflows	—	700	—	—	700
Financing cash outflows	(85)	—	—	(2,650)	(2,735)
Interest charges for the year	2,023	—	3,042	—	5,065
Finance costs accrued	2,769	—	(2,769)	—	—
Arising from disposal of subsidiary	—	—	—	(34)	(34)
Addition of lease liabilities arising from
right-of-use assets	—	—	—	1,143	1,143
At 31 December 2020	5,931	16,200	48,055	1,489	71,675

40 Major Non-cash Transactions

During the year ended 31 December 2020, the Group acquired a subsidiary for a consideration which was satisfied by the issue of 112,000,000 new ordinary shares of the Company, details of which are set out in Note 37(b)(i).

41 Related Party Transactions

In addition to transactions and balances with certain related parties disclosed elsewhere in the consolidated financial statements, the Group had the following related party transactions:

Key management compensation

Key management includes directors and senior management. The compensation paid or payable to key management is shown below:

	2020 HK\$'000	2019 HK\$'000
Basic salaries and bonuses Pension costs — defined contribution plan	7,353 186	6,889 193
	7,539	7,082

42 Statement of Financial Position of the Company

	2020 HK\$'000	2019 HK\$'000
Non-current assets
Investments in subsidiaries	20,699	20,777
	20,699	20,777
Current assets
Financial asset at fair value through profit or loss	368	1,979
Prepayments and other receivables	654	236
Amounts due from subsidiaries	34,926	43,318
Amount due from an associate	—	20
Cash and bank balances	1,602	6,463
	37,550	52,016
Current liabilities
Accrued charges	3,874	927
Amounts due to subsidiaries	1,600	758
	5,474	1,685
Net current assets	32,076	50,331
Total assets less current liabilities	52,775	71,108
Non-current liabilities
Promissory note payable	48,055	47,782
Net assets	4,720	23,326
Equity
Share capital	8,724	5,950
Reserves	(4,004)	17,376
Total equity	4,720	23,326

The Company's statement of financial position was approved and authorised for issue by the board of directors on 30 March 2021 and is signed on its behalf by:

Lam Chung Ho, Alastair Wong Kang Man Director Director

42 Statement of Financial Position of the Company (Continued)

Movements of the Company's reserves are as follows:

	Share premium HK\$'000	Other reserve HK\$'000 (Note 33)	Share option reserve HK\$'000	Accumulated losses HK\$'000	Total HK\$'000
Balance at 1 January 2019	82,012	20,465	—	(40,581)	61,896
Loss for the year	—	—	—	(44,520)	(44,520)
Balance at 31 December 2019
and 1 January 2020	82,012	20,465	—	(85,101)	17,376
Loss for the year	—	—	—	(28,373)	(28,373)
Recognition of equity-settled
share-based payments	—	—	1,050	—	1,050
Issue of shares:
– for cash	3,818	—	—	—	3,818
– for acquisition of subsidiary	1,344	—	—	—	1,344
– upon exercise of share options	1,354	—	(562)	—	792
Share issue expenses	(11)	—	—	—	(11)
Balance at 31 December 2020	88,517	20,465	488	(113,474)	(4,004)

43 Subsidiaries

The principal subsidiaries of the Company at 31 December 2020, which, in the opinion of the directors of the Company, principally affected the results or assets of the Group, are set out below. Unless otherwise stated, they have share capital consisting solely of ordinary shares that are held directly by the Group, and the proportion of ownership interests held equals the voting rights held by the Group.

Name of the entity	Place of incorporation and type of legal entity	Principal activities/ place of operations	Particulars of issued share capital	Ownership interest held by the Group		Ownership interest held by the non controlling interests
				2020 (%)	2019 (%)	2020 (%)	2019 (%)
AL Group International Limited	BVI, limited liability company	Investment holding/ Hong Kong	1 ordinary share of US\$1	100%	100%	—	—
AL Design & Associates Limited	Hong Kong, limited liability company	Provision of interior design and fit out solutions and overall project management/ Hong Kong	15,000 ordinary shares with no par value	100%	100%	—	—
Legend One Contracting Limited	Hong Kong, limited liability company	Provision of interior design and fit out solutions and overall project management/ Hong Kong	10,000 ordinary shares with no par value	100%	100%	—	—
Active Doors Finance Limited	Hong Kong, limited liability company	Money lending/ Hong Kong	1,000,000 ordinary shares with no par value	—	100%	—	—
Benefit Focus Limited	BVI, limited liability company	Investment holding/ Hong Kong	10,000 ordinary share of US\$1 each	100%	100%	—	—
Earn Action Limited	BVI, limited liability company	Investment holding/ Hong Kong	10,000 ordinary share of US\$1 each	—	100%	—	—
Sunny Stage Limited	BVI, limited liability company	Investment holding/ Hong Kong	10,000 ordinary share of US\$1 each	100%	100%	—	—
Fasty Aim Limited	BVI, limited liability company	Investment holding/ Hong Kong	10,000 ordinary share of US\$1 each	100%	100%	—	—
Major Joyful Limited	BVI, limited liability company	Investment holding/ Hong Kong	10,000 ordinary share of US\$1 each	100%	100%	—	—
ACE Architectural and Interior Design Limited	Hong Kong, limited liability company	Provision of interior design and fit out solutions and overall project management/ Hong Kong	10,000 ordinary shares with no par value	60%	60%	40%	40%
YTO Limited	Hong Kong limited liability company	Provision of interior design and fit out solution/ Hong Kong	2,000,000 ordinary shares with no par value	100%	—	—	—
Overseas Travel Science and Technology Limited	Hong Kong limited liability company	Investment holding/ Hong Kong	1,000,000 ordinary shares with no par value	100%	—	—	—

Note: None of the subsidiaries had issued any debt securities during the year and at the end of the year.

43 Subsidiaries (Continued)

Details of non-wholly owned subsidiary that has material non-controlling interests

The table below shows details of non-wholly owned subsidiary of the Group that has material non-controlling interests.

Name of subsidiary	Place of incorporation and principal place of business	Proportion of ownership interests and voting rights held by non-controlling interest		Loss allocated to non-controlling interests		Accumulated non-controlling interests
		2020 %	2019 %	2020 HK\$'000	2019 HK\$'000	2020 HK\$'000	2019 HK\$'000
ACE Architectural and Interior Design Limited ("ACE")	Hong Kong	40	40	(4,173)	(4,332)	(11,585)	(7,412)

Summarised financial information in respect of the Group's subsidiary that has material noncontrolling interests is set out below. The summarised financial information below represents amounts before intragroup eliminations.

ACE	31 December 2020 HK\$'000	31 December 2019 HK\$'000
Current assets	25,428	32,272
Non-current assets	577	2,413
Current liabilities	(54,968)	(52,824)
Non-current liabilities	—	(391)
Equity attributable to owners of the Company	(17,378)	(11,118)
Non-controlling interests	(11,585)	(7,412)

43 Subsidiaries (Continued)

Details of non-wholly owned subsidiary that has material non-controlling interest (Continued)

	Year ended 31 December 2020 HK\$'000	Year ended 31 December 2019 HK\$'000
Revenue	3,921	61,662
Other income	1,495	186
Subcontracting and materials costs	(2,758)	(61,010)
Other expenses	(13,091)	(11,667)
Loss for the year	(10,433)	(10,829)
Loss attributable to:
— owners of the Company	(6,260)	(6,497)
— non-controlling interests	(4,173)	(4,332)
Loss for the year	(10,433)	(10,829)
Net cash outflows from operating activities	(3,471)	(7,307)
Net cash outflows from investing activities	—	(567)
Net cash inflows from financing activities	995	8,004
Net cash (outflow)/inflow	(2,476)	130

44 Events subsequent to the end of the reporting period

On 4 February 2021, the Company issued 16,000,000 shares upon the exercise of share options granted at the exercise price of HK\$0.043 per share.

FIVE YEARS FINANCIAL SUMMARY

Results

	Year ended 31 December 2020 HK\$'000	Year ended 31 December 2019 HK\$'000	Year ended 31 December 2018 HK\$'000	Year ended 31 December 2017 HK\$'000	Year ended 31 December 2016 HK\$'000
Revenue	67,076	142,729	162,434	118,688	87,588
(Loss)/profit before income tax	(42,233)	(60,334)	(38,045)	3,488	(6,534)
Income tax credit/(expense)	22	(431)	60	(1,268)	(1,295)
(Loss)/profit attributable to the owners of the Company for the year	(38,038)	(56,433)	(35,158)	2,450	(7,829)
Total comprehensive (expenses)/income attributable to the owners of the Company for the year	(38,571)	(56,533)	(35,525)	2,849	(7,807)

Assets and Liabilities

	Year ended 31 December 2020 HK\$'000	Year ended 31 December 2019 HK\$'000	Year ended 31 December 2018 HK\$'000	Year ended 31 December 2017 HK\$'000	Year ended 31 December 2016 HK\$'000
Total assets	85,643	123,536	173,120	129,024	108,076
Total liabilities	111,621	116,537	105,256	40,633	22,281
Net (liabilities)/assets Non-controlling interests	(25,978) (11,585)	6,999 (7,412)	67,864 (3,080)	88,391 (253)	85,795 —
Equity attributable to owners of the Company for the year	(14,393)	14,411	70,944	88,644	85,795

AI assistant

Basic House New Life Group Limited — Annual Report 2020

51406_rns_2021-03-30_c290f106-74f9-43bc-afbf-9aa6b7635a51.pdf

CHARACTERISTICS OF GEM OF THE STOCK EXCHANGE OF HONG KONG LIMITED (THE "STOCK EXCHANGE")

CONTENTS

CORPORATE INFORMATION

Executive Directors

Independent Non-executive Directors

Compliance Officer

Registered Office

Principal Place of Business in Hong Kong

Independent Auditors

Audit Committee

Remuneration Committee

Nomination Committee

Company Secretary

CORPORATE INFORMATION (CONTINUED)

Principal Bankers

Principal Share Registrar and Transfer Office

Hong Kong Branch Share Registrar and Transfer Office

Stock Code

Company Website

CEO's STATEMENT (CONTINUED)

Business and Financial Review

CEO's STATEMENT (CONTINUED)

Social Responsibilities and Corporate Branding

Future Prospect

Appreciation and Positivity

Market Overview

Business Overview

In terms of Number of Projects*

In terms of Revenue*

Average Revenue per Project*

Financial Overview

Comparison between Business Objectives and Actual Business Progress

Use of Listing Proceeds

Fundraising Activities of the Group

Liquidity, Financial Resources and Capital Structure

Foreign Exchange Exposure

Pledge of Assets

Contingent Liabilities and Capital Commitments

Future Plans for Material Investment and Capital Assets

Significant Investments Held

Material Acquisitions and Disposals of Subsidiaries, Associates and Joint Ventures

Employees and Remuneration Policies

Significant Event after the Reporting Period

Executive Directors

Independent Non-executive Directors

Senior Management

REPORT OF THE DIRECTORS

Principal Activities and Business Review

Environmental Policies and Performance

Compliance with Laws and Regulations

Relationship with key parties

Customers

Suppliers

Employees

Shareholders

Principal Risks and Uncertainties

Results and Appropriations

Five Years Financial Summary

Shares Issued in the Year

Equity-linked Agreements

Pre-emptive Rights

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

Distributable Reserves

Donations

Major Customers and Suppliers

Directors and Directors' Service Contracts

Executive Directors:

Independent Non-executive Directors:

Biographical Details of Directors and Senior Management

Changes of Directors' Information under Rule 17.50A(1) of the GEM Listing Rules

Management Contracts

Permitted Indemnity Provisions

Directors' Remuneration

Directors' Material Interests in Transactions, Arrangements and Contracts that are Significant in Relation to the Company's Business

Connected/Related Parties Transactions

Share Option Scheme

Directors and Chief Executive's Interests and/or Short Positions in the Shares, Underlying Shares and Debentures of the Company or any Specified Undertaking of the Company or any Other Associated Corporation

Basic House New Life Group Limited Annual Report 2020