Canopy SkyFire Group Limited — Interim / Quarterly Report 2021

Nov 12, 2021

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On Real International Holdings Limited 安悅國際控股有限公司

(incorporated in the Cayman Islands with limited liability) Stock Code: 8245

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2021 INTERIM REPORT

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CHARACTERISTICS OF THE 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 of the Stock Exchange 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 On Real International Holdings Limited (the “ Company ”, together with its subsidiaries, the “ Group ”) 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 (the “ GEM Listing Rules ”) for the purpose of giving information with regard to the Company. 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 respects and not misleading or deceptive, and there are no other matters the omission of which would make any statement herein or this report misleading.

Contents
Corporate Information	3
Financial Highlights (Unaudited)	5
Management Discussion and Analysis	6
Other Information	17
Unaudited Condensed Consolidated Financial Statements	21
Notes to Unaudited Condensed Consolidated Interim Financial Information	27

CORPORATE INFORMATION

DIRECTORS

Executive Directors: Mr. Chan Lung Ming (Chairman) Mr. Yeung Shing Wai Ms. Sin Pui Ying Non-executive Director: Mr. Tao Hong Ming Independent Mr. Chan Shiu Man Non-executive Directors: Mr. Wong Ching Wan Mr. Cheng Chai Fu AUDIT COMMITTEE Mr. Wong Ching Wan (Chairman) Mr. Chan Shiu Man Mr. Cheng Chai Fu REMUNERATION Mr. Chan Shiu Man (Chairman) COMMITTEE Mr. Wong Ching Wan Mr. Cheng Chai Fu NOMINATION Mr. Cheng Chai Fu (Chairman) COMMITTEE Mr. Chan Shiu Man Mr. Wong Ching Wan COMPANY SECRETARY Mr. Lee Cheuk Man COMPLIANCE OFFICER Mr. Yeung Shing Wai AUTHORISED Mr. Yeung Shing Wai REPRESENTATIVES Mr. Lee Cheuk Man REGISTERED OFFICE Cricket Square Hutchins Drive P.O. Box 2681 Grand Cayman KY1–1111 Cayman Islands PRINCIPAL PLACE G/F., 200 Hennessy Road OF BUSINESS Wan Chai IN HONG KONG Hong Kong

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PRINCIPAL SHARE Conyers Trust Company (Cayman) Limited REGISTRAR AND Cricket Square TRANSFER OFFICE IN Hutchins Drive THE CAYMAN ISLANDS P.O. Box 2681 Grand Cayman KY1–1111 Cayman Islands HONG KONG BRANCH Boardroom Share Registrars (HK) Limited SHARE REGISTRAR Room 2103B, 21/F AND TRANSFER 148 Electric Road OFFICE North Point, Hong Kong PRINCIPAL BANKERS The Hongkong and Shanghai Banking Corporation Limited 1 Queen’s Road Central Hong Kong AUDITOR Elite Partners CPA Limited 10/F., 8 Observatory Road Tsim Sha Tsui, Kowloon Hong Kong STOCK CODE 8245 COMPANY’S WEBSITE www.on-real.com

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FINANCIAL HIGHLIGHTS

• Revenue of the Company for the six months ended 30 September 2021 amounted to approximately HK$54.6 million, representing a significant decrease of approximately 70.8% as compared with that of approximately HK$187.1 million for the six months ended 30 September 2020.

• Loss attributable to the owner of the Company for the six months ended 30 September 2021 amounted to approximately HK$24.9 million as compared to a loss of approximately HK$15.0 million for the six months ended 30 September 2020.

• Basic and diluted loss per share for the six months ended 30 September 2021 amounted to approximately HK cents 4.15 (for the six months ended 30 September 2020: HK cents 2.50).

• The Board does not recommend the payment of any dividend for the six months ended 30 September 2021 (for the six months ended 30 September 2020: nil).

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MANAGEMENT DISCUSSION AND ANALYSIS

The board of Directors (the “ Board ”) of the Company is pleased to present the unaudited condensed consolidated results of the Group for the six months ended 30 September 2021, together with the unaudited comparative figures for the corresponding period in 2020.

BUSINESS REVIEW

The Group is a two-way radio product designer and manufacturer established in 2001. We derive revenue principally from designing, manufacturing and selling two-way radios and baby monitor products on original design manufacturing basis.

The Group’s revenue decreased from approximately HK$187.1 million for the six months ended 30 September 2020 to approximately HK$54.6 million for the six months ended 30 September 2021, representing a decrease of approximately 70.8%. Such decrease was mainly due to (i) order reducing from our customers due to the trade war between the People’s Republic of China and the United States; (ii) the delay of sales orders affected by the knockdown of transportation due to the effect of Novel Coronavirus (“ COVID-19 ”); and (iii) the delay of material supply especially Integrated Circuit (“ IC chips ”) due to the global shortage of raw materials.

The Group’s revenue of two-way radios decreased by approximately 73.3% from approximately HK$146.8 million for the six months ended 30 September 2020 to approximately HK$39.2 million for the six months ended 30 September 2021. The reason for the decrease was that the sales orders were delayed due to the knockdown of transportation and the lack of raw materials under the effect of COVID-19 during the six months ended 30 September 2021.

The Group’s revenue of baby monitors decreased by approximately 70.6% from approximately HK$1.1 million for the six months ended 30 September 2020 to approximately HK$0.3 million for the six months ended 30 September 2021 mainly due to the decrease in demand of our audio baby monitor products.

The Group did not derive any revenue from servicing business for the six months ended 30 September 2021 (2020: approximately HK$7.7 million). This was mainly due to the provision of electronic manufacturing servicing business for the six months ended 30 September 2020 while no such order was made during the six months ended 30 September 2021.

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The Group’s revenue of other products decreased by approximately 52.3% from approximately HK$31.4 million for the six months ended 30 September 2020 to approximately HK$15.0 million for the six months ended 30 September 2021 mainly due to decrease in demand and decrease of number of purchase orders from our other products.

The Company will continue to diversify the revenue stream and expand the customer base by expanding product offerings and exploring business opportunity with current and potential customers.

The following table sets forth the breakdown of the revenue of the Group by product/ service categories for the six months ended 30 September 2020 and 2021:

	Unaudited Six months ended 30 September 2021 2020 Increase (decrease) HK$’000 % HK$’000 % HK$’000 %
Two-way radio Baby monitors Service business Other products Total	39,234 71.9 146,845 78.5 (107,611) (73.3) 321 0.6 1,090 0.6 (769) (70.6) — — 7,713 4.1 (7,713) (100.0) 15,001 27.5 31,445 16.8 (16,444) (52.3)
	54,556 100.0 187,093 100.0 (132,537) (70.8)

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PROSPECT

Our business objectives are to grow our existing business by strengthening our product portfolio, enhancing our information management system and enhancing our marketing efforts. We will continue to look for opportunities to diversify our revenue stream, search for new product and to leverage our developed sales channels and network for distributing related products.

In coming year, the Group will continue to spend effort in research and development on new product line and seek for new customers and sales channels. We will also continue to subcontract partial of our manufacturing and operation activities to reduce the fix overhead and to enhance the flexibility in terms of fixed cost commitment. We will continue to put effort in developing new model of our products and diversify our revenue streams which are expected to bring growth potential for turnover to the Group and returns to the shareholders of the Company (the “ Shareholders ”). The Group will enhance our business revenue and profitability by introducing new product categories and/or leveraging our research and development capability to provide design engineering service to our customers. The Group will look for and consider potential investment business opportunities from time to time.

The economic downturn caused by impact of COVID-19 and the effect of trade war between the People’s Republic of China and United States have brought about additional uncertainties to the Group’s operating environment and may impact the Group’s operations and financial position. The Group will continue to keep track of development of the COVID-19 and trade war and to evaluate their impacts on the Group’s financial position, cash flows and operating results. The Group holds a positive and optimistic attitude to react proactively to its possible impact on Group’s performance.

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FINANCIAL REVIEW

Cost of Sales and Gross Profit

The majority of the Group’s cost of sales comprised of raw material cost, direct labour costs and subcontracting fees. Our cost of sales decreased by approximately 69.9% from HK$176.1 million for the six months ended 30 September 2020 to HK$53.0 million for the six months ended 30 September 2021. The gross profit ratio decreased from approximately 5.9% for the six months ended 30 September 2020 to approximately 2.9% for the six months ended 30 September 2021. The reason for the decrease in gross profit was that the proportion of the decrease in revenue outweigh the fixed overhead especially the staff costs.

Selling and Distribution Expenses

The selling and distribution expenses decreased from approximately HK$2.2 million for the six months ended 30 September 2020 to approximately HK$0.8 million for the six months ended 30 September 2021, which was mainly due to less transportation expenses and certification cost incurred compared with the corresponding period in 2020.

Administrative Expenses

The administrative expenses increased from approximately HK$22.7 million for the six months ended 30 September 2020 to approximately HK$25.7 million for the six months ended 30 September 2021, which was mainly due to increase of research and development fee.

Loss attributable to the owners of the Company

Loss attributable to the owners of the Company for the six months ended 30 September 2021 amounted approximately HK$24.9 million compared with loss of approximately HK$15.0 million fox the six months ended 30 September 2020. The reason for the increase in the loss was mainly contributed by the proportion of the decrease in revenue due to trade war, COVID-19 and shortage of raw materials which outweigh the fixed overhead especially the staff costs.

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Liquidity, Financial Resources and Capital Structure

Historically, the Group has funded the liquidity and capital requirements primarily through operating cash flows and bank borrowings. As at 30 September 2021, we had various short term borrowings, bank borrowings and lease liabilities of approximately HK$6.8 million (as at 31 March 2021: approximately HK$16.2 million), representing a decrease of approximately HK$9.4 million as compared to that as at 31 March 2021.

Net current assets decreased from approximately HK$25.5 million as at 31 March 2021 to approximately HK$1.4 million as at 30 September 2021, which was mainly due to decrease in the bank balances for usage of general working capital and repayment of bank borrowings during the six months ended 30 September 2021.

The Company requires cash primarily for working capital needs. As at 30 September 2021, the Company had approximately HK$10.1 million in cash and bank balances (as at 31 March 2021: approximately HK$11.8 million), representing a decrease of approximately HK$1.7 million as compared to that as at 31 March 2021.

As of 30 September 2021, the equity attributable to the owners of the Company were approximately HK$6.7 million, of which share capital was approximately HK$7.5 million, capital reserve was approximately HK$1.5 million, PRC statutory surplus reserve was approximately HK$2.7 million, exchange reserve was approximately HK$3.6 million and accumulated loss were approximately HK$102.4 million. The equity attributable to the owners of the Company decreased by approximately 78.4% from approximately HK$31.0 million as at 31 March 2021. There were no debt securities issued by the Group during the six months ended 30 September 2021.

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Capital Commitments

As at 30 September 2021, the Company had no any capital commitments on acquisition of property, plant and equipment (as at 31 March 2021: nil).

Gearing Ratio

As at 30 September 2021, the gearing ratio of the Group was approximately 94.5% (as at 31 March 2021: approximately 50.1%). The gearing ratio is calculated based on the borrowings divided by the equity attributable to owners of the Company as at 30 September 2021. The increase of the gearing ratio was mainly attributable to the decrease in the amount of equity arising from operating activities.

Pledged of Assets

As at 30 September 2021 and 31 March 2021, the Group’s banking facilities were secured by:

• (i) pledged bank deposits with carrying amount of approximately HK$1,158,000; and

• (ii) a corporate guarantee from the Company with an aggregate amount of approximately HK$65,000,000.

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Contingent Liabilities

On 20 January 2020, the Company received a third-party notice with legal case no. HCA1643/2019 between the Barton Eagle Limited (the “ Plaintiff ”), Lam Tak Hung (the “ Defendant ”) and the Company. The Plaintiff claimed against the Defendant approximately HK$8 million under a guarantee for debts own by the Company. The Defendant claims against the Company to be indemnified against the Plaintiff’s claim and the cost of this action on the grounds that the Company are the principal debtor of the alleged debt. The management of the Company is seeking the legal opinion for the above case.

Up to the date of this report, the outcome of the proceedings is still uncertain. As the Directors considered it is premature and not practical to draw a conclusion of the outcome of the claims and that the ultimate liability, if any, will not have a material adverse impact on the Group’s consolidated financial position, no provision was made as at 30 September 2021 (as at 31 March 2021: nil).

Apart from the contingent liabilities disclosed on the above, the Company has no significant contingent liabilities as at 30 September 2021 (as at 31 March 2021: nil).

Financial Risk Management

During the six months ended 30 September 2021, the Group regularly reviewed the risk and credit control systems of its profit centres in order to improve the overall controlling system and mitigate credit risk.

Risk management is carried out by finance department under policies approved by the Board. Finance department identifies, evaluates and hedges financial risks in close cooperation with the Group’s operating units. The Board provides guidance for overall risk management and specific areas, such as foreign exchange risk, interest rate risk, credit risk, use of derivative financial instruments and non-derivative financial instruments, and investment of excess liquidity.

The Company did not engage in any derivatives agreement and did not commit to any financial instruments to hedge its foreign exchange exposure as of 30 September 2021.

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FOREIGN EXCHANGE EXPOSURE

The Group operates in the PRC and Hong Kong with all of the transactions settled in Renminbi (“ RMB ”), U.S Dollar, Euro and Hong Kong Dollar during the six months ended 30 September 2021. Therefore, the Group considers the risk exposure to foreign currency fluctuation would be essentially in line with the performance of the exchange rate of above-mentioned currencies. During the six months ended 30 September 2021, the Group did not adopt any long-term contracts, currency borrowings or other means to hedge our foreign currency exposure.

Significant Investments held, Material Acquisitions and Disposals of Subsidiaries,

and Future Plans for Material Investments or Capital Assets

There were neither significant investments held as at 30 September 2021 nor material acquisitions and disposals of subsidiaries during the six months ended 30 September 2021. Save for the business plan and the capital commitments as disclosed in this report, there is no plan for material investment or capital assets, nor any material acquisitions and disposals of subsidiaries, associates and joint ventures as at 30 September 2021.

Dividend

The Board does not recommend the payment of a dividend for the six months ended 30 September 2021 (2020: nil).

Employees and Remuneration Policies

As of 30 September 2021, the Group had a total of 159 employees. Total staff costs (including Directors’ emoluments) were approximately HK$14.6 million for the six months ended 30 September 2021 (30 September 2020: HK$8.7 million). Remuneration is determined with reference to market conditions and the performance, qualifications and experience of individual employee. Year-end bonus will be paid to employees as recognition of and reward for their contributions according to individual performance. Other benefits include share option scheme, contributions to statutory mandatory provident fund schemes and social insurance together with housing provident funds to its employees in Hong Kong and the PRC respectively.

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FUND RAISING ACTIVITIES

Share Consolidation, Change in Board Lot Size, Authorised Share Capital Increase and Rights Issue

Details of the Share Consolidation, Authorised Share Capital Increase and Right Issue were set out in the Company’s announcements (the “ Announcements ”) dated 24 December 2019 and 4 February 2020, the Company’s circular (the “ Circular ”) dated on 15 January 2020 and the Company’s prospectus (the “ Prospectus ”). Unless otherwise defined, capitalised terms used herein shall bear the same meanings ascribed thereto in the Announcements.

On 24 December 2019, the Board proposed to the Shareholders to effect the Share Consolidation which involved the consolidation of every ten (10) issued and unissued Existing Shares of par value HK$0.00125 each into one (1) Consolidated Share of par value of HK$0.0125. The Board also proposed to change the board lot size for trading on the Stock Exchange from 5,000 Existing Shares to 10,000 Consolidated Shares upon the Share Consolidation having become effective.

Also, the Company proposed to increase the Company’s authorised share capital (conditional on the Share Consolidation having become effective) from HK$7,800,000 divided into 624,000,000 Consolidated Shares to HK$39,000,000 divided into 3,120,000,000 Consolidated Shares by the creation of an additional 2,496,000,000 Consolidated Shares.

The Board proposed, subject to, amongst others, the Share Consolidation and the Authorised Share Capital Increase becoming effective, to implement the Rights Issue on the basis of one (1) Rights Share for every two (2) Consolidated Shares held on the Record Date at the Subscription Price of HK$0.1 per Rights Share, to raise gross proceeds of approximately HK$19.95 million before expenses, by way of the Rights Issue of 199,500,000 Rights Shares to the Qualifying Shareholders.

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The Company provisionally allotted to the Qualifying Shareholders one Rights Share in nil-paid form for every two Consolidated Shares in issue and held on the Record Date. The Rights Issue was not available to the Excluded Shareholders.

The net proceeds from the Rights Issue after deducting all necessary expenses were to be approximately HK$17.8 million, which were intended to be applied in following manner: (i) as to approximately HK$14.1 million, being approximately 79.2%, for expansion of existing business and/or acquisition of and/or investment in business(es) which leverage on the competitive advantage of the Group should suitable opportunities arise; and (ii) remaining net proceeds of approximately HK$3.7 million, being approximately 20.8%, for general working capital of the Group.

On 4 February 2020, all the resolutions of Share Consolidation and Authorised Share Capital Increase were duly passed by the Shareholders by way of poll at the EGM. As all the conditions of the Share Consolidation had been fulfilled, the Share Consolidation and Authorised Share Capital Increased had taken effect on 6 February 2020.

On 6 March 2020, all conditions set out in the underwriting agreement relating to the Rights Issue had been fulfilled and the Rights Issue became unconditional. The gross proceeds raised from the Rights Issue are approximately HK$19.95 million before expenses.

Details of the Rights Issue and Underwriting Agreement were set out in the Announcements, Circular and Prospectus.

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As at 30 September 2021, the net proceeds of the Rights Issue had been utilised as follows:

			Amount
		Actual net	utilised up to	Balance as at
		proceeds	30 September	30 September
		allocated	2021	2021
		HK$ Million	HK$ Million	HK$ Million
Share Consolidation, Change in
Board Lot Size, Authorised
Share Capital Increase and
Rights Issue(completion on
11 March 2021)
Expansion of existing business
and/or acquisition of and/or
investment in business(es) which
leverage on the competitive
advantage of the Group		14.1	14.1	—
General working capital		3.7	3.7	—

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OTHER INFORMATION

DIRECTORS’ AND CHIEF EXECUTIVE’S INTERESTS AND SHORT POSITIONS IN SHARES, UNDERLYING SHARES AND DEBENTURES OF THE COMPANY

As at 30 September 2021, none of the Directors or chief executive of the Company or their associates had any interests and short positions in any shares, underlying shares or debentures of the Company or any associated corporations (within the meaning of Part XV of the SFO) (i) which were required to be notified to the Company and the Stock Exchange pursuant to Divisions 7 and 8 of Part XV of the SFO (including interests or short positions which each of them has taken or deemed to have taken under the provisions of the SFO); or (ii) which were required, pursuant to section 352 of the SFO, to be entered into the register referred to therein; or (iii) which were required, pursuant to Rules 5.46 to 5.67 of the GEM Listing Rules, to be notified to the Company and the Stock Exchange. There were no debt securities issued by the Group during the six months ended 30 September 2021.

SUBSTANTIAL SHAREHOLDERS’ AND OTHER PERSONS’ INTERESTS AND SHORT POSITIONS IN SHARES, UNDERLYING SHARES AND DEBENTURES OF THE COMPANY

As at 30 September 2021, so far as known to the Directors, the following shareholders had, or were deemed to have, interests or short positions, in the shares or underlying shares of the Company as recorded in the register required to be kept under Section 336 of the SFO:

Long positions in shares of the Company

		Number
		of Shares
		interested or		Percentage
Name	Capacity	held		of interest
Solution Smart Holdings	Beneficial owner	112,589,600		18.81%
Limited (“Solution
Smart”)(Note 1)
Mr. Chung Wai Sum	Interest in a controlled	112,589,600		18.81%
(“Mr. Chung”)(Note 1)	corporation
SMK Investment	Beneficial owner	90,997,600		15.20%
Company Limited
(“SMK”)(Note 2)
Mr. Kor Sing Mung	Interest in a controlled	90,997,600		15.20%
Michael_(Note 2)_	corporation

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Notes:

1. Mr. Chung Wai Sum is the sole beneficial shareholder of Solution Smart. Therefore, Mr. Chung is deemed to be interested in 112,589,600 shares of the Company held by Solution Smart under the SFO.

2. Mr. Kor Sing Mung Michael is the sole beneficial shareholder of SMK. Therefore, Mr. Kor Sing Mung Michael is deemed to be interested in 90,997,600 shares of the Company held by SMK under the SFO.

3. All interests stated above represent long positions.

Save as disclosed above, the Directors are not aware of any other person who had an interest or short position in the shares or underlying shares (including interest in options, if any) of the Company as recorded in the register required to be kept under section 336 of the SFO as at 30 September 2021.

CORPORATE GOVERNANCE

The Company is committed to ensure a high standard of corporate governance in the interests of the shareholders and devotes considerable effort to maintain high level of business ethics and corporate governance practices. The Company has complied with the Corporate Governance Code (the “ CG Code ”) as set out in Appendix 15 to the GEM Listing Rules throughout the six months ended 30 September 2021. The Company has applied the principles of, and complied with, the applicable code provisions of the CG Code during the six months ended 30 September 2021.

The Company fully complied with all the code provisions set out in the CG Code throughout the six months ended 30 September 2021.

DIRECTORS’ SECURITIES TRANSACTIONS

The Group had adopted Rules 5.46 to Rules 5.67 Rules of the GEM Listing Rules (“ Model Code ”) as its own code of conduct regarding Directors’ securities transactions on terms no less exacting than the required standard of dealings.

Having made specific enquiry with all the Directors and all the Directors of the Company had confirmed compliance with the required standard of dealings set out in the Model Code and the code of conduct for Directors’ securities transactions during the six months ended 30 September 2021.

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PURCHASE, SALE OR REDEMPTION OF THE LISTED SECURITIES OF THE COMPANY

The Company has not redeemed any of its shares during the six months ended 30 September 2021. Neither the Company nor any of its subsidiaries had purchased, sold or redeemed any of the listed securities of the Company during the six months ended 30 September 2021.

SHARE OPTION SCHEME

The share option scheme of the Company (“ Scheme ”) was adopted pursuant to a resolution passed by the Company’s shareholders on 16 September 2015 for the primary purpose is to attract, retain and motivate talented participants, to strive for future developments and expansion of the Group. Eligible participants of the Scheme include any employees, any executives, non-executive Directors (including independent non-executive Directors), advisors, consultants of the Company or any of its subsidiaries.

The Scheme will remain valid and effective for a period of 10 years commencing on the date on which the Scheme is adopted, after which period no further share options will be granted but the provisions of the Scheme shall in all other respects remain in full force and effect and share options which are granted during the life of the Scheme may continue to be exercisable in accordance with their terms of issue. The principal terms of which were summarized in the paragraph headed “Share Option Scheme” in Appendix IV to the prospectus of the Company dated 18 September 2015. No share options had been granted, agreed to be granted, exercised, cancelled, expired or lapsed under the Scheme during the six months ended 30 September 2020. The Company did not have any outstanding share options, warrants and convertible instruments into shares as at 30 September 2021 and the date of this report. The total number of shares of the Company which may be issued upon the exercise of all options to be granted under the Scheme was 26,880,000 shares (adjusted as a result of share consolidation effected on 6 February 2020) of the Company, representing approximately 4.5% of the issued share capital of the Company as at 30 September 2021 and the date of this report.

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AUDIT COMMITTEE

The existing audit committee of the Company (the “ Audit Committee ”) consists of three independent non-executive Directors, chaired by Mr. Wong Ching Wan and the other two members are Mr. Chan Shiu Man and Mr. Cheng Chai Fu.

The unaudited interim financial results of the Group for the six months ended 30 September 2021 have been reviewed by the Audit Committee.

EVENTS AFTER THE REPORTING PERIOD

There were no significant events since 30 September 2021 and up to the date of this report.

By Order of the Board On Real International Holdings Limited Chan Lung Ming Chairman and executive Director

Hong Kong, 12 November 2021

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UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

CONDENSED CONSOLIDATED STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME

For the three and six months ended 30 September 2021

The Board is pleased to announce the unaudited consolidated results of the Group for the three months and six months ended 30 September 2021, together with the comparative figures for the corresponding period in 2020 which have been reviewed and approved by the Audit Committee, as follows:

Notes	Three months ended 30 September Six months ended 30 September 2021 2020 2021 2020 HK$’000 HK$’000 HK$’000 HK$’000 (Unaudited) (Unaudited) (Unaudited) (Unaudited)	Three months ended 30 September Six months ended 30 September 2021 2020 2021 2020 HK$’000 HK$’000 HK$’000 HK$’000 (Unaudited) (Unaudited) (Unaudited) (Unaudited)	Three months ended 30 September Six months ended 30 September 2021 2020 2021 2020 HK$’000 HK$’000 HK$’000 HK$’000 (Unaudited) (Unaudited) (Unaudited) (Unaudited)
	2021
	HK$’000
	(Unaudited)
Revenue 6 Cost of sales Gross profit Other income 7 Other gains and (losses) 8 Selling and distribution expenses Administrative expenses Finance costs 9 Loss before income tax 10 Income tax expense 11 Loss for the period Other comprehensive income (expense) Item that may be reclassified subsequently to profit or loss: Exchange differences arising on translation of foreign operations Total comprehensive expense for the period		102,433 54,556 (95,563) (52,997)	187,093 (176,126)
	26,973
	(26,578)
		6,870 1,559	10,967
	395
		834 445 (1,602) (164) (1,040) (794) (15,491) (25,665) (616) (238)	2,111 (1,685) (2,188) (22,666) (1,355)
	210
	22
	(124)
	(20,791)
	(76)
		(11,045) (24,857) (155) —	(14,816) (155)
	(20,364)
	—
		(11,200) (24,857) (538) 521	(14,971) (513)
	(20,364)
	(21)
		(11,738) (24,336)	(15,484)
	(20,385)

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CONDENSED CONSOLIDATED STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME

For the three and six months ended 30 September 2021

Notes	Three months ended 30 September Six months ended 30 September 2021 2020 2021 2020 HK$’000 HK$’000 HK$’000 HK$’000 (Unaudited) (Unaudited) (Unaudited) (Unaudited)	Three months ended 30 September Six months ended 30 September 2021 2020 2021 2020 HK$’000 HK$’000 HK$’000 HK$’000 (Unaudited) (Unaudited) (Unaudited) (Unaudited)	Three months ended 30 September Six months ended 30 September 2021 2020 2021 2020 HK$’000 HK$’000 HK$’000 HK$’000 (Unaudited) (Unaudited) (Unaudited) (Unaudited)
	2021
	HK$’000
	(Unaudited)
Loss for the period attributable to: Owners of the Company Non-controlling interests Total comprehensive expense for the period attributable to: Owners of the Company Non-controlling interests Loss per share (HK cents) Basic and diluted 12		(11,200) (24,857) — —	(14,971) —
	(20,364)
	—
		(11,200) (24,857)	(14,971)
	(20,364)
		(11,738) (24,336) — —	(15,484) —
	(20,385)
	—
		(11,738) (24,336)	(15,484)
	(20,385)
		(1.87) (4.15)	(2.50)
	(3.40)

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CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL POSITION

As at 30 September 2021

Notes	30 September 2021	31 March 2021 HK$’000 (Audited)
	HK$’000
	(Unaudited)
Non-current assets Property, plant and equipment 14 Right-of-use assets Intangible assets 14 Investment deposit Deposit and prepayment 15 Current assets Inventories 16 Trade and other receivables 15 Loan receivable 17 Pledged bank deposits Bank balances and cash Current liabilities Trade and other payables 18 Borrowings 19 Amount due to a related company 20 Lease liabilities Income tax payables		— 313 — 5,400 136
	32
	219
	—
	4,600
	625
		5,849
	5,476
		24,398 43,942 — 1,158 11,815
	26,361
	21,728
	—
	1,196
	10,125
		81,313
	59,410
		37,590 15,560 2,281 359 —
	50,083
	6,295
	1,286
	379
	—
		55,790
	58,043

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Notes	30 September 2021	31 March 2021 HK$’000 (Audited)
	HK$’000
	(Unaudited)
Net current assets Total assets less current liabilities Non-current liabilities Lease liabilities Net assets Capital and reserves Share capital 21 Reserves Equity attributable to owners of the Company Non-controlling interests Total equity		25,523
	1,367
		31,372 315
	6,843
	122
		31,057
	6,721
		7,481 23,513
	7,481
	(823)
		30,994 63
	6,658
	63
		31,057
	6,721

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CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY

For the six months ended 30 September 2021

	Attributable to owners of the Company	Attributable to owners of the Company	Attributable to owners of the Company	Attributable to owners of the Company	Attributable to owners of the Company
	Share capital Share premium Capital reserve PRC statutory reserve Exchange reserve Accumulated losses Total Non– controlling interests Total equity
	HK$’000 HK$’000 HK$’000 HK$’000 HK$’000 HK$’000 HK$’000 HK$’000 HK$’000
Balance at 1 April 2021 (Audited) Loss for the period Other comprehensive income Exchange difference arising on translation of foreign operations Total comprehensive expense Balance at 30 September 2021 (Unaudited)
	7,481 93,897 1,465 2,670 3,034 (77,553) 30,994 63 31,057
	— — — — — (24,857) (24,857) — (24,857)
	— — — — 521 — 521 — 521
	— — — — 521 (24,857) (24,336) — (24,336)
	7,481 93,897 1,465 2,670 3,555 (102,410) 6,658 63 6,721
			Attributable to owners of the Company
Balance at 1 April 2020 (Audited) Loss for the period Other comprehensive expense Exchange difference arising on translation of foreign operations Total comprehensive expense Balance at 30 September 2020 (Unaudited)	7,481 93,897 1,465 2,670 909 (42,972) 63,450 68 63,518 — — — — — (14,971) (14,971) — (14,971) — — — — (513) — (513) — (513)
	— — — — (513) (14,971) (15,484) — (15,484)
	7,481 93,897 1,465 2,670 396 (57,943) 47,966 68 48,034

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CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

For the six months ended 30 September 2021

	Six months ended 30 September 2021 2020 HK$’000 HK$’000 (Unaudited) (Unaudited)
Net cash generated from (used in) operating activities Net cash generated from (used in) investing activities Net cash (used in) generated from financing activities Net decrease in cash and cash equivalents Cash and cash equivalents at beginning of the period Effect on foreign exchange rates change Cash and cash equivalents at end of the period Analysis of cash and cash equivalents Bank balances and cash	7,447 (34,575) 53 (1,349) (9,676) 10,780
	(2,176) (25,144) 12,973 47,896 524 —
	11,321 22,752
	11,321 22,752

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NOTES TO UNAUDITED CONDENSED CONSOLIDATED INTERIM FINANCIAL INFORMATION

1 CORPORATION INFORMATION, REORGANISATION AND BASIS OF PRESENTATION

(a) General information

The Company was incorporated in the Cayman Islands as an exempted company with limited liability under Companies Law, Cap 22 (Law 3 of 1961 as consolidated and revised), of the Cayman Islands. The address of its registered office is Cricket Square, Hutchins Drive, P.O. Box 2681, Grand Cayman, KY1–1111, Cayman Islands and the principal place of business is G/F, 200 Hennessy Road, Wan Chai, Hong Kong.

The Company is an investment holding company. The principal activities of the Group are designing, trading and manufacturing of two-way radios, baby monitors, other communication devices and servicing business of the above products.

The Company was listed on the GEM on 30 September 2015.

This unaudited condensed consolidated interim financial information is presented in thousands of Hong Kong dollars (“ HK$000 ”), unless otherwise stated.

(b) Basis of presentation

The presentation applied are consistent with those of the consolidated annual financial statements for the year ended 31 March 2021.

2 BASIS OF PREPARATION

The unaudited condensed consolidated financial statements of the Group for the six months ended 30 September 2021 (“ Interim Period ”) have been prepared in accordance with Hong Kong Accounting Standard (“ HKAS ”) 34 “Interim Financial Reporting” issued by the Hong Kong Institute of Certified Public Accountants (“ HKICPA ”) and the applicable disclosure requirements of the Rules Governing the Listing of Securities on the GEM (the “ GEM Listing Rules ”).

The accounting policies and methods of computation used in the preparation of the unaudited condensed consolidated financial statements of the Group for the Interim Period are consistent with those used in the audited financial statements of the Group for the year ended 31 March 2021 and should be used in conjunction with the audited Consolidated Financial Statements for the year ended 31 March 2021.

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2 BASIS OF PREPARATION (CONTINUED)

HKICPA has issued a number of new and revised HKFRSs and interpretations that are first effective or available for early adoption for the Interim Period. There have been no significant changes to the accounting policies applied in these financial statements for the Interim Period presented as a result of these developments.

The unaudited condensed consolidated financial statements for the Interim Period have not been audited by the Company’s independent auditor but have been reviewed by the Company’s audit committee.

The preparation of the unaudited condensed consolidated financial statements of the Group for the Interim Period is in conformity with the HKFRSs requirements in the use of certain critical accounting estimates. The HKFRSs also require the management to exercise their judgements in the process of applying the Group’s accounting policies.

ADOPTION OF NEW AND AMENDED HKFRSs

In the current period, the Group has adopted all the new and revised Hong Kong Financial Reporting Standards (“ HKFRSs ”) issued by the HKICPA that are relevant to its operation and effective for its accounting period beginning on 1 April 2021. HKFRSs comprise Hong Kong Financial Reporting Standards, Hong Kong Accounting Standards (“ HKAS ”) and Interpretations.

The Group has not early adopted any other standard, interpretation or amendment that has been issued but is not yet effective. A number of new or amended standards are effective from 1 April 2021 but they do not have a material effect on the Group’s unaudited condensed consolidated interim financial statements.

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3 PRINCIPAL ACCOUNTING POLICIES

The unaudited condensed consolidated financial statements have been prepared on the historical cost basis except for financial asset at fair value through profit or loss which is measured at fair values.

4 ESTIMATES

The preparation of unaudited condensed consolidated interim financial information requires management to make judgements, estimates and assumptions that affect the application of accounting policies and the reported amounts of assets and liabilities, income and expense. Actual results may differ from these estimates.

In preparing this unaudited condensed consolidated interim financial information, the significant judgements made by management in applying the Group’s accounting policies and the key sources of estimation uncertainty were the same as those that applied to the consolidated financial statements for the year ended 31 March 2021.

5 FINANCIAL RISK MANAGEMENT AND FINANCIAL INSTRUMENTS

5.1 Financial risk factors

The Group’s activities expose it to a variety of financial risks: market risk (including foreign exchange risk and cash flow interest rate risk), credit risk and liquidity risk. The unaudited interim condensed consolidated financial information do not include all financial risk management information and disclosures required in the consolidated annual financial statements, and should be read in conjunction with the Group’s annual financial statements as at 31 March 2021.

There have been no changes in the risk management policies since year end.

5.2 Liquidity risk

Compared to year end, there have been no material changes to the policies and practices for the Group’s liquidity and funding risks management as described in the annual financial statements for the year ended 31 March 2021.

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5 FINANCIAL RISK MANAGEMENT AND FINANCIAL INSTRUMENTS

(CONTINUED)

5.3 Fair value estimation

The table below analyses the Group’s financial instruments carried at fair value. The different levels have been defined as follows:

• Quoted prices (unadjusted) in active markets for identical assets or liabilities (level 1)

• 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)

• Inputs for the asset and liability that are not based on observable market data (that is, unobservable inputs) (level 3)

The fair values of trade and other receivables, bank balances and cash, trade and other payables and borrowings as at 30 September 2021 approximate to their carrying amounts.

6 SEGMENT INFORMATION

Total revenue recognised during the respective period are as follows:

	Three months ended 30 September Six months ended 30 September 2021 2020 2021 2020 HK$’000 HK$’000 HK$’000 HK$’000 (Unaudited) (Unaudited) (Unaudited) (Unaudited)
Sales of goods Sales of service	26,973 102,400 54,556 179,380 — 33 — 7,713
	26,973 102,433 54,556 187,093

The revenue from external parties is derived from numerous external customers and the revenue reported to the management is measured in a manner consistent with that in the condensed consolidated income statements.

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6 SEGMENT INFORMATION (CONTINUED)

The Group is principally engaged in the designing, trading and manufacturing of two-way radios, baby monitors, other communication devices and servicing business of the above products.

The executive Directors have been identified as the chief operating decision makers. The executive Directors have determined the operating segments based on the reports reviewed by them that are used to make strategic decisions.

Management of the Company considers the business from a product perspective whereby management of the Company assesses the performance of two-way radios, baby monitors, other communication products and servicing business based on gross profit arising in the course of the ordinary activities which are recurring in nature.

Capital expenditure comprises additions to property, plant and equipment.

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6 SEGMENT INFORMATION (CONTINUED)

The segment information provided to the executive Directors for the reportable segments are as follows:

	Two-way radios Baby monitors Service business Other products (Note) Total HK$’000 HK$’000 HK$’000 HK$’000 HK$’000 (Unaudited) (Unaudited) (Unaudited) (Unaudited) (Unaudited)
For the six months ended 30 September 2021 Total segment revenue (from external customers) Segment result for the period Other segment items: Depreciation of property, plant and equipment For the six months ended 30 September 2020 Total segment revenue (from external customers) Segment result for the period Other segment items: Depreciation of property, plant and equipment
	39,234 321 — 15,001 54,556
	922 14 — 623 1,559
	— 1 — — 1
	146,845 1,090 7,713 31,445 187,093
	8,369 (73) 480 2,191 10,967
	378 1 14 100 493

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6 SEGMENT INFORMATION (CONTINUED)

SEGMENT INFORMAT	ION(CONTINUED)
	Two-way radios Baby monitors Service business Other products (Note) Total HK$’000 HK$’000 HK$’000 HK$’000 HK$’000 (Unaudited) (Unaudited) (Unaudited) (Unaudited) (Unaudited)
For the three months ended 30 September 2021 Total segment revenue (from external customers) Segment result for the period Other segment items: Depreciation of property, plant and equipment For the three months ended 30 September 2020 Total segment revenue (from external customers) Segment result for the period Other segment items: Depreciation of property, plant and equipment
	24,180 — — 2,793 26,973
	335 1 — 59 395
	— 1 — — 1
	82,794 533 33 19,073 102,433
	5,166 (87) 252 1,539 6,870
	201 1 — 61 263

Note: Other products include transistors, integrated circuits, plastic casings, rechargeable battery chargers, ultrasonic cleansers, inductive emergency flashlights, LCD display module and accessories such as headsets, belt clips, chargers and power adaptors, etc.

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6 SEGMENT INFORMATION (CONTINUED)

A reconciliation of total segment result to the loss for the respective period is provided as follows:

	Three months ended 30 September Six months ended 30 September 2021 2020 2021 2020 HK$’000 HK$’000 HK$’000 HK$’000 (Unaudited) (Unaudited) (Unaudited) (Unaudited)
Segment results Other income Other gains and (losses) Selling, distribution and administrative expenses Finance costs Loss before income tax	395 6,870 1,559 10,967
	210 834 445 2,111 22 (1,602) (164) (1,685) (20,915) (16,531) (26,459) (24,854) (76) (616) (238) (1,355)
	(20,364) (11,045) (24,857) (14,816)

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6 SEGMENT INFORMATION (CONTINUED)

An analysis of revenue by geographic location, based on shipping destination, is set out below:

	Three months ended 30 September Six months ended 30 September 2021 2020 2021 2020 HK$’000 HK$’000 HK$’000 HK$’000 (Unaudited) (Unaudited) (Unaudited) (Unaudited)
The United States of America (the “US”) Europe_(Note 1) The Netherlands Asia(Note 2) The United Kingdom (“UK”) Germany Others(Note 3)_	— 31,753 — 69,850 2,703 4,060 3,886 5,646 — 1,718 — 2,752 24,270 34,392 50,670 56,059 — 3,808 — 4,962 — 25,202 — 46,172 — 1,500 — 1,652
	26,973 102,433 54,556 187,093

Note 1: Europe includes but is not limited to France, Italy and Belgium but excludes UK, Germany and the Netherlands.

Note 2: Asia includes but is not limited to the PRC and Hong Kong. Note 3: Others include but is not limited to Brazil, Canada and Russia.

Revenue is allocated based on the shipping destination.

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7 OTHER INCOME

	Three months ended 30 September Six months ended 30 September 2021 2020 2021 2020 HK$’000 HK$’000 HK$’000 HK$’000 (Unaudited) (Unaudited) (Unaudited) (Unaudited)
Bank interest income Gain on disposal of non-current assets Sale of scrap materials Others	25 29 89 57 51 214 95 379 12 9 16 19 122 582 245 1,656
	210 834 445 2,111

8 OTHER GAINS AND (LOSSES)

	Three months ended 30 September Six months ended 30 September 2021 2020 2021 2020 HK$’000 HK$’000 HK$’000 HK$’000 (Unaudited) (Unaudited) (Unaudited) (Unaudited)
Exchange gains (losses), net Loss on disposal of subsidiary	22 (930) (164) (1,013) — (672) — (672)
	22 (1,602) (164) (1,685)

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9 FINANCE COSTS

	Three months ended 30 September Six months ended 30 September 2021 2020 2021 2020 HK$’000 HK$’000 HK$’000 HK$’000 (Unaudited) (Unaudited) (Unaudited) (Unaudited)
Interest on: — bank and other borrowings — lease liabilities	67 608 218 1,345 9 8 20 10
	76 616 238 1,355

10 LOSS BEFORE INCOME TAX

	Three months ended 30 September Six months ended 30 September 2021 2020 2021 2020 HK$’000 HK$’000 HK$’000 HK$’000 (Unaudited) (Unaudited) (Unaudited) (Unaudited)
Cost of inventories recognised as expenses Employee benefit expenses Subcontracting fees Amortisation of intangible assets Depreciation — Property, plant and equipment — Rights-of-use assets Expenses relating to short-term leases and other leases with lease terms end within 12 months of the date of initial application of HKFRS 16	18,466 81,880 36,982 152,281 10,561 4,971 14,582 8,655 1,085 9,119 6,158 14,761 — 353 — 353 1 455 1 685 47 419 94 604 722 730 1,233 1,124

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11 INCOME TAX EXPENSE

No provision for Hong Kong Profits Tax and PRC enterprise income tax has been made as the Group’s did not have any assessable profits for the six months ended 30 September 2021.

Under the Law of the PRC on Enterprise Income Tax (the “ EIT Law ”) and Implementation Regulation of the EIT Law, the tax rate of the PRC subsidiaries is 25% during the six months ended 30 September 2020.

The amount of income tax expense charged to the condensed consolidated statements of profit or loss and other comprehensive income represents:

	Three months ended 30 September Six months ended 30 September 2021 2020 2021 2020 HK$’000 HK$’000 HK$’000 HK$’000 (Unaudited) (Unaudited) (Unaudited) (Unaudited)
Current tax: PRC Enterprise Income Tax	— 155 — 155

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12 LOSS PER SHARE

(a) Basic

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

	Three months ended	Three months ended	Six months	Six months	ended
	30 September		30 September
	2021	2020	2021			2020
	HK$’000	HK$’000	HK$’000		HK$’000
	(Unaudited)	(Unaudited)	(Unaudited)		(Unaudited)
Loss attributable to owners
of the Company_(HK$’000)_	(20,364)	(11,200)	(24,857)		(14,971)
Weighted number of ordinary
shares in issue_(’000)_	598,500	598,500	598,500		598,500
Basic loss per share
(HK cents per share)	(3.40)	(1.87)	(4.15)			(2.50)

(b) Diluted

Diluted loss per share is the same as basic loss per share as there were no potential outstanding shares during the respective periods.

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13 DIVIDENDS

The Directors do not recommend the payment of any dividend in respect of the six months ended 30 September 2021 (2020: nil).

14 CAPITAL EXPENDITURE

	Property, plant and equipment Intangible assets – Product development costs HK$’000 HK$’000
(Unaudited) Six months ended 30 September 2021 Opening net book amount as at 1 April 2021 Additions Depreciation/amortisation Exchange differences Closing net book amount as at 30 September 2021 (Audited) Year ended 31 March 2021 Opening net book amount as at 1 April 2020 Additions Depreciation/amortisation Disposal and written off Impairment Exchange differences Closing net book amount as at 31 March 2021
	— —
	36 —
	(1) —
	(3) —
	32 —
	1,990 627 1,742 — (1,234) (611) (32) — (2,566) (50) 100 34
	— —

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15 TRADE AND OTHER RECEIVABLES

	30 September 2021 31 March 2021 HK$’000 HK$’000 (Unaudited) (Audited)
Trade receivable_(Note a)_ Prepayments Value-added tax receivables Deposits Other receivables Total trade and other receivables Less: non-current portion Current portion	5,359 27,554 9,630 755 4,226 13,578 141 143 2,997 2,048
	22,353 44,078 (625) (136)
	21,728 43,942

Note:

(a) The carrying amounts of trade receivable approximate their fair values

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15 TRADE AND OTHER RECEIVABLES (CONTINUED)

• (a) The ageing analysis of the trade receivable based on invoice date are as follows:

	30 September 2021 31 March 2021 HK$’000 HK$’000 (Unaudited) (Audited)
Within 30 days 31 to 60 days 61 to 90 days 91 to 180 days Over 180 days Total	3,352 11,361 379 3,626 — 5,476 1,627 6,973 1 118
	5,359 27,554

• (b) The ageing analysis of the trade receivable based on due date are as follows:

	30 September 2021 31 March 2021 HK$’000 HK$’000 (Unaudited) (Audited)
Currents Within 30 days 31 to 60 days 61 to 90 days 91 to 180 days Over 180 days Amounts past due but not impaired Total	3,352 11,361
	379 3,626 — 5,476 1,021 1,023 607 6,068 — —
	2,007 16,193
	5,359 27,554

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16 INVENTORIES

	30 September 2021 31 March 2021 HK$’000 HK$’000 (Unaudited) (Audited)
Raw materials Work in progress Finished goods	14,726 13,558 9,563 9,337 2,072 1,503
	26,361 24,398

The cost of inventories recognised as expenses in “cost of sales” amounted to approximately HK$152,281,000 and HK$36,982,000 for the six months ended 30 September 2020 and 30 September 2021, respectively.

17 LOAN RECEIVABLE

	30 September 2021	31 March 2021 HK$’000 (Audited)
	HK$’000
	(Unaudited)
Unsecured fixed-rate loan receivable Less: Allowance for credit losses		3,000 (3,000)
	3,000
	(3,000)
		—
	—

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18 TRADE AND OTHER PAYABLES

	30 September 2021 31 March 2021 HK$’000 HK$’000 (Unaudited) (Audited)
Trade payables Accrued expenses Other payables Trade and other payables	32,732 27,441 2,919 5,196 14,432 4,953
	17,351 10,149
	50,083 37,590

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

	30 September 2021 31 March 2021 HK$’000 HK$’000 (Unaudited) (Audited)
Within 30 days 31 to 60 days 61 to 90 days More than 90 days	11,543 4,387 8,154 393 5,477 21,171 7,558 1,490
	32,732 27,441

The credit period on purchases of goods is 90 days. The Group has financial risk management policies in place to ensure that all payables are settled within the credit timeframe.

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19 BORROWINGS

BORROWINGS
	30 September 2021 31 March 2021 HK$’000 HK$’000 (Unaudited) (Audited)
Secured bank borrowings Secured other borrowings Total borrowings	695 9,960 5,600 5,600
	6,295 15,560

Carrying amount repayable (based on scheduled repayment dates set out in loan agreements):

	30 September 2021 31 March 2021 HK$’000 HK$’000 (Unaudited) (Audited)
Within one year Amount shown under current liabilities	6,295 15,560
	6,295 15,560

• (a) Secured bank borrowings of the Group as at 30 September 2021 and 31 March 2021 were secured by a corporate guarantee from the Company and pledged bank deposits.

(b) On 16 July 2019, the Company entered into assignment of debt agreement with the lender to factor trade receivable with the gross carrying amount of approximately HK$7,809,000 to lender with recourse. Subsequent to entered into assignment of debt agreement, the secured other borrowings were interestfree and will be settled upon settlement of factored trade receivable with the amounts of HK$7,308,000 (net of allowance for credit losses).

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19 BORROWINGS (CONTINUED)

(c) The weighted average effective interest rates (per annum) at the end of the respective reporting periods are as follows:

30 September 2021 31 March 2021 HK$’000 HK$’000 (Unaudited) (Audited) Variable-rate borrowings effective interest rate 3.17% to 3.23% 3.17% to 3.23% AMOUNT DUE TO A RELATED COMPANY 30 September 2021 31 March 2021 HK$’000 HK$’000 (Unaudited) (Audited)		30 September 2021 31 March 2021 HK$’000 HK$’000 (Unaudited) (Audited)
		3.17% to 3.23% 3.17% to 3.23%
Xinxing On Time Electronics Limited		1,286 2,281

20 AMOUNT DUE TO A RELATED COMPANY

The balances are unsecured, interest-free and repayable on demand.

21 SHARE CAPITAL

	Number of shares Amount ’000 HK$’000
Authorised: Ordinary shares of HK$0.0125 each (2020: HK$0.0125) Issued and fully paid: Ordinary shares of HK$0.0125 each at 31 March 2021 (audited),1 April 2021 (unaudited) and 30 September 2021 (unaudited)	3,120,000 39,000
	598,500 7,481

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22 RELATED-PARTY TRANSACTIONS

For the purposes of these unaudited condensed consolidated interim financial statements, parties are considered to be related to the Group if the party has the ability, directly or indirectly, to exercise significant influence over the Group in making financial and operating decisions. Related parties may be individuals (being members of key management personnel, significant shareholders and/or their close family members) or other entities and include entities which are under the significant influence of related parties of the Group where those parties are individuals. Parties are also considered to be related if they are subject to common control.

The following is a summary of the significant transactions carried out between the Group and its related parties in the ordinary course of business during the three months and six months ended 30 September 2020 and 30 September 2021.

(a) Transactions with related parties

	Three months ended 30 September Six months ended 30 September 2021 2020 2021 2020 HK$’000 HK$’000 HK$’000 HK$’000 (Unaudited) (Unaudited) (Unaudited) (Unaudited)
Rental expenses charged by a related company

Note:

Rental expenses charged was paid to Xinxing On Time Electronics Limited. Mr. Tam Wing Ki (“ Mr. Tam ”), the ex-director and ex-chairman of the Company, has direct interest in the relevant party. Subsequent to the resignation of the director and chairman of the Company, Mr. Tam is still acting as director of certain subsidiaries and one of the key management personnel of the Group.

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22 RELATED-PARTY TRANSACTIONS (CONTINUED)

(b) Key management compensation

Key management includes directors (executive and non-executive) and the senior management of the Group. The compensation paid or payable to key management for employee services is disclosed as follows:

	Three months ended 30 September Six months ended 30 September 2021 2020 2021 2020 HK$’000 HK$’000 HK$’000 HK$’000 (Unaudited) (Unaudited) (Unaudited) (Unaudited)
Wages, salaries and allowances Retirement benefit costs	1,230 1,532 2,460 2,885 18 26 36 52
	1,248 1,558 2,496 2,937

23 EVENTS AFTER REPORTING PERIOD

There is no material subsequent event undertaken by the Company or by the Group after 30 September 2021 and up to the date of this interim report.

24 APPROVAL OF THE UNAUDITED INTERIM FINANCIAL STATEMENTS

The unaudited interim financial statements were approved and authorised for issue by the Board on 12 November 2021.

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