Canopy SkyFire Group Limited — Interim / Quarterly Report 2022

Aug 13, 2021

==> picture [171 x 45] intentionally omitted <==

On Real International Holdings Limited ����������

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

FIRST QUARTERLY RESULTS ANNOUNCEMENT FOR THE THREE MONTHS ENDED 30 JUNE 2021

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 announcement, make no representation as to its accuracy or completeness and expressly disclaim any liability whatsoever for any loss howsoever arising from or in reliance upon the whole or any part of the contents of this announcement.

This announcement, 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 announcement 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 announcement misleading.

– 1 –

FINANCIAL HIGHLIGHTS

• Revenue of the Company for the three months ended 30 June 2021 amounted to approximately HK$27.6 million, representing a significant decrease of approximately 67.4% as compared with that of approximately HK$84.7 million for the three months ended 30 June 2020.

• Loss attributable to the owner of the Company for the three months ended 30 June 2021 amounted to approximately HK$4.5 million compared with loss of approximately HK$3.8 million for the three months ended 30 June 2020.

• Basic and diluted loss per share for the three months ended 30 June 2021 amounted to approximately HK cents 0.75 (for the three months ended 30 June 2020: HK cents 0.63).

• The Board does not recommend the payment of any dividend in respect of the three months ended 30 June 2021 (2020: nil).

– 2 –

CONDENSED CONSOLIDATED STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME

For the three months ended 30 June 2021

The board of Directors (the “ Board ”) is pleased to announce the unaudited consolidated results of the Group for the three months ended 30 June 2021, together with the comparative figures for the corresponding period in 2020 which have been reviewed and approved by the audit committee of the Company (the “ Audit Committee ”), as follows:

Note Revenue 3 Cost of sales Gross profit Other income 4 Other losses 5 Selling and distribution expenses Administrative expenses Finance costs 7 Loss before income tax 6 Income tax expense 8 Loss for the period Other comprehensive income Item that may be reclassified subsequently to profit or loss: Exchange differences arising on translation of foreign operations Total comprehensive expense for the period

Three months ended 30 June 2021 2020 HK$’000 HK$’000 (Unaudited) (Unaudited) 27,583 84,660 (26,419) (80,563) 1,164 4,097 235 1,277 (186) (83) (670) (1,148) (4,874) (7,177) (162) (737) (4,493) (3,771) – – (4,493) (3,771) 542 25 (3,951) (3,746)

– 3 –

CONDENSED CONSOLIDATED STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME

For the three months ended 30 June 2021

Note Loss for the period Owners of the Company Non-controlling interest Total comprehensive expense for the period attributable to: Owners of the Company Non-controlling interest Loss per share (HK Cents) Basic and diluted 9	Three months ended 30 June 2021 2020 HK$’000 HK$’000 (Unaudited) (Unaudited) (4,493) (3,771) – – (4,493) (3,771) (3,951) (3,746) – – (3,951) (3,746) (0.75) (0.63)

– 4 –

CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY

For the three months ended 30 June 2021

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 June 2021 (Unaudited) Balance at 1 April 2020 (Audited) Loss for the period Other comprehensive income Exchange difference arising on translation of foreign operations Total comprehensive expense Balance at 30 June 2020 (Unaudited)	Share Capital HK$’000 7,481 – – – 7,481 7,481 – – – 7,481		Attributable to owners of the Company	Attributable to owners of the Company	Attributable to owners of the Company	Attributable to owners of the Company	Accumulated losses HK$’000 (77,553) (4,493) – (4,493) (82,046) (42,972) (3,771) – (3,771) (46,743)	Total HK$’000 30,994 (4,493) 542 (3,951) 27,043 63,450 (3,771) 25 (3,746) 59,704	Non- controlling interests HK$’000 63 – – – 63 68 – – – 68	Total equity HK$’000 31,057
			Share Premium HK$’000 93,897 – – – 93,897 93,897 – – – 93,897	Capital Reserve HK$’000 1,465 – – – 1,465 1,465 – – – 1,465	PRC Statutory Reserve HK$’000 2,670 – – – 2,670 2,670 – – – 2,670	Exchange Reserve HK$’000 3,034 – 542 542 3,576 909 – 25 25 934
										(4,493) 542
										(3,951)
										27,106
										63,518
										(3,771) 25
										(3,746)
										59,772

– 5 –

NOTES TO CONDENSED CONSOLIDATED FINANCIAL INFORMATION

1 GENERAL INFORMATION

The Company was incorporated in the Cayman Islands on 30 June 2014 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, PO 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 and 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 financial information is presented in thousands of Hong Kong dollars (“ HK$’000 ”), unless otherwise stated.

2 BASIC OF PREPARATION AND PRINCIPAL ACCOUNTING POLICIES

This unaudited condensed consolidated first quarterly financial information for the three months ended 30 June 2021 has been prepared in accordance with Hong Kong Financial Reporting Standards (“ HKFRS ”) issued by the Hong Kong Institute of Certified Public Accountants 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 three months ended 30 June 2021 are consistent with those used in the audited consolidated financial statements for the year ended 31 March 2021 and should be read in conjunction with the consolidated annual financial statements for the year ended 31 March 2021.

The unaudited condensed consolidated financial statements for the three months ended 30 June 2021 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 three months ended 30 June 2021 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.

– 6 –

3 SEGMENT INFORMATION

Total revenue recognised during the respective period are as follows:

Sales of goods Sales of service	Three months ended 30 June 2021 2020 HK$’000 HK$’000 (Unaudited) (Unaudited) 27,583 76,980 – 7,680 27,583 84,660	Three months ended 30 June 2021 2020 HK$’000 HK$’000 (Unaudited) (Unaudited) 27,583 76,980 – 7,680 27,583 84,660
		84,660

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.

The Group is principally engaged in the designing, trading and manufacturing of twoway radios, baby monitors and other products 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 considers the business from a product perspective whereby management assesses the performance of two-way radios, baby monitors, and other 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.

– 7 –

The segment information provided to the executive Directors for the reportable segments for the three months ended 30 June 2021 and 30 June 2020 is as follows:

Two-way radios Baby monitors Service business Other products (Note (i)) Total HK$’000 HK$’000 HK$’000 HK$’000 HK$’000 (Unaudited) (Unaudited) (Unaudited) (Unaudited) (Unaudited) For the three months ended 30 June 2021 Total segment revenue (from external customers) 15,054 321 – 12,208 27,583 Segment results for the period 587 13 – 564 1,164 Other segment item: Depreciation of property, plant and equipment – – – – – For the three months ended 30 June 2020 Total segment revenue (from external customers) 64,051 557 7,680 12,372 84,660 Segment results for the period 3,203 14 228 652 4,097 Other segment item: Depreciation of property, plant and equipment 177 – 14 39 230	Two-way radios Baby monitors Service business Other products (Note (i)) Total HK$’000 HK$’000 HK$’000 HK$’000 HK$’000 (Unaudited) (Unaudited) (Unaudited) (Unaudited) (Unaudited) For the three months ended 30 June 2021 Total segment revenue (from external customers) 15,054 321 – 12,208 27,583 Segment results for the period 587 13 – 564 1,164 Other segment item: Depreciation of property, plant and equipment – – – – – For the three months ended 30 June 2020 Total segment revenue (from external customers) 64,051 557 7,680 12,372 84,660 Segment results for the period 3,203 14 228 652 4,097 Other segment item: Depreciation of property, plant and equipment 177 – 14 39 230	Two-way radios Baby monitors Service business Other products (Note (i)) Total HK$’000 HK$’000 HK$’000 HK$’000 HK$’000 (Unaudited) (Unaudited) (Unaudited) (Unaudited) (Unaudited) For the three months ended 30 June 2021 Total segment revenue (from external customers) 15,054 321 – 12,208 27,583 Segment results for the period 587 13 – 564 1,164 Other segment item: Depreciation of property, plant and equipment – – – – – For the three months ended 30 June 2020 Total segment revenue (from external customers) 64,051 557 7,680 12,372 84,660 Segment results for the period 3,203 14 228 652 4,097 Other segment item: Depreciation of property, plant and equipment 177 – 14 39 230
		1,164
		–
		84,660 4,097 230

Note (i): 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.

– 8 –

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

Segment results Other income Other losses Selling, distribution and administrative expenses Finance costs Loss before income tax	Three months ended 30 June 2021 2020 HK$’000 HK$’000 (Unaudited) (Unaudited) 1,164 4,097 235 1,277 (186) (83) (5,544) (8,325) (162) (737) (4,493) (3,771)

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

The United States of America Europe_(Note 1) The Netherlands Asia(Note 2) The United Kingdom (“UK”) Germany Others(Note 3)_	Three months ended 30 June 2021 2020 HK$’000 HK$’000 (Unaudited) (Unaudited) – 38,097 1,183 1,586 – 1,034 26,400 21,667 – 1,154 – 20,969 – 153 27,583 84,660	Three months ended 30 June 2021 2020 HK$’000 HK$’000 (Unaudited) (Unaudited) – 38,097 1,183 1,586 – 1,034 26,400 21,667 – 1,154 – 20,969 – 153 27,583 84,660
		84,660

– 9 –

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

• Note 2: Asia includes but is not limited to the PRC and Hong Kong.

• Note 3: Others includes but is not limited to Brazil, Canada and Russia. Revenue is allocated based on the shipping destination.

Revenue is allocated based on the shipping destination.

4 OTHER INCOME

Bank interest income Gain on disposal of property, plant and equipment Sales of mould Sales of scrap materials Others 5 OTHER LOSSES Exchange loss, net	Three months ended 30 June 2021 2020 HK$’000 HK$’000 (Unaudited) (Unaudited) 64 28 44 165 – 368 4 9 123 707 235 1,277 2021 2020 HK$’000 HK$’000 (Unaudited) (Unaudited) (186) (83)

– 10 –

6 LOSS BEFORE INCOME TAX

LOSS BEFORE INCOME TAX
	Three months	ended 30 June
	2021	2020
	HK$’000	HK$’000
	(Unaudited)	(Unaudited)
Cost of inventories recognised as expenses	18,516	70,671
Employee benefit expenses	4,021	3,279
Subcontracting fees	5,073	5,642
Depreciation
— Property, plant and equipment	–	230
— Right-of-use assets	47	185
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	511	394

7 FINANCE COSTS

Interest on: — Bank and other borrowings — Lease liabilities	Three months ended 30 June 2021 2020 HK$’000 HK$’000 (Unaudited) (Unaudited) 151 737 11 – 162 737	Three months ended 30 June 2021 2020 HK$’000 HK$’000 (Unaudited) (Unaudited) 151 737 11 – 162 737
		737

8 INCOME TAX EXPENSE

No provision for Hong Kong Profits Tax and PRC enterprise income tax has been made as the Group did not have any assessable profits for the three months ended 30 June 2021 (2020: nil).

– 11 –

9 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.

Loss attributable to owners of the Company_(HK$’000) Weighted average number of ordinary shares in issue(’000) Basic loss per share (HK cents per share)_	Three months ended 30 June 2021 2020 (Unaudited) (Unaudited) (4,493) (3,771) 598,500 598,500 (0.75) (0.63)

(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.

10 DIVIDENDS

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

– 12 –

11 RELATED-PARTY TRANSACTIONS

For the purposes of these condensed consolidated 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 ended 30 June 2021 and 30 June 2020.

Rental expenses charged by a related company	Three months ended 30 June 2021 2020 HK$’000 HK$’000 (Unaudited) (Unaudited) 521 461

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 this resignation of the director and chairman of the Company, Mr. Tam is still acting as director of certain subsidiaries and as one of the key management personnel of the Group.

12 EVENT AFTER REPORTING PERIOD

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

– 13 –

MANAGEMENT DISCUSSION AND ANALYSIS

The Board is pleased to present the unaudited condensed consolidated results of the Group for the three months ended 30 June 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 the 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$84.7 million for the three months ended 30 June 2020 to approximately HK$27.6 million for the three months ended 30 June 2021, representing a significant decrease of approximately 67.4%. 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 76.5% from approximately HK$64.1 million for the three months ended 30 June 2020 to approximately HK$15.1 million for the three months ended 30 June 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 three months ended 30 June 2021.

The Group’s revenue of baby monitor decreased by approximately 42.4% from approximately HK$0.6 million for the three months ended 30 June 2020 to approximately HK$0.3 million for the three months ended 30 June 2021 due to the decrease in demand of our audio baby monitor products.

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

The Group’s revenue of other products decreased by approximately 1.3% from approximately HK$12.4 million for the three months ended 30 June 2020 to approximately HK$12.2 million for the three months ended 30 June 2021, which remained constant compared with the corresponding period.

– 14 –

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 tables set forth the breakdowns of the revenue of the Group by product/service categories for the three months ended 30 June 2021 and 2020:

Two-way radios Baby monitors Servicing business Other products Total	Unaudited For the three months ended 30 June 2021 2020 HK$’000 % HK$’000 % 15,054 54.6 64,051 75.6 321 1.2 557 0.7 – – 7,680 9.1 12,208 44.2 12,372 14.6 27,583 100 84,660 100	Increase (decrease) HK$’000 % (48,997) (76.5) (236) (42.4) (7,680) (100.0) (164) (1.3) (57,077) (67.4)

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.

– 15 –

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.

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 67.2% from approximately HK$80.6 million for the three months ended 30 June 2020 to approximately HK$26.4 million for the three months ended 30 June 2021, which was in line with the decrease in revenue for the three months ended 30 June 2021. The gross margin slightly decreased from approximately 4.8% for the three months ended 30 June 2020 to approximately 4.2% for the three months ended 30 June 2021, which remained constant compared with corresponding period.

Selling and distribution expenses

The selling and distribution expenses decreased from approximately HK$1.1 million for the three months ended 30 June 2020 to approximately HK$0.7 million for the three months ended 30 June 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 decreased from approximately HK$7.2 million for the three months ended 30 June 2020 to approximately HK$4.9 million for the three months ended 30 June 2021, which was mainly due to decrease of expenses of consulting fee.

– 16 –

Loss attributable to the owners of the Company

Loss attributable to the owner of the Company for the three months ended 30 June 2021 amounted to approximately HK$4.5 million compared with loss of approximately HK$3.8 million for the three months ended 30 June 2020.

Dividend

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

Significant Investments Held, Material Acquisitions and Disposals of Subsidiaries, and Future Plans for Material Investments or Capital Assets

As at 30 June 2021, the Group did not hold any significant investments.

The Group did not have material investment and disposal during three months ended 30 June 2021.

The Group did not have any other immediate plans for material investment and capital assets as at the date of this announcement.

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 was set out in the Company’s announcements (the “ Announcements ”) dated 24 December 2019 and 4 February 2020 and 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 involves 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 proposes 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.

– 17 –

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 (assuming no further issue or repurchase of Shares on or before the Record Date), by way of the Rights Issue of 199,500,000 Rights Shares to the Qualifying Shareholders.

The Company provisionally allot 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 will not be 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 have been fulfilled, the Share Consolidation and Authorised Share Capital Increased has taken effect on 6 February 2020.

On 6 March 2020, all conditions set out in the underwriting agreement relating to the Rights Issue have 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.

– 18 –

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

				Expected
	Actual	Amount		timeline for
	proceed	utilized up to	Balance as at 30	fully unutilized
	allocated	30 June 2021	June 2021	amount(Note)
	HK$ Million	HK$ Million	HK$ Million	HK$ Million
Share Consolidation, Change in
Board Lot Size, Authorised Share
Capital Increase and Rights Issue
(completion on 11 March 2020)
Expansion of existing business and/	14.1	13.3	0.8	In or before
or acquisition of and/or investment				31 March
in business(es) which leverage				2022
and/or investment in business(es)
which leverage on the competitive
advantage of the Group
General working capital	3.7	3.7	–	–

Note: The expected timetable for fully utilising the unutilised net proceeds of the Right Issue is determined based on the Group’s best estimate of future market conditions, and is subject to change depending on current market conditions and future market developments.

OTHER INFORMATION

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

As at 30 June 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 three months ended 30 June 2021.

– 19 –

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

As at 30 June 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 of
Name	Capacity	held	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 Company	Beneficial owner	90,997,600	15.20%
Limited
(“SMK”)(Note 2)
Mr. Kor Sing Mung	Interest in a controlled	90,997,600	15.20%
Michael_(Note 2)_	corporation

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 has 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 June 2021.

– 20 –

DIRECTORS’ INTEREST IN CONTRACTS

Apart from the transactions disclosed under the heading “Related Party Transactions” as set out in note 11 of this announcement, there were no other contracts of significance in relation to the Group’s business to which the Group was a party and which a Director had a material interest, whether directly or indirectly, subsisted during the three months ended 30 June 2021.

DIRECTORS’ INTERESTS IN A COMPETING BUSINESS

For the three months ended 30 June 2021, the Directors are not aware of any business or interest of the Directors, the management of the Company and their respective associates (as defined under the GEM Listing Rules) that compete or may compete with the business of the Group and any other conflict of interest which any such person has or may have with the Group.

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 three months ended 30 June 2021. The Company has applied the principles of, and complied with, the applicable code provisions of the CG Code during the three months ended 30 June 2021.

The Company fully complied with all the Code Provisions throughout the three months ended 30 June 2021.

DIRECTORS’ SECURITIES TRANSACTIONS

The Group had adopted Rules 5.46 to 5.67 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 three months ended 30 June 2021.

– 21 –

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

The Company has not redeemed any of its shares during the three months ended 30 June 2021. Neither the Company nor any of its subsidiaries had purchased or sold any of Company’s shares during the three months ended 30 June 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 summarised in the paragraph headed “Share Option Scheme” in Appendix IV to the Prospectus. No share options had been granted, agreed to be granted, exercised, cancelled, expired or lapsed under the Scheme during the three months ended 30 June 2021. The Company did not have any outstanding share options, warrants and convertible instruments into shares as at 30 June 2021 and the date of this announcement. 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 June 2021 and the date of this announcement.

– 22 –

AUDIT COMMITTEE

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

The unaudited first quarterly financial results of the Group for the three months ended 30 June 2021 have been reviewed by the Audit Committee.

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

Hong Kong, 13 August 2021

As at the date of this announcement, the Board comprises three executive Directors, namely Mr. Chan Lung Ming, Mr. Yeung Shing Wai and Ms. Sin Pui Ying; one non-executive Director, namely Mr. Tao Hong Ming; and three independent non-executive Directors, namely Mr. Chan Shiu Man, Mr. Wong Ching Wan and Mr. Cheng Chai Fu.

This announcement, for which the Directors collectively and individually accept full responsibility, includes particulars given in compliance with 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 announcement 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 announcement misleading.

This announcement will remain on the “Latest Company Announcements” page of the GEM website at www.hkgem.com for at least 7 days from the date of its posting and be posted on the website of the Company at www.on-real.com.

– 23 –