Central Development Holdings Limited — Interim / Quarterly Report 2022

Nov 25, 2021

Hong Kong Exchanges and Clearing Limited and The Stock Exchange of Hong Kong Limited 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.

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CENTRAL DEVELOPMENT HOLDINGS LIMITED 中發展控股有限公司

(Incorporated in the Cayman Islands with limited liability)

(Stock Code: 475)

ANNOUNCEMENT OF INTERIM RESULTS FOR THE SIX MONTHS ENDED 30 SEPTEMBER 2021

The board (the “ Board ”) of directors (the “ Director(s) ”) of Central Development Holdings Limited (the “ Company ”) is pleased to announce the unaudited interim results of the Company and its subsidiaries (collectively referred to as the “ Group ”) for the six months ended 30 September 2021 which have been reviewed by the Company’s audit committee and external auditor, together with the comparative figures for the corresponding previous period as follows:

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CONDENSED CONSOLIDATED STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME

FOR THE SIX MONTHS ENDED 30 SEPTEMBER 2021

NOTES Revenue 3 Cost of sales Gross profit Other income 5 Other gains and losses, net 6 Impairment loss on trade receivables under expected credit loss model Selling and distribution costs Administrative expenses Other expenses Equity-settled share-based payments Finance costs 7 Loss before taxation Income tax 8 Loss for the period 9 Other comprehensive income (expense) for the period Items that will not be reclassified to profit or loss: Exchange differences arising on translation to presentation currency Fair value gain on revaluation of properties Deferred tax relating to fair value gain on revaluation of properties Total comprehensive (expense) income for the period Loss for the period attributable to: – Owners of the Company – Non-controlling interests

Six months ended 30 September 2021 2020 HK$’000 HK$’000 (unaudited) (unaudited) 70,359 14,307 (66,536) (13,749) 3,823 558 2,983 2,164 6,008 999 (2,805) – (1,827) (773) (10,274) (8,868) – (1,396) (2,095) – (3,401) (2,581) (7,588) (9,897) (1,386) (262) (8,974) (10,159) 753 719 – 19,594 – (4,899) 753 15,414 (8,221) 5,255 (7,680) (8,840) (1,294) (1,319) (8,974) (10,159)

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NOTE Total comprehensive (expense) income attributable to: – Owners of the Company – Non-controlling interests Loss per share 10 Basic (HK cents) Diluted (HK cents)	Six months ended 30 September 2021 2020 HK$’000 HK$’000 (unaudited) (unaudited) (8,131) 6,561 (90) (1,306) (8,221) 5,255 (2.01) (2.37) (2.01) (2.37)

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CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL POSITION AT 30 SEPTEMBER 2021

NOTES Non-current assets Property, plant and equipment 12 Right-of-use assets 12 Investment properties 12 Intangible assets Deposits paid for acquisition of property, plant and equipment Rental deposits Current assets Inventories Trade receivables 13 Other receivables, deposits and prepayments Bank balances and cash Current liabilities Trade payables 14 Other payables and accruals Contract liabilities Loans from a shareholder Bank borrowing Lease liabilities Net current assets Total assets less current liabilities	At 30 September 2021 HK$’000 (unaudited) 20,965 9,703 84,508 55,429 2,291 242 173,138 5,090 4,505 48,660 18,786 77,041 7,249 26,487 5,756 4,897 2,610 3,212 50,211 26,830 199,968	At 31 March 2021 HK$’000 (audited) 21,446 10,129 79,274 55,539 2,288 238
		168,914
		6,844 8,143 13,918 37,301
		66,206
		7,699 25,070 221 4,984 2,499 3,081
		43,554
		22,652
		191,566

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Non-current liabilities Loans from a controlling shareholder Deferred tax liabilities Bank borrowing Lease liabilities Net assets Capital and reserves Share capital Reserves Equity attributable to owners of the Company Non-controlling interests Total equity	At 30 September 2021 HK$’000 (unaudited) 108,235 9,494 22,203 877 140,809 59,159 3,876 24,846 28,722 30,437 59,159	At 31 March 2021 HK$’000 (audited) 104,752 7,868 23,190 2,438
		138,248
		53,318
		3,723 19,068
		22,791 30,527
		53,318

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NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS FOR THE SIX MONTHS ENDED 30 SEPTEMBER 2021

1. BASIS OF PREPARATION

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

2. PRINCIPAL ACCOUNTING POLICIES

The condensed consolidated financial statements have been prepared on the historical cost basis except for investment properties that are measured at fair value.

Other than the additional accounting policies resulting from application of amendments to Hong Kong Financial Reporting Standards (“HKFRSs”) and application of certain accounting policies which became relevant to the Group, the accounting policies and methods of computation used in the condensed consolidated financial statements for the six months ended 30 September 2021 are the same as those presented in the Group’s annual financial statements for year ended 31 March 2021.

Application of amendments to HKFRSs

In the current interim period, the Group has applied the following amendments to HKFRSs issued by the HKICPA, for the first time, which are mandatorily effective for the annual periods beginning on or after 1 April 2021 for the preparation of the Group’s condensed consolidated financial statements:

Amendment to HKFRS 16 Covid-19-Related Rent Concessions Amendment to HKFRS 16 Covid-19-Related Rent Concessions beyond 30 June 2021 Amendments to HKFRS 9, HKAS 39, Interest Rate Benchmark Reform – Phase 2 HKFRS 7, HKFRS 4 and HKFRS 16

The application of the amendments to HKFRSs in the current interim period has had no material impact on the Group’s financial positions and performance for the current and prior periods and/or on the disclosures set out in these condensed consolidated financial statements.

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3. REVENUE

Disaggregation of revenue from contracts with customer

Revenue from sales of goods: Jewelry products Solar energy products Refined oil Liquefied natural gas (“LNG”) Total Timing of revenue recognition A point in time	Six months ended 30 September 2021 2020 HK$’000 HK$’000 (unaudited) (unaudited) 11,891 7,855 266 6,452 13,873 – 44,329 – 70,359 14,307 70,359 14,307	Six months ended 30 September 2021 2020 HK$’000 HK$’000 (unaudited) (unaudited) 11,891 7,855 266 6,452 13,873 – 44,329 – 70,359 14,307 70,359 14,307
		14,307
		14,307

During the interim period, the Group has also engaged in sales of LNG.

Set out below is the reconciliation of the revenue from contracts with customers with the amounts disclosed in the segment information.

For six months ended 30 September 2021 (unaudited)

Jewelry business HK$’000 Sales of jewelry products 11,891 Sales of solar energy products – Sales of refined oil – Sales of LNG – 11,891 For six months ended 30 September 2020 (unaudited) Jewelry business HK$’000 Sales of jewelry products 7,855 Sales of solar energy products – 7,855	Energy business HK$’000 – 266 13,873 44,329 58,468 Energy business HK$’000 – 6,452 6,452	Total HK$’000 11,891 266 13,873 44,329
		70,359
		Total HK$’000 7,855 6,452
		14,307

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4. SEGMENT INFORMATION

Segment revenue and results

The following is an analysis of the Group’s revenue and results by operating and reportable segment:

For six months ended 30 September 2021 (unaudited)

Jewelry business HK$’000 Revenue 11,891 Segment profit (loss) 129 Unallocated corporate other gains Unallocated corporate income Unallocated corporate expenses Finance costs Loss before taxation For six months ended 30 September 2020 (unaudited)	Energy business HK$’000 58,468 (6,006)	Total HK$’000 70,359 (5,877) 4,365 2,983 (6,482) (2,577) (7,588)

Revenue Segment loss Unallocated corporate other gains Unallocated corporate income Unallocated corporate expenses Finance costs Loss before taxation	Jewelry business HK$’000 7,855 (16)	Energy business HK$’000 6,452 (6,929)	Total HK$’000 14,307 (6,945) 1,041 2,164 (4,495) (1,662) (9,897)

Revenue reported above represents revenue generated from external customers. There were no inter-segment sales during both periods.

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Segment assets and liabilities

The following is an analysis of the Group’s assets and liabilities by operating and reportable segment:

Jewelry business Energy business Total segment assets Bank balances and cash Other unallocated assets Consolidated assets Jewelry business Energy business Total segment liabilities Loans from a controlling shareholder and a shareholder Other unallocated liabilities Consolidated liabilities	At 30 September 2021 HK$’000 (unaudited) 1,955 144,440 146,395 18,786 84,998 250,179 2,007 63,655 65,662 113,132 12,226 191,020	At 31 March 2021 HK$’000 (audited) 2,444 114,345
		116,789 37,301 81,030
		235,120
		2,577 59,220
		61,797 109,736 10,269
		181,802

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

• all assets are allocated to reportable segments other than certain property, plant and equipment, certain right-of-use assets, certain other receivables, deposits and prepayments, investment properties and bank balances and cash.

• all liabilities are allocated to reportable segments other than certain other payables and accruals, certain lease liabilities, loans from a controlling shareholder and a shareholder and deferred tax liabilities.

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Geographical information

The Group’s operations are mainly carried out in the People’s Republic of China (“the PRC”), the country of domicile, and Hong Kong.

The revenue of the Group is mainly derived from external customers located in the PRC and Hong Kong.

The Group’s revenue from external customers based on the location of customers are set out below:

The PRC Hong Kong Others	Six months ended 30 September 2021 2020 HK$’000 HK$’000 (unaudited) (unaudited) 64,630 5,069 5,729 9,173 – 65 70,359 14,307	Six months ended 30 September 2021 2020 HK$’000 HK$’000 (unaudited) (unaudited) 64,630 5,069 5,729 9,173 – 65 70,359 14,307
		14,307

Information about the Group’s non-current assets based on the geographical location of the assets is set out below:

The PRC Hong Kong	At 30 September 2021 HK$’000 (unaudited) 172,864 32 172,896	At 31 March 2021 HK$’000 (audited) 168,653 23
		168,676

Note: Non-current assets excluded rental deposits.

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5. OTHER INCOME

Interest income Rental income Government grants_(note)_ Others	Six months ended 30 September 2021 2020 HK$’000 HK$’000 (unaudited) (unaudited) 118 390 2,863 1,143 – 189 2 442 2,983 2,164	Six months ended 30 September 2021 2020 HK$’000 HK$’000 (unaudited) (unaudited) 118 390 2,863 1,143 – 189 2 442 2,983 2,164
		2,164

Note: During the six months ended 30 September 2020, the Group received and recognised government grants of HK$189,000 related to Employment Support Scheme provided by the Hong Kong government (six months ended 30 September 2021: nil).

6. OTHER GAINS AND LOSSES, NET

Gain from change in fair value of investment properties Gain on disposal of subsidiaries Gain on disposal of property, plant and equipment Net foreign exchange gain (loss)	Six months ended 30 September 2021 2020 HK$’000 HK$’000 (unaudited) (unaudited) 4,086 1,041 1,377 – 213 – 332 (42 6,008 999	Six months ended 30 September 2021 2020 HK$’000 HK$’000 (unaudited) (unaudited) 4,086 1,041 1,377 – 213 – 332 (42 6,008 999
		999

7. FINANCE COSTS

Six months ended
30 September
2021 2020
HK$’000 HK$’000
(unaudited) (unaudited)

Interest on bank borrowing Interest on lease liabilities Imputed interest on loans from a controlling shareholder	746 108 2,547 3,401	860 74 1,647
		2,581

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8. INCOME TAX

Income tax in the condensed consolidated statement of profit or loss and other comprehensive income represents:

Overprovision in prior years Deferred tax Income tax for the period	Six months ended 30 September 2021 2020 HK$’000 HK$’000 (unaudited) (unaudited) – 168 (1,386) (430) (1,386) (262)	Six months ended 30 September 2021 2020 HK$’000 HK$’000 (unaudited) (unaudited) – 168 (1,386) (430) (1,386) (262)
		(262)

9. LOSS FOR THE PERIOD

Loss for the period has been arrived at after charging:

	Six months ended	Six months ended
	30 September
	2021		2020
	HK$’000	HK$’000
	(unaudited)	(unaudited)
Depreciation of property, plant and equipment	863		1,851
Depreciation of right-of-use assets	657		1,091
Amortisation of intangible assets	918		–
Cost of inventories recognised as an expense	66,536	13,749
Staff costs (including directors’ remuneration)	6,739		4,048
Research and development expenses (included in
other expenses)	–		1,220

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10. LOSS PER SHARE

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

Loss for the purposes of calculating basic and diluted loss per share: Loss for the period attributable to owners of the Company Number of shares Weighted average number of ordinary shares for the purposes of calculating basic loss per share	Six months ended 30 September 2021 2020 HK$’000 HK$’000 (unaudited) (unaudited) (7,680) (8,840) ’000 ’000 382,213 372,264

The computation of diluted loss per share for both periods does not assume the exercise of share options since it would result in a decrease in loss per share.

11. DIVIDENDS

No dividends were paid, declared or proposed during the interim period. The directors of the Company have determined that no dividend will be paid in respect of the six months ended 30 September 2021 (six months ended 30 September 2020: nil).

12. PROPERTY, PLANT AND EQUIPMENT, RIGHT-OF-USE ASSETS AND INVESTMENT PROPERTIES

During the six months ended 30 September 2021, the Group acquired property, plant and equipment of HK$69,000 (six months ended 30 September 2020: HK$4,000). During the six months ended 30 September 2021, the Group also disposed of property, plant and equipment with carrying amount of nil at consideration of HK$213,000, resulting in a gain on disposal of HK$213,000 (six months ended 30 September 2020: nil).

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During the six months ended 30 September 2021, the Group extended a lease agreement with lease term of 2 years (six months ended 30 September 2020: a new lease agreement and extended a lease agreement, both with lease term of 3 years). On lease commencement, the Group recognised right-of-use assets of HK$83,000 (six months ended 30 September 2020: HK$2,628,000) and lease liabilities of HK$83,000 (six months ended 30 September 2020: HK$2,603,000).

The fair value of the Group’s investment properties as at 30 September 2021 and 31 March 2021 have been arrived at on the basis of valuation carried out by Masterpiece Valuation Advisory Limited (“Masterpiece”), an independent qualified professional valuer not connected to the Group. In estimating the fair value of the properties, the highest and best use of the properties is their current use. The fair values are arrived at by using income approach which capitalises the net rental income derived from the existing lease and/or achievable in the existing market with due allowance for the reversionary income potential of the lease, which has been then capitalised to determine the market value at an appropriate capitalisation rate. The management of the Group works closely with Masterpiece to establish and determine the appropriate valuation inputs for fair value measurements, by using input of capitalisation rate at 7% derived from market rent.

13. TRADE RECEIVABLES

Trade receivables less: Allowance for credit losses	At 30 September 2021 HK$’000 (unaudited) 8,512 (4,007) 4,505	At 31 March 2021 HK$’000 (audited) 9,345 (1,202) 8,143

The Group allowed an average credit period ranging from 30 to 180 days to its customers of jewelry business and average credit period ranging from 5 to 365 days to its customers of energy business.

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The following is an ageing analysis of trade receivables, net of allowance for credit losses presented based on the invoice date at the end of reporting period:

Within 30 days 31 to 90 days 91 to 180 days Over 180 days	At 30 September 2021 HK$’000 (unaudited) 3,297 298 144 766 4,505	At 31 March 2021 HK$’000 (audited) 2,684 358 262 4,839
		8,143

The basis of determining the inputs and assumptions and the estimation techniques used in the condensed consolidated financial statements for the six months ended 30 September 2021 are the same as those followed in the preparation of the Group’s annual financial statements for the year ended 31 March 2021.

14. TRADE PAYABLES

The following is an ageing analysis of trade payables presented based on the invoice date at the end of reporting period:

Within 30 days 31 to 90 days 91 to 180 days Over 180 days	At 30 September 2021 HK$’000 (unaudited) 1,514 293 74 5,368 7,249	At 31 March 2021 HK$’000 (audited) 1,666 752 – 5,281
		7,699

The average credit on purchase of goods ranges from 30 to 365 days.

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MANAGEMENT DISCUSSION AND ANALYSIS

BUSINESS REVIEW

The Group was principally engaged in the energy business and jewelry business for the six months ended 30 September 2021 (the “ Current Period ”). During the Current Period, the Group continued to strategically expand its energy business with a view to further diversifying the Group’s overall business by expanding its revenue stream. During the Current Period, the Group recorded total sales of approximately HK$70.4 million (2020: HK$14.3 million), representing an increase of approximately 391.8% as compared to that for the six months ended 30 September 2020 (the “ Previous Period ”). The increase in revenue for the Current Period was mainly due to the increase in revenue from both the energy business and the jewelry business.

Energy Business

During the Current Period, we continued to focus on our prime objective of providing a diversified range of energy products and services. We are actively developing and expanding the energy business with our proprietary technology products and through continued cooperation with our experienced business partners in the industry.

Given the prevailing global economic downturn, the Chinese government has stepped up its economic policies and adopted a domestic-international dual circulation economic development strategy to drive China’s economic recovery and continuous growth. Thus, during the Current Period, we have prudently analysed and identified our appropriate markets, deployed operational staff and resources across different regions, streamlined the structure and offices of overseas divisions and their back-office functions, and focused on diversifying the energy business in the China’s market. Under the leadership of the management of the Group, we have swiftly seized these opportunities to develop and achieved encouraging results. Following the Group’s acquisition of Chengdu Kaibangyuan Trading Co., Ltd. ( 成都凱邦源商貿有限公司 ) (“ Chengdu Kaibangyuan* ”) as our subsidiary at the end of the previous financial year, we have been fully committed to promoting the sales operation of refined oil and LNG at the filling station. Leveraging on Chengdu Kaibangyuan’s well-established relationships with large central state-owned enterprises, its stable supply chain resources and the delivery and distribution capacity of its filling station, Chengdu Kaibangyuan has become one of our major business growth drivers during the Current Period, which will not only enhance our market competitiveness in the energy business, but also facilitate our diversification in the energy market, further create synergy for different energy products, and help further contribute to achieving the “dual carbon” goals.

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On the other hand, due to the ongoing global impact of the COVID-19 pandemic and the complex international economic situation, there remain great challenges and uncertainties in the business environment of the sale of solar energy products and provision of related consulting services during the Current Period. The construction progress of many solar photovoltaic (PV) projects continued to be delayed due to varying degrees of lockdown measures imposed by governments and rising transportation costs. Meanwhile, the price of silicon, cell and other raw materials have risen significantly during the Current Period, which resulted in continuing high prices for solar PV products and prompted domestic and international customers to adopt a cautious strategy. The number of new solar PV installations in China in the first half of 2021 therefore had already been significantly lower than that forecasted by industry associations at the beginning of the year, and our sales had also taken a hit. In the face of such great challenges, we continued to utilise our proprietary technology rights and continued to liaise and collaborate with an advanced solar PV technology solution provider and several original equipment manufacturers to respond to market changes.

In conclusion, this difficult period marred by the pandemic and global economic downturn has prompted us to aim for diversification in expanding our business scope which includes the sale of various customised solar module intelligent technology products (including solar PV modules, new energy intelligent DC inverters and power optimisers), the provision of energy efficiency analysis and technical improvement advisory services on solar energy projects, the sale of LNG and the sale of refined oil, enabling us to respond quickly to market changes and achieve positive business results. Through the successful and orderly expansion of the energy business, the Group’s revenue from the energy business increased by approximately 806.2% year-on-year from approximately HK$6.5 million in the Previous Period to approximately HK$58.5 million in the Current Period.

Jewelry Business

Our jewelry business is primarily focused on the provision of products to jewelry distributors in Hong Kong and China. During the Current Period, global economic conditions remained difficult. Given that the COVID-19 outbreak was still not effectively contained, the continued implementation of pandemic prevention and travel restriction measures around the world, including China and Hong Kong, have continued to pose significant challenges to the jewelry industry.

In view that the COVID-19 pandemic in China was no longer spreading widely, demand for jewelry in China began to show signs of recovery and consumer confidence and spending has also increased accordingly. The resumption of the major international jewelry fairs in Hong Kong and China has increased sales and sourcing opportunities for the Current Period, resulting in an increase in our overall volume of our sales order as compared to the same period last year. With our long-established relationships with suppliers, we were able to maintain a steady supply volume and product quality during the Current Period, enabling a slow recovery of our jewelry business.

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During the Current Period, revenue generated from the jewelry business increased by approximately 51.4% from the Previous Period to approximately HK$11.9 million (2020: HK$7.8 million). Sales attributable to Hong Kong accounted for approximately 48.2% (2020: 43.4%) of the overall sales of jewelry business, while sales attributable to China accounted for approximately 51.8% (2020: 56.6%).

PROSPECTS

Looking ahead, the Group believes that the COVID-19 pandemic may continue to adversely affect the Group’s financial performance in the short to medium term. Nevertheless, the energy sector is still in a phase of high value appreciation and the Board believes that the energy business will continue to be a growth driver for the Group in the future.

The clean energy industry is entering into a new phase of development that promotes larger scale, higher proportion and higher quality development, driven by China’s and the world’s “dual carbon” goals of “peaking carbon emissions and achieving carbon neutrality”. Governments from different regions as well as international organisations believe that solar energy and natural gas will become the two most important energy sources for global electricity in the future. In terms of China’s domestic policy, the energy sector, including clean energy such as solar PV and natural gas, is set to welcome new growth driven by the policy of building new power system which based primarily on clean energy. Nevertheless, society has relied on coal and oil for centuries, and demand for refined oil will not burst immediately like a bubble. While clean energy is growing at a high rate, we believe that refined oil will remain valuable for a long time to come.

Leveraging “Dual Carbon” to Accelerate the Transformation of Traditional Filling Station

Market-oriented reform will be further promoted during the 14th Five-Year (2021-2025) Plan period and the “energy production-supply-storage-transportation-sale system” will be gradually improved, with the integration and development of solar energy and other clean energy sources combined with traditional energy sources which is becoming a new trend. In June 2021, the National Energy Administration of China issued the Notice on the Submission of Pilot Scheme for the Development of Distributed Rooftop Photovoltaic Systems in the Entire County (City and District), which further accelerated the development of distributed rooftop PV systems in entire counties (cities and districts), and brought about a period of rapid development on the construction of solar PV power stations at filling stations.

We will actively explore the model of “solar PV + filling station”. With our experience in solar PV and energy storage, we plan to make use of the idle space on the rooftops of our own filling station to conduct pilot construction of distributed solar power stations by using our solar intelligent products in order to promote our products and attract other potential customers who operate filling stations to build more distributed solar PV power stations, thereby increasing the market share and revenue of the Group’s solar energy products.

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Manage Market Uncertainty Risks through Diversification

In order to cope with potential uncertainty risks and unfavourable market conditions, we will adopt a more proactive approach in negotiating and entering strategic partnerships with various well-known enterprises in the industry, actively explore potential energy projects, including distributed PV power stations, energy storage power stations, charging stations and LNG filling stations, and explore the development model for combining multiple energy sources. At the same time, we also plan to leverage on our own resource advantage in the areas of energy storage technology, distribution and industry networks to actively identify projects such as distributed natural gas energy stations project and direct supply to industry project, and gradually expand nationwide by taking advantage of local policies to become a supplier that provides more diversified energy products and solutions.

We also recognise that the risks arising from the ongoing pandemic and the unstable international trade situation should not be overlooked. The management of the Group will continue to assess the market situation, actively optimise resource allocation, improve operational efficiency and seek new business growth drivers to strengthen its foundation in the China’s market, while further exploring development opportunities in different markets, and adhering to the general operating principles of seeking stability amidst changes and striving for progress amidst stability, thereby creating long-term value for shareholders.

A Challenging Business Environment for Jewelry Market

In the short to medium term, the course of the pandemic will continue to adversely affect our jewelry business. While the restrictions imposed on the economies of some of the countries affected by the pandemic in the past have begun to be eased, most economies are still facing uncertainty and volatility, and market conditions are expected to remain difficult as the pandemic subsists. Despite the fact that customer demand in China has begun to rebound from the pandemic, customer demand in Hong Kong remains to be dragged down by traveller isolation measures and weak consumer sentiment, with no end in sight of a full recovery.

Despite the unfavourable business environment and increasing market competition, we will continue to focus on enhancing customer service quality and exploring new business opportunities through participation in jewelry fairs and exhibitions. We will also continue to adopt appropriate measures to cope with future challenges, including closely monitoring business operations, controlling costs and reducing any unnecessary expenses, and enrich our product offerings by leveraging on our established customer and supplier base in Hong Kong and China. In addition, we will continue to explore business opportunities and sales channels, and increase our product selections to meet the latest market trends and expand into other sales channels, such as online distributors and third-party resellers. The Group will thoroughly review the operation of the jewelry business and respond to the everchanging COVID-19 pandemic situation and market conditions in order to formulate business plans and strategies for future business development.

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FINANCIAL REVIEW

Revenue

Revenue of the Group for the Current Period was approximately HK$70.4 million, representing an increase of approximately 391.8% as compared to approximately HK$14.3 million for the Previous Period. The increase was mainly the result of the increase in turnover of both the energy business and the jewelry business.

Revenue of the energy business increased by approximately 806.2% from approximately HK$6.5 million for the Previous Period to approximately HK$58.5 million for the Current Period. It was primarily attributable to the increase in revenue derived from sales of refined oil and LNG during the Current Period. The sales orders of our solar intelligent technology products was continuously impacted by worldwide COVID-19 outbreak and the escalated international trade conflict.

Revenue of the jewelry business increased by approximately 51.4% from approximately HK$7.8 million for the Previous Period to approximately HK$11.9 million for the Current Period. It was primarily attributable to the gradual recovery of consumption sentiment and the market demands of jewelry products in China. The revenue was also prompted by the increase in business opportunities after the resumption of international jewelry trade shows in Hong Kong during the Current Period.

Cost of Sales and Gross profit

Cost of sales of the Group for the Current Period was approximately HK$66.5 million, representing an increase of approximately 383.9%, as compared to approximately HK$13.7 million for the Previous Period. Gross profit increased from approximately HK$0.6 million for the Previous Period to approximately HK$3.8 million for the Current Period, representing an increase of approximately 585.1%. The increase was mainly attributable to the increase in the turnover of both the energy business and the jewelry business for the Current Period.

Meanwhile, gross profit margin increased from 3.9% for the Previous Period to 5.4% for the Current Period. The increase was primarily attributable to the expansion of the product mix of the energy business, which includes the products with higher gross profit margins.

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Other income

Other income increased from approximately HK$2.2 million for the Previous Period to approximately HK$3.0 million for the Current Period, representing an increase of approximately 37.8%, which was mainly attributable to rental income from the investment properties of the Group during the Current Period.

Other gains and losses, net

The Group recorded net other gains of approximately HK$6.0 million for the Current Period (2020: HK$1.0 million). The gains were contributed by the net foreign exchange gains of approximately HK$0.3 million (2020: net foreign exchange losses of HK$0.1 million), a gain from change in fair value of investment properties of approximately HK$4.1 million (2020: HK$1.0 million), a gain on disposal of property, plant and equipment of approximately HK$0.2 million (2020: Nil) and net gains on disposal of subsidiaries of approximately HK$1.4 million (2020: Nil) during the Current Period.

Impairment loss on trade receivables under expected credit loss (“ECL”)

The Group recorded an impairment loss on trade receivables under the ECL model amounted to approximately HK$2.8 million for the Current Period (2020: Nil). The management of the Group will continue to conduct regular review of the debtors’ repayment histories, resources and financial capabilities to ensure the ability of repayment within the credit period.

Selling and distribution costs

Selling and distribution costs increased from approximately HK$0.8 million for the Previous Period to approximately HK$1.8 million for the Current Period, representing an increase of approximately 136.4%, which was primarily attributable to the increase in distribution cost because of the increase in overall turnover during the Current Period.

Administrative expenses

Administrative expenses increased from approximately HK$8.9 million for the Previous Period to approximately HK$10.3 million for the Current Period, representing an increase of approximately 15.9%, which was mainly due to the combination of the set up expenses of the newly acquired subsidiary in Chengdu and the continuous implementation of tightened cost control in the Current Period.

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Other expenses

Other expenses for the Previous Period amounted to approximately HK$1.4 million mainly representing the research and development cost incurred in development stage, whereas none incurred in the Current Period.

Equity-settled share-based payments

Equity-settled share-based payments amounted to approximately HK$2.1 million (2020: Nil) representing the recognition of equity-settled share options expenses in connection with the grant of share options during the Current Period.

Finance costs

Finance costs represented the imputed interest of approximately HK$2.5 million derived from the long term loans from a controlling shareholder (2020: HK$1.6 million), the interest of approximately HK$0.1 million derived from lease liabilities (2020: HK$0.1 million) and the interest of approximately HK$0.7 million derived from the long term bank loan (2020: HK$0.9 million) for the Current Period.

Income tax expense

Income tax expense of the Group recorded for the Current Period amounting to approximately HK$1.4 million (2020: HK$0.3 million) mainly attributable to the provision of deferred tax expense arising from the investment properties of the Group during the Current Period.

Loss for the period attributable to the Owners of the Company

By reason of the factors as stated above, the loss for the period attributable to the owners of the Company decreased from approximately HK$8.8 million for the Previous Period to approximately HK$7.7 million for the Current Period, representing a decrease of approximately 13.1%. Basic loss per share was 2.0 HK cents (2020: 2.4 HK cents).

DIVIDEND

The Board has resolved not to recommend the payment of an interim dividend for the six months ended 30 September 2021 (2020: Nil).

LIQUIDITY AND FINANCIAL POSITIONS

As at 30 September 2021, the Group had net current assets and current ratio stood at approximately HK$26.8 million and 1.5 respectively (31 March 2021: HK$22.7 million and 1.5 respectively).

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As at 30 September 2021, the bank balances and cash amounted to approximately HK$18.8 million (31 March 2021: HK$37.3 million). As at 30 September 2021, the inventories amounted to approximately HK$5.1 million (31 March 2021: HK$6.8 million), mainly representing the finished goods of solar thermal cooling-stored pipes and solar modules intelligent technology products. As at 30 September 2021, the trade receivables and trade payables amounted to approximately HK$4.5 million and HK$7.2 million respectively (31 March 2021: HK$8.1 million and HK$7.7 million respectively), both of which were mainly derived from the energy business. As at 30 September 2021, the Group’s property, plant and equipment, right-of-use assets and investment properties amounted to approximately HK$21.0 million, HK$9.7 million and HK$84.5 million respectively (31 March 2021: HK$21.4 million, HK$10.1 million and HK$79.3 million respectively). The investment properties of the Group located at No. 61, Haichao Road, Sino-Italy Ningbo Ecological Park, Yuyao City of Zhejiang Province and held under operating leases to earn rentals are revalued by an independent firm of professional property valuer on an open market value basis and are measured using the fair value model for both periods.

As at 30 September 2021, the net carrying amount of the intangible assets was approximately HK$55.4 million (31 March 2021: HK$55.5 million), which represented the operating rights in relation to the relevant certificates, licenses and approvals for the operations of the filling station and the sale of refined oil with finite useful lives. The intangible assets were arising from the acquisition of Chengdu Kaibangyuan.

CAPITAL RESOURCES AND GEARING

As at 30 September 2021, the Group had an interest-bearing bank borrowing of approximately HK24.8 million (31 March 2021: HK$25.7 million) and bore an effective interest rate of 3.4% per annum (31 March 2021: 3.4%), of which approximately HK$2.6 million (31 March 2021: HK$2.5 million) will be repayable within one year and approximately HK$22.2 million (31 March 2021: HK$23.2 million) will be repayable after one year. The Group’s gearing ratio (which was expressed as a percentage of total bank borrowing over total equity) was approximately 41.9% as at 30 September 2021 (31 March 2021: 48.2%).

The bank borrowing was secured by the Group’s assets, for details of the charges on Group’s assets, please refer to the section headed “Charges On Group Assets” in this announcement. Save as disclosed above, the Group has no other banking facilities (31 March 2021: Nil). As at 30 September 2021, the Group had interest-free loans due to a controlling shareholder of approximately HK$108.2 million (31 March 2021: HK$104.8 million) which will be repayable after one year and had interest-free loans due to a shareholder of approximately HK$4.9 million (31 March 2021: HK$5.0 million) which will be repayable within one year.

The Group principally meets its working capital requirement and other liquidity requirements through a combination of operating cash flows, interest-free loans due from a shareholder and a controlling shareholder and proceeds from the issue of new shares during the Current Period.

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CAPITAL STRUCTURE

The Group’s total assets and total liabilities as at 30 September 2021 amounted to approximately HK$250.2 million (31 March 2021: HK$235.1 million) and approximately HK$191.0 million (31 March 2021: HK$181.8 million) respectively. The Group’s debt ratio (which was expressed as a percentage of total liabilities over total assets) was approximately 76.4% as at 30 September 2021 (31 March 2021: 77.3%).

USE OF PROCEEDS FROM THE SUBSCRIPTION

On 19 April 2021, the Company entered into a subscription agreement with Mr. Liu Jie, an independent third party (the “ Subscriber ”), pursuant to which the Subscriber agreed to subscribe, and the Company agreed to allot and issue 15,300,000 shares of the Company at par value of HK$0.01 each under general mandate to the Subscriber at the subscription price of HK$0.75 per share (the “ Subscription ”). The Subscription was completed on 4 June 2021, please refer to the announcements of the Company on 19 April 2021, 12 May 2021 and 4 June 2021 for further details of the Subscription. The gross proceeds and net proceeds (after deducting the related fees and expenses incurred in relation to the subscription, the “ Net Proceeds ”) from the Subscription were HK$11,475,000 and approximately HK$11,408,000 respectively, which the entire Net Proceeds was intended to be used as general working capital of the Group. The use of the Net Proceeds as at 30 September 2021 and the expected timeline for the intended use of the remaining unused Net Proceeds are set out as follows:

					Expected
	Intended		Actual		timeline for
	amount of		use of the		utilizing the
	the Net	Net Proceeds up		Unutilized	remaining
Intended use of	Proceeds	to	30 September	balance as at 30	unused Net
the Net Proceeds	to be used		2021	September 2021	Proceeds(Note 1)
	(Approximately)	(Approximately)		(Approximately)
	HK$’million		HK$’million	HK$’million
General working					From
capital of the					1 October 2021 to
Group	11.4		6.2 (Note 2)	5.2	31 March 2022

Notes:

1. The expected timeline for utilizing the remaining proceeds is based on the best estimation of the future market conditions made by the Group. It will be subject to change based on the current and future development of market conditions.

2. As at 30 September 2021, approximately HK$6.2 million was used as general working capital of the Group, including approximately HK$2.6 million for staff cost and approximately HK$3.6 million for office rent, legal and professional expenses and other recurring operating expenses. The proceeds were used as intended.

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CHARGES ON GROUP ASSETS

As at 30 September 2021, the buildings with carrying amounts of approximately HK$4.4 million (31 March 2021: HK$4.5 million), the right-of-use assets with carrying amounts of approximately HK$5.8 million (31 March 2021: HK$5.8 million) and the investment properties with carrying amounts of approximately HK$84.5 million (31 March 2021: HK$79.3 million), were pledged to a bank in China as collateral security for a bank borrowing amounted to approximately HK$24.8 million (31 March 2021: HK$25.7 million).

Save as disclosed above, there was no other charge on Group’s assets as of 30 September 2021.

CAPITAL COMMITMENTS AND CONTINGENT LIABILITIES

As at 30 September 2021, the Group did not have any capital commitments (31 March 2021: Nil).

As at 30 September 2021, the Group did not have any significant contingent liabilities (31 March 2021: Nil).

EMPLOYEE AND REMUNERATION POLICY

As at 30 September 2021, the Group had a total of 68 employees (31 March 2021: 39). The Group’s remuneration policies are formulated on the performance and work experience of individual employees and prevailing market rates, which will be reviewed regularly every year. Salaries of employees are maintained at competitive levels while bonuses are granted by reference to the performance of the Group and individual employees.

The Group also provides internal training to employees when necessary and other staff benefits including share option scheme and corporate contribution to the statutory mandatory provident fund scheme for employees in Hong Kong and the statutory central pension schemes for employees in China.

Furthermore, the remuneration committee of the Company (the “ Remuneration Committee ”) will review and give recommendations to the Board as to the compensation package of the Directors and senior management of the Group with reference to salaries paid by comparable companies, time commitment and responsibilities of the Directors and senior management of the Group.

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FOREIGN EXCHANGE FLUCTUATION AND HEDGES

The business operations of the Group’s subsidiaries were conducted mainly in China with sales and purchase of the Group’s subsidiaries denominated mainly in Renminbi and United States dollars (“ USD ”). The Group’s cash and bank deposits were denominated in Hong Kong dollars, Renminbi and USD. Any significant exchange rate fluctuation of Hong Kong dollars against Renminbi or USD may have a financial impact on the Group. While the Group would closely monitor the volatility of the Renminbi exchange rate, the Directors considered that the Group’s current risk exposure to foreign exchange rate fluctuation remained minimal currently.

As at 30 September 2021 and 31 March 2021, no forward foreign currency contracts are designated in hedging accounting relationships.

SIGNIFICANT INVESTMENTS, MATERIAL ACQUISITIONS AND DISPOSALS OF SUBSIDIARIES AND AFFILIATED COMPANIES

There were no significant investments, material acquisitions and disposals of subsidiaries, associates and joint ventures during the Current Period.

FUTURE PLANS FOR MATERIAL INVESTMENTS OR CAPITAL ASSETS

The Group did not have any plans for material investments and capital assets as at 30 September 2021.

CORPORATE GOVERNANCE PRACTICES

The Board and the management of the Company are committed to the establishment of good corporate governance practices and procedures. The corporate governance principles of the Company emphasize effective internal control, accountability and transparency of the Board and are adopted in the best interest of the Company and its shareholders.

Accordingly, the Company has adopted the code provisions set out in the Code on Corporate Governance Practices (the “ CG Code ”) contained in Appendix 14 to Rules Governing the Listing of Securities (the “ Listing Rules ”) on the Stock Exchange of Hong Kong Limited (the “ Stock Exchange ”).

Save as disclosed in this announcement, the Company has applied the principles and complied with all the applicable code provisions set out in the CG Code throughout the six months ended 30 September 2021.

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NON-COMPLIANCE WITH RULES 3.10(1), 3.10(2), 3.21, 3.25 OF THE LISTING RULES AND CODE PROVISION A.5.1 OF THE CG CODE

Following the pass away of Mr. Wu Chi Keung on 12 October 2021, who was an independent non-executive Director, the chairman of each of the audit committee of the Company (the “ Audit Committee ”), the Remuneration Committee and nomination committee of the Company (the “ Nomination Committee ”) and the only independent non-executive Director having appropriate professional qualifications or accounting or related financial management expertise under Rule 3.10(2) of the Listing Rules, the Board only comprises six members with three executive Directors, a non-executive Director and two independent non-executive Directors. As a result, the Company was not in compliance with (i) Rule 3.10(1) of the Listing Rules, which stipulates that the Board shall comprise at least three independent non-executive Directors; (ii) Rule 3.10(2) of the Listing Rules, which stipulates that at least one of the independent non-executive Directors must have appropriate professional qualifications or accounting or related financial management expertise; (iii) Rule 3.21 of the Listing Rules, which stipulates that the audit committee shall comprise at least three non-executive Directors and a majority of which must be independent non-executive Directors, that at least one of whom is an independent non-executive Director with appropriate professional qualifications or accounting or related financial management expertise as required under Rule 3.10(2) of the Listing Rules and that the audit committee must be chaired by an independent non-executive Director; (iv) Rule 3.25 of the Listing Rules, which stipulates that the remuneration committee shall comprise a majority of independent non-executive Directors and chaired by an independent non-executive Director; and (v) code provision A.5.1 of the CG Code which stipulates that the number of independent non-executive Directors shall represent the majority of the nomination committee.

As Ms. Zhong Yingjie, Christina, who has appropriate professional qualifications or accounting or related financial management expertise under Rule 3.10(2) of the Listing Rules, was subsequently appointed as an independent non-executive Director, and the chairman of the Audit Committee, on 25 October 2021, the Company has three independent non-executive Directors, constituting the only three Audit Committee members. As a result, the composition of the Board and the Audit Committee meet with the requirements under Rules 3.10(1), 3.10(2) and 3.21 of the Listing Rules respectively. Mr. Jin Qingjun, who is an independent non-executive Director, was appointed as the chairman of each of the Nomination Committee and the Remuneration Committee on 25 October 2021, as a result, the composition of the Nomination Committee meet with the requirements under code provision A.5.1 of the CG Code. Ms. Sun Ivy Connie, who is an independent non-executive Director, was also appointed as a member of the Remuneration Committee on 25 October 2021. As a result of the change in the composition of the Remuneration Committee, the composition of the Remuneration Committee meets with the requirements under Rule 3.25 of the Listing Rules.

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MODEL CODE FOR SECURITIES TRANSACTIONS BY DIRECTORS

The Company has adopted the Model Code for Securities Transactions by Directors of Listed Issuers (the “ Model Code ”) as set out in Appendix 10 to the Listing Rules as its own code of conduct regarding securities transactions by the Directors. Having made specific enquiry of all Directors, they confirmed that they have complied with the required standard set out in the Model Code throughout the six months ended 30 September 2021.

UPDATE ON DIRECTORS’ INFORMATION UNDER RULE 13.51B(1) OF THE LISTING RULES

Upon specific enquiry by the Company and following confirmations from the Directors, all the changes in the information of the Directors required to be disclosed pursuant to Rule 13.51B(1) of the Listing Rules since the Company’s last published annual reports, saved as disclosed above in this announcement, are set out below:

Mr. Jin Qingjun, an independent non-executive Director, retired from the position of independent non-executive director of Guotai Junan Securities Co., Ltd., a company listed on the Stock Exchange (stock code: 2611) and the Shanghai Stock Exchange (stock code: 601211), with effect from 28 June 2021.

PURCHASE, SALE OR REDEMPTION OF THE COMPANY’S LISTED SHARES

Neither the Company, nor any of its subsidiaries purchased, redeemed or sold any of the Company’s listed shares during the six months ended 30 September 2021.

REVIEW BY AUDIT COMMITTEE AND INDEPENDENT EXTERNAL AUDITOR

The Company has established the Audit Committee with written terms of reference in compliance with the code provisions under the CG Code. The primary duty of the Audit Committee is to review and supervise the financial reporting process, risk management and internal control systems of the Group. As at the date of this announcement, the Audit Committee comprises three independent non-executive Directors, namely Ms. Zhong Yingjie, Christina (Chairman), Mr. Jin Qingjun and Ms. Sun Ivy Connie. The Audit Committee has reviewed the accounting standards and practices adopted by the Group and discussed with the management about the internal control and financial reporting matters, including the review of the unaudited interim results for the six months ended 30 September 2021. The Group’s external auditor, Deloitte Touche Tohmatsu, has been appointed to review the interim financial information. On the basis of their review, they are not aware of any material modifications that should be made to the interim financial information for the six months ended 30 September 2021.

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SUFFICIENCY OF PUBLIC FLOAT

Based on the information that is publicly available to the Company and within the knowledge of the Directors as at the date of this announcement, the Company has maintained the prescribed percentage of public float under the Listing Rules.

PUBLICATION OF INTERIM REPORT ON THE STOCK EXCHANGE WEBSITE

This announcement is published on the websites of the Stock Exchange (www.hkexnews. hk) and the Company (www.475hk.com) and the interim report containing all the information required by the Listing Rules will be dispatched to shareholders and published on the websites of the Stock Exchange and the Company in due course.

APPRECIATION

Our Board would like to take this opportunity to express its gratitude to our shareholders, our business associates and all our employees for their continuous support.

By order of the Board CENTRAL DEVELOPMENT HOLDINGS LIMITED Chan Wing Yuen, Hubert Chief Executive & Executive Director

Hong Kong, 25 November 2021

As at the date of this announcement, the Board consists of three executive Directors, namely Mr. Wu Hao, Mr. Hu Yangjun and Mr. Chan Wing Yuen, Hubert; a non-executive Director, namely Mr. Li Wei Qi, Jacky; and three independent non-executive Directors, namely Mr. Jin Qingjun, Ms. Sun, Ivy Connie and Ms. Zhong Yingjie, Christina.

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