eprint Group Limited - Interim / Quarterly Report 2020

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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eprint GROUP LIMITED eprint 集團有限公司

(Incorporated in the Cayman Islands with limited liability)

(Stock code: 1884)

INTERIM RESULTS ANNOUNCEMENT FOR THE SIX MONTHS ENDED 30 SEPTEMBER 2019

FINANCIAL HIGHLIGHTS
	For the six months ended
	30 September
	2019 2018	Change
	HK$’000 HK$’000
	(Unaudited) (Unaudited)
Operating Results
Revenue	205,158 204,789	0.2%
– e-print segment	159,068 158,168	0.6%
– e-banner segment	46,090 46,621	(1.1%)
Segment results	7,102 12,889	(44.9%)
– e-print segment	6,661 11,915	(44.1%)
– e-banner segment	441 974	(54.7%)
Profit for the period attributable to
equity holders of company	5,962 11,456	(48.0%)
Net profit margin % (Attributable to
equity holders of company)	2.9% 5.6%
Gross profit margin %	35.2% 35.6%
Basic earnings per share (HK Cents)	1.08 2.08	(48.1%)
	As at As at
	30 September 31 March
	2019 2019	Change
	HK$’000 HK$’000
	(Unaudited) (Audited)
Financial Position
Total assets	339,514 310,673	9.3%
Total equity	230,594 234,518	(1.7%)
Cash and cash equivalents	108,922 123,664	(11.9%)

The board (the “ Board ”) of directors (the “ Directors ”) of eprint Group Limited (the “ Company ”) announces the unaudited consolidated interim results of the Company and its subsidiaries (collectively, the “ Group ”) for the six months ended 30 September 2019, together with the comparative figures for the corresponding period in 2018.

CONDENSED INTERIM CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

For the six months ended 30 September 2019

Note Revenue Cost of sales Gross profit Other income Other gains/(losses) – net Selling and distribution expenses Administrative expenses Operating profit 4 Finance income Finance costs Finance income – net 5 Share of profit of a joint venture Share of losses of associates Profit before income tax Income tax expense 6 Profit for the period	Six months ended 30 September 2019 2018 HK$’000 HK$’000 (Unaudited) (Unaudited) 205,158 204,789 (133,020) (131,836) 72,138 72,953 1,297 1,629 (5,741) 1,791 (19,987) (23,624) (40,605) (39,860) 7,102 12,889 1,249 446 (1,064) (393) 185 53 897 1,047 (136) (578) 8,048 13,411 (2,136) (1,898) 5,912 11,513

Note
Other comprehensive income:
Item that may be subsequently reclassified to
profit or loss
Currency translation differences
Total comprehensive income for the period
Profit for the period attributable to:
Equity holders of the Company
Non-controlling interest
Earnings per share
– basic and diluted (expressed in HK cents per share)
7
Total comprehensive income attributable to:
Equity holders of the Company
Non-controlling interest

Six months ended
30 September
2019
2018
HK$’000
HK$’000
(Unaudited)
(Unaudited)
(1,036)
(1,491)
4,876
10,022
5,962
11,456
(50)
57
5,912
11,513
1.08
2.08
4,946
10,042
(70)
(20)
4,876
10,022

CONDENSED INTERIM CONSOLIDATED STATEMENT OF FINANCIAL POSITION

As at 30 September 2019

Note Assets Non-current assets Property, plant and equipment Right-of-use assets Intangible assets Other financial assets at amortised cost Investments in associates Investment in a joint venture Deferred income tax assets Deposits and prepayments Current assets Inventories Trade receivables 10 Deposits, prepayments and other receivables Other financial assets at amortised cost Financial assets at fair value through profit or loss 9 Amounts due from related companies Cash and cash equivalents Total assets	As at 30 September 2019 HK$’000 (Unaudited) 112,960 43,682 725 633 1,957 10,492 2,231 8,231 180,911 6,073 6,014 10,165 14,472 12,714 243 108,922 158,603 339,514	As at 31 March 2019 HK$’000 (Audited) 121,213 – 725 1,100 1,158 10,084 2,313 6,093 142,686 6,032 6,480 10,639 8,919 9,545 2,708 123,664 167,987 310,673

Note Equity Capital and reserves attributable to the equity holders of the Company Share capital Share premium Other reserves Non-controlling interests Total equity Liabilities Non-current liabilities Obligations under finance leases Lease liabilities Deferred income tax liabilities Other payables Current liabilities Trade payables 11 Accruals and other payables Borrowings Obligations under finance leases Lease liabilities Amount due to related companies Amounts due to directors Current income tax payable Total liabilities Total equity and liabilities	As at 30 September 2019 HK$’000 (Unaudited) 5,500 132,921 86,152 224,573 6,021 230,594 – 23,653 6,551 915 31,119 7,699 27,155 22,145 – 18,957 201 238 1,406 77,801 108,920 339,514	As at 31 March 2019 HK$’000 (Audited) 5,500 132,921 90,006 228,427 6,091 234,518 268 – 6,901 1,063 8,232 9,323 30,250 25,943 1,868 – 34 200 305 67,923 76,155 310,673

NOTES TO THE CONDENSED INTERIM CONSOLIDATED FINANCIAL INFORMATION

1 BASIS OF PREPARATION

This condensed interim consolidated financial information for the six months ended 30 September 2019 has 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 requirements of the Rules Governing the Listing of Securities (the “ Listing Rules ”) on The Stock Exchange of Hong Kong Limited (the “ Stock Exchange ”).

This condensed interim consolidated financial information should be read in conjunction with the Group’s consolidated financial statements for the year ended 31 March 2019, which are prepared in accordance with Hong Kong Financial Reporting Standards (“ HKFRSs ”).

2 PRINCIPAL ACCOUNTING POLICIES

The accounting policies applied are consistent with those used in preparing the Group’s financial statements for the year ended 31 March 2019, except as stated below.

(a) The following amendment to standard is mandatory for the Group’s accounting period beginning on 1 April 2019:

HKFRS 16 Leases

The impact of the adoption of the standard and the new accounting policy are disclosed in Note 2.1 below.

Annual Improvements Project	Annual improvements 2015-2017 cycle
(Amendments)
HKAS 19 (Amendments)	Plan amendment, curtailment or settlement
HKAS 28 (Amendments)	Long-term interests in associates and joint ventures
HKFRS 9 (Amendments)	Prepayment Features with Negative Compensation
HK(IFRIC) 23	Uncertainty over Income Tax Treatments

The Group has adopted these amendments and the adoption of these amendments did not have significant impacts on the Group’s results and financial position.

There are no other new standards or amendments to standards that are effective for the first time for this interim period that could be expected to have a material impact on the Group.

(b) The following new standards and amendments have been issued, but are not effective for the Group’s accounting period beginning on 1 April 2019 and have not been early adopted:

		Effective for accounting periods beginning on or after
HKFRS 3 (Revised)	Definition of a Business	1 January 2020
(Amendments)
Conceptual Framework for	Revised conceptual framework for	1 January 2020
Financial Reporting 2018	financial reporting
Amendments to HKAS 1	Definition of Material	1 January 2020
and HKAS 8
HKFRS 17	Insurance contracts	1 January 2021
HKAS 10 and HKFRS 28	Sale or Contribution of Assets between an	Note
(Amendments)	Investor and its Associates or Joint Venture

Note: To be announced by HKICPA

The Directors are in the process of assessing the financial impact of the adoption of the above new standards and amendments to standards. The Directors will adopt the new standards and amendments when they become effective.

(c) Taxes on income in the interim periods are accrued using the tax rate that would be applicable to expected total annual profit or loss.

2.1 Changes in accounting policy

The following explains the impact of the adoption of HKFRS 16 “Leases” on the Group’s financial information and also discloses the new accounting policy that has been applied from 1 April 2019, where it is different to those applied in prior periods.

Impact on financial information

As a lessee

The Group elected to adopt HKFRS 16 without restating comparative information. The reclassifications and the adjustments are therefore not reflected in the consolidated statement of financial position as at 31 March 2019, but are recognised in the opening of the condensed interim consolidated statement of financial position on 1 April 2019.

On adoption of HKFRS 16, the Group recognized lease liabilities in relation to lease which had previously been classified as ‘operating leases’ under the principles of HKAS 17 Leases. These liabilities were measured at the present value of the remaining lease payments, discounted using the lessee’s incremental borrowing rate as of 1 April 2019.

For leases previously classified as finance leases, the entity recognized the carrying amount of the lease asset and lease liability immediately before transition as the carrying amount of the right-of-use asset and the lease liability at the date of initial application. The measurement principles of HKFRS 16 are only applied after that date.

The impacts arising from the adoption of HKFRS 16 as at 1 April 2019 are as follows:

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As at
1 April 2019
HK$’000
(Unaudited)
----- End of picture text -----

Operating lease commitments disclosed as at 31 March 2019 Lease liabilities discounted at relevant incremental borrowing rates Add: Reclassification from obligations under finance lease recognised as at 31 March 2019 Less: Recognition exemption – short term leases Less: Recognition exemption – low-value leases Lease liabilities as at 1 April 2019 Analysed as Current Non-current	48,640 45,556 2,136 (1,410) (20) 46,262 17,013 29,249 46,262

The carrying amount of right-of-use assets as at 1 April 2019 comprises the following:

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As at
1 April 2019
HK$’000
(Unaudited)
----- End of picture text -----

Right-of-use assets relating to operating leases recognised upon application of HKFRS 16 Reclassify from property, plant and equipment Adjustments on rental deposits at 1 April 2019 (Note) By class: Plant and buildings Machinery	44,126 4,448 608 49,182 41,841 7,341 49,182

Note:

Before the application of HKFRS 16, the Group considered refundable rental deposits paid as rights and obligations under leases to which HKAS 17 applied. Based on the definition of lease payments under HKFRS 16, such deposits are not payments relating to the right to use of the underlying assets and were adjusted to reflect the discounting effect at transition. Accordingly, approximately HK$608,000 was adjusted to refundable deposits paid and right-of-use assets.

3 SEGMENT INFORMATION

The chief operating decision-maker has been identified as the Executive Directors of the Company. The chief operating decision-maker has determined the operating segments based on the reports approved by the Board, that are used to make strategic decisions and assess performance.

The chief operating decision-maker has determined the operating segments based on these reports. The Group is organised into two business segments:

(a) paper printing segment (mainly derived from the brand “e-print”); and
(b) banner printing segment (mainly derived from the brand “e-banner”).

Operating segments are reported in a manner consistent with the internal reporting provided to the chief operating decision-marker.

Management assesses the performance of the operating segments based on a measure of gross profit less distribution and administrative expenses that are allocated to each segment. Other information provided is measured in a manner consistent with that in the financial statements.

Sales between segments are carried out at arm’s length basis.

The subsidiary incorporated in the People’s Republic of China (the “ PRC ”) provides information technology (“ I.T. ”) support services within the Group. The subsidiaries incorporated in Malaysia and Australia generated immaterial external revenue during the period. Since the Group mainly operates in Hong Kong and the Group’s assets are mainly located in Hong Kong, no geographical segment information is presented.

During the six months ended 30 September 2019 and 2018, no external customers contributed over 10% of the Group’s revenue.

Segment revenue Revenue from external customers Inter-segment revenue Total Segment results Finance income Finance costs Share of profit of a joint venture Share of losses of associates Profit before income tax Income tax expense Profit for the period Depreciation of property, plant and equipment Depreciation of right-of-use assets Capital expenditure	For the six months ended 30 September	For the six months ended 30 September	For the six months ended 30 September	2019 Total HK$’000 (Unaudited) 205,158 – 205,158 7,102 1,249 (1,064) 897 (136) 8,048 (2,136) 5,912 7,588 9,219 3,474
	Paper printing HK$’000 (Unaudited) 159,068 239 159,307 6,661 3,701 7,510 2,517	Banner printing HK$’000 (Unaudited) 46,090 30 46,120 441 3,887 1,709 957	Eliminations HK$’000 (Unaudited) – (269) (269) – – –

For the six months ended 30 September 2018	For the six months ended 30 September 2018	For the six months ended 30 September 2018	For the six months ended 30 September 2018
Paper printing HK$’000 (Unaudited) 158,168 140 158,308 11,915 5,617 2,542	Banner printing HK$’000 (Unaudited) 46,621 28 46,649 974 3,429 1,381	Eliminations HK$’000 (Unaudited) – (168) (168) – –	Total HK$’000 (Unaudited) 204,789 –
			204,789
			12,889 446 (393) 1,047 (578)
			13,411 (1,898)
			11,513
			9,046 3,923

The following tables present segment assets as at 30 September 2019 and 31 March 2019 respectively.

	As at 30 September 2019	As at 30 September 2019	As at 30 September 2019
	Paper	Banner
	printing	printing	Total
	HK$’000	HK$’000	HK$’000
	(Unaudited)	(Unaudited)	(Unaudited)
Segment assets	173,663	44,480	218,143
		As at 31 March 2019
	Paper	Banner
	printing	printing	Total
	HK$’000	HK$’000	HK$’000
	(Unaudited)	(Unaudited)	(Unaudited)
Segment assets	134,958	40,809	175,767

Segment assets for banner printing segment mainly represented property, plant and equipment, right-of-use assets and goodwill amounting to HK$23,577,000 (31 March 2019: HK$28,450,000), HK$8,824,000 (31 March 2019: HK$ nil) and HK$725,000 (31 March 2019: HK$725,000).

A reconciliation of segment assets to total assets is provided as follows:

Segment assets Investments in associates Investment in a joint venture Cash and cash equivalents Total assets	As at 30 September 2019 HK$’000 218,143 1,957 10,492 108,922 339,514	As at 31 March 2019 HK$’000 175,767 1,158 10,084 123,664 310,673

4 OPERATING PROFIT

Operating profit is stated after (charging)/crediting the following:

	Six months ended 30 September	Six months ended 30 September
	2019	2018
	HK$’000	HK$’000
	(Unaudited)	(Unaudited)
Depreciation of property, plant and equipment	7,588	9,046
Depreciation of right-of-use assets	9,219	–
Recovery of trade receivables previously written off	(12)	(12)
Loss/(gain) on disposal of property, plant and equipment	773	(40)
Net exchange gain	(255)	(752)
Cost of materials	28,354	24,983
Subcontracting fee	68,685	75,107
Operating lease rental of premises and equipment	2,700	10,590

5 FINANCE INCOME – NET

Finance income
Interest income from bank deposits
Interest income from loan receivables
Finance costs
Finance charge on obligations under finance lease
Interest expenses on lease liabilities
Interest expenses on borrowings
Finance income – net
INCOME TAX EXPENSE
Current income tax
– Hong Kong profits tax
– PRC corporate income tax
Under/(over) provision in prior years
Deferred income tax
Income tax expense

Six months ended 30 September
2019
2018
HK$’000
HK$’000
(Unaudited)
(Unaudited)
733
435
516
11
1,249
446
–
(111)
(780)
–
(284)
(282)
(1,064)
(393)
185
53
Six months ended 30 September
2019
2018
HK$’000
HK$’000
(Unaudited)
(Unaudited)
2,360
2,085
34
10
10
(203)
(268)
6
2,136
1,898

6 INCOME TAX EXPENSE

Taxation on profits has been calculated on the estimated assessable profits for the six months ended 30 September 2019 at the rates of taxation prevailing in the countries/places in which the Group operates. Income tax expense is recognised based on management’s estimate of the weighted average annual income tax rate expected for the full financial year.

7 EARNINGS PER SHARE

(a) Basic

Basic earnings per share is calculated by dividing the profit attributable to equity holders of the Company by the weighted average number of ordinary shares in issue for the six months ended 30 September 2019 and 2018.

Profit attributable to the equity holders of the Company (HK$’000) Weighted average number of ordinary shares in issue (thousands) Basic earnings per share (HK cents)	Six months ended 30 September 2019 2018 (Unaudited) (Unaudited) 5,962 11,456 550,000 550,000 1.08 2.08	Six months ended 30 September 2019 2018 (Unaudited) (Unaudited) 5,962 11,456 550,000 550,000 1.08 2.08
		550,000
		2.08

(b) Diluted

For the six months ended 30 September 2019 and 2018, diluted earnings per share is the same as the basic earnings per share as there was no dilutive potential ordinary shares.

8 DIVIDENDS

A dividend of HK$8,800,000 that relates to the year ended 31 March 2019 was paid in September 2019 (2018: HK$13,200,000).

The Board resolved not to declare an interim dividend for the six months ended 30 September 2019 (2018: Nil).

9 FINANCIAL ASSETS AT FAIR VALUE THROUGH PROFIT OR LOSS

	As at	As at
	30 September	31 March
	2019	2019
	HK$’000	HK$’000
	(Unaudited)	(Audited)
Fair value of mutual fund investments	12,656	4,145
Listed equity investment	58	5,400
	12,714	9,545

The listed equity investments represent shares listed on the Stock Exchange.

Financial assets at fair value through profit or loss are presented within investing activities in the condensed interim consolidated statement of cash flows.

Changes in fair value of financial assets at fair value through profit or loss are recorded in ‘Other gains/(losses) – net’ in the condensed interim consolidated statement of comprehensive income.

The fair value of the listed equity investments is based on quoted prices (unadjusted) in active markets and is classified within level 1 of the fair value hierarchy.

10 TRADE RECEIVABLES

The Group’s credit terms granted to customers of printing services are mainly cash on delivery and on credit. Our average credit period offered to customers ranges from 30 days to 60 days.

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

Up to 30 days 31-60 days Over 60 days	As at 30 September 2019 HK$’000 (Unaudited) 3,768 1,331 915 6,014	As at 31 March 2019 HK$’000 (Audited) 3,906 1,155 1,419 6,480

11 TRADE PAYABLES

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

Up to 30 days 31-60 days 61-90 days Over 90 days	As at 30 September 2019 HK$’000 (Unaudited) 7,278 2 270 149 7,699	As at 31 March 2019 HK$’000 (Audited) 5,495 2,330 763 735 9,323

MANAGEMENT DISCUSSION AND ANALYSIS

BUSINESS REVIEW

The Board presents to the Company’s shareholders the results of the Group for the six months ended 30 September 2019. The Group’s revenue amounted to HK$205.2 million, representing an increase of 0.2% as compared with that of the period ended 30 September 2018. Gross profit margin slightly decreased to 35.2% (2018: 35.6%). The Group’s unaudited profit attributable to equity holders for the six months ended 30 September 2019 was HK$6.0 million, representing a decrease of 48% as compared with that of the period ended 30 September 2018. The decrease in net profit was mainly attributed to the fair value loss of HK$5.2 million on the equity investment held by the Group.

For the Group’s paper printing segment, the revenue slightly increased by HK$0.9 million or 0.6% from HK$158.2 million to HK$159.1 million. The advertising printing was still the major contributor to the segment’s revenue and recorded an amount of HK$63.9 million for the six months ended 30 September 2019. The segment’s gross profit margin slightly decreased from 35.4% to 34.6%, and the major reason was that the delivery charges, which was classified as selling and distribution expenses in the previous period, had been reclassified to cost of sales in the current period according to the accounting standard. If the impact of the reclassification was ignored, the segment’s gross profit margin would be 36.9%, which represented a 1.5 percent point increase when compared with the same period of last year. The increase was contributed by the effective cost control. The segment’s operating profits decreased by HK$5.3 million in the current period and it was mainly caused by the fair value loss of HK$5.2 million incurred on the listed equity investment held.

For the Group’s banner printing segment, the revenue dropped by 1.1% when compared with the same period of last year. The segment’s gross profit margin slightly increased by 0.4 percent point when compared with same the period of last year. If the impact of the above mentioned reclassification was ignored, the segment’s gross profit margin would be increased to 38.3%, which is 1.9 percent point higher. Effective cost control was the major reason of the increase in segment’s gross profit margin. Even though the segment recorded an increase in its gross profit, the segment’s operating profits dropped by HK$0.5 million as a result of the increased daily operating costs.

OUTLOOK

With the combined effects of the increasing popularity of digital marketing and Hong Kong’s economic instability, the managements expects the business environment will be more challenging in the coming year. In order to overcome these obstacles and increase the market share, the Group will put maximum efforts to make use of its solid financial resources and reputation to improve the quality of its principal printing business, invest in suitable financial products and diversify the business.

Under the leadership of the Board, the management of the Group has formed a broad consensus in response to the Group’s key development areas. The Group will continue to strengthen its leading market position and increase its market share by adopting the following approaches:

Strengthening the cost control to achieve competitive pricing strategy.
Improving the customers experience by expanding the product mix and offering the customization of the products and services.
Continuously enhancing the value added services, including but not limited to the e-print mobile application, online self-service platform, phone ordering system and logistics system.

FINANCIAL REVIEW

Revenue

Income from the provision of printing services in Hong Kong increased by HK$0.4 million or 0.2% from HK$204.8 million for the six months ended 30 September 2018 to HK$205.2 million for the six months ended 30 September 2019. The growth was primarily due to the increasing demands on the bound book printing services. The following table sets forth a breakdown of the revenue by service category and their respective percentage of the total revenue for the periods indicated.

Advertising printing Bound book printing Stationery printing Banner printing Other services Total	2019 HK$’000 (Unaudited) 63,921 50,643 38,320 40,317 11,957 205,158	31.1% 24.7% 18.7% 19.7% 5.8% 100%	2018 HK$’000 (Unaudited) 64,612 46,827 40,242 40,800 12,308 204,789	31.6% 22.9% 19.6% 19.9% 6.0%
				100%

The advertising printing was still the major contributor of the revenue, which accounted for 31.1% of the total revenue for the six months ended 30 September 2019.

		Six months ended	30 September
	2019		2018
	HK$’000		HK$’000
Sales Channels	(Unaudited)		(Unaudited)
Stores	34,151	16.6%	54,105	26.4%
Websites	105,875	51.6%	86,570	42.3%
Others (Note)	65,132	31.8%	64,114	31.3%
Total	205,158	100.0%	204,789	100.0%

Note: “Others” refers to revenue derived from orders received over the telephone, through e-mail, e-print mobile application and “Photobook” program.

Websites remained the major sales channel and it contributed 51.6% of total revenue for the six months ended 30 September 2019. And the sales contributed by stores decreased from 26.4% for the six months ended 30 September 2018, to 16.6% for the six months ended 30 September 2019. The changes were the result of the increasing reliance on the online platform because of its sound reputation.

Other income

Other income primarily mainly comprises the sales of scrap materials. The amount decreased by HK$0.3 million and it was mainly caused by the decrease of the interest income received from the unlisted bond securities by HK$0.6 million when compared with the same period of last year.

Detail of the unlisted bond security as at 30 September 2019 and 31 March 2019 is as follows:

Investment date	Detail of the unlisted bond security	Amount
20 October 2016	Subscribed for bonds issued by National Arts	HK$5,000,000
	Entertainment and Culture Group Limited
	(stock code: 8228)

In view of the sufficiency of the Group’s liquidity, the Group had diversified to invest in bonds issued by the listed companies on the Stock Exchange for the purpose of capital preservation and a relative high interest return accruing when compared with the bank interest income. As at 30 September 2019, there was an unsettled principal amount of HK$0.5 million. On 8 November 2019, National Arts Entertainment and Culture Group Limited announced that the financial restructuring scheme was approved. Under the scheme, the Group will be allotted the convertible bonds in the amount of 60% of the outstanding principal amount which equivalents to HK$300,000 and the remaining 40% of the outstanding principal amount will be allotted and issued new shares in which the value equivalents to HK$200,000.

Other gains/(losses) – net

Other gains/(losses) – net mainly comprises the fair value changes on the financial assets and the losses on disposal of property, plant and equipment. The Group generated a gain of HK$1.8 million for the six months ended 30 September 2018 while it incurred the net loss of HK$5.7 million for the current period. The major reason for the losses was due to the listed equity investment held by the Group, which was classified as financial assets at fair value through profit or loss, recorded a significant drop in share price in the current period, and hence incurred the fair value loss of HK$5.2 million.

Selling and distribution expenses

Selling and distribution expenses mainly consisted of staff costs, distribution costs, handling charges for electronic payments, and store rentals. Selling and distribution expenses represent 9.7% and 11.5% of the revenue for the six months ended 30 September 2019 and 2018, respectively. The decrease of HK$3.6 million was mainly due to the reclassification of delivery charges of HK$4.3 million to cost of sales according to the accounting standard. If we ignore the effect of the reclassification, the expenses would slightly increased by HK$0.7 million, which was mainly attributed to the increased staff cost.

Administrative expenses

Administrative expenses primarily comprised directors’ remunerations, staff costs and outsourced customer support expenses. Administrative expenses represent 19.8% and 19.5% of the total revenue for the six months ended 30 September 2019 and 2018 respectively. The amount increased by HK$0.7 million from HK$39.9 million for the six months ended 30 September 2018 to HK$40.6 million for the six months ended 30 September 2019. The increase in expenses was the result of the increased outsourced customer support expenses.

Finance income

Finance income primarily represented the interest income generated from the bank deposits and the loan receivables.

Finance costs

Finance costs primarily consist of interest expenses on bank borrowings and interest expenses on lease liabilities.

Share of profit of a joint venture

Share of profit of a joint venture represented the share of result of the Group’s joint venture. During the six months ended 30 September 2019, the Company had one joint venture in Malaysia.

Share of losses of associates – net

Share of losses of associates represented the share of results of the Group’s associates. During the six months ended 30 September 2019, the Company had three associates operating in the PRC and Hong Kong respectively.

Profit for the period attributable to equity holders of the Company

Profit for the period attributable to equity holders of the Company decreased by HK$5.5 million or 48.0%, from HK$11.5 million for the six months ended 30 September 2018 to HK$6.0 million for the six months ended 30 September 2019. Net profit margin dropped from 5.6% for the six months ended 30 September 2018 to 2.9% for the six months ended 30 September 2019. The decrease in the profit for the period attributable to equity holders of the Company was mainly due to the fair value loss of HK$5.2 million on the equity investment held by the Group.

Liquidity and Financial Information

As at 30 September 2019, the Group’s bank balances and cash was approximately HK$108.9 million, represented a decrease of HK$14.7 million when compared with that as at 31 March 2019. The decrease was mainly caused by the additional investment in the mutual fund investment and dividend payment during the period. As at 30 September 2019 and 30 September 2018, the financial ratios of the Group were as follows:

Current ratio(1) Gearing ratio(2) Notes:	As at 30 September 2019 2.0 28.1%	As at 30 September 2018 2.5 12.3%

(1) Current ratio is calculated based on total current assets divided by total current liabilities.

(2) Gearing ratio is calculated based on total bank overdraft, borrowings and leases liabilities divided by total equity and multiplied by 100%.

Borrowings

The Group had the bank borrowings of HK$22.1 million and HK$25.9 million as at 30 September 2019 and 31 March 2019 respectively. All bank borrowings were made from banks in Hong Kong and were repayable within 1 year, except a mortgage loan with the carrying amount of HK$20.4 million was repayable within twenty years. The bank borrowings with repayable on demand clause was classified as current liabilities. No financial instruments were used for hedging purposes, nor were there any foreign currency net investments hedged by current borrowings and/or other hedging instruments. The weighted average interest rates (per annum) were 2.1% and 2.4% for the six months ended 30 September 2019 and 30 September 2018, respectively.

Treasury policies

The Group has adopted a prudent financial management approach towards its treasury policies and thus maintained a healthy liquidity position throughout the period. The Board closely monitors the Group’s liquidity position to ensure that the liquidity structure of the Group’s assets, liabilities and other commitments can meet its funding requirements from time to time.

Capital structure

The capital of the Company comprises ordinary shares and other reserves. The shares of the Company were listed on the Main Board of the Stock Exchange since 3 December 2013. As at 30 September 2019, the total number of issued ordinary shares of the Company was 550,000,000 shares.

Capital commitments

As at 30 September 2019 and 31 March 2019, the Group has capital commitments of HK$4.1 million and HK$4.4 million for investment in an associate and purchase of computer equipment, respectively.

Significant investments held

Except for the investments in subsidiaries, joint venture and associates, the Group did not hold any significant investment in equity interest in any other company during the period under review.

Future plans for material investments and capital assets

Except for the aforesaid capital commitment to the investment in an associate, the Group did not have other plans for material investments and capital assets.

Material acquisitions or disposals

The Group did not have any material acquisition or disposal of associates, subsidiaries or joint ventures during the six months ended 30 September 2019.

Exposure to foreign exchange risk

The Group operates principally in Hong Kong and its business is supported by an information technology support services centre located in the PRC. The Group is exposed to foreign exchange risk arising from the exposure of Renminbi against Hong Kong dollars. The Group does not hedge its foreign exchange risk as its exposure to foreign exchange risk is low as the Group’s cash flows mainly denominated in Hong Kong dollars.

Charge of assets

As at 30 September 2019 and 31 March 2019, the Group pledged the plant and machinery with a carrying value of HK$2.3 million and HK$4.4 million respectively, as collaterals to secure the Group’s lease liabilities. As at 30 September 2019 and 31 March 2019, the Group pledged two properties with a carrying value of HK$61.4 million and HK$62.5 million respectively, as collaterals to secure the Group’s mortgage loan.

Capital expenditure

During the period under review, the Group invested HK$3.5 million in property, plant and equipment, represented an increase of HK$0.2 million when compared with the same period of last year.

EMPLOYEES AND EMOLUMENT POLICIES

As at 30 September 2019, the Group had 326 full time employees. There is no significant change in the Group’s emolument policies. On top of basic salaries, bonuses may be paid by reference to the Group’s performance as well as individual’s performance. Other staff benefits include housing allowances, contributions to Mandatory Provident Fund retirement benefits scheme in Hong Kong, the provision of pension funds, medical insurance, unemployment insurance and other relevant insurance for employees who are employed by the Group pursuant to the PRC rules and regulations and the prevailing regulatory requirements of the PRC, and the Employees Provident Fund and contributions to Social Security Organization for employees who are employed by the Group pursuant to the Malaysian rules and regulations and the prevailing regulatory requirements of Malaysia.

INTERIM DIVIDEND

The Board has resolved not to declare an interim dividend for the six months ended 30 September 2019 (2018: Nil).

PURCHASE, SALE OR REDEMPTION OF LISTED SECURITIES OF THE COMPANY

Neither the Company nor any of its subsidiaries purchased, sold or redeemed any of the Company’s listed securities during the six months ended 30 September 2019.

MODEL CODE FOR SECURITIES TRANSACTIONS BY DIRECTORS

The Company has adopted the Model Code for Securities Transactions by Directors of Listed Issuers (the “ Model Code ”) as set out in Appendix 10 to the Listing Rules as the code of conduct regarding securities transactions by the Directors. Having made specific enquiry of all Directors, the Company confirmed that all Directors had complied with the required standards as set out in the Model Code for the six months ended 30 September 2019.

CORPORATE GOVERNANCE PRACTICES

The Company has adopted the code provisions set out in the Corporate Governance Code (“ CG Code ”) as set out in Appendix 14 to the Listing Rules as its own code of corporate governance.

For the six months ended 30 September 2019, the Company was in compliance with the relevant code provisions set out in the CG Code except for the deviation as explained below.

Code provision A.2.1 of the CG Code provides that the roles of the chairman and chief executive officer should be separated and should not be performed by the same individual. The Company does not at present separate the roles of the chairman and chief executive officer. Mr. She Siu Kee William is the chairman and chief executive officer of the Company. The Board believes that vesting the roles of both chairman and chief executive officer in the same person has the benefit of ensuring consistent leadership within the Group and enables more effective and efficient overall strategic planning for the Group. The Board further believes that the balance of power and authority for the present arrangement will not be impaired and is adequately ensured by the current Board which comprises experienced and high calibre individuals with sufficient number thereof being non-executive Directors and independent non-executive Directors.

REVIEW OF INTERIM RESULTS BY AUDIT COMMITTEE

The Company established the audit committee of the Company (the “ Audit Committee ”) on 13 November 2013 with written terms of reference, which was revised on 25 February 2019 in compliance with the CG Code. The primary duties of the Audit Committee are to review and supervise the financial reporting system and to review the risk management and internal control systems of the Group. The Audit Committee comprises three independent non-executive Directors, namely, Mr. Ma Siu Kit (Chairman), Mr. Poon Chun Wai and Mr. Fu Chung. The Audit Committee has reviewed the unaudited condensed interim consolidated financial information for the six months ended 30 September 2019.

INTERIM REPORT

The interim report of the Company for the six months ended 30 September 2019 will be published and dispatched to the equity holders of the Company in mid-December 2019.

On behalf of the Board eprint Group Limited She Siu Kee William Chairman

Hong Kong, 22 November 2019

As at the date of this announcement, the executive Directors are Mr. She Siu Kee William and Mr. Chong Cheuk Ki; the non-executive Directors are Mr. Leung Wai Ming and Mr. Cai Qiang; and the independent non-executive Directors are Mr. Poon Chun Wai, Mr. Fu Chung and Mr. Ma Siu Kit.