Guoxia Technology Co., Ltd. - Interim / Quarterly Report 2021

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GREATER BAY AREA DYNAMIC GROWTH HOLDING LIMITED ��

(Incorporated in Bermuda with limited liability)

(Stock Code: 1189)

INTERIM RESULTS FOR THE SIX MONTHS ENDED 30 JUNE 2021

The board (“Board”) of directors (“Directors”) of GREATER BAY AREA DYNAMIC GROWTH HOLDING LIMITED (“Company”) announces the unaudited consolidated results of the Company and its subsidiaries (hereinafter collectively referred to as “Group”) for the six months ended 30 June 2021 together with comparative figures for the corresponding period in 2020 as follows:

CONDENSED CONSOLIDATED STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME

For the six months ended 30 June 2021

NOTES Revenue Contracts with customers Leases Total revenue 3 Direct operating costs Gross profit Other income, gains and losses Distribution and selling expenses Administrative and other operating expenses Fair value loss on investment properties 10 Gain on disposal of subsidiaries 4 Finance costs	Six months ended 30 June 2021 2020 *HK$’000* HK$’000 (unaudited) (unaudited) 18,276 17,888 15,642 17,422 33,918 35,310 (12,268) (16,238) 21,650 19,072 14,277 7,486 (175) (160) (46,994) (67,791) (18,093) (18,344) – 67,446 (1,716) (979)

NOTES
(Loss) profit before tax
Income tax credit (expense)
5
Loss for the period
6
Other comprehensive income for the period
Item that may be reclassified subsequently to
profit or loss:
Exchange difference arising on
translation of foreign operations
Total comprehensive expense for the period
Loss for the period attributable to:
Owners of the Company
Non-controlling interests
Total comprehensive expense for the period
attributable to:
Owners of the Company
Non-controlling interests
LOSS PER SHARE
8
Basic (HK$)
Diluted (HK$)

Six months ended 30 June
2021
2020
HK$’000
HK$’000
(unaudited)
(unaudited)
(31,051)
6,730
248
(8,682)
(30,803)
(1,952)
2,246
214
(28,557)
(1,738)
(27,792)
(1,372)
(3,011)
(580)
(30,803)
(1,952)
(26,184)
(1,625)
(2,373)
(113)
(28,557)
(1,738)
(0.04)
(0.00)
(0.04)
(0.00)

CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL POSITION

AT 30 JUNE 2021

NOTES Non-current assets Property, plant and equipment 9 Investment properties 10 Right-of-use assets Current assets Inventories Trade and other receivables 11 Investments held for trading 12 Bank balances and cash Assets classified as held for sale 13 Current liabilities Trade and other payables 14 Borrowing – amount due within one year Tax liabilities Lease liabilities Contract liabilities Liabilities associated with assets classified as held for sale 13 Net current assets Total assets less current liabilities Non-current liabilities Borrowing – amount due after one year Deferred tax liabilities Lease liabilities Net assets	30 June 2021 *HK$’000* (unaudited) 254,293 37,000 1,708 293,001 949 67,744 130 1,765,995 1,834,818 – 1,834,818 47,098 22,000 18,113 1,819 758 89,788 – 89,788 1,745,030 2,038,031 36,797 22,347 – 59,144 1,978,887	31 December 2020 HK$’000 (audited) 211,996 55,000 2,609
		269,605
		908 36,088 116 1,813,337
		1,850,449 2,951
		1,853,400
		36,911 22,000 18,113 1,863 2,030
		80,917 1,376
		82,293
		1,771,107
		2,040,712
		– 24,033 871
		24,904
		2,015,808

Capital and reserves Share capital Reserves Equity attributable to owners of the Company Non-controlling interests Total equity	30 June 2021 *HK$’000* (unaudited) 7,892 1,784,154 1,792,046 186,841 1,978,887	31 December 2020 HK$’000 (audited) 7,892 1,825,112
		1,833,004 182,804
		2,015,808

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE SIX MONTHS ENDED 30 JUNE 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 (“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 condensed consolidated financial statements do not include all the information and disclosures required in the annual consolidated financial statements and should be read in conjunction with the annual consolidated financial statements of GREATER BAY AREA DYNAMIC GROWTH HOLDING LIMITED and its subsidiaries for the year ended 31 December 2020.

The unaudited consolidated financial statements for the period ended 30 June 2021 (the “Period”) have not been audited by the Company’s independent auditor, but have been reviewed by the Company’s audit committee.

2. PRINCIPAL ACCOUNTING POLICIES

The condensed consolidated financial statements have been prepared on the historical cost basis except for certain properties and financial instruments, which are measured at fair values.

Other than changes in accounting policies resulting from application of new and amendments to Hong Kong Financial Reporting Standards (“HKFRSs”), the accounting policies and methods of computation used in the condensed consolidated financial statements for the six months ended 30 June 2021 are the same as those presented in the Group’s annual consolidated financial statements for the year ended 31 December 2020.

The HKICPA has issued a number of new and revised HKFRSs and interpretations that are first effective or available for early adoption for the six months ended 30 June 2021. The Group is assessing the full impact of the new standards, amendments and interpretations. According to the preliminary assessment, there have been no material impact on the accounting policies applied in these financial statements for the current and prior accounting periods presented as a result of these developments.

3. SEGMENT INFORMATION

Information reported to the executive directors of the Company, being the chief operating decision maker (“CODM”), for the purposes of resource allocation and assessment of segment performance focuses on types of services provided and activities carried out by the Group’s operating divisions.

Specifically, the Group’s reportable segments under HKFRS 8 “Operating Segments” are as follows:

Hotel operations - hotel accommodation, food and banquet operations and rental income from rentals of shop units situated in the hotels of the Group and from rentals of investment properties; and
Securities trading - trading of equity securities

No operating segments have been aggregated in arriving at the reportable segments of the Group.

Segment revenue and results

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

Six months ended 30 June 2021 (unaudited)

REVENUE RESULTS Segment profit excluding depreciation of property, plant and equipment and fair value gain on investments held for trading Depreciation of property, plant and equipment Fair value gain on investments held for trading Segment (loss) profit Directors’ emoluments Interest income on bank deposits Fair value loss on investment properties Central administrative costs and other unallocated corporate expenses Loss before tax	Hotel operations *HK$’000* 33,918 991 (14,474) – (13,483)	Securities trading *HK$’000* – – – 87 87	Consolidated *HK$’000* 33,918 991 (14,474) 87 (13,396) (1,174) 10,048 (18,093) (8,436) (31,051)

Six months ended 30 June 2020 (unaudited)

REVENUE RESULTS Segment profit excluding depreciation of property, plant and equipment and fair value loss on investments held for trading Depreciation of property, plant and equipment Fair value loss on investments held for trading Segment profit (loss) Directors’ emoluments Interest income on bank deposits Fair value loss on investment properties Central administrative costs and other unallocated corporate expenses Profit before tax	Hotel operations HK$’000 35,310 50,948 (16,362) – 34,586	Securities trading HK$’000 – – – (35) (35)	Consolidated HK$’000 35,310 50,948 (16,362) (35) 34,551 (1,969) 2,116 (18,344) (9,624) 6,730

Segment result represents the (loss) profit from each segment without allocation of directors’ emoluments, interest income on bank deposits, fair value gain (loss) on investment properties and central administrative costs and other unallocated corporate expenses. This is the measure reported to the Group’s CODM for the purposes of resource allocation and performance assessment.

4. DISPOSAL OF SUBSIDIARIES

On 26 February 2020, the Group disposed of its subsidiaries, Luoyang Golden Gulf Hotel Company Limited and its subsidiary. The related gain at the date of disposal was as follows:

		HK$’000
Gain on disposal of subsidiaries:
Consideration received		68,500
Net assets disposed of		(20,016)
Non-controlling interests		8,006
Gain on disposal of subsidiaries before taxation and release of attributable reserve		56,490
Cumulative exchange differences in respect of the net assets of the subsidiaries
reclassified from equity to profit or loss on loss of control of the subsidiaries		17,806
Gain on disposal of subsidiaries before taxation		74,296
Less: Taxation		(6,850)
Gain on disposal of subsidiaries after taxation		67,446

INCOME TAX (CREDIT) EXPENSE
	Six months ended 30 June
	2021	2020
	*HK$’000*	HK$’000
	(unaudited)	(unaudited)
Current tax:
People’s Republic of China (“PRC”) taxes	1,717	14,517
Deferred tax	(1,965)	(5,835)
Income tax (credit) expense	(248)	8,682

5. INCOME TAX (CREDIT) EXPENSE

The directors of the Company considered the amount involved upon implementation of the two-tiered profits tax rates regime as insignificant to the condensed consolidated financial statements. Hong Kong Profits Tax is calculated at 16.5% of the estimated assessable profit for both periods.

Under the Law of the PRC on Enterprise Income Tax (the “EIT Law”) and Implementation Regulation of the EIT Law, the tax rate of the PRC subsidiaries is 25% for both periods.

6. LOSS FOR THE PERIOD

Loss for the period has been arrived at after charging the following items:

	Six months ended 30 June	Six months ended 30 June
	2021	2020
	*HK$’000*	HK$’000
	(unaudited)	(unaudited)
Depreciation of property, plant and equipment	14,612	18,967
Depreciation of right-of-use assets	906	16,362
Electricity, water and utilities	3,320	3,826
Lease payments for short-term leases	782	641
Loss on disposal of property, plant and equipment	–	14

7. DIVIDENDS

The directors of the Company have resolved not to declare an interim dividend for the six months ended 30 June 2021 (Six months ended 30 June 2020: nil).

8. LOSS PER SHARE

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

Loss Loss for the period attributable to owners of the Company for the purpose of basic and diluted loss per share Number of shares Weighted average number of ordinary shares for the purpose of basic and diluted loss per share	Six months ended 30 June 2021 2020 *HK$’000* HK$’000 (unaudited) (unaudited) (27,792) (1,372) 789,211,046 789,211,046	Six months ended 30 June 2021 2020 *HK$’000* HK$’000 (unaudited) (unaudited) (27,792) (1,372) 789,211,046 789,211,046

		789,211,046

The computation of diluted loss per share for both periods does not assume the exercise of the Company’s outstanding share options since their assumed exercise would result in a decrease in loss per share.

9. MOVEMENTS IN PROPERTY, PLANT AND EQUIPMENT

During the current interim period, the Group paid approximately HK$375,737 for acquisition of leasehold improvement and furniture and fixtures (Six months ended 30 June 2020: approximately HK$54,250 for acquisition of furniture and fixtures and office equipment) and addition of HK$54,112,500 of commercial properties through the acquisition of a non-wholly owned subsidiary.

Rosedale Hotel Guangzhou Co., Ltd. (“Rosedale Guangzhou”)

Included in the hotel properties in the PRC is a hotel property with carrying value of HK$88,527,000, net of accumulated impairment loss of HK$6,322,000 (31 December 2020: carrying value of HK$92,116,000, net of accumulated impairment loss of HK$6,322,000) situated in Guangzhou, in which the Group holds land use rights and property right of the hotel property for a term expiring in January 2037, under the name of Rosedale Guangzhou.

Pursuant to a co-operative agreement entered into between Allied Glory Investment Limited (“Allied Glory”), an indirect non-wholly owned subsidiary of the Company, and the minority shareholder of Rosedale Guangzhou, the co-operative period for Rosedale Guangzhou is 50 years commencing from 15 January 1987.

On 3 May 2017, Allied Glory received an Arbitral Award issued by the China International Economic and Trade Arbitration Commission (the “CIETAC”) pursuant to which the co-operative period for Rosedale Guangzhou under the co-operative agreement made shall be extended until 15 January 2027.

Impairment assessment on hotel properties

The Group incurred operating losses in its hotel operations segment in the PRC, and there were certain adverse changes in the market and economic environment in the PRC in which the hotel operations of the Group are located. Accordingly, management has reviewed the recoverability of the relevant carrying amounts of the cash generating units (“CGU(s)”) in the hotel operations segment in the PRC and the recoverability of the relevant carrying amounts of the individual assets of property, plant and equipment if their fair values less costs of disposal are available, as appropriate. Each CGU represents each of the hotel operations that generate independent cash flows.

The recoverable amounts have been determined based on higher of fair value less cost of disposal or value-in-use calculations. The recoverable amount of the CGU of each hotel operation in the PRC was based on its value in use and was determined by management. The value in use calculation is a discounted cash flow model using cash flow projections based on five-year financial budgets, with reference to past performance and expectations for market development, approved by management and using a discount rate of 10.50% (31 December 2020: 10.50%). Cash flows after the 5-year period were extrapolated using a 2% (31 December 2020: 2%) growth rate in considering the economic condition of the market.

As at 30 June 2021, from the above assessment on each of the hotel operations located in the PRC, there is no impairment for the six months ended 30 June 2021 in respect of the hotel properties or the CGUs to which these hotel properties relate. Further, the Group did not identify objective evidence of reversal of impairment loss for the current interim period.

10. MOVEMENTS IN INVESTMENT PROPERTIES

The Group’s investment properties as at the end of the current interim period were determined based on the income capitalization approach, where the market rentals of all lettable units of the properties are assessed and discounted at the market yield expected by investors for this type of properties. The market rentals are assessed by reference to the rentals achieved in the lettable units of the properties as well as other lettings of similar properties in the neighbourhood. The resulting decrease in fair value of investment properties of HK$18,093,000 has been recognised directly in profit or loss for the six months ended 30 June 2021 (Six months ended 30 June 2020: HK$18,344,000).

11. TRADE AND OTHER RECEIVABLES

The Group allows an average credit period of 30 days to its trade customers.

The following is an analysis of trade receivables by age, presented based on the invoice date, which approximated the revenue recognition date.

0 - 30 days 31 - 60 days 61 - 90 days Over 90 days INVESTMENTS HELD FOR TRADING Listed investments – Equity securities listed in Hong Kong	30 June 2021 *HK$’000* (unaudited) 5,103 109 7 16 5,235 30 June 2021 *HK$’000* (unaudited) 130	31 December 2020 HK$’000 (audited) 1,063 272 43 4 1,382 31 December 2020 HK$’000 (audited) 116

12. INVESTMENTS HELD FOR TRADING

13. DISPOSAL GROUP CLASSIFIED AS HELD FOR SALE

The major classes of assets and liabilities of the Rosedale Park Limited (“Rosedale Park”), an indirect non-wholly owned subsidiary of the Company as at 31 December 2020, which have been classified as held for sale and presented separately in the consolidated statement of financial position, are as follows:

Inventories Trade and other receivables Bank balances and cash Total assets classified as held for sale Trade and other payables Contract liabilities Total liabilities directly associated with assets classified as held for sale	HK$’000 80 1,398 1,473
	2,951

	1,319 57
	1,376

The disposal of the entire equity interest in Rosedale Park was completed on 1 January 2021.

14. TRADE AND OTHER PAYABLES

The following is an analysis of trade payables by age, presented based on the invoice date.

0 - 30 days 31 - 60 days 61 - 90 days Over 90 days	30 June 2021 *HK$’000* (unaudited) 924 642 431 1,241 3,238	31 December 2020 HK$’000 (audited) 1,062 762 442 2,145
		4,411

The credit period on purchases of goods ranges from 30 to 60 days.

MANAGEMENT DISCUSSION AND ANALYSIS

MARKET REVIEW

Recovery momentum continues to establish across major economies in the first half of 2021 from the growing of vaccination coverage. However, given the lack of international travel and various social distancing measures imposed on the food and beverage sector under the COVID-19 pandemic, the global hotel sector continued to face severe disruption and demand remained subdued. Despite seeing some recovery through our hotels implemented some innovative staycation packages which positively uptake from the local market in response of the lack of international travelers, government still restricted not allowing to host large functions and events, many of them being cancelled or postponed. Other than the impacts of the COVID-19 pandemic, it is important to note the tension between the United States (the “US”) and the PRC remained intense. Overall, the first half of 2021 stayed a most challenging time for the Group, with all of our operations continuing to be severely impacted by the global COVID-19 pandemic.

Despite signs of global slowdown, with a challenging operating environment as the COVID-19 pandemic, the PRC has adopted hardcore prevention measures with a series of positive fiscal policies to contain the pandemic spread and has avoided new bigger waves of infection that delayed progress elsewhere and has pushed ahead in economic recovery, driven by rising domestic demand. Judging from that, the execution of these policies went well and the PRC continued to manage a growth in the first half of 2021. The PRC’s gross domestic product (“GDP”) increased by approximately 12.7% as compared to year-over-year in 2020. Meanwhile, there were approximately 67 million of people entered/exited through the immigration clearance in the PRC during the six months ended 30 June 2021, which represented an increase of approximately 35% and 190%, as compared to year-over-year of 2020 and 2019, respectively.

FINANCIAL REVIEW

During the six months ended 30 June 2021, the Group’s business and financial performance had been impacted significantly and adversely by the COVID-19 pandemic with the travel restrictions, revenue of the Group attained HK$33.9 million, representing a decrease of 4.0% as compared to HK$35.3 million for the six months ended 30 June 2020. The results of the Group for the six months ended 30 June 2021 was a loss of HK$30.8 million (Six months ended 30 June 2020: HK$2.0 million) which was mainly attributable to gross profit of HK$21.7 million (Six months ended 30 June 2020: gross profit of HK$19.1 million); administrative and other operating expenses of HK$47.0 million (Six months ended 30 June 2020: HK$67.8 million); distribution and selling expenses of HK$0.2 million (Six months ended 30 June 2020: HK$0.2 million); finance costs of HK$1.7 million (Six months ended 30 June 2020: HK$1.0 million); fair value loss on investment properties of HK$18.1 million (Six months ended 30 June 2020: HK$18.3 million); partially offset by other incomes of HK$14.3 million (Six months ended 30 June 2020: HK$7.5 million) and income tax credit of HK$0.2 million (Six months ended 30 June 2020: income tax expense of HK$8.7 million).

The performance of the Group’s hotel operations and securities trading during the six months ended 30 June 2021 under review, the commentary on the hotel sector and the changes in general market conditions and the potential impact on their operating performance and future prospects are contained in the succeeding sections headed “BUSINESS REVIEW” and “PROSPECTS”.

BUSINESS REVIEW

(a) Hotel Operations

During the six months ended 30 June 2021, the hotel operations comprise the operations of two “Rosedale” branded 4-star rated hotels located in Guangzhou and Shenyang. Under the aforesaid challenging operating environment in the period under review, overall revenue generated from hotel operations decreased by 4.0% to HK$33.9 million for the six months ended 30 June 2021 (Six months ended 30 June 2020: HK$35.3 million). The combined average occupancy rate of the Group increased by 1.7% to 31.8% for the six months ended 30 June 2021 (Six months ended 30 June 2020: 30.1%). If the operational figures of our hotels are only compared with those of other comparable hotels in similar categories, their performance will be in line with market averages. The gross margin was maintained at 63.8% or increased by 9.8% when compared with the corresponding period in 2020 of 54.0%. To combat the competitive environment, the Group will continue to invest resources to enhancing its market network and positioning and, in the meantime, will further streamline its business operations to contain costs efficiently.

(b) Securities Trading

The segment recorded a profit of HK$0.1 million for the six months ended 30 June 2021 (Six months ended 30 June 2020: segment loss of HK$0.1 million), mainly representing fair value gain of investments held for trading, as a result of mark to market valuations as at the balance sheet date.

ACQUISITION OF A SUBSIDIARY

On 22 March 2021, Guangzhou Rosedale Investment Limited (廣州珀麗投資有限公司), an indirect wholly-owned subsidiary of the Company, entered into an agreement to acquire 65% interest in the registered capital of Guangzhou Qiao Feng Enterprise Development Limited (廣州市翹豐企業發展有限公司) (“Qiao Feng”) for a cash consideration of RMB5 million. The major assets and liabilities of Qiao Feng consist of certain commercial properties located in Guangzhou and interest bearing borrowing with the aforesaid properties as collaterals. The agreement was completed during the current interim period.

LIQUIDITY AND FINANCIAL RESOURCES

The COVID-19 pandemic has impacted and will continue to impact materially our business, financial condition and results of operations. While we believe strong liquidity position will enable us to fund our current obligations for the foreseeable future. As at 30 June 2021, the Group’s cash and bank balances and investments held for trading amounted to HK$1,766.1 million (31 December 2020: HK$1,813.5 million). The Group has interest-bearing borrowings amounted to HK$58.8 million (31 December 2020: HK$22.0 million).

The Group’s current assets and current liabilities as at 30 June 2021 were HK$1,834.8 million and HK$89.8 million (31 December 2020: HK$1,853.4 million and HK$82.3 million), respectively. As a result, the current ratio of the Group as at 30 June 2021 was 20.4 (31 December 2020: 22.5). The gearing ratio as at 30 June 2021, expressed as a percentage of total borrowings to equity attributable to owners of the Company, was 3.3% (31 December 2020: 1.0%).

As at each of 30 June 2021 and 31 December 2020, over 95% of the Group’s cash and bank balances and investments held for trading were denominated in Hong Kong dollar and United States dollar.

CHARGE OF ASSETS

The borrowing (current liabilities) was secured by the Group’s interest over certain subsidiaries as at each of 30 June 2021 and 31 December 2020.

The borrowing (non-current liabilities) was secured by the commercial properties of Qiao Feng, a non-wholly owned subsidiary acquired during the current interim period.

CONTINGENT LIABILITIES

The Group did not have any significant contingent liabilities as at each of 30 June 2021 and 31 December 2020.

FOREIGN CURRENCY EXPOSURE

The majority of the Group’s assets and liabilities and business transactions were denominated in Hong Kong dollar and Renminbi. During the six months ended 30 June 2021, the Group has not entered into any hedging arrangements. However, the Group will actively consider the use of relevant financial instruments to manage currency exchange risks in line with our business development.

INTEREST RATE EXPOSURE

During the six months ended 30 June 2021, the Group was not subject to the risk of significant interest rate volatility. The Company will continue to monitor the interest rate markets and actively consider the application of relevant financial instruments to manage risks associated with interest rates.

EMPLOYEE AND REMUNERATION POLICY

At 30 June 2021, the Group had 378 employees of which 366 employees were stationed in the PRC. Employees’ remuneration packages were determined in accordance with individual’s responsibility, competence and skills, qualifications, experience and performance as well as market pay-level. Staff benefits include training programs, provident fund scheme, medical insurance and other competitive fringe benefits.

To provide incentives and rewards to employees, the Company has adopted a share option scheme for the eligible participants (including employees).

PROSPECTS

Looking ahead, with the COVID-19 pandemic continuing and rising cases of the Delta variant is concerning, it is not easy to predict when international travel can resume to normal levels and the lookout for our business recovery remains uncertain. COVID-19 is a major humanitarian challenge, new procedures, standards and processes, either temporary or long term have been newly set, which has led to a generational shift in the way the world operates. We hope the vaccination rates will increase substantially with COVID-19 cases remains low so that borders can reopen as soon as possible to both domestic and international travelers. At the same time, the hotel sector is moving forward towards a ‘new normal’, with unprecedented health and safety measures in place. Thus, we have begun consolidating internal operational efficiency in response to change in the markets as well as managing the cost and programme implications of COVID-19. Our central mission is restoring consumers’ confidence, which must be to give every guest of our hotels the confidence and reassurance that they are safe when they stay with us.

As the path of the pandemic remains highly uncertain, the revenue of the Group will continue to be impacted during a period when the Group is taking strict precautionary measures to ensure the health and safety of its employees, and we are hopeful that almost 100% of our staff will be fully vaccinated. Although the COVID-19 vaccination is in place all around the developed nations, the management of the Company do not expect a robust rebound of the hospitality market in the remaining months of the year. Besides seeking further high-quality hotel investment opportunities, the Group shall look into other business segments with high growth potentials including property development and investment in the PRC to enhance the return of the Company and shareholders of the Company as a whole.

INTERIM DIVIDEND

The Board has resolved not to declare an interim dividend for the six months ended 30 June 2021 (Six months ended 30 June 2020: nil).

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

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

REVIEW BY AUDIT COMMITTEE

The audit committee of the Company has reviewed the unaudited condensed consolidated financial statements of the Group for the six months ended 30 June 2021.

CORPORATE GOVERNANCE

In the opinion of the Board, the Company had complied with the code provisions set out in the Corporate Governance Code (“CG Code”) contained in Appendix 14 to the Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited during the six months ended 30 June 2021, except for the following deviations:

Code Provision A.4.1

Code provision A.4.1 of the CG Code stipulates that non-executive directors should be appointed for a specific term, subject to re-election. The current independent non-executive Directors were not appointed for a specific term but are subject to retirement by rotation and re-election at each annual general meeting in accordance with the bye-laws of the Company (“Bye-Laws”). The Board considers that sufficient measures have been taken to ensure that the Company’s corporate governance practices are no less exacting than those prescribed by code provision A.4.1, and does not intend to take any steps in this regard at the moment.

Code Provision E.1.2

Code provision E.1.2 of the CG Code stipulates that the chairman of the board should attend the annual general meeting. The chairman of the Company, Mr. Tam Chung Sun was unable to attend the annual general meeting of the Company held on 30 June 2021 (“2021 AGM”) due to COVID-19 restrictions. Mr. Lai Tsz Wah, the managing director of the Company, attended and took the chair of the 2021 AGM in accordance with Bye-Law 68 of the Bye-Laws and answered questions from shareholders of the Company.

By order of the Board GREATER BAY AREA DYNAMIC GROWTH HOLDING LIMITED Tam Chung Sun Chairman

Hong Kong, 26 August 2021

As at the date of this announcement, the Board comprises:

Executive Directors: Independent Non-executive Directors: Mr. Tam Chung Sun (Chairman) Mr. Kwok Ka Lap, Alva Mr. Lai Tsz Wah (Managing Director) Mr. Poon Kwok Hing, Albert Mr. Liu Hao Mr. Sin Chi Fai

For identification purposes only