LH Group Limited

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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(Incorporated in the Cayman Islands with limited liability) (Stock code: 1978)

INTERIM RESULTS ANNOUNCEMENT FOR THE SIX MONTHS ENDED 30 JUNE 2021

FINANCIAL HIGHLIGHTS

	Six months ended 30 June	Six months ended 30 June
	2021	2020	% Change
	*HK$ million*	HK$ million
Revenue	422.9	404.2	4.6%
Profit attributable to the shareholders of
the Company	25.6	24.3	5.7%
Earnings per share
Basic and diluted_(HK cents)_	3.20	3.03	5.7%

Interim dividend in respect of the six months ended 30 June 2021 of HK2.40 cents per share (2020: nil), which represented a dividend payout ratio of approximately 75%.

RESULTS

The board (the “ Board ”) of directors (the “ Directors ”) of LH Group Limited (the “ Company ”) is pleased to announce the unaudited condensed consolidated interim results of the Company and its subsidiaries (collectively, the “ Group ”) for the six months ended 30 June 2021 (the “ Period ”), together with the comparative figures for the previous year as follows:

– 1 –

UNAUDITED CONDENSED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

For the six months ended 30 June 2021

Note
Revenue
4
Other income and gains
5
Cost of food and beverages
Staff costs
Depreciation and amortisation
Depreciation of right-of-use assets
Property rentals and related expenses
Fuel and utility expenses
Advertising and marketing expenses
Other operating expenses
Provision for impairment of property, plant and
equipment
Provision for impairment of right-of-use assets
Finance income
6
Finance costs
6
Profit before taxation
8
Income tax expense
7
Profit and total comprehensive income
for the period attributable to the shareholders
of the Company
Earnings per share
Basic and diluted
9

Six months ended 30 June
2021
2020
HK$’000
HK$’000
(Unaudited)
(Unaudited)
422,881
404,234
15,289
42,315
(133,711)
(125,089)
(135,788)
(128,276)
(14,891)
(18,712)
(47,190)
(47,730)
(19,609)
(18,085)
(8,977)
(9,842)
(2,560)
(3,230)
(45,338)
(40,592)
—
(9,111)
—
(19,417)
1,003
2,584
(2,285)
(2,804)
28,824
26,245
(3,186)
(1,990)
25,638
24,255
HK3.20 cents
HK3.03 cents

– 2 –

CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL POSITION

As at 30 June 2021

Note ASSETS NON-CURRENT ASSETS Property, plant and equipment Right-of-use assets Investment property Intangible assets Rental and utilities deposits 11 Prepayments for property, plant and equipment 11 Deferred income tax assets CURRENT ASSETS Inventories Trade receivables 11 Prepayments, deposits and other receivables 11 Tax recoverable Short term bank deposits Cash and cash equivalents Total assets EQUITY Equity and reserves attributable to the shareholders of the Company Share capital Share premium Reserves Total equity	As at 30 June 2021 *HK$’000* (Unaudited) 106,710 148,037 658 5,074 39,001 845 27,567 327,892 29,182 4,236 29,231 686 102,723 182,942 349,000 676,892 80,000 122,781 132,178 334,959	As at 31 December 2020 HK$’000 (Audited) 106,952 169,332 670 5,419 39,463 1,805 26,040 349,681 32,414 4,962 20,983 686 159,623 179,148 397,816 747,497 80,000 122,781 211,820 414,601

– 3 –

CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL POSITION (CONTINUED)

As at 30 June 2021

Note LIABILITIES NON-CURRENT LIABILITIES Provision for reinstatement costs 12 Lease liabilities Deferred income tax liabilities CURRENT LIABILITIES Trade payables 12 Other payables and accruals 12 Contract liabilities Lease liabilities Tax payable Total liabilities Total equity and liabilities	As at 30 June 2021 *HK$’000* (Unaudited) 12,484 73,196 5,155 90,835 51,440 66,937 27,115 98,525 7,081 251,098 341,933 676,892	As at 31 December 2020 HK$’000 (Audited) 14,932 95,752 5,155 115,839 37,657 59,886 21,819 93,401 4,294 217,057 332,896 747,497

– 4 –

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY

(Unaudited) Balance as at 1 January 2021 Profit and total comprehensive income for the Period Dividends (Note 10) Balance as at 30 June 2021 (Unaudited) Balance as at 1 January 2020 Profit and total comprehensive income for the Period Balance as at 30 June 2020	Attributable to shareholders of the Company Share Capital Share Premium Retained Earnings Other Reserves *HK$’000* *HK$’000* *HK$’000* *HK$’000* 80,000 122,781 184,201 27,619 — — 25,638 — — — (105,280) — 80,000 122,781 104,559 27,619 Attributable to shareholders of the Company Share Capital Share Premium Retained Earnings Other Reserves HK$’000 HK$’000 HK$’000 HK$’000 80,000 122,781 43,873 27,619 — — 24,255 — 80,000 122,781 68,128 27,619	Total *HK$’000* 334,601 25,638 (105,280) 334,959 Total HK$’000 274,273 24,255 298,528

– 5 –

NOTES

1. GENERAL INFORMATION

The Company was incorporated in the Cayman Islands on 9 June 2017 as an exempted company with limited liability under the Companies Act of the Cayman Islands and its shares have been listed (the “ Listing ”) on the Main Board of The Stock Exchange of Hong Kong Limited (the “ Stock Exchange ”) since 30 May 2018 (the “ Listing Date ”). The address of the Company’s registered office is 190 Elgin Avenue, George Town, Grand Cayman KY1-9008, Cayman Islands.

The Company is an investment holding company and its subsidiaries are principally engaged as full-service restaurants operator serving Asian cuisine including Japanese, Korean, Cantonese and Shanghainese cuisine in Hong Kong.

The unaudited condensed consolidated interim financial information is presented in Hong Kong dollars (“ HK$ ”), unless otherwise stated, and has been approved for issue by the Board on 27 August 2021.

2. BASIS OF PREPARATION

The unaudited condensed consolidated interim financial information have been prepared in accordance with Hong Kong Accounting Standard (“ HKAS ”) 34 “Interim Financial Reporting” issued by the Hong Kong Institute of Certified Public Accountants (“ HKICPA ”) and the applicable disclosure requirements of Appendix 16 to the Rules Governing the Listing of Securities on the Stock Exchange (the “ Listing Rules ”). The Group’s unaudited condensed consolidated interim financial information should be read in conjunction with the Company’s annual report for the year ended 31 December 2020 (the “ 2020 Annual Report ”).

The preparation of the unaudited condensed consolidated interim financial information in conformity with HKAS 34 requires management to make judgements, estimates and assumptions that affect the application of accounting policies and reported amounts of assets and liabilities, income and expenses on a year-to-date basis. Actual results may differ from these estimates. In preparing this unaudited consolidated interim financial information, the significant judgements made by management in applying the Group’s accounting policies and the key sources of estimation uncertainty were the same as those that applied to the 2020 Annual Report, except as stated below.

Income tax expense is recognised based on management’s estimate of the weighted average effective annual income tax rate expected for the full financial year.

– 6 –

3. ACCOUNTING POLICIES

The accounting policies and methods of computation used in preparing the unaudited condensed consolidated interim financial information are consistent with those followed in preparing the 2020 Annual Report, except for the adoption of the following amended Hong Kong Financial Reporting Standards (“ HKFRSs ”) and HKASs (collectively “ new HKFRSs ”) as set out below.

New and amended standards adopted by the Group

The following amended standards have been adopted by the Group for the financial period beginning on or after 1 January 2021:

HKFRS 16 (Amendments) Covid-19-Related Rent Concessions HKFRS 9, HKAS 39, HKFRS 7, Interest Rate Benchmark Reform HKFRS 4 and HKFRS 16 — Phase 2 (Amendments)

These amended standards have no material impact on the Group in the current or future reporting periods and on foreseeable future transactions.

The Group has adopted Amendment to HKFRS 16 — COVID-19-Related Rent Concessions for the financial period beginning on or after 1 January 2021. The amendment provides an optional practical expedient allowing lessees to elect not to assess whether a rent concession related to COVID-19 is a lease modification. Lessees adopting this election may account for qualifying rent concessions in the same way as they would if they were not lease modifications. The practical expedient only applies to rent concessions occurring as a direct consequence of the COVID-19 pandemic and only if all of the following conditions are met: a) the change in lease payments results in revised consideration for the lease that is substantially the same as, or less than, the consideration for the lease immediately preceding the change; b) any reduction in lease payments affects only payments due on or before 30 June 2021; and c) there is no substantive change to other terms and conditions of the lease.

The Group has applied the practical expedient to all qualifying COVID-19-related rent concessions. Rent concessions of approximately HK$2,703,000 have been accounted for as negative variable lease payments and recognised in property rentals and related expenses in the consolidated statement of comprehensive income for the six months ended 30 June 2021, with a corresponding adjustment to the lease liability.

The Group has not adopted any new or amended standards or interpretations that are not yet effective during the six months ended 30 June 2021.

– 7 –

4. REVENUE AND SEGMENT INFORMATION

(a) Revenue

Revenue, which is also the Group’s turnover, represents amounts received and receivable from the operation of restaurants and sales of food ingredients and others in Hong Kong, net of discount. An analysis of revenue is as follows:

Recognised at a point in time: Restaurant operations Sale of food ingredients and others	Six months ended 30 June 2021 2020 *HK$’000* HK$’000 (Unaudited) (Unaudited) 421,092 401,832 1,789 2,402 422,881 404,234

(b) Segment information

The Directors, who are the chief operating decision makers of the Group, review the Group’s internal reporting in order to assess performance and allocate resources. Management has determined the operating segments based on reports reviewed by the Directors that are used to make strategic decisions.

The Group is principally engaged in the operation of restaurant chains and sales of food ingredients in Hong Kong. Management reviews the operating results of the business of major cuisine and sale of food ingredients and others which the Group operates to make decisions about resources to be allocated.

– 8 –

The Group has the following reporting segments:

(a) Cantonese cuisine — Operation of Cantonese cuisine restaurants self-owned brands under the self-established “ Pot Master ” brand, offering Cantonese cuisine
(b) Asian cuisine — Operation of Asian cuisine restaurants under franchised brands the franchised “ Gyu-Kaku ”, “ On-Yasai ”, “ GyuKaku Jinan-Bou ” and “ Yoogane ” brands
(c) Asian cuisine — Operation of Asian cuisine restaurants under self-owned brands self-owned brands, including “ Mou Mou Club ” and “ Peace Cuisine ”
(d) Sale of food ingredients Sale of food ingredients to related parties and and others external third parties and other business

Segment revenue and segment profit/(loss) are the measures reported to the Directors for the purpose of resources allocation and performance assessment. Segment profit/(loss), which is a measure of adjusted profit/(loss) before tax, is measured consistently with the Group’s profit/(loss) before tax except that unallocated finance income and unallocated cost are excluded from this measurement.

Segment assets consist primarily of property, plant and equipment, right-of-use assets, intangible assets, inventories, trade receivables, prepayments, deposits and other receivables. They exclude property, plant and equipment and prepayments, deposits and other receivables and cash and cash equivalents for general use, investment property, deferred income tax assets and tax recoverable.

Segment liabilities consist primarily of trade payables, contract liabilities, lease liabilities and other payables and accruals. They exclude other payables and accruals for general use, tax payables and deferred income tax liabilities.

All operating entities of the Group are domiciled in Hong Kong. All of the Group’s revenue are derived in Hong Kong. As at 30 June 2021 and 31 December 2020, all of non-current assets of the Group are located in Hong Kong.

– 9 –

An analysis of the Group’s revenue, profit before taxation and depreciation and amortisation for the six months ended 30 June 2021 and 2020 and segment assets and liabilities as at 30 June 2021 and 31 December 2020 is as follows:

(Unaudited) Segment revenue Revenue Inter-segment revenue External revenue Segment profit/(loss) Segment profit includes Depreciation and amortisation Depreciation of right-of-use assets Segment profit Unallocated depreciation and amortisation Unallocated depreciation of right-of-use assets Unallocated cost Unallocated finance income Unallocated finance costs Profit before taxation Segment assets Segment liabilities	Cantonese cuisine — self-owned brands *HK$’000* 18,070 — 18,070 2,196 (144) (15) 12,988 (7,480)	For the six months ended 30 June 2021 Asian cuisine — franchised brands Asian cuisine — self-owned brands Sale of food ingredients and others *HK$’000* *HK$’000* *HK$’000* 304,090 98,932 46,169 — — (44,380) 304,090 98,932 1,789 47,635 8,222 (842) (9,262) (3,640) (684) (31,104) (13,926) — As at 30 June 2021 203,217 76,676 92,838 (195,014) (73,048) (17,761)	Total *HK$’000* 467,261 (44,380) 422,881 57,211 (13,730) (45,045) 57,211 (1,161) (2,145) (25,825) 778 (34) 28,824 385,719 (293,303)

– 10 –

(Unaudited) Segment revenue Revenue Inter-segment revenue External revenue Segment profit/(loss) Segment profit includes Depreciation and amortisation Depreciation of right-of-use assets Provision for impairment Segment profit Unallocated depreciation and amortisation Unallocated depreciation of right-of-use assets Unallocated cost Unallocated finance income Unallocated finance costs Profit before taxation Segment assets Segment liabilities	Cantonese cuisine — self-owned brands HK$’000 40,421 — 40,421 30,619 (1,617) (1,104) — 11,942 (6,473)	For the six months ended 30 June 2020 Asian cuisine — franchised brands Asian cuisine — self-owned brands Sale of food ingredients and others HK$’000 HK$’000 HK$’000 266,737 94,674 47,178 — — (44,776) 266,737 94,674 2,402 32,826 (21,021) 639 (9,117) (6,861) — (28,415) (16,067) — (9,770) (18,758) — As at 31 December 2020 200,949 90,422 82,532 (182,898) (87,368) (10,899)	Total HK$’000 449,010 (44,776) 404,234 43,063 (17,595) (45,586) (28,528) 43,063 (1,117) (2,144) (15,336) 1,862 (83) 26,245 385,845 (287,638)

– 11 –

A reconciliation of segment assets to the Group’s total assets is as follows:

	As at	As at
	30 June	31 December
	2021	2020
	*HK$’000*	HK$’000
	(Unaudited)	(Audited)
Segment assets	385,719	385,845
Unallocated assets	291,173	361,652
	676,892	747,497

A reconciliation of segment liabilities to the Group’s total liabilities is as follows			:
	As at	As at
	30 June	31 December
	2021	2020
	*HK$’000*	HK$’000
	(Unaudited)	(Audited)
Segment liabilities	293,303	287,638
Unallocated liabilities	48,630	45,258
	341,933	332,896

OTHER INCOME AND GAINS
	Six months ended 30 June
	2021	2020
	*HK$’000*	HK$’000
	(Unaudited)	(Unaudited)
Government grants	9,727	13,330
Net gain from lease modification due to early
termination on leases	—	26,933
Sponsorship income	2,163	—
Over-provision of legal costs	1,468	—
Promotion income from a credit card company	1,600	1,550
Sundry income	331	502
	15,289	42,315

A reconciliation of segment liabilities to the Group’s total liabilities is as follows:

5. OTHER INCOME AND GAINS

– 12 –

6. FINANCE INCOME AND COSTS

Interest income from bank deposits Finance income on financial assets Finance income Finance costs paid for lease liabilities	Six months ended 30 June 2021 2020 *HK$’000* HK$’000 (Unaudited) (Unaudited) 747 1,795 256 789 1,003 2,584 (2,285) (2,804)

7. TAXATION

Hong Kong profits tax has been provided on the estimated assessable profits at a rate of 16.5% for the six months ended 30 June 2021 and 2020.

The major components of the income tax expense are as follows:

Hong Kong profits tax Current income tax Deferred income tax	Six months ended 30 June 2021 2020 *HK$’000* HK$’000 (Unaudited) (Unaudited) 4,713 4,259 (1,527) (2,269) 3,186 1,990

– 13 –

8. PROFIT BEFORE TAXATION

Profit before taxation is arrived at after charging/(crediting) the followings:

Depreciation of property, plant and equipment Depreciation of right-of-use assets Depreciation of investment property Amortisation of intangible assets COVID-19 related rent concessions Lease payments under operating leases in respect of land and buildings: — Minimum lease payments — Contingent rental Employee benefit expenses Wages and salaries Discretionary bonuses Retirement benefit scheme contributions Staff welfare Reversal of untaken annual leave Provision for long service payment Auditors’ remuneration — Audit services — Non-audit services		Six months ended 30 June 2021 2020 *HK$’000* HK$’000 (Unaudited) (Unaudited) 14,534 18,419 47,190 47,730 12 12 345 281 (2,703) (8,319)	Six months ended 30 June 2021 2020 *HK$’000* HK$’000 (Unaudited) (Unaudited) 14,534 18,419 47,190 47,730 12 12 345 281 (2,703) (8,319)
		523 6,147	2,260 7,627
		6,670	9,887
		117,509 12,025 5,535 1,641 (1,010) 88	112,157 8,956 5,712 1,886 (802) 367
		135,788 1,050 329	128,276 1,100 532

– 14 –

9. EARNINGS PER SHARE ATTRIBUTABLE TO SHAREHOLDERS OF THE COMPANY

(a) Basic

The calculation of basic earnings per share is based on the profit attributable to shareholders of the Company (the “ Shareholders ”) of approximately HK$25,638,000 (six months ended 30 June 2020: HK$24,255,000) and the 800,000,000 ordinary shares in issue during the six months ended 30 June 2021 and 2020.

Profit attributable to the Shareholders_(HK$’000) Number of ordinary shares in issue(’000)_ Earnings per share	Six months ended 30 June 2021 2020 (Unaudited) (Unaudited) 25,638 24,255 800,000 800,000 HK3.20 cents HK3.03 cents

(b) Diluted

Diluted earnings per share for the six months ended 30 June 2021 and 2020 are the same as the basic earnings per share as there were no potentially dilutive ordinary shares issued.

10. DIVIDEND

A final dividend for the year ended 31 December 2020 of HK13.16 cents per ordinary share, totalling HK$105,280,000, was declared by the Board on 29 March 2021 and approved by the Shareholders at the annual general meeting of the Company held on 3 June 2021, which was paid on Friday, 25 June 2021.

An interim dividend in respect of the six months ended 30 June 2021 of HK2.40 cents per ordinary share, totalling HK$19,200,000, was proposed by the Board on 27 August 2021. The proposed dividend is not reflected as dividend payable in the consolidated statement of financial position.

– 15 –

11. TRADE AND OTHER RECEIVABLES

Trade receivables mainly represent receivables from financial institutions in relation to the payment settled by credit cards by customers of which the settlement period is normally within 3 days from transaction date. Generally, there is no credit period granted to customers, except for certain corporate customers in relation to sales of food ingredients, to which a credit period of 30 days is granted by the Group.

External customers	As at 30 June 2021 *HK$’000* (Unaudited) 4,236	As at 31 December 2020 HK$’000 (Audited) 4,962

An ageing analysis of the trade receivables as at 30 June 2021 and 31 December 2020, based on the invoice date, is as follows:

Within 30 days 31–60 days 61–180 days	As at 30 June 2021 *HK$’000* (Unaudited) 3,610 356 270 4,236	As at 31 December 2020 HK$’000 (Audited) 3,237 105 1,620
		4,962

– 16 –

There was no recent history of default in respect of the Group’s debtors. Based on past experience, management believes that no impairment allowance is necessary in respect of the past due balances as there has not been a significant change in credit quality and the balances are still considered fully recoverable. The Group did not hold any collateral over these balances. No impairment loss was recognised by the Group as at 30 June 2021 and 31 December 2020.

Prepayments Rental and utilities deposits Other receivables Less: non-current portion — Rental and utilities deposits — Prepayments for property, plant and equipment Current portion	As at 30 June 2021 *HK$’000* (Unaudited) 13,760 53,667 1,650 69,077 (39,001) (845) 29,231	As at 31 December 2020 HK$’000 (Audited) 7,881 51,013 3,357 62,251 (39,463) (1,805) 20,983

As at 30 June 2021 and 31 December 2020, the balances of deposits and other receivables were neither past due nor impaired. Financial assets included in the above balances relate to receivables for which there was no recent history of default.

The maximum exposure to credit risk as at 30 June 2021 and 31 December 2020 was the carrying value of each class of receivable mentioned above. The Group did not hold any collateral as security.

– 17 –

12. TRADE PAYABLES, OTHER PAYABLES AND ACCRUALS

An ageing analysis of the trade payables as at 30 June 2021 and 31 December 2020, based on the invoice date, is as follows:

Within 30 days 31–60 days 61–180 days Over 180 days	As at 30 June 2021 *HK$’000* (Unaudited) 33,975 17,242 11 212 51,440	As at 31 December 2020 HK$’000 (Audited) 19,436 18,012 94 115
		37,657

The trade payables are non-interest-bearing with payment terms of 30–60 days in general.

Rent payable Accrued employee benefit expenses Provision for long service payment Provision for untaken annual leave Provision for reinstatement costs Other accrued expenses Payables for purchase of property, plant and equipment Other payables Less: non-current portion — Provision for reinstatement costs Current portion	As at 30 June 2021 *HK$’000* (Unaudited) 2,472 22,325 1,110 7,225 18,429 23,134 4,094 632 79,421 (12,484) 66,937	As at 31 December 2020 HK$’000 (Audited) 1,545 18,280 994 8,235 18,105 23,555 3,472 632 74,818 (14,932) 59,886

– 18 –

MANAGEMENT DISCUSSION AND ANALYSIS

BUSINESS REVIEW

The Group is a top full service multi-brand restaurant group in Hong Kong specialising in Asian (in particular Japanese) and Cantonese cuisine.

As at 30 June 2021, the Group operated one Cantonese restaurant under a self-owned brand “ Pot Master ( 煲仔王 ) ”; and 39 Asian restaurants under two self-owned brands, namely, “ Mou Mou Club ( 牛涮鍋 ) ” and “ Peace Cuisine ( 和平飯店 ) ”, and four franchised brands, namely “ Gyu-Kaku ( 牛角 ) ”, “ Gyu-Kaku Jinan-Bou ( 牛角次男坊 ) ”, “ On-Yasai ( 溫野菜 ) ” and “ Yoogane ( 柳氏家 ) ”, which serve quality, value-for-money delicacies to diversified customer segments seeking a wide array of culinary experiences. We pride ourselves in the extensive market coverage of our brand portfolio, which allows us to tap into customer segments spanning across mid-to-high end market to mass market with different culinary preferences.

The following table sets forth the number of restaurants we operated as at the dates indicated.

Cantonese cuisine restaurants — Self-owned brands Asian cuisine restaurants — Self-owned brands — Franchised brands Sub-total of Asian restaurants: Total:	As at 30 June 2021 2020 1 2 13 14 26 22 39 36 40 38	As at 30 June 2021 2020 1 2 13 14 26 22 39 36 40 38
		36
		38

– 19 –

FINANCIAL REVIEW

Revenue

The Group’s revenue for the Period was affected by the outbreak of COVID-19 pandemic (the “ Pandemic ”) and mandatory social distancing measures, such as seating restrictions, reduced operating hours and other measures which aim to contain the Pandemic. Despite the negative impact brought by the Pandemic, the Group’s revenue increased by approximately 4.6%, or approximately HK$18.6 million, from approximately HK$404.2 million for the six months ended 30 June 2020 (the “ Last Corresponding Period ”) to approximately HK$422.9 million for the Period.

The increase in revenue was mainly due to (i) the increase of number of franchised brands of Asian cuisine restaurants owned by the Group; and (ii) the gradual recovery of catering industry with the better control of the Pandemic in Hong Kong in the first half of 2021.

The revenue from Asian cuisine restaurants — franchised brands increased by approximately HK$37.4 million or approximately 14.0%, from approximately HK$266.7 million to approximately HK$304.1 million. Asian cuisine restaurants — franchised brands remained as the main pillar of revenue, constituting approximately 71.9% of the total revenue for the Period (Last Corresponding Period: 66.0%).

The revenue from Asian cuisine restaurants — self-owned brands increased by approximately HK$4.3 million or approximately 4.5%, from approximately HK$94.7 million to approximately HK$98.9 million.

However, due to the combined effect of the Pandemic and the closure of one Cantonese cuisine restaurant in September 2020, the revenue from Cantonese cuisine restaurant decreased from approximately HK$40.4 million for the Last Corresponding Period to approximately HK$18.1 million for the Period.

– 20 –

Revenue by business segments is set out below:

Cantonese cuisine restaurants — Self-owned brands Asian cuisine restaurants — Self-owned brands — Franchised brands Sub-total of restaurant operations Sale of food ingredients and others Total	For the six months ended 30 June 2021 2020 Revenue % of total Revenue Revenue % of total Revenue *HK$’000* *(%)* HK$’000 (%) 18,070 4.3 40,421 10.0 98,932 23.4 94,674 23.4 304,090 71.9 266,737 66.0 421,092 99.6 401,832 99.4 1,789 0.4 2,402 0.6 422,881 100.0 404,234 100.0

Other income and gains

The Group’s other income and gains decreased significantly by approximately 63.9%, or approximately HK$27.0 million, from approximately HK$42.3 million for the Last Corresponding Period to approximately HK$15.3 million for the Period. The decrease was mainly due to the net gain from lease modification of approximately HK$26.9 million recorded for the Last Corresponding Period while there was no such gain for the Period.

Cost of food and beverages

The Group’s cost of food and beverages increased by approximately 6.9%, or approximately HK$8.6 million, from approximately HK$125.1 million for the Last Corresponding Period to approximately HK$133.7 million for the Period. The increase was in line with the increase in revenue during the Period. The cost of food and beverages as a percentage of revenue increased slightly from approximately 30.9% for the Last Corresponding Period to approximately 31.6% for the Period.

– 21 –

Staff costs

The Group’s staff costs increased by approximately 5.9%, or approximately HK$7.5 million, from approximately HK$128.3 million for the Last Corresponding Period to approximately HK$135.8 million for the Period. Such increase was primarily due to the receipt of subsidies of approximately HK$7.2 million under the Employment Support Scheme of the AntiEpidemic Fund launched by the Hong Kong Government for the Last Corresponding Period, while there were no such subsidies received for the Period. The staff costs as a percentage of revenue remained relatively stable at approximately 32.1% for the Period (Last Corresponding Period: approximately 31.7%).

Profit for the Period

Profit for the Period increased by approximately 5.7%, or approximately HK$1.4 million, from approximately HK$24.3 million for the Last Corresponding Period to approximately HK$25.6 million for the Period. Such increase was mainly due to the combined effect of provision for impairment of property, plant and equipment and right-of-use assets of a total of approximately HK$28.5 million made for the Last Corresponding Period, while no impairment was made for the Period, which is partially offset by the decrease in HK$27.0 million in other income discussed above.

Excluding one-off and non-recurring items, i.e. government grants, gain from lease modification, provision for impairment and over-provision of legal costs, the core profit from our operation for the Period was approximately HK$17.6 million, representing a significant increase by approximately 140.2%, or approximately HK$10.3 million, from approximately HK$7.3 million for the Last Corresponding Period.

LIQUIDITY AND FINANCIAL RESOURCES

The Group financed its business with internally generated cash flows and proceeds received from the Listing. As at 30 June 2021, the Group had short term bank deposits of approximately HK$102.7 million (as at 31 December 2020: approximately HK$159.6 million) and cash and cash equivalents of approximately HK$182.9 million (as at 31 December 2020: approximately HK$179.1 million). Most bank deposits and cash were denominated in HK$. The Group will continue to use the internal generated cash flows and proceeds received from the Listing as a source of funding for future developments.

As at 30 June 2021, the Group’s total current assets and current liabilities were approximately HK$349.0 million (as at 31 December 2020: approximately HK$397.8 million) and approximately HK$251.1 million (as at 31 December 2020: approximately HK$217.1 million) respectively, while the current ratio was about 1.4 times (as at 31 December 2020: about 1.8 times).

– 22 –

As at 30 June 2021, the gearing ratio of the Group was not applicable as it had no outstanding interest-bearing bank borrowings. The gearing ratio is calculated by total interest-bearing bank borrowings divided by total equity and multiplied by 100%.

SIGNIFICANT INVESTMENTS

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

MATERIAL ACQUISITIONS AND DISPOSALS OF SUBSIDIARIES, ASSOCIATES AND JOINT VENTURES

The Group has no material acquisition or disposal of subsidiaries, associates or joint ventures during the Period.

CHARGES ON GROUP ASSETS

As at 30 June 2021, the Group did not have any charges on assets.

CAPITAL STRUCTURE

There was no change in the capital structure of the Group during the six months ended 30 June 2021. The capital of the Group only comprises ordinary shares.

EVENTS AFTER THE REPORTING PERIOD

No significant events occurred since the end of the Period and up to the date of this announcement which requires disclosure.

EMPLOYEES AND REMUNERATION POLICIES

As at 30 June 2021, the Group had 1,434 employees (as at 31 December 2020: 1,344 employees). The remuneration of the employees is determined by reference to prevailing market terms and in accordance with the performance, qualification and experience of each individual employee. The Group offered induction training when a staff member joins the Group and regular training as to work safety, work procedures and other work related ad hoc trainings are given to staff members regularly.

The emoluments of the Directors are recommended by the remuneration committee of the Company, with reference to their respective contribution of time, effort and expertise on the Company’s matters. The Company has adopted a share option scheme (the “ Share Option Scheme ”) on 4 May 2018 to reward the participants defined thereunder for their contribution to the Group’s success and to provide them with incentives to further contribute to the Group. The Share Option Scheme has become effective on 30 May 2018. In addition, employees are entitled to performance and discretionary new year bonuses.

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No share option was granted during the Period. As at 30 June 2021, the Company had no outstanding share option under the Share Option Scheme.

FOREIGN EXCHANGE EXPOSURE

Most of the transactions of the Group are denominated in Hong Kong dollars and the Group is not exposed to any significant foreign exchange exposure. The Company did not engage in hedging of foreign currency during the Period.

CONTINGENT LIABILITIES

As at 30 June 2021, the Group did not have any material contingent liabilities.

PROSPECTS

Owing to the outbreak of COVID-19 since 2020 and the stringent and mandatory social distancing measures in place earlier this year, the revenue of the Group has been severely impacted and recorded operating loss from January to early February 2021. However, thanks to the constant support from our customers, the Group showed strong resilience and agility in the remaining months of the first half of 2021 since mid-February 2021, during which the anti-Pandemic measures began to be gradually relieved, which had rapidly recouped the revenue and have been bringing considerable profits to the Group in the overall for the first half of 2021.

Looking forward, the management expects that the overall vaccination progress on a mass scale both locally and globally and the consumption voucher scheme recently commenced will help facilitate the speedy recovery of the local consumption market and bring significant opportunity to the business growth of the Group. Moreover, after almost two years of Pandemic along with various difficulties and challenges, the Group became stronger through hardship, making breakthrough in all aspects such as cost control, management quality and crisis management, with its overall capacity reaching the highest point since its listing and continues to improve. The management is confident that the Group is better positioned than ever before to overcome the difficulties that may arise in the future.

As of the Latest Practicable Date (24 August 2021), the overall vaccination rate of the first dose for the Group’s permanent frontline staff reached 74.83% (the overall vaccination rate in Hong Kong was 58.70% on the same date), and is increasing in preparation for the eventuality of the fifth wave of the Pandemic.

The Group will also launch its new self-owned brand “Wing Wah Allday” and introduce a new franchised brand “The Matcha Tokyo” in the second half of the year, to provide diverse dining experiences to customers and further expand the Group’s business presence to traditional local cuisines restaurants and fine casual cafés.

With a robust financial position and brand layout of the Group, provided that the Pandemic situation in Hong Kong would not deteriorate in 2021, the management remains optimistic on the financial performance of the Group in the second half of 2021 and believes that the Group will achieve further growth.

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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, the Company has maintained a sufficient public float of at least 25% of the issued shares for the Period and up to the date of this announcement under the Listing Rules.

INTERIM DIVIDEND

Having considered the economic outlook, the Group’s financial position, its future expansion plans and other factors, the Board has declared payment of an interim dividend of HK2.40 cents per share for the Period (Last Corresponding Period: Nil), totalling HK$19,200,000, payable to the Shareholders whose names appear on the register of members of the Company (the “ Register of Members ”) on Wednesday, 15 September 2021. The interim dividend will be paid to the Shareholders on or around Monday, 27 September 2021.

CLOSURE OF REGISTER OF MEMBERS

For the purpose of determination of entitlement to the interim dividend, the Register of Members will be closed from Monday, 13 September 2021 to Wednesday, 15 September 2021, both days inclusive, during which no transfer of shares will be registered. In order to qualify for the interim dividend, all completed transfer forms accompanied by the relevant share certificates, must be lodged with the Company’s Hong Kong share registrar, Computershare Hong Kong Investor Services Limited at Shops 1712–1716, 17th Floor, Hopewell Centre, 183 Queen’s Road East, Wanchai, Hong Kong for registration not later than 4:30 p.m. on Friday, 10 September 2021.

CORPORATE GOVERNANCE PRACTICES

The Group is committed to maintaining high standards of corporate governance to safeguard the interests of the Shareholders and to enhance corporate value and accountability. The Company has adopted the Corporate Governance Code and the Corporate Governance Report (the “ CG Code ”) as set out in Appendix 14 to the Listing Rules as its own code of corporate governance.

For the Period, save for the deviation from code provision A.2.1 of the CG Code, which is explained in the paragraph below, the Board considers that the Company has in all material respects complied with all the code provisions of the CG Code and adopted most of the best practices set out therein.

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Pursuant to code provision A.2.1 of the CG Code, the roles of the chairperson and the chief executive officer should be separate and should not be performed by the same individual. Mr. Wong Kit Lung Simon (“ Mr. Wong ”) currently holds both positions. Mr. Wong has been the key leadership figure of the Group who has been primarily involved in the formulation of business strategies and determination of the overall direction of the Group. He has also been chiefly responsible for the Group’s operations as he directly supervises the senior management of the Group. Taking into account the experience and expertise of Mr. Wong in the catering industry and the continuation of the implementation of the business plans, the Directors (including the independent non-executive Directors) consider Mr. Wong as the best candidate for both positions and the present arrangements are beneficial and in the interests of the Company and the Shareholders as a whole. The balance of power and authority is ensured by the operation of the senior management and the Board, which comprises experienced and high-calibre individuals. The Board currently comprises two executive Directors (including Mr. Wong) and three independent non-executive Directors and therefore has a strong independence element in its composition.

MODEL CODE FOR SECURITIES TRANSACTIONS

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

PURCHASE, SALE OR REDEMPTION OF LISTED SECURITIES

Neither the Company nor its subsidiaries has purchased, sold or redeemed any of the Company’s listed securities for the Period.

AUDIT COMMITTEE

The Board has established an audit committee (the “ Audit Committee ”) which comprises three independent non-executive Directors, namely Ms. Hung Lo Shan Lusan (Chairperson), Mr. Hung Wai Man and Mr. Sin Yat Kin. The primary duties of the Audit Committee are to assist the Board by providing an independent view of the effectiveness of the financial reporting process, internal control and risk management system of the Group, to oversee the audit process, to develop and review our policies and to perform other duties and responsibilities as assigned by the Board. The Audit Committee has held meetings to discuss the financial reporting process, internal control and risk management system of the Group, including the review of the unaudited interim results and the unaudited interim condensed consolidated financial information of the Group for the Period.

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The unaudited condensed consolidated interim results of the Group for the Period have not been audited or reviewed by the Company’s auditor but have been reviewed by the Audit Committee and the management of the Company.

PUBLICATION OF THE INTERIM RESULTS AND 2021 INTERIM REPORT ON THE WEBSITES OF THE STOCK EXCHANGE AND THE COMPANY

This interim results announcement is published on the websites of the Stock Exchange ( www.hkexnews.hk ) and the Company ( www.lhgroup.com.hk ), and the 2021 interim report containing the information required by Appendix 16 to the Listing Rules will be despatched to the Shareholders and will be published on the respective websites of the Stock Exchange and the Company according to the requirements under the Listing Rules.

APPRECIATION

The Board would like to express its sincere gratitude to the management team and all the staff of the Group for their continuous support and contribution. The Board also takes this opportunity to thank the Shareholders, customers, business partners and professional parties for their unreserved support in the prospects of the Group.

By order of the Board LH GROUP LIMITED Wong Kit Lung Simon Prof, BBS, JP Chairman

Hong Kong, 27 August 2021

As at the date of this announcement, the Board comprises Mr. Wong Kit Lung Simon Prof, BBS, JP, and Ms. Ko Sau Chee Grace as executive Directors; and Mr. Sin Yat Kin SBS, CSDSM, JP, Ms. Hung Lo Shan Lusan and Mr. Hung Wai Man Prof, JP as independent non-executive Directors.

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