Planetree International Development Limited — Annual Report 2020

Mar 19, 2021

Hong Kong Exchanges and Clearing Limited and The Stock Exchange of Hong Kong Limited take no responsibility for the contents of this announcement, make no representation as to its accuracy or completeness and expressly disclaim any liability whatsoever for any loss howsoever arising from or in reliance upon the whole or any part of the contents of this announcement.

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(Incorporated in Bermuda with limited liability)

(Stock code: 00613)

2020 ANNUAL RESULTS

The board (the “ Board ”) of directors (the “ Directors ”) of Planetree International Development Limited (the “ Company ”) is pleased to announce the consolidated results of the Company and its subsidiaries (collectively the “ Group ”) for the year ended 31 December 2020 together with the comparative figures for the corresponding year in 2019 as follows:

CoNSoLiDATED STATEmENT of PRofiT oR LoSS

For the year ended 31 December 2020

Notes Revenue Fee and commission income Asset management service income Corporate advisory service income Financial advisory service income Net gain (loss) on disposal of financial assets at FVPL Interest income from margin clients, loan receivables and debt investments at amortised cost Dividend income from financial assets at FVPL Gross rental income Total revenue 4 Other income and gains 4 Net gain on disposal of debt investments at amortised cost Gain on bargain purchase of subsidiaries Reversal of (Impairment losses) on loan and interest receivables Reversal of (Impairment losses) on promissory note receivable Impairment losses on trade receivables	2020 HK$’000 1,216 51,735 16,759 4,736 3,497 88,631 659 9,543 176,776 66,880 155 683 495 3,184 (613)	2019 HK$’000 (Represented) 713 — — — (42,986) 27,294 8,530 12,267 5,818 50,891 11,482 8,260 (1,883) (3,184) —

— 1 —

Notes Depreciation of property and equipment and rights-of-use assets Administrative expenses Other losses 5 Finance costs 6 Share of result of an associate Profit before taxation 7 Income tax expense 8 Profit and total comprehensive income for the year Profit for the year attributable to: Owners of the Company Non-controlling interests Total comprehensive income attributable to: Owners of the Company Non-controlling interests Earnings per share 10 Basic Diluted	2020 HK$’000 (11,981) (103,962) (121,811) (7,062) 46,563 49,307 (8,464) 40,843 41,762 (919) 40,843 41,762 (919) 40,843 HK cents 4.47 4.46	2019 HK$’000 (Represented) (1,954) (33,994) (6,300) (1,099) — 28,037 (6,962) 21,075 22,312 (1,237) 21,075 22,312 (1,237) 21,075 HK cents (Adjusted) 2.40 2.40

— 2 —

CoNSoLiDATED STATEmENT of fiNANCiAL PoSiTioN

At 31 December 2020

Notes Non-current assets Property and equipment Investment properties Intangible assets Goodwill Investment in an associate Debt investments at amortised cost Loan and other receivables Other assets Current assets Trade, loan and other receivables 11 Financial assets at fair value through profit or loss (“FVPL”) Bank balances — trust and segregated accounts Bank balances and cash Current liabilities Trade and other payables 12 Lease liabilities — current portion Interest-bearing borrowings Income tax payable Net current assets Total assets less current liabilities Non-current liabilities Other payables Lease liabilities — non-current portion Deferred taxation NET ASSETS Capital and reserves Share capital Reserves Equity attributable to owners of the Company Non-controlling interests ToTAL EQUiTY	2020 HK$’000 217,128 358,200 12,817 6,115 181,366 8,030 1,503 3,205 788,364 1,062,642 27,922 179,617 250,579 1,520,760 169,822 1,886 275,664 11,262 458,634 1,062,126 1,850,490 1,690 3,886 1,185 6,761 1,843,729 93,953 1,671,467 1,765,420 78,309 1,843,729	2019 HK$’000 181,210 457,700 6,500 — — 39,737 174,764 3,230
		863,141
		395,042 505,618 44,402 232,254
		1,177,316
		63,237 2,084 186,875 59
		252,255
		925,061
		1,788,202
		1,944 716 8,854
		11,514
		1,776,688
		93,053 1,570,159
		1,663,212 113,476
		1,776,688

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NoTES:

1. General

Planetree International Development Limited (the “ Company ”) is a public limited company incorporated in Bermuda as an exempted company and its shares are listed on The Stock Exchange of Hong Kong Limited (the “ Stock Exchange ”).

The Company and its subsidiaries (together the “ Group ”) principally engages in (i) financial services with operations under the Securities and Futures Ordinance (“ Sfo ”) licences, (ii) credit and lending services with operations under Money Lenders Ordinance (the “ mLo ”) licences, (iii) other financial services, (iv) property investment and leasing, and (v) tactical and strategic investment.

The consolidated financial statements are presented in Hong Kong dollars, which is also the functional currency of the Company.

2. Basis of preparation and changes in accounting policies and disclosures

Basis of preparation

These consolidated financial statements have been prepared in accordance with Hong Kong Financial Reporting Standards (“ HKfRSs ”), which collective term includes all applicable HKFRSs, Hong Kong Accounting Standards (“ HKASs ”) and Interpretations issued by the Hong Kong Institute of Certified Public Accountants (the “ HKiCPA ”), accounting principles generally accepted in Hong Kong and the disclosure requirements of the Hong Kong Companies Ordinance. The consolidated financial statements also comply with the applicable disclosure requirements of the Rules Governing the Listing of Securities on the Stock Exchange (the “ Listing Rules ”).

All amounts have been rounded to the nearest thousand, unless otherwise indicated.

The consolidated financial statements have been prepared on a basis consistent with the accounting policies adopted in the 2019 consolidated financial statements except for the adoption of the following revised HKFRSs that are relevant to the Group and effective from the current year. The adoption of the other amendments does not have any significant impact on the consolidated financial statements.

Adoption of revised HKfRSs

Amendments to HKASs 1 and 8: Definition of Material

The amendments clarify the definition of material and align the definition used across HKFRSs.

The adoption of the amendments does not have any significant impact on the consolidated financial statements.

Amendments to HKFRS 3: Definition of a Business

The amendments, among others, revise the definition of a business and include new guidance to evaluate whether an acquired process is substantive.

The adoption of the amendments does not have any significant impact on the consolidated financial statements.

— 4 —

3. operating segment information

The Group determines its operating segment and measurement of segment profit based on the internal reports to executive directors, the Group’s chief operating decision makers, for the purposes of resource allocation and performance assessment.

The Group’s reportable and operating segments are as follows:

• (a) Financial services — operations under SFO licences segment, which engages in the provision of dealing in securities, margin financing services, dealing in futures contracts, advising on corporate finance and asset management services under Type 1, Type 2, Type 6 and Type 9 licences granted under the SFO;

• (b) Credit and lending services — operations under MLO licences segment, which generates interest income from money lending activities with licences granted under the MLO;

• (c) Other financial services segment, which engages in the provision of corporate advisory related services;

• (d) Property investment and leasing segment, which consists of the leasing of properties directly owned by the Group for rental income and/or capital appreciation potential; and

• (e) Tactical and strategic investment segment, which trades and holds debt and equity securities, earns interest and dividend income from the relevant securities investments.

• The chief operating decision makers have updated the name of its reportable and operating segments for clearer descriptive information about them. SFO is defined as the Securities and Futures Ordinance, Chapter 571 of the laws of Hong Kong. MLO is defined as the Money Lenders Ordinance, Chapter 163 of the laws of Hong Kong.

— 5 —

Segment revenue and results

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

For the year ended 31 December 2020

Revenue Other income and gains Segment revenue Segment profit (loss) Unallocated other income and gains Gain on bargain purchase of a subsidiary Corporate and unallocated expenses, net Profit for the year	financial services — operations under Sfo licences HK$’000 117,235 794 118,029 99,891	Credit and lending services — operations under mLo licences HK$’000 26,883 14 26,897 21,714	other financial services HK$’000 16,759 3 16,762 7,029	Property investment and leasing Tactical and strategic investment Consolidated HK$’000 HK$’000 HK$’000 9,543 6,356 176,776 3 15,918 16,732 9,546 22,274 193,508 (21,264) (34,849) 72,521 50,148 683 (82,509) 40,843

— 6 —

For the year ended 31 December 2019

Revenue Other income and gains Segment revenue Segment (loss) profit Unallocated other income and gains Gain on bargain purchase of subsidiaries Corporate and unallocated expenses, net Profit for the year	Financial services — operations under SFO licences HK$’000 1,460 4 1,464 (1,048)	Credit and lending services — operations under MLO licences HK$’000 14,146 — 14,146 8,423	Property investment and leasing HK$’000 12,267 — 12,267 (4,725)	Tactical and strategic investment HK$’000 (22,055) 49,557 27,502 24,366	Consolidated HK$’000 5,818 49,561 55,379 27,016 1,330 8,260 (15,531) 21,075

Profit for the year

Segment revenue includes revenue from tactical and strategic investment, property investment and leasing, other financial services, credit and lending services — operations under MLO licences and financial services — operations under SFO licences. In addition, the chief operating decision makers also consider interest income on promissory note receivable and exchange gain as segment revenue.

Segment result represents the profit earned or loss incurred by each segment without allocation of the central corporate expenses. On the other hand, the chief operating decision makers consider share of result of an associate as segment result under tactical and strategic investment segment.

— 7 —

Segment assets and liabilities

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

At 31 December 2020

Assets Liabilities	financial services — operations under Sfo licences HK$’000 943,319 (168,316)	Credit and lending services — operations under mLo licences HK$’000 431,036 (4,322)	other financial services HK$’000 21,450 (3,736)	Property investment and leasing Tactical and strategic investment HK$’000 HK$’000 360,497 229,294 (149,236) (36,661)	Unallocated Consolidated HK$’000 HK$’000 323,528 2,309,124 (103,124) (465,395)

At 31 December 2019

Assets Liabilities	Financial services — operations under SFO licences HK$’000 482,120 (58,974)	Credit and lending services — operations under MLO licences HK$’000 87,122 (386)	Property investment and leasing HK$’000 459,020 (7,415)	Tactical and strategic investment HK$’000 719,245 (5,715)	Unallocated HK$’000 292,950 (191,279)	Consolidated HK$’000 2,040,457 (263,769)

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

• all assets are allocated to operating and reportable segments other than certain property and equipment, certain other receivables and bank balances and cash;

• all liabilities are allocated to operating and reportable segments other than certain other payables, certain lease liabilities, interest-bearing borrowings, certain income tax payable and certain deferred taxation.

— 8 —

other segment information

For the year ended 31 December 2020

		Credit and
	financial	lending
	services —	services —
	operations	operations	other	Property	Tactical
	under Sfo	under mLo	financial	investment	and strategic
	licences	licences	services	and leasing	investment	Unallocated	Consolidated
	HK$’000	HK$’000	HK$’000	HK$’000	HK$’000	HK$’000	HK$’000
Amounts included in the measure of
segment profit or segment assets:
Capital expenditure	746	—	403	61,500	—-	42,606	105,255
Interest income included in other
income and gains	36	—	—	—	13,407	322	13,765
Interest expenses	—	—	—	4,035	1,075	1,952	7,062
Reversal of impairment losses on
loan receivables	—	495	—	—	—	—	495
Reversal of impairment losses on
promissory note receivable	—	—	—	—	3,184	—	3,184
Impairment losses on trade receivables	468	—	145	—	—	—	613
Gain on disposal of subsidiaries	—	—	—	—	—	48,187	48,187
Depreciation of property and
equipment and right-of-use assets	4,301	—	82	11	—	7,587	11,981
Amortisation of intangible assets	8	—	—	—	—	—	8
Share-based compensation expenses	—	—	—	—	—	53,246	53,246
Share of result of an associate	—	—	—	—	46,563	—	46,563

For the year ended 31 December 2019

		Credit and
	Financial	lending
	services —	services —
	operations	operations	Property	Tactical
	under SFO	under MLO	investment	and strategic
	licences	licences	and leasing	investment	Unallocated	Consolidated
	HK$’000	HK$’000	HK$’000	HK$’000	HK$’000	HK$’000
Amounts included in the measure of segment profit or
segment assets:
Capital expenditure	173,815	—	—	—	9,047	182,862
Interest income included in other income and gains	4	—	—	2,135	524	2,663
Interest expenses	—	—	815	181	103	1,099
Impairment losses on loan receivables	—	1,883	—	—	—	1,883
Impairment losses on promissory note receivable	—	—	—	3,184	—	3,184
Gain on disposal of a subsidiary	—	—	—	—	385	385
Depreciation of property and equipment and
right-of-use assets	263	—	78	—	1,613	1,954

— 9 —

4. Revenue, other income and gains

An analysis of the Group’s revenue, other income and gains is as follows:

Notes Revenue Fee and commission income (a) Asset management service income (b) Corporate advisory service income (b) Financial advisory service income (a) Net gain (loss) on disposal of financial assets at FVPL (c) Interest income from: — margin clients — loan receivables — debt investments at amortised cost Dividend income from financial assets at FVPL Gross rental income other income and gains Interest income on: — bank deposits — other receivable from an ex-shareholder of a subsidiary — promissory note receivable Gain on disposal of subsidiaries Gain on disposal of property and equipment Gain on futures trading Government subsidies (d) Management fee income Net fair value gains on financial assets at FVPL Net exchange gain Others	2020 HK$’000 1,216 51,735 16,759 4,736 3,497 59,548 26,883 2,200 88,631 659 9,543 176,776 310 48 13,407 13,765 48,187 — 1,487 1,260 1,120 — 31 1,030 53,115 66,880	2019 HK$’000 713 — — — (42,986) 747 14,146 12,401 27,294 8,530 12,267 5,818 231 297 2,135 2,663 385 120 — — — 47,364 — 359 48,228 50,891

— 10 —

Notes:

• (a) All fee and commission income and financial advisory service income are recognised at a point in time.

• (b) Asset management service income and corporate advisory service income are recognised over time.

• (c) The amount represented the proceeds from the disposal of financial assets at FVPL of HK25,763,000 (2019: HK$667,804,000) less relevant costs and carrying value of the investments sold of HK$22,266,000 (2019: HK$710,790,000).

• (d) During the year, the Group recognised government subsidies of HK$1,260,000 (2019: HK$ Nil) in respect of the Employment Support Scheme under Anti-epidemic Fund of the Hong Kong SAR Government due to the COVID-19 pandemic.

5. other losses

Loss on disposal of property and equipment Fair value loss on contingent consideration receivable Net fair value losses on financial assets at FVPL Net fair value losses on investment properties finance costs Interest on interest-bearing borrowings Interest on margin account Imputed interest on lease liabilities	2020 HK$’000 40 3,000 94,171 24,600 121,811 2020 HK$’000 5,911 1,075 76 7,062	2019 HK$’000 — — — 6,300
		6,300
		2019 HK$’000 996 — 103
		1,099

6. finance costs

— 11 —

7. Profit before taxation

This is stated after charging (crediting):

Employee benefits expenses (including directors’ emoluments) Salaries and other benefits Retirement benefit scheme contributions Share-based compensation expenses — grant of share options to employees and directors Share-based compensation expenses — grant of share award to an employee Auditor’s remuneration Amortisation of intangible assets — included in administrative expenses Direct operating expenses (including repairs and maintenance) arising from rental-earning investment properties Net exchange (gain) loss Lease payments in respect of rented premises Share-based compensation expenses — grant of share options to consultants	2020 HK$’000 24,580 454 43,620 2,310 70,964 1,496 8 2,032 (31) 277 7,316	2019 HK$’000 10,351 210 — —
		10,561
		1,350 — 621 385 264 —

8. income tax expense

Under the two-tiered profits tax rates regime, the profits tax rate for the first HK$2,000,000 assessable profits arising from Hong Kong of qualifying entities will be taxed at 8.25%, and assessable profits arising from Hong Kong above HK$2,000,000 will continue be taxed at the rate of 16.5%. As only one of the subsidiaries in the Group is eligible to elect the two-tiered profits tax rates, profits of the remaining subsidiaries of the Group will continue to be taxed at a flat rate of 16.5%.

For the years ended 31 December 2020 and 2019, Hong Kong Profits Tax is calculated in accordance with the two-tiered profits tax rates regime.

Current tax Hong Kong Profits Tax Current year Under provision in prior year Deferred taxation Origination and reversal of temporary difference Income tax expense	2020 HK$’000 11,529 — 11,529 (3,065) 8,464	2019 HK$’000 59 17
		76 6,886
		6,962

— 12 —

9. Dividend

The Board of Directors does not recommend the payment of a dividend for the years ended 31 December 2020 and 2019.

10. Earnings per share

The calculation of the basic and diluted earnings per share is based on the profit attributable to the equity holders of the Company and the weighted average number of ordinary shares in issue during the year.

The outstanding share awards of the Company have been included in the computation of diluted earnings per share as they are dilutive for the year ended 31 December 2020.

The calculations of basic and diluted earnings per share are based on:

Earnings

	2020	2019
	HK$’000	HK$’000
Profit for the year attributable to the equity holders of the Company,
for the purpose of basic and diluted earnings per share	41,762	22,312
Number of shares
	2020	2019
		(Adjusted)
Issued ordinary shares at 1 January	9,305,276,756	9,305,276,756
Effect of share consolidation	(8,374,749,081) (8,374,749,081)
Shares vested under the share award scheme	1,901,639	—
Equity-settled share-based payments on acquisition of a subsidiary	1,032,786	—
Weighted average number of ordinary shares in issue for the
purpose of basic earnings per share	933,462,100	930,527,675
Effect of dilutive potential shares from share award scheme	1,095,466	—
Effect of dilutive potential shares from share option scheme	823,042	—
Weighted average number of ordinary shares in issue for the
purpose of diluted earnings per share	935,380,608	930,527,675

— 13 —

11. Trade, loan and other receivables

Notes Trade receivables Trade receivables arising from the business of securities brokerage (a) — cash clients — margin clients (b) — Hong Kong Securities Clearing Company Limited (“HKSCC”) (c) Trade receivables from futures clearing house arising from the business of dealing in futures contracts (a) Trade receivables from provision of corporate advisory service (d) Trade receivables from provision of financial advisory service (d) Trade receivables from provision of assets management service — from independent third parties (d) — from an associate (d) Trade receivables from provision of underwriting service Less: Loss allowance Rental receivables Loan and interest receivables Loan and interest receivables from independent third parties Less: Loss allowance (e) other receivables Deposits with securities brokers (f) Other receivable from an ex-shareholder of a subsidiary (g) Promissory note receivable (h) Prepayments Deposits Other receivables Due from an associate (i) Less: Non-current portion Loan and interest receivables Other receivables Current portion	2020 HK$’000 36 673,832 478 4,665 11,404 3,222 36,782 14,820 126 745,365 (613) 744,752 — 319,114 (7,300) 311,814 77 — — 2,607 2,246 2,637 12 7,579 1,064,145 — (1,503) (1,503) 1,062,642	2019 HK$’000 4 247,719 3 5,554 — — — — — 253,280 — 253,280 320 94,917 (7,795) 87,122 77 51,803 173,409 1,587 1,378 830 — 229,084 569,806 (995) (173,769) (174,764) 395,042

— 14 —

Notes:

• (a) No aging analysis by invoice date is disclosed as in the opinion of the directors of the Company, the aging analysis does not give additional value in view of the nature of financial services business. The Group offsets certain trade receivable and trade payable upon the Group exercising legally enforceable right to set off the balances; and intends to settle on a net basis or to realise the balances simultaneously.

• (b) Trade receivables from margin clients are repayable on demand and bear interest ranging from 15% to 24% (2019: 12% to 24%) per annum for the year ended 31 December 2020. The loans are secured by pledged marketable securities with a total fair value of approximately HK$4,009,170,000 (2019: HK$1,669,597,000) . The Group is permitted to sell or repledge the marketable securities if the customers default on the payment when requested by the Group.

• (c) The settlement terms of trade receivables arising from the provision of securities brokerage business with HKSCC are usually two days after trade date.

• (d) Trade receivables from provision of corporate advisory service, financial advisory service and assets management service are unsecured, interest-free and repayable within 30 days upon presentation of invoices.

• (e) Loan receivables represent receivables arising from the Group’s credit and lending business and are stated at amortised cost.

At the end of the reporting period, the loan receivables are related to four (2019: four) new customers and ten (2019: two) existing customers. Loan receivables include fixed rate loan advances to independent third parties of approximately HK$46,662,000 (2019: HK$25,282,000) which are secured by the pledge of certain collaterals and personal guarantees, bearing interest ranging from 12% to 15% (2019: 15% to 24%) per annum and have contractual loan period between 3 months and 2 years (2019: 3 months and 12 months) under the Group’s credit and lending operation. The remaining balance includes both fixed and variable rate loan advances to independent third parties of approximately HK$265,152,000 (2019: HK$61,840,000) which are unsecured, bearing interest ranging from 5% to 36% (2019: 5% to 24%) per annum and not overdue as at the end of reporting period. The contractual loan period for majority of the remaining balance is between 1 month and 2 years (2019: between 9 months and 2 years) .

The amount granted to individuals and corporates depends on management’s assessment of credit risk of the customers by evaluation on background check (such as their profession, salaries and current working position for individual borrowers and their industry and financial position for corporate borrowers) and repayment abilities. As at 31 December 2020, allowance for impairment loss of HK$7,300,000 (2019: HK$7,795,000) is recognised for the loan receivables.

• (f) Deposits with securities brokers represented the funds deposited with the brokers’ houses for securities trading purpose.

• (g) As at 31 December 2019, the amount due was non-trade nature, unsecured, bore interest at 7% per annum and repayable in January 2020. The carrying amount of the amounts due approximated their fair values. The amount was fully settled in January 2020.

— 15 —

• (h) The amount represented a zero-coupon promissory note issued by an independent third party on 30 September 2019 which is at principal amount of HK$190,000,000 maturing on 30 June 2021. The amount due has been fully settled during the reporting period (2019: Nil) .

During the year ended 31 December 2020, the Group recognised interest income and reversal of impairment losses of approximately HK$13,407,000 and HK$3,184,000 respectively for the promissory note receivable.

• (i) The amount due is unsecured, interest-free and has no fixed repayment term.

Aging analysis of loan receivables (net of loss allowance) prepared based on contractual due date is as follows:

	2020	2019
	HK$’000	HK$’000
Not yet past due	311,814	87,122

As at 31 December 2020, the Group recognised loss allowance of HK$7,300,000 (2019: HK$7,795,000) on its loan receivables. The movement in the loss allowance for loan receivables during the year is summarised below.

At the beginning of the reporting period Increase (Decrease) in allowance Reversal of allowance upon recovery of loan At the end of the reporting period	2020	Total HK$’000 7,795 6,537 (7,032) 7,300	2019
	12-month ECL Lifetime ECL Performing Under- performing HK$’000 HK$’000 804 6,991 6,537 — (41) (6,991) 7,300 —		12-month ECL Lifetime ECL Performing Under- performing HK$’000 HK$’000 5,912 — (4,239) 6,991 (869) — 804 6,991	Total HK$’000 5,912 2,752 (869)
				7,795

For the year ended 31 December 2019, one of the loans had a significant increase in credit risk and was considered to classify as Under-Performing for which the Lifetime ECL was recognised. The significant increase in credit risk refers to increase in rate for exposure at default due to the deterioration of financial performance of the borrower. The loan was recovered in current year.

The management closely monitor the credit quality of the loans and there are no indications that the loan receivables neither past due nor impaired will be uncollectible.

— 16 —

12. Trade and other payables

Notes Trade payables Trade payables arising from the business of securities brokerage (a) — cash clients — margin clients — HKSCC Trade payables arising from the business of options broking (a) Trade payables arising from the business of dealing in futures contract (b) (c) other payables Other payables and accrued charges Rental deposits received Less: non-current portion Current portion Total current portion	2020 HK$’000 1,456 154,106 4,409 209 3,018 163,198 6,624 1,690 8,314 (1,690) 6,624 169,822	2019 HK$’000 1,669 8,451 40,420 212 6,824 57,576 4,111 3,494 7,605 (1,944) 5,661 63,237

Notes:

• (a) Trade payables to cash, margin and option clients are repayable on demand. The settlement terms of trade payables arising from the provision of securities brokerage business with HKSCC are usually two days after trade date. No aging analysis is disclosed as in the opinion of the directors of the Company, the aging analysis does not give additional value in view of the nature of securities brokerage business.

• (b) Trade payables to clients arising from the business of dealing in futures contracts are margin deposits received from clients for their trading of futures contracts on the Hong Kong Futures Exchange Limited (the “ HKfE ”). The excesses of the outstanding amounts over the required initial margin deposits stipulated by the HKFE are repayable to clients on demand.

• (c) Included in trade payables were amounts in aggregate of HK$154,702,000 (2019: HK$44,402,000) in respect of the trust and segregated bank balances received and held for clients in the course of dealing in regulated activities.

— 17 —

mANAGEmENT DiSCUSSioN AND ANALYSiS

REViEW of RESULTS

During the year under review, the total revenue and other income of the Group increased by HK$186.9 million or 330% to HK$243.7 million as compared to last year. The Group recorded a consolidated profit of HK$41.8 million attributable to shareholders of the Company for the year ended 31 December 2020 (the “ Year ”), an increase of HK$19.5 million or 87% from last year. The increase in profit is attributable to the Group’s successful development of its financial services business.

With the management’s dedication and continuous efforts, the Group experienced significant growth in revenue in the Year attained mainly from the following areas:

• (i) the Group’s securities dealing team holds Type 1 licence granted under the SFO to carry on the business of dealing in securities and has provided margin financing services which generated margin loan interest for HK$59.5 million in the Year (2019: HK$0.7 million);

• (ii) the Group’s asset management team holds Type 9 licence granted under the SFO to carry on the business of provision of asset management services which generated asset management fees and performance fees based on the appreciation in the value of clients’ net assets under their management in the sum of HK$51.7 million in the Year (2019: Nil);

• (iii) the Group’s corporate finance advisory team (with Type 6 licence granted under the SFO) and the other corporate advisory related services team have provided professional services which generated advisory fees for HK$21.5 million in the Year (2019: Nil); and

• (iv) the Group’s money lending team has provided credit and lending services (under a licence granted under the Money Lenders Ordinance, Chapter 163 of the laws of Hong Kong) which generated loan interest for HK$26.9 million in the Year (2019: HK$14.1 million).

The basic and diluted earnings per share for the Year were HK4.47 cents and HK4.46 cents respectively, whereas the basic and diluted earnings per share of HK2.40 cents (adjusted as a result of the Company’s share consolidation effective on 12 May 2020) was recorded for the last corresponding year.

During the Year, the sum of administrative expenses increased to HK$104.0 million (2019: HK$34.0 million). In exploring new business opportunities and successfully expanding the Group’s business scope, more legal and professional fees were incurred, apart from additional staff salaries. To attract talents to make contributions to the development of the Group’s businesses, the Company also granted share options and share awards to directors, employees and consultants, resulting in a sum of share option expenses for HK$50.9 million and an amount of share award expenses for HK$2.3 million recorded under administrative expenses during the Year.

— 18 —

The management and certain staff showed support and devotion to the Company by voluntarily cancelling 88,000,000 (adjusted as a result of the Company’s share consolidation effective on 12 May 2020) share options granted by the Company without any monetary consideration or compensation for betterment of the Company and its shareholders as a whole. The sum of administrative expenses for HK$50.9 million without cash outlay was recorded by the Company during the Year based on the valuations of those share options. Upon cancellation of the share options in November 2020, there was a transfer of HK$50.9 million from the Company’s share option reserve (a non-distributable reserve) to retained earnings (a distributable reserve). Although such a transfer does not alter the Group’s profitability for the year under review, the closing balance of retained earnings to be brought forward has been increased for the benefit of the Company and its shareholders as a whole.

fiNAL DiViDEND

The Board resolved not to recommend the payment of a final dividend for the year ended 31 December 2020 (2019: Nil). No interim dividend was declared for the financial years of 2020 and 2019.

BUSiNESS REViEW

With the aim at enhancing the Group’s long-term growth potential, the Group successfully implemented the business diversification strategy during the Year by reducing the scale of the Group’s portfolio of listed equity investments and portfolio of investment properties so as to allocate more resources to develop the business of providing financial services to clients. The principal activities of the Group are classified into the following business segments:

(1) financial services — operations under Sfo licences

After the acquisition of a majority stake (approximately 52.63% shareholding) in Planetree (Cayman) Capital Limited (“ Planetree Capital ”, formerly known as Liberty Capital Limited) in mid-December 2019, the Group in January 2020 injected a sum of HK$227.8 million equity capital into Planetree Capital to develop its businesses covering the provision of dealing in securities (including the provision of margin loans to clients), dealing in futures contracts and asset management services through Planetree Capital’s subsidiaries (together the “ Planetree Capital Group ”) with Type 1, Type 2 and Type 9 licences granted under the Securities and Futures Ordinance (the “ Sfo ”, Chapter 571 of the laws of Hong Kong) to carry on such kind of regulated business activities. Through shares buybacks from Planetree Capital’s minority shareholders completed in December 2019 and August 2020, Planetree Capital has now become a wholly-owned subsidiary of the Company with a consolidated net asset value of HK$636 million together with our head office inter-company finance for HK$306 million as at 31 December 2020. Planetree Capital Group has leveraged on the Group’s financial resources, business network and management efforts as well as the goodwill of being a member of a listed group to procure high net worth individual and corporate clients to substantially boost its

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businesses. The expanded margin loan book generated margin loan interest for HK$59.5 million in the Year (2019: HK$0.7 million) while the asset management services reactivated during the Year generated asset management fees and performance fees (based on the appreciation in the value of clients’ net assets under their management) in the sum of HK$51.7 million in the Year (2019: Nil).

In order to expand the scope of this segment, the Company in May 2020 announced the acquisition of the entire equity interest in Akron Corporate Finance Limited (“ Akron ”, which engages in Type 6 regulated activity, i.e. advising on corporate finance, under the SFO) at a consideration of HK$6 million, which was satisfied by allotting and issuing 6,000,000 new shares in the Company to the vendor in October 2020, after successfully getting approval from the Securities and Futures Commission for the Group to become Akron’s substantial shareholder. The Group’s business network has facilitated Akron to develop its business. From the completion of the acquisition till the end of the Year, Akron contributed revenue of HK$4.7 million to the Group (2019: Nil).

This segment recorded segment revenue of HK$118.0 million (2019: HK$1.5 million) and achieved a segment profit of HK$99.9 million (2019: a loss of HK$1.0 million) and has become the most profitable core business of the Group.

(2) Credit and lending services — operations under mLo licences

The Group conducts its money lending business with two money lender licences held by the Group under the Money Lenders Ordinance (the “ mLo ”, Chapter 163 of the laws of Hong Kong). The segment revenue increased from HK$14.1 million last year to HK$26.9 million with more loans granted by the Group to a broader base of clients in this segment, as reflected by the increase in the gross balance of loan and interest receivables from HK$94.9 million as at 31 December 2019 to HK$319.1 million as at the Year end. The segment profit increased to HK$21.7 million (2019: HK$8.4 million).

(3) other financial services

To open up a new business line in financial services, the Group also acquired the entire equity interest in Briscoe Wong Advisory Limited in October 2020. Briscoe Wong Advisory Limited has carried on the business of providing corporate advisory related services in Hong Kong. By utilising the Group’s integrated platform in financial services and the goodwill of being a member of a listed group, Briscoe Wong Advisory Limited has striven to expand its business. From the completion of the said acquisition till the end of the Year, this segment recorded segment revenue of HK$16.8 million (2019: Nil) and achieved a segment profit of HK$7.0 million (2019: Nil).

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(4) Property investment and leasing

To contain the negative impacts on local property prices arising from the COVID-19 pandemic and to focus on the development of the financial services business, the Group disposed of 4 residential units and 3 industrial units by selling certain property holding companies in May 2020. The total valuation of these properties was HK$136.4 million by that time (after deducting the fair value losses of HK$8.1 million recorded before the disposal) while the net asset value of the relevant property holding companies at the time of disposal was HK$12.9 million after netting off loans and debts repayable to independent third parties. The relevant property holding companies were sold for a cash consideration of HK$20 million, resulting in a gain of HK$7.1 million which recovered most of the aforesaid fair value losses.

In July 2020, the Group through a subsidiary acquired a property holding company holding a commercial property in Wanchai by issuing new shares in that subsidiary to the vendor so that the subsidiary has changed from a wholly-owned subsidiary to a non-wholly owned subsidiary. This arrangement was devised by the Group to diversify its property portfolio without incurring capital expenditure.

To alleviate the impact of COVID-19 on our community, the Group exercised its social responsibility by granting a temporary rent concession to tenants whose business was seriously affected by the pandemic.

Overall speaking, this segment during the Year recorded segment revenue of HK$9.5 million (2019: HK$12.3 million). There was a segment loss of HK$21.3 million (2019: HK$4.7 million), mainly due to fair value losses on investment properties in the sum of HK$24.6 million for the year (2019: HK$6.3 million). As at 31 December 2020, the Group held 3 commercial properties in Hong Kong for leasing to independent third party tenants for rental income with a total fair value at HK$358.2 million.

(5) Tactical and strategic investment

The Directors are aware of the amended Listing Rules effective since 1 October 2019: “Under Rule 13.24(1) of the Listing Rules, an issuer shall carry out, directly or indirectly, a business with a sufficient level of operations and assets of sufficient value to support its operations to warrant the continued listing of the issuer’s securities. Under Rule 13.24(2), proprietary trading and/or investment in securities by an issuer and its subsidiaries (other than an issuer which is an investment company listed under Chapter 21) are normally excluded when considering whether the issuer can meet rule 13.24 (1). ”

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In view of the above amended Listing Rule requirement, the Board has formulated a business strategy to allocate more financial resources to develop the financial services business. Hence, the Group has deliberately scaled down the resources put in this business segment since the second half of 2019. Apart from selling part of financial assets at fair value through profit or loss (“ fVPL ”) through securities brokers during the Year, a subsidiary holding part of such financial assets issued new shares to an independent third party investor in December 2020, resulting in the Group’s equity interest therein decreasing from 100% to 40% and has since become an associate of the Group. Consequently, the Group divested most of its portfolio of financial assets at FVPL during the Year.

Having implemented the divestment strategy, the sum of financial assets at FVPL and debt investments at amortised cost under this segment was HK$36.0 million as at 31 December 2020, as compared to HK$545.4 million as at 31 December 2019. Due to the scaling down of this segment coupled with the depressed stock market conditions during the Year caused by the COVID-19 pandemic, segment revenue dropped from HK$27.5 million last year to HK$22.3 million during the Year. There was a segment loss of HK$34.8 million during the Year as compared to a segment profit of HK$24.4 million during last year, mainly due to the decline in prices of financial assets at FVPL held by the Group during the Year.

The Group’s strategy in allocating resources from investment segment to develop financial services segment has proven to be successful as the segment profit of financial services during the Year overwhelmed the loss in investment segment.

oUTLooK AND STRATEGY

Going forward, the Group will continue to develop the core business into a more integrated financial services business. The Group is in the process of applying for licences to carry on Type 7 (providing automated trading services) and Type 8 (securities margin financing) regulated activities under the SFO. Moreover, the Group is preparing an application to the Securities and Futures Commission for approving Akron to act as sponsor to conduct initial public offering sponsorship business under the SFO. A more comprehensive profile of licences under the SFO is expected to create synergy effect favourable to the Group’s development of an integrated financial services business and to grasp the opportunities in the capital market when the COVID-19 pandemic is brought under control with the vaccination programs has recently been launched in Hong Kong and other countries.

The widely expected economic recovery worldwide in the coming year will refill vitality in the local financial market and property market. The Board envisages higher demand for various financial services in Hong Kong including securities brokerage services, margin loan financing, wealth management services and other credit and lending services. The Group has established a viable and sustainable operation in providing aforementioned financial services to clients and is poised to expand its clientele. The Group’s property investment and leasing segment will continue to generate a stable income. The Group’s business outlook is optimistic and the Board expects the Group’s overall business to pursue growth in revenue and profitability in the year 2021.

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fiNANCiAL REViEW

Revenue

The revenue of the Group was approximately HK$176.8 million for the Year, representing an increase of HK$171.0 million or almost 29 times from the last corresponding year. Taking account of other income and gains, the total segment revenue of the Group was approximately HK$193.5 million for the Year, representing an increase of HK$138.1 million from the last corresponding year. The increase in revenue and segment revenue was a result of the Group’s successful development of its financial services business.

other Comprehensive income

The Group recorded no other comprehensive income for the year (2019: Nil).

Net Asset Value

As at 31 December 2020, the consolidated net asset value of the Group was HK$1,843.7 million (2019: HK$1,776.7 million). The consolidated net asset value per share of the Group was HK$1.96 (2019: HK$1.91, adjusted due to the Company’s share consolidation effected on 12 May 2020). The Group’s total assets and total liabilities were HK$2,309.1 million (2019: HK$2,040.5 million) and HK$465.4 million (2019: HK$263.8 million) respectively.

Capital Structure

On 12 May 2020, the Company effected a share consolidation whereby every 10 shares in the Company by that time were consolidated into one consolidated share in order to: (1) make the consolidated shares in the Company more attractive to institutional and professional investors who may avoid investing in securities with trading price of HK$0.5 or less; and (2) reduce the overall transaction and handling costs of dealings in the shares in the Company so as to attract more investors.

On 1 June 2020, the Company issued 3,000,000 awarded shares to an employee under the Company’s share award scheme.

On 30 October 2020, the Company issued 6,000,000 new shares as the consideration for completing the acquisition of the entire equity interest in Akron Corporate Finance Limited. Since then, the Company has 939,527,675 shares in issue.

The Group’s capital expenditure and investments were mainly funded from cash on hand, internallygenerated funds and bank borrowings. Cash is generally placed in short-term deposits mostly denominated in U.S. dollars and Hong Kong dollars. The Group does not use any financial instruments for hedging purpose.

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Liquidity and financial Resources

The Group’s cash and cash equivalents, being mainly denominated in Hong Kong dollars, was HK$430.2 million as at 31 December 2020 (2019: HK$276.7 million). The cash and cash equivalents and the financial assets at FVPL in aggregate were HK$458.1 million as at 31 December 2020 (2019: HK$782.3 million). The liquidity of the Group was very strong with a current ratio of 3.3 as at 31 December 2020 (2019: 4.7).

The Group had bank borrowing in the sum of HK$275.7 million as at 31 December 2020 (2019: HK$186.9 million). The Group did not have any available short-term revolving banking facilities as at 31 December 2020 (2019: Nil).

Exposure to fluctuation in Exchange Rates and Related Hedges

As the Group’s major source of income, expenses, major assets and bank deposits were denominated in Hong Kong dollars and U.S. dollars, the Group’s exposure to fluctuation in foreign exchange rates was minimal due to the pegged exchange rate. The Group did not have any related hedging instruments.

Gearing Ratio

As at 31 December 2020, the gearing ratio of the Group, as measured by dividing the net debt to Shareholders’ equity, was 1% (2019: inapplicable as the net debt was negative when cash and cash equivalents could entirely cover the total debt). Net debt was calculated as bank borrowings plus other payables and accruals, net of cash and cash equivalents.

Contingent Liabilities

The Group did not have any material contingent liabilities as at 31 December 2020 (2019: Nil).

Charges on Group Assets

As at 31 December 2020, the Group pledged its investment properties with an aggregate carrying value of approximately HK$303.2 million as security for general banking facilities granted to the Group (2019: HK$313.2 million).

Significant investments

During the year under review, the Group divested its investments in financial assets at FVPL. Hence, the carrying value of the Group’s portfolio of financial assets at FVPL reduced to HK$27.9 million as at 31 December 2020 (2019: HK$505.6 million). At the year end, the Group held only one investment in a listed company in the portfolio of financial assets at FVPL, which is not considered as a significant investment held by the Group as its value was less than 5% of the Group’s total assets as at 31 December 2020.

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Save as disclosed in the “Business Review” section and elsewhere above, there was no other significant investment held, nor were there any material acquisitions or disposals of subsidiaries, associates or joint ventures during the year under review. There was no present plan authorised by the Board for material investments or acquisition of material capital assets as at the date of this announcement.

Significant Events since the End of the Reporting Period

On 9 March 2021, Maxlord Enterprises Limited (“ maxlord ”, one of the two indirect subsidiaries of the Company carrying on credit and lending services) allotted and issued 10,000 new shares (the “ Subscription Shares ”) to an independent third party subscriber at a consideration of HK$100,000,000 in order to have more cash for the development of credit and lending services. Since then, the Group’s equity interest in Maxlord has reduced from 100% to approximately 66.7%.

Besides, the subscriber has been granted an option to subscribe further 10,000 option shares (the “ option Shares ”) at the subscription price of HK$100,000,000 (the “ option ”). The Option Shares, if the Option is exercised, together with the Subscription Shares, would represent 50% of the enlarged issued share capital of Maxlord as enlarged by the issuance of the Subscription Shares and the Option Shares. In such event when the Group’s equity interest in Maxlord decreasing to 50%, Maxlord will then change from a subsidiary to a joint venture of the Group.

There were no other significant events affecting the Group since the end of the reporting period.

oTHER iNfoRmATioN

Corporate Governance

The Company is committed to achieving and maintaining high standards of corporate governance practice. Throughout the year ended 31 December 2020, the Company complied with all code provisions of Corporate Governance Code as set out in Appendix 14 of the Rules Governing the Listing of Securities (the “ Listing Rules ”) on the Stock Exchange, except for deviation from code provisions A.2 and A.5.1. For code provision A.2, the position of “chairman” being left vacant before appointing Dr. Leung Wing Cheung, William as the executive chairman of the Board from 2 June 2020 and the position of “chief executive officer” of the has not been formally filled while Ms. Cheung Ka Yee has effectively served such a role. For code provision A.5.1, Mr. Kwong Kai Sing, Benny remained as the chairman of the Nomination Committee of the Company during the year upon his cessation as the acting chairman of the Company on 2 June 2020 as the Board considered his good business network would make him a suitable candidate to continue chairing the Nomination Committee.

The Company will continually review its corporate governance framework to ensure best corporate governance practices. Save as disclosed above, there were no significant changes in the Company’s corporate governance practice or from the information disclosed in the Corporate Governance Report in the latest published annual report.

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Compliance of model Code

The Company has adopted the Model Code for Securities Transactions by Directors of Listed Issuers (the “ model Code ”) as set out in Appendix 10 to the Listing Rules as its own code of conduct regarding securities transaction by Directors and relevant employees. Following specific enquiry by the Company, each Director confirmed that throughout the accounting year under review, they have complied with the required standards set out in the Model Code.

Environmental, Social and Governance (“ESG”) Performance

The Board is committed to achieving sustainable development and protection of the environment and engaging ESG considerations as an integral part of the business operations and investment of the Company. The Company’s strategy in ESG management can be achieved by adopting ecofriendly management practices, making efficient use of resources, and promoting green awareness within the Group. The Company strives to promote awareness on environmental protection and optimises efficient use of energy in daily operation by encouraging employees to recycle office suppliers, plus a series of measures to develop practices to promote energy-saving and emission reduction. The Company will further enhance ESG management by participating in community engagement and ensuring our business development will take into consideration the communities’ interest. The Company has complied with all the applicable environmental laws and regulations that have a significant impact on the Company. Details of ESG practice of the Group are set out in 2020 annual report which are prepared in accordance with the Environmental, Social and Governance Reporting Guide as set out in Appendix 27 to the Listing Rules, and will be available on the website of the Company (www.planetreeintl.com) and the designated issuer website of the Stock Exchange (www.hkexnews.hk) in due course.

Human Resources Practices

The Group’s remuneration policy is to ensure fair and competitive packages based on business needs and industry practice. The Company aims to provide incentives to Directors, senior management and employees to perform at their highest levels as well as to attract, retain and motivate the very best people. Remuneration will be determined by taking into consideration factors such as market and economic situation, inflation, employment conditions elsewhere in the Group and salaries paid by comparable companies. In addition, performance-based assessment such as individual’s potential and contribution to the Group, time commitment and responsibilities undertaken will all be considered.

There were 48 work forces (inclusive of all the directors of the Company) working for the Group as at 31 December 2020. The Group also provides other staff benefits including mandatory provident fund, medical insurance and discretionary training subsidy. The Company also operates a discretionary share option scheme and a discretionary share award scheme to motivate employees’ performance and loyalty.

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SCoPE of WoRK of mAZARS CPA LimiTED

The figures in respect of the Group’s consolidated statement of financial position, consolidated statement of profit or loss, consolidated statement of comprehensive income and the related notes thereto for the year ended 31 December 2020 as set out in this announcement have been agreed by the Company’s auditors, Mazars CPA Limited (“ mazars ”) to the amounts set out in the Group’s draft consolidated financial statements for the year. The work performed by Mazars in this respect did not constitute an assurance engagement performed in accordance with Hong Kong Standards on Auditing, Hong Kong Standards on Review Engagements or Hong Kong Standards on Assurance Engagements issued by the HKICPA and consequently no assurance has been expressed by Mazars on this announcement.

REViEW of fiNANCiAL STATEmENTS

The audit committee of the Company has reviewed the accounting principles and standards adopted by the Group, the risk management and internal control systems and financial reporting matters of the Group. In addition, the consolidated financial statements of the Group for the year ended 31 December 2020 have been reviewed by the audit committee.

PURCHASE, SALE oR REDEmPTioN of LiSTED SECURiTiES of THE ComPANY

Neither the Company, nor any of its subsidiaries has purchased, redeemed or sold any of the listed securities of the Company during the year ended 31 December 2020.

PUBLiCATioN of 2020 ANNUAL RESULTS AND ANNUAL REPoRT

This announcement is published on the website of the Company (www.planetreeintl.com) and the designated issuer website of the Stock Exchange (www.hkexnews.hk). The 2020 annual report will be dispatched to Shareholders and made available on the above websites in due course.

APPRECiATioN

The Board would like to take this opportunity to extend our gratitude and sincere appreciation to the management team and all staff for their diligence and dedication throughout the Year.

By order of the Board Planetree international Development Limited man Wai Chuen Executive Director

Hong Kong, 19 March 2021

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

Executive Directors:

Dr. Leung Wing Cheung, William (Executive Chairman) Mr. Lam Hiu Lo Mr. Liang Kang

Independent Non-Executive Directors: Mr. Chan Sze Hung Mr. Zhang Shuang Mr. Chung Kwok Pan Ms. Liu Yan

Ms. Cheung Ka Yee

Mr. Man Wai Chuen

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