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 and any part of the contents of this announcement.

ETERNITY INVESTMENT LIMITED

(Incorporated in Bermuda with limited liability)

(Stock Code: 764)

INTERIM RESULTS ANNOUNCEMENT FOR THE SIX MONTHS ENDED 30 JUNE 2017

The board of directors (the "Board") of Eternity Investment Limited (the "Company") announces the unaudited condensed consolidated results of the Company and its subsidiaries (collectively the "Group") for the six months ended 30 June 2017 together with the comparative figures for 2016 as follows:

CONDENSED CONSOLIDATED STATEMENT OF PROFIT OR LOSS

	Notes	Six months ended 30 June
		2017HK$’000(Unaudited)	2016HK$’000(Unaudited)
Continuing operations
Revenue	3	16,658	93,801
Cost of sales		(18,051)	(56,751)
Gross (loss)/profit		(1,393)	37,050
Investment and other income	4	1,121	988
Other gains and losses	5	(197,979)	(154,486)
Selling and distribution expenses		(1,629)	(2,456)
Administrative expenses		(40,155)	(31,439)
Share of results of associates		(1)	—
Loss from operations		(240,036)	(150,343)
Finance costs	6	(5,396)	(5,133)
Loss before taxation		(245,432)	(155,476)
Income tax expense	7	(223)	(594)
Loss for the period from continuing operations	8	(245,655)	(156,070)
Discontinued operations
Loss for the period from discontinued operations	9	(3)	(16)
Loss for the period		(245,658)	(156,086)

	Six months ended 30 June
	2017	2016
	HKS'000	HKS'000
Loss for the period attributable to:	(Unaudited)	(Unaudited)
Owners of the Company	(245,658)	(156,084)
Non-controlling interests	—	(2)
	(245,658)	(156,086)
Interim dividend	—	—
Loss per share	10
From continuing and discontinued operations
— Basic	HK(7.27) cents	HK(5.08) cents
— Diluted	HK(7.27) cents	HK(5.08) cents
From continuing operations
— Basic	HK(7.27) cents	HK(5.08) cents
— Diluted	HK(7.27) cents	HK(5.08) cents
From discontinued operations
— Basic	HK — cent	HK — cent
— Diluted	HK — cent	HK — cent

CONDENSED CONSOLIDATED STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME

	Six months ended 30 June
	2017	2016
	HK$'000	HK$'000
	(Unaudited)	(Unaudited)
Loss for the period	(245,658)	(156,086)
Other comprehensive income/(expense) for the period, net of income tax
Items that may be reclassified subsequently to profit or loss:
Exchange differences arising on translating foreign operations	49,598	(32,695)
Net loss arising on revaluation of available-for-sale financial assets	—	(57,750)
Reclassification adjustment relating to impairment loss recognised in respect of available-for-sale financial assets	—	57,750
Total comprehensive expense for the period	(196,060)	(188,781)
Total comprehensive expense for the period attributable to:
Owners of the Company	(196,060)	(188,779)
Non-controlling interests	—	(2)
	(196,060)	(188,781)

— 3 —

CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL POSITION

| | At
30 June
2017
HK$’000
(Unaudited) | At
31 December
2016
HK$’000
(Audited) |
| --- | --- | --- |
| ASSETS | | |
| Non-current assets | | |
| Property, plant and equipment | 455,821 | 432,976 |
| Investment properties | 571,020 | 561,089 |
| Intangible assets | 907,346 | 890,185 |
| Goodwill | 342,366 | 332,189 |
| Interests in associates | 599 | 600 |
| Available-for-sale financial assets | — | 365,172 |
| Deferred tax assets | 5,495 | 4,738 |
| Deposit paid for acquisition of properties | 48,300 | — |
| Prepayments | — | 1,561 |
| Loans receivables | 11 | 323,258 |
| | 2,654,205 | 2,727,010 |
| Current assets | | |
| Inventories | 40,465 | 45,636 |
| Loans receivables | 11 | 436,397 |
| Trade receivables | 12 | 50,005 |
| Deposits, prepayments and other receivables | 164,199 | 101,261 |
| Amount due from an associate | 1,697 | 1,697 |
| Financial assets at fair value through profit or loss | 524,354 | 544,442 |
| Tax recoverable | 6,537 | 6,694 |
| Cash and cash equivalents | 216,622 | 438,975 |
| | 1,440,276 | 1,514,528 |
| Total assets | 4,094,481 | 4,241,538 |
| EQUITY | | |
| Capital and reserves attributable to owners of the Company | | |
| Share capital | 38,592 | 32,160 |
| Reserves | 3,124,242 | 3,216,985 |
| Equity attributable to owners of the Company | 3,162,834 | 3,249,145 |
| Non-controlling interests | (6) | (6) |
| Total equity | 3,162,828 | 3,249,139 |

— 4 —

	Notes	At 30 June 2017 HK$’000 (Unaudited)	At 31 December 2016 HK$’000 (Audited)
LIABILITIES
Current liabilities
Trade payables	13	19,963	36,532
Deposits received, accruals and other payables		163,525	173,497
Receipts in advance		38,912	36,512
Promissory note		—	30,000
Tax payables		91,816	85,318
Amount due to an associate		—	991
Bank borrowings		28,036	27,203
		342,252	390,053
Non-current liabilities
Other payables		86,791	85,670
Receipts in advance		48,600	59,400
Bank borrowings		107,472	117,878
Deferred tax liabilities		346,538	339,398
		589,401	602,346
Total liabilities		931,653	992,399
Total equity and liabilities		4,094,481	4,241,538
Net current assets		1,098,024	1,124,475
Total assets less current liabilities		3,752,229	3,851,485

Notes:

Basis of preparation

The condensed consolidated financial statements for the six months ended 30 June 2017 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 (the “HKICPA”) and the applicable disclosure requirements set out in Appendix 16 of the Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited.

The condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements of the Group for the year ended 31 December 2016, which have been prepared in accordance with Hong Kong Financial Reporting Standards (“HKFRSs”) which is a collective term that includes all applicable individual HKFRSs, HKASs and Interpretations issued by the HKICPA.

The condensed consolidated financial statements have been prepared on the historical cost basis, except for investment properties and certain financial instruments that are measured at fair values at the end of each reporting period.

The condensed consolidated financial statements are presented in thousands of units of Hong Kong dollars (HK$’000), which is also the functional currency of the Company.

Application of new and amendments to HKFRSs

The accounting policies and method of computation used in the condensed consolidated financial statements are consistent with those followed in the preparation of the audited consolidated financial statements of the Group for the year ended 31 December 2016, except as described below.

In the current period, the Group has adopted, for the first time, the following amendments to HKFRSs issued by the HKICPA, which are effective for the Group’s financial period beginning from 1 January 2017. A summary of the amendments to HKFRSs adopted by the Group is set out as follows:

HKAS 7 (Amendments)	Disclosure Initiative
HKAS 12 (Amendments)	Recognition of Deferred Tax Assets for Unrealised Losses
HKFRSs (Amendments)	Annual Improvements to HKFRSs 2014-2016 Cycle

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

Early adoption of HKFRS 9 Financial Instruments

During the period, the Group has early adopted HKFRS 9 that is effective for annual periods beginning on or after 1 January 2018. The Group has chosen 1 January 2017 as its date of initial application.

— 6 —

Accounting policies applied from 1 January 2017

HKFRS 9 addresses the classification, measurement and recognition of financial assets and financial liabilities, and introduces new rules for hedge accounting and new impairment model for financial assets. The final version of HKFRS 9 was issued in September 2014. It replaces the guidance in HKAS 39 Financial Instruments: Recognition and Measurement that is related to the classification and measurement of financial instruments. HKFRS 9 retains but simplifies the mixed measurement model and establishes three primary measurement categories for financial assets: amortised cost, fair value through other comprehensive income ("FVTOCI") and fair value through profit or loss ("FVTPL"). The basis of classification depends on the entity's business model and the contractual cash flow characteristics of the financial assets. Investments in equity instruments (that are not held-for-trading) are measured at fair values with an irrevocable election at inception to present changes in fair value in other comprehensive income not recycling. There is now a new expected credit losses model that replaces the incurred loss impairment model used in HKAS 39. For financial liabilities, there were no changes to classification and measurement except for the recognition of changes in own credit risk in other comprehensive income, for liabilities designated at FVTPL. HKFRS 9 relaxes the requirements for hedge effectiveness by replacing the bright line hedge effective tests. It requires an economic relationship between the hedged item and hedging instrument and for the "hedged ratio" to be the same as the one management actually uses for risk management purposes.

Financial assets

(i) Classification

From 1 January 2017, the Group classified its financial assets in the following measurement categories:

those to be measured subsequently at fair value (either through other comprehensive income, or through profit or loss), and
those to be measured at amortised cost.

The classification depends on the entity's business model for managing the financial assets and the contractual terms of the cash flows.

For assets measured at fair value, gains and losses will either be recorded in profit or loss or other comprehensive income. For investments in debt instruments, this will depend on the business model in which the investment is held. For investments in equity instruments, this will depend on whether the Group has made an irrevocable election at the time of initial recognition to account for the equity investments (that are not held-for-trading) at FVTOCI.

The Group reclassifies debt investments when and only when its business model for managing those assets changes.

(ii) Measurement

At initial recognition, the Group measures a financial asset at its fair value plus, in the case of a financial asset not at FVTPL, transaction costs that are directly attributable to the acquisition of the financial asset. Transaction costs of financial assets at FVTPL are recognised in profit or loss.

Debt instruments

Subsequent measurement of debt instruments depends on the Group’s business model for managing the assets and the cash flow characteristics of the assets. There are three measurement categories into which the Group classifies its debt instruments:

Amortised cost: Assets that are held for collection of contractual cash flows, where the assets’ cash flows represent solely payments of principal and interest, are measured at amortised cost. A gain or loss on a debt investment that is subsequently measured at amortised cost and is not part of a hedging relationship is recognised in profit or loss when the asset is derecognised or impaired. Interest income from these financial assets is included in investment and other income using the effective interest rate method.
FVTOCI: Assets that are held for collection of contractual cash flows and for selling the financial assets, where the assets’ cash flows represent solely payments of principal and interest, are measured at FVTOCI. Movements in the carrying amount are taken through other comprehensive income, except for the recognition of impairment gains or losses which are recognised in profit or loss. When the financial asset is derecognised, the cumulative gain or loss previously recognised in other comprehensive income is reclassified from equity to profit or loss and recognised in other gains and losses. Interest income from these financial assets is included in investment and other income using the effective interest rate method.
FVTPL: Assets that do not meet the criteria for amortised cost or FVTOCI are measured at FVTPL. A gain or loss on a debt investment that is subsequently measured at FVTPL and is not part of a hedging relationship is recognised in profit or loss and presented net in the condensed consolidated statement of profit or loss within other gains and losses in the period in which it arises. Interest income from these financial assets is included in investment and other income.

Equity instruments

The Group subsequently measures all equity investments at fair value. Where the Group’s management has elected to present fair value gains and losses on equity investments (that are not held-for-trading) in other comprehensive income, there is no subsequent reclassification of fair value gains and losses to profit or loss. Dividends from such investments continue to be recognised in profit or loss as investment and other income when the Group’s right to receive payments is established.

Changes in the fair value of financial assets at FVTPL are recognised in other gains and losses in the condensed consolidated statement of profit or loss as applicable. Impairment losses (and reversal of impairment losses) on equity investments measured at FVTOCI are not reported separately from other changes in fair value.

— 8 —

(iii) Impairment

The Group assesses on a forward looking basis the expected credit losses associated with its assets measured at amortised cost and FVTOCI. The impairment methodology applied depends on whether there has been a significant increase in credit risk.

In accordance with HKFRS 9, the Group did not restate prior periods and the cumulative effect of initially applying the standard as an adjustment was recognised in either retained profits or an appropriate equity reserve as of the opening balance as at 1 January 2017.

The following summarises the classification and measurement changes for the Group’s financial assets on 1 January 2017, being the date of initial application of HKFRS 9, as follows:

(i) Listed equity securities previously classified as available-for-sale financial assets

Based on the business model for managing its financial assets, the Group elected to present in profit or loss subsequent changes in the fair value of all its listed equity securities previously classified as available-for-sale financial assets. As a result, the listed equity securities with carrying amounts of HK$365,000,000 were reclassified from available-for-sale financial assets to financial assets at FVTPL.

Cumulative gains arising on revaluation of available-for-sale financial assets recognised in other comprehensive income of HK$144,250,000 were transferred from available-for-sale financial assets revaluation reserve to retained profits.

(ii) Club debenture previously classified as available-for-sale financial assets

Based on the business model for managing its financial assets, the Group elected to present in profit or loss subsequent changes in the fair value of its club debenture previously classified as available-for-sale financial asset. As a result, the club debenture with a carrying amount of HK$172,000 was reclassified from available-for-sale financial asset to financial asset at FVTPL. Subsequent to the reclassification, the club debenture was disposed of on 17 February 2017 through the disposal of Riche Video Limited (“Riche Video”), an indirect wholly owned subsidiary of the Company.

Apart from stated above, the Group has not early adopted other new and amendments to HKFRSs that have been issued by the HKICPA but are not yet effective.

Operating segments

The Group’s operating segments have been determined based on the information reported to the Chairman of the Board, being the chief operating decision maker, that are used for performance assessment and to make strategic decisions. The Group’s operating businesses are structured and managed separately according to the nature of their operations and the products and services they provide. Each of the Group’s operating segments represents a strategic business unit that offers products and services which are subject to risks and returns that are different from those of other operating segments. The Group currently has four operating segments:

— 9 —

(a) Property investment Leasing of rental properties
(b) Sale of financial assets Sale of financial assets
(c) Money lending Money lending
(d) Sale of jewelry products and precious stones Design and sale of jewelry products, and sale of precious stones

An operating segment regarding the distribution of films and sub-licensing of film rights was discontinued on 17 February 2017.

(a) Segment revenue and results

For the six months ended 30 June 2017

	Continuing operations				Discontinued operations
	Property investment HKS'000 (Unaudited)	Sale of financial assets HKS'000 (Unaudited)	Money lending HKS'000 (Unaudited)	Sale of jewelry products and precious stones HKS'000 (Unaudited)	Sub-total HKS'000 (Unaudited)	Distribution HKS'000 (Unaudited)
Segment revenue	22,292	(51,925)	30,624	15,667	16,658	—
Segment (loss)/profit	(570)	(241,862)	29,943	(2,284)	(214,773)	(3)
Interest income on bank deposits					39	—
Unallocated corporate income					60	—
Unallocated corporate expenses					(25,362)	—
Gain on disposal of a subsidiary					1	—
Finance costs					(5,396)	—
Share of results of associates					(1)	—
Loss before taxation					(245,432)	(3)
Income tax expense					(223)	—
Loss for the period					(245,655)	(3)

For the six months ended 30 June 2016

	Continuing operations				Discontinued operations
	Property investment HK$'000 (Unaudited)	Sale of financial assets HK$'000 (Unaudited)	Money lending HK$'000 (Unaudited)	Sale of jewelry products and precious stones HK$'000 (Unaudited)	Sub-total HK$'000 (Unaudited)	Distribution HK$'000 (Unaudited)
Segment revenue	24,131	(12,022)	21,992	59,700	93,801	—
Segment profit/(loss)	3,115	(108,642)	21,833	6,005	(77,689)	(16)
Interest income on bank deposits					296	—
Unallocated corporate income					6	—
Unallocated corporate expenses					(14,985)	—
Impairment loss recognised in respect of amount due from an associate					(221)	—
Impairment loss recognised in respect of available-for-sale financial assets reclassified from equity to profit or loss					(57,750)	—
Finance costs					(5,133)	—
Share of results of associates					—	—
Loss before taxation					(155,476)	(16)
Income tax expense					(594)	—
Loss for the period					(156,070)	(16)

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

Segment results represent (loss incurred)/profit earned by each segment without allocation of central administrative expenses including directors' emoluments, share of results of associates, investment and other income, certain other gains and losses, finance costs and income tax expense. This is the measure reported to the chief operating decision maker for the purposes of resource allocation and assessment of segment performance.

(b) Segment assets and liabilities

At 30 June 2017

	Continuing operations					Discontinued operations
	Property investment HKS'000 (Unaudited)	Sale of financial assets HKS'000 (Unaudited)	Money lending HKS'000 (Unaudited)	Sale of jewelry products and precious stones HKS'000 (Unaudited)	Sub-total HKS'000 (Unaudited)	Distribution HKS'000 (Unaudited)	Consolidated HKS'000 (Unaudited)
Segment assets
— Hong Kong	76,751	565,007	890,991	83,366	1,616,115	—	1,616,115
— The People’s Republic of China (the “PRC”)	2,472,158	—	—	—	2,472,158	—	2,472,158
	2,548,909	565,007	890,991	83,366	4,088,273	—	4,088,273
Unallocated corporate assets							6,208
Consolidated total assets							4,094,481
Segment liabilities
— Hong Kong	(45)	(12,154)	(4,515)	(20,592)	(37,306)	—	(37,306)
— The PRC	(885,181)	—	—	—	(885,181)	—	(885,181)
	(885,226)	(12,154)	(4,515)	(20,592)	(922,487)	—	(922,487)
Unallocated corporate liabilities							(9,166)
Consolidated total liabilities							(931,653)

— 12 —

At 31 December 2016

	Continuing operations					Discontinued operations
	Property investment HK$'000 (Audited)	Sale of financial assets HK$'000 (Audited)	Money lending HK$'000 (Audited)	Sale of jewelry products and precious stones HK$'000 (Audited)	Sub-total HK$'000 (Audited)	Distribution HK$'000 (Audited)	Consolidated HK$'000 (Audited)
Segment assets
— Hong Kong	1,064	723,789	616,139	134,711	1,475,703	269	1,475,972
— The PRC	2,364,162	—	—	—	2,364,162	—	2,364,162
	2,365,226	723,789	616,139	134,711	3,839,865	269	3,840,134
Unallocated corporate assets							401,404
Consolidated total assets							4,241,538
Segment liabilities
— Hong Kong	(1,198)	(12,138)	(1,220)	(39,719)	(54,275)	(1)	(54,276)
— The PRC	(833,443)	—	—	—	(833,443)	—	(833,443)
	(834,641)	(12,138)	(1,220)	(39,719)	(887,718)	(1)	(887,719)
Unallocated corporate liabilities							(104,680)
Consolidated total liabilities							(992,399)

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

all assets are allocated to operating segments other than interests in associates, amount due from an associate, certain deposits, prepayments, and cash and cash equivalents that are not attributable to individual segments. Assets used jointly by individual segments are allocated on the basis of the revenues earned by individual segments; and
all liabilities are allocated to operating segments other than amount due to an associate, tax payables, certain accruals, other payables and receipts in advance that are not attributable to individual segments. Liabilities for which segments are jointly liable are allocated in proportion to segment assets.

For the six months ended 30 June 2017

	Continuing operations	Discontinued operations
Property investment HKS'000 (Unaudited)	Sale of financial assets HKS'000 (Unaudited)	Money lending HKS'000 (Unaudited)
Amounts included in the measure of segment (loss)/profit and segment assets
Additions to property, plant and equipment	17,353	—
Amortisation of intangible assets	(9,950)	—
Depreciation of property, plant and equipment	(6,763)	—
Dividend income	—	1,022
Loss arising on change in fair value of investment properties	(7,143)	—
Loss arising on change in fair value of financial assets at fair value through profit or loss	—	(190,837)

For the six months ended 30 June 2016

	Continuing operations	Discontinued operations
Property investment HKS'000 (Unaudited)	Sale of financial assets HKS'000 (Unaudited)	Money lending HKS'000 (Unaudited)
Amounts included in the measure of segment profit/(loss) and segment assets
Additions to property, plant and equipment	39,406	—
Amortisation of intangible assets	(10,427)	—
Depreciation of property, plant and equipment	(7,303)	—
Dividend income	—	686
Gain arising on change in fair value of investment properties	713	—
Loss arising on change in fair value of financial assets at fair value through profit or loss	—	(97,228)

(d) Geographical segments

The Group mainly operates in Hong Kong and the PRC. The Group’s revenue from external customers by geographical location is detailed below:

	Continuing operations		Discontinued operations
	Six months ended 30 June		Six months ended 30 June
	2017 HK$’000 (Unaudited)	2016 HK$’000 (Unaudited)	2017 HK$’000 (Unaudited)	2016 HK$’000 (Unaudited)
Australia	30	861	—	—
Europe	3,242	5,666	—	—
Hong Kong	(9,425)	39,100	—	—
The Middle East	467	3,386	—	—
The PRC	22,292	24,131	—	—
The United States of America	52	20,657	—	—
	16,658	93,801	—	—

Investment and other income

	Six months ended 30 June
	2017	2016
	HK$’000 (Unaudited)	HK$’000 (Unaudited)
Continuing operations
Dividend income	1,022	686
Interest income on bank deposits	39	296
Sundry income	60	6
	1,121	988

— 16 —

Other gains and losses

	Six months ended 30 June
	2017
HK$’000
(Unaudited)	2016
HK$’000
(Unaudited)
Continuing operations
(Loss)/gain arising on change in fair value of investment properties	(7,143)	713
Impairment loss recognised in respect of amount due from
an associate	—	(221)
Impairment loss recognised in respect of available-for-sale
financial assets	—	(57,750)
Gain on disposal of a subsidiary	1	—
Loss arising on change in fair value of financial assets at fair value
through profit or loss	(190,837)	(97,228)
	(197,979)	(154,486)

Finance costs

	Six months ended 30 June
	2017
HK$’000
(Unaudited)	2016
HK$’000
(Unaudited)
Continuing operations
Interest on bank borrowings	3,752	5,133
Interest on short-term loan	1,644	—
	5,396	5,133

Income tax expense

	Six months ended 30 June
	2017
HK$’000
(Unaudited)	2016
HK$’000
(Unaudited)
Continuing operations
Hong Kong Profits Tax
— Current tax	(3,385)	(3,124)
PRC Enterprise Income Tax
— Current tax	(1,982)	(804)
Deferred taxation credit	5,144	3,334
	(223)	(594)

Hong Kong Profits Tax is calculated at 16.5% of the estimated assessable profits for both periods. The subsidiaries incorporated in the PRC are subject to the PRC Enterprise Income Tax at 25% for both periods. The subsidiary incorporated in Dubai Multi Commodities Centre of United Arab Emirates enjoys a 50-year tax holiday for corporate income tax from the date of incorporation.

8. Loss for the period from continuing operations

Loss for the period from continuing operations has been arrived at after charging/(crediting):

	Six months ended 30 June
	2017	2016
	HK$'000
(Unaudited)	HK$'000
(Unaudited)
Continuing operations
Amortisation of intangible assets	9,950	10,427
Cost of inventories sold	13,255	47,897
Depreciation of property, plant and equipment	6,831	7,369
Operating lease rentals in respect of rental premises	1,028	1,045
Operating lease rentals in respect of operating rights	8,277	8,464
Less: operating lease rentals capitalised	(5,430)	(5,599)
	2,847	2,865
Equity-settled share-based payment expenses in respect of consultancy services	702	—
Staff costs (including directors' emoluments):
— salaries, allowances and benefits in kind	15,621	14,803
— contributions to retirement benefits schemes	221	233
— equity-settled share-based payment expenses	9,821	—
	25,663	15,036
Gross rental income from investment properties and operating rights	(22,292)	(24,131)
Less: direct operating expenses incurred for investment properties and operating rights that generated rental income during the period	5,930	9,962
Less: direct operating expenses incurred for investment properties and operating rights that did not generated rental income during the period	81	112
	(16,281)	(14,057)

Discontinued operations

On 17 February 2017, the Group entered into a sale and purchase agreement to dispose of the entire issued share capital of Riche Video, which is principally engaged in distribution of video products and holding of film rights. The disposal of distribution of films and sub-licensing of film rights operations enables the Group to concentrate resources on its existing businesses. The disposal was completed on 17 February 2017, on which date the control of Riche Video passed to the acquirer.

The loss for the six months ended 30 June 2017 and 2016 from the discontinued distribution of films and sub-licensing of film rights operations is set out below. The comparative figures in the condensed consolidated statement of profit or loss have been restated to re-present the distribution of films and sub-licensing of film rights operations as discontinued operations.

The results and cash flows of the discontinued operations for the six months ended 30 June 2017 and 2016 were as follows:

	Six months ended 30 June
	2017	2016
	HK$'000	HK$'000
	(Unaudited)	(Unaudited)
Revenue	—	—
Administrative expenses	(3)	(16)
Loss before taxation	(3)	(16)
Income tax expense	—	—
Loss for the period	(3)	(16)
Net cash outflow from operating activities	(96)	(5)
Net cash outflow	(96)	(5)

The gain on disposal of distribution of films and sub-licensing of film rights operations was HK$1,000.

— 18 —

— 19 —

10. Loss per share

From continuing and discontinued operations

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

Six months ended 30 June
2017	2016
HK$'000	HK$'000
(Unaudited)	(Unaudited)

Loss for the purpose of basic and diluted loss per share

Loss for the period attributable to owners of the Company

(245,658)	(156,084)
Six months ended 30 June
---	---
2017	2016
'000	'000
(Unaudited)	(Unaudited)

Number of ordinary shares

Weighted average number of ordinary shares for the purpose of basic and diluted loss per share

3,379,472	3,074,644

The calculation of diluted loss per share does not assume the exercise of the Company’s outstanding share options as they had an anti-dilutive effect to the basic loss per share for the six months ended 30 June 2017 and 2016.

— 20 —

From continuing operations

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

	Six months ended 30 June
	2017	2016
	HK$'000	HK$'000
	(Unaudited)	(Unaudited)
Loss for the purpose of basic and diluted loss per share
Loss for the period from continuing operations	(245,655)	(156,070)
Less: loss for the period from continuing operations attributable to non-controlling interests	—	2
Loss for the period from continuing operations attributable to owners of the Company	(245,655)	(156,068)

The denominators used are same as those detailed above for both basic and diluted loss per share from continuing and discontinued operations.

From discontinued operations

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

	Six months ended 30 June
	2017	2016
	HK$'000	HK$'000
	(Unaudited)	(Unaudited)
Loss for the purpose of basic and diluted loss per share
Loss for the period from discontinued operations	(3)	(16)

The denominators used are same as those detailed above for both basic and diluted loss per share from continuing and discontinued operations.

11. Loans receivables

| | At
30 June
2017
HK$’000
(Unaudited) | At
31 December
2016
HK$’000
(Audited) |
| --- | --- | --- |
| Loans to customers | 751,277 | 446,355 |
| Accrued interest receivables | 8,378 | 4,808 |
| | 759,655 | 451,163 |
| Less: impairment loss recognised | — | — |
| | 759,655 | 451,163 |

All loans are denominated in Hong Kong dollars. The loans receivables carry effective interest ranging from 8% to 12% per annum (year ended 31 December 2016: 8% to 20% per annum). A maturity profile of the loans receivables (net of impairment loss recognised, if any) at the end of the reporting periods, based on the maturity date is as follows:

| | At
30 June
2017
HK$’000
(Unaudited) | At
31 December
2016
HK$’000
(Audited) |
| --- | --- | --- |
| Current assets | | |
| Within one year | 436,397 | 312,663 |
| Non-current assets | | |
| More than one year but not exceeding two years | 323,258 | 138,500 |
| | 759,655 | 451,163 |

At 30 June 2017, certain loans in the aggregate principal amounts of HK$100,000,000 (31 December 2016: HK$53,500,000) are secured by personal guarantees, share charges and pledge of the customers' properties.

In determining the recoverability of the loans receivables, the Group considers any change in the credit quality of the loans receivables during the reporting period. The concentration of credit risk is limited due to the customer base being large and unrelated.

— 21 —

— 22 —

12. Trade receivables

The following is an aging analysis of the trade receivables (net of allowance for doubtful debts, if any) at the end of the reporting period presented based on the invoice dates:

	At 30 June 2017 HK$’000 (Unaudited)	At 31 December 2016 HK$’000 (Audited)
0-30 days	6,584	9,534
31-60 days	3,962	8,055
61-90 days	2,899	3,299
91-120 days	3,001	3,026
121-180 days	1,804	7,081
Over 180 days	31,755	32,165
	50,005	63,160

The Group allows credit period ranging from 0 to 180 days to its customers.

13. Trade payables

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

	At 30 June 2017 HK$’000 (Unaudited)	At 31 December 2016 HK$’000 (Audited)
0-30 days	—	3,255
31-60 days	105	3,681
61-90 days	121	9,385
91-120 days	193	6,525
Over 120 days	19,544	13,686
	19,963	36,532

The average credit period on purchase of goods and services is 120 days.

— 23 —

INTERIM DIVIDEND

The Board does not recommend the payment of an interim dividend for the six months ended 30 June 2017 (six months ended 30 June 2016: Nil).

MANAGEMENT DISCUSSION AND ANALYSIS

Financial Review

Given that the Group has not been able to secure quality films at reasonable price for distribution for several years, the Group ceased its film distribution business by disposing of the entire issued share capital of Riche Video Limited (“Riche Video”), an indirect wholly owned subsidiary of the Company, on 17 February 2017 in order to concentrate resources on its existing businesses. Accordingly, the results of Riche Video are presented separately as discontinued operations for the six months ended 30 June 2017 for financial reporting purposes. Riche Video is principally engaged in distribution of video products and holding of film rights.

Loss attributable to owners of the Company for the six months ended 30 June 2017 amounted to HK$245,658,000, a 57.39% increase from HK$156,084,000 for the six months ended 30 June 2016. The deterioration in the results is discussed in the sub-sections headed “Results of continuing operations” and “Operations Review” below.

Results of continuing operations

During the six months ended 30 June 2017, the Group recorded revenue of HK$16,658,000, an 82.24% decrease from HK$93,801,000 for the previous period. This decrease was attributable to (i) the decrease in the Group’s sale of jewelry products and precious stones, and (ii) the significant increase in loss on sale of financial assets. Of the total revenue, HK$30,624,000 was generated from money lending, HK$15,667,000 was generated from sale of jewelry products and precious stones, HK$22,292,000 was generated from property investment and a loss of HK$51,925,000 was generated from sale of financial assets.

Loss for the period from continuing operations amounted to HK$245,655,000, a 57.40% increase from HK$156,070,000 for the six months ended 30 June 2016. This significant increase was mainly attributable to a HK$93,609,000 increase in loss arising on change in fair value of financial assets at fair value through profit or loss.

Gross profit for sale of jewelry products and precious stones decreased by 79.56% from HK$11,803,000 in the six months ended 30 June 2016 to HK$2,412,000 in the six months ended 30 June 2017 and gross profit margin for sale of jewelry products and precious stones decreased from 19.77% in the six months ended 30 June 2016 to 15.40% in the six months ended 30 June 2017. These decreases were mainly due to the sluggish market conditions and the recording of a HK$1,662,000 sales return from customers as discussed in the section headed “Operations Review”.

Gross profit for property investment increased by 14.53% from HK$15,276,000 in the six months ended 30 June 2016 to HK$17,496,000 in the six months ended 30 June 2017. The increase was mainly due to the receipt of a Mainland China Business Tax refund of HK$4,794,000. Gross profit margin for property investment increased from 63.30% in the six months ended 30 June 2016 to 78.49% in the six months ended 30 June 2017. Such increase was attributable to the refund of Mainland China Business Tax as mentioned above.

Other gains and losses represent items of income and expenses, which are material and/or extraordinary in nature. Other gains and losses recorded by the Group during the six months ended 30 June 2017 are as follows:

(a) On 17 February 2017, the Group disposed of the entire issued share capital of Riche Video at a consideration of HK$173,000 and recognised a gain on disposal of a subsidiary of HK$1,000.

(b) At the end of the reporting period, the Group measured the fair value of the investment property located at No. 33 Nonglinxia Road, Yuexiu District, Guangzhou, Mainland China (the "Guangzhou Property") and recognised a loss of HK$7,143,000 arising on change in fair value of investment properties.

(c) At the end of the reporting period, the Group measured its equity portfolio at market prices and recognised a loss of HK$190,837,000 arising on change in fair value of financial assets at fair value through profit or loss.

Selling and distribution expenses mainly represent staff costs of sales teams, overseas travelling expenses, freight charges and commission incurred by the Group's sale of jewelry products and precious stones business. Selling and distribution expenses decreased by 33.67% from HK$2,456,000 in the six months ended 30 June 2016 to HK$1,629,000 in the six months ended 30 June 2017. This decrease was attributable to (i) the restructuring of the Group's sales force in response to the sluggish market conditions, and (ii) the reduction in overseas business travelling activities.

Administrative expenses amounted to HK$40,155,000 for the six months ended 30 June 2017, a 27.72% increase from HK$31,439,000 for the previous period. This increase was mainly attributable to the recognition of equity-settled share-based payment expenses arising from the grant of share options of HK$10,523,000.

For the six months ended 30 June 2017, Spark Concept Group Limited ("Spark Concept"), a 49% owned associate of the Group, and its subsidiaries (collectively, the "Spark Concept Group") reported a consolidated profit of HK$339,000. Although the Spark Concept Group returned to profitability in the six months ended 30 June 2017, no share of the Spark Concept Group's profit was recognised as the Group's share of the losses not recognised in the previous years has not been recovered by the share of the current period profit. The share of results of associates of HK$1,000 represented the Group's share of loss from China Hong Kong Money Limited, a 30% owned associate of the Group.

— 24 —

Finance costs represented interests on mortgage loan and short-term loan paid by the Group. Finance costs increased by 5.12% from HK$5,133,000 in the six months ended 30 June 2016 to HK$5,396,000 in the six months ended 30 June 2017. Such increase was due to the interest payment of a short-term loan of HK$1,644,000, which was partly offset by a HK$1,381,000 decrease in interest on mortgage loan. The short-term loan in the principal amount of HK$150,000,000 was obtained on 23 March 2017 for the purpose of financing the Group’s short-term funding needs and was fully repaid on 12 May 2017.

Income tax expense decreased from HK$594,000 in the six months ended 30 June 2016 to HK$223,000 in the six months ended 30 June 2017. Such decrease was mainly attributable to a HK$1,810,000 increase in deferred taxation credit, which was partly offset by a HK$1,439,000 increase in current tax expense resulted from the increase in estimated taxable income of the Group’s property investment business.

Results on discontinued operations

Loss from discontinued operations for the six months ended 30 June 2017 amounted to HK$3,000, which represented the results of Riche Video for the period from 1 January 2017 to 17 February 2017, being the date on which Riche Video ceased to be a subsidiary of the Company.

Liquidity and financial resources

During the six months ended 30 June 2017, the Group funded its operations through a combination of cash generated from operations, equity attributable to owners of the Company, issue of new shares and borrowings. Equity attributable to owners of the Company decreased from HK$3,249,145,000 at 31 December 2016 to HK$3,162,834,000 at 30 June 2017. This decrease was mainly attributable to the loss of HK$245,658,000 incurred by the Group for the six months ended 30 June 2017, which was partly offset by (i) a HK$99,226,000 increase in share capital and share premium resulted from the issue of 643,200,000 new ordinary shares at a price of HK$0.160 per share on 16 May 2017, and (ii) a HK$49,598,000 increase in exchange reserve resulted from an exchange gain arising on translating the Group’s operations in Mainland China into Hong Kong dollars at the reporting date.

At 30 June 2017, the cash and cash equivalents of the Group amounted to HK$216,622,000 (31 December 2016: HK$438,975,000).

At 30 June 2017, the Group had outstanding borrowings of HK$135,508,000 (31 December 2016: HK$175,081,000) representing the mortgage loan (equivalent to RMB117,610,000) which was interest bearing at the benchmark interest rate of The People’s Bank of China upward by 10.00% per annum, secured by the Guangzhou Property and maturing on 21 April 2022. The decrease in outstanding borrowings was mainly attributable to the repayment of promissory note of HK$30,000,000 issued to Gome Finance Technology Co., Ltd. (stock code: 628) on 23 March 2017.

— 25 —

— 26 —

Gearing ratio

At 30 June 2017, the gearing ratio calculated as a percentage of total borrowings over equity attributable to owners of the Company was 4.28% (31 December 2016: 5.39%).

Net current assets and current ratio

At 30 June 2017, the Group’s net current assets and current ratio were HK$1,098,024,000 (31 December 2016: HK$1,124,475,000) and 4.21 (31 December 2016: 3.88) respectively.

Capital structure

On 16 May 2017, the Company allotted and issued 643,200,000 new ordinary shares at a price of HK$0.160 per share to five individual investors, who are independent third parties, and five corporate investors, whose ultimate beneficial owners are independent third parties, by way of placing of new shares under general mandate raising HK$99,226,000 (net of expenses) for financing the proposed acquisition of seven office units located at Shun Tak Centre, West Tower, Hong Kong (the “Hong Kong Property”) as announced by the Company on 13 April 2017. The closing price of the Company’s ordinary shares was HK$0.199 per share as quoted on The Stock Exchange of Hong Kong Limited (the “Stock Exchange”) on 26 April 2017, being the date of the placing agreement. The net price to the Company of each new ordinary share was HK$0.154. The directors considered that the placing presented an opportunity for the Company to raise additional funds for financing the proposed acquisition of the Hong Kong Property while broadening the shareholder base of the Company.

Use of proceeds from fund raising activities

As at 30 June 2017, the net proceeds of HK$99,226,000 from the placing of 643,200,000 new ordinary shares under general mandate had not been applied for the proposed acquisition of the Hong Kong Property and were placed as interest bearing deposits with a licensed bank in Hong Kong.

Material acquisitions

During the six months ended 30 June 2017, the Group had no material acquisitions.

Material disposals

During the six months ended 30 June 2017, the Group disposed of an aggregate of 13,500,000 shares in SkyNet Group Limited (stock code: 8176) at an average price of approximately HK$7.25 per share in a series of transactions on open market pursuant to the 12-month disposal mandate granted to the directors by the shareholders at the Company’s special general meeting held on 12 May 2016. The 12-month disposal mandate constitutes a very substantial disposal of the Company under the Rules Governing the Listing of Securities on the Stock Exchange (the “Listing Rules”) and was approved by the shareholders at the Company’s special general meeting held on 12 May 2016.

— 27 —

Pledge of assets

At 30 June 2017, the Guangzhou Property with a carrying amount of HK$571,020,000 (31 December 2016: HK$561,089,000) has been pledged to secure the mortgage loan granted to the Group.

Material commitments

At 30 June 2017, the Group had a total commitment of HK$57,992,000 (31 December 2016: HK$58,190,000) relating to the development costs for a piece of 580 Chinese acre land (the “Subject Land”) adjacent to the Group’s membership golf club and resort in Beijing, Mainland China (the “Club”), which were contracted but not provided for.

Exchange risk and hedging

The majority of the Group’s transactions, assets and liabilities are denominated in Hong Kong dollars, United States dollars and Renminbi. The Group is exposed to exchange risk with respect mainly to Renminbi which may affect its performance. The directors closely monitor statement of financial position and cashflow exchange risk exposures and where considered appropriate use financial instruments, such as forward exchange contracts, foreign currency options and forward rate agreements, to hedge this exchange risk. During the six months ended 30 June 2017, no financial instruments for hedging purposes were used by the Group.

Contingent liabilities

At 30 June 2017, the Group had no material contingent liabilities.

Employees and remuneration policy

At 30 June 2017, the headcount of the Group was 38 (30 June 2016: 41). Staff costs (including directors’ emoluments) amounted to HK$25,663,000 in the six months ended 30 June 2017 (six months ended 30 June 2016: HK$15,036,000). The increase in staff costs was mainly attributable to the recognition of equity-settled share-based payment expenses of HK$9,821,000 arising from the grant of share options to executive directors and employees of the Group. In addition to basic salaries, contributions to retirement benefits scheme and discretionary bonus, staff benefits include medical scheme and share options.

Operations Review

Given that the Group has not been able to secure quality films at reasonable price for distribution for several years, the Group ceased its film distribution business by disposing of the entire issued share capital of Riche Video at the consideration of HK$173,000 on 17 February 2017 in order to concentrate resources on its existing businesses. The disposal of Riche Video resulted in the recognition of a gain of HK$1,000.

During the six months ended 30 June 2017, the Group's sale of financial assets business reported a segment loss (before taxation) of HK$241,862,000, which mainly included (i) a loss of HK$51,925,000 from trading of Hong Kong listed equities, (ii) a loss of HK$190,837,000 arising on change in fair value of financial assets at fair value through profit or loss, and (iii) the dividend income from Hong Kong listed equities held by the Group of HK$1,022,000. The reporting of the segment loss mainly due to (i) a HK$39,903,000 increase in the loss incurred from trading of Hong Kong listed equities, and (ii) the poor market sentiment on small-cap stocks.

During the six months ended 30 June 2017, the Group acquired five Hong Kong listed equities with the aggregate acquisition cost of HK$79,973,000 and made the trading loss of HK$51,925,000 from disposing of three Hong Kong listed equities with the aggregate carrying amount plus transactions costs of HK$274,974,000 at the aggregate sale proceeds of HK$223,049,000. In addition, the Hong Kong listed equities held by the Group as available-for-sale financial assets of HK$365,000,000 were reclassified to financial assets at fair value through profit or loss as the Group has early adopted HKFRS 9 in its consolidated financial statements with effect from 1 January 2017.

Movements in the Hong Kong listed equities held by the Group during the six months ended 30 June 2017 and 2016 are as follows:

| | 2017
HK$'000 | 2016
HK$'000 |
| --- | --- | --- |
| Carrying amount at 1 January | 544,442 | 597,658 |
| Add: Re-classification from available-for-sale financial assets | 365,000 | — |
| Acquisitions | 79,973 | 302,035 |
| Less: Disposals | (274,224) | (78,336) |
| Loss arising on change in fair value | (190,837) | (97,228) |
| Carrying amount at 30 June | 524,354 | 724,129 |

Details of the Hong Kong listed equities held by the Group at 30 June 2017 are as follows:

Name of Hong Kong listed equities	Number of shares held at 30 June 2017	Fair value at 30 June 2017	Fair value as compared to the consolidated total assets of the Group at 30 June 2017	Gain/(loss) arising on change in fair value recognised in the six months ended 30 June 2017
		HK$'000		HK$'000
Brockman Mining Ltd. (stock code: 159)	40,220,000	6,033	0.15%	1,201
CBK Holdings Ltd. (stock code: 8428)	21,720,000	3,671	0.09%	(1,217)
China Healthcare Enterprise Group Ltd. (stock code: 1143)	30,000,000	3,450	0.08%	90
China Healthwise Holdings Ltd. (stock code: 348)	800,000,000	108,000	2.64%	(57,210)
Frontier Services Group Ltd. (stock code: 500)	4,800,000	7,056	0.17%	2,064
Hsin Chong Group Holdings Ltd. (“Hsin Chong”) (stock code: 404)	90,000,000	—*	0.00%	(31,950)
Kingston Financial Group Ltd. (stock code: 1031)	33,028,000	93,139	2.27%	(17,505)
Lajin Entertainment Network Group Ltd. (stock code: 8172)	123,000,000	51,660	1.26%	(28,052)
Sincere Watch (Hong Kong) Ltd. (stock code: 444)	55,000,000	9,460	0.23%	(1,540)
SkyNet Group Ltd. (stock code: 8176)	14,000,000	130,060	3.18%	(1,540)
Town Health International Medical Group Ltd. (stock code: 3886)	70,000,000	47,600	1.16%	(39,900)
Yunfeng Financial Group Ltd. (stock code: 376)	14,368,000	64,225	1.57%	(15,278)
		524,354		(190,837)

*: The share price of Hsin Chong closed at HK$0.35 per share on 31 March 2017, being the last trading day prior to the suspension of trading of the shares at 9:00 a.m. on 3 April 2017. In view of the recent development of suspension announced by Hsin Chong, the entire fair value of the shares in Hsin Chong of HK$31,500,000 at 30 June 2017 was fully impaired for prudence sake.

During the six months ended 30 June 2017, the Group’s money lending business generated interest income on loans of HK$30,624,000, a 39.25% increase from HK$21,992,000 for the previous period. This increase was attributable to the increase in the aggregate principal amount of new loans granted in the six months ended 30 June 2017 as compared to the previous period. The average monthly outstanding balance of loans receivables increased from HK$526,715,000 in the six months ended 30 June 2016 to HK$693,612,000 in the six months ended 30 June 2017. During the period under review, the Group granted new loans in the aggregate principal amount of HK$742,000,000 to six customers. The Group’s customers made drawing in the aggregate principal amount of HK$631,884,000 from the existing and new loans and the Group received loans repayment of HK$326,961,000 from its customers. At the end of the reporting period, the directors assessed the collectability of the loan receivables. As there was no objective evidence that the Group would not be able to collect its loans receivables, no impairment loss on loans receivables was recognised. At 30 June 2017, the Group’s loans receivables together with accrued interest receivables amounted to HK$759,655,000 (31 December 2016: HK$451,163,000).

During the six months ended 30 June 2017, the Group’s sale of jewelry products and precious stones business generated revenue of HK$15,667,000, a 73.76% decrease from HK$59,700,000 for the previous period, and reported a segment loss (before taxation) of HK$2,284,000, whereas a segment profit (before taxation) of HK$6,005,000 was recorded for the previous period. The decrease in revenue and the deterioration in segment results in the six months ended 30 June 2017 were mainly attributable to the sluggish market conditions and the recording of a HK$1,662,000 sales return from customers. In response to the sluggish market conditions, the Group restructured its sales force in order to ensure a cost effective operating structure and refined its business strategy by developing, in addition to overseas retail shops market, overseas retail chain stores market. A number of customers had not settled their trade debts for a long period of time. Having negotiated with these customers, the Group accepted sales return from certain of these customers in order to reduce its credit risk and reached repayment schedules for the long outstanding trade debts with others. Up to now, these long outstanding trade debts have been settled as scheduled. As the sale of precious stones business merely provides a single digit gross profit margin and requires a longer than expected period for trade debts settlement, the Group has temporarily suspended its sale of precious stones business since the first quarter of 2017.

At 30 June 2017, the Group’s inventories of jewelry products and precious stones, including raw materials, work-in-progress and finished goods, amounted to HK$35,081,000 (31 December 2016: HK$38,329,000) and the Group’s sale of jewelry products and precious stones business had undelivered sale orders amounting to HK$2,758,000 (31 December 2016: HK$2,000,000).

During the six months ended 30 June 2017, the Group’s property investment business generated rental income of HK$22,292,000, a 7.62% decrease from HK$24,131,000 for the six months ended 30 June 2016, and recorded a segment loss (before taxation) of HK$570,000, whereas a segment profit (before taxation) of HK$3,115,000 was recorded in the six months ended 30 June 2016. The decrease in rental income was due to one of the tenants of the Guangzhou Property moved out in May 2017 and the decrease in average exchange rate in translating rental income received and receivable in Renminbi into Hong Kong dollars. Of the total rental income, HK$10,204,000 was generated from the assets of the Club and HK$12,088,000 was generated from the Guangzhou Property. No rental income was generated from the Subject Land as the entire Subject Land is still at development stage.

— 30 —

The development of the Subject Land is divided into three phases, in which the first phase involves erecting nine hotel villas with a total gross floor area of 21,661 square meters, the second phase involves erecting 29 hotel villas with a total gross floor area of 33,000 square meters, and the third phase is a development of a five-storey high-end hotel apartment complex with restaurants, multifunction room facilities and approximately 100 hotel apartment units with a total gross floor area of 25,000 square meters. At 30 June 2017, the first phase development was substantially completed. In view of being approached by various prospective purchasers for sale and purchase of the Club and the Subject Land, marketing activity for leasing the nine hotel villas was delayed and the development of the Subject Land was temporarily suspended for the purpose of selling the Club and the Subject Land as at their current conditions with no further development costs to be incurred. On 10 May 2017, the Group entered into a non-legal binding letter of intent with China Healthwise Holdings Limited (stock code: 348) relating to the possible disposal of the entire issued share capital of Smart Title Limited, an indirect wholly owned subsidiary of the Company, by the Group to China Healthwise Holdings Limited, where the Club and the Subject Land are held by an indirect wholly owned subsidiary of Smart Title Limited. However, the non-legal binding letter of intent was terminated on 10 July 2017. Following the termination, the marketing activity for leasing the nine hotel villas has been launched in July 2017 and the development of the first phase of the Subject Land is being finalised.

Taking into account the development costs already incurred, the remaining total budgeted development costs to be incurred by the Group for the Subject Land at 30 June 2017 is approximately RMB853,424,000 (equivalent to HK$983,315,000). To speed up the development of the Subject Land, the Group was in discussions with several financial institutions relating to obtaining borrowings for financing a portion of the remaining total budgeted development costs. The remaining portion will be financed by the Group's internal resources and the rental income generated from the assets of the Club and the Subject Land.

At the end of the reporting period, the directors performed an impairment test for the intangible assets relating to (i) the rights to construct and operate the club facilities of the Club, and (ii) the rights to develop and operate the Subject Land and the rights to manage the properties erected on the Subject Land with reference to the valuation report prepared by an independent valuer. As the recoverable amounts of the intangible assets exceeded their carrying amounts, no impairment was required.

At the end of the reporting period, the directors measured the fair value of the Guangzhou Property. Based on a property valuation report prepared by another independent valuer, the fair value of the Guangzhou Property decreased from RMB501,900,000 (equivalent to HK$561,089,000) at 31 December 2016 to RMB495,600,000 (equivalent to HK$571,020,000) at 30 June 2017. Accordingly, the Group recognised a loss of RMB6,300,000 (equivalent to HK$7,143,000) arising on change in fair value of investment properties. However, the loss arising on change in fair value was not reflected in the carrying amount of the Guangzhou Property at 30 June 2017, the carrying amount of the Guangzhou Property increased from HK$561,089,000 at 31 December 2016 to HK$571,020,000 at 30 June 2017 instead. It is due to the Renminbi to Hong Kong dollars exchange rate increased

— 31 —

by approximately 3.07% from 31 December 2016 to 30 June 2017, which created an exchange realignment of HK$17,074,000 in translating the carrying amount of Guangzhou Property from Renminbi to Hong Kong dollars at the end of the reporting period. Such exchange realignment not only offset the loss of HK$7,143,000 arising on change in fair value entirely, but also put up the carrying amount of the Guangzhou Property by HK$9,931,000.

The Group was in discussion with a Mainland Chinese bank relating to refinancing its existing mortgage loan secured by the Guangzhou Property for keeping the cash out to meet the Group's financing needs.

The directors are optimistic about the prospect of the Hong Kong office market. To enlarge and diversify the Group's investment properties portfolio, the Group as purchaser entered into a provisional sale and purchase agreement with an independent third party relating to the proposed acquisition of the Hong Kong Property at a consideration of HK$322,000,000 on 13 April 2017. The Group intends to hold the Hong Kong Property for long-term investment purpose. Upon completion, part of the Hong Kong Property is intended to be used as the head office of the Company and the remaining part is intended to be leased out for generating rental income. The consideration for the proposed acquisition will be financed by the internal resources of the Group, the net proceeds from the placing of 643,200,000 new ordinary shares under general mandate as completed on 16 May 2017 and bank borrowings. The proposed acquisition constitutes a major transaction for the Company under the Listing Rules and was approved by the shareholders at the special general meeting of the Company held on 18 July 2017. Completion of the proposed acquisition is expected to be taken place on or before 18 September 2017.

The Spark Concept Group is operating two Japanese noodle shops (麵鮮醬油房周月) in Central and Quarry Bay, and a high-end Japanese restaurant (料理人上田) in Central. During the six months ended 30 June 2017, the Spark Concept Group reported a profit of HK$339,000, whereas a loss of HK$1,464,000 was recorded in the correspondence period in 2016. No share of the Spark Concept Group's profit was recognised as the Group's share of the losses not recognised in the previous years has not been recovered by the share of the current period profit. The turnaround in the Spark Concept Group's performance was mainly attributable to the two Japanese noodle shops making profit, however such profit was partly offset by the loss incurred by the high-end Japanese restaurant. No further cash was advanced to the Spark Concept Group by the Group during the six months ended 30 June 2017. In view of the improvement on the Spark Concept Group's performance, no impairment loss was recognised against the amount due from the Spark Concept Group. At 30 June 2017, the Spark Concept Group owed the Group an amount of HK$7,393,000 (before accumulated impairment of HK$5,696,000), which is unsecured, non-interest bearing and repayable on demand. As announced by the Michelin Guide in November 2016, the Japanese noodle shops in Central and Quarry Bay are again awarded the Bib Gourmand rating in the Michelin Guide Hong Kong Macau 2017.

— 32 —

Future Prospects

While the Federal Reserve kept its policy rate unchanged in its July meeting, an important message is that it is looking to start its balance sheet reduction soon. Global markets may face challenges from the Federal Reserve’s policy normalisation in the second half of 2017. Accordingly, the directors cautiously monitor Hong Kong equity market and adjust the Group’s equity portfolio as and when appropriate in the second half of 2017.

As certain internal cash resources of the Group is allocated to finance the proposed acquisition of the Hong Kong Property and the development of the Subject Land, the Group slows down its pace of its money lending business and the directors expect the interest income on loans in the second half of 2017 may be more or less the same as the one in the first half of 2017.

In the second half of 2017, the Group has refined the business strategy for its sale of jewelry products business and resources have been allocated for developing overseas retail chain stores market in order to achieve a stable settlement on its trade debts. As time is needed for developing this market, it is expected that the performance of the Group’s sale of jewelry products business in the second half of 2017 may be more or less the same as the one in the first half of 2017.

The marketing activity for leasing the nine hotel villas in the Subject Land has been launched in July 2017. If the nine hotel villas are leased out, the directors expect that the rental income of the Group will show a growth in the second half of 2017.

In the second half of 2017, the directors will continue to cautiously monitor the business environment and strengthen the Group’s business foundation by focusing the Group’s existing businesses. In addition, the directors will continue to cautiously identify suitable investment opportunities for the Group to diversify its businesses and broaden its revenue.

Events after the End of the Reporting Period

Subsequent to 30 June 2017 and up to the date of this result announcement, the Group had the following material events:

(a) The proposed acquisition of the Hong Kong Property was approved by the shareholders at the special general meeting of the Company held on 18 July 2017.

(b) In August 2017, the Group obtained a secured bank loan in the principal amount of RMB170,000,000 (equivalent to HK$201,462,000) for refinancing its existing mortgage loan.

(c) On 22 August 2017, the Company entered into a conditional subscription agreement with an independent third party relating to the issue of HK$300,000,000 8.00% secured notes due 2020 for financing a portion of the development costs of the Subject Land. The notes were issued on 25 August 2017. Please refer to the Company’s announcement dated 22 August 2017 for more information.

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COMPLIANCE WITH CORPORATE GOVERNANCE CODE

In the opinion of the Board, the Company had complied with the code provisions of the Corporate Governance Code (the "Code") as set out in Appendix 14 of the Listing Rules throughout the six months ended 30 June 2017, except for:

(a) code provision A.2.1 of the Code requires that the roles of chairman and chief executive officer should be separate and should not be performed by the same individual. During the six months ended 30 June 2017, Mr. Lei Hong Wai has taken up the roles of the Chairman of the Board and the Chief Executive Officer of the Company. Mr. Lei possesses essential leadership skills and has extensive experience in corporate management and business development. The Board is of the view that currently vesting the roles of the Chairman and the Chief Executive Officer in the same person provides the Group with strong and consistent leadership and allows for more effective and efficient business planning and decisions as well as execution of long-term business strategies; and

(b) code provision A.4.1 of the Code requires that non-executive directors should be appointed for a specific term, subject to re-election. All non-executive directors of the Company are not appointed for a specific term, but are subject to retirement from office by rotation and re-election in accordance with the provisions of the Company's bye-laws. At each annual general meeting, one-third of the directors for the time being, (or, if their number is not a multiple of three, the number nearest to but not less than one-third) shall retire from office by rotation, provided that every director shall be subject to retirement by rotation at least once every three years. As such, the Company considers that such provision is sufficient to meet the underlying objective of this code provision.

COMPLIANCE WITH THE MODEL CODE FOR SECURITIES TRANSACTIONS BY DIRECTORS

The Company has adopted the Model Code for Securities Transactions by Directors of Listed Issuers (the "Model Code") as set out in Appendix 10 of the Listing Rules for securities transactions by the directors of the Company. Having made specific enquiry by the Company, all directors have confirmed that they have complied with the required standard as set out in the Model Code throughout the six months ended 30 June 2017.

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

Neither the Company nor any of its subsidiaries purchased, sold or redeemed any of the Company's listed securities during the six months ended 30 June 2017.

REVIEW OF FINANCIAL INFORMATION

The Audit Committee has reviewed the 2017 interim report and the unaudited condensed consolidated financial statements for the six months ended 30 June 2017 and agreed to the accounting principles and policies adopted by the Company. In addition, the Company’s external auditor, HLB Hodgson Impey Cheng Limited, has reviewed the unaudited condensed consolidated financial statements for the six months ended 30 June 2017 in accordance with Hong Kong Standard on Review Engagements 2410 “Review of Interim Financial Information Performed by the Independent Auditor of the Entity” issued by the Hong Kong Institute of Certified Public Accountants.

By Order of the Board
Eternity Investment Limited
Lei Hong Wai
Chairman

Hong Kong, 30 August 2017

As at the date of this announcement, the Board comprises four executive directors, namely, Mr. Lei Hong Wai, Mr. Cheung Kwok Wai Elton, Mr. Chan Kin Wah Billy and Mr. Cheung Kwok Fan; and three independent non-executive directors, namely, Mr. Wan Shing Chi, Mr. Ng Heung Yan and Mr. Wong Tak Chuen.

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