Synagistics Limited — Annual Report 2019

Jun 25, 2019

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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OP FINANCIAL LIMITED 東英金融有限公司[*]

(Incorporated in the Cayman Islands with limited liability)

(Stock Code: 1140)

ANNUAL RESULTS ANNOUNCEMENT FOR THE YEAR ENDED 31 MARCH 2019

RESULTS

The board of directors (the “Board” or the “Directors”) of OP Financial Limited and its subsidiaries (the “Group”) is pleased to present to the shareholders the audited consolidated results of the Group for the financial year ended 31 March 2019 (the “Year”) together with comparative figures for the last financial year as follows:

C O N S O L I D A T E D S T A T E M E N T O F P R O F I T O R L O S S A N D O T H E R COMPREHENSIVE INCOME FOR THE YEAR ENDED 31 MARCH 2019

Note Turnover 3 Revenue 3 Other income Net change in unrealized (loss)/gain on financial assets at fair value through profit or loss – arising from listed investments – arising from unlisted investments Net change in unrealized (loss)/gain on financial liabilities at fair value through profit or loss Net realized gain on disposal of investments – arising from listed investments – arising from unlisted investments	2019 HK$’000 1,784,148 227,892 16,841	2018 HK$’000 430,744 125,437 12,558
	(79,847) (78,592)	(39,648) 80,015
	(158,439) (12,986)	40,367 37,861
	117,515 92,994	41,921 7,192
	210,509	49,113

• For identification purposes only

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C O N S O L I D A T E D S T A T E M E N T O F P R O F I T O R L O S S A N D O T H E R COMPREHENSIVE INCOME (CONTINUED) FOR THE YEAR ENDED 31 MARCH 2019

Note Loss on disposal of subsidiaries Impairment loss on available-for-sale financial assets Provision for expected credit losses Equity-settled share-based payments Operating and administrative expenses 6 Profit from operations Finance costs Share of results of investment accounted for using equity method Profit before tax Taxation 5 Profit for the Year 6 Other comprehensive income Items that may be reclassified to profit or loss Available-for-sale financial assets: Fair value changes Impairment loss Balance transferred to profit or loss upon disposal Share of other comprehensive income of investments accounted for using equity method Investment revaluation reserve Surplus reserve Exchange differences Net other comprehensive income for the Year Total comprehensive income for the Year Earnings per share Basic 7(a) Diluted 7(b) Proposed final dividend per share	2019 HK$’000 – – (72,687) (12,200) (117,251) 81,679 (10,478) 205,958 277,159 (20,469) 256,690 – – – (186) 165 (228) (249) 256,441 8.74 cents 8.68 cents 4.6 cents	2018 HK$’000 (483) (3,353) – (7,116) (165,417) 88,967 (3,126) 50,421 136,262 7,158 143,420 48,903 3,353 (161) 186 9 440 52,730 196,150 6.77 cents 6.72 cents 4 cents

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CONSOLIDATED STATEMENT OF FINANCIAL POSITION

AT 31 MARCH 2019

Note Non-current assets Fixed assets Deferred tax assets Investments accounted for using equity method Available-for-sale financial assets Financial assets at fair value through profit or loss Debt investments Current assets Financial assets at fair value through profit or loss Debt investments Accounts and loans receivable 8 Prepaid tax Interest receivables Prepayments and other receivables Bank and cash balances TOTAL ASSETS	2019 HK$’000 4,118 8,234 1,147,289 – 1,604,321 1,423,674 4,187,636 653,869 601,805 172,402 12,837 29,640 23,763 193,800 1,688,116 5,875,752	2018 HK$’000 594 3,133 1,015,689 346,804 352,422 –
		1,718,642
		1,082,874 1,456,000 83,237 12,837 14,133 10,446 1,771,671
		4,431,198
		6,149,840

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CONSOLIDATED STATEMENT OF FINANCIAL POSITION (CONTINUED) AT 31 MARCH 2019

Note Capital and reserves Share capital Reserves TOTAL EQUITY Current liabilities Accounts payable Other payables Deposit received Loan payable 9 Financial liabilities at fair value through profit or loss Tax payable Non-current liabilities Financial liabilities at fair value through profit or loss TOTAL LIABILITIES TOTAL EQUITY AND LIABILITIES NET ASSETS Net asset value per share 10	2019 HK$’000 290,094 5,340,369 5,630,463 11,000 20,491 – 71,558 37,295 40,249 180,593 64,696 245,289 5,875,752 5,630,463 HK$1.94	2018 HK$’000 293,740 5,301,118
		5,594,858
		69,353 14,694 240,000 127,975 58,310 14,678
		525,010
		29,972
		554,982
		6,149,840
		5,594,858
		HK$1.90

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NOTES

1 BASIS OF PREPARATION

The consolidated financial statements of the Group have been prepared in accordance with Hong Kong Financial Reporting Standards (“HKFRSs”), accounting principles generally accepted in Hong Kong and the applicable disclosures required by the Rules Governing the Listing of Securities (the “Listing Rules”) on the Stock Exchange of Hong Kong Limited (“Stock Exchange”) and by the Hong Kong Companies Ordinance.

The consolidated financial statements have been prepared under the historical cost convention, as modified by the revaluation of certain investments and derivatives which are carried at their fair values.

2 ADOPTION OF NEW AND REVISED HONG KONG FINANCIAL REPORTING STANDARDS

(a) New standards and amendments to standards adopted by the Group

In the Year, the Company and its subsidiaries (the “Group”) has adopted all the relevant new and revised Hong Kong Financial Reporting Standards (“HKFRSs”) issued by the Hong Kong Institute of Certified Public Accountants (“HKICPA”) that are currently in issue and effective for its accounting year beginning on 1 April 2018. HKFRSs comprise all applicable individual Hong Kong Financial Reporting Standards (“HKFRS”), Hong Kong Accounting Standards (“HKAS”), and interpretations (“HK(IFRIC)”).

The following amendment to standards have been adopted by the Group for the first time for the financial year commencing 1 April 2018.

HKFRS 9	Financial Instruments
HKFRS 15	Revenue from Contracts with Customers and
	the related Amendments
HK(IFRIC) – Int 22	Foreign Currency Transactions and Advance Consideration
Amendments to HKFRS 2	Classification and Measurement of
	Share-based Payment Transactions
Amendments to HKAS 28	As part of the Annual Improvements to HKFRSs 2014–2016 Cycle

Except as described below, the application of the new and amendments to HKFRSs and the interpretation in the current year have had no material impact on the Group’s financial performance and positions for the current and prior years and/or on the disclosures set out in these consolidated financial statements.

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HKFRS 9 “Financial instruments”

The adoption of HKFRS 9 has resulted in the restatement of the following line items. The restatements are explained in detail below.

Consolidated statement of financial position (extracted) Non-current assets Available-for-sale financial assets Financial assets at fair value through profit or loss Current assets Financial assets at fair value through profit or loss Debt investments Capital and reserves Investment revaluation reserve Retained profits	31 March 2018 As originally presented New classification category under HKFRS 9 HK$’000 HK$’000 346,804 (346,804) 352,422 346,804 1,082,874 – 1,456,000 – 70,668 (70,482) 450,039 70,482	Expected credit losses (“ECL”) under HKFRS 9 HK$’000 – – – (40,449) – (40,449)	1 April 2018 Restated HK$’000 – 699,226
			1,082,874 1,415,551
			186 480,072

HKFRS 9 replaces the provision of HKAS 39 that relate to the recognition, classification and measurement of financial assets and liabilities, derecognition of financial instruments, impairment of financial assets and hedge accounting.

(i) Impact of adoption

The adoption of HKFRS 9 from 1 April 2018 resulted in changes in accounting policies for certain financial instruments held by the Group. In accordance with the transition provisions in HKFRS 9, comparative figures of the financial information have not been restated.

On 1 April 2018 (the date of initial application of HKFRS 9), the Group’s management has assessed which business models applied to the financial assets held by the Group and has classified its financial instruments into the appropriate HKFRS 9 categories. The major effects resulting from this reclassification are as follows:

Reclassification from available-for-sale financial assets (“AFS”) to financial assets at fair value through profit or loss (“FVPL”)

Equity investments of HK$346,804,000 were reclassified from AFS to FVPL as at 1 April 2018. The Group elected to account for these equity investments at FVPL. Related fair value gains of HK$70,482,000 were transferred from investment revaluation reserve to retained profits on 1 April 2018. For the year ended 31 March 2019, net fair value losses of HK$33,389,000 relating to these investments were recognized in profit or loss.

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Impairment of financial assets

The Group assesses ECL on financial assets which are subject to impairment under HKFRS 9 (including debt investments, accounts and loans receivable, interest receivables, other receivables and bank and cash balances). The assessment is updated at each reporting date to reflect changes in credit risk since initial recognition.

Lifetime ECL represents the ECL that will result from all possible default events over the expected life of the relevant instrument. In contrast, 12-month ECL (“12m ECL”) represents the portion of lifetime ECL that is expected to result from default events that are possible within 12 months after the reporting date. Assessments are done based on the Group’s historical credit loss experience, adjusted for factors that are specific to the debtors, general economic conditions and an assessment of both the current conditions at the reporting date as well as the forecast of future conditions.

The Group measures the loss allowance equal to 12m ECL, unless when there has been a significant increase in credit risk since initial recognition, the Group recognizes lifetime ECL. The assessment of whether lifetime ECL should be recognized is based on significant increases in the likelihood or risk of a default occurring since initial recognition.

In assessing whether the credit risk has increased significantly since initial recognition, the Group compares the risk of a default occurring on the financial instrument as at the reporting date with the risk of a default occurring on the financial instrument as at the date of initial recognition. In making this assessment, the Group considers both quantitative and qualitative information that is reasonable and supportable, including historical experience and forwardlooking information that is available without undue cost or effort.

In particular, the following information is taken into account when assessing whether credit risk has increased significantly:

• an actual or expected significant deterioration in the financial instrument’s external (if available) or internal credit rating;

• significant deterioration in external market indicators of credit risk;

• existing or forecast adverse changes in business, financial or economic conditions that are expected to cause a significant decrease in the debtor’s ability to meet its debt obligations;

• an actual or expected significant deterioration in the operating results of the debtor;

• an actual or expected significant adverse change in the regulatory, economic, or technological environment of the debtor that results in a significant decrease in the debtor’s ability to meet its debt obligations.

The measurement of ECL is a function of the probability of default, loss given default (i.e. the magnitude of the loss if there is a default) and the exposure at default. The assessment of the probability of default and loss given default is based on historical data adjusted by forward looking information.

Generally, the ECL is estimated as the difference between all contractual cash flows that are due to the Group in accordance with the contract and all the cash flows that the Group expects to receive, discounted at the effective interest rate determined at initial recognition.

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Interest income is calculated based on the gross carrying amount of the financial asset unless the financial asset is credit impaired, in which case interest income is calculated based on amortized cost of the financial asset.

As at 1 April 2018, the directors of the Company reviewed and assessed the Group’s existing financial assets for impairment using reasonable and supportable information that is available without undue cost or effort in accordance with the requirements of HKFRS 9.

• (ii) Accounting policies applied from 1 April 2018

From 1 April 2018, the Group classifies its financial assets in the following measurement categories: those to be measured subsequently at FVPL and at amortized cost. The classification depends on the Group’s business model for managing the financial assets and the contractual terms of the cash flows.

Equity instruments

The Group subsequently measures all equity investments at FVPL.

Changes in the fair value of the financial assets at FVPL are recognized in the consolidated statement of profit or loss.

Dividend and interest income from such investments continue to be recognized in profit or loss when the Group’s right to receive payments is established.

Debt investments

Debt investment is subsequently measured at amortized cost only if it is a debt investment, and the objective of the Group’s business model is to hold the asset to collect the contractual cash flows, and the asset’s contractual cash flows characteristics represent only unleveraged payments of principal and interest.

Interest income from these financial assets is included in revenue using the effective interest rate method.

From 1 April 2018, the Group assesses on a forward looking basis the expected credit losses associated with its debt instruments carried at amortized cost. The impairment methodology applied depends on whether there has a significant increase in credit risk.

For accounts and loan receivables, the Group applies the simplified approach permitted by HKFRS 9, which requires expected lifetime losses to be recognized from initial recognition of the receivables. Based on the assessment of the management, the expected credit loss is immaterial.

Derivatives

Derivative financial investments are initially recognized at fair value on the date a derivative contract is entered into and are subsequently remeasured at their fair value. The derivative financial investments are designated by the Group as non-hedging derivative financial investments and are classified as current assets. Changes in the fair value of any non-hedging derivative financial investments are recognized immediately in the consolidated statement of profit or loss.

Other financial assets

At initial recognition, the Group measures other financial assets at its fair value. Transaction costs of financial assets carried at FVPL are expensed in profit or loss.

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HKFRS 15 “Revenue from Contracts with Customers”

The HKICPA has issued a new standard for the recognition of revenue. This has replaced HKAS 18 which covers contracts for goods and services and HKAS 11 which covers construction contracts. The new standard is based on the principle that revenue is recognized when control of a good or service transfers to a customer. The adoption of HKFRS 15 “Revenue from contracts with customers” has had an insignificant effect on the consolidated financial statements of the Group.

(b) New standards, amendments and interpretations have been issued but not yet effective for the Year and have not been early adopted

HKFRS 16, ‘Leases’

HKFRS 16 will result in almost all leases being recognized on the consolidated statement of financial position, as the distinction between operating and finance leases is removed. Under the new standard, an asset (the right to use the leased item) and a financial liability to pay rentals are recognized. The only exceptions are short-term and low-value leases. The accounting for lessors will not significantly change.

The standard will affect primarily the accounting for the Group’s operating leases.

As at 31 March 2019, the Group has non-cancellable operating lease commitments of HK$111,704,000. For these lease commitments, the Group expects to recognize lease commitment of approximately HK$115,718,000 as right-of-use assets and lease liabilities of approximately HK$109,694,000 on 1 April 2019, net current assets will be HK$32,035,000 lower due to the presentation of a portion of the liability as a current liability.

The Group will apply the standard from its mandatory adoption date of 1 April 2019. The Group intends to apply the simplified transition approach and will not restate comparative amounts for the year prior to first adoption.

There are no other HKFRSs or HK (IFRIC) interpretations that are not yet effective that would be expected to have a material impact on the Group.

3 TURNOVER AND REVENUE

Turnover represents the aggregate of dividend income, performance premium from co-investment partner, interest income and gross sales proceeds from disposal of equity investments.

Turnover and revenue recognized during the Year are analyzed as follows:

Dividend income Performance premium from co-investment partner Interest income Revenue Gross sales proceeds from disposal of equity investments Turnover	2019 HK$’000 6,483 – 221,409 227,892 1,556,256 1,784,148	2018 HK$’000 7,077 15,639 102,721
		125,437 305,307
		430,744

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4 SEGMENT INFORMATION

The chief operating decision maker has been identified as the executive directors, subject to requirements of the Listing Rules. The executive directors assess the operating segments using a measure of operating profit. The Group’s measurement policies for segment reporting under HKFRS 8 are the same as those used in its HKFRS financial statements.

On adopting of HKFRS 8, based on the internal financial information reported to the executive directors for decisions about resources allocation to the Group’s business components and review of these components’ performance, the Group has identified only one operating segment, being investment holding. Accordingly, segment disclosures are not presented.

Geographical information:

Revenue Hong Kong Mainland China United States of America	2019 HK$’000 150,554 73 77,265 227,892	2018 HK$’000 98,895 19,691 6,851
		125,437

In presenting the geographical information, revenue is based on the location of the investments or the investment partners.

Non-current assets other than financial instruments

	2019	2018
	HK$’000	HK$’000
Hong Kong	118,095	161,754
Mainland China	1,041,546	857,662

Information about major investments:

During the Year, interest income received from five of the Group’s debt investments, which individually accounted for 10% or more of the Group’s total revenue amounted to approximately HK$43,699,000, HK$29,594,000, HK$26,667,000, HK$24,955,000 and HK$24,308,000 respectively.

During the year ended 31 March 2018, interest income received from one of the Group’s debt investments and performance premiums derived from one of the Group’s unlisted investments, which individually accounted for 10% or more of the Group’s total revenue amounted to approximately HK$49,233,000 and HK$15,639,000 respectively.

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5 TAXATION

• (a) On 21 March 2018, the Hong Kong Legislative Council passed the Inland Revenue (Amendment) Bill 2017 (the “Bill”) which introduces the two-tiered profits tax rates regime. The Bill was signed into law on 28 March 2018 and was gazette on the following day. Under the two-tiered profits tax rates regime, the first HK$2 million of profits of qualifying corporation will be taxed at 8.25%, and profits above HK$2 million will be taxed at 16.5%. The profits of group entities not qualifying for the two-tiered profits tax rates regime will continue to be taxed at the flat rate of 16.5%.

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

Taxation on overseas profit has been calculated on the estimated assessable profit for the Year at the rates of taxation prevailing in that overseas country.

Hong Kong Profits Tax Over-provision of Hong Kong Profits Tax for previous year Deferred tax assets recognized	2019 HK$’000 25,570 – (5,101) 20,469	2018 HK$’000 – (4,025) (3,133) (7,158)

• (b) The reconciliation between the income tax and the product of profit before tax multiplied by the domestic tax rates applicable to profits of the consolidated entities is as follows:

Profit before tax Tax calculated at domestic tax rates applicable to profits in the respective countries Tax effect of income that is not taxable Tax effect of deemed taxable profit Tax effect of expenses that are not deductible Tax effect of temporary differences not recognized Tax effect of tax losses not recognized Tax effect of utilization of tax losses not previously recognized Over-provision of Hong Kong Profits Tax for previous year Taxation	2019 HK$’000 277,159 45,731 (86,043) 4,780 65,800 (5,953) – (3,846) – 20,469	2018 HK$’000 136,262 22,483 (26,952) – 4,255 660 122 (3,701) (4,025) (7,158)

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6 PROFIT FOR THE YEAR

The Group’s profit for the Year is stated after charging the following:

Auditor’s remuneration – Audit – Others Depreciation Investment management fee Operating lease payments in respect of office premises Staff costs (including directors’ emoluments) Salaries and other benefits Mandatory provident fund contributions Equity-settled share-based compensation	2019 2018 HK$’000 HK$’000
	1,846 1,437 376 365
	2,222 1,802 828 138 13,800 55,866 10,760 9,348
	59,202 58,447 641 550 12,200 7,116
	72,043 66,113

7 EARNINGS PER SHARE

(a) Basic earnings per share

Basic earnings per share is calculated by dividing the profit for the Year by the weighted average number of ordinary shares in issue less treasury shares during the Year.

	2019	2018
Profit for the Year (HK$’000)	256,690	143,420
Weighted average number of ordinary shares in issue less treasury
shares (in thousand)	2,935,413	2,116,958
Basic earnings per share	8.74 cents	6.77 cents

(b) Diluted earnings per share

Diluted earnings per share is calculated by adjusting the weighted average number of ordinary shares outstanding to assume conversion of all dilutive potential ordinary shares. The Company has one category of dilutive potential ordinary shares: share options. For share options, the number of shares that would have been issued assuming the exercise of the share options less the number of shares that could have been issued at fair value (determined as the average market price per share for the Year) for the same total proceeds is the number of shares issued for no consideration. The resulting number of shares issued for no consideration is included in the weighted average number of ordinary shares as the denominator for calculating diluted earnings per share.

Profit for the Year (HK$’000) Weighted average number of ordinary shares in issue less treasury shares (in thousand) Adjustments for share options (in thousand) Diluted earnings per share	2019 2018 256,690 143,420
	2,935,413 2,116,958 21,386 18,351
	2,956,799 2,135,309 8.68 cents 6.72 cents

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8 ACCOUNTS AND LOANS RECEIVABLE

Note Unsecured loan to a potential investee (a) Consideration receivables (b) Accounts receivable (c) Amounts due from associates, joint ventures and related companies (d) Dividend receivable Analyzed as: Current assets (a) Unsecured loan Impairment loss	2019 HK$’000 20,195 59,778 136 26,893 65,400 172,402 172,402 2019 HK$’000 70,041 (49,846) 20,195	2018 HK$’000 74,307 – 7,878 1,052 –
		83,237
		83,237
		2018 HK$’000 74,307 –
		74,307

Unsecured loan of RMB60,000,000, approximately HK$70,041,000 (2018: HK$74,307,000), is provided to a potential investee established in the PRC. The Group assesses the feasibility of the potential investment from time to time. Impairment loss of RMB42,700,000, approximately HK$49,846,000 (2018: Nil) is recognized against unsecured loan at 31 March 2019 based on estimated recoverable amount determined by reference to an analysis of the counterparty’s current financial position.

Impairment loss of RMB42,700,000, approximately HK$49,775,000 by average exchange rate, is recognized in profit or loss.

The Group does not hold any collateral or other credit enhancement over the balance.

• (b) Consideration receivables included balances of HK$51,278,000 and HK$8,500,000 in respect of the disposal of a listed equity investment and an unlisted equity investment respectively.

None of the above assets are either past due or impaired. The financial assets included in the above balances related to the receivables for which there were no recent history of default.

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• (c) The Group does not hold any collateral or other credit enhancements over the accounts receivable from co-investment partners. The aging analysis of accounts receivable based on the invoice date is as follows:

Unbilled < 3 months	2019 HK$’000 136 – 136	2018 HK$’000 3,954 3,924
		7,878

At 31 March 2019 and 2018, the accounts receivable were neither past due nor impaired.

• (d) Amounts due from associates, joint ventures and related companies arise mainly from advance money provided for a potential investment project and administrative expenses paid by the Group on behalf of its associates, joint ventures and related companies. The amounts are unsecured, interest-free and repayable on demand.

9 LOAN PAYABLE

Other borrowing_(note a) Bank borrowing(note b)_	2019 HK$’000 71,558 – 71,558	2018 HK$’000 75,917 52,058
		127,975

Notes:

• (a) Other borrowing represents RMB61,300,000 (equivalent to approximately HK$71,558,000) (2018: HK$75,917,000) loan due to its associate, namely上海赫奇企業管理諮詢有限公司, for a potential investment opportunity in the PRC. The borrowings are unsecured, non-interest bearing and repayable on demand.

• (b) All bank borrowings were settled during the Year.

• (c) The carrying amounts of the Group’s and the Company’s loan payable approximate to their fair values.

10 NET ASSET VALUE PER SHARE

The net asset value per share is calculated by dividing the net asset value of the Group at 31 March 2019 of approximately HK$5,630,463,000 (2018: HK$5,594,858,000) by the number of ordinary shares in issue less treasury shares at that date, being 2,900,940,000 (2018: 2,937,396,000).

11 COMPARATIVE FIGURES

Certain comparative figures have been restated to conform with the current year’s presentation.

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MANAGEMENT DISCUSSION AND ANALYSIS

THE OP FINANCIAL CHARTER

OP Financial is a cross-border investor with a focus on China’s fast growing industries and the best investment opportunities. We believe a long-term investment perspective is a critical enabler of responsible investment. The close integration among industries, technology, and financial capital has become an irresistible trend, leading to the new industrial revolution. Our mission is to identify great companies and enhance their performance by providing patient capital and support to strong management teams.

Being an owner of the portfolio, we invest off our own balance sheet. Our investment covers long-term core holding, mid-term private equity and venture capital, and short-term arbitrage opportunities, with returns generating from interests, dividends and capital appreciation.

INVESTMENT REVIEW

Investment Activity

OP Financial has initiated the upgrade of its overall strategic planning since early 2018 and has been bullish on the long-term growth of the Chinese economy. During the Year, OP Financial endeavored to discover industry leaders as long-term core holding companies and made breakthrough in the healthcare. Healthcare is a huge industrial cluster with sustainable and long-term development and less affected by economic cycles.

Taking into account the challenging market conditions during the Year, we remained prudent on the new equity investments and endeavored to make maximum value of the capital and our financing capability. We invested in iCarbonX Group Limited (“iCarbonX”) as the largest portfolio and one of the core holding companies to capture the great synergy among industries, technology, and financial capital. Overall, we made a total of HK$3,368 million new investments during the Year, which was distributed in long-term core holding, midterm PE/VC and short-term arbitrage opportunities as 33%, 8% and 59%. Apart from the new investment made during the Year, our divestment of HK$2,174 million mainly derived from some short-term debt instruments, listed securities and private equity investments.

– 15 –

During the Year, the investment in debt and other instruments contributed to enhancing the capital liquidity and generated revenue in fixed income, and the investment and disposal of some listed securities brought positive returns. Our mixed portfolio helped to reduce the impact caused by some financial asset price fluctuation on the back of the volatile capital market and challenging economic environment.

New investment and divestment/disposal (2017-2019) (HK$ million)

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3,995
3,368
889
904
1,266
2,174
2017 2018 2019
New investment Divestment/disposal
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Portfolio Breakdown

We divide our strategy into three categories, namely long-term core holding, mid-term private equity and venture capital, and short-term arbitrage and others. The core holding strategy is our first focus, and we take advantage of the long-term investment with own capital to support their development. We uncover companies with high potential of both growth and scalability and support them with a long-term capital. The mid-term private equity and venture capital aim to seek opportunities arose in emerging industries and even will contribute to the consolidation of the industry chain for core holdings. The third strategy focuses on opportunities that mainly emerge from short-term financing needs and other opportunistic deals.

As of 31 March 2019, the top three sectors for our existing investments were medical & health, finance and TMT. The leading position of medical & health sector was our new investment iCarbonX. In the finance sector, Beijing International Trust Co., Ltd. made the largest contribution. In the TMT sector, major investments included Didi Chuxing and Wacai.

By Sector

By Holding Period

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----- Start of picture text -----

Debt and other instruments 37.55%
Medical & Health 25.40%
<1 year 41.08%
Finance 18.51%
1-2 years 34.94%
TMT 8.83%
2-3 years 5.99%
Consumer 3.05%
3-4 years 13.48%
Energy & Environment 2.86%
>5 years 4.51%
Materials & Industry 2.27%
Other 1.53%
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MAJOR INVESTMENT PORTFOLIO

Long-term Core Holding

As of 31 March 2019, our core holding companies include iCarbonX, CSOP Asset Management Limited (“CSOP”) and OPIM Holdings Limited (“OPIM”). iCarbonX focuses on digital health management, CSOP is the largest RQFII manager globally, while OPIM is Asia’s leading hedge fund platform. As of 31 March 2019, OP Financial’s holding in this category amounted to HK$1,255.71 million. OP Financial will hold these core holding companies to pursue long-term investment return.

iCarbonX Group Limited

Date of initial investment: 2018 Type of deal: Core Holding Equity ownership: <5% Cost: HK$1,098.79 million Valuation: HK$1,099.00 million Location: China Industry: Medical & Healthcare

In 2018, OP Financial invested in iCarbonX as one of its core holding companies and established a joint venture with iCarbonX named iCarbonX OP Investment Limited to capture potential investment opportunities.

iCarbonX is the global pioneer in digital life and precision health management and aims to build an ecosystem of digital life based on a combination of individuals’ life data, the Internet and artificial intelligence. Its main founding team includes the world’s top biotechnology experts with extensive experiences in multi-omics technology, medical service, biological data analysis, artificial intelligence, and data mining.

iCarbonX has established a digital life alliance with a number of innovative technology companies, and actively carry out cross-border cooperation layout as well as the use of digital life technology to help integrate the enterprise with growth prospects. OP Financial believes that the development of iCarbonX will benefit from the combination of life science, information technology, big data, and artificial intelligence, and will actively bridge opportunities between iCarbonX and industry leaders to accelerate its development and capital appreciation in the healthcare industry. OP Financial will benefit from the capital appreciation and potential investment cooperation of iCarbonX and hold it as a long-term core holding company.

– 17 –

CSOP Asset Management Limited

Date of initial investment: 2008 Type of deal: Core Holding Equity ownership: 30% Cost: HK$60.00 million Valuation: HK$98.69 million Location: Hong Kong Industry: Finance

OP Financial and China Southern Asset Management Co., Ltd. jointly established CSOP in 2008. Currently OP Financial owns 30% of issued capital of CSOP. Our position in CSOP fell from HK$150.32 million to HK$98.69 million over the Year due to HK$65.40 million dividend declared during the Year. The share of cumulative profits from 1 April 2018 amounted to HK$13.8 million. Taking into account the shared results and dividend received, OP Financial has achieved over 4x returns on CSOP to date.

CSOP is a well-known asset management company in Hong Kong, which manages private and public funds, as well as providing investment advisory services to Asian and global investors with a dedicated focus on China investing. CSOP holds a total of RMB46.10 billion RMB Qualified Foreign Institutional Investor (RQFII) quota, making it the largest RQFII manager in the market. CSOP’s newly launched innovative products during the Year, including CSOP Hong Kong Dollar Money Market ETF and CSOP US Dollar Money Market ETF, filled the gap in Hong Kong’s money market fund industry.

CSOP’s leading position in RQFII product management has made it one of the leading ETF providers in Hong Kong. With the further opening of China’s capital market and the increasing confidence of international investors in China, CSOP will continue to bridge investment opportunities in China for overseas investors with its abundant and innovative fund products and achieve steady development. OP Financial believes that CSOP is expected to continue to bring solid returns and will hold it as a long-term core holding company.

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OPIM Holdings Limited

Date of initial investment: 2008 Type of deal: Core Holding Equity ownership: 30% Cost: HK$53.59 million Valuation: HK$58.02 million Location: Hong Kong Industry: Finance

OP Financial currently owns 30% of the issued share capital in OPIM Holdings Limited and also owns 100% of the issued non-voting preference shares of its subsidiaries (together “OPIM”). Our investment position increased from HK$52.62 million to HK$58.02 million on account of AUM increase of OPIM.

OPIM is a leading hedge fund platform in Asia serving both global and Asia-based managers to develop funds across diversified strategies for institutional and professional investors. It has built an ecosystem linking up fund managers, service providers and capital allocators, which enable the managers to launch offshore funds in fast and affordable structures. The ecosystem allows the managers to focus on performance and build a professional track record.

With the acceleration of the entrance of China’s private equity to the overseas market, OPIM is expected to maintain a steady rise in the asset of the momentum, in terms of the growth of the number of funds and the overall scale. At the same time, with the opening up of China’s capital market, especially driven by the QFII project, the entry of foreign managers into the Chinese market is also expected to bring new growth opportunities for OPIM’s platform business. OP Financial believes that the business scale of OPIM is expected to continue to improve, and it will hold it as a long-term core holding company.

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Mid-term Private Equity and Venture Capital

During the Year, OP Financial added few investments in mid-term private equity and venture capital investment, while the divestments mainly include 3 private equity investments and one matured fund. As of 31 March 2019, OP Financial’s holding in this category amounted to HK$1,952.66 million. OP Financial will benefit from the mid-term asset appreciation and maintain the holding as reserve for future divestment. The major investments are listed below:

Treasure Up Ventures Limited (BITIC)

Date of initial investment: 2016 Type of deal: Private Equity Equity ownership: 25% Cost: HK$351.67 million Valuation: HK$688.74 million Location: China Industry: Finance

OP Financial acquired 25% equity interest in Treasure Up Ventures Limited, which in turn participates in a minority economic interest in Beijing International Trust Co., Ltd. (“BITIC”). Our position increased from HK$490.74 million to HK$688.74 million due to the prospects of overall Chinese Trust industry leading to the valuation increase of BITIC.

BITIC is a Chinese large-scale non-banking financial institution, which engages in trusts, investment funds, financial services, brokerage, and advisory businesses.

Trust industry has been playing an irreplaceable role in China’s economic development and financial resource allocation. In recent years, it has been continuously improving the efficiency and capacity of serving the real economy. In 2018, BITIC implemented the development strategy of reducing the quantity and improving quality and adjusted the layout of trust business to realize the steady development, with trust assets rising steadily. OP Financial believes that BITIC will benefit from the continuous improvement of China’s financial system and the upgrading of the trust industry, and bring good investment returns to the Company.

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Victorian Investment Limited Partnership

Date of initial investment: 2018 Type of deal: Private Equity Equity ownership: 46.15% Cost: HK$234.80 million Valuation: HK$236.79 million Location: China Industry: Medical & Healthcare

In 2018, OP Financial invested US$30 million (equivalent to approximately HK$234.80 million) in Victorian Investment Limited Partnership to participate the investment in the healthcare business of a Chinese company. Our position slightly increased from HK$235.41 million last year to HK$236.79 million.

The investment has a maturity of 2 years and OP Financial will divest the investment after maturity.

During the investment period, OP Financial will receive consistent returns and distributions under the investment framework of Victorian Investment Limited Partnership. The market potential of China’s health industry is constantly being released. OP Financial made this investment in line with its current investment layout of the industry, and it is expected to obtain good returns after the exit of the investment.

Xiaoju Kuaizhi Inc. (Didi Chuxing)

Date of initial investment: 2016 Type of deal: Private Equity Equity ownership: <1% Cost: HK$116.45 million Valuation: HK$156.88 million Location: China Industry: TMT

Xiaoju Kuaizhi Inc. (“Xiaoju Kuaizhi”) is the Cayman Island SPV of Didi Chuxing. OP Financial subscribed less than 1% preferred shares issued by Xiaoju Kuaizhi. Our position in Didi Chuxing nearly remained unchanged as compared to HK$156.83 million last year.

Didi Chuxing is the world’s leading one-stop mobile transportation platform. Didi Chuxing offers a full range of app-based mobility options for over 550 million users.

With the development of urbanization and the evolution of consumption habits, mobile transportation will play an important role in urban society. In recent years, Didi Chuxing has been actively exploring the application of artificial intelligence, big data, and other technologies in the transportation industry, and the optimization and upgrading of its business and actively promote global operations. OP Financial believes that with Didi Chuxing’s leading position in the industry and its smart transportation layout, the Company will benefit from the prospects of the transportation industry and the capital appreciation of this investment.

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OP EBS Fintech Investment L.P. (Wacai)

Date of initial investment: 2017 Type of deal: Private Equity Equity ownership: 40% Cost: HK$156.26 million Valuation: HK$156.53 million Location: China Industry: TMT

OP Financial and China Everbright Securities International Structured Finance Company Limited formed OP EBS Fintech Investment L.P., for subscription of preferred shares of Wacai. Our position in Wacai nearly remained unchanged as compared to HK$156.26 million last year.

Wacai Holdings Limited (“Wacai”) is one of the earliest established Fin-tech companies in China, which has gradually evolved into an internet finance platform with a wide array of personal financial management tools and services, wealth management services and credit solutions.

The development of the Internet finance industry will continue to benefit from the innovative consolidation of finance, technology, and the Internet. The industry regulation is becoming more standardized. It is expected that the market share will be integrated, and Wacai is expected to benefit from it. OP Financial will continue to monitor the dynamic development of China’s Internet financial market to benefit from the potential opportunities brought by the industry.

BE Financial Service (Beijing) Investment Holdings Limited

Date of initial investment: 2017 Type of deal: Private Equity Equity ownership: 20% Cost: HK$46.64 million Valuation: HK$51.29 million Location: China Industry: Energy & Environment

OP Financial partners with Beijing Enterprises Water Group Limited (“BEWG”, stock code: 371.HK) to promote the establishment of BE Financial Service (Beijing) Investment Holdings Limited (北控金服 (北京)投資控股有限公司, “BEFS”). OP Financial committed RMB200 million for 20% registered capital in BEFS and has paid up the first capital call of RMB40 million (equivalent to HK$46.64 million) in August 2017. Our position slightly increased from HK$49.17 million last year to HK$51.29 million.

BEFS works along with its subsidiaries to provide comprehensive services of fund investment, financing, and management for BEWG’s PPP projects in relation to environmental protection. As a large water treatment and environmental protection group with core competitiveness in China, BEWG has achieved a nationwide strategic layout and successfully entered into the overseas market. OP Financial believes that with China’s continuous support for the environmental protection industry and the market-leading position of BEWG, BEFS will promote business development in an orderly manner and bring medium-term investment returns to the Company.

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Short-term Arbitrage and Others

During the Year, OP Financial made new investment and divestment in some debt instruments and listed securities to enhance the capital liquidity and generated returns from interests, dividends and capital gains. At the same time, our portfolio of debt instruments recorded provision for expected credit losses following the adoption of HKFRS 9, while some listed securities recorded market price change among the fluctuating stock market. As of 31 March 2019, OP Financial’s holding in listed securities that falls into this category amounted to HK$183.36 million, while its holding in debt and other instruments amounted to approximately HK$2.04 billion.

OP Financial maintains close communication with the debt issuers. At the end of the Year, no material issue was found to significantly affect the loan repayment ability of the issuers. OP Financial maintains the held-to-maturity strategy in debt investment.

FINANCIAL REVIEW

Financial position

Net asset value: The Group’s net asset value as at 31 March 2019 increased by 0.64% from HK$5.59 billion to HK$5.63 billion. The NAV per share increased from HK$1.90 to HK$1.94.

Gearing: The gearing ratio, which is calculated on the basis of total liabilities over total equity as at 31 March 2019, was 0.04 (31 March 2018: 0.10). We managed to maintain our low leverage policy for the investments.

Investments accounted for using equity method: It represents mainly our interest in mid-term private equity companies including BITIC, and the share of the core holding company CSOP. Assets increased by 12.96% to HK$1,147.29 million as at 31 March 2019 (31 March 2018: HK$1,015.69 million), which was mainly due to the valuation increase of BITIC, offsetting share of results of several associates, joint ventures and the decline in our positions with CSOP due to dividend declared during the Year.

Available-for-sale financial assets: Upon application of HKFRS 9 on 1 April 2018, the available-for-sale financial assets (“AFS”) are all reclassified to financial assets at fair value through profit or loss (“FVPL”).

Financial assets at fair value through profit or loss: The HK$822.89 million or 57.33% of increase from HK$1.44 billion to HK$2.26 billion was mainly attributable to (i) the new investment of HK$1,098.79 million in iCarbonX, (ii) the reclassification of HK$346.80 million of equity investments from AFS to FVPL, offsetting (iii) HK$277.36 million of the partial disposal or fair value decrease of some listed securities, and (iv) HK$330.96 million of fair value decrease of some private equity investments and investment funds.

Debt investments: It represents the investments in debt instruments during the Year. Assets increased by 39.11% to HK$2,025.48 million as at 31 March 2019 (31 March 2018: HK$1,456.00 million). The debt investments contributed to enhancing the capital liquidity and generated revenue in fixed income.

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Bank and cash balances: To implement our deployment in the healthcare industry and to make good use of capital, most cash was utilized in the investment in iCarbonX and other investments during the Year. Several short-term investments were partially disposed or divested on schedule, and we also divested some debt instruments after maturity to enhance the cash level. As of 31 March 2019, we maintained a net cash position and our bank and cash balance was HK$193.80 million (31 March 2018: HK$1.77 billion).

RESULTS

Amid the challenging economic environment and the volatile stock market, the investment industry experienced certain pressure during the Year. Despite this, benefitted from the prudent and diverse investment strategy and effective risk management mechanism, the major portfolios of the Company delivered a solid performance with stable valuation. The Company was profitable during the Year. The total comprehensive income amounted to a gain of HK$256.44 million compared to HK$196.15 million last year, an increase of 30.74%. These were primarily due to share of results of investments accounted for using equity method, the realized gains on disposal/distribution of some listed securities and PE/VC investments as well as the interest income from debt instruments.

As of 31 March 2019, OP Financial’s net asset value per share was HK$1.94, an increase of 2.11% from HK$1.90 in 2018. Over the five years to 31 March 2019, the net asset value per share plus distributed dividends has increased by 48.58%.

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NAV per Share Movement (2014-2019)
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Consolidated statement of profit or loss and other comprehensive Income

Revenue represents the income received and receivable on investments during the Year as follows:

Dividend income(1) Interest income(2) Performance premium from co-investment partner	2019 HK$’000 6,483 221,409 – 227,892	2018 HK$’000 7,077 102,721 15,639
		125,437

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• (1) Dividends received from listed investments during the Year.

• (2) Interest income of HK$221.41 million generated from the Company’s debt investments as well as term deposits in banks.

Net change in unrealized (loss)/gain on financial assets at fair value through profit or loss: The net change in unrealized loss of HK$158.44 million (2018: gain of HK$40.37 million) mainly represents the net result of (i) unrealized loss of HK$63.20 million on Thrive World Limited, (ii) net unrealized loss of HK$79.85 million on listed shares, and (iii) unrealized loss of HK$48.21 million on an exchangeable bond, offsetting the unrealized gain of HK$48.67 million on some private equity investment and several investment funds.

Net change in unrealized (loss)/gain on financial liabilities at fair value through profit or loss: The net change in unrealized loss of HK$12.99 million (2018: gain of HK$37.86 million) mainly represents the increase in share of interests by our co-investment partner, attributable to unrealized gains generated from those co-investments.

Net realized gain on disposal/distribution of investments: The HK$210.51 million (2018: gain of HK$49.11 million) represents the net result of (i) realized gain of HK$117.51 million on the disposal of listed securities, (ii) realized gain of HK$79.34 million on the disposal and distribution of several private equity investment, and (iii) realized gain of HK$13.66 million on the disposal and redemption of investment funds.

Provision for expected credit losses (“ECL”): The HK$72.69 million represents the provision for ECL on debt instruments, following the adoption of HKFRS 9 by the Group and provision for a loan receivable provided to a potential investee established in the PRC during the Year.

Equity-settled share-based payments: The HK$12.20 million represents the value of share options vested during the Year. These share options were granted to certain directors, employees and consultants on 20 May 2016 and 1 February 2018, which are vested over five years from the grant date.

Operating and administrative expenses: The HK$117.25 million (2018: HK$165.42 million) mainly include staff costs, investment management fee, rents, and legal and professional fees. The decrease was mainly attributable to the decrease of investment management fee pursuant to the revised investment management agreement with Oriental Patron Asia Limited.

Share of results of investments accounted for using equity method: a net gain of approximately HK$205.96 million (2018: gain of HK$50.42 million) mainly accounted for our share of results of BITIC and CSOP.

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Other comprehensive income: Changes to the Group’s NAV, otherwise not accounted for in “profit for the Year”, are found in “other comprehensive income”. Upon the application of HKFRS 9 on 1 April 2018, AFS were reclassified to FVPL. The fair value changes of these assets were recognized in profit or loss during the Year. The net loss of HK$249,000 (2018: gain of HK$52.73 million) only represents the share of investment revaluation reserve, surplus reserve and the exchange differences of investments accounted for using equity method. Combining with the “profit for the Year”, the total comprehensive income for the Year was a gain of HK$256.44 million.

DIVIDEND POLICY AND PROPOSED FINAL DIVIDEND

No interim dividend was paid during the Year (2018: nil).

As part of a long-term commitment to providing shareholder value, the Board intends to recommend dividend distribution upon successful exit of any material profitable investment position.

The Board recommend the payment of a final dividend of HK4.6 cents (2018: HK 4 cents) per share in respect of the Year to shareholders whose names appear on the Register of Members of the Company at the close of business on Friday, 30 August 2019. The proposed final dividend will be paid on Wednesday, 11 September 2019 following the approval at the forthcoming annual general meeting of the Company.

CLOSURE OF REGISTER OF MEMBERS

For determining the entitlement to the proposed final dividend for the Year (subject to approval by shareholders of the Company at the forthcoming annual general meeting), the register of members of the Company will be closed from Monday, 2 September 2019 to Tuesday, 3 September 2019, both days inclusive, during which period no transfer of shares of the Company will be registered. In order to qualify for the proposed final dividend, all transfers of shares accompanied by the relevant share certificates and transfer forms must be lodged with the Company’s branch share registrar in Hong Kong, Tricor Abacus Limited at Level 54, Hopewell Centre, 183 Queen’s Road East, Hong Kong for registration no later than 4:30 p.m. on Friday, 30 August 2019.

LIQUIDITY AND FINANCIAL RESOURCES

Interest income from financial instruments held and bank deposits, dividend income from investments held were the Company’s major source of revenue during the Year.

As at 31 March 2019, the Group had cash and bank balances of HK$193.80 million (31 March 2018: HK$1.77 billion). The Group had HK$71.56 million of interest-free borrowings from one of the associates for a PRC potential investment at 31 March 2019 (31 March 2018: The Group had loan payables of HK$127.98 million of bank margin financing on listed equity investments and interest-free borrowings from one of associates for a PRC potential investment). The debt-to-equity ratio (interest-bearing external borrowings divided by shareholders’ equity) stood at zero (31 March 2018: 0.9%) while the current ratio (current assets divided by current liabilities) was 9 times (31 March 2018: 8 times). For further analysis of the Group’s cash position, current assets and gearing, please refer to paragraphs under subsections headed “Financial Position” above.

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We finance our ongoing operating activities by using funds from our operations, external credit or financing arrangements. We routinely monitor current and expected operational requirements and financial market conditions to evaluate the use of available financing sources. Considering our existing working capital position and our ability to access debt funding sources, the Board believes that our operations and borrowing resources are sufficient to provide for our current and foreseeable capital requirements to support our ongoing investments and working capital requirements for the next twelve months.

CAPITAL STRUCTURE

As at 31 March 2019, the Company’s shareholders’ equity and the total number of shares in issue less treasury shares for the Company stood at HK$5.63 billion (31 March 2018: HK$5.59 billion) and 2,900,940,000 (31 March 2018: 2,937,396,000), respectively.

MATERIAL ACQUISITIONS AND DISPOSALS OF INVESTMENTS

The Company had the following material acquisitions as well as disposals of investments during the Year.

Long-term Core Holding Mid-term private equity and venture capital Short-term arbitrage opportunities – Listed security – Debt instrument Total	New/ Additional investment (HK$ million) 1,099(1) 267(3) 645(5) 1,357 3,368	Divestment/ Disposal (HK$ million) 65(2) 474(4) 911(6) 724 2,174

(1) The HK$1,099 million represents our new investment in iCarbonX

• (2) The HK$65 million represents the dividend declared by CSOP

• (3) The HK$267 million represents our new/additional investment in four private equity investments

• (4) The HK$474 million mainly represents our divestment of one private equity investment in finance sector and partial redemption of Greater China Select Fund

• (5) The HK$645 million represents our new/additional investment in three listed securities

• (6) The HK$911 million represents our divestment and partial disposal of four listed securities

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SEGMENT INFORMATION

Segment information of the Group is set out in note 4 on pages 10 of this announcement.

EMPLOYEES

As of 31 March 2019, the Group had 47 employees (2018: 46), inclusive of all directors of the Company and its subsidiaries. Total staff costs for the Year increased to HK$72.04 million (2018: HK$66.11 million). The Group’s remuneration policies are in line with the market practice and are determined on the basis of the performance and experience of the individual employee.

SHARE OPTION SCHEME

During the Year, the Board had not granted any share option under the Company’s share option scheme to any Directors or eligible employee of the Group and 300,000 granted share options were exercised (2018: nil). As at 31 March 2019, there were 72,700,000 (31 March 2018: 73,000,000) share options that remained outstanding under the scheme.

EXPOSURE TO FLUCTUATIONS IN EXCHANGE RATES AND RELATED HEDGES

At 31 March 2019, the Company exposure to foreign currency risk from financial instruments that are monetary items included financial assets at fair value through profit or loss, loan and interest receivables, bank balances, other payables (31 March 2018: financial assets at fair value through profit or loss, loan and interest receivables, bank balances, account and other payables). These assets were denominated in RMB and the maximum exposure to foreign currency risk was RMB284,589,000, equivalent to HK$332,215,000 (31 March 2018: RMB406,108,000, equivalent to HK$502,944,000).

At 31 March 2019, the Group held certain financial assets which were denominated in USD. The Board is of the opinion that the Company’s exposure to USD foreign currency risk is minimal as HKD is pegged to USD by the Hong Kong’s Linked Exchange Rate System.

CHARGES ON THE COMPANY’S ASSETS AND CONTINGENT LIABILITIES

As at 31 March 2019, there were no charges on the Company’s assets.

– 28 –

At 31 March 2019, the Group had given guarantees in respect of the settlement of RMB20,000,000 (equivalent to HK$23,347,000) (31 March 2018: HK$24,769,000) loan provided by 博石資產管理股份有限公司 to 上海幸福九號網絡科技有限公司, a potential investee of the Company. In the opinion of the directors of the Company, the fair values of the financial guarantee contract of the Group are insignificant at initial recognition and the directors of the Company consider that the possibility of default of the parties involved is remote, accordingly, no value has been recognized at the inception of the guarantee contract and at the end of the Year.

FUTURE PLANS FOR MATERIAL INVESTMENTS OR CAPITAL ASSETS AND THEIR EXPECTED SOURCES OF FUNDING

As at 31 March 2019, there were no plans for material investments or capital assets, but the Company may, at any point, be negotiating potential investments. The Company considers new investments as part of its normal business, and therefore management may publically announce these plans as they become necessarily discloseable to shareholders during the course of the financial year.

PURCHASE, SALE OR REDEMPTION OF SECURITIES

During the Year and up to the date of this announcement, the Company repurchased a total of 36,756,000 Shares at an aggregate consideration of approximately HK$78,100,000 and cancelled a total of 21,068,000 Shares. The remaining 15,688,000 shares were not cancelled and recognized as treasury shares. The purchase of shares was effected by the Directors, pursuant to the unconditional and general mandate granted by the Shareholders at the annual general meeting dated 28 August 2018 with a view to benefiting shareholders as a whole by enhancing the net asset value per share and earnings per share.

Save as disclosed above, neither the Company nor any of its subsidiaries had purchased, sold or redeemed any of the Company’s listed securities during the Year and up to the date of this announcement.

CORPORATE GOVERNANCE CODE COMPLIANCE

Except otherwise stated herein, none of the Directors is aware of any information that would reasonably indicate that the Company is not, or was not, at any time during the Year, in compliance with the CG Code.

Code provision A.6.7 provided that, the independent non-executive directors and other nonexecutive directors, as equal Board members, should give the Board and any committees on which they serve the benefit of their skills, expertize and varied backgrounds and qualifications through regular attendance and active participation. They should also attend general meetings and develop a balanced understanding of the views of shareholders.

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AUDIT COMMITTEE

The Company established an audit committee in accordance with Rule 3.21 of the Listing Rules. Amongst other duties, the principal duties of the audit committee are to review the interim and annual results and internal control system of the Company.

The Company’s audit committee comprised three independent non-executive directors, namely, Mr. KWONG Che Keung, Gordon, Prof. HE Jia and Mr. WANG Xiaojun. Mr. KWONG Che Keung, Gordon is the chairman of the Audit Committee.

The audited consolidated financial statements for the Year have been reviewed by the audit committee.

MODEL CODE FOR SECURITIES TRANSACTIONS BY DIRECTORS OF LISTED ISSUERS

The Company has adopted a “Policy for Director and Employee Dealings in the Company’s Securities” which supplements the Model Code for Securities Transactions by Directors of Listed Issuers (“Model Code”) set out in Appendix 10 of the Listing Rules and is available on the Company’s website. Following specific enquiry by the Company, all Directors have confirmed, that they have fully complied with the Model Code and the aforesaid internal policy regarding Directors’ securities transactions throughout the Year.

REVIEW OF THE ANNUAL RESULTS ANNOUNCEMENT BY AUDITOR

The figures in respect of the annual results announcement of the Group’s consolidated statement of financial position, consolidated statement of profit or loss and other comprehensive income and the related notes thereto for the financial year ended 31 March 2019 have been agreed by the Group’s auditor, Messrs. PricewaterhouseCoopers, to the amounts set in the Group’s audited consolidated financial statements for the financial year ended 31 March 2019. The work performed by Messrs. PricewaterhouseCoopers in this respect did not constitute an assurance engagement in accordance with Hong Kong Standards on Auditing, Hong Kong Standards on Review Engagements or Hong Kong Standards on Assurance Engagements issued by the Hong Kong Institute of Certified Public Accountants and consequently no assurance has been expressed by Messrs. PricewaterhouseCoopers on the annual results announcement.

FORWARD-LOOKING STATEMENTS

This announcement contains certain statements that are forward-looking or which use certain forward-looking terminologies. These forward-looking statements are based on the current beliefs, assumptions and expectations of the Board of Directors of the Company regarding the industry and markets in which it invests. These forward-looking statements are subject to risks, uncertainties and other factors beyond the Company’s control which may cause actual results or performance to differ materially from those expressed or implied in such forwardlooking statements.

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PUBLICATION OF FINANCIAL INFORMATION

This results announcement is published on the websites of the Stock Exchange (www.hkex.com.hk) and the Company (www.opfin.com.hk). The Group’s annual report for the Year will be dispatched to the shareholders of the Company and available on the above websites in due course.

By order of the Board OP Financial Limited Zhang Gaobo Executive Director and Chairman

Hong Kong SAR, 25 June 2019

As at the date of this announcement, the Board comprises four executive Directors, namely, Mr. Zhang Zhi Ping, Mr. Zhang Gaobo, Dr. Liu Zhiwei and Mr. Zhang Weidong; three nonexecutive Directors, namely Dr. Wu Zhong, Mr. Chen Yuming and Dr. Fu Weigang; and three independent non-executive Directors, namely, Mr. Kwong Che Keung, Gordon, Professor He Jia and Mr. Wang Xiaojun.

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