EAGLE RIDE INVESTMENT HOLDINGS LIMITED (Incorporated in the Cayman Islands with limited liability) () (Stock Code : 901) Interim Report 2016 Positive, Sagacious, Enterprising & Innovative
CONTENTS Page Corporate Information 2 Management Discussion and Analysis 4 Other Information 9 Condensed Consolidated Statement of Profit or Loss and Other Comprehensive Income 15 Condensed Consolidated Statement of Financial Position 16 Condensed Consolidated Statement of Changes in Equity 17 Condensed Consolidated Statement of Cash Flows 18 Notes to the Condensed Consolidated Financial Statements 19 Report on Review of Condensed Consolidated Financial Statements 54 Interim Report 2016 中期報告 1
CORPORATE INFORMATION DIRECTORS EXECUTIVE DIRECTOR CHAN Yiu Pun, Clement NON-EXECUTIVE DIRECTORS HU Haisong TUNG Shu Sun (Chairman) INDEPENDENT NON-EXECUTIVE DIRECTORS GUI Shengyue WANG Xianzhang Vichai PHAISALAKANI (also known as Mr. Andy HUNG) CHIEF FINANCIAL OFFICER YU Tak Shing, Eric COMPANY SECRETARY AU Shiu Kee NOMINATION COMMITTEE Hu Haisong WANG Xianzhang (Chairman of Nomination Committee) Vichai PHAISALAKANI REMUNERATION COMMITTEE HU Haisong WANG Xianzhang (Chairman of Remuneration Committee) Vichai PHAISALAKANI AUDIT COMMITTEE HU Haisong Vichai PHAISALAKANI (Chairman of Audit Committee) WANG Xianzhang INVESTMENT COMMITTEE CHAN Yiu Pun, Clement (Chairman of Investment Committee) HU Haisong WANG Xianzhang Iraj ERSHAGHI REGISTERED OFFICE Cricket Square Hutchins Drive P.O. Box 2681 Grand Cayman KY1-1111 Cayman Islands Iraj ERSHAGHI Cricket Square Hutchins Drive P.O. Box 2681 Grand Cayman KY1-1111 Cayman Islands 2 EAGLE RIDE INVESTMENT HOLDINGS LIMITED 鷹力投資控股有限公司
PRINCIPAL PLACE OF BUSINESS IN HONG KONG Room 2206, 22nd Floor China Resources Building 26 Harbour Road, Wanchai Hong Kong INVESTMENT MANAGER Blue Star Asset Management Limited AUDITOR HLM CPA Limited Certified Public Accountants PRINCIPAL BANKERS The Hongkong and Shanghai Banking Corporation Limited Chong Hing Bank Limited PRINCIPAL SHARE REGISTRAR IN THE CAYMAN ISLANDS Royal Bank of Canada Trust Company (Cayman) Limited 4th Floor, Royal Bank House 24 Shedden Road PO Box 1586, Grand Cayman KY1-1110 Cayman Islands BRANCH SHARE REGISTRAR IN HONG KONG Computershare Hong Kong Investor Services Limited Rooms 1712-1716, 17th Floor, Hopewell Centre 183 Queen s Road East Hong Kong STOCK CODE 901 COMPANY WEBSITE http://www.eaglerideinvestment.com 26 22 2206 Royal Bank of Canada Trust Company (Cayman) Limited 4th Floor, Royal Bank House 24 Shedden Road PO Box 1586, Grand Cayman KY1-1110 Cayman Islands 183 17 1712-1716 901 http://www.eaglerideinvestment.com Interim Report 2016 中期報告 3
MANAGEMENT DISCUSSION AND ANALYSIS The board of Directors (the Board ) of Eagle Ride Investment Holdings Limited (the Company ) is pleased to present the unaudited condensed consolidated interim results of the Company and its subsidiaries (the Group ) for the six months ended 30 June 2016 (the Period ), which have been reviewed by the Company s Audit Committee and the auditor, as set out on pages 15 to 53. 1553 BUSINESS REVIEW Eagle Ride Investment Holdings Limited is an investment holding company. The Company s investment instruments are to be made in the form of equity securities or equityrelated securities or debt-related instruments in listed and unlisted companies engaged in, but not limited to, the oil sector. At 30 June 2016, the Group s investment portfolio was diversified and comprised of different sectors of business including education, oil field and investment in securities. The total assets of the Group were approximately HK$105,821,000 of which non-current portion and current portion were approximately HK$31,938,000 and HK$73,883,000 respectively. 105,821,000 31,938,000 73,883,000 The current liabilities of the Group at 30 June 2016 we r e a p p r oximately H K $23,575,000 w h i c h consisted of approximately HK$2,587,000 accrual for the administrative and other operating expenses; approximately HK$10,070,000 unsecured borrowings; and approximately HK$10,918,000 loans from a director. The net assets of the Group at 30 June 2016 were approximately HK$48,665,000. 23,575,000 2,587,000 10,070,000 10,918,000 48,665,000 4 EAGLE RIDE INVESTMENT HOLDINGS LIMITED 鷹力投資控股有限公司
For the period ended 30 June 2016, the Group achieved that the net unrealised gain arising on revaluation of financial assets as held for trading was increased by approximately 70% compared to the last reporting period ended 30 June 2015. Furthermore, the Company has a net gain of approximately HK$505,000 during the Period compared to net loss of approximately HK$12,733,000 in the last reporting period ended 30 June 2015. 70% 505,000 12,733,000 With the extensive management experience and solid investment record, as well as the wide network of the board members and partners, the Group continues to bring value to the Company and all of its shareholders. FINANCIAL REVIEW During the reporting period ended, the Company s investment performances were as follows: 1. Net unrealised gain arising on revaluation of financial assets designated as held for trading was approximately HK$16,162,000 or 70% increment compared to the last reporting period ended 30 June 2015; 1. 16,162,000 70% 2. Net unrealised gain arising on revaluation of financial assets designated as at fair value through profit or loss ( FVTPL ) was approximately HK$467,000 or 413% increment compared to the last reporting period ended 30 June 2015; and 2. 467,000 413% 3. Gain on disposal of a subsidiary which holds one unlisted equity investment was approximately HK$2,226,000. 3. 2,226,000 Interim Report 2016 中期報告 5
For the period ended 30 June 2016, the net profit attributable to owners of the Company was approximately H K $ 5 0 5, 0 0 0, i m p r o v e m e n t o f a p p r o x i m a t e l y H K $13,238,000 f r o m t h e l o s s o f a p p r o x i m a t e l y HK$12,733,000 in the last corresponding period. The improvement was mainly due to the increase of unrealised gain arising on revaluation of the financial assets designated as held for trading which amounted at approximately HK$6,661,000 and the decrease in administrative and other operating expenses which amounted at approximately HK$4,221,000. 505,000 12,733,000 13,238,000 6,661,000 4,221,000 At 30 June 2016, the Group recorded net current assets of approximately HK$50,309,000 and net assets of approximately HK$48,665,000, which included unsecured borrowings of approximately HK$10,070,000 and loans from a director of approximately HK$10,918,000, which were due for repayment within the next twelve months after 30 June 2016. The fair value of financial assets designated as held for trading is dropped from approximately HK$54,818,000 at the end of the reporting period to approximately HK$5,351,000 at 30 August 2016, the latest practicable date before the issuance of the interim report, which the Group would suffer an unrealised loss of approximately HK$49,467,000 and resulted in net current liabilities and net liabilities position on a proforma basis before the provision of operational expenses. The Group is fully aware of the financial position and several measurements have been carried out to improve the Company s liquidity. The measurements are as follows: 50,309,000 48,665,000 10,070,00010,918,000 54,818,000 5,351,000 49,467,000 1. Mr. Hu Haisong has confirmed that despite the term for the loans due to him is within twelve months, he will not demand repayment of the loans until the Group is financially viable to make the repayment and he will provide continuous financial support to the Group to meet its financial obligations; 1. 6 EAGLE RIDE INVESTMENT HOLDINGS LIMITED 鷹力投資控股有限公司
2. Subsequent to the end of the reporting period, the Group entered into a legally binding share placing agreement with a placing agent for the issue and allotment of a maximum of 300,000,000 shares at the price of HK$0.255 per share on the best effort basis. Reference is made to the announcement of the Company dated 26 August 2016 in relation to the placing of new shares of the Company under general mandate; and 2. 0.255 300,000,000 3. The Group is taking measures to tighten cost controls over the administrative and other operating expenses. 3. After taking into account the above measures, the directors of the Company consider that the Group will have sufficient working capital to finance its operations and financial obligations as and when they fall due, and accordingly, are satisfied that it is appropriate to prepare the condensed consolidated financial statements for the six months ended 30 June 2016 on a going concern basis. At 30 June 2016, margin facility of approximately HK$27,409,000 (31 December 2015: approximately HK$19,328,000) from a regulated securities broker was granted to the Group under which financial assets at FVTPL with market value of approximately HK$54,818,000 (31 December 2015: approximately HK$38,657,000) were pledged as collateral for the facilities granted. No margin facility was utilised by the Group at 30 June 2016 (31 December 2015: nil). 27,409,000 19,328,000 54,818,000 38,657,000 The Company has foreign currency investments in financial assets, which expose it to foreign currency risk. The Group is mainly exposed to the effects of fluctuation of the US$ and the S$. The Board believes that the foreign exchange risk is minimal. Interim Report 2016 中期報告 7
DIVIDENDS The Board does not recommend the payment of an interim dividend for the Period (six months ended 30 June 2015: HK$nil). GEARING RATIO The gearing ratio (total borrowings/total assets) was 51.57% (31 December 2015: 33.81%). 51.57% 33.81% LITIGATION No outstanding litigation at 30 June 2016 was noted (31 December 2015: nil). CONTINGENT LIABILITIES At 30 June 2016, the Group did not have any contingent liabilities (31 December 2015: nil). EMPLOYEES At 30 June 2016, the Group has employed 13 employees, including one Executive Director and had no major changes in the information related to human resources as stated in its 2015 Annual Report. OUTLOOK 13 Looking ahead, the investment market is expected to remain challenging in the second half of 2016. In spite of this, the Group will continue to adopt and maintain a prudent investment approach to capture attractive investment opportunities as and when they arise. The Group will continue fully leveraging its strong market analytical capability and carefully identify the market trend through a flexible investment strategy to bring the maximum returns for all the shareholders. 8 EAGLE RIDE INVESTMENT HOLDINGS LIMITED 鷹力投資控股有限公司
OTHER INFORMATION REVIEW OF INTERIM FINANCIAL INFORMATION The interim financial information of the Group for the Period is unaudited, but has been reviewed by HLM CPA Limited, the Company s independent auditor, in accordance with the 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. The interim financial information has also been reviewed by the Company s Audit Committee. COMPLIANCE WITH THE CORPORATE GOVERNANCE CODE 2410 The Company s corporate governance practices are based on the principles, code provisions and recommended best practices as set out in the Corporate Governance Code and Corporate Governance Report (the CG Code ) contained in Appendix 14 to the Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited (the Listing Rules ). During the Period, the Company has complied with all code provisions, and where applicable, certain recommended best practices set out in the CG Code except for code provision A.6.7 of the CG Code as explained below. 14 A.6.7 Interim Report 2016 中期報告 9
Under the code provision A.6.7 of the CG Code, independent non-executive Directors and other nonexecutive Directors should attend general meetings and develop a balanced understanding of the views of members. All Directors are encouraged to attend the Company s general meetings and each Director makes every effort to attend. However, one independent nonexecutive Director and two non-executive Directors were unable to attend the annual general meeting held on 26 May 2016 due to other personal engagements. RISK MANAGEMENT AND INTERNAL CONTROL A.6.7 The Board recognises its responsibility for maintaining a sound and effective system of internal control to safeguard the shareholders investment and the Company s assets, and for reviewing its effectiveness. The Company has appointed an independent professional as an internal audit and to report directly to the Audit Committee on a semi-annually basis. B a s e d o n t h e r e s p e c t i ve a s s e s s m e n t s m a d e by management, the Audit Committee considered that for the six months ended 30 June 2016: The risk management and internal control systems, as well as accounting systems of the Group were in place and functioning effectively and adequately, and were designed to provide reasonable assurance that material assets were protected, business risks attributable to the Group were identified and monitored, material transactions were executed in accordance with management s authorisation and the financial statements were reliable for publication. There was an ongoing process in place for identifying, evaluating and managing the significant risks faced by the Group. 10 EAGLE RIDE INVESTMENT HOLDINGS LIMITED 鷹力投資控股有限公司
COMPLIANCE WITH THE MODEL CODE FOR SECURITIES TRANSACTIONS BY DIRECTORS The Company had adopted the Model Code for Securities Transactions by Directors of Listed Issuers (the Model Code ), as contained in Appendix 10 of the Listing Rules, as the required standard for the Directors of the Company to deal in the securities of the Company. Upon enquiry by the Company, all Directors of the Company have confirmed that they have complied with the required standards set out in the Model Code throughout the Period. PURCHASE, SALE OR REDEMPTION OF SHARES 10 The Company has not redeemed any of its shares during the Period. Neither the Company nor any of its subsidiaries has purchased or sold any of the Company s shares during the Period. Interim Report 2016 中期報告 11
DIRECTORS INTERESTS AND SHORT POSITIONS At 30 June 2016, the Directors of the Company and their associates had the following interests and short positions in any shares, underlying shares and debentures of the Company and its associated corporations (within the meaning of Part XV of the Securities and Futures Ordinance ( SFO )) as recorded in the register required to be kept under Section 352 of the SFO or as otherwise notified to the Company and the Stock Exchange pursuant to the Model Code. XV 352 LONG POSITIONS Name Capacity and nature Note Number of shares Total % of issued share capital Mr. HU Haisong Interest of corporation (1) 966,638,573 966,638,573 64.44 Note: 1) 966,638,573 shares are held through Eagle Ride Investments Limited ( Eagle Ride Investments ). Eagle Ride Investments is an investment holding company, a wholly-owned subsidiary of APAC Investment Holdings Limited ( APAC ), which is beneficially owned as to approximately 94.19% interests by Mr. Hu Haisong ( Mr. Hu ) and approximately 5.81% by other investors. 1) 966,638,573Eagle Ride Investments LimitedEagle Ride Investments Eagle Ride Investments 94.19% 5.81% Save as disclosed above, at 30 June 2016, none of the Directors and chief executive of the Company or their associates had any interests or short positions in the shares, underlying shares or debentures of the Company or any of its associated corporations (within the meaning of Part XV of the SFO) as recorded in the register maintained by the Company pursuant to section 352 of the SFO or as otherwise notified to the Company and the Stock Exchange pursuant to the Model Code. XV 352 12 EAGLE RIDE INVESTMENT HOLDINGS LIMITED 鷹力投資控股有限公司
ARRANGEMENTS TO ACQUIRE SHARES OR DEBENTURES At no time during the Period was the Company or its subsidiaries, a party to any arrangements to enable the Directors of the Company to acquire benefits by means of the acquisition of shares in, or debentures of, the Company or any other body corporate. Save as disclosed under the heading Share Option Scheme below, the Company did not grant any right to subscribe for the shares in the Company to any Directors of the Company or their respective spouse or children under the age of 18 during the Period. SHARE OPTION SCHEME A new share option scheme was adopted by members of the Company on 22 May 2015 (the 2015 Share Option Scheme ). The purpose of the 2015 Share Option Scheme is to reward and provide incentives to eligible participants and encourage them to contribute to the Group. Under the 2015 Share Option Scheme, the Board may at their discretion, at any time following the date of the adoption of the 2015 Share Option Scheme but before the tenth anniversary of that date, grant share options to eligible participants, including directors of the Company and its subsidiaries and any other persons including consultants, advisors, agents, customers, suppliers, etc. to subscribe for shares in the Company. 2015 5 22 2015 2015 2015 2015 During the Period, no options granted, exercised or cancelled under the 2015 Share Option Scheme. 2015 Interim Report 2016 中期報告 13
SUBSTANTIAL SHAREHOLDERS AND OTHER PERSONS INTERESTS AND SHORT POSITIONS At 30 June 2016, the following persons (other than the Directors of the Company) had interest or short positions in the shares and underlying shares of the Company as recorded in the register required to be kept by the Company pursuant to Section 336 of the SFO: 336 Name Capacity Nature of interests Number of issued shares held Approximate percentage of the total issued share capital of the Company Eagle Ride Investments Limited* Beneficial owner Corporate 966,638,573 64.44 * Eagle Ride Investments, a company incorporated in the British Virgin Islands with limited liability, wholly-owned by APAC, a company incorporated in Samoa and beneficially owned as to approximately 94.19% by Mr. Hu, the Non-executive Director of the Company, and approximately 5.81% by the Investors ( Investors ) (whose interests are held on trust by Mr. Hu). The investors, namely (i) Mr. Wang Haibin, a resident of the People s Republic of China (the PRC ) and engages in investment business in the PRC; and (ii) RB International Investments Asia Limited is principally engaged in financial services. * Eagle Ride Investments 94.19% 5.81% (i) (ii) RB International Investments Asia Limited Save as disclosed above, the Company had not been notified by any other person (other than the Directors of the Company) who had an interest or a short position in the shares and underlying shares of the Company as recorded in the register required to be kept by the Company pursuant to Section 336 of the SFO as at 30 June 2016. PUBLIC FLOAT Based on the information that is public available and within the knowledge of the Directors, the Company maintained the percentage prescribed for public float requirement under the Listing Rules at the date of this interim report. 336 14 EAGLE RIDE INVESTMENT HOLDINGS LIMITED 鷹力投資控股有限公司
CONDENSED CONSOLIDATED STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME For the six months ended 30 June 2016 (Unaudited) For the six months ended 30 June 2016 2015 Notes HK$ HK$ Revenue Net unrealised gain arising on revaluation of financial assets designated as held for trading 16,161,600 9,500,400 Net unrealised gain (loss) arising on revaluation of financial assets designated as at fair value through profit or loss Gain on disposal of a subsidiary Net other income, gains and losses Administrative and other operating expenses 466,708 (149,058) (4) 2,225,567 992,990 (485,369) (16,809,909) (21,030,456) Profit (loss) from operations (5) 3,036,956 (12,164,483) Finance costs (6) (2,532,030) (568,408) Profit (loss) before tax 504,926 (12,732,891) Income tax expense (7) Profit (loss) for the period and total comprehensive income (expenses) attributable to owners of the Company 504,926 (12,732,891) Profit (loss) per share Basic and diluted (9) HK$0.03 cents (HK$0.85 cents) Interim Report 2016 中期報告 15
CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL POSITION At 30 June 2016 (Unaudited) (Audited) At 30 June 2016 At 31 December 2015 Notes HK$ HK$ Non-current assets Furniture, fixtures and equipment (10) 3,147,695 3,801,953 Financial assets at fair value through profit or loss (11) 26,417,529 25,055,044 Rental deposit 2,372,498 31,937,722 28,856,997 Current assets Other receivables, deposits and prepayments 1,071,804 2,357,636 Financial assets at fair value through profit or loss (11) 54,818,400 38,656,800 Cash and bank balances (12) 17,993,287 145,520 73,883,491 41,159,956 Assets classified as held for sale (13) 24,930,413 73,883,491 66,090,369 Current liabilities Creditors and accrued expenses 2,586,554 6,528,400 Deposit received in advance (13) 8,155,980 Unsecured borrowings (14) 10,070,459 Loans from a director (15) 10,917,584 11,910,881 23,574,597 26,595,261 Net current assets 50,308,894 39,495,108 Total assets less current liabilities 82,246,616 68,352,105 Non-current liabilities Unsecured borrowings (14) 3,799,861 Corporate bonds (16) 29,782,202 20,192,478 33,582,063 20,192,478 NET ASSETS 48,664,553 48,159,627 Capital and reserves Share capital (17) 18,750,735 18,750,735 Reserves 29,913,818 29,408,892 TOTAL EQUITY 48,664,553 48,159,627 16 EAGLE RIDE INVESTMENT HOLDINGS LIMITED 鷹力投資控股有限公司
CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY For the six months ended 30 June 2016 Share capital Share premium Capital redemption reserves Accumulated losses Total HK$ HK$ HK$ HK$ HK$ At 1 January 2015 (audited) Total comprehensive expenses for the period 18,750,735 601,966,480 168,800 (512,323,517) 108,562,498 (12,732,891) (12,732,891) At 30 June 2015 (unaudited) 18,750,735 601,966,480 168,800 (525,056,408) 95,829,607 At 1 January 2016 (audited) Total comprehensive income for the period 18,750,735 601,966,480 168,800 (572,726,388) 48,159,627 504,926 504,926 At 30 June 2016 (unaudited) 18,750,735 601,966,480 168,800 (572,221,462) 48,664,553 Interim Report 2016 中期報告 17
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS For the six months ended 30 June 2016 (Unaudited) For the six months ended 30 June 2016 2015 HK$ HK$ Net cash used in operating activities (21,086,950) (18,939,358) Investing activity Proceeds from disposal of a subsidiary 19,000,000 8,155,980 Net cash generated from investing activity 19,000,000 8,155,980 Financing activities Proceeds from loans from a director 3,000,000 2,500,000 Repayment of loans from a director (4,002,463) (1,028,408) Net proceeds from issue of corporate bonds 8,950,000 10,735,000 Net proceeds from unsecured borrowings 12,900,000 Corporate bond interest paid (574,384) Director s loan interest paid (338,436) Net cash generated from financing activities Net increase in cash and cash equivalents Cash and cash equivalents at the beginning of the period Cash and cash equivalents at the end of the period 19,934,717 12,206,592 17,847,767 1,423,214 145,520 87,041 17,993,287 1,510,255 18 EAGLE RIDE INVESTMENT HOLDINGS LIMITED 鷹力投資控股有限公司
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS 1. BASIS OF PREPARATION 1. The condensed consolidated financial statements have been prepared in accordance with Hong Kong Accounting Standard 34 Interim Financial Reporting ( HKAS 34 ) issued by the Hong Kong Institute of Certified Public Accountants (the HKICPA ) as well as with the applicable disclosure requirements of Appendix 16 to the Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited (the Listing Rules ). It was authorised for issue on 31 August 2016. 34 34 16 The condensed consolidated financial statements has been prepared in accordance with the same accounting policies adopted in the Group s audited financial statements for the year ended 31 December 2015, except for adoption of the new and revised Hong Kong Financial Reporting Standards (the HKFRSs ) which are effective for the first time set out in Note 2 of the condensed consolidated financial statements. 2 The preparation of the condensed consolidated financial statements in conformity with HKAS 34 requires management to make judgements, estimates and assumptions that affect the application of policies and reported amounts of assets and liabilities, income and expenses on a year to date basis. Actual results may differ from these estimates. 34 Interim Report 2016 中期報告 19
1. BASIS OF PREPARATION (continued) 1. This interim financial report contains condensed consolidated financial statements and selected explanatory notes. The notes include an explanation of events and transactions that are significant to an understanding of the changes in the financial position and performance of the Group since 31 December 2015. The condensed consolidated financial statements and notes thereon do not include all of the information required for full set of financial statements prepared in accordance with the HKFRSs. Going concern At 30 June 2016, the Group recorded net current assets of approximately HK$50,309,000 and net assets of approximately HK$48,665,000, which included the unsecured borrowings of approximately HK$10,070,000 and loans from Mr. Hu Haisong ( Mr. Hu ), the non-executive director and ultimate controlling shareholder of the Company, of approximately HK$10,918,000, which are due for repayment within the next twelve months after the end of the reporting period. 50,309,000 48,665,000 10,070,000 10,918,000 Subsequent to the end of the reporting period, (i) the Group invested in a 2-year corporate bond in the principal amount of HK$5,000,000 and; (ii) the fair value of financial assets designated as held for trading has dropped from approximately HK$54,818,000 at the end of the reporting period to approximately HK$5,351,000 at 30 August 2016, the latest practicable date before the issuance of the interim report. These events greatly impair the liquidity of the Group subsequent to the reporting date. If these events were taken into consideration, the Group would be reporting as net current liabilities of approximately HK$4,158,000 and net liabilities of approximately HK$802,000 on a proforma basis before the provision of operational expenses. (i) 5,000,000 (ii) 54,818,000 5,351,000 4,158,000 802,000 20 EAGLE RIDE INVESTMENT HOLDINGS LIMITED 鷹力投資控股有限公司
1. BASIS OF PREPARATION (continued) 1. Accordingly, the above situation has given rise to a substantial uncertainty about the Group s ability to continue as a going concern as the Group will be unable to meet its liabilities in full when they fall due unless it is able to generate sufficient net cash inflows from its operations and/or other sources. In this regard, the directors of the Company have identified and/or implemented the following plans to alleviate the Group s going concern problem: Mr. Hu has confirmed that despite the term for the loans due to him is within twelve months, he will not demand repayment of the loans until the Group is financially viable to make the repayment and he will provide continuous financial support to the Group to meet its financial obligations; Subsequent to the end of the reporting period, the Group entered into a legally binding share placing agreement with a placing agent for the issue and allotment of a maximum of 300,000,000 shares at the price of HK$0.255 per share on the best effort basis. Reference is made to the announcement of the Company dated 26 August 2016 in relation to the placing of new shares of the Company under general mandate; and 0.255 300,000,000 The Group is taking measures to tighten cost controls over the administrative and other operating expenses. Interim Report 2016 中期報告 21
1. BASIS OF PREPARATION (continued) 1. After taking into account the above measures, the directors of the Company consider that the Group will have sufficient working capital to finance its operations and financial obligations as and when they fall due, and accordingly, are satisfied that it is appropriate to prepare the condensed consolidated financial statements for the six months ended 30 June 2016 on a going concern basis. Should the Group be unable to continue as a going concern, adjustments would have to be made to write down the value of assets to their recoverable amounts on a liquidation basis, to provide for any further liabilities which might arise and to reclassify non-current assets and non-current liabilities as current assets and current liabilities respectively. The effect of these adjustments has not been reflected in these condensed consolidated financial statements. 22 EAGLE RIDE INVESTMENT HOLDINGS LIMITED 鷹力投資控股有限公司
2. APPLICATION OF NEW AND REVISED HONG KONG FINANCIAL REPORTING STANDARDS 2. The condensed consolidated financial statements have been prepared on the historical cost basis except for certain financial instruments, which are measured at fair values. In the current interim period, the Group has applied, for the first time, the following amendments to HKFRSs issued by the HKICPA that are relevant for the preparation of the Group s condensed consolidated financial statements: Amendments to HKFRSs Annual Improvements to HKFRS 2012-2014 Cycle Amendments to HKFRS 10, HKFRS 12 and HKAS 28 (2011) Investment Entities: Applying the Consolidation Exception 10 12 28 Amendments to HKFRS 11 Amendments to HKAS 1 Amendments to HKAS 16 and HKAS 38 Amendments to HKAS 16 and HKAS 41 Amendments to HKAS 27 (2011) Accounting for Acquisitions of Interests in Joint Operations Disclosure Initiative Clarification of Acceptable Methods of Depreciation and Amortisation Agriculture: Bearer Plants Equity Method in Separate Financial Statements 11 1 16 38 16 41 27 Interim Report 2016 中期報告 23
2. APPLICATION OF NEW AND REVISED HONG KONG FINANCIAL REPORTING STANDARDS (continued) 2. The application of the above amendments to HKFRSs in the current interim period has had no material impacts on the amounts reported in these condensed consolidated financial statements and/or disclosures set out in these condensed consolidated financial statements. New and revised HKFRSs issued but not yet effective The Group has not early applied the following new and revised HKFRSs, which have been issued but are not yet effective, in these interim financial statements: Amendments to HKFRS 2 Classification and Measurement of Share-based Payment Transactions 2 HKFRS 9 (2014) Financial Instruments 2 Amendments to HKFRS 10 and HKAS 28 (2011) HKFRS 15 Amendments to HKFRS 15 Sale or Contribution of Assets between an Investor and its Associate or Joint Venture 4 Revenue from Contracts with Customers 2 Clarifications to HKFRS 15 Revenue from Contracts with customers 2 HKFRS 16 Leases 3 Amendments to Disclosure Initiative 1 HKAS 7 Amendments to HKAS 12 Recognition of Deferred Tax Assets for Unrealised Losses 1 2 9 10 28 15 15 2 2 4 2 15 2 16 3 7 1 12 1 1 Effective for annual periods beginning on or after 1 January 2017, with earlier application permitted. 2 Effective for annual periods beginning on or after 1 January 2018, with earlier application permitted. 3 Effective for annual periods beginning on or after 1 January 2019, with earlier application permitted. 4 Effective date yet to be determined. 1 2 3 4 24 EAGLE RIDE INVESTMENT HOLDINGS LIMITED 鷹力投資控股有限公司
2. APPLICATION OF NEW AND REVISED HONG KONG FINANCIAL REPORTING STANDARDS (continued) 2. The directors of the Company anticipate that the adoption of HKFRS 9 in the future may have certain impact on the amounts reported in respect of the Group s financial assets and financial liabilities. It is not practicable to provide a reasonable estimate of that effect until a detailed review has been completed. 9 The directors of the Company do not anticipate that the application of the other new or revised standards, amendments will have material impact on the condensed consolidated financial statements. 3. SEGMENT INFORMATION 3. Business segments During the periods ended 30 June 2016 and 2015, the Group s revenue and net profit (loss) mainly derived from the unrealised gain arising on revaluation of financial assets designated as held for trading and the unrealised gain (loss) arising on revaluation of financial assets designated as at fair value through profit or loss ( FVTPL ). The directors of the Company consider that these activities constitute one business segment since these transactions are subject to common risks and returns. Given the nature of the Group s operation is investment holdings only, it is not considered meaningful to provide a business segment analysis of operating gain (loss). Interim Report 2016 中期報告 25
3. SEGMENT INFORMATION (continued) 3. Geographical segments The Group s segment assets and liabilities which represent furniture, fixtures and equipment, financial assets at FVTPL, assets classified as held for sale, deposit received in advance, unsecured borrowings and corporate bonds for the period/year, analysed by geographical market, are as follows: (Unaudited) At 30 June 2016 PRC (except Hong Kong) Hong Kong Singapore United States of America Total HK$ HK$ HK$ HK$ HK$ Segment assets 57,966,095 19,092,917 7,324,612 84,383,624 Unallocated assets 21,437,589 Total assets 105,821,213 Segment liabilities 43,652,522 43,652,522 Unallocated liabilities 13,504,138 Total liabilities 57,156,660 26 EAGLE RIDE INVESTMENT HOLDINGS LIMITED 鷹力投資控股有限公司
3. SEGMENT INFORMATION (continued) 3. Geographical segments (continued) (Audited) At 31 December 2015 PRC (except Hong Kong) Hong Kong Singapore United States of America Total HK$ HK$ HK$ HK$ HK$ Segment assets 24,930,413 42,458,753 18,401,582 6,653,462 92,444,210 Unallocated assets 2,503,156 Total assets 94,947,366 Segment liabilities 28,348,458 28,348,458 Unallocated liabilities 18,439,281 Total liabilities 46,787,739 Interim Report 2016 中期報告 27
4. GAIN ON DISPOSAL OF A SUBSIDIARY 4. The Group entered into a sale agreement in 2015 to dispose of its 100% equity interest in Clear Gold Limited ( Clear Gold ), a wholly-owned subsidiary which held one of the unlisted equity investments, at a consideration of US$3,500,000 (equivalent to approximately HK$27,156,000). The transaction was completed on 14 March 2016. The gain arising from the disposal of Clear Gold was calculated as follows: 100% 3,500,000 27,156,000 HK$ Net asset disposed of: Financial assets at FVTPL 24,930,413 Gain on disposal of a subsidiary 2,225,567 Total consideration received in cash 27,155,980 28 EAGLE RIDE INVESTMENT HOLDINGS LIMITED 鷹力投資控股有限公司
5. PROFIT (LOSS) FROM OPERATIONS 5. (Unaudited) For the six months ended 30 June 2016 2015 HK$ HK$ Profit (loss) from operations has been arrived at after charging (crediting): Investment management fee 831,690 1,108,642 Depreciation of furniture, fixtures and equipment 654,258 663,280 Net exchange (gain) loss (896,007) 485,799 Net unrealised gain arising on revaluation of financial assets designated as held for trading (16,161,600) (9,500,400) Net unrealised (gain) loss arising on revaluation of financial assets designated as at FVTPL (466,708) 149,058 Gain on disposal of a subsidiary (2,225,567) Operating lease rentals in respect of: office equipment 20,832 19,840 office premises 4,053,185 4,104,565 Directors remuneration and staff costs: salaries, allowance and other benefits in kind 6,590,815 7,974,362 contributions to MPF scheme 104,885 137,945 Interim Report 2016 中期報告 29
6. FINANCE COSTS 6. (Unaudited) For the six months ended 30 June 2016 2015 HK$ HK$ Interest on: Loans from a director wholly repayable within one year Short-term unsecured borrowings wholly repayable within one year Long-term unsecured borrowings wholly repayable within five years Corporate bonds (Note 16) wholly repayable within five years not wholly repayable within five years 16 347,602 128,592 870,459 99,861 471,121 373,253 742,987 66,563 2,532,030 568,408 30 EAGLE RIDE INVESTMENT HOLDINGS LIMITED 鷹力投資控股有限公司
7. INCOME TAX EXPENSE 7. No provision for Hong Kong Profits Tax has been made for the six months ended 30 June 2016 and 2015 as the Group did not have any assessable profits. 8. DIVIDENDS 8. No dividend was paid, declared or proposed for the six months ended 30 June 2016 (six months ended 30 June 2015: HK$nil). 9. PROFIT (LOSS) PER SHARE 9. The calculation of the basic profit (loss) per share is based on the profit for the Period HK$504,926 (six months ended 30 June 2015: loss HK$12,732,891) and the number of ordinary shares of 1,500,058,784 (six months ended 30 June 2015: 1,500,058,784) in issue at the end of the reporting period. 504,926 12,732,891 1,500,058,784 1,500,058,784 The amounts of diluted profit (loss) per share are the same as basic profit (loss) per share as there were no potential ordinary shares outstanding for the six months ended 30 June 2016 and 2015. 10. FURNITURE, FIXTURES AND EQUIPMENT 10. During the six months ended 30 June 2016, no acquisition or disposal of furniture, fixtures and equipment by the Group (six months ended 30 June 2015: HK$nil). Interim Report 2016 中期報告 31
11. FINANCIAL ASSETS AT FAIR VALUE THROUGH PROFIT OR LOSS 11. (Unaudited) At 30 June 2016 HK$ (Audited) At 31 December 2015 HK$ Non-current asset Financial assets designated as at FVTPL Unlisted equity investments 26,417,529 25,055,044 Current asset Financial assets designated as held for trading Equity investment listed in Hong Kong 54,818,400 38,656,800 The total market value of the financial assets designated as held for trading pledged to the securities broker was approximately HK$54,818,000 (31 December 2015: approximately HK$38,657,000). 54,818,000 38,657,000 32 EAGLE RIDE INVESTMENT HOLDINGS LIMITED 鷹力投資控股有限公司
11. FINANCIAL ASSETS AT FAIR VALUE THROUGH PROFIT OR LOSS (continued) 11. The Group had the following equity investments: At 30 June 2016 (Unaudited) Name of investee company Place of registration/ incorporation Number of shares held Effective shareholding interest Carrying amount Unrealised (loss) gain arising on revaluation Exchange gain Fair value/ market value HK$ HK$ HK$ HK$ Unlisted equity investments E-Com Holdings Pte. Ltd. ( E-Com ) Singapore 1,259,607 23.70% 18,401,582 (197,887) 889,222 19,092,917 E-Com Holdings Pte. Ltd. E-Com Vaca Energy, LLC ( Vaca ) Vaca Energy, LLCVaca United States of America 1,322,843 6.33% 6,653,462 664,595 6,555 7,324,612 Listed equity investment Tech Pro Technology Development Limited ( Tech Pro ) Cayman Islands 21,840,000 0.33% 38,656,800 16,161,600 54,818,400 Interim Report 2016 中期報告 33
11. FINANCIAL ASSETS AT FAIR VALUE THROUGH PROFIT OR LOSS (continued) 11. At 31 December 2015 (Audited) Name of investee company Place of registration/ incorporation Number of shares held Effective shareholding interest Carrying amount Unrealised (loss) gain arising on revaluation Exchange loss Fair value/ market value HK$ HK$ HK$ HK$ Unlisted equity investments E-Com Singapore 1,259,607 23.70% 27,073,124 (7,092,423) (1,579,119) 18,401,582 E-Com Vaca United States 1,322,843 6.33% 23,575,462 (16,902,921) (19,079) 6,653,462 of America Vaca Listed equity investment Tech Pro Cayman Islands 21,840,000 0.33% 33,306,000 5,350,800 38,656,800 The fair value of unlisted equity investments were determined by the directors of the Company with reference to the professional valuation carried out by Peak Vision Appraisals Limited, an independent qualified professional valuer. The market value of listed equity investment was determined based on the quoted market bid prices available on The Stock Exchange of Hong Kong Limited (the Stock Exchange ) at the end of the reporting period. 34 EAGLE RIDE INVESTMENT HOLDINGS LIMITED 鷹力投資控股有限公司
12. CASH AND BANK BALANCES 12. (Unaudited) At 30 June 2016 HK$ (Audited) At 31 December 2015 HK$ Deposits with banks 17,981,988 142,059 Cash on hand 11,299 3,461 17,993,287 145,520 13. ASSETS CLASSIFIED AS HELD FOR SALE AND DEPOSIT RECEIVED IN ADVANCE 13. The Company entered into a sale agreement with an independent purchaser in 2015, pursuant to which the Company agreed to sell to the purchaser the 1 issued and fully paid ordinary share of Clear Gold at the consideration of USD3,500,000 ( Disposal Transaction ). At 31 December 2015, Clear Gold was classified as assets held for sale, and a 30% non-refundable deposit amounting to USD1,050,000 (equivalent to approximately HK$8,156,000), had been received from the purchaser and represented as deposit received in advance. The Disposal Transaction was completed in March 2016. 1 3,500,000 30% 1,050,000 8,156,000 Interim Report 2016 中期報告 35
14. UNSECURED BORROWINGS 14. (Unaudited) At 30 June 2016 (Audited) At 31 December 2015 Notes HK$ HK$ Current liability Loan from a licensed money lending company, unsecured (a) 10,070,459 Non-current liability Loan from a third party, unsecured (b) 3,799,861 Notes: (a) Loan from a licensed money lending company, (a) unsecured The loan is due to an independent licensed money lending company at a principal amount of HK$10,000,000, net 10,000,000 800,000 transaction cost of HK$800,000, bearing fixed interest rate at 10% 10% per annum for a term of one year. The effective interest 18.00% rate is 18.00% per annum. (b) Loan from a third party, unsecured (b) The loan is due to an independent third party at a principal amount of HK$4,000,000, net transaction cost of HK$300,000, bearing fixed interest rate at 8% per annum for a term of four years. The effective interest rate is 11.01% per annum. 4,000,000 300,000 8% 11.01% 36 EAGLE RIDE INVESTMENT HOLDINGS LIMITED 鷹力投資控股有限公司
15. LOANS FROM A DIRECTOR 15. (Unaudited) At 30 June 2016 HK$ (Audited) At 31 December 2015 HK$ Loans advanced 10,590,721 11,593,184 Loan interest payable 326,863 317,697 10,917,584 11,910,881 The loans obtained from a director were unsecured, bearing fixed interest rate at 6% per annum and repayable within one year. 6% The directors of the Company consider that the carrying amounts approximate to their fair values. Interim Report 2016 中期報告 37
16. CORPORATE BONDS 16. The corporate bonds recognised in the condensed consolidated statements of financial position were calculated as follows: HK$ At 1 January 2015 Issue of bonds, net of transaction cost 18,835,000 Effective interest expenses 1,433,094 Interest paid (75,616) At 31 December 2015 and 1 January 2016 (audited) 20,192,478 Issue of bonds, net of transaction cost 8,950,000 Effective interest expenses (Note 6) 6 1,214,108 Interest paid (574,384) At 30 June 2016 (unaudited) 29,782,202 For the period ended 30 June 2016, the Group has issued a 7-year corporate bond, with principal amount, net of direct expenses, of HK$8,950,000 to an independent third party, which will be due in April 2023. The corporate bond is unsecured and carries interest at fixed rate of 7% per annum with interest payable annually. The effective interest rate of the corporate bond is 8.85% per annum. 8,950,000 7% 8.85% 38 EAGLE RIDE INVESTMENT HOLDINGS LIMITED 鷹力投資控股有限公司
16. CORPORATE BONDS (continued) 16. For the year ended 31 December 2015, the Company had issued 3-year to 7-year corporate bonds with aggregate principal amounts, net of direct expenses, of HK$18,835,000 to certain independent third parties, which will be due in January 2018, March 2022 and July 2022. These corporate bonds are unsecured and carry interest at fixed rates of 5% to 7% per annum with interest payable semi-annually or annually. The effective interest rate of these corporate bonds range from 10.43% to 21.58% per annum. 18,835,000 5% 7% 10.43% 21.58% T h e C o m p a n y h a s t h e r i g h t t o r e d e e m t h e outstanding principal amount, in whole or in part, of three corporate bonds at any time before the maturity date (the Redemption Rights ) with at least 5 clear business days written notice, but the bondholders have no right to require the Group to redeem bond before the maturity date. The Redemption Rights are regarded as embedded derivatives in the host contract. The Redemption Rights are not recognised in the condensed consolidated financial statements since the directors of the Company consider that the probability of exercise of the Redemption Rights are remote. The directors of the Company have assessed the fair values of the Redemption Rights at initial recognition with reference to the professional valuation carried out by Peak Vision Appraisals Limited, an independent qualified professional valuer, and consider that the fair values were insignificant. Accordingly, the fair values of the Redemption Rights were not accounted for in the consolidated financial statements at 30 June 2016 and 31 December 2015. Interim Report 2016 中期報告 39
17. SHARE CAPITAL 17. Number of ordinary shares of HK$0.0125 each 0.0125 HK$ Authorised: At 1 January 2015, 31 December 2015, 1 January 2016 and 30 June 2016 80,000,000,000 1,000,000,000 Number of ordinary shares of HK$0.0125 each 0.0125 HK$ Issued and fully paid: At 1 January 2015, 31 December 2015, 1 January 2016 and 30 June 2016 1,500,058,784 18,750,735 During the Period, there was no movement in the Company s share capital. 40 EAGLE RIDE INVESTMENT HOLDINGS LIMITED 鷹力投資控股有限公司
18. RELATED PARTY DISCLOSURES 18. (a) Transactions (a) The Group had the following significant related party transactions during the Period which were carried out in the normal course of the Group s business: (Unaudited) For the six months ended 30 June 2016 2015 Name of related party Nature of transaction Notes HK$ HK$ Blue Star Investment management fee (a) 831,690 1,108,642 Mr. Hu Loan interest expenses (b) 347,602 128,592 Ms. Li Consultancy fee (c) 480,000 Interim Report 2016 中期報告 41
18. RELATED PARTY DISCLOSURES (continued) 18. (a) Transactions (continued) (a) Notes: (a) Pursuant to the investment management agreement dated 27 March 2014 made between Blue Star Asset Management Limited (Formerly named as Corban Asset Management Limited ) ( Blue Star ) and the Company, the Company pays Blue Star an investment management fee for the period from 13 May 2014 to 31 December 2016 payable monthly in HK Dollars in advance 2% per annum of the net asset value of the Company on the basis of the actual number of days elapsed in the relevant month. (a) 2% Blue Star is deemed to be a connected party of the Group pursuant to Rule 14A.08 of the Listing Rules. 14A.08 (b) The loans from a director were unsecured and repayable on or before the maturity date with fixed interest rate at 6% per annum. Details are set out in Note 15 of the condensed consolidated financial statements. (b) 6% 15 (c) Consultancy fee has been paid to a former nonexecutive director, Ms. Li Yunshan ( Ms. Li ) commencing from 1 January 2014 at HK$120,000 per month and was reduced to HK$80,000 with effective from 1 March 2014. The consultancy agreement was terminated effective from 16 November 2015. (c) 120,000 80,000 42 EAGLE RIDE INVESTMENT HOLDINGS LIMITED 鷹力投資控股有限公司
18. RELATED PARTY DISCLOSURES (continued) 18. (b) Balances (b) (Unaudited) (Audited) At 30 June 2016 At 31 December 2015 Name of related party Nature of balance HK$ HK$ Blue Star Accrued investment management fee 247,401 1,280,900 Mr. Hu Loans from a director 10,917,584 11,910,881 Interim Report 2016 中期報告 43
19. COMMITMENTS 19. At the end of the reporting period, the Group had the commitments for future minimum lease payments under non-cancellable operating leases in respect of rented office equipment and office premises which fall due as follows: Office equipment Office premises (Unaudited) (Audited) (Unaudited) (Audited) At 30 June At 31 December At 30 June At 31 December 2016 2015 2016 2015 HK$ HK$ HK$ HK$ Within one year 42,336 42,000 8,374,118 3,418,285 In the second to fifth years inclusive 63,504 84,672 15,932,100 4,371 105,840 126,672 24,306,218 3,422,656 20. FINANCIAL RISK MANAGEMENT 20. (a) Financial risk factors (a) The Group s activities expose it to a variety of financial risks: market risk (including foreign currency risk, fair value interest rate risk, cash flow interest rate risk and price risk), credit risk and liquidity risk. 44 EAGLE RIDE INVESTMENT HOLDINGS LIMITED 鷹力投資控股有限公司
20. FINANCIAL RISK MANAGEMENT (continued) 20. (a) Financial risk factors (continued) (a) The interim financial information do not included all financial risk management information and disclosures required in the annual financial statements, and should be read in conjunction with the Group s annual financial statements at 31 December 2015. There have been no changes in the risk management policies since year end. (b) Fair value measurement of financial instruments (b) (i) Fair value of the Group s financial assets that are measured at fair value on a recurring basis (i) Some of the Group s financial assets are measured at fair value at the end of each reporting period. The following table gives information about how the fair values of these financial assets and financial liabilities are determined (in particular, the valuation techniques and inputs used). Interim Report 2016 中期報告 45
20. FINANCIAL RISK MANAGEMENT (continued) 20. (b) Fair value measurement of financial instruments (continued) (b) (i) Fair value of the Group s financial assets that are measured at fair value on a recurring basis (continued) (i) Financial assets Fair value at Fair value hierarchy Valuation technique(s) and key input Significant unobservable input(s) (Unaudited) 30 June 2016 (Audited) 31 December 2015 Financial assets designated as held for trading Listed equity investment in Hong Kong HK$54,818,400 Listed equity investment in Hong Kong HK$38,656,800 Level 1 Quoted market bid price in an active market N/A 54,818,400 38,656,800 Financial assets designated as at FVTPL Unlisted equity investments in overseas E-Com HK$19,092,917 Unlisted equity investments in overseas E-Com HK$18,401,582 Level 3 Income approach in this approach, the discounted cash flow method was used to capture the present value of the expected future economic benefits to be derived from the ownership of investee. Discount rate 18.11% (31 December 2015: 17.07%) Discount for lack of marketability ( DLOM ) 11.00% (31 December 2015: 11.00%) E-Com 19,092,917 E-Com 18,401,582 18.11% 17.07%) 11.00% 11.00%) 46 EAGLE RIDE INVESTMENT HOLDINGS LIMITED 鷹力投資控股有限公司