(Incorporated in the Cayman Islands with limited liability)
(Stock Code: 3628)
2020 INTERIM REPORT
HIGHLIGHTS
- Revenue for the six months ended 30 June 2020 was HK$35,618,000, representing a decrease of 13.5% as compared with the corresponding period in 2019;
- Profit attributable to shareholders of the Company for the six months ended 30 June 2020 was HK$1,302,000 while it was HK$1,571,000 for the six months ended 30 June 2019; and
- The Directors do not recommend the payment of an interim dividend for the six months ended 30 June 2020.
RENHENG Enterprise Holdings Limited | 1 |
The board (the "Board") of directors (the "Directors") of RENHENG Enterprise Holdings Limited (the "Company") hereby presents the unaudited condensed consolidated financial statements of the Company and its subsidiaries (collectively referred to as the "Group") for the six months ended 30 June 2020 together with the unaudited comparative figures for the corresponding period in 2019 as follows:
CONDENSED CONSOLIDATED STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME
For the six months ended | |||||
30 June | |||||
2020 | 2019 | ||||
HK$'000 | HK$'000 | ||||
Notes | (Unaudited) | (Unaudited) | |||
Revenue | 3 | 35,618 | 41,162 | ||
Cost of sales | (20,267) | (25,999) | |||
Gross profit | 15,351 | 15,163 | |||
Other income and gains | 4 | 1,886 | 2,806 | ||
Selling and distribution costs | (3,503) | (5,886) | |||
Administrative expenses | (10,825) | (8,447) | |||
Profit before taxation | 5 | 2,909 | 3,636 | ||
Taxation | 6 | (1,607) | (2,065) | ||
Profit for the period | 1,302 | 1,571 | |||
Other comprehensive expense for the period: | |||||
Item that will not be reclassified to profit or loss: | |||||
Exchange difference arising on translation of | (1,927) | ||||
foreign operations | (1,750) | ||||
Total comprehensive expense for the period | (625) | (179) | |||
Earnings per share | 7 | HK cents | HK cents | ||
- Basic | 0.2 | 0.2 | |||
2 | INTERIM REPORT 2020 |
CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL POSITION
As at | As at 31 | |||
30 June 2020 | December 2019 | |||
HK$'000 | HK$'000 | |||
Notes | (Unaudited) | (Audited) | ||
Non-current assets | ||||
6,487 | ||||
Property, plant and equipment | 7,772 | |||
Right-of-use assets | 2,446 | 2,700 | ||
Investment properties | 19,525 | 19,871 | ||
28,458 | 30,343 | |||
Current assets | ||||
9 | 46,508 | 39,549 | ||
Inventories | ||||
Trade and other receivables | 10 | 41,556 | 40,677 | |
Restricted bank deposits | 11 | 6,350 | 8,457 | |
Bank balances and cash | 11 | 71,610 | 70,207 | |
166,024 | 158,890 | |||
Current liabilities | ||||
12 | 39,817 | 35,008 | ||
Trade and other payables | ||||
Lease liabilities | 216 | 368 | ||
Contract liabilities | 34,174 | 33,063 | ||
Tax payable | 5,723 | 5,741 | ||
79,930 | 74,180 | |||
Net current assets | 86,094 | 84,710 | ||
Total assets less current liabilities | 114,552 | 115,053 | ||
Non-current liabilities | ||||
2,057 | ||||
Deferred tax liabilities | 1,901 | |||
Lease liabilities | - | 32 | ||
2,057 | 1,933 | |||
112,495 | 113,120 | |||
Capital and reserves | ||||
2,010 | ||||
Share capital | 2,010 | |||
Share premium | 41,818 | 41,818 | ||
Reserves | 76,945 | 78,872 | ||
Accumulated losses | (8,278) | (9,580) | ||
Total equity | 112,495 | 113,120 | ||
RENHENG Enterprise Holdings Limited | 3 |
2020 REPORT INTERIM 4
CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
Discretionary | Statutory | Property | |||||||||
Share | Merger | surplus | surplus | Capital | revaluation | Translation | Accumulated | ||||
Share capital | premium | reserve | reserve | reserve | reserve | reserve | reserve | losses | Total | ||
HK$'000 | HK$'000 | HK$'000 | HK$'000 | HK$'000 | HK$'000 | HK$'000 | HK$'000 | HK$'000 | HK$'000 | ||
At 1 January 2019 (Audited) | 2,010 | 41,818 | 49,091 | 3,338 | 23,711 | 999 | 2,775 | 1,195 | (9,650) | 115,287 | |
Profit for the period | - | - | - | - | - | - | - | - | 1,571 | 1,571 | |
Exchange differences arising | |||||||||||
on translation of foreign | |||||||||||
operations | - | - | - | - | - | - | - | (1,750) | - | (1,750) | |
Total comprehensive (expense) | |||||||||||
income for the period | - | - | - | - | - | - | - | (1,750) | 1,571 | (179) | |
At 30 June 2019 (Unaudited) | 2,010 | 41,818 | 49,091 | 3,338 | 23,711 | 999 | 2,775 | (555) | (8,079) | 115,108 | |
At 1 January 2020 (Audited) | 2,010 | 41,818 | 49,091 | 3,338 | 24,345 | 999 | 2,775 | (1,676) | (9,580) | 113,120 | |
Profit for the period | - | - | - | - | - | - | - | - | 1,302 | 1,302 | |
Exchange differences arising | |||||||||||
on translation of foreign | - | - | - | - | - | - | - | (1,927) | - | (1,927) | |
operations | |||||||||||
Total comprehensive (expense) | |||||||||||
- | - | - | - | - | - | - | (1,927) | 1,302 | (625) | ||
income for the period | |||||||||||
At 30 June 2020 (Unaudited) | 2,010 | 41,818 | 49,091 | 3,338 | 24,345 | 999 | 2,775 | (3,603) | (8,278) | 112,495 | |
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOW
For the six months ended | |||
30 June | |||
2020 | 2019 | ||
HK$'000 | HK$'000 | ||
(Unaudited) | (Unaudited) | ||
Net cash used in operating activities | (106) | (18,071) | |
Investing activities | |||
8,323 | |||
Release of restricted bank deposits | 9,390 | ||
Interest received | 872 | 641 | |
Placement of restricted bank deposits | (6,350) | (850) | |
Proceeds on disposal of property, plant and | - | ||
equipment | 210 | ||
Purchase of property, plant and equipment | (41) | (19) | |
Net cash generated from investing activities | 2,804 | 9,372 | |
Financing activity | |||
(181) | |||
Repayments of lease liabilities | (156) | ||
Net cash used in financing activity | (181) | (156) | |
Net increase (decrease) in cash and cash equivalents | 2,517 | (8,855) | |
Cash and cash equivalents at beginning of the | 70,207 | ||
period | 61,104 | ||
Effect of foreign exchange rate changes | (1,114) | (441) | |
Cash and cash equivalents at end of the period, | |||
71,610 | |||
represented by bank balances and cash | 51,808 | ||
RENHENG Enterprise Holdings Limited | 5 |
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
1. BASIS OF PREPARATION
The condensed consolidated financial statements for the six months ended 30 June 2020 were unaudited but have been reviewed by the audit committee of the Company. The condensed consolidated financial statements have been prepared in accordance with Hong Kong Accounting Standard 34 ("HKAS 34") Interim Financial Reporting 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").
1A. SIGNIFICATE EVENT IN THE CURRENT INTERIM PERIOD
The outbreak of COVID-19 and the subsequent quarantine measures as well as the travel restrictions imposed by many countries have had negative impacts to the global economy, business environment and directly and indirectly affect the operations of the Group. The Group had to suspend its manufacturing activities from January 2020 to mid of February 2020 due to mandatory government quarantine measures in an effort to contain the spread the pandemic. As such, the financial positions and performance of the Group were affected by the delay in completion of contracts with customers.
2. PRINCIPAL ACCOUNTING POLICIES
The condensed consolidated financial statements have been prepared on the historical cost basis except for investment properties that are measured at fair values at the end of the reporting period.
Other than additional accounting policies resulting from application of amendments to Hong Kong Financial Reporting Standards ("HKFRSs"), the accounting policies and methods of computation used in the condensed consolidated financial statements for the six months ended 30 June 2020 are the same as those presented in the Group's annual financial statements for the year ended 31 December 2019.
Application of amendments to HKFRSs
In the current interim period, the Group has applied the Amendments to References to the Conceptual Framework in HKFRS Standards and the following amendments to HKFRSs issued by the HKICPA, for the first time, which are mandatorily effective for the annual period beginning on or after 1 January 2020 for the preparation of the Group's condensed consolidated financial statements:
Amendments to HKAS 1 and HKAS 8 | Definition of Material |
Amendments to HKFRS 3 | Definition of a Business |
Amendments to HKFRS 9, HKAS 39 and | Interest Rate Benchmark Reform |
HKFRS 7 |
Except as described below, the application of the Amendments to References to the Conceptual Framework in HKFRS Standards and the amendments to HKFRSs in the current period has had no material impact on the Group's financial positions and performance for the current and prior periods and/or on the disclosures set out in these condensed consolidated financial statements.
2.1 Impacts of application on Amendments to HKAS1 and HKAS 8 Definition of Material
The amendments provide a new definition of material that states "information is material if omitting, misstating or obscuring it could reasonably be expected to influence decisions that the primary users of general purpose financial statements make on the basis of those financial statement, which provide financial information about a specific reporting entity." The amendments also clarify that materiality depends on the nature of magnitude of information, either individually or in combination with other information, in the context of the financial statements taken as a whole.
The application of the amendments in the current period had no impact on the condensed consolidated financial statements. Changes in presentation and disclosures on the application of the amendments, if any, will be reflected on the consolidated financial statement for the year ending 31 December 2020.
6 | INTERIM REPORT 2020 |
3. REVENUE AND SEGMENT INFORMATION
Disaggregation of revenue from contracts with customers and segment information
For the six months ended 30 June 2020 | |||
Construction | |||
contracts of casing | |||
and flavouring | |||
system | Sales of goods | Total | |
HK$'000 | HK$'000 | HK$'000 | |
(Unaudited) | (Unaudited) | (Unaudited) | |
Type of products | |||
Construction works | 21,637 | - | 21,637 |
Sales of goods | |||
- | 11,175 | 11,175 | |
- pneumatic feeding system | |||
- others | - | 2,806 | 2,806 |
- | 13,981 | 13,981 | |
21,637 | 13,981 | 35,618 | |
For the six months ended 30 June 2019 | |||
Construction | |||
contracts of casing | |||
and flavouring | |||
system | Sales of goods | Total | |
HK$'000 | HK$'000 | HK$'000 | |
(Unaudited) | (Unaudited) | (Unaudited) | |
Type of products | |||
Construction works | 33,215 | - | 33,215 |
Sales of goods | |||
- pneumatic feeding system | - | 449 | 449 |
- others | - | 7,498 | 7,498 |
- | 7,947 | 7,947 | |
33,215 | 7,947 | 41,162 | |
The revenue from construction contracts of casing and flavouring system and sales of goods are recognised at a point in time.
The Group's operating activities are attributable to a single operating segment focusing on manufacture and sale of tobacco machinery products.
No other discrete financial information, analysis of segment assets or segment liabilities is presented as they are not regularly provided to the chief executive officer of the Company, being the chief operating decision maker of the Company for the purposes of resources allocation and assessment. Accordingly, no segment information, other than the Group's results and financial position as a whole, is presented. All of the Group's revenue are derived in the People's Republic of China ("PRC") and majority of the Group's non-current assets are located in the PRC (excluding Hong Kong).
RENHENG Enterprise Holdings Limited | 7 |
4. | OTHER INCOME AND GAINS | ||
For the six months | |||
ended 30 June | |||
2020 | 2019 | ||
HK$'000 | HK$'000 | ||
(Unaudited) | (Unaudited) | ||
Subsidy income (note) | 531 | 983 | |
Rental income from investment properties | 79 | 165 | |
Bank interest income | 800 | 641 | |
Other income | 1,410 | 1,789 | |
Sales of scrap materials, parts and components, net gain | 476 | 941 | |
Gain on disposal of property, plant and equipment, net | - | 76 | |
Other gains | 476 | 1,017 | |
1,886 | 2,806 | ||
Note: These government grants were for immediate and unconditional financial support with no future related costs nor related to any assets, therefore, the Group recognised the income upon receipts.
5. | PROFIT BEFORE TAXATION | ||
For the six months | |||
ended 30 June | |||
2020 | 2019 | ||
HK$'000 | HK$'000 | ||
(Unaudited) | (Unaudited) | ||
Profit before taxation has been arriving at after charging: | |||
Directors' emoluments | 900 | 907 | |
Other staff costs: | 4,949 | ||
Salaries, bonus and allowances | 5,979 | ||
Retirement benefits scheme contributions | 196 | 381 | |
Total staff costs | 6,045 | 7,267 | |
Auditor's remuneration | 500 | 450 | |
Research and development cost recognised as an | 2,832 | ||
expense (included in administrative expenses) | 1,893 | ||
Depreciation of property, plant and equipment | 1,195 | 956 | |
Depreciation of right-of-use assets | 212 | 190 | |
8 | INTERIM REPORT 2020 |
6. TAXATION
For the six months
ended 30 June
20202019
HK$'000HK$'000
(Unaudited)(Unaudited)
The charge comprises: | ||
PRC Enterprise Income Tax - current period | 1,418 | 1,770 |
Deferred taxation | 189 | 295 |
1,607 | 2,065 | |
No provision for Hong Kong Profits Tax has been made for the six months ended 30 June 2020 and 2019 as the Group has no assessable profit arisen in, or was derived from Hong Kong.
The provision for PRC Enterprise Income Tax is based on the estimated taxable income for PRC taxation purposes at 25% for both periods pursuant to the Law of the PRC on Enterprise Income Tax and Implementation Legislation.
7. EARNINGS PER SHARE
The calculation of the basic earnings per share attributable to owners of the Company for both periods is based on the following data:
For the six months | ||
ended 30 June | ||
2020 | 2019 | |
HK$'000 | HK$'000 | |
(Unaudited) | (Unaudited) | |
Profit | ||
Profit for the period attributable to owners of the | ||
Company for the purposes of basic earnings per | 1,302 | |
share | 1,571 | |
Number of shares | ||
Number of ordinary shares for the purposes of | 804,000,000 | |
calculating basic earnings per share | 804,000,000 | |
No diluted earnings per share were presented for both periods as there was no potential ordinary shares in issue for both periods.
8. DIVIDEND
No dividends were paid, declared or proposed during the interim period. The directors of the Company have determined that no dividend will be paid in respect of the interim period.
RENHENG Enterprise Holdings Limited | 9 |
9. INVENTORIES
As at | As at | |
30 June 2020 | 31 December 2019 | |
HK$'000 | HK$'000 | |
(Unaudited) | (Audited) | |
Raw materials | 13,112 | 7,354 |
Work in progress | 33,396 | 32,195 |
46,508 | 39,549 | |
10. TRADE AND OTHER RECEIVABLES
As at | As at | ||
30 June 2020 | 31 December 2019 | ||
HK$'000 | HK$'000 | ||
(Unaudited) | (Audited) | ||
Trade and bills receivables | 29,431 | 28,587 | |
Less: allowance for credit losses | (2,897) | (2,948) | |
26,534 | 25,639 | ||
Retention money receivables | 11,526 | 11,447 | |
Prepayments and deposits | 1,038 | 1,345 | |
Other receivables | 2,917 | 2,714 | |
Less: allowance for credit losses | (459) | (468) | |
41,556 | 40,677 | ||
The following is an aged analysis of trade and bills receivables (net of allowance for credit losses) presented based on the invoice date at the end of the reporting periods:
As at | As at | |
30 June 2020 | 31 December 2019 | |
HK$'000 | HK$'000 | |
(Unaudited) | (Audited) | |
0 - 90 days | 10,135 | 10,164 |
91 - 365 days | 4,488 | 8,598 |
1 - 2 years | 8,249 | 6,877 |
Over 2 years | 3,662 | - |
26,534 | 25,639 | |
The Group normally allows a credit period of three months to its trade customers. Before accepting any new customer, the Group will internally assess the credit quality of the potential customer and define appropriate credit limits.
The basis of determining the inputs and assumptions and the estimation techniques used in the condensed consolidated financial statements for the six months ended 30 June 2020 are the same as those followed in the preparation of the Group's annual financial statements for the year ended 31 December 2019.
10 INTERIM REPORT 2020
- RESTRICTED BANK DEPOSITS/BANK BALANCES AND CASH
As at 30 June 2020, the restricted bank deposits carry effective interest rate of 2.40% (31 December 2019: 2.85%) per annum, representing amounts withheld in a bank for settlement of bills payables and to secure certain construction contracts.
Bank balances comprising cash and short-term deposits with an original maturity of three months or less carried at prevailing market deposit rate. The effective interest rates of these deposits ranged from 0.001% to 3.50% (31 December 2019: 0.001% to 3.50%) per annum. - TRADE AND OTHER PAYABLES
As at | As at | |
30 June 2020 | 31 December 2019 | |
HK$'000 | HK$'000 | |
(Unaudited) | (Audited) | |
Trade payables | 20,901 | 14,631 |
Bills payables | 5,544 | 6,652 |
26,445 | 21,283 | |
Amount due to a director (note) | 4,200 | 4,200 |
Accrued welfare expenses | 1,574 | 1,602 |
Valued added tax payable | 1,281 | 885 |
Other payables | 6,123 | 6,870 |
Other tax payables | 194 | 168 |
39,817 | 35,008 | |
Note: The amount due to a director represented advance from a director of the Company who is also the ultimate controlling shareholder of the Company. The amount is non-trade in nature, unsecured, non- interest bearing and repayable on demand.
The following is an aged analysis of trade and bills payables presented based on the invoice date at the end of the reporting period:
As at | As at | |
30 June 2020 | 31 December 2019 | |
HK$'000 | HK$'000 | |
(Unaudited) | (Audited) | |
0 - 90 days | 20,278 | 13,967 |
91 - 365 days | 5,247 | 6,195 |
1 - 2 years | 736 | 704 |
Over 2 years | 184 | 417 |
26,445 | 21,283 | |
The average credit period on purchase of goods is 90 days. | ||
RENHENG Enterprise Holdings Limited 11
MANAGEMENT DISCUSSION AND ANALYSIS
The Group is principally engaged in the manufacture, sale and provision of maintenance, overhaul and modification services in respect of tobacco machinery products in the PRC. We generate our turnover primarily from projects related to three types of catalogued special-purpose tobacco machinery products, namely the casing and flavouring systems, the pneumatic feeding systems and the pre-pressing packing machines.
FINANCIAL REVIEW
The economic outlook and operating environment of the PRC have become more challenging in the first half of 2020 as a result of COVID-19 outbreak. The medium-to-long-term economic growth of the PRC has slowed down. The Group responded with calm and poise to the outbreak of the COVID-19 and adopted sound and scientific counter-epidemic measures, such that business operations and production were resumed quicker than expected. However, the Group's operation was still affected by the external factors like the prohibitions on interprovincial transportation and restrictions of on-site installation which led to the decrease in revenue by 13.5% from HK$41,162,000 for the six months ended 30 June 2019 to HK$35,618,000 for the current period under review.
Construction of casing and flavouring systems are still the core business of the Group. Revenue from the construction of casing and flavouring systems continued to outperform other type of products and goods despite its shares in total revenue has been tumbled from 80.7% of the total revenue in prior period to 60.8% of the total revenue in the current period under review. Sales of pneumatic feeding system for the six months ended 30 June 2020 has been escalated to HK$11,175,000 (six months ended 30 June 2019: HK$449,000) which mainly resulted from the completion of a contract with contract sum amounted to approximately HK$9.9 million during the current period. The sales of other goods which mainly include water treatment system, retooling and repair system and other products have plummeted more than 60% from HK$7,498,000 to HK$2,806,000 for the current period in comparison with prior period. The Group does not have seasonality of operations and the revenue from construction works and sales of goods depend on the design and complexity of the products and demands from the customers.
Despite the revenue of the Group has decreased by more than 10%, the gross profit margin of the current period was 43.1% (six months ended 30 June 2019: 36.8%) and was mainly contributed by a higher gross profit margin from the pneumatic feeding systems and retooling and repair systems.
12 INTERIM REPORT 2020
The operating expenditure of the Group, comprising the selling and distribution costs and administrative expenses, amounted to HK$3,503,000 and HK$10,825,000, respectively for the six months ended 30 June 2020 (six months ended 30 June 2019: HK$5,886,000 and HK$8,447,000). Due to the suspension or limited services of transportation facilities in certain provinces in the PRC, less marketing initiatives has been placed in the first half year of 2020. Although the outbreak of COVID-19 has brought certain pressure to bear on the Group's business, the Group has taken a positive view and undertaken more effort on research and development on its new systems and strengthen the safety control measures in the manufacturing plants resulting to an increase in administrative expense for the current period.
Other income and gains of HK$1,886,000, down from HK$2,806,000 in the prior period fuelled in part by decrease in subsidy income form government by HK$452,000 and decline in sales of scrap materials, parts and components of HK$465,000.
Tax expense of HK$1,607,000 was incurred for the six months ended 30 June 2020 (six months ended 30 June 2019: HK$2,065,000). Tax expense was resulted from the profit earned by the PRC subsidiary and deferred taxation on the withholding tax on undistributed profit.
The net profit for the six months ended 30 June 2020 was HK$1,302,000 downed by HK$269,000 or 17.1% from the corresponding period in 2019. Exchange loss arising on translation of foreign operation amounted to HK$1,927,000 was resulted from the depreciation of Renminbi to Hong Kong dollars and led to a total comprehensive expense of HK$625,000 for the six months ended 30 June 2020 while it was HK$179,000 for the prior period.
FINANCIAL POSITION, LIQUIDITY AND FINANCIAL RESOURCES
As at 30 June 2020, the Group had a stable capital structure with net current assets of HK$86,094,000 (31 December 2019: HK$84,710,000). Bank balances and cash of the Group as at 30 June 2020 amounted to HK$71,610,000 (31 December 2019: HK$70,207,000), which were mainly denominated in Renminbi and Hong Kong dollars. Other than the amount due to a director of the Company who is also the ultimate controlling shareholder of the Company amounted to HK$4,200,000, there were no other borrowings, mortgages or charges as at 30 June 2020 and 31 December 2019.
SEGMENTAL INFORMATION
An analysis of the Group's performance for the six months ended 30 June 2020 by business segment is set out in note 3 to the condensed consolidated financial statements.
CONTINGENT LIABILITIES
As at 30 June 2020, the Group did not have any material contingent liabilities.
RENHENG Enterprise Holdings Limited 13
SIGNIFICANT INVESTMENTS HELD
The Group's investing activities mainly include the placement and withdrawal of short term fixed deposits and purchase of property, plant and equipment.
MATERIAL ACQUISITION AND DISPOSAL
The Group had no material acquisition and disposal of subsidiaries during the six months ended 30 June 2020.
BUSINESS REVIEW AND PROSPECT
As a result of the outbreak of COVID-19 and the corresponding public health measures taken by the PRC government, the operation of the Group was suspended from January 2020 to mid of February 2020. Being a manufacturer on catalogued special-purpose tobacco machinery products with sales solely from the PRC, the Group's revenue for the first half year of 2020 has been worsen up as expected. Benefiting from operating leverage, we were able to maintain a stable performance as compared to the prior period.
The Group is conducting renegotiation with relevant customers on the delivery time and other terms for construction of the systems and sales of goods to adjust the delivery schedule, so as to minimise the negative economic impact on both parties. On the other hand, the Group works closely with suppliers to speed up the delivery of raw materials in order to ensure the Group's normal production order and meet customer delivery needs. As the economy has gradually recovered, we are actively participating in various contract biddings. The Group has successfully bid a construction contract of casing and flavouring systems with contract sum of around HK$63 million in July 2020 and together with other contracts entered in the first half of 2020 and the committed backlog on hand, the Group is cautiously optimistic about the future market conditions.
To consolidate its existing business strengths, the Group will drive quality and efficiency enhancement for its existing projects and further optimise its business mix by stepping up with the development of manufacturing of water treatment system and retooling and repaid services (included in the sales of other goods) to increase its weighting in the Group's overall business portfolio.
The Group will persist in leading the way through business innovations and driving sustainable development of various businesses through technological innovation and innovations in business model, in a full effort to foster core corporate competitiveness.
14 INTERIM REPORT 2020
PREIPO SHARE OPTION SCHEME
The Company's pre-IPO share option scheme (the "Pre-IPO Share Option Scheme") was adopted pursuant to a written resolution passed by the shareholders on 20 October 2011. The purpose of the Pre-IPO Share Option Scheme is to grant options to the participants as incentive or rewards for their contributions to the Group.
Options to subscribe for an aggregate of 1,300,000 shares at an exercise price of HK$0.96 were granted to 10 participants including one executive Director, four members of the senior management of the Group and five employees of the Group, each at a consideration of HK$10.00 under the Pre-IPO Share Option Scheme on 20 October 2011.
Up to 30 June 2020, no outstanding options were resulted.
SHARE OPTION SCHEME
The Company's share option scheme (the "Share Option Scheme") was adopted pursuant to a written resolution passed by the shareholders on 20 October 2011 for the primary purpose of providing the people and the parties working for the interests of the Group with an opportunity to obtain an equity interest in the Company, thus linking their interest with the interests of the Group and thereby providing them with an incentive to work better for the interests of the Group.
Up to 30 June 2020, no options were granted to Directors, eligible employees and other outside third parties under the Share Option Scheme.
EMPLOYEES AND REMUNERATION POLICIES
As at 30 June 2020, the Group has a total of 132 employees (31 December 2019: 133 employees). Total staff costs (including directors' emoluments) were HK$6,045,000 for the six months ended 30 June 2020 (six months ended 30 June 2019: HK$7,267,000).
Remuneration in the form of salaries and bonus is determined by reference to our employees' respective experience, responsibilities, qualification and competence displayed and our operation results. Our employees also receive reimbursements for expenses which are necessarily and reasonably incurred for providing services to our Group or executing their functions in relation to our operations. Our Directors and employees may also receive options granted under the share option scheme.
RENHENG Enterprise Holdings Limited 15
DIRECTORS' AND CHIEF EXECUTIVE'S INTEREST IN SHARES, UNDERLYING SHARES AND DEBENTURES
As at 30 June 2020, the interests of Directors and chief executive of the Company in the shares, underlying shares and debentures of the Company or any of its associated corporations (within the meaning of Part XV of the Securities and Futures Ordinance ("SFO")) which were notified to the Company and The Stock Exchange of Hong Kong Limited (the "Stock Exchange") pursuant to Divisions 7 and 8 of Part XV of the SFO (including interests or short positions which they are taken or deemed to have under such provisions of the SFO), or 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 required standard of dealings by Directors as referred to the Model Code for Securities Transactions by Directors of Listed Issuers contained in Appendix 10 to the Listing Rules, were as follows:
Long positions
Ordinary shares of HK$0.0025 each of the Company | Approximate | ||
percentage of | |||
Number of issued | the issued share | ||
ordinary shares | capital of the | ||
Name | Capacity/Nature of Interest | held | Company |
Directors | |||
Ms. Liu Li (note) | Interest of controlled corporations | 600,000,000 | 74.6% |
Mr. Xu Jiagui | Beneficial interest | 800,000 | 0.1% |
Note: Open Venture Global Limited ("Open Venture") and LinkBest Capital Limited ("LinkBest"), which are both wholly owned by Ms. Liu Li, are interested in 240,000,000 shares and 360,000,000 shares of the Company, respectively.
Save as disclosed above, none of the Directors and the chief executive of the Company nor their associates had any interests or short positions in any shares, underlying shares or debentures of the Company or any of its associated corporations as at 30 June 2020.
16 INTERIM REPORT 2020
SUBSTANTIAL SHAREHOLDERS' AND OTHER PERSONS' INTERESTS IN SHARES, UNDERLYING SHARES AND DEBENTURES
As at 30 June 2020, according to the register of interests required to be kept by the Company under Section 336 of the SFO other than the interests disclosed above in respect of Directors and chief executive of the Company, the following parties had interests in shares of the Company, as notified to the Company and the Stock Exchange, as follows:
Long positions
Ordinary shares of HK$0.0025 each of the Company | Approximate | ||
percentage of | |||
Number of issued | the issued share | ||
Name of | ordinary shares | capital of the | |
shareholders | Capacity/Nature of Interest | held | Company |
LinkBest (note) | Beneficial owner | 360,000,000 | 44.8% |
Open Venture | |||
(note) | Beneficial owner | 240,000,000 | 29.8% |
Note: LinkBest and Open Venture are wholly owned by Ms. Liu Li.
Save as disclosed above, the Company has not been notified of any other relevant interests or short positions in the issued share capital of the Company as at 30 June 2020.
COMPETING INTERESTS
None of the Directors nor their respective associates (as defined under the Listing Rules) had any interest in a business that competes or may compete with the business of the Group.
PURCHASE, SALE OR REDEMPTION OF THE COMPANY 'S LISTED SECURITIES
During the six months ended 30 June 2020, neither the Company nor any of its subsidiaries has purchased, sold or redeemed any of the Company's listed securities.
RENHENG Enterprise Holdings Limited 17
CORPORATE GOVERNANCE PRACTICES
Pursuant to the Corporate Governance Code (the "CG Code") contained in Appendix 14 to the Listing Rules which sets out the principles of good corporate governance and the code provisions (the "Code Provisions"), the Company has applied all the Code Provisions as set out in the CG Code during the six months ended 30 June 2020, save and except the Code Provision A.2.1 of the CG Code as follows:
The roles of chairman and chief executive of the Company are both performed by the same individual - Ms Liu Li. Ms. Liu Li will ensure that all the Board members keep abreast of the conduct, business activities and development of the Group and adequate, complete and reliable information is provided to Directors on issues to be considered by the Board.
AUDIT COMMITTEE
The audit committee comprising three independent non-executive Directors and is chaired by Mr. Wong Yiu Kit, Ernest. The rest of the members are Mr. Kong Hing Ki and Mr. Wu Wei. The interim report for the six months ended 30 June 2020 have been reviewed by the audit committee in accordance with the Listing Rules. The audit committee was of the opinion that such results complied with the applicable accounting standards and that adequate disclosures had been made.
By order of the Board
RENHENG Enterprise Holdings Limited
Liu Li
Chairman & Chief Executive Officer
Hong Kong, 21 August 2020
As at the date of this report, the executive Directors are Ms. Liu Li and Mr. Xu Jiagui and the independent non-executive Directors are Mr. Wong Yiu Kit, Ernest, Mr. Kong Hing Ki and Mr. Wu Wei.
18 INTERIM REPORT 2020
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Renheng Enterprise Holdings Ltd. published this content on 18 September 2020 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 18 September 2020 08:39:05 UTC