South China Financial : Interim Report for the Six Months Ended 30 June 2019

SOUTH CHINA FINANCIAL HOLDINGS LIMITED

南 華 金 融 控 股 有 限 公 司

(Incorporated in Hong Kong with limited liability)

(Stock Code: 00619)

INTERIM REPORT

FOR THE SIX MONTHS ENDED 30 JUNE 2019

UNAUDITED INTERIM RESULTS

The board of directors (the "Board") of South China Financial Holdings Limited (the "Company") presents the unaudited consolidated results of the Company and its subsidiaries (collectively, the "Group") for the six months ended 30 June 2019 (the "Period") together with the relevant comparative figures as follows:

CONDENSED CONSOLIDATED STATEMENT OF PROFIT OR LOSS

		Six Months ended 30 June
		2019		2018
		(Unaudited)	(Unaudited)
	Notes	HK$'000	HK$'000
CONTINUING OPERATIONS
Revenue	3,5	132,674		66,988
Fair value gain on investment properties		21,000		40,000
Impairment of loans and trade receivables, net		(3,584)	(1,433)
Fair value gain/(loss) on financial assets at fair value
through profit or loss, net		21,823		(98,418)
Fair value gain on derivative financial instruments		3,275		56
Other income		1,449		2,069
Other operating expenses		(133,999)	(112,146)
Profit/(loss) from operating activities		42,638		(102,884)
Finance costs	6	(9,575)	(8,120)
Profit/(loss) before tax from continuing operations	4	33,063		(111,004)
Income tax expenses	7	(2,820)	(550)
Profit/(loss) for the period from continuing operations		30,243		(111,554)
DISCONTINUING OPERATION
Loss for the period from a discontinuing operation		(5,078)	-
Profit/(loss) for the period		25,165		(111,554)

- 1 -

CONDENSED CONSOLIDATED STATEMENT OF PROFIT OR LOSS (Continued)
				Six Months ended 30 June
				2019		2018
				(Unaudited)	(Unaudited)
			Notes	HK$'000	HK$'000
Attributable to:
	Equity holders of the Company
		- For profit/(loss) from continuing operations		30,268		(111,554)
		- For loss from a discontinuing operation	9	(5,078)	-
	For profit/(loss) for the period		25,190		(111,554)
	Non-controlling interests		(25)	-
				25,165		(111,554)
Earnings/(loss) per share attributable to equity holders
	of the Company	10			(Restated)
Basic and diluted
	- For profit/(loss) for the period		HK8.3 cents	HK37.0 cents
	- For profit/(loss) from continuing operations		HK10.0 cents	HK37.0 cents

- 2 -

CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL POSITION
		As at	As at
		30 June	31 December
		2019		2018
		(Unaudited)	(Audited)
	Notes	HK$'000	HK$'000
NON-CURRENT ASSETS
Property, plant and equipment		2,970		3,591
Investments properties	11	550,000		529,000
Right-of-use assets		7,589		-
Intangible assets		10,368		10,916
Investments in associates		-	-
Equity investments designated at fair value through
other comprehensive income	17	32,270	30,520
Debt investments at fair value through
other comprehensive income	17	3,080	3,080
Other assets		9,038	7,514
Goodwill		89,948	89,948
Long term loans receivable	13	17,345	11,849
Long term prepayments and deposits		580	608
Total non-current assets		723,188		687,026
CURRENT ASSETS
Inventories		12,409		13,432
Financial assets at fair value through profit or loss	12,17	393,965		431,167
Loans receivable	13	287,958		285,428
Trade receivables	14	205,238		167,580
Contract assets		1,970		3,352
Prepayments, other receivables and other assets		50,277		41,348
Derivative financial instruments	17	495		541
Tax recoverable		378		227
Cash held on behalf of clients		534,004		541,617
Cash and bank balances		87,218		108,456
		1,573,912		1,593,148
Assets of a disposal group classified as held for sale	9	6,344		7,225
Total current assets		1,580,256		1,600,373

- 3 -

CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL POSITION (Continued)

		As at	As at
		30 June	31 December
		2019		2018
		(Unaudited)	(Audited)
	Notes	HK$'000	HK$'000
CURRENT LIABILITIES
Client deposits		662,706		485,171
Trade payables	14	21,728	170,473
Other payables and accruals		32,951	33,174
Derivative financial instruments		230	197
Interest-bearing bank and other borrowings		446,111	486,978
Tax payables		5,714	2,898
		1,169,440		1,178,891
Liabilities directly associated with the assets classified
as held for sale	9	7,130		6,605
Total current liabilities		1,176,570		1,185,496
NET CURRENT ASSETS		403,686		414,877
TOTAL ASSETS LESS CURRENT LIABILITIES		1,126,874		1,101,903
NON-CURRENT LIABILITIES
Interest-bearing bank and other borrowings		151,168		152,919
Deposits received		3,234		3,672
Deferred tax liabilities		31,210		30,952
		185,612		187,543
Net assets		941,262		914,360
EQUITY
Equity attributable to equity holders of the Company
Share capital	15	1,085,474		1,085,474
Reserves		(145,018)	(171,945)
		940,456		913,529
Non-controlling interests		806		831
Total equity		941,262		914,360

- 4 -

CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
		Attributable to equity holders of the Company
											Non-
		Share	Other	Accumulated			controlling	Total
		capital	reserves		losses	Total	interests	equity
		(Unaudited)	(Unaudited)		(Unaudited)	(Unaudited)	(Unaudited)	(Unaudited)
		HK$'000	HK$'000		HK$'000	HK$'000	HK$'000	HK$'000
At 1 January 2019	1,085,474		135,350		(307,295)	913,529		831		914,360
Profit/(loss) for the period	-	-	25,190		25,190		(25)	25,165
Other comprehensive income
	for the period	-	1,737			-	1,737		-	1,737
Total comprehensive income/
	(loss) for the period	-	1,737		25,190		26,927		(25)	26,902
Transfer of share options
	reserve upon the lapse of
	share options	-	(1,264)	1,264		-	-	-
At 30 June 2019	1,085,474		135,823			(280,841)	940,456		806		941,262
At 1 January 2018	1,085,474		148,313		(67,091)	1,166,696		-	1,166,696
First adoption of HKFRS 9 (note 2)	-	-	(1,313)	(1,313)	-	(1,313)
Adjusted balance at 1 January 2018	1,085,474		148,313		(68,404)	1,165,383		-	1,165,383
Loss for the period	-	-	(111,554)	(111,554)	-	(111,554)
Other comprehensive loss for
	the period	-	(3,608)		-	(3,608)	-	(3,608)
Total comprehensive loss for
	the period	-	(3,608)	(111,554)	(115,162)	-	(115,162)
Equity-settled share option
	arrangements	-	157			-	157		-	157
Transfer of share options reserve
	upon the lapse of share options	-	(859)	859		-	-	-
At 30 June 2018	1,085,474		144,003		(179,099)	1,050,378		-	1,050,378

- 5 -

CONDENSED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
			Six Months ended 30 June
			2019		2018
			(Unaudited)	(Unaudited)
		Note	HK$'000	HK$'000
Profit/(loss) for the period		25,165		(111,554)
Other comprehensive income/(loss) for the period	16	1,737		(3,608)
Total comprehensive income/(loss) for the period		26,902		(115,162)
Attributable to:
	Equity holders of the Company		26,927		(115,162)
	Non-controlling interests		(25)	-
			26,902		(115,162)

- 6 -

CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
		Six months ended 30 June
		2019		2018
		(Unaudited)	(Unaudited)
		HK$'000	HK$'000
Net cash flows from/(used in) operating activities	25,595		(111,806)
CASH FLOWS FROM INVESTING ACTIVITIES
Dividend income received from listed investments	6,064		6,648
Purchases of items of property, plant and equipment	-	(617)
Acquisition of subsidiaries	-	(46,174)
Increase in other assets	(1,524)	2,995
Net cash flows from/(used in) investing activities	4,540		(37,148)
CASH FLOWS FROM FINANCING ACTIVITIES
New bank loans	5,280,000		516,225
Repayment of bank loans	(5,312,921)	(474,101)
Principal portion of lease payments	(987)	-
Net cash flows from/(used in) financing activities	(33,908)	42,124
NET DECREASE IN CASH AND CASH EQUIVALENTS	(3,773)	(106,830)
Cash and cash equivalents at beginning of the period	32,634		168,659
Effect of foreign exchange rate changes, net	19		(936)
CASH AND CASH EQUIVALENTS AT END OF
THE PERIOD	28,880		60,893
ANALYSIS OF BALANCES OF CASH AND CASH EQUIVALENTS
Cash and bank balances	87,218		151,133
Bank overdrafts	(58,545)	(90,240)
Cash and bank balances attributable to a discontinuing operation	207		-
		28,880		60,893

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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

For the six months ended 30 June 2019

1. BASIS OF PREPARATION
   The unaudited condensed consolidated interim results of the Group and the unaudited condensed consolidated interim financial statements (the "interim financial statements") have been reviewed by the audit committee of the Company.
   The interim financial statements have been prepared in accordance with the applicable disclosure provisions of the Rules Governing the Listing of Securities on the Stock Exchange, including compliance with Hong Kong Accounting Standard (the "HKAS") 34, Interim Financial Reporting, issued by the Hong Kong Institute of Certified Public Accountants (the "HKICPA").
   These interim financial statements do not include all the information and disclosures required in annual financial statements, and should be read, where relevant, in conjunction with the 2018 annual financial statements of the Group.
   The financial information relating to the year ended 31 December 2018 that is included in the unaudited interim condensed consolidated statement of financial position as comparative information does not constitute the Company's statutory annual consolidated financial statements for that year but is derived from those financial statements. Further information relating to those statutory financial statements required to be disclosed in accordance with section 436 of the Hong Kong Companies Ordinance is as follow:
   The Company has delivered the financial statements for the year ended 31 December 2018 to the Registrar of Companies as required by section 662(3) of, and Part 3 of Schedule 6 to, the Hong Kong Companies Ordinance. The Company's auditors have reported on the financial statements for the year ended 31 December 2018. The auditor's report was unqualified, and did not contain a statement under sections 406(2), 407(2) or 407(3) of the Hong Kong Companies Ordinance.
2. CHANGES IN ACCOUNTING POLICIES
   The accounting policies adopted in the preparation of the interim condensed consolidated financial information are consistent with those applied in the preparation of the Group's annual consolidated financial statements for the year ended 31 December 2018, except for the adoption of the new and revised Hong Kong Financial Reporting Standards ("HKFRSs") effective as of 1 January 2019.

Amendments to HKFRS 9 HKFRS 16 Amendments to HKAS 19 Amendments to HKAS 28 HK(IFRIC)-Int 23

Amendments to HKFRS 3, HKFRS 11,   HKAS 12 and HKAS 23

Prepayment Features with Negative Compensation Leases

Plan Amendment, Curtailment or Settlement Long-term interests in Associates and Joint Ventures Uncertainty over Income Tax Treatments Annual Improvements 2015-2017 Cycle

Other than as explained below regarding the impact of HKFRS 16, the adoption of the above new and revised standards has had no significant financial effect on these interim financial statements.

HKFRS 16 replaces HKAS 17 Leases, HK(IFRIC)-Int4 Determining whether an Arrangement contains a Lease, HK(SIC)-Int15 Operating Leases - Incentives and HK(SIC)-Int27 Evaluating the Substance of Transactions Involving the Legal Form of a Lease. The standard sets out the principles for the recognition, measurement, presentation and disclosure of leases and requires lessees to account for all leases under a single on-balancesheet model. Lessor accounting under HKFRS 16 is substantially unchanged from HKAS 17. Lessors will continue to classify leases as either operating or finance leases using similar principles as in HKAS 17. Therefore, HKFRS 16 did not have any financial impact on leases where the Group is the lessor.

- 8 -

2. CHANGES IN ACCOUNTING POLICIES (Continued)

The Group adopted HKFRS 16 using the modified retrospective method of adoption with the date of initial application of 1 January 2019. Under this method, the standard is applied retrospectively with the cumulative effect of initial adoption as an adjustment to the opening balance of retained earnings at 1 January 2019, and the comparative information for 2018 was not restated and continues to be reported under HKAS 17.

New definition of a lease

Under HKFRS 16, a contract is, or contains a lease if the contract conveys a right to control the use of an identified asset for a period of time in exchange for consideration. Control is conveyed where the customer has both the right to obtain substantially all of the economic benefits from use of the identified asset and the right to direct the use of the identified asset. The Group elected to use the transition practical expedient allowing the standard to be applied only to contracts that were previously identified as leases applying HKAS 17 and HK(IFRIC)-Int 4 at the date of initial application. Contracts that were not identified as leases under HKAS 17 and HK(IFRIC)-Int 4 were not reassessed. Therefore, the definition of a lease under HKFRS 16 has been applied only to contracts entered into or changed on or after 1 January 2019.

At inception or on reassessment of a contract that contains a lease component, the Group allocates the consideration in the contract to each lease and non-lease component on the basis of their stand-alone prices.

As a lessee - Leases previously classified as operating leases Nature of the effect of adoption of HKFRS 16

The Group has lease contracts for office properties. As a lessee, the Group previously classified leases as either finance leases or operating leases based on the assessment of whether the lease transferred substantially all the rewards and risks of ownership of assets to the Group. Under HKFRS 16, the Group applies a single approach to recognise and measure right-of-use assets and lease liabilities for all leases, except for elective exemptions for short-term leases (elected by class of underlying asset). The Group has elected not to recognise right-of-use assets and lease liabilities for leases, that at the commencement date, have a lease term of 12 months or less. Instead, the Group recognises the lease payments associated with those leases as an expense on a straight-line basis over the lease term.

Impacts on transition

Lease liabilities at 1 January 2019 were recognised based on the present value of the remaining lease payments, discounted using the incremental borrowing rate at 1 January 2019 and included in interest-bearing bank and other borrowings.

The right-of-use assets were measured at the amount of the lease liability, adjusted by the amount of any prepaid or accrued lease payments relating to the lease recognised in the statement of financial position immediately before 1 January 2019. All these assets were assessed for any impairment based on HKAS 36 on that date. The Group elected to present the right-of-use assets separately in the statement of financial position.

The Group has used the following elective practical expedients when applying HKFRS 16 at 1 January 2019:

• Applied the short-termlease exemptions to leases with a lease term that ends within 12 months from the date of initial application
• Used hindsight in determining the lease term where the contract contains options to extend/terminate the lease

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3. REVENUE

An analysis of revenue is as follows:

		Six months ended 30 June
		2019		2018
		(Unaudited)	(Unaudited)
		HK$'000	HK$'000
Revenue from contracts with customers:
	Commission and brokerage income	17,171		24,161
	Rendering of services	15,622		13,801
	Handling fee income	1,199		1,392
	Media publications and financial public relation services*
	("Media Services")	20,931		18,188
	Sales of jewellery products	18,152		-
		73,075		57,542
Revenue from other sources:
	Profit/(loss) on the trading of securities, forex, bullion and
	future contracts, net	34,317		(19,232)
	Interest income from loans and trade receivables	10,631		13,589
	Interest income from forex and bullion contracts trading	230	286
	Interest income from banks and financial institutions	1,997	2,254
	Dividend income from listed investments	6,064	6,648
	Gross rental income	6,360	5,901
		59,599		9,446
		132,674		66,988

• Including advertising income, service income and circulation income

- 10 -

3. REVENUE (Continued)

Revenue from contracts with customers Disaggregated revenue information

For the period ended 30 June 2019

										Media
										publications
									and financial
				Corporate		Asset and		public
			advisory and		wealth		relation	Jewellery	Other
	Broking	underwriting	management		services	business	business	Total
	(Unaudited)		(Unaudited)		(Unaudited)		(Unaudited)	(Unaudited)	(Unaudited)	(Unaudited)
Type of goods or services	HK$'000		HK$'000		HK$'000		HK$'000	HK$'000	HK$'000	HK$'000
Commission and brokerage income	15,819			-	1,352		-	-	-	17,171
Corporate advisory fee income	-	14,916			-		-	-	-	14,916
Handling fee income	733		-	706		-	-	-	1,439
Sales of jewellery products	-		-		-		-	18,152	-	18,152
Other business income	-		-		-		-	-	466	466
Media publications and
financial public relation services*	-		-		-	20,931	-	-	20,931
Total revenue from contracts
with customers	16,552		14,916		2,058		20,931		18,152		466	73,075
Geographical markets
Hong Kong	16,552		6,554		1,352		20,931		-	466	45,855
Mainland China	-	2,949			-		-	18,152		-	21,101
Other countries	-	5,413		706			-	-	-	6,119
Total revenue from contracts
with customers	16,552		14,916		2,058		20,931		18,152		466	73,075
Timing of revenue recognition
Goods or services transferred at
a point in time	16,552			-	2,058		14,273		18,152		466	51,501
Services transferred over time	-	14,916			-	6,658		-	-	21,574
Total revenue from contracts
with customers	16,552		14,916		2,058		20,931		18,152		466	73,075

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3. REVENUE (Continued)

Revenue from contracts with customers (Continued) For the period ended 30 June 2018

												Media
											publications
											and financial
						Corporate		Asset and		public
						advisory and		wealth		relation					Other
		Broking		underwriting		management		services				business			Total
		(Unaudited)		(Unaudited)		(Unaudited)	(Unaudited)				(Unaudited)			(Unaudited)
Type of goods or services		HK$'000		HK$'000		HK$'000	HK$'000				HK$'000			HK$'000
Commission and brokerage income	22,316		-	1,845		-						-	24,161
Corporate advisory fee income		-	11,970		-		-						-	11,970
Handling fee income	864		-	20		-						-	884
Placement and underwriting services	301	1,530		-		-						-	1,831
Other business income		-		-		-		-	508	508
Media publications and
financial public relation services*		-		-		-	18,188						-	18,188
Total revenue from contracts with customers	23,481		13,500	1,865	18,188	508	57,542
Geographical markets
Hong Kong	23,481		10,380	1,865	18,188	508	54,422
Mainland China		-	1,120		-		-						-	1,120
Other countries		-	2,000		-		-						-	2,000
Total revenue from contracts with customers	23,481		13,500	1,865	18,188	508	57,542
Timing of revenue recognition
Goods or services transferred at
a point in time	23,481		1,530	1,865	10,807	508	38,191
Services transferred over time		-	11,970		-	7,381						-	19,351
Total revenue from contracts with customers		23,481			13,500	1,865	18,188	508	57,542
4. PROFIT/(LOSS) BEFORE TAX FROM CONTINUING OPERATIONS
												Six months ended 30 June
														2019				2018
												(Unaudited)	(Unaudited)
												HK$'000			HK$'000
The Group's profit/(loss) before tax from continuing operations
is arrived at after charging:
Cost of services provided														13,648				15,371
Depreciation and amortisation														1,016				875
Depreciation of right-of-use assets														987						-
Cost of inventories sold														13,653						-
Cost of media publications and financial public relation services							15,684				14,359
Interest expenses for short-terminterest-bearing bank and other borrowings				2,636				3,389

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5. REVENUE AND SEGMENTAL INFORMATION

The Group manages its business by divisions, which are organised by business lines (products and services). In a manner consistent with the way in which information is reported internally to the Group's most senior executive management for the purposes of resource allocation and performance assessment, the Group has identified 8 (six months ended 30 June 2018: 8) reportable segments as summarised below.

				Six months ended 30 June
		2019		2018		2019	2018
							Profit/(loss)	Profit/(loss)
						from operating	from operating
		Revenue	Revenue		activities	activities
		HK$'000	HK$'000		HK$'000	HK$'000
Broking	16,755	23,486	(19,462)	(9,439)
Trading and investment	40,617	(12,112)	58,991	(115,228)
Margin financing and money lending	12,406		15,623		(1,850)	6,842
Corporate advisory and underwriting	14,916		13,499		1,135	(557)
Assets and wealth management	2,071		1,895		(3,423)	(8,828)
Property investment	6,360		5,901		26,947		45,758
Media publication and financial
	public relation services
	("Media Services")	20,931		18,188		(19,171)	(15,511)
Jewellery and other business	18,618		508		(529)	(5,921)
Consolidated	132,674		66,988	42,638		(102,884)

Over 75% of the Group's revenue and contribution to profit/(loss) from operating activities were derived from operations in Hong Kong.

1. FINANCE COSTS
   Finance costs mainly represent interest on a mortgage loan secured by the Group's investment properties.
2. INCOME TAX
   Hong Kong profits tax has been provided in this current Period at the rate of 16.5% on the estimated assessable profits arising in Hong Kong for the underprovision of income tax in the prior years. During the corresponding period in 2018, no provision for the Hong Kong profits tax has been made as the Group either had no estimated assessable profits or had available tax losses carried forward to offset the assessable profits arising in Hong Kong. Taxes on profits assessable elsewhere have been calculated at the rates of tax prevailing in the jurisdictions in which the Group operates, based on existing legislation, practices and interpretations in respect thereof.
3. INTERIM DIVIDEND
   The Board resolved not to declare the payment of an interim dividend for the Period (six months ended 30 June 2018: Nil).
4. DISCONTINUING OPERATION
   Year Blossom Limited, a wholly-owned subsidiary of the Company, together with its subsidiaries (the "Disposal Group") were principally engaged in food and beverage operations in Nanjing, the PRC. During the year ended 31 December 2018, the Group had decided to cease its food and beverage operations business after periodic performance assessment for better allocation of the Group's resources. The Disposal Group was classified as a disposal group held for sale and as a discontinuing operation.
   On 1 February 2019, the Company entered into a conditional sale and purchase agreement with South China Industries (BVI) Limited, a wholly-owned subsidiary of South China Holdings Company Limited, pursuant to which the Company agreed to dispose of the entire issued share capital of Year Blossom Limited. As at 30 June 2019, the internal restructuring of the Disposal Group is in the process.

- 13 -

9. DISCONTINUING OPERATION (Continued)

The result of the Disposal Group for the Period are presented below:

	Six months ended 30 June
	2019		2018
	(Unaudited)	(Unaudited)
	HK$'000	HK$'000
Revenue	4,554		-
Cost of inventories consumed	(2,314)	-
Gross profit	2,240		-
Other operation expenses	(7,318)	-
Loss before tax from the discontinuing operation	(5,078)	-
Income tax	-	-
Loss for the period from the discontinuing operation	(5,078)	-

The major classes of assets and liabilities of the Disposal Group classified as held for sale as at 30 June 2019 and

31 December 2018 are as follows:

	30 June	31 December
	2019	2018
	(Unaudited)	(Audited)
	HK$'000	HK$'000
Assets
Property, plant and equipment	3,989	4,716
Inventories	213	236
Trade receivables	-	43
Prepayments, other receivables and other assets	1,935	2,057
Cash and bank balances	207	173
Assets classified as held for sale	6,344		7,225
Liabilities
Trade payables	(2,025)	(2,663)
Other payables and accruals	(5,105)	(3,942)
Liabilities directly associated with the assets classified as held for sale	(7,130)	(6,605)
Net assets/(liabilities) directly associated with the Disposal Group	(786)	620

The calculation of basic and diluted loss per share from the discontinuing operation are based on:

			Six months ended 30 June
		2019		2018
			(Unaudited)	(Unaudited)
Loss attributable to ordinary equity holders of the Company from
	the discontinuing operation	(HK$5,078,000)	-
Weighted average number of ordinary shares in issue during the Period
	used in the basic and diluted loss per share calculation	301,277,070		-
Loss per share
	Basic and diluted, from the discontinuing operation		(HK1.7 cents)	-

- 14 -

1. EARNINGS/(LOSS) PER SHARE ATTRIBUTABLE TO EQUITY HOLDERS OF THE COMPANY
   The calculation of the basic earnings/(loss) per share amounts is based on the profit for the Period attributable to equity holders of the Company of HK$25,190,000 (six months ended 30 June 2018: loss of HK$111,554,000) and the weighted average number of 301,277,070 (six months ended 30 June 2018: 301,434,007 (Restated)) ordinary shares in issue during the Period.
   The calculation of the basic earnings/(loss) per share amounts from continuing operations is based on the profit for the year from continuing operations attributable to equity holders of the Company of HK$30,268,000 (six months ended 30 June 2018: loss of HK$111,554,000) and the weighted average number of 301,277,070 (six months ended 30 June 2018: 301,434,007 (Restated)) ordinary shares in issue during the Period.
   The basic and diluted earnings per share amounts for the six months ended 30 June 2018 had been adjusted to reflect the share consolidation of the Company during the year ended 31 December 2018.
   No adjustment has been made to the basic earnings/(loss) per share amount presented for the six months ended 30 June 2019 and 2018 in respect of a dilution as the impact of the share options outstanding during the periods had no dilutive effect on the basic earnings/(loss) per share amount presented.
2. INVESTMENT PROPERTIES

	30 June	31 December
	2019	2018
	(Unaudited)	(Audited)
	HK$'000	HK$'000
Carrying amount at 1 January	529,000	480,000
Net gain from a fair value adjustment	21,000	49,000
Carrying amount	550,000		529,000

On 30 June 2019, the Group's investment properties were revalued by Ravia Global Appraisal Advisory Limited at HK$550,000,000 (31 December 2018: HK$529,000,000). The fair value of investment properties is determined using the market comparison approach by reference to recent sales prices of comparable properties on a price per square foot basis. The investment properties are leased to third parties under operating leases.

The Group's investment properties are situated in Hong Kong. The investment properties with a carrying value of HK$550,000,000 (31 December 2018: HK$529,000,000) were pledged to secure banking facilities granted to the Group.

Details of the Group's investment properties are as follows:
Location	Existing use
26th Floor, Tower One, Lippo Centre, 89 Queensway, Admiralty, Hong Kong	Office building

12. FINANCIAL ASSETS AT FAIR VALUE THROUGH PROFIT OR LOSS

Financial assets at fair value through profit or loss represented listed equity investments, mainly in Hong Kong, at market value.

- 15 -

13. LOANS RECEIVABLE

The loans receivable at the end of the reporting period are analysed by the remaining period to the contractual maturity dates as follows:

		30 June	31 December
		2019	2018
		(Unaudited)	(Audited)
		HK$'000	HK$'000
Repayable:
	On demand	255,169	265,800
	Within 3 months	3,683	15,954
	3 months to 1 year	29,106	14,390
	1 year to 5 years	17,345	1,133
		305,303		297,277
Portion classified as current assets	(287,958)	(285,428)
Portion classified as non-current assets	17,345		11,849

1. TRADE RECEIVABLES AND PAYABLES
   The Group allows a credit period up to the respective settlement dates of securities, forex, bullion and commodities transactions (normally two business days after the respective trade dates for Hong Kong stocks) or a credit period mutually agreed between the contracting parties. The credit period for Media Services is generally one month, extending up to four months for major customers. The credit period for corporate advisory services is generally within two weeks. The Group's trading terms with its jewellery retail customers are mainly on cash and credit card settlement.
   All of the Group's trade receivables and payables are aged within 90 days.
2. SHARE CAPITAL

	30 June	31 December
	2019	2018
	(Unaudited)	(Audited)
	HK$'000	HK$'000
Issued and fully paid:
301,277,070 (2018: 301,277,070) ordinary shares	1,085,474		1,085,474

On 8 November 2018, the Company implemented the share consolidation on the basis that every fifty issued shares in the share capital of the Company were consolidated into one consolidated share in the share capital of the Company (the "Share Consolidation"). The issued ordinary shares of the Company were decreased from 15,063,853,500 shares to 301,277,070 shares as a result of the Share Consolidation.

16. OTHER COMPREHENSIVE INCOME/(LOSS) FOR THE PERIOD
	Six Months ended 30 June
	2019		2018
	(Unaudited)	(Unaudited)
	HK$'000	HK$'000
Change in fair value of equity investments designated at fair value
through other comprehensive income	1,750		(2,520)
Exchange differences on translation of foreign operations	(13)	(1,088)
	1,737		(3,608)

- 16 -

17. FAIR VALUE AND FAIR VALUE HIERARCHY OF FINANCIAL INSTRUMENTS

The fair values of equity investments and derivative financial instruments are based on quoted market prices. The fair value of debt investments at fair value through other comprehensive income in which represented club debentures have been estimated based on quoted market prices.

Fair value hierarchy

The following tables illustrate the fair value measurement hierarchy of the Group's financial instruments:

As at 30 June 2019

						Fair value measurement using
			Quoted prices	Significant		Significant
			in active	observable		unobservable
			markets	inputs		inputs
			(Level 1)	(Level 2)		(Level 3)	Total
			(Unaudited)	(Unaudited)		(Unaudited)	(Unaudited)
			HK$'000	HK$'000		HK$'000	HK$'000
Assets measured at fair value:
Equity investments designated at
	fair value through other
	comprehensive income	32,270			-		-	32,270
Debt investments at fair value through
	other comprehensive income	-	3,080		-	3,080
Financial assets at fair value through
	profit or loss	393,965			-		-	393,965
Derivative financial instruments	-	495		-	495
			426,235			3,575		-	429,810
Liabilities measured at fair value:
Derivative financial instruments		-		230		-	230
As at 31 December 2018
						Fair value measurement using
			Quoted prices	Significant		Significant
			in active	observable		unobservable
			markets	inputs		inputs
			(Level 1)	(Level 2)		(Level 3)	Total
			(Audited)	(Audited)		(Audited)	(Audited)
			HK$'000	HK$'000		HK$'000	HK$'000
Assets measured at fair value:
Equity investments designated at
	fair value through other
	comprehensive income	30,520			-		-	30,520
Debt investments at fair value through
	other comprehensive income	-	3,080		-	3,080
Financial assets at fair value through
	profit or loss	431,167			-		-	431,167
Derivative financial instruments	-	541		-	541
			461,687	3,621		-	465,308
Liabilities measured at fair value:
Derivative financial instruments	-	197		-	197

- 17 -

MANAGEMENT DISCUSSION AND ANALYSIS

FINANCIAL SUMMARY

The Group has recorded a turnaround result for the Period. The aggregate revenue of the Group increased from HK$67.0 million for the Period in 2018 by 98% to HK$132.7 million for the same period in 2019 and a profit of HK$25.2 million for the Period as opposed to a loss of HK$111.6 million for the corresponding period in 2018.

BUSINESS REVIEW

Brokerage

At the beginning of 2019, global market sentiment improved as a result of the temporary relief of tension of the trade war between the United States ("US") and China and the anticipation a of return to quantitative easing monetary policies around the world. The turning point came in May when the US suddenly accused China of reneging already agreed upon deals and raised the tariff on $200 billion worth of Chinese goods from 10% to 25%. Uncertainties were fueled over the trade negotiations between the U.S. and China again and numerous other geopolitical tensions in both developed and emerging markets. Ongoing demonstrations in Hong Kong have also contributed to the volatile financial landscape, with market turnover plummeting since May and most investors adopting a wait-and-see attitude.

The average daily market turnover for the first half year of 2019 decreased by 23% to HK$98 billion from HK$127 billion for the same period last year. Some of the Group marketing events were cancelled or postponed due to a series of protests. The brokerage commission income decreased from HK$23.5 million to HK$16.8 million and the operating loss of this business segment increased from HK$9.4 million to HK$19.5 million.

Margin financing and money lending

Interest income recorded for the Period was HK$12.4 million compared with HK$15.6 million for the same period last year. The momentum of the Hong Kong stock market faded out since May and funding was withdrawn from the financial market. The margin loan size was reduced from HK$264.2 million at 31 December 2018 to HK$254.3 million at 30 June 2019. In addition, the monthly average Hong Kong Interbank Borrowing Rates ("HIBOR") increased from 1.04%p.a. for the Period in 2018 by 61% to 1.67%p.a. for the same period in 2019. As a result, the operating loss of this segment was HK$1.9 million of the Period as opposed to operating profits of HK$6.8 million in the last period.

Corporate advisory and underwriting

During the first half of 2018, the market was dominated by small and medium size Initial Public Offers ("IPO"). The total number of newly listed companies for the first six months in 2018 was 108 while it was reduced to 84 for the same corresponding period in 2019. Conversely, the total fund-raising amount was HK$52 billion for the period ended 30 June 2018 and increased to HK$70 billion for the same corresponding period in 2019. The average fund-raising size per IPO increased from HK$481 million for the period ended 30 June 2018 by 73% to HK$833 million for the corresponding period in 2019.

- 18 -

Our competitive offering worked well in the small-to-medium ("SME") size market with 2 IPO deals completed for the first half year of 2018. In 2019, the bribery scandal of the Listing Division of Hong Kong Exchange and Clearing Limited ("HKEx") 2019, the US-China Trade War and the series of demonstrations in Hong Kong has put a curb on investors' appetites in SME IPO deals. Faced with such a challenging investment environment, we were only able to successfully complete 1 IPO deal for the same corresponding period in 2019. In order to increase and improve our revenue stream under such unfavorable market sentiments, we are also actively soliciting more private equity and pre-IPO fund raising deals.

Although the business environment was extremely tough during the Period, our Corporate advisory and underwriting departments were able to improve their results during the Period. Our revenue in this business segment has slightly increased to HK$14.9 million as compared with HK$13.5 million for the same period last year. The operating loss for the six months period ended 30 June 2018 was HK$0.6 million as opposed to the operating profit of HK$1.1 million for the corresponding period in 2019. We have a strong deal flows pipeline and, provided investors' risks appetite does not deteriorate further, we anticipate our submitted IPO applications to HKEx will crystalize into revenue in the second half of 2019.

Asset and wealth management

For the six-months ended 30 June 2019, this business segment recorded revenue of HK$2.1 million as opposed to HK$1.9 million for the same period last year and reduced operating loss from HK$8.8 million to HK$3.4 million. We have actively developed various initiatives to build up the business. The Asset Management team was appointed by a Korean bank to manage their private pre-IPO fund set-up in Hong Kong and the Wealth Management team has extended its product range to bonds during the Period.

Although the Group continued to invest in key strategic initiatives for future growth, we will maintain a prudent approach to cost management at all times.

Media and financial public relations

South China Media is one of the top players of financial and lifestyle media brands magazines in Hong Kong and provides a broad spectrum of media related services from print and digital media platforms to event and marketing services.

The business environment for media and entertainment sector remains challenging, particularly for the traditional print media. The revenue and operating loss of the media business segment were HK$20.9 million and HK$19.2 million respectively for the current Period. During the Period, the Media Group continued to focus on investing on the development of its digital offerings and products in order to transform into a multi- media company and provide services to clients through a variety of channels.

- 19 -

Trading and investment

The Group's investment portfolio, which was mainly booked under financial assets at fair value through profit or loss, decreased from HK$431.2 million as at 31 December 2018 to HK$394.0 million as at 30 June

2019. The major investments holding and its fair value gains or losses are listed below:

		Carrying
		amount	Percentage of		Fair value
		as at	shareholding		gain/(loss)
Stock code	Name of security	30 June 2019	interest	during the year
		HK$'000			HK$'000
670	China Eastern Airlines Corporation	100,650	0.151	4,764
	Limited
3988	Bank of China Limited	72,564	0.007	(4,581)
1097	i-CABLE Communications Limited	45,924	6.502	(541)
1033	Sinopec Oilfield Service Corporation	34,452	0.240	15,098
1618	Metallurgical Corporation of China Ltd.	28,568	0.066	2,870
Others		111,807		4,213
		393,965		21,823

The Hang Seng Index ("HSI") reached its record high of 33,154 in January 2018 and then dropped to 28,955 at 31 December 2018. During the first four months of 2019, HSI picked up its uptrend again and reached 30,157 in April but then the sudden halt on the trade negotiation between US and China has driven the HSI down to 28,543 as at 30 June 2019. The Group grasped the opportunity of market rebound during the Period and recognized a gain of HK$59.0 million from its trading and investment segment as opposed to the loss of HK$115.2 million for the same period last year. In addition, there was a fair value gain on financial assets for the Period amounted to HK$21.8 million as compared with the fair value loss of HK$98.4 million for the same period in 2018.

Property investment

The price of commercial properties remained strong in the first half year of 2019. A revaluation gain of HK$21 million, representing 4% of the fair value of our investment property at 31 December 2018, was recorded for the Period. The fair value of the investment properties increased from HK$529 million at 31 December 2018 to HK$550 million at the end of the Period. Gross rental income for the Period also increased by 8.5% to HK$6.4 million from HK$5.9 million for last period.

LIQUIDITY AND FINANCIAL RESOURCES

The Group had obtained short term credit facilities which were reviewed annually and a long term mortgage loan from a bank. The banking facilities for the share margin finance operations were secured by the securities of our margin clients and the Group. The outstanding credit facilities were guaranteed by the Company. The Group monitors capital using a gearing ratio, which is net debt divided by capital plus net debt. Net debt includes interest-bearing bank borrowings, less cash and bank balances. Capital represents total equity. The gearing ratio as at 30 June 2019 was approximately 34.6% (31 December 2018: 36.8%). The Group had a cash balance of HK$87.2 million at the end of the Period, a decrease of 19.6% from the end of 2018. The Group had sufficient working capital base to meet its operational needs.

- 20 -

CAPITAL STRUCTURE

There was no material change in Group's capital structure during the Period as compared to the most recent published annual report.

Use of proceeds update

As disclosed in the 2016 Annual Report dated 28 March 2017, the unutilized net proceeds from rights issue completed on 11 August 2016 amounted to HK$391.2 million as at 28 February 2017, of which (i) approximately HK$280 million was intended to be used to set up a securities joint venture in mainland China, (ii) HK$87.2 million earmarked for use towards the lending business, and (iii) HK$24 million for use as seed capital in fund products by the Company and the costs incidental to setting up of fund products.

The Group has continued to use the unutilized funds according to the revised intended use. As at 30 June 2018, the unutilized net proceeds have been reduced to HK$302.0 million, of which (a) the amount of HK$280 million was designated for setting up of a securities joint venture in China, and (b) HK$22.0 million towards asset management related business. During the reporting period, the Company has actively identified parties for the purpose of establishing a securities joint venture in mainland China, but no such initial negotiations came to fruition. The Company shall continue to actively seek appropriate partners but believes that the process is unlikely to complete in the imminent future.

Consistent with the long term goal of supporting the sustainable and healthy development of the Company's principal operating activities, the Company follows the prevailing practice and continues to apply the following capital management and interim deployment strategies in respect of the abovementioned unutilized proceeds of approximately HK$302.0 million, pending the identification and conclusion of a securities joint venture and subject to the progress business and the launch of the fund products under asset management business:

1. used as standby capital to support the securities brokerage business, the securities financing business and lending business when needed; and
2. for better effectiveness and returns in respect of the Company's capital management, and to improve cash flow management, the Company shall adopt a treasury management model that may involve (but shall not be limited to) repayment of revolving bank loans, holding fixed income instruments, high grade equity instruments and other financial investments.

PLEDGES OF ASSETS

As at 30 June 2019, the Group's inventories, investment properties and listed securities held in trading and investment portfolio were pledged to banks for banking facilities.

CONTINGENT LIABILITIES AND COMMITMENTS

As at 30 June 2019, the Group had no material contingent liabilities and commitments.

- 21 -

EVENT AFTER THE REPORTING PERIOD

On 3 July 2019, the Company (i) proposed a rights issue on the basis of three rights shares for every two existing shares in issue at a subscription price of HK$0.42 per rights share to raise approximately HK$189.8 million (before expenses) (the "Rights Issue"); and (ii) entered into the underwriting agreement (the "Underwriting Agreement") with Uni-Spark Investments Limited (the "Underwriter"). Pursuant to the Underwriting Agreement, the Underwriter has conditionally agreed to fully underwrite all the rights shares other than those agreed to be taken up by Mr. Ng Hung Sang ("Mr. Ng") (the Chairman of the Board, an Executive Director and substantial shareholder of the Company and the beneficial owner of the entire interests in the Underwriter) and his close associates (namely (i) the Underwriter; (ii) Fung Shing Group Limited; (iii) Parkfield Holdings Limited; and (iv) Ronastar Investments Limited) and Mr. Ng Yuk Yeung Paul, the son of Mr. Ng pursuant to their respective irrevocable undertakings. Details of the Rights Issue and the Underwriting Agreement were set out in the circular of the Company dated 2 August 2019.

An extraordinary general meeting of the Company was held on 23 August 2019 (the "EGM") to pass the resolutions for among others, the Rights Issue, the Underwriting Agreement and the whitewash waiver. As the Rights Issue was not approved by the independent shareholders at the EGM, the Underwriting Agreement will not become unconditional and the Rights Issue will not proceed.

EMPLOYEES

As at 30 June 2019, the total number of employees of the Group was 316 (six months ended 30 June 2018: 274). Employees' costs (including directors' emoluments) amounted to approximately HK$63.9 million for the Period (six months ended 30 June 2018: approximately HK$57.3 million). The changes were mainly attributable to the combined effect of the acquisition of Jewellery business completed in September 2018 and the full period costs incurred for Lifestyle Group which was acquired in March 2018.

In addition to salary, other fringe benefits such as medical subsidies, life insurance, provident fund and subsidized external training are offered to employees. Continuous professional training will continue to be arranged for those staff who are registered with the Securities and Futures Commission. Performance of the employees is normally reviewed on an annual basis with adjustment compatible to the market. Individual employee may also receive a discretionary bonus at the end of each year based on performance. Selected employees may also be granted share option and share award under the share option scheme and share award scheme respectively adopted by the Company.

Prospects

Due to the US-China Trade War and the unstable political environment in Hong Kong, the financial market witnessed significant uncertainty and volatility. Most of investors are hesitant in making further investments and the stock market turnover remains at a relatively low level. The global economy is also under pressure due to the trade and political tensions among the US and other countries as well as an imminent recession in certain geographies. It is the general expectation in various countries that the equities market will be relatively choppy without a clear direction in the near future.

- 22 -

On the other hand, the anticipation of a return to a low interest rate environment has triggered a high demand for fixed income products. The Group has launched our bond financing business in the second quarter this year, and will continue to do marketing and promotion campaigns for this new product to eligible high net worth clients. In addition, the Group noted an upward trend of futures and options trading from its existing clients due to the volatility of the stock market. In order to grasp this upward trend, the Group keeps on organizing seminars both on-line and off-line to educate both existing and potential clients the value of various trading strategies of futures and options so as to compensate the decrease of revenue caused by low turnover in stock market.

In order to establish the Group's brand name and network in the PRC, the Group has signed a memorandum of understanding with a state-owned futures company and is discussing co-operation projects with a radio station in the Great Bay Area ("GBA"). These business alliances are stepping stones for the Group to expand the PRC clientele. Leveraging on the recent technology advancement, a new non-face-to-face account opening mobile application will be launched to allow the clients in the PRC to open accounts with the Group remotely in a regulatory compliant way. Meanwhile, the Group is going to organise seminars and events in the PRC, particularly in the GBA so as to expand its clientele and increase the source of revenue.

The Group aims to grow its loan book in order to generate more bread and butter revenue from interest income. Despite the local and global market environment, we remain watchful for opportunities in corporate finance deals and will continue to develop our business pipeline.

The Group is in discussion with various business partners to establish a range of Private Equity Funds. The aim, aside from generating additional revenue through management fees and AUM in our Asset Management business, is to generate more investment banking related businesses by being able to leverage deals and investors from the private equity funds. The Group believes that this will create more synergies and opportunities between the two business units in the long term.

The Media Group will continue to act as the strategic media partner to select clients and continue to provide total media solutions by utilizing our skills and technology in events management, print, digital and multimedia offerings. Furthermore, we will continue to reinforce the elements of the GBA, the Belt and Road Initiative, Green and Corporate Social Responsibility into our business. By leveraging the resource advantages of South China Finance and South China Media team, our Financial Public Relations team is dedicated to providing tailor-made, comprehensive and integrated public relations as well as marketing services to our corporate clients at different development stages.

With a proud history of more than 30 years and its reputable brand name built in Hong Kong, we believe our strategies will be realized and deliver long term shareholder value in the future.

INTERIM DIVIDEND

The Board resolved not to declare the payment of an interim dividend for the Period (six months ended 30 June 2018: Nil).

- 23 -

DIRECTORS' AND CHIEF EXECUTIVES' INTERESTS AND SHORT POSITIONS IN SHARES, UNDERLYING SHARES AND DEBENTURES

As at 30 June 2019, the interests and short positions of the Directors and chief executives 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, Chapter 571 of the laws of Hong Kong (the "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 for Securities Transactions by Directors of Listed Issuers (the "Model Code") as set out in Appendix 10 to the Rules Governing the Listing of Securities on the Stock Exchange (the "Listing Rules") were as follows:

Long positions in ordinary shares of the Company

			Number of ordinary shares held		Approximate
							percentage of
							total interests
			Personal	Family	Corporate	Total	to total
Name of Director	Capacity	interests	interests	interests	interests	issued shares
Mr. Ng Hung Sang	Beneficial owner/	11,133,264	-	77,328,343	88,461,607	29.36%
("Mr. Ng")	Interest of			(Note)
		controlled
		corporations
Ms. Cheung Choi Ngor	Beneficial owner	12,300,311	-	-	12,300,311	4.08%
Hon. Raymond Arthur	Interest of spouse	-	53,000	-	53,000	0.02%
William Sears, Q.C.

Note:

The 77,328,343 shares of the Company held by Mr. Ng through controlled corporations included 23,526,030 shares held by Fung Shing Group Limited ("Fung Shing"), 44,623,680 shares held by Parkfield Holdings Limited ("Parkfield"), 1,999,872 shares held by Ronastar Investments Limited ("Ronastar") and 7,178,761 shares held by Uni-Spark Investments Limited ("Uni-Spark"). Fung Shing, Parkfield and Ronastar were directly wholly-owned by Mr. Ng. Uni-Spark was indirect wholly-owned by Mr. Ng.

Save as disclosed above, as at 30 June 2019, none of the Directors or chief executive of the Company had any interest or short position in any shares, underlying shares or debentures of the Company or any associated corporations (within the meaning of Part XV of the SFO) which was required to be (i) notified to the Company and the Stock Exchange pursuant to Divisions 7 and 8 of Part XV of the SFO (including the interests and short positions in which they were deemed or taken to have under such provisions of the SFO); or (ii) recorded in the register required to be kept by the Company under section 352 of the SFO; or (iii) notified to the Company and the Stock Exchange pursuant to the Model Code.

- 24 -

SUBSTANTIAL SHAREHOLDERS' AND OTHER PERSONS' INTERESTS AND SHORT POSITIONS IN SHARES AND UNDERLYING SHARES

As at 30 June 2019, substantial shareholders and other persons (other than Directors or chief executive of the Company) who had interests or short positions in the shares or underlying shares of the Company which would fall to be disclosed to the Company under the provisions of Divisions 2 and 3 of Part XV of the SFO, or which were recorded in the register required to be kept by the Company under section 336 of the SFO were as follow:

Long position in the ordinary shares

		Number of ordinary shares held		Approximate
						percentage of
						total interests
		Beneficial	Family	Corporate	Total	to total issued
Name of Shareholder	Capacity	interests	interests	interests	interests	shares
Ms. Ng Lai King Pamela	Interest of spouse	-	88,461,607	-	88,461,607	29.36%
			(Note 1)
Fung Shing Group Limited	Beneficial owner	-	-	23,526,030	23,526,030	7.81%
("Fung Shing")				(Note 2)
Parkfield Holdings Limited	Beneficial owner	-	-	44,623,680	44,623,680	14.81%
("Parkfield")				(Note 3)

Notes:

1. Ms. Ng Lai King Pamela is the spouse of Mr. Ng. By virtue of the SFO, Ms. Ng Lai King Pamela is deemed to be interested in the 88,461,607 shares which Mr. Ng is interested in.
2. Fung Shing is wholly-owned by Mr. Ng.
3. Parkfield is wholly-owned by Mr. Ng.

Save as disclosed above, as at 30 June 2019, the Company was not notified by any persons (other than Directors or chief executive of the Company as discussed above) who had interests or short positions in the shares or underlying shares of the Company which would fall to be disclosed to the Company under the provisions of Divisions 2 and 3 of Part XV of the SFO, or which were recorded in the register required to be kept by the Company under section 336 of the SFO.

- 25 -

EMPLOYEES' SHARE AWARD SCHEME

On 10 June 2015, the Company adopted the Share Award Scheme whereby the Company may grant share awards to selected employees in recognition of their contributions to the Group and as incentive to retain them to support the operations and ongoing development of the Group and attract suitable personnel for the Group's further development. Pursuant to the terms and the conditions of the Share Award Scheme, the Company shall settle a sum up to and not exceeding HK$20 million for the purchase of shares of the Company and/or other shares listed on the Main Board or GEM of the Stock Exchange from market. Such shares shall form part of the capital of the trust fund set up for the Share Award Scheme. The Board may, from time to time, select employees for participation in the Share Award Scheme and cause to be paid an amount to the trustee from the Company's resources for the purpose of purchase of shares as referred to in the above.

No share award has been granted to the employees of the Company during the Period.

SHARE OPTION SCHEME

The Company adopted a share option scheme in June 2012 (the "Scheme") for the purpose of providing incentives and rewards to eligible participants, who contribute to success of the Group's operations, and retaining such participants for their continuing support to the Group. Particulars and movements of the outstanding share options granted under the Scheme during the Period were as follows:

Number of share options

Date of

Outstanding

Outstanding

as at

Granted

Exercised

Lapsed

as at

grant of

Exercise

Exercise

Name or category

1 January

during the

during the

during the

30 June

share

period of

price per

of participant

2019

Period

Period

Period

2019

options

share options

share

HK$

Employees

207,177

-

-

(207,177)

-

09/06/2015

09/06/2017-

9.750

08/06/2019

207,180

-

-

(51,795)

155,385

09/06/2015

09/06/2018-

9.750

08/06/2020

Total

414,357

-

-

(258,972)

155,385

Notes:

1. All share options granted are subject to a vesting period and becoming exercisable in the following manner:

From the date of grant of share options	Exercisable percentage
Within 12 months	Nil
13th-36th month	331/3%
25th-48th month	331/3%
37th-60th month	331/3%

The unexercised share options of each exercise period will lapse at the end of the respective exercise periods.

1. The exercise price of the share option is subject to adjustment in case of rights issues, or other alteration in the capital structure of the Company.

- 26 -

PURCHASE, SALE OR REDEMPTION OF LISTED SECURITIES OF THE COMPANY

During the Period, neither the Company nor any of its subsidiaries purchased, sold or redeemed any of the Company's listed securities.

CHANGES TO INFORMATION IN RESPECT OF DIRECTORS

In accordance with Rule 13.51B(1) of the Listing Rules, the changes to information required to be disclosed pursuant to paragraphs (a) to (e) and (g) of Rule 13.51(2) of the Listing Rules during the course of the Directors' terms of office for the period from date of publication of the Company's latest annual report up to the date of this interim report is set out below:

Ms. Ng Yuk Mui Jessica has been appointed as non-executive director of i-Cable Communications Limited, a company whose shares listed on the Main Board of the Stock Exchange with effect from 2 July 2019.

CORPORATE GOVERNANCE CODE

The Company had complied with all the code provisions as set out in the Corporate Governance Code (the "CG Code") contained in Appendix 14 to the Listing Rules except that (i) Mr. Ng Hung Sang, an Executive Director and the Chairman of the Board of the Company and Ms. Cheung Choi Ngor, an Executive Director and Vice-Chairman of the Board of the Company were unable to attend the annual general meeting of the Company held on 18 June 2019 (the "2019 AGM") which deviated from code provision E.1.2 of the CG Code;

1. Hon. Raymond Arthur William Sears, Q.C., an Independent Non-executive Director of the Company was unable to attend the 2019 AGM which deviated from code provision A.6.7 of the CG Code as they had other business engagements.

MODEL CODE FOR SECURITIES TRANSACTIONS

The Company has adopted the Model Code as its code of conduct regarding the directors' securities transactions. In addition, the Board has established similar guidelines for relevant employees who are likely to possess inside information in relation to the Group or its securities.

In response to the Company's specific enquiry, all Directors confirmed that they have complied with the required standard set out in the Model Code regarding securities transactions by Directors throughout the Period.

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AUDIT COMMITTEE

The Company has established an Audit Committee with written terms of reference in compliance with the Listing Rules. The Audit Committee presently comprises three Independent Non-executive Directors, namely Mr. Tung Woon Cheung Eric (Chairman of the Audit Committee), Hon. Raymond Arthur William Sears, Q.C. and Mrs. Tse Wong Siu Yin Elizabeth.

The Group's unaudited consolidated results for the Period have been reviewed by the Audit Committee. The audit committee was of the opinion that the preparation of such interim results complied with the applicable accounting standards and requirements and that adequate disclosures were made.

By Order of the Board

South China Financial Holdings Limited

南華金融控股有限公司

Ng Hung Sang

Chairman and Executive Director

Hong Kong, 27 August 2019

As at the date of this report, the Directors of the Company are (1) Mr. Ng Hung Sang, Ms. Cheung Choi Ngor and Ms. Ng Yuk Mui Jessica as executive directors; and (2) Mrs. Tse Wong Siu Yin Elizabeth, Hon. Raymond Arthur William Sears, Q.C. and Mr. Tung Woon Cheung Eric as independent non- executive directors.

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