# Provision of money lending services

During the nine months ended 30 September 2020, the impact of the global pandemic caused a general suspension in economic activities and the strict measures adopted for social distancing in general led to the worsening of individual employment and a significant drop in business operations. Similarly, the PRC Mainland market was also affected and hence the credit risk in the money lending services was perceived to be higher accordingly. Given the stringent economic and business outlook, the Group strictly adhered to cautious credit assessment and reviewed the Group’s policies by timely assessing existing and potential clients’ credit profile with reference to the then market condition and their respective background. In view of the current uncertain economic condition that affected projection on assets valuation, business forecasts and individual’s repayment abilities, the Group continued to adopt a prudent approach in selecting qualified credit applicants for potential business opportunities. Accordingly, there was a significant decrease in revenue generated for this business segment to approximately HK\$0.01 million for the nine months ended 30 September 2020 (for the nine months ended 30 September 2019: approximately HK\$0.41 million).

# Outlook

In view of the current social and economic challenges encountered in the PRC Mainland and globally, the Group believed that the strategies to explore appropriate new business and regional markets in order to mitigate overall business risks is the proper approach for sustainable operation. The Group hopes the business segment in the provision of education management services in the PRC Mainland will gradually recover in the second half of 2020, while the pandemic in the PRC Mainland remains stable and controlled. The business segments of trading of precious metal and money lending require cautious assessment and robust risk control management. The Group will continue to explore further opportunities to strengthen business and market presence in its business segment of provision of education management services as well as to manage its business segments of trading of precious metal and money lending on a cautious and prudent basis. All in all, the Group will continue to strive for balance in further developing its existing business model whereas securing the return and value to the shareholders of the Company as a whole.

# Financial Review

For the nine months ended 30 September 2020, the Group had a total revenue of approximately HK\$6.4 million (for the nine months ended 30 September 2019: approximately HK\$195.9 million), representing a decrease of approximately 96.7% as compared with the nine months ended 30 September 2019. For the nine months ended 30 September 2020, the Group recorded a loss of approximately HK\$27.4 million (for the nine months ended 30 September 2019: approximately HK\$26.4 million), representing an increase of approximately 3.8% as compared with the nine months ended 30 September 2019. The increase in loss was mainly attributable to net effect of:

(i) a significant decrease in the Group’s total revenue of approximately 96.7% as discussed in above;

(ii) for the nine months ended 30 September 2020, approximately HK\$4.1 million for the carrying value of inventories sold was recognised (for the nine months ended 30 September 2019: approximately HK\$185 million);

(iii) the fair value loss on investment in unlisted equity securities of approximately HK\$2.5 million;

(iv) a provision of loss allowance of approximately HK\$1.4 million provided on loan receivable;

(v) a decrease in trading losses on commodity forward contracts of approximately HK\$2.7 million;

(vi) a decrease in employee costs of approximately HK\$3.4 million; and

(vii) a decrease in other operating expenses of approximately HK\$3.2 million.

For the nine months ended 30 September 2020, the Group’s loss attributable to owners of the Company was approximately HK\$26.4 million, as compared to the loss attributable to owners of the Company of approximately HK\$27.2 million for the nine months ended 30 September 2019.

# Gearing ratio

The Group monitors capital on the basis of the net gearing ratio. This ratio is calculated as net debt divided by total capital.

As at 30 September 2020, no gearing ratio was presented as the Group has net cash surplus (31 December 2019: net cash surplus).