INTERIM REPORT

2020

CONTENTS

  • Corporate Information
  • Management Discussion and Analysis

22 Corporate Governance and Other Information

33 Report on Review of Condensed Consolidated Financial Statements

35 Condensed Consolidated Statement of Comprehensive Income

37 Condensed Consolidated Statement of Financial Position

  1. Condensed Consolidated Statement of Changes in Equity
  2. Condensed Consolidated Statement of Cash Flows

43 Notes to the Condensed Consolidated Financial Statements

Throughout this interim report, the official Chinese names marked with "*" are the English translations and are for reference only. Should there be any inconsistency between the Chinese and English version, the Chinese version should prevail.

CORPORATE INFORMATION

Executive Directors

Ms. MAN Lai Hung

(Chairman and Chief Executive Officer)

Ms. LIANG Yuhua (Chief Operating Officer)

Ms. HO Suk Mee

Non-executive Director

Mr. LIU Xing

Principal place of business and headquarters in Hong Kong

7th Floor

Chai Wan Industrial City, Phase II 70 Wing Tai Road

Chai Wan

Hong Kong

Independent Non-executive Directors

Principal share registrar

Conyers Trust Company (Cayman) Limited

Ms. LAW Elizabeth

Cricket Square, Hutchins Drive

Mr. HO Cham

P.O. Box 2681

Mr. MAK Ping Leung (alias Mr. MAK Wah Cheung)

Grand Cayman KY1-1111

Audit committee

Cayman Islands

Hong Kong branch share registrar

Ms. LAW Elizabeth (Chairman)

Mr. LIU Xing

Tricor Investor Services Limited

Mr. HO Cham

Level 54, Hopewell Centre

Mr. MAK Ping Leung (alias Mr. MAK Wah Cheung)

183 Queen's Road East

Remuneration committee

Hong Kong

Principal bankers

Mr. MAK Ping Leung (alias Mr. MAK Wah Cheung)

(Chairman)

Standard Chartered Bank (Hong Kong) Limited

Ms. MAN Lai Hung

Bank of China (Hong Kong) Limited

Ms. LAW Elizabeth

The Hongkong and Shanghai Banking

Nomination committee

Corporation Limited

Legal Adviser

Ms. MAN Lai Hung (Chairman)

Ms. LAW Elizabeth

As to Hong Kong laws

Mr. HO Cham

Chiu & Partners

Company secretary

Auditor

Mr. LAU Chun Pong (Chief Financial Officer)

Moore Stephens CPA Limited

Authorised representatives

Certified Public Accountants

Stock Code

Ms. MAN Lai Hung

Mr. LAU Chun Pong

3686

Registered office

Company's website

Cricket Square

www.cliffordmodernliving.com

Hutchins Drive

Investor Enquiry Hotline

P.O. Box 2681

Grand Cayman KY1-1111

Tel: (852) 2889 0183

Cayman Islands

Headquarters in the PRC Mainland

Investor Enquiry Email Address

pr@cliffordmodernliving.com.hk

8 Shiguang Road

Panyu

Guangzhou

Guangdong

PRC Mainland

2

CLIFFORD MODERN LIVING HOLDINGS LIMITED

MANAGEMENT DISCUSSION AND ANALYSIS

Business Review

The Group is a service provider with a diversified service portfolio comprising six main service segments: (i) property management services, (ii) renovation and fitting-out services, (iii) retail services, (iv) off-campus training services, (v) information technology services and (vi) Ancillary Living Services (as hereinafter defined).

  • Property Management Services

The Group provided property management services to 15 residential communities and six pure commercial properties or projects with an aggregate contracted gross floor area ("GFA") of approximately 9,660,000 sq.m. as at 30 June 2020. The table below sets forth the total contracted GFA and the number of residential communities and pure commercial properties or projects the Group managed in different regions in the mainland of People's Republic of China (the "PRC Mainland") as at the dates indicated:

As at 30 June 2020

As at 31 December 2019

Approximate

Approximate

total

total

contracted

Number of

contracted

Number of

GFA

communities

GFA

communities

('000 sq.m.)

('000 sq.m.)

Residential communities

4,398

5

Panyu district

4,398

5

Huadu district

1,208

7

1,037

7

Zhaoqing city

346

1

346

1

Foshan city

867

2

867

2

Sub-total

6,819

15

6,648

15

Pure commercial

properties/projects

202

3

Huadu district

259

3

Maoming city

-

-

129

1

Panyu district

2,639

3

2,628

3

Sub-total

2,841

6

3,016

7

Total

9,660

21

9,664

22

2020 Interim Report

3

MANAGEMENT DISCUSSION AND ANALYSIS

  • Renovation and Fitting-out Services

The Group provides renovation and fitting-out services principally for residents, tenants or owners or their principal contractors in their residential units, offices, shops and other properties. To utilise our workforce more efficiently, we delegate certain renovation and fitting-out services to third-partysub-contractors. We constantly monitor and evaluate third-partysub-contractors on their ability to meet our requirements and standards to ensure the overall quality of our work.

  • Retail Services

The Group operated 17 retail outlets of different scales covering a total GFA of approximately 12,400 sq.m. as at 30 June 2020. These 17 retail outlets consist of a wet market, 2 supermarkets and 14 convenience stores.

The following table sets out the Group's average daily revenue by type of the retail outlets in operation during the six months ended 30 June 2019 and 2020 respectively:

For the six months

ended 30 June

20202019

Average daily revenue by type of

retail outlet (in RMB thousands) (Note)

Supermarket

261.21

168.74

Wet market

30.27

32.37

Convenience store

122.34

82.07

Note: Calculated by dividing revenue for six months by 180 days.

4

CLIFFORD MODERN LIVING HOLDINGS LIMITED

MANAGEMENT DISCUSSION AND ANALYSIS

  • Off-campusTraining Services

The Group had four learning centres in Panyu district as at 30 June 2020 (31 December 2019: three learning centres). Training programmes mainly include tutoring courses and language learning classes.

  • Information Technology Services
    Engineering services

The Group provides information technology services, related engineering services, security systems services and hardware and software integration services, most of which are delivered on project basis.

Telecommunication services

The Group entered into contracts with some major telecommunication service providers under which the Group acts as agent for their products and services.

2020 Interim Report

5

MANAGEMENT DISCUSSION AND ANALYSIS

  • Ancillary Living Services

The Group provides catering consultancy services, property agency services, employment placement services and laundry services, collectively "Ancillary Living Services".

Catering consultancy services

The Group provides catering consultancy services and receives a fixed consultancy service fee on monthly basis.

Property agency services

The property agency industry is tied up with the property market. Although more stringent regulations have been introduced by the PRC Mainland government, the Group believes that the demand for property agency services will still increase in the long term.

Employment placement services

The Group constantly monitors the performance and services quality of relevant household helpers and dispatched workers.

Laundry services

The Group maintains both the safety and quality of services by providing continuous training to its staff.

Investments in unallocated silver bullion

The Group, utilising its internal resources, purchased a total of 800,000 ounces of unallocated silver bullion through Standard Chartered Bank (Hong Kong) Limited, a licensed bank in Hong Kong, during the six months ended 30 June 2020 with the total consideration of approximately RMB102.5 million. Taking into consideration the slowdown in economic growth in PRC Mainland, the investments in unallocated silver bullion are considered to be part of the Group's treasury management to diversify its asset structure. For further details, please refer to the announcements of the Company dated 26 February 2020 and 28 February 2020 respectively.

6

CLIFFORD MODERN LIVING HOLDINGS LIMITED

MANAGEMENT DISCUSSION AND ANALYSIS

Prospects and Future Plans

Expansion of the property management network through engagements in integrated projects

We plan to expand our business by managing integrated projects which include apartments, shopping malls and office buildings developed by third parties in Guangdong Province. The services we will be providing include property management services, property agency services and marketing consultancy services.

Further expansion of our information technology services

As more and more emphasis is being placed on the development of smart cities and communities in the PRC Mainland, we see an enormous growth potential of the information technology market. We plan to further increase our investment in information technology services segment, with the goal to increase our market share and boost the growth of our overall business. It is expected that more projects will be secured in the second half of the year.

Recovery of our off-campus training services segment from the outbreak of coronavirus disease (the "COVID-19 Outbreak")

The demands for our off-campus training services had begun to resume gradually since April 2020, we are optimistic about the condition in the second half of 2020 and we expect that our revenue generated from our off-campus training services will resume gradually.

Develop online marketing and build online distribution channels

We intend to promote various services by reaching our customers through different online channels including websites and apps on smartphones. Currently, we are upgrading our sales and accounting systems so as to further enhance our data collection process, which in turn enables us to respond more quickly to our customers' needs.

Further explore new investment opportunities

Facing the challenges of possible slowdown of the economic growth of the PRC Mainland, we will remain prudent in monitoring the Group's expenditures, look for new investment opportunities to cope with existing market environment and constantly review our business strategies.

2020 Interim Report

7

MANAGEMENT DISCUSSION AND ANALYSIS

Financial Review

Revenue

For the six months ended

Percentage of

30 June

Variance

total revenue

2020

2019

2020

2019

RMB'000

RMB'000

RMB'000

%

%

%

Property management services

37,365

27,582

9,783

35.5%

21.4%

15.5%

Renovation and fitting-out

services

7,347

11,219

(3,872)

-34.5%

4.2%

6.3%

Retail services

74,489

50,973

23,516

46.1%

42.7%

28.6%

Off-campus training services

6,546

22,287

(15,741)

-70.6%

3.7%

12.5%

Information technology services

31,994

33,152

(1,158)

-3.5%

18.3%

18.6%

Ancillary Living Services

16,952

33,035

(16,083)

-48.7%

9.7%

18.5%

Total

174,693

178,248

(3,555)

-2.0%

100.0%

100.0%

Revenue decreased from RMB178.2 million for the six months ended 30 June 2019 to RMB174.7 million for the six months ended 30 June 2020, representing a decrease of RMB3.6 million or 2.0%. Decline in revenue was mainly caused by the decline in revenue from renovation and fitting-out services, off-campus training services, information technology services and Ancillary Living Services and was offset by the increase in revenue from property management services and retail services.

8

CLIFFORD MODERN LIVING HOLDINGS LIMITED

MANAGEMENT DISCUSSION AND ANALYSIS

Property management services

For the six months

ended 30 June

20202019

RMB'000 RMB'000

General property management services

24,132

20,997

Resident support services

13,233

6,585

Total

37,365

27,582

Revenue from the property management services was increased by 35.5% to RMB37.4 million for the six months ended 30 June 2020 from RMB27.6 million for the six months ended 30 June 2019. The increase in revenue of the general property management services from RMB21.0 million for the six months ended 30 June 2019 to RMB24.1 million for the six months ended 30 June 2020 was primarily due to the changes in our charging method for one of our commercial projects from commission basis to lump sum basis. The increase in revenue of the resident support services from RMB6.6 million for the six months ended 30 June 2019 to RMB13.2 million for the six months ended 30 June 2020 was due to the increase in demand for our household helper services.

2020 Interim Report

9

MANAGEMENT DISCUSSION AND ANALYSIS

Renovation and Fitting-out Services

For the six months ended 30 June

20202019

RMB'000 RMB'000

Total revenue

7,347

11,219

Revenue from the renovation and fitting-out services was decreased by 34.5%, from RMB11.2 million for the six months ended 30 June 2019 to RMB7.3 million for the six months ended 30 June 2020. Such decrease was mainly due to the delayed resumption of normal business operations caused by the COVID-19 Outbreak after the Chinese New Year holidays.

Retail Services

For the six months

ended 30 June

2020

2019

RMB'000

RMB'000

Revenue by type of retail outlet

Supermarkets

47,018

30,374

Wet market

5,449

5,827

Convenience stores

22,022

14,772

Total

74,489

50,973

10

CLIFFORD MODERN LIVING HOLDINGS LIMITED

MANAGEMENT DISCUSSION AND ANALYSIS

Revenue from the retail services was increased by 46.1% to RMB74.5 million for the six months ended 30 June 2020 from RMB51.0 million for the six months ended 30 June 2019. The increase was caused by i) increase in demand for our retail services during the COVID-19 Outbreak, and ii) opening of two convenience stores and one supermarket in the first quarter of 2020.

Off-campus Training Services

For the six months

ended 30 June

20202019

RMB'000 RMB'000

Off-campus training revenue by category

Training programmes

1,464

3,946

Interest classes

5,082

18,341

Total

6,546

22,287

2020 Interim Report

11

MANAGEMENT DISCUSSION AND ANALYSIS

Revenue from the off-campus training services was decreased by 70.6% to RMB6.5 million for the six months ended 30 June 2020 from RMB22.3 million for the six months ended 30 June 2019. Such decrease was primarily due to the delayed resumption of normal business operations caused by the COVID-19 Outbreak after the Chinese New Year holidays. However, the demands for the off-campus training services has begun to resume gradually since the second quarter of 2020.

Information Technology Services

For the six months

ended 30 June

2020

2019

RMB'000

RMB'000

Information technology services

revenue by category

Engineering

29,936

31,486

Telecommunication

2,058

1,666

Total

31,994

33,152

Revenue from the information technology services was decreased by 3.5% from RMB33.2 million for the six months ended 30 June 2019 to RMB32.0 million for the six months ended 30 June 2020. Such decrease was mainly due to the decrease in number of projects which led to the decrease in revenue from the engineering services from RMB31.5 million for the six months ended 30 June 2019 to RMB29.9 million for the six months ended 30 June 2020. Engineering services comprises information technology hardware integration and network installation.

12

CLIFFORD MODERN LIVING HOLDINGS LIMITED

MANAGEMENT DISCUSSION AND ANALYSIS

Ancillary Living Services

For the six months

ended 30 June

2020

2019

RMB'000

RMB'000

Ancillary Living Services revenue by category

Catering services

1,795

1,771

Property agency services

7,598

21,980

Employment placement services

4,318

3,577

Laundry services

3,241

5,707

Total

16,952

33,035

Revenue from the Ancillary Living Services was decreased by 48.7% from RMB33.0 million for the six months ended 30 June 2019 to RMB17.0 million for the six months ended 30 June 2020. Such decrease was primarily due to i) the delayed resumption of normal business operations of our employment placement services and laundry services caused by the COVID-19 Outbreak after the Chinese New Year holidays; and ii) the decrease in commission we received from sales of new units during the period.

2020 Interim Report

13

MANAGEMENT DISCUSSION AND ANALYSIS

Cost of Sales

Cost of sales comprises mainly the cost of goods sold for retail services, the employee benefit expenses for each of our business segments and the project cost for renovation and fitting-out services and information technology services. For the six months ended 30 June 2020, cost of sales increased by approximately RMB2.0 million from approximately RMB100.6 million for the six months ended 30 June 2019 to approximately RMB102.6 million. The increase in cost of sales was primarily due to i) the changes in our charging method for one of our commercial projects from commission basis to lump sum basis; and ii) the fact that more goods were being sold for our retail services segment.

Gross Profit and Gross Profit Margin

Gross profit decreased from approximately RMB77.7 million for the six months ended 30 June 2019 to approximately RMB72.1 million for the six months ended 30 June 2020, representing a decrease of approximately RMB5.6 million or 7.2%. Meanwhile, the Group's gross profit margin from continuing operations decreased from approximately 43.6% for the six months ended 30 June 2019 to approximately 41.3% for the six months ended 30 June 2020. The decrease in gross profit and gross profit margin was primarily due to i) the changes in our charging method for one of our commercial projects from commission basis to lump sum basis; and ii) the increase in revenue from our retail services, which used to generate lower gross profit margin as compared to other service segments and thus lowering our overall gross profit margin.

Selling and Marketing Expenses

Selling and marketing expenses primarily consist of the employee benefit expenses for sales and marketing staff, operating lease payments, depreciation and amortisation charges and utility expenses.

Selling and marketing expenses increased from RMB12.8 million for the six months ended 30 June 2019 to RMB13.3 million for the six months ended 30 June 2020, representing an increase of 4.2%, which was primarily due to the increase in the number of retail outlets during the six months ended 30 June 2020.

14

CLIFFORD MODERN LIVING HOLDINGS LIMITED

MANAGEMENT DISCUSSION AND ANALYSIS

Administrative Expenses

Administrative expenses primarily consist of the employee benefit expenses, operating lease payments, depreciation and amortisation charges, professional fees and office expenses for the administrative departments.

Administrative expenses remained stable at RMB15.6 million for the six months ended 30 June 2020 (for the six months ended 30 June 2019: RMB15.3 million).

Other Income

Other income remained stable and amounted to RMB0.5 million for the six months ended 30 June 2020 (for the six months ended 30 June 2019: RMB0.6 million), mainly representing interest income on cash and cash equivalents.

Other Gains - Net

The Group incurred other gains of RMB7.3 million for the six months ended 30 June 2019 and RMB4.5 million for the six months ended 30 June 2020. The change was primarily caused by finance leases of right-of-use assets and the fluctuation in exchange rate of Renminbi against Hong Kong dollars.

Finance Income

Finance income increased from RMB0.7 million for the six months ended 30 June 2019 to RMB0.8 million for the six months ended 30 June 2020. Finance income was derived from the term deposits and subscription of wealth management products from banks.

2020 Interim Report

15

MANAGEMENT DISCUSSION AND ANALYSIS

Finance Costs

Finance costs amounted to RMB1.0 million for the six months ended 30 June 2020, which represents the interest expense on lease liabilities.

Income Tax Expenses

The effective tax rate was 22.8% for the six months ended 30 June 2020 (for the six months ended 30 June 2019: 23.0%).

Net Profit for the Period

For the six months ended 30 June 2020, as a result of the foregoing, the Group's net profit from continuing operations was RMB36.0 million (six months ended 30 June 2019: RMB42.7 million) and its net profit margin was 20.6% (six months ended 30 June

2019: 24.0%).

Property, Plant and Equipment

Property, plant and equipment mainly consist of the machinery, vehicles, office equipment and leasehold improvements. As at 31 December 2019 and 30 June 2020, the net book values of the property, plant and equipment of the Group were RMB14.4 million and RMB20.4 million respectively.

Investment Properties

Investment properties amounted to RMB9.2 million as at 30 June 2020 represent principally right-of-use assets, which are held for long-term rental yields and are not occupied by the Group and are recognised due to operating leases. More details are set out in note 11 to the condensed consolidated financial statements of this report.

16

CLIFFORD MODERN LIVING HOLDINGS LIMITED

MANAGEMENT DISCUSSION AND ANALYSIS

Financial Assets at Fair Value Through Profit or Loss

As at 30 June 2020, financial assets at fair value through profit or loss represented unlisted financial products purchased from commercial banks with high market credit rating, liquidity and stable return as below:

Acquisition

during the

Changes in

six months

fair value

Size relative

Fair value

ended

(Recognised as

Fair value

to the

Investment

as at

30 June

gains in

as at

Group's

No.

Bank

Product name

Product type

Principle business of the underlying assets

cost

31/12/2019

2020

profit or loss)

30/06/2020

total assets

RMB'000

RMB'000

RMB'000

RMB'000

RMB'000

1

Agricultural Bank

Benlifeng Bubugao

Unlisted financial products

Underlying assets include national bonds, corporate

4,000

4,147

-

-

4,147

0.67%

of China

Open-ended RMB Wealth

purchased from

bonds, central bank bills, repurchase, higher credit

Management Products*

commercial banks

rating debt (including but not limited to, corporate

("本利豐步步高"

bonds, short-term financing bonds), exchange

開放式人民幣理財產品)

bonds, privately raised company bonds, money

market funds, bond funds, other low-risk funds or

assets, targeted asset management plans, trust

plans and other investment products that meet

regulatory requirements.

2

Bank of China

Bank of China Capital-

Unlisted financial products

Underlying assets include national bonds, corporate

22,000

-

22,000

74

22,074

3.56%

protected

purchased from

bonds, NCD, bank deposits, bond repurchase,

RMB Open-ended Wealth

commercial banks

high-quality corporate bonds (including short-term

Management Products*

corporate bonds of securities companies), short-

(中銀保本理財-人民幣按期

term financing bonds, ultra-short-term financing

開放理財產品)

bonds, medium-term notes, privately raised

company bonds, and other low-risk and high-

liquidity financial assets within the scope permitted

by laws and regulations.

Investments in Unallocated Silver Bullion

800,000 ounces of unallocated silver bullion with total consideration of approximately RMB102.5 million was purchased by the Group through Standard Chartered Bank (Hong Kong) Limited, a licensed bank in Hong Kong. The Group recorded a change in fair value gain of approximately RMB0.4 million and the fair value as at 30 June 2020 amounted to RMB102.9 million.

2020 Interim Report

17

MANAGEMENT DISCUSSION AND ANALYSIS

Inventories

Inventories mainly consist of the merchandise goods for the retail service segment and raw materials for the Group's information technology services segment the Group procured from suppliers.

Inventories increased from approximately RMB8.8 million as at 31 December 2019 to approximately RMB11.3 million as at 30 June 2020, which was primarily due to adjustment of stock level according to the trading volume.

During the six months ended 30 June 2020, the Group did not recognise any provision or write-down for our inventories.

Trade and Other Receivables

Trade and other receivables mainly consist of the trade receivables, the amounts placed in bank accounts opened on behalf of the residents ("Residents' Accounts"), other receivables and prepayments.

Trade receivables

Trade receivables are mainly related to the Group's receivables from the outstanding property management fee, information technology services and renovation and fitting- out services.

Trade receivables were decreased by 34.6% from RMB72.2 million as at 31 December 2019 to RMB47.2 million as at 30 June 2020, which was primarily due to the settlement of final payment in some of the Group's renovation and fitting-out services projects.

Other receivables

Other receivables are mainly rental deposits, deposits paid to the Group's suppliers and fixed return and capital preservation wealth management product.

Other receivables were decreased by 8.3% from RMB18.8 million as at 31 December 2019 to RMB17.3 million as at 30 June 2020 due to decrease in finance leases receivable of right-of-use assets.

18

CLIFFORD MODERN LIVING HOLDINGS LIMITED

MANAGEMENT DISCUSSION AND ANALYSIS

Amounts placed in Residents' Accounts

Certain property management companies of the Group have engaged in the provision of property management services for residential communities on commission basis and opened the Residents' Accounts. These Residents' Accounts are used to collect the property management fee and resident support services fee from the residents. The property management companies have undertaken the treasury function for these bank accounts on behalf of the residents pursuant to the property management contracts. As at 30 June 2020, amounts included in Residents' Accounts of RMB3.5 million represented the balances of the property management commission fee and resident support service fee entitled by the property management companies (31 December 2019: RMB6.2 million).

Trade and Other Payables

Trade and other payables primarily comprise trade payables, other payables and accrued payroll.

Trade payables

Trade payables primarily comprise fees due to the suppliers for the procurement of the raw materials for the Group's renovation and fitting-out services segment and the information technology services segment, and the products for the provision of the retail services segment of the Group, and the fees due to the sub-contractors for the provision of the resident support services and information technology services.

Trade payables were decreased by 4.6% from RMB50.3 million as at 31 December 2019 to RMB48.0 million as at 30 June 2020 as a result of decrease in the procurement of the raw materials for the information technology services segment.

Other payables

Other payables primarily comprise amounts due to the third parties amounting to RMB22.6 million and RMB24.2 million as at 31 December 2019 and 30 June 2020 respectively, which mainly included the deposits received from the stall tenants in the retail business. The increase was mainly due to the increase in the rental rate and the related deposit.

2020 Interim Report

19

MANAGEMENT DISCUSSION AND ANALYSIS

Interim Dividend

The Board has resolved not to declare any interim dividend in respect of the six months ended 30 June 2020 (for the six months ended 30 June 2019: Nil).

Risks of Foreign Exchange Fluctuation

The Group's functional currency is RMB. The Group is not exposed to significant foreign exchange risks and has not implemented any foreign currency hedging policy at the moment. However, the continuous monitoring on the foreign exchange exposure is carried out by the management.

Liquidity and Capital Resources

As at 30 June 2020, the Group's material sources of liquidity were cash and cash equivalents of RMB297.8 million (31 December 2019: RMB364.9 million). The decrease was due to of the investment in unallocated silver bullion of approximately RMB102.5 million during the six months ended 30 June 2020.

During the six months ended 30 June 2020, the Group has not obtained any loans or borrowings.

Gearing Ratio

Gearing ratio is calculated based on the Group's total debts (being cash advances due to the related parties) divided by the Group's total equity as of the end of each period. The Group's gearing ratio was nil as at 30 June 2020 and 31 December 2019.

Pledge of Assets

The Group had no pledged assets as at 30 June 2020 (31 December 2019: Nil).

Contingent Liabilities

The Group had no material contingent liabilities as at 30 June 2020.

20

CLIFFORD MODERN LIVING HOLDINGS LIMITED

MANAGEMENT DISCUSSION AND ANALYSIS

Employees and Remuneration Policies

As at 30 June 2020, excluding the labour costs borne by the properties that were managed on commission basis, the Group had approximately 594 employees (31 December 2019: approximately 642 employees). Remuneration is determined with reference to the performance, skills, qualifications and experiences of the staff concerned and the prevailing industry practice.

Apart from salary payments, other staff benefits include contribution of the mandatory provident fund (for Hong Kong employees) and state-managed retirement pension scheme (for employees in the PRC Mainland) and a discretionary bonus program.

In addition, the Company operates a pre-initial public offering share option scheme (the "Pre-IPOShare Option Scheme") and a share option scheme (the "Share Option Scheme") (collectively, the "Schemes") in October 2016 which allows the Directors to grant share options to employees of the Group in order to retain elite personnel to stay with the Group and to provide incentives for their contribution to the Group. Details of the share options are set out in the paragraph headed "Share Option Schemes" in this report.

Significant Investment Held, Material Acquisition and Disposals of Subsidiaries or Associated Companies

Save as disclosed in paragraph headed "Financial assets at fair value through profit or loss" and "Investments in unallocated silver bullion" in this report, the Group had no significant investment held, material acquisition or disposal of subsidiaries or associated companies during the six months ended 30 June 2020.

Significant Events after the Reporting Period

The fair value of the investment in silver bullion has been increased by approximately 46.9% as at the date of this report.

Save as disclosed above, the Group does not have any material subsequent event after 30 June 2020 and up to the date of this report.

2020 Interim Report

21

CORPORATE GOVERNANCE AND OTHER INFORMATION

The Board of Directors of the Company is committed to achieving high corporate governance standards.

The Board believes that the high corporate governance standards are essential in providing a framework for the Company to safeguard the interests of shareholders, enhance its corporate value, formulate its business strategies and policies, and enhance its transparency and accountability.

Corporate Governance Code

The Company has applied the principles as set out in the Corporate Governance Code (the "CG Code") contained in Appendix 14 to the Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited (the "Stock Exchange") (the "Listing Rules"). The Board is of the view that throughout the six months ended 30 June 2020, save for the following deviation, the Company has complied with all the code provisions as set out in the CG Code.

Both the positions of the Chairman and Chief Executive Officer of the Company are held by Ms. MAN Lai Hung.

Under code provision A.2.1 of the CG Code as set out in Appendix 14 to the Listing Rules, the roles of Chairman and Chief Executive Officer should be separated and should not be performed by the same individual.

However, the Board considers that Ms. MAN Lai Hung has in-depth knowledge and experience in the Group's businesses in the PRC Mainland and therefore it is the best interests of the Group for her to take up the dual roles of the Chairman and Chief Executive Officer. The Board believes that the combined roles of Ms. MAN Lai Hung can provide the Company with strong and consistent leadership that facilitates effective and efficient planning and implementation of business decisions and strategies, and should be overall beneficial to the management and development of the Group's business. The structure is supported by the Company's well established corporate governance structure and internal control policies.

22

CLIFFORD MODERN LIVING HOLDINGS LIMITED

CORPORATE GOVERNANCE AND OTHER INFORMATION

Dividend Policy

The Board aims at providing sustainable returns to the Company's shareholders whilst retaining adequate reserves for the Group's future development. Under a dividend policy adopted by the Board on 22 March 2019 (the "Dividend Policy"), the declaration, payment and amount of dividends will be subjected to the Board's discretion and the approval of shareholders of the Company. Subject to the factors set out below, the Group targets to distribute the dividend to its shareholders no less than 25% of the Company's audited consolidated profit attributable to the owners of the Company in any financial year.

Dividends may be recommended, declared and paid to the Company's shareholders from time to time. In summary, the declaration of dividends and the dividend amount shall be determined at the sole and absolute discretion of the Board taking into account the following factors:

  • results of operations;
  • cash flows;
  • financial position;
  • statutory and regulatory restrictions on the dividends paid by the Group;
  • future prospects; and
  • others factors which the Board considers relevant.

The Board will review the Dividend Policy from time to time.

2020 Interim Report

23

CORPORATE GOVERNANCE AND OTHER INFORMATION

Model Code for Securities Transactions

The Company has adopted the Model Code for Securities Transactions by Directors of Listed Issuers (the "Model Code") as set out in Appendix 10 to the Listing Rules as the Group's code of conduct regarding the Directors' securities transactions.

Specific enquiry has been made by the Company with all Directors and the Directors have confirmed that they have complied with the required standard set out in the Model Code and its code of conduct regarding directors' securities transactions throughout the six months ended 30 June 2020.

Board Composition

The Board currently comprises seven Directors, consisting of three executive Directors, a non-executive Director and three independent non-executive Directors.

Audit Committee

The Audit Committee consists of three independent non-executive Directors, namely Ms. LAW Elizabeth (Chairman), Mr. HO Cham and Mr. MAK Ping Leung (alias Mr. MAK Wah Cheung) and one non-executive Director, namely Mr. LIU Xing (with Ms. LAW Elizabeth possessing the appropriate professional qualifications and accounting and related financial management expertise). The unaudited interim financial information for the six months ended 30 June 2020 has been reviewed with no disagreement by the Audit Committee of the Company. In addition, the independent auditor of the Company, Moore Stephens CPA Limited, has reviewed the unaudited interim results for the six months ended 30 June 2020 in accordance with Hong Kong Standard on Review Engagements 2410 "Review of Interim Financial Information Performed by the Independent Auditor of the Entity" issued by the Hong Kong Institute of Certified Public Accountants.

24

CLIFFORD MODERN LIVING HOLDINGS LIMITED

CORPORATE GOVERNANCE AND OTHER INFORMATION

Auditor

PricewaterhouseCoopers ("PwC") has retired as the auditor of the Company with effect from the conclusion of the annual general meeting ("AGM") of the Company held on 26 June 2020 and did not stand for re-appointment as the Company's auditor since PwC could not reach an agreement with the Company on the audit fee for the financial year ending 31 December 2020. On 14 May 2020, the Board has resolved, having regard to the recommendation from the Audit Committee, to propose the appointment of Moore Stephens CPA Limited as the new auditor of the Company following the retirement of PwC and to hold office until the conclusion of the next annual general meeting of the Company, subject to the approval by the shareholders of the Company at the forthcoming annual general meeting. For further details, please refer to the announcement of the Company in respect of proposed change of auditor dated 22 May 2020.

Remuneration Committee

The Remuneration Committee consists of two independent non-executive Directors, namely Mr. MAK Ping Leung (alias Mr. MAK Wah Cheung) (Chairman) and Ms. LAW Elizabeth and an executive Director, Ms. MAN Lai Hung.

The terms of reference of the Remuneration Committee are of no less exacting terms than those set out in the CG Code. The primary functions of the Remuneration Committee include reviewing and making recommendations to the Board on the remuneration packages of the individual executive Directors and the senior management, the remuneration policy and structure for all Directors and the senior management; and establishing the transparent procedures for developing such remuneration policy and structure to ensure that no Director or any of his/her associates will participate in deciding his/her own remuneration.

For the six months ended 30 June 2020, a meeting of the Remuneration Committee was held on 27 March 2020 to review and make recommendations to the Board on the remuneration policy and structure of the Company and the remuneration packages of the executive, non-executive and independent non-executive Directors and the senior management and other related matters.

2020 Interim Report

25

CORPORATE GOVERNANCE AND OTHER INFORMATION

Nomination Committee

The Nomination Committee consists of an executive Director, Ms. MAN Lai Hung (Chairman), and two independent non-executive Directors, namely Ms. LAW Elizabeth and Mr. HO Cham.

The terms of reference of the Nomination Committee are of no less exacting terms than those set out in the CG Code. The principal duties of the Nomination Committee include reviewing the structure, size and composition of the Board, developing and formulating relevant procedures for the nomination and appointment of Directors, making recommendations to the Board on the appointment and succession planning of Directors, and assessing the independence of independent non-executive Directors.

In assessing the Board composition, the Nomination Committee would take into account various aspects as well as factors concerning Board diversity as set out in the Company's Board diversity policy, including but not limited to the skills, regional and industry experience, educational background, knowledge, expertise, culture, independence, age, gender and other qualities. The Nomination Committee would discuss and agree on the measurable objectives for achieving diversity on the Board, where necessary, and recommend them to the Board for adoption.

For the six months ended 30 June 2020, a meeting of the Nomination Committee was held on 27 March 2020 to review the structure, size and composition of the Board and the independence of the independent non-executive Directors and to consider the qualifications of the retiring Directors standing for election at the annual general meeting. The Board diversity policy was also reviewed at the meeting.

26

CLIFFORD MODERN LIVING HOLDINGS LIMITED

CORPORATE GOVERNANCE AND OTHER INFORMATION

Disclosure of Directors' Information Pursuant to Rules 13.51(2) and 13.51(B)(1) of the Listing Rules

For the six months ended 30 June 2020, Mr. MAK Ping Leung (alias Mr. MAK Wah Cheung) resigned as an executive director of Hong Kong Economic Times Holdings Limited (香港經濟日報集團有限公司) (listed on the Stock Exchange with stock code 00423) with effect from 1 May 2020.

Save as disclosed above, there are no changes in the Directors' biographical details since the date of the 2019 annual report of the Company, which are required to be disclosed pursuant to Rules 13.51(2) and 13.51(B)(1) of the Listing Rules.

Share Option Schemes

The Company operates the Pre-IPO Share Option Scheme and the Share Option Scheme for the purpose of recognising and rewarding the contribution of certain eligible participants to the growth and development of the Group and its listing, to strengthen the corporate governance mechanism, to improve the employee incentive system, to align the interest of the Company, its shareholders and its management, to encourage continuing development of the eligible employees with a view to promoting the long-term stability and interest of the Group.

Eligible participants of the Schemes include the Directors, the employees of the Group and other selected groups of participants. The Pre-IPO Share Option Scheme and the Share Option Scheme were adopted by the Company on 21 October 2016 and became effective on the same day. Unless otherwise cancelled or amended, the Pre- IPO Share Option Scheme will remain in force for 5 years and six months from the listing date on 8 November 2016 (the "Listing Date"), and the Share Option Scheme will remain in force for 10 years from the adoption date.

The maximum number of shares in respect of which options may be granted under the Schemes and any other schemes by the Company shall not, in aggregate, exceed 10% of the issued share capital of the Company as at the Listing Date unless the shareholders' approval has been obtained.

The maximum number of shares issuable under the share options to each eligible participant in the Schemes within any 12-month period is limited to 1% of the shares of the Company in issue at any time. Any further grant of the share options in excess of this limit is subject to the shareholders' approval in advance in a general meeting.

2020 Interim Report

27

CORPORATE GOVERNANCE AND OTHER INFORMATION

Share options granted to a Director, chief executive or substantial shareholder of the Company, or to any of their associates, are subject to the approval in advance by the independent non-executive Directors. In addition, any share options granted to a substantial shareholder or an independent non-executive Director of the Company, or to any of their associates, in excess of 0.1% of the shares of the Company in issue at any time or with an aggregate value (based on the closing price of the Company's shares at the date of grant) in excess of HK$5 million, within any 12-month period, are subject to the shareholders' approval in advance in a general meeting.

The offer of a grant of share options may be accepted upon the payment of a nominal consideration of HK$1 in total by the grantee. The exercise period of the share options granted is determinable by the Directors, and may commence from the date of the offer of the share options and end on a date which is not later than 10 years from the date of the offer of the share options or the date on which such options lapse, if earlier.

Details of the movements in the Company's outstanding share options granted under the Pre-IPO Share Option Scheme and the Share Option Scheme for the six months ended 30 June 2020 were as follows:

Closing

price of

the shares on

the trading day

Balance

Lapsed

Balance

Exercised

immediately

before

Name of category

as at

Exercise

or cancelled

as at

price

the date of

31 December

during

during

30 June

Date of

Exercise

per share

grant

of participant

2019

the period

the period

2020

grant

period

(HK$)

(HK$)

Directors

LIANG Yuhua

2,500,000

-

-

2,500,000

21 October 2016

9 May 2017 to

0.414

N/A

8 May 2022

LIU Xing

2,500,000

-

-

2,500,000

21 October 2016

9 May 2017 to

0.414

N/A

8 May 2022

Employees of the Group

975,000

-

-

975,000

21 October 2016

9 May 2017 to

0.414

N/A

8 May 2022

Total

5,975,000

-

-

5,975,000

28

CLIFFORD MODERN LIVING HOLDINGS LIMITED

CORPORATE GOVERNANCE AND OTHER INFORMATION

  1. Pre-IPOShare Option Scheme
    Pursuant to the Pre-IPO Share Option Scheme, the Company has granted 21,175,000 options to the eligible Directors, senior management and employees of the Group at the time to subscribe for the ordinary shares of the Company subject to the terms stipulated under the Pre-IPO Share Option Scheme. The exercise price is 90% of the final offer price of the shares issued in connection with the listing (HK$0.414). No options were exercised, and no options were lapsed or cancelled during the six months ended 30 June 2020. As at the date of this interim report, the Company had 5,975,000 share options under the Pre- IPO Share Option Scheme, representing approximately 0.6% of the issued share capital of the Company as at that date.
    Further details of the Pre-IPO Share Option Scheme are set out in note 23(c) to the interim financial information.
  2. Share Option Scheme
    Pursuant to the Share Option Scheme, the Directors may invite participants to take up options at a price determined by the Board but in any event shall not be less than the highest of (i) the nominal value of a share; (ii) the closing price of the share as stated in the Stock Exchange's daily quotation sheet on the offer date; and (iii) the average of the closing prices of the shares as stated in the Stock Exchange's daily quotations sheets for the five business days immediately preceding the offer date. The option may be exercised in accordance with the terms of the Share Option Scheme at any time during the option period which may be determined and notified by the Board to the grantee at the time of making an offer. As at the date of this interim report, no options have been granted or agreed to be granted pursuant to the Share Option Scheme.

Purchase, Sale or Redemption of the Company's Listed Securities

There was no purchase, sale or redemption by the Company or any of its subsidiaries, of the Company's listed securities during the six months ended 30 June 2020.

2020 Interim Report

29

CORPORATE GOVERNANCE AND OTHER INFORMATION

Disclosure of Interests

Directors' and Chief Executives' Interests and Short Positions in Shares, Underlying Shares and Debentures

As at 30 June 2020, the interests and short positions of the Directors and the chief executives of the Company in the shares, underlying shares and debentures of the Company or of any associated corporations (within the meaning of Part XV of the Securities and Futures Ordinance (the "SFO")) of the Company, as recorded in the register required to be kept by the Company pursuant to Section 352 of the SFO, or as otherwise notified to the Company and the Stock Exchange pursuant to the Model Code as contained in Appendix 10 to the Listing Rules were as follows:

Approximate

percentage of

Nature of

Number of

shareholding

Name of Director

interest/Capacity

shares

in the Company

Ms. MAN Lai Hung(1)

Interest in a

735,840,000

72.48%

controlled

corporation(1)

Ms. MAN Lai Hung

Beneficial owner

5,000,000

0.49%

Ms. LIANG Yuhua

Beneficial owner

2,500,000(2)

0.25%

Mr. LIU Xing

Beneficial owner

2,500,000(2)

0.25%

Notes:

  1. Elland Holdings Limited is solely owned by Ms. MAN Lai Hung which in turn owns 735,840,000 shares of the Company. By virtue of the SFO, Ms. MAN Lai Hung is deemed or taken to be interested in all the shares which are beneficially owned by Elland Holdings Limited.
  2. These represent the maximum number of shares of the Company which may be allotted and issued to such Directors upon the exercise of the pre-IPO share options granted to each of them under the Pre-IPO Share Option Scheme. In respect of these two Directors, these pre-IPO share options may be exercised at any time during the period (i) commencing on the business day immediately after the expiry of the six-month period after the Listing Date and (ii) ending on the date falling in five (5) years and six
    (6) months of the Listing Date. The exercise price for subscription of each share upon the exercise of the pre-IPO share options is equal to 90% of HK$0.46.
  3. All the shares are held in long position.

30

CLIFFORD MODERN LIVING HOLDINGS LIMITED

CORPORATE GOVERNANCE AND OTHER INFORMATION

Save as disclosed above, as at 30 June 2020, none of the Directors or chief executives of the Company had or was deemed to have any interests or short positions in the shares, underlying shares or debentures of the Company and its associated corporations (within the meaning of Part XV of the SFO), which had been recorded in the register maintained by the Company pursuant to section 352 of the SFO or which had been notified to the Company and the Stock Exchange pursuant to the Model Code contained in the Listing Rules.

Substantial Shareholders' Interests and Short Positions in Shares and Underlying Shares

As at 30 June 2020, so far as the Directors are aware, the following substantial shareholders (other than the Directors and the chief executives of the Company) or institutions have interests or short positions of 5% or more in the shares or underlying shares of the Company as recorded in the register required to be kept under section

336 of the SFO:

Approximate

percentage of

Capacity/Nature

Number of

shareholding

Name

of interest

shares

in the Company

Elland Holdings Limited

Beneficial owner

735,840,000

72.48%

Mr. PANG Lun Kee

Interest of spouse

740,840,000

72.97%

Clifford(1)

Notes:

  1. Mr. PANG Lun Kee Clifford is the spouse of Ms. MAN Lai Hung. By virtue of the SFO, Mr. PANG Lun Kee Clifford is deemed to be interested in the shares of the Company held by Ms. MAN Lai Hung.
  2. All the shares are held in long position.

2020 Interim Report

31

CORPORATE GOVERNANCE AND OTHER INFORMATION

Save as disclosed above, as at 30 June 2020, the Directors are not aware of any other person or corporation having an interest or short position in shares and underlying shares of the Company or its associated corporation(s) which would require to be recorded in the register required to be kept by the Company pursuant to Section 336 of the SFO.

Interim Dividend

The Board has resolved not to declare any interim dividend in respect of the six months ended 30 June 2020 (for the six months ended 30 June 2019: Nil).

32

CLIFFORD MODERN LIVING HOLDINGS LIMITED

REPORT ON REVIEW OF CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

To the Board of Directors of Clifford Modern Living Holdings Limited

(Incorporated in the Cayman Islands with limited liability)

Introduction

We have reviewed the condensed consolidated financial statements of Clifford Modern Living Holdings Limited (the "Company") and its subsidiaries (collectively referred to as the "Group") set out on pages 35 to 100, which comprise the condensed consolidated statement of financial position as of 30 June 2020 and the condensed consolidated statement of comprehensive income, condensed consolidated statement of changes in equity and condensed consolidated statement of cash flows for the six months period then ended and certain explanatory notes. The Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited require the preparation of a report on interim financial information to be in compliance with the relevant provisions thereof and Hong Kong Accounting Standard 34 "Interim Financial Reporting" ("HKAS 34") issued by the Hong Kong Institute of Certified Public Accountants. The directors of the Company are responsible for the preparation and presentation of the condensed consolidated financial statements in accordance with HKAS 34. Our responsibility is to express a conclusion on the condensed consolidated financial statements based on our review, and to report our conclusion solely to you, as a body, in accordance with our agreed terms of engagement, and for no other purpose. We do not assume responsibility towards or accept liability to any other person for the contents of this report.

2020 Interim Report

33

REPORT ON REVIEW OF CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Scope of Review

We conducted our review in accordance with Hong Kong Standard on Review Engagements 2410 "Review of Interim Financial Information Performed by the Independent Auditor of the Entity" issued by the Hong Kong Institute of Certified Public Accountants. A review of the condensed consolidated financial statements consists of making inquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures. A review is substantially less in scope than an audit conducted in accordance with Hong Kong Standards on Auditing and consequently does not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit. Accordingly, we do not express an audit opinion.

Conclusion

Based on our review, nothing has come to our attention that causes us to believe that the condensed consolidated financial statements are not prepared, in all material aspects, in accordance with HKAS 34.

Moore Stephens CPA Limited

Certified Public Accountants

Hung, Wan Fong Joanne

Practising Certificate Number: P05419

Hong Kong, 28 August 2020

34

CLIFFORD MODERN LIVING HOLDINGS LIMITED

CONDENSED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

For the six months ended 30 June 2020

Six months ended 30 June

2020

2019

Notes

RMB'000

RMB'000

(Unaudited)

(Unaudited)

Continuing operations

Revenue

5

174,693

178,248

Cost of sales

6

(102,620)

(100,567)

Gross profit

72,073

77,681

Selling and marketing expenses

6

(13,344)

(12,811)

Administrative expenses

6

(15,596)

(15,265)

Impairment losses on trade and

other receivables

(406)

(200)

Other income

7

500

647

Other gains - net

7

4,467

7,326

Operating profit

47,694

57,378

Finance income

8

776

678

Finance costs

8

(1,000)

(894)

Finance costs - net

(224)

(216)

Profit before taxation

47,470

57,162

Income tax expense

9

(11,510)

(14,438)

Profit from continuing operations

35,960

42,724

Profit from discontinued operation

25(b)

-

635

Profit and total comprehensive income

for the period

35,960

43,359

2020 Interim Report

35

CONDENSED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

For the six months ended 30 June 2020

Six months ended 30 June

2020

2019

Notes

RMB'000

RMB'000

(Unaudited)

(Unaudited)

Total comprehensive income for the

period attributable to owners

of the Company arises from:

- Continuing operations

35,960

42,724

- Discontinued operation

-

635

35,960

43,359

Earnings per share for profit from

continuing operations attributable

to the owners of the Company

during the period

(expressed in RMB per share):

- Basic and diluted

10

0.035

0.042

Earnings per share for profit attributable

to the owners of the Company

during the period

(expressed in RMB per share):

- Basic and diluted

10

0.035

0.043

The above condensed consolidated statement of comprehensive income should be read in conjunction with the accompanying notes.

36

CLIFFORD MODERN LIVING HOLDINGS LIMITED

CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL POSITION

As at 30 June 2020

As at

30 June

31 December

2020

2019

Notes

RMB'000

RMB'000

(Unaudited)

(Audited)

Assets and liabilities

Non-current assets

Property, plant and equipment

11

20,389

14,350

Investment properties

11

9,199

8,694

Intangible assets

11

1,697

1,737

Right-of-use assets

12(a)

28,652

17,329

Financial assets at fair value through

profit or loss

13

4,147

4,147

Investment in silver bullion

14

102,873

-

Trade and other receivables

16

3,896

9,916

Deferred tax assets

21

2,556

2,304

173,409

58,477

Current assets

Inventories

15

11,335

8,777

Trade and other receivables

16

73,012

90,914

Contract assets

17

13,596

11,557

Financial assets at fair value through

profit or loss

13

22,074

-

Term deposits

18(a)

28,852

30,786

Restricted cash

18(b)

618

616

Cash and cash equivalents

18(c)

297,821

364,909

447,308

507,559

2020 Interim Report

37

CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL POSITION

As at 30 June 2020

As at

30 June

31 December

2020

2019

Notes

RMB'000

RMB'000

(Unaudited)

(Audited)

Current liabilities

Trade and other payables

19

111,640

100,717

Contract liabilities

20

44,760

23,456

Lease liabilities

12(b)

9,820

9,839

Tax payables

9,464

12,206

175,684

146,218

Net current assets

271,624

361,341

Total assets less current liabilities

445,033

419,818

Non-current liabilities

Lease liabilities

12(b)

31,864

19,091

Deferred tax liabilities

21

1,953

2,335

33,817

21,426

Net assets

411,216

398,392

38

CLIFFORD MODERN LIVING HOLDINGS LIMITED

CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL POSITION

As at 30 June 2020

As at

30 June

31 December

2020

2019

Notes

RMB'000

RMB'000

(Unaudited)

(Audited)

Equity

Share capital

22

8,872

8,872

Share premium

22

179,118

179,118

Other reserves

23

(107,067)

(105,706)

Retained earnings

330,293

316,108

Total equity

411,216

398,392

The above condensed consolidated statement of financial position should be read in conjunction with the accompanying notes.

The condensed consolidated financial statement on pages 35 to 100 was approved by the board of directors on and was signed on its behalf by:

Ms. MAN Lai Hung

Ms. LIANG Yuhua

Chairman & Chief Executive Officer &

Chief Operating Officer &

Executive Director

Executive Director

2020 Interim Report

39

CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

For the six months ended 30 June 2020

Attributable to the owners of the Company

Share

Share

Other

Retained

capital

premium

reserves

earnings

Total

Notes

RMB'000

RMB'000

RMB'000

RMB'000

RMB'000

Balance at 1 January 2019 (audited)

8,872

179,118

(111,497)

245,658

322,151

Profit and total comprehensive income

for the period

-

-

-

43,359

43,359

Transactions with owners

of the Company

Dividends declared by the Company

24

-

-

-

(19,569)

(19,569)

Appropriation of statutory reserves

23(a)

-

-

729

(729)

-

-

-

729

(20,298)

(19,569)

Balance at 30 June 2019 (unaudited)

8,872

179,118

(110,768)

268,719

345,941

Balance at 1 January 2020 (audited)

8,872

179,118

(105,706)

316,108

398,392

Profit and total comprehensive income

for the period

-

-

-

35,960

35,960

Transactions with owners

of the Company

Dividends declared by the Company

24

-

-

-

(23,136)

(23,136)

Deregistration of subsidiaries

23(a)

-

-

(1,361)

1,361

-

-

-

(1,361)

(21,775)

(23,136)

Balance at 30 June 2020 (unaudited)

8,872

179,118

(107,067)

330,293

411,216

The above condensed consolidated statement of changes in equity should be read in conjunction with the accompanying notes.

40

CLIFFORD MODERN LIVING HOLDINGS LIMITED

CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS

For the six months ended 30 June 2020

Six months ended 30 June

2020

2019

Notes

RMB'000

RMB'000

(Unaudited)

(Unaudited)

Cash flows from operating activities

Cash generated from operations

82,598

50,006

Income tax paid

(14,886)

(7,702)

Net cash generated from operating activities

67,712

42,304

Cash flows from investing activities

Purchases of property, plant and equipment

11

(8,837)

(975)

Proceeds from disposal of property,

plant and equipment

163

325

Purchases of intangible assets

11

(148)

(217)

Proceeds from disposal of assets

classified as held for sale and

liabilities directly associated with

assets classified as held for sale

-

4,826

Proceeds from disposal of right-of-use assets

-

1,230

Decrease in term deposits

1,934

20,305

Purchase of financial assets at fair value

through profit or loss

13(b)

(22,000)

(1,000)

Purchase of silver bullion

14

(102,489)

-

Proceeds from disposal of financial assets

at fair value through profit or loss

-

30,509

Interest received

1,203

519

Net cash (used in)/generated from

investing activities

(130,174)

55,522

2020 Interim Report

41

CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS

For the six months ended 30 June 2020

Six months ended 30 June

2020

2019

Notes

RMB'000

RMB'000

(Unaudited)

(Unaudited)

Cash flows from financing activities

Principle and interest elements of

lease payment

(5,281)

(5,257)

Net cash used in financing activities

(5,281)

(5,257)

Net (decrease)/increase in cash and

cash equivalents

(67,743)

92,569

Cash and cash equivalents

at beginning of period

18(c)

364,909

209,362

Exchange gains on cash and cash equivalents

655

590

Cash and cash equivalents

at end of period

18(c)

297,821

302,521

The above condensed consolidated statement of cash flows should be read in conjunction with the accompanying notes.

42

CLIFFORD MODERN LIVING HOLDINGS LIMITED

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

For the six months ended 30 June 2020

1. General information

Clifford Modern Living Holdings Limited (the "Company") was incorporated in the Cayman Islands on 6 January 2016 as an exempted company with limited liability under the Companies Law of the Cayman Islands. The address of the Company's registered office is located at Cricket Square, Hutchins Drive, P.O. Box 2681, Grand Cayman, KY1-1111, Cayman Islands. The principal place of business of the Company is located at 7th Floor, Chai Wan Industrial City, Phase II, 70 Wing Tai Road, Chai Wan, Hong Kong.

The Company's shares were listed on The Stock Exchange of Hong Kong Limited (the "Stock Exchange") on 8 November 2016 (the "Listing"). In the opinion of the directors of the Company, the ultimate holding company of the Group is Elland Holdings Limited, a company incorporated in the British Virgin Islands which is wholly owned by Ms. Man Lai Hung ("Ms. Man").

The Company is an investment holding company. The Company and its subsidiaries (hereinafter collectively referred to as the "Group") are primarily engaged in the provision of services to residents in properties developed under the brand name of Clifford, including retail services, catering services, property management services, laundry services, off-campus training services, property agency services, employment placement services, information technology services, renovation and fitting-out services, etc. in the mainland of People's Republic of China (the "PRC Mainland").

These condensed consolidated financial statements are presented in Renminbi ("RMB"), unless otherwise stated, which is the same as the functional currencies of the Group.

These condensed consolidated financial statements have not been audited.

2020 Interim Report

43

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

For the six months ended 30 June 2020

2. Basis of preparation

These condensed consolidated financial statements have been prepared in accordance with Hong Kong Accounting Standard 34 "Interim Financial Reporting" issued by 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.

These condensed consolidated financial statements have been prepared under the historical cost basis except for the investment in silver bullion and certain financial instruments which have been measured at fair value.

These condensed consolidated financial statements do not include all the notes of the type normally included in an annual consolidated financial statements. Accordingly, this information is to be read in conjunction with the annual consolidated financial statements for the year ended 31 December 2019, which have been prepared in accordance with Hong Kong Financial Reporting Standards (the "HKFRSs"), and any public announcement made by the Company during the current interim reporting period.

3. Principal accounting policies

The accounting policies and methods of computation adopted in the preparation of these condensed consolidated financial statements are consistent with those applied in the preparation of the Group's annual consolidated financial statements for the year ended 31 December 2019, except for the accounting policy for the investment in silver bullion (Note 3(a)) and the adoption of revised HKFRSs effective for the financial period beginning on 1 January 2020 (Note 3(b)).

44

CLIFFORD MODERN LIVING HOLDINGS LIMITED

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

For the six months ended 30 June 2020

3. Principal accounting policies (continued)

  1. Investment in silver bullion
    As disclosed in Note 14, the investment in silver bullion was made by the Group through the bank during the current interim reporting period. Given that the underlying asset of the investment contract is a kind of commodity, the settlement of investment contract is either physical delivery of silver bullion or cash settled at the London silver spot price at the Group's sole discretion, and such transaction is not within the normal course of business of the Group but for long term capital appreciation. The management of the Company considered it is appropriate to develop the following accounting policy for the recognition and measurement of the investment in silver bullion and apply it consistently:
    "On initial recognition, the investment of silver bullion is measured at fair value with the gain or loss arising from subsequent changes in the fair value of the investment to be included in the profit or loss in the period in which they arise.
    Expenditures that are directly attributable to the investment in silver bullion are expensed in the profit or loss."

2020 Interim Report

45

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

For the six months ended 30 June 2020

3. Principal accounting policies (continued)

  1. New and revised HKFRSs adopted by the Group
    In the current interim reporting period, the Group has adopted, for the first time, the following revised HKFRSs issued by the HKICPA which are mandatory effective for the annual period beginning on or after 1 January 2020 for the preparation of the Group's condensed consolidated financial statements:

HKFRS 3 Amendments

Definition of a Business

HKFRS 9, HKAS 39 and

Interest Rate Benchmark Reform

HKFRS 7 Amendments

HKAS 1 and HKAS 8

Definition of Material

Amendments

Conceptual Framework for

Revised Conceptual Framework for

Financial Reporting 2018

Financial Reporting

HKFRS 16 Amendments

COVID-19 Related Rent Concessions

The adoption of these revised HKFRSs in the current period has had no material effect on the Group's financial position and performance for the current and prior accounting periods and/or on disclosures set out in these condensed consolidated financial statements.

46

CLIFFORD MODERN LIVING HOLDINGS LIMITED

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

For the six months ended 30 June 2020

3. Principal accounting policies (continued)

  1. New and revised HKFRSs not yet effective for the financial period beginning on 1 January 2020 and not early adopted by the Group
    Up to the date of issuance of this report, the Group has not early adopted any of the following new and revised HKFRSs, which have been issued but are not yet effective, in these condensed consolidated financial statements:

Effective for

annual years

beginning on

or after

HKFRS 10 and HKAS 28

Sale or Contribution of Assets

To be determined *

Amendments

between an Investor and its

Associate or Joint Venture

HKFRS 17

Insurance contracts

1 January 2021

HKAS 16 Amendments

Property, plant and equipment -

1 January 2022

Proceeds before intended Use

HKAS 37 Amendments

Onerous Contracts - Cost of Fulfilling

1 January 2022

a Contract

HKFRS 3 (Revised)

Reference to the Conceptual

1 January 2022

Amendments

Framework

HKFRSs Amendments

Annual Improvements to HKFRSs

1 January 2022

2018-2020

HKAS 1 Amendments

Classification of liabilities as current

1 January 2023

or non-current

  • The amendments were original intended to be effective for annual periods beginning on or after 1 January 2019. The effective date has now been deferred. Early adoption of the amendments continues to be permitted.

The Group has already commenced an assessment of the impact of these new and revised HKFRSs. According to the preliminary assessment made by the directors, no significant impact on the financial performance and position of the Group is expected when they become effective.

2020 Interim Report

47

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

For the six months ended 30 June 2020

4. Critical accounting estimates and judgements

The preparation of condensed consolidated financial statements requires management to make judgements, estimates and assumptions that affect the application of accounting policies and the reported amounts of assets and liabilities, income and expense. Actual results may differ from these estimates.

In preparing these condensed consolidated financial statements, the significant judgements made by management in applying the Group's accounting policies and the key sources of estimation uncertainty were the same as those that applied to the annual consolidated financial statements for the year ended 31 December 2019.

5. Segment information

Information reported to the executive directors of the Company, who are the chief operating decision makers of the Group, was specifically focused on the segments of retail services, information technology services, property management services, off-campus training services, property agency services, renovation and fitting-out services and other services for the purpose of resource allocation and performance assessment. These divisions are the basis on which the Group reports its segment information under HKFRS 8 "Operation Segments".

The executive directors of the Company assess the performance of the operating segments based on a measure of segment revenue and results and segment assets and liabilities. Segment results excluded other income, other gains - net, finance costs - net, central administration costs, income tax expense, and segment assets excluded deferred tax assets, financial assets at fair value through profit or loss, investment in silver bullion, term deposits, restricted cash and cash and cash equivalents, and segment liabilities excluded dividend payable and deferred tax liabilities as these activities are centrally driven by the Group.

48

CLIFFORD MODERN LIVING HOLDINGS LIMITED

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

For the six months ended 30 June 2020

5. Segment information (continued)

Segment revenue and results

The segment revenue and results and the reconciliation with profit from continuing operations are as follows:

For the six months ended 30 June 2020 (unaudited)

Information

Property

Off-campus

Property

Renovation

Retail

technology

management

training

agency

and fitting-

services

services

services

services

services

out services

Others

Total

RMB'000

RMB'000

RMB'000

RMB'000

RMB'000

RMB'000

RMB'000

RMB'000

Gross segment revenue

74,571

31,994

37,713

6,546

7,598

7,347

9,354

175,123

Inter-segment revenue

(82)

-

(348)

-

-

-

-

(430)

Revenue

74,489

31,994

37,365

6,546

7,598

7,347

9,354

174,693

Timing of revenue recognition

At a point in time

66,853

-

-

-

1,902

-

1,027

69,782

Over time

7,636

31,994

37,365

6,546

5,696

7,347

8,327

104,911

74,489

31,994

37,365

6,546

7,598

7,347

9,354

174,693

Segment results

15,522

5,208

21,427

(1,176)

1,180

2,967

2,601

47,729

Other income

500

Other gains - net

4,467

Finance costs - net

(224)

Unallocated expenses

(5,002)

Income tax expense

(11,510)

Profit from continuing

operations for the period

35,960

Segment results include:

Depreciation and amortisation

(4,880)

(677)

(817)

(1,774)

(135)

(25)

(591)

(8,899)

Loss on disposal of property,

plant and equipment

(6)

-

-

-

-

-

-

(6)

(Provision for)/Reversal of

impairment losses on trade

and other receivables

(13)

(150)

(287)

-

-

(219)

263

(406)

Written off of trade receivables

-

-

-

-

-

-

(134)

(134)

2020 Interim Report

49

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

For the six months ended 30 June 2020

5. Segment information (continued)

Segment revenue and results (continued)

For the six months ended 30 June 2019 (unaudited)

Information

Property

Off-campus

Property

Renovation

Retail

technology

management

training

agency

and fitting-

services

services

services

services

services

out services

Others

Total

RMB'000

RMB'000

RMB'000

RMB'000

RMB'000

RMB'000

RMB'000

RMB'000

Gross segment revenue

50,982

33,152

28,010

22,287

21,980

11,219

11,055

178,685

Inter-segment revenue

(9)

-

(428)

-

-

-

-

(437)

Revenue

50,973

33,152

27,582

22,287

21,980

11,219

11,055

178,248

Timing of revenue recognition

At a point in time

43,424

-

3,294

-

-

-

656

47,374

Over time

7,549

33,152

24,288

22,287

21,980

11,219

10,399

130,874

50,973

33,152

27,582

22,287

21,980

11,219

11,055

178,248

Segment results

8,548

7,312

18,275

8,486

4,443

4,342

2,696

54,102

Other income

647

Other gains - net

7,326

Finance costs - net

(216)

Unallocated expenses

(4,697)

Income tax expense

(14,438)

Profit from continuing

operations for the period

42,724

Segment results include:

Depreciation and amortisation

(3,351)

(834)

(391)

(1,399)

(146)

-

(526)

(6,647)

Loss on disposal of property,

plant and equipment

-

-

-

-

-

-

(1)

(1)

Provision for impairment

losses on trade and other

receivables

(12)

-

-

-

-

-

(188)

(200)

  • Certain comparative figures have been reclassified to conform to the current period's presentation.

50

CLIFFORD MODERN LIVING HOLDINGS LIMITED

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

For the six months ended 30 June 2020

5. Segment Information (continued)

The segment assets and liabilities and the reconciliation with total assets and liabilities of the Group as at 30 June 2020 and 31 December 2019 are as follows:

Segment assets

As at

30 June

31 December

2020

2019

RMB'000

RMB'000

(Unaudited)

(Audited)

Retail services

57,151

36,215

Information technology services

57,432

69,376

Property management services

12,080

12,555

Off-campus training services

17,352

18,431

Property agency services

2,043

1,808

Renovation and fitting-out services

5,360

14,005

Others

10,358

10,884

Total segment assets

161,776

163,274

Financial assets at fair value through

profit or loss

26,221

4,147

Investment in silver bullion

102,873

-

Term deposits

28,852

30,786

Restricted cash

618

616

Cash and cash equivalents

297,821

364,909

Deferred tax assets

2,556

2,304

Total assets

620,717

566,036

2020 Interim Report

51

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

For the six months ended 30 June 2020

5. Segment Information (continued)

Segment liabilities

As at

30 June

31 December

2020

2019

RMB'000

RMB'000

(Unaudited)

(Audited)

Retail services

64,064

55,476

Information technology services

47,497

41,733

Property management services

16,789

7,446

Off-campus training services

27,947

31,945

Property agency services

3,516

5,004

Renovation and fitting-out services

16,776

17,955

Others

7,823

5,750

Total segment liabilities

184,412

165,309

Dividend payable

23,136

-

Deferred tax liabilities

1,953

2,335

Total liabilities

209,501

167,644

These assets and liabilities are allocated based on the operations of the segment and the physical location of the assets and liabilities.

52

CLIFFORD MODERN LIVING HOLDINGS LIMITED

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

For the six months ended 30 June 2020

5. Segment Information (continued)

As at 30 June 2020, more than 90% (31 December 2019: more than 90%) of the Group's non-current assets other than financial assets, investment in silver bullion and deferred tax assets, are situated in the PRC Mainland.

During the six months ended 30 June 2020, more than 90% (the six months ended 30 June 2019: more than 90%) of the Group's revenue were derived from activities carried out and from customers located in the PRC Mainland and no geographical segment analysis is prepared.

Clifford Estates (Panyu) Limited* (廣州市番禺祈福新邨房地產有限公司), a company under significant influence of the spouse of Ms. Man, contributes more than 13% (the six months ended 30 June 2019: more than 6%) of the Group's revenue on the segments of retail services, information technology services, property management services and off-campus training services (the six months ended 30 June 2019: retail services, information technology services, property management services and off-campus training services) for the six months ended 30 June 2020.

2020 Interim Report

53

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

For the six months ended 30 June 2020

6. Expense by nature - continuing operations

Six months ended 30 June

2020

2019

RMB'000

RMB'000

(Unaudited)

(Unaudited)

Employee benefit expenses (including

emoluments of directors)

33,300

40,573

- Wages and salaries

28,967

34,599

- Social insurance expenses (Note)

1,597

3,655

- Housing benefits

1,116

565

- Other employee benefits

1,620

1,754

Cost of goods sold for retail business

41,626

25,779

Construction cost for information

technology services

21,506

18,649

Agency cost for property agency services

4,525

11,763

Service charges for employment

placement services

2,475

2,505

Cost of raw materials and consumables

2,094

1,373

Sub-contracting costs for renovation and

fitting-out services

4,187

8,275

Depreciation and amortisation

8,899

6,647

- property, plant and equipment, investment

properties and intangible assets (Note 11)

5,324

3,819

- right-of-use assets (Note 12)

3,575

2,828

Utilities - electricity, water and gas, etc.

3,871

2,753

Short-term lease expenses and management fees

442

2,744

Office expenses

2,294

1,907

Auditor's remuneration

471

750

Professional fee

1,678

1,540

Tax and other levies

1,546

1,480

Others

2,646

1,905

131,560

128,643

54

CLIFFORD MODERN LIVING HOLDINGS LIMITED

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

For the six months ended 30 June 2020

6. Expense by nature - continuing operations (continued)

Note: Employees in the Group's PRC subsidiaries are required to participate in a defined contribution retirement scheme administered and operated by the local municipal government. The Group's PRC subsidiaries contribute funds which are calculated based on certain percentages of the average employee salary as agreed by local municipal government to the scheme to fund the retirement benefits of the employees.

Pursuant to an announcement issued by the Ministry of Human Resources and Social Security of the PRC, in light of COVID-19 outbreak, certain Group entities are exempted from making employer contributions to pension, unemployment, and work-related injury insurance schemes between February to May 2020.

2020 Interim Report

55

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

For the six months ended 30 June 2020

7. Other income, other gains - net - continuing operations

Six months ended 30 June

2020

2019

RMB'000

RMB'000

(Unaudited)

(Unaudited)

Other income:

Interest income on cash and cash equivalents

405

551

Interest income from amounts placed in

Residents' Accounts (Note 16(b))

95

96

500

647

Other gains, net:

Loss on termination of lease of premises

(420)

-

Gain on disposal of right-of-use assets

-

5,916

Loss on disposal of property,

plant and equipment

(6)

(1)

Gains on foreign exchanges - net

3,529

590

Fair value gains on financial assets at fair value

through profit or loss ("FVTPL") (Note 13(b))

74

275

Fair value gain on investment in silver bullion

(Note 14)

384

-

Government grant

181

61

Written off of trade receivables

(134)

-

Compensation from tenants

444

-

Others

415

485

4,467

7,326

56

CLIFFORD MODERN LIVING HOLDINGS LIMITED

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

For the six months ended 30 June 2020

8. Finance costs - net

Six months ended 30 June

2020

2019

RMB'000

RMB'000

(Unaudited)

(Unaudited)

Finance income:

- Interest income on term deposits and

wealth management products

776

678

Finance costs:

- Interest paid/payable for lease liabilities

(Note 12(c))

(1,000)

(894)

Finance costs - net

(224)

(216)

2020 Interim Report

57

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

For the six months ended 30 June 2020

9. Income tax expense

Six months ended 30 June

2020

2019

RMB'000

RMB'000

(Unaudited)

(Unaudited)

Current tax:

- PRC Mainland corporate income tax

10,806

13,128

- Hong Kong profits tax

-

43

- PRC Mainland withholding income tax

1,338

-

Total current tax

12,144

13,171

Deferred tax:

- PRC Mainland corporate income tax

(274)

895

- PRC Mainland withholding income tax

(360)

550

Total deferred tax

(634)

1,445

Income tax expense

11,510

14,616

Income tax expense is attributable to:

- Profit from continuing operations

11,510

14,438

- Profit from discontinued operation

-

178

11,510

14,616

58

CLIFFORD MODERN LIVING HOLDINGS LIMITED

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

For the six months ended 30 June 2020

9. Income tax expense (continued)

PRC Mainland Corporate Income Tax

The income tax provision of the Group in respect of operations in the PRC Mainland has been calculated at the applicable tax rate on the estimated assessable profits for the period, based on the existing legislation, interpretations and practices in respect thereof.

The general corporate income tax rate applicable to the Group entities located in the PRC Mainland ("PRC Mainland entities") is 25% according to the Corporate Income Tax Law of the People's Republic of China effective on 1 January 2008. During the year ended 31 December 2017, a subsidiary of the Company obtained the Certificate of "High and New Technology Enterprise" with valid period from 2017 to 2019. According to the Corporate Income Tax Law of the People's Republic of China, corporations which obtain the Certificate of "High and New Technology Enterprise" are entitled to enjoy a preferential corporate income rate of 15%. The corporate income rate has been resumed to 25% since 1 January 2020.

Under the tax reduction measures introduced by the State Council, from 1 January 2018 to 31 December 2020, the qualifying small enterprises whose assessable profit falls under RMB1,000,000 will be qualified for a reduced 5% effective tax rate, and those assessable profit falls under RMB3,000,000 but above RMB1,000,000 will be qualified for a reduced 10% effective tax rate.

PRC Mainland Withholding Income Tax

PRC Mainland withholding income tax of 10% shall be levied on the dividends declared by PRC Mainland entities to their foreign investors out of their profits earned after 1 January 2008. A lower 5% withholding tax rate was applied when the immediate holding companies of the PRC Mainland subsidiaries are incorporated or operated in Hong Kong and fulfil the requirement to the tax treaty arrangement between the PRC Mainland and Hong Kong.

During the six months ended 30 June 2020, a provision of deferred tax for the earnings of the PRC Mainland subsidiaries planned to be distributed to the other overseas group entities has been made at withholding income tax rate of 5% (the six months ended 30 June 2019: 5%).

2020 Interim Report

59

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

For the six months ended 30 June 2020

9. Income tax expense (continued)

Hong Kong Profits Tax

No provision for Hong Kong profits tax has been provided as the Group had no assessable profits for the six months ended 30 June 2020 (the six months ended 30 June 2019: Nil).

Overseas Corporate Income Tax

The Company was incorporated in the Cayman Islands as an exempted company with limited liability under the Companies Law, Cap 22 of Cayman Islands and is exempted from Cayman Islands income tax. British Virgin Islands subsidiaries were incorporated under the International Business Companies Act of the British Virgin Islands and are exempted from British Virgin Islands income tax.

10. Earnings per share

  1. Basic
    Basic earnings per share is calculated by dividing the profit attributable to the owners of the Company by the weighted average number of ordinary shares in issue during the period.

Six months ended 30 June

2020 2019

(Unaudited) (Unaudited)

Profit from continuing operations attributable

to the owners of the Company (RMB)

35,960,000

42,724,000

Weighted average number of

ordinary shares in issue

1,015,200,000

1,015,200,000

60

CLIFFORD MODERN LIVING HOLDINGS LIMITED

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

For the six months ended 30 June 2020

10. Earnings per share (continued)

(a) Basic (continued)

Six months ended 30 June

2020

2019

(Unaudited)

(Unaudited)

Basic earnings per share for profit from

continuing operations attributable to the

owners of the Company during the period

(expressed in RMB per share)

0.035

0.042

Profit attributable to the owners

of the Company (RMB)

- From continuing operations

35,960,000

42,724,000

- From discontinued operation

-

635,000

35,960,000

43,359,000

Weighted average number of

ordinary shares in issue

1,015,200,000

1,015,200,000

Basic earnings per share for profit attributable

to the owners of the Company during

the period (expressed in RMB per share)

0.035

0.043

2020 Interim Report

61

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

For the six months ended 30 June 2020

10. Earnings per share (continued)

  1. Diluted
    Diluted earnings per share is calculated by adjusting the weighted average number of ordinary shares outstanding to assume conversion of all dilutive potential ordinary shares. The Company has dilutive potential ordinary shares arising from the employees' share options. For the employees' share options, the number of shares that would have been issued assuming the exercise of the share options less the number of shares that could have been issued at fair value (determined as the average market price per share) for the same total proceeds is the number of shares issued for no consideration. The resulting number of shares issued for no consideration is included in the weighted average number of ordinary shares as the denominator for calculating diluted earnings per share.
    As stated in Note 23(c), the Employees' Share Option Scheme was adopted on 8 November 2016 and became effective on the same day. Diluted earnings per share for the six months ended 30 June 2020 was calculated as below:

62

CLIFFORD MODERN LIVING HOLDINGS LIMITED

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

For the six months ended 30 June 2020

10. Earnings per share (continued)

(b) Diluted (continued)

Six months ended 30 June

2020

2019

(Unaudited)

(Unaudited)

Profit from continuing operations attributable

to the owners of the Company (RMB)

35,960,000

42,724,000

Weighted average number of ordinary shares

in issue

1,015,200,000

1,015,200,000

Adjustment for:

- Employees' share options

1,547,399

1,819,072

Weighted average number of ordinary shares

for diluted earnings per share

1,016,747,399

1,017,019,072

Diluted earnings per share for profit from

continuing operations attributable to the

owners of the Company during the period

(expressed in RMB per share)

0.035

0.042

2020 Interim Report

63

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

For the six months ended 30 June 2020

10. Earnings per share (continued)

(b) Diluted (continued)

Six months ended 30 June

2020

2019

(Unaudited)

(Unaudited)

Profit attributable to the owners of the

Company (RMB)

- From continuing operations

35,960,000

42,724,000

- From discontinued operation

-

635,000

35,960,000

43,359,000

Weighted average number of ordinary shares

in issue

1,015,200,000

1,015,200,000

Adjustment for:

- Employees' share options

1,547,399

1,819,072

Weighted average number of ordinary shares

for diluted earnings per share

1,016,747,399

1,017,019,072

Diluted earnings per share for profit attributable

to the owners of the Company during the

period (expressed in RMB per share)

0.035

0.043

64

CLIFFORD MODERN LIVING HOLDINGS LIMITED

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

For the six months ended 30 June 2020

11. Property, plant and equipment, investment properties and intangible assets

Property,

plant and

Investment

Intangible

equipment

properties

assets

RMB'000

RMB'000

RMB'000

(Note)

As at 31 December 2019

Cost

33,067

12,058

2,417

Accumulated depreciation and

amortisation

(18,717)

(3,364)

(680)

Net book amount (audited)

14,350

8,694

1,737

Six months ended 30 June 2020

Opening net book amount

14,350

8,694

1,737

Additions

8,837

3,012

148

Disposals

(169)

-

-

Depreciation and amortisation charge

(Note 6)

(2,629)

(2,507)

(188)

Closing net book amount (unaudited)

20,389

9,199

1,697

As at 30 June 2020

Cost

40,329

15,070

2,565

Accumulated depreciation and

amortisation

(19,940)

(5,871)

(868)

Net book amount (unaudited)

20,389

9,199

1,697

Note: As at 30 June 2020, the Group leases certain office premises under operating leases with certain related parties (Note 26(b)) and independent third parties. Certain of the Group's right-of-use assets which are used in the sub-leasing business, meet the definition of investment properties.

2020 Interim Report

65

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

For the six months ended 30 June 2020

12. Right-of-use asset and lease liabilities

  1. Right-of-useassets

Office

premises

RMB'000

As at 31 December 2019

Cost

22,441

Accumulated depreciation

(5,112)

Net book amount (audited)

17,329

Six months ended 30 June 2020

Opening net book amount

17,329

Addition

15,965

Derecognised upon termination of lease

(1,067)

Depreciation charge (Note 6)

(3,575)

Closing net book amount (unaudited)

28,652

As at 30 June 2020

Cost

36,757

Accumulated depreciation

(8,105)

Net book amount (unaudited)

28,652

66

CLIFFORD MODERN LIVING HOLDINGS LIMITED

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

For the six months ended 30 June 2020

12. Right-of-use asset and lease liabilities (continued)

  1. Lease liabilities

As at

30 June 31 December

2020 2019

RMB'000 RMB'000 (Unaudited) (Unaudited)

Analysed into:

Current portion

9,820

9,839

Non-current portion

31,864

19,091

41,684

28,930

  1. The amounts recognised in condensed consolidated statement of comprehensive income are as follows:

Six months ended 30 June

2020

2019

RMB'000

RMB'000

(Unaudited)

(Unaudited)

Interest on lease liabilities (Note 8)

1,000

894

Depreciation charged on right-of-use

assets (Note 6)

3,575

2,828

Expense relating to short-term lease

(Note 6)

442

2,744

The total cash outflow for leases for the six months ended 30 June 2020 was approximately RMB5,723,000 (the six months ended 30 June 2019: RMB8,001,000).

2020 Interim Report

67

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

For the six months ended 30 June 2020

  1. Right-of-useasset and lease liabilities (continued)
    1. The Group entered certain lease in respect of properties from related parties to the Group. The amount of rental payable by the Group under the lease are approximately RMB755,000 (31 December 2019: RMB755,000) per month with the lease term ranging from 2 to 10 years (31 December 2019: 1 to 10 years).
      As at 30 June 2020, included in the Group's current and non-current lease liabilities, approximately RMB6,288,000 and RMB17,142,000 (31 December 2019: RMB7,414,000 and RMB18,089,000) respectively were the amounts due to related parties. The short-term lease expenses, interest expenses on lease liabilities and payment of lease liabilities during the six months ended 30 June 2020 and 2019 are disclosed in Note 26(b).
    2. The Group leases various properties. Rental contracts are typically made for fixed periods of 1 to 10 years (31 December 2019: 1 to 10 years). Lease terms are negotiated on an individual basis and contain a wide range of different terms and conditions. The lease agreements do not impose any covenants, but leased assets may not be used as security for borrowing purposes.
  2. Fair value measurement of financial instruments
    1. Fair value hierarchy
      To provide an indication about the reliability of the inputs used in determining fair value, the Group classifies its financial instruments into the three levels.
      Level 1: The fair value of financial instruments traded in active markets (such as publicly traded derivatives, and equity securities) is based on quoted market prices at the end of the reporting period. The quoted marked price used for financial assets held by the Group is the current bid price. These instruments are included in level 1.
      Level 2: The fair value of financial instruments that are not traded in an active market (for example, over-the-counter derivatives) is determined using valuation techniques which maximise the use of observable market data and rely as little as possible on entity specific estimates. If all significant inputs required to fair value an instrument are observable, the instrument is included in level 2.

68

CLIFFORD MODERN LIVING HOLDINGS LIMITED

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

For the six months ended 30 June 2020

13. Fair value measurement of financial instruments (continued)

  1. Fair value hierarchy (continued)
    Level 3: If one or more of the significant inputs is not based on observable market data, the instrument is included in level 3. This is the case for unlisted equity securities.
    The level in the fair value hierarchy within which the financial assets is categorized in its entirety is based on the lowest level of input that is significant to the fair value measurement. The financial assets measured at fair value in the condensed consolidated statement of financial position are grouped into the fair value hierarchy as follows:

As at

30 June

31 December

2020

2019

RMB'000

RMB'000

(Unaudited)

(Audited)

Financial assets at FVTPL

- Financial products with variable returns

26,221

(Note)

4,147

Analysed into:

4,147

Non-current

4,147

Current

22,074

-

26,221

4,147

Note:

These are the financial products purchased from commercial banks in the PRC Mainland. These financial products with the original maturity period of 3 months to 10 years (31 December 2019: 10 years) carry the variable return rate, resulting from possible changes in market interest rates. Such investment is subject to financial risk exposure in terms of interest rate risk.

In respect of one the financial product with fair value of approximately RMB4,147,000 (31 December 2019: RMB4,147,000), the Group can unconditionally cancel or terminate the investment in the financial product at any time, at the original principal amount and the accrued interests up to the date of cancellation/termination.

The fair value of the financial products as at the end of the reporting period was estimated by the management of the Company by using discounted cash flow method which based on the present value of the contractual stream of future cash flows (which is estimated with reference to the expected return rates) discounted at the discount rate (which is determined with reference to the yield of the PRC Mainland government bonds for respective maturity periods) and credit spread determined with reference to the premium compensated from the market comparable with the same credit rating as the commercial banks.

2020 Interim Report

69

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

For the six months ended 30 June 2020

13. Fair value measurement of financial instruments (continued)

  1. Fair value measurements using significant unobservable inputs (Level 3)
    The following table illustrate the fair value measurement hierarchy of the Group's financial instruments:

Level 3

RMB'000

At 1 January 2019 (audited)

40,448

Acquisitions

1,000

Fair value gains recognised in profit or loss (Note 7)

275

Disposals

(30,509)

At 30 June 2019 (unaudited)

11,214

At 1 January 2020 (audited)

4,147

Acquisitions

22,000

Fair value gains recognised in profit or loss (Note 7)

74

At 30 June 2020 (unaudited)

26,221

70

CLIFFORD MODERN LIVING HOLDINGS LIMITED

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

For the six months ended 30 June 2020

13. Fair value measurement of financial instruments (continued)

  1. Valuation inputs and relationships to fair value
    The following table presents the Group's financial assets measured and recognised at fair value at 30 June 2020 on a recurring basis:

Range of

inputs

Financial

(probability-

Relationship of

assets at

Fair value at

Valuation

Unobservable

weighted

unobservable

FVTPL

30 June 2020

technique

inputs*

average)

inputs to fair value

RMB'000

Financial

26,221

Discounted

Expected Interest

2.40%-3.00%

A change expected

products (the

cash flow

rate per annum

interest rate per

expiry dates

annum 100 basic

ranging

points results in a

from 5 Aug

change in fair value

2020 to 20

by approximately

September

RMB349,000 (31

2026 (31

December 2019:

December

RMB40,000)

2019: 20

September

2026))

    • There were no significant inter-relationships between unobservable inputs that materially affect fair values.
  1. Fair values of other financial instruments
    The Group also has a number of financial instruments which are not measured at fair value in the condensed consolidated statement of financial position. For the majority of these instruments, the fair values are not materially different to their carrying amounts, since the interest receivable/ payable is either close to current market rates or the instruments are short- term in nature.

2020 Interim Report

71

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

For the six months ended 30 June 2020

14. Investment in silver bullion

During the six months ended 30 June 2020, the Group invested in a total of 800,000 ounces of unallocated silver bullion through Standard Chartered Bank (Hong Kong) Limited at a total consideration of approximately RMB102,489,000 (the six months ended 30 June 2019 (unaudited): Nil). Such investment is held for long-term capital appreciation, and the management of the Company has decided to use the fair value model, with the changes in fair value to be recognised in the profit or loss in the period of changes.

The fair value of the investment in silver bullion is measured with reference to their quoted price in the London Silver Market at the end of each reporting period. As at 30 June 2020, the fair value of the investment in silver bullion amounted to approximately RMB102,873,000. Such investment is subject to financial risk exposure in terms of commodity price risk.

The Group can unconditionally, at its sole discretion, convert the investment into allocated silver bullion or realise the investment into cash at the London silver spot price by giving not less than 2 business days' prior written notice.

15. Inventories

As at

30 June 31 December

2020 2019

RMB'000 RMB'000

(Unaudited) (Audited)

Merchandise goods

10,662

7,295

Raw materials and consumables

673

1,480

Others

-

2

11,335

8,777

72

CLIFFORD MODERN LIVING HOLDINGS LIMITED

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

For the six months ended 30 June 2020

16. Trade and other receivables

As at

30 June

31 December

2020

2019

RMB'000

RMB'000

(Unaudited)

(Audited)

Trade receivables (Note (a)):

- Related parties (Note 26(d))

22,646

25,531

- Third parties

26,472

48,128

Total trade receivables

49,118

73,659

Less: allowance for impairment of trade

receivables

(1,883)

(1,477)

47,235

72,182

Amounts placed in Residents' Accounts (Note (b))

3,524

6,246

Other receivables:

- Related parties (Note 26(d))

2,260

4,859

- Third parties (Note (c))

15,075

14,035

Total other receivables

17,335

18,894

2020 Interim Report

73

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

For the six months ended 30 June 2020

16. Trade and other receivables (continued)

As at

30 June

31 December

2020

2019

RMB'000

RMB'000

(Unaudited)

(Audited)

Less: allowance for impairment of

other receivables

(68)

(68)

17,267

18,826

Prepayments:

- Third parties

8,882

3,576

Total trade and other receivables

76,908

100,830

Analysed into:

Non-current

3,896

9,916

Current

73,012

90,914

76,908

100,830

74

CLIFFORD MODERN LIVING HOLDINGS LIMITED

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

For the six months ended 30 June 2020

16. Trade and other receivables (continued)

Notes:

  1. Trade receivables due from third parties mainly represented the receivables arising from provision of information technology services and renovation and fitting-out services and the receivables of outstanding property management fee charged on commission basis.
    During the six months ended 30 June 2020, the credit period granted to trade customers of information technology services and renovation and fitting-out services varies from one month to one year (31 December 2019: one month to one year); the trading of retail services, catering services, off-campus training services, property agency services, employment placement services and laundry services are mainly carried out on a cash basis (31 December 2019: cash basis).
    As at 30 June 2020 and 31 December 2019, the ageing analysis of the trade receivables based on invoice date, were as follows:

As at

30 June

31 December

2020

2019

RMB'000

RMB'000

(Unaudited)

(Audited)

Less than 1 year

44,621

69,799

1 to 2 year(s)

2,883

2,055

Over 2 years

1,614

1,805

49,118

73,659

Less: allowance for impairment

of trade receivables

(1,883)

(1,477)

47,235

72,182

In determining the recoverability of such receivables, the Group takes into consideration a number of indicators, including, among others, subsequent settlement status, historical write-off experience and the collection rate of the customers in estimating the future cash flows from the receivables.

2020 Interim Report

75

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

For the six months ended 30 June 2020

16. Trade and other receivables (continued)

Notes: (continued)

  1. Certain property management companies of the Group have engaged in the provision of property management services for residential communities on commission basis and opened bank accounts on behalf of the residents ("Residents' Accounts"). These Residents' Accounts are used to collect the property management fee and resident support services fee from the residents. The property management companies have undertaken the treasury function for these bank accounts on behalf of the residents pursuant to the property management contracts. As at 30 June 2020, amounts included in Residents' Accounts of approximately RMB3,524,000 (31 December 2019: RMB6,246,000) represented the balances of the property management commission fee and resident support service fee entitled by the property management companies. As at 30 June 2020, amounts placed in Resident's Accounts carry interest at prevailing rates from 0.30% to 2.10% per annum (31 December 2019: 0.30% to 2.10% per annum). The fair value of these balances approximates their carrying amounts.
  2. Included in the other receivables balance are the finance lease receivables with aggregate carrying amount of approximately RMB3,895,000 (31 December 2019: RMB6,704,000). Certain leased properties under subleases were accounted for as finance leases and carried interest at 4.75% (31 December 2019: 4.75%) per annum as at 30 June 2020. The head leases generally run for an initial period of 2 to 5 years (31 December 2019: 3 to 5 years) while the period of finance leases is ranging from 2 to 5 years (31 December 2019: 2 to 5 years).

The maximum exposure to credit risk at the reporting dates is the carrying value of each class of receivables mentioned above. The Group does not hold any collateral as security.

The Group applies the simplified approach to provide for expected credit losses prescribed by HKFRS 9. As at 30 June 2020, a provision of RMB1,950,000 (31 December 2019: RMB1,545,000) was made against the gross amounts of trade and other receivables.

76

CLIFFORD MODERN LIVING HOLDINGS LIMITED

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

For the six months ended 30 June 2020

17. Contract assets

As at

30 June 31 December

2020 2019

RMB'000 RMB'000

(Unaudited) (Audited)

Amounts due from customers for contract works

- Related parties (Note 26(d))

3,172

5,264

- Third parties

10,424

6,293

13,596

11,557

18. Cash and bank balances

  1. Term deposits

As at

30 June 31 December

2020 2019

RMB'000 RMB'000

(Unaudited) (Audited)

With maturity date over 3 months from

initial recognition

28,852

30,786

As at 30 June 2020, the term deposits with expiry dates ranging from 17 December 2020 to 23 June 2021 (31 December 2019: from 18 March 2020 to 26 December 2020) carry interest at prevailing deposit rates which range from 1.75% to 2.10% per annum (31 December 2019: 1.75% to 2.10% per annum). The fair value of the Group's term deposits approximate their carrying amounts. The term deposits are denominated in RMB.

2020 Interim Report

77

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

For the six months ended 30 June 2020

18. Cash and bank balances (continued)

  1. Restricted cash
    Restricted cash represents cash deposits in the banks as security for issuance of cash cards and carrying out training services according to the relevant regulations in the PRC Mainland.
  2. Cash and cash equivalents

As at

30 June 31 December

2020 2019

RMB'000 RMB'000

(Unaudited) (Audited)

Cash at banks and on hand

274,698

274,301

Short-term bank deposits

23,123

90,608

297,821

364,909

78

CLIFFORD MODERN LIVING HOLDINGS LIMITED

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

For the six months ended 30 June 2020

18. Cash and bank balances (continued)

  1. Cash and cash equivalents (continued)
    As at 30 June 2020, short-term bank deposits carried interest at prevailing deposit rates which range from 0.50% to 1.50% per annum (31 December 2019: 0.50% to 1.50% per annum).

As at

30 June 31 December

2020 2019

RMB'000 RMB'000

(Unaudited) (Audited)

Cash and cash equivalents denominated in:

- RMB

257,462

327,814

- Hong Kong Dollar ("HK$")

40,352

37,088

- United States Dollar ("US$")

7

7

297,821

364,909

The conversion of RMB denominated balances into foreign currencies and the remittance of such foreign currencies out of the PRC Mainland are subject to relevant rules and regulations of foreign exchange control promulgated by the PRC Mainland government.

2020 Interim Report

79

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

For the six months ended 30 June 2020

19. Trade and other payables

As at

30 June

31 December

2020

2019

RMB'000

RMB'000

(Unaudited)

(Audited)

Trade payables (Note (a)):

- Related parties (Note 26(d))

7

7

- Third parties

47,998

50,313

48,005

50,320

Other payables (Note (b)):

- Related parties (Note 26(d))

7,089

9,523

- Third parties

24,204

22,626

31,293

32,149

Accrued payroll

7,721

14,223

Dividend payable (Note 24)

23,136

-

Other tax payables

1,485

4,025

111,640

100,717

80

CLIFFORD MODERN LIVING HOLDINGS LIMITED

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

For the six months ended 30 June 2020

19. Trade and other payables (continued)

  1. As at 30 June 2020 and 31 December 2019, the ageing analysis of the trade payables (including amounts due to related parties of trading in nature) based on invoice date were as follows:

As at

30 June 31 December

2020 2019

RMB'000 RMB'000

(Unaudited) (Audited)

Less than 1 year

43,973

44,399

1 to 2 year(s)

3,721

5,549

2 to 3 years

51

147

Over 3 years

260

225

48,005

50,320

The balances of trade payables over 1 year mainly represented the amounts due to third party contractors for renovation and maintenance services and information technology services.

  1. Other payables mainly represented the property management deposits received from property owners and rental deposits which amounted to approximately RMB4,942,000 (31 December 2019: Nil) and RMB4,632,000 (31 December 2019: RMB4,238,000) respectively.

2020 Interim Report

81

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

For the six months ended 30 June 2020

20. Contract liabilities

As at

30 June

31 December

2020

2019

RMB'000

RMB'000

(Unaudited)

(Audited)

Advances from customers

- Related parties (Note 26(d))

569

2,657

- Third parties

20,223

17,416

Amounts due to customers for contract works

- Related parties (Note 26(d))

16,999

936

- Third parties

6,969

2,447

44,760

23,456

82

CLIFFORD MODERN LIVING HOLDINGS LIMITED

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

For the six months ended 30 June 2020

21. Deferred tax

The movement in deferred tax assets during the period, without taking into consideration the offsetting of balances within the same tax jurisdiction, is as follows:

Temporary difference

relating to expenses not temporarily deductible

2020 2019

RMB'000 RMB'000

(Unaudited) (Audited)

Deferred tax assets

As at 1 January (audited)

2,304

1,743

Credited to profit or loss (Note 9)

252

419

As at 30 June (unaudited)

2,556

2,162

2020 Interim Report

83

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

For the six months ended 30 June 2020

21. Deferred tax (continued)

The movement in deferred tax liabilities during the period, without taking into consideration the offsetting of balances within the same tax jurisdiction, is as follows:

Temporary difference

relating to undistributed

profit of subsidiaries

2020 2019

RMB'000 RMB'000

Deferred tax liabilities

As at 1 January (audited)

(2,335)

(3,000)

Credited/(charged) to profit or loss (Note 9)

382

(1,864)

As at 30 June (unaudited)

(1,953)

(4,864)

As at 30 June 2020, the Group did not recognise deferred tax assets of approximately RMB455,000 (31 December 2019: RMB939,000) in respect of tax losses of approximately RMB1,819,000 (31 December 2019: RMB4,849,000). Tax losses of group entities operated in the PRC Mainland could be carried forward for a maximum of five years.

As at 30 June 2020, the Group has not recognised the provision of PRC Mainland withholding income tax of approximately RMB7,259,000 (31 December 2019: RMB5,203,000) in relation to the undistributed profits of certain PRC Mainland group entities totaling approximately RMB145,177,000 (31 December 2019: RMB104,061,000) as the Group does not have a plan to distribute these profits out of the PRC Mainland in the foreseeable future.

84

CLIFFORD MODERN LIVING HOLDINGS LIMITED

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

For the six months ended 30 June 2020

22. Share capital and share premium

Details of the share capital and share premium of the Company are as follows:

Number of

Share

ordinary shares

Share capital

premium

Total

Translated to

HK$

RMB'000

RMB'000

RMB'000

Authorised:

At 30 June 2019 and 2020

10,000,000,000

100,000,000

87,440

Issued and fully paid:

As at 1 January 2020 and

30 June 2020

1,015,200,000

10,152,000

8,872

179,118

187,990

As at 1 January 2019 and

30 June 2019

1,015,200,000

10,152,000

8,872

179,118

187,990

2020 Interim Report

85

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

For the six months ended 30 June 2020

23. Other reserves

Reserves for

transactions

Share-based

with non-

Statutory

Capital

compensation

controlling

reserve

reserve

reserve

interests

Total

RMB'000

RMB'000

RMB'000

RMB'000

RMB'000

(Note (a))

(Note (b))

(Note (c))

As at 1 January 2019 (audited)

23,431

(121,099)

502

(14,331)

(111,497)

Appropriation of statutory reserves

729

-

-

-

729

As at 30 June 2019 (unaudited)

24,160

(121,099)

502

(14,331)

(110,768)

As at 1 January 2020 (audited)

29,222

(121,099)

502

(14,331)

(105,706)

Deregistration of subsidiaries

(1,361)

-

-

-

(1,361)

As at 30 June 2020 (unaudited)

27,861

(121,099)

502

(14,331)

(107,067)

  1. Statutory reserve
    In accordance with relevant rules and regulations in the PRC Mainland, except for sino-foreign equity joint venture enterprises, all PRC Mainland companies are required to transfer 10% of their profit after taxation calculated under PRC Mainland accounting rules and regulations to the statutory reserve fund, until the accumulated total of the fund reaches 50% of their registered capital. The statutory reserve fund can only be used upon approval by the relevant authority, to offset losses carried forward from previous years or to increase capital of the respective companies.

86

CLIFFORD MODERN LIVING HOLDINGS LIMITED

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

For the six months ended 30 June 2020

23. Other reserves (continued)

  1. Capital reserve
    The amounts of RMB111,305,000 represented the difference between the carrying value of the listing business and the par value of shares issued by the Company to the then shareholders of the Group in exchange of the listing business during the reorganisation for the listing. The remaining balance of RMB9,794,000 represented paid-in capital of the acquired subsidiary in a business combination under common control in 2017.
  2. Employees' share option scheme
    On 21 October 2016, the Company granted share options to certain directors, senior management and employees of the Group (the "Recipients") under a share option scheme (the "Employees' Share Option Scheme"), under which the option holders are entitled to acquire an aggregate of 21,175,000 shares of the Company at 10% discount to the offer price of HK$0.46 per share upon the listing date on 8 November 2016 ("Listing Date").
    The employees' share options shall be exercisable at any time during the period (i) commencing on the business day immediately after the expiry of the six-month period after the Listing Date and (ii) ending on the date falling in five years and six months of the Listing Date.
    During the six months ended 30 June 2020, no share option was exercised, and the number of share options outstanding remains 5,975,000 (the six months ended 30 June 2019: 5,975,000) with exercise price of HK$0.414 for each.
    The expiry date of the share options outstanding is 8 May 2022.
    The Group has no legal or constructive obligation to repurchase or settle the share options in cash.

2020 Interim Report

87

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

For the six months ended 30 June 2020

24. Dividend

Pursuant to the approval at the annual general meeting of shareholders of the Company on 26 June 2020, a final dividend of HK2.50 cents per share for the year ended 31 December 2019 (the six months ended 30 June 2019: a final dividend of HK2.20 cents per share for the year ended 31 December 2018) was approved and to be distributed out of the Company's retained earnings. The final dividend amounting to approximately HK$25,380,000 (equivalent to approximately to RMB23,136,000) (the six months ended 30 June 2019: HK$22,334,000 (equivalent to approximately to RMB19,569,000)) based on the total number of issued shares of the Company of 1,015,200,000 shares (the six months ended 30 June 2019: 1,015,200,000 shares) was recognised as a liability in the condensed consolidated statement of financial position as at 30 June 2020 (Note 19).

No interim dividend for the six months ended 30 June 2020 (the six months ended 30 June 2019: Nil) has been proposed by the Board of Directors of the Company.

25. Assets classified as held for sale

  1. Discontinued operations
    In December 2018, the Group terminated operation of all its catering outlets under Guangzhou Clifford Farm Restaurant Catering Limited* 廣州市祈福農家菜館餐飲有限公司, Guangzhou Clifford Big Brother Congee & Noodles Limited* 廣州市祈福一哥雲吞麵有限公司, Guangzhou Clifford Herbal Cuisine Catering Limited* 廣州市祈福藥膳坊餐飲有限公司, Guangzhou Mascot Catering Limited* 廣州市福品餐飲有限公司 (together, the "Catering Companies"). According to the agreement dated 1 January 2019, major assets and liabilities of the outlets of the Catering Companies were sold to a third party. As at 30 June 2020, all outlets of the Catering Companies were deregistered.
    Financial information of the Catering Companies is presented as a discontinued operation in the annual consolidated financial statements for the year ended 31 December 2019 and in the condensed consolidated financial statements for the six months ended 30 June 2019.

88

CLIFFORD MODERN LIVING HOLDINGS LIMITED

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

For the six months ended 30 June 2020

25. Assets classified as held for sale (continued)

  1. Financial performance and cash flow information
    The financial performance and cash flow information presented reflects the operation for the six months ended 30 June 2019.

Six months

ended

30 June 2019

RMB'000

(Unaudited)

Revenue from contracts with customers

-

Cost of sales

-

Gross profit

-

Selling and marketing expenses

-

Administrative expenses

(16)

Other income

-

Other gains - net

-

Gain on sale of assets classified as held

for sale and liabilities directly

associated with assets classified

as held for sale

829

Profit before taxation

813

Income tax expense

(178)

Profit from discontinued operation

635

Net cash outflow from operating activities

(16)

Net cash inflow from investing activities

4,780

Net increase in cash generated

by the discontinued operation

4,764

2020 Interim Report

89

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

For the six months ended 30 June 2020

25. Assets classified as held for sale (continued)

  1. Details of the sale of assets and liabilities of the Catering Companies

Six months

ended

30 June 2019

RMB'000

(Unaudited)

Consideration received

4,826

Carrying amount of net assets sold

(4,013)

Gain on sale before taxation

813

Income tax expense

(178)

Gain on sale after taxation

635

26. Related party transactions

  1. Name and relationship with related parties:

Name

Relationship

Ms. Man Lai Hung

Ultimate shareholder of the Company

Guangzhou Fortune Software Limited*

Company under control of the spouse of

廣州市科進計算機技術有限公司

Ms. Man

Guangdong Clifford Hospital Company Limited*

Company under control of the spouse of

廣東祈福醫院有限公司

Ms. Man

Guangzhou Huadu Clifford Property

Company under control of the spouse of

Development Company Limited*

Ms. Man

廣州市花都祈福房地產有限公司

Guangzhou Huadu Clifford Estates Property

Company under control of the spouse of

Development Company Limited*

Ms. Man

廣州市花都祈福花園房產有限公司

90

CLIFFORD MODERN LIVING HOLDINGS LIMITED

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

For the six months ended 30 June 2020

26. Related party transactions (continued)

  1. Name and relationship with related parties: (continued)

Name

Relationship

Guangzhou Crown Property Company Limited*

Company under control of the spouse of

廣州市冠都物業有限公司

Ms. Man

Guangzhou Huadu Clifford Property

Company under control of the spouse of

Company Limited*

Ms. Man

廣州市花都祈福置業有限公司

Foshan Nanhai Clifford Golden Lake Hotel Limited* Company under control of the spouse of

佛山市南海祈福仙湖酒店有限公司

Ms. Man

Guangzhou Huadu Xin Hua Clifford Property

Company under control of the spouse of

Development Company Limited*

Ms. Man

廣州市花都新華祈福房地產有限公司

Guangzhou Panyu Clifford English

Company under control of the spouse of

Experimental School*

Ms. Man

廣州市番禺區祈福英語實驗學校

Zhaoqing Clifford Coast Property

Company under control of the spouse of

Development Company Limited*

Ms. Man

肇慶祈福海岸房地產有限公司

Foshan Nanhai Clifford Property

Company under control of the spouse of

Development Limited*

Ms. Man

佛山市南海祈福置業有限公司

Guangzhou Lakeside Property Company Limited*

Company under control of the spouse of

廣州市倚湖物業有限公司

Ms. Man

Foshan Nanhai Clifford Household

Company under control of the spouse of

Industrial Company Limited*

Ms. Man

佛山市南海祈福家居實業有限公司

Foshan Nanhai Clifford Property Development

Company under control of the spouse of

Company Limited*

Ms. Man

佛山市南海祈福房地產有限公司

2020 Interim Report

91

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

For the six months ended 30 June 2020

26. Related party transactions (continued)

  1. Name and relationship with related parties: (continued)

Name

Relationship

Guangzhou Clifford Postnatal Care

Company under control of the spouse of

Company Limited*

Ms. Man

廣州市祈福母嬰護理服務有限公司

Guangzhou Clifford Property Limited*

Company under control of the spouse of

廣州市祈福物業有限公司

Ms. Man

Guangzhou Panyu Clifford Property

Company under control of the spouse of

Company Limited*

Ms. Man

廣州市番禺祈福房產有限公司

Guangzhou Clifford Wonderland Service

Company under control of Ms. Man

Apartment Company Limited*

廣州市祈福繽紛世界國際公寓有限公司

Guangzhou Panyu CZ Clifford Lakeside

Company under control of Ms. Man

Kindergarten*

廣州市番禺區鍾村街祈福倚湖灣幼兒園

Guangzhou Clifford Business Center Management

Company under control of the spouse of

Company Limited*

Ms. Man

廣州市祈福商務中心經營管理有限公司

China Venture Limited

Company under control of the spouse of

Ms. Man

Guangzhou Zhan Sheng Commercial

Company under control of the spouse of

Property Management Company Limited*

Ms. Man

廣州市展盛商業地產經營管理有限公司

Guangzhou Clifford Wonderland Commercial

Company under control of the spouse of

Property Management Company Limited*

Ms. Man

廣州市祈福繽紛世界商業地產經營管理有限公司

Guangzhou Clifford Wonderland

Company under control of the spouse of

Company Limited*

Ms. Man

廣州市祈福繽紛樂園有限公司

92

CLIFFORD MODERN LIVING HOLDINGS LIMITED

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

For the six months ended 30 June 2020

26. Related party transactions (continued)

  1. Name and relationship with related parties: (continued)

Name

Relationship

Guangzhou Clifford Wonderland Hotel Limited*

Company under control of the spouse of

廣州市祈福繽紛世界酒店有限公司

Ms. Man

Guangzhou Clifford Property Management

Company under control of the spouse of

Company Limited*

Ms. Man

廣州市祈福地產經營管理有限公司

Guangzhou Clifford Property

Company under control of the spouse of

Management Limited*

Ms. Man

廣州祈福物業管理有限公司

Maliton Services Limited

Company under control of the spouse of

Ms. Man

Tango Trading Limited

Company under control of the spouse of

Ms. Man

Guangzhou Panyu Clifford English

Company under joint control of the

Experimental Primary School*

spouse of Ms. Man and independent

廣州市番禺區祈福英語實驗小學

third parties

Guangzhou Panyu Clifford Estates

Company under significant influence of

Resort Club Company Limited*

the spouse of Ms. Man

廣州市番禺祈福新邨渡假俱樂部有限公司

Clifford Estates (Panyu) Limited*

Company under significant influence of

廣州市番禺祈福新邨房地產有限公司

the spouse of Ms. Man

Guangzhou Clifford Estates School*

Company under significant influence of

廣州市番禺區祈福新邨學校

the spouse of Ms. Man

Guangzhou Panyu Clifford English

Company under significant influence of

Experimental Kindergarten*

the spouse of Ms. Man

廣州市番禺區祈福英語實驗幼兒園

  • The English name of the related parties represents the best effort by the management of the Group in translating their Chinese names as they do not have an official English name.

2020 Interim Report

93

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

For the six months ended 30 June 2020

26. Related party transactions (continued)

  1. The following transactions were carried out with related parties:

Six months ended 30 June

2020

2019

RMB'000

RMB'000

(Unaudited)

(Unaudited)

Sales of goods to:

Companies under control of Ms. Man

-

110

Companies under control of the spouse

of Ms. Man

139

364

Companies under significant influence of

the spouse of Ms. Man

12

109

A company under joint control of the

spouse of Ms. Man and independent

third parties

130

54

281

637

Provision of services to:

Companies under control of Ms. Man

298

50

Companies under control of the spouse

of Ms. Man

14,962

20,948

Companies under significant influence of

the spouse of Ms. Man

22,549

13,054

A company under joint control of the

spouse of Ms. Man and independent

third parties

154

415

37,963

34,467

94

CLIFFORD MODERN LIVING HOLDINGS LIMITED

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

For the six months ended 30 June 2020

26. Related party transactions (continued)

  1. The following transactions were carried out with related parties: (continued)

Six months ended 30 June

2020

2019

RMB'000

RMB'000

(Unaudited)

(Unaudited)

Short-term lease expenses and

management fee

Companies under control of the spouse

of Ms. Man

196

201

Companies under significant influence

of the spouse of Ms. Man

556

755

752

956

Interest expenses for lease liabilities

Companies under control of the spouse

of Ms. Man

108

251

Companies under significant influence

of the spouse of Ms. Man

491

561

599

812

Payment of lease liabilities

Companies under control of the spouse

of Ms. Man

1,665

2,665

Companies under significant influence

of the spouse of Ms. Man

2,045

1,857

3,710

4,522

2020 Interim Report

95

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

For the six months ended 30 June 2020

26. Related party transactions (continued)

(c) Key management compensation

Six months ended 30 June

2020

2019

RMB'000

RMB'000

(Unaudited)

(Unaudited)

Short-term employee benefits

2,089

2,166

Post-employment benefits

59

71

Salaries and other employee benefits

2,148

2,237

(d) Balances with related parties

As at

30 June

31 December

2020

2019

RMB'000

RMB'000

(Unaudited)

(Audited)

Receivables from related parties

- Trade receivables (Note 16) (Note (i))

Companies under control of Ms. Man

6

6

Companies under control of the

spouse of Ms. Man

16,292

18,623

Companies under significant influence

of the spouse of Ms. Man

5,893

6,399

A company under joint control of the

spouse of Ms. Man and independent

third parties

455

503

22,646

25,531

96

CLIFFORD MODERN LIVING HOLDINGS LIMITED

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

For the six months ended 30 June 2020

26. Related party transactions (continued)

  1. Balances with related parties (continued)

As at

30 June

31 December

2020

2019

RMB'000

RMB'000

(Unaudited)

(Audited)

- Other receivables (Note 16) (Note (ii))

Companies under control of Ms. Man

-

45

Companies under control of the

spouse of Ms. Man

992

3,569

Companies under significant influence

of the spouse of Ms. Man

1,268

1,245

2,260

4,859

2020 Interim Report

97

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

For the six months ended 30 June 2020

26. Related party transactions (continued)

  1. Balances with related parties (continued)

As at

30 June 31 December

2020 2019

RMB'000 RMB'000

(Unaudited) (Audited)

- Contract assets (Note 17)

Companies under control of

the spouse of Ms. Man

2,680

1,740

Companies under significant influence

of the spouse of Ms. Man

492

3,519

A company under joint control of the

spouse of Ms. Man and

independent third parties

-

5

3,172

5,264

Total receivables from related parties

28,078

35,654

98

CLIFFORD MODERN LIVING HOLDINGS LIMITED

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

For the six months ended 30 June 2020

26. Related party transactions (continued)

  1. Balances with related parties (continued)

As at

30 June

31 December

2020

2019

RMB'000

RMB'000

(Unaudited)

(Audited)

Payables to related parties

- Trade payables (Note 19) (Note (i))

Companies under significant influence

of the spouse of Ms. Man

7

7

- Other payables (Note 19) (Note (ii))

Companies under control of the

spouse of Ms. Man

2,783

3,628

Companies under significant influence

of the spouse of Ms. Man

4,306

5,869

A company under joint control of

the spouse of Ms. Man and

independent third parties

-

26

7,089

9,523

2020 Interim Report

99

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Clifford Modern Living Holdings Ltd. published this content on 21 September 2020 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 21 September 2020 13:14:03 UTC