(March 31, 2017 - Hong Kong) Realord Group Holdings Limited (“Realord” or the “Company”, together with its subsidiaries collectively known as the “Group”, stock code: 1196.HK) is pleased to announce its audited annual results for the year ended 31 December 2016 (the “Year”).

2016 Annual Results

During the Year under review, the Group recorded total revenue of approximately HK$209.8 million, representing an increase of approximately 1.0% as compared with last year (2015: HK$207.7 million (restated)). The Group recorded a profit of approximately HK$80.1 million for the Year, increased by 145.4% as compared to HK$32.6 million in 2015. The gross profit margin increased to 43.4% (2015: 34.2%) due to the remarkable increase of the revenue contributed by the Financial Services Segment and Property Investment segment. The earnings per share was HK6.95 cents (2015: HK3.04 cents).

The increase in profit attributable to the equity holders was mainly due to the increase in revenue arising from the rental income in Property Investment Segment of approximately HK$11.3 million and the fair value gain on investment properties amounted to approximately HK$270.5 million (2015: HK$90.1 million), which was partly offset by the related deferred taxation of the fair value gain of approximately HK$125.6 million (2015: HK$14.5 million), the revaluation deficit on property, plant and equipment of approximately HK$17.3 million (2015: HK$2.1 million) as well as the increase in finance cost of approximately HK$ 18.2 million. The increase in finance cost was mainly due to the increase of interest-bearing borrowings during the Year.

Business review

The Motor Vehicle Parts Segment contributed revenue of approximately HK$100.6 million, representing an increase of 5.5% from HK$95.4 million year-over-year (“YoY”), which accounted for 48% of the Group’s total revenue during the Year. However, due to the increase in administrative expenses for expansion of the operation, the operating profit decreased to approximately HK$5.0 million.

The Commercial Printing Segment recorded a revenue of approximately HK$72.7 million, representing an increase of 6.6% from HK$68.2 million YoY, which accounted for 34.7% of the Group’s total revenue during the year. However, due to the increase in the operation cost, the operating profit decreased to approximately HK$0.9 million.

The Property Investment Segment recorded a revenue of approximately HK$17.0 million during the year under review, representing 8.1% of the total revenue of the Group. The revenue from this business segment increased by 198.2% as compared to approximately HK$5.7 million (restated) in 2015. The increase was resulted from the acquisition of the properties located at Qiankeng Industrial Zone, which contributed additional revenue to the business during the year. Due to the fair value gain on investment properties recorded during the Year amounted to approximately HK$270.5 million (2015: HK90.1 million), the profit from this business increased to approximately HK$282.4 million (2015: HK$90.6 million (restated)).

The Financial Services Segment generated revenue of approximately HK$10.9 million, representing an increase of 119.0% from HK$5.0 million YoY, contributing 5.2% of the Group’s total revenue during the Year. Due to the increase in the revenue, the segment recorded an operating profit of HK$2.4 million for the Year as compared to operating loss of approximately HK$1.2 million in 2015.

The Hangtag Segment contributed revenue of approximately HK$8.5 million, as compared to HK$11.5 million in 2015, representing 4.0% of the Group’s total revenue during the Year. The decrease was mainly resulted from the decrease in orders from customers, which were mainly from the garment industry. Through implementation of cost control measures, included outsourcing part of the manufacturing process, the operating loss decreased to HK$0.4 million as compared to operating loss of approximately HK$2.3 million in 2015.

Outlook

For the coming years, the Group would extend the Motor Vehicle Parts Segment to the retails operation. The Group is in the process to set up retail shops in Hong Kong and the PRC in order to gain direct access to the customer market. The Group expects that the PRC operations will effectively contribute the expansion of this business segment. Besides, the Group is sourcing different brands of motor vehicle parts suppliers in order to broaden the variety of products offered to our customers.

The operating environment of the commercial printing and hangtag businesses will continue to be competitive. The Group shall strengthen its business development team to achieve sales growth and increase market share. Meanwhile, the Group shall adopt a more conservative strategy by simplifying the operation process and reducing the operation scale.

Financial Services Segment and Property Investment Segment will become the growth driver for the Group in the future. The Group had entered into an agreement with 5 other independent third parties to set up a securities company (namely “Yuegang Securities Company Ltd”) in Guangzhou Pilot Free Trade Zone, Nanshan area to carry out full license securities businesses in the PRC. The Group believes that the set-up of the securities company, when materialized, will be beneficial to acquire valuable investment opportunities by gaining a foothold in the strictly regulated securities market in the PRC. It can also promote the expansion of Financial Services Segment for the Group. With the launch of the Shenzhen-Hong Kong Stock Connect Scheme, the preferential government policies and the establishment of the joint venture, the Group would sustain a long term growth in the Financial Services business.

In 2016, The Group completed the acquisition of “Qiankeng Industrial Land” (land and properties located at Qiankeng Industrial Zone, Fumin Community, Guanlan Town, Baoan District, Shenzhen, the PRC). The properties together with “Zhangkenjing Land” (land and properties located at the Industrial Zone in Zhangkengjing Community, Guanlan, Longhua district, Shenzhen, the PRC) acquired in 2015, are considered as the paramount assets of the Group to evolve the real estate development business. The Group is in the process to study on the possibilities to change the land use of the Zhangkenjing Land to the use as office buildings and associated apartment and facilities. Looking forward, the Group will keep track with the economic and urban renewal development in the PRC and will strive to explore for any potential real estate development or property investment opportunities.

The Group will diversify its business into scrap materials industry upon the acquisition of Top Eagle International Trading Limited. In view of the government’s plan to foster the development of the recycling industry, the Directors are optimistic about the prospects of the scrap materials industry and are of the view that it is an opportunity for the Group to further diversify the business scope of the Group.

In addition, the Group has become a constituent of Shenzhen-Hong Kong Stock Connect Scheme which reflects a high recognition of the Company’s good performance and industry position. Through the scheme, the Group expects to diversify its shareholder base and enhance liquidity. With the continuing development of businesses, the Group will strive for a better return to investors.

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