Results Highlights

• The completed acquisition of “Guanlan Property” and “Guangming Property” in Shenzhen broadens the Group's property portfolio and the rental income will be expectedly generated in 2H2018
• Changing the land use of the two owned industrial properties in Guanlan Longhua District, Shenzhen, will enhance and maximize the property value.
• In line with the new national environmental protection policies, exploration in the Southeast Asia’s environmental protection business market will increase flexibility in the future

2018 Interim Results

(August 28, 2018 - 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 unaudited interim results for the six months ended 30 June 2018 (the “Period”). The Group’s results recorded a surge in profit before tax by 289.4% to approximately HK$504.3 million and profit by 298.6 % to approximately HK$347.2 million for the Period.

During the Period, the Group recorded a revenue of approximately HK$220.3 million, an increase of 1.9% when compared with the same period last year. The increase was mainly due to increase in revenue of Motor Vehicle Parts Segment and Commercial Printing Segment. Subsequent to the Group tightened its credit control policy and put more effort in recovering overdue trade receivables in 2017, the Group resume its sales of motor vehicle parts back to normal, during the Period under review. As a result, Motor Vehicle Parts Segment recorded a huge increase in revenue by approximately 140.4% Year over Year (“YoY”) to HK$46.5 million. The basic earnings per share was HK27.21 cents.

The Group recorded a profit of HK$347.2 million, representing a significant increase by 298.6% YoY. The increase in profit by approximately HK$260.1 million was primarily attributable to fair value gains on investment properties of approximately HK$455.5 million, as a result of the Group broadening the property investment portfolio, which were enhanced after acquisition of Realord Investment Limited through acquisition of Realord Ventures Limited and Manureen Ventures Limited in April 2018 and the exchange gain of HK$182.1 million recognized during the Period under review.

Business review

The Environmental Protection Segment contributed a revenue of HK$113.8 million, representing 51.6% of the Group’s total revenue during the period under review. The segment recorded an operating profit of HK$11.1 million, representing an increase of 40.2% as compared to that of the last corresponding period. Based on the acquisition agreements in which the Group has acquired 60% of the issued share capital of Realord Environmental Protection, 1,750,000 consideration shares shall be allotted and issued by the Company to the vendor, Fortune Victory Asia Corporation, as part of the consideration if the qualified profit of Realord Environmental Protection for the financial year ended 31 December 2017 was not less than HK$35,000,000. The qualified profit of Realord Environmental Protection for the year ended 31 December 2017 amounted to approximately HK$46,179,000. Accordingly, the target profit has been fulfilled and the relevant consideration shares were allotted and issued to the vendor in June 2018.

The Motor Vehicle Parts Segment generated a revenue of HK$46.4 million during the period under review, representing 21.1 % of the total revenue of the Group. This segment recorded an increase in revenue by 140.4% as compared to HK$19.3million in the last corresponding period. The segment derived a profit of HK$76,000 during the period under review as compared to a profit of HK$138,000 in the last corresponding period.

The Commercial Printing Segment contributed a revenue of HK$44.9 million, representing 20.4% of the Group’s total revenue during the period under review. There was an increase in revenue by 15.4% as compared to the last corresponding period. However, due to the increase in the operation cost, the segment merely generated an operating profit of HK$2.1 million for the reporting period as compared to the operating profit of HK$380,000 for the last corresponding period.

The Property Investment Segment generated a revenue of HK$9.8 million, representing 4.4% of the total revenue of the Group. The revenue from this segment slightly increased by 7.7% when compared with the same period last year. The operating profit from this segment increased substantially from HK$150.8 million in the last corresponding period to HK$353.7 million during the period under review. The increase was mainly due to the increased fair value gains on investment properties recorded during the period under review amounted to approximately HK$455.5 million.

The Financial Services Segment generated a revenue of approximately HK$5.0 million, representing 2.3% of the total revenue of the Group during the period under review. The revenue of this segment remained stable. The segment recorded an operating profit of approximately HK$412,000 for the reporting period

The Hangtag Segment generated a revenue of approximately HK$498,000, representing 0.2% of the Group’s total revenue. The segment revenue decreased by 68.8% from the last corresponding period of approximately HK$1.6 million for the period under review. The operating loss derived from this segment was minimal during the period under review and the last corresponding period.

Outlook

During these years, the Group has always been committed to improving the business of all segments in order to achieve diversified business development. The Group has been actively exploring property investment business. In April 2018, the Group has finished the acquisition of Guanlan Property and Guangming Property, significantly enhancing the property portfolio of the Group. It is expected that the Guanlan Property and Guangming Property will generate rental income in the second half of 2018 and bring potential capital gain for the Group. The Group is optimistic about the prospects of the property investment business. Going forward, the Group will strive to identify properties with investment value and broaden the Group's property portfolio.

In May 2017, the Group submitted the applications to Shenzhen Longhua District Urban Renewal Bureau for changing the land use of two owned industrial properties in Longhua District, Shenzhen, namely the “Zhangkengjing industrial property” and “Qiankeng industrial property”, and another “Zhangkengjing industrial land” of which the development right was granted from Shenzhen Zhangkengjing Joint Stock Company to the Group. According to the applications, the land use of two Zhangkengjing industrial properties are planned to change to residential apartments and office use, while the Qiankeng property will be changed for public housing and residential use. It is expected that approval for the applications will be granted in the second half of 2018, subject to government schedules, and thereafter the redevelopment works will commence.

For the aspect of Environmental Protection Segment, as a result of new relevant environmental protection regulations released in the PRC to impose further requirements on importing scrap materials during the period under review, the Group plans to develop a processing plant in Southeast Asia for sourcing and dismantling scrap material from the originate country of scrap material in order to enhance the Group’s ability and flexibility to fulfill the new relevant environmental protection regulations. Hence, the Group will adjust the schedule to develop a processing plant for recycling and production of copper and aluminum ingots in Wuzhou Import Renewable Resources Processing Park located in Wuzhou, Guangxi Province, the PRC. In the future, the Group will examine the recent development of the environmental protection industry in the PRC, and commence the construction of the PRC Processing Plant in due course. It is expected that the construction of the PRC Processing Plant will commence in the first quarter of 2019.

Dr. Bryan Lin, Xiaohui, Chairman of Realord Group expresses “The acquisition of Realord Villas and Realord Science & Technology Park completed in April 2018 enriches the Group’s property portfolio and income source. As the residents are moving in Realord Villas’ residential flats (also known as ‘Enterprise Talents Indemnificatory Housing Units’) allocated by Shenzhen Futian District Housing and Construction Bureau, the operating leases of the mall, retail shops and parking lots are expected to be motivated, thus generating rental income in the second half of the year. It is anticipated the open of Guangzhou-Shenzhen-Hong Kong Express Rail Link and the surrounding railways, transportation facilities, and the commercial and residential buildings successively will be constructed in Guangming District, Shenzhen in which the commercial properties development will also be motivated. Realord Science & Technology Park, in there, will be benefited. As the projects in the Guangdong-Guangxi Interprovincial Pilot Cooperation Special Zone and implementation of new environmental protection regulations have been commenced that bring opportunities for the Group’s environment protection business and enlighten the new idea in exploring the Southeast Asia market. Looking ahead, Realord Group will be devoted to maintaining steady growth of each segment in order to strive for the greatest return for investors and shareholders.”