(March 29, 2018 - Hong Kong) Realord Group Holdings Limited (“Realord” or the “Company”, together with its subsidiaries collectively known as the “Group”, stock code: 01196.HK) is pleased to announce its unaudited annual results for the twelve months ended 31 December 2018 (“the Year”). During the year under review, the total revenue increased to HK$811 million, representing an increase of 6.3% as compared to HK$763 million in FY2017. The Group recorded a huge increase with approximately 245% in the profit as HK$383.7 million this year, compared to HK$111.2 million in FY2017.

OVERVIEW OF FULL YEAR 2018 RESULTS (UNAUDITED)

Benefited from an increase in profit margin derived from the Environmental Protection Segment from 9.4% to 15.9% and the fair value gains on investment properties of approximately HK$671.4 million (2017: HK$155.7 million), which was partly offset by the deferred taxation imposed on the fair value gains of approximately HK$166.1 million (FY2017: HK$48.8 million) as well as the finance costs of approximately HK$424 million (FY2017: HK$30.8 million), the profit attributable to the shareholders from HK$93.25 million in FY2017 rose to HK$363.2 million this year, which is about 289.56% year-over-year. The basic earnings per share is up from HK$8.11 cents in 2017 to HK$26.89 cents this year, with an increase of approximately 231.57%, whereas the net asset value is up from HK$0.93 in FY2017 to HK$2.17 in FY2018 with 133.33%.

Business Segments Summary:

Environmental Protection Segment

• Recorded HK$571 million, as 70.4% of the Group’s Total Revenue.
• The profit of this business segment reached HK$67.3 million for the year, representing an increase of 28.74% as compared with HK$52.30 in FY2017.
• In February 2017, the Group completed the acquisition of 60% of the issued share capital of Realord Environmental Protection (REP) from a vendor at a maximum consideration of $HK60 million, including HK$25 million in cash and 5 million consideration shares (HK$7.00 per share, involving an amount of HK$35 million). According to the agreement, if REP has achieved a profit target not less than HK$15 million in FY2016, 750,000 consideration shares shall be allotted and issued by the Company to the vendor; if the profit target was not less than HK$35 million in FY2017, 1,750,000 consideration shares shall be allotted and issued by the Company to the vendor; if the profit target was not less than HK$50 million in FY2018, 2,500,000 consideration shares shall be allotted and issued by the Company to the vendor
• The Profit contributed by Environmental Protection Segment in FY2016 and FY2017 were HK$29.25 million and HK$46.17 million respectively which exceeded the profit targets from an agreement, and therefore the Group has granted 750,000 and 1,750,000 consideration shares to the vendor accordingly.
• In the second quarter of 2018, new environmental protection regulations were launched in the PRC which have tightened the import requirement of scrap materials since 31 December 2018. As a result, the Group postponed its plan to develop a processing plant in the PRC for recycling and production of copper and aluminum ingots to second half of 2019
• To expand business overseas and look for suitable location in East or Southeast Asian Regions to develop another processing plant for dismantling, crushing, and smelting of scrap materials.

Motor Vehicle Parts Segment

• Representing 15.7% of the Group’s total revenue during the year, the Motor Vehicle Parts Segment recorded a significant increase by 46.3% to approximately HK$127.1 million as compared to HK$86.9 million in FY2017. Substantial growth in revenue was mainly attributable to expansion of operation in Guangzhou during the year.
• However, the increase in revenue was offset by increase in administrative and operating expenses incurred for expansion of the Guangzhou operation. The segment became breakeven for the year as compared to an operating profit of approximately HK$0.6 million for the last year.
• In view of high rental expense incurred for a retail store in Hong Kong, the Group has ceased the retail business in Hong Kong since November.
• The Group is now shifting its focus to sales at online platforms and automobile sales service shops, which concentrates target customers in Guangzhou, the PRC.
• Such change could reduce operating costs and at the same time capture the market trend as well as enhance distribution network in Guangzhou.

Commercial Printing Segment

• Contributed approximately HK$82.4 million, representing 10.2% of the Group’s total revenue during the year. There was an increase by 17.6% to approximately HK$82.4 million as compared to HK$70 million in FY2017.
• As a result of procured several IPO and merger and acquisition transaction engagements and implemented certain cost control activities during the year, the operating profit of approximately HK$2.3 million as compared to loss of approximately HK$8.1 million in FY2017.

Property Investment Segment

• Recorded a revenue of approximately HK$19.5 million during the year, representing 2.4% of the total revenue of the Group. The revenue from this business decreased by 3.3% to approximately HK$19.5 million as compared to approximately HK$20.2 million in the last year.
• However, due to the substantial increase in fair value gains on investment properties in Shenzhen resulted from the acquisition of a commercial/apartment building, retail shops and all car parking spaces of “Realord Villas” located in Longhua and 2 blocks of office building (“Realord Technology Park”) in Guangming during the year amounted to approximately HK$671.4 million (2017: HK$155.7 million), the profit from this segment increased to approximately HK$316.2 million during the year as compared to the profit of approximately HK$169.2 million in the last year.
• The Directors are of the view that the acquisition would largely enhance the Group’s portfolio of investment properties and strengthen the property investment business of the Group by creating additional stream of stable rental income and potential capital gain for the Group.
• The Group expects that the renovation project of Realord Villas and Realord Technology Park will be completed in late 2019 and mid 2020 respectively, and commence business in early 2020 and late 2020, respectively.

Financial Services Segment

• HK$10.3 million, as 1.3% of the Group’s total revenue, was recorded during the year which maintains a similar level as compared to HK$10.8 million in FY2017.
• On 23 May 2016, the Group entered into an agreement with 5 other independent third parties to set up a joint venture security company named “Yuegang Securities Limited” (“Security Company”) in Pilot Free Trade Zone, Nanshan District, Guangzhou to carry out securities businesses in the PRC. Upon establishment, the Group agreed to subscribe 10% equity interests of the Security Company with RMB350 million in cash. The application for the approval was filed to China Securities Regulatory Commission (the “CSRC”) in July 2016 and under review as at the reporting date.
• In September 2018, the Group acquired the entire issued share capital of a Hong Kong company which is licensed to carry out Type 4 (advising on securities) and Type 9 (asset management) regulated activities under the Securities and Futures Ordinance (“SFO”) and authorized by the Hong Kong Confederation of Insurance Brokers as an intermediary to broker long term insurance under Insurance Ordinance (Chapter 41 of the Laws of Hong Kong).
• In December 2018, the Group acquired 60% entire issued share capital of Optima Capital Limited (the “OCL”), a corporation with licenses to carry out Type 1 (dealing in securities), Type 4 (advising on securities) and Type 6 (advising on corporate finance) regulated activities under the SFO. It principally engages in providing corporate finance advisory services in Hong Kong.
• The Group believes that the two acquisitions will help strengthen its Financial Services Business in Hong Kong and will complement its existing services portfolio, provide more comprehensive services to customers, and to broaden its client base.

Hangtags Segment

• The Hangtag Segment contributed a revenue of approximately HK$1.0 million, representing 0.1% of the Group’s total revenue during the year. The revenue from the Hangtag Segment further decreased by 62.3% as compared to the revenue of the last year of approximately HK$2.6 million.
• The decrease was mainly resulted from less orders received from customers, which were mainly from the garment industry. Through implementation of cost control measures, included outsourcing the manufacturing processes, the segment remained breakeven for both this year and the last year.

Dr. Bryan Lin, Xiaohui, Chairman of Realord Group expresses “The Group will continue to explore more for opportunities in investment and expansions, particularly the unveil of Guangdong-Hong Kong-Macao Greater Bay Area development plan will bring us unlimited business chances, therefore we are confident in maintaining a momentum to our business in the coming year.”

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