Asia Financial : ANNOUNCEMENT OF FINAL RESULTS FOR THE YEAR ENDED 31ST DECEMBER, 2020

Hong Kong Exchanges and Clearing Limited and The Stock Exchange of Hong Kong Limited take no responsibility for the contents of this announcement, make no representation as to its accuracy or completeness and expressly disclaim any liability whatsoever for any loss howsoever arising from or in reliance upon the whole or any part of the contents of this announcement.

*

(Stock Code: 662)

ANNOUNCEMENT OF FINAL RESULTS FOR THE YEAR ENDED 31ST DECEMBER, 2020

RESULTS

The board of directors (the "Board") of Asia Financial Holdings Limited (the "Company" or "Asia Financial") announces the results of the Company and its subsidiaries (collectively known as the "Group") for the year ended 31st December, 2020 as follows:

Consolidated Statement of Profit or Loss

Year ended 31st December, 2020

Notes

2020 HK$'000

2019 HK$'000

REVENUE

3

_1__,7_4_7_,_9_1_8 _________

_1__,7_0_2_,_0_0_9 _________

Gross premiums

Reinsurers' share of gross premiums

1,668,958 __(_6_3_2_,_0_8_3)

1,545,448 __(_5_6_8_,_7_9_7)

Net insurance contracts premiums revenue

1,036,875

976,651

Gross claims paid

(723,229)

(946,606)

Reinsurers' share of gross claims paid Gross change in outstanding claims

339,447

553,415

(252,680)

(163,601)

Reinsurers' share of gross change in outstanding claims

___1_2_6_,_2_9_6

____7_0_,_5_4_8

Net claims incurred

(510,166)

(486,244)

Commission income Commission expense

138,134 __(_3_9_3_,_2_5_8)

135,657 __(_3_8_7_,_8_4_1)

Net commission expense

(255,124)

(252,184)

Management expenses for underwriting business Underwriting profit

__(_1_1_7_,_6_4_7)

___(_8_7_,_2_7_5)

153,938

150,948

……continued

Consolidated Statement of Profit or Loss (continued)

Notes

2020 HK$'000

2019 HK$'000

Dividend income

Realised gain/(loss) on investments Unrealised gain on investments Interest income

Other income and gains/(losses), net

166,270 118,832

(64,049) 22,884

98,856 33,871

77,671 102,335

____(_8_,_2_2_8)

424,458

_______4_5_4 429,324

Operating expenses

Finance costs 4

Share of profits or losses of joint ventures Share of profits or losses of associates

( 133,132) ______(3__83_)

(138,088) ____(_4_,_0_2_2)

290,943 287,214

26,883 46,801

____5_4_,_5_9_5

___1_0_0_,_2_4_4

PROFIT BEFORE TAX 5

Income tax expense 6

372,421

___(_2_7_,_4_7_4)

434,259 ___(_2_6_,_6_9_1)

PROFIT FOR THE YEAR

Attributable to:

Equity holders of the Company Non-controlling interests

___3_4_4_,_9_4_7 _________

337,952 _____6_,_9_9_5

___4_0_7_,_5_6_8 _________

408,965 ____(_1_,_3_9_7)

___3_4_4_,_9_4_7 _________

EARNINGS PER SHARE ATTRIBUTABLE TO

ORDINARY EQUITY HOLDERS OF THE COMPANY 8

Basic and diluted

- For profit for the year

_H__K_3_5_.4__c_e_n_t_s ____________

___4_0_7_,_5_6_8 _________

__H_K_4_2_._2_c_e_n_t_s ____________

Consolidated Statement of Comprehensive Income

2020 HK$'000

2019 HK$'000

PROFIT FOR THE YEAR

OTHER COMPREHENSIVE INCOME

Other comprehensive income that may be reclassified to profit or loss in subsequent periods:

Share of other comprehensive income of joint ventures

___3_4_4_,_9_4_7

___4_0_7_,_5_6_8

9,879 16,343

Share of other comprehensive income of associates

32,443 2,255

Exchange differences on translation of foreign operations

______(9__10_)

_____(__6_7_6)

Net other comprehensive income that may be reclassified to profit or loss in subsequent periods

Other comprehensive income that will not be reclassified to profit or loss in subsequent periods:

Equity investments designated at fair value through other comprehensive income:

Changes in fair value

Income tax effect

____4_1_,_4_1_2

542,491 ___(_8_5_,_9_3_9)

____1_7_,_9_2_2

711,615 __(_1_0_6_,_8_3_8)

Net other comprehensive income that will not be reclassified to profit or loss in subsequent periods

OTHER COMPREHENSIVE INCOME

FOR THE YEAR, NET OF TAXTOTAL COMPREHENSIVE INCOME

FOR THE YEAR

ATTRIBUTABLE TO:

Equity holders of the Company Non-controlling interests

___4_5_6_,_5_5_2 ___6_0_4_,_7_7_7

___4_9_7_,_9_6_4 ___6_2_2_,_6_9_9

___8_4_2_,_9_1_1 _________

835,359 _____7_,_5_5_2

_1__,0_3_0_,_2_6_7 _________

1,027,506 _____2_,_7_6_1

___8_4_2_,_9_1_1 _________

_1__,0_3_0_,_2_6_7 _________

Consolidated Statement of Financial Position

31st December, 2020

ASSETS

Property, plant and equipment Investment properties Interests in joint ventures Interests in associates Due from associates

Held-to-collect debt securities at amortised cost Equity investments designated at fair value through other comprehensive income

Pledged deposits

Loans and advances and other assets

Financial assets at fair value through profit or loss Insurance receivables

Reinsurance assets

Cash and cash equivalents

Notes

2020 HK$'000

2019 HK$'000

194,232 181,382

257,500 285,300

515,444 496,698

427,519 507,333

256,140 256,140

1,042,767 738,587

6,850,964

5,801,466

313,357 305,590

153,702 117,982

9

1,341,716 231,385 1,531,060 __2_,_80_0_,_2_4_0

1,147,947 251,060 1,401,886 __3__,3_6_6_,_6_0_2

Total assets

EQUITY AND LIABILITIES

Equity attributable to equity holders of the Company Issued capital

Reserves

Proposed final dividend

Non-controlling interests

_1_5_,_91_6_,_0_2_6 _________

10

__1_4_,8_5_7_,_9_7_3 __________

946,620

9,991,849

____6_5_,_9_7_0

11,004,439

____5_4_,_8_8_1

960,840

9,267,043

_____4_7_,_9_6_8

10,275,851

_____4_7_,_3_2_9

Total equity

Liabilities

Insurance contracts liabilities Insurance payables

Due to associates Other liabilities

Interest-bearing bank borrowing Tax payable

Deferred tax liabilities

Total liabilities

Total equity and liabilities

_1_1_,_05_9_,_3_2_0

__1_0_,3_2_3_,_1_8_0

3,935,104

3,603,464

11

169,375 207,099

4,222 4,222

304,552 264,101

- 100,000

69,637 73,957

____37_3_,_8_1_6

__4_,_85_6_,_7_0_6 _1_5_,_91_6_,_0_2_6 _________

____2_8_1_,_9_5_0 __4__,5_3_4_,_7_9_3 __1_4_,8_5_7_,_9_7_3 __________

Notes 1.

Changes in Accounting Policies and Disclosures

The Group has adopted the Conceptual Framework for Financial Reporting 2018 and the following revised Hong Kong Financial Reporting Standards ("HKFRSs") (which include all Hong Kong Financial Reporting Standards, Hong Kong Accounting Standards ("HKASs") and Interpretations) for the first time for the current year's financial statements.

Amendments to HKFRS 3	Definition of a Business
Amendments to HKFRS 9,
HKAS 39 and HKFRS 7	Interest Rate Benchmark Reform
Amendments to HKAS 1
and HKAS 8	Definition of Material
Amendment to HKFRS 16	COVID-19-Related Rent Concessions (early adopted)

The nature and the impact of the Conceptual Framework for Financial Reporting 2018 and the revised HKFRSs are described below:

Conceptual Framework for Financial Reporting 2018 (the "Conceptual Framework")

The Conceptual Framework sets out a comprehensive set of concepts for financial reporting and standard setting, and provides guidance for preparers of financial statements in developing consistent accounting policies and assistance to all parties to understand and interpret the standards. The Conceptual Framework includes new chapters on measurement and reporting financial performance, new guidance on the derecognition of assets and liabilities, and updated definitions and recognition criteria for assets and liabilities. It also clarifies the roles of stewardship, prudence and measurement uncertainty in financial reporting. The Conceptual Framework is not a standard, and none of the concepts contained therein override the concepts or requirements in any standard. The Conceptual Framework did not have any significant impact on the financial position and performance of the Group.

Amendments to HKFRS 3 Definition of a Business

Amendments to HKFRS 3 clarify and provide additional guidance on the definition of a business. The amendments clarify that for an integrated set of activities and assets to be considered a business, it must include, at a minimum, an input and a substantive process that together significantly contribute to the ability to create output. A business can exist without including all of the inputs and processes needed to create outputs. The amendments remove the assessment of whether market participants are capable of acquiring the business and continue to produce outputs. Instead, the focus is on whether acquired inputs and acquired substantive processes together significantly contribute to the ability to create outputs. The amendments have also narrowed the definition of outputs to focus on goods or services provided to customers, investment income or other income from ordinary activities. Furthermore, the amendments provide guidance to assess whether an acquired process is substantive and introduce an optional fair value concentration test to permit a simplified assessment of whether an acquired set of activities and assets is not a business. The Group has applied the amendments prospectively to transactions or other events that occurred on or after 1st January, 2020. The amendments did not have any impact on the financial position and performance of the Group.

1.

Changes in Accounting Policies and Disclosures (continued)

Amendments to HKFRS 9, HKAS 39 and HKFRS 7 Interest Rate Benchmark Reform Amendments to HKFRS 9, HKAS 39 and HKFRS 7 address the effects of interbank offered rate reform on issues affecting financial reporting in the period before the replacement of an existing interest rate benchmark with an alternative risk-free rate ("RFR"). The amendments provide temporary reliefs which enable hedge accounting to continue during the period of uncertainty before the replacement of an existing interest rate benchmark introduction of the alternative RFR. In addition, the amendments require companies to provide additional information to investors about their hedging relationships which are directly affected by these uncertainties. The amendments did not have any impact on the financial position and performance of the Group as the Group does not have any interest rate hedge relationships.

Amendments to HKAS 1 and HKAS 8 Definition of Material

Amendments to HKAS 1 and HKAS 8 provide a new definition of material. The new definition states that information is material if omitting, misstating or obscuring it could reasonably be expected to influence decisions that the primary users of general purpose financial statements make on the basis of those financial statements. The amendments clarify that materiality will depend on the nature or magnitude of information, or both. The amendments did not have any significant impact on the financial position and performance of the Group.

Amendment to HKFRS 16 COVID-19-Related Rent Concessions

Amendment to HKFRS 16 provides a practical expedient for lessees to elect not to apply lease modification accounting for rent concessions arising as a direct consequence of the COVID-19 pandemic. The practical expedient applies only to rent concessions occurring as a direct consequence of the pandemic and only if (i) the change in lease payments results in revised consideration for the lease that is substantially the same as, or less than, the consideration for the lease immediately preceding the change; (ii) any reduction in lease payments affects only payments originally due on or before 30th June, 2021; and (iii) there is no substantive change to other terms and conditions of the lease. The amendment is effective for annual periods beginning on or after 1st June, 2020 with earlier application permitted and shall be applied retrospectively. The amendments did not have any impact on the financial position and performance of the Group as the Group does not have any rent concessions.

2.

Operating Segment Information

(a) Operating segments

The following tables present revenue, profit and certain asset and liability information for the Group's operating segments.

Segment revenue:

External customers

Other revenue, income andInsurance 2020 HK$'000

1,747,918

gains, net 109,687

Intersegment 5,911

Total

Segment results

Share of profits or losses of:

Joint ventures Associates

Profit before tax Income tax expense

Profit for the yearCorporate 2020 HK$'000

-160,833

- (5,911)

____________

_____________

Eliminations Consolidated 2020 2020 HK$'000 HK$'000

• - 1,747,918

-

_____________

____________ ____________

1,863,516

_____________ _____________

160,833 (5,911)

____________ ____________

184,914

_____________ _____________

_____________ _____________

270,520

-

____________

____________ ____________

2,018,438

106,029

_____________ _____________

- 290,943

(6,313) 16,891

33,196 - 26,883

37,704 - 54,595

____________

372,421

(6,037)

(21,437)

-

____________

(27,474)

____________ ____________

344,947

Insurance 2019

HK$'000

Segment revenue:

External customers

Other revenue, income and

1,702,009

gains, net 131,360

Intersegment 5,339

Total

Segment results

Share of profits or losses of:

Joint ventures Associates

Profit before tax Income tax expense

Profit for the yearCorporate 2019

HK$'000

-

147,016

- (5,339)

____________

_____________

Eliminations 2019 HK$'000

• - 1,702,009

-

_____________

____________ ____________

1,838,708

_____________ _____________

147,016 (5,339)

____________ ____________

203,613

_____________ _____________

_____________ _____________

Consolidated

2019

HK$'000

278,376

-

____________

____________ ____________

1,980,385

83,601

_____________ _____________

- 287,214

12,105 (7,184)

34,696 - 46,801

107,428 - 100,244

____________

434,259

(25,796)

(895)

-

____________

(26,691)

____________ ____________

407,568

• 2. Operating Segment Information (continued)

  (a) Operating segments (continued)

  31st December, 2020 Segment assets Interests in joint ventures Interests in associates

  Total assets

  Segment liabilities

  Insurance

  HK$'000

  7,359,635 409,855

  _____________

  49,607 _____________ 427,519

  _____________ _____________

  7,819,097

  _____________ _____________

  CorporateConsolidated

  HK$'000

  HK$'000

  7,613,428

  14,973,063

  105,589 515,444

  377,912 _______________

  _____________ _____________

  8,096,929

  4,189,996

  _____________ _____________

  _______________ _______________

  15,916,026

  666,710

  _______________ _______________

  4,856,706

  31st December, 2019 Segment assets Interests in joint ventures Interests in associates

  Total assets

  Segment liabilities

  7,119,144

  6,734,798

  13,853,942

  400,305 96,393 496,698

  _____________

  200,913 _____________

  _____________ _____________

  7,720,362

  _____________ _____________

  306,420 507,333

  _____________ _____________

  7,137,611

  4,099,403

  _____________ _____________

  _______________

  _______________ _______________

  14,857,973

  435,390

  _______________ _______________

  4,534,793

  (b)Geographical information

  Over 90% of the Group's revenue and results are derived from operations carried out in Hong Kong, Macau and Mainland China.

• 3. Revenue

  Revenue represents gross premiums net of discounts, from the direct and reinsurance businesses underwritten during the year.

• 4. Finance Costs

2020

2019

HK$'000

HK$'000

Interest on a bank loan Interest on lease liabilities

304

3,968

______7_9_

_______5_4

_____3_8_3_ ________

____4_,_0_2_2 ________

5.

Profit before Tax

The Group's profit before tax is arrived at after crediting/(charging):

2020 HK$'000

2019 HK$'000

Auditor's remuneration Depreciation

Employee benefit expense (including directors' remuneration):

Wages and salaries

(3,757) (3,675)

(14,022) (10,406)

(154,854) (144,952)

Pension scheme contributions Less: Forfeited contributions

Net pension scheme contributions

(6,784) (6,232)

______5_0_ ___(_6_,_7_3_4)

______1_5_8 ___(_6_,_0_7_4)

Total employee benefit expense

_(_1_6_1_,_5_8_8) ________

_(_1_5_1_,_0_2_6) ________

Expenses relating short-term leases and leases of low-value assets

Realised gain/(loss) on:

• - disposal of financial assets at fair value through profit or loss, net

• - redemption/call-back of held-to-collect debt securities at amortised cost

• - gain on changes in ownership interest in a joint venture

• - gain on deemed disposal of interest in an associate

(715) (450)

(82,249) 23,182

- (298)

5,535 ___1_2_,_6_6_5

- ________-Total realised gain/(loss) on investments

Unrealised gain on financial assets at fair value through profit or loss , net

Changes in expected credit losses for:

Insurance receivables

Held-to-collect debt securities at amortised cost

Interest income

Loss on disposal/write-off of items of property, plant and equipment* Gross rental income*

Direct operating expenses (including repairs and maintenance) arising from rental-earning investment properties

Change in fair value of investment properties* Employment Support Scheme from the Government* Write-off of interest in a joint venture

Foreign exchange gain/(loss), net*

__(_6_4_,_0_4_9) ________

___2_2_,_8_8_4 ________

98,856

33,871

(5,014)

(3,300)

(1,237)

-77,671 102,335

(288) (71)

7,132 7,271

(366) (269)

(28,704)

(2,600)

6,602 - 1,392

-

(183) (11,786)

• 5. Profit before Tax (continued)

• 6. Income Tax

  2020	2019
  HK$'000	HK$'000
  Dividend income from:
  Listed investments	52,364	63,392
  Unlisted investments	__1_1_3_,_9_0_6	___5_5_,_4_4_0
  Total dividend income	__1_6_6_,_2_7_0	__1_1_8_,8__32_

  ________

• The Group's profit before tax is arrived at after crediting/(charging):

  ________

  *These amounts were included in "Other income and gains/(losses), net" in the consolidated statement of profit or loss.

• Hong Kong profits tax has been provided at the rate of 16.5% (2019: 16.5%) on the estimated assessable profits arising in Hong Kong during the year. Taxes on profits assessable elsewhere have been calculated at the rates of tax prevailing in the locations in which the Group operates.

2020 HK$'000

2019 HK$'000

Current - Hong Kong

Charge for the year

16,985 19,699

Over provision in prior years

(19,250) (25)

Current - Elsewhere

Charge for the year

23,818 6,930

Under provision/(over provision) in prior years

(6) 219

Deferred

Total tax charge for the year

___5_,_9_2_7 __2_7_,_4_7_4 _______

____(1_3_2_)

__2_6_,_6_9_1 _______

• 7. Dividends

  2020

  HK$'000

  2019 HK$'000

  Interim - HK1.0 cent (2019: HK3.5 cents) per ordinary share Proposed final - HK7.0 cents (2019: HK5.0 cents)

  9,493

  33,907

  per ordinary share

  ___6_5_,_9_7_0 __4_7_,_9_6_8

  ___7_5_,_4_6_3 __8_1_,_8_7_5

  ________

  _______

  The proposed final dividend for the year is subject to the approval of the Company's shareholders at the forthcoming annual general meeting. Accordingly, the proposed final dividend has been included in the proposed final dividend reserve account within the equity attributable to equity holders of the Company in the statement of financial position.

• 8. Earnings Per Share Attributable to Ordinary Equity Holders of the Company

  The calculation of the basic earnings per share amount is based on the profit for the year attributable to ordinary equity holders of the Company of HK$337,952,000 (2019: HK$408,965,000) and the weighted average number of ordinary shares of 954,031,000 (2019: 967,969,000) in issue during the year.

  No adjustment has been made to the basic earnings per share amounts presented for the years ended 31st December, 2020 and 2019 in respect of a dilution as the Group had no potentially dilutive ordinary shares in issue during the years ended 31st December, 2020 and 2019.

9.

Insurance Receivables

2020 HK$'000

2019 HK$'000

Amounts due in respect of:

Direct underwriting Reinsurance accepted

99,795 __1_4_2_,_1_8_1

135,355 __1_2_1_,_2_8_2

Less: Impairment allowance

241,976 __(_1_0_,_5_9_1)

256,637 ___(_5_,_5_7_7)

__2_3_1_,_3_8_5 ________

__2_5_1_,_0_6_0 ________

The Group grants credit terms of three months to six months on billed policies. The past settlement history of these receivables indicates that certain debtors settle in arrears subsequent to the credit period, which may also involve settlement subsequent to 12 months from the end of the reporting period.

The Group's insurance receivables relate to a large number of diversified customers, and therefore, there is no significant concentration of credit risk. Insurance receivables are non-interest-bearing.

An aging analysis of the insurance receivables based on the issuance date of policies, as at the end of the reporting period, is as follows:

2020 HK$'000

2019 HK$'000

Three months or less

195,413 216,283

Six months or less but over three months One year or less but over six months Over one year

37,406 36,285

8,807 3,219

_____3_5_0_

______8_5_0

Less: Impairment allowance

241,976 __(_1_0_,_5_9_1)

256,637 ___(_5_,_5_7_7)

__2_3_1_,_3_8_5 ________

__2_5_1_,_0_6_0 ________

9.

Insurance Receivables (continued)

The movements in the loss allowance for impairment of insurance receivables are as follows:

2020 HK$'000

2019 HK$'000

At beginning of year Impairment losses

5,577 2,765

5,014 3,300

Amount written off as uncollectible

_______- __1_0_,_5_9_1 _______

(___4_8_8_)

__5_,_5_7_7 ______

An impairment analysis is performed at each reporting date using a provision matrix to measure expected credit losses. The provision rates are based on days past due for groupings of various customer segments with similar loss patterns (i.e., by geographical region, product type, customer type and rating, and coverage by letters of credit or other forms of credit insurance). The calculation reflects the probability-weighted outcome, the time value of money and reasonable and supportable information that is available at the reporting date about past events, current conditions and forecasts of future economic conditions. Generally, insurance receivables are written off if past due for more than one year and are not subject to enforcement activity.

Set out below is the information about the credit risk exposure on the Group's insurance receivables using a provision matrix:

As at 31st December, 2020

Past due

CurrentLess than 1 month

1 to 3 monthsOver 3 monthsTotalExpected credit loss rate

Gross carrying amount (HK$'000) Expected credit losses (HK$'000)

0.32% 195,413 617

3.56% 19,830 706

11.39% 17,576 2,002

• 79.35% 4.38%

• 9,157 241,976

• 7,266 10,591

As at 31st December, 2019

Past dueCurrentLess than 1 month

Expected credit loss rate

Gross carrying amount (HK$'000) Expected credit losses (HK$'000)

0.26% 216,283 562

3.41%

17,938

612

1 to 3 months 12.91% 18,347 2,369

Over 3 monthsTotal

• 50.00% 2.17%

• 4,069 256,637

• 2,034 5,577

10.

Share Capital

2020 HK$'000

2019 HK$'000

Authorised: 1,500,000,000 (2019: 1,500,000,000) ordinary shares of HK$1 each

_1__,5_0_0_,_0_0_0 _________

_1__,5_0_0_,_0_0_0 _________

Issued and fully paid: 946,620,000 (2019: 960,840,000) ordinary shares of HK$1 each

___9_4_6_,_6_2_0 _________

___9_6_0_,_8_4_0 _________

A summary of movements in the Company's share capital is as follows:

Number of

shares in issue

Share capital HK$'000

At 1st January, 2019

Shares repurchased and cancelled

973,180,000 __(_1_2_,3_4_0_,_0_0_0)

973,180 __(_1_2_,_3_4_0)At 31st December, 2019 and 1st January, 2020 Shares repurchased and cancelled (Note)

960,840,000 __(_1_4_,2_2_0_,_0_0_0)

960,840 __(_1_4_,_2_2_0)

At 31st December, 2020

_9__4_6_,6_2_0_,_0_0_0 ___________

__9_4_6_,_6_2_0 ________

Note:

At 31st December, 2019, 148,000 shares with cost of HK$593,000 were classified as treasury shares, and were subsequently cancelled in January 2020. During the year ended

31st December, 2020, a subsidiary of the Company repurchased 14,542,000 ordinary shares of the Company of HK$1 each on the Stock Exchange at prices ranging from

HK$2.90 to HK$4.00 per share at a total consideration of HK$51,863,000 (including expenses and dividend). Out of which, 14,072,000 repurchased shares were cancelled.

The premium of HK$36,516,000 paid on the repurchase of such shares was debited to the retained profits account and an amount of HK$14,220,000 was transferred from retained profits of the Company to the capital redemption reserve, as set out in the consolidated statement of changes in equity in the 2020 annual report.

The remaining 470,000 shares with cost of HK$1,720,000 were classified as treasury shares at 31st December, 2020 and were subsequently cancelled in January 2021.

Subsequent to the end of the reporting period, the Group repurchased and cancelled 3,726,000 ordinary shares of the Company from the market at prices ranging from HK$3.80 to HK$4.10 per share at a total amount of HK$14,479,000 (including transaction cost). As at the date of this announcement, the number of issued shares of the Company is 942,424,000.

11.

Insurance Payables

An aging analysis of the insurance payables based on the invoice date, as at the end of the reporting period, is as follows:

2020 HK$'000

2019 HK$'000

Three months or less

Six months or less but over three months One year or less but over six months Over one year

107,562 138,495

17,684 23,820

22,952 16,985

__2_1_,_1_7_7

_2_7_,_7_9_9

_1_6_9_,_3_7_5 _______

2_0_7_,_0_9_9 ______

MANAGEMENT DISCUSSION AND ANALYSIS

Asia Financial Holdings Limited ("Asia Financial", "The Group" or "The Company") recorded a net profit attributable to shareholders of HK$337.9 million in 2020, a 17.4% decrease over 2019. The coronavirus pandemic and its repercussions continued affecting economies worldwide. However encouraging news of new vaccines has buoyed investor confidence and global equities markets have rebounded. In this time of unpredictable economic headwinds, both our investment portfolio and our core businesses showed reassuring resiliency. Due to market volatility, we recorded realised loss but unrealised gain in our investment portfolio. Dividend income increased significantly. Underwriting profits showed a 2% growth over 2019. Overall contributions from our joint ventures and associates were mixed, however our expenses remained under control.

Economic Background

Overall global economic growth fell in 2020, due to the unprecedented COVID-19 pandemic, which triggered the most severe recession in over a century. However, the -3.5% year-end decline in global GDP was less severe than initially predicted. The US unemployment rate, which hit a record high of 14.7% in April, fell by year end to 6.7%. Interest rates worldwide remained low, buoying global equities markets. Hong Kong experienced a difficult economic year; GDP contracted by 6.1% in 2020, and at year-end unemployment was 7%, a 17-year high. China's economy, meanwhile, rebounded more quickly from the pandemic and it was the only major world economy to register positive GDP growth by 2.3% in 2020.

The US stock market outperformed expectations and finished at record levels in 2020 despite earlier losses and the pandemic impact. S&P 500 index ended the year with a strong gain of 16.3 percent, and the Dow Jones index and Nasdaq index gained 7.2 and 43.6 percent, respectively. China stock market, as well, soared to record levels due to an early and strong pandemic recovery. Market performance elsewhere was mixed. The Hang Seng index yearly results were down by 3.4%, sharply behind the performance of China and US markets, H Shares were in line with the Hang Seng index, losing 3.8%.

Management Approach and Future Prospects

The global and regional economic picture as we enter 2021 remains uncertain and difficult to predict, but there are reasons for cautious optimism in both the near and long term. There is a concerning disconnect between markets and economies -- while big equities markets in the US and China have rebounded, overall global economic growth indicators are weak. Geopolitical risk and US-China relations continue to impact both equities markets and trade. However it is expected that a new US administration will bring with it a more rational and stable business and trade policy. The weak Hong Kong economy will continue to be a challenge through 2021. Finally, the widening gap between rich and poor in global economies, the potential impacts of climate change, and the challenge of sustainable development will be important factors in the long-term business environment.

Management Approach and Future Prospects (continued)

Asia Financial's prospects for 2021 will continue to be influenced by the unpredictable pattern and pace of global economic recovery from the pandemic crisis. Nevertheless, we remain cautiously optimistic about the outlook for our insurance operations. Our core business is solid and mature, and we are fortunate to enjoy customer confidence in the marketplace, due to our Asia Insurance Company, Limited ("Asia Insurance")'s 60+ year history in the insurance business. We will continue with our conservative but flexible core investment approach in the pursuit of long-term growth in shareholder value.

We will be closely monitoring all of these developments, as well as the continuing pandemic crisis and its impact on the global economy, and will maintain a prudent portfolio investment strategy accordingly.

The current outlook for our insurance operations is positive, with our strong distribution network and market positioning helping us to perform well despite the challenging economic situation and a crowded and competitive market. We will continue reviewing and optimizing our mix of business segments. We are also further developing our distribution capacity and product range.

At this time of global challenge in our industry and the world, our company's reputation and stability are an advantage in an uncertain and volatile marketplace. The region is undergoing a major transformation involving the rise of large middle classes, gradually aging societies and greater use of market-based solutions to demographic and other policy challenges. In this changing environment, Asia Financial is well-positioned for steady and successful growth.

This is the long-term environment on which Asia Financial's management focuses. We aim to continue building on our interests in livelihood-related service industries such as insurance, retirement, health and property development, focused on Hong Kong and Greater China. Our investment spheres fit well with our traditional expertise and networks of clients and partners, and as a whole are well-positioned to benefit from long-term economic and social trends. In considering ways to build upon this base, we will adhere to this fundamental approach and exercise patience and caution.

Key Financial and Business Performance Indicators

(All changes in % refer to the same period last year)

Profit attributable to equity holders of the Company:	HK$337.9 million	-17.4%
Earnings per share:	HK35.4 cents	-16.1%
Final dividend per share:	HK7.0 cents	+40.0%
Total dividend per share:	HK8.0 cents	-5.9%
Equity attributable to equity holders of the Company:	HK$11,004.4 million	+7.1%
Total Assets:	HK$15,916.0 million	+7.1%
Return on equity:	3.2% (4.2% for 2019)
Earnings and Dividends

For the year ended 31st December, 2020, the Group recorded net profit attributable to shareholders of HK$337.9 million, representing a 17.4% decrease compared with the previous year. We recorded realised loss but unrealised gain in our investment portfolio. Dividend income increased and underwriting profits showed a 2% growth over 2019. Overall contributions from our joint ventures and associates were mixed.

The Group's earnings per share for the year 2020 were HK35.4 cents. The Board had declared an interim dividend of HK1.0 cent in August 2020 and proposed a final dividend of HK7.0 cents, making a total dividend for the year of HK8.0 cents per share.

Capital Structure

The Group finances its own working capital requirement through funds generated from operations.

Liquidity, Financial Resources and Gearing Ratio

Cash and cash equivalents as at 31st December, 2020 amounted to HK$2,800,240,000 (2019: HK$3,366,602,000).

The Group had no bank borrowing as at 31st December, 2020 (2019: The Group had a bank borrowing of HK$100,000,000 which was secured by certain bank deposits and Hong Kong listed shares, repayable on or before 29th January, 2020 and charged at 1.25% over the 1, 2, 3 or 6-month Hong Kong Interbank Offered Rate per annum. The bank borrowing was fully repaid on 29th January, 2020).

No gearing ratio was calculated as the Group had no net current debt as at 31st December, 2020. The gearing ratio was based on net current debt divided by total capital plus net current debt. Net current debt includes current portion of insurance contract liabilities, insurance payables, amounts due to associates and other liabilities, less cash and cash equivalents and financial assets at fair value through profit or loss. Capital represents equity attributable to equity holders of the Company.

The Group's liquidity position remains strong and the Group has sufficient financial resources to satisfy its commitment and working capital requirements.

Charge on Assets

As at 31st December, 2020, Asia Insurance charged assets with a carrying value of HK$119,030,000 (2019: HK$119,516,000) in favour of a cedant to secure the performance of Asia Insurance's obligations to the cedant under certain pecuniary loss reinsurance contracts.

Contingent Liabilities

As at 31st December, 2020, the Group had no material contingent liabilities.

Business Review

Insurance

Wholly owned subsidiary, Asia Insurance achieved net profit attributable to shareholders of HK$189.6 million in 2020, a 0.6% decrease compared with the same period in 2019.

Despite the pandemic's impact on our clients' businesses, our turnover for 2020 rose by 3%, an extraordinary testimony to our company's reputation for service, its diversified scope of insurance products, and client confidence. We maintained most of our existing business while adding new business as well, particularly in our core small and medium sized enterprises (SMEs) market. There was no exposure to major catastrophes during the period. Underwriting profit showed a 2% growth. Our fundamental underwriting profit trend remains healthy and stable, and we remain among the top performers in the Hong Kong insurance industry, with a S&P Global rating of A. (All the above figures are before elimination of group transactions.)

We recorded realised loss but unrealised gain in our investments, and a lower dividend income from the listed equities investments impacted by the slowing down of business performance from COVID-19.

The small rise in Asia Insurance's costs in 2020 was in line with the company's continuing business growth, higher internal audit fees, and investment in user and backend systems.

The outlook for Asia Insurance's core underwriting activities looks positive for 2021 and beyond in both Hong Kong and Macau. We will continue to utilize our risk management expertise to focus on quality business, and to optimize the mix of business segments while spreading risk. We are confident that our strengths in these areas will ensure continued healthy underwriting profitability.

Asia Insurance continued in 2020 to develop its distribution network through new agents and brokers and on-line digital channels. We are successfully introducing an on-line platform for business partners. We are also actively working on significant enhancements to our product range, and ongoing upgrades to employee skills, systems and distribution capacity in anticipation of future trends in clients' needs and market conditions.

Business Review (continued)

Insurance (continued)

Looking ahead, we also anticipate possible opportunities arising from the central government's "Greater Bay Area" plan to further integrate Pearl River Delta regions. Additionally, in the aftermath of COVID-19 people are increasingly aware of the need to protect their health with insurance coverage, a trend that will add traction to our core business and support our market growth.

In general, Asia Insurance expects to continue to build on its status as a leader in Hong Kong's general insurance market with an outstanding reputation for service and professionalism.

In terms of investment performance, the pandemic and related economic fallout make us cautiously optimistic for 2021. We are expecting that the introduction of vaccines will result in the gradual reopening of borders and resumption of normal business activity, however the pace of recovery is still uncertain. We will maintain a sensible and watchful approach towards portfolio management.

Joint ventures and associates in the insurance segment had mixed performances in 2020. BC Reinsurance Limited recovered early losses and ended the year with a stable profit, due to solid underwriting profit and a fair investment market. Hong Kong Life Insurance Limited experienced a marginal loss with the cost control of marketing expenses implemented. Professional Liability Underwriting Services Limited enjoyed a stable profit while The People's Insurance Company of China (Hong Kong) Limited saw a return to healthy underwriting profit up to October 2020, when it was reclassified as a direct investment.

PICC Life Insurance Company Limited ("PICC Life"), in which Asia Financial has a 5% stake, continues to take advantage of its opportunities as a company with a nationwide licence. The fair value appreciated sharply in 2020. During the year 2020, PICC Life declared a record high dividend to the company. At the time of writing, final results were still awaited. However, the company maintains a healthy position in the Chinese market, with a substantial network of offices. This stake is Asia Financial's single biggest external holding.

Business Review (continued)

Other Portfolio Investment

Trading investments recovered their early 2020 losses and showed positive momentum at year end. We synchronized our portfolio in line with market changes, and will continue to monitor and leverage continuing market fluctuations, and take profit at the appropriate times. Returns from non-traded investments were healthy.

Our portfolio will remain focused on good quality equities and fixed-income investments, and our approach will be long-term rather than reactive to year-on-year fluctuations in market valuations. We will continue to place the highest priority on preservation of core shareholder wealth. At the same time, we will remain alert to potential new long-term opportunities arising from major developments in the international environment, and changes in consumer trends in the post-COVID-19 market.

Health Care and Wellness

Our 4.7% holding in Bumrungrad Hospital Public Company Limited ("Bumrungrad") in Bangkok is our largest listed equity investment. This year, the stock market valuation weakened due to a suffering Thai economy, which experienced its sharpest downturn in 22 years. The Thai baht, as well, dropped in value although it began to recover in early 2021. Additionally, the company felt the transitional negative effect of coronavirus pandemic restrictions on entry to Thailand (45% of Bumrungrad's patients are from overseas). As Thailand slowly re-opens its borders to medical tourism, Bumrungrad's success in attracting patients internationally through the delivery of high-quality medical services is likely to rebound in the long term.

Pension and Asset Management

The Group's holding in Bank Consortium Holding Limited ("BCH"), one of our joint ventures, generated very healthy returns in 2020, in spite of the economic situation. Bank Consortium Trust Company Limited ("BCT"), a wholly owned subsidiary of BCH, remains one of the major providers of Mandatory Provident Fund services in Hong Kong.

The Group's holding in BBL Asset Management Company Limited of Thailand represent 2.8% of our total assets. It operates as an investment management company and offers asset management, equities, fixed income, investment strategies, financial planning, and advisory services. It saw a stable return in 2020 and has continued to declare dividend for the past several years.

Property Development

The Group's interests in real estate are focused on Shanghai and represent 3.4% of our total assets. The main project is a residential and commercial complex in Jiading in Shanghai, in which we have a 27.5% stake.

Business Review (continued)

Property Development (continued)

China's property market remains strong, and there is high demand among lifestyle-conscious young urbanites for design-forward housing complexes like Jiading. Its Phase 3 is being developed in four stages, and in the first half of 2020 we took a healthy profit from 2019 residential sales of Stage One. Despite the COVID-19 pandemic, there was enthusiastic demand for residential sales of Stage Two, which is now 100% sold. We expect to realise these profits in 2021. Stage Three is now complete and 99% has been sold. The property's 450 units will be delivered in the second quarter of 2021 and we anticipate realising these profits in the coming year. Stage Four will be put up for sale in 2021, and because of current demand in the Shanghai market we expect the steady profits from this project to continue apace.

Securities Investments Representing More than 5% of Total Assets

As at 31st December, 2020, two securities investments each represented above 5% of the Group's total assets:

Holding	No. of shares (in thousand)	Fair value as at 31st December, 2020 (HK$'million)	% of total Group assets	Realised/ unrealised gains/(losses), after tax (HK$'million)	Dividends received, after tax (HK$'million)
PICC Life	1,288,055	4,320	27.1%	792	66
Bumrungrad	37,214	1,155	7.3%	(164)	19

Both investments are mainly long-term strategic holdings.

Impact of the COVID-19 Pandemic

Effect on our operations, and relative risk and uncertainties

Economic volatility from COVID-19 did not have material effect on our overall 2020 performance. Many of our insurance business customers are SMEs, who were particularly vulnerable during the pandemic. However, this impacted our bottom line to a manageable extent only.

The performance of our investment portfolio in 2020 was also affected by COVID-19 indirectly but not to a significant extent. Based on recent market performance, and anticipating continued low interest rates and a stimulus policy in the US, we expect that COVID-19 will have only minimal impact on our investment portfolio performance in 2021.

Impact of the COVID-19 Pandemic (continued)

Measures taken to manage the effects of COVID-19 pandemic

Our company's traditionally watchful and cautious approach to investment has enabled us to successfully weather market volatility in periods of economic stress. This investment management strategy helped us to navigate successfully through the difficulties of 2020, and we anticipate it will continue to do so in the future.

In terms of actual exposure to the COVID-19 pandemic, in 2020 we took robust measures to protect the health and safety of our staff and our clients. We established new health protocols and guidelines, minimised the risk of business disruption by preparing detailed contingency plans, and expanded digital and software capacity to enable us to shift business activity online when necessary.

Compliance with Laws and Regulations

The Group takes active steps to ensure compliance with all relevant laws and regulations in all jurisdictions in which it operates, and recognizes the risks of non-compliance. It dedicates sufficient resources and personnel to ensure such compliance, and to maintaining adequate liaison and communication with regulatory authorities. We believe that risks attached to non-compliance are low.

Principal Risks and Uncertainties

The Group's principal risks are exposed to a variety of key risks including credit risk, equity price risk, insurance risk, interest rate risk, liquidity risk, foreign exchange risk, market risk and operation risk. Details of the aforesaid key risks and mitigation measures are elaborated in the note of "Financial Risk Management Objectives and Policies" to the consolidated financial statements of the Group in the 2020 annual report.

MANAGEMENT DISCUSSION AND ANALYSIS (continued)

Stakeholders

Asia Financial understands the importance of its relationships with employees, customers, suppliers, investors, regulators, members of the communities in which we operate, and other stakeholders whose actions can affect the company's performance and value.

Employees

The Company recognizes the vital role that skilled and motivated staff play in its success. Our human resources policy is therefore to encourage, recognize and reward good performance through appropriate training, appraisal and remuneration practices. The Company is confident of its ability to attract high quality staff and believes that risks attached to over-reliance on key personnel are moderate.

Customers

The Company's main clients are insurance policyholders. Delivery of excellent customer service is a key reason for our consistent underwriting profitability. Diversification of our client base and avoidance of over-dependency on core clients are among our risk management practices.

Shareholders

The Company is committed to creating wealth for our shareholders. This aim is fundamental to all our operations and investment activities.

Employees and Remuneration Policy

The total number of employees of the Group for the year ended 31st December, 2020 was 299 (2019: 291). Employees were remunerated on the basis of their performance, experience and prevailing industry practice. Remuneration of the employees includes salary and discretionary bonus which is based on the Group's results and individual performance. Medical and retirement benefit schemes are made available to all levels of personnel. There was no share option scheme in operation during the year. The Group also offers various training and induction programmes to its employees.

The remuneration policy of the Group is formulated and recommended by the Remuneration Committee of the Company for the Board's approval. The Remuneration Committee's responsibilities include reviewing and approving the management's remuneration proposals, and making recommendations to the Board on the adjustments to remuneration packages payable to directors, senior management and employees of the Group.

ANNUAL GENERAL MEETING

The Annual General Meeting (the "AGM") of the Company will be held on Friday, 21st May, 2021. Notice of the AGM will be published and despatched to the shareholders on or about Tuesday, 20th April, 2021.

FINAL DIVIDEND

The Board has resolved to recommend to the shareholders the payment of a final dividend of HK7.0 cents (2019: HK5.0 cents) per share which, together with the interim dividend of HK1.0 cent (2019: HK3.5 cents) per share, will make a total dividend of HK8.0 cents (2019:

HK8.5 cents) per share for the year ended 31st December, 2020. The proposed final dividend will be paid in cash to those shareholders whose names are on the Register of Members of the Company on Wednesday, 2nd June, 2021 and the dividend warrants will be despatched to shareholders on or about Friday, 11th June, 2021.

CLOSURE OF REGISTER OF MEMBERS

The Register of Members of the Company will be closed for the following periods:

(a) For the purpose of ascertaining shareholders' right to attend and vote at the AGM:

Latest time to lodge transfers	4:30 p.m. on 14th May, 2021
Book close dates (both days inclusive)	17th to 21st May, 2021
Record date	21st May, 2021
AGM	21st May, 2021

(b) For the purpose of ascertaining shareholders' entitlement to the proposed final dividend:

Ex-dividend date for final dividend	27th May, 2021
Latest time to lodge transfers	4:30 p.m. on 28th May, 2021
Book close dates (both days inclusive)	31st May, 2021 to 2nd June, 2021
Record date for final dividend

2nd June, 2021

All transfers accompanied by the relevant share certificates must be lodged for registration with the Company's Hong Kong Branch Registrar, Computershare Hong Kong Investor

Services Limited, at Shops 1712-1716, 17th Floor, Hopewell Centre, 183 Queen's Road East, Wan Chai, Hong Kong, not later than the above specified time.

During the year ended 31st December, 2020, a subsidiary of the Company repurchased a total of 14,542,000 ordinary shares of the Company on The Stock Exchange of Hong Kong Limited (the "Stock Exchange") at an aggregate purchase price of approximately HK$51,744,000 (excluding expenses) which was paid wholly out of retained profits. Such repurchased shares were cancelled during the year and after the end of the year. Details of the ordinary shares repurchased on the Stock Exchange during the year are as follows:

Aggregate

Number of purchase price ordinary shares Price per share (excluding

Month of repurchase

repurchased Highest Lowest expenses)

HK$ HK$ HK$'000

January 2020

918,000 4.00 3.84 3,593

February 2020

422,000 3.85 3.83 1,624

March 2020

58,000 2.90 2.90 168

June 2020

2,956,000 3.50 3.35 10,106

July 2020

7,044,000 3.58 3.40 24,810

September 2020

914,000 3.65 3.50 3,290

October 2020

818,000 3.66 3.60 2,973

November 2020

942,000 3.71 3.60 3,463

December 2020

___4_7_0_,_0_0_0_ _1_4_,_5_4_2_,0_0_0_ __________

3.75 3.55

_____1_,_7_1_7

51,744 _________ _________

Subsequent to the end of the year and up to the date of this announcement, a total of 3,726,000 ordinary shares of the Company were repurchased on the Stock Exchange at an aggregate purchase price of approximately HK$14,453,000 (excluding expenses) which was paid wholly out of retained profits. Such repurchased shares were cancelled on 3rd February, 2021 and 5th March, 2021 respectively. Details of the ordinary shares repurchased on the Stock Exchange after the end of the year are as follows:

AggregateMonth of repurchaseNumber of ordinary shares repurchasedpurchase price

Price per share (excluding Highest Lowest expenses)

HK$ HK$ HK$'000

January 2021 February 2021

244,000 __3_,4_8_2_,_0_0_0_

• 3.95 3.80 949

• 4.10 3.80 ____1_3_,_5_0_4

__3_,_7_2_6_,0_0_0_ __________

14,453 _________ _________

(continued)

As a result of the above share repurchases, the issued share capital of the Company was accordingly reduced by the par value of the aforesaid repurchased ordinary shares which were cancelled during the year and after the end of the year. As at the date of this announcement, the number of issued ordinary shares of the Company is 942,424,000 shares.

The purchase of the Company's shares during the year and after the end of the year was effected by the directors, pursuant to the mandate from shareholders received at the annual general meetings held in 2019 and 2020 respectively. The directors believe that the above share repurchases were exercised in the best interests of the Company and its shareholders and that such share repurchases would lead to an enhancement of the net assets value and/or earnings per share of the Company.

Save as disclosed above, neither the Company nor any of its subsidiaries purchased, sold or redeemed any of the Company's shares during the year ended 31st December, 2020 and up to the date of this announcement.

CORPORATE GOVERNANCE CODE

Throughout the year ended 31st December, 2020, the Company has applied the principles and complied with all the applicable code provisions set out in the Corporate Governance Code contained in Appendix 14 of the Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited.

REVIEW OF RESULTS

The Audit Committee of the Company has met the auditor of the Company, Ernst & Young, and reviewed and agreed with the auditor the Group's results for the year ended 31st December, 2020.

PUBLICATION OF FINAL RESULTS AND ANNUAL REPORT

This results announcement is published on the Company's website atwww.afh.hk and the HKExnews website atwww.hkexnews.hk.The 2020 annual report will be despatched to the shareholders and available at the same websites on or about Tuesday, 20th April, 2021.

By Order of the Board Asia Financial Holdings Limited

CHAN Yau Hing Robin

Chairman

Hong Kong, 26th March, 2021

As at the date of this announcement, the executive directors of the Company are Dr. CHAN Yau Hing Robin (Chairman), Mr. CHAN Bernard Charnwut (President), Mr. TAN Stephen, Mr. WONG Kok Ho; the non-executive directors are Mr. KAWAUCHI Yuji, Mr. OGURA Satoru; and the independent non-executive directors are Ms. CHOW Suk Han Anna, Mrs. LAI KO Wing Yee Rebecca and Mrs. SHUEN LEUNG Lai Sheung Loretta.

* For identification purpose only