Synergis : ANNOUNCEMENT OF UNAUDITED INTERIM RESULTS FOR THE SIX MONTHS ENDED 30 JUNE 2020

Hong Kong Exchanges and Clearing Limited and The Stock Exchange of Hong Kong Limited (the "Stock Exchange") 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.

SYNERGIS HOLDINGS LIMITED

昇捷控股有限公司

(Incorporated in Bermuda with limited liability)

(Stock Code: 02340)

ANNOUNCEMENT OF

UNAUDITED INTERIM RESULTS

FOR THE SIX MONTHS ENDED 30 JUNE 2020

The board (the "Board") of directors (the "Directors") of Synergis Holdings Limited (the "Company" or "Synergis") announces the unaudited interim results of the Company and its subsidiaries (collectively, the "Group") for the six months ended 30 June 20 20 (the "Reporting Period").

FINANCIAL OVERVIEW

		Six months ended
		30 June		Change
HK$' million		2020	2019		Amount	%
Revenue	553.8	737.0		(183.2)	↓24.9%
Gross profit	41.9	77.1		(35.2)	↓ 45.7%
Gross profit margin	7.6%	10.5%	-	↓2.9%
Operating expenses (including interest)	(51.4)	(51.8)		0.4	↓0.8%
Government subsidies	13.8	-	13.8	-
Profit attributable to shareholders	1.6	20.5		(18.9)	↓92.2%
EBITDA	19.1	32.5		(13.4)	↓41.2%
Basic earnings per share (HK cents)	0.4	4.8		(4.4)	↓91.7%

- 1 -

The Group reported consolidated revenue of approximately HK$553.8 million for the Reporting Period, a decrease of approximately 24.9% over the six months ended 30 June 2019 (the "Corresponding Period") as a result of the completion of a few key contracts and fewer new contracts with substantial revenue contributions of interiors and special projects business (the "ISP Business") having been awarded.

The gross profit has reduced by 45.7% to approximately HK$41.9 million with 2.9% lower on gross profit margin than that of the Corresponding Period. Such decrease in gross profit margin was mainly due to substantial loss being incurred in some of the project works and certain costs incurred involving works done from construction projects still under negotiations with employers of ISP Business. With the continuous cost control measures implemented by the management, the operating expenses could be maintained at similar level of the Corresponding Period of approximately HK$51.4 million. Although the Group has received and accounted for the government subsidies of approximately HK$13.6 million under HKSAR Government's Employment Support Scheme ("ESS") for the property and facility management ("PFM") business and ancillary business (the "Ancillary Business") (collectively, the "PFM Business") that deducted the reimbursement to be paid to the respective incorporation owners in the PFM Business after Reporting Period, the Group still saw a significant decrease in net profit and recorded the net profit of approximately HK$1.6 million for the Reporting Period. Earnings per share was 0.4 HK cents (2019: 4.8 HK cents).

Reference is made to the annual report of the Company for the year ended 31 December 2019. A winding up order has been made against Hsin Chong Group Holdings Limited ("Hsin Chong Group") in January 2020 by the Supreme Court of Bermuda in its place of incorporation in Bermuda. Accordingly, whatever debts owed to the Company and its subsidiaries by Hsin Chong Group, the Company has claimed by way of filing proof of debts against Hsin Chong Group in its place of incorporation in Bermuda. As an unsecured creditor, the recoverability of our debts seems to be remote in future under the petition. Besides, the Company received a writ of summons issued in the High Court by QBE Hongkong and Shanghai Insurance Limited regarding a claim for approximately HK$34.2 million in January 2020. The Company is seeking legal advice in respect of the proceeding and would defend its position (particularly the claim amounts that the Company is not responsible for). We shall make further announcement(s) as and when appropriate.

BUSINESS REVIEW AND PROSPECTS

Business Overview

The novel coronavirus outbreak since early of 2020 has caused negative impacts on the Group's business performance. The Group expects the event may continue to affect our business performance in the second half of 2020. In light of the changing uncertainty in the global economy and the current pandemic, the Group will continue to closely monitor the market conditions, stay alert to formulate strategies to pursue steady development and strive for the improvement of our financial performance.

Although the Group has received and accounted for the government subsidies of approximately HK$13.8 million mainly from ESS for the PFM Business during the Reporting Period, the Group still recorded a significant decrease in the profit attributable to Shareholders mainly because of the decrease in gross profit of the ISP Business.

- 2 -

PFM Business remained stable in revenue and gross profit as in past years even though not counting in the government subsidies from ESS, and still continued to maintain its solid market position in the industry. In view of the external environment of construction industry continuing to worsen, the management strives re-engineering for our ISP Business through adopting more appropriate business strategy and re-structuring management team from around mid of 2020. During the Reporting Period, ISP Business has still contributed one-third of the Group's revenue.

• PFM Business achieved a satisfactory result and has successfully maintained the similar revenue as the Corresponding Period. The gross profit has slightly decreased by 7.1% to approximately HK$45.7 million amid some adverse financial impact on our business due to the novel coronavirus. We still achieved same operating profit approximately of HK$18.9 million as last year and increased the net profit by 76.4% to approximately HK$30.7 million over last year with government subsidies from ESS. This business segment's portfolio leaped into a new milestone with approximately of HK$200.0 million as some new contracts awarded up to the date of this announcement especially we got another significant batch of Fitter Services Term Maintenance Contracts with Link Property Management Services Limited ("Link") to provide technical support services to its shopping centers and car parks.
• Due to fewer new contracts awarded and the substantial loss being incurred in two significant contracts of our ISP Business during the Reporting Period, the revenue decreased by half and the gross profit decreased by 113.6% to loss of approximately HK$3.8 million. In light of doubled interest expenses mainly due to the issuance of convertible bond in November 2019, coupled with similar level of operating expenses with last year, the operating result was inevitably turning to record a loss of approximately HK$23.2 million.

			PFM					ISP
	Six months ended 30 June		Six months ended 30 June
				Change					Change
HK$' million	2020		2019	Amount	%		2020	2019		Amount	%
Revenue	365.4	366.1	(0.7)	↓0.2%	188.4	370.9	(182.5)	↓49.2%
Gross Profit/(Loss)	45.7	49.2	(3.5)	↓7.1%	(3.8)	27.9	(31.7)	↓113.6%
Operating Expenses	(26.8)	(30.3)	3.5	↓11.6%	(14.0)	(14.9)	0.9	↓6.0%
Interest Expenses	-	-	-	-		(5.4)	(2.2)	(3.2)	↑145.5%
Operating Profit/
(Loss)	18.9		18.9	-	-		(23.2)	10.8		(34.0)	↓314.8%
Others	1.3	1.2	0.1	↑8.3%	(0.6)	(0.1)	(0.5)	↑500%
Government
Subsidies	13.6	-	13.6	-		0.2	-	0.2	-
Taxation	(3.1)	(2.7)	(0.4)	↑14.8%	(0.2)	(2.5)	2.3	↓92.0%
Net Profit/(Loss)	30.7		17.4	13.3	↑76.4%		(23.8)	8.2		(32.0)	↓390.2%

- 3 -

Property and Facility Management Business

Despite the challenges in first half of 2020, Synergis has remained the leading position in the market with the extensive experience of over 40 years and able to maintain good financial performance in the first half of the year. Synergis continues to serve a diverse portfolio for a wide spectrum of clients including government, corporate clients, public institutions and private clients. Synergis manages over 400 projects with over 80,000 residential units covering 7.6 million square metres of residential, commercial and industrial facilities in Hong Kong and China. The scope of services includes but not limited to government departments, large-scale public facilities, transportation systems, airport cargo terminals, education institutions, hospitals, commercial and industrial properties, shopping malls, public housing estate, private housing and car parks, etc.

In the first half of 2020, the PFM business has been awarded approximately 30 new and key contracts ranging from one-year to five-year span with total contract sum of approximately HK$200 million. Those new contracts together with outstanding services to be provided over HK$800 million have brought Synergis to a new milestone and the expansion of business scope to comprehensive technical support services to shopping centers and the management services to 4-block industrial buildings.

Together with the two Property Management Support Services Contracts we got last year and our current two contracts of Car Park Management Business with Link, Synergis has further strengthened our business relationship, in which we have been in a long-term client relationship with Link since 2012. One of the new key contracts awarded during the Reporting Period is the three groups of 3-year contracts for the Provision of Fitter Services Term Maintenance Contracts for Link's shopping centres, carparks, markets & cooked-food stalls in Yuen Long & Tuen Mun, Kowloon Central, Kowloon West & Wong Tai Sin and Tsuen Wan, Kwai Tsing, Tung Chung & Hong Kong Island from Link. Another noteworthy contracts is a 21-month management contract of multi-blocks industrial building - Kwun Tong Industrial Centre, in provision of property management, security, cleaning and maintenance services.

The facility management team has also put forward keen effort to win several key contracts including public institution and hospitals. The major contracts awarded during the Reporting Period included the provision of property management services to the Independent Commission Against Corruption Building and the provision of security services for Caritas Medical Centre, Kowloon West Cluster and Yan Chai Hospital.

We have a dedicated team to manage our car park management business and achieved a satisfactory result since last year. During the Reporting Period, we have also been awarded a new key contract of Western Wholesale Food Market under the Agriculture, Fisheries and Conservation Department. It is another key milestone of the business to further extend our client portfolio of Car Park Management Business to cover government projects.

Despite the pandemic of novel coronavirus since January 2020 with some delay for the existing contracts renewal, Synergis managed to keep high renewal rate of some existing major contracts. The renewed key contracts included the provision of facilities management services at Residential, Riding Schools and Other Associated Properties at The Hong Kong Jockey Club, Yee Fung Garden, Robinson Mansion, Sun Tin Wai Commercial Centre & Car Park, Hong Kong Baptist University Senior Staff Quarters, etc.

- 4 -

In the first half of 2020, our China business had maintained with minor operating profit of approximately of HK$0.7 million in the Reporting Period despite of the adverse impact on the business development under the pandemic of novel coronavirus. The effective resources relocation and cost conscious strategies still be appropriate under management assessment. In view of keen competition and market saturation in the first-tier cites, the team will further explore opportunities in second-tier cities like Jinan and Chengdu. We are confident to improve the profitability of our China business.

To provide comprehensive and all-round services to our clients, Synergis has developed the Ancillary Business to fulfill different kind of customer needs - including integrated procurement, laundry, cleaning, security, maintenance and technical support services. The cleaning business segment continued to be the main revenue and profit contributor to Ancillary Business. The revenue of our cleaning business segment has been improved by 9.7% as compared with the Corresponding Period. Due to the outbreak of novel coronavirus since January 2020, there was some adverse impact for our revenue with minor drop of 7.1% to approximately HK$60.7 million as compared with the Corresponding Period. The gross profit and operating profit also reduced by 16.1% and 40.4% to approximately HK$11.6 million and HK$3.3 million respectively as compared to those of the Corresponding Period. The reduction was mainly due to fewer new projects undertaken by our technical support services segments as compared with last year and also fewer tender opportunities in the market under the novel coronavirus outbreak. It was already confirmed that some of renovation and improvement works would be postponed to at least later this year or next year.

The Ancillary Business will remain the strategy to enhance our competitiveness in the market and further improve the service quality to maintain our current customers and explore new business opportunity. Although the current situation has slowed down its business growth, we are still confident of the future development potential of the Ancillary Business. The management strived the best to improve our financial performance under uncertain economic situation. We will continue to sustain our market position through securing more contracts to enrich our company profile and maintain the current business portfolio by offering excellent and professional services to our clients.

- 5 -

Interiors and Special Projects Business

As another key business arm of Synergis, ISP Business provides one-stop services including planning, design, consultancy, project management, etc. to its customers.

ISP Business continues to contribute approximately one-third of the total revenue of the Group. During the Reporting Period, the total revenue and operating loss of ISP Business recorded approximately HK$188.4 million and approximately HK$23.2 million respectively. The significant decrease in revenue and gross profit were mainly due to the completion of a few key contracts and two loss-making projects. Out of the total ISP revenue contributions during the Reporting Period, over half came from several key projects including remodel of a temple in Kowloon Tong, alteration and addition works at Kowloon Investment Building, 8 Bute Street in Mongkok, and building and electrical and mechanical works for automation of arrival bags delivery at the Hong Kong International Airport.

Despite the increasing competitive environment of the industry, the total outstanding workload for contracts on hand as of 30 June 2020 was still recorded at approximately HK$500 million. Affected by the novel coronavirus and local economic downturn, Hong Kong's property market and the local operating environment, in particular retail and hotel operations, have weakened. Construction projects and property sales have slowed down as developers and investors took a more prudent business approach. All these have inevitably affected our ISP Business. We continue to strive for the growth of the ISP Business through staying focus on our key strength including fitting-out, alteration and addition, renovation, etc. With the team's commitment to excellence, we are looking for an improvement of our overall business performance in the near future.

Outlook of the Group

Looking forward, we expect the local economy remains challenging, amid the novel coronavirus outbreak and local economic downturn. Our ISP Business, which is heavily relied on retail and hospitality market condition, will be inevitably affected. Facing near-term headwinds from economic uncertainties, we shall capture the opportunity of the steady local residential property sector and strive to maintain a continuous business growth. Our PFM Business expects to remain stable comparatively.

On a group-wide overview, we consider that the overall financial performance of the Group remains sound. Management seeks to proactively improve the quality of our services and create value for our stakeholders through comprehensive and innovative solutions and better communications with clients. The awards we have won over the years attest to the wide recognition we have received for our dedication. Aligning our values of customer focus, integrity, teamwork, innovation and pursuit of excellence, sustainability is our core business strategy. Besides, with the rapid change of business environment, we will continue to manage various operational and financial risks and take appropriate measures to minimise and combat these risks. Leveraging its solid foundation and committed management team, the Group has full confidence in overcoming all the difficulties ahead of us and is still cautiously optimistic about the outlook of both businesses with continuing challenge and uncertainties.

- 6 -

Disposal of PFM Business

On 6 April 2020, the Company and the potential purchaser (the "Potential Purchaser") entered into a non-legally binding memorandum of understanding in relation to possible disposal of the PFM Business, pursuant to which the Company has intended to dispose of, and the Potential Purchaser has intended to acquire the entire issued share capital of the certain subsidiaries of the Company which are principally engaged in the PFM Business (the "Possible Disposal").

As at the date of this announcement, no formal agreement has been entered into between the Company and the Potential Purchaser and the Board will continue to negotiate the terms of the formal agreement with the Potential Purchaser. The Company will make further announcement(s) should there be any updates in relation to the Possible Disposal as and when appropriate. Details of the Possible Disposal are set out in the announcements of the Company dated 6 April 2020, 18 May 2020 and 4 June 2020 respectively.

Financial Position and Financial Risk Management

As at 30 June 2020, the total outstanding bank loan was HK$111.0 million, and scheduled to be repaid within one year. This included a term loan of HK$35.0 million drawn down to support ISP operation. The remaining sum represented the working capital loans for supporting ISP operation and business development. Details of which are disclosed in note 10 to the financial statements in this announcement. During the Reporting Period, the Group's sources of fund were generated primarily from operating and financing activities (including bank facilities).

Interest costs on bank borrowings were primarily charged based on a spread over HIBOR. With regard to the current portfolio of businesses, management expects that financial requirements for the foreseeable future will be met from a combination of shareholders' equity and banking facilities. The Group would continue to proactively monitor the financial position and maintain sufficient working capital and liquidity in the way that can enable us to capture any good business opportunities and to meet the challenges ahead.

The Company placed the 7% convertible bonds in an aggregate principal amount of HK$42,000,000 (the "Convertible Bonds") on 18 November 2019 pursuant to the placing agreement dated 24 October 2019 (the "Placing") by the placing agents to six placees, being individual and corporate investors who are the independent third parties and are not connected with the Company as well as its connected persons, whereby the Convertible Bonds may be convertible into a maximum of 84,000,000 conversion shares based on the initial conversion price of HK$0.50 per conversion share upon exercise in full of the conversion rights attaching to the Convertible Bonds. As at 30 June 2020 and up to the date of this announcement, no conversion share has been issued under the Convertible Bonds which will be due in November 2021.

The gross and net proceeds from the placing amounted to approximately HK$42,000,000 and HK$41,000,000 respectively. The net issue price for the Placing is approximately HK$0.49 per conversion share. The net proceeds from the Placing were fully used as the general working capital of the Group according to the purpose of the Placing. Details of the Placing are set out in the announcements of the Company dated 24 October 2019 and 18 November 2019 respectively as well as note 11 to the financial statements in this announcement.

- 7 -

	Financial position (HK$'000)			30 June 2020			31 December 2019
	Total assets			716,521			836,365
Receivables and other assets	551,095		673,725
Cash and cash equivalents and pledged bank
	deposits/time deposits with original maturities
	over three months	131,248		128,344
	Current assets			682,343			802,069
Payables and other liabilities	430,184		534,383
Bank loans	111,000		131,000
	Current liabilities			541,184			665,383
Other non-current liabilities	6,214		4,440
Convertible bonds	37,321		35,882
	Non-current liabilities			43,535			40,322
	Net assets			131,802			130,660
Net assets per share (HK cents)	26.1		25.9
	Gearing ratios and liquidity
Net debt to net assets	13.0%	29.5%
Total debt to net assets	112.5%		127.7%
Current ratio	1.3		1.2

The Group adopts a conservative approach in the management of its financial risks and resources, under the supervision of the Executive Committee.

Interest rate risk arising from bank borrowings is low as interest rates are fixed for short-term periods to take advantage of the lower rates thus available. Interest rates will be subject to fluctuation at the time of renewal.

The Group's business is conducted primarily in Hong Kong, and its majority assets and liabilities are denominated in Hong Kong Dollars. Therefore, the Group has minimal foreign currency exposure. The growth of the Group's business in China has been funded via permanent capital injection, which is for the long-term and as such, foreign currency hedging is considered unnecessary.

It is the Group's policy not to enter into derivative transactions for speculative purposes. It is also the Group's policy not to invest its financial resources in financial products, including hedge funds or similar instruments, with significant underlying leverage or derivative exposure.

There were no material investments, capital commitments or contingent liabilities as at 30 June 2020 and up to the date of this announcement, other than a writ of summons received by the Company from QBE Hongkong and Shanghai Insurance Limited. Details of the writ of summons were given in the announcement of the Company dated 30 January 2020.

- 8 -

Cash Management

The Group operates a centralised cash management system. Cash balances surplus to meet immediate requirements are mainly placed as short-term bank deposits with licensed banks in Hong Kong.

Human Resources

As at 30 June 2020, the Group employed a total of 5,116 staff (31 December 2019: 4,944) in Hong Kong and China.

In order to sustain our quality services, it is always our long-term goal to retain top talent for the Group. We put a lot of efforts in ensuring our staff members are enjoying competitive remuneration and benefits through market research for regular benchmarking review. Our Human Resources Team always strives their best to keep track of changes in the latest market conditions for attracting more high caliber candidates to join our winning team. In addition, aiming for the mutual growth of the staff and the Group, we do our utmost to invest and share resources with our staff. We have formulated a holistic policy on human capital management with the theme of "We Care We Share 盡展關懷 共享成果". We do believe our staff will reward the Company and customers through providing quality services and thus gain more appreciation and recognition from the customers. Besides, the Human Resources team manages through enhancing the existing Human Resources system aiming to uplift the effectiveness and efficiency of business operations.

Assessment of 2020 novel coronavirus impact

There has been an outbreak of the novel coronavirus in Hong Kong in January 2020. The Group expects the novel coronavirus outbreak to have no material impact on PFM Business, However, ISP Business experienced and is anticipating more challenges arising from the novel coronavirus outbreak. Due to the implementation of precautionary measures by the Government to tackle the novel coronavirus outbreak, especially in the first quarter of 2020, supply of materials was seriously disrupted which resulted in delay of site-work progress and increase in costs to maintain the required site workforce for a longer period. The outbreak also caused postponement of projects tenders, cancellation of bids, and alternation of clients' plans of implementation of projects, which resulted in decrease of new projects undertaken by ISP Business. The Directors consider that it is difficult to estimate the full impact in the coming months given the dynamic nature of these circumstances and the uncertainty over the duration of the outbreak. The Board will continue to assess the impact of the outbreak on the Group's operation and financial performance, closely monitor the Group's exposure to the risks and uncertainties in connection with the outbreak, and maintain close communication with different stakeholders of the Group.

INTERIM DIVIDEND

The Board resolved not to declare interim dividend for the Reporting Period (2019: nil).

- 9 -

CONDENSED CONSOLIDATED STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME

FOR THE SIX MONTHS ENDED 30 JUNE 2020

			Unaudited
		Six months ended 30 June
		2020	2019
	Note	HK$'000			HK$'000
Revenue	3	553,783	736,955
Cost of sales and service		(511,916)			(659,848)
Gross profit		41,867	77,107
Other income		14,769	1,602
General and administrative expenses		(43,707)	(49,309)
Interest expenses		(5,774)	(3,311)
Doubtful debts recovery		663	89
Impairment of contract assets		(1,111)	-
Impairment of receivables		(1,815)			(408)
Profit before taxation	4	4,892	25,770
Taxation	5	(3,295)	(5,290)
Profit attributable to the equity holders of the
Company		1,597	20,480
Earnings per share for profit attributable to the
equity holders of the Company
- basic (HK cents)	6	0.4			4.8
- diluted (HK cents)	6	0.3			4.1

- 10 -

CONDENSED CONSOLIDATED STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME

FOR THE SIX MONTHS ENDED 30 JUNE 2020

	Unaudited
	Six months ended 30 June
	2020			2019
	HK$'000	HK$'000
Profit for the period	1,597			20,480
Other comprehensive loss:
Items that may be subsequently reclassified to profit
or loss
Exchange differences on translating foreign
operations	(455)			(123)
Total comprehensive income for the period
attributable to equity holders of the Company	1,142			20,357

- 11 -

CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL POSITION AS AT 30 JUNE 2020

		Unaudited		Audited
		30 June		31 December
		2020	2019
	Note	HK$'000		HK$'000
Non-current assets
Property, plant and equipment		20,658	20,387
Investment properties		7,000	7,200
Deferred tax assets		6,520	6,294
Prepayment		-		415
Total non-current assets		34,178	34,296
Current assets
Contract assets		229,270	312,863
Receivables	8	295,851	336,633
Deposits and prepayments		25,934	22,819
Taxation recoverable		40	1,410
Cash and cash equivalents		120,084	116,873
Pledged bank deposits/time deposits with original
maturities over three months		11,164		11,471
Total current assets		682,343	802,069
Current liabilities
Payables and accruals	9	392,817	506,619
Contract liabilities		23,410	15,892
Bank loans	10	111,000	131,000
Lease liabilities		8,753	7,641
Taxation payable		5,204		4,231
Total current liabilities		541,184	665,383
Net current assets		141,159		136,686
Total assets less current liabilities		175,337	170,982
Non-current liabilities
Long service payment liabilities		1,576	1,576
Convertible bonds	11	37,321	35,882
Lease liabilities		4,266	2,464
Deferred tax liabilities		372		400
Total non-current liabilities		43,535	40,322
Net assets		131,802	130,660
Equity attributable to equity holders of the
Company
Share capital	12	50,486	50,486
Reserves		81,316		80,174
Total equity		131,802		130,660

- 12 -

NOTES TO THE INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

1 Basis of Preparation

The unaudited interim condensed consolidated financial statements have been prepared in accordance with Hong Kong Accounting Standard ("HKAS") 34 "Interim Financial Reporting" issued by the Hong Kong Institute of Certified Public Accountants.

Except as described below, the accounting policies used in the preparation of these unaudited interim condensed consolidated financial statements are consistent with those set out in the annual report for the year ended 31 December 2019.

The Hong Kong Institute of Certified Public Accountants has issued a number of new or revised standards, interpretations and amendments to standards which are effective for accounting period beginning 1 January 2020:

Amendments to HKFRS 3	Definition of a Business
Amendments to HKFRS 9, HKAS 39 and	Interest Rate Benchmark Reform
HKFRS 7
Amendments to HKAS 1 and HKAS 8	Definition of Material

The adoption of the new HKFRSs and amendments to HKFRSs has no material impact on the Group's condensed consolidated interim financial statements.

The interim condensed consolidated financial statements do not include all financial risk management information and disclosures required in the annual financial statements, and should be read in conjunction with the Group's annual financial statements as at 31 Dece mber 2019.

The Group's activities expose it to a variety of financial risks: market risk (including foreign exchange risk and interest rate risk), credit risk and liquidity risk.

The Group adopts prudent liquidity risk management which includes maintaining sufficient bank balances and cash, and having available funding through an adequate amount of committed credit facilities. Cash flow forecast is performed in the operating segments of the Group and aggregated by corporate finance team taking into account the Group's history of refinancing, its available banking facilities and its assets backing. Corporate finance team monitors forecasts of the Group's liquidity requirements to ensure the Group has sufficient cash to operate and meet its liabilities as and when they fall due.

- 13 -

1. Critical accounting estimates and judgements
   The preparation of interim 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 expenses. Actual results may differ from these estimates.
   In the preparation of these interim condensed consolidated financial statements, the significant judgements made by the management in applying the Group's accounting policies and the key sources of estimation uncertainty were the same as those that applied to the consolidated financial statements for the year ended 31 December 2019.
   As at 30 June 2020, the Group had certain claims over its contract assets and receivables in respect of disputes or prolonged negotiation between the Group and the employers in certain building construction contracts. The Group is closely monitoring the development of these contracts and has been negotiating with the employers or seeking relevant resolutions. The directors are of the view that the carrying value of the balances as at 30 June 2020 would be fully recoverable. The determination of the recoverability involved significant management estimation.
   The Group assesses on a forward looking basis the expected credit losses associated with its receivables and contract assets under HKFRS 9. The impairment methodology applied depends on whether there has been a significant increase in credit risk. To make that assessment, the Group compares the risk of a default occurring on the financial instrument as at the reporting date with the risk of a default occurring on the financial instrument as at the date of initial recognition and consider reasonable and supportable information, that is available without undue cost or effort, that is indicative of significant increases in credit risk since initial recognition. Significant estimates and judgements are required in determining the amount that is not recoverable and the forecast of future economic conditions.
2. Segment Information
   In accordance with the Group's internal financial reporting provided to the chief operating decision-maker, identified as the Executive Committee, who is responsible for allocating resources, assessing performance of the operating segments and making strategic decisions, the reportable operating segments and their results are as below:
3. • property and facility management services in Hong Kong;
   • property and facility management services in China;
   • ancillary business including integrated procurement, laundry, cleaning, security, maintenance and technical support services; and
   • interiors and special projects.

- 14 -

Segment Results (in HK$'000)

			PFM								Corporate
			Hong		Ancillary		PFM		ISP		Overhead
	Six months ended 30 June 2020		Kong	China	Business		Business		Business		(Note)		Total
	Revenue
	- At a point in time	-	-	7,369		7,369		-		-		7,369
	- Over time	301,639	3,093	53,326		358,058		188,356		-		546,414
			301,639	3,093	60,695		365,427		188,356		-		553,783
	Gross Profit/(Loss)		31,415	2,700	11,565		45,680		(3,813)		-		41,867
	Gross Profit/(Loss) Margin	10.4%	87.3%	19.1%		12.5%		-2.0%		-		7.6%
	Operating expenses	(16,451)	(2,047)	(8,294)		(26,792)		(14,030)		(5,148)		(45,970)
	Interest expenses	-	-	-		-		(5,361)		-		(5,361)
	Operating Profit/(Loss)		14,964	653	3,271		18,888		(23,204)		(5,148)		(9,464)
	Operating Profit/(Loss) Margin	5.0%	21.1%	5.4%		5.2%		-12.3%		-		-1.7%
	Interest expenses for
	acquisition loan						-		-		(190)		(190)
	Interest expenses for lease						(181)		(42)		-		(223)
	Other income						15,161		(392)		-		14,769
	Profit/(Loss) before taxation						33,868		(23,638)		(5,338)		4,892
	Taxation						(3,138)		(157)		-		(3,295)
	Profit/(Loss) for the period						30,730		(23,795)		(5,338)		1,597

			PFM								Corporate
		Hong			Ancillary		PFM		ISP		Overhead
	Six months ended 30 June 2019	Kong		China	Business		Business		Business		(Note)		Total
	Revenue
	- At a point in time	-		-	7,790		7,790		-		-		7,790
	- Over time	296,199	4,574	57,525		358,298		370,867		-		729,165
		296,199		4,574	65,315		366,088		370,867		-		736,955
	Gross Profit	32,413		2,973	13,780		49,166		27,941		-		77,107
	Gross Profit Margin	10.9%	65.0%	21.1%		13.4%		7.5%		-		10.5%
	Operating expenses	(19,082)	(2,905)	(8,290)		(30,277)		(14,928)		(4,423)		(49,628)
	Interest expenses	-		-	-		-		(2,242)		-		(2,242)
	Operating Profit	13,331		68	5,490		18,889		10,771		(4,423)		25,237
	Operating Profit Margin	4.5%	1.5%	8.4%		5.2%		2.9%		-		3.4%
	Interest expenses for
	acquisition loan						-		-		(791)		(791)
	Interest expenses for lease						(154)		(124)		-		(278)
	Other income						1,443		159		-		1,602
	Profit before taxation						20,178		10,806		(5,214)		25,770
	Taxation						(2,712)		(2,578)		-		(5,290)
	Profit for the period						17,466		8,228		(5,214)		20,480

Note: Corporate overhead mainly represents corporate and administrative activities, and shared services.

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4	Profit Before Taxation
		Unaudited
		Six months ended 30 June
		2020	2019
		HK$'000	HK$'000
	Profit before taxation is arrived after charging /(crediting):
	Staff costs, including directors' emoluments	328,001	329,645
	Depreciation of property, plant and equipment	2,581	3,441
	Depreciation of right-of-use assets	5,875	6,554
	Short-term lease expenses	546	339
	Loss on disposal of property, plant and equipment	1,088	102
	Fair value loss/(gain) on investment properties	200	(200)
	Exchange (gain)/loss	(44)	186
	Rental income from investment properties	(158)	(204)
	Bank interest income	(363)	(303)
	Government subsidies (Note)	(13,840)	-

Note:

After deducting the reimbursement to be paid to the respective Incorporation Owners in PFM Business.

5 Taxation

Hong Kong profits tax has been provided at the rate of 16.5% (2019: 16.5%) on the estimated assessable profits for the period after application of available tax losses brought forward for both periods. Taxation on overseas profits has been calculated on the estimated assessable profits for the period at the rates of taxation prevailing in the countries in which the Group operates.

The amount of tax charged/(credited) to the condensed consolidated statement of profit or loss and other comprehensive income represents:

	Unaudited
	Six months ended 30 June
	2020			2019
	HK$'000	HK$'000
Current taxation
Hong Kong profits tax
- provision for the period	3,585			4,682
- (over)/under provision in prior years	(37)			24
Deferred taxation	(253)			584
	3,295			5,290

- 16 -

6 Earnings Per Share

1. Basic earnings per share is calculated by dividing the Group's unaudited profit attributable to equity holders less dividends (if any) to convertible preference shareholders by the weighted-average number of ordinary shares in issue during the period.

		Unaudited
		Six months ended 30 June
		2020			2019
Profit attributable to equity holders (HK$'000)	1,597			20,480
Weighted-average ordinary shares issued ('000)	424,850			424,850
Basic earnings per share (HK cents)		0.4			4.8

1. Diluted earnings per share for the Reporting Period is calculated by dividing the Group's unaudited profit attributable to the equity holders by the weighted-average ordinary shares outstanding after adjusting for the potential ordinary shares to be issued on convertible preference shares and convertible bonds. The calculation of the diluted earnings per share attributable to the ordinary equity holders of the Company is based on the following data:

Earnings

Earnings for the purposes of basic earnings per share

(HK$'000)

Number of share

Weighted-average ordinary shares issued ('000)

Effect of dilutive potential ordinary shares:

Unaudited

Six months ended 30 June

20202019

1,59720,480

424,850424,850

- Convertible preference shares ('000)	80,000	80,000
Weighted-average ordinary shares for calculating
diluted earnings per share ('000)	504,850		504,850
Diluted earnings per share (HK cents)		0.3		4.1

Note:

The effect of any potential exercise of convertible bonds is excluded from the calculation of diluted earnings per share for the period ended 30 June 2020 where the effect would be anti-dilutive.

- 17 -

1. Dividend
   At a meeting held on 25 August 2020, the Board resolved not to declare interim dividend for the period ended 30 June 2020 (2019: nil).
2. Receivables
   The credit period of the Group's accounts receivable generally ranges from 30 to 60 days. (31 December 2019: 30 to 60 days) and the majority of the Group's accounts receivable are denominated in Hong Kong dollars. The ageing analysis of accounts receivable by invoice date is as follows:

	Unaudited		Audited
	30 June		31 December
	2020	2019
	HK$'000		HK$'000
Accounts receivable
0 to 30 days	72,038	118,025
31 to 60 days	31,019	37,013
61 to 90 days	15,390	17,489
Over 90 days	33,743		112,956
	152,190	285,483
Retention receivables and
other receivables	145,495		145,452
Receivables	297,685	430,935
Impairment of accounts receivable,
retention receivables and other receivables	(1,834)		(94,302)
	295,851		336,633

Retention receivables in respect of the contracting business are settled in accordance with the terms of the respective contracts. At 30 June 2020, retention receivables held by customers for contract works amounting to approximately HK$10,621,000 (31 December 2019: HK$9,907,000) are expected to be recovered or settled in more than 12 months from the end of the reporting period, all of the remaining balances are expected to be recovered or settled within one year. Retention receivables are included in current assets as the Group expects to realise these within its normal operating cycle.

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

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9 Payables and Accruals

The credit period of the Group's accounts payable generally ranges from 30 to 60 days. (31

December 2019: 30 to 60 days). The ageing analysis of accounts payable by invoice date is as follows:

			Unaudited				Audited
			30 June				31 December
		2020	2019
			HK$'000				HK$'000
	Accounts payable
	0 to 30 days	219,092	286,450
	31 to 60 days	9,046	12,245
	61 to 90 days	5,175	7,663
	Over 90 days	27,628		32,230
		260,941	338,588
	Retention payables, other payables and accruals	131,876		168,031
		392,817	506,619
10	Bank Loans
			Unaudited				Audited
			30 June				31 December
		2020	2019
			HK$'000				HK$'000
	Bank loans contains a clause of repayment on demand:
	- Portion due for repayment within one year	111,000	80,000
	- Portion due for repayment in the second year		-			51,000
			111,000			131,000

Notes:

(a) The Group had bank loans of HK$111,000,000 (31 December 2019: HK$131,000,000) denominated in Hong Kong dollars.

(b) The bank loans of the Group carried weighted average interest rates of 3.0% (31 December 2019: 5.4%) per annum.

(c) The Group's term loan of HK$76,000,000 (31 December 2019: HK$96,000,000) is subject to a floating charge over the assets of the Company and its subsidiaries.

(d) The Group's term loan of HK$76,000,000 (31 December 2019: HK$96,000,000) is personally guaranteed by an indirect controlling shareholder.

(e) Bank deposit of HK$10,000,000 (31 December 2019: HK$10,160,000) is pledged as security for the Group's bank loan of HK$35,000,000 (31 December 2019: HK$35,000,000).

(f) The carrying amounts of loans approximate their fair values.

- 19 -

11 Convertible Bonds

The Company issued 84,000,000, 7% convertible bonds with a principal amount of HK$42,000,000 on 18 November 2019. The convertible bonds are denominated in Hong Kong dollars. The bonds will mature by two years from the issue date with repayment of principal amount or can be converted into ordinary shares of the Company at the holder's option at the fixed rate of one share per HK$0.5 of the outstanding principal.

The fair values of the liability component and the equity conversion component were valued by independent professional valuer, Pretium Advisory Services Limited, at the issuance of the convertible bonds and not subject to annual revaluation. The fair value of the liability component, included in non-current financial liabilities, was calculated using a market interest rate for an equivalent non-convertible bonds. The residual amount, representing the value of the equity conversion component, is included in shareholders' equity net of deferred income taxes.

The convertible bonds recognized in the statement of financial position is calculated as follows:

	HK$'000
Equity component at 31 December 2019 and 30 June 2020	5,180
Liability component at 31 December 2019	35,882
Interest expenses	2,896
Interest paid	(1,457)
Liability component at 30 June 2020	37,321

Interest expenses on the convertible bonds are calculated using the effective interest method by applying the effective interest rate of 17.1% to the liability component. None of the convertible bonds were redeemed or converted during the period.

12 Share Capital

		Number of
		shares		Amount
		'000		HK$'000
Ordinary shares:
At 31 December 2019, 1 January 2020
and 30 June 2020	424,850	42,486
Convertible preference shares:
At 31 December 2019, 1 January 2020
and 30 June 2020	80,000	8,000
Ordinary shares and convertible preference shares issued
and fully paid
At 30 June 2020	504,850		50,486
At 31 December 2019		504,850		50,486

- 20 -

PURCHASE, SALE OR REDEMPTION OF THE COMPANY'S LISTED SECURITIES

Neither the Company nor any of its subsidiaries purchased, sold or redeemed any of the Company's listed securities during the Reporting Period.

SUBSEQUENT EVENT AFTER THE REPORTING PERIOD

There is no event after the Reporting Period which would have a material impact on the Company's financial position.

REVIEW OF INTERIM RESULTS

The results of the Group for the Reporting Period have been reviewed by the audit committee of the Board and by the Company's external auditor, BDO Limited, 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.

COMPLIANCE WITH THE MODEL CODE FOR SECURITIES TRANSACTIONS BY DIRECTORS

The Board has adopted the Model Code for Securities Transactions by Directors of Listed Issuers

(the "Model Code") as set out in Appendix 10 of the Rules Governing the Listing of Securities (the

"Listing Rules") on the Stock Exchange (as amended from time to time by the Stock Exchange) as its own code of conduct for regulating securities transactions by the Directors. Having been made specific enquiry by the Company, all the Directors confirmed they have complied with the required standard set out in the Model Code throughout the Reporting Period.

COMPLIANCE WITH CORPORATE GOVERNANCE CODE

The Company has applied the principles in the code provisions and certain recommended best

practices set out in the Corporate Governance Code (the "CG Code") as set out in Appendix 14 of

the Listing Rules.

During the Reporting Period, the Company complied with all code provisions of the CG Code.

By order of the Board

Synergis Holdings Limited

Kingston Chu Chun Ho

Chairman

Hong Kong, 25 August 2020

As at the date of this announcement, the Board comprises Mr. Kingston Chu Chun Ho (Chairman) and Ms. Hui Suk Man (Deputy Chairman and Managing Director for the property and facility management) as Executive Directors; and Mr. Lau Man Tak, Mr. Eric Lee Hon Man and Dr. Wong Yun Kuen as Independent Non-executive Directors.

- 21 -