香港交易及結算所有限公司及香港聯合交易所有限公司對本公告之內容概不 負責，對其準確性或完整性亦不發表任何聲明，並明確表示，概不就因本公告 全部或任何部分內容而產生或因倚賴該等內容而引致之任何損失承擔任何責 任。 （於開曼群島註冊成立之有限公司） （股份代號：264） 截 至 二 零 二 二 年 十 二 月 三 十 一 日 止 年 度 之 年 度 業 績 公 告 中聯發展控股集團有限公司（「本公司」）董事（「董事」）會（「董事會」）欣然呈報本公 司及其附屬公司（統稱為「本集團」）截至二零二二年十二月三十一日止年度之 年度業績連同截至二零二一年十二月三十一日止年度之比較數字，詳情如下。 ...

香港交易及結算所有限公司及香港聯合交易所有限公司對本公告之內容概不 負責，對其準確性或完整性亦不發表任何聲明，並明確表示，概不就因本公告 全部或任何部分內容而產生或因倚賴該等內容而引致之任何損失承擔任何責 任。 （於開曼群島註冊成立之有限公司） （股份代號：264） 截 至 二 零 二 二 年 十 二 月 三 十 一 日 止 年 度 之 年 度 業 績 公 告 中聯發展控股集團有限公司（「本公司」）董事（「董事」）會（「董事會」）欣然呈報本公 司及其附屬公司（統稱為「本集團」）截至二零二二年十二月三十一日止年度之 年度業績連同截至二零二一年十二月三十一日止年度之比較數字，詳情如下。 ...

Revenue and Profitability - Revenue for the six months ended June 30, 2022, was HKD 19,614,000, a decrease of 22.9% compared to HKD 25,440,000 in the same period of 2021[10] - Gross profit increased to HKD 7,895,000, representing a gross margin of 27.1%, down from 31.0% in 2021[11][12] - The company reported a total comprehensive loss attributable to owners of the company of HKD 8,934,000 for the period[36] - The group incurred a pre-tax loss of HKD (9,856,000) for the six months ended June 30, 2022, compared to a loss of HKD (8,660,000) in the previous period[131] - The company reported a pre-tax loss of approximately 9,856,000 HKD for the six months ended June 30, 2022, compared to a loss of 8,660,000 HKD for the same period in 2021[200] Financial Position - Total assets as of June 30, 2022, were HKD 38,243,000, down from HKD 41,186,000 at the end of 2021[17] - The total liabilities increased significantly, with current liabilities totaling HKD 64,440,000 as of June 30, 2022[43] - Total liabilities amounted to HKD 42,226,000, with current liabilities contributing HKD 41,013,000[91] - The total liabilities of the company as of June 30, 2022, were 76,642,000 HKD, compared to 71,721,000 HKD as of December 31, 2021, indicating an increase of approximately 6%[177] - The total equity attributable to owners of the company decreased to HKD (38,399,000) as of June 30, 2022[66] Cash Flow and Liquidity - Cash and cash equivalents increased to HKD 1,632,000 from HKD 1,469,000 in the previous year[18] - The current ratio decreased to 0.36 from 0.43, indicating a decline in short-term financial health[20] - The quick ratio improved to 0.25 from 0.16, suggesting better liquidity management[21] - The company recorded cash flows from operating activities of HKD 955,000, compared to cash used of HKD (5,230,000) in the previous period[79] - Cash and cash equivalents decreased to HKD 1,632,000 as of June 30, 2022, down from HKD 2,280,000[79] Loans and Financial Support - The company has a commitment from an executive director for an interest-free loan of HKD 8,000,000, which will not be demanded for repayment until the company is able to do so[91] - The company has an additional loan agreement for up to HKD 30,000,000, which remains undrawn as of June 30, 2022[91] - As of June 30, 2022, the total amount of loans provided by Mr. Zhao to the group was approximately HKD 10,437,000, with HKD 5,166,000 of this amount being deferred for an additional two years[96] - The company has entered into several loan agreements with Mr. Zhao, totaling approximately HKD 11,544,000, which are unsecured and interest-free, due for repayment by August 2024[99] - If external financing is less than HKD 30,000,000 by the end of 2022, Mr. Zhao plans to enter into another shareholder loan agreement to cover the shortfall[99] Operational Performance and Strategy - The group is actively working to improve operational performance and financial conditions, focusing on expanding the existing customer base and optimizing marketing resources in faster-recovering markets[100] - The management is rigorously reviewing the performance of retail stores in Hong Kong to determine if relocations or closures are necessary, while also leveraging e-commerce platforms to explore the Chinese market[100] - The company is committed to reducing inventory levels of raw materials, particularly slow-moving stock, to enhance financial stability[100] - The group is facing significant uncertainties regarding its ability to continue as a going concern, which may require adjustments to asset valuations and liabilities[100] Accounting and Reporting - The company has adopted new accounting standards that may impact financial reporting, including changes related to property, plant, and equipment[108] - The group has not identified any significant impact on its financial performance and position from the new accounting standards and amendments that are expected to be effective from January 1, 2023[121] - The group operates two reportable segments: leather manufacturing and leather retail, with the industrial hemp cultivation business not yet significant enough to be reported separately[130] - The group’s management assesses segment performance without allocating central income and expenses, which are not included in the operating segment performance metrics[130] - The group has adopted new or revised accounting standards effective from January 1, 2022, which did not have a significant impact on the interim financial statements[117] Employee and Other Costs - The company reported a decrease in employee costs to 9,283,000 HKD for the six months ended June 30, 2022, from 9,772,000 HKD in the same period of 2021, a reduction of about 5%[192] - The company recognized impairment losses on right-of-use assets amounting to 1,519,000 HKD for the six months ended June 30, 2022, compared to 819,000 HKD in the previous year[183] - The interest expense on lease liabilities was recorded at 667,000 HKD for the six months ended June 30, 2022, slightly down from 698,000 HKD in the same period of 2021[184] - The company received government subsidies of approximately 8,000 HKD related to the COVID-19 pandemic for the six months ended June 30, 2022, compared to zero in the previous year[194] Dividends and Share Information - The company did not recommend any interim dividend for the six months ended June 30, 2022, consistent with the previous year[198] - The weighted average number of ordinary shares issued was 382,704,000 for both the six months ended June 30, 2022, and 2021, with no potential dilutive shares[200]

Financial Performance - The company recorded revenue of approximately HKD 49,192,000 for the year ended December 31, 2021, representing a significant increase of 23.7% or approximately HKD 9,421,000 compared to HKD 39,771,000 for the previous year[11]. - Gross profit for the year was approximately HKD 9,820,000, with a gross margin decrease from 30.0% in 2020 to 20.0% in 2021, primarily due to additional production costs during the factory relocation[11]. - The company reported a loss before tax of approximately HKD 20,987,000 for the year, slightly improved from a loss of HKD 21,758,000 in the previous year[11]. - Other income decreased by 51.7%, from approximately HKD 2,772,000 in 2020 to approximately HKD 1,338,000 in 2021, mainly due to the absence of government subsidies received in the previous year[11]. - The company reported a net loss attributable to owners of approximately HKD 20,987,000, with a loss per share of HKD 0.055, compared to HKD 0.057 in the previous year[13]. - Revenue for the year ended December 31, 2021, was HKD 49,192,000, an increase of 23.5% from HKD 39,771,000 in 2020[196]. - Gross profit decreased to HKD 9,820,000 from HKD 11,934,000, representing a decline of 17.7%[196]. - The net loss attributable to shareholders for the year was HKD 20,987,000, compared to a loss of HKD 21,758,000 in 2020[196]. Cost and Expenses - Sales and distribution costs increased significantly by approximately HKD 3,217,000 to about HKD 7,575,000, driven by revenue growth and rising global transportation costs[12]. - The company recorded a loss of approximately HKD 5,787,000 in the leather retail segment, an improvement from a loss of HKD 7,286,000 in the previous year[20]. Assets and Liabilities - Current ratio decreased to 0.43 from 0.75 in the previous year, indicating a decline in short-term financial health[7]. - Market capitalization decreased to approximately HKD 271,720,000 from HKD 367,396,000 in the previous year[7]. - Total assets as of December 31, 2021, were approximately HKD 41,186,000, an increase from HKD 32,092,000 in the previous year[26]. - As of December 31, 2021, the company's current liabilities and asset deficit were approximately HKD 33,259,000 and HKD 30,535,000, respectively[99]. - Current liabilities increased significantly to HKD 58,292,000 from HKD 37,854,000, an increase of 54.0%[199]. - Cash and cash equivalents decreased to HKD 1,469,000 from HKD 2,280,000, a decline of 35.5%[199]. Revenue Sources - The leather production and retail business accounted for approximately 93.5% of total revenue in 2021, up from 92.4% in 2020[15]. - Revenue from the United States increased to HKD 29,888,000, accounting for 65.0% of total revenue, compared to HKD 22,707,000 and 61.8% in the previous year[17]. - Retail revenue from Hong Kong decreased by approximately 21.9% to HKD 2,366,000, down from HKD 3,028,000 in the previous year[20]. Corporate Governance - The board of directors consists of three executive directors and three independent non-executive directors, with no significant relationships among them[51]. - The company aims to enhance corporate governance standards to protect shareholder interests[48]. - The audit committee has been established to review and supervise the group's financial reporting processes and risk management systems[171]. - The company has adopted a standard code of conduct for securities trading by directors, confirming compliance for the year ended December 31, 2021[50]. - The company has established appropriate insurance for legal actions against its directors and senior officers for the year ended December 31, 2021[61]. - The company has complied with the corporate governance code, except for deviations related to internal audit functions[168]. Risk Management - The company has implemented a risk management and internal control system, which is reviewed annually by the audit committee[72]. - The company has been monitoring foreign exchange risks and will consider measures for significant risks as needed[33]. - An independent annual review of the risk management system has been conducted by an external consultant, which has been approved by the board and audit committee[109]. Future Plans - The company plans to focus on designing and launching a new series of leather products in 2022 to attract younger consumers[21]. - The company has obtained a license for industrial hemp cultivation and is in the initial stages of developing hemp textile products[23]. Financial Uncertainty - The company faces significant uncertainty regarding its ability to continue as a going concern due to its financial situation[100]. - The financial statements do not reflect any adjustments that would arise from the inability to secure financing, indicating significant uncertainty regarding the company's ability to continue as a going concern[105]. - The audit committee has reviewed the management's action plan in response to the inability to express an opinion on the financial statements and supports the management's views on the company's going concern capability[106].

Financial Performance - Revenue for the six months ended June 30, 2021, was HKD 25,440,000, an increase of 54.5% compared to HKD 16,445,000 for the same period in 2020[19] - Gross profit for the same period was HKD 7,895,000, representing a gross margin of 31.0%, up from 25.7% in 2020[19] - The company reported a loss before tax of HKD 8,660,000, compared to a loss of HKD 6,966,000 in the previous year, indicating a 24.4% increase in losses[19] - The company reported a total comprehensive loss attributable to owners of HKD 9,133,000 for the period, compared to HKD 7,623,000 in 2020[30] - The loss per share for the period was HKD 2.26, compared to HKD 1.82 in the previous year, reflecting a 24.2% increase in losses per share[30] - For the six months ended June 30, 2021, the company reported a total comprehensive income of approximately -8,660,000 HKD, compared to -9,133,000 HKD for the same period in 2020, indicating a 5.2% improvement year-over-year[43] - The company reported a basic loss attributable to owners of approximately HKD 8,660,000 for the six months ended June 30, 2021, compared to HKD 6,966,000 for the same period in 2020[94] - The group recorded a net loss attributable to shareholders of approximately HKD 8,660,000, compared to a loss of approximately HKD 6,966,000 for the same period in 2020[138] Assets and Liabilities - Total assets as of June 30, 2021, amounted to HKD 44,325,000, up from HKD 32,092,000 at the end of 2020[23] - Cash and cash equivalents decreased to HKD 945,000 from HKD 2,280,000, reflecting a decline of 58.6%[23] - The current ratio decreased to 0.60 from 0.75, indicating a decline in short-term financial health[25] - Total liabilities increased, with net liabilities reaching HKD 19,012,000, up from HKD 10,887,000, indicating a worsening financial position[40] - The company reported net current liabilities of approximately 18,646,000 HKD and total liabilities of 19,012,000 HKD as of June 30, 2021, indicating significant financial strain[54] - The company’s total equity decreased from -100,635,000 HKD at the beginning of the year to -109,295,000 HKD by June 30, 2021[43] Cash Flow - The net cash used in operating activities for the first half of 2021 was -5,230,000 HKD, a significant increase from -1,313,000 HKD in the same period of 2020[46] - The company recorded a net decrease in cash and cash equivalents of 1,115,000 HKD for the six months ended June 30, 2021, compared to a decrease of 3,263,000 HKD in the prior year[46] - As of June 30, 2021, the company had cash and cash equivalents of 945,000 HKD, a substantial decline from 12,330,000 HKD at the end of the previous year[46] Business Operations - The company has expanded its business into industrial hemp cultivation and hemp textile production since obtaining relevant licenses in June 2020[48] - The total revenue for the manufacturing segment was HKD 21,486,000, while the retail segment generated HKD 4,113,000, leading to a combined total revenue of HKD 25,599,000 for the six months ended June 30, 2021, compared to HKD 16,652,000 in the same period of 2020, representing a year-over-year increase of approximately 54.3%[74] - The production business generated revenue of approximately HKD 21,327,000, a 45.4% increase from approximately HKD 14,667,000 in the prior year[145] - Retail business revenue surged by approximately 131.3% to about HKD 4,113,000 from approximately HKD 1,778,000 in the same period last year[151] Expenses - Employee costs (excluding directors' remuneration) amounted to HKD 9,772,000 for the first half of 2021, compared to HKD 8,676,000 in the same period of 2020, representing an increase of about 12.6%[84] - Selling and distribution costs increased by approximately 100.8% to about HKD 3,460,000, primarily due to the opening of two retail stores and additional costs for domestic retail business development[138] - Administrative and other operating expenses rose by approximately 21.7% to about HKD 12,304,000, mainly due to exchange losses and impairment of right-of-use assets[138] Accounting and Compliance - The group has adopted new and revised accounting standards, including HKFRS 9 and HKAS 39, which address issues not previously covered in earlier amendments related to interest rate benchmark reforms[60] - The group has early adopted the revised HKFRS 16, allowing lessees to account for rent concessions directly related to COVID-19 without lease modifications, applicable to rent reductions affecting payments due on or before June 30, 2022[63] - The group is evaluating the impact of new accounting standards and initial results indicate no significant effect on financial performance and position[68] - Management's significant judgments and estimates in applying accounting policies remain consistent with those applied in the 2020 annual financial statements[69] Loans and Financing - The company has received a commitment letter from its executive director, Mr. Qin, to not demand repayment of the outstanding loan of 8,000,000 HKD until the company is able to repay[54] - A new loan agreement was established with Mr. Qin on August 28, 2021, providing up to 30,000,000 HKD in interest-free and unsecured loans for two years[54] - The company has also secured a loan financing agreement with Mr. Zhao for up to 20,000,000 HKD, which remains undrawn as of the reporting date[54] - The company has a loan agreement with a director for HKD 8,000,000, which is unsecured and interest-free[115] - The company received an interest-free loan of approximately HKD 3,374,000 from the ultimate holding shareholder, which is due by June 30, 2022[118] - The company has multiple loan agreements with the ultimate holding shareholder, totaling approximately HKD 3,003,000, which are also interest-free and unsecured[122] Taxation - The company did not recognize any tax expenses for the periods due to the absence of taxable profits in Hong Kong and China[89] - The company incurred additional Hong Kong profits tax assessments totaling HKD 648,000, HKD 485,000, and HKD 465,000 for the assessment years 2011-2012, 2012-2013, and 2013-2014 respectively, all of which are under dispute and have been conditionally deferred[90][92] - The tax review by the tax authority is still in the preliminary stage, and the outcome cannot be reasonably determined at this time[92] Inventory and Receivables - The total trade receivables as of June 30, 2021, amounted to HKD 13,623,000, compared to HKD 10,956,000 as of December 31, 2020, indicating a significant increase[106] - The expected credit loss for trade receivables as of June 30, 2021, totaled HKD 1,145,000, an increase from HKD 1,123,000 as of December 31, 2020[107] - The total accounts payable as of June 30, 2021, was HKD 4,089,000, an increase from HKD 2,746,000 as of December 31, 2020[109] - The overdue accounts payable of less than 30 days decreased to HKD 947,000 from HKD 1,185,000[109] Corporate Governance - The group has adhered to the corporate governance code principles and provisions as per the listing rules appendix 14 for the six months ending June 30, 2021, with the exception of certain deviations[200]

Financial Performance - The company reported a revenue of approximately HKD 39,771,000 for the year ended December 31, 2020, a significant decrease of 35.0% or about HKD 21,431,000 compared to HKD 61,202,000 in 2019[14]. - Gross profit for the year was approximately HKD 11,934,000, down from HKD 28,787,000 in 2019, resulting in a gross margin decrease from 47.0% to 30.0%[14]. - The company recorded a loss before tax of approximately HKD 21,758,000 for the year, compared to a loss of HKD 18,325,000 in 2019[11]. - Total revenue for the year ended December 31, 2020, was approximately HKD 36,743,000, a decrease of about 26.8% from HKD 50,190,000 in 2019[20]. - The leather retail business recorded a loss of approximately HKD 7,286,000 for the year ended December 31, 2020, compared to a loss of HKD 9,275,000 in 2019[23]. - The gross profit margin decreased to approximately 56.6% in 2020 from 64.0% in 2019[22]. - Cash and bank deposits as of December 31, 2020, were approximately HKD 2,280,000, down from HKD 15,041,000 in 2019[29]. - The company reported a basic loss per share of 5.7 HKD cents, compared to 4.8 HKD cents in 2019[16]. Revenue Breakdown - The leather production and retail business accounted for approximately 92.4% of total revenue, up from 82.0% in 2019[18]. - Revenue from the production segment was approximately HKD 36,743,000, down from HKD 50,190,000 in 2019, primarily due to reduced demand caused by the COVID-19 pandemic[19]. - Revenue from the United States accounted for 61.8% of total revenue in 2020, down from 56.0% in 2019, with a total of HKD 22,707,000[20]. Cost Management - Other income increased by 435.1% to approximately HKD 2,772,000, driven by government subsidies and rental concessions totaling about HKD 2,109,000[15]. - Selling and distribution costs decreased by approximately HKD 7,813,000 to about HKD 4,358,000, reflecting reduced retail operations due to the pandemic[15]. - Administrative and other operating expenses were reduced by approximately HKD 6,644,000 to about HKD 25,155,000, attributed to improved human resource management[15]. - The ratio of overall store rental expenses to revenue increased significantly to approximately 98.1% in 2020 from 47.3% in 2019[22]. Liquidity and Financial Health - The current ratio decreased to 0.75 from 1.14 in the previous year, indicating a decline in liquidity[11]. - The current ratio as of December 31, 2020, was approximately 0.75, compared to 1.14 in 2019[29]. - The company had no bank borrowings or financing as of December 31, 2020, resulting in a debt-to-equity ratio of zero for both 2019 and 2020[35]. Corporate Governance - The company has adhered to the corporate governance code as per the Hong Kong Stock Exchange rules, with compliance noted for the year ending December 31, 2020[56]. - The board consists of three executive directors and three independent non-executive directors, with all members attending 100% of board meetings held during the year[61]. - The company has implemented appropriate insurance for directors and senior officers against legal actions, ensuring compliance with corporate governance standards[64]. - Continuous professional development for all directors is emphasized, with training provided on regulatory updates and the company's operations[65]. - The roles of the chairman and CEO are clearly separated, with Zhao Jingfei as chairman and Fan Xin as CEO, ensuring effective governance[75]. - The company has established three committees under the board: the Audit Committee, the Remuneration Committee, and the Nomination Committee, to enhance oversight[78]. - The company aims to enhance shareholder value and protect shareholder rights through good corporate governance practices[56]. Risk Management - The company is committed to improving risk management and internal control systems as a continuous process[57]. - The board is responsible for maintaining an effective internal control system to safeguard shareholder investments and company assets[106]. - The company has implemented a risk management system to identify, assess, and manage risks associated with its operations[106]. - An independent external consultant was hired to conduct an annual review of the risk management system, which was approved by the board and audit committee[107]. Environmental, Social, and Governance (ESG) Measures - The report covers the environmental, social, and governance (ESG) measures and performance during the reporting period[121]. - The report's scope is consistent with the previous year's ESG report, covering retail operations in Hong Kong and production operations in China[122]. - The company emphasizes stakeholder engagement as a key success factor in formulating its environmental and social strategies[129]. - The board is responsible for assessing and determining the group's ESG-related risks and ensuring effective risk management systems are in place[120]. - The company has established various communication channels to collect stakeholder feedback and understand their expectations regarding sustainability[129]. Employee Management and Development - The company employed 169 staff as of December 31, 2020, an increase from 165 in 2019, with compensation based on job nature, performance, and tenure[44]. - The total number of employees as of December 31, 2020, was 169, all of whom are full-time employees[163]. - The employee structure includes 78 male and 91 female employees, with the majority aged between 20-30 years[162]. - A total of 117 employees participated in training sessions during the reporting period, accumulating 480 hours of training[182]. - The company emphasizes the importance of training for employee development and has implemented monthly training plans[180]. - The company has implemented a performance evaluation system to assess employee performance, which influences salary adjustments, bonuses, and promotion decisions[166]. Community Engagement and Social Responsibility - The company emphasizes corporate social responsibility by establishing a "Social Responsibility Guideline" to promote community care[197]. - During the reporting period, the company encouraged employees to participate in community activities and charitable events[197]. - The company plans to continue engaging in social contribution activities, including organizing and participating in various initiatives to assist those in need[197].

Financial Performance - Revenue for the six months ended June 30, 2020, was HKD 16,445,000, a decrease of 38.5% compared to HKD 26,816,000 for the same period in 2019[19] - Gross profit for the same period was HKD 4,220,000, representing a gross margin of 25.7%, down from 47.7% in 2019[19] - Loss before tax was HKD 6,966,000, compared to a loss of HKD 10,156,000 in the previous year, indicating a 31.5% improvement[19] - The company reported a total comprehensive loss attributable to shareholders of HKD 7,623,000, compared to HKD 9,814,000 in the previous year[28] - The group recorded a net loss attributable to shareholders of approximately HKD 6,966,000, compared to a loss of approximately HKD 10,158,000 in the same period of 2019[108] Assets and Liabilities - Total assets as of June 30, 2020, were HKD 37,362,000, down from HKD 48,642,000 at the end of 2019[19] - Cash and cash equivalents decreased to HKD 12,330,000 from HKD 15,470,000, reflecting a decline of 20.5%[19] - The company's total equity attributable to shareholders was HKD 1,882,000, significantly lower than HKD 9,505,000 in 2019[19] - The total consolidated liabilities as of June 30, 2020, were HKD 35,480,000, compared to HKD 39,137,000 in 2019, reflecting a reduction in liabilities[71] Cash Flow - The net cash used in operating activities for the six months ended June 30, 2020, was HKD (1,313,000), a significant improvement from HKD (7,341,000) in the same period of 2019, reflecting a 82.1% reduction in cash outflow[41] - The company’s cash and cash equivalents decreased by HKD 3,263,000 for the six months ended June 30, 2020, compared to a decrease of HKD 10,879,000 in the same period of 2019, showing a 70% improvement[41] Operational Changes - The company has implemented a plan to diversify into industrial hemp cultivation and hemp textile production, having obtained a cultivation license and commenced trial planting in Yunnan in June 2020[51] - The company is designing hemp textile products with an expected launch in the first quarter of 2021, aiming to diversify its product portfolio and revenue sources[51] - The company’s management has taken measures to reduce operating expenses to mitigate losses during the forecast period[51] Revenue Segmentation - The group reported that its main business involves manufacturing and distributing leather goods, fashion apparel, footwear, and leather accessories retail[64] - The production business generated revenue from external customers of approximately HKD 14,667,000, a decrease of 24.3% from approximately HKD 19,379,000, attributed to reduced demand and logistics restrictions due to COVID-19[113] - Retail business revenue dropped by approximately 76.1% to about HKD 1,778,000, with self-branded sales declining by approximately 75.5%[122] Employee and Operational Costs - Employee costs (excluding directors' remuneration) for the six months ended June 30, 2020, were HKD 6,255,000, significantly lower than HKD 15,124,000 in 2019[78] - The overall store rental cost as a percentage of revenue increased significantly from about 33.0% to 61.0%, while employee costs as a percentage of revenue rose to 63.4% from approximately 27.7%[122] Compliance and Governance - The audit committee has been established to review and supervise the group's financial reporting procedures, internal controls, and risk management systems[175] - The audit committee consists of three independent non-executive directors, including the chairperson, Ms. Han Yu[175] - The company confirmed compliance with the standards set out in the code of conduct for securities transactions by its directors during the six months ending June 30, 2020[174] Future Outlook - The company plans to focus on improving production efficiency, restructuring its store portfolio, and developing e-commerce channels to explore the rapidly growing online market[127] - The group plans to diversify its product portfolio and revenue sources through the development of industrial hemp textile products[129]

Financial Performance - Revenue for the year ended December 31, 2019, was HKD 61,202,000, a decrease of 4.2% from HKD 63,900,000 in 2018[9] - Gross profit increased to HKD 28,787,000, representing a gross margin of 47.0% compared to 34.4% in the previous year[9] - The company reported a loss of HKD 18,327,000 for the year, an improvement from a loss of HKD 31,466,000 in 2018[9] - Basic loss per share improved to HKD 0.0479 from HKD 0.0822 in the previous year[9] - The company recorded revenue of approximately HKD 61,202,000 for the year ended December 31, 2019, a decrease of 4.2% compared to HKD 63,900,000 in 2018[18] - Gross profit increased to approximately HKD 28,787,000, with a gross margin rising from 34.4% in 2018 to 47.0% in 2019, primarily due to effective cost control in raw materials[18] - The group recorded a loss of approximately HKD 18,327,000 for the year ended December 31, 2019, with net current assets and total assets decreasing to approximately HKD 5,286,000 and HKD 9,505,000 respectively[196] Liquidity and Financial Position - Current ratio decreased to 1.14 from 2.12, indicating a decline in short-term liquidity[9] - The net asset value per share decreased to HKD 0.02 from HKD 0.07, indicating a decline in shareholder equity[9] - The group reported a significant decrease in cash and bank deposits, approximately HKD 15,470,000 as of December 31, 2019, down from HKD 25,729,000 in 2018[36] - Total current assets decreased to approximately HKD 42,896,000 as of December 31, 2019, compared to HKD 51,140,000 in 2018, while total current liabilities increased to approximately HKD 37,610,000 from HKD 24,173,000[36] - Shareholders' equity decreased to approximately HKD 9,505,000 as of December 31, 2019, from HKD 28,057,000 in 2018, primarily due to annual business losses[36] - The group has no bank borrowings as of December 31, 2019, resulting in a zero debt-to-equity ratio[37] Market Performance - The market capitalization increased to HKD 581,710,000 from HKD 524,304,000, reflecting a positive market perception[9] - Sales to the US market surged by approximately 84.5%, reaching HKD 28,095,000, compared to HKD 15,231,000 in 2018[25] - The retail segment's revenue fell to approximately HKD 11,012,000, a decline of 47.1% from HKD 20,801,000 in 2018[30] - The company's own brand "Urban Stranger" accounted for approximately 80.5% of retail sales, down from 86.8% in 2018[30] - The operating loss for the retail segment increased to approximately HKD 9,275,000, compared to HKD 1,899,000 in 2018[30] Strategic Initiatives - The company plans to focus on cost reduction strategies to improve profitability in the upcoming year[12] - Future outlook includes potential market expansion and exploration of new product development opportunities[12] - The company plans to enhance brand image and maintain high product quality to strengthen competitiveness amid challenging market conditions[31] - The company aims to improve operational efficiency in its production segment and reassess resource utilization to increase profitability[31] - The group plans to enhance marketing activities for leather products and improve service quality in existing stores[34] - The group has initiated trial sales on the Shopee platform starting March 2020, targeting Taiwan and Malaysia, with plans for further expansion into other Southeast Asian countries[34] - The group has ceased new store rental agreements planned in October 2019 and closed two existing stores in February 2020 due to the challenging retail environment in Hong Kong[34] Corporate Governance - The company has adhered to the corporate governance code as per the Hong Kong Stock Exchange regulations for the year ending December 31, 2019[63] - The company is committed to improving risk management and internal control systems as a continuous process[64] - The board consists of three executive directors and three independent non-executive directors, with no significant relationships among them[69] - The company has made efforts to enhance shareholder value and protect shareholder interests through good corporate governance practices[63] - The company has appointed independent non-executive directors with diverse backgrounds and experience in finance and management[68] - The company is focused on maintaining high standards of corporate governance to support its success[63] - The board consists of three independent non-executive directors, ensuring compliance with listing rules[71] - The company has arranged appropriate insurance for directors and senior officers for the year ending December 31, 2019[72] - The audit committee is composed of three independent non-executive directors, meeting the requirements of listing rules[83] - The audit committee held three meetings during the year ending December 31, 2019, with attendance records documented[84] - The company adopted a revised audit committee charter to align with listing rules regarding risk management and internal controls[83] - The company believes that the current management structure allows for swift and effective decision-making[79] - The independent non-executive directors have confirmed their independence as per the relevant regulations[71] - The company provides training and updates on regulatory developments to ensure compliance with good corporate governance practices[73] Risk Management and Internal Controls - The audit committee is responsible for monitoring the integrity of financial statements and compliance with accounting standards and regulations[89] - The audit committee is tasked with assessing the effectiveness of risk management and internal control systems within the company[89] - The company has established arrangements for employees to report concerns regarding financial reporting and internal controls confidentially[91] - An independent external consultant was hired to conduct an annual review of the risk management system, which has been approved by the board and audit committee[122] - The internal audit function is reviewed annually, and the company opts for independent external professionals to assess the internal control system for cost-effectiveness[121] - The company has taken appropriate actions to strengthen its internal control system based on the recommendations from the independent review[122] Shareholder Information - The company encourages shareholders to attend the annual general meeting and provides timely information through various communication channels[125] - The company has not disclosed any tax relief benefits for shareholders holding its securities[192] - The ultimate holding company has committed to provide necessary financial support to ensure the group can meet its financial obligations for at least 24 months from December 31, 2019[197] - The company has established a compensation policy based on operational performance and market data for its directors and top earners[164] - Zhao Jingfei, the Chairman and Executive Director, holds 287,024,406 shares, representing 75.00% of the company's equity[169] - Waterfront Holding Group Co., Ltd., the beneficial owner, also holds 287,024,406 shares, accounting for 75.00% of the company's equity[175] - The largest supplier accounts for 22.2% of total purchases, while the top five suppliers combined account for 51.3%[181] - The largest customer represents 43.1% of total sales, with the top five customers accounting for 66.9%[181] - As of June 18, 2019, public shareholders held 95,571,594 shares, approximately 24.97% of the total issued share capital[184] - Following a sale of 108,000 shares, public holdings increased to 95,679,594 shares, approximately 25% of the total issued share capital[184] Compliance and Legal Matters - The company has complied with all relevant laws and regulations without any significant breaches reported for the year ending December 31, 2019[143] - The company has not entered into any significant contracts with its controlling shareholder or its subsidiaries as of December 31, 2019[189] - There were no related party transactions that required disclosure under Chapter 14A of the Listing Rules for the year ended December 31, 2019[190] - The company did not recommend a final dividend for the year ending December 31, 2019[148] - The company’s distributable reserves amounted to approximately HKD 588,000 as of December 31, 2019[152] - The company has implemented environmental policies aimed at sustainability and resource efficiency, with no environmental penalties reported for the year ending December 31, 2019[142] - The company has not adopted any new share option schemes since the expiration of the previous scheme on February 17, 2013[176] - No stock-linked agreements were established during the year ended December 31, 2019[180] - The company reported no significant disputes with suppliers, customers, or stakeholders for the year ending December 31, 2019[145] - There were no changes to the company's articles of association during the review year[135] Board and Management - The company appointed Zhao Jingfei as chairman and executive director on July 22, 2019, and he has been involved in management since then[70] - The company held four board meetings during the year ending December 31, 2019, to review financial and operational performance[69] - The board consists of four directors as of the report date, with three being independent non-executive directors, promoting important oversight and control in management processes[113] - The board has the authority to declare and distribute dividends, considering the group's financial condition, cash flow, and other relevant factors[114] - The board is responsible for preparing the company's consolidated financial statements, ensuring compliance with statutory requirements and applicable accounting standards[116] - The company has established measurable goals for board diversity, considering various aspects such as gender, age, cultural background, and professional experience[111] - The Nomination Committee will review the board diversity policy annually to ensure its effectiveness and discuss any necessary amendments[113] - The board diversity policy emphasizes the importance of diversity in enhancing board effectiveness and achieving a balanced composition[110] - The company has committed to maintaining a diverse board to align with its business needs and strategies[109] - The board has reviewed the effectiveness of the internal control system as of December 31, 2019, and believes it is implemented and effective[124]

Financial Performance - Revenue for the six months ended June 30, 2019, was HKD 26,816,000, a decrease of 22.7% compared to HKD 34,626,000 in the same period of 2018[9] - Gross profit for the same period was HKD 12,799,000, resulting in a gross margin of 47.7%, down from 51.0% in 2018[9] - Loss before tax for the period was HKD 10,156,000, compared to a loss of HKD 8,869,000 in the previous year, indicating a 14.5% increase in losses[9] - The company reported a total comprehensive loss attributable to owners of HKD 9,814,000 for the period, compared to HKD 9,262,000 in 2018[16] - Basic and diluted loss per share was HKD 0.0265, compared to HKD 0.0232 in the previous year, representing a 14.2% increase in loss per share[16] - The group reported external customer revenue of HKD 28,733 thousand for the six months ended June 30, 2019, down from HKD 36,838 thousand in the same period of 2018, representing a decrease of approximately 22%[73] - The group recorded a total loss before tax of HKD 10,156 thousand for the six months ended June 30, 2019, compared to a loss of HKD 8,869 thousand for the same period in 2018, indicating an increase in losses of about 14.5%[73] Assets and Liabilities - Total assets as of June 30, 2019, were HKD 55,584,000, slightly up from HKD 55,230,000 in 2018[9] - Total liabilities increased to HKD 33,672 thousand as of June 30, 2019, up from HKD 24,173 thousand at the end of 2018, indicating a rise in trade and other payables[18] - The company's net asset value decreased to HKD 18,243 thousand as of June 30, 2019, down from HKD 28,057 thousand at the end of 2018, reflecting a decline in reserves[23] - The group’s total liabilities rose to HKD 37,341 thousand as of June 30, 2019, compared to HKD 24,173 thousand in the previous year, representing an increase of about 54.3%[87] Cash Flow and Liquidity - Cash and cash equivalents decreased to HKD 14,966,000 from HKD 25,729,000, reflecting a decline of 42.3%[9] - The current ratio dropped to 1.33 from 2.12, indicating a decrease in short-term financial health[9] - The quick ratio also fell to 0.87 from 1.53, suggesting reduced liquidity[9] - The company reported a net cash outflow from operating activities of HKD (7,341) thousand for the six months ended June 30, 2019, compared to HKD (1,602) thousand for the same period in 2018[27] - Cash and cash equivalents at the end of the period were HKD 14,966 thousand, down from HKD 25,729 thousand at the beginning of the period, indicating liquidity challenges[27] Inventory and Receivables - Trade receivables increased to HKD 10,023 thousand as of June 30, 2019, compared to HKD 7,074 thousand at the end of 2018, indicating growth in sales[18] - The company reported a significant increase in inventory, reaching HKD 15,451 thousand as of June 30, 2019, compared to HKD 14,096 thousand at the end of 2018[18] Market and Sales Performance - The production segment reported external customer revenue of HKD 21,296 thousand for the first half of 2019, down from HKD 23,847 thousand in 2018, a decline of approximately 10.7%[73] - The retail segment generated external customer revenue of HKD 7,437 thousand for the six months ended June 30, 2019, compared to HKD 12,991 thousand in 2018, reflecting a decrease of about 42.5%[73] - Sales from the production segment decreased by 10.4% to approximately HKD 19,379,000, primarily due to reduced demand in Hong Kong, China, and overseas markets[127] - European sales dropped by approximately 47.9% to HKD 3,899,000, while U.S. sales increased by approximately 54.4% to HKD 9,833,000[128] Employee Costs and Expenses - The group’s employee costs (excluding directors' remuneration) amounted to HKD 15,124 thousand for the first half of 2019, compared to HKD 14,026 thousand in 2018, reflecting an increase of about 7.8%[91] - The company maintained relatively stable administrative and other operating expenses at approximately HKD 17,246,000, compared to HKD 17,109,000 for the same period in 2018[122] Accounting and Financial Reporting - The adoption of HKFRS 16 resulted in an increase of HKD 8,285,000 in right-of-use assets as of January 1, 2019[41] - Total liabilities increased by HKD 8,285,000, with non-current lease liabilities rising by HKD 4,446,000 and current lease liabilities by HKD 3,839,000[41] - The transition to HKFRS 16 did not have a significant impact on the financial performance, cash flows, or financial position of the group[38] Dividends and Shareholding - The group did not declare any interim dividends for the six months ended June 30, 2019, consistent with the previous year[100] - The company does not recommend the payment of an interim dividend for the six months ended June 30, 2019, and 2018[150] - As of June 30, 2019, Zhao Jingfei holds 287,132,406 shares, representing 75.03% of the issued share capital[155] Compliance and Governance - The audit committee consists of three independent non-executive directors, overseeing the group's accounting principles and internal controls[173]

Financial Performance - Revenue for the fiscal year 2018 was HKD 63,900,000, a decrease from HKD 78,937,000 in 2017, representing a decline of approximately 19.1%[18] - Gross profit for 2018 was HKD 21,945,000, down from HKD 34,979,000 in 2017, resulting in a gross margin of 34.4% compared to 44.3% in the previous year[18] - The net loss for the fiscal year 2018 was HKD 31,466,000, compared to a loss of HKD 16,676,000 in 2017, indicating a significant increase in losses[18] - The company reported a basic loss per share of HKD 0.0822 for 2018, compared to HKD 0.0405 in 2017, indicating worsening performance on a per-share basis[18] - The group recorded revenue of approximately HKD 63,900,000 for the year ended December 31, 2018, a decrease of 19.0% or approximately HKD 15,037,000 compared to HKD 78,937,000 in 2017[23] - Gross profit was approximately HKD 21,975,000, with a gross margin decrease from approximately 44.3% to 34.4% due to inventory impairment provisions of approximately HKD 6,127,000[23] - The group reported a net loss attributable to shareholders of approximately HKD 31,466,000 for the year, compared to a loss of approximately HKD 14,225,000 in 2017[24] - The retail segment's revenue decreased by 25.4% to approximately HKD 20,801,000 from HKD 27,888,000 in the previous year[30] Liquidity and Capital Structure - The current ratio decreased to 2.12 in 2018 from 3.28 in 2017, reflecting a decline in liquidity[18] - The cash and bank deposits as of December 31, 2018, were approximately HKD 25,729,000, down from approximately HKD 44,507,000 in 2017[38] - As of December 31, 2018, the company's debt-to-equity ratio was 49.0%, up from 20.8% as of December 31, 2017[52] - The market capitalization as of the end of 2018 was HKD 524,304,000, an increase from HKD 325,298,000 in 2017[18] Dividends and Shareholder Returns - The company did not declare any dividends for the fiscal year 2018, consistent with the previous year[18] - The board of directors did not recommend any final dividend for the year ended December 31, 2018[40] - The company adopted a dividend policy on December 31, 2018, allowing the board to declare dividends subject to shareholder approval, considering financial status, cash flow, and operational needs[127] Business Segments and Revenue Breakdown - The revenue breakdown by region for 2018 showed Hong Kong at 36%, the US at 20%, and China at 4%[14] - The revenue breakdown by business segment indicated production at 67% and retail at 33% for 2018[15] - The production and retail segments contributed approximately HKD 43,099,000 and HKD 20,801,000 to total revenue, respectively[25] - Sales in the Hong Kong market dropped significantly by 52.3% to approximately HKD 2,378,000 from HKD 4,988,000 in the previous year[28] Corporate Governance - The company has maintained good corporate governance practices, adhering to the principles and code provisions of the Corporate Governance Code as of December 31, 2018[64] - The board consists of one executive director and three independent non-executive directors, with no significant relationships among them[71] - The company emphasizes continuous professional development for all directors to ensure compliance with good corporate governance practices[76] - The board has committed to regular meetings to ensure that the governance structure does not lead to an imbalance of power between the board and management[95] - The company has established a framework for employees to report concerns regarding financial reporting and internal controls confidentially[106] Risk Management and Internal Controls - The company has adopted principles and practices regarding internal controls and risk management, which were reviewed with the management team during the year[106] - The audit committee is responsible for reviewing the integrity of the company's financial statements and ensuring compliance with applicable accounting standards and regulations[103] - An independent external consultant was hired to review the company's risk management and internal control systems, with actions taken to enhance these systems based on the report[135] - The company has a risk management system that includes identifying, assessing, and managing risks related to its business operations[134] Environmental and Social Responsibility - The company reported a total greenhouse gas emissions of 13.07 tons for Scope 1 and 625.61 tons of CO2 equivalent for Scope 2[164] - The company has implemented strict guidelines for handling industrial wastewater and waste, ensuring compliance with environmental regulations[158] - The company aims to create value for stakeholders through effective internal controls in environmental protection and community engagement[153] - The company has maintained compliance with local environmental protection laws and holds the necessary permits for pollutant emissions[159] - The company has developed a resource-saving and environmentally friendly operational mechanism to minimize its environmental impact[158] Employee Management and Training - The company employs a total of 190 staff, with 24% male and 76% female employees[172] - A total of 190 employees participated in training, representing 75% of the total workforce[189] - Senior management received 28.5 hours of training, while administrative staff received 45 hours and other employees received 139.5 hours[189] - The company has established a health and safety committee to oversee workplace safety and compliance with relevant laws[182] - Regular safety inspections and training are conducted to ensure employee safety and proper use of personal protective equipment[183] Procurement and Supplier Management - The company has implemented a procurement management procedure to enhance supply chain management and ensure the selection of qualified suppliers[194] - The procurement department evaluates suppliers based on product quality, after-sales service, production scale, and capacity, categorizing them from A to D[195] - The company has not changed any major suppliers during the reporting period, maintaining stable relationships to ensure supply and cost stability[200]