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Financial Performance - Revenue for the six months ended June 30, 2022, was HK$3,516,625, an increase of 9.3% compared to HK$3,218,999 for the same period in 2021[16]. - Gross profit decreased to HK$406,210, down 10.6% from HK$454,662 in the previous year[16]. - Profit for the period attributable to owners of the Company was HK$70,327, a decline of 48.2% from HK$136,248 in the prior year[16]. - Basic and diluted earnings per share were both HK 5.7 cents, down from HK 11.1 cents in the same period last year[16]. - Other revenue decreased to HK$31,233, down 22.7% from HK$40,408 in the previous year[16]. - Profit before income tax expense was HK$114,084, down 39.5% from HK$188,942 in the same period last year[16]. - Profit for the period decreased to HK$87,463,000 from HK$151,721,000, representing a decline of approximately 42.4% year-over-year[19]. - Total comprehensive income for the period attributable to owners of the Company was HK$56,768,000, down from HK$139,970,000, a decrease of about 59.3%[19]. - EBITDA for the six months ended June 30, 2022, was HK$210,160,000, a decrease of 26.3% from HK$285,092,000 in 2021, with an EBITDA margin of 6.0% compared to 8.9% in the prior year[120]. - Profit attributable to owners of the Company for 1H2022 was approximately HK$70,000,000, down from approximately HK$136,000,000 in 1H2021[98]. Expenses and Costs - Distribution and selling expenses were HK$54,608, a decrease of 20.1% compared to HK$68,334 in the prior year[16]. - Administrative expenses increased to HK$236,075, up from HK$224,981 in the previous year[16]. - Employee costs for the six months ended June 30, 2022, were HK$476,882, a decrease from HK$507,252 in 2021, representing a decline of 6.0%[65]. - Finance costs decreased to HK$7,264 for the six months ended June 30, 2022, from HK$7,850 in the same period of 2021, a reduction of 7.4%[59]. - Total distribution and selling expenses amounted to HK$54,608,000, representing 1.6% of total revenue, down from 2.1% in the previous year[126]. - Administrative expenses for the period were HK$236,075,000, accounting for 6.7% of total revenue, a slight decrease from 7.0% in the same period last year[127]. Assets and Liabilities - Non-current assets decreased to HK$1,698,559,000 from HK$1,728,511,000, reflecting a reduction of approximately 1.7%[20]. - Current assets increased slightly to HK$4,023,556,000 from HK$4,019,879,000, showing a marginal growth of 0.1%[20]. - Total equity attributable to owners of the Company decreased to HK$3,421,002,000 from HK$3,560,238,000, a decline of approximately 3.9%[21]. - Bank borrowings due within one year increased to HK$474,096,000 from HK$327,342,000, representing a rise of about 44.8%[21]. - The Group's total liabilities were HK$2,087,598,000, an increase from HK$1,989,292,000 at the end of 2021[132]. - The Group's bank balances and cash amounted to HK$1,127,065,000, up from HK$824,979,000 at the end of 2021[135]. Cash Flow and Investments - Net cash generated from operating activities for the six months ended June 30, 2022, was HK$181,008,000, compared to a cash outflow of HK$175,903,000 in the same period of 2021[25]. - The net cash used in investing activities was HK$33,004,000 for the six months ended June 30, 2022, compared to HK$10,233,000 in the same period of 2021[25]. - The Group incurred capital expenditure of HK$56,884,000 on property, plant, and equipment during the six months ended June 30, 2022, compared to HK$47,340,000 in the same period last year[74]. Market and Economic Conditions - Global economic growth is expected to slow to 2.9% in 2022 due to the spillover effects of the war and exacerbated geopolitical tensions[113]. - Continued high inflation has resulted in economic downturns and a decline in commodity prices from high levels[113]. - Supply disruptions, increased food insecurity, and rising borrowing costs present significant downside risks to the growth outlook[113]. - The median value of annual aggregate consumer price inflation in East Asia and the Pacific is expected to exceed 3% in 2022, impacting overall market conditions[119]. Corporate Governance and Compliance - The company complied with all applicable code provisions of the Corporate Governance Code throughout the reporting period[155]. - The audit committee, composed of three independent non-executive directors, reviewed the unaudited consolidated interim results for 1H2022[160]. - The company has established an audit committee to supervise financial reporting, risk management, and internal control systems[157]. Workforce and Operations - The Company operates 7 production facilities across China, Sri Lanka, and Indonesia, with a global workforce of approximately 7,100 employees[4]. - The Group's total trade and bills payables as of June 30, 2022, were HK$711,503,000, down from HK$956,450,000 as of December 31, 2021, indicating a decrease of 25.7%[81]. - The Group continues to implement streamlined production to minimize labor costs[138].

Company Overview - Fountain Set Group is one of the world's largest fabric manufacturers, producing knitted fabric and garments through vertically integrated operations[3]. - The company operates 7 production facilities in the PRC, Sri Lanka, and Indonesia, employing close to 7,900 staff globally[4]. - Chinatex Corporation Limited has been the largest shareholder of the company since 2012, indicating strong backing from a state-owned enterprise[5]. - The company emphasizes research and development, collaborating with brands to create innovative fabric and garment products[4]. - The company has a strong global marketing network with representative offices in 4 countries[4]. Financial Performance - Revenue for 2021 reached HK$6,751.3 million, a 36.4% increase from HK$4,943.2 million in 2020[14]. - Profit attributable to owners of the company was HK$241.3 million, up 181.5% from HK$85.7 million in 2020[14]. - Profit margin improved to 3.6% in 2021, compared to 1.7% in 2020[14]. - Basic and diluted earnings per share increased to 19.7 HK cents, up from 7.0 HK cents in 2020[14]. - Proposed final dividend per share is 16.00 HK cents, significantly higher than 7.00 HK cents in 2020[14]. - Net current assets at year-end were HK$2,248.8 million, an increase from HK$2,059.3 million in 2020[14]. - Total assets rose to HK$5,748.4 million, compared to HK$5,425.7 million in 2020[14]. - Total bank borrowings increased to HK$327.3 million from HK$236.7 million in 2020[14]. - Return on equity improved to 7.2% in 2021, up from 2.8% in 2020[14]. - The Company reported a profit before income tax expense of HK$337,450,000 for the year ended 31 December 2021, compared to HK$122,145,000 in 2020[30]. Operational Insights - The management discussion and analysis section provides insights into operational strategies and market conditions affecting the company[9]. - The consolidated statement of profit or loss and other comprehensive income will provide a detailed view of the company's financial performance[9]. - Future outlook and performance guidance will be discussed in the chairman's statement and management analysis sections[9]. - The Group's operational strategy of "production, supply and sales integration" effectively responded to market risks[90]. - The manufacturing costs increased due to tightened supply and rising procurement costs, which were passed on to clients[95]. Sustainability and Corporate Governance - The Group's sustainability initiatives include the establishment of a "Sustainability Development and Enhancement Committee" to drive sustainability objectives and set ambitious targets[79]. - The company has been recognized as an Approved Licensee of Supima and a Certified Licensee of COTTON USA™[35]. - The company achieved ISO 50001:2018 Energy Management System Certification from Beijing Zhongjing Quality Certification Co., Ltd[44]. - The company obtained ISO 14001:2015 Environmental Management System Certification from Beijing Zhongjing Quality Certification Co., Ltd[44]. - The Group acknowledges the importance of corporate governance in enhancing shareholder value and is committed to improving its policies[89]. Market Conditions and Future Outlook - The global economy is expected to decelerate from a growth rate of 5.5% in 2021 to 4.1% in 2022 and further to 3.2% in 2023 according to the World Bank[76]. - Rising inequality and security challenges are particularly harmful for developing countries, potentially leading to a more difficult operating environment for corporations[76]. - The recovery of the end consumer apparel market supports strong customer order demand, with solid order visibility and encouraging business results seen in Q1 2022 compared to the same period in 2021[172]. - Rising raw material costs and potential disruptions from the Omicron variant may lead to inflation in consumer prices and affect supply chain stability[172]. Innovations and Product Development - The Group developed 1,300 product samples across more than 400 special varieties, enhancing market competitiveness and significantly increasing order value[98]. - The introduction of DuPont Sorona®Plus elastic cool fiber knitted fabric marked a significant advancement in functional fabrics, which has been put into mass production[111]. - The development of multi-layer composite fabrics has progressed from three-layer to five-layer structures, enhancing product variety and performance, with these fabrics becoming a main product line[115]. - Continuous investment in R&D will focus on functional fabrics, multi-fiber composite fabrics, and green environmental clothing to improve product variety and quality[178]. Corporate Governance Structure - As of December 31, 2021, the board of directors comprised 11 members, including 5 executive directors, 2 non-executive directors, and 4 independent non-executive directors, with NEDs and INEDs representing approximately 55% of the board[181]. - The company has established a governance framework that adheres to the corporate governance code as per the Hong Kong Stock Exchange's listing rules, ensuring shareholder and stakeholder interests are maintained[180]. - The board is responsible for the leadership and control of the company and its subsidiaries, focusing on promoting the success of the group through strategic direction and performance monitoring[184].

Financial Performance - Revenue for the six months ended June 30, 2021, was HK$3,218,999,000, an increase from HK$2,099,734,000 in the same period of 2020, representing a growth of approximately 53.4%[17] - Gross profit for the same period was HK$454,662,000, compared to HK$213,644,000 in 2020, indicating a significant increase of about 112.5%[17] - Profit for the period attributable to owners of the Company was HK$136,248,000, a turnaround from a loss of HK$15,154,000 in the previous year[17] - Basic earnings per share for the period was 11.1 HK cents, compared to a loss of 1.2 HK cents per share in the same period of 2020[17] - Other revenue and gains amounted to HK$40,408,000, up from HK$31,959,000 in the previous year, reflecting an increase of approximately 26.5%[17] - The company reported a profit for the period of HK$151,721,000, a significant increase from a loss of HK$16,432,000 in the previous year[20] - Total comprehensive income for the period was HK$156,546,000, compared to a loss of HK$24,673,000 in 2020[20] - EBITDA for the six months ended June 30, 2021, was HK$285,092,000, significantly up from HK$101,657,000 in the prior year[142] - The gross profit margin improved to 14.1% for the six months ended June 30, 2021, compared to 10.2% in the same period of 2020[142] Assets and Liabilities - Non-current assets decreased slightly to HK$1,706,372,000 from HK$1,746,822,000 at the end of 2020[21] - Current assets increased to HK$4,051,037,000, up from HK$3,678,889,000 at the end of 2020, driven by higher inventories and trade receivables[21] - Net current assets improved to HK$2,142,635,000 from HK$2,059,253,000[21] - The company’s total equity increased to HK$3,631,960,000 from HK$3,579,789,000[22] - Trade and bills receivables rose to HK$1,215,085,000 from HK$1,027,493,000, indicating improved collection efficiency[21] - The company’s bank borrowings due within one year increased to HK$456,612,000 from HK$229,606,000, reflecting increased short-term financing needs[21] - Total assets as of June 30, 2021, were approximately HK$5,757,409,000, compared to HK$5,425,711,000 at the end of 2020[154] - The Group's consolidated tangible net worth was HK$3,330,680,000, an increase from HK$3,195,548,000 as of December 31, 2020[163] Cash Flow and Financing - For the six months ended June 30, 2021, net cash used in operating activities was HK$175,903,000, compared to HK$2,608,000 in the same period of 2020, indicating a significant increase in cash outflow[28] - New bank borrowings raised amounted to HK$692,703,000, an increase from HK$432,426,000 in the previous year[28] - The average effective interest rate of bank borrowings decreased to 1.62% as of June 30, 2021, down from 2.46% at the end of 2020[92] - The Group's total bank debt to consolidated tangible net worth ratio remained stable at 0.1 for both periods[163] Expenses and Cost Management - Distribution and selling expenses decreased to HK$68,334,000 from HK$52,896,000, showing a reduction in costs[17] - Finance costs were HK$7,850,000, down from HK$10,800,000 in the previous year, indicating improved financial management[17] - The Group successfully reduced distribution and selling expenses, administrative expenses, and finance costs to 9.3% of total revenue in 1H2021, down from 11.2% in 1H2020[121] - Administrative expenses represented 7.0% of total revenue, a decrease from 8.2% year-on-year[149] Market and Operational Insights - The Group operates 8 production facilities across China, Sri Lanka, and Indonesia, with a global workforce of nearly 7,900 employees[4] - The Group's revenue from the production and sales of dyed fabrics and yarns was HK$2,867,089, up from HK$1,851,603, indicating a growth of about 55%[52] - Revenue from the production and sales of garments was approximately HK$351,900,000, accounting for 10.9% of the Group's total revenue[125] - The total sales volume of fabric increased by approximately 46.1% compared to 1H2020[119] - The Group maintains an optimistic outlook for business and financial performance in the second half of 2021, supported by active orders from global clients[132] Governance and Compliance - The interim financial statements were prepared in accordance with HKAS 34, ensuring compliance with relevant accounting standards[14] - The Group's financial statements have been prepared under the historical cost basis, consistent with the accounting policies adopted in the 2020 annual financial statements[31] - The Board has complied with all applicable code provisions of the Corporate Governance Code, except for code provision A.2.1, which stipulates the separation of roles between the chairman and chief executive officer[186] Shareholder Information - The number of ordinary shares issued and fully paid increased to 1,225,026,960 as of June 30, 2021, from 889,810,000 at the end of 2020, reflecting a significant increase in share capital[94] - COFCO Corporation and Chinatex Corporation Limited each hold 465,262,000 shares, representing approximately 37.98% of the issued shares[182] - The ownership structure indicates that COFCO, Chinatex, and their subsidiaries are interconnected, with shared interests in the shares held[183] Sustainability and Future Outlook - The Group has received the Global Recycled Standard (GRS) 4.0 certification in May 2021, highlighting its commitment to sustainability[129] - The implementation of China's three-child policy is anticipated to boost the children's clothing market, providing new sales opportunities for the Group[136] - The Group's performance in 2021 is expected to be among the best in its recent history if no unexpected negative circumstances arise in the second half of the year[132]

Company Overview - Fountain Set Group is one of the world's largest fabric manufacturers, producing knitted fabric and garments through vertically integrated operations[5]. - The company operates 8 production facilities in the PRC, Sri Lanka, and Indonesia, employing close to 7,600 staff globally[6]. - Chinatex Corporation Limited has been the largest shareholder since 2012, being a wholly-owned subsidiary of COFCO Corporation[7]. - The company has a strong global network with marketing and representative offices in 4 countries[6]. Research and Development - The company emphasizes research and development, collaborating with brands to create innovative fabric and garment products[6]. - Continuous investment in research and development will focus on functional fabrics, multi-fiber composite fabrics, and fabrics for green environmental clothing[182]. - The Group plans to enhance its capabilities in technological innovation, product upgrade, production capacity coordination, and market cultivation to maintain competitiveness[178]. Financial Performance - Revenue for 2020 decreased to HK$4,943.2 million, down 25.1% from HK$6,605.7 million in 2019[16]. - Profit attributable to owners of the Company fell to HK$85.7 million, a decline of 39.3% compared to HK$141.1 million in 2019[16]. - Profit margin decreased to 1.7% in 2020 from 2.1% in 2019[16]. - Basic and diluted earnings per share were both HK$7.0, down from HK$11.6 in the previous year[16]. - Total assets increased to HK$5,425.7 million in 2020, up from HK$5,296.9 million in 2019[16]. - The gross profit for the year was HK$611,132,000, down from HK$760,952,000 in 2019, resulting in a gross profit margin of 12.4%[141]. - The overall profit for the year 2020 was HK$101,591,000, representing a reduction of only 39.1% from HK$166,814,000 in 2019, despite a loss in the first half of the year[102]. Operational Challenges - The Fountain Set Group faced significant operational challenges due to the global Pandemic, resulting in a sharp reduction in orders and severe operating conditions for textile and apparel export companies[109]. - The Pandemic caused a substantial decline in production and exports from April to June 2020, with major customers significantly reducing orders during this period[110]. - The global textile supply chain was interrupted, leading to acute operational difficulties for the Fountain Set Group and similar companies[109]. - The lengthy impact of the Pandemic on export textile companies was unexpected, leading to overall losses in February 2020[112]. Recovery and Future Outlook - By the end of Q2 2020, the Fountain Set Group achieved recovery growth in operating results, stabilizing and improving its operating conditions[115]. - The Group remains optimistic about the recovery of the retail apparel industries in the US, Europe, and China as the COVID-19 situation stabilizes[73]. - Future outlook includes potential market expansion and new product development initiatives[11]. - The Group anticipates favorable policies from the Chinese government that will positively impact the textile industry moving forward[81][85]. Sustainability Initiatives - The Group has established a "Sustainability Development and Enhancement Committee" to drive sustainability objectives and goals[74]. - The centralized heat supply project aims to reduce emissions of nitrogen oxide, sulfur dioxide, and other pollutants by replacing 28 coal-fired heaters[75]. - The Group's concentrated heating project in Sha Tin is expected to reduce emissions from 28 remaining coal-fired boilers, contributing to cleaner air in the community[78]. - The Group is committed to achieving sustainable green development through technological and management innovation during the 14th Five-Year Plan period[179]. Corporate Governance - The company maintains a high standard of corporate governance, consistently complying with the Corporate Governance Code as per the Listing Rules[189]. - The board is responsible for the leadership and control of the company, focusing on strategic direction and monitoring financial performance[196]. - The board has established a formal list to regularly review specific matters that should be handled by the board or delegated to management[199]. Market Strategy - The Group aims to increase its share in the overseas market and develop industrial textiles as a new growth segment, particularly focusing on medical textiles[181]. - The company is planning to adjust its development strategy to facilitate transformation and high-quality development during the 14th Five-Year Plan[126]. - The company aims to leverage innovation to navigate unprecedented challenges in the global textile industry[130].

Financial Performance - Revenue for the six months ended June 30, 2020, was HK$2,099,734,000, a decrease of 38.0% compared to HK$3,388,393,000 for the same period in 2019[16] - Gross profit for the same period was HK$213,644,000, down 48.8% from HK$416,904,000 in 2019[16] - The company reported a loss for the period of HK$16,432,000, compared to a profit of HK$90,597,000 in the previous year[16] - Basic and diluted loss per share was HK$1.2, compared to earnings of HK$6.8 per share in the prior period[16] - Total comprehensive loss for the period was HK$24,673,000, with HK$21,280,000 attributable to the owners of the company, contrasting with a total comprehensive income of HK$88,575,000 in the previous year[18] - The company reported a significant increase in bank borrowings due within one year, rising from HK$67,923,000 to HK$504,181,000, indicating a shift towards increased leverage[20] - The company reported a loss attributable to owners of HK$15,154,000 for the six months ended June 30, 2020, compared to a profit of HK$82,685,000 in the same period of 2019[87] Expenses and Cost Management - Distribution and selling expenses were HK$31,959,000, slightly decreased from HK$32,013,000 in the previous year[16] - Administrative expenses decreased to HK$172,999,000 from HK$217,720,000 in 2019, reflecting a reduction of 20.5%[16] - Finance costs were HK$10,800,000, down from HK$19,476,000 in the previous year[16] - The Group's overall distribution and selling expenses amounted to approximately HK$52,896,000, representing 2.5% of total revenue, compared to 2.1% in the previous year[169] - Administrative expenses were approximately HK$172,999,000, accounting for 8.2% of total revenue, up from 6.4% in the same period last year[169] Assets and Liabilities - Non-current assets decreased from HK$1,835,805,000 at the end of 2019 to HK$1,776,967,000 as of June 30, 2020, reflecting a reduction in investment properties and property, plant, and equipment[20] - Current assets also declined from HK$3,461,095,000 to HK$3,262,172,000, primarily due to a decrease in inventories and trade receivables[20] - The company's net current assets decreased from HK$2,129,442,000 to HK$1,964,479,000, indicating a tightening liquidity position[20] - Total equity attributable to owners of the company fell from HK$3,419,461,000 to HK$3,270,288,000, reflecting the impact of the comprehensive loss[21] - The Group's total assets decreased to HK$5,039,139,000 from HK$5,296,900,000 at the end of 2019, while total liabilities decreased to HK$1,606,649,000 from HK$1,711,844,000[172] Cash Flow and Financing - For the six months ended June 30, 2020, the net cash used in operating activities was HK$ (2,608,000), a significant decrease compared to HK$ 221,091,000 in the same period of 2019[25] - The company experienced a net cash generated from financing activities of HK$ 220,701,000, contrasting with a net cash used of HK$ (229,194,000) in the previous year[25] - New bank borrowings raised during the period amounted to HK$ 432,426,000, a decrease from HK$ 742,590,000 in the previous year[25] - Repayments of bank borrowings amounted to HK$51,560,000, down 93.7% from HK$814,558,000 in the prior year period[100] Impact of COVID-19 - The Group experienced significant operational impacts due to the COVID-19 pandemic, affecting its interim financial statements for the six months ended 30 June 2020[29] - The Group's production was significantly impacted by the COVID-19 pandemic, leading to temporary suspensions of operations in February 2020[134] - Domestic sales were sluggish due to the inability to resume work as scheduled after the Chinese New Year, caused by the lockdown measures[134] - The Group is assessing the impact of COVID-19 on its financial statements, including the criteria for rent concessions[45] Market and Operational Strategy - The company continues to focus on research and development to innovate fabric and garment products in collaboration with brands and suppliers[4] - The Group continues to monitor market conditions and adjust strategies accordingly in response to the ongoing pandemic[50] - The Group is actively collaborating with clients in the China market to develop new product lines using innovative fabrics, capitalizing on the rebound of the Chinese economy[156] Employee and Management - The company operates 8 production facilities across China, Sri Lanka, and Indonesia, with a global workforce of approximately 7,700 employees[4] - The remuneration of key management personnel for the six months ended June 30, 2020, was HK$2,608,000, slightly down from HK$2,617,000 in the same period of 2019[128] - The Group's emolument policies are regularly reviewed based on individual performance and regional salary trends, with potential discretionary bonuses based on profitability[183] Recognition and Sustainability - Fountain Set (Holdings) Limited received multiple awards in 1H2020, including the "2019 Key and Major Enterprise of Jiangyin" and "2019 Outstanding Unit of Safety in Production"[34] - The company achieved certifications such as the Global Organic Textile Standard and Organic Content Standard in 2020, enhancing its compliance and sustainability credentials[147] - The company is committed to environmental management, as shown by its Environmental Management System Certification received in June 2020[147]

Company Overview - Fountain Set Group operates 8 production facilities across China, Sri Lanka, and Indonesia, employing close to 8,300 staff globally[5]. - The company is one of the world's largest fabric manufacturers, specializing in knitted fabric and garments for renowned apparel retailers[4]. - Chinatex Corporation Limited has been the largest shareholder since 2012, indicating strong backing from a state-owned enterprise[6]. - The company emphasizes research and development, collaborating with brands to create innovative fabric and garment products[5]. - Fountain Set Group has a significant global presence with marketing and representative offices in 4 countries[5]. - The company has a vertically integrated operation model, covering fabric knitting, dyeing, printing, finishing, and garment manufacturing[4]. Financial Performance - Revenue for 2019 was HK$6,605.7 million, a decrease of 12.1% from HK$7,510.8 million in 2018[15]. - Profit attributable to owners of the Company was HK$141.1 million, down from HK$160.8 million in 2018, reflecting a decline of 12.2%[15]. - Earnings per share (basic and diluted) decreased to 11.6 HK cents from 13.3 HK cents, a reduction of 12.8%[15]. - Proposed final dividend per share is 9.28 HK cents, down from 10.64 HK cents in 2018, representing a decrease of 12.8%[15]. - Total assets decreased to HK$5,296.9 million from HK$5,664.5 million, a decline of 6.5%[15]. - Total bank borrowings reduced significantly to HK$222.4 million from HK$798.5 million, a decrease of 72.1%[15]. - Net bank borrowings increased to (HK$723.0 million) from (HK$191.1 million), indicating a worsening of liquidity position[15]. - Return on equity decreased to 4.7% from 5.0%, reflecting a decline in profitability[15]. - Capital expenditure for 2019 was HK$134.6 million, down from HK$242.7 million in 2018, a reduction of 44.7%[15]. - Inventory turnover period improved to 78 days from 81 days, indicating better inventory management[15]. Market Conditions - Global economic growth weakened to an estimated 2.4% in 2019, the lowest rate since the global financial crisis[65]. - Global trade growth slowed sharply from 4% in 2018 to 1.4% in 2019, marking the weakest pace since the global financial crisis[65]. - Continuous tightening of domestic environmental protection policies in China led to increased production costs for energy, water treatment, and electricity[67]. - The minimum wage in China has been consistently increasing since 2018 due to a shortage of frontline labor, significantly raising fabric dyeing production costs[67]. - Bilateral negotiations between the United States and China resulted in a Phase One agreement, which included a planned partial rollback of tariffs[66]. - Key indicators of economic activity have declined, approaching their lowest levels since the global financial crisis[64]. - Manufacturing activity slowed markedly throughout 2019, with some tentative stabilization at weak levels[64]. - The closure of several enterprises due to higher environmental requirements has led to a tight supply and rising prices of dyes and chemicals[67]. - The prolonged trade disputes between the U.S. and China have heightened policy uncertainty, impacting international trade and investment[66]. Operational Strategy - The Group aims to provide an overview of its strategy and business outlook in light of these economic conditions[63]. - The Group is focused on expanding its market reach and enhancing its product offerings through strategic partnerships and technological advancements[5]. - The Group has implemented cost control measures and timely responses to mitigate the impact of the Epidemic[75]. - The Group aims to maintain operational efficiency and reduce costs while enhancing product quality and delivery in 2020[76]. - The Group plans to optimize product structure and increase efforts in product development, introducing new varieties of fabrics to the market[76]. Research and Development - The R&D department advanced new product development, achieving important results in high-needle and high-density fabrics, and various fiber composite fabrics[101]. - The Group's collaboration with universities on fabric design and functional fabrics is expected to enhance market competitiveness and brand image[105]. - The Group achieved significant results in product development, with nearly 1,000 varieties across four major series, including upgrades and new material applications[122]. - The successful development of DuPont sorona®plus elastic cool fiber knitted fabric has led to mass production, enhancing the Group's functional fabric offerings[122]. Environmental Commitment - The Group has established a "Sustainability Development and Enhancement Committee" to drive sustainability objectives and goals since 2016[73]. - The centralized heat supply project aims to reduce emissions and improve air quality by replacing coal-fired heaters with natural gas boilers[73]. - The Group is committed to investing in advanced technologies and pollution control measures to enhance environmental performance[73]. - The Group has improved environmental protection facilities and strengthened waste gas and wastewater treatment capabilities to meet national standards[125]. - The Group's production enterprises strictly comply with national pollutant emission standards, significantly reducing domestic and industrial waste volumes[127]. Corporate Governance - The Board of Directors consists of 9 members, with non-executive and independent non-executive directors representing about 56% of the Board[174]. - The Group's management practices adhere to the Corporate Governance Code, reinforcing its corporate governance principles[174]. - The Board has established three committees: Audit Committee, Remuneration Committee, and Nomination Committee, each with specific terms of reference[197]. - The Audit Committee held four meetings during the year, focusing on reviewing financial statements, internal controls, and risk management systems[197]. - The Company has established an Audit Committee to supervise financial reporting processes and internal control systems, with revised terms of reference effective from January 1, 2019[197].

Financial Performance - Revenue for the six months ended June 30, 2019, was HK$3,388,393,000, a decrease of 9.9% from HK$3,760,117,000 in the same period of 2018[18]. - Gross profit increased to HK$416,904,000, representing a gross margin of 12.3%, compared to HK$368,019,000 in 2018[18]. - Profit for the period attributable to owners of the Company was HK$82,685,000, up 29.6% from HK$63,754,000 in the previous year[18]. - Basic and diluted earnings per share for the period were both HK 6.8 cents, an increase from HK 5.3 cents in 2018[18]. - Total comprehensive income for the period reached HK$88,575,000, compared to HK$70,638,000 in 2018, reflecting a growth of 25%[21]. - Profit for the period increased to HK$90,597,000, up 32% from HK$68,653,000 in 2018[21]. - The Group's EBITDA for the period was approximately HK$236,782,000, compared to HK$185,469,000 in the same period last year[164]. - The overall cost of sales for the six months ended June 30, 2019, was approximately HK$2,971,489,000, with a gross profit margin of 12.3%, up from 9.8% in the same period last year[170]. Expenses and Costs - Distribution and selling expenses decreased to HK$72,509,000, down 23.4% from HK$94,602,000 in the prior year[18]. - Administrative expenses slightly decreased to HK$217,720,000 from HK$219,737,000, showing a marginal reduction[18]. - Finance costs increased to HK$19,476,000, up from HK$12,982,000, indicating higher borrowing costs[18]. - The depreciation of property, plant, and equipment was HK$92,449,000 for the six months ended June 30, 2019, an increase from HK$85,469,000 in the same period of 2018[100]. - Capital expenditure during the period was approximately HK$43,295,000, significantly lower than HK$128,395,000 for the same period in 2018[171]. Assets and Liabilities - Non-current assets totaled HK$1,882,295,000 as of June 30, 2019, up from HK$1,771,706,000 at the end of 2018[22]. - Current assets amounted to HK$3,852,180,000, slightly down from HK$3,892,818,000 in December 2018[22]. - Total equity decreased to HK$3,538,429,000 from HK$3,601,245,000 in December 2018[24]. - Bank borrowings due within one year decreased to HK$374,641,000 from HK$495,707,000 in 2018[22]. - The Group's total assets increased to HK$5,734,475,000 as of June 30, 2019, compared to HK$5,664,524,000 at the end of 2018[174]. - Current liabilities decreased to HK$1,595,782,000 as of June 30, 2019 from HK$1,687,133,000 at the end of 2018[174]. Share Options and Dividends - The final dividend declared for the year ended December 31, 2018, was HK10.64 cents per share, totaling approximately HK$130,071,000, compared to HK$125,323,000 for the previous year[91]. - A special dividend of HK1.33 cents per share was declared for the year ended December 31, 2018, amounting to approximately HK$16,259,000, while no special dividend was declared in the previous year[91]. - The total number of share options outstanding as of January 1, 2019, was 26,100,000[199]. - During the review period, 17,450,000 share options were exercised[199]. - As of June 30, 2019, there were 8,350,000 share options outstanding[199]. Market and Economic Conditions - Global growth in 2019 is expected to slow to 2.6%, with emerging market and developing economies projected to grow at 4%[155]. - The Group holds a prudently conservative attitude towards performance in the second half of 2019 due to increased uncertainties from the US-China trade war[157]. - The Group's business has not been directly impacted by the trade war, but customer ordering behavior has become more conservative[157]. - The anticipated recovery for emerging economies is projected at 4.6% in 2020[155]. Operational Efficiency and Strategy - The Group focused on lean management, technology automation, machinery upgrades, and cost control initiatives to enhance overall operating profitability[143]. - The Group successfully implemented continuous restructuring and consolidation of subsidiaries to streamline operations and reduce costs during the review period[144]. - The Group continues to invest resources in developing innovative products in collaboration with customers in the textile and apparel industry[157]. - The Group strategically targeted to minimize credit risks and enhance working capital through effective credit management[144]. Employee and Management Information - The Company has a global workforce of approximately 8,800 employees, supporting its operations across multiple countries[4]. - Employee costs, including directors' emoluments, amounted to HK$492,129,000 for the six months ended June 30, 2019, a decrease of 3.2% from HK$508,076,000 in the same period of 2018[100]. - Total compensation for key management personnel during the six months ended June 30, 2019, was HK$2,617,000, an increase from HK$1,693,000 in the same period of 2018[137].

Company Overview - Fountain Set Group is one of the world's largest fabric manufacturers, producing knitted fabric and garments through vertically integrated operations[4]. - The company operates 8 production facilities in the PRC, Sri Lanka, and Indonesia, employing close to 9,000 staff globally[5]. - Chinatex Corporation Limited has been the largest shareholder since 2012, indicating strong backing from a state-owned enterprise[6]. - The company emphasizes research and development, collaborating with brands to create innovative fabric and garment products[5]. - Fountain Set Group has a strong global marketing presence with offices in 5 countries[5]. - The company is committed to expanding its market reach and enhancing its product offerings through continuous innovation[5]. Financial Performance - Revenue for 2018 reached HK$7,510.8 million, an increase of 8.6% from HK$6,913.8 million in 2017[29]. - Profit attributable to owners of the Company was HK$160.8 million, slightly up from HK$156.8 million in the previous year[29]. - Profit margin decreased to 2.1% in 2018 from 2.3% in 2017[29]. - Basic and diluted earnings per share were both HK$0.133, compared to HK$0.130 in 2017[29]. - Proposed final dividend per share increased to HK$0.1064 from HK$0.1040 in 2017, with a dividend payout ratio of 90.0%[29]. - Total assets as of December 31, 2018, were HK$5,664.5 million, up from HK$5,589.0 million in 2017[29]. - Net bank borrowings stood at HK$(191.1) million, compared to HK$(127.4) million in 2017[29]. - Capital expenditure for the year was HK$242.7 million, an increase from HK$231.3 million in 2017[29]. - Return on equity improved to 5.0% in 2018 from 4.9% in 2017[29]. - Inventory turnover period decreased to 81 days in 2018 from 86 days in 2017[29]. Market Environment - Global GDP growth decreased from 3.1% in 2017 to 3% in 2018, below the June forecast of 3.1%[61]. - The textile industry faced increased production costs due to rising prices of cotton, dyes, and chemicals, alongside weak consumer demand[61]. - Trade tensions among major economies remained elevated, affecting the overall market environment[61]. - The company experienced operational challenges due to the dual pressures from upstream and downstream in the industry chain[61]. Operational Efficiency - The company maintains a diverse network of production and trading offices across key markets, enhancing its operational efficiency[13]. - The Group achieved a historical peak in turnover during the year under review, successfully overcoming challenges posed by the Sino-U.S. trade dispute and increased manufacturing costs in China[62]. - The Group's centralized procurement management system has been crucial in mitigating the impact of rising raw material prices, particularly for cotton yarn, dyes, and chemicals[98]. - Unified production scheduling has been implemented to stabilize operations, balancing production and demand amidst fluctuations in order sizes and categories[99][100]. Sustainability Initiatives - The Group has established a "Sustainability Development and Enhancement Committee" to drive sustainability objectives and set ambitious targets for improvement since 2016[64]. - The centralized heat supply project is a key initiative aimed at reducing emissions and contributing to cleaner air in the community by decreasing the number of coal-fired boilers in the area[62]. - The Group's environmental initiatives include inviting qualified advisors to evaluate and recommend improvements for environmental protection measures in its factories[64]. Governance and Board Structure - The Board of Directors as of December 31, 2018, comprised 9 members, with non-executive and independent non-executive directors representing about 56% of the Board[170]. - The Company has consistently complied with the Corporate Governance Code throughout 2018, reinforcing its corporate governance principles[170]. - New executive directors were appointed on August 28, 2018, including Mr. Liu Xianfu, Mr. Tao Yongming, and Mr. Yau Hang Tat Andrew[170]. - The number of independent non-executive directors continuously represents one-third of the Board, in compliance with Listing Rules[170]. - The Board has established three committees: Audit Committee, Remuneration Committee, and Nomination Committee, with their terms of reference reviewed and approved[194].