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].