Financial Performance - For the year ended December 31, 2023, the company reported a revenue of HK$4,440,235, an increase from HK$4,118,246 in the previous year, representing a growth of approximately 7.8%[3] - The gross profit for the year was HK$321,989, compared to HK$577,817 in the previous year, indicating a decline of about 44.8%[3] - Profit before income tax expense was HK$111,128, a significant recovery from a loss of HK$20,210 in the previous year[3] - The profit for the year attributable to owners of the company was HK$67,844, a turnaround from a loss of HK$93,164 in the previous year[3] - Total comprehensive income for the year attributable to owners was HK$63,714, compared to a loss of HK$128,342 in the previous year[11] - The company’s net assets increased to HK$3,468,666 from HK$3,423,767, reflecting a growth of approximately 1.3%[13] - The finance costs for the year were HK$26,258, up from HK$21,408 in the previous year, indicating an increase of approximately 22.5%[3] - The Group's effective tax expense for 2023 was HK$43,284,000, down from HK$72,954,000 in 2022, indicating a decrease of about 40%[73] - The Group reported a net exchange loss of HK$1,543,000 in 2023, a significant improvement from a loss of HK$6,223,000 in 2022[77] - The gain on disposal of property, plant, and equipment was HK$9,600,000 in 2023, compared to HK$1,467,000 in 2022[77] - The reversal of impairment loss recognized on trade and bills receivables amounted to HK$259,011,000 in 2023, with no such amount in 2022[77] - The total other gains and losses for 2023 were HK$277,529,000, a substantial increase from HK$1,681,000 in 2022[77] - The Group's earnings attributable to owners for 2023 were HK$50,903,000, recovering from a loss of HK$115,532,000 in 2022[89] - Profit attributable to owners of the Company was HK$50,903,000 in 2023, a significant recovery from a loss of HK$115,532,000 in 2022[64] Revenue and Sales - For the year ended 31 December 2023, revenue from the production and sales of dyed fabrics and yarns was HK$4,440,235, a decrease from HK$6,053,645 in 2022, representing a decline of approximately 26.6%[44] - The Group's revenue for the year ended December 31, 2023, was HK$4,440,235,000, a decrease of 26.7% compared to HK$6,053,645,000 in 2022[100] - The core business of manufacturing and selling dyed fabrics and yarns generated revenue of approximately HK$3,639,699,000, accounting for 82.0% of total revenue, down from 85.1% in 2022[147] - Revenue from the production and sales of dyed fabrics and yarns was approximately HK$3,639,699,000, accounting for 82.0% of total revenue, down from 85.1% in 2022[168] - The Group's revenue decreased by 26.7% year-on-year, primarily due to a 22.9% decline in fabric sales volume[169] Costs and Expenses - The Group's cost of sales for 2023 was HK$4,118,246,000, a decrease from HK$5,475,828,000 in 2022, reflecting a reduction of approximately 24.8%[56] - The overall cost of sales for the year was approximately HK$4,118,246,000, down from HK$5,475,828,000 in 2022, resulting in a gross profit margin of 7.3%, compared to 9.5% in 2022[170] - Employee costs, including directors' emoluments, decreased to HK$691,167,000 in 2023 from HK$848,355,000 in 2022, a reduction of approximately 18.5%[56] - The Group's finance costs for 2023 were approximately HK$26,258,000, representing 0.6% of total revenue, compared to 0.4% in 2022[150] - Research and development costs decreased slightly to HK$56,659,000 in 2023 from HK$59,115,000 in 2022[56] Assets and Liabilities - Trade and bills receivables as of 31 December 2023 were HK$808,091, down from HK$928,721 in 2022, indicating a decrease of about 12.9%[45] - Trade receivables decreased to HK$720,569,000 from HK$797,805,000 year-on-year, while bills receivables also fell to HK$122,661,000 from HK$183,025,000[118] - The total inventories decreased to HK$783,908,000 in 2023 from HK$929,526,000 in 2022[92] - Bills payables were HK$1,103,000 as of December 31, 2023, significantly reduced from HK$19,200,000 in 2022[95] - Trade payables increased to HK$651,571,000 from HK$491,299,000, with trade payables within 1 month rising significantly to HK$430,215,000 from HK$260,063,000[120] - As of 31 December 2023, the Group's total assets were approximately HK$4,900,839,000, down from HK$5,046,765,000 in 2022[151] - The Group's inventories as of 31 December 2023 amounted to approximately HK$783,908,000, with an inventory turnover period of 69 days, an increase of 7 days compared to 62 days in 2022[150] Strategic Initiatives - The company is focusing on expanding its market presence and enhancing product offerings, although specific new products and technologies were not detailed in the report[3] - The Group aims to transform from a fabric manufacturing-oriented enterprise to a balanced fabric-to-garment integrated product and technology R&D service-oriented enterprise[183] - The Group plans to enhance product quality and competitiveness, focusing on cotton knitted fabric while addressing weaknesses in synthetic fiber fabrics[186] - The Group will prioritize developing emerging markets and domestic mid-to-high-end markets, targeting renowned international and domestic brand customers[187] - The Group is committed to improving operational efficiency and addressing challenges related to orders, layout, costs, and quality to achieve better returns for stakeholders[188] - The Group proactively adjusted production capacity and order allocation in response to the restructuring of the global textile and apparel supply chain[102] - The Group has strengthened its R&D capabilities for new fiber and functional fabric products to improve customer service levels[160] Dividends and Shareholder Information - The final dividend recommended is HK$3.00 cents per share, with a payout ratio of 71.43%, amounting to approximately HK$36,751,000[100] - The final dividend for 2023 is subject to shareholder approval at the upcoming annual general meeting[100] - The Board has proposed a final dividend to shareholders, subject to approval at the AGM, to be paid on or about 16 July 2024[194] - The Register of Members will be closed from 18 June 2024 to 21 June 2024 for the AGM, during which no share transfers will be registered[197] Governance and Compliance - The Audit Committee, consisting of three independent non-executive directors, has reviewed the Group's audited financial results for the year ended 31 December 2023[198] - The Group's segment profit does not include central administration costs and other expenses, which are essential for resource allocation and performance assessment[42] - The Group has adopted HKFRS 17 for insurance contracts, effective from 1 January 2023, but it has not materially impacted financial performance[37] - The amendments to HKFRSs had no impact on the consolidated financial statements of the Group, ensuring consistency in financial reporting[31] - The Group's financial performance was not materially impacted by the adoption of new and amended HKFRSs, but it did affect the disclosures of accounting policies[30] - The Group aims to enhance overall strategy planning by having the same individual serve as both Chairman and CEO, which is a deviation from the CG Code[193]

Financial Performance - For the six months ended June 30, 2023, the Group reported a consolidated profit of HKD 150 million, representing a 10% increase compared to the same period in 2022[16]. - The Group's revenue for the first half of 2023 was HKD 1.2 billion, reflecting a growth of 8% year-on-year[16]. - Revenue for the six months ended June 30, 2023, was HK$2,193,867, a decrease of 37.7% from HK$3,516,625 in 2022[17]. - Gross profit for the same period was HK$171,339, down 57.8% from HK$406,210 in 2022[17]. - Loss for the period attributable to owners of the Company was HK$81,607, compared to a profit of HK$70,327 in 2022[17]. - Basic and diluted loss per share for the period was HK$6.7, a decline from earnings of HK$5.7 per share in 2022[17]. - Total comprehensive expense for the period was HK$82,872, compared to a comprehensive income of HK$71,423 in 2022[19]. - The net cash generated from operating activities for the six months ended June 30, 2023, was HK$32,856, a significant decrease of 81.85% compared to HK$181,008 for the same period in 2022[29]. - Total comprehensive income for the period was a loss of HK$89,282, compared to a comprehensive income of HK$56,768 in the previous year, marking a substantial decline[27]. - The Group reported a loss of HK$81,607,000 for the six months ended June 30, 2023, compared to a profit of HK$70,327,000 in the same period of 2022[91]. Assets and Liabilities - The total assets of the Group as of June 30, 2023, amounted to HKD 2.5 billion, an increase of 5% from the previous year[16]. - The Group's cash and cash equivalents stood at HKD 300 million, which is a 15% increase compared to the previous period[16]. - Non-current assets decreased to HK$1,603,586 from HK$1,671,542 as of December 31, 2022[22]. - Current assets decreased to HK$3,167,278 from HK$3,375,223 as of December 31, 2022[22]. - Net current assets were HK$2,111,626, down from HK$2,193,049 at the end of 2022[22]. - Total equity decreased to HK$3,340,895 from HK$3,423,767 as of December 31, 2022[24]. - As of June 30, 2023, the company's total equity attributable to owners decreased to HK$3,131,785, down from HK$3,221,067 at the beginning of the year, reflecting a decline of approximately 2.77%[27]. - The Group's bank borrowings due within one year decreased to HK$168,347 from HK$200,734 at the end of 2022[24]. - The Group's bank borrowings were HK$38,725,000 as of June 30, 2023, down from HK$121,138,000 at December 31, 2022[132]. Operational Developments - The Group plans to expand its production facilities in Indonesia, aiming to increase capacity by 20% by the end of 2024[2]. - The Group is investing in R&D for innovative fabric technologies, with a budget allocation of HKD 50 million for the upcoming fiscal year[2]. - The Group's workforce has grown to approximately 5,800 employees, with a focus on enhancing operational efficiency[2]. - The Group's market presence has expanded to four additional countries, enhancing its global footprint[2]. - The Group is exploring potential acquisitions to strengthen its supply chain and market position in the fabric manufacturing industry[2]. Market Conditions - The global textile and garment industry faced significant challenges in 1H2023, including the impact of the Russia-Ukraine war and rising global inflation, leading to a decline in consumer purchasing power[135]. - The Group experienced a significant reduction in orders due to decreased demand from retail apparel customers, attributed to stockpiling and inflationary pressures[135]. - Market adjustments are anticipated to depend on a significant reduction in inventory levels of retail brand customers and a recovery in consumer purchasing desire[135]. - The Group anticipates a cautious outlook for the second half of 2023 due to ongoing challenges such as high inventory costs and international shipping prices[169]. Cost Management - The Group plans to strictly control sales and operational costs while streamlining the organization to mitigate impacts from high inventory and fixed costs[165]. - The Group continues to focus on lean management, technology automation, machinery upgrade, and cost reduction initiatives to enhance overall operating efficiency[142][146]. - The Group plans to implement strict cost control measures and further expand its domestic market in response to external uncertainties and high raw material costs[169]. Sustainability and Certifications - Fountain Set (Holdings) Limited received multiple certifications in 2023, including the Global Organic Textiles Standard (GOTS) Version 6.0 and the Organic Content Standard (OCS) Version 3.0, enhancing its sustainability credentials[151]. - The company achieved the 2022 Outstanding Contribution Award for High-quality Development from the Jiangyin High-tech Industrial Development Zone, recognizing its commitment to quality[153]. - In 2023, Fountain Set Limited obtained the ISO 14001 Environmental Management System Certificate and the ISO 50001 Energy Management System Certificate, indicating its focus on environmental and energy management[154]. - The company was recognized as one of the Top 30 Chinese Knitting Industries in 2022 by the China Knitting Industry Association, reflecting its competitive position in the market[152]. - Fountain Set Limited has been actively expanding its certifications, with 14 memberships in the U.S. Cotton Trust Protocol, demonstrating its commitment to sustainable cotton sourcing[153]. - The company received the Oeko-Tex Standard 100 Certificate in March 2023, ensuring its products meet high safety and environmental standards[154]. - Fountain Set Limited's subsidiary, Jiangyin Fuhui Textiles Limited, achieved the ISO 14001 certification in June 2023, further solidifying its environmental management practices[153]. - The company continues to enhance its laboratory capabilities, obtaining various laboratory accreditation certificates from recognized organizations, ensuring quality control in its production processes[152]. Economic Outlook - Global economic growth is projected to decelerate from 3.1% in 2022 to 2.1% in 2023, with advanced economies slowing from 2.6% to 0.7%[159]. - Economic activity in emerging markets and developing economies (EMDEs) is expected to be about 5% below pre-pandemic levels by the end of 2024[159]. - The Chinese economy is anticipated to rebound to a growth rate of 5.6% in the second half of 2023, supported by strong domestic demand and recovery in service sectors[160]. - The outlook for global economic and retail markets remains uncertain due to weak external demand and tightening financial conditions[164].

CONDENSED CONSOLIDATED STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME 簡明綜合損益及其他全面收益表 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的內容概不負責，對其準確性或完整性亦不發表任何聲明，並 明確表示，概不對因本公告全部或任何部份內容而產生或因倚賴該等內容而引致的任何損失承擔任何責任。 （於香港註冊成立之有限公司）（股份代號：420） 2023 6 30 6 截至 年 月 日止 個月 中期業績公告 2023 6 30 6 褔田實業（集團）有限公司董事會（分別為「本公司」及「董事」）謹此宣佈截至 年 月 日止 個月本公司及其附屬公司（統稱為 「本集團」）之未經審核簡明綜合業績如下： CONDENSED CONSOLIDATED STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME 簡明綜合損益及其他全面收益表 (Unaudited) Six mon（th未s 經en審de核d） 30 June 6 30 6 截至 月 日止 個月 202 ...

Company Overview - Fountain Set Group is one of the world's largest fabric manufacturers, producing knitted fabric and garments through vertically integrated operations[1]. - The company has 7 production facilities located in the PRC, Sri Lanka, and Indonesia, with a global workforce of nearly 5,900 employees[2]. - Chinatex Corporation Limited has been the largest shareholder of Fountain Set since 2012, indicating strong backing from a state-owned enterprise[3]. - Fountain Set operates marketing and representative offices in 4 countries, enhancing its global reach[2]. Financial Performance - Revenue for 2022 decreased to HK$6,053.6 million, down 10.3% from HK$6,751.3 million in 2021[4]. - The company reported a loss attributable to owners of HK$115.5 million, compared to a profit of HK$241.3 million in 2021[4]. - Profit margin turned negative at -1.9%, a decline from 3.6% in the previous year[4]. - Basic and diluted earnings per share were both -9.4 HK cents, down from 19.7 HK cents in 2021[4]. - Proposed final dividend per share was not declared, compared to 16.00 HK cents in 2021, with a dividend payout ratio of 81.2% in the previous year[4]. - Total assets decreased to HK$5,046.8 million from HK$5,748.4 million in 2021[4]. - Net current assets were HK$2,193.0 million, slightly down from HK$2,248.8 million in 2021[4]. - Total bank borrowings increased to HK$436.2 million from HK$327.3 million in 2021[4]. - Return on equity fell to -2.7%, down from 7.2% in the previous year[4]. - Inventory turnover period improved to 62 days from 107 days in 2021[4]. Awards and Recognition - Jiangyin Fuhui Textiles Limited received the "2021 Top 100 Star Enterprise" award from the Jiangyin Municipal Party Committee of Communist Party of China[47]. - Yancheng Fuhui Textiles Limited was awarded the "2021 Technology Innovation Award" by Chinatex Corporation[52]. - Fountain Set (Holdings) Limited achieved the Global Recycled Standard 4.0 certification, enhancing its sustainability credentials[44]. - The company holds multiple Oeko-Tex Standard 100 Certificates, ensuring product safety and environmental standards[54]. - Jiangyin Fuhui Textiles Limited was recognized as an "Outstanding Enterprise of Foreign Investment" in 2021, reflecting its strong performance in attracting foreign capital[50]. - The company has been acknowledged as a "Charitable Enterprise" in 2021, highlighting its commitment to social responsibility[50]. - Fountain Set (Holdings) Limited is a certified bluesign system partner, indicating its dedication to sustainable textile production[44]. - The company has received the "Best Quick Response Award" from ANTA Sports Products Limited, showcasing its operational efficiency[59]. - Jiangyin Fuhui Textiles Limited was recognized for its "Outstanding Contribution Award for High-quality Development" in 2021, emphasizing its role in regional economic growth[47]. - The company has been awarded the ISO 50001 Energy Management System Certificate, demonstrating its commitment to energy efficiency[50]. Market Conditions and Challenges - The net loss attributable to the owners of the Company for the year ended December 31, 2022, was primarily due to reduced consumer purchasing momentum, purchasing power decline, overstocking by retail clients, and a one-off redundancy compensation of approximately HK$127 million[72]. - The adverse market conditions were influenced by global inflation and the ongoing war in Ukraine, impacting consumer behavior and demand[72]. - Global growth is projected to decelerate sharply, with a decline to 1.7% in 2023 from 3.0% expected six months prior, indicating a broad-based deterioration across regions[81]. - By the end of 2024, GDP levels in emerging market and developing economies (EMDEs) are expected to be about 6% below pre-pandemic levels[81]. - The escalation of geopolitical conflicts and sanctions has driven up global commodity prices, significantly increasing manufacturing costs[103]. Sustainability Initiatives - The Group has established a "Sustainability Development and Enhancement Committee" to drive sustainability objectives and goals across its operations[82]. - The centralized heat supply project has reduced 28 coal-fired heaters, contributing to cleaner air by lowering nitrogen oxide and sulfur dioxide emissions[83]. - The first phase of the project was completed in 2018, and the second phase began in 2019, with two new natural gas boilers operational in January and August 2021[83]. - The Group is committed to investing in advanced technologies and pollution reduction measures, including periodic training for staff on environmental protection[88][92]. - The establishment of a "Sustainability and Improvement Committee" in 2016 aims to enhance management's perspective on sustainable development and set ambitious goals[85]. - The Group's commitment to green development is expected to improve the ecological environment and overall social benefits in the region[86]. Operational Strategies - The Group anticipates a turnaround in financial performance by enhancing operational efficiency and exploring market opportunities[90][97]. - The Group is actively promoting the Yancheng Fuhui Expansion Project to enhance digitalization, intelligence, and eco-friendliness in operations[115]. - The future supply chain will focus on regionalization, localization, and diversification, leading to more flexible global supply chains[110]. - The Group aims to optimize operations by boosting domestic sales, shortening inventory turnover days, and reducing inventory levels[111]. - Fountain Set Group actively adjusted its sales strategy in response to a challenging business environment in 2022, maintaining stable domestic sales orders despite a slowdown in economic growth[119]. - The export sales team focused on reducing the loss of quarterly intended orders and securing unconfirmed orders from major customers in the United States, while increasing the supply of high-value products[120]. - The Group emphasized product development and quality improvement, enhancing R&D capabilities to meet market demands and improve product quality[122]. - A tracking mechanism for new product production was strengthened, effectively addressing recurring quality issues such as dyeing defects and wear marks[123]. - Inventory management was optimized to mitigate operating risks, with a focus on reducing raw material and finished goods backlog to improve capital turnover[124]. - Centralized procurement management was deepened, leading to significant reductions in procurement costs through optimized supplier catalogs and online supervision[128]. - Production management measures were implemented to control costs, including segmented production and optimizing employment structure[129]. - Lean management initiatives helped reduce product defection and repair rates, improving overall product quality and reducing manufacturing costs[130]. - Staff reduction and efficiency increase measures were taken to enhance per-capita efficiency and ensure stable business development[131]. - The salt city expansion project is a key initiative for the Group's transformation, focusing on smart manufacturing and sustainable development in the textile industry[117]. Economic Outlook - The International Monetary Fund projected global economic growth to decline from 3.4% in 2022 to 2.9% in 2023[200]. - The United Nations forecasted world economic growth to fall from approximately 3% in 2022 to 1.9% in 2023[200]. - The World Bank projected a slowdown in global economic growth to 1.7% in 2023, indicating a significant risk of recession[200]. - Average per-capita incomes in fragile and conflict-affected areas are expected to decline by 2024, indicating stalled income convergence[89]. Corporate Governance - Corporate governance policies are being improved to enhance shareholder value, with the formation of various committees at the Board level[96][98]. - The Group has complied with all covenant ratios and undertakings for the years ended December 31, 2022, and 2021[188].

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的內容概不負責，對其準確性或完整性亦不發表任何聲明，並 明確表示，概不對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的任何損失承擔任何責任。 （於香港註冊成立之有限公司）（股份代號：420） 2022 12 31 截至 年 月 日止年度 末期業績公告 2022 12 31 褔田實業（集團）有限公司董事會（分別為「本公司」及「董事」）謹此宣佈截至 年 月 日止年度本公司及其附屬公司（統稱為 「本集團」或「福田集團」）之經審核綜合業績如下： CCOONNSSOOLLIIDDAATTEEDD SSTTAATTEEMMEENNTT OOFF PPRROOFFIITT OORR LLOOSSSS AANNDD OOTTHHEERR CCOOMMPPRREEHHEENNSSIIVVEE IINNCCOOMMEE 綜綜合合損損益益及及其其他他全全面面收收益益表表 FFOORR TTHHEE YYEEAARR EENNDDEEDD 3311 DDEECCEEMMBBEERR 22002222 22002222 1122 3311 截截至至 年年 月月 日日止止 ...

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]