Company Information [Board of Directors and Committees](index=4&type=section&id=Board%20of%20Directors%20and%20Committees) The company's Board of Directors comprises executive, non-executive, and independent non-executive directors, supported by Remuneration, Nomination, Audit, and Environmental, Social and Governance Committees to ensure robust corporate governance - The Board members include Executive Directors Mr. Zeng Guang Sheng (Chairman and CEO) and Mr. Wu Kai Ping, Non-executive Directors Ms. Zeng Jing and Mr. Chen Kuang Guo, and Independent Non-executive Directors Mr. Yang Ru Sheng, Mr. Zhang Zhen Yu, Mr. Mei Wai Yick, and Mr. Xu Bing[7](index=7&type=chunk) - The company has a Remuneration Committee, Nomination Committee, Audit Committee, and Environmental, Social and Governance Committee, each chaired by an independent non-executive director[7](index=7&type=chunk) [Registered Office and Principal Places of Business](index=5&type=section&id=Registered%20Office%20and%20Principal%20Places%20of%20Business) The company is registered in the Cayman Islands with principal places of business in Hong Kong, mainland China, and Thailand, and its Hong Kong share registrar is Hong Kong Central Share Registrar Services Limited - The registered office is located in the Cayman Islands, and the Hong Kong share registrar is Hong Kong Central Share Registrar Services Limited[10](index=10&type=chunk)[13](index=13&type=chunk) - Principal places of business are located in Kowloon, Hong Kong, Zengcheng District, Guangzhou City, Guangdong Province, China, and Ayutthaya Province, Thailand[14](index=14&type=chunk)[15](index=15&type=chunk)[16](index=16&type=chunk)[17](index=17&type=chunk)[19](index=19&type=chunk)[20](index=20&type=chunk)[21](index=21&type=chunk)[23](index=23&type=chunk)[24](index=24&type=chunk)[25](index=25&type=chunk) Company Profile [Principal Business Activities](index=6&type=section&id=Principal%20Business%20Activities) International Precision Group Limited primarily engages in the manufacturing and sale of precision metal parts, widely used in automotive, hydraulic equipment, hard disk drives (HDD), electronics, and other instruments, serving top-tier multinational clients - The company is an investment holding company, with its subsidiaries primarily engaged in the manufacturing and sale of precision metal parts[27](index=27&type=chunk) - The Group manufactures precision metal parts and assembled parts for automotive components, hydraulic equipment, hard disk drives (HDD), electronics, and other instruments[27](index=27&type=chunk) - Clients are mainly top-tier multinational enterprises in the information technology, hydraulic power, automotive, and electrical appliance industries, demanding extremely high precision for metal parts[27](index=27&type=chunk) Company Milestones [Development History](index=7&type=section&id=Development%20History) Since commencing precision parts business in Singapore in 1990, the Group has expanded to Thailand, Hong Kong, and mainland China, listed on the Hong Kong Stock Exchange Main Board in 2004, and achieved recent milestones in the robotics industry, high-tech enterprise certification, and university-industry collaboration - Precision parts business commenced in Singapore in **1990**, followed by operations in Thailand (**1997**), Guangdong Province, China (**1994, 2002, 2011**), and Hong Kong (**1994**)[30](index=30&type=chunk) - Listed on the Main Board of The Stock Exchange of Hong Kong Limited on **November 1, 2004**[30](index=30&type=chunk) - Recent key milestones include: appointed as a council member of the China Robot Industry Alliance in **2019**, signed a strategic cooperation agreement with Zhejiang University South China Industrial Technology Research Institute in **2018**, established a joint postgraduate training base with Tsinghua University Shenzhen Graduate School in **2017**, and successfully developed proprietary robotic arms in **2015**[30](index=30&type=chunk) Group Structure [Principal Subsidiaries and Associates](index=8&type=section&id=Principal%20Subsidiaries%20and%20Associates) As of June 30, 2020, International Precision Group's structure reveals numerous wholly-owned or controlled subsidiaries and associates globally, primarily in China, Hong Kong, Thailand, and the British Virgin Islands, with operations spanning manufacturing, sales offices, investment holding, and technology development - The Group owns manufacturing and sales offices in China, including Dongguan Keda, Jiangsu Keda, Guangzhou Xinhao Precision Technology, and Integrated Precision Engineering (Thailand) Company Limited[33](index=33&type=chunk) - Investment holding companies include International Precision Engineering Limited (Hong Kong), Anglo Dynamic Limited (British Virgin Islands), and Shenzhen Zhizao Investment Co., Ltd. and Shenzhen Intelligent Manufacturing Technology Co., Ltd. in China[33](index=33&type=chunk) - The Group is also involved in surface treatment (Kaige Surface Treatment (Taicang) Co., Ltd., Zhenjiang Huishi Surface Treatment Co., Ltd.) and robot manufacturing (International Precision Robot Manufacturing Co., Ltd., Jiangsu Kezhi Robot Manufacturing Co., Ltd.)[36](index=36&type=chunk) Financial Highlights [Ratio Analysis](index=10&type=section&id=Ratio%20Analysis) As of June 30, 2020, the company maintained a high current ratio, saw an increase in net cash to equity ratio, but experienced significant declines in both gross and net profit margins, alongside an increase in average trade receivables and inventory turnover days Key Statistics (2015-H1 2020) | Indicator | June 30, 2020 | Dec 31, 2019 | Dec 31, 2018 | Dec 31, 2017 | Dec 31, 2016 | Dec 31, 2015 | | :--- | :--- | :--- | :--- | :--- | :--- | :--- | | Current Ratio | 7.23 | 7.93 | 2.59 | 3.30 | 3.48 | 2.02 | | Net Cash to Equity Ratio | 0.38 | 0.34 | 0.24 | 0.24 | 0.29 | 0.15 | | Dividend Payout Ratio | Not Applicable | 13.1% | 11.2% | 34.9% | 43.0% | 40.6% | | Gross Profit Margin | 20.7% | 22.3% | 30.8% | 34.4% | 30.8% | 27.9% | | Net Profit Margin | 0.6% | 5.1% | 9.0% | 12.2% | 12.9% | 9.8% | | Average Trade Receivables Turnover Days | 114 days | 110 days | 103 days | 94 days | 93 days | 101 days | | Average Inventory Turnover Days | 164 days | 153 days | 143 days | 122 days | 126 days | 135 days | | Net Asset Value Per Share (HKD) | 1.57 | 1.63 | 1.61 | 1.62 | 1.42 | 1.55 | | Cash Per Share (HKD) | 0.81 | 0.81 | 0.80 | 0.87 | 0.91 | 0.75 | [Business Segments and Geographical Classification](index=11&type=section&id=Business%20Segments%20and%20Geographical%20Classification) In the first half of 2020, automotive parts remained the primary revenue source, though with a slight decrease in proportion, while HDD parts sales increased; geographically, sales in China, Macau, and Hong Kong accounted for the largest share, with North America and Europe seeing reduced contributions Business Segment Revenue (HKD Thousands) | Business Segment | H1 2020 | H1 2019 | H1 2018 | | :--- | :--- | :--- | :--- | | Automotive | 180,773 | 220,862 | 239,735 | | Hydraulic | 88,833 | 118,329 | 130,523 | | HDD | 49,439 | 46,930 | 49,394 | | Other | 19,241 | 17,710 | 18,340 | Geographical Classification Ratio | Region | H1 2020 | H1 2019 | | :--- | :--- | :--- | | China, Macau & Hong Kong | 44% | 37% | | North America | 19% | 23% | | Europe | 12% | 9% | | Thailand | 20% | 25% | | Malaysia | 3% | 3% | | Other | 2% | 3% | [Cash and Equity Position](index=12&type=section&id=Cash%20and%20Equity%20Position) As of June 2020, the company maintained a high level of cash and cash equivalents, but total debt increased, and total equity slightly decreased - As of June 2020, cash and cash equivalents were **HKD 855,569 thousand**, total debt was **HKD 231,448 thousand**, and equity was **HKD 1,654,142 thousand**[46](index=46&type=chunk)[74](index=74&type=chunk)[75](index=75&type=chunk) Management Discussion and Analysis [Business Review](index=13&type=section&id=Business%20Review) In the first half of 2020, the Group experienced significant declines in sales and profit due to the COVID-19 pandemic and US-China trade tensions, particularly impacting European and American markets; the Group actively responded by developing domestic clients, entering the high-end hydraulic parts market, strengthening financial control, promoting automated production, and fostering talent - The COVID-19 pandemic led to overseas client factory closures, order cancellations or postponements, resulting in a significant decline in the Group's sales and profit[48](index=48&type=chunk) Business Segment Sales Change for H1 2020 | Business Segment | H1 2020 (HKD Thousands) | H1 2019 (HKD Thousands) | Change % | | :--- | :--- | :--- | :--- | | Automotive Parts | 180,773 | 220,862 | -18.2 | | Hydraulic Equipment Parts | 88,833 | 118,329 | -24.9 | | HDD Parts | 49,439 | 46,930 | +5.3 | | Other | 19,241 | 17,710 | +8.6 | | **Total** | **338,286** | **403,831** | **-16.2** | - The Group actively developed domestic clients and entered the high-end, high-precision hydraulic parts market to reduce reliance on overseas client orders[49](index=49&type=chunk) - Facing the pandemic, the Group adopted prudent financial operations, strengthened monitoring of trade receivables and inventory, optimized supplier resources, and utilized idle funds to increase deposit income[52](index=52&type=chunk) - After the domestic pandemic eased, the Group improved existing equipment, promoted automated production, refined environmental management systems, and officially launched the IPE Engineer Academy to strengthen talent development and intellectual property protection[52](index=52&type=chunk)[53](index=53&type=chunk) [Financial Review](index=14&type=section&id=Financial%20Review) In the first half of 2020, the Group's sales decreased by 16.2% year-on-year, gross profit by 19.3%, and gross profit margin by 0.8 percentage points; net profit significantly declined by 86.1% due to lower sales, high fixed costs, increased share-based payment expenses, and pandemic-related shutdown costs, though other income (bank interest, exchange gains) rose and finance costs decreased due to reduced loan amounts Key Financial Data for H1 2020 | Indicator | H1 2020 (HKD Thousands) | H1 2019 (HKD Thousands) | Change (HKD Thousands) | Change % | | :--- | :--- | :--- | :--- | :--- | | Sales | 338,286 | 403,831 | (65,545) | -16.2 | | Gross Profit | 70,029 | 86,743 | (16,714) | -19.3 | | Gross Profit Margin | 20.7% | 21.5% | -0.8% | - | | Other Income | 16,434 | 8,810 | 7,624 | +86.5 | | Distribution Costs | 9,727 | 7,125 | 2,602 | +36.5 | | Administrative and Other Expenses | 67,021 | 62,563 | 4,458 | +7.1 | | Finance Costs | 4,387 | 8,032 | (3,645) | -45.4 | | Profit for the Period | 2,186 | 15,724 | (13,538) | -86.1 | - The increase in other income was primarily due to an increase of **HKD 2,955 thousand** in bank interest income and **HKD 5,516 thousand** in exchange gains from USD appreciation[56](index=56&type=chunk) - The increase in administrative expenses was mainly due to **HKD 3,109 thousand** in share-based payment expenses for share options granted and **HKD 4,805 thousand** in expenses incurred from production base shutdowns during the pandemic in mainland China[57](index=57&type=chunk) - Finance costs decreased by **45.4%**, primarily due to a reduction in overall loan amounts and lower bank borrowing interest rates[57](index=57&type=chunk) [Liquidity, Financial Resources and Financial Ratios](index=16&type=section&id=Liquidity%2C%20Financial%20Resources%20and%20Financial%20Ratios) In the first half of 2020, the Group maintained stable net cash inflow from operating activities but saw increased net cash outflow from investing activities; net cash outflow from financing activities significantly decreased due to bank loan repayments, resulting in an increase in net cash and cash equivalents at period-end and an improved net cash position - As of June 30, 2020, cash attributable per share was **HKD 0.81**, consistent with the end of last year; net asset value per share was **HKD 1.57**, a **3.7%** year-on-year decrease[61](index=61&type=chunk) - Net cash inflow from operating activities was **HKD 111,422 thousand**, largely stable compared to the same period last year, mainly due to cost control, procurement supervision, and accelerated collection of receivables[61](index=61&type=chunk) - Net cash outflow from investing activities was **HKD 17,012 thousand**, an increase of **HKD 10,996 thousand** from the same period last year, reflecting increased capital expenditure[61](index=61&type=chunk) - Net cash outflow from financing activities was **HKD 27,565 thousand**, primarily used for repaying existing bank loans, a significant decrease from the same period last year[62](index=62&type=chunk) - Net increase in cash and cash equivalents at period-end was **HKD 66,845 thousand**, and net cash (cash and bank balances less total bank borrowings) increased by **HKD 35,494 thousand** to **HKD 624,121 thousand**[62](index=62&type=chunk) [Currency Risk and Management](index=16&type=section&id=Currency%20Risk%20and%20Management) The Group faces foreign currency exchange rate fluctuation risks, with primary revenue denominated in USD and most expenses in JPY, RMB, THB, and HKD, making RMB fluctuations particularly impactful on profitability - The Group's revenue is primarily denominated in **USD**, while major expenses (raw materials, machinery costs, production expenses) are denominated in **JPY, RMB, THB, and HKD**[63](index=63&type=chunk) - Exchange rate fluctuations, particularly in **RMB**, may negatively impact the Group's profitability[63](index=63&type=chunk) [Human Resources](index=17&type=section&id=Human%20Resources) The Group is committed to talent development, launching the IPE Engineer Lecture Series, deepening university-industry collaboration, and enhancing employee benefits; as of June 30, 2020, the Group had 2,181 employees, a 3.8% decrease from the prior year - Launched the IPE Engineer Lecture Series, cultivating high-quality, professional, and managerial industry elites through lectures, practical training, and engineer forums[65](index=65&type=chunk) - Deepened university-industry collaboration, establishing partnerships with Guangzhou Electromechanical Technician College and Xinhua College of Sun Yat-sen University, and recruiting master's and bachelor's fresh graduates from target universities nationwide[65](index=65&type=chunk) - Enhanced employee benefits, adjusting salaries for technicians and engineers, and modifying working hours to implement humanized management[65](index=65&type=chunk) - As of June 30, 2020, the Group had **2,181 employees**, a decrease of **86 employees** or **3.8%** from the same period last year[66](index=66&type=chunk) [Outlook](index=17&type=section&id=Outlook) For the second half, the Group will continue its 'promote transformation, prevent risks, improve efficiency' strategy, focusing on cost reduction, efficiency, and quality; facing global economic downturn and recurring pandemic challenges, the Group will actively expand into new markets, clients, and products, accelerate high-value hydraulic parts development, and strengthen inventory and cash management - The goal for the second half is to continue implementing the "promote transformation, prevent risks, improve efficiency" operational strategy, with "reduce costs, improve efficiency, enhance quality" as production principles[67](index=67&type=chunk) - Global economic downturn and the threat of a second wave of the pandemic are expected to continue impacting consumer confidence, leading to sustained market weakness[67](index=67&type=chunk) - The Group will continuously expand into new markets, clients, and products, explore new profit growth points, accelerate new project development, and enhance the supply capacity of high-tech, high-demand, and high-value hydraulic parts[68](index=68&type=chunk) - Continue to strengthen inventory control, optimize procurement resources, shorten procurement cycles, reduce costs and expenses, control financial risks, and improve return on capital[68](index=68&type=chunk) Condensed Consolidated Statement of Profit or Loss [Profit or Loss Performance for H1 2020](index=19&type=section&id=Profit%20or%20Loss%20Performance%20for%20H1%202020) For the six months ended June 30, 2020, the Group's revenue decreased by 16.2% year-on-year to HKD 338,286 thousand, gross profit declined by 19.3%, and profit for the period significantly fell by 86.1% to HKD 2,186 thousand, with basic and diluted earnings per share both at HKD 0.3 cents Condensed Consolidated Statement of Profit or Loss Summary (For the six months ended June 30) | Indicator | 2020 (HKD Thousands) | 2019 (HKD Thousands) | | :--- | :--- | :--- | | Revenue | 338,286 | 403,831 | | Cost of Sales | (268,257) | (317,088) | | Gross Profit | 70,029 | 86,743 | | Other Income | 16,434 | 8,810 | | Distribution Costs | (9,727) | (7,125) | | Administrative and Other Expenses | (67,021) | (62,563) | | Operating Profit | 9,715 | 25,865 | | Finance Costs | (4,387) | (8,032) | | Share of Loss of an Associate | (1,806) | (762) | | Profit Before Tax | 3,522 | 17,071 | | Income Tax | (1,336) | (1,347) | | Profit for the Period | 2,186 | 15,724 | | Profit Attributable to Equity Holders of the Company | 2,645 | 15,870 | | Non-controlling Interests | (459) | (146) | | Earnings Per Share (Basic) | 0.3 HKD cents | 1.5 HKD cents | | Earnings Per Share (Diluted) | 0.3 HKD cents | 1.5 HKD cents | Condensed Consolidated Statement of Comprehensive Income [Comprehensive Income Performance for H1 2020](index=20&type=section&id=Comprehensive%20Income%20Performance%20for%20H1%202020) For the six months ended June 30, 2020, the Group's total comprehensive income for the period was negative HKD 59,703 thousand, primarily due to exchange differences on translating foreign operations of negative HKD 61,889 thousand, a stark contrast to the positive HKD 20,526 thousand in the prior year Condensed Consolidated Statement of Comprehensive Income Summary (For the six months ended June 30) | Indicator | 2020 (HKD Thousands) | 2019 (HKD Thousands) | | :--- | :--- | :--- | | Profit for the Period | 2,186 | 15,724 | | Other Comprehensive Income: Exchange Differences on Translating Foreign Operations | (61,889) | 4,802 | | Total Comprehensive Income for the Period | (59,703) | 20,526 | | Attributable to Equity Holders of the Company | (59,241) | 20,668 | | Non-controlling Interests | (462) | (142) | - Exchange differences on translating foreign operations turned from a positive **HKD 4,802 thousand** in the prior year to a negative **HKD 61,889 thousand**, which is the main reason for the significant decrease in total comprehensive income[73](index=73&type=chunk) Condensed Consolidated Statement of Financial Position [Financial Position for H1 2020](index=21&type=section&id=Financial%20Position%20for%20H1%202020) As of June 30, 2020, the Group's total assets less current liabilities amounted to HKD 1,845,035 thousand, with net assets of HKD 1,654,142 thousand; both non-current and current assets decreased, while current liabilities slightly increased and non-current liabilities decreased Condensed Consolidated Statement of Financial Position Summary (As of June 30) | Indicator | 2020 (HKD Thousands) | 2019 (HKD Thousands) | | :--- | :--- | :--- | | **Non-current Assets** | | | | Property, Plant and Equipment | 605,820 | 648,445 | | Total Non-current Assets | 697,246 | 742,356 | | **Current Assets** | | | | Inventories | 238,162 | 243,480 | | Trade Receivables | 192,376 | 229,249 | | Cash and Bank Balances | 855,569 | 847,093 | | Total Current Assets | 1,331,881 | 1,364,196 | | **Current Liabilities** | | | | Bank Loans | 53,668 | 53,769 | | Total Current Liabilities | 184,092 | 171,935 | | Net Current Assets | 1,147,789 | 1,192,261 | | **Non-current Liabilities** | | | | Bank Loans | 177,780 | 204,697 | | Total Non-current Liabilities | 190,893 | 218,620 | | **Net Assets** | 1,654,142 | 1,715,997 | | **Total Equity** | 1,654,142 | 1,715,997 | - Net book value of property, plant and equipment decreased from **HKD 648,445 thousand** at the end of 2019 to **HKD 605,820 thousand** as of June 30, 2020[74](index=74&type=chunk) - Trade receivables decreased from **HKD 229,249 thousand** at the end of 2019 to **HKD 192,376 thousand**, reflecting an improvement in receivables collection[74](index=74&type=chunk) Condensed Consolidated Statement of Cash Flows [Cash Flows for H1 2020](index=23&type=section&id=Cash%20Flows%20for%20H1%202020) For the six months ended June 30, 2020, the Group maintained stable net cash generated from operating activities, experienced increased net cash outflow from investing activities, and significantly reduced net cash outflow from financing activities, leading to an increase in net cash and cash equivalents at period-end Condensed Consolidated Statement of Cash Flows Summary (For the six months ended June 30) | Indicator | 2020 (HKD Thousands) | 2019 (HKD Thousands) | | :--- | :--- | :--- | | Net Cash Generated from Operating Activities | 111,422 | 111,754 | | Net Cash Used in Investing Activities | (17,012) | (6,016) | | Net Cash Used in Financing Activities | (27,565) | (159,044) | | Net Increase/(Decrease) in Cash and Cash Equivalents | 66,845 | (53,306) | | Cash and Cash Equivalents at End of Period | 855,569 | 790,899 | - Net cash used in investing activities increased from **HKD 6,016 thousand** in the same period of 2019 to **HKD 17,012 thousand**, primarily due to increased purchases of property, plant and equipment[76](index=76&type=chunk) - Net cash used in financing activities significantly decreased from **HKD 159,044 thousand** in the same period of 2019 to **HKD 27,565 thousand**, mainly due to reduced repayment of bank loans[76](index=76&type=chunk) Condensed Consolidated Statement of Changes in Equity [Changes in Equity for H1 2020](index=24&type=section&id=Changes%20in%20Equity%20for%20H1%202020) For the six months ended June 30, 2020, the Group's total equity decreased from HKD 1,715,997 thousand at the beginning of the period to HKD 1,654,142 thousand, primarily due to negative total comprehensive income for the period (affected by exchange fluctuation reserve) and declared dividends, though share-based payment arrangements increased equity Condensed Consolidated Statement of Changes in Equity Summary (For the six months ended June 30) | Indicator | 2020 (HKD Thousands) | 2019 (HKD Thousands) | | :--- | :--- | :--- | | Total Equity at Beginning of Period | 1,715,997 | 1,692,865 | | Profit for the Period | 2,186 | 15,724 | | Exchange Differences on Translating Foreign Operations | (61,889) | 4,802 | | Total Comprehensive Income for the Period | (59,703) | 20,526 | | Final Dividend Declared for 2019 | (5,261) | - | | Share-based Payment Arrangements | 3,109 | - | | Total Equity at End of Period | 1,654,142 | 1,713,391 | - Exchange fluctuation reserve significantly decreased from **HKD 80,100 thousand** at the beginning of the period to **HKD 18,214 thousand** at the end of the period, reflecting the negative impact of foreign currency exchange rate changes on equity[77](index=77&type=chunk) - Share-based payment arrangements resulted in an expense of **HKD 3,109 thousand**, increasing the share option reserve[77](index=77&type=chunk) Notes to the Condensed Consolidated Financial Statements [1. Company Information](index=25&type=section&id=1.%20Company%20Information) This note reiterates the company's incorporation in the Cayman Islands, its listing on the Hong Kong Stock Exchange Main Board, and its principal business of manufacturing and selling precision metal parts - The company was incorporated in the Cayman Islands on **July 10, 2002**, and listed on the Main Board of The Stock Exchange of Hong Kong Limited on **November 1, 2004**[79](index=79&type=chunk) - The Group's principal business is the manufacturing and sale of precision metal parts for automotive components, hydraulic equipment parts, hard disk drives (HDD), and other purposes[79](index=79&type=chunk) [2. Basis of Preparation](index=25&type=section&id=2.%20Basis%20of%20Preparation) The condensed consolidated financial statements are prepared in accordance with Hong Kong Accounting Standard 34 Interim Financial Reporting issued by the HKICPA and the disclosure requirements of Appendix 16 of the Listing Rules, using the historical cost convention and presented in Hong Kong Dollars - The financial statements are prepared in accordance with Hong Kong Accounting Standard 34 Interim Financial Reporting issued by the Hong Kong Institute of Certified Public Accountants and the applicable disclosure requirements of Appendix 16 to the Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited[80](index=80&type=chunk) - The financial statements are prepared on the historical cost basis, except for derivative financial instruments which are measured at fair value, and are presented in Hong Kong Dollars[80](index=80&type=chunk) [3. Principal Accounting Policies](index=25&type=section&id=3.%20Principal%20Accounting%20Policies) During this interim period, the Group first adopted amendments to the Conceptual Framework for Financial Reporting and amendments to Hong Kong Financial Reporting Standards, including 'Definition of Material' and 'Definition of a Business,' which had no significant impact on the current period's financial position and performance - During this interim period, the Group first adopted amendments to Hong Kong Accounting Standard 1 and Hong Kong Accounting Standard 8 (Amendments) "Definition of Material" and Hong Kong Financial Reporting Standard 3 (Amendments) "Definition of a Business," among other amendments[81](index=81&type=chunk) - The "Definition of Material" amendments provide a new definition for materiality, emphasizing the impact of information on the decisions of primary users of financial statements[82](index=82&type=chunk) - The "Definition of a Business" amendments introduce an optional concentration test to simplify the assessment of whether acquired activities and assets constitute a business[84](index=84&type=chunk) - These amendments had no significant impact on the Group's condensed consolidated financial statements[81](index=81&type=chunk)[85](index=85&type=chunk) [4. Operating Segment Information](index=27&type=section&id=4.%20Operating%20Segment%20Information) The Group's operations are categorized into six reportable segments based on customer location: Thailand, Malaysia, Mainland China/Macau/Hong Kong, North America, Europe, and other countries; in the first half of 2020, Mainland China/Macau/Hong Kong was the largest revenue source, but both revenue and gross profit significantly decreased in North America and Europe - The Group manages its business by customer location, categorizing operations into six reportable segments: Thailand, Malaysia, Mainland China/Macau/Hong Kong, North America, Europe, and other countries[87](index=87&type=chunk)[88](index=88&type=chunk) Reportable Segment Revenue and Gross Profit (For the six months ended June 30) | Region | 2020 Revenue (HKD Thousands) | 2020 Gross Profit (HKD Thousands) | 2019 Revenue (HKD Thousands) | 2019 Gross Profit (HKD Thousands) | | :--- | :--- | :--- | :--- | :--- | | Thailand | 14,472 | 1,857 | 12,615 | 2,449 | | Malaysia | 40,469 | 8,378 | 35,528 | 7,631 | | Mainland China, Macau & Hong Kong | 149,497 | 30,947 | 148,948 | 31,995 | | North America | 63,963 | 13,241 | 94,386 | 20,274 | | Europe | 67,484 | 13,970 | 101,961 | 21,901 | | Other Countries | 7,903 | 1,636 | 11,606 | 2,493 | | **Total** | **343,788** | **70,029** | **405,044** | **86,743** | - Revenue in North America and Europe decreased by **32.2%** and **33.8%** year-on-year, respectively, with corresponding reductions in gross profit[91](index=91&type=chunk) [5. Revenue and Other Income and Gains](index=29&type=section&id=5.%20Revenue%20and%20Other%20Income%20and%20Gains) In the first half of 2020, the Group's total revenue was HKD 338,286 thousand, with automotive parts remaining the largest contributor; other income and gains significantly increased, primarily driven by higher bank interest income and net exchange differences Revenue and Other Income and Gains Analysis (For the six months ended June 30) | Item | 2020 (HKD Thousands) | 2019 (HKD Thousands) | | :--- | :--- | :--- | | **Revenue** | | | | Sales of Automotive Parts | 180,773 | 220,862 | | Sales of Hydraulic Equipment Parts | 88,833 | 118,329 | | Sales of HDD Parts | 49,439 | 46,930 | | Other | 19,241 | 17,710 | | **Total Revenue** | **338,286** | **403,831** | | **Other Income** | | | | Bank Interest Income | 6,935 | 3,980 | | Government Grants | 120 | 1,708 | | Reversal of Impairment Loss on Trade and Other Receivables | 257 | 2,123 | | Other | 1,715 | 894 | | **Gains** | | | | Gain on Disposal of Property, Plant and Equipment | 522 | 105 | | Gain on Disposal of Financial Assets | 1,369 | - | | Net Exchange Differences | 5,516 | - | | **Total Other Income and Gains** | **16,434** | **8,810** | - Bank interest income increased from **HKD 3,980 thousand** in 2019 to **HKD 6,935 thousand** in 2020[93](index=93&type=chunk) - A net exchange difference gain of **HKD 5,516 thousand** was recorded in the first half of 2020, with no such gain in the same period of 2019[93](index=93&type=chunk) [6. Finance Costs](index=29&type=section&id=6.%20Finance%20Costs) In the first half of 2020, the Group's finance costs significantly decreased by 45.4% year-on-year to HKD 4,387 thousand, primarily due to reduced interest on bank loans Finance Costs Analysis (For the six months ended June 30) | Item | 2020 (HKD Thousands) | 2019 (HKD Thousands) | | :--- | :--- | :--- | | Interest on Bank Loans | 3,496 | 6,937 | | Arrangement Fees | 853 | 1,069 | | Interest on Lease Liabilities | 38 | 26 | | **Total Finance Costs** | **4,387** | **8,032** | - Interest on bank loans decreased from **HKD 6,937 thousand** in the same period of 2019 to **HKD 3,496 thousand** in 2020[94](index=94&type=chunk) [7. Profit Before Tax](index=30&type=section&id=7.%20Profit%20Before%20Tax) In the first half of 2020, the Group's profit before tax was HKD 3,522 thousand, a significant decrease from the prior year, primarily influenced by cost of inventories sold, depreciation, share-based payment expenses, and net exchange differences Profit Before Tax Deductions/(Additions) (For the six months ended June 30) | Item | 2020 (HKD Thousands) | 2019 (HKD Thousands) | | :--- | :--- | :--- | | Cost of Inventories Sold | 268,257 | 317,088 | | Depreciation of Property, Plant and Equipment | 56,799 | 53,061 | | Depreciation of Right-of-use Assets | 1,234 | 1,494 | | Share-based Payment Expenses | 3,109 | - | | Auditor's Remuneration | 1,266 | 1,445 | | Net Exchange Differences | (5,516) | 3,276 | | Gain on Disposal of Property, Plant and Equipment | (522) | (105) | | Provision for Obsolete Inventories | - | 85 | | Reversal of Impairment Loss on Trade and Other Receivables | 257 | 2,123 | - New share-based payment expenses of **HKD 3,109 thousand** were incurred in the first half of 2020[95](index=95&type=chunk) - Net exchange differences turned from a loss of **HKD 3,276 thousand** in the same period of 2019 to a gain of **HKD 5,516 thousand** in the same period of 2020[95](index=95&type=chunk) [8. Income Tax](index=30&type=section&id=8.%20Income%20Tax) In the first half of 2020, the Group's income tax expense was HKD 1,336 thousand, largely consistent with the prior year, calculated primarily at Hong Kong profits tax rate of 16.5% and prevailing rates in other operating regions Income Tax Analysis (For the six months ended June 30) | Item | 2020 (HKD Thousands) | 2019 (HKD Thousands) | | :--- | :--- | :--- | | Current | 1,336 | 1,347 | | Deferred | - | - | | **Total Tax Expense for the Period** | **1,336** | **1,347** | - Hong Kong profits tax is provided at a rate of **16.5%**, and other regions are calculated at their respective prevailing tax rates[96](index=96&type=chunk) [9. Earnings Per Share](index=31&type=section&id=9.%20Earnings%20Per%20Share) For the six months ended June 30, 2020, the Group's basic and diluted earnings per share were both HKD 0.3 cents, a significant decrease from HKD 1.5 cents in the prior year, primarily due to reduced profit attributable to equity holders of the company Earnings Per Share Calculation (For the six months ended June 30) | Indicator | 2020 (HKD Thousands/Thousand Shares) | 2019 (HKD Thousands/Thousand Shares) | | :--- | :--- | :--- | | Profit Attributable to Equity Holders of the Company for Basic EPS Calculation | 2,645 | 15,870 | | Weighted Average Number of Ordinary Shares in Issue for Basic EPS Calculation | 1,052,254 | 1,052,254 | | **Basic Earnings Per Share** | **0.3 HKD cents** | **1.5 HKD cents** | | **Diluted Earnings Per Share** | **0.3 HKD cents** | **1.5 HKD cents** | [10. Property, Plant and Equipment](index=32&type=section&id=10.%20Property%2C%20Plant%20and%20Equipment) As of June 30, 2020, the Group's net book value of property, plant and equipment was HKD 605,820 thousand, a decrease from the beginning of the period, with additions of HKD 19,954 thousand, disposals of HKD 34,572 thousand, and impact from exchange adjustments - As of June 30, 2020, the net book value of property, plant and equipment was **HKD 605,820 thousand**[100](index=100&type=chunk) - Additions during the period amounted to **HKD 19,954 thousand**, disposals to **HKD 34,572 thousand**, and exchange adjustments resulted in a cost reduction of **HKD 55,616 thousand**[100](index=100&type=chunk) - Depreciation provision for the period was **HKD 56,799 thousand**[100](index=100&type=chunk) [11. Inventories](index=33&type=section&id=11.%20Inventories) As of June 30, 2020, the Group's total inventories amounted to HKD 238,162 thousand, a slight decrease from the end of 2019, with finished goods and raw materials being the main components Inventory Composition (As of June 30) | Item | 2020 (HKD Thousands) | 2019 (HKD Thousands) | | :--- | :--- | :--- | | Raw Materials | 64,158 | 64,476 | | Consumables | 46,264 | 48,131 | | Work-in-progress | 64,729 | 64,002 | | Finished Goods | 112,415 | 125,945 | | Less: Provision for Obsolete Inventories | (49,404) | (59,074) | | **Total Inventories** | **238,162** | **243,480** | - Provision for obsolete inventories decreased from **HKD 59,074 thousand** at the end of 2019 to **HKD 49,404 thousand** as of June 30, 2020[101](index=101&type=chunk) [12. Trade Receivables](index=33&type=section&id=12.%20Trade%20Receivables) As of June 30, 2020, the Group's net trade receivables were HKD 192,376 thousand, a decrease from the end of 2019; credit terms generally range from 60 to 120 days, and the Group maintains strict control over overdue balances Trade Receivables Ageing Analysis (As of June 30) | Ageing | 2020 (HKD Thousands) | 2019 (HKD Thousands) | | :--- | :--- | :--- | | Within 1 month | 63,569 | 90,894 | | 1 to 2 months | 50,126 | 59,098 | | 2 to 3 months | 43,114 | 41,868 | | 3 to 4 months | 28,192 | 24,531 | | 4 to 12 months | 7,645 | 13,216 | | Over 1 year | 298 | 467 | | Less: Impairment | (568) | (825) | | **Total Trade Receivables** | **192,376** | **229,249** | - Impairment provision for trade receivables decreased from **HKD 825 thousand** at the end of 2019 to **HKD 568 thousand** as of June 30, 2020[103](index=103&type=chunk) [13. Cash and Bank Balances](index=34&type=section&id=13.%20Cash%20and%20Bank%20Balances) As of June 30, 2020, the Group's cash and bank balances were HKD 855,569 thousand, a slight increase from the end of 2019, with unpledged time deposits accounting for HKD 141,549 thousand Cash and Bank Balances Analysis (As of June 30) | Item | 2020 (HKD Thousands) | 2019 (HKD Thousands) | | :--- | :--- | :--- | | Cash and Bank Balances | 714,020 | 602,607 | | Unpledged Time Deposits with Original Maturity within Three Months at Acquisition | 141,549 | 244,486 | | **Cash and Cash Equivalents** | **855,569** | **847,093** | [14. Trade Payables](index=34&type=section&id=14.%20Trade%20Payables) As of December 31, 2019, the Group's total trade payables amounted to HKD 65,848 thousand, primarily comprising amounts due within one month, generally repayable within 30 to 90 days Trade Payables Ageing Analysis (As of December 31, 2019) | Ageing | Amount (HKD Thousands) | | :--- | :--- | | Within 1 month | 38,402 | | 1 to 2 months | 14,142 | | 2 to 3 months | 12,498 | | Over 3 months | 806 | | **Total Trade Payables** | **65,848** | - Trade payables are non-interest bearing and generally repayable within **30 to 90 days**[105](index=105&type=chunk) [15. Share Capital](index=35&type=section&id=15.%20Share%20Capital) As of June 30, 2020, the company's authorized share capital was HKD 200,000 thousand, with issued and fully paid share capital of HKD 105,225 thousand, remaining unchanged during the period Share Capital Composition (As of June 30) | Item | 2020 (HKD Thousands) | 2019 (HKD Thousands) | | :--- | :--- | :--- | | Authorized Share Capital (2,000,000,000 shares of HKD 0.1 each) | 200,000 | 200,000 | | Issued and Fully Paid Share Capital (1,052,254,135 shares of HKD 0.1 each) | 105,225 | 105,225 | - There was no change in the issued and fully paid share capital for the six months ended June 30, 2020, and for the year ended December 31, 2019[106](index=106&type=chunk) [16. Bank Loans](index=35&type=section&id=16.%20Bank%20Loans) As of June 30, 2020, the Group's total bank loans were HKD 231,448 thousand, a decrease from the end of 2019; all loans are unsecured and guaranteed by the company and certain subsidiaries, with the Group complying with all financial covenants Bank Loan Repayment Terms (As of June 30) | Term | 2020 (HKD Thousands) | 2019 (HKD Thousands) | | :--- | :--- | :--- | | Within 1 year or on demand | 53,668 | 53,769 | | After 1 year but within 2 years | 177,780 | 204,697 | | **Total Bank Loans** | **231,448** | **258,466** | - All bank loans are unsecured and guaranteed by the company and certain of its subsidiaries[107](index=107&type=chunk) - As of June 30, 2020, the Group had not breached any covenants related to drawing down financing[107](index=107&type=chunk) [17. Commitments](index=36&type=section&id=17.%20Commitments) As of June 30, 2020, the Group's total contracted but unprovided capital commitments amounted to HKD 4,191 thousand, primarily for buildings, plant, and machinery Capital Commitments (As of June 30) | Item | 2020 (HKD Thousands) | 2019 (HKD Thousands) | | :--- | :--- | :--- | | Buildings | 857 | 992 | | Plant and Machinery | 3,334 | 2,915 | | **Total** | **4,191** | **3,907** | [18. Related Party Transactions](index=36&type=section&id=18.%20Related%20Party%20Transactions) In the first half of 2020, the Group's total remuneration paid to key management personnel was HKD 6,735 thousand, a decrease from the prior year, but with new share-based payment expenses for share options Total Remuneration Paid to Key Management Personnel (For the six months ended June 30) | Item | 2020 (HKD Thousands) | 2019 (HKD Thousands) | | :--- | :--- | :--- | | Short-term Employee Benefits | 4,180 | 6,967 | | Share-based Payment Expenses | 2,519 | - | | Post-employment Benefits | 36 | 30 | | Long Service Payments | - | 390 | | **Total Remuneration** | **6,735** | **7,387** | - New share-based payment expenses of **HKD 2,519 thousand** were incurred in the first half of 2020[109](index=109&type=chunk) [19. Approval of Financial Statements](index=36&type=section&id=19.%20Approval%20of%20Financial%20Statements) The condensed financial statements were approved and authorized for issue by the Board of Directors on August 24, 2020 - The condensed financial statements were approved and authorized for issue by the Board of Directors on **August 24, 2020**[110](index=110&type=chunk) Other Information [Directors' and Chief Executive's Interests and Short Positions in Shares and Underlying Shares](index=37&type=section&id=Directors%27%20and%20Chief%20Executive%27s%20Interests%20and%20Short%20Positions%20in%20Shares%20and%20Underlying%20Shares) As of June 30, 2020, several directors held share options in the company, with Mr. Zeng Guang Sheng holding 42,000,000 options; additionally, Mr. Zeng Guang Sheng and Ms. Zeng Jing held ordinary shares in China Baoan Group, the company's controlling shareholder Directors' Long Positions in Underlying Shares of the Company (Share Options) | Director Name | Number of Underlying Shares Involved in Share Options Granted | Percentage of Company's Issued Share Capital | | :--- | :--- | :--- | | Mr. Zeng Guang Sheng | 42,000,000 | 3.99% | | Mr. Wu Kai Ping | 20,000,000 | 1.90% | | Ms. Zeng Jing | 13,000,000 | 1.24% | | Mr. Chen Kuang Guo | 5,000,000 | 0.48% | Directors' Long Positions in Ordinary Shares of Associated Corporations (China Baoan Group) | Director Name | Number of Ordinary Shares in China Baoan Group | Percentage of China Baoan Group's Issued Share Capital | | :--- | :--- | :--- | | Mr. Zeng Guang Sheng | 672,906 | 0.03% | | Ms. Zeng Jing | 10,222,583 | 0.40% | [Substantial Shareholders' and Other Persons' Interests and Short Positions in Shares and Underlying Shares](index=39&type=section&id=Substantial%20Shareholders%27%20and%20Other%20Persons%27%20Interests%20and%20Short%20Positions%20in%20Shares%20and%20Underlying%20Shares) As of June 30, 2020, Baoan Technology Co., Ltd. (wholly-owned by China Baoan Group) was the company's largest shareholder, holding 53.63% of shares; Tottenhill Limited and its associates, Mr. Cui Shaoan and Ms. Liang Yongyi, collectively held 17.36% of shares Substantial Shareholders' Long Positions in Ordinary Shares of the Company (As of June 30, 2020) | Name of Substantial Shareholder | Number of Ordinary Shares in the Company | Percentage of Company's Issued Share Capital | | :--- | :--- | :--- | | Baoan Technology Co., Ltd. | 564,321,250 | 53.63% | | China Baoan Group Co., Ltd. | 564,321,250 | 53.63% | | Tottenhill Limited | 167,966,975 | 15.96% | | Mr. Cui Shaoan (Total) | 182,668,225 | 17.36% | | Ms. Liang Yongyi (Total) | 182,668,225 | 17.36% | - Baoan Technology Co., Ltd. is wholly-owned by China Baoan Group Co., Ltd., thus China Baoan Group Co., Ltd. is deemed to have the same share interest[116](index=116&type=chunk) - Mr. Cui Shaoan holds shares through Tottenhill Limited, which he wholly owns, and through his spouse, Ms. Liang Yongyi[116](index=116&type=chunk) [Share Option Scheme](index=40&type=section&id=Share%20Option%20Scheme) The company has a share option scheme to reward contributors; as of June 30, 2020, a total of 94,300,000 share options remained unexercised, with 54,300,000 granted on April 3, 2020, at an exercise price of HKD 0.9 per share - The share option scheme aims to provide incentives and rewards to eligible participants who have contributed to the Group's business[119](index=119&type=chunk) Changes in Outstanding Share Options During the Period (As of June 30, 2020) | Participant | As of Jan 1, 2020 | Granted During Period | As of June 30, 2020 | Date of Grant | Exercise Price (HKD per share) | | :--- | :--- | :--- | :--- | :--- | :--- | | Directors (Subtotal) | 40,000,000 | 40,000,000 | 80,000,000 | 05/06/2017, 03/04/2020 | 2.0200, 0.9000 | | Employees Total | - | 12,300,000 | 12,300,000 | 03/04/2020 | 0.9000 | | One Supplier | - | 2,000,000 | 2,000,000 | 03/04/2020 | 0.9000 | | **Total** | **40,000,000** | **54,300,000** | **94,300,000** | | | - The fair value of share options granted on April 3, 2020, was approximately **HKD 11,000,000**, with an exercise price of **HKD 0.9 per share**[120](index=120&type=chunk) [Purchase, Redemption or Sale of the Company's Listed Securities](index=41&type=section&id=Purchase%2C%20Redemption%20or%20Sale%20of%20the%20Company%27s%20Listed%20Securities) For the six months ended June 30, 2020, neither the company nor any of its subsidiaries purchased, redeemed, or sold any of the company's listed securities - For the six months ended June 30, 2020, neither the company nor any of its subsidiaries purchased, redeemed, or sold any of the company's listed securities[123](index=123&type=chunk) [Interim Dividend](index=41&type=section&id=Interim%20Dividend) The Board of Directors does not recommend the payment of any interim dividend for the six months ended June 30, 2020 - The Board of Directors does not recommend the payment of any interim dividend for the six months ended June 30, 2020 (for the six months ended June 30, 2019: nil)[124](index=124&type=chunk) [Corporate Governance](index=41&type=section&id=Corporate%20Governance) The company is committed to maintaining high standards of corporate governance and complies with the Corporate Governance Code in Appendix 14 of the Listing Rules, with the exception that Mr. Zeng Guang Sheng holds both Chairman and Chief Executive Officer roles, an arrangement the Board believes provides strong and consistent leadership for the Group - The company has complied with the code provisions of the Corporate Governance Code set out in Appendix 14 of the Listing Rules during the review period[125](index=125&type=chunk) - The roles of Chairman and Chief Executive Officer are held by Mr. Zeng Guang Sheng, an arrangement the Board believes is beneficial to the company's shareholders as a whole, providing strong and consistent leadership[125](index=125&type=chunk) [Audit Committee](index=41&type=section&id=Audit%20Committee) The company's Audit Committee, composed of four independent non-executive directors, is responsible for reviewing accounting principles, risk management, internal controls, and financial reporting procedures, and has reviewed the interim results - The Audit Committee comprises four independent non-executive directors: Mr. Yang Ru Sheng (Chairman), Mr. Zhang Zhen Yu, Mr. Mei Wai Yick, and Mr. Xu Bing[126](index=126&type=chunk) - The Committee has reviewed the accounting principles and practices adopted by the Group, discussed matters related to risk management, internal controls, and financial reporting procedures, and will review the Group's interim results for the six months ended June 30, 2020[126](index=126&type=chunk) [Model Code](index=41&type=section&id=Model%20Code) The company has adopted a code of conduct for directors' securities transactions no less exacting than the Model Code set out in Appendix 10 of the Listing Rules, and confirms that directors have complied with this code - The company has adopted its own code of conduct for directors' securities transactions, the terms of which are no less exacting than the Model Code set out in Appendix 10 of the Listing Rules[127](index=127&type=chunk) - Following specific enquiries made to all directors, they all confirmed that they have complied with their own code and the Model Code[127](index=127&type=chunk) [Compliance with Written Guidelines for Securities Transactions by Relevant Employees](index=41&type=section&id=Compliance%20with%20Written%20Guidelines%20for%20Securities%20Transactions%20by%20Relevant%20Employees) The company has established written guidelines for securities transactions by employees who may possess inside information, and confirms no instances of non-compliance by relevant employees during the period - The company has established written guidelines for securities transactions by employees who may possess inside information regarding the company or its securities, with terms no less exacting than the Model Code set out in Appendix 10 of the Listing Rules[128](index=128&type=chunk) - For the six months ended June 30, 2020, the company was not aware of any instances of non-compliance with the written guidelines by relevant employees[128](index=128&type=chunk) [Update on Directors' Information under Rule 13.51B(1) of the Listing Rules](index=42&type=section&id=Update%20on%20Directors%27%20Information%20under%20Rule%2013.51B(1)%20of%20the%20Listing%20Rules) This note updates the latest appointments of Independent Non-executive Director Mr. Mei Wai Yick, including his resignation as CEO and Executive Committee member of China Shandong Hi-Speed Financial Group Limited, and his appointment as Deputy CEO of China Life Franklin Asset Management Company Limited - Independent Non-executive Director Mr. Mei Wai Yick resigned as Chief Executive Officer and Executive Committee member of China Shandong Hi-Speed Financial Group Limited on **January 14, 2020**[130](index=130&type=chunk) - Effective **July 2020**, Mr. Mei was appointed as Deputy Chief Executive Officer of China Life Franklin Asset Management Company Limited[130](index=130&type=chunk) [General Disclosure Made under Rule 13.21 of the Listing Rules](index=42&type=section&id=General%20Disclosure%20Made%20under%20Rule%2013.21%20of%20the%20Listing%20Rules) The Group disclosed a HKD 275 million term loan facility agreement containing specific performance covenants related to its controlling shareholder, China Baoan Group, requiring it to remain the single largest ultimate beneficial owner and hold no less than 50.1% equity interest or control, non-compliance of which could constitute an event of default - The Group entered into a **HKD 275,000,000** term loan facility agreement for refinancing and general corporate purposes; as of June 30, 2020, the outstanding loan facility was **HKD 234,000,000**[131](index=131&type=chunk) - The facility agreement stipulates that if the company fails to ensure that China Baoan Group Co., Ltd. (1) remains the single largest ultimate beneficial owner of the company; (2) directly or indirectly beneficially holds no less than **50.1%** equity interest in the company; or (3) controls the company, it may constitute an event of default[132](index=132&type=chunk) [Acknowledgement](index=42&type=section&id=Acknowledgement) The Board of Directors expresses gratitude for the continuous support from shareholders and the contributions of all directors and staff to the Group - The Board of Directors expresses gratitude for the continuous support from shareholders and the contributions of all directors and staff to the Group[133](index=133&type=chunk)

[Company Information](index=3&type=section&id=Company%20Information) This section provides essential administrative and contact information, including board members, committee structures, registered office, key operating locations (Hong Kong, China, Thailand), principal bankers, and auditor details - The Board of Directors comprises executive, non-executive, and independent non-executive directors, with established audit, remuneration, nomination, and environmental, social, and governance committees[4](index=4&type=chunk) - The company's auditor is KPMG[16](index=16&type=chunk) - The company's shares are listed on the Main Board of The Stock Exchange of Hong Kong Limited under stock code 929[23](index=23&type=chunk) [Company Profile](index=5&type=section&id=Company%20Profile) International Precision Group Limited, incorporated in the Cayman Islands in 2002, operates as an investment holding company with subsidiaries primarily engaged in manufacturing and selling precision metal parts for automotive, hydraulic, HDD, and electronics industries, serving top-tier multinational clients - The company was incorporated in the Cayman Islands on July 10, 2002, with its principal business being the manufacturing and sale of precision metal parts[25](index=25&type=chunk) - Products are applied in automotive parts, hydraulic equipment, hard disk drives (HDD), electronics, and other instruments[25](index=25&type=chunk) - Clients are primarily top-tier multinational corporations in the IT, hydraulic power, automotive, and electrical appliance industries, demanding high precision for metal parts[25](index=25&type=chunk) [Company Milestones](index=6&type=section&id=Company%20Milestones) The company's milestones highlight its development since 1990 in business expansion, technological innovation, and industry certifications, including establishing operations in Singapore, Thailand, and China, listing on the HKEX in 2004, developing proprietary robotic arms, achieving IATF16949 certification, and securing council member status in the China Robot Industry Alliance with a strategic partnership with Zhejiang University - Precision parts business commenced in Singapore in 1990, with subsidiaries progressively established in Thailand and China[27](index=27&type=chunk) - Listed on the Main Board of The Stock Exchange of Hong Kong Limited on November 1, 2004[27](index=27&type=chunk) - Successfully developed proprietary robotic arms in 2015 and obtained IATF16949 automotive certification in 2017-2018[27](index=27&type=chunk) - Appointed as a council member of the China Robot Industry Alliance and the first council member of the Guangdong Robot Association in 2019, also signing a strategic cooperation agreement with Zhejiang University South China Industrial Technology Research Institute[27](index=27&type=chunk) [Group Structure](index=7&type=section&id=Group%20Structure) The group structure chart illustrates the complex hierarchy of the company and its principal subsidiaries and associates as of December 30, 2019, with the Cayman Islands-based investment holding company controlling manufacturing, sales, and technology development entities in China (Guangzhou, Shenzhen, Dongguan, Jiangsu) and Thailand through various BVI and Hong Kong investment holding companies, covering precision metal parts manufacturing, surface treatment, intelligent manufacturing, and robotics manufacturing - International Precision Group Limited (Cayman Islands) is an investment holding company with multiple BVI and Hong Kong investment holding subsidiaries[29](index=29&type=chunk)[30](index=30&type=chunk)[33](index=33&type=chunk) - Key operating entities are located in China (Guangzhou Xinhao Precision Technology, Dongguan Keda Hardware Products, Jiangsu Keda Precision Machinery Equipment, Shenzhen Intelligent Manufacturing Technology, etc.) and Thailand (Integrated Precision Engineering (Thailand) Company Limited), engaged in manufacturing, sales, and technology development[30](index=30&type=chunk)[33](index=33&type=chunk) - The Group's business encompasses diversified areas such as precision metal parts manufacturing, sales offices, technology development offices, surface treatment, and robotics manufacturing[30](index=30&type=chunk)[33](index=33&type=chunk) [Financial Highlights](index=9&type=section&id=Financial%20Highlights) In FY2019, the Group faced severe challenges, with revenue decreasing by 13.9% to HK$812 million and gross profit significantly declining by 37.8% to HK$181 million, resulting in a 51.3% year-on-year decrease in profit for the year to HK$41.11 million; despite profit pressure, the current ratio improved to 7.93 and net cash to equity ratio increased to 0.34, indicating enhanced liquidity, with Mainland China, Macau, and Hong Kong contributing the largest share of regional revenue at 39% 2019 Key Financial Data (Consolidated Statement) | Indicator | 2019 (HK$ thousand) | 2018 (HK$ thousand) | Change (HK$ thousand) | Change (%) | | :--- | :--- | :--- | :--- | :--- | | Revenue | 812,177 | 943,476 | (131,299) | -13.9% | | Cost of sales | (631,249) | (652,687) | 21,438 | -3.3% | | Gross profit | 180,928 | 290,789 | (109,861) | -37.8% | | Other income | 19,913 | 8,557 | 11,356 | 132.7% | | Distribution costs | (15,959) | (26,535) | 10,576 | -39.9% | | Administrative and other expenses | (123,524) | (152,887) | 29,363 | -19.2% | | Finance costs | (14,430) | (18,471) | 4,041 | -21.9% | | Share of loss of associates | 1,650 | (1,271) | 2,921 | N/A | | Profit before tax | 48,578 | 100,182 | (51,604) | -51.5% | | Income tax | (7,467) | (15,720) | 8,253 | -52.5% | | Profit for the year | 41,111 | 84,462 | (43,351) | -51.3% | | Attributable to equity holders of the Company | 40,345 | 85,328 | (44,983) | -52.7% | | Earnings per share – Basic | 3.83 HK cents | 8.11 HK cents | (4.28) HK cents | -52.8% | 2019 Key Financial Ratios | Indicator | 2019 | 2018 | | :--- | :--- | :--- | | Current ratio | 7.93 | 2.59 | | Net cash to equity ratio | 0.34 | 0.24 | | Gearing ratio | 15.1% | 25.8% | | Gross profit margin | 22.3% | 30.8% | | Net profit margin | 5.1% | 9.0% | | Net asset value per share (HK$) | 1.63 | 1.61 | | Dividend per share (HK cents) | 0.50 | 0.90 | 2019 Regional Revenue Breakdown | Region | Percentage | | :--- | :--- | | Mainland China, Macau and Hong Kong | 39% | | North America | 23% | | Europe | 23% | | Malaysia | 9% | | Thailand | 4% | | Others | 2% | - As of December 31, 2019, cash and cash equivalents amounted to **HK$847 million**, total debt was **HK$258 million**, and total equity was **HK$1.716 billion**, indicating an improved net cash to equity ratio[47](index=47&type=chunk) [Chairman's Report](index=13&type=section&id=Chairman's%20Report) The Chairman's Report reviews the challenging operating environment in 2019, including a sharp decline in HDD business, a sluggish global automotive market, and the impact of US-China trade friction, leading to a significant drop in overall turnover and gross profit; in response, the Group implemented various measures such as relocating production lines to Thailand to mitigate tariffs, expanding into the 3C market, developing new domestic clients, optimizing procurement, improving production processes and automation, and strengthening industry-academia collaboration, with future strategies focusing on "promoting transformation, preventing risks, and enhancing efficiency" through sales growth, cost control, and talent development 2019 Turnover by Business Segment (vs. 2018) | Business Segment | 2019 (HK$ thousand) | 2018 (HK$ thousand) | Change % | | :--- | :--- | :--- | :--- | | Automotive Parts | 449,302 | 465,070 | -3.4% | | Hydraulic Equipment Parts | 228,038 | 263,476 | -13.5% | | HDD Parts | 92,452 | 165,964 | -44.3% | | Others | 42,385 | 48,966 | -13.4% | | **Total** | **812,177** | **943,476** | **-13.9%** | - HDD parts turnover declined by **44.3%** year-on-year, and US-China trade friction led to a **20.0%** decrease in sales to US customers[50](index=50&type=chunk)[51](index=51&type=chunk) - Gross profit decreased by **37.8%** year-on-year to **HK$181 million**, primarily due to declining orders and underutilized production capacity[52](index=52&type=chunk) - Proactive measures were taken: relocating some product lines to Thailand to avoid tariffs; reallocating idle resources to target the 3C market; developing new domestic clients (e.g., Hengli Hydraulic); and expanding new suppliers to reduce costs and enhance supply chain flexibility[54](index=54&type=chunk) - Strengthened industry-academia collaboration with Tsinghua University, Zhejiang University, and South China University of Technology to develop harmonic reducers, hydraulic technology, and industrial automation equipment[56](index=56&type=chunk) - Established an internal audit department to enhance cost control and actively applied for government support policies and tariff exemptions[56](index=56&type=chunk) - Future operating strategies will continue to focus on "promoting transformation, preventing risks, and enhancing efficiency," prioritizing sales growth, strengthening cost control, optimizing financial analysis and auditing, and continuously enhancing talent development[59](index=59&type=chunk)[60](index=60&type=chunk) [Management Discussion and Analysis](index=16&type=section&id=Management%20Discussion%20and%20Analysis) Management discussion and analysis details the 2019 financial performance, with turnover decreasing by 13.9% due to a sharp decline in HDD parts orders and gross profit margin significantly falling due to unachieved economies of scale; however, other income substantially increased from bank interest, government grants, and accounts receivable reversals, while the Group effectively controlled selling and distribution expenses, administrative expenses, and finance costs; liquidity improved with increased net cash inflow from operating activities, reduced capital expenditure, and a significant decrease in total bank borrowings, leading to a substantial increase in net cash and a more robust financial position; human resources focused on employee safety, welfare, and talent development - 2019 turnover was **HK$812 million**, a **13.9%** year-on-year decrease, primarily impacted by the sharp decline in HDD parts orders[64](index=64&type=chunk) - Gross profit margin decreased from **30.8%** in 2018 to **22.3%** in 2019, with gross profit declining by **37.8%** year-on-year[64](index=64&type=chunk) - Other income increased to **HK$19.913 million** (2018: HK$8.557 million), mainly due to increased bank interest income (**HK$4.74 million**), government grants (**HK$3.361 million**), and accounts receivable reversals (**HK$2.079 million**)[64](index=64&type=chunk) - Selling and distribution expenses decreased by **39.9%**, primarily due to a **HK$7.027 million** refund of US import tariffs on parts[65](index=65&type=chunk) - Administrative and other expenses saved **19.2%**, mainly due to reduced share option amortization, salaries, and directors' emoluments, but offset by an increase in exchange losses of **HK$13.016 million**[67](index=67&type=chunk) - Finance costs decreased by **21.8%** to **HK$14.43 million**, attributed to reduced financing amounts and lower borrowing interest rates[67](index=67&type=chunk) - Net cash inflow from operating activities was **HK$229 million** (2018: HK$180 million), and net cash outflow from investing activities significantly decreased by **HK$79.27 million**[69](index=69&type=chunk) - Total bank borrowings decreased by **HK$178 million** to **HK$258 million**, and net cash increased by **HK$185 million** to **HK$589 million**, enhancing the Group's financial resilience in adverse conditions[70](index=70&type=chunk) - The total number of employees decreased by **140** (**5.9%**) to **2,229** in 2019, with the Group continuously strengthening employee safety awareness, recreational activities, and team building, while collaborating with universities to cultivate talent[73](index=73&type=chunk) [Directors and Senior Management](index=19&type=section&id=Directors%20and%20Senior%20Management) This section details the biographies of the Group's Board members, including executive, non-executive, and independent non-executive directors, and senior management; Board members possess extensive professional backgrounds and management experience in economics, finance, accounting, and mechanical engineering, with independent non-executive directors having deep expertise in their respective fields, while senior management brings years of experience in marketing, manufacturing, and financial management, collectively supporting the Group's operations and strategic development - Executive Directors include Mr. Zeng Guangsheng (Chairman and CEO, Doctor of Economics) and Mr. Wu Kaiping (responsible for financial management, Master of Economics, MBA)[75](index=75&type=chunk)[76](index=76&type=chunk) - Non-Executive Directors include Ms. Zeng Jing (Financial Controller of Asset Management at China Baoan Group) and Mr. Chen Kuangguo (Executive Deputy General Manager of Financial Investment Department at China Baoan Group)[77](index=77&type=chunk) - Independent Non-Executive Directors include Mr. Yang Rusheng (Chairman of the Audit Committee, Certified Public Accountant, Tax Agent), Mr. Zhang Zhenyu (Chairman of the Remuneration Committee, Senior Accountant of CPA Australia, ESG Analyst), Mr. Mei Weiyi (MBA, investment management experience), and Mr. Xu Bing (Doctor of Mechanical Engineering, Professor at Zhejiang University, Director of State Key Laboratory of Fluid Power and Mechatronic Systems)[79](index=79&type=chunk)[80](index=80&type=chunk)[82](index=82&type=chunk)[83](index=83&type=chunk) - Senior management includes Mr. He Ruhai and Mr. Liu Zhaocong (Vice Presidents of Marketing), Mr. Jiang Fei (Deputy General Manager, Head of Heat Treatment Department), and Mr. Tam Yiu Chung (Chief Financial Officer and Company Secretary)[85](index=85&type=chunk)[86](index=86&type=chunk) [Corporate Governance Report](index=23&type=section&id=Corporate%20Governance%20Report) The Corporate Governance Report outlines the company's commitment to good corporate governance and its compliance with the HKEX Corporate Governance Code, noting a deviation where the Chairman and CEO roles are combined, which the Board believes provides strong and consistent leadership; the report details the Board's responsibilities, composition, director training, securities dealing code, and the terms of reference and 2019 work of the Executive, Remuneration, Audit, Nomination, and Environmental, Social and Governance Committees, also emphasizing directors' responsibilities for financial reporting, risk management, internal controls, and communication policies with shareholders and investors - The company complies with the Corporate Governance Code, though the roles of Chairman and Chief Executive Officer are combined under Mr. Zeng Guangsheng, which the Board believes provides strong and consistent leadership[89](index=89&type=chunk)[96](index=96&type=chunk) - The Board of Directors comprises two executive directors, two non-executive directors, and four independent non-executive directors, meeting the Listing Rules' requirement for independent non-executive directors[93](index=93&type=chunk)[94](index=94&type=chunk) - Executive, Remuneration, Audit, Nomination, and Environmental, Social and Governance Committees are established, each with written terms of reference[93](index=93&type=chunk)[110](index=110&type=chunk) - The Remuneration Committee reviewed the remuneration policy in 2019 and made recommendations on the remuneration of newly appointed directors[113](index=113&type=chunk) - The Audit Committee reviewed annual and interim financial results, the scope of audit work, and assessed the effectiveness of risk management and internal control systems in 2019[117](index=117&type=chunk) - The Nomination Committee reviewed the Board structure, assessed the independence of independent non-executive directors, and made recommendations for new director appointments in 2019, emphasizing Board diversity[124](index=124&type=chunk) - The Environmental, Social and Governance Committee was established on November 25, 2019, to strengthen the Group's risk management and fulfillment of social responsibilities[126](index=126&type=chunk) - The Board confirmed it has reviewed the effectiveness of the Group's risk management and internal control systems and considers them effective and adequate[133](index=133&type=chunk) - In 2019, audit service fees paid to external auditor KPMG amounted to **HK$1.8 million**, and non-audit service fees were **HK$0.733 million**[136](index=136&type=chunk) - The company has a shareholder communication policy and a dividend policy, providing shareholders with the right to convene extraordinary general meetings and propose resolutions[141](index=141&type=chunk)[143](index=143&type=chunk) [Environmental, Social and Governance Report](index=37&type=section&id=Environmental%2C%20Social%20and%20Governance%20Report) This report, the Group's fourth ESG report, covers the 2019 ESG performance of its main operating locations in Guangzhou, Dongguan, China, and Bangkok, Thailand, emphasizing the Group's commitment to sustainable development and the establishment of an ESG Committee for systematic risk management; environmentally, the Group strictly complies with regulations, reducing total greenhouse gas emissions by 8% in 2019 and implementing various energy and water-saving measures; socially, the Group adheres to labor laws, prioritizes employee welfare, health and safety, development training, and actively engages in community investment, while also establishing robust policies and practices for supply chain management, product responsibility, data protection, intellectual property, and anti-corruption [Scope and Reporting Period](index=37&type=section&id=Scope%20and%20Reporting%20Period) This is the fourth Environmental, Social and Governance (ESG) report for International Precision Group Limited, covering the environmental and social performance of the Group's main operating locations in Guangzhou, Dongguan, China, and Bangkok, Thailand, from January 1 to December 31, 2019, which collectively account for over 90% of the Group's total revenue - This is the Group's fourth ESG report, covering the period from January 1 to December 31, 2019[147](index=147&type=chunk) - The report's scope includes manufacturing and sales offices in Guangzhou, Dongguan, China, and Bangkok, Thailand, accounting for over **90%** of the Group's total revenue[147](index=147&type=chunk) [Stakeholder Engagement and Materiality](index=37&type=section&id=Stakeholder%20Engagement%20and%20Materiality) The Group maintains close communication with key stakeholders, including Board members, management, employees, customers, and suppliers, through daily interactions to understand their needs and concerns; the 2019 stakeholder survey identified product and service quality, data protection, customer service, anti-corruption, and occupational health and safety as the most material social issues, with suggestions including establishing an ESG committee, extending lunch breaks, implementing stricter supplier evaluations, addressing excessive employee working hours, optimizing logistics efficiency, and implementing waste recycling - The Group maintains continuous communication with key stakeholders, including Board members, managers, supervisors, frontline employees, customers, and suppliers[148](index=148&type=chunk) - The 2019 stakeholder survey confirmed that the most material issues are concentrated in social aspects, including product and service quality, data protection, customer service, anti-corruption, and occupational health and safety[148](index=148&type=chunk) - Stakeholder suggestions included establishing a Sustainability and ESG Committee, extending lunch breaks, implementing stricter evaluation procedures for key suppliers, addressing excessive employee working hours, optimizing logistics efficiency, and implementing waste recycling[151](index=151&type=chunk)[152](index=152&type=chunk)[153](index=153&type=chunk) [The Group's Sustainability Mission and Vision](index=39&type=section&id=The%20Group's%20Sustainability%20Mission%20and%20Vision) The Group is committed to achieving an optimal balance between maximum profit, responsibility, and satisfaction for stakeholders, encouraging waste reduction and energy and water conservation; in 2019, a formal Environmental, Social and Governance Committee was successfully established to identify ESG risks, implement policies, and track performance; the Group continuously pursues management excellence, obtaining multiple system certifications (e.g., IATF16949, AS9100, ISO9001, ISO14001), and gaining community recognition for R&D and technological advancements, including appointment as a council member of the China Robot Industry Alliance and hosting the "International Precision Quality Month" - The Group is committed to achieving the overall best balance between maximum profit, responsibility, and satisfaction for stakeholders, and encourages waste reduction, electricity, and water conservation[161](index=161&type=chunk) - In 2019, a formal Environmental, Social and Governance Committee was successfully established, responsible for identifying ESG risks, implementing policies, and tracking performance[161](index=161&type

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Corporate Information [Board of Directors](index=3&type=section&id=Board%20of%20Directors) The Board comprises executive, non-executive, and independent directors, with established Audit, Remuneration, and Nomination Committees - The Board of Directors includes Executive Directors Mr Cheung Chun Yue, Mr Zeng Guangsheng (Chairman and CEO), Mr Mui Wai Yat, Mr Wu Kai Ping; Non-executive Director Ms Zeng Jing; and Independent Non-executive Directors Mr Yeung Jue Sheng, Mr Cheung Chun Yue, Mr Mui Wai Yat[4](index=4&type=chunk) - The Audit Committee is chaired by Mr Yeung Jue Sheng, the Remuneration Committee by Mr Cheung Chun Yue, and the Nomination Committee by Mr Zeng Guangsheng[4](index=4&type=chunk) [Registered Office and Principal Places of Business](index=4&type=section&id=Registered%20Office%20and%20Principal%20Places%20of%20Business) The company is registered in the Cayman Islands with principal business locations in Hong Kong, Guangdong China, and Thailand - The company's registered office is in the Cayman Islands, with principal places of business in Kowloon Bay, Hong Kong; Zengcheng District, Guangzhou, China; and Ayutthaya, Thailand[6](index=6&type=chunk)[12](index=12&type=chunk)[16](index=16&type=chunk)[20](index=20&type=chunk) - The auditor is KPMG, and the Hong Kong branch share registrar is Tricor Investor Services Limited[20](index=20&type=chunk) - The company's stock code is 929, listed on the Main Board of The Stock Exchange of Hong Kong Limited[20](index=20&type=chunk) Corporate Profile [Business and Customers](index=5&type=section&id=Business%20and%20Customers) The Group manufactures and sells precision metal parts for automotive, hydraulic, HDD, and electronics industries, serving top multinational clients - The Group began its precision parts business in Singapore in 1990 and was incorporated in the Cayman Islands as an investment holding company in 2002[23](index=23&type=chunk) - It primarily manufactures precision metal parts and assembled components for automotive parts, hydraulic equipment, hard disk drives (HDD), electronics, and other instruments[23](index=23&type=chunk) - Customers are mainly top-tier multinational corporations in the IT, hydraulic power, automotive, and electrical appliance industries with stringent precision requirements[23](index=23&type=chunk) Corporate Milestones [Key Development History](index=6&type=section&id=Key%20Development%20History) The company has expanded geographically, gone public, and obtained multiple key industry certifications since its establishment in 1990 - Established IPE (Singapore) in 1990, followed by IPE (Hong Kong) and Dongguan Koda in Guangdong, China in 1994[27](index=27&type=chunk) - Listed on the Main Board of The Stock Exchange of Hong Kong Limited on November 1, 2004[27](index=27&type=chunk) - Obtained key industry certifications including AS9100 (aerospace) and TS16949 (automotive) in 2010, IATF16949 (automotive) in 2017, and further IATF16949 certifications in 2018[27](index=27&type=chunk) - Successfully developed its own brand of robotic arms in 2015 and was recognized as a High-tech Enterprise in 2018, signing a strategic cooperation agreement with Zhejiang University's South China Institute of Industrial Technology[27](index=27&type=chunk) Corporate Structure [Group Organizational Structure](index=7&type=section&id=Group%20Organizational%20Structure) The investment holding company controls manufacturing, sales, and technology subsidiaries in Hong Kong, Mainland China, and Thailand - The company is an investment holding company that holds subsidiaries through several British Virgin Islands investment holding companies[30](index=30&type=chunk)[33](index=33&type=chunk)[36](index=36&type=chunk)[37](index=37&type=chunk)[38](index=38&type=chunk) - Major subsidiaries are located in China (Guangzhou, Dongguan, Jiangsu, Changshu, Taicang, Zhenjiang, Shenzhen), Thailand, Hong Kong, and Macau[30](index=30&type=chunk)[31](index=31&type=chunk)[33](index=33&type=chunk)[36](index=36&type=chunk)[38](index=38&type=chunk)[39](index=39&type=chunk)[40](index=40&type=chunk)[41](index=41&type=chunk)[42](index=42&type=chunk)[43](index=43&type=chunk)[44](index=44&type=chunk)[45](index=45&type=chunk)[46](index=46&type=chunk) - Subsidiary businesses cover precision metal parts manufacturing, surface treatment services, robotics manufacturing, lighting technology, and technology development[30](index=30&type=chunk)[31](index=31&type=chunk)[33](index=33&type=chunk)[40](index=40&type=chunk)[41](index=41&type=chunk)[42](index=42&type=chunk)[43](index=43&type=chunk)[46](index=46&type=chunk) Financial Summary [Performance](index=9&type=section&id=Performance) In FY2018, revenue slightly increased by 0.2% to HK$943 million, but gross margin declined from 34% to 31%, impacting overall profitability Key Financial Data for FY2018 (Consolidated) | Indicator | 2018 (HK$ '000) | 2017 (HK$ '000) | Change (%) | | :--- | :--- | :--- | :--- | | Revenue | 943,476 | 941,438 | +0.2 | | Cost of sales | (652,687) | (618,010) | +5.6 | | Gross profit | 290,789 | 323,428 | -10.1 | | Other income | 8,557 | 7,017 | +21.9 | | Distribution costs | (26,535) | (23,778) | +11.6 | | Administrative and other expenses | (152,887) | (160,639) | -4.8 | | Finance costs | (18,471) | (15,972) | +15.6 | | Share of loss of an associate | (1,271) | (17) | +7352.9 | | Profit before taxation | 100,182 | 130,039 | -23.0 | | Income tax | (15,720) | (15,327) | +2.6 | | Profit for the year | 84,462 | 114,712 | -26.4 | | Attributable to equity shareholders of the Company | 85,328 | 114,808 | -25.7 | | Non-controlling interests | (866) | (96) | +802.1 | - **Gross profit margin** decreased from 34% in 2017 to 31% in 2018[48](index=48&type=chunk) [Condensed Consolidated Statement of Financial Position](index=10&type=section&id=Condensed%20Consolidated%20Statement%20of%20Financial%20Position) As of year-end 2018, total assets slightly decreased, with a significant reduction in non-current liabilities but an increase in current liabilities Condensed Consolidated Statement of Financial Position (as of December 31) | Indicator | 2018 (HK$ '000) | 2017 (HK$ '000) | | :--- | :--- | :--- | | Total non-current assets | 828,700 | 883,043 | | Total current assets | 1,426,636 | 1,447,979 | | Total current liabilities | 550,870 | 438,977 | | Net current assets | 875,766 | 1,009,002 | | Total non-current liabilities | 11,601 | 190,770 | | Total equity | 1,692,865 | 1,701,275 | - **Total non-current liabilities** decreased significantly from HK$190,770 thousand in 2017 to HK$11,601 thousand in 2018[50](index=50&type=chunk) [Ratio Analysis](index=10&type=section&id=Ratio%20Analysis) In 2018, key liquidity, profitability, and operational efficiency ratios deteriorated, reflecting increased business challenges Key Statistics (as of December 31) | Indicator | 2018 | 2017 | | :--- | :--- | :--- | | Current ratio | 2.59 | 3.30 | | Dividend payout ratio | 11.2% | 34.9% | | Gross profit margin | 30.8% | 34.4% | | Net profit margin | 9.0% | 12.2% | | Average trade receivables turnover days | 103 Days | 94 Days | | Average inventories turnover days | 143 Days | 122 Days | | Net asset value per share (HK$) | 1.61 | 1.62 | | Dividend per share | 0.9 HK cents | 3.8 HK cents | | Earnings per share — Basic | 8.11 HK cents | 10.91 HK cents | - The **current ratio** declined from 3.30 in 2017 to 2.59 in 2018, and the **dividend payout ratio** dropped sharply from 34.9% to 11.2%[51](index=51&type=chunk) - Both **gross and net profit margins** decreased, while turnover days for receivables and inventories increased, indicating lower operational efficiency[51](index=51&type=chunk) [Geographical Segment Ratios](index=11&type=section&id=Geographical%20Segment%20Ratios) In 2018, the sales contribution from Mainland China, Macau, and Hong Kong increased, while North America's share declined - In 2018, sales from Mainland China, Macau, and Hong Kong accounted for **31%**, North America for **25%**, Europe for **23%**, Thailand for **12%**, Malaysia for **6%**, and other regions for **3%**[55](index=55&type=chunk) - Compared to 2017, the sales proportion from Mainland China, Macau, and Hong Kong increased, while the share from North America decreased[55](index=55&type=chunk) [Cash and Cash Equivalents, Total Debt, and Equity](index=12&type=section&id=Cash%20and%20Cash%20Equivalents%2C%20Total%20Debt%2C%20and%20Equity) As of year-end 2018, both cash and total debt decreased, while total equity remained relatively stable - In 2018, cash and cash equivalents stood at **HK$840,181 thousand**, total debt was **HK$436,775 thousand**, and equity was **HK$1,692,865 thousand**[58](index=58&type=chunk)[50](index=50&type=chunk) - Both cash and cash equivalents and total debt decreased compared to 2017[58](index=58&type=chunk)[50](index=50&type=chunk) Chairman's Statement [Business Review](index=13&type=section&id=Business%20Review) In 2018, sales grew slightly by 0.2% to HK$943 million amid trade frictions, with automotive parts growth offsetting HDD parts decline - The Group's 2018 sales were **HK$943,476,000**, a slight increase of **0.2%** from 2017, primarily impacted by US-China trade friction[60](index=60&type=chunk) - The automotive parts business grew by **6.2%** to **HK$465,070,000**, mitigating trade impacts by shifting sales from North America (down from 29.3% to 24.9%) to China (up from 27.5% to 31.1%)[61](index=61&type=chunk) - Hydraulic equipment parts sales increased by **3.2%** to **HK$263,476,000**, helping to offset the **7.3%** decline in HDD parts sales (which totaled HK$165,964,000)[62](index=62&type=chunk) - Gross profit margin decreased by **3.6 percentage points** to **30.8%**, and net profit attributable to equity shareholders fell by **25.7%** to **HK$85,328,000**[62](index=62&type=chunk) [Prospects](index=14&type=section&id=Prospects) The Group will focus on the automotive parts business, particularly in the new energy vehicle market, and enhance automation to improve efficiency - The Group will steadily develop its automotive parts business, targeting orders from Chinese automakers and focusing on the new energy vehicle sector[64](index=64&type=chunk) - Automation will be enhanced to improve production efficiency, especially for high-volume, labor-intensive products, with continued improvements to in-house developed robots[64](index=64&type=chunk) - R&D investment reached **HK$22,942,000** in 2018, an **83.3% year-on-year increase**, and a strategic cooperation agreement was signed with Zhejiang University's South China Institute of Industrial Technology for technology commercialization[65](index=65&type=chunk) Management Discussion and Analysis [Financial Review](index=15&type=section&id=Financial%20Review) In 2018, total sales grew 0.2% to HK$943 million, driven by automotive and hydraulic parts, while profitability was impacted by rising costs - The Group's overall sales for 2018 amounted to **HK$943,476,000**, a year-on-year increase of **0.2%**[70](index=70&type=chunk) Sales Breakdown by Business Segment in 2018 | Business Segment | 2018 (HK$ '000) | % of Total | 2017 (HK$ '000) | % of Total | Change (%) | | :--- | :--- | :--- | :--- | :--- | :--- | | Automotive parts | 465,070 | 49.3 | 438,009 | 46.5 | +6.2 | | Hydraulic equipment parts | 263,476 | 27.9 | 255,326 | 27.1 | +3.2 | | HDD parts | 165,964 | 17.6 | 179,018 | 19.0 | –7.3 | | Others | 48,966 | 5.2 | 69,085 | 7.4 | –29.1 | | Total | 943,476 | 100.0 | 941,438 | 100.0 | +0.2 | - Distribution costs increased by **HK$2,757,000**, mainly due to US tariffs, while administrative expenses decreased by **4.8%** due to foreign exchange gains, though offset by higher salaries and R&D investment[74](index=74&type=chunk) - Finance costs rose by **HK$2,499,000** to **HK$18,471,000**, primarily due to higher interest rates on bank loans[74](index=74&type=chunk) [Pledge of Group's Assets](index=16&type=section&id=Pledge%20of%20Group's%20Assets) As of year-end 2018, the Group's total borrowings decreased to HK$437 million, secured by corporate guarantees without other asset pledges - As at 31 December 2018, the Group's total borrowings amounted to **HK$436,775,000**, a decrease from HK$504,504,000 in 2017[75](index=75&type=chunk) - All borrowings were secured by corporate guarantees from the Company, with no other assets pledged[75](index=75&type=chunk) [Liquidity, Financial Resources and Financial Ratios](index=16&type=section&id=Liquidity%2C%20Financial%20Resources%20and%20Financial%20Ratios) The Group's operations are funded by internal cash flow and bank financing, with stable operating cash flow but a slight decrease in net cash - In 2018, cash per share was **HK$0.80** (2017: HK$0.87), and net asset value per share was **HK$1.61** (2017: HK$1.62)[76](index=76&type=chunk) - Net cash inflow from operating activities was **HK$180,434,000**, remaining stable compared to 2017[76](index=76&type=chunk) - Net cash outflow from investing activities decreased from **HK$185,836,000** in 2017 to **HK$98,544,000** in 2018[76](index=76&type=chunk) - Net cash (cash and bank balances less total bank borrowings) was **HK$403,406,000**, a slight decrease from 2017[76](index=76&type=chunk) [Currency Risk and Management](index=16&type=section&id=Currency%20Risk%20and%20Management) The Group is exposed to foreign currency risk as revenue is in USD while most expenses are in JPY, RMB, THB, and HKD - The Group is exposed to foreign currency exchange rate fluctuation risks, primarily involving USD (revenue) and JPY, RMB, THB, and HKD (expenses)[77](index=77&type=chunk) - Fluctuations in the RMB could particularly have a negative impact on the Group's profitability[77](index=77&type=chunk) [Human Resources](index=17&type=section&id=Human%20Resources) As of year-end 2018, the Group's total number of employees was 2,369, a slight increase of 1.7% from the previous year - As at 31 December 2018, the Group had a total of **2,369 employees**, an increase of 40 employees or **1.7%** from 2017[80](index=80&type=chunk) - The Group has a share option scheme, mandatory provident fund scheme, and local retirement benefit schemes to motivate and reward employees[80](index=80&type=chunk) - Employee training is encouraged to enhance skills and personal development, with workshops held to improve work safety knowledge and team spirit[82](index=82&type=chunk) Directors and Senior Management [Directors](index=18&type=section&id=Directors) The section details the backgrounds and responsibilities of the Group's executive, non-executive, and independent non-executive directors - Mr Zeng Guangsheng serves as Chairman of the Board, CEO, and Executive Director, having joined the Group in 2016 with a Ph.D. in Economics[85](index=85&type=chunk) - Mr Wu Kai Ping, an Executive Director, is responsible for the Group's overall financial management and holds Master's degrees in Economics and Business Administration[85](index=85&type=chunk) - Ms Zeng Jing is a Non-executive Director and the current CFO of China Baoan Group Asset Management Co, Ltd, with over 21 years of experience[86](index=86&type=chunk) - Independent Non-executive Directors Mr Yeung Jue Sheng, Mr Cheung Chun Yue, and Mr Mui Wai Yat possess extensive professional experience in finance, audit, and investment management[91](index=91&type=chunk) [Senior Management](index=20&type=section&id=Senior%20Management) The Group's senior management team includes vice presidents responsible for marketing and sales strategies, and deputy general managers for key departments - Mr Ho Yu Hoi, Vice President, is responsible for overall marketing strategy and daily operations of IPE (Thailand), with over 36 years of experience[94](index=94&type=chunk) - Mr Lau Siu Chung, Vice President, is responsible for formulating and implementing sales strategies, with over 22 years of experience in precision parts marketing[94](index=94&type=chunk) - Mr Jiang Fei and Mr Lei Ting Yong serve as Deputy General Managers, heading the Heat Treatment Department and the Research and Product Development Department, respectively[94](index=94&type=chunk) - Mr Tam Yiu Chung is the Chief Financial Officer and Company Secretary, holding a Master's degree in Professional Accounting[95](index=95&type=chunk) Corporate Governance Report [Corporate Governance Practices of the Company](index=21&type=section&id=Corporate%20Governance%20Practices%20of%20the%20Company) The Group is committed to maintaining high standards of corporate governance in compliance with the Hong Kong Stock Exchange's code - The Group complies with the Corporate Governance Code in Appendix 14 of the Listing Rules, with the exception of code provision A.2.1 (separation of Chairman and CEO roles)[99](index=99&type=chunk) - The Company is committed to reviewing and enhancing its corporate governance practices to meet regulatory requirements and shareholder expectations[100](index=100&type=chunk) [Board of Directors](index=21&type=section&id=Board%20of%20Directors) The Board provides leadership and approves strategic policies, with a diverse composition and a strong attendance record at meetings - The Board is responsible for the overall management and supervision of the Company's business, providing leadership and approving strategic policies to enhance shareholder value[101](index=101&type=chunk) - The Board's composition reflects a balance of skills and experience necessary for the business and independent judgment, with all Directors contributing broad business and financial expertise[107](index=107&type=chunk) - Mr Zeng Guangsheng serves as both Chairman and CEO, an arrangement the Board believes provides strong and consistent leadership beneficial to the Group[112](index=112&type=chunk) - Board members actively participate in continuous professional development through internal briefings, reading materials, and external training courses[116](index=116&type=chunk) - The Company has adopted a code of conduct for directors' securities transactions no less exacting than the Model Code in Appendix 10 of the Listing Rules, with all Directors confirming compliance[117](index=117&type=chunk) - The Board held four meetings in 2018 with good attendance from most directors, and the Chairman also met with the independent non-executive directors[123](index=123&type=chunk)[125](index=125&type=chunk) [Responsibilities and Delegation](index=21&type=section&id=Responsibilities%20and%20Delegation) The Board oversees overall management and strategic policy approval, while delegating daily operational responsibilities to senior management - The Board is responsible for the overall management and supervision of the Company's business, with its main role being to provide leadership and approve strategic policies to enhance shareholder value[101](index=101&type=chunk) - The Board retains decision-making authority on all major matters, including the approval and monitoring of all policy matters, overall strategies, budgets, and internal control systems[101](index=101&type=chunk) - The Board delegates certain responsibilities to senior management, including implementing Board decisions, coordinating daily operations, and overseeing production and business planning[102](index=102&type=chunk) [Composition of the Board](index=22&type=section&id=Composition%20of%20the%20Board) The Board's composition reflects a balance of skills and experience, meeting Listing Rules requirements for independent directors - The Board consists of Mr Zeng Guangsheng (Chairman and CEO), Mr Wu Kai Ping (Executive Director), Ms Zeng Jing (Non-executive Director), and Mr Yeung Jue Sheng, Mr Cheung Chun Yue, and Mr Mui Wai Yat (Independent Non-executive Directors)[105](index=105&type=chunk) - There are no relationships among the Board members, and its composition reflects the balance of skills and experience required for the Group's business needs and independent judgment[107](index=107&type=chunk) - The Board complies with Listing Rules regarding the minimum number of independent non-executive directors (at least three, representing one-third) and the requirement for at least one to have appropriate professional qualifications[107](index=107&type=chunk) [Chairman and Chief Executive Officer](index=23&type=section&id=Chairman%20and%20Chief%20Executive%20Officer) Mr Zeng Guangsheng holds the dual roles of Chairman and CEO, which the Board believes provides strong and consistent leadership - Following the resignation of Mr Chui Siu On as CEO on 29 October 2018, Mr Zeng Guangsheng has served as both Chairman of the Board and CEO[112](index=112&type=chunk) - The Board believes that combining these two roles allows Mr Zeng to provide strong and consistent leadership, enabling more efficient planning, decision-making, and implementation of the Group's long-term business strategy[112](index=112&type=chunk) [Appointment and Re-election of Directors](index=23&type=section&id=Appointment%20and%20Re-election%20of%20Directors) Independent non-executive directors are appointed for one-year terms, and all directors are subject to retirement by rotation every three years - Each independent non-executive director is appointed for a term of approximately one year, until the next annual general meeting[113](index=113&type=chunk) - According to the Company's Articles of Association, all directors must retire by rotation at least once every three years, and newly appointed directors must be re-elected at the next general meeting[113](index=113&type=chunk) - Mr Mui Wai Yat, Mr Yeung Jue Sheng, and Mr Cheung Chun Yue will retire by rotation and be eligible for re-election at the 2019 Annual General Meeting[113](index=113&type=chunk) [Directors' Training and Continuous Development](index=24&type=section&id=Directors'%20Training%20and%20Continuous%20Development) The company provides comprehensive induction for new directors and supports ongoing professional development for all board members - Newly appointed directors receive a comprehensive induction to understand the Group's business, operations, and their duties under the Listing Rules[116](index=116&type=chunk) - Directors are required to participate in continuous professional development, with the Company arranging internal briefings, providing reading materials, and encouraging participation in relevant training courses at the Company's expense[116](index=116&type=chunk) - In 2018, all directors participated in briefings and received materials on Listing Rules amendments, with some also attending other professional training[116](index=116&type=chunk) [Model Code for Securities Transactions](index=24&type=section&id=Model%20Code%20for%20Securities%20Transactions) The company has adopted a strict code for directors' securities transactions, and all directors have confirmed compliance - The Company has adopted a code of conduct for directors' securities transactions no less exacting than the Model Code in Appendix 10 of the Listing Rules, and all directors have confirmed compliance[117](index=117&type=chunk) - The Company has established written guidelines for employees who may have access to inside information, with no instances of non-compliance found[117](index=117&type=chunk) - The Company informs directors and relevant employees of restricted periods for securities trading in advance[118](index=118&type=chunk) [Corporate Governance Functions](index=24&type=section&id=Corporate%20Governance%20Functions) The Board is responsible for performing the corporate governance functions as set out in the Corporate Governance Code - The Board is responsible for performing the functions set out in code provision D.3.1 of the Corporate Governance Code[119](index=119&type=chunk) - In 2018, the Board reviewed the Company's corporate governance policies, director and senior management training, legal and regulatory compliance, code of conduct adherence, and disclosures in the Corporate Governance Report[119](index=119&type=chunk) [Attendance Record of Meetings of Directors and Committee Members](index=25&type=section&id=Attendance%20Record%20of%20Meetings%20of%20Directors%20and%20Committee%20Members) In 2018, the Board held four meetings with a strong attendance record from directors and committee members Attendance Record of Director and Committee Meetings in 2018 | Director's Name | Board of Directors | Remuneration Committee | Nomination Committee | Audit Committee | Annual General Meeting | | :--- | :--- | :--- | :--- | :--- | :--- | | Mr Zeng Guangsheng | 4/4 | 1/1 | 1/1 | – | 1/1 | | Mr Chui Siu On | 2/3 | 1/1 | 1/1 | – | 0/1 | | Mr Lau Siu Chung | 3/3 | – | – | – | 1/1 | | Ms Zhao Dezhen | 3/3 | – | – | – | 1/1 | | Mr Wu Kai Ping | 4/4 | – | – | – | 1/1 | | Ms Zeng Jing | 4/4 | – | – | – | 1/1 | | Dr Zheng Yue | 3/3 | 1/1 | 1/1 | 2/2 | 0/1 | | Mr Yeung Jue Sheng | 4/4 | 1/1 | 1/1 | 2/2 | 1/1 | | Mr Cheung Chun Yue | 4/4 | 1/1 | 1/1 | 2/2 | 1/1 | | Mr Mui Wai Yat | 1/1 | – | – | – | – | - The Chairman of the Board held a meeting with the independent non-executive directors during the year without the presence of other directors[125](index=125&type=chunk) [Board Committees](index=26&type=section&id=Board%20Committees) The Board has established Executive, Remuneration, Audit, and Nomination Committees to oversee specific areas of company affairs - The Board has established an Executive Committee, a Remuneration Committee, an Audit Committee, and a Nomination Committee to oversee specific areas of the Company's affairs[128](index=128&type=chunk) - All Board committees have specific written terms of reference and are required to report their decisions or recommendations to the Board[128](index=128&type=chunk) [Executive Committee](index=26&type=section&id=Executive%20Committee) The Executive Committee oversees the implementation of strategic plans and makes decisions on daily management and operational matters - The Executive Committee is composed of Mr Zeng Guangsheng (Chairman) and Mr Wu Kai Ping[129](index=129&type=chunk) - Its primary responsibilities include overseeing the implementation of the Group's strategic plans, the operations of all business units, and making decisions on daily management and operational matters[129](index=129&type=chunk) [Remuneration Committee](index=26&type=section&id=Remuneration%20Committee) The Remuneration Committee recommends remuneration policies for directors and senior management to the Board, ensuring transparency - The Remuneration Committee consists of three independent non-executive directors (chaired by Mr Cheung Chun Yue), Mr Yeung Jue Sheng, Mr Mui Wai Yat, and one executive director, Mr Zeng Guangsheng, with a majority of members being independent[130](index=130&type=chunk) - Its main duty is to make recommendations to the Board on the remuneration packages, policies, and structure for directors and senior management, ensuring transparency in the process[130](index=130&type=chunk) - In 2018, the committee reviewed the Group's remuneration policy and packages for directors and senior officers, and recommended the remuneration for the newly appointed director, Mr Mui Wai Yat[131](index=131&type=chunk) Annual Remuneration of Senior Management in 2018 | Remuneration Range | Number of Individuals | | :--- | :--- | | HK$0 to HK$1,000,000 | 2 | | HK$1,000,001 to HK$2,000,000 | 1 | | HK$2,000,01 to HK$3,000,000 | 1 | | HK$3,000,001 to HK$4,000,000 | 2 | [Audit Committee](index=27&type=section&id=Audit%20Committee) The Audit Committee reviews financial statements, monitors the external auditor's independence, and oversees risk management and internal controls - The Audit Committee is composed of three independent non-executive directors (chaired by Mr Yeung Jue Sheng), Mr Cheung Chun Yue, and Mr Mui Wai Yat, with at least one member possessing appropriate professional qualifications in accounting and financial management[137](index=137&type=chunk) - Its primary duties include reviewing financial statements, monitoring the independence and effectiveness of the external auditor, recommending the auditor's appointment, and reviewing the Company's financial reporting, internal control, and risk management systems[138](index=138&type=chunk) - In 2018, the committee reviewed and discussed the annual and interim financial results, the scope of audit work, auditor's fees, and the risk management and internal control systems[139](index=139&type=chunk) [Nomination Committee](index=28&type=section&id=Nomination%20Committee) The Nomination Committee reviews the Board's composition, develops nomination procedures, and assesses the independence of directors - The Nomination Committee consists of one executive director, Mr Zeng Guangsheng (Chairman), and three independent non-executive directors, Mr Yeung Jue Sheng, Mr Cheung Chun Yue, and Mr Mui Wai Yat, with a majority of members being independent[142](index=142&type=chunk) - Its main responsibilities include reviewing the Board's composition, establishing procedures for the nomination and appointment of directors, and assessing the independence of independent non-executive directors[142](index=142&type=chunk) - The Company has adopted a board diversity policy, reviewing the Board's structure, size, and composition annually, considering factors such as gender, age, cultural background, professional qualifications, skills, and experience[142](index=142&type=chunk) - The Company has also adopted a director nomination policy with selection criteria and procedures to ensure a balance of skills, experience, and diversity on the Board[143](index=143&type=chunk) - In 2018, the committee reviewed the Board's structure, recommended the re-election of directors, assessed the independence of INEDs, and recommended the appointment of Mr Mui Wai Yat as an independent non-executive director[147](index=147&type=chunk) [Directors' Responsibility for Financial Reporting](index=29&type=section&id=Directors'%20Responsibility%20for%20Financial%20Reporting) The Board is responsible for preparing the annual financial statements and ensuring all disclosures are balanced, clear, and understandable - The Directors acknowledge their responsibility for preparing the Company's financial statements for the year ended 31 December 2018[148](index=148&type=chunk) - The Board is responsible for presenting a balanced, clear, and understandable assessment in its annual and interim reports, inside information announcements, and other disclosures[148](index=148&type=chunk) - The Directors are not aware of any material uncertainties relating to events or conditions that may cast significant doubt upon the Company's ability to continue as a going concern[149](index=149&type=chunk) [Risk Management and Internal Control](index=29&type=section&id=Risk%20Management%20and%20Internal%20Control) The Board oversees the establishment and maintenance of an effective risk management and internal control system, supported by an internal audit function - The Board is responsible for evaluating and determining the nature and extent of risks the Group is willing to take in achieving its strategic objectives and ensuring an appropriate and effective risk management and internal control system is established and maintained[152](index=152&type=chunk) - The Group's procedures for risk management and internal control include risk identification, assessment, monitoring, and reporting[154](index=154&type=chunk)[155](index=155&type=chunk)[156](index=156&type=chunk)[157](index=157&type=chunk) - The Group has an internal audit function and has appointed a professional consulting firm to assist in reviewing the effectiveness of its risk management and internal controls[157](index=157&type=chunk) - The Board has reviewed the effectiveness of the risk management and internal control systems and considers them to be effective and adequate, with ongoing improvements and monitoring[157](index=157&type=chunk) [External Auditor and Auditor's Remuneration](index=31&type=section&id=External%20Auditor%20and%20Auditor's%20Remuneration) KPMG served as the external auditor for 2018, with total fees for audit and non-audit services amounting to HK$2.5 million Analysis of External Auditor's Remuneration in 2018 | Service Type | Fees Paid/Payable (HK$ '000) | | :--- | :--- | | Audit services | 1,800 | | Non-audit services (tax services and others) | 699 | | Total | 2,499 | [Company Secretary](index=31&type=section&id=Company%20Secretary) The Company Secretary, Mr Tam Yiu Chung, undertook over 15 hours of professional training during the 2018 financial year - The Company Secretary, Mr Tam Yiu Chung, participated in no less than 15 hours of relevant professional training during the 2018 financial year[163](index=163&type=chunk) [Communication with Shareholders and Investors](index=32&type=section&id=Communication%20with%20Shareholders%20and%20Investors) The company maintains effective communication with shareholders through its website, regular dialogue, and general meetings - The Company's website (www.ipegroup.com) serves as a communication platform for shareholders and investors, providing information on business development, financial data, and corporate governance practices[171](index=171&type=chunk) - Designated senior management maintains regular dialogue with institutional investors and analysts to keep them informed of the Company's latest developments[171](index=171&type=chunk) - General meetings provide an opportunity for communication between the Board and shareholders, where Board members and senior officers answer questions[171](index=171&type=chunk) [Policies on Shareholders](index=32&type=section&id=Policies%20on%20Shareholders) The company has established a shareholder communication policy and a dividend policy to address shareholder interests and returns - The Company has established a shareholder communication policy to ensure that shareholders' opinions and concerns are properly handled[172](index=172&type=chunk) - The Company has adopted a dividend policy, under which the Board may declare dividends based on financial conditions and policy terms, with final dividends subject to shareholder approval[172](index=172&type=chunk) [Shareholders' Rights](index=33&type=section&id=Shareholders'%20Rights) The company protects shareholder rights by proposing separate resolutions at general meetings and allowing shareholders to convene meetings - The Company proposes separate resolutions for each substantial issue, including the election of individual directors, for shareholders' consideration and voting at general meetings[176](index=176&type=chunk) - Shareholders holding not less than one-tenth of the paid-up capital have the right to request the Board or Company Secretary to convene an extraordinary general meeting[176](index=176&type=chunk) - Shareholders intending to propose a person for election as a director must issue a written notice with relevant information[176](index=176&type=chunk) - All resolutions proposed at general meetings (except for purely procedural or administrative matters) are decided by poll on a one-share-one-vote basis, with results published on the websites of the Stock Exchange and the Company[177](index=177&type=chunk) Environmental, Social and Governance Report [Scope and Reporting Period](index=34&type=section&id=Scope%20and%20Reporting%20Period) This third ESG report covers the 2018 calendar year, focusing on the environmental and social performance of three key operating sites - This is the third Environmental, Social and Governance Report of IPE Group Limited, covering the period from 1 January to 31 December 2018[180](index=180&type=chunk) - The report's scope includes the manufacturing and sales offices in Guangzhou Xinhao and Dongguan Koda in China, and IPE (Thailand), which together account for over 90% of the Group's total revenue[180](index=180&type=chunk)[181](index=181&type=chunk) [Stakeholder Engagement and Materiality](index=34&type=section&id=Stakeholder%20Engagement%20and%20Materiality) The Group engages with key stakeholders to identify material ESG issues, with social topics like anti-corruption and safety being top priorities - The Group communicates with key stakeholders, including board members, managers, supervisors, frontline staff, customers, and suppliers, through daily interactions to understand their needs and concerns[182](index=182&type=chunk) - A stakeholder survey identified the most important issues as anti-corruption, occupational health and safety, customer privacy, labor practices, and environmental protection measures[182](index=182&type=chunk) - Many stakeholders emphasized that ensuring environmental protection and strengthening community relations are crucial for the Group's long-term success[184](index=184&type=chunk) [Stakeholders' Feedback](index=35&type=section&id=Stakeholders'%20Feedback) The Group welcomes feedback from stakeholders on its ESG approach and performance, which can be submitted via mail - The Group welcomes feedback from stakeholders on its ESG approach and performance, which can be submitted by mail to its Hong Kong office[185](index=185&type=chunk) [The Group's Sustainability Mission and Vision](index=35&type=section&id=The%20Group's%20Sustainability%20Mission%20and%20Vision) The Group aims to balance stakeholder profit, responsibility, and satisfaction through management excellence and continuous certification - The Group is committed to achieving an optimal balance to bring maximum profit, responsibility, and satisfaction to its stakeholders[186](index=186&type=chunk) - It continuously obtains and renews system certifications such as IATF16949:2016, AS9100:2016, ISO9001:2015, and ISO14001:2004[186](index=186&type=chunk) - In 2018, Dongguan Koda obtained IATF16949 and ISO 14001 certifications, and Guangzhou Xinhao was recognized as a High-tech Enterprise[186](index=186&type=chunk) - Obtaining the Authorized Economic Operator (AEO) certification helps improve processes and standardize internal procedures for enhanced efficiency and reliability[186](index=186&type=chunk) [A. Environment](index=36&type=section&id=A.%20Environment) The Group adheres to environmental laws and implements various energy and resource conservation programs, with no major violations in 2018 - The Group strictly complies with national and local laws and regulations on environmental protection and pollution control[189](index=189&type=chunk) - No material non-compliance with relevant laws and regulations regarding emissions, discharges, and waste was identified in 2018[190](index=190&type=chunk) - Various energy and resource conservation programs have been implemented, such as maintaining air conditioning temperatures at no lower than 26°C and turning off idle lighting[189](index=189&type=chunk) [A1. Emissions](index=36&type=section&id=A1.%20Emissions) The Group's main emissions are monitored and controlled, with total GHG emissions in 2018 amounting to 39,875 tonnes of CO2e - The main sources of air emissions are particulates from production processes and cooking fumes from canteens, both of which are monitored and comply with emission limits[191](index=191&type=chunk) Annual Greenhouse Gas Emissions in 2018 | GHG Emission Scope | Source of Emission | GHG Emissions (tonnes of CO2e) | Sub-total (tonnes of CO2e) | Total GHG Emissions (%) | | :--- | :--- | :--- | :--- | :--- | | Scope 1 Direct Emissions | Fuel combustion from stationary sources | 462.51 | 894.66 | 2% | | | Fuel combustion from mobile sources | 408.91 | | | | Scope 2 Energy Indirect Emissions | Purchased electricity | 38,587.03 | 38,592.42 | 97% | | | Purchased town gas | 5.39 | | | | Scope 3 Other Indirect Emissions | Electricity used for fresh water processing by government departments/third parties | 218.73 | 387.78 | 1% | | | Electricity used for sewage processing by government departments/third parties | 108.61 | | | | | Business travel by employees | 14.25 | | | | | Paper waste disposed at landfills | 46.19 | | | | Total | | 39,875 | | 100% | - In 2018, a total of **100.37 tonnes of hazardous waste** was generated, primarily engine oil, chemical pollutants, and sludge, all managed in compliance with legal requirements[206](index=206&type=chunk) - A total of **164.83 tonnes of non-hazardous waste** (excluding office paper) was generated in 2018, mainly industrial and domestic waste, with recycling encouraged[210](index=210&type=chunk) - Measures to reduce emissions include using LPG instead of gasoline, optimizing vehicle dispatch, and prioritizing fuel-efficient, low-emission vehicles[214](index=214&type=chunk) - Waste reduction is achieved through waste management procedures, recycling bins, reuse of cutting oil, and paper conservation policies[215](index=215&type=chunk)[216](index=216&type=chunk) [A2. Use of Resources](index=42&type=section&id=A2.%20Use%20of%20Resources) In 2018, the Group consumed 61.7 million kWh of electricity and 543,437 cubic meters of water, implementing various efficiency initiatives Annual Direct Energy Consumption and Intensity (Electricity) in 2018 | Location | Consumption (kWh) | | :--- | :--- | | Guangzhou Xinhao | 48,175,251 | | Dongguan Koda | 8,964,120 | | IPE (Thailand) | 4,527,280 | | The Group Total | 61,666,651 | - Total water consumption in 2018 was **543,437 cubic meters**, sourced from municipal tap water, with no issues in sourcing water[223](index=223&type=chunk) - Energy efficiency programs were implemented across operating sites, including using LED lighting, optimizing transformers, and utilizing waste heat from air compressors[226](index=226&type=chunk)[230](index=230&type=chunk)[231](index=231&type=chunk) - Water conservation policies include efficient water use and wastewater recycling, with regular equipment checks for leaks[239](index=239&type=chunk)[241](index=241&type=chunk)[242](index=242&type=chunk)[243](index=243&type=chunk) Annual Packaging Material Usage in 2018 | Packaging Material Type | Guangzhou Xinhao (kg) | Dongguan Koda (kg) | IPE (Thailand) (kg) | | :--- | :--- | :--- | :--- | | Corrugated paperboard | 105,800 | 10,712 | 2,922 | | Plastic film and bags | 40,600 | 22,670 | 4,673 | | Total packaging materials | 146,400 | 33,382 | 7,595 | [A3. The Environment and Natural Resources](index=47&type=section&id=A3.%20The%20Environment%20and%20Natural%20Resources) The Group's operations have no significant adverse environmental impact, with continuous efforts to reduce resource consumption - The Group's business operations have not had a significant adverse impact on the environment[247](index=247&type=chunk) - The main environmental impact comes from the consumption of purchased electricity, and the Group has adopted policies to conserve electricity, water, and paper to mitigate negative effects[247](index=247&type=chunk) [B. Social](index=48&type=section&id=B.%20Social) The Group complies with labor laws, prioritizes employee health and safety, invests in training, and maintains ethical operating practices - The Group strictly complies with national and local laws and regulations regarding employment and labor practices[250](index=250&type=chunk) - No material non-compliance with laws regarding compensation, dismissal, recruitment, working hours, equal opportunity, or other benefits was identified in 2018[250](index=250&type=chunk) - The Group places great importance on providing a safe and accident-free working environment, supplying personal protective equipment and monitoring workplace conditions[271](index=271&type=chunk) - Significant resources have been invested in upgrading the supplier management system, with environmental and social performance being key evaluation criteria[284](index=284&type=chunk) - Integrity, honesty, and fairness are core values, with strict measures against bribery, fraud, and other illicit activities[308](index=308&type=chunk) - The Group encourages employee volunteerism and collaborates with think tanks to create training bases for students and researchers[310](index=310&type=chunk) [1. Employment and Labour Practices](index=48&type=section&id=1.%20Employment%20and%20Labour%20Practices) The Group adheres to labor laws, provides competitive compensation, and focuses on employee health, safety, and professional development - The Group has formally established a trade union and encourages all eligible employees to join for collective bargaining[251](index=251&type=chunk) - The dismissal policy was updated to enhance internal security management and standardize termination procedures[254](index=254&type=chunk) - All employees are provided with equal opportunities without discrimination based on gender, nationality, race, religion, age, marital status, or disability[254](index=254&type=chunk) Employment Profile by Type, Category, Contract, Age, Gender, and Region in 2018 | Category | Guangzhou Xinhao | Dongguan Koda | IPE (Thailand) | Total | | :--- | :--- | :--- | :--- | :--- | | Total employees | 1,608 | 360 | 161 | 2,129 | | Full-time | 1,608 | 360 | 161 | 2,129 | | Senior management | 7 | 1 | 1 | 9 | | Middle management | 48 | 8 | 4 | 60 | | Frontline and other staff | 1,553 | 351 | 156 | 2,060 | | Below 30 years old | 486 | 87 | 30 | 603 | | >=30 to <50 years old | 906 | 220 | 128 | 1,254 | | >=50 years old | 216 | 53 | 3 | 272 | | Male | 820 | 184 | 37 | 1,041 | | Female | 788 | 176 | 124 | 1,088 | | Mainland China | 1,604 | 360 | 0 | 1,964 | | Thailand | 0 | 0 | 160 | 160 | | Others | 4 | 0 | 1 | 5 | | Indefinite or permanent contract | 287 | 73 | 160 | 520 | | Fixed-term contract | 1,321 | 287 | 1 | 1,609 | - The overall employee turnover rate in 2018 was **57%**, with most departures being frontline staff; the turnover rate at IPE (Thailand) was significantly lower than in China[264](index=264&type=chunk) Total Employee Turnover Rate by Employment Type, Age, Gender, and Region in 2018 | Category | Turnover Rate (%) | | :--- | :--- | | Senior management | 11 | | Middle management | 5 | | Frontline and other staff | 59 | | Below 30 years old | 115 | | >=30 to <50 years old | 39 | | >=50 years old | 9 | | Male | 74 | | Female | 40 | | Mainland China | 61 | | Thailand | 5 | | Others | 20 | - There were **no work-related fatalities** in 2018, with a total of **285 lost days** due to **35 injury cases**[274](index=274&type=chunk) - In 2018, **1,350 employees** completed **7,362.5 hours of training**, averaging **3.46 hours per employee**[277](index=277&type=chunk) - The recruitment process includes background checks to ensure compliance with legal and internal regulations, with no cases of child or forced labor found[281](index=281&type=chunk) [2. Operating Practices](index=60&type=section&id=2.%20Operating%20Practices) The Group maintains robust operating practices, including stringent supply chain management, quality control, and anti-corruption measures - The Group has invested heavily in upgrading its supplier management system, obtaining Authorized Economic Operator (AEO) certification and establishing a supplier and procurement management procedure[284](index=284&type=chunk) - Environmental and social performance, including discharge permits and ISO 14001 certification, are key considerations when evaluating suppliers[284](index=284&type=chunk) - In 2018, the Group engaged **726 suppliers**, with **546** from Mainland China and **97** from Thailand[293](index=293&type=chunk) - Product quality is managed through a strict quality assurance/control process, including incoming, first-piece, in-process, and finished goods inspections[297](index=297&type=chunk) - The product recall percentage at Guangzhou Xinhao decreased in 2018, with the monetary value of losses from recalls reduced by **25%**[300](index=300&type=chunk) - An information security management system is in place to protect data through technical and administrative controls, with regular backups and accountability for data breaches[304](index=304&type=chunk) - Intellectual property is protected through R&D management, confidentiality agreements, and patent applications, with **16 utility model patents**, **4 design patents**, and **2 invention patents** obtained in 2018[305](index=305&type=chunk) - The Group upholds integrity and fairness as core values, conducting background checks on employees and prohibiting illicit activities, with no violations related to bribery or fraud found in 2018[308](index=308&type=chunk) [3. Community](index=66&type=section&id=3.%20Community) The Group encourages employee volunteerism and engages in community investment through donations and industry-academia collaborations - The Group encourages employees to participate in a variety of volunteer activities[310](index=310&type=chunk) - Through its industry-academia-research management system, the Group collaborates with think tanks and has established its R&D center as an off-campus training base for students and researchers[310](index=310&type=chunk) - In 2018, the Group participated in various community investment activities, including donations for elderly care, children's day events, support for AIDS patients, and sponsoring technical competitions[311](index=311&type=chunk) [Appendix: Environmental, Social and Governance Index](index=68&type=section&id=Appendix%3A%20Environmental%2C%20Social%20and%20Governance%20Index) This appendix provides an index cross-referencing the ESG report's content with the Hong Kong Stock Exchange's reporting guide - The appendix provides an index for the ESG report, aligning disclosures with the Hong Kong Stock Exchange's reporting guide by referencing page numbers and tables[314](index=314&type=chunk) - The index covers environmental aspects (emissions, resource use), social aspects (employment, health and safety, training, labor standards), and operational practices (supply chain, product responsibility, anti-corruption, community investment)[314](index=314&type=chunk)[316](index=316&type=chunk)[319](index=319&type=chunk)[321](index=321&type=chunk)[324](index=324&type=chunk)[326](index=326&type=chunk) Report of the Directors [Principal Activities](index=74&type=section&id=Principal%20Activities) The Company's principal activity is investment holding, with subsidiaries primarily engaged in manufacturing and selling precision parts - The Company's principal activity is investment holding, and details of its subsidiaries' principal activities are set out in note 12 to the financial statements[329](index=329&type=chunk) - There were no significant changes in the nature of the Group's principal activities during the year[329](index=329&type=chunk) [Results and Dividends](index=74&type=section&id=Results%20and%20Dividends) The Group's profit for 2018 is detailed in the financial statements, and the Board does not recommend a final dividend - The Company paid an interim dividend of **0.9 HK cents** per share on 21 September 2018 (2017: 2.2 HK cents per share)[330](index=330&type=chunk) - The Board does not recommend the payment of a final dividend for the year ended 31 December 2018 (2017: 1.6 HK cents per share)[330](index=330&type=chunk) [Closure of Register of Members](index=74&type=section&id=Closure%20of%20Register%20of%20Members) The register of members will be closed from May 15 to May 20, 2019, to determine eligibility for the Annual General Meeting - The register of members of the Company will be closed from Wednesday, 15 May 2019 to Monday, 20 May 2019 (both days inclusive)[331](index=331&type=chunk) - To be eligible to attend and vote at the AGM on 20 May 2019, all transfer documents must be lodged with Tricor Investor Services Limited by 4:30 p.m. on Tuesday, 14 May 2019[331](index=331&type=chunk) [Business Review](index=74&type=section&id=Business%20Review) This review covers the Group's performance, risks, future developments, and commitment to ESG principles and stakeholder relations - The business review covers the principal risks and uncertainties facing the Group, an analysis of its performance using financial key performance indicators, and a discussion of significant events and future developments[332](index=332&type=chunk) - The Group strictly complies with applicable environmental and social regulations, laws, and standards[332](index=332&type=chunk) - Technological advancements, particularly industrial robots and automation, are expected to enhance operational efficiency, reduce resource consumption, and prevent work-related injuries[332](index=332&type=chunk) - The Group will continue to seek improvements in its ESG performance and maintain close communication with stakeholders[332](index=332&type=chunk) [Summary of Financial Information](index=75&type=section&id=Summary%20of%20Financial%20Information) A summary of the Group's results, assets, liabilities, and non-controlling interests for the last five financial years is provided - A summary of the published results, assets, liabilities, and non-controlling interests of the Group for the last five financial years is set out on pages 8 to 11 of the annual report[334](index=334&type=chunk) - This summary does not form part of the audited financial statements[334](index=334&type=chunk) [Bank Loans and Other Borrowings](index=75&type=section&id=Bank%20Loans%20and%20Other%20Borrowings) Details of the Group's bank loans and other borrowings are disclosed in note 18 to the financial statements - Particulars of bank loans and other borrowings of the Group are set out in note 18 to the financial statements[335](index=335&type=chunk) [Properties](index=75&type=section&id=Properties) Details of the Group's principal properties and property interests are provided on page 129 of the annual report - Particulars of the principal properties and property interests of the Group are set out on page 129 of this annual report[336](index=336&type=chunk) [Share Capital and Share Options](index=75&type=section&id=Share%20Capital%20and%20Share%20Options) Details of movements in the Company's share options and share capital during the year are disclosed in the financial statements - Details of movements in the share options and share capital of the Company during the year are set out in notes 19 and 21 to the financial statements, respectively[337](index=337&type=chunk) [Equity-linked Agreements](index=75&type=section&id=Equity-linked%20Agreements) Details of the Company's equity-linked agreements are disclosed in the "Share Option Scheme" section and in the financial statements - Details of the equity-linked agreements entered into by the Company are disclosed in the "Share Option Scheme" section of this report and in note 19 to the financial statements[338](index=338&type=chunk) [Pre-emptive Rights](index=75&type=section&id=Pre-emptive%20Rights) There are no provisions for pre-emptive rights requiring a pro-rata issue of new shares to existing shareholders - There are no provisions for pre-emptive rights under the Company's Articles of Association or the laws of the Cayman Islands which would oblige the Company to offer new shares on a pro-rata basis to existing shareholders[339](index=339&type=chunk) [Purchase, Redemption or Sale of Listed Securities of the Company](index=75&type=section&id=Purchase%2C%20Redemption%20or%20Sale%20of%20Listed%20Securities%20of%20the%20Company) Neither the Company nor any of its subsidiaries purchased, redeemed, or sold any of the Company's listed securities during the year - Neither the Company nor any of its subsidiaries purchased, redeemed or sold any of the Company's listed securities during the year[340](index=340&type=chunk) [Distributable Reserves](index=75&type=section&id=Distributable%20Reserves) As of year-end 2018, the Company's distributable reserves amounted to HK$833 million, subject to solvency conditions - As at 31 December 2018, the Company's reserves available for distribution, calculated in accordance with the Companies Law of the Cayman Islands, amounted to **HK$833,205,000**[341](index=341&type=chunk) - The share premium and contributed surplus, totaling **HK$462,243,000**, are available for distribution, provided the Company is able to pay its debts as they fall due in the ordinary course of business[341](index=341&type=chunk) [Charitable Donations](index=75&type=section&id=Charitable%20Donations) The Group's charitable donations in 2018 totaled HK$1.04 million, a significant increase from the previous year - Charitable donations made by the Group during the year amounted to **HK$1,042,000** (2017: HK$140,000)[342](index=342&type=chunk) [Major Customers and Suppliers](index=76&type=section&id=Major%20Customers%20and%20Suppliers) In 2018, the top five customers and suppliers accounted for 30.1% of sales and 29.6% of purchases, respectively - Sales to the Group's five largest customers accounted for **30.1%** of the total sales for the year, with the largest customer accounting for **9.1%**[344](index=344&type=chunk) - Purchases from the Group's five largest suppliers accounted for **29.6%** of the total purchases for the year, with the largest supplier accounting for **8.0%**[344](index=344&type=chunk) - None of the Directors, their close associates, or any shareholder holding more than 5% of the Company's issued shares had any beneficial interest in the Group's five largest customers and suppliers[344](index=344&type=chunk) [Management Contracts](index=76&type=section&id=Management%20Contracts) No contracts concerning the management and administration of the Group's business were entered into or existed during the year - No contracts concerning the management and administration of the whole or any substantial part of the business of the Group were entered into or existed during the year[345](index=345&type=chunk) [Directors](index=76&type=section&id=Directors) This section lists the directors who served during 2018 and notes changes in board composition and upcoming re-elections - In 2018, Mr Chui Siu On, Mr Lau Siu Chung, and Ms Zhao Dezhen resigned as Executive Directors, Dr Zheng Yue resigned as an Independent Non-executive Director, and Mr Mui Wai Yat was appointed as an Independent Non-executive Director[346](index=346&type=chunk) - Mr Yeung Jue Sheng, Mr Cheung Chun Yue, and Mr Mui Wai Yat will retire by rotation and be eligible for re-election at the 2019 Annual General Meeting[346](index=346&type=chunk) - The Company has received annual confirmations of independence from Mr Yeung Jue Sheng, Mr Cheung Chun Yue, and Mr Mui Wai Yat and considers them to be independent[346](index=346&type=chunk) [Biographical Details of Directors and Senior Management](index=77&type=section&id=Biographical%20Details%20of%20Directors%20and%20Senior%20Management) Biographical details of the Company's directors and the Group's senior management are provided on pages 17 to 19 of the annual report - Biographical details of the directors of the Company and senior management of the Group are set out on pages 17 to 19 of the annual report[348](index=348&type=chunk) [Directors' Service Contracts](index=77&type=section&id=Directors'%20Service%20Contracts) Executive directors have three-year service agreements, while independent non-executive directors have one-year appointments - Each of the executive Directors has entered into a service agreement with the Company for a term of three years[349](index=349&type=chunk) - Each of the independent non-executive Directors has been appointed for a term of approximately one year[350](index=350&type=chunk) - None of the Directors proposed for re-election at the 2019 Annual General Meeting has a service contract with the Company which is not determinable within one year without payment of compensation[351](index=351&type=chunk) [Directors' Remuneration](index=77&type=section&id=Directors'%20Remuneration) Directors' fees are subject to shareholder approval, while other remuneration is determined by the Board based on performance - Directors' fees are subject to approval by the shareholders at the general meeting[352](index=352&type=chunk) - Other emoluments are determined by the Board of Directors with reference to the Directors' duties, responsibilities, and performance, as well as the Group's results[352](index=352&type=chunk) [Directors' Interests in Transactions, Arrangements or Contracts](index=77&type=section&id=Directors'%20Interests%20in%20Transactions%2C%20Arrangements%20or%20Contracts) No director had a material interest in any significant transaction, arrangement, or contract entered into by the Group during the year - No transaction, arrangement or contract of significance to the business of the Group to which the Company's holding company or any of its subsidiaries was a party and in which a Director or a Director's connected entity had a material interest, whether directly or indirectly, subsisted during the year[353](index=353&type=chunk) [Directors' Indemnity](index=77&type=section&id=Directors'%20Indemnity) A permitted indemnity provision for the benefit of the Company's directors was in force throughout the year - A permitted indemnity provision (as defined in the Hong Kong Companies Ordinance) for the benefit of the Directors of the Company is currently in force and was in force throughout the year[354](index=354&type=chunk) [Directors' and Chief Executive's Interests and Short Positions in Shares and Underlying Shares](index=78&type=section&id=Directors'%20and%20Chief%20Executive's%20Interests%20and%20Short%20Positions%20in%20Shares%20and%20Underlying%20Shares) As of year-end 2018, several directors held interests in the Company's share options and in the ordinary shares of its associated corporation Directors' Long Positions in Underlying Shares of the Company as at 31 December 2018 (Physically settled unlisted equity derivatives) | Name of Director | Capacity and nature of interest | Number of underlying shares in respect of share options granted | Percentage of the Company's issued share capital (%) | | :--- | :--- | :--- | :--- | | Mr Zeng Guangsheng | Direct beneficial owner | 22,000,000 | 2.09 | | Mr Wu Kai Ping | Direct beneficial owner | 10,000,000 | 0.95 | | Ms Zeng Jing | Direct beneficial owner | 8,000,000 | 0.76 | Directors' Long Positions in Ordinary Shares of Associated Corporation as at 31 December 2018 (China Baoan Group Co, Ltd) | Name of Director | Capacity and nature of interest | Number of ordinary shares in China Baoan Group Co, Ltd | Percentage of the issued share capital of China Baoan Group Co, Ltd (%) | | :--- | :--- | :--- | :--- | | Mr Zeng Guangsheng | Direct beneficial owner | 560,755 | 0.03 | | Ms Zeng Jing | Direct beneficial owner | 8,518,819 | 0.40 | - Save as disclosed above, as at 31 December 2018, none of the other Directors or the chief executive had any interests or short positions in the shares, underlying shares or debentures of the Company or any of its associated corporations that were required to be recorded[358](index=358&type=chunk) [Share Option Scheme](index=79&type=section&id=Share%20Option%20Scheme) The Company's share option scheme aims to reward eligible participants, with 42 million options outstanding as of year-end 2018 - The Company has a share option scheme to provide incentives and rewards to eligible participants for their contributions to the Group's success[360](index=360&type=chunk) Movements in Share Options in 2018 | Name or category of participant | At 1 January 2018 | Granted during the year | Exercised during the year | Lapsed during the year | Forfeited/Cancelled during the year | At 31 December 2018 | Date of grant of options | Exercise period of options | Exercise price of options (per Share HK$) | | :--- | :--- | :--- | :--- | :--- | :--- | :--- | :--- | :--- | :--- | | Mr Zeng Guangsheng | 22,000,000 | – | – | – | – | 22,000,000 | 06-06-17 | 01-09-18 to 31-08-22 | 2.0200 | | Mr Chui Siu On | 2,000,000 | – | – | – | – | 2,000,000 | 06-06-17 | 01-09-18 to 31-08-22 | 2.0200 | | Mr Lau Siu Chung | 2,000,000 | – | – | (2,000,000) | – | – | 06-06-17 | 01-09-18 to 31-08-22 | 2.0200 | | Ms Zhao Dezhen | 2,000,000 | – | – | (2,000,000) | – | – | 06-06-17 | 01-09-18 to 31-08-22 | 2.0200 | | Mr Wu Kai Ping | 10,000,000 | – | – | – | – | 10,000,000 | 06-06-17 | 01-09-18 to 31-08-22 | 2.0200 | | Ms Zeng Jing | 8,000,000 | – | – | – | – | 8,000,000 | 06-06-17 | 01-09-18 to 31-08-22 | 2.0200 | | Total for Directors | 46,000,000 | – | – | (4,000,000) | – | 42,000,000 | | | | | Total for senior management members and other employees | 4,000,000 | – | – | (4,000,000) | – | – | 06-06-17 | 01-09-18 to 31-08-22 | 2.0200 | | T