飛達帽業控股有限公司（「本公司」，連同其附屬公司統稱「本集團」）根據香港聯合 交易所有限公司證券上市規則（「上市規則」）第13.09(2)(a)條及香港法例第571章證 券及期貨條例第XIVA部內幕消息條文（定義見上市規則）刊發本公佈。 本公司董事會（「董事會」）謹此知會本公司股東及潛在投資者，根據對本集團最近 期未經審核綜合管理賬目及董事會目前可獲得之資料所作之初步評估，預期本集 團截至二零二五年六月三十日止六個月之未經審核中期業績（「二零二五年未經審 核中期業績」）之本公司擁有人應佔綜合溢利將不少於58,000,000港元，較二零 二四年中期報告所錄得截至二零二四年六月三十日止六個月之本公司擁有人應佔 溢利約35,269,000港元有所增長。該淨利潤增長主要歸因於本集團製造業務分部（特 別是孟加拉製造業務）之營業額及利潤增加，原因包括：(i)更多訂單從受美國高 關稅影響國家轉移至孟加拉；(ii)生產效率提升；及(iii)成本控制改善。儘管如此， 二零二五年未經審核中期業績之增長預期將被本集團貿易業務分部表現未如預期 所部分抵銷。 1 香港交易及結算所有限公司及香港聯合交易所有限公司對本公佈之內容概不負責， ...

Financial Performance - The group's total revenue for the year was HKD 1,474,488,000, an increase of 3.9% from HKD 1,418,994,000 in 2023[11] - Gross profit decreased by 4.4% to HKD 455,482,000, with a gross margin decline of 2.7 percentage points to 30.9%[11] - Shareholders' profit attributable to the company was HKD 57,074,000, down 51.6% from HKD 117,949,000 in 2023[11] - Manufacturing business revenue increased by 13.4% to HKD 931,812,000, accounting for 63.2% of total revenue[12] - Trade business revenue decreased by 9.1% to HKD 542,676,000, representing 36.8% of total revenue[14] - The group recorded an operating loss of HKD 95,443,000 in the trade division, compared to an operating loss of HKD 56,563,000 in 2023[14] Investments and Acquisitions - The group acquired 55% of a Dutch brand patent franchise product development company to enhance market presence in Europe and other overseas markets[10] - The group has acquired 55% equity in Difuzed B.V. for EUR 5 million (approximately HKD 43.1 million), which will become a subsidiary post-acquisition completion on August 23, 2024[25][26] - The acquisition of the Dutch company is expected to expand market coverage to the Middle East and Africa, despite anticipated losses in 2025, with a focus on integrating resources to enhance sales and profits in the long term[16] Production Capacity and Operations - The Bangladesh factory has a monthly production capacity of 6.5 million hats and has started producing wallets, belts, and bags[12] - The Mexican factory is expected to reach a monthly capacity of 1 million hats by the end of 2025[12] - A new production line in Cambodia is planned to begin operations in the second half of 2025, with an estimated monthly capacity of 450,000 units, aimed at capturing orders shifting from China due to supply chain adjustments[15] - The Mexican factory is expected to significantly enhance operational efficiency by 2025, with plans to start producing high-end styles from Q2 2025 after successful employee training and process optimization[15] - The company operates three production bases located in Bangladesh, Mexico, and Shenzhen, China, with a total production capacity of 7,300,000 units per month[162] Financial Position and Cash Flow - Cash and undrawn bank financing totaled approximately HKD 191,793,000 and HKD 720,625,000, respectively, as of December 31, 2024[11] - As of December 31, 2024, the group's cash and cash equivalents totaled HKD 196 million, a decrease from HKD 331 million in 2023, with a bank credit facility of HKD 905.4 million available[21] - The group's debt-to-equity ratio increased to 16.9% in 2024 from 13.8% in 2023, indicating a stronger financial position to meet operational needs[21] Corporate Governance - The company adheres to the corporate governance code as per the Hong Kong Stock Exchange listing rules[47] - The board consists of 6 executive directors and 3 independent non-executive directors, meeting the requirements of the listing rules[54] - The board has adopted a code of conduct for securities trading, ensuring compliance by all directors and employees with access to inside information[67] - The company has established a mechanism to ensure that independent opinions from individual directors are communicated to the board[68] - The company has a structured process for the appointment and re-election of directors, ensuring transparency and careful consideration[60] Risk Management and Internal Controls - The board is responsible for the overall risk management and internal control systems, with regular reviews to ensure effectiveness[85] - The risk management and internal control systems are designed to manage risks rather than eliminate them, providing reasonable assurance against significant misstatements or losses[84] - The internal audit team assists the board and audit committee in monitoring the effectiveness of internal controls, with no significant deficiencies noted in the 2024 audit[89] - The audit committee has reviewed compliance with legal and regulatory standards, ensuring adherence to disclosure requirements and internal practices[89] Shareholder Communication and Dividends - The company has established effective communication channels with shareholders, including annual general meetings and online updates[100] - The interim dividend of HKD 0.03 per share, totaling HKD 12,877,000, was paid on October 10, 2024[109] - The proposed final dividend is HKD 0.05 per share, down from HKD 0.06 per share in 2023, subject to shareholder approval at the upcoming annual general meeting[109] Environmental Sustainability - The company is committed to environmental sustainability, adhering to all relevant laws and regulations regarding emissions and waste management during the reporting period[163] - The company has established an environmental management system across all its production sites to minimize waste and emissions[166] - The company aims to reduce energy consumption and greenhouse gas emissions through various strategies, including reusing boiler condensate and improving energy efficiency[171] - The company has implemented measures to reduce harmful emissions and waste throughout its value chain[166] - The company has achieved Global Recycle Standard (GRS Scope Certification) for its Bangladesh factory, indicating a commitment to sustainable materials[185] Employee and Workforce Management - Employee expenses for the year amounted to approximately HKD 398 million, an increase from HKD 342.8 million in 2023, with a total workforce of 8,200 employees across various regions[28] - The total number of full-time employees as of December 31, 2024, is 8,179, with an additional 21 part-time employees[191] - The employee gender distribution shows a significant presence of male employees in China and Bangladesh, with a total of 3,369 male and 4,048 female employees[195] Community Engagement and Corporate Social Responsibility - The group made charitable and other donations totaling HKD 2,265,000 during the year, down from HKD 3,754,000 in 2023[118] - The company is focused on community engagement to achieve sustainable development and operations[190]

Financial Performance - For the fiscal year ending December 31, 2024, the company reported total revenue of HKD 1,474,488,000, an increase of 3.9% from HKD 1,418,994,000 in 2023[3] - The gross profit for the year was HKD 455,482,000, down 4.4% from HKD 476,364,000 in the previous year[3] - The operating profit decreased significantly to HKD 113,004,000, a decline of 40.7% compared to HKD 190,204,000 in 2023[3] - The net profit attributable to shareholders was HKD 57,074,000, down 51.6% from HKD 117,949,000 in the prior year[5] - Basic earnings per share decreased to HKD 13.2989 from HKD 27.5473, reflecting a decline of 51.7%[5] - The group’s operating profit for 2024 was HKD 95,133,000, down 26.9% from HKD 130,323,000 in 2023[17] - Shareholders' profit for the year was HKD 57,074,000, a significant decline of 51.6% compared to HKD 117,949,000 in 2023[46] Revenue Breakdown - Total revenue from external customers for the year 2024 reached HKD 1,474,488,000, an increase of 3.9% compared to HKD 1,418,994,000 in 2023[22] - The manufacturing segment generated revenue of HKD 931,812,000 in 2024, up from HKD 821,760,000 in 2023, reflecting a growth of 13.4%[17] - The trading segment reported revenue of HKD 542,676,000 in 2024, a decrease of 9.2% from HKD 597,234,000 in 2023[17] - Manufacturing revenue increased by 13.4% to HKD 931,812,000 from HKD 821,760,000 in 2023, accounting for 63.2% of total revenue[48] - Trade business revenue decreased by 9.1% year-on-year to HKD 542,676,000, accounting for 36.8% of total group revenue[50] Assets and Liabilities - Total assets increased to HKD 1,944,866,000, up from HKD 1,786,603,000, representing a growth of 8.8%[7] - Total liabilities rose to HKD 765,577,000 in 2024, up from HKD 625,420,000 in 2023, indicating a 22.4% increase[18] - Non-current assets increased to HKD 940,361,000 in 2024 from HKD 725,022,000 in 2023, representing a growth of 29.6%[23] - Trade receivables rose to HKD 400,015,000 in 2024, up from HKD 339,151,000 in 2023, indicating an increase of 17.9%[34] Cash Flow and Expenditures - The company reported a decrease in cash and cash equivalents to HKD 179,638,000 from HKD 317,849,000, a decline of 43.5%[7] - Capital expenditures for the year amounted to HKD 210,805,000, compared to HKD 153,639,000 in 2023, reflecting a significant increase of 37.2%[20] - The group’s cash and undrawn bank financing totaled approximately HKD 191,793,000 and HKD 750,600,000, respectively, as of December 31, 2024[46] - The group plans a capital expenditure budget of HKD 152.6 million for 2025, primarily for expanding operations in Mexico and Cambodia[56] Dividends and Shareholder Returns - The proposed final dividend per share decreased to HKD 0.05 in 2024 from HKD 0.06 in 2023, reflecting a reduction of 16.7%[32] - The board proposed a final dividend of HKD 0.05 per share, down from HKD 0.06 per share in the previous year[61] Corporate Governance - The board confirmed compliance with the corporate governance code for the fiscal year ending December 31, 2024[64] - All directors confirmed adherence to the standard code of conduct for securities transactions for the fiscal year ending December 31, 2024[65] - The audit committee reviewed the consolidated financial statements for the fiscal year ending December 31, 2024[66] - The auditor confirmed that the preliminary announcement figures align with the draft consolidated financial statements for the fiscal year ending December 31, 2024[67] Future Outlook and Strategies - The company plans to continue exploring new product development and market expansion strategies to enhance future performance[2] - The group expects the new Hong Kong Financial Reporting Standards to have minimal impact on its operational performance and financial position[14] - The group plans to expand production in Cambodia, with a monthly capacity of approximately 450,000 units starting in the second half of 2025[52] - The group’s Mexican factory is expected to reach a production capacity of 1,000,000 hats per month by the end of 2025[47] Acquisitions and Investments - The group completed the acquisition of 55% equity in Difuzed B.V. for EUR 5,000,000 (approximately HKD 43,124,000) on August 23, 2024[42] - Difuzed contributed revenue of HKD 63,594,000 since the acquisition, with a net loss of HKD 14,414,000 during the same period[44]

[Management Discussion and Analysis](index=3&type=section&id=Management%20Discussion%20and%20Analysis) This section reviews the company's financial performance, business operations, and future outlook [Financial Review](index=3&type=section&id=Financial%20Review) The Group saw significant declines in revenue and profit in H1 2024, but maintained its interim dividend and robust financial position Key Financial Indicators for H1 2024 | Indicator | For the six months ended June 30, 2024 | For the six months ended June 30, 2023 | Year-on-year Change | | :--- | :--- | :--- | :--- | | Revenue | HKD 687,114,000 | HKD 780,258,000 | -11.9% | | Gross Profit | HKD 219,510,000 | HKD 273,930,000 | -19.9% | | Gross Profit Margin | 31.9% | 35.1% | -3.2pp | | Profit Attributable to Owners | HKD 35,269,000 | HKD 65,075,000 | -45.8% | | Interim Dividend | 3 HK cents per share | 3 HK cents per share | Unchanged | - The Group's financial position is robust, with cash on hand of approximately **HKD 189 million** and unutilized banking facilities of approximately **HKD 804 million** as of June 30, 2024[3](index=3&type=chunk) [Business Review](index=3&type=section&id=Business%20Review) Both manufacturing and trading businesses faced sales pressure from weak demand and destocking, leading to declining manufacturing profit and an operating loss in trading [Manufacturing Business](index=3&type=section&id=Manufacturing%20Business) Manufacturing revenue declined 5.0% due to weak market demand and destocking, with varied factory performance and a 27.8% drop in segment operating profit Manufacturing Business Performance | Indicator | For the six months ended June 30, 2024 | For the six months ended June 30, 2023 | Year-on-year Change | | :--- | :--- | :--- | :--- | | Revenue | HKD 445,769,000 | HKD 469,233,000 | -5.0% | | Segment Operating Profit | HKD 93,178,000 | HKD 129,083,000 | -27.8% | - Factory performance varied, with Bangladesh improving costs despite lower sales, Shenzhen facing higher costs from reduced orders, and the new Mexico plant incurring initial operating losses[6](index=6&type=chunk) [Trading Business](index=4&type=section&id=Trading%20Business) Trading revenue fell 22.4% due to a weak retail market, with high distribution costs widening operating losses despite improved gross margin, prompting strategic acquisitions for market expansion Trading Business Performance | Indicator | For the six months ended June 30, 2024 | For the six months ended June 30, 2023 | Year-on-year Change | | :--- | :--- | :--- | :--- | | Revenue | HKD 241,345,000 | HKD 311,025,000 | -22.4% | | Operating Loss | (HKD 37,739,000) | (HKD 28,039,000) | Loss widened | - To expand market coverage, the Group acquired property in Missouri, USA, for a warehouse and a **55% equity interest** in a Dutch design company to penetrate European and other overseas markets[7](index=7&type=chunk) [Outlook](index=5&type=section&id=Outlook) Despite macroeconomic uncertainties, the Group is cautiously optimistic, focusing on enhancing factory efficiency, diversifying production, expanding market reach through acquisitions, and optimizing logistics with a new US warehouse - Production strategy: Focus on improving processes and stability at the Mexico factory, enhancing employee training; the Bangladesh factory will improve the synergistic benefits of newly added production lines for wallets, belts, and other accessories[10](index=10&type=chunk) - Trading strategy: Utilize the newly acquired Dutch design company to expand market coverage from Europe and America to the Middle East and Africa, and secure more brand licenses[10](index=10&type=chunk) - Infrastructure support: The Missouri, USA warehouse, expected to be operational in **Q4 2024**, will help save rental expenses and improve operational efficiency[10](index=10&type=chunk) [Liquidity and Financial Resources](index=6&type=section&id=Liquidity%20and%20Financial%20Resources) The Group maintains a robust financial position with ample cash, unutilized banking facilities, and a low gearing ratio at period-end Liquidity Position (as of June 30, 2024) | Indicator | Amount | December 31, 2023 | | :--- | :--- | :--- | | Total Cash and Bank Balances | HKD 205.2 million | HKD 331.0 million | | Unutilized Banking Facilities | HKD 803.7 million | HKD 733.7 million | | Gearing Ratio (Borrowings to Total Equity) | 13.4% | 13.8% | [Other Operating and Financial Information](index=6&type=section&id=Other%20Operating%20and%20Financial%20Information) The Group incurred significant capital expenditures for US property and capacity upgrades, and completed the acquisition of Difuzed B.V. to expand market reach and product portfolio [Capital Expenditure](index=6&type=section&id=Capital%20Expenditure) Major capital expenditures included **HKD 102.4 million** for US property and **HKD 24.2 million** for equipment upgrades, with future commitments for factory expansions and warehouse renovation - Capital expenditures during the period primarily included: - Investment of approximately **HKD 102.4 million** for property acquisition in Missouri, USA, for office and warehouse purposes - Investment of **HKD 24.2 million** for additions of plant and machinery to upgrade and expand production capacity[15](index=15&type=chunk) [Acquisition of a Subsidiary](index=7&type=section&id=Acquisition%20of%20a%20Subsidiary) In August 2024, the Group acquired a **55% stake** in Difuzed B.V. for **EUR 5 million** to expand market reach to the EU, Middle East, and Africa, and diversify product lines - On August 23, 2024, the Group acquired a **55% equity interest** in Dutch company Difuzed B.V. for a total consideration of **EUR 5 million** (approximately **HKD 42.5 million**), aiming to expand geographical market coverage and diversify its product lines[17](index=17&type=chunk) [Foreign Exchange Risk](index=7&type=section&id=Foreign%20Exchange%20Risk) The Group faces Bangladeshi Taka exchange rate risk, with a **1% Taka fluctuation** estimated to impact manufacturing gross profit margin by approximately **0.28%** - The Group estimates that a **1% appreciation or depreciation** of the Bangladeshi Taka would result in a decrease or increase of approximately **0.28%** in the manufacturing business's gross profit margin[18](index=18&type=chunk) [Employees and Remuneration Policy](index=7&type=section&id=Employees%20and%20Remuneration%20Policy) As of period-end, the Group employed approximately **8,104 staff** across five regions, with total employee expenses amounting to approximately **HKD 192.3 million** Employee Distribution and Expenses (as of June 30, 2024) | Region | Number of Employees | | :--- | :--- | | China (including Hong Kong) | 335 | | Bangladesh | 7,222 | | Mexico | 389 | | USA and UK | 158 | | **Total** | **8,104** | | **Employee Expenses for the Period** | **HKD 192.3 million** | [Interim Dividend and Closure of Register of Members](index=8&type=section&id=Interim%20Dividend%20and%20Closure%20of%20Register%20of%20Members) This section details the interim dividend declaration and related administrative procedures [Interim Dividend](index=8&type=section&id=Interim%20Dividend) The Board declared an interim dividend of **3 HK cents per share** for H1 2024, consistent with the previous year - The Board declared an interim dividend of **3 HK cents per share**, consistent with the same period in 2023, payable on or after October 10, 2024[20](index=20&type=chunk) [Interim Condensed Consolidated Financial Statements](index=9&type=section&id=Interim%20Condensed%20Consolidated%20Financial%20Statements) This section presents the unaudited interim condensed consolidated financial statements, including the statement of profit or loss, financial position, and cash flows [Interim Condensed Consolidated Statement of Profit or Loss](index=9&type=section&id=Interim%20Condensed%20Consolidated%20Statement%20of%20Profit%20or%20Loss) For H1 2024, Group revenue declined **11.9%** to **HKD 687.1 million**, with profit attributable to owners falling **45.8%** to **HKD 35.27 million** Summary of Consolidated Statement of Profit or Loss (for the six months ended June 30) | Indicator (HKD thousands) | 2024 (Unaudited) | 2023 (Unaudited) | | :--- | :--- | :--- | | Revenue | 687,114 | 780,258 | | Gross Profit | 219,510 | 273,930 | | Operating Profit | 65,048 | 100,000 | | Profit for the Period | 39,979 | 71,603 | | Profit Attributable to Owners of the Company | 35,269 | 65,075 | | Basic Earnings Per Share (HK cents) | 8.218 | 15.230 | [Interim Condensed Consolidated Statement of Financial Position](index=11&type=section&id=Interim%20Condensed%20Consolidated%20Statement%20of%20Financial%20Position) As of June 30, 2024, the Group reported total assets of **HKD 1,775.75 million** and total equity of **HKD 1,173.51 million**, reflecting a stable financial position Summary of Consolidated Statement of Financial Position | Indicator (HKD thousands) | June 30, 2024 (Unaudited) | December 31, 2023 (Audited) | | :--- | :--- | :--- | | Total Assets | 1,775,751 | 1,786,603 | | Total Liabilities | 602,245 | 625,420 | | Total Equity | 1,173,506 | 1,161,183 | [Interim Condensed Consolidated Statement of Cash Flows](index=15&type=section&id=Interim%20Condensed%20Consolidated%20Statement%20of%20Cash%20Flows) Net cash from operating activities decreased to **HKD 31.77 million** due to lower profit, while investing activities saw a **HKD 123.07 million** outflow for US property, and financing activities resulted in a net outflow Summary of Consolidated Statement of Cash Flows (for the six months ended June 30) | Indicator (HKD thousands) | 2024 (Unaudited) | 2023 (Unaudited) | | :--- | :--- | :--- | | Net Cash from Operating Activities | 31,765 | 146,272 | | Net Cash Used in Investing Activities | (123,068) | (9,709) | | Net Cash Used in Financing Activities | (36,399) | (58,630) | | Net Decrease in Cash and Cash Equivalents | (127,702) | 77,933 | [Summary of Notes to Unaudited Interim Condensed Consolidated Financial Information](index=16&type=section&id=Summary%20of%20Notes%20to%20Unaudited%20Interim%20Condensed%20Consolidated%20Financial%20Information) This section provides key explanatory notes to the interim condensed consolidated financial information, detailing segment performance, earnings per share, borrowings, and post-reporting period events [Note 7: Segment Information](index=21&type=section&id=Note%207:%20Segment%20Information) Manufacturing contributed **64.9%** of total revenue with a **20.9%** operating profit margin, while trading accounted for **35.1%** of revenue and incurred an operating loss Segment Results (for the six months ended June 30, 2024) | Business Segment | Revenue (HKD thousands) | % of Total Revenue | Operating Profit/(Loss) (HKD thousands) | | :--- | :--- | :--- | :--- | | Manufacturing Business | 445,769 | 64.9% | 93,178 | | Trading Business | 241,345 | 35.1% | (37,739) | [Note 10: Earnings Per Share](index=26&type=section&id=Note%2010:%20Earnings%20Per%20Share) Basic earnings per share significantly decreased to **8.218 HK cents** from **15.230 HK cents** last year, with diluted earnings per share at **8.141 HK cents** Earnings Per Share (for the six months ended June 30) | Indicator (HK cents) | 2024 | 2023 | | :--- | :--- | :--- | | Basic Earnings Per Share | 8.218 | 15.230 | | Diluted Earnings Per Share | 8.141 | 14.900 | [Note 17: Borrowings](index=37&type=section&id=Note%2017:%20Borrowings) At period-end, total borrowings were **HKD 158 million**, mostly current, with some from an affiliate of a company shareholder Borrowings Structure (as of June 30, 2024) | Category (HKD thousands) | Amount | | :--- | :--- | | Current Borrowings | 150,459 | | Non-current Borrowings | 7,197 | | **Total Borrowings** | **157,656** | [Note 20: Events After the Reporting Period](index=40&type=section&id=Note%2020:%20Events%20After%20the%20Reporting%20Period) On August 23, 2024, the Group completed the acquisition of a **55% stake** in Dutch company Difuzed B.V. for **EUR 5 million** - On August 23, 2024, the Group acquired a **55% equity interest** in Dutch company Difuzed B.V. for a total consideration of **EUR 5 million** (approximately **HKD 42.5 million**)[86](index=86&type=chunk) [Other Information Required by Listing Rules](index=41&type=section&id=Other%20Information%20Required%20by%20Listing%20Rules) This section provides additional information as required by the Listing Rules, including details on directors' and major shareholders' interests, share option schemes, and corporate governance [Directors' and Substantial Shareholders' Interests](index=41&type=section&id=Directors'%20and%20Substantial%20Shareholders'%20Interests) The report details directors' and substantial shareholders' interests, with Mr. Yan Hei Cheung and Ms. Ngan Po Ling collectively holding **65.23%**, and Mr. Christopher Koch and NEHK holding **19.48%** - As of June 30, 2024, Mr. Yan Hei Cheung and Ms. Ngan Po Ling, Pauline were deemed to be jointly interested in **65.23%** of the Company's interests[89](index=89&type=chunk) - Substantial shareholder Mr. Christopher Koch and NEHK, controlled by him, held **19.48%** of the Company's interests[100](index=100&type=chunk)[101](index=101&type=chunk) [Share Option Scheme](index=42&type=section&id=Share%20Option%20Scheme) A new share option scheme was adopted in May 2024, with **28,345,000 options** unexercised under the previous scheme and no new grants during the period - As of June 30, 2024, **28,345,000 share options** remained unexercised under the previous share option scheme[92](index=92&type=chunk)[96](index=96&type=chunk) - The Company adopted a new share option scheme on May 24, 2024, with the total number of shares that may be issued not exceeding **10%** of the then-issued shares[92](index=92&type=chunk) [Corporate Governance](index=47&type=section&id=Corporate%20Governance) The Board confirms compliance with the Corporate Governance Code during the period, and the Audit Committee has reviewed the interim financial information - The Board is of the view that the Company has complied with the code provisions of the Corporate Governance Code for the six months ended June 30, 2024[106](index=106&type=chunk) - The Audit Committee has reviewed the interim condensed consolidated financial information for the period ended June 30, 2024[108](index=108&type=chunk)

Financial Performance - For the six months ended June 30, 2024, the company's revenue was HKD 687,114,000, a decrease of 11.95% compared to HKD 780,258,000 for the same period in 2023[1] - Gross profit for the same period was HKD 219,510,000, down 19.87% from HKD 273,930,000 in 2023[1] - Operating profit decreased to HKD 65,048,000, a decline of 35% from HKD 100,000,000 in the previous year[1] - Net profit for the period was HKD 39,979,000, representing a 44.14% decrease from HKD 71,603,000 in 2023[2] - Basic earnings per share dropped to HKD 8.218, down 46.06% from HKD 15.230 in the same period last year[2] - Total reported segment revenue was HKD 711,068,000, down 12.3% from HKD 810,421,000 in the previous year[12] - Reported segment profit was HKD 55,439,000, a decrease of 45.4% from HKD 101,044,000 in the previous year[12] - Operating profit for the period was HKD 65,048,000, down 35.0% from HKD 100,000,000 in the previous year[12] - Net profit for the period was HKD 39,979,000, a decrease of 44.2% from HKD 71,603,000 in the previous year[12] - Basic earnings per share for the six months ended June 30, 2024, was 8.218 HKD cents, down from 15.230 HKD cents in the same period of 2023, reflecting a decrease of about 46.0%[21] - Net profit attributable to shareholders decreased by 45.8% to HKD 35,269,000 from HKD 65,075,000 in the previous year[33] Assets and Liabilities - Total assets as of June 30, 2024, were HKD 1,775,751,000, a slight decrease from HKD 1,786,603,000 at the end of 2023[4] - Total liabilities as of June 30, 2024, were HKD 360,870,000, down from HKD 386,489,000 as of December 31, 2023[15] - The company's cash and cash equivalents decreased to HKD 188,628,000 from HKD 317,849,000 at the end of 2023[4] - Trade receivables increased to HKD 370,820,000 from HKD 339,151,000, with a net amount of HKD 352,257,000 after impairment losses[27] - Trade payables decreased to HKD 150,752,000 from HKD 169,544,000, while accrued expenses and other payables remained stable[29] Segment Performance - Revenue from external customers for the manufacturing segment was HKD 445,769,000, a decrease of 5.1% from HKD 469,233,000 in the previous year[12] - Revenue from external customers for the trading segment was HKD 241,345,000, a decrease of 22.4% from HKD 311,025,000 in the previous year[12] - The manufacturing segment's revenue decreased by 5.0% to HKD 445,769,000, accounting for approximately 64.9% of total revenue[34] - The trading segment's revenue decreased by 22.4% to HKD 241,345,000, representing 35.1% of total revenue[36] - The manufacturing segment reported an operating profit of HKD 93,178,000, down 27.8% from HKD 129,083,000 in the previous year[35] Capital Expenditures and Investments - Capital expenditures for the period were HKD 157,490,000, an increase from HKD 153,639,000 in the previous year[15] - Capital expenditures for the six months ended June 30, 2024, amounted to HKD 127,615,000 for property, plant, and equipment, significantly higher than HKD 23,685,000 in the same period of 2023, representing an increase of approximately 438.5%[25] - The group invested approximately HKD 102.4 million in property acquisition in Missouri, USA, and HKD 24.2 million in equipment and machinery upgrades during the period[40] - The company acquired 55% equity interest in Difuzed B.V. for EUR 5,000,000 (approximately HKD 42,500,000) to expand its market presence[31] - The group has approved capital commitments of HKD 122.7 million for the construction of a warehouse and dormitory in Mexico and expansion of operations in Bangladesh[40] Corporate Governance - The board declared an interim dividend of HKD 0.03 per share, consistent with the previous year[43] - The board of directors consists of nine members, including six executive directors and three independent non-executive directors[49] - The executive directors include Mr. Yan Xiangqiang, Ms. Yan Baoling, Mr. James S. Patterson, Mr. Yan Zhaohan, Mr. Li Wenxing, and Mr. Yan Zhaozhen[49] - The independent non-executive directors are Mr. Wu Jundong, Mr. Zhuang Disheng, and Mr. Li Yinquan[49] - The announcement was made on August 27, 2024, indicating the company's commitment to transparency and governance[49] - The company aims to enhance its strategic direction through the expertise of its diverse board members[49] - The board composition reflects a balance of executive and independent oversight, which is crucial for effective decision-making[49] - The presence of independent directors is intended to ensure accountability and protect shareholder interests[49] - The company is focused on maintaining strong corporate governance practices to support long-term growth[49] - The board's diverse backgrounds are expected to contribute to innovative strategies and market expansion[49] - The company is committed to regular updates and communication with stakeholders regarding its performance and strategic initiatives[49] Operational Efficiency and Future Outlook - The group plans to enhance operational efficiency through cost control measures and diversified supply chains to mitigate rising costs[38] - The group expects the new warehouse in Missouri to be operational by Q4 2024, improving operational efficiency and reducing rental expenses[40] - The group anticipates a 1% appreciation/depreciation of the Bangladeshi Taka will impact manufacturing gross margins by approximately 0.28%[42] - Employee headcount as of June 30, 2024, included 335 in China, 7,222 in Bangladesh, 389 in Mexico, and 158 in the USA and UK[43]

Employee Statistics and Diversity - The company reported a total employee count of 7,631, with 4,151 in Hong Kong and 3,480 in mainland China[3]. - The gender distribution shows 46.7% of employees are female in Hong Kong, while in mainland China, the female percentage is 8.6%[13]. - The company has a total of 310 full-time employees and 7,631 part-time employees across various regions[5]. - The employee turnover rate in Hong Kong is 35.8% for the age group 30 to 50 years[13]. - The company promotes equal employment opportunities and prohibits discrimination based on gender, race, religion, age, and other factors[15]. - The gender ratio among employees is approximately 1:0.9, indicating a commitment to gender diversity[188]. Financial Performance - The company's revenue for the year was HKD 1,418,994,000, a decrease of 24.2% compared to HKD 1,874,424,000 in 2022[46]. - Gross profit was HKD 476,364,000, down 25.3% from HKD 637,296,000 in the previous year, with a slight decline in gross margin to 33.6%[46]. - Shareholders' profit attributable to the company was HKD 117,949,000, reflecting a 39.6% decrease from HKD 195,390,000 in 2022[46]. - Operating profit decreased to HKD 190,204, a decline of 28.0% compared to HKD 264,059 in 2022[182]. - Net profit for the year was HKD 127,808, representing a decrease of 40.0% from HKD 213,307 in 2022[182]. - Basic earnings per share for 2023 was HKD 27.5473, down from HKD 45.8728 in 2022, reflecting a decline of 40.0%[183]. - The company reported a net financial loss of HKD 13,177, slightly up from HKD 13,074 in the previous year[182]. Community Engagement and Social Responsibility - The company donated RMB 1,000,000 to Nanjing University and RMB 500,000 to Yongchun Charity Association as part of its community investment efforts[20]. - The company has received public recognition for its efforts in social and environmental initiatives in 2023[87]. - The company has set targets for emissions reduction and has taken steps to achieve these goals, demonstrating commitment to sustainability[90]. - The company has not encountered any issues with water sourcing, ensuring sustainable water usage[90]. Operational Developments - A new factory in Mexico was completed in December 2023, enhancing the company's rapid production capabilities and market share in the hat industry[44]. - The new factory in Mexico is strategically located less than two kilometers from the US border, significantly reducing delivery times and logistics costs for US-bound orders[59]. - The trading division has begun producing wallets and belts in its Bangladesh factory to reduce procurement costs and improve delivery speed[61]. - The company focused on optimizing factory operations and utilizing automated production equipment to reduce production costs[59]. Risk Management and Compliance - The company adheres to all relevant labor laws and regulations, ensuring no child labor is employed in its operations[26]. - The group faces foreign exchange risks due to currency fluctuations, particularly with GBP, which could impact after-tax profits by approximately HKD 299,000 if GBP fluctuates by 5%[73]. - The group has diversified its investment portfolio to manage price risk associated with its investments in listed and unlisted securities[75]. - The company has established policies to ensure compliance with the Personal Data (Privacy) Ordinance in Hong Kong, emphasizing data protection[82]. - The company has not faced any concluded corruption lawsuits during the reporting period, indicating a strong anti-corruption stance[96]. Corporate Governance - The company has adopted the corporate governance code principles as per the Hong Kong Stock Exchange's listing rules and has complied with all code provisions for the year ending December 31, 2023[152]. - The board consists of six executive directors and three independent non-executive directors, ensuring a balanced composition for effective independent judgment[163]. - The company has maintained a gender-diverse board with one female and seven male directors, which is considered satisfactory under the diversity policy[168]. - The board has undergone corporate governance training to enhance its effectiveness[166]. - The company has established a clear distinction between the roles of the board and daily management to ensure balanced power distribution[160]. Health and Safety - The company reported no fatalities due to work-related incidents over the past three years, maintaining a safety record of zero[91]. - There were no workdays lost due to work-related injuries, indicating effective health and safety measures[91]. - The company did not recall any products for safety or health reasons, reflecting strong product responsibility[96]. - There were no complaints received regarding products and services, showcasing high customer satisfaction[96].

Sales Outlook and Production Capacity - The group maintains a cautiously optimistic sales outlook for hats and consumer products in 2024, supported by the new factory in Mexico and improved production efficiency[1] - The new Mexican factory is expected to employ approximately 1,000 workers by the end of this year, with a monthly production capacity of 1 million units[1] - A new factory in Mexico was completed at the end of last year, enhancing order production capacity and reducing logistics costs for shipments to the U.S.[24] - The group has advanced automated production equipment and skilled labor in its Bangladesh factory, achieving a monthly production capacity of 6 million pieces[51] Financial Performance - The diluted earnings per share for 2023 was HKD 26.9886, down from HKD 45.0421 in 2022[18] - The company's manufacturing revenue for the year was HKD 821,760,000, a decrease of 27.1% compared to HKD 1,127,566,000 in the previous year[24] - The trading business revenue decreased by 20.0% to HKD 597,234,000, down from HKD 746,858,000, accounting for 42.1% of total revenue[26] - The group’s revenue for the year was HKD 1,418,994,000, a decrease of 24.2% compared to HKD 1,874,424,000 in the previous year[48] - Gross profit for the year was HKD 476,364,000, down 25.3% from HKD 637,296,000, with a slight decline in gross margin to 33.6% from 34.0%[48] - Shareholders' profit attributable to the company was HKD 117,949,000, a decrease of 39.6% compared to HKD 195,390,000 in the previous year[48] - The company's profit for the year 2023 was HKD 127,808,000, a decrease of 40% compared to HKD 213,307,000 in 2022[67] - Basic earnings per share for the company owners was HKD 27.5473, down from HKD 45.8728 in the previous year, representing a decline of 40%[67] Cash Flow and Capital Expenditures - As of December 31, 2023, the group's cash and cash equivalents totaled HKD 331 million, an increase from HKD 268.5 million in 2022[8] - The group maintained a stable operating cash flow with cash and undrawn bank financing totaling approximately HKD 317,849,000 and HKD 733,700,000, respectively, compared to HKD 246,949,000 and HKD 579,600,000 in the previous year[49] - The group plans to invest HKD 262 million in capital expenditures for 2024, with HKD 133.6 million allocated for the construction of a warehouse and dormitory in Mexico[10] - Capital expenditures for the year amounted to HKD 153,639,000, a decrease from HKD 205,365,000 in the previous year, representing a reduction of about 25.2%[85] Cost Control and Operational Efficiency - The group has implemented various cost control measures to address challenges such as a 60% increase in the minimum wage in Bangladesh and rising raw material prices[4] - The company has optimized factory operations and invested in automation to reduce production costs while maintaining a high gross margin[24] - The group will continue to optimize its product mix and operational efficiency in its trade business, including the acquisition of a property in Missouri for warehouse use[4] - The company is actively seeking to optimize its workforce structure and improve operational efficiency to control sales and distribution costs[26] Assets and Liabilities - Total assets decreased to HKD 1,786,603,000 in 2023 from HKD 1,958,314,000 in 2022, reflecting a reduction of approximately 8.7%[69] - Total liabilities decreased to HKD 625,420,000 in 2023 from HKD 889,333,000 in 2022, a reduction of approximately 29.7%[71] - The company's equity increased to HKD 1,161,183,000 in 2023 from HKD 1,068,981,000 in 2022, reflecting an increase of about 8.6%[71] - Inventory levels decreased significantly to HKD 373,652,000 in 2023 from HKD 523,646,000 in 2022, a decline of approximately 28.6%[69] - Trade receivables also saw a reduction, falling to HKD 321,399,000 in 2023 from HKD 435,287,000 in 2022, a decrease of about 26.1%[69] Market Challenges - The group faced challenges in the retail market due to economic slowdowns in major markets, impacting procurement activities and overall retail sales[47] - The group anticipates that a 1% appreciation of the Bangladeshi Taka will reduce the manufacturing gross margin by approximately 0.28%[12] Dividends - The company proposed a final dividend of HKD 0.06 per share, totaling HKD 25,750,000, consistent with the previous year's dividend[8] - The board declared a final dividend of HKD 0.06 per share, maintaining the total dividend for the year at HKD 0.09 per share[48]

Financial Performance - The company's total revenue for the six months ended June 30, 2023, was HKD 780.26 million, a decrease of 17.2% compared to HKD 941.91 million for the same period in 2022[23]. - Gross profit fell by 9.8% to HKD 273.93 million, with a slight increase in gross margin to 35.1% from 32.2% in the previous year[23]. - Net profit attributable to shareholders decreased by 23.0% to HKD 65.08 million, down from HKD 84.49 million in the prior year[23]. - Trade business revenue decreased by 18.1% to HKD 311.03 million, accounting for 39.9% of total revenue[25]. - The group's revenue for the manufacturing business decreased by 16.5% to HKD 469,233,000, accounting for approximately 60.1% of total revenue[46]. - Operating profit for the manufacturing segment declined by 9.0% to HKD 129,083,000 compared to HKD 141,885,000 in the previous year[46]. - The group reported a net profit of HKD 71,603,000, down from HKD 91,257,000 in the previous year, representing a decrease of approximately 21.5%[37]. - Basic earnings per share decreased to 15.230 HKD from 20.804 HKD, reflecting a decline of about 26.8%[37]. - Total comprehensive income for the period, after tax, was HKD 66,918,000, down from HKD 88,029,000 in the previous year, indicating a decline of about 24.0%[78]. Cash and Liquidity - As of June 30, 2023, the company's cash and bank balances totaled HKD 327.20 million, an increase from HKD 268.50 million at the end of 2022[31]. - Cash and undrawn bank credit as of June 30, 2023, were approximately HKD 323,200,000 and HKD 705,000,000, respectively, compared to HKD 246,900,000 and HKD 579,500,000 at the end of 2022[45]. - Cash and cash equivalents increased to HKD 323,248,000 from HKD 246,949,000, representing a growth of approximately 30.8%[80]. - The company reported a net cash inflow from operating activities of HKD 146,272,000 for the six months ended June 30, 2023, compared to HKD 65,369,000 for the same period in 2022, representing an increase of 123%[104]. - Cash and cash equivalents at the end of the period increased to HKD 323,248,000, up from HKD 240,056,000 at the end of the previous period, reflecting a growth of 35%[104]. Investments and Capital Expenditure - The company invested approximately HKD 23.7 million in equipment and machinery to upgrade and expand capacity during the period[32]. - The company approved capital commitments of HKD 102.2 million for production facilities in Mexico and Bangladesh, along with HKD 0.3 million for trade business equipment upgrades[73]. - The company’s cash outflow for purchasing property, plant, and equipment was HKD 23,685,000, down from HKD 30,528,000 in the previous year, indicating a reduction of 22%[104]. - The company made an investment of approximately HKD 33 million in a limited partnership in China, representing about 3.36% of the target investment amount[118]. Debt and Financial Position - The company’s bank credit facilities amounted to HKD 893.0 million, with HKD 705.0 million undrawn as of June 30, 2023[31]. - The company's debt-to-equity ratio improved to 19.5% as of June 30, 2023, compared to 22.8% at the end of 2022, indicating a stronger financial position[72]. - The company has a total liability of HKD 432,520,000 as of June 30, 2023, compared to HKD 575,765,000 at the end of the previous year[126]. - The company’s total financial liabilities have not shown significant changes compared to the end of the previous year[111]. Operational Developments - The company is expanding its production base in Mexico, expected to be completed by the end of this year, enhancing order fulfillment capabilities and reducing logistics costs[29]. - The group plans to enhance operational management and optimize efficiency, with a new factory in Bangladesh significantly increasing production capacity[50]. - The company has established strong, long-term relationships with major retail brands, which will help maintain stable pricing and support sustainable development[28]. Market Outlook - The company anticipates a cautious optimism in sales prospects for consumer goods, supported by declining inflation rates and improved consumer confidence in the European and American retail markets[27]. - The group anticipates a recovery in order volume as inventory levels in major markets like the U.S. continue to decline[49]. - The group will implement various cost control measures to address challenges from rising raw material prices and high freight costs[51]. Shareholder Returns - The group declared an interim dividend of 3 HKD cents per share, consistent with the previous year[35]. - The company paid dividends amounting to HKD 25,703,000 during the period, slightly up from HKD 24,319,000 in the same period last year[104]. - The company has not declared any special dividends for the fiscal year 2022, compared to HKD 8,106,000 in special dividends for the fiscal year 2021[168]. Asset Management - The company's total assets decreased to HKD 1,839,270,000 as of June 30, 2023, from HKD 1,958,314,000 at the end of 2022, reflecting a reduction of approximately 6.1%[80]. - The company reported a decrease in inventory to HKD 387,550,000 from HKD 523,646,000, indicating a reduction of about 26.0%[80]. - The carrying amount of other intangible assets decreased to HKD 31,264,000 as of June 30, 2023, from HKD 52,243,000 as of December 31, 2022, a decline of approximately 40.1%[187]. Financial Risks and Management - The company’s financial risk management policies have remained unchanged since the end of the previous fiscal year[112]. - The expected credit loss provision made during the six months ended June 30, 2023, was HKD 2,052,000, a decrease from HKD 2,425,000 for the same period in 2022[144]. - The income tax expense for the six months ended June 30, 2023, was HKD 20,009,000, down from HKD 22,367,000 in the previous year, indicating a decrease of approximately 11%[145]. Stock and Shareholder Information - The total number of issued shares increased to 428,684,448 as of June 30, 2023, from 426,601,448 at the end of 2022, reflecting an increase of approximately 0.5%[179]. - The company's weighted average number of ordinary shares increased to 427,289,401 for the six months ended June 30, 2023, from 406,107,058 in the same period of 2022[147]. - As of June 30, 2023, there are 28,825,000 unexercised stock options available for exercise[197]. - No new stock options were granted in the six months ending June 30, 2023, consistent with the same period in 2022[199].

Financial Statements This section presents the interim condensed consolidated financial statements, including the statement of profit or loss, comprehensive income, and balance sheet [Interim Condensed Consolidated Statement of Profit or Loss](index=1&type=section&id=Interim%20Condensed%20Consolidated%20Statement%20of%20Profit%20or%20Loss) For the six months ended June 30, 2023, the Group's revenue decreased by 17.2% to HK$780.26 million, with gross profit down 9.8% to HK$273.93 million, while profit attributable to owners of the Company declined 23.0% to HK$65.08 million, and basic earnings per share was 15.23 HK cents Interim Consolidated Statement of Profit or Loss Summary | Item | H1 2023 (HK$ thousands) | H1 2022 (HK$ thousands) | Year-on-year Change | | :--- | :--- | :--- | :--- | | Revenue | 780,258 | 941,912 | -17.2% | | Gross Profit | 273,930 | 303,717 | -9.8% | | Operating Profit | 100,000 | 118,413 | -15.5% | | Profit Before Income Tax | 91,612 | 113,624 | -19.4% | | Profit for the Period | 71,603 | 91,257 | -21.5% | | Profit Attributable to Owners of the Company | 65,075 | 84,486 | -23.0% | | Basic Earnings Per Share (HK cents) | 15.230 | 20.804 | -26.8% | | Diluted Earnings Per Share (HK cents) | 14.900 | 20.422 | -27.0% | [Interim Condensed Consolidated Statement of Comprehensive Income](index=3&type=section&id=Interim%20Condensed%20Consolidated%20Statement%20of%20Comprehensive%20Income) For the six months ended June 30, 2023, total comprehensive income for the period decreased to HK$66.92 million from HK$88.03 million in the prior year, with total comprehensive income attributable to owners of the Company at HK$60.27 million Interim Consolidated Statement of Comprehensive Income Summary | Item | H1 2023 (HK$ thousands) | H1 2022 (HK$ thousands) | | :--- | :--- | :--- | | Profit for the Period | 71,603 | 91,257 | | Other Comprehensive Income | (4,685) | (3,228) | | Total Comprehensive Income for the Period | 66,918 | 88,029 | | Attributable to Owners of the Company | 60,273 | 81,448 | | Attributable to Non-controlling Interests | 6,645 | 6,581 | [Interim Condensed Consolidated Balance Sheet](index=4&type=section&id=Interim%20Condensed%20Consolidated%20Balance%20Sheet) As of June 30, 2023, the Group's total assets decreased to HK$1.839 billion from HK$1.958 billion at year-end 2022, with total liabilities reducing to HK$728.67 million and total equity increasing to HK$1.111 billion, while net current assets slightly improved Balance Sheet Summary | Item | June 30, 2023 (HK$ thousands) | December 31, 2022 (HK$ thousands) | | :--- | :--- | :--- | | **Assets** | | | | Non-current Assets | 718,892 | 697,091 | | Current Assets | 1,120,378 | 1,261,223 | | **Total Assets** | **1,839,270** | **1,958,314** | | **Equity and Liabilities** | | | | Total Equity | 1,110,602 | 1,068,981 | | Non-current Liabilities | 81,799 | 93,639 | | Current Liabilities | 646,869 | 795,694 | | **Total Liabilities** | **728,668** | **889,333** | | **Total Equity and Liabilities** | **1,839,270** | **1,958,314** | Notes to the Financial Statements This section provides detailed notes on the basis of preparation, accounting policies, segment information, and other financial details supporting the interim financial statements [1. Basis of Preparation and 2. Accounting Policies](index=6&type=section&id=1.%20Basis%20of%20Preparation%20and%202.%20Accounting%20Policies) These interim financial statements are prepared in accordance with HKAS 34 'Interim Financial Reporting' and are unaudited, with accounting policies consistent with the annual financial statements for the year ended December 31, 2022, and new or revised standards adopted during the period having no significant impact on the Group's accounting policies - The interim financial information is prepared in accordance with HKAS 34 and should be read in conjunction with the 2022 annual financial statements[13](index=13&type=chunk) - Except for insurance contract investments, accounting policies are consistent with the prior year, and newly issued standards have no significant impact on the Group[20](index=20&type=chunk)[21](index=21&type=chunk)[27](index=27&type=chunk) [3. Segment Information](index=7&type=section&id=3.%20Segment%20Information) The Group's operations are divided into manufacturing and trading segments, with manufacturing contributing the majority of revenue and all profit, while the trading segment recorded a loss, with manufacturing revenue at HK$469.23 million and segment profit at HK$129.08 million, and trading revenue at HK$311.03 million and segment loss at HK$28.04 million - The Group's operations are categorized into two main segments: **Manufacturing**, with production facilities in Bangladesh and Shenzhen, China, primarily serving customers in the US and Europe; and **Trading**, involving the trade and distribution of headwear, leather goods, and accessories through various subsidiaries in the US and European markets[23](index=23&type=chunk)[51](index=51&type=chunk)[48](index=48&type=chunk) Segment Results by Business for H1 2023 | Item (HK$ thousands) | Manufacturing | Trading | Total | | :--- | :--- | :--- | :--- | | Revenue from External Customers | 469,233 | 311,025 | 780,258 | | Reportable Segment Profit/(Loss) | 129,083 | (28,039) | 101,044 | [4. Profit Before Income Tax](index=9&type=section&id=4.%20Profit%20Before%20Income%20Tax) Profit before income tax for the period was HK$91.61 million, with key deductions including depreciation of property, plant and equipment at HK$25.68 million, amortization of other intangible assets at HK$13.66 million, and net finance costs of HK$8.37 million, alongside provisions of HK$1.94 million for obsolete inventories and HK$2.05 million for trade receivables - Provisions for obsolete inventories of **HK$1.94 million** and expected credit losses of **HK$2.05 million** were made during the period[30](index=30&type=chunk) Key Expenses and Finance Costs | Item (HK$ thousands) | H1 2023 | H1 2022 | | :--- | :--- | :--- | | Depreciation of Property, Plant and Equipment | 25,675 | 20,176 | | Amortization of Other Intangible Assets | 13,664 | 10,548 | | Finance Costs – Net | (8,374) | (4,711) | [5. Income Tax Expense](index=10&type=section&id=5.%20Income%20Tax%20Expense) For the six months ended June 30, 2023, income tax expense decreased to HK$20.01 million from HK$22.37 million in the prior year, with Hong Kong profits tax accrued at 16.5% and overseas profits tax calculated based on applicable rates in the respective operating countries Composition of Income Tax Expense | Item (HK$ thousands) | H1 2023 | H1 2022 | | :--- | :--- | :--- | | Current Year Tax | 19,596 | 22,188 | | Deferred Income Tax | 413 | 179 | | **Total Income Tax Expense** | **20,009** | **22,367** | - Hong Kong profits tax rate is **16.5%**, consistent with the prior year[43](index=43&type=chunk) [6. Earnings Per Share](index=11&type=section&id=6.%20Earnings%20Per%20Share) For the six months ended June 30, 2023, profit attributable to owners of the Company was HK$65.08 million, resulting in basic earnings per share of 15.23 HK cents based on a weighted average of 427.29 million ordinary shares outstanding, and diluted earnings per share of 14.90 HK cents after considering the dilutive effect of share options Basic Earnings Per Share Calculation | Item | H1 2023 | H1 2022 | | :--- | :--- | :--- | | Profit Attributable to Owners of the Company (HK$ thousands) | 65,075 | 84,486 | | Weighted Average Number of Ordinary Shares Outstanding | 427,289,401 | 406,107,058 | | **Basic Earnings Per Share (HK cents)** | **15.230** | **20.804** | Diluted Earnings Per Share Calculation | Item | H1 2023 | H1 2022 | | :--- | :--- | :--- | | Weighted Average Number of Ordinary Shares for Calculation | 436,741,782 | 413,696,223 | | **Diluted Earnings Per Share (HK cents)** | **14.900** | **20.422** | [7. Dividends](index=12&type=section&id=7.%20Dividends) The Board declared an interim dividend of 3 HK cents per share for the six months ended June 30, 2023, consistent with the prior year, totaling approximately HK$12.86 million, in addition to the final dividend of 6 HK cents per share for 2022, amounting to HK$25.70 million, paid during the period - Interim dividend of **3 HK cents per share** declared, consistent with the same period in 2022[41](index=41&type=chunk) - Final dividend for 2022 of **6 HK cents per share**, totaling **HK$25.70 million**, was paid during the period[56](index=56&type=chunk) [8. Capital Expenditure and Other Assets/Liabilities](index=13&type=section&id=8.%20Capital%20Expenditure%20and%20Other%20Assets%2FLiabilities) During the period, the Group's capital expenditure on property, plant and equipment was HK$23.69 million, and on intangible assets was HK$5.58 million, while net trade receivables decreased from HK$435 million to HK$365 million, primarily aged within 60 days, and trade payables also decreased from HK$234 million to HK$153 million [8.1 Capital Expenditure](index=13&type=section&id=8.1%20Capital%20Expenditure) The Group incurred capital expenditures primarily for property, plant, and equipment, and intangible assets during the period - For the six months ended June 30, 2023, the Group's total capital expenditure amounted to **HK$29.27 million**, including **HK$23.69 million** for property, plant and equipment, and **HK$5.58 million** for intangible assets[57](index=57&type=chunk) [9. Right-of-use Assets and Lease Liabilities](index=14&type=section&id=9.%20Right-of-use%20Assets%20and%20Lease%20Liabilities) This section details the Group's right-of-use assets and corresponding lease liabilities as of the reporting date - As of June 30, 2023, the carrying amount of right-of-use assets was **HK$57.09 million**, and total lease liabilities were **HK$60.93 million**, with no additions to right-of-use assets during the period[59](index=59&type=chunk)[60](index=60&type=chunk) [10. Trade Receivables and 11. Trade Payables](index=15&type=section&id=10.%20Trade%20Receivables%20and%2011.%20Trade%20Payables) This section provides an aging analysis of the Group's trade receivables and trade payables Aging Analysis of Trade Receivables (HK$ thousands) | Aging | June 30, 2023 | December 31, 2022 | | :--- | :--- | :--- | | 0–30 Days | 135,248 | 127,622 | | 31–60 Days | 101,224 | 122,207 | | 61–90 Days | 67,405 | 85,906 | | Over 90 Days | 77,021 | 113,554 | | **Total** | **380,898** | **449,289** | Aging Analysis of Trade Payables (HK$ thousands) | Aging | June 30, 2023 | December 31, 2022 | | :--- | :--- | :--- | | 0–30 Days | 46,257 | 120,896 | | 31–60 Days | 22,819 | 30,694 | | 61–90 Days | 13,854 | 6,839 | | Over 90 Days | 70,327 | 75,150 | | **Total** | **153,257** | **233,579** | Management Discussion and Analysis This section provides an overview of the Group's financial performance, business operations, future outlook, and financial management strategies [Financial and Business Review](index=17&type=section&id=Financial%20and%20Business%20Review) In the first half of 2023, the Group's revenue decreased by 17.2% to HK$780.26 million due to global market inventory overhang and weakening demand, yet gross margin increased to 35.1% through stable pricing and cost control, while manufacturing revenue declined 16.5% and trading revenue fell 18.1%, resulting in an operating loss for the latter, and profit attributable to shareholders decreased by 23.0% to HK$65.08 million - Facing market oversupply, the Group maintained a stable pricing strategy to protect gross margin, which slightly increased by **2.9 percentage points to 35.1%**[70](index=70&type=chunk)[72](index=72&type=chunk) - Manufacturing revenue decreased by **16.5%**, primarily due to reduced shipments as European and US customers digested inventory[73](index=73&type=chunk) - Trading revenue decreased by **18.1%**, also impacted by customer inventory digestion, and recorded an operating loss of **HK$28.04 million** as sales decline outpaced cost savings[76](index=76&type=chunk) [Prospects](index=18&type=section&id=Prospects) Looking ahead, despite global economic uncertainties, the Group is cautiously optimistic about prospects as European and US retail markets are expected to improve with declining inflation, anticipating inventory levels in key markets to normalize by Q4, leading to order recovery, while the Group will leverage its rapid production capabilities, enhanced by a new Mexican production base, and expand product lines to accessories at the new Bangladesh plant for synergistic benefits - Major retailers' inventory levels are expected to return to healthy levels by **Q4 this year**, leading to a rebound in order volumes[77](index=77&type=chunk) - The Group is establishing a new production base in Mexico, expected to be completed by year-end, which will enhance rapid order production capabilities and shorten delivery times to the US[79](index=79&type=chunk) - The new Bangladesh plant is completed and will expand production lines to accessories like belts and wallets, aiming to optimize resource utilization and achieve production-trading synergies[79](index=79&type=chunk) [Liquidity, Financial Resources, and Capital Management](index=20&type=section&id=Liquidity%2C%20Financial%20Resources%2C%20and%20Capital%20Management) As of June 30, 2023, the Group maintained a robust financial position with total cash and bank balances of HK$327.2 million and unutilized bank credit facilities of HK$705 million, while the gearing ratio improved to 19.5% from 22.8% at year-end, indicating sufficient financial resources for operational needs, with capital expenditure of approximately HK$29.3 million during the period Liquidity and Credit Status (HK$ millions) | Item | June 30, 2023 | December 31, 2022 | | :--- | :--- | :--- | | Cash and Bank Balances | 327.2 | 268.5 | | Unutilized Bank Credit | 705.0 | 579.5 | - Gearing ratio improved to **19.5%** from **22.8%** as of December 31, 2022[82](index=82&type=chunk) - Capital expenditure during the period included approximately **HK$23.7 million** for upgrading and expanding production capacity, and **HK$5.6 million** for trading business equipment and systems[83](index=83&type=chunk) [Other Operational Information](index=20&type=section&id=Other%20Operational%20Information) The Group's assets and liabilities are primarily denominated in HKD, USD, RMB, or BDT, exposing it to foreign exchange risk, particularly from BDT fluctuations, while as of June 30, 2023, the Group had approximately 9,379 employees globally, with the majority in Bangladesh, and employee expenses for the period were approximately HK$182 million - The Group faces foreign exchange risk, with a **1% fluctuation** in Bangladesh Taka expected to result in an approximate **0.2% inverse change** in manufacturing segment gross margin[84](index=84&type=chunk) - As of June 30, 2023, the Group employed **8,830 workers and employees in Bangladesh**, **386 in China (including Hong Kong)**, and **163 in the US and UK**[84](index=84&type=chunk) Other Information This section covers dividend policies, shareholder information, and corporate governance practices [Dividends and Shareholder Information](index=20&type=section&id=Dividends%20and%20Shareholder%20Information) The Board declared an interim dividend of 3 HK cents per share, payable on or after October 10, 2023, with share transfer registration suspended from September 18 to 20, 2023, to determine dividend entitlement, and no listed securities were purchased, sold, or redeemed by the Company during the period - Interim dividend of **3 HK cents per share** declared, payable on or after **October 10, 2023**[85](index=85&type=chunk)[89](index=89&type=chunk) - Share transfer registration will be suspended from **September 18 to 20, 2023**, to determine eligibility for the interim dividend[91](index=91&type=chunk)[86](index=86&type=chunk) - Neither the Company nor its subsidiaries purchased, sold, or redeemed any of the Company's listed securities during the period[92](index=92&type=chunk) [Corporate Governance](index=21&type=section&id=Corporate%20Governance) The Company has adopted and complied with the Corporate Governance Code and the Model Code for Securities Transactions by Directors of Listed Issuers as set out in the Listing Rules Appendix, and the Audit Committee, comprising all independent non-executive directors, has reviewed these interim financial statements - The Board believes the Company has complied with the **Corporate Governance Code** set out in Appendix 14 of the Listing Rules during the period[93](index=93&type=chunk) - All Directors have confirmed compliance with the **Model Code for Securities Transactions** during the period[87](index=87&type=chunk) - The Audit Committee has reviewed the **interim condensed consolidated financial information** for the period ended June 30, 2023[94](index=94&type=chunk)

Financial Performance - The company's revenue for the year increased by 17.1% to HKD 1,874,424,000, compared to HKD 1,600,255,000 in 2021[10] - Gross profit rose significantly by 33% to HKD 637,296,000, with a gross margin improvement of 4.1 percentage points to 34.0%[10] - Shareholders' profit surged by 52.6% to HKD 195,390,000, up from HKD 128,076,000 in the previous year[10] - Manufacturing business revenue increased by 33.6% to HKD 1,127,566,000, with a segment operating profit soaring by 77.0% to HKD 309,750,000[11] - Trade business revenue was HKD 746,858,000, remaining stable compared to the previous year, but incurred an operating loss of HKD 59,079,000 due to logistics disruptions[13] Production and Capacity Expansion - The company plans to enhance production capacity by 20% with the new facility in Bangladesh, expected to commence operations in Q2 2023[15] - The group plans to establish a production base in Mexico to enhance rapid order production capabilities and expand customer sources, with construction expected to be completed by the end of this year[16] - Capital expenditures for the year were approximately HKD 123.8 million, primarily for enhancing manufacturing capacity and expanding operations in Bangladesh[20] - The capital expenditure budget is set at HKD 123.5 million, with HKD 120.5 million allocated for the construction of the Mexican factory and expansion in Bangladesh[21] Financial Position and Cash Management - The company has approximately HKD 246,949,000 in cash and HKD 579,600,000 in undrawn bank financing as of December 31, 2022[10] - As of December 31, 2022, the group's cash and cash equivalents totaled HKD 268.5 million, an increase from HKD 204.7 million in 2021[19] - The group's bank credit facilities amounted to HKD 788.7 million, with HKD 579.5 million unused as of December 31, 2022[19] - The debt-to-equity ratio improved to 22.8% in 2022 from 30.5% in 2021, indicating a stronger financial position[19] Corporate Governance - The company has maintained high standards of corporate governance, adhering to the principles of the corporate governance code as per the Hong Kong Stock Exchange's listing rules[41] - The board of directors held a total of 4 meetings during the year, with all executive directors attending all meetings[42] - Independent non-executive directors attended all shareholder meetings, demonstrating strong engagement in corporate governance[42] - The company has established a practice of providing independent professional advice to directors to assist in fulfilling their responsibilities[44] - The company has a structured approach to board meetings, ensuring reasonable notice is given for all meetings[43] Risk Management and Internal Controls - The board is responsible for the effectiveness of the risk management and internal control systems, which are reviewed regularly[77] - The company conducts risk assessments that are integrated into strategic planning, business planning, and daily operations[79] - The company has established effective risk management and internal control systems to ensure the protection of significant assets and reliable financial reporting[83] - The internal audit team, with the assistance of the audit committee, oversees the monitoring processes, and no significant internal control deficiencies were noted in the 2022 audit[82] Environmental Sustainability - The company emphasizes sustainable development strategies and has formed an ESG working group to assess and report on related risks[142] - In 2022, the total greenhouse gas emissions amounted to 46,777 tons of CO2 equivalent, with 85% from indirect emissions related to electricity and transportation[158] - The company achieved a 2% reduction in waste at its Bangladesh facility in 2023, with total harmless waste generated being 598 tons in 2022, up from 534 tons in 2021[162][163] - The total wastewater generated in 2022 was 219,958 cubic meters, with all waste management practices compliant with applicable environmental laws and regulations[161][160] Employee Management and Training - The total training hours for employees amounted to 9,936 hours, with an average training duration of 12 hours per full-time employee[199] - The average training duration for male employees was 11 hours, while female employees averaged 13 hours[199] - 100% of senior management, middle management, and regular employees participated in training programs[199] - The company emphasizes emotional well-being through initiatives like "pressure relief counseling sessions" for employees[196] Shareholder Communication and Dividends - The company has established effective communication channels with shareholders, including annual general meetings and online updates[92] - The company proposed a final dividend of HKD 0.06 per share for the year ended December 31, 2022, compared to HKD 0.04 per share in the previous year, along with a special dividend of HKD 0.02 per share[103] - The total reserves available for cash distribution as of December 31, 2022, amounted to HKD 722,652,000, an increase from HKD 624,888,000 in the previous year[110] Related Party Transactions - The independent non-executive directors have reviewed the ongoing related party transactions and confirmed they are conducted in the ordinary course of business and on normal commercial terms[118] - The company has complied with the disclosure requirements under Listing Rule 14A regarding related party transactions[116]