Financial Performance - The company reported a profit attributable to owners of approximately HKD 18.9 million for the fiscal year 2023, compared to a loss of approximately HKD 12.1 million in fiscal year 2022[3]. - Revenue for the fiscal year 2023 was approximately HKD 165.0 million, representing a year-on-year increase of approximately 20.1% from HKD 137.4 million in 2022[14]. - Gross profit increased to approximately HKD 87.1 million in 2023, up from approximately HKD 75.2 million in 2022, with a gross margin of approximately 52.8%[19]. - The company's total revenue for the fiscal year 2023 increased by approximately 20.1% to about HKD 165.0 million, up from approximately HKD 137.4 million in the fiscal year 2022[41]. - The company's financing costs decreased by approximately 17.7% to about HKD 9.3 million in fiscal year 2023, down from approximately HKD 11.3 million in fiscal year 2022[46]. - The company's audited net profit for the year ending December 31, 2023, is estimated to be less than HKD 30 million, with a fair value gain of HKD 44 million recognized in other comprehensive income[71]. Market Performance - Revenue from the Chinese market, the company's main sales market, accounted for approximately 79.9% of total revenue in fiscal year 2023, with a slight increase of 0.04% from the previous year[18]. - The company experienced a significant increase in sales in Hong Kong and Macau, with revenue rising by 67.5% to approximately HKD 5.6 million in 2023[18]. - Revenue from the Hong Kong and Macau markets rose by approximately 67.5% to about HKD 5.6 million in fiscal year 2023, compared to approximately HKD 3.3 million in fiscal year 2022[42]. - Other Asian markets, primarily Vietnam, Korea, and Southeast Asia, contributed approximately 15.4% to total revenue in fiscal year 2023, amounting to about HKD 25.5 million[40]. Business Expansion and Strategy - The company acquired a smartwatch accessory processing factory, diversifying its business into the research and production of smartwatch accessories[29]. - The company completed the acquisition of a smart watch manufacturer on April 19, 2023, to strengthen its revenue base in the smart watch market[60]. - The company plans to enhance its overseas brand promotion efforts and expand its market presence, particularly in the smart watch segment, which shows strong growth potential[60]. - The company plans to expand its sales in Southeast Asia and North America, with a focus on enhancing brand image in Singapore's duty-free stores and launching a new duty-free store in Thailand in Q2 2024[81]. - The company aims to focus its R&D resources on overseas markets and develop more new products in the coming year[61]. - The company is implementing various strategies to address market challenges, including enhancing design solutions and increasing promotional efforts[30]. Operational Challenges - The company faced challenges in the retail sector due to slow economic recovery and conservative purchasing demands from distributors[5]. - The company's administrative expenses rose by approximately 60.5% to about HKD 50.4 million in 2023, compared to approximately HKD 31.4 million in 2022[20]. - Inventory increased from approximately HKD 322.3 million as of December 31, 2022, to approximately HKD 324.8 million as of December 31, 2023[21]. - The company's trade and other receivables increased by approximately 44.9 million to about HKD 134.7 million as of December 31, 2023, from approximately HKD 89.8 million as of December 31, 2022[47]. - Trade and other payables increased from approximately HKD 33.7 million as of December 31, 2022, to approximately HKD 67.2 million as of December 31, 2023, an increase of about 33.5 million HKD[68]. Corporate Governance - The company is committed to good corporate governance principles, adhering to the corporate governance code as per the listing rules[67]. - The board consists of 4 male and 2 female members, reflecting a commitment to diversity in skills and experience[108]. - The independent non-executive directors have confirmed their independence according to the listing rules, ensuring unbiased oversight[111]. - The audit committee met without management to review the audited annual results for the year ended December 31, 2022, and the unaudited interim results for the six months ended June 30, 2023[129]. - The remuneration committee held two meetings this year, ensuring no directors participated in determining their own remuneration[130]. - The chairman and CEO roles are held by separate individuals, ensuring clear division of responsibilities[109]. - The board has adopted a diversity policy to enhance the benefits of diverse perspectives in decision-making[108]. - The company has established a nomination committee on June 24, 2014, to regularly review the board's structure and recommend suitable candidates to ensure fairness and transparency in nominations[131]. - The board has conducted an annual review of the effectiveness of the internal control systems to protect the group's assets and shareholder investments[157]. - The company has implemented measures to identify insider information and maintain its confidentiality until proper disclosure through the stock exchange[157]. Sustainability and ESG - The company emphasizes sustainable development, with the board leading discussions and decisions on significant environmental, social, and governance matters[192]. - The company is focused on enhancing its environmental, social, and governance performance to achieve future sustainable development[190]. - The company has identified key environmental, social, and governance issues to focus on, including employee rights, safety and health, green building opportunities, product quality and safety, and innovation management[182]. - The company is committed to continuously adjusting its sustainable development management strategies based on stakeholder expectations and actual business conditions[190]. - The company will continue to engage with various stakeholders to listen to their voices and grow together[182]. Shareholder Communication - The company emphasizes maintaining clear, timely, and effective communication with shareholders and investors to ensure high transparency[178]. - The company has a process for shareholders to request special meetings if they hold at least 10% of the voting shares[179]. - The board will continue to review the dividend policy and has the discretion to amend it at any time, with no guarantee of declaring any specific amount of dividends[177]. - The company is committed to providing stable and sustainable returns to shareholders, considering capital needs and future expansion plans when deciding on dividends[177]. - The board of directors has decided not to recommend a final dividend for the fiscal year 2023, consistent with the previous fiscal year[198].

Sales and Revenue Growth - The company plans to enhance offline sales by focusing on promotional activities in third, fourth, and fifth-tier cities, aiming to increase sales through diverse marketing strategies [2]. - E-commerce sales will be expanded significantly, particularly through platforms like Tmall and JD.com, with efforts to optimize product presentation and improve conversion rates [2]. - For the fiscal year ending December 31, 2023, the company's revenue increased from approximately HKD 137.4 million to approximately HKD 165.0 million, representing a growth of about 20.8% [74]. - Revenue from external customers for 2023 reached HKD 164,994,000, an increase from HKD 137,368,000 in 2022, representing a growth of approximately 20.2% [89]. - The revenue breakdown includes HKD 131,849,000 from China, HKD 18,351,000 from Vietnam, and HKD 5,592,000 from Hong Kong and Macau, with notable growth in Vietnam and Southeast Asia [89]. - The company has 37 sales points in Hong Kong and Macau, with sales increasing by approximately 67.5% to about HKD 5.6 million, accounting for about 3.4% of total revenue [168]. - The company has 116 sales points in other markets, primarily in Europe, with sales rising by approximately 57.3% to about HKD 2.1 million, representing about 1.3% of total revenue [169]. Profitability and Financial Performance - The company's net profit for the fiscal year 2023 increased by approximately HKD 44.2 million, a significant improvement from a net loss of about HKD 1.3 million in the previous fiscal year [17]. - The profit attributable to the company's owners for the fiscal year 2023 was approximately HKD 18.9 million, compared to a loss of approximately HKD 12.1 million in the fiscal year 2022 [74]. - The pre-tax profit for 2023 was HKD 18,871,000, a turnaround from a loss of HKD 12,068,000 in 2022, reflecting improved financial performance [96]. - The total comprehensive income attributable to the company's owners for the fiscal year 2023 was approximately HKD 29.2 million, compared to a loss of approximately HKD 4.9 million in the fiscal year 2022 [75]. - The estimated after-tax profit for the group for the year ending December 31, 2023, is expected to be less than HKD 30,000,000, indicating cautious financial projections [103]. Expenses and Cost Management - Administrative expenses decreased by approximately HKD 2.0 million or 17.7%, from about HKD 11.3 million in fiscal year 2022 to about HKD 9.3 million in fiscal year 2023 [18]. - The company's administrative expenses rose by approximately 60.5% to about HKD 50.4 million in 2023, up from HKD 31.4 million in 2022 [175]. - Employee costs totaled HKD 57,040,000 in 2023, compared to HKD 39,426,000 in 2022, marking an increase of approximately 44.5% [91]. - The cost of goods sold for the year included employee costs and depreciation amounting to HKD 23,632,000, up from HKD 8,647,000 in 2022, indicating a significant increase in operational costs [90]. Assets and Liabilities - The company reported non-current assets of HKD 154.694 million for the year ending December 31, 2023, compared to HKD 23.974 million in 2022, indicating a significant increase [60]. - Current assets increased to HKD 501.310 million in 2023 from HKD 423.971 million in 2022, reflecting a growth of approximately 18.3% [60]. - The company has a total asset value of HKD 656,004,000, with total liabilities amounting to HKD 488,212,000 [115]. - Trade and other payables rose from approximately HKD 33.7 million on December 31, 2022, to about HKD 67.2 million on December 31, 2023, an increase of approximately HKD 33.5 million [20]. - The company's trade and other receivables increased from approximately HKD 89.8 million as of December 31, 2022, to about HKD 134.7 million as of December 31, 2023, an increase of approximately 44.9 million [190]. Strategic Initiatives and Market Expansion - The company is committed to developing smart watch accessories to leverage the growing smart watch market and enhance profitability [10]. - The company plans to strengthen sales and brand image in the Southeast Asian and North American markets, with a focus on Singapore and Thailand duty-free stores [46]. - The company plans to enhance resource sharing and marketing interaction with sister brands to increase global market influence [46]. - The company has expanded its business into the smart watch manufacturing sector as of the fiscal year ending December 31, 2023 [67]. - The company plans to launch a new store counter design in 2023 to enhance brand visibility and stimulate terminal sales through promotional gifts [200]. Acquisitions and Investments - The company successfully acquired a smartwatch accessory manufacturing factory, enhancing its product diversification and synergy with traditional watch business [47]. - The company completed the acquisition of 100% equity in Kam Hee Industrial Limited and its subsidiaries on April 19, 2023 [79]. - The company completed the acquisition of Jinxi Industrial Co., Ltd. for a total consideration of HKD 108.456 million on April 19, 2023 [134]. - The acquisition of Jinxi Group contributed approximately HKD 53.0 million in revenue and a net profit of about HKD 7.9 million from the acquisition date to December 31, 2023 [164]. - The goodwill generated from the acquisition amounted to HKD 42.2 million, attributed to the growth and profit potential in the smartwatch business [163]. Corporate Governance and Management - The company is committed to maintaining high standards of corporate governance throughout the year [53]. - The company is exploring an equity incentive mechanism to complete an annual equity incentive plan [49]. - The company maintains a prudent financial management approach, ensuring sufficient financial resources to meet funding needs and manage liquidity risks [191]. - The company aims to implement strict performance evaluations across sales departments, focusing on invoicing, collections, and profit metrics [48].

Financial Performance - Total revenue for the six months ended June 30, 2023, was HKD 82,542,000, representing a 39% increase from HKD 59,390,000 for the same period in 2022[20][23]. - The net profit after tax for the six months ended June 30, 2023, was HKD 1,271,000, compared to a net loss of HKD 9,730,000 for the same period in 2022[20][38]. - The company achieved a profit attributable to equity holders of approximately HKD 1.3 million in the first half of 2023, a significant turnaround from a loss of approximately HKD 9.7 million in the same period of 2022[132]. - The gross profit increased to approximately HKD 44.1 million in the first half of 2023, up from approximately HKD 39.1 million in the first half of 2022, while the gross margin decreased to approximately 53.4% from 65.8%[138]. - The group recorded a net income of approximately HKD 1.3 million for the first half of the 2023 fiscal year, compared to a net loss of approximately HKD 9.7 million in the same period of 2022[169]. Assets and Liabilities - As of June 30, 2023, total assets amounted to HKD 464,647,000, an increase from HKD 423,971,000 as of December 31, 2022, representing a growth of approximately 9.4%[2]. - Current liabilities increased to HKD 381,133,000 from HKD 318,728,000, reflecting a rise of about 19.6%[2]. - Non-current liabilities surged to HKD 114,185,000 from HKD 21,375,000, indicating a significant increase of approximately 434.5%[3]. - The company's net asset value rose to HKD 147,294,000 as of June 30, 2023, compared to HKD 107,842,000 at the end of 2022, marking an increase of around 36.6%[3]. - The company’s total liabilities increased, reflecting its strategy to leverage debt for growth, with a notable rise in both current and non-current liabilities[61]. Cash Flow and Investments - Operating cash flow showed a net outflow of HKD 21,271,000 for the six months ended June 30, 2023[10]. - The company reported a net cash inflow from investing activities of HKD 10,533,000 for the period[10]. - The company raised new bank borrowings amounting to HKD 18,518,000 during the financing activities[10]. - Cash and cash equivalents decreased to HKD 3,040,000 from HKD 6,274,000, a decline of approximately 51.6%[10]. Revenue Segments - The watch business segment generated revenue of HKD 61,339,000, up from HKD 59,390,000, while the smart manufacturing segment contributed HKD 21,203,000[20][22]. - The company reported a significant increase in revenue from the Chinese market, reaching HKD 61,939,000, up from HKD 57,026,000 in the previous year[23]. - Revenue from the Chinese market decreased by approximately 1.9% to about HKD 55.9 million in the first half of 2023, accounting for approximately 91.1% of total watch business revenue[146]. - Sales in the Hong Kong and Macau markets increased by approximately 193.3% to about HKD 4.4 million in the first half of 2023, representing approximately 7.2% of total watch business revenue[147]. - Sales in other markets, primarily in Southeast Asia and Europe, increased by approximately 22.2% to about HKD 1.1 million in the first half of 2023, accounting for approximately 1.7% of total watch business revenue[148]. Acquisitions and Growth - The company acquired a subsidiary for HKD 42,178,000 during the first half of 2023, contributing to its asset growth[49]. - The acquisition of the Jinxi Group was completed on April 19, 2023, for a total consideration of HKD 108,456,000, which includes the issuance of 12,820,512 shares as the first tranche of payment[81]. - The goodwill generated from the acquisition of Jinxi Group is HKD 42,178,000, attributed to expected synergies and growth potential in the smartwatch sector[94]. - The company completed the acquisition of a smart manufacturing business on April 19, 2023, which focuses on designing and producing stainless steel alloy watch cases and smart watch cases[151]. - The acquisition of Kinsey Group contributed approximately HKD 21,203,000 in revenue and HKD 5,257,000 in net profit from the acquisition date to June 30, 2023[99]. Shareholder Information - The average number of ordinary shares issued during the period was 352,041,051, compared to 347,437,000 shares in the previous year[38]. - The company issued a total of 360,257,512 shares as of June 30, 2023, reflecting an increase from 347,437,000 shares at the end of 2022[78]. - Basic and diluted earnings per share for the first half of 2023 were approximately HKD 0.36, compared to a loss of approximately HKD 2.80 per share in the same period of 2022[139]. Expenses and Costs - Employee costs increased to HKD 26,708,000, compared to HKD 22,868,000 in the previous year, reflecting a rise in salaries and benefits[36]. - The group’s distribution expenses increased by approximately HKD 0.4 million or about 1.7% to approximately HKD 23.5 million, representing about 28.4% of total revenue in the first half of 2023[166]. - The group’s administrative expenses rose by approximately HKD 2.2 million or about 11.5% to approximately HKD 21.4 million in the first half of 2023[167]. - The financing costs decreased to HKD 4,439,000 for the six months ended June 30, 2023, down from HKD 6,447,000 in the same period of 2022[31]. Future Plans and Strategies - The company aims to enhance brand awareness and market share through coordinated online and offline marketing activities targeting younger consumers[195]. - The company plans to optimize e-commerce operations by exploring potential collaboration platforms and experimenting with various live-streaming sales models[199]. - The company will focus on reducing inventory levels while ensuring sales supply, aiming to improve operational efficiency through close collaboration between procurement and sales departments[200]. - The company will continue to develop high-quality Swiss-made watches while analyzing consumer trends to design products that cater to target customers[194]. Dividends and Commitments - The company did not declare or propose any dividends for the periods ended June 30, 2023, and 2022[39]. - The company will not declare any interim dividends for the six months ending June 30, 2023[187]. - The company has no significant future investment or acquisition plans as of June 30, 2023[181]. - The company has no major capital commitments as of June 30, 2023[191].

[Financial Summary](index=1&type=section&id=Financial%20Summary) Provides a concise overview of the group's key financial performance metrics for the first half of the 2023 fiscal year 2023 First Half Key Financial Data | Indicator | 2023 First Half (HK$ thousand) | 2022 First Half (HK$ thousand) | Change (%) | | :--- | :--- | :--- | :--- | | Revenue | 82,500 | 59,400 | +38.9% | | Gross Profit Margin | 53.4% | 65.8% | -12.4pp | | Gross Profit | 44,100 | 39,100 | +12.8% | | Profit/(Loss) after Tax | 1,300 | (9,700) | Turnaround to Profit | | Basic and Diluted Earnings/(Loss) Per Share (HK cents) | 0.36 | (2.80) | Turnaround to Profit | [Condensed Consolidated Statement of Profit or Loss and Other Comprehensive Income](index=2&type=section&id=Condensed%20Consolidated%20Statement%20of%20Profit%20or%20Loss%20and%20Other%20Comprehensive%20Income) Presents the group's financial performance, including revenue, expenses, and profit or loss, for the six months ended June 30, 2023 Condensed Consolidated Statement of Profit or Loss and Other Comprehensive Income (For the six months ended June 30, 2023) | Indicator | 2023 (HK$ thousand) | 2022 (HK$ thousand) | | :--- | :--- | :--- | | Revenue | 82,542 | 59,390 | | Cost of Sales | (38,433) | (20,306) | | Gross Profit | 44,109 | 39,084 | | Net Other Gains and Losses | 3,463 | (1,303) | | Other Income | 2,762 | 1,060 | | Distribution Expenses | (23,475) | (23,079) | | Administrative Expenses | (21,409) | (19,200) | | Finance Costs | (4,439) | (6,447) | | Profit/(Loss) Before Tax | 1,011 | (9,885) | | Income Tax Credit | 260 | 155 | | Profit/(Loss) for the Period Attributable to Owners of the Company | 1,271 | (9,730) | | Basic and Diluted Earnings/(Loss) Per Share (HK cents) | 0.36 | (2.80) | [Condensed Consolidated Statement of Financial Position](index=3&type=section&id=Condensed%20Consolidated%20Statement%20of%20Financial%20Position) Details the group's assets, liabilities, and equity as of June 30, 2023, and December 31, 2022 Condensed Consolidated Statement of Financial Position (As of June 30, 2023) | Indicator | June 30, 2023 (HK$ thousand) | December 31, 2022 (HK$ thousand) | | :--- | :--- | :--- | | **Non-current Assets** | | | | Property, Plant and Equipment | 59,717 | 23,093 | | Goodwill | 42,178 | – | | Intangible Assets | 66,867 | – | | **Current Assets** | | | | Inventories | 316,042 | 322,277 | | Trade and Other Receivables | 139,065 | 88,920 | | Bank Balances and Cash | 3,040 | 6,274 | | **Current Liabilities** | | | | Trade and Other Payables | 63,167 | 33,689 | | Contingent Consideration Payable | 11,590 | – | | Bank and Other Borrowings | 35,376 | 29,390 | | **Non-current Liabilities** | | | | Contingent Consideration Payable | 66,097 | – | | **Total Equity** | 147,294 | 107,842 | [Notes to the Condensed Consolidated Financial Statements](index=5&type=section&id=Notes%20to%20the%20Condensed%20Consolidated%20Financial%20Statements) Provides detailed explanations and disclosures supporting the condensed consolidated financial statements [Basis of Presentation](index=5&type=section&id=1.%20Basis%20of%20Presentation) Outlines the accounting standards and currency used for preparing the condensed consolidated interim financial statements - The condensed consolidated interim financial statements are prepared in accordance with International Accounting Standard 34 and Appendix 16 of the Listing Rules, presented in **HK dollars**[104](index=104&type=chunk) - The statements include explanations of events and transactions significant to understanding changes in the group's financial position and performance, and should be read in conjunction with the 2022 consolidated financial statements[105](index=105&type=chunk) [Changes in Accounting Policies](index=5&type=section&id=2.%20Changes%20in%20Accounting%20Policies) States that accounting policies remain consistent with the prior year, with no material impact from new standards - Accounting policies used for preparing the condensed consolidated interim financial statements are consistent with those adopted in the 2022 annual financial statements, with no material impact from new standards or interpretations on the group's current or prior period business and financial position[133](index=133&type=chunk)[116](index=116&type=chunk) [Revenue and Segment Information](index=6&type=section&id=3.%20Revenue%20and%20Segment%20Information) Details revenue sources from watch and smart manufacturing businesses, with significant growth in Southeast Asia [Segment Revenue and Results](index=6&type=section&id=Segment%20Revenue%20and%20Results) Analyzes revenue and profit contributions from the watch and smart manufacturing segments for the reporting period - The group's operating segments include the **watch business** (manufacturing and selling watches) and the **smart manufacturing business** (designing, developing, and manufacturing stainless steel alloy watch cases and smart watch cases)[9](index=9&type=chunk)[138](index=138&type=chunk) Segment Revenue and Results (For the six months ended June 30, 2023) | Indicator | Watch (HK$ thousand) | Smart Manufacturing (HK$ thousand) | Unallocated (HK$ thousand) | Total (HK$ thousand) | | :--- | :--- | :--- | :--- | :--- | | Revenue | 61,339 | 21,203 | – | 82,542 | | Profit/(Loss) Before Income Tax | 154 | 4,878 | (4,021) | 1,011 | | Profit/(Loss) After Income Tax | 35 | 5,257 | (4,021) | 1,271 | Segment Revenue and Results (For the six months ended June 30, 2022) | Indicator | Watch (HK$ thousand) | Smart Manufacturing (HK$ thousand) | Unallocated (HK$ thousand) | Total (HK$ thousand) | | :--- | :--- | :--- | :--- | :--- | | Revenue | 59,390 | – | – | 59,390 | | Loss Before Income Tax | (4,972) | – | (4,913) | (9,885) | | Loss After Income Tax | (4,817) | – | (4,913) | (9,730) | [Geographical Information](index=7&type=section&id=Geographical%20Information) Presents revenue breakdown by customer location, highlighting China as the primary market and Southeast Asia's growth Revenue by Customer Location (For the six months ended June 30, 2023) | Region | 2023 (HK$ thousand) | 2022 (HK$ thousand) | | :--- | :--- | :--- | | People's Republic of China | 61,939 | 57,026 | | Hong Kong and Macau | 5,252 | 1,491 | | Southeast Asia | 14,519 | 635 | | Other (mainly Europe) | 832 | 238 | | **Total** | **82,542** | **59,390** | [Major Customers Information](index=8&type=section&id=Major%20Customers%20Information) Identifies key customers and their revenue contributions from the watch and smart manufacturing segments Major Customer Revenue (For the six months ended June 30) | Customer | 2023 (HK$ thousand) | 2022 (HK$ thousand) | | :--- | :--- | :--- | | Customer A from Watch Business Segment | 10,301 | 14,199 | | Customer B from Smart Manufacturing Business Segment | 14,757 | – | [Income Tax Credit](index=9&type=section&id=5.%20Income%20Tax%20Credit) Explains the group's income tax provisions across different jurisdictions and the period's tax credit - Hong Kong profits tax is calculated at **16.5%**, but the group has no assessable profits in Hong Kong, so no provision is made[5](index=5&type=chunk) - Swiss federal withholding tax is paid at a rate of **35%** on profit distributions, while Swiss income tax is calculated at **8.5%** for direct federal tax and **11.5%** for cantonal/municipal tax[6](index=6&type=chunk)[91](index=91&type=chunk) - Chinese subsidiaries are subject to a **25%** tax rate, but no provision is made due to the absence of assessable profits[92](index=92&type=chunk) Income Tax Credit for the Period (For the six months ended June 30) | Indicator | 2023 (HK$ thousand) | 2022 (HK$ thousand) | | :--- | :--- | :--- | | Current Tax: Swiss Income Tax | (135) | (137) | | Deferred Tax Credit | 395 | 292 | | **Income Tax Credit for the Period** | **260** | **155** | [Dividends](index=9&type=section&id=6.%20Dividends) Confirms no dividends were paid or proposed during the reporting period or subsequent to it - No dividends were paid or proposed by the group for the six months ended June 30, 2023, and 2022, nor were any dividends proposed after the reporting period end[93](index=93&type=chunk) [Earnings/(Loss) Per Share](index=9&type=section&id=7.%20Earnings%2F%28Loss%29%20Per%20Share) Reports the basic and diluted earnings per share, reflecting a turnaround from loss to profit Earnings/(Loss) Per Share (For the six months ended June 30) | Indicator | 2023 | 2022 | | :--- | :--- | :--- | | Profit/(Loss) Attributable to Owners of the Company (HK$ thousand) | 1,271 | (9,730) | | Weighted Average Number of Ordinary Shares in Issue (shares) | 352,041,051 | 347,437,000 | | Basic and Diluted Earnings/(Loss) Per Share (HK cents) | 0.36 | (2.80) | - For the six months ended June 30, 2023, no potential dilutive ordinary shares were in issue, thus diluted earnings/(loss) per share is the same as basic earnings/(loss) per share[97](index=97&type=chunk) [Trade and Other Receivables](index=10&type=section&id=8.%20Trade%20and%20Other%20Receivables) Details the composition and aging analysis of trade and other receivables, showing a significant increase Trade and Other Receivables (As of June 30, 2023) | Indicator | June 30, 2023 (HK$ thousand) | December 31, 2022 (HK$ thousand) | | :--- | :--- | :--- | | Gross Trade Receivables | 132,976 | 96,151 | | Less: Provision for Impairment Losses | (8,154) | (18,230) | | Net Trade Receivables | 124,822 | 77,921 | | Other Receivables | 5,473 | 2,875 | | Prepayments | 6,029 | 5,646 | | **Total Current Trade and Other Receivables** | **139,065** | **88,920** | | **Total Trade and Other Receivables** | **140,951** | **89,801** | Aging Analysis of Trade Receivables (As of June 30, 2023) | Aging | 2023 (HK$ thousand) | 2022 (HK$ thousand) | | :--- | :--- | :--- | | 0 to 90 days | 56,122 | 52,336 | | 91 to 180 days | 30,812 | 12,901 | | 181 to 270 days | 31,118 | 9,324 | | Over 270 days | 6,770 | 3,360 | | **Total** | **124,822** | **77,921** | - The group grants credit terms of **30 to 180 days** to its trade customers[98](index=98&type=chunk) [Goodwill](index=11&type=section&id=9.%20Goodwill) Explains the goodwill arising from the acquisition of the Jinxi Group, reflecting expected synergies and growth potential Movement in Goodwill (As of June 30, 2023) | Item | HK$ thousand | | :--- | :--- | | At January 1, 2023 | – | | Acquisition of a Subsidiary (Note 12) | 42,178 | | **At June 30, 2023** | **42,178** | - Goodwill of **HK$42,178 thousand** arising from the acquisition is attributed to expected synergies from the business combination and the growth and profitability potential of expanding the smart watch business[81](index=81&type=chunk) [Intangible Assets](index=11&type=section&id=10.%20Intangible%20Assets) Outlines the carrying value and composition of intangible assets, primarily from the Jinxi Group acquisition Intangible Assets (As of June 30, 2023) | Item | Technical Know-how (HK$ thousand) | Customer Relationships (HK$ thousand) | Total (HK$ thousand) | | :--- | :--- | :--- | :--- | | Cost: At January 1, 2023 | – | – | – | | Acquisition of a Subsidiary (Note 12) | 46,050 | 22,333 | 68,383 | | At June 30, 2023 | 46,050 | 22,333 | 68,383 | | Accumulated Amortisation: At January 1, 2023 | – | – | – | | Charged during the period | 770 | 746 | 1,516 | | At June 30, 2023 | 770 | 746 | 1,516 | | **Carrying Amount: At June 30, 2023** | **45,280** | **21,587** | **66,867** | [Trade and Other Payables](index=12&type=section&id=11.%20Trade%20and%20Other%20Payables) Presents the breakdown of trade and other payables, indicating a substantial increase from the prior period Trade and Other Payables (As of June 30, 2023) | Indicator | June 30, 2023 (HK$ thousand) | December 31, 2022 (HK$ thousand) | | :--- | :--- | :--- | | Trade Payables | 31,439 | 23,860 | | Other Payables | 27,354 | 2,529 | | Accrued Expenses | 3,359 | 6,962 | | Contract Liabilities from Sale of Goods | 1,015 | 338 | | **Total** | **63,167** | **33,689** | [Acquisition of a Subsidiary](index=12&type=section&id=12.%20Acquisition%20of%20a%20Subsidiary) Details the acquisition of Jinxi Group, its strategic rationale, consideration, and financial contribution - The group completed the acquisition of the entire equity interest in Jinxi Industrial Limited and its subsidiaries (collectively, the "Jinxi Group") on **April 19, 2023**, for a consideration of **HK$108,456 thousand**[87](index=87&type=chunk)[81](index=81&type=chunk) - The Jinxi Group primarily engages in the design, development, and manufacturing of stainless steel alloy watch cases and smart watch cases as an original design manufacturer or original equipment manufacturer[87](index=87&type=chunk) - The acquisition consideration included the issuance of **38,461,538 consideration shares** and a **cash payment of HK$40,000,000**, with a profit guarantee mechanism where the vendor committed that the Jinxi Group's after-tax net profit for each of the fiscal years 2023 to 2025 would not be less than **HK$30,000 thousand**[88](index=88&type=chunk) Total Consideration and Goodwill for Jinxi Group Acquisition | Item | HK$ thousand | | :--- | :--- | | First Tranche Consideration Shares Issued at Completion | 30,769 | | Fair Value of Contingent Consideration Payable | 77,687 | | **Total Consideration** | **108,456** | | Less: Fair Value of Net Assets Acquired | (66,278) | | **Goodwill** | **42,178** | - From the acquisition date to June 30, 2023, the Jinxi Group contributed approximately **HK$21,203 thousand** in revenue and approximately **HK$5,257 thousand** in net profit to the group[16](index=16&type=chunk) [Management Discussion and Analysis](index=16&type=section&id=Management%20Discussion%20and%20Analysis) Provides management's perspective on the group's operational and financial performance, strategies, and outlook [Business Review](index=16&type=section&id=Business%20Review) Reviews the group's business performance, highlighting diversification through smart manufacturing and market responses [Watch Business](index=16&type=section&id=Watch%20Business) Discusses the watch business's revenue growth, market performance, and e-commerce strategies - Watch business revenue increased by approximately **3.2%** from approximately **HK$59.4 million** in the first half of fiscal year 2022 to approximately **HK$61.3 million** in the first half of fiscal year 2023[128](index=128&type=chunk) - While facing challenges of limited customer traffic in free trade zones, Hong Kong, Macau, and overseas markets, with a slight decrease in Hainan duty-free shop sales, the Southeast Asian market achieved **positive growth**[19](index=19&type=chunk) - The China market remains the group's primary market with **673 sales points**, contributing approximately **HK$55.9 million** in revenue, accounting for approximately **91.1%** of total watch business revenue[125](index=125&type=chunk) - Sales in the Hong Kong and Macau markets increased by approximately **193.3%** from approximately **HK$1.5 million** in the first half of fiscal year 2022 to approximately **HK$4.4 million** in the first half of fiscal year 2023[20](index=20&type=chunk) - The decline in the e-commerce sector was reduced due to strict pricing policies and effective communication with online platforms, alongside active promotion of exclusive new products[124](index=124&type=chunk) [Smart Manufacturing Business](index=18&type=section&id=Smart%20Manufacturing%20Business) Highlights progress in smart manufacturing, including client follow-ups, strategic partnerships, and patent applications - The smart manufacturing division followed up on the final deliveries for major clients and established strategic partnerships with renowned electronics manufacturers[144](index=144&type=chunk) - This division received new structural component orders for smart watches and made substantial progress in the development and mass production of specialized watch straps[144](index=144&type=chunk) - Mold development for wearable rings was completed and is currently entering the Engineering Verification Test (EVT) phase, paving the way for mass production in the second half of the year[144](index=144&type=chunk) - **Thirteen patent applications** for innovative structural designs were submitted in the first half of 2023, with **three already certified**, underscoring the commitment to protecting novel technological advancements[144](index=144&type=chunk) [Financial Review](index=19&type=section&id=Financial%20Review) Analyzes the group's financial performance, including revenue growth, profitability, and liquidity position [Revenue and Segment Information](index=19&type=section&id=Revenue%20and%20Segment%20Information) Reports significant revenue growth, driven by the new smart manufacturing business segment - The group's revenue increased by approximately **38.9%** from approximately **HK$59.4 million** in the first half of fiscal year 2022 to approximately **HK$82.5 million** in the first half of fiscal year 2023[145](index=145&type=chunk) - Revenue from the smart manufacturing business was approximately **HK$21.2 million** in the first half of fiscal year 2023[22](index=22&type=chunk) [Cost of Sales](index=19&type=section&id=Cost%20of%20Sales) Details the increase in cost of sales, influenced by both watch and smart manufacturing segments - The group's cost of sales increased by approximately **89.2%** from approximately **HK$20.3 million** in the first half of fiscal year 2022 to approximately **HK$38.4 million** in the first half of fiscal year 2023[50](index=50&type=chunk) - Cost of sales for the watch business increased by **25.1%** to **HK$25.4 million**[173](index=173&type=chunk) - Cost of sales for the smart manufacturing business was approximately **HK$13.0 million** in the first half of fiscal year 2023[147](index=147&type=chunk) [Gross Profit](index=20&type=section&id=Gross%20Profit) Examines the growth in gross profit and the decline in gross profit margin for the period - The group's gross profit increased by approximately **12.8%** from approximately **HK$39.1 million** in the first half of fiscal year 2022 to approximately **HK$44.1 million** in the first half of fiscal year 2023[174](index=174&type=chunk) - The watch business contributed approximately **HK$35.9 million**, and the smart manufacturing business contributed approximately **HK$8.2 million**[174](index=174&type=chunk) - Gross profit margin decreased from approximately **65.8%** in the first half of fiscal year 2022 to approximately **53.4%** in the first half of fiscal year 2023[174](index=174&type=chunk) [Net Other Gains and Losses](index=20&type=section&id=Net%20Other%20Gains%20and%20Losses) Reports the net other gains for the period, showing a positive shift compared to the prior year - The group recorded net other gains of approximately **HK$3.5 million** in the first half of fiscal year 2023, compared to net other gains of approximately **HK$1.3 million** in the first half of fiscal year 2022[148](index=148&type=chunk) [Distribution Expenses](index=20&type=section&id=Distribution%20Expenses) Analyzes the slight increase in distribution expenses and its reduced proportion of total revenue - The group's distribution expenses increased by approximately **1.7%** from approximately **HK$23.1 million** in the first half of fiscal year 2022 to approximately **HK$23.5 million** in the first half of fiscal year 2023[175](index=175&type=chunk) - Distribution expenses accounted for approximately **28.4%** of the group's total revenue in the first half of fiscal year 2023 (first half of fiscal year 2022: approximately **38.9%**)[175](index=175&type=chunk) [Administrative Expenses](index=20&type=section&id=Administrative%20Expenses) Reports the increase in administrative expenses for the first half of the fiscal year - The group's administrative expenses increased by approximately **11.5%** from approximately **HK$19.2 million** in the first half of fiscal year 2022 to approximately **HK$21.4 million** in the first half of fiscal year 2023[149](index=149&type=chunk) [Finance Costs](index=20&type=section&id=Finance%20Costs) Details the reduction in finance costs for the reporting period - The group's finance costs decreased by approximately **31.3%** from approximately **HK$6.4 million** in the first half of fiscal year 2022 to approximately **HK$4.4 million** in the first half of fiscal year 2023[176](index=176&type=chunk) [Profit for the Period Attributable to Owners of the Company](index=20&type=section&id=Profit%20for%20the%20Period%20Attributable%20to%20Owners%20of%20the%20Company) Highlights the turnaround from a net loss to a net profit attributable to owners of the company - The group's net profit attributable to owners of the company was approximately **HK$1.3 million** in the first half of fiscal year 2023, compared to a net loss of approximately **HK$9.7 million** in the first half of fiscal year 2022[150](index=150&type=chunk) [Inventories](index=20&type=section&id=Inventories) Reports a slight decrease in inventory levels as of June 30, 2023 - Inventories as of June 30, 2023, were approximately **HK$316.0 million**, a decrease of approximately **HK$6.3 million** from approximately **HK$322.3 million** as of December 31, 2022[177](index=177&type=chunk) [Trade and Other Receivables and Payables](index=21&type=section&id=Trade%20and%20Other%20Receivables%20and%20Payables) Summarizes the significant increases in both trade and other receivables and payables - The group's trade and other receivables as of June 30, 2023, were approximately **HK$141.0 million**, an increase of approximately **HK$51.2 million** from approximately **HK$89.8 million** as of December 31, 2022[55](index=55&type=chunk) - The group's trade and other payables as of June 30, 2023, were approximately **HK$63.2 million**, an increase of approximately **HK$29.5 million** from approximately **HK$33.7 million** as of December 31, 2022[178](index=178&type=chunk) [Liquidity, Financial Resources and Capital Structure](index=21&type=section&id=Liquidity%2C%20Financial%20Resources%20and%20Capital%20Structure) Assesses the group's liquidity position, including cash, borrowings, and the capital gearing ratio - As of June 30, 2023, the group had pledged bank deposits of approximately **HK$6.5 million** and unpledged cash and bank balances of approximately **HK$3.0 million**[56](index=56&type=chunk) - The group's bank and other borrowings amounted to approximately **HK$298.9 million**, of which approximately **HK$296.4 million** are repayable within one year[56](index=56&type=chunk) - The group's capital gearing ratio as of June 30, 2023, was approximately **202.9%** (December 31, 2022: approximately **261.6%**)[179](index=179&type=chunk) [Foreign Exchange Risk](index=21&type=section&id=Foreign%20Exchange%20Risk) Identifies the group's exposure to foreign exchange fluctuations and management's monitoring approach - The group faces foreign exchange fluctuation risks due to foreign currency sales by certain member companies and various assets and liabilities denominated in foreign currencies[180](index=180&type=chunk) - Management will monitor foreign exchange trends and consider hedging significant foreign exchange risks when necessary[153](index=153&type=chunk) [Pledge of Assets](index=22&type=section&id=Pledge%20of%20Assets) States the amount of deposits pledged to secure short-term bank financing - As of June 30, 2023, approximately **HK$6.5 million** in deposits were pledged to secure short-term bank financing granted to the group[182](index=182&type=chunk) [Material Acquisitions and Disposals of Subsidiaries or Associates](index=22&type=section&id=Material%20Acquisitions%20and%20Disposals%20of%20Subsidiaries%20or%20Associates) Confirms the acquisition of Jinxi Group as the only material transaction during the period - The group completed the acquisition of Jinxi Industrial Limited, primarily engaged in the smart watch case business, on **April 19, 2023**[155](index=155&type=chunk) - Apart from the aforementioned acquisition, no other material investments or significant acquisitions or disposals of subsidiaries, associates, or joint ventures were made in the first half of fiscal year 2023[183](index=183&type=chunk) [Future Plans for Material Investments and Capital Assets](index=22&type=section&id=Future%20Plans%20for%20Material%20Investments%20and%20Capital%20Assets) States that there are no definite future plans for material investments or capital asset acquisitions - As of June 30, 2023, the group had no definite future plans for material investments or acquisitions of significant capital assets[156](index=156&type=chunk) [Interim Dividend](index=22&type=section&id=Interim%20Dividend) Confirms the Board's decision not to declare an interim dividend for the period - The Board resolved not to declare an interim dividend for the six months ended June 30, 2023 (first half of fiscal year 2022: nil)[157](index=157&type=chunk) [Contingent Liabilities](index=22&type=section&id=Contingent%20Liabilities) States that the group had no significant contingent liabilities as of June 30, 2023 - As of June 30, 2023, the group had no significant contingent liabilities (December 31, 2022: nil)[184](index=184&type=chunk) [Employees and Remuneration Policy](index=22&type=section&id=Employees%20and%20Remuneration%20Policy) Details the increase in employee numbers, total staff costs, and the group's remuneration policy - As of June 30, 2023, the group had a total of **446 full-time employees** (December 31, 2022: **146 employees**)[185](index=185&type=chunk) - Total staff costs (including directors' emoluments) for the first half of fiscal year 2023 were approximately **HK$26.7 million** (first half of fiscal year 2022: approximately **HK$22.9 million**)[185](index=185&type=chunk) - The remuneration policy includes fixed salaries, allowances, sales commissions, year-end bonuses, and a share option scheme, with regular training and annual performance reviews provided[158](index=158&type=chunk)[61](index=61&type=chunk) [Capital Commitments](index=23&type=section&id=Capital%20Commitments) Confirms the absence of any significant capital commitments as of June 30, 2023 - As of June 30, 2023, the group had no significant capital commitments (December 31, 2022: nil)[159](index=159&type=chunk) [Events After Reporting Period](index=23&type=section&id=Events%20After%20Reporting%20Period) States that no significant events occurred after the reporting period - No significant events occurred after the reporting period[33](index=33&type=chunk) [Prospects](index=23&type=section&id=Prospects) Outlines the group's strategic direction for both watch and smart manufacturing businesses, focusing on growth and efficiency [Watch Business](index=23&type=section&id=Watch%20Business) Details strategies for brand promotion, sales channels, product development, and inventory management in the watch business - The group will continue to promote and enhance the brand awareness of "Ernest Borel" through various marketing channels, targeting younger and more international consumers[34](index=34&type=chunk) - Offline sales strategies will continue to implement flexible sales policies, customized for each region and client, and actively explore new market segments[162](index=162&type=chunk) - In e-commerce, while maintaining basic monthly sales revenue, the group aims for steady growth and will actively experiment with different live-streaming models to drive sales performance and enhance brand awareness[36](index=36&type=chunk) - Product planning will focus on reducing movement and spare parts inventory while ensuring sales supply, producing in phases, and delivering on demand through real-time analysis of sales and inventory[163](index=163&type=chunk) - R&D efforts will be strengthened to develop high-quality products reflecting brand image and to achieve rapid and precise R&D for e-commerce exclusive products, shortening product development cycles[37](index=37&type=chunk) [Smart Manufacturing Business](index=25&type=section&id=Smart%20Manufacturing%20Business) Focuses on meeting client demands, expanding production capacity, and recruiting talent for the smart manufacturing business - The group is fully committed to meeting customer demand, ensuring successful production of Milanese mesh watch straps, and has signed contracts for several smart ring models, with production to be swiftly implemented upon test approval[164](index=164&type=chunk) - The group is closely following industry trends by researching and evaluating the latest smart watch models from major clients, and plans to expand production capacity in the second half of the year through equipment procurement, process optimization, and increased personnel[164](index=164&type=chunk) - Talent recruitment is a key task, focusing on hiring skilled professionals with strong operational capabilities from domestic listed companies to strengthen sales efforts[164](index=164&type=chunk) [Conclusion](index=25&type=section&id=Conclusion) Summarizes the group's commitment to revenue growth, cost control, and preparing for future opportunities - The group will actively oversee both the watch and smart manufacturing businesses, continuously seeking various channels to expand sales revenue, and closely controlling operating costs such as sales, distribution, and administrative expenses to achieve the goal of increasing revenue and reducing expenditure[165](index=165&type=chunk) - The group will prepare for future opportunities, aiming to expand profitability and deliver valuable and sustainable returns to shareholders[165](index=165&type=chunk) - Despite global economic shifts and a complex and challenging external environment, coupled with pressure on domestic economic development, the resilience, deep potential, and vitality of the Chinese economy remain unchanged[38](index=38&type=chunk) [Corporate Governance Code](index=26&type=section&id=Corporate%20Governance%20Code) Details the company's adherence to corporate governance principles and relevant codes [Compliance with Corporate Governance Code](index=26&type=section&id=Compliance%20with%20Corporate%20Governance%20Code) Reports the company's compliance with the Corporate Governance Code, noting one specific deviation - The company has complied with all code provisions of the Corporate Governance Code set out in Appendix 14 of the Listing Rules for the six months ended June 30, 2023, except for one deviation[39](index=39&type=chunk) - This deviation occurred because Mr. Xiong Ying, a Non-executive Director, was unable to attend the Annual General Meeting held on June 2, 2023, due to other commitments[75](index=75&type=chunk) [Code for Securities Transactions by Directors](index=26&type=section&id=Code%20for%20Securities%20Transactions%20by%20Directors) Confirms the company's adoption of a standard code for directors' securities transactions and their compliance - The company has adopted the Standard Code as the code of conduct for directors' securities transactions[68](index=68&type=chunk) - All directors confirmed compliance with the required standards set out in the Standard Code and its code of conduct for directors' securities transactions for the six months ended June 30, 2023[68](index=68&type=chunk) [Audit Committee](index=26&type=section&id=Audit%20Committee) Describes the Audit Committee's composition, terms of reference, and review of interim results - The company has established an Audit Committee, with its written terms of reference in compliance with the Listing Rules and the Corporate Governance Code[76](index=76&type=chunk) - The Audit Committee comprises three independent non-executive directors: Mr. To Chun Kee (Chairman), Ms. Chan Lai Wah, and Mr. Cheung Bun[69](index=69&type=chunk) - The Audit Committee has reviewed the unaudited interim results and interim report for the six months ended June 30, 2023, and recommended their adoption by the Board, deeming them prepared in accordance with applicable accounting standards and requirements with sufficient disclosures[69](index=69&type=chunk) [Review of Condensed Consolidated Financial Statements](index=26&type=section&id=Review%20of%20Condensed%20Consolidated%20Financial%20Statements) Confirms the Audit Committee's review and recommendation for adoption of the interim financial statements - The Audit Committee has reviewed the unaudited interim results and interim report for the six months ended June 30, 2023[69](index=69&type=chunk) - The Audit Committee believes that these results and report were prepared in accordance with applicable accounting standards and requirements, with sufficient disclosures, and recommended their adoption by the Board[69](index=69&type=chunk) [Other Information](index=27&type=section&id=Other%20Information) Presents additional disclosures regarding the company's securities, publications, and board composition [Purchase, Sale or Redemption of Listed Securities](index=27&type=section&id=Purchase%2C%20Sale%20or%20Redemption%20of%20Listed%20Securities) States that no listed securities of the company were purchased, sold, or redeemed during the period - Neither the company nor its subsidiaries purchased, sold, or redeemed any of the company's listed securities during the six months ended June 30, 2023[70](index=70&type=chunk) [Publication of Interim Results Announcement and Interim Report](index=27&type=section&id=Publication%20of%20Interim%20Results%20Announcement%20and%20Interim%20Report) Informs about the publication channels for the interim results announcement and interim report - This announcement has been published on the website of The Stock Exchange of Hong Kong Limited and the company's website[169](index=169&type=chunk) - The company's interim report for the six months ended June 30, 2023, will be published on the aforementioned websites and dispatched to the company's shareholders at the appropriate time[169](index=169&type=chunk) [Board of Directors](index=27&type=section&id=Board%20of%20Directors) Lists the current composition of the Board of Directors, including executive, non-executive, and independent non-executive members - As of the date of this announcement, the Board of Directors includes Executive Directors Mr. Teguh Halim and Ms. Lin Li, Non-executive Director Mr. Xiong Ying, and Independent Non-executive Directors Mr. To Chun Kee, Ms. Chan Lai Wah, and Mr. Cheung Bun[170](index=170&type=chunk)[71](index=71&type=chunk)[77](index=77&type=chunk)

Financial Performance - The gross profit decreased by approximately HKD 15.6 million or about 17.3% from approximately HKD 90.8 million in the fiscal year 2021 to approximately HKD 75.2 million in the fiscal year 2022, with the gross profit margin dropping from about 60.9% to 54.7%[1] - Other income and loss decreased from a gain of approximately HKD 1.5 million in the fiscal year 2021 to a loss of approximately HKD 1.3 million in the fiscal year 2022, a decrease of HKD 2.8 million[2] - The company recorded a loss of approximately HKD 12.1 million in the 2022 fiscal year, compared to a loss of approximately HKD 31.8 million in the 2021 fiscal year[147] - The company achieved sales of HKD 137 million in the past year, indicating a challenging performance but a commitment to strategic adjustments for future growth[111] Cost Management - Administrative expenses reduced by approximately HKD 13.3 million or about 29.7% from approximately HKD 44.7 million in the fiscal year 2021 to approximately HKD 31.4 million in the fiscal year 2022[4] - Distribution expenses decreased by approximately HKD 21.5 million or about 32.0% from approximately HKD 67.1 million in the fiscal year 2021 to approximately HKD 45.6 million in the fiscal year 2022[81] - Total employee costs decreased from approximately HKD 55.1 million in 2021 to approximately HKD 39.4 million in 2022[132] - Financing costs decreased by approximately HKD 2.2 million or about 16.6% from approximately HKD 13.5 million in 2021 to approximately HKD 11.3 million in 2022[146] Inventory and Receivables - Inventory decreased by approximately HKD 50.4 million from approximately HKD 372.7 million as of December 31, 2021, to approximately HKD 322.3 million as of December 31, 2022[5] - Trade and other receivables increased from approximately HKD 47.7 million on December 31, 2021, to approximately HKD 89.8 million on December 31, 2022, an increase of about 42.1 million HKD[122] - Trade and other payables decreased from approximately HKD 38.5 million on December 31, 2021, to approximately HKD 33.7 million on December 31, 2022, a decrease of about 4.8 million HKD[122] - As of December 31, 2022, the group's inventory was valued at HKD 322,277,000, representing a significant proportion of the total assets[187] Environmental and Social Responsibility - The report includes key performance indicators related to greenhouse gas emissions, waste management, and resource usage[49] - Direct (Scope 1) and energy-related (Scope 2) greenhouse gas emissions are reported in tons, with specific metrics for harmful and non-harmful waste generation[49] - The company has implemented measures to reduce emissions and manage waste effectively, with results documented in the report[49] - The company has policies to prevent child labor and forced labor, ensuring compliance with relevant laws and regulations[51] - The report outlines the company's commitment to environmental protection and resource conservation initiatives[50] Employee Development and Training - Employee training programs are in place, with a percentage of trained employees reported by gender and employee category[51] - The company maintains a strong commitment to employee training, ensuring staff are updated on product, technology developments, and market conditions[106] - The company has adopted a stock option plan to reward employees for their contributions to growth and development[29] Corporate Governance - The company has received written annual confirmations from all independent non-executive directors regarding their independence, affirming compliance with listing rules[92] - The company’s board and senior management have established service contracts for three years, with provisions for rotation and re-election[115] - The independent auditor, Hong Kong BDO Limited, will be reappointed at the upcoming annual general meeting[184] - The audit committee reviewed the accounting principles and discussed audit, internal control, and financial reporting matters[164] Marketing and Brand Strategy - The company emphasizes continuous innovation and employee development as key strategies for maintaining competitiveness in a volatile market[10] - The company is focused on brand promotion and adapting to the preferences of younger consumers to enhance brand vitality and market share[112] - The company engaged in promotional activities with influencers to enhance brand recognition and market reputation[174] - The company’s marketing strategy includes collaborations with sports figures to promote its brand image[174] Compliance and Legal Matters - The group has complied with all relevant laws and regulations that have a significant impact on its business operations during the year ending December 31, 2022[182] - There were no major litigations or arbitrations involving the group as of December 31, 2022, nor any pending or threatened significant claims[183] - The company has adhered to the International Financial Reporting Standards and the Hong Kong Companies Ordinance in preparing its financial statements[192] Future Outlook - The company believes in a rebound in performance despite the global economic slowdown and challenges faced in the watch industry[111] - The company plans to enhance marketing strategies and integrate online and offline resources to increase brand exposure and sales[140] - The company plans to shorten the research and development cycle to ensure timely product development and align with current market trends and consumer preferences[112]

香港交易及結算所有限公司及香港聯合交易所有限公司對本公告的內容 概不負責，對其準確性或完整性亦不發表任何聲明，並明確表示，概不對 因本公告全部或任何部份內容而產生或因倚賴該等內容而引致的任何損 失承擔任何責任。 ERNEST BOREL HOLDINGS LIMITED 依 波 路 控 股 有 限 公 司 （於開曼群島註冊成立之有限公司） （股份代號：1856） 2022年 年 度 業 績 公 告 年度業績 依波路控股有限公司（「本公司」或「依波路」）董事（「董事」）會（「董事會」）謹 此 公 佈 本 公 司 及 其 附 屬 公 司（統 稱「本 集 團」）於 截 至2022年12月31日 止 年 度的經審核綜合業績，連同截至2021年12月31日止年度的比較數字。 財務及營運摘要 • 截 至2022年12月31日 止 財 政 年 度（「2022財 政 年 度」）的 營 業 額 較 截 至 2021年12月31日止財政年度（「2021財政年度」）減少，由約149.3百萬港 元減至約137.4百萬港元。 ...

Financial Performance - For the first half of the 2022 fiscal year, the company's revenue decreased by approximately 25.9% to about HKD 59.4 million, down from approximately HKD 80.1 million in the same period of 2021[12][25]. - Gross profit for the first half of 2022 was approximately HKD 39.1 million, resulting in a gross margin of about 65.8%, compared to a gross profit of approximately HKD 55.8 million and a gross margin of about 69.6% in the first half of 2021[13][18]. - The company reported a loss attributable to equity holders of approximately HKD 9.7 million for the first half of 2022, compared to a loss of approximately HKD 4.8 million in the same period of 2021[13][18]. - Gross profit decreased from approximately HKD 55.8 million in the first half of the 2021 fiscal year to approximately HKD 39.1 million in the first half of the 2022 fiscal year, a reduction of about HKD 16.7 million or approximately 30.0%[29]. - Gross margin fell from approximately 69.6% in the first half of the 2021 fiscal year to approximately 65.8% in the first half of the 2022 fiscal year[29]. - The company incurred a loss before tax of HKD 9,885,000 for the six months ended June 30, 2022[97]. - The net loss attributable to shareholders for the period was HKD 9,730,000, resulting in a basic and diluted loss per share of HKD 0.10[97]. - The company reported a net loss attributable to shareholders of HKD 9,730,000 for the six months ended June 30, 2022, compared to a loss of HKD 4,761,000 for the same period in 2021[133]. Market Performance - The number of sales points in China as of June 30, 2022, was 683, with revenue from this segment decreasing by approximately 27.6% to about HKD 57.0 million, accounting for approximately 96.0% of total revenue[23][27]. - The Hong Kong and Macau markets saw an increase in sales from approximately HKD 0.6 million to about HKD 1.5 million, representing a growth of approximately 151.9%[24][27]. - Other markets, primarily in Southeast Asia and Europe, experienced a revenue increase from approximately HKD 0.7 million to about HKD 0.9 million, reflecting a growth of approximately 19.9%[24][27]. - Revenue from external customers in China for the six months ended June 30, 2022, was HKD 57,026 thousand, down 27.7% from HKD 78,793 thousand in the same period of 2021[118]. Cost Management - Distribution expenses decreased by approximately HKD 8.3 million or about 26.6% to approximately HKD 23.1 million in the first half of the 2022 fiscal year, representing about 38.9% of total revenue[31]. - Administrative expenses decreased by approximately HKD 3.8 million or about 16.6% to approximately HKD 19.2 million in the first half of the 2022 fiscal year[32]. - The total employee cost for the first half of the 2022 fiscal year was approximately HKD 22.9 million, down from approximately HKD 28.0 million in the first half of the 2021 fiscal year[51]. - Employee costs totaled HKD 22,868,000 for the six months ended June 30, 2022, down from HKD 28,007,000 in the same period of 2021, reflecting a decrease of approximately 18.5%[131]. - The company is implementing effective cost control strategies to reduce unnecessary operating expenses while closely monitoring inventory levels to mitigate risks[62]. Inventory and Assets - Inventory as of June 30, 2022, was approximately HKD 357.6 million, a decrease of about HKD 15.0 million from approximately HKD 372.7 million as of December 31, 2021[37]. - As of June 30, 2022, total assets decreased to HKD 419,912 thousand from HKD 427,082 thousand as of December 31, 2021, representing a decline of approximately 1.4%[98]. - The company's non-current assets decreased from HKD 40,301 thousand to HKD 34,737 thousand, a reduction of about 13.8%[98]. - Total trade receivables amounted to HKD 60,978,000 as of June 30, 2022, an increase from HKD 55,353,000 as of December 31, 2021[136]. - The net amount of trade receivables after impairment provisions was HKD 41,902,000 as of June 30, 2022, compared to HKD 35,803,000 as of December 31, 2021[136]. Debt and Liabilities - The capital debt ratio as of June 30, 2022, was approximately 273.6%, up from approximately 250.9% as of December 31, 2021[41]. - Total liabilities increased slightly from HKD 324,490 thousand to HKD 328,218 thousand, an increase of approximately 1.1%[98]. - The company's equity attributable to owners decreased from HKD 112,775 thousand to HKD 102,969 thousand, a decline of about 8.7%[102]. - The group's bank loans with collateral amounted to HKD 17,109,000 as of June 30, 2022, compared to HKD 15,707,000 as of December 31, 2021, representing an increase of 8.96%[150]. - The scheduled repayment of bank loans includes HKD 14,028,000 due within one year as of June 30, 2022, compared to HKD 12,217,000 as of December 31, 2021, an increase of 14.83%[150]. Strategic Initiatives - The company anticipates that the long-term resilience of the Chinese consumer market will support stable growth despite short-term fluctuations due to economic instability[19]. - The company is actively expanding its market share in first and second-tier cities while targeting third-tier cities with a new sales model aimed at distributors in these areas[58]. - E-commerce sales are expected to grow steadily, with the company optimizing its platform investments and exploring potential partnerships beyond traditional platforms like Tmall, JD, and Vipshop[61]. - Future strategies include optimizing operations to capture a larger market share, particularly in third-tier cities, and transforming challenges into opportunities[63]. - The company aims to diversify revenue streams and maintain tight control over sales, distribution, and administrative expenses to achieve cost-saving goals[63]. - The company is committed to enhancing its profitability and delivering sustainable returns to shareholders through strategic preparations for future opportunities[63]. Corporate Governance - The company has established an audit committee to oversee financial reporting and internal controls, consisting of three independent non-executive directors[88]. - The company remains compliant with the corporate governance code as of June 30, 2022[86]. - The company has no significant future plans for major investments or acquisitions of capital assets as of June 30, 2022[46]. - The company did not declare or recommend any dividends for the periods ended June 30, 2022, and 2021[132].

Financial Performance - Revenue for the fiscal year ended December 31, 2021, increased from approximately HKD 122.6 million to approximately HKD 149.3 million, representing a growth of about 21.9%[10] - The company reported a loss attributable to owners of approximately HKD 31.8 million for the fiscal year 2021, compared to a profit of approximately HKD 1.3 million in the fiscal year 2020[11] - The loss per share for the fiscal year 2021 was approximately HKD 0.0916, compared to earnings per share of approximately HKD 0.0038 in the fiscal year 2020[12] - The company did not recommend the payment of a final dividend for the fiscal year 2021[13] - The company's revenue increased by approximately 21.7% from about HKD 122.6 million in 2020 to approximately HKD 149.3 million in 2021[49] - Gross profit rose by about 24.5% to approximately HKD 90.8 million in 2021, with a gross margin of approximately 60.9%, up from 59.5% in 2020[54] Market Performance - Sales performance in the Chinese market showed significant improvement, with sales revenue increasing compared to the previous year[19] - Revenue from the Chinese market increased by approximately 22.9% to about HKD 146.0 million, accounting for approximately 97.8% of total revenue in 2021[44] - Sales in the Hong Kong and Macau markets rose by approximately 88.1% to about HKD 1.9 million, representing approximately 1.3% of total revenue[45] - Revenue from other markets decreased by approximately 52.0% to about HKD 1.3 million, making up approximately 0.9% of total revenue[46] Operational Strategies - The company is strategically expanding its sales network in lower-tier cities in China to enhance sales revenue and operational efficiency[19] - The group is actively evaluating the performance of all sales points and closing underperforming locations to optimize resource allocation and improve profitability[19] - The company plans to explore various channels to expand sales revenue while closely controlling operational costs related to sales, distribution, and administrative expenses to achieve the goal of "increasing revenue and reducing expenditure"[24] - The group maintains a cautiously optimistic outlook for the retail market in 2022, anticipating a gradual restart of economic activities as vaccination rates increase, despite uncertainties such as variant viruses[24] E-commerce and Marketing - The group's e-commerce sales have shown a strong upward trend, becoming a major revenue driver, with active participation in platforms like Tmall and JD.com, as well as exploring influencer marketing and short video promotions[24] - Marketing strategies have shifted focus to online promotions through various e-commerce and social media platforms to maintain brand visibility[23] - E-commerce sales performance remains strong, with plans to explore new local and overseas platforms and optimize pricing strategies to attract a broader consumer base[83] Financial Management - Distribution expenses increased by approximately 48.0% to about HKD 67.1 million in 2021[59] - Administrative expenses rose by approximately 12.7% to about HKD 44.7 million in 2021[60] - The company is focused on effective inventory management to ensure stable cash flow and a healthy financial position, aiming to optimize inventory structure[24] - Cash and bank balances decreased to approximately HKD 7.6 million in 2021 from about HKD 18.4 million in 2020[64] - The group's debt-to-equity ratio as of December 31, 2021, was approximately 250.9%, up from 173.9% in 2020[65] Corporate Governance - The board consists of two executive directors, one non-executive director, and three independent non-executive directors[90] - The company has adopted the corporate governance code as per the listing rules, ensuring accountability and performance improvement[87] - All directors confirmed compliance with the standard code for securities trading during the fiscal year 2021, except for two non-executive directors who conducted transactions without prior notice[88] - The board is responsible for overseeing the group’s overall strategy, operational performance, and risk management systems[89] Environmental, Social, and Governance (ESG) Initiatives - The group focuses on sustainable development and has identified key environmental, social, and governance (ESG) issues, including employee rights, safety and health, and product quality and safety[150] - The report covers significant ESG matters faced by the group from January 1, 2021, to December 31, 2021[154] - The group emphasizes the importance of good ESG strategies to enhance investment value and provide long-term returns to stakeholders[164] - The total greenhouse gas emissions for the reporting period amounted to 135.96 tons of CO2 equivalent, with a density of 0.0027 tons of CO2 equivalent per watch produced[174] Sustainability Goals - The company aims to reduce carbon emission density by 10% by 2027[198] - The company plans to decrease energy consumption density by 10% by 2027[198] - The total water consumption dropped significantly to 138.64 cubic meters in 2021 from 691.69 cubic meters in 2020, a reduction of approximately 80%[195] - The company promotes a "reduce, reuse, and recycle" philosophy to protect the environment and contribute to society[200]

Financial Performance - For the first half of the 2021 fiscal year, revenue increased by approximately 109.5% to about HKD 80.1 million, up from approximately HKD 38.2 million in the same period of 2020[9]. - Gross profit rose to approximately HKD 55.8 million, with a gross margin of about 69.6%, compared to a gross profit of approximately HKD 20.9 million and a margin of about 54.6% in the previous year[9]. - The net loss after tax decreased from approximately HKD 10.1 million in the first half of 2020 to approximately HKD 4.8 million in the first half of 2021[9]. - The basic loss per share for the first half of 2021 was approximately HKD 1.37 cents, compared to approximately HKD 2.91 cents in the same period of 2020[9]. - The company reported revenue of HKD 80,113,000 for the six months ended June 30, 2021, a significant increase of 109.5% compared to HKD 38,236,000 for the same period in 2020[80]. - Gross profit for the same period was HKD 55,798,000, representing a gross margin of approximately 69.7%[80]. - The company incurred a loss before tax of HKD 4,612,000, an improvement from a loss of HKD 15,017,000 in the prior year, indicating a reduction in losses by 69.3%[80]. - The net loss attributable to shareholders for the period was HKD 4,761,000, compared to HKD 10,115,000 in the previous year, reflecting a 52.9% decrease in losses[80]. - The company’s total comprehensive loss for the period was HKD 12,454,000, compared to HKD 6,317,000 in the same period last year[80]. Market Performance - Revenue from the Chinese market increased by approximately 117.2% to about HKD 78.8 million, accounting for approximately 98.4% of total revenue[15]. - Sales in the Hong Kong and Macau markets decreased by approximately 16.4% to about HKD 0.6 million, representing approximately 0.7% of total revenue[16]. - Sales in other markets, primarily in Southeast Asia and Europe, fell by approximately 41.5% to about HKD 0.7 million, accounting for approximately 0.9% of total revenue[17]. - The overall market conditions and consumer sentiment in mainland China have improved, contributing to the significant revenue growth despite challenges in other regions[12]. Expenses and Costs - Sales cost increased by approximately HKD 6.9 million or 40.0% from HKD 17.3 million in the first half of FY2020 to HKD 24.3 million in the first half of FY2021[21]. - Distribution expenses increased by approximately HKD 14.6 million or 86.9% from HKD 16.8 million in the first half of FY2020 to HKD 31.4 million in the first half of FY2021, representing 39.2% of total revenue[24]. - Administrative expenses rose by approximately HKD 10.9 million or 90.7% from HKD 12.1 million in the first half of FY2020 to HKD 23.0 million in the first half of FY2021[25]. - The total employee costs for the period were HKD 28,007,000, up from HKD 22,029,000 in the previous year, marking an increase of 27.1%[107]. Inventory and Assets - As of June 30, 2021, inventory was approximately HKD 361.1 million, an increase of approximately HKD 1.5 million from HKD 359.6 million as of December 31, 2020[29]. - As of June 30, 2021, total assets amounted to HKD 441,411 thousand, an increase of 1.4% from HKD 433,411 thousand as of December 31, 2020[82]. - Non-current assets decreased slightly to HKD 41,482 thousand from HKD 41,285 thousand, indicating a marginal decline of 0.5%[82]. - The company's cash and cash equivalents at the end of the period were HKD 24,537 thousand, up from HKD 16,371 thousand at the end of June 2020, representing a year-on-year increase of 50.0%[89]. Debt and Liabilities - The capital debt ratio as of June 30, 2021, was approximately 201.0%, up from 173.9% as of December 31, 2020[33]. - Total liabilities increased to HKD 311,088 thousand as of June 30, 2021, compared to HKD 291,328 thousand at the end of 2020, reflecting a rise of 6.8%[82]. - The company’s total non-current liabilities rose to HKD 32,415 thousand, up from HKD 31,524 thousand, marking an increase of 2.8%[84]. - Bank loans with a maturity within one year amounted to HKD 13,000,000 as of June 30, 2021, compared to HKD 19,384,000 as of December 31, 2020, reflecting a decrease of approximately 33%[125]. Strategic Focus - The company is focusing on expanding its e-commerce business in mainland China through major online sales platforms, which has positively impacted revenue[14]. - The company plans to focus on high-quality "Swiss-made" watches and adapt to market trends to design products that cater to target customers[47]. - The company will continue to enhance brand awareness through various marketing strategies, including participation in the China International Import Expo in November[48]. - The company is focusing on expanding its sales network in high-potential markets, particularly in the Hainan Free Trade Zone, to increase sales revenue from strong sales points[49]. - The company plans to enhance its e-commerce operations by introducing exclusive watch styles for online platforms and adjusting pricing strategies to attract a broader consumer base[51]. - Effective cost control strategies are being implemented to reduce unnecessary operating expenses while closely monitoring inventory levels to mitigate risks[52]. - The company maintains a cautious yet optimistic outlook for the future, closely monitoring the pandemic situation and adjusting operational strategies accordingly[53]. Shareholder Information - As of June 30, 2021, the company had a total of 347,437,000 shares issued, with significant shareholdings by International Brand Limited (64.08%) and Anli (10.92%)[61][63]. - The company has a share option plan in place with a maximum issuance limit of 34,700,000 shares, representing approximately 9.99% of the issued share capital as of the report date[69]. - The company did not declare or recommend any dividends for the six months ended June 30, 2021, consistent with the previous year[108]. - The company is focused on sustainable and valuable returns for shareholders through constructive brand development[53].

1856 ERNEST BOREL HOLDINGS LIMITED 依 波 路 控 股 有 限 公 司 (於開曼群島註冊成立之有限公司) 股份代號 : 1856 年 報 2020 目錄 2 公司資料 3 財務摘要 4 主席報告書 6 董事及高級管理人員履歷詳情 9 管理層討論與分析 14 企業管治報告 24 環境、社會及管治報告 38 董事會報告書 50 獨立核數師報告 54 綜合損益及其他全面收益表 55 綜合財務狀況表 57 綜合權益變動表 58 綜合現金流量表 60 綜合財務報表附註 112 五年財務摘要 公司資料 依波路控股有限公司（「本公司」，連同其附屬公司統稱「本集團」） 董事 執行董事 商建光先生（董事會（「董事會」）主席） Teguh Halim先生（董事會副主席） 熊威先生 林黎女士 非執行董事 熊鷹先生 陶立先生 獨立非執行董事 杜振基先生 許卓傑先生 陳麗華女士 公司秘書 吳建新先生 審核委員會 杜振基先生（主席） 許卓傑先生 陳麗華女士 薪酬委員會 杜振基先生（主席） Teguh Halim先生 熊威先生 許卓傑先生 陳麗華女士 提名委員會 商建光先生（主席） 熊威先生 杜振基先生 ...