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进腾集团(02011) - 2023 - 年度业绩
2024-04-14 10:04
Financial Performance - Revenue for 2023 reached HKD 266,548,000, an increase of 23.6% compared to HKD 215,578,000 in 2022[1] - Gross profit for 2023 was HKD 110,540,000, representing a significant increase of 58.6% from HKD 69,710,000 in 2022[4] - The company reported a net loss of HKD 79,869,000 for 2023, a drastic decline from a profit of HKD 658,000 in 2022, marking a change of (12,238.1%)[8] - The operating profit for the reportable segments was HKD 25,293,000 for 2023, compared to HKD 5,814,000 in 2022, reflecting a significant increase of 335.5%[45][47] - The pre-tax loss for the year ended December 31, 2023, was approximately HKD 70,600,000, a decline from a pre-tax profit of HKD 540,000 in 2022, marking a turnaround of about HKD 71,140,000[100] - The gross profit for the group increased by approximately 58.6% to about HKD 110,500,000 for the year ended December 31, 2023, with a gross profit margin rising from approximately 32.3% in 2022 to 41.5% in 2023[108] - The group’s equity return rate attributable to equity shareholders was approximately -56.0% for the year ended December 31, 2023, compared to approximately -1.0% in 2022[193] Assets and Liabilities - Total assets decreased by 9.0% to HKD 278,103,000 in 2023 from HKD 305,712,000 in 2022[1] - Cash and cash equivalents fell by 39.8% to HKD 63,332,000 in 2023, down from HKD 105,266,000 in 2022[1] - Equity attributable to shareholders decreased by 33.3% to HKD 123,378,000 in 2023 from HKD 184,913,000 in 2022[1] - The total liabilities for the reportable segments increased to HKD 134,120,000 in 2023 from HKD 87,936,000 in 2022, indicating a rise of 52.1%[49] - The net current asset value increased from approximately HKD 105,030,000 in 2022 to about HKD 107,680,000 in 2023[131] Revenue Streams - The company generated HKD 246,810,000 in revenue from mainland China, representing 92.9% of total revenue for 2023[51] - Revenue from the zipper business for the year ended December 31, 2023, was approximately HKD 233,680,000, an increase of about 8.4% compared to the previous year[101] - A major customer accounted for over 10% of the group's revenue, contributing HKD 32,871,000 from property management services in 2023[52] - The increase in revenue was mainly attributed to the expansion of new property management services, contributing significantly to the group's income[187] Expenses and Costs - Employee costs increased to HKD 93,763,000 in 2023 from HKD 83,066,000 in 2022, reflecting a growth of 13%[61] - Distribution costs for the year ended December 31, 2023, were approximately HKD 23,170,000, accounting for about 8.7% of total revenue, compared to 6.0% in 2022[111] - Administrative expenses for the year ended December 31, 2023, were approximately HKD 93,740,000, representing about 35.2% of total revenue, up from 31.2% in 2022[111] - The company recognized impairment losses on certain assets in the supply chain division, contributing to the increased losses for the year[113] New Business Initiatives - The company began providing property management services in September 2023, indicating a strategic expansion into new service areas[25] - A new business segment for property management services in mainland China was initiated in September 2023, leading to a restructuring of the internal reporting framework[42] - The company aims to diversify its business by introducing short-cycle, cash flow-stable, and light-asset property management services[156] Governance and Compliance - The board of directors includes four independent non-executive directors out of nine, ensuring adherence to good corporate governance principles[164] - The company has complied with all corporate governance code provisions except for a deviation regarding the roles of the chairman and CEO, which is justified by the board due to the small size of the management team[165] - The company has established an audit committee consisting of three independent non-executive directors to oversee financial reporting and risk management[169] Future Outlook - The company anticipates challenges in business development due to rising costs of raw materials, energy, and labor, influenced by geopolitical factors and high interest rates[154] - The company is adopting a cautious approach towards future macroeconomic improvements and will implement measures to enhance automation, improve production processes, and control costs[162] Shareholder Matters - The company does not recommend any dividend payment for the year ended December 31, 2023, consistent with 2022[95] - The company plans to change its name from "China Apex Group Limited" to "Gilston Group Limited," pending shareholder approval[175] - The net proceeds from the general placement of new shares amounted to approximately HKD 68.6 million, with HKD 38.6 million allocated for general working capital and investments[173]
进腾集团(02011) - 2023 - 中期财报
2023-09-26 08:43
[Company Information](index=3&type=section&id=%E5%85%AC%E5%8F%B8%E8%B3%87%E6%96%99) This chapter lists the basic information of China Hengtai Group Limited and its subsidiaries, including key contact and governance details such as company secretary, board members (executive, non-executive, independent non-executive directors), committee compositions, registered office, principal place of business in Hong Kong, share registrar, auditor, principal bankers, and company website - Board members include **Yip Siu Lun** (Chairman), **Ng Cheuk Hin**, **Mak Yung Bun**, **Cheung Ka Yin** (Executive Directors), **Lam Ping** (Non-executive Director), and **Leung Ka Tin**, **Cheng Hong Kei**, **Lau Wai King**, **Or Kwok Shu** (Independent Non-executive Directors)[16](index=16&type=chunk)[3](index=3&type=chunk)[5](index=5&type=chunk) - The compositions of the Audit Committee, Remuneration Committee, and Nomination Committee are listed, with **Mr. Cheng Hong Kei** serving as Chairman of the Audit and Remuneration Committees, and **Mr. Yip Siu Lun** as Chairman of the Nomination Committee[10](index=10&type=chunk)[16](index=16&type=chunk) - The Company's registered office is in the Cayman Islands, and its principal place of business in Hong Kong is at Units 10A & 10B, 15th Floor, 9 Queen's Road Central, Central[4](index=4&type=chunk)[10](index=10&type=chunk) [Financial Summary](index=5&type=section&id=%E8%B2%A1%E5%8B%99%E6%91%98%E8%A6%81) This chapter outlines China Hengtai Group's key financial performance for the six months ended June 30, 2023, showing a slight decrease in revenue, an increase in gross profit, but a significant reduction in profit for the period and earnings per share, with total assets and cash and cash equivalents both decreasing Financial Summary for the Six Months Ended June 30, 2023 | Metric | June 30, 2023 (thousand HKD) | June 30, 2022 (thousand HKD) | Change (+/-) | | :--- | :--- | :--- | :--- | | Revenue | 123,386 | 125,612 | (1.7%) | | Gross Profit | 42,594 | 40,808 | 4.4% | | Gross Profit Margin | 34.5% | 32.5% | 6.2% | | Profit for the Period | 5,910 | 10,978 | (46.2%) | | Profit for the Period Attributable to Equity Holders of the Company | 3,394 | 8,587 | (60.5%) | | Basic and Diluted Earnings Per Share (HK cents) | 0.6 | 1.8 | (66.7%) | | Metric | June 30, 2023 (thousand HKD) | December 31, 2022 (thousand HKD) | Change (+/-) | | :--- | :--- | :--- | :--- | | Total Assets | 284,991 | 305,712 | (6.8%) | | Cash and Cash Equivalents | 67,457 | 105,266 | (35.9%) | | Total Equity Attributable to Equity Holders of the Company | 179,488 | 184,913 | (2.9%) | [Management Discussion and Analysis](index=6&type=section&id=%E7%AE%A1%E7%90%86%E5%B1%A4%E8%A8%8E%E8%AB%96%E5%8F%8A%E5%88%86%E6%9E%90) This section details the Group's business operations, financial performance, future outlook, and key management matters during the reporting period, highlighting efforts to enhance competitiveness despite macroeconomic challenges, a slight revenue decrease, improved gross margin, and a significant net profit decline due to reduced foreign exchange gains and increased professional fees, also covering related party transactions, liquidity, employees, and the share option scheme [Business Review](index=6&type=section&id=%E6%A5%AD%E5%8B%99%E5%9B%9E%E9%A1%A7) The Group primarily engages in the manufacturing of zipper chains in China, serving OEM clients for renowned apparel brands, with profit attributable to equity holders of the Company significantly decreasing for the six months ended June 30, 2023, mainly due to reduced net foreign exchange gains and additional professional fees for business development - The Group's core business is the manufacturing of zipper chains in China, primarily serving OEM clients for apparel brands[22](index=22&type=chunk) - For the six months ended June 30, 2023, profit attributable to equity holders of the Company was approximately **HKD 3.39 million**, a decrease of approximately **60.5%** compared to **HKD 8.59 million** in the same period of 2022[23](index=23&type=chunk) - The decrease in profit was mainly due to a reduction in net foreign exchange gains from approximately **HKD 6.9 million** in the same period of 2022 to approximately **HKD 4.9 million**, and additional professional fees incurred for business development[23](index=23&type=chunk) [Outlook](index=7&type=section&id=%E5%89%8D%E6%99%AF) Facing challenges in H1 2023 such as insufficient domestic demand, weak consumer spending, and a complex external environment, the Group recognizes the resilience and potential of the Chinese economy and plans to enhance future development through increased market development, R&D investment, expanded production capacity, digital transformation, and strengthened capital and talent management - In H1 2023, the economy faced difficulties and challenges including insufficient domestic demand, weak consumer spending, and a severe and complex external environment (e.g., Russia-Ukraine conflict, US dollar interest rate hikes, inflation)[26](index=26&type=chunk) - The Group will intensify market development efforts, expanding its zipper business beyond the apparel industry and developing overseas markets[40](index=40&type=chunk) - The Group plans to increase R&D investment to enhance its capabilities and accelerate the transformation from digitalization and informatization to 'intelligent digitalization' to improve operational efficiency and management levels[40](index=40&type=chunk)[18](index=18&type=chunk) - Other countermeasures include integrating and expanding production capacity, improving production processes, controlling costs, and strengthening capital and talent management[18](index=18&type=chunk)[42](index=42&type=chunk)[17](index=17&type=chunk) [Financial Review](index=8&type=section&id=%E8%B2%A1%E5%8B%99%E5%9B%9E%E9%A1%A7) This section details the Group's financial performance during the reporting period, covering revenue, gross profit, expenses, profitability, related party transactions, liquidity, and capital resources, noting a slight revenue decrease but improved gross margin due to cost control, a significant net profit decline from reduced foreign exchange gains and increased professional fees, stable net current assets, no bank borrowings or pledged assets, and disclosures on employees and the decision not to declare an interim dividend [Revenue](index=8&type=section&id=%E6%94%B6%E5%85%A5) For the six months ended June 30, 2023, the Group's revenue was approximately **HKD 123.4 million**, a 1.7% decrease year-on-year, primarily due to insufficient domestic demand and weak consumer spending caused by RMB depreciation, with zipper chains and sliders remaining the main revenue source and mainland China contributing the majority of revenue - For the six months ended June 30, 2023, revenue was approximately **HKD 123.4 million**, a year-on-year decrease of **1.7%**[36](index=36&type=chunk) Revenue Analysis by Product Category | Product Category | 2023 (thousand HKD) | 2023 (%) | 2022 (thousand HKD) | 2022 (%) | | :--- | :--- | :--- | :--- | :--- | | Zipper Chains and Sliders | 122,120 | 99.0 | 123,042 | 98.0 | | Others | 1,266 | 1.0 | 2,570 | 2.0 | | **Total** | **123,386** | **100.0** | **125,612** | **100.0** | Revenue Analysis by Geographical Location | Geographical Location | 2023 (thousand HKD) | 2023 (%) | 2022 (thousand HKD) | 2022 (%) | | :--- | :--- | :--- | :--- | :--- | | Mainland China | 109,042 | 88.4 | 108,821 | 86.6 | | Overseas | 14,344 | 11.6 | 16,791 | 13.4 | | **Total** | **123,386** | **100.0** | **125,612** | **100.0** | - The decrease in revenue was mainly due to insufficient domestic demand and weak consumer spending caused by RMB depreciation[37](index=37&type=chunk) [Gross Profit](index=9&type=section&id=%E6%AF%9B%E5%88%A9) For the six months ended June 30, 2023, the Group's gross profit increased by **4.4%** to **HKD 42.594 million**, with the gross profit margin rising to **34.5%**, primarily due to cost control measures implemented in daily operations Gross Profit Analysis by Product Category | Product Category | 2023 (thousand HKD) | 2023 (%) | 2022 (thousand HKD) | 2022 (%) | | :--- | :--- | :--- | :--- | :--- | | Zipper Chains and Sliders | 41,734 | 98.0 | 39,620 | 97.1 | | Others | 860 | 2.0 | 1,188 | 2.9 | | **Total** | **42,594** | **100.0** | **40,808** | **100.0** | - The increase in gross profit was mainly due to the impact of cost control measures implemented in daily operations[41](index=41&type=chunk) [Expenses and Costs](index=9&type=section&id=%E9%96%8B%E6%94%AF%E5%8F%8A%E6%88%90%E6%9C%AC) Distribution costs increased by **44.7%** year-on-year to **HKD 9.07 million**, mainly due to increased sales activities and advertising, while administrative expenses rose by **8.8%** year-on-year to **HKD 32.57 million**, primarily due to higher professional fees related to business development - Distribution costs increased by approximately **44.7%** to approximately **HKD 9.07 million**, mainly due to increased sales activities and advertising[43](index=43&type=chunk) - Administrative expenses increased by approximately **8.8%** to approximately **HKD 32.57 million**, mainly due to increased professional fees related to business development[43](index=43&type=chunk) [Profitability](index=9&type=section&id=%E7%9B%88%E5%88%A9%E8%83%BD%E5%8A%9B) For the six months ended June 30, 2023, profit attributable to equity holders of the Company was approximately **HKD 3.39 million**, a significant decrease from the prior year, resulting in a profit margin of approximately **2.75%** - Profit attributable to equity holders of the Company was approximately **HKD 3.39 million**, compared to approximately **HKD 8.59 million** in the same period last year[44](index=44&type=chunk) - The profit margin attributable to equity holders of the Company was approximately **2.75%**[44](index=44&type=chunk) [Related Party Transactions](index=10&type=section&id=%E9%97%9C%E9%80%A3%E4%BA%A4%E6%98%93) The Group entered into several lease agreements with related parties owned by directors or senior management for properties in Hong Kong, Zhejiang, Guangdong, and Jingmen, with independent property valuers confirming all monthly rents referenced market prices, and these leases resulted in the recognition of additional right-of-use assets under HKFRS 16, constituting related party transactions under the Listing Rules - The Group renewed a lease agreement for a Hong Kong property with Success Point Limited (owned by **Mr. Hui Sek Pang** and **Mr. Hui Sek Nam**) at a monthly rent of **HKD 54,000**[49](index=49&type=chunk) - The Group renewed a lease agreement for its Zhejiang production base with Foshan Nanhai Jinheming Investment Co., Ltd. (owned by **Mr. Hui Sek Pang** and **Mr. Hui Sek Nam**) at a monthly rent of **RMB 625,958**[50](index=50&type=chunk) - The Group renewed a lease agreement for its Guangdong factory with **Mr. Hui Sek Pang** and **Mr. Hui Sek Nam** at a monthly rent of **RMB 428,980**[53](index=53&type=chunk) - In accordance with HKFRS 16, these lease agreements resulted in the recognition of right-of-use assets totaling approximately **HKD 2 million**, **HKD 0.2 million**, **HKD 8.58 million**, and **HKD 8.34 million** respectively[58](index=58&type=chunk) [Business Update on Relocation of Zhejiang Production Base](index=12&type=section&id=%E6%9C%89%E9%97%9C%E6%90%AC%E9%81%B7%E6%B5%99%E6%B1%9F%E7%94%A2%E5%9F%BA%E4%B9%8B%E6%A5%AD%E5%8B%99%E6%9B%B4%E6%96%B0) The Group's production base in Jiashan County, Zhejiang Province, is subject to relocation as part of an organic renewal project within the economic development zone, with no specific relocation timetable received yet, and the Group is discussing the relocation plan with the Jiashan Economic and Technological Development Zone Management Committee - The Group's production base in Jiashan County, Zhejiang Province, China, is subject to relocation due to an organic renewal project within the economic development zone[59](index=59&type=chunk) - Kaiyi Zhejiang has not yet received a relocation timetable and will discuss the relocation plan with the Jiashan Economic and Technological Development Zone Management Committee[59](index=59&type=chunk) [Liquidity and Capital Resources](index=13&type=section&id=%E6%B5%81%E5%8B%95%E8%B3%87%E9%87%91%E5%8F%8A%E8%B3%87%E6%9C%AC%E8%B3%87%E6%BA%90) For the six months ended June 30, 2023, the Group recorded net cash outflows from operating, investing, and financing activities, leading to a significant decrease in cash and cash equivalents, and while the Group actively reviews its capital structure and monitors capital status using an adjusted net debt to capital ratio (target below 20%), this ratio was not calculated as total debt was lower than cash - Net cash outflow from operating activities was approximately **HKD 16.55 million** (2022: HKD 12.07 million), primarily due to an increase in trade receivables[61](index=61&type=chunk) - Net cash outflow from investing activities was approximately **HKD 2.91 million**, mainly attributable to payments for the purchase of property, plant and equipment[61](index=61&type=chunk) - Net cash outflow from financing activities was approximately **HKD 12.56 million** (2022: net inflow of HKD 0.45 million), mainly due to rental payments[61](index=61&type=chunk) - As at June 30, 2023, cash and cash equivalents were approximately **HKD 67.46 million**, a decrease of approximately **HKD 37.81 million** from December 31, 2022[62](index=62&type=chunk) - The Group's strategy is to maintain an adjusted net debt to capital ratio below **20%**, but this ratio was not calculated as total debt was lower than cash and cash equivalents[64](index=64&type=chunk) [Net Current Assets](index=14&type=section&id=%E6%B5%81%E5%8B%95%E8%B3%87%E7%94%A2%E6%B7%A8%E5%80%BC) As at June 30, 2023, the Group's net current assets were **HKD 107.96 million**, an increase of approximately **HKD 2.93 million** from December 31, 2022, with current assets primarily comprising inventories, trade and other receivables, and cash and cash equivalents, while current liabilities mainly consisted of trade and other payables and the current portion of lease liabilities - As at June 30, 2023, net current assets were **HKD 107.96 million**, an increase of approximately **HKD 2.93 million** from December 31, 2022[65](index=65&type=chunk) - Key components of current assets included inventories of approximately **HKD 26.45 million**, trade and other receivables of approximately **HKD 82.94 million**, and cash and cash equivalents of approximately **HKD 67.46 million**[65](index=65&type=chunk) - Key components of current liabilities included trade and other payables of approximately **HKD 50.66 million** and the current portion of lease liabilities of approximately **HKD 18.13 million**[65](index=65&type=chunk) [Bank Borrowings](index=14&type=section&id=%E9%8A%80%E8%A1%8C%E5%80%9F%E8%B2%B8) As at June 30, 2023, and June 30, 2022, the Group had no bank borrowings, rendering the gearing ratio inapplicable - As at June 30, 2023, and June 30, 2022, the Group had no bank borrowings[66](index=66&type=chunk) [Pledged Assets](index=14&type=section&id=%E5%B7%B2%E6%8A%B5%E6%8A%BC%E8%B3%87%E7%94%A2) As at June 30, 2023, the Group had no pledged assets - As at June 30, 2023, the Group had no pledged assets[67](index=67&type=chunk) [Contingent Liabilities](index=15&type=section&id=%E6%88%96%E7%84%B6%E8%B2%A0%E5%82%B5) As at June 30, 2023, the Group had no significant contingent liabilities - As at June 30, 2023, the Group had no significant contingent liabilities[69](index=69&type=chunk) [Foreign Currency Risk](index=15&type=section&id=%E5%A4%96%E5%B9%A3%E9%A2%A8%E9%9A%AA) Individual companies within the Group have limited foreign currency risk as most transactions are denominated in their respective functional currencies, and for the six months ended June 30, 2023, the Group did not hedge against risks arising from exchange rate fluctuations - Individual companies within the Group have limited foreign currency risk, with most transactions denominated in their functional currencies[70](index=70&type=chunk) - For the six months ended June 30, 2023, the Group did not hedge against risks arising from exchange rate fluctuations[70](index=70&type=chunk) [Employees](index=15&type=section&id=%E5%83%B1%E5%93%A1) As at June 30, 2023, the Group had **663** full-time employees, a decrease from the prior year, but staff costs increased to approximately **HKD 51.05 million** due to human resource integration - As at June 30, 2023, the Group had **663** full-time employees (June 30, 2022: 804 employees)[71](index=71&type=chunk) - For the six months ended June 30, 2023, staff costs were approximately **HKD 51.05 million** (2022: approximately HKD 49.98 million), with the increase mainly due to an increase in the number of workers resulting from human resource integration[71](index=71&type=chunk) [Significant Acquisitions and Disposals of Subsidiaries and Associates](index=15&type=section&id=%E9%99%84%E5%B1%AC%E5%85%AC%E5%8F%B8%E5%8F%8A%E8%81%AF%E7%87%9F%E5%85%AC%E5%8F%B8%E7%9A%84%E9%87%8D%E5%A4%A7%E6%94%B6%E8%B3%BC%E5%8F%8A%E5%87%BA%E5%94%AE%E4%BA%8B%E9%A0%85) For the six months ended June 30, 2023, the Group had no significant acquisitions or disposals of subsidiaries and associates - For the six months ended June 30, 2023, the Group had no significant acquisitions or disposals of subsidiaries and associates[72](index=72&type=chunk) [Interim Dividend](index=15&type=section&id=%E4%B8%AD%E6%9C%9F%E8%82%A1%E6%81%AF) The Board does not recommend the payment of any interim dividend for the six months ended June 30, 2023 - The Board does not recommend the payment of any interim dividend for the six months ended June 30, 2023[28](index=28&type=chunk) [Events After Reporting Period](index=16&type=section&id=%E5%A0%B1%E5%91%8A%E6%9C%9F%E5%AE%8C%E7%B5%90%E5%BE%8C%E4%BA%8B%E9%A0%85) The Directors confirm that no significant events affecting the Group have occurred after June 30, 2023, and up to the date of this report - The Directors confirm that no significant events affecting the Group have occurred after June 30, 2023, and up to the date of this report[75](index=75&type=chunk) [Share Option Scheme](index=16&type=section&id=%E8%B3%BC%E8%82%A1%E6%AC%8A%E8%A8%88%E5%8A%83) The Company adopted a share option scheme on May 30, 2023, to incentivize or reward selected participants for their contributions to the Group, with an authorized limit of **10%** of issued shares and a 10-year validity, and no share options had been granted as of June 30, 2023 - The Company adopted a share option scheme by ordinary resolution on **May 30, 2023**, to incentivize or reward participants for their contributions to the Group[76](index=76&type=chunk)[29](index=29&type=chunk) - The total number of shares under the share option scheme shall not exceed **10%** of the issued shares (i.e., **55,776,480 shares**), and the scheme is valid for **10 years**[84](index=84&type=chunk)[80](index=80&type=chunk) - As at June 30, 2023, no share options had been granted or agreed to be granted under the share option scheme[81](index=81&type=chunk) [Disclosure of Interests](index=18&type=section&id=%E6%AC%8A%E7%9B%8A%E6%8A%AB%E9%9C%B2) This chapter discloses the interests and short positions of Directors and chief executives, as well as substantial shareholders and other persons, in the Company's shares, noting that **Ms. Lam Ping** and **Mr. Mak Yung Bun** hold shares through controlled corporations, and China Huarong Asset Management Co., Ltd. and its subsidiaries are deemed controlling shareholders, with several beneficial owners and receivers holding significant stakes [Directors' and Chief Executives' Interests and/or Short Positions in the Shares, Underlying Shares or Debentures of the Company or any Associated Corporation](index=18&type=section&id=%E8%91%A3%E4%BA%8B%E5%8F%8A%E4%B8%BB%E8%A6%81%E8%A1%8C%E6%94%BF%E4%BA%BA%E5%93%A1%E6%96%BC%E6%9C%AC%E5%85%AC%E5%8F%B8%E6%88%96%E5%85%B6%E4%BB%BB%E4%BD%95%E7%9B%B8%E8%81%AF%E6%B3%95%E5%9C%98%E4%B9%8B%E8%82%A1%E4%BB%BD%E3%80%81%E7%9B%B8%E9%97%9C%E8%82%A1%E4%BB%BD%E6%88%96%E5%82%B5%E6%AC%8A%E8%AD%89%E4%B8%AD%E4%B9%8B%E6%AC%8A%E7%9B%8A%E5%8F%8A%E2%88%95%E6%88%96%E6%B7%A1%E5%80%89) As at June 30, 2023, **Ms. Lam Ping** and **Mr. Mak Yung Bun** were each deemed to have an interest in **26,556,126 shares** of the Company, representing **4.76%** of the issued shares, held through their jointly owned Golden Diamond Inc., with no other Directors or chief executives holding disclosable interests or short positions Directors' Long Positions in the Shares and Underlying Shares of the Company | Name of Director | Nature of Interest | Number of Shares | Approximate Percentage of Interest | | :--- | :--- | :--- | :--- | | Lam Ping | Interest in controlled corporation | 26,556,126 | 4.76% | | Mak Yung Bun | Interest in controlled corporation | 26,556,126 | 4.76% | - Ms. Lam Ping and Mr. Mak Yung Bun were each deemed to have an interest in **26,556,126 shares** of the Company, held through Golden Diamond Inc.[89](index=89&type=chunk) [Substantial Shareholders' and Other Persons' Interests and Short Positions in the Shares or Underlying Shares of the Company](index=19&type=section&id=%E4%B8%BB%E8%A6%81%E8%82%A1%E6%9D%B1%E5%8F%8A%E5%85%B6%E4%BB%96%E4%BA%BA%E5%A3%AB%E6%96%BC%E6%9C%AC%E5%85%AC%E5%8F%B8%E4%B9%8B%E8%82%A1%E4%BB%BD%E6%88%96%E7%9B%B8%E9%97%9C%E8%82%A1%E4%BB%BD%E4%B9%8B%E6%AC%8A%E7%9B%8A%E5%8F%8A%E6%B7%A1%E5%80%89) As at June 30, 2023, several substantial shareholders and other persons held interests of **5%** or more in the Company's issued share capital, with China Sun, Central Eagle, and Golden Diamond as beneficial owners, and China Huarong Asset Management Co., Ltd. and its multi-tiered subsidiaries (including Noble Wisdom Ever Limited) holding **70.16%** of shares through security interests, while **Chan Ho Yin** and **Li Kin Long Kenny** held **28.73%** of shares as joint and several receivers Substantial Shareholders' and Other Persons' Long Positions in the Shares and Underlying Shares of the Company | Name of Shareholder | Capacity | Number of Shares | Approximate Percentage of Interest | | :--- | :--- | :--- | :--- | | China Sun | Beneficial owner | 133,706,331 | 23.97% | | Central Eagle | Beneficial owner | 130,897,663 | 23.47% | | Golden Diamond | Beneficial owner | 26,566,126 | 4.76% | | Noble Wisdom Ever Limited | Security interest | 326,089,600 | 70.16% | | China Huarong Overseas Investment Holdings Co., Ltd. | Interest in controlled corporation | 326,089,600 | 70.16% | | Huarong Overseas Investment & Asset Management Co., Ltd. | Interest in controlled corporation | 326,089,600 | 70.16% | | Huarong Zhiyuan Investment Management Co., Ltd. | Interest in controlled corporation | 326,089,600 | 70.16% | | China Huarong Asset Management Co., Ltd. | Interest in controlled corporation | 326,089,600 | 70.16% | | Chan Ho Yin | Joint and several receivers | 160,272,457 | 28.73% | | Li Kin Long Kenny | Joint and several receivers | 160,272,457 | 28.73% | - China Huarong Asset Management Co., Ltd., through its wholly-owned Huarong Zhiyuan Investment Management Co., Ltd., Huarong Overseas Investment & Asset Management Co., Ltd., and China Huarong Overseas Investment Holdings Co., Ltd., indirectly controls Noble Wisdom Ever Limited, thereby holding **70.16%** of the Company's shares[102](index=102&type=chunk)[103](index=103&type=chunk)[104](index=104&type=chunk)[105](index=105&type=chunk) - Chan Ho Yin and Li Kin Long Kenny have been appointed as joint and several receivers of the pledged assets, involving share charges over the Company's shares executed by China Sun Corporation, Central Eagle Limited, and Golden Diamond Inc.[105](index=105&type=chunk) [Corporate Governance and Other Information](index=22&type=section&id=%E4%BC%81%E6%A5%AD%E7%AE%A1%E6%B2%BB%E5%8F%8A%E5%85%B6%E4%BB%96%E8%B3%87%E6%96%99) This chapter outlines the Group's corporate governance practices, confirming compliance with most Corporate Governance Code provisions, with an exception for independent non-executive directors' attendance at the AGM, and notes the adoption of a standard code for securities transactions by directors and relevant employees, no purchases, sales, or redemptions of listed securities by the Company or its subsidiaries during the reporting period, and the Audit Committee's review of the interim financial report [Corporate Governance Practices](index=22&type=section&id=%E4%BC%81%E6%A5%AD%E7%AE%A1%E6%B2%BB%E5%B8%B8%E8%A6%8F) The Company is committed to maintaining stringent corporate governance and has complied with all provisions of the Corporate Governance Code, except for certain independent non-executive directors' absence from the AGM on **June 27, 2023**, due to personal reasons, and has adopted a standard code for directors' securities transactions and a similar code of conduct for relevant employees - The Company has complied with all provisions of the Corporate Governance Code, except that certain independent non-executive directors were unable to attend the Annual General Meeting held on **June 27, 2023**, due to personal reasons[108](index=108&type=chunk)[110](index=110&type=chunk) - The Company has adopted the Model Code as its code of conduct for directors' securities transactions and has made specific enquiries to all Directors, who confirmed their compliance[110](index=110&type=chunk) - The Company has also adopted a code of conduct for relevant employees' securities transactions, the terms of which are no less exacting than the Model Code[110](index=110&type=chunk) [Purchase, Sale or Redemption of the Company's Listed Securities](index=22&type=section&id=%E8%B3%BC%E8%B2%B7%E3%80%81%E5%87%BA%E5%94%AE%E6%88%96%E8%B4%96%E5%9B%9E%E6%9C%AC%E5%85%AC%E5%8F%B8%E4%B8%8A%E5%B8%82%E8%AD%89%E5%88%B8) For the six months ended June 30, 2023, neither the Company nor any of its subsidiaries purchased, sold, or redeemed any of the Company's listed securities - For the six months ended June 30, 2023, neither the Company nor any of its subsidiaries purchased, sold, or redeemed any of the Company's listed securities[111](index=111&type=chunk) [Audit Committee](index=22&type=section&id=%E5%AF%A9%E6%A0%B8%E5%A7%94%E5%93%A1%E6%9C%83) The Group's unaudited interim financial report for the six months ended June 30, 2023, has been reviewed by the Board's Audit Committee - The Group's unaudited interim financial report for the six months ended June 30, 2023, has been reviewed by the Board's Audit Committee[112](index=112&type=chunk) [Condensed Consolidated Statement of Profit or Loss](index=23&type=section&id=%E7%B0%A1%E6%98%8E%E7%B6%9C%E5%90%88%E6%90%8D%E7%9B%8A%E8%A1%A8) The condensed consolidated statement of profit or loss shows that for the six months ended June 30, 2023, the Group's revenue was **HKD 123.386 million**, gross profit was **HKD 42.594 million**, and profit for the period was **HKD 5.910 million**, a significant **46.2%** decrease from the prior year, with profit attributable to equity holders of the Company at **HKD 3.394 million** and basic and diluted earnings per share at **0.6 HK cents** Summary of Condensed Consolidated Statement of Profit or Loss | Metric | June 30, 2023 (thousand HKD) | June 30, 2022 (thousand HKD) | | :--- | :--- | :--- | | Revenue | 123,386 | 125,612 | | Cost of sales | (80,792) | (84,804) | | Gross profit | 42,594 | 40,808 | | Other income and gains/(losses) – net | 6,383 | 8,266 | | Distribution costs | (9,070) | (6,269) | | Administrative expenses | (32,574) | (29,947) | | Interest on lease liabilities | (1,472) | (2,088) | | Profit before tax | 5,861 | 10,770 | | Income tax credit | 49 | 208 | | Profit for the period | 5,910 | 10,978 | | Profit for the period attributable to equity holders of the Company | 3,394 | 8,587 | | Profit for the period attributable to non-controlling interests | 2,516 | 2,391 | | Basic and diluted earnings per share (HK cents) | 0.6 | 1.8 | [Condensed Consolidated Statement of Profit or Loss and Other Comprehensive Income](index=24&type=section&id=%E7%B0%A1%E6%98%8E%E7%B6%9C%E5%90%88%E6%90%8D%E7%9B%8A%E5%8F%8A%E5%85%B6%E4%BB%96%E5%85%A8%E9%9D%A2%E6%94%B6%E7%9B%8A%E8%A1%A8) The condensed consolidated statement of profit or loss and other comprehensive income shows that for the six months ended June 30, 2023, profit for the period was **HKD 5.910 million**, but due to exchange differences arising from the translation of financial statements of mainland China subsidiaries, other comprehensive income was negative **HKD 10.371 million**, resulting in a total comprehensive income for the period of negative **HKD 4.461 million** Summary of Condensed Consolidated Statement of Profit or Loss and Other Comprehensive Income | Metric | June 30, 2023 (thousand HKD) | June 30, 2022 (thousand HKD) | | :--- | :--- | :--- | | Profit for the period | 5,910 | 10,978 | | Items that may be reclassified subsequently to profit or loss: Exchange differences arising from translation of financial statements of mainland China subsidiaries | (10,371) | (14,619) | | Total comprehensive income for the period | (4,461) | (3,641) | | Attributable to equity holders of the Company | (5,425) | (3,849) | | Attributable to non-controlling interests | 964 | 208 | [Condensed Consolidated Statement of Financial Position](index=25&type=section&id=%E7%B0%A1%E6%98%8E%E7%B6%9C%E5%90%88%E8%B2%A1%E5%8B%99%E7%8B%80%E6%B3%81%E8%A1%A8) The condensed consolidated statement of financial position shows that as at June 30, 2023, the Group's total assets less current liabilities were **HKD 216.095 million**, and net assets were **HKD 201.954 million**, with non-current assets primarily comprising property, plant and equipment and right-of-use assets, current assets showing a significant increase in trade and other receivables but a decrease in cash and cash equivalents, and current liabilities mainly consisting of trade and other payables and lease liabilities Summary of Condensed Consolidated Statement of Financial Position | Metric | June 30, 2023 (thousand HKD) | December 31, 2022 (thousand HKD) | | :--- | :--- | :--- | | **Non-current assets** | | | | Property, plant and equipment | 69,369 | 73,753 | | Right-of-use assets | 26,353 | 37,068 | | Intangible assets | 1,081 | 1,272 | | Deferred tax assets | 5,580 | 5,691 | | **Current assets** | | | | Inventories | 26,455 | 33,527 | | Trade and other receivables | 82,940 | 43,753 | | Cash and cash equivalents | 67,457 | 105,266 | | **Current liabilities** | | | | Trade and other payables | 50,659 | 47,577 | | Amounts due to related parties | – | 7,393 | | Lease liabilities (current portion) | 18,126 | 22,427 | | **Non-current liabilities** | | | | Lease liabilities (non-current portion) | 13,017 | 20,661 | | Deferred tax liabilities | 1,124 | 1,124 | | **Total equity** | | | | Total equity attributable to equity holders of the Company | 179,488 | 184,913 | | Non-controlling interests | 22,466 | 21,502 | | **Net assets** | **201,954** | **206,415** | [Condensed Consolidated Statement of Changes in Equity](index=27&type=section&id=%E7%B0%A1%E6%98%8E%E7%B6%9C%E5%90%88%E6%AC%8A%E7%9B%8A%E8%AE%8A%E5%8B%95%E8%A1%A8) The condensed consolidated statement of changes in equity traces equity movements for the six months ended June 30, 2023, showing that while profit for the period increased equity attributable to equity holders of the Company, exchange reserves significantly decreased due to exchange differences from translating financial statements of mainland China subsidiaries, resulting in negative total comprehensive income and a net decrease in total equity attributable to equity holders of the Company Summary of Condensed Consolidated Statement of Changes in Equity | Metric | Balance at January 1, 2023 (thousand HKD) | Profit for the period (thousand HKD) | Other comprehensive income (thousand HKD) | Transfer to statutory reserve (thousand HKD) | Balance at June 30, 2023 (thousand HKD) | | :--- | :--- | :--- | :--- | :--- | :--- | | Share capital | 5,578 | – | – | – | 5,578 | | Share premium | 213,575 | – | – | – | 213,575 | | Capital reserve | 18,324 | – | – | – | 18,324 | | Statutory reserve | 25,856 | – | – | 1,805 | 27,661 | | Exchange reserve | (515) | – | (8,819) | – | (9,334) | | Accumulated losses | (77,905) | 3,394 | – | (1,805) | (76,316) | | **Total attributable to equity holders of the Company** | **184,913** | **3,394** | **(8,819)** | **–** | **179,488** | | Non-controlling interests | 21,502 | 2,516 | (1,552) | – | 22,466 | | **Total equity** | **206,415** | **5,910** | **(10,371)** | **–** | **201,954** | [Condensed Consolidated Statement of Cash Flows](index=29&type=section&id=%E7%B0%A1%E6%98%8E%E7%B6%9C%E5%90%88%E7%8F%BE%E9%87%91%E6%B5%81%E9%87%8F%E8%A1%A8) The condensed consolidated statement of cash flows shows that for the six months ended June 30, 2023, the Group recorded net cash outflows from operating, investing, and financing activities, resulting in a net decrease in cash and cash equivalents of **HKD 32.022 million**, with cash and cash equivalents at period-end totaling **HKD 67.457 million** Summary of Condensed Consolidated Statement of Cash Flows | Category of Activities | June 30, 2023 (thousand HKD) | June 30, 2022 (thousand HKD) | | :--- | :--- | :--- | | Net cash used in operating activities | (16,550) | (12,065) | | Net cash used in investing activities | (2,909) | (4,318) | | Net cash (used in)/generated from financing activities | (12,563) | 447 | | Net decrease in cash and cash equivalents | (32,022) | (15,936) | | Cash and cash equivalents at January 1 | 105,266 | 59,870 | | Effect of exchange rate changes | (5,787) | (3,011) | | Cash and cash equivalents at June 30 | 67,457 | 40,923 | [Notes to the Unaudited Interim Financial Report](index=30&type=section&id=%E6%9C%AA%E7%B6%93%E5%AF%A9%E6%A0%B8%E4%B8%AD%E6%9C%9F%E8%B2%A1%E5%8B%99%E5%A0%B1%E5%91%8A%E9%99%84%E8%A8%BB) This chapter provides detailed notes to the condensed consolidated interim financial statements, covering general company information, basis of preparation, significant accounting policy changes, segment reporting, revenue recognition, profit before tax composition, income tax credit, earnings per share calculation, property, plant and equipment, trade and other receivables, cash and cash equivalents, trade and other payables, amounts due to related parties, capital reserves and dividends, commitments, and significant related party transactions [General Information](index=30&type=section&id=%E4%B8%80%E8%88%AC%E8%B3%87%E6%96%99) The Company is an exempted company incorporated in the Cayman Islands, with its shares listed on the Stock Exchange, primarily engaged in the zipper business, and China Huarong Asset Management Co., Ltd. is considered by the Directors to be the Company's controlling shareholder, with receivers appointed for certain shares - The Company is an exempted company incorporated in the Cayman Islands, with its shares listed on The Stock Exchange of Hong Kong Limited, primarily engaged in the zipper business[127](index=127&type=chunk)[133](index=133&type=chunk) - Huarong (a subsidiary of China Huarong Asset Management Co., Ltd.) is the controlling shareholder of the Company[129](index=129&type=chunk) - Mr. Chan Ho Yan and Mr. Li Kin Long Kenny have been appointed as joint and several receivers for **341,446,600 shares** of the Company[128](index=128&type=chunk) [Basis of Preparation](index=31&type=section&id=%E7%B7%A8%E8%A3%BD%E5%9F%BA%E6%BA%96) The condensed consolidated interim financial statements are prepared in accordance with the applicable disclosure provisions of the Listing Rules of the Stock Exchange and Hong Kong Accounting Standard 34 Interim Financial Reporting issued by the HKICPA, involving the use of certain judgments, estimates, and assumptions - The condensed consolidated interim financial statements are prepared in accordance with the Listing Rules of the Stock Exchange and Hong Kong Accounting Standard 34 Interim Financial Reporting[136](index=136&type=chunk) - The preparation involves the use of certain judgments, estimates, and assumptions, and actual results may differ from these estimates[130](index=130&type=chunk) [Principal Accounting Policies](index=31&type=section&id=%E4%B8%BB%E8%A6%81%E6%9C%83%E8%A8%88%E6%94%BF%E7%AD%96) The condensed consolidated interim financial statements are prepared using the same accounting policies adopted in the 2022 annual financial statements, and new or revised Hong Kong Financial Reporting Standards effective from **January 1, 2023**, had no significant impact on the Group's condensed consolidated interim financial statements - The condensed consolidated interim financial statements are prepared in accordance with the same accounting policies adopted in the 2022 annual financial statements[138](index=138&type=chunk) - New or revised Hong Kong Financial Reporting Standards (including HKFRS 17 and amendments to HKAS 8, HKAS 1, and HKAS 12) effective from **January 1, 2023**, had no significant impact on the Group's condensed consolidated interim financial statements[140](index=140&type=chunk) [Segment Reporting](index=32&type=section&id=%E5%88%86%E9%83%A8%E5%A0%B1%E5%91%8A) The Group manages its business by business line and geographical region, with information reported to the chief operating decision-maker focusing on revenue analysis by customer geographical location, providing no other separate financial information beyond overall results and financial position - The Group manages its business by segments, which are organized by business line and geographical region[141](index=141&type=chunk) - Information reported to the chief operating decision-maker focuses on revenue analysis by customer geographical location[141](index=141&type=chunk) [Revenue](index=33&type=section&id=%E6%94%B6%E5%85%A5) The Group's principal business is the manufacturing and sale of zipper chains, sliders, and other related products, with revenue from sales of goods totaling **HKD 123.386 million** for the six months ended June 30, 2023, predominantly from zipper chains and sliders, and revenue is recognized when control of the goods is transferred to the customer, with no individual customer's transactions exceeding **10%** of the Group's revenue - The Group's principal business is the manufacturing and sale of zipper chains, sliders, and other related products[143](index=143&type=chunk) Amounts of Each Major Category of Revenue | Revenue Category | June 30, 2023 (thousand HKD) | June 30, 2022 (thousand HKD) | | :--- | :--- | :--- | | Zipper Chains and Sliders | 122,120 | 123,042 | | Others | 1,266 | 2,570 | | **Total** | **123,386** | **125,612** | - Revenue is recognized at the point in time when control of the goods is transferred to the customer, and no individual customer's transactions exceeded **10%** of the Group's revenue[144](index=144&type=chunk)[145](index=145&type=chunk) [Profit Before Tax](index=33&type=section&id=%E9%99%A4%E7%A8%85%E5%89%8D%E6%BA%A2%E5%88%A9) Profit before tax is influenced by various factors, including staff costs, other income and gains net (such as interest income, gain on disposal of property, government grants, net foreign exchange gains), and other expense items (such as depreciation and amortization, provision for impairment loss on inventories, cost of inventories), with net foreign exchange gains decreasing compared to the prior year Staff Costs | Item | June 30, 2023 (thousand HKD) | June 30, 2022 (thousand HKD) | | :--- | :--- | :--- | | Salaries, wages and other benefits | 46,101 | 44,317 | | Contributions to defined contribution retirement plans | 4,950 | 5,659 | | **Total** | **51,051** | **49,976** | Other Income and Gains/(Losses) – Net | Item | June 30, 2023 (thousand HKD) | June 30, 2022 (thousand HKD) | | :--- | :--- | :--- | | Interest income | 256 | 203 | | Gain on disposal of property, plant and equipment | 23 | 6 | | Government grants | 543 | 215 | | Net foreign exchange gains | 4,897 | 6,950 | | Others | 664 | 892 | | **Total** | **6,383** | **8,266** | Other Items | Item | June 30, 2023 (thousand HKD) | June 30, 2022 (thousand HKD) | | :--- | :--- | :--- | | Depreciation and amortization | 15,996 | 17,084 | | Provision for/(reversal of) impairment loss on inventories | 1,363 | (36) | | Cost of inventories | 80,792 | 84,804 | [Income Tax Credit](index=35&type=section&id=%E6%89%80%E5%BE%97%E7%A8%85%E6%8A%B5%E5%85%8D) The Group is not subject to income tax in the Cayman Islands and British Virgin Islands, while Hong Kong profits tax rate is **16.5%**, and for mainland China subsidiaries, Kaiyi Guangdong enjoys a preferential tax rate of **15%** as a high-tech enterprise until **2025**, with others at **25%**, and dividends paid to non-resident enterprise investors are subject to a **10%** withholding income tax, which can be reduced to **5%** for eligible Hong Kong tax residents - The Group is not subject to any income tax in the Cayman Islands or the British Virgin Islands[151](index=151&type=chunk) - Kaiyi Zipper Company Limited is subject to Hong Kong profits tax at a rate of **16.5%**[152](index=152&type=chunk) - Kaiyi (Guangdong) Garment Accessories Co., Ltd. enjoys a preferential income tax rate of **15%** as a high-tech enterprise until **2025**, while other mainland China subsidiaries are subject to a statutory tax rate of **25%**[152](index=152&type=chunk) - Dividends paid by PRC resident enterprises to non-PRC resident enterprise investors are subject to a **10%** withholding income tax, which can be reduced to **5%** for eligible Hong Kong tax residents[152](index=152&type=chunk) [Earnings Per Share](index=36&type=section&id=%E6%AF%8F%E8%82%A1%E7%9B%88%E5%88%A9) For the six months ended June 30, 2023, basic earnings per share were **0.6 HK cents**, calculated based on profit attributable to equity holders of the Company of **HKD 3.394 million** and a weighted average of **557,764,800** ordinary shares outstanding, with diluted earnings per share being equal to basic earnings per share due to the absence of potential dilutive ordinary shares - Basic earnings per share are calculated based on profit attributable to equity holders of the Company of **HKD 3.394 million** and a weighted average of **557,764,800** ordinary shares outstanding[158](index=158&type=chunk) - As there were no potential dilutive ordinary shares for the six months ended June 30, 2023, and 2022, diluted earnings per share were equal to basic earnings per share[154](index=154&type=chunk) [Property, Plant and Equipment](index=36&type=section&id=%E7%89%A9%E6%A5%AD%E3%80%81%E5%BB%A0%E6%88%BF%E5%8F%8A%E8%A8%AD%E5%82%99) For the six months ended June 30, 2023, the Group acquired items of property, plant and machinery (including payments for construction in progress) at a cost of **HKD 4.016 million** - For the six months ended June 30, 2023, the Group acquired items of property, plant and machinery (including payments for construction in progress) at a cost of **HKD 4.016 million**[155](index=155&type=chunk) [Trade and Other Receivables](index=37&type=section&id=%E8%B2%BF%E6%98%93%E5%8F%8A%E5%85%B6%E4%BB%96%E6%87%89%E6%94%B6%E6%AC%BE%E9%A0%85) As at June 30, 2023, total trade and other receivables significantly increased to **HKD 82.94 million** from **HKD 43.753 million** at December 31, 2022, with trade receivables within one month accounting for the largest portion, and all trade and other receivables are expected to be recovered or recognized as expenses within one year Ageing Analysis of Trade and Other Receivables | Ageing | June 30, 2023 (thousand HKD) | December 31, 2022 (thousand HKD) | | :--- | :--- | :--- | | Within 1 month | 34,330 | 13,723 | | Over 1 month but within 2 months | 27,739 | 14,520 | | Over 2 months but within 3 months | 6,890 | 5,838 | | Over 3 months | 9,751 | 2,905 | | **Trade receivables and bills receivable, net of loss allowance** | **78,710** | **36,986** | | Rental deposits | 770 | – | | Other prepayments | 1,838 | 1,233 | | Other tax receivables | – | 5,080 | | Other receivables | 1,622 | 454 | | **Total** | **82,940** | **43,753** | - All trade and other receivables are expected to be recovered or recognized as expenses within one year[161](index=161&type=chunk) [Cash and Cash Equivalents](index=38&type=section&id=%E7%8F%BE%E9%87%91%E5%8F%8A%E7%8F%BE%E9%87%91%E7%AD%89%E5%83%B9%E7%89%A9) As at June 30, 2023, the Group's cash and bank balances were **HKD 67.457 million**, a decrease from **HKD 105.266 million** at December 31, 2022 Cash and Cash Equivalents | Item | June 30, 2023 (thousand HKD) | December 31, 2022 (thousand HKD) | | :--- | :--- | :--- | | Cash and bank balances | 67,457 | 105,266 | | **Cash and cash equivalents in the condensed consolidated statement of cash flows** | **67,457** | **105,266** | [Trade and Other Payables](index=38&type=section&id=%E8%B2%BF%E6%98%93%E5%8F%8A%E5%85%B6%E4%BB%96%E6%87%89%E4%BB%98%E6%AC%BE%E9%A0%85) As at June 30, 2023, total trade and other payables increased to **HKD 50.659 million** from **HKD 47.577 million** at December 31, 2022, with key components including wages and staff welfare payable, trade payables, and accrued expenses Ageing Analysis and Composition of Trade and Other Payables | Item | June 30, 2023 (thousand HKD) | December 31, 2022 (thousand HKD) | | :--- | :--- | :--- | | Trade payables | 12,563 | 7,630 | | Wages and staff welfare payable | 23,581 | 22,721 | | Accrued expenses | 7,769 | 6,932 | | Amounts payable for purchase of property, plant and equipment | 641 | 2,274 | | Other tax payables | 3,580 | 5,588 | | Contract liabilities | 1,419 | 1,832 | | Other payables | 1,106 | 600 | | **Total** | **50,659** | **47,577** | [Amounts Due to Related Parties](index=39&type=section&id=%E6%87%89%E4%BB%98%E9%97%9C%E8%81%AF%E6%96%B9%E6%AC%BE%E9%A0%85) As at June 30, 2023, amounts due to related parties were zero, compared to **HKD 7.393 million** at December 31, 2022, with the balance representing advances made by an individual (who is a vice president and son-in-law of a Director of the Company), which were unsecured, interest-free, and repayable on demand - As at June 30, 2023, amounts due to related parties were **zero** (December 31, 2022: HKD 7.393 million)[117](index=117&type=chunk) - The amount represented advances made by an individual who is a vice president and son-in-law of a Director of the Company, which were unsecured, interest-free, and repayable on demand[166](index=166&type=chunk) [Capital, Reserves and Dividends](index=39&type=section&id=%E8%B3%87%E6%9C%AC%E3%80%81%E5%84%B2%E5%82%99%E5%8F%8A%E8%82%A1%E6%81%AF) For the period ended June 30, 2023, no interim dividend was declared by the Company, and both authorized share capital and issued and fully paid share capital remained unchanged at **2,000,000 thousand shares** (**HKD 20 million**) and **557,765 thousand shares** (**HKD 5.578 million**) respectively - No interim dividend was declared for the periods ended June 30, 2023, and 2022[167](index=167&type=chunk) Authorized and Issued Share Capital | Item | June 30, 2023 Number of Shares (thousand shares) | June 30, 2023 Share Capital (thousand HKD) | December 31, 2022 Number of Shares (thousand shares) | December 31, 2022 Share Capital (thousand HKD) | | :--- | :--- | :--- | :--- | :--- | | Authorized: Ordinary shares of HKD 0.01 each | 2,000,000 | 20,000 | 2,000,000 | 20,000 | | Ordinary shares, issued and fully paid | 557,765 | 5,578 | 557,765 | 5,578 | [Commitments](index=40&type=section&id=%E6%89%BF%E6%93%94) As at June 30, 2023, the Group had capital commitments contracted but not provided for in the condensed consolidated interim financial statements amounting to **HKD 1.119 million** Capital Commitments Outstanding | Item | June 30, 2023 (thousand HKD) | December 31, 2022 (thousand HKD) | | :--- | :--- | :--- | | Contracted | 1,119 | 1,460 | [Significant Related Party Transactions](index=40&type=section&id=%E9%87%8D%E5%A4%A7%E9%97%9C%E9%80%A3%E6%96%B9%E4%BA%A4%E6%98%93) The Group engaged in several significant related party transactions, primarily involving rental payments for leased land and buildings under agreements with **Mr. Hui Sek Pang**, **Mr. Hui Sek Nam**, Success Point Limited, Foshan Nanhai Jinheming Investment Co., Ltd., and Kaiyi (Jingmen) Garment Accessories Co., Ltd., and key management personnel compensation also increased - The Group renewed lease agreements with senior management **Mr. Hui Sek Pang** and **Mr. Hui Sek Nam**, with **HKD 2.912 million** in rent paid for the six months ended June 30, 2023[171](index=171&type=chunk) - The Company paid rent of **HKD 324,000** and **HKD 4.249 million** to Success Point Limited and Foshan Nanhai Jinheming Investment Co., Ltd., respectively[172](index=172&type=chunk) - Kaiyi Guangdong renewed a lease agreement with Kaiyi (Jingmen) Garment Accessories Co., Ltd., with **HKD 3.618 million** in rent paid for the six months ended June 30, 2023[174](index=174&type=chunk) Key Management Personnel Compensation | Item | June 30, 2023 (thousand HKD) | June 30, 2022 (thousand HKD) | | :--- | :--- | :--- | | Short-term employee benefits | 3,779 | 2,565 | | Post-employment benefits | 46 | 60 | | **Total** | **3,825** | **2,625** | [Events After Reporting Period](index=41&type=section&id=%E5%A0%B1%E5%91%8A%E6%9C%9F%E5%AE%8C%E7%B5%90%E5%BE%8C%E4%BA%8B%E9%A0%85) Except as disclosed in this report, the Directors confirm that no significant events affecting the Group have occurred after June 30, 2023, and up to the date of approval of these condensed consolidated interim financial statements - The Directors confirm that no significant events affecting the Group have occurred after June 30, 2023, and up to the date of approval of these condensed consolidated interim financial statements[177](index=177&type=chunk) [Glossary](index=42&type=section&id=%E8%A9%9E%E5%BD%99) This chapter provides definitions for key terms and abbreviations used in the interim report to ensure consistent understanding of the report's content - This glossary defines key terms used in the report, such as 'Board', 'CG Code', 'Company', 'Group', 'HKD', 'Hong Kong', 'Listing Rules', 'Main Board', 'Model Code', 'OEM', 'PRC' or 'mainland China', 'SFO', 'Shareholder', 'RMB', and 'Stock Exchange'[179](index=179&type=chunk)[181](index=181&type=chunk)[182](index=182&type=chunk)[185](index=185&type=chunk)[186](index=186&type=chunk)[187](index=187&type=chunk)
进腾集团(02011) - 2023 - 中期业绩
2023-08-30 14:31
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,並明確表示概不就因本公告全 部或任何部分內容而產生或因依賴該等內容而引致的任何損失承擔任何責任。 China Apex Group Limited 中 國 恒 泰 集 團 有 限 公 司 (於開曼群島註冊成立的有限公司) (股份代號:2011) 中 期 業 績 公 告 截 至2023年6月30日 止 六 個 月 財務概要 截至6月30日止六個月 2023年 2022年 千港元 千港元 變動 (未經審核) (未經審核) +/(-) 收入 123,386 125,612 (1.7%) 毛利 42,594 40,808 4.4% 毛利率 34.5% 32.5% 6.2% 期內溢利 5,910 10,978 (46.2%) 本公司權益股東應佔 ...
进腾集团(02011) - 2022 - 年度财报
2023-04-25 08:38
Financial Performance - For the year ended December 31, 2022, the group's revenue from zipper business decreased to approximately HKD 215,580,000, down about 10.1% from HKD 239,720,000 in 2021[19][20] - Sales of zipper strips and sliders decreased by approximately HKD 28,220,000 or 12.0% to about HKD 206,850,000, primarily due to reduced consumer demand[22] - The group's gross profit for the year was HKD 69,710,000, compared to HKD 71,913,000 in the previous year, reflecting a slight decline[25] - Operating profit for the year was HKD 4,395,000, a significant improvement from an operating loss of HKD 13,222,000 in 2021[25] - The net profit attributable to equity shareholders was a loss of HKD 1,888,000, compared to a loss of HKD 17,503,000 in the previous year, indicating a reduction in losses[25] - The overall gross profit for the group decreased by approximately 3.1% to about HKD 69.71 million, with a gross profit margin increasing from approximately 30.0% in 2021 to 32.3% in 2022[39] - The pre-tax profit for the year ended December 31, 2022, was approximately HKD 544,000, a turnaround from a pre-tax loss of about HKD 16.94 million in 2021[58] - The company's loss attributable to equity shareholders for 2022 was approximately HKD 1,890,000, a decrease of about 89.2% compared to a loss of HKD 17,500,000 in 2021[67] Assets and Liabilities - The total assets less current liabilities amounted to HKD 228,200,000, an increase from HKD 199,753,000 in 2021[12] - The group's net asset value was HKD 206,415,000, up from HKD 164,766,000 in the previous year[12] - Inventory increased by approximately 8.8% to about HKD 33.53 million as of December 31, 2022, from HKD 30.83 million in the previous year[44] - Trade receivables decreased by approximately 24.4% from HKD 48,910,000 in 2021 to HKD 36,990,000 in 2022[71] - Trade payables decreased by 29.7% from approximately HKD 10,900,000 in 2021 to about HKD 7,600,000 in 2022[72] - As of December 31, 2022, the company's lease liabilities were approximately HKD 43.09 million, down from HKD 50.29 million in 2021[99] Cash Flow - The net cash inflow from operating activities for 2022 was approximately HKD 15,650,000, down from HKD 35,590,000 in 2021[76] - As of December 31, 2022, cash and cash equivalents amounted to approximately HKD 105,270,000, an increase of about HKD 45,400,000 compared to the previous year[76] - The net cash generated from operating activities was approximately HKD 15.65 million, a decrease of 56% from HKD 35.59 million in 2021[100] - The net cash used in investing activities was HKD (13.65) million, improving from HKD (18.25) million in 2021[100] - The net cash generated from financing activities was HKD 50.53 million, a significant increase from HKD (20.81) million in 2021[100] - The total cash and cash equivalents increased to HKD 105.27 million as of December 31, 2022, compared to HKD 59.87 million at the beginning of the year[100] Operational Strategy - The company aims to diversify and enhance its business portfolio through restructuring the board and actively seeking new business opportunities[15] - The ongoing COVID-19 pandemic and global economic challenges have impacted consumer demand, but the company has maintained operational standards to minimize disruptions[14] - The company plans to enhance market development efforts and expand into overseas markets, focusing on sectors beyond the apparel industry[120] - The company aims to accelerate its transition from digitalization to "smartization" to improve operational efficiency and management levels[120] - For 2023, the company aims to enhance automation, improve production processes, and control costs to increase competitiveness amid inflation challenges[133] Corporate Governance - The company has adopted a board diversity policy to ensure a diverse range of skills, experiences, and perspectives, including gender, age, cultural and educational background, and professional experience[172] - The nomination committee held four meetings during the year ended December 31, 2022, to review the board's structure, size, and composition, as well as the independence of independent non-executive directors[196] - The audit committee conducted three meetings to review the financial performance and compliance procedures for the year ended December 31, 2022[190] - The independent non-executive directors have confirmed their independence in accordance with the listing rules, and the company believes all independent non-executive directors are independent[173] - The company has established a remuneration committee to determine the remuneration of individual executive directors and senior management, ensuring transparency in the remuneration policy[193] - The board is responsible for leading and controlling the company, overseeing business strategies and performance, and making objective decisions in the company's best interest[176] - The company has implemented a system for employees to confidentially report any concerns regarding financial reporting or internal controls[190] - The company has a structured process for the appointment and reappointment of directors, ensuring that at least one-third of the directors retire at each annual general meeting[174] - The company provides onboarding training for new directors to ensure they understand their responsibilities under the listing rules and relevant regulations[185] - The board consists of nine directors, with four being independent non-executive directors, promoting important oversight and control in management processes[198] Research and Development - The company is committed to enhancing its research and development capabilities to align with market trends and customer demands[2] Fundraising and Investments - The company successfully raised funds through a rights issue in June 2022, providing sufficient capital reserves for future development[15] - The net proceeds of approximately HKD 68.6 million are expected to be utilized for general working capital and investment opportunities, with a remaining balance of HKD 52.4 million to be used by June 30, 2024[122] - The company did not have any significant investments, acquisitions, or disposals during the year ended December 31, 2022[84] Taxation - After being recognized as a high-tech enterprise, the applicable income tax rate for the company in Guangdong is expected to be 15% until 2024; if the tax benefits are not granted, the normal income tax rate will be 25%[132]
进腾集团(02011) - 2022 - 年度业绩
2023-03-30 14:36
香港交易及結算所有限公司及香港聯合交易所有限公司對本公告的內容概不 負責,對其準確性或完整性亦不發表任何聲明,並明確表示,概不對因本公告 全部或任何部分內容而產生或因倚賴該等內容而引致的任何損失承擔任何責 任。 China Apex Group Limited 中 國 恒 泰 集 團 有 限 公 司 (於開曼群島註冊成立的有限公司) (股份代號:2011) 全 年 業 績 公 告 截 至2022年12月31日 止 年 度 財務摘要 2022年 2021年 變動 千港元 千港元 +╱(–) 收入 215,578 239,717 (10.1%) 毛利 69,710 71,913 (3.1%) 年內溢利╱(虧損) 658 (16,911) (103.9%) 權益股東應佔虧損 (1,888) (17,503) (89.2%) 於12月31日 ...
进腾集团(02011) - 2022 - 中期财报
2022-09-22 08:47
Financial Performance - For the six months ended June 30, 2022, the company reported revenue of HKD 125,612,000, an increase of 11.0% compared to HKD 113,116,000 for the same period in 2021[7]. - Gross profit for the same period was HKD 40,808,000, representing a 31.8% increase from HKD 30,956,000 in 2021, with a gross margin of 32.5%[7]. - The company achieved a profit attributable to equity shareholders of HKD 8,587,000, a significant turnaround from a loss of HKD 4,148,000 in the previous year, marking a 307.0% improvement[7]. - Revenue for the six months ended June 30, 2022, was HKD 125,612,000, an increase of 11.1% from HKD 113,116,000 in the same period of 2021[71]. - The company reported a profit before tax of HKD 10,770,000, compared to a loss of HKD 3,455,000 in the previous year[71]. - Net profit attributable to equity shareholders was HKD 8,587,000, a significant recovery from a loss of HKD 4,148,000 in the prior period[71]. - Basic and diluted earnings per share for the period were HKD 1.8, compared to a loss of HKD 0.9 per share in the same period last year[71]. - Reported segment profit for the six months ended June 30, 2022, was HKD 10,583,000, an increase of 33% from HKD 7,962,000 in the same period of 2021[104]. Revenue Breakdown - Revenue from zipper products accounted for 98.0% of total sales, with HKD 123,042,000 generated from zipper and slider sales[16]. - Domestic sales in mainland China represented 86.6% of total revenue, amounting to HKD 108,821,000, while overseas sales contributed 13.4% with HKD 16,791,000[16]. - The revenue from external customers for the mainland China segment was HKD 108,821,000, while the overseas segment generated HKD 16,791,000, contributing to a total of HKD 125,612,000 from external customers[100]. Expenses and Costs - Distribution costs decreased by approximately 18.2% from about HKD 7,670,000 for the six months ended June 30, 2021, to about HKD 6,270,000 for the same period in 2022, primarily due to the suspension of large events during the COVID-19 pandemic[20]. - Administrative expenses increased by approximately 23.8% from about HKD 24,180,000 for the six months ended June 30, 2021, to about HKD 29,950,000 for the same period in 2022, mainly due to rising R&D costs for product quality improvement and information technology development[20]. - Employee costs for the six months ended June 30, 2022, were approximately HKD 49,980,000, down from HKD 52,040,000 for the same period in 2021, primarily due to a reduction in workforce[43]. - The group incurred depreciation and amortization expenses totaling HKD 17,084,000, down from HKD 18,422,000 in the same period last year[112]. Cash Flow and Assets - Cash and cash equivalents decreased by 31.6% to HKD 40,923,000 from HKD 59,870,000 in the previous year[7]. - The net cash outflow from operating activities for the six months ended June 30, 2022, was approximately HKD 12,070,000, compared to HKD 1,350,000 for the same period in 2021, primarily due to an increase in trade receivables[34]. - The net cash outflow from investing activities for the six months ended June 30, 2022, was approximately HKD 4,310,000, a decrease from HKD 12,700,000 for the same period in 2021, mainly due to payments for the purchase of properties, plants, and equipment[34]. - As of June 30, 2022, cash and cash equivalents amounted to approximately HKD 40,920,000, a decrease of about HKD 18,950,000 compared to December 31, 2021, primarily due to increased payments for property, plant, and equipment, as well as rent[35]. - The total assets of the company as of June 30, 2022, were HKD 292,918,000, reflecting a 6.2% increase from HKD 275,779,000 at the end of 2021[7]. - The group's current assets amounted to approximately HKD 154,910,000, with major components including inventory of about HKD 33,920,000 and trade receivables of approximately HKD 80,070,000[38]. Shareholder Information - Major shareholders included China Sun with 28.77% and Central Eagle with 28.16% of the issued share capital as of June 30, 2022[58]. - The company completed a placement of 92,960,800 shares at HKD 0.75 per share on July 12, 2022[48]. - The company’s major shareholder, China Huarong Asset Management Co., Ltd., held approximately 46.48% of the issued share capital as of June 30, 2022[87]. Corporate Governance and Compliance - The company maintained strict corporate governance practices and complied with all relevant codes, except for some independent directors' absence due to COVID-19[67]. - The company’s interim financial statements were prepared in accordance with the Hong Kong Financial Reporting Standards, with no significant impact from the new or revised standards effective from January 1, 2022[92]. Future Outlook and Strategy - The company plans to enhance product competitiveness and customer satisfaction by increasing new product development efforts[13]. - The company aims to integrate and expand production capacity while improving production automation and product quality[13]. - The company maintains a conservative outlook on the consumer market and the apparel industry due to ongoing economic pressures and rising costs[11].
进腾集团(02011) - 2021 - 年度财报
2022-05-13 08:35
Financial Performance - For the year ended December 31, 2021, the company reported revenue of HKD 239.7 million, an increase of 40.9% from HKD 170.1 million in 2020[11] - The gross profit margin improved to 30.0% in 2021, up from 20.1% in 2020[8] - The company recorded a net loss attributable to equity shareholders of HKD 17.5 million for 2021, compared to a loss of HKD 46.9 million in 2020, representing a 62.7% reduction in losses[11] - The company's loss attributable to equity shareholders was approximately HKD 17.5 million in 2021, a reduction of about 62.7% from HKD 46.91 million in 2020[39] - The pre-tax loss for the year ended December 31, 2021, was approximately HKD 16.94 million, a decrease of about HKD 36.95 million compared to a loss of HKD 53.89 million in 2020[24] Assets and Liabilities - Total assets decreased to HKD 275.8 million in 2021 from HKD 290.7 million in 2020, a decline of 5.0%[8] - Current liabilities increased from HKD 71,247,000 in 2020 to HKD 76,026,000 in 2021, an increase of 6.9%[15] - The net asset value decreased from HKD 173,041,000 in 2020 to HKD 164,766,000 in 2021, a decrease of 4.7%[15] - Non-current assets decreased from HKD 152,018,000 in 2020 to HKD 133,109,000 in 2021, a reduction of 12.5%[13] - Total assets decreased from HKD 290,702,000 in 2020 to HKD 275,779,000 in 2021, a decline of 5.1%[13] Cash Flow and Liquidity - Cash and cash equivalents stood at HKD 59.9 million, slightly down from HKD 60.9 million in 2020[8] - The net cash inflow from operating activities for 2021 was approximately HKD 35.59 million, compared to HKD 18.67 million in 2020, representing an increase of 90.5%[52] - The current ratio remained stable at 1.9 in both 2021 and 2020, indicating consistent liquidity[8] - The adjusted net debt to equity ratio was maintained below 20%, with the ratio at approximately 1.9% as of December 31, 2020, and no calculation for 2021 due to total debt being lower than cash and cash equivalents[54] Operational Efficiency - The company aims to enhance its operational efficiency and reduce administrative expenses moving forward[11] - The inventory turnover days improved to 62 days in 2021 from 82 days in 2020, indicating better inventory management[8] - Administrative expenses increased to approximately HKD 64.14 million in 2021, accounting for about 26.8% of total revenue, down from 31.9% in 2020[37] - The company aims to integrate and expand production capacity, improve automation, and enhance product quality to control costs and shorten delivery times[77] Business Strategy and Growth - The company plans to focus on market expansion and new product development in the upcoming fiscal year[11] - The company is exploring new business and investment opportunities to enhance profitability and maximize shareholder value[19] - The management is optimistic about future growth and is focusing on diversifying the business portfolio[19] - The company plans to enhance product competitiveness and customer satisfaction by increasing new product development efforts in response to market demands[77] Environmental Responsibility - The company is committed to maintaining a sustainable development culture amidst economic, ecological, technological, and social challenges[145] - The company reported a total carbon emission of 15,977 tons, with a density of 66.66 tons per HKD 1 million revenue[154] - The company generated 190,782 tons of wastewater, resulting in a density of 795.92 tons per HKD 1 million revenue[154] - The company consumed 13,613,094 kWh of electricity in its factories, with a density of 56,792.22 kWh per HKD 1 million revenue[157] - The company has implemented various environmental management policies in accordance with ISO standards, aiming to reduce waste and energy consumption[147] Employee Management - The total number of full-time employees at the company is 676, with a turnover rate of approximately 34% in 2021, which is a decrease of 38% compared to the fiscal year 2020 and a decline of 114% compared to fiscal year 2019[170][172] - Employee costs for 2021 were approximately HKD 109.8 million, an increase from HKD 78.7 million in 2020, primarily due to the recovery of operations post-COVID-19 and increased performance bonuses[64] - The company has implemented a comprehensive health and safety policy, adhering to relevant laws such as the Labor Law and the Occupational Disease Prevention Law of the People's Republic of China[175] - The company has established a 5S management system in its factories to ensure a safe working environment, providing employees with necessary protective equipment and conducting regular safety inspections[176] Governance and Compliance - The company appointed Mr. Ye Zhaolin as Chairman and Executive Director on March 23, 2022, following the resignation of Mr. Zhuang Weidong on March 4, 2022[90] - The Audit Committee, consisting of three independent non-executive directors, held three meetings to review the financial performance and compliance procedures for the year ending December 31, 2021[105] - The company has established three committees: Audit Committee, Remuneration Committee, and Nomination Committee, to oversee specific aspects of its affairs[101] - The company ensures that all directors receive appropriate training and continuous professional development to fulfill their responsibilities[100] Customer Satisfaction and Quality Control - The company has established a comprehensive quality management system, achieving certifications such as ISO 9001 and OEKO-TEX® STANDARD 100[193] - In 2021, the company received no customer complaints regarding product quality, a significant improvement from 49 complaints in 2020[194] - The company has established a customer complaint mechanism to address and resolve issues promptly, ensuring customer satisfaction[194]
进腾集团(02011) - 2021 - 中期财报
2021-09-16 08:35
```markdown [Company Information](index=3&type=section&id=Company%20Information) The company's board comprises executive, non-executive, and independent non-executive directors, with its registered office in the Cayman Islands and principal Hong Kong operations in Chater House, Central, audited by BDO Limited - The company's Board of Directors comprises executive directors Mr. Zhuang Weidong (Chairman), Mr. Qiu Chuanzhi (President), Mr. Wu Hangzheng (Vice Chairman), Mr. Mai Rongbin (Vice President), non-executive director Ms. Lin Ping, and independent non-executive directors Mr. Leung Ka Tin, Mr. Cheng Hong Ki, and Mr. Lau Wai King[4](index=4&type=chunk) - The company secretary is Mr. Yau Chi Chiu, with the registered office in the Cayman Islands and principal place of business in Hong Kong at Chater House, Central[4](index=4&type=chunk) - The Hong Kong share registrar is Tricor Investor Services Limited, and the auditor is BDO Limited[7](index=7&type=chunk) [Financial Highlights](index=5&type=section&id=Financial%20Highlights) The group reported a 42.7% revenue increase and a 60.1% reduction in loss for the six months ended June 30, 2021, while total assets remained stable and cash equivalents decreased Financial Highlights for the Six Months Ended June 30, 2021 | Indicator | 2021 (HK$ thousand) | 2020 (HK$ thousand) | Change (+/-) | | :--- | :--- | :--- | :--- | | Revenue | 113,116 | 79,255 | 42.7% | | Gross Profit (HK$ thousand) | 30,956 | 18,635 | 66.1% | | Gross Profit Margin | 27.4% | 23.5% | 16.6% | | Loss for the period | (3,418) | (8,563) | (60.1%) | | Loss attributable to equity holders of the Company | (4,148) | (8,928) | (53.5%) | | Basic and diluted loss per share (HK cents) | (0.9) | (1.9) | (52.6%) | Balance Sheet Highlights as of June 30, 2021 | Indicator | June 30, 2021 (HK$ thousand) | December 31, 2020 (HK$ thousand) | Change (+/-) | | :--- | :--- | :--- | :--- | | Total assets | 288,936 | 290,702 | (0.6%) | | Cash and cash equivalents | 38,673 | 60,930 | (36.5%) | | Total equity attributable to equity holders of the Company | 150,391 | 151,873 | (1.0%) | [Management Discussion and Analysis](index=6&type=section&id=Management%20Discussion%20and%20Analysis) This section provides an in-depth review of the group's business performance, financial position, and future outlook, including detailed analysis of revenue, expenses, and liquidity [Business Review](index=6&type=section&id=Business%20Review) The group's core business is zipper manufacturing in China, with a significant reduction in loss attributable to equity holders due to market recovery and customer expansion - The group's core business is manufacturing **zippers** in China, primarily serving OEMs that produce garments for renowned Chinese and international apparel brands[11](index=11&type=chunk) - For the six months ended June 30, 2021, loss attributable to equity holders of the Company was approximately **HK$4.15 million**, a **53.5% reduction** from HK$8.93 million in the same period of 2020, primarily due to effective COVID-19 control, market improvement, garment industry rebound, and customer expansion[12](index=12&type=chunk) [Outlook](index=6&type=section&id=Outlook) The company anticipates continued economic recovery in China, with demand for zippers driven by domestic consumption and evolving fashion trends, while implementing strategic initiatives for growth - In the first half of 2021, China's economy continued to recover, but the evolution of the global COVID-19 pandemic remains uncertain, with China's economic growth in the second half relying on domestic demand[13](index=13&type=chunk) - The apparel industry rebounded post-pandemic, with domestic brands gaining consumer recognition, anticipating **low-speed demand growth** in the second half, and diversified fashion trends creating new opportunities for the zipper industry[13](index=13&type=chunk) - The company will implement multiple measures, including increasing new product development, expanding e-commerce markets, integrating and expanding production capacity, optimizing processes, strengthening capital management, accelerating digital transformation, and enhancing talent management[15](index=15&type=chunk) [Financial Review](index=7&type=section&id=Financial%20Review) The group's revenue increased by 42.7% to HK$113 million, with a substantial reduction in loss attributable to equity holders, driven by strong zipper sales and improved profitability - For the six months ended June 30, 2021, the group's revenue was approximately **HK$113.12 million**, an increase of approximately **42.7%** compared to the same period in 2020[16](index=16&type=chunk) - Loss attributable to equity holders of the Company was approximately **HK$4.15 million**, a significant reduction from approximately HK$8.93 million in the prior year period[16](index=16&type=chunk) [Revenue](index=8&type=section&id=Revenue) The group's revenue for the six months ended June 30, 2021, increased by 42.7% to HK$113 million, primarily driven by zipper and puller sales, with Mainland China contributing 90.8% Revenue Analysis by Product Category | Product Category | 2021 (HK$ thousand) | 2021 (%) | 2020 (HK$ thousand) | 2020 (%) | | :--- | :--- | :--- | :--- | :--- | | Sale of goods | | | | | | Zipper chains and pullers | 111,410 | 98.5 | 78,128 | 98.6 | | Others | 1,706 | 1.5 | 1,127 | 1.4 | | Total | 113,116 | 100.0 | 79,255 | 100.0 | Revenue Analysis by Geographical Location | Geographical Location | 2021 (HK$ thousand) | 2021 (%) | 2020 (HK$ thousand) | 2020 (%) | | :--- | :--- | :--- | :--- | :--- | | Mainland China | 102,673 | 90.8 | 69,850 | 88.1 | | Overseas | 10,443 | 9.2 | 9,405 | 11.9 | | Total | 113,116 | 100.0 | 79,255 | 100.0 | - The increase in zipper business revenue was primarily due to effective COVID-19 control, gradual improvement in the end consumer market, recovery of the apparel industry, and the group's further expansion of high-quality customers, leading to increased sales orders[19](index=19&type=chunk) [Gross Profit](index=9&type=section&id=Gross%20Profit) Gross profit increased by 66.1% to HK$30.956 million, mainly due to a significant increase in revenue without major changes in fixed expenses Gross Profit Analysis by Product Category | Product Category | 2021 (HK$ thousand) | 2021 (%) | 2020 (HK$ thousand) | 2020 (%) | | :--- | :--- | :--- | :--- | :--- | | Zipper chains and pullers | 30,038 | 97.0 | 18,833 | 101.1 | | Others | 918 | 3.0 | (198) | (1.1) | | Total | 30,956 | 100.0 | 18,635 | 100.0 | - The increase in gross profit was mainly due to a significant increase in revenue, while fixed expenses (such as amortization of right-of-use assets and depreciation) remained largely unchanged[22](index=22&type=chunk) [Expenses and Costs](index=9&type=section&id=Expenses%20and%20Costs) Distribution costs increased by 41.5% due to higher sales, while administrative expenses decreased by 6.7% primarily due to reduced staff salaries and benefits - Distribution costs increased by approximately **41.5%** from approximately HK$5.42 million in the same period of 2020 to approximately **HK$7.67 million** in the same period of 2021, primarily due to increased staff costs and transportation costs resulting from higher sales[23](index=23&type=chunk) - Administrative expenses decreased by approximately **6.7%** from approximately HK$25.92 million in the same period of 2020 to approximately **HK$24.18 million** in the same period of 2021, primarily due to a reduction in salaries and welfare expenses[23](index=23&type=chunk) [Profitability](index=9&type=section&id=Profitability) The group's loss attributable to equity holders significantly decreased to HK$4.15 million, with the loss ratio improving to 3.67%, reflecting overall enhanced profitability - For the six months ended June 30, 2021, the group recorded a loss attributable to equity holders of the Company of approximately **HK$4.15 million**, compared to approximately HK$8.93 million in the same period of 2020[24](index=24&type=chunk) - For the six months ended June 30, 2021, the loss ratio attributable to equity holders of the Company was approximately **3.67%**, with the reduction in loss primarily due to the combined effects mentioned above[24](index=24&type=chunk) [Right-of-Use Assets and Lease Liabilities](index=10&type=section&id=Right-of-Use%20Assets%20and%20Lease%20Liabilities) The group adopted HKFRS 16, recognizing lease liabilities of approximately HK$55.08 million and right-of-use assets of HK$46.54 million as of June 30, 2021 - The group has applied HKFRS 16 to recognize lease liabilities and right-of-use assets since January 1, 2019[26](index=26&type=chunk) - As of June 30, 2021, lease liabilities and right-of-use assets were approximately **HK$55.08 million** and **HK$46.54 million**, respectively[26](index=26&type=chunk) [Related Party Transactions and Continuing Connected Transactions](index=10&type=section&id=Related%20Party%20Transactions%20and%20Continuing%20Connected%20Transactions) The group entered into a new lease agreement for a China property with a related party, recognized as a one-off connected transaction, and has ongoing connected lease transactions - On August 27, 2021, the group entered into the Jingmen Lease Agreement with Kaiyi (Jingmen) Garment Accessories Co., Ltd. (a related party) to lease a property in China, with a monthly rent of **RMB533,000** for a term from September 1, 2021, to August 31, 2023[27](index=27&type=chunk) - The Jingmen Lease Agreement was recognized as an acquisition of a right-of-use asset, constituting a one-off connected transaction for the Company, with additional assets recognized of approximately **HK$8.58 million**[30](index=30&type=chunk) - The group has a continuing connected lease agreement with Kaiyi Jingmen, with a monthly rent of **RMB400,000**, and a maximum annual aggregate amount of **RMB6 million** for each of the three years ending August 31, 2021[31](index=31&type=chunk) [Liquidity and Capital Resources](index=12&type=section&id=Liquidity%20and%20Capital%20Resources) Net cash outflow from operating activities significantly decreased, while cash and cash equivalents reduced, and the group maintained its adjusted net debt-to-capital ratio below 20% - For the six months ended June 30, 2021, the group's net cash outflow from operating activities was approximately **HK$1.35 million** (2020: HK$8.6 million), net cash outflow from investing activities was approximately **HK$12.7 million** (2020: HK$19.77 million inflow), and net cash outflow from financing activities was approximately **HK$11.68 million** (2020: HK$45.78 million)[33](index=33&type=chunk) - As of June 30, 2021, cash and cash equivalents were approximately **HK$38.67 million**, a decrease of approximately **HK$22.26 million** from December 31, 2020[34](index=34&type=chunk) - The group's strategy is to maintain an adjusted net debt-to-capital ratio below **20%**, with ratios of **9.5%** and **1.9%** as of June 30, 2021, and December 31, 2020, respectively[37](index=37&type=chunk) [Net Current Assets](index=13&type=section&id=Net%20Current%20Assets) Net current assets increased to approximately HK$73.01 million, primarily comprising inventory, trade and other receivables, and cash and cash equivalents - As of June 30, 2021, the group recorded current assets of approximately **HK$149.8 million** and current liabilities of approximately **HK$76.796 million**[38](index=38&type=chunk) - Net current assets increased by approximately **HK$5.57 million** from approximately HK$67.44 million as of December 31, 2020, to approximately **HK$73.01 million** as of June 30, 2021[38](index=38&type=chunk) [Pledged Assets](index=13&type=section&id=Pledged%20Assets) As of June 30, 2021, the group had no pledged assets - As of June 30, 2021, the group had no pledged assets[39](index=39&type=chunk) [Contingent Liabilities](index=13&type=section&id=Contingent%20Liabilities) As of June 30, 2021, the group had no significant contingent liabilities - As of June 30, 2021, the group had no significant contingent liabilities[40](index=40&type=chunk) [Foreign Currency Risk](index=13&type=section&id=Foreign%20Currency%20Risk) The group's foreign currency risk is limited as most transactions are denominated in the functional currency of its operations, with no hedging activities undertaken - The foreign currency risk for individual companies within the group is limited, as most transactions are denominated in the same functional currency related to their operations[41](index=41&type=chunk) - For the six months ended June 30, 2021, the group did not hedge against risks arising from exchange rate fluctuations[41](index=41&type=chunk) [Employees](index=14&type=section&id=Employees) The group's full-time employees increased to 804, with staff costs rising to approximately HK$52.04 million due to increased production - As of June 30, 2021, the group had **804 full-time employees** (June 30, 2020: 758 employees)[43](index=43&type=chunk) - Staff costs incurred for the six months ended June 30, 2021, were approximately **HK$52.04 million** (2020: approximately HK$42.65 million), primarily due to an increase in the number of workers resulting from increased production[43](index=43&type=chunk) [Changes in Remuneration of Three Executive Directors](index=14&type=section&id=Changes%20in%20Remuneration%20of%20Three%20Executive%20Directors) Three executive directors, Mr. Zhuang Weidong, Mr. Qiu Chuanzhi, and Mr. Mai Rongbin, each waived part of their remuneration, receiving HK$50,000 for the period - For the six months ended June 30, 2021, Mr. Zhuang Weidong, Mr. Qiu Chuanzhi, and Mr. Mai Rongbin each waived part of their remuneration as executive directors, receiving **HK$50,000** each[44](index=44&type=chunk) [Interim Dividend](index=14&type=section&id=Interim%20Dividend) The Board recommended no interim dividend payment for the six months ended June 30, 2021, or 2020 - The Board recommended no interim dividend payment for the six months ended June 30, 2021, and 2020[45](index=45&type=chunk) [Events After Reporting Period](index=14&type=section&id=Events%20After%20Reporting%20Period) Details of events after the reporting period are provided in Note 16 to the unaudited interim financial report on page 40 - Details of events after the reporting period are set out in Note 16 to the unaudited interim financial report on page 40 of this interim report[46](index=46&type=chunk) [Disclosure of Interests](index=15&type=section&id=Disclosure%20of%20Interests) This section details the interests and short positions of directors, chief executives, and substantial shareholders in the company's shares and underlying shares [Directors' and Chief Executive's Interests and Short Positions in Shares, Underlying Shares, or Debentures of the Company or its Associated Corporations](index=15&type=section&id=Directors%27%20and%20Chief%20Executive%27s%20Interests%20and%20Short%20Positions%20in%20Shares%2C%20Underlying%20Shares%2C%20or%20Debentures%20of%20the%20Company%20or%20its%20Associated%20Corporations) As of June 30, 2021, several directors held long positions in the company's shares through controlled corporations, with Mr. Qiu Chuanzhi holding approximately 28.77% and Mr. Zhuang Weidong holding 28.16% Directors' Long Positions in Shares and Underlying Shares of the Company | Name of Director | Nature of Interest | Number of Shares | Approximate Percentage of Interest | | :--- | :--- | :--- | :--- | | Qiu Chuanzhi | Interest in controlled corporation | 133,706,331 | 28.77% | | Zhuang Weidong | Interest in controlled corporation | 130,897,663 | 28.16% | | Lin Ping | Interest in controlled corporation | 82,342,606 | 17.72% | | Mai Rongbin | Interest in controlled corporation | 82,342,606 | 17.72% | - Mr. Qiu Chuanzhi wholly owns China Sun Corporation, Mr. Zhuang Weidong holds **90%** interest in Central Eagle Limited, and Ms. Lin Ping and Mr. Mai Rongbin hold **60%** and **25%** interests in Golden Diamond Inc., respectively[51](index=51&type=chunk) [Substantial Shareholders' and Other Persons' Interests and Short Positions in Shares or Underlying Shares of the Company](index=17&type=section&id=Substantial%20Shareholders%27%20and%20Other%20Persons%27%20Interests%20and%20Short%20Positions%20in%20Shares%20or%20Underlying%20Shares%20of%20the%20Company) As of June 30, 2021, substantial shareholders included China Sun, Central Eagle, Golden Diamond, and China Huarong Overseas Investment Holdings Co., Ltd. and its affiliates, holding a combined 70.16% interest Substantial Shareholders' and Other Persons' Long Positions in Shares and Underlying Shares of the Company | Name of Shareholder | Capacity | Number of Shares | Percentage | | :--- | :--- | :--- | :--- | | China Sun | Beneficial owner | 133,706,331 | 28.77% | | Central Eagle | Beneficial owner | 130,897,663 | 28.16% | | Golden Diamond | Beneficial owner | 82,342,606 | 17.72% | | Noble Wisdom Ever Limited | Interest in security | 326,089,600 | 70.16% | | China Huarong Overseas Investment Holdings Co., Ltd. | Interest in controlled corporation | 326,089,600 | 70.16% | | Huarong Huaqiao Asset Management Co., Ltd. | Interest in controlled corporation | 326,089,600 | 70.16% | | Huarong Zhiyuan Investment Management Co., Ltd. | Interest in controlled corporation | 326,089,600 | 70.16% | | China Huarong Asset Management Co., Ltd. | Interest in controlled corporation | 326,089,600 | 70.16% | - China Huarong Overseas wholly owns Noble Wisdom, Huarong Huaqiao wholly owns China Huarong Overseas, Huarong Zhiyuan holds **91%** interest in Huarong Huaqiao, and China Huarong Asset Management wholly owns Huarong Zhiyuan[59](index=59&type=chunk) [Directors' Interests in Competing Businesses](index=19&type=section&id=Directors%27%20Interests%20in%20Competing%20Businesses) No director held any interest in businesses directly or indirectly competing with the group's business during the reporting period or up to the date of this interim report - For the six months ended June 30, 2021, and up to the date of this interim report, no director held or had held any interest in any business (other than the group's business) that directly or indirectly competes or is likely to compete with the group's business[62](index=62&type=chunk) [Corporate Governance and Other Information](index=20&type=section&id=Corporate%20Governance%20and%20Other%20Information) The company adheres to stringent corporate governance practices, including compliance with the Corporate Governance Code and a model code for securities transactions by directors and employees [Corporate Governance Practices](index=20&type=section&id=Corporate%20Governance%20Practices) The company is committed to maintaining strict corporate governance guidelines and procedures, fully complying with all provisions of the Corporate Governance Code - The company has complied with all provisions set out in the Corporate Governance Code[65](index=65&type=chunk) [Compliance with Model Code by Directors and Relevant Employees](index=20&type=section&id=Compliance%20with%20Model%20Code%20by%20Directors%20and%20Relevant%20Employees) The company adopted the Model Code for directors' securities transactions, with all directors confirming compliance, and also implemented a code for relevant employees - The company has adopted the Model Code as the code of conduct for directors' securities transactions, with all directors confirming compliance during the period from January 1, 2021, to June 30, 2021[66](index=66&type=chunk) - The company has also adopted a code of conduct for securities transactions by relevant employees, with terms no less exacting than those set out in the Model Code[66](index=66&type=chunk) [Purchase, Sale or Redemption of the Company's Listed Securities](index=20&type=section&id=Purchase%2C%20Sale%20or%20Redemption%20of%20the%20Company%27s%20Listed%20Securities) Neither the company nor its subsidiaries purchased, sold, or redeemed any of the company's listed securities during the six months ended June 30, 2021 - For the six months ended June 30, 2021, neither the company nor any of its subsidiaries purchased, sold, or redeemed any of the company's listed securities[67](index=67&type=chunk) [Audit Committee](index=20&type=section&id=Audit%20Committee) The unaudited interim financial report for the six months ended June 30, 2021, has been reviewed by the Board's Audit Committee - The group's unaudited interim financial report for the six months ended June 30, 2021, has been reviewed by the Board's Audit Committee[68](index=68&type=chunk) [Condensed Consolidated Statement of Profit or Loss](index=21&type=section&id=Condensed%20Consolidated%20Statement%20of%20Profit%20or%20Loss) This statement presents the group's financial performance, showing revenue, costs, and loss for the six months ended June 30, 2021 Condensed Consolidated Statement of Profit or Loss (For the six months ended June 30) | Indicator | 2021 (HK$ thousand) | 2020 (HK$ thousand) | | :--- | :--- | :--- | | Revenue | 113,116 | 79,255 | | Cost of Sales (HK$ thousand) | (82,160) | (60,620) | | Gross Profit (HK$ thousand) | 30,956 | 18,635 | | Other Income and (Losses) / Gains, Net (HK$ thousand) | (622) | 6,079 | | Distribution Costs (HK$ thousand) | (7,663) | (5,416) | | Administrative Expenses (HK$ thousand) | (24,182) | (25,924) | | Interest on Lease Liabilities (HK$ thousand) | (1,944) | (1,961) | | Loss Before Tax (HK$ thousand) | (3,455) | (8,587) | | Income Tax Credit (HK$ thousand) | 37 | 24 | | Loss for the period | (3,418) | (8,563) | | Loss attributable to equity holders of the Company | (4,148) | (8,928) | | Loss attributable to non-controlling interests | 730 | 365 | | Basic and diluted loss per share (HK cents) | (0.9) | (1.9) | [Condensed Consolidated Statement of Profit or Loss and Other Comprehensive Income](index=22&type=section&id=Condensed%20Consolidated%20Statement%20of%20Profit%20or%20Loss%20and%20Other%20Comprehensive%20Income) This statement details the group's total comprehensive income, including profit or loss and other comprehensive income components for the period Condensed Consolidated Statement of Profit or Loss and Other Comprehensive Income (For the six months ended June 30) | Indicator | 2021 (HK$ thousand) | 2020 (HK$ thousand) | | :--- | :--- | :--- | | Loss for the period | (3,418) | (8,563) | | Other comprehensive income for the period: | | | | -Exchange differences arising on translation of financial statements of Mainland China subsidiaries (HK$ thousand) | 3,183 | (4,664) | | Total Comprehensive Income for the Period (HK$ thousand) | (235) | (13,227) | | Attributable to Equity Holders of the Company (HK$ thousand) | (1,482) | (12,807) | | Attributable to Non-controlling Interests (HK$ thousand) | 1,247 | (420) | [Condensed Consolidated Statement of Financial Position](index=23&type=section&id=Condensed%20Consolidated%20Statement%20of%20Financial%20Position) This statement provides a snapshot of the group's assets, liabilities, and equity as of June 30, 2021 Condensed Consolidated Statement of Financial Position (As of June 30, 2021) | Indicator | June 30, 2021 (HK$ thousand) | December 31, 2020 (HK$ thousand) | | :--- | :--- | :--- | | **Non-current Assets** | | | | Property, Plant and Equipment (HK$ thousand) | 83,056 | 86,616 | | Right-of-Use Assets (HK$ thousand) | 46,542 | 56,408 | | Intangible Assets (HK$ thousand) | 358 | 140 | | Deferred Tax Assets (HK$ thousand) | 5,970 | 5,834 | | **Current Assets** | | | | Inventories (HK$ thousand) | 32,048 | 26,881 | | Trade and Other Receivables (HK$ thousand) | 77,268 | 49,082 | | Cash and Cash Equivalents (HK$ thousand) | 38,673 | 60,930 | | **Current Liabilities** | | | | Trade and Other Payables (HK$ thousand) | 59,804 | 52,245 | | Lease Liabilities (Current Portion) (HK$ thousand) | 16,869 | 18,880 | | **Non-current Liabilities** | | | | Lease Liabilities (Non-current Portion) (HK$ thousand) | 38,210 | 45,290 | | Deferred Tax Liabilities (HK$ thousand) | 1,124 | 1,124 | | Total Equity (HK$ thousand) | 172,806 | 173,041 | | Total equity attributable to equity holders of the Company | 150,391 | 151,873 | | Non-controlling Interests (HK$ thousand) | 22,415 | 21,168 | [Condensed Consolidated Statement of Changes in Equity](index=25&type=section&id=Condensed%20Consolidated%20Statement%20of%20Changes%20in%20Equity) This statement outlines the changes in the group's equity attributable to owners and non-controlling interests for the reporting period Condensed Consolidated Statement of Changes in Equity (For the six months ended June 30) | Indicator | June 30, 2021 (HK$ thousand) | January 1, 2021 (HK$ thousand) | June 30, 2020 (HK$ thousand) | January 1, 2020 (HK$ thousand) | | :--- | :--- | :--- | :--- | :--- | | Share capital | 4,648 | 4,648 | 4,648 | 4,648 | | Share premium | 145,830 | 145,830 | 145,830 | 180,690 | | Capital reserve | 18,324 | 18,324 | 18,324 | 18,324 | | Statutory reserve | 26,492 | 25,856 | 26,027 | 25,856 | | Exchange reserve | 18,395 | 15,729 | (5,133) | (1,254) | | Accumulated losses | (63,298) | (58,514) | (20,706) | (11,607) | | Total attributable to equity holders of the Company | 150,391 | 151,873 | 168,990 | 216,657 | | Non-controlling interests | 22,415 | 21,168 | 22,219 | 22,639 | | Total equity | 172,806 | 173,041 | 191,209 | 239,296 | - For the six months ended June 30, 2021, loss attributable to equity holders of the Company was **HK$4.148 million**, and loss attributable to non-controlling interests was **HK$0.73 million**[80](index=80&type=chunk) - For the six months ended June 30, 2020, a special dividend of **HK$34.86 million** was distributed[78](index=78&type=chunk) [Condensed Consolidated Statement of Cash Flows](index=27&type=section&id=Condensed%20Consolidated%20Statement%20of%20Cash%20Flows) This statement summarizes the cash inflows and outflows from operating, investing, and financing activities for the six months ended June 30, 2021 Condensed Consolidated Statement of Cash Flows (For the six months ended June 30) | Indicator | 2021 (HK$ thousand) | 2020 (HK$ thousand) | | :--- | :--- | :--- | | Net cash used in operating activities | (1,346) | (8,598) | | Net cash (used in) / from investing activities | (12,702) | 19,771 | | Net cash used in financing activities | (11,683) | (45,783) | | Net decrease in cash and cash equivalents | (25,731) | (34,610) | | Cash and cash equivalents at January 1 | 60,930 | 91,174 | | Effect of exchange rate changes | 3,474 | (2,300) | | Cash and cash equivalents at June 30 | 38,673 | 54,264 | [Notes to the Unaudited Interim Financial Report](index=28&type=section&id=Notes%20to%20the%20Unaudited%20Interim%20Financial%20Report) This section provides detailed explanatory notes supporting the condensed consolidated interim financial statements, covering accounting policies, segment information, and significant transactions [1 General Information](index=28&type=section&id=1%20General%20Information) China Everbright Group Limited is an exempted company incorporated in the Cayman Islands, with its shares listed on The Stock Exchange of Hong Kong Limited - China Everbright Group Limited is an exempted company incorporated in the Cayman Islands under the Companies Act, with its shares listed on The Stock Exchange of Hong Kong Limited[86](index=86&type=chunk) [2 Basis of Preparation](index=28&type=section&id=2%20Basis%20of%20Preparation) The unaudited condensed consolidated interim financial statements are prepared in accordance with HKAS 34 and Listing Rules, involving judgments, estimates, and assumptions - The unaudited condensed consolidated interim financial statements are prepared in accordance with the applicable disclosure provisions of the Listing Rules of the Stock Exchange, including compliance with Hong Kong Accounting Standard 34 Interim Financial Reporting issued by the Hong Kong Institute of Certified Public Accountants[87](index=87&type=chunk) - The preparation of the condensed consolidated interim financial statements requires the use of certain judgments, estimates, and assumptions, and actual results may differ from these estimates[87](index=87&type=chunk) [3 Principal Accounting Policies](index=29&type=section&id=3%20Principal%20Accounting%20Policies) The interim financial statements follow the same accounting policies as the 2020 annual financial statements, with new HKFRS standards having no significant impact - The condensed consolidated interim financial statements are prepared in accordance with the same accounting policies adopted in the 2020 annual financial statements, except for changes in accounting policies required to be adopted in the 2021 annual financial statements[89](index=89&type=chunk) - New or revised Hong Kong Financial Reporting Standards (including amendments to HKFRS 16 and interest rate benchmark reform) effective from January 1, 2021, had no significant impact on the group's condensed consolidated interim financial statements[90](index=90&type=chunk) [4 Segment Reporting](index=29&type=section&id=4%20Segment%20Reporting) The group operates in two reportable segments: Zipper (Mainland China) and Zipper (Overseas), with inter-segment transactions priced at market rates - The group has two reportable segments: Zipper (Mainland China) and Zipper (Overseas)[91](index=91&type=chunk) - The Zipper (Mainland China) segment manufactures zipper products primarily for customers in the Mainland China market; the Zipper (Overseas) segment purchases zipper products from the Mainland China segment and sells them to overseas market customers[92](index=92&type=chunk)[93](index=93&type=chunk) Segment Results (For the six months ended June 30, 2021) | Indicator | Zipper - Mainland China (HK$ thousand) | Zipper - Overseas (HK$ thousand) | Total (HK$ thousand) | | :--- | :--- | :--- | :--- | | Revenue from external customers | 102,673 | 10,443 | 113,116 | | Inter-segment revenue | 7,280 | – | 7,280 | | Reportable segment revenue | 109,953 | 10,443 | 120,396 | | Reportable segment profit / (loss) | 9,324 | (1,362) | 7,962 | | Depreciation and amortization for the period | 15,028 | 541 | 15,569 | [5 Revenue](index=33&type=section&id=5%20Revenue) The group's primary business is manufacturing and selling zippers and related products, with total revenue of HK$113 million for the period, and no single customer exceeding 10% of total revenue - The group's principal business is the manufacturing and sale of zippers, pullers, and other related products[106](index=106&type=chunk) Amounts of Each Major Revenue Category (For the six months ended June 30) | Revenue Category | 2021 (HK$ thousand) | 2020 (HK$ thousand) | | :--- | :--- | :--- | | Sale of goods | | | | Zipper chains and pullers | 111,410 | 78,128 | | Others | 1,706 | 1,127 | | Total | 113,116 | 79,255 | - No single customer's transactions exceeded **10%** of the group's revenue[108](index=108&type=chunk) [6 Loss Before Tax](index=33&type=section&id=6%20Loss%20Before%20Tax) Loss before tax for the period reflects increased staff costs and depreciation, offset by a reversal of inventory impairment loss, with other income and losses turning negative Staff Costs (For the six months ended June 30) | Category | 2021 (HK$ thousand) | 2020 (HK$ thousand) | | :--- | :--- | :--- | | Salaries, Wages and Other Benefits (HK$ thousand) | 47,536 | 40,641 | | Contributions to Defined Contribution Retirement Plans (HK$ thousand) | 4,500 | 2,005 | | Total | 52,036 | 42,646 | Other Income and (Losses) / Gains, Net (For the six months ended June 30) | Category | 2021 (HK$ thousand) | 2020 (HK$ thousand) | | :--- | :--- | :--- | | Other income and (losses) / gains, net | (622) | 6,079 | Other Items (For the six months ended June 30) | Category | 2021 (HK$ thousand) | 2020 (HK$ thousand) | | :--- | :--- | :--- | | Depreciation and Amortization: | | | | -Plant and equipment | 7,899 | 6,323 | | -Intangible Assets (HK$ thousand) | 101 | 601 | | -Right-of-Use Assets (HK$ thousand) | 10,422 | 9,454 | | Total | 18,422 | 16,378 | | Impairment Loss on Inventories (Reversal) / Provision (HK$ thousand) | (9) | 461 | | Cost of inventories | 82,160 | 60,620 | [7 Income Tax (Credit) / Expense](index=35&type=section&id=7%20Income%20Tax%20%28Credit%29%20%2F%20Expense) The group recorded an income tax credit of HK$37 thousand, with varying tax rates for its subsidiaries in Hong Kong and Mainland China, including preferential rates for high-tech enterprises Income Tax (Credit) / Expense (For the six months ended June 30) | Category | 2021 (HK$ thousand) | 2020 (HK$ thousand) | | :--- | :--- | :--- | | Current Tax - PRC Enterprise Income Tax (HK$ thousand) | 32 | (30) | | Deferred Tax (HK$ thousand) | (69) | 6 | | Total | (37) | (24) | - Kaiyi (Guangdong) Garment Accessories Co., Ltd. is recognized as a high-tech enterprise, enjoying a preferential income tax rate of **15%** until 2021, while other Mainland China subsidiaries have a statutory income tax rate of **25%**[115](index=115&type=chunk) - Dividends paid by Chinese resident enterprises to non-Chinese resident enterprise investors are subject to a **10% withholding income tax**, with eligible Hong Kong tax residents subject to a reduced rate of **5%**[115](index=115&type=chunk) [8 Loss Per Share](index=36&type=section&id=8%20Loss%20Per%20Share) Basic loss per share was HK$0.9 cents, with diluted loss per share being the same due to the absence of potential dilutive shares - Basic loss per share is calculated based on the loss attributable to equity holders of the Company of **HK$4.148 million** for the six months ended June 30, 2021, and the weighted average number of ordinary shares outstanding of **464.804 million**, resulting in **HK$0.9 cents**[117](index=117&type=chunk) - As there were no potential dilutive shares outstanding for the six months ended June 30, 2020, and 2021, diluted loss per share is equal to basic loss per share[118](index=118&type=chunk) [9 Property, Plant and Equipment](index=36&type=section&id=9%20Property%2C%20Plant%20and%20Equipment) During the six months ended June 30, 2021, the group acquired property, plant, and equipment items, including payments for construction in progress, totaling HK$4.814 million - For the six months ended June 30, 2021, the group acquired property, plant, and equipment items (including payments for construction in progress) at a cost of **HK$4.814 million** (six months ended June 30, 2020: HK$5.027 million)[119](index=119&type=chunk) [10 Trade and Other Receivables](index=37&type=section&id=10%20Trade%20and%20Other%20Receivables) Total trade and other receivables amounted to HK$77.268 million, with most trade receivables and bills due within one month, and all expected to be recovered within one year Aging Analysis of Trade Receivables and Bills Receivable (As of reporting period end) | Aging | June 30, 2021 (HK$ thousand) | December 31, 2020 (HK$ thousand) | | :--- | :--- | :--- | | Within one month | 62,391 | 18,049 | | Over one month but within two months | 5,424 | 13,065 | | Over two months but within three months | 2,556 | 6,144 | | Over three months | 2,418 | 6,278 | | Trade receivables and bills receivable, net of loss allowance (HK$ thousand) | 72,789 | 43,536 | | Lease deposits (HK$ thousand) | 2,783 | 2,665 | | Other prepayments (HK$ thousand) | 1,183 | 1,155 | | Other receivables (HK$ thousand) | 513 | 1,726 | | Total | 77,268 | 49,082 | - All trade and other receivables are expected to be recovered or recognized as expenses within one year[121](index=121&type=chunk) [11 Cash and Cash Equivalents](index=38&type=section&id=11%20Cash%20and%20Cash%20Equivalents) Cash and cash equivalents decreased to HK$38.673 million as of June 30, 2021, from HK$60.93 million at December 31, 2020 Cash and Cash Equivalents (As of June 30, 2021) | Category | June 30, 2021 (HK$ thousand) | December 31, 2020 (HK$ thousand) | | :--- | :--- | :--- | | Bank and cash in hand (HK$ thousand) | 38,673 | 60,930 | | Cash and cash equivalents in condensed consolidated cash flow statement (HK$ thousand) | 38,673 | 60,930 | [12 Trade and Other Payables](index=38&type=section&id=12%20Trade%20and%20Other%20Payables) Total trade and other payables were HK$59.804 million, with trade payables primarily due within one month, and significant amounts for wages and property, plant, and equipment purchases Aging Analysis of Trade and Other Payables (As of reporting period end) | Category | June 30, 2021 (HK$ thousand) | December 31, 2020 (HK$ thousand) | | :--- | :--- | :--- | | Within one month | 17,204 | 8,072 | | Over one month but within three months | 984 | 1,362 | | Over three months but within six months | 5 | 1 | | Over six months | 192 | 162 | | Trade payables (HK$ thousand) | 18,385 | 9,597 | | Accrued wages and staff welfare (HK$ thousand) | 20,498 | 17,004 | | Accrued expenses (HK$ thousand) | 6,824 | 5,582 | | Payables for purchase of property, plant and equipment (HK$ thousand) | 9,408 | 18,723 | | Contract liabilities (HK$ thousand) | 1,134 | 841 | | Other receivables (HK$ thousand) | 3,555 | 498 | | Total | 59,804 | 52,245 | [13 Capital, Reserves and Dividends](index=39&type=section&id=13%20Capital%2C%20Reserves%20and%20Dividends) No interim dividends were declared for the periods ended June 30, 2021, or 2020, though a special dividend was paid in 2020, and the company's share capital remained unchanged Dividends (For the six months ended June 30) | Category | 2021 (HK$ thousand) | 2020 (HK$ thousand) | | :--- | :--- | :--- | | Special dividend: declared per ordinary share: Nil (2020: HK$0.075) | - | 34,860 | - No interim dividends were declared for the periods ended June 30, 2021, and 2020[128](index=128&type=chunk) Share Capital (As of June 30, 2021) | Category | June 30, 2021 Number of Shares (thousand shares) | June 30, 2021 Share Capital (HK$ thousand) | December 31, 2020 Number of Shares (thousand shares) | December 31, 2020 Share Capital (HK$ thousand) | | :--- | :--- | :--- | :--- | :--- | | Authorised: Ordinary shares of HK$0.01 each | 2,000,000 | 20,000 | 2,000,000 | 20,000 | | Ordinary shares, issued and fully paid | 464,804 | 4,648 | 464,804 | 4,648 | [14 Commitments](index=40&type=section&id=14%20Commitments) Capital commitments contracted but not provided for in the financial statements increased to HK$0.522 million as of June 30, 2021 Unfulfilled Capital Commitments (As of June 30, 2021) | Category | June 30, 2021 (HK$ thousand) | December 31, 2020 (HK$ thousand) | | :--- | :--- | :--- | | Contracted | 522 | 288 | [15 Significant Related Party Transactions](index=40&type=section&id=15%20Significant%20Related%20Party%20Transactions) The group engaged in several lease agreements with related parties, including senior management and their controlled entities, with total rent paid amounting to approximately HK$6.236 million - For the six months ended June 30, 2021, the group paid **HK$2.831 million** in rent to senior management Mr. Xu Xipeng and Mr. Xu Xinan for certain lease and building renewal lease agreements[132](index=132&type=chunk) - For the six months ended June 30, 2021, the group paid rent of **HK$0.36 million** and **HK$2.999 million** respectively to Shengdian Co., Ltd. and Foshan Nanhai Jinheming Investment Co., Ltd., owned by Mr. Xu Xipeng and Mr. Xu Xinan, for leased-back assets[133](index=133&type=chunk) - For the six months ended June 30, 2021, the group paid **HK$2.875 million** in rent under a lease agreement with Kaiyi (Jingmen) Garment Accessories Co., Ltd[135](index=135&type=chunk) Key Management Personnel Remuneration (For the six months ended June 30) | Category | 2021 (HK$ thousand) | 2020 (HK$ thousand) | | :--- | :--- | :--- | | Short-term employee benefits | 2,518 | 5,334 | | Retirement scheme contributions | 177 | 95 | | Total | 2,695 | 5,429 | [16 Events After Reporting Period](index=41&type=section&id=16%20Events%20After%20Reporting%20Period) The group renewed a lease agreement with Kaiyi (Jingmen) Garment Accessories Co., Ltd. through its Jingmen branch, a company owned by Mr. Xu Xipeng and Mr. Xu Xinan - The group renewed a lease agreement with Kaiyi (Jingmen) Garment Accessories Co., Ltd. through its Jingmen branch, as lessee, with the company owned **50%** by lessor Mr. Xu Xipeng and **50%** by Mr. Xu Xinan[137](index=137&type=chunk) [Glossary](index=42&type=section&id=Glossary) This section defines key terms and abbreviations used throughout the report to ensure clarity and consistent understanding - This section provides definitions for key terms used in the report, including Board, Corporate Governance Code, Company, Directors, Group, HK$, Hong Kong, Listing Rules, Main Board, Model Code, OEM, PRC or Mainland China, RMB, SFO, Shares, Shareholders, Stock Exchange, etc[139](index=139&type=chunk)[142](index=142&type=chunk)[143](index=143&type=chunk)[144](index=144&type=chunk)[145](index=145&type=chunk)[146](index=146&type=chunk) ```
进腾集团(02011) - 2020 - 年度财报
2021-04-23 09:11
Company Profile [Corporate Information](index=2&type=section&id=Corporate%20Information) This section provides core corporate data, including board composition, key advisors, and registered office details - The Board of Directors comprises four executive directors, one non-executive director, and three independent non-executive directors[6](index=6&type=chunk) - The company's auditor is BDO Limited[7](index=7&type=chunk) Financial Highlights [Five-Year Financial Summary](index=3&type=section&id=Five-Year%20Financial%20Summary) This section presents key financial performance and position indicators over the past five years, highlighting operational challenges in 2020 Five-Year Financial Summary (2016-2020) | Metric | 2020 | 2019 | 2018 | 2017 | 2016 (Restated) | | :--- | :--- | :--- | :--- | :--- | :--- | | **Results from Continuing Operations** | | | | | | | Revenue (HK$ million) | 170.09 | 205.80 | 197.53 | 184.73 | 145.57 | | Gross Profit (HK$ million) | 34.24 | 52.93 | 63.92 | 57.70 | 42.07 | | Gross Profit Margin (%) | 20.1 | 25.7 | 32.4 | 31.2 | 28.9 | | Net Loss Margin (%) | -27.6 | -21.5 | -16.8 | -24.4 | 15.1 (Profit Margin) | | **Financial Position (HK$ '000)** | | | | | | | Total Assets | 290,702 | 338,348 | 330,454 | 380,180 | 405,760 | | Total Equity Attributable to Equity Holders | 151,873 | 216,657 | 264,730 | 314,083 | 298,523 | | **Financial Ratios** | | | | | | | Current Ratio (times) | 1.9 | 3.2 | 6.0 | 5.0 | 4.0 | | Gearing Ratio (%) | 40.5 | 29.3 | 12.9 | 11.4 | 21.6 | | Inventory Turnover (days) | 82 | 70 | 66 | 62 | 58 | | Trade Receivables Turnover (days) | 91 | 72 | 74 | 77 | 78 | Consolidated Statement of Profit or Loss Summary (2020 vs 2019) (HK$ '000) | Item | 2020 | 2019 | | :--- | :--- | :--- | | Revenue | 170,089 | 205,796 | | Gross Profit | 34,235 | 52,932 | | Operating Loss | (50,232) | (39,255) | | Loss Before Tax | (53,894) | (43,000) | | Loss for the Year | (51,209) | (44,164) | | Loss Attributable to Equity Holders of the Company | (46,907) | (44,180) | Consolidated Statement of Financial Position Summary (2020 vs 2019) (HK$ '000) | Item | 2020 | 2019 | | :--- | :--- | :--- | | Non-current Assets | 152,018 | 142,345 | | Current Assets | 138,684 | 196,003 | | **Total Assets** | **290,702** | **338,348** | | Current Liabilities | 71,247 | 60,671 | | Non-current Liabilities | 46,414 | 38,381 | | **Net Assets** | **173,041** | **239,296** | | **Total Equity Attributable to Equity Holders of the Company** | **151,873** | **216,657** | Chairman's Statement [Chairman's Statement](index=8&type=section&id=Chairman's%20Statement) The Chairman addresses the significant impact of the COVID-19 pandemic on revenue and outlines the Group's future strategy for growth - Due to the COVID-19 pandemic, global travel restrictions severely impacted customer demand, leading to a **significant decline in the Group's revenue**[25](index=25&type=chunk) - The Group has implemented **strict cost control measures** and maintained stable performance in its overall zipper business[25](index=25&type=chunk) - Looking ahead, the Group will continue to seek attractive investment and acquisition opportunities in other industries to **enhance profitability and maximize shareholder value**[25](index=25&type=chunk) Management Discussion and Analysis [Business Overview](index=10&type=section&id=Overview) The Group's continuing operation in 2020 was the zipper business, primarily serving OEMs for Chinese and international apparel brands - The Group's core business is zipper manufacturing, with customers being primarily OEM manufacturers for Chinese and international apparel brands[29](index=29&type=chunk) [Financial Summary](index=10&type=section&id=Financial%20Summary) In FY2020, the Group's revenue decreased to HK$170 million and its pre-tax loss widened to HK$53.89 million due to multiple factors Key Financial Indicator Changes for FY2020 | Indicator | 2020 (HK$ million) | 2019 (HK$ million) | Change | | :--- | :--- | :--- | :--- | | Revenue | 170.09 | 205.80 | ↓17.4% | | Loss Before Tax | 53.89 | 43.00 | ↑25.3% | - The increase in pre-tax loss was mainly due to: - Gross profit decreased from HK$52.93 million to **HK$34.24 million** - Recognition of impairment losses on property, plant and equipment of **HK$8.22 million** and on right-of-use assets of **HK$4.89 million** - A net foreign exchange loss of **HK$10.13 million** (2019: gain of HK$2.83 million) - The loss was partially offset by a fair value gain on financial assets at FVTPL of **HK$1.53 million** (2019: loss of HK$23.60 million)[30](index=30&type=chunk) [Revenue Analysis](index=10&type=section&id=Revenue) Total revenue in 2020 decreased by 17.4% to HK$170 million, driven by a decline in core product sales due to the COVID-19 pandemic Revenue by Product Category (HK$ million) | Product Category | 2020 | % of Total Revenue | 2019 | % of Total Revenue | | :--- | :--- | :--- | :--- | :--- | | Finished Zippers and Sliders | 167.42 | 98.4% | 202.22 | 98.3% | | Others | 2.67 | 1.6% | 3.58 | 1.7% | | **Total Revenue** | **170.09** | **100.0%** | **205.80** | **100.0%** | Revenue by Geographical Location (HK$ million) | Region | 2020 | % of Total Revenue | 2019 | % of Total Revenue | | :--- | :--- | :--- | :--- | :--- | | Mainland China | 150.18 | 88.3% | 183.00 | 88.9% | | Overseas | 19.91 | 11.7% | 22.80 | 11.1% | | **Total Revenue** | **170.09** | **100.0%** | **205.80** | **100.0%** | - The decrease in revenue from finished zippers and sliders was mainly due to the global COVID-19 pandemic, which led to a reduction in sales orders from customers (primarily apparel product OEMs)[35](index=35&type=chunk) [Cost of Sales and Gross Profit](index=11&type=section&id=Cost%20of%20Sales%20and%20Gross%20Profit) In 2020, cost of sales decreased, but a larger revenue decline led to a 35.3% drop in gross profit and a lower gross margin Gross Profit and Gross Margin Changes | Indicator | 2020 | 2019 | Change | | :--- | :--- | :--- | :--- | | Cost of Sales (HK$ million) | 135.85 | 152.86 | ↓11.1% | | Gross Profit (HK$ million) | 34.24 | 52.93 | ↓35.3% | | Gross Margin (%) | 20.1% | 25.7% | ↓5.6pp | [Operating Expenses](index=12&type=section&id=Operating%20Expenses) Distribution costs decreased in line with revenue in 2020, while administrative expenses remained stable but increased as a percentage of revenue - Distribution costs were approximately **HK$11.76 million**, a year-on-year decrease mainly due to lower staff and transportation costs in line with reduced revenue[42](index=42&type=chunk) - Administrative expenses were approximately **HK$54.25 million**, remaining stable year-on-year, but its ratio to turnover increased to **31.9%**[43](index=43&type=chunk) [Profitability](index=12&type=section&id=Profitability) In 2020, the loss attributable to equity holders widened to HK$46.91 million, with the loss ratio and ROE indicating deteriorating profitability Profitability Indicators | Indicator | 2020 | 2019 | | :--- | :--- | :--- | | Loss Attributable to Equity Holders (HK$ million) | 46.91 | 44.18 | | Loss Attributable to Equity Holders as a % of Revenue | 27.6% | 21.5% | | Return on Equity (%) | -30.9% | -20.4% | [Financial Position Analysis](index=13&type=section&id=Financial%20Position%20Analysis) The company redeemed all financial assets at FVTPL in 2020, while inventory and receivables turnover days increased, indicating lower operational efficiency - In March 2020, the company redeemed all its remaining shares in the Fullgoal Strategic Growth Fund for net proceeds of approximately **HK$24.89 million** and no longer holds any interest in the fund[49](index=49&type=chunk)[50](index=50&type=chunk) - Inventory turnover days increased from **70 days** in 2019 to **82 days** in 2020[53](index=53&type=chunk) - Trade receivables turnover days increased from **72 days** in 2019 to **91 days** in 2020[56](index=56&type=chunk) - Trade payables turnover days increased from **21 days** in 2019 to **26 days** in 2020[59](index=59&type=chunk) [Liquidity and Capital Resources](index=14&type=section&id=Liquidity%20and%20Capital%20Resources) The Group's operating cash flow turned positive in 2020, but a significant outflow from financing activities led to a decrease in year-end cash Cash Flow Summary (HK$ million) | Item | 2020 | 2019 | | :--- | :--- | :--- | | Net cash from/(used in) operating activities | 18.67 | (1.37) | | Net cash from investing activities | 3.02 | 34.61 | | Net cash used in financing activities | (56.59) | (22.09) | | **Net (decrease)/increase in cash and cash equivalents** | **(34.90)** | **11.15** | | **Cash and cash equivalents at year-end** | **60.93** | **91.17** | - The Group had **no borrowings** at the end of 2019 and 2020, other than lease liabilities[66](index=66&type=chunk) - The Group's strategy is to maintain an adjusted net debt-to-capital ratio below 20%; the ratio was **1.9%** at the end of 2020[66](index=66&type=chunk) - Net current assets decreased significantly from HK$135 million to **HK$67.44 million**, mainly due to the redemption of financial assets and payment of a special dividend[67](index=67&type=chunk) [Other Matters](index=15&type=section&id=Other%20Matters) This section covers foreign exchange risk, employee information, a change in the company's name, and adjustments to director remuneration - As of the end of 2020, the Group had **694 full-time employees**, a decrease from 816 in 2019, with staff costs decreasing from HK$90.61 million to HK$78.70 million[73](index=73&type=chunk) - The company's English name was changed from "KEE Holdings Company Limited" to "**China Apex Group Limited**", and its Chinese name was also changed[76](index=76&type=chunk) - Executive Directors Mr. Zhuang Weidong, Mr. Qiu Chuanzhi, and Mr. Mai Rongbin voluntarily waived part of their remuneration to support the company's development[78](index=78&type=chunk) [Connected Transactions](index=17&type=section&id=Connected%20Transactions%20and%20Continuing%20Connected%20Transactions) This section discloses multiple transactions with connected persons, primarily involving lease renewals and equipment purchases from entities controlled by former controlling shareholders - The Group renewed the lease for its Hong Kong property with connected party Shing Tin Limited for two years at a monthly rent of **HK$60,000**[79](index=79&type=chunk) - The Group renewed the lease for its Zhejiang production base with a connected party for two years at a monthly rent of **RMB 417,300**[82](index=82&type=chunk) - The Group renewed the lease for its Guangdong factory premises with connected persons Mr. Hui Sik Pang and Mr. Hui Sik Nam for two years at a monthly rent of **RMB 394,000**[83](index=83&type=chunk) - The Group purchased dyeing equipment from a connected party, KEE (Jingmen) Garment Accessories Company Limited, for a consideration of **RMB 6.718 million**[88](index=88&type=chunk) [Business Outlook](index=21&type=section&id=Outlook) The Group anticipates a gradual market recovery and will implement six key measures to address challenges and capture potential growth opportunities - Despite weak domestic and external demand, the Group believes the apparel and textile industry is gradually recovering as the pandemic comes under control[98](index=98&type=chunk) - The Group will implement six key measures to address challenges and seize market opportunities: 1. Expand into the e-commerce market and enhance product quality 2. Integrate and upgrade production capacity to improve the industrial chain 3. Optimize processes and strengthen cost management 4. Enhance capital management to control operational risks 5. Accelerate digital transformation 6. Strengthen talent management to improve organizational capabilities[100](index=100&type=chunk) Corporate Governance Report [Corporate Governance Practices](index=23&type=section&id=Corporate%20Governance%20Practices) This report details the company's corporate governance practices for 2020, confirming compliance with most code provisions while noting some deviations - For the year ended December 31, 2020, the company complied with all code provisions of the Corporate Governance Code, except for the deviation where the roles of Chairman and Chief Executive Officer were not separated[105](index=105&type=chunk)[112](index=112&type=chunk) - The Board consists of eight members, including four executive directors, one non-executive director, and three independent non-executive directors, meeting Listing Rules requirements[107](index=107&type=chunk)[113](index=113&type=chunk) - The company has established an Audit Committee, a Remuneration Committee, and a Nomination Committee, with their compositions, duties, and meeting records detailed[122](index=122&type=chunk)[125](index=125&type=chunk)[130](index=130&type=chunk)[133](index=133&type=chunk) - The Group appointed an external independent consultant for an annual review of its internal control system, which the Board deemed effective as of year-end 2020[146](index=146&type=chunk)[149](index=149&type=chunk) Environmental, Social and Governance (ESG) Report [Environmental Aspect](index=34&type=section&id=Environmental%20Aspect%20Report) The Group manages its environmental impact through an ISO 14001-based system, focusing on emissions control and resource efficiency Key Emissions Data for 2020 | Emission Type | Unit | Total Emissions | Intensity (per HK$ million of revenue) | | :--- | :--- | :--- | :--- | | Greenhouse Gases (Scope 1, 2, 3) | Tonnes of CO2e | 14,172 | 83.3 | | Wastewater | Tonnes | 46,110 | 271.1 | | Hazardous Waste | Tonnes | 4.5 | 0.03 | | Non-hazardous Waste | Tonnes | 52 | 0.31 | Key Resource Consumption Data for 2020 | Resource | Unit | Total Consumption | Intensity (per HK$ million of revenue) | | :--- | :--- | :--- | :--- | | Electricity (Factory) | kWh | 11,438,255 | 67,249 | | Water | Tonnes | 305,064 | 1,794 | | Diesel | Litres | 423,115 | 2,488 | | Natural Gas | m³ | 210,787 | 1,239 | [Social Aspect (Employment and Labor Practices)](index=38&type=section&id=Employment%20and%20Labor%20Practices) The Group prioritizes employee welfare, fair employment, and workplace safety, with detailed data on workforce composition and training provided - As of year-end 2020, the Group had **694 full-time employees**, down from 816 in 2019, with an overall employee turnover rate of approximately **47%** for the year[184](index=184&type=chunk) Occupational Health and Safety Statistics | Indicator | 2020 | 2019 | | :--- | :--- | :--- | | Lost days due to work injury | 466 | 282 | | Number of work-related fatalities | 0 | 0 | | Number of work-related injuries | 11 | 17 | - The Group provided various internal and external training for employees, with male employees receiving an average of **2.45 training hours** and female employees receiving **2.76 hours** in 2020[192](index=192&type=chunk)[193](index=193&type=chunk) - The Group strictly adheres to labor standards and had **no incidents of child or forced labor** during the reporting period[196](index=196&type=chunk) [Social Aspect (Operating Practices and Community Investment)](index=42&type=section&id=Operating%20Practices) The Group maintains robust supply chain management, product responsibility, and anti-corruption practices while actively investing in its community - The Group has **349 suppliers**, all located in Mainland China, to reduce the carbon footprint from transportation[198](index=198&type=chunk) - The Group's production bases are certified under ISO 9001 and OEKO-TEX® STANDARD 100; in 2020, it received **49 customer complaints** and had no product recalls due to health and safety issues[200](index=200&type=chunk) - The Group has an anti-fraud and whistle-blowing system and **received no reports of corruption** during the reporting period[204](index=204&type=chunk)[207](index=207&type=chunk) - The Group's "KEE Charity Foundation" assists employees in need and donated **RMB 225,900** to the Red Cross to combat the COVID-19 pandemic[208](index=208&type=chunk) Biographical Details of Directors and Senior Management [Biographical Details of Directors and Senior Management](index=44&type=section&id=Biographical%20Details%20of%20Directors%20and%20Senior%20Management) This section provides detailed professional backgrounds of the company's directors and senior management team - Provides the biographies of Executive Directors Mr. Zhuang Weidong (Chairman), Mr. Qiu Chuanzhi (President), Mr. Wu Hangzheng (Vice Chairman), and Mr. Mai Rongbin (Vice President)[211](index=211&type=chunk)[212](index=212&type=chunk)[213](index=213&type=chunk) - Provides the biographies of Non-executive Director Ms. Lin Ping and three Independent Non-executive Directors, Mr. Cheng Hong Kei, Mr. Liu Huaijing, and Mr. Leung Kar Tin[215](index=215&type=chunk)[216](index=216&type=chunk)[217](index=217&type=chunk)[218](index=218&type=chunk) - Provides the biographies of senior management members, including Chief Financial Officer Mr. Yau Chi Chiu[220](index=220&type=chunk)[221](index=221&type=chunk) Report of the Directors [Report of the Directors](index=47&type=section&id=Report%20of%20the%20Directors) This report presents statutory disclosures for the year ended December 31, 2020, covering business review, financial results, and shareholder information - The company's principal activity is the design, manufacture, and sale of finished zippers and other garment accessories in China[224](index=224&type=chunk) - The company paid a special dividend of **HK$0.075 per share** on March 3, 2020, and the Board does not recommend a final dividend for 2020[229](index=229&type=chunk) Percentage of Major Customers and Suppliers in Total Turnover | Category | 2020 (%) | 2019 (%) | | :--- | :--- | :--- | | Largest Customer | 4.4 | 4.6 | | Five Largest Customers | 14.3 | 16.1 | | Largest Supplier | 10.0 | 12.8 | | Five Largest Suppliers | 29.1 | 33.5 | - The Board has reviewed the continuing connected transactions for the year and confirmed they were conducted in the ordinary course of business on normal commercial terms, fair and reasonable, and in the interests of shareholders as a whole[264](index=264&type=chunk) Independent Auditor's Report [Audit Opinion and Key Audit Matters](index=56&type=section&id=Independent%20Auditor's%20Report) The independent auditor issued an unqualified opinion on the financial statements, highlighting inventory valuation and asset impairment as key audit matters - The auditor concluded that the consolidated financial statements give a **true and fair view** of the Group's financial position and performance in accordance with HKFRSs, issuing an **unqualified opinion**[276](index=276&type=chunk) - **Key Audit Matter 1: Valuation of inventories**, which was significant due to the material carrying amount and the judgment involved in determining provisions[281](index=281&type=chunk) - **Key Audit Matter 2: Impairment assessment of non-financial assets**, which was critical due to impairment indicators such as declining gross profit margins and continuous losses in the zipper business[283](index=283&type=chunk)[284](index=284&type=chunk) Consolidated Financial Statements [Consolidated Statement of Profit or Loss](index=62&type=section&id=Consolidated%20Statement%20of%20Profit%20or%20Loss) The Group's revenue for FY2020 was HK$170 million, with the loss for the year widening to HK$51.21 million Key Data from Consolidated Statement of Profit or Loss (HK$ '000) | Item | 2020 | 2019 | | :--- | :--- | :--- | | Revenue | 170,089 | 205,796 | | Gross Profit | 34,235 | 52,932 | | Loss before tax | (53,894) | (43,000) | | **Loss for the year** | **(51,209)** | **(44,164)** | | Loss attributable to equity holders of the Company | (46,907) | (44,180) | | Basic and diluted loss per share (HK cents) | (10.1) | (9.5) | [Consolidated Statement of Profit or Loss and Other Comprehensive Income](index=63&type=section&id=Consolidated%20Statement%20of%20Profit%20or%20Loss%20and%20Other%20Comprehensive%20Income) The total comprehensive loss for the year narrowed to HK$31.40 million, primarily due to a positive foreign currency translation difference Key Data from Consolidated Statement of Comprehensive Income (HK$ '000) | Item | 2020 | 2019 | | :--- | :--- | :--- | | Loss for the year | (51,209) | (44,164) | | Exchange difference on translation of financial statements of subsidiaries in Mainland China | 19,814 | (4,474) | | **Total comprehensive income for the year** | **(31,395)** | **(48,638)** | | Total comprehensive income attributable to equity holders of the Company | (29,924) | (48,073) | [Consolidated Statement of Financial Position](index=64&type=section&id=Consolidated%20Statement%20of%20Financial%20Position) As of December 31, 2020, the Group's total assets decreased to HK$291 million, with net assets declining to HK$173 million Key Data from Consolidated Statement of Financial Position (HK$ '000) | Item | 31 December 2020 | 31 December 2019 | | :--- | :--- | :--- | | **Total Assets** | **290,702** | **338,348** | | Total Liabilities | 117,661 | 99,052 | | **Net Assets** | **173,041** | **239,296** | | Total equity attributable to equity holders of the Company | 151,873 | 216,657 | | Non-controlling interests | 21,168 | 22,639 | | **Total Equity** | **173,041** | **239,296** | [Consolidated Statement of Changes in Equity](index=66&type=section&id=Consolidated%20Statement%20of%20Changes%20in%20Equity) Total equity attributable to shareholders decreased from HK$217 million to HK$152 million in FY2020, driven by the annual loss and dividend payments - Total equity attributable to the Company's equity holders decreased from **HK$217 million** at the beginning of the year to **HK$152 million** at year-end[310](index=310&type=chunk) - The main items causing the decrease in equity were the **loss for the year of HK$46.91 million** and the **payment of a special dividend of HK$34.86 million**[310](index=310&type=chunk) - An increase in the exchange reserve of **HK$16.98 million** partially offset the reduction in equity[310](index=310&type=chunk) [Consolidated Statement of Cash Flows](index=67&type=section&id=Consolidated%20Statement%20of%20Cash%20Flows) The Group's operating activities generated a net cash inflow, but financing outflows led to a net decrease in cash and cash equivalents for FY2020 Key Data from Consolidated Statement of Cash Flows (HK$ '000) | Item | 2020 | 2019 | | :--- | :--- | :--- | | Net cash from/(used in) operating activities | 18,668 | (1,372) | | Net cash from investing activities | 3,015 | 34,607 | | Net cash used in financing activities | (56,587) | (22,086) | | **Net (decrease)/increase in cash and cash equivalents** | **(34,904)** | **11,149** | | **Cash and cash equivalents at 31 December** | **60,930** | **91,174** | Notes to the Consolidated Financial Statements [Summary of Notes to the Financial Statements](index=68&type=section&id=Notes%20to%20the%20Consolidated%20Financial%20Statements) This section provides detailed notes on the basis of preparation, accounting policies, key estimates, and segmental analysis for the financial statements - The financial statements are prepared in accordance with Hong Kong Financial Reporting Standards and presented in Hong Kong dollars[318](index=318&type=chunk)[345](index=345&type=chunk) - Note 6 provides a detailed disclosure of the Group's two reportable segments: Zippers (Mainland China) and Zippers (Overseas), including revenue, profit/loss, and asset information for each[442](index=442&type=chunk)[443](index=443&type=chunk)[444](index=444&type=chunk) - Notes 14 and 23(b) disclose that due to declining gross profit margins and continuous losses in the zipper business, the Group recognized impairment losses of **HK$8.215 million** on property, plant and equipment and **HK$4.885 million** on right-of-use assets[492](index=492&type=chunk)[498](index=498&type=chunk)[550](index=550&type=chunk) - Note 31 details significant transactions with related parties, primarily property leases and equipment purchases from companies controlled by former controlling shareholders[595](index=595&type=chunk)[597](index=597&type=chunk) Glossary [Definitions](index=132&type=section&id=Glossary) This section provides clear definitions for specific terms and abbreviations used throughout the annual report to aid reader comprehension - This section provides definitions for the technical terms and abbreviations used in the report[633](index=633&type=chunk)
进腾集团(02011) - 2020 - 中期财报
2020-09-22 08:42
[Company Information](index=3&type=section&id=Company%20Information) This section provides essential corporate details, including board composition, committee structures, and key registration and operational information [Board of Directors and Committees](index=3&type=section&id=Board%20of%20Directors%20and%20Committees) The Company's Board of Directors comprises executive, non-executive, and independent non-executive directors, supported by Audit, Nomination, and Remuneration Committees to ensure effective corporate governance - Executive Directors include Mr. Zhuang Weidong (Chairman), Mr. Qiu Chuanzhi (President), Mr. Wu Hangzheng (Vice Chairman), and Mr. Mai Rongbin (Vice President)[3](index=3&type=chunk) - Independent Non-executive Directors include Mr. Leung Ka Tin, Mr. Cheng Hong Ki, and Mr. Lau Wai King[3](index=3&type=chunk) - Mr. Cheng Hong Ki chairs the Audit and Remuneration Committees, while Mr. Zhuang Weidong chairs the Nomination Committee[3](index=3&type=chunk) [Registration and Operational Information](index=3&type=section&id=Registration%20and%20Operational%20Information) The Company is registered in the Cayman Islands with its principal place of business in Central, Hong Kong, detailing key information such as share registrars, auditor, principal bankers, and website - The registered office is in the Cayman Islands, with the principal place of business in Hong Kong at Room 510, Chater House, 8 Connaught Road Central, Hong Kong[3](index=3&type=chunk) - Tricor Investor Services Limited serves as the Hong Kong Share Registrar, and BDO Limited is the auditor[5](index=5&type=chunk) - Principal bankers include The Bank of East Asia, The Hongkong and Shanghai Banking Corporation, Industrial and Commercial Bank of China, Agricultural Bank of China, China Construction Bank, and Bank of Guangzhou[5](index=5&type=chunk) [Financial Highlights](index=5&type=section&id=Financial%20Highlights) For the six months ended June 30, 2020, the Company's revenue significantly decreased by **32.5%** year-on-year, gross profit fell by **52.2%**, resulting in a loss for the period, with total assets, cash and cash equivalents, and equity attributable to owners of the Company all showing substantial declines Financial Performance for the Six Months Ended June 30, 2020 | Indicator | 2020 June 30 (HK$'000) | 2019 June 30 (HK$'000) | Change (+/-) | | :--- | :--- | :--- | :--- | | Revenue | 79,255 | 117,469 | (32.5%) | | Gross Profit | 18,635 | 38,957 | (52.2%) | | Gross Margin | 23.5% | 33.2% | (29.2%) | | (Loss) / Profit for the Period | (8,563) | 6,346 | Not Applicable | | (Loss) / Profit for the Period Attributable to Owners of the Company | (8,928) | 4,913 | Not Applicable | | Basic and Diluted (Loss) / Earnings Per Share (HK cents) | (1.9) | 1.1 | Not Applicable | Key Balance Sheet Data | Indicator | 2020 June 30 (HK$'000) | 2019 December 31 (HK$'000) | Change (+/-) | | :--- | :--- | :--- | :--- | | Total Assets | 289,434 | 338,348 | (14.5%) | | Cash and Cash Equivalents | 54,264 | 91,174 | (40.5%) | | Total Equity Attributable to Owners of the Company | 168,990 | 216,657 | (22.0%) | [Management Discussion and Analysis](index=6&type=section&id=Management%20Discussion%20and%20Analysis) This section provides a comprehensive review of the Group's business operations, financial performance, future outlook, and key financial metrics for the reporting period [Business Review](index=6&type=section&id=Business%20Review) The Group primarily engages in zipper manufacturing in China, serving OEM clients for Chinese and international apparel brands, with the COVID-19 pandemic leading to reduced customer orders and a shift from profit to loss for the period - The Group's principal business is the manufacturing of zippers, with customers being OEMs for Chinese and international apparel brands[9](index=9&type=chunk) - The Group is actively seeking new investment and business opportunities for diversification, having entered into a memorandum of understanding on June 5, 2020, for the potential acquisition of Mosaic Capital Limited, a licensed corporation[10](index=10&type=chunk) - For the six months ended June 30, 2020, the Group recorded a loss attributable to owners of the Company of approximately **HK$8,930 thousand**, primarily due to reduced sales orders in the zipper business and a sharp decline in revenue and gross profit caused by the COVID-19 pandemic[11](index=11&type=chunk) [Outlook](index=6&type=section&id=Outlook) Facing challenges from the COVID-19 pandemic and the US-China trade war, the apparel industry's domestic and export markets remain weak, prompting the Company to adapt to market changes, enhance production, optimize processes, strengthen financial and talent management, and accelerate digital transformation to capitalize on industry consolidation opportunities - The COVID-19 pandemic and the US-China trade war have hindered terminal consumption and exports in the apparel industry, leading to a weak domestic and foreign trade market[12](index=12&type=chunk) - The Company will implement measures including exploring e-commerce markets, enhancing product quality, shortening delivery times, integrating production capacity, optimizing processes, strengthening cost and capital management, and accelerating digital transformation and talent management[14](index=14&type=chunk) - The pandemic is expected to accelerate industry consolidation in the zipper sector, creating potential market expansion opportunities for the Company, which will review its business strategies and explore other investment opportunities[14](index=14&type=chunk) [Financial Review](index=7&type=section&id=Financial%20Review) For the six months ended June 30, 2020, the Group's revenue decreased by **32.5%** year-on-year to approximately **HK$79,260 thousand**, shifting from a profit in the prior period to a loss of approximately **HK$8,930 thousand**, primarily due to reduced customer orders in the zipper business caused by the COVID-19 pandemic - For the six months ended June 30, 2020, the Group's revenue was approximately **HK$79,260 thousand**, representing a year-on-year decrease of **32.5%**[15](index=15&type=chunk)[17](index=17&type=chunk) - The Group recorded a loss attributable to owners of the Company of approximately **HK$8,930 thousand**, compared to a profit of approximately **HK$4,910 thousand** in the corresponding period of 2019[15](index=15&type=chunk) Revenue Analysis by Product Category | Product Category | 2020 (HK$'000) | % | 2019 (HK$'000) | % | | :--- | :--- | :--- | :--- | :--- | | Sales of goods | | | | | | Zippers and sliders | 78,128 | 98.6 | 115,749 | 98.5 | | Others | 1,127 | 1.4 | 1,720 | 1.5 | | **Total** | **79,255** | **100.0** | **117,469** | **100.0** | Revenue Analysis by Geographical Location | Geographical Location | 2020 (HK$'000) | % | 2019 (HK$'000) | % | | :--- | :--- | :--- | :--- | :--- | | Mainland China | 69,850 | 88.1 | 103,344 | 88.0 | | Overseas | 9,405 | 11.9 | 14,125 | 12.0 | | **Total** | **79,255** | **100.0** | **117,469** | **100.0** | Gross Profit Analysis by Product Category | Product Category | 2020 (HK$'000) | % | 2019 (HK$'000) | % | | :--- | :--- | :--- | :--- | :--- | | Zippers and sliders | 18,833 | 101.1 | 38,120 | 97.9 | | Others | (198) | (1.1) | 837 | 2.1 | | **Total** | **18,635** | **100.0** | **38,957** | **100.0** | - Distribution costs decreased by **26.5%** year-on-year to approximately **HK$5,420 thousand**, primarily due to lower staff and transportation costs resulting from reduced sales[22](index=22&type=chunk) - Administrative expenses slightly decreased by **1.5%** year-on-year to approximately **HK$25,920 thousand**, mainly because costs associated with the establishment of the Jingmen branch in 2019 were not incurred in 2020[22](index=22&type=chunk) - The Group recorded a loss attributable to owners of the Company of approximately **HK$8,930 thousand** for the period, with a loss margin of approximately **11.3%**, primarily due to reduced revenue and gross profit from the zipper business[24](index=24&type=chunk) - The Company redeemed its remaining fund shares on March 25, 2020, receiving net proceeds of approximately **HK$24,890 thousand**, and recorded a fair value gain on financial assets at fair value through profit or loss of approximately **HK$1,530 thousand** for the six months ended June 30, 2020[25](index=25&type=chunk) - As of June 30, 2020, lease liabilities and right-of-use assets were approximately **HK$57,600 thousand** and **HK$55,930 thousand**, respectively, reflecting the impact of adopting HKFRS 16[28](index=28&type=chunk) [Related Party Transactions and Continuing Connected Transactions](index=11&type=section&id=Related%20Party%20Transactions%20and%20Continuing%20Connected%20Transactions) The Group entered into multiple land and building lease agreements with related parties, including one-off and continuing connected transactions, involving properties in Hong Kong, a production base in Zhejiang Province, and properties in China, with total rental expenses increasing during the reporting period - The Group renewed the lease for a Hong Kong property with Success Point Limited (owned by Mr. Hui Sik Pang and Mr. Hui Sik Nam) for a monthly rent of **HK$60 thousand** for two years[30](index=30&type=chunk) - The Group renewed the lease for a production base in Zhejiang Province with Foshan Nanhai Jinheming Investment Co., Ltd. (owned by Mr. Hui Sik Pang and Mr. Hui Sik Nam) for a monthly rent of **RMB417.3 thousand** for two years[31](index=31&type=chunk) - The aforementioned lease renewals were identified as one-off connected transactions, involving an additional total right-of-use asset of approximately **HK$25,040 thousand**[34](index=34&type=chunk) - Continuing connected transactions include the renewal of a Hong Kong property lease with Success Point Limited (monthly rent of **HK$51 thousand**), the renewal of a Zhejiang production base lease with Nanhai Jinheming (monthly rent of **RMB275 thousand**), and the lease of a China property with Kaiyi (Jingmen) Garment Accessories Co., Ltd. (monthly rent of **RMB400 thousand**)[35](index=35&type=chunk)[39](index=39&type=chunk) - For the six months ended June 30, 2020, the total rental expense under various lease agreements was approximately **HK$5,199 thousand**, with an additional rental expense of approximately **HK$2,868 thousand** from new lease renewals[42](index=42&type=chunk) [Liquidity and Capital Resources](index=15&type=section&id=Liquidity%20and%20Capital%20Resources) The Group's net cash outflow from operating activities decreased, while investment activities shifted from outflow to inflow, primarily due to fund redemptions; net cash outflow from financing activities significantly increased, mainly for special dividend payments and lease liability settlements, resulting in a decrease in total cash and cash equivalents and a rise in the gearing ratio, which remains robust - For the six months ended June 30, 2020, net cash outflow from operating activities was approximately **HK$8,600 thousand**, a decrease year-on-year, mainly due to tax refunds and enhanced trade receivables collection[44](index=44&type=chunk) - Net cash inflow from investing activities was approximately **HK$19,770 thousand**, primarily attributable to the redemption of investment funds[44](index=44&type=chunk) - Net cash outflow from financing activities was approximately **HK$45,780 thousand**, mainly used for the payment of special dividends (approximately **HK$34,860 thousand**) and lease liabilities[44](index=44&type=chunk)[45](index=45&type=chunk) - As of June 30, 2020, cash and cash equivalents amounted to approximately **HK$54,260 thousand**, a decrease of approximately **HK$36,910 thousand** from December 31, 2019[45](index=45&type=chunk) - As of June 30, 2020, the gearing ratio (total liabilities divided by total assets) was **34.0%**, an increase from **29.3%** as of December 31, 2019, but still considered robust[45](index=45&type=chunk) [Net Current Assets](index=16&type=section&id=Net%20Current%20Assets) The Group's net current assets decreased from approximately **HK$135,000 thousand** at the end of 2019 to approximately **HK$88,980 thousand** as of June 30, 2020, primarily due to the payment of a special dividend during the period - As of June 30, 2020, current assets were approximately **HK$146,000 thousand**, primarily comprising inventories, trade and other receivables, and cash and cash equivalents[47](index=47&type=chunk) - Current liabilities mainly include trade and other payables and lease liabilities[47](index=47&type=chunk) - Net current assets decreased by approximately **HK$46,350 thousand** to **HK$88,980 thousand**, mainly due to the payment of a special dividend[47](index=47&type=chunk) [Pledged Assets and Contingent Liabilities](index=16&type=section&id=Pledged%20Assets%20and%20Contingent%20Liabilities) As of June 30, 2020, the Group had no pledged assets or significant contingent liabilities - As of June 30, 2020, the Group had no pledged assets[48](index=48&type=chunk) - As of June 30, 2020, the Group had no significant contingent liabilities[49](index=49&type=chunk) [Foreign Currency Risk](index=16&type=section&id=Foreign%20Currency%20Risk) The Group's foreign currency risk is limited as most transactions are denominated in their functional currencies, and no hedging against exchange rate fluctuations was undertaken during the reporting period - The foreign currency risk of individual companies within the Group is limited, as most transactions are denominated in their functional currencies[50](index=50&type=chunk) - For the six months ended June 30, 2020, the Group did not hedge against risks arising from exchange rate fluctuations[50](index=50&type=chunk) [Employees and Remuneration](index=16&type=section&id=Employees%20and%20Remuneration) As of June 30, 2020, the Group's employee count decreased by **8.3%** year-on-year to **758**, with a corresponding reduction in staff costs, and two executive directors resumed receiving salaries after waiving remuneration for a specific period - As of June 30, 2020, the Group had **758** employees, a decrease of approximately **8.3%** compared to the same period in 2019[51](index=51&type=chunk) - For the six months ended June 30, 2020, staff costs were approximately **HK$42,650 thousand**, a year-on-year decrease, mainly due to reduced headcount resulting from lower production volume[51](index=51&type=chunk) - Mr. Zhuang Weidong and Mr. Qiu Chuanzhi waived their executive director's remuneration from April 1 to May 31, 2020, and resumed receiving a monthly salary of **HK$10 thousand** from June 1, 2020[53](index=53&type=chunk) [Dividends](index=17&type=section&id=Dividends) The Company paid a special dividend of **HK$0.075** per share, totaling **HK$34,860 thousand**, on March 3, 2020, and the Board recommended no interim dividend for the six months ended June 30, 2020 - On February 11, 2020, shareholders approved the payment of a special dividend of **HK$0.075** per share from the share premium account, totaling **HK$34,860.3 thousand**, which was fully paid on March 3, 2020[54](index=54&type=chunk) - The Board recommended not to pay any interim dividend for the six months ended June 30, 2020[54](index=54&type=chunk) [Events After Reporting Period](index=17&type=section&id=Events%20After%20Reporting%20Period) Subsequent to the reporting period, the Group completed the acquisition of all equity and shareholder loans of a Chinese consulting service company on August 11, 2020, for a consideration of **RMB2.177 million** - On August 11, 2020, subsequent to the reporting period, the Group completed the acquisition of all equity and shareholder loans of a company incorporated in China (the "PRC Company") for a consideration of **RMB2,177 thousand** (equivalent to approximately **HK$2,400 thousand**)[161](index=161&type=chunk) [Disclosure of Interests](index=18&type=section&id=Disclosure%20of%20Interests) This section details the interests of directors, chief executives, substantial shareholders, and other relevant parties in the Company's shares, as well as information on directors' competing businesses and the share option scheme [Directors' and Chief Executive's Interests in Shares](index=18&type=section&id=Directors'%20and%20Chief%20Executive's%20Interests%20in%20Shares) As of June 30, 2020, several directors and chief executives held long positions in the Company's shares through controlled corporations, with Mr. Qiu Chuanzhi and Mr. Zhuang Weidong holding approximately **28.77%** and **28.16%** interests, respectively Directors' and Chief Executive's Long Positions in the Company's Shares | Director Name | Type of Interest | Number of Shares | Approximate Percentage of Interest | | :--- | :--- | :--- | :--- | | Qiu Chuanzhi | Interest in controlled corporation | 133,706,331 | 28.77% | | Zhuang Weidong | Interest in controlled corporation | 130,897,663 | 28.16% | | Lin Ping | Interest in controlled corporation | 82,342,606 | 17.72% | | Mai Rongbin | Interest in controlled corporation | 82,342,606 | 17.72% | - Mr. Qiu Chuanzhi wholly owns China Sun Corporation, Mr. Zhuang Weidong holds a **90%** interest in Central Eagle Limited, and Ms. Lin Ping and Mr. Mai Rongbin hold **60%** and **25%** interests in Golden Diamond Inc., respectively[59](index=59&type=chunk) [Substantial Shareholders' and Other Persons' Interests in Shares](index=20&type=section&id=Substantial%20Shareholders'%20and%20Other%20Persons'%20Interests%20in%20Shares) As of June 30, 2020, apart from the directors, China Huarong Overseas Investment Holding Co., Ltd. and its associated companies, through Noble Wisdom Ever Limited, held approximately **70.16%** of the Company's shares, making them the largest substantial shareholders Substantial Shareholders' and Other Persons' Long Positions in the Company's Shares | Shareholder Name | Capacity | Number of Shares | Approximate Percentage of Interest | | :--- | :--- | :--- | :--- | | China Sun | Beneficial owner | 133,706,331 | 28.77% | | Central Eagle | Beneficial owner | 130,897,663 | 28.16% | | Golden Diamond | Beneficial owner | 82,342,606 | 17.72% | | Noble Wisdom Ever Limited | Security interest | 326,089,600 | 70.16% | | China Huarong Overseas Investment Holding Co., Ltd. | Interest in controlled corporation | 326,089,600 | 70.16% | | Huarong Overseas Asset Management Co., Ltd. | Interest in controlled corporation | 326,089,600 | 70.16% | | Huarong Zhiyuan Investment Management Co., Ltd. | Interest in controlled corporation | 326,089,600 | 70.16% | | China Huarong Asset Management Co., Ltd. | Interest in controlled corporation | 326,089,600 | 70.16% | - Noble Wisdom Ever Limited is wholly owned by China Huarong Overseas, which is wholly owned by Huarong Overseas, which holds a **91%** interest in Huarong Zhiyuan, which is wholly owned by China Huarong Asset Management[68](index=68&type=chunk) [Directors' Interests in Competing Businesses](index=22&type=section&id=Directors'%20Interests%20in%20Competing%20Businesses) For the six months ended June 30, 2020, and up to the date of this report, no director held any interest in any business that competes with the Group's business - For the six months ended June 30, 2020, and up to the date of this interim report, no director held any direct or indirect interest in any business that competes with the Group's business[71](index=71&type=chunk) [Share Option Scheme](index=22&type=section&id=Share%20Option%20Scheme) The Company has a share option scheme to reward employees for their contributions to the Group, with a maximum of **40 million shares** issuable under the scheme as of June 30, 2020, but no options were granted, exercised, lapsed, or cancelled during the reporting period - The share option scheme aims to grant share options to selected employees as a reward for their contributions to the Group[72](index=72&type=chunk) - As of June 30, 2020, the maximum number of shares that may be issued upon exercise of share options under the scheme was **40 million shares**, representing approximately **8.6%** of the issued shares[72](index=72&type=chunk) - For the six months ended June 30, 2020, no outstanding share options existed under the Company's share option scheme, nor were any options granted, exercised, lapsed, or cancelled[74](index=74&type=chunk) [Corporate Governance and Other Information](index=24&type=section&id=Corporate%20Governance%20and%20Other%20Information) This section outlines the Company's commitment to maintaining stringent corporate governance practices, compliance with the Model Code, and details regarding transactions involving its listed securities and the Audit Committee's review [Corporate Governance Practices](index=24&type=section&id=Corporate%20Governance%20Practices) The Company is committed to maintaining stringent corporate governance guidelines and procedures and has complied with all provisions of the Corporate Governance Code - The Company has complied with all provisions contained in the Corporate Governance Code and is committed to maintaining stringent corporate governance guidelines and procedures[76](index=76&type=chunk) [Compliance with Model Code by Directors and Relevant Employees](index=24&type=section&id=Compliance%20with%20Model%20Code%20by%20Directors%20and%20Relevant%20Employees) The Company has adopted the Model Code as the code of conduct for directors' securities transactions, with all directors confirming compliance during the reporting period, and has also established a code of conduct for relevant employees no less exacting than the Model Code - The Company has adopted the Model Code as the code of conduct for directors' securities transactions, and all directors confirmed compliance throughout the reporting period[77](index=77&type=chunk) - The Company has also adopted a code of conduct for relevant employees who may possess inside information, requiring them to comply when dealing in the Company's securities[77](index=77&type=chunk) [Purchase, Sale or Redemption of the Company's Listed Securities](index=24&type=section&id=Purchase%2C%20Sale%20or%20Redemption%20of%20the%20Company's%20Listed%20Securities) For the six months ended June 30, 2020, neither the Company nor any of its subsidiaries purchased, sold, or redeemed any of the Company's listed securities - For the six months ended June 30, 2020, neither the Company nor any of its subsidiaries purchased, sold, or redeemed any of the Company's listed securities[78](index=78&type=chunk) [Audit Committee](index=24&type=section&id=Audit%20Committee) The Group's unaudited interim report for the six months ended June 30, 2020, has been reviewed by the Board's Audit Committee - The Group's unaudited interim report for the six months ended June 30, 2020, has been reviewed by the Board's Audit Committee[79](index=79&type=chunk) [Condensed Consolidated Statement of Profit or Loss](index=25&type=section&id=Condensed%20Consolidated%20Statement%20of%20Profit%20or%20Loss) For the six months ended June 30, 2020, the Group shifted from a profit in the prior period to a loss, primarily due to a significant decline in revenue and a sharp reduction in gross profit, recording a loss before tax of **HK$8,587 thousand** compared to a profit of **HK$8,812 thousand** in the prior year Condensed Consolidated Statement of Profit or Loss (For the Six Months Ended June 30) | Indicator | 2020 (HK$'000) | 2019 (HK$'000) | | :--- | :--- | :--- | | Revenue | 79,255 | 117,469 | | Cost of sales | (60,620) | (78,512) | | Gross Profit | 18,635 | 38,957 | | Other income and gains / (losses) – net | 6,079 | 5,543 | | Distribution costs | (5,416) | (7,368) | | Administrative expenses | (25,924) | (26,311) | | Interest on lease liabilities | (1,961) | (2,009) | | (Loss) / Profit before tax | (8,587) | 8,812 | | Income tax credit / (expense) | 24 | (2,466) | | (Loss) / Profit for the period | (8,563) | 6,346 | | (Loss) / Profit for the period attributable to owners of the Company | (8,928) | 4,913 | | (Loss) / Profit for the period attributable to non-controlling interests | 365 | 1,433 | | Basic and diluted (loss) / earnings per share (HK cents) | (1.9) | 1.1 | [Condensed Consolidated Statement of Profit or Loss and Other Comprehensive Income](index=26&type=section&id=Condensed%20Consolidated%20Statement%20of%20Profit%20or%20Loss%20and%20Other%20Comprehensive%20Income) For the six months ended June 30, 2020, the Group shifted from a profit to a loss for the period, and other comprehensive income was negative due to exchange differences, resulting in a total comprehensive income of negative **HK$13,227 thousand** compared to positive **HK$8,452 thousand** in the prior year Condensed Consolidated Statement of Profit or Loss and Other Comprehensive Income (For the Six Months Ended June 30) | Indicator | 2020 (HK$'000) | 2019 (HK$'000) | | :--- | :--- | :--- | | (Loss) / Profit for the period | (8,563) | 6,346 | | Other comprehensive income for the period | | | | – Exchange differences on translation of financial statements of Mainland China subsidiaries | (4,664) | 2,106 | | **Total comprehensive income for the period** | **(13,227)** | **8,452** | | Attributable to owners of the Company | (12,807) | 6,655 | | Attributable to non-controlling interests | (420) | 1,797 | | **Total comprehensive income for the period** | **(13,227)** | **8,452** | [Condensed Consolidated Statement of Financial Position](index=27&type=section&id=Condensed%20Consolidated%20Statement%20of%20Financial%20Position) As of June 30, 2020, the Group's total assets decreased compared to the end of 2019, and net current assets also significantly reduced, while non-current assets remained relatively stable and current liabilities slightly declined Condensed Consolidated Statement of Financial Position (As of June 30) | Indicator | 2020 June 30 (HK$'000) | 2019 December 31 (HK$'000) | | :--- | :--- | :--- | | **Non-current assets** | | | | Property, plant and equipment | 76,447 | 79,243 | | Right-of-use assets | 55,933 | 52,042 | | Intangible assets | 275 | 885 | | Prepayments for property, plant and equipment | 2,145 | 3,004 | | Lease deposits | 5,334 | 3,986 | | Deferred tax assets | 3,125 | 3,185 | | **Total non-current assets** | **143,259** | **142,345** | | **Current assets** | | | | Inventories | 32,515 | 34,425 | | Financial assets at fair value through profit or loss | – | 23,583 | | Trade and other receivables | 58,975 | 44,698 | | Current tax recoverable | 421 | 2,123 | | Cash and cash equivalents | 54,264 | 91,174 | | **Total current assets** | **146,175** | **196,003** | | **Current liabilities** | | | | Trade and other payables | 39,498 | 44,344 | | Lease liabilities | 17,699 | 16,327 | | **Total current liabilities** | **57,197** | **60,671** | | **Net current assets** | **88,978** | **135,332** | | **Total assets less current liabilities** | **232,237** | **277,677** | | **Non-current liabilities** | | | | Lease liabilities | 39,904 | 37,257 | | Deferred tax liabilities | 1,124 | 1,124 | | **Total non-current liabilities** | **41,028** | **38,381** | | **Net assets** | **191,209** | **239,296** | | **Total equity** | **191,209** | **239,296** | [Condensed Consolidated Statement of Changes in Equity](index=29&type=section&id=Condensed%20Consolidated%20Statement%20of%20Changes%20in%20Equity) For the six months ended June 30, 2020, total equity attributable to owners of the Company significantly decreased from **HK$216,600 thousand** as of January 1, 2020, to **HK$169,000 thousand** at period-end, primarily due to the loss for the period, a reduction in exchange reserves, and the payment of a special dividend Condensed Consolidated Statement of Changes in Equity (For the Six Months Ended June 30) | Indicator | Share Capital (HK$'000) | Share Premium (HK$'000) | Capital Reserve (HK$'000) | Statutory Reserve (HK$'000) | Exchange Reserve (HK$'000) | Retained Earnings (HK$'000) | Total Attributable to Owners of the Company (HK$'000) | Non-controlling Interests (HK$'000) | Total Equity (HK$'000) | | :--- | :--- | :--- | :--- | :--- | :--- | :--- | :--- | :--- | :--- | | **Balance at January 1, 2020** | **4,648** | **180,690** | **18,324** | **25,856** | **(1,254)** | **(11,607)** | **216,657** | **22,639** | **239,296** | | Loss for the period | – | – | – | – | – | (8,928) | (8,928) | 365 | (8,563) | | Other comprehensive income | – | – | – | – | (3,879) | – | (3,879) | (785) | (4,664) | | **Total comprehensive income** | **–** | **–** | **–** | **–** | **(3,879)** | **(8,928)** | **(12,807)** | **(420)** | **(13,227)** | | Special dividend | – | (34,860) | – | – | – | – | (34,860) | – | (34,860) | | Transfer to statutory reserve | – | – | – | 171 | – | (171) | – | – | – | | **Balance at June 30, 2020** | **4,648** | **145,830** | **18,324** | **26,027** | **(5,133)** | **(20,706)** | **168,990** | **22,219** | **191,209** | [Condensed Consolidated Statement of Cash Flows](index=31&type=section&id=Condensed%20Consolidated%20Statement%20of%20Cash%20Flows) For the six months ended June 30, 2020, the Group's net cash outflow from operating activities decreased, net cash inflow from investing activities significantly increased, while net cash outflow from financing activities substantially rose, primarily due to the payment of a special dividend, resulting in a decrease in cash and cash equivalents to **HK$54,264 thousand** at period-end Condensed Consolidated Statement of Cash Flows (For the Six Months Ended June 30) | Indicator | 2020 (HK$'000) | 2019 (HK$'000) | | :--- | :--- | :--- | | Net cash used in operating activities | (8,598) | (13,282) | | Net cash from / (used in) investing activities | 19,771 | (12,136) | | Net cash used in financing activities | (45,783) | (9,161) | | Net decrease in cash and cash equivalents | (34,610) | (34,579) | | Cash and cash equivalents at January 1 | 91,174 | 78,587 | | Effect of foreign exchange rate changes | (2,300) | 279 | | **Cash and cash equivalents at June 30** | **54,264** | **44,287** | [Notes to the Unaudited Interim Financial Report](index=32&type=section&id=Notes%20to%20the%20Unaudited%20Interim%20Financial%20Report) This section provides detailed notes to the unaudited interim financial report, covering general information, basis of preparation, significant events, accounting policies, use of judgments and estimates, segment reporting, revenue, profit/loss before tax, income tax, earnings per share, property, plant and equipment, financial assets, receivables, cash, payables, capital, reserves, dividends, commitments, related party transactions, and events after the reporting period [1 General Information](index=32&type=section&id=1%20General%20Information) China Everbright Group Limited is an exempted company incorporated in the Cayman Islands, with its shares listed on The Stock Exchange of Hong Kong Limited - The Company is an exempted company incorporated in the Cayman Islands under the Companies Law of the Cayman Islands, and its shares are listed on The Stock Exchange of Hong Kong Limited[95](index=95&type=chunk) [2 Basis of Preparation](index=32&type=section&id=2%20Basis%20of%20Preparation) The interim financial report is prepared in accordance with the Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited and Hong Kong Accounting Standard 34, utilizing management judgments, estimates, and assumptions, where actual results may differ - The interim financial report is prepared in accordance with the Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited and Hong Kong Accounting Standard 34 issued by the Hong Kong Institute of Certified Public Accountants[96](index=96&type=chunk) - The condensed consolidated interim financial statements require the use of management judgments, estimates, and assumptions, and actual results may differ from these estimates[96](index=96&type=chunk) [3 Significant Events](index=33&type=section&id=3%20Significant%20Events) The COVID-19 pandemic severely impacted the Group's operations, leading to demand setbacks, supply chain disruptions, and increased future uncertainty; despite reduced sales and cash flows, impairment assessments showed no impairment of non-financial assets, and the Group received government subsidies for employee wages and social security contribution reductions - The COVID-19 pandemic severely impacted the Group's operations, including demand setbacks, disruptions in inventory supply from key suppliers, and increased future uncertainty[98](index=98&type=chunk) - Despite reduced sales and cash flows, impairment assessments by independent valuers indicated no impairment of non-financial assets in cash-generating units[99](index=99&type=chunk)[100](index=100&type=chunk) - The Group received government subsidies of approximately **HK$598 thousand** for Hong Kong employee wages and reduced social security contributions by approximately **HK$2,304 thousand** due to China's social security relief policies[102](index=102&type=chunk) [4 Principal Accounting Policies](index=35&type=section&id=4%20Principal%20Accounting%20Policies) The condensed consolidated interim financial statements are prepared using the same accounting policies adopted in the 2019 annual financial statements, incorporating several new or revised Hong Kong Financial Reporting Standards effective in 2020, which had no significant impact on the Group's financial statements - The condensed consolidated interim financial statements are prepared in accordance with the same accounting policies adopted in the 2019 annual financial statements[104](index=104&type=chunk) - The Group adopted several new or revised Hong Kong Financial Reporting Standards, which had no significant impact on the condensed consolidated interim financial statements[105](index=105&type=chunk) [5 Use of Judgements and Estimates](index=36&type=section&id=5%20Use%20of%20Judgements%20and%20Estimates) Management made significant judgments and estimates in preparing the financial statements, particularly impacted by COVID-19, concerning government subsidy compliance, non-financial asset impairment, inventory net realizable value, customer return probabilities, expected credit losses, and going concern assessment; despite performance decline, directors believe no material uncertainty exists regarding the Group's going concern for the next 18 months - The impact of COVID-19 necessitated significant judgments and estimates regarding government subsidy compliance, recoverable amounts of non-financial assets, net realizable value of inventories, probability of customer returns, and expected credit losses[107](index=107&type=chunk)[108](index=108&type=chunk) - Despite the Group's performance decline during the period, the directors believe there are no material uncertainties that would cast significant doubt upon the Group's ability to continue as a going concern for the next 18 months[109](index=109&type=chunk) [6 Segment Reporting](index=37&type=section&id=6%20Segment%20Reporting) The Group is organized into two reportable segments by business line and geography: Zippers (Mainland China) and Zippers (Overseas); the Mainland China segment primarily manufactures and sells zipper products to domestic customers, while the Overseas segment procures from the Mainland China segment and sells to international customers, with the Mainland China segment shifting from profit to loss and the Overseas segment experiencing reduced profit for the six months ended June 30, 2020 - The Group is divided into two reportable segments: Zippers (Mainland China) and Zippers (Overseas)[110](index=110&type=chunk) - The Zippers (Mainland China) segment primarily manufactures and sells zipper products to customers in the Mainland China market, while the Zippers (Overseas) segment procures from the Mainland China segment and sells to customers in overseas markets[111](index=111&type=chunk) Segment Results (For the Six Months Ended June 30, 2020) | Indicator | Mainland China (HK$'000) | Overseas (HK$'000) | Total (HK$'000) | | :--- | :--- | :--- | :--- | | Revenue from external customers | 69,850 | 9,405 | 79,255 | | Reportable segment profit / (loss) | (563) | 655 | 92 | | Depreciation and amortisation for the period | 13,010 | 510 | 13,520 | | Reportable segment assets | 244,507 | 7,882 | 252,389 | | Reportable segment liabilities | 88,395 | 2,042 | 90,437 | Segment Results (For the Six Months Ended June 30, 2019) | Indicator | Mainland China (HK$'000) | Overseas (HK$'000) | Total (HK$'000) | | :--- | :--- | :--- | :--- | | Revenue from external customers | 103,344 | 14,125 | 117,469 | | Reportable segment profit | 10,182 | 1,002 | 11,184 | | Depreciation and amortisation for the period | 10,980 | 476 | 11,456 | | Reportable segment assets | 263,912 | 16,667 | 280,579 | | Reportable segment liabilities | 95,970 | 2,678 | 98,648 | Reconciliation of Reportable Segment Profit or Loss | Indicator | 2020 (HK$'000) | 2019 (HK$'000) | | :--- | :--- | :--- | | Reportable segment profit | 92 | 11,184 | | Elimination of unrealised gains and losses on inter-segment purchases of inventories, other assets and property, plant and equipment | 43 | 820 | | Reportable segment profit from external customers | 135 | 12,004 | | Other income and gains / (losses) – net | 6,079 | 5,543 | | Interest on lease liabilities | (1,961) | (2,009) | | Unallocated head office and corporate expenses | (12,840) | (6,726) | | (Loss) / Profit before tax | (8,587) | 8,812 | [7 Revenue](index=41&type=section&id=7%20Revenue) The Group's primary business involves the manufacturing and sale of zippers, sliders, and related products; for the six months ended June 30, 2020, revenue from sales of goods amounted to **HK$79,255 thousand**, with zippers and sliders constituting the vast majority - The Group's principal business is the manufacturing and sale of zippers, sliders, and other related products[125](index=125&type=chunk) Revenue by Major Category (For the Six Months Ended June 30) | Revenue Category | 2020 (HK$'000) | 2019 (HK$'000) | | :--- | :--- | :--- | | Sales of goods | | | | Zippers and sliders | 78,128 | 115,749 | | Others | 1,127 | 1,720 | | **Total** | **79,255** | **117,469** | - No individual customer's transactions exceeded **10%** of the Group's revenue[127](index=127&type=chunk) [8 (Loss) / Profit Before Tax](index=41&type=section&id=8%20(Loss)%20%2F%20Profit%20Before%20Tax) This section details the various expenses and income affecting the loss/profit before tax, including a year-on-year decrease in staff costs, an increase in other income and net gains, and changes in depreciation, amortization, and inventory costs Staff Costs (For the Six Months Ended June 30) | Indicator | 2020 (HK$'000) | 2019 (HK$'000) | | :--- | :--- | :--- | | Salaries, wages and other benefits | 40,641 | 43,624 | | Contributions to defined contribution retirement plans | 2,005 | 3,238 | | **Total** | **42,646** | **46,862** | Other Income and Gains / (Losses) – Net (For the Six Months Ended June 30) | Indicator | 2020 (HK$'000) | 2019 (HK$'000) | | :--- | :--- | :--- | | Fair value gain on financial assets at fair value through profit or loss | 1,526 | 5,519 | | Interest income | 137 | 542 | | Loss on disposal of property, plant and equipment | (25) | (19) | | Government grants | 2,300 | 563 | | Others | 2,141 | (1,062) | | **Total** | **6,079** | **5,543** | Other Items (For the Six Months Ended June 30) | Indicator | 2020 (HK$'000) | 2019 (HK$'000) | | :--- | :--- | :--- | | Depreciation and amortisation | | | | – Plant and equipment | 6,323 | 4,607 | | – Intangible assets | 601 | 391 | | – Right-of-use assets | 9,454 | 8,933 | | **Total depreciation and amortisation** | **16,378** | **13,931** | | Inventories written down (net of reversal) | 461 | (90) | | Cost of inventories | 60,620 | 78,512 | [9 Income Tax in Condensed Consolidated Statement of Profit or Loss](index=43&type=section&id=9%20Income%20Tax%20in%20Condensed%20Consolidated%20Statement%20of%20Profit%20or%20Loss) For the six months ended June 30, 2020, the Group recorded an income tax credit of **HK$24 thousand**, compared to an income tax expense of **HK$2,466 thousand** in the prior period; Mainland China subsidiaries are subject to varying income tax rates, and dividends paid to non-PRC resident enterprise investors are subject to withholding income tax Income Tax in Condensed Consolidated Statement of Profit or Loss (For the Six Months Ended June 30) | Indicator | 2020 (HK$'000) | 2019 (HK$'000) | | :--- | :--- | :--- | | Current tax – PRC Enterprise Income Tax | (30) | 2,328 | | Deferred tax | 6 | 138 | | **Total** | **(24)** | **2,466** | - No income tax is payable in the Cayman Islands and British Virgin Islands, while Kaiyi Zipper Company Limited is subject to a **16.5%** Hong Kong Profits Tax[133](index=133&type=chunk) - Kaiyi (Guangdong) Garment Accessories Co., Ltd., as a high-tech enterprise, enjoys a preferential income tax rate of **15%** until 2021, while other Mainland China subsidiaries are subject to a statutory income tax rate of **25%**[134](index=134&type=chunk) - Dividends paid by PRC resident enterprises to non-PRC resident enterprise investors are subject to a **10%** withholding income tax, with eligible Hong Kong tax residents potentially qualifying for a reduced tax rate of **5%**[134](index=134&type=chunk) [10 (Loss) / Earnings Per Share](index=44&type=section&id=10%20(Loss)%20%2F%20Earnings%20Per%20Share) For the six months ended June 30, 2020, the Company's basic loss per share was **1.9 HK cents**, compared to earnings per share of **1.1 HK cents** in the prior period; diluted loss/earnings per share were the same as basic loss/earnings per share due to the absence of potential dilutive shares - Basic loss per share was calculated based on the loss attributable to owners of the Company of **HK$8,928 thousand** and the weighted average number of **464.8 million** ordinary shares outstanding for the six months ended June 30, 2020, resulting in **1.9 HK cents**[136](index=136&type=chunk) - As there were no potential dilutive shares outstanding for the six months ended June 30, 2019 and 2020, diluted (loss) / earnings per share were equal to basic (loss) / earnings per share[137](index=137&type=chunk) [11 Property, Plant and Equipment](index=44&type=section&id=11%20Property%2C%20Plant%20and%20Equipment) For the six months ended June 30, 2020, the Group's cost of additions to property, plant, and equipment (including payments for construction in progress) was **HK$5,027 thousand**, a decrease compared to the prior period - For the six months ended June 30, 2020, the Group acquired property, plant, and equipment (including payments for construction in progress) at a cost of **HK$5,027 thousand**, a decrease from **HK$10,002 thousand** in the corresponding period of 2019[138](index=138&type=chunk) [12 Financial Assets at Fair Value Through Profit or Loss](index=44&type=section&id=12%20Financial%20Assets%20at%20Fair%20Value%20Through%20Profit%20or%20Loss) The Group redeemed its remaining shares in an unlisted investment fund during the six months ended June 30, 2020, receiving proceeds of approximately **HK$25,109 thousand**, thus no longer holding such financial assets at period-end; the fair value of the fund was measured using net asset value and categorized into three levels according to accounting standards - For the six months ended June 30, 2020, the Group redeemed its remaining shares in an unlisted investment fund, receiving proceeds of approximately **HK$25,109 thousand**[139](index=139&type=chunk) Financial Assets at Fair Value Through Profit or Loss | Indicator | 2020 June 30 (HK$'000) | 2019 December 31 (HK$'000) | | :--- | :--- | :--- | | Unlisted investment funds at fair value | – | 23,583 | - The fair value of the fund is calculated based on the net asset value reported by the fund manager and categorized into Level 1, Level 2, and Level 3 according to accounting standards[142](index=142&type=chunk) [13 Trade and Other Receivables](index=47&type=section&id=13%20Trade%20and%20Other%20Receivables) As of June 30, 2020, the Group's total trade and other receivables amounted to **HK$58,975 thousand**, an increase from the end of 2019, with receivables within one month constituting the largest portion; all receivables are expected to be recovered within one year Ageing Analysis of Trade and Other Receivables | Ageing | 2020 June 30 (HK$'000) | 2019 December 31 (HK$'000) | | :--- | :--- | :--- | | Within 1 month | 38,173 | 11,379 | | Over 1 month but within 2 months | 6,900 | 14,645 | | Over 2 months but within 3 months | 4,285 | 6,969 | | Over 3 months | 3,697 | 8,697 | | **Trade receivables and bills receivable, net of loss allowance** | **53,055** | **41,690** | | Other prepayments | 3,963 | 1,490 | | Deposits and other receivables | 1,957 | 1,518 | | **Total** | **58,975** | **44,698** | - All trade and other receivables are expected to be recovered or recognized as expenses within one year[147](index=147&type=chunk) [14 Cash and Cash Equivalents](index=48&type=section&id=14%20Cash%20and%20Cash%20Equivalents) As of June 30, 2020, the Group's cash and cash equivalents amounted to **HK$54,264 thousand**, a decrease from **HK$91,174 thousand** at the end of 2019 Cash and Cash Equivalents | Indicator | 2020 June 30 (HK$'000) | 2019 December 31 (HK$'000) | | :--- | :--- | :--- | | Bank and cash in hand | 54,264 | 91,174 | | **Cash and cash equivalents in the condensed consolidated statement of cash flows** | **54,264** | **91,174** | [15 Trade and Other Payables](index=48&type=section&id=15%20Trade%20and%20Other%20Payables) As of June 30, 2020, the Group's total trade and other payables amounted to **HK$39,498 thousand**, a decrease from **HK$44,344 thousand** at the end of 2019, with salaries and staff welfare payable and payables for property, plant, and equipment being the main components Ageing Analysis of Trade and Other Payables | Ageing | 2020 June 30 (HK$'000) | 2019 December 31 (HK$'000) | | :--- | :--- | :--- | | Within 1 month | 9,221 | 8,991 | | Over 1 month but within 3 months | 427 | 555 | | Over 3 months but within 6 months | – | 17 | | Over 6 months | 626 | 414 | | **Trade payables** | **10,274** | **9,977** | | Salaries and staff welfare payable | 13,588 | 19,449 | | Accrued expenses | 2,552 | 4,302 | | Payables for purchase of property, plant and equipment | 8,368 | 10,019 | | Other tax payables | 1,848 | – | | Contract liabilities | 2,412 | 592 | | Other payables | 456 | 5 | | **Total** | **39,498** | **44,344** | [16 Capital, Reserves and Dividends](index=49&type=section&id=16%20Capital%2C%20Reserves%20and%20Dividends) The Company paid a special dividend of **HK$34,860 thousand** in March 2020, but no interim dividend was declared for the six months ended June 30, 2020, while authorized and issued share capital remained unchanged Dividends (For the Six Months Ended June 30) | Indicator | 2020 (HK$'000) | 2019 (HK$'000) | | :--- | :--- | :--- | | Special dividend: declared: HK$0.075 per ordinary share | 34,860 | – | | **Total** | **34,860** | **–** | - No interim dividend was declared for the six months ended June 30, 2020[152](index=152&type=chunk) Authorized and Issued Share Capital | Indicator | 2020 June 30 Number of Shares (thousands) | 2020 June 30 Share Capital (HK$'000) | 2019 December 31 Number of Shares (thousands) | 2019 December 31 Share Capital (HK$'000) | | :--- | :--- | :--- | :--- | :--- | | Authorized: Ordinary shares of HK$0.01 par value each | 2,000,000 | 20,000 | 2,000,000 | 20,000 | | Ordinary shares, issued and fully paid: At January 1, June 30 and December 31 | 464,804 | 4,648 | 464,804 | 4,648 | [17 Commitments](index=50&type=section&id=17%20Commitments) As of June 30, 2020, the Group's unfulfilled capital commitments not provided for in the consolidated financial statements amounted to **HK$2,470 thousand**, a decrease from the end of 2019 Unfulfilled Capital Commitments | Indicator | 2020 June 30 (HK$'000) | 2019 December 31 (HK$'000) | | :--- | :--- | :--- | | Contracted for | 2,470 | 4,464 | [18 Significant Related Party Transactions](index=50&type=section&id=18%20Significant%20Related%20Party%20Transactions) The Group engaged in multiple lease transactions with related parties (Mr. Hui Sik Pang and Mr. Hui Sik Nam and their controlled companies) involving plant, land, and buildings, with total rental expenses for these transactions increasing during the reporting period; this section also discloses key management personnel compensation - The Group renewed lease agreements with Mr. Hui Sik Pang and Mr. Hui Sik Nam for certain leases and buildings, with rent paid amounting to **HK$2,381 thousand** for the six months ended June 30, 2020[156](index=156&type=chunk) - The Group leased back assets from Success Point Limited and Foshan Nanhai Jinheming Investment Co., Ltd., with rents paid amounting to **HK$356 thousand** and **HK$2,684 thousand**, respectively, for the six months ended June 30, 2020[157](index=157&type=chunk) - The Company entered into lease agreements with Kaiyi (Jingmen) Garment Accessories Co., Ltd. for certain leased land and buildings, with rent paid amounting to **HK$2,646 thousand** for the six months ended June 30, 2020[159](index=159&type=chunk) Key Management Personnel Compensation (For the Six Months Ended June 30) | Indicator | 2020 (HK$'000) | 2019 (HK$'000) | | :--- | :--- | :--- | | Short-term employee benefits | 5,334 | 3,464 | | Contributions to retirement schemes | 95 | 138 | | **Total** | **5,429** | **3,602** | [19 Events After Reporting Period](index=51&type=section&id=19%20Events%20After%20Reporting%20Period) Subsequent to the reporting period, the Group completed the acquisition of all equity and shareholder loans of a Chinese consulting service company on August 11, 2020, for a consideration of **RMB2.177 million** - Subsequent to the end of the reporting period, on August 11, 2020, the Group completed the acquisition of all equity and shareholder loans of a company incorporated in China (the "PRC Company") for a consideration of **RMB2,177 thousand** (equivalent to approximately **HK$2,400 thousand**)[161](index=161&type=chunk) [Glossary](index=52&type=section&id=Glossary) This section provides definitions for key terms used throughout the interim report, including Board, Corporate Governance Code, Company, Directors, Group, HK$, Hong Kong, Listing Rules, Main Board, Model Code, OEM, PRC, RMB, SFO, Shares, Shareholders, and Stock Exchange - This section defines key terms used in the interim report, such as "Board," "Corporate Governance Code," "Company," "Group," "HK$," "Listing Rules," "OEM," and "PRC"[163](index=163&type=chunk)[166](index=166&type=chunk)[167](index=167&type=chunk)[168](index=168&type=chunk)[169](index=169&type=chunk)[170](index=170&type=chunk)