[Supplementary Announcement to the 2023 Annual Report](index=1&type=section&id=Supplementary%20Announcement%20to%20the%202023%20Annual%20Report) [Impairment Details](index=1&type=section&id=(1)%20Impairment) The company recognized impairment losses on property, plant, and equipment and right-of-use assets totaling HKD 54 million due to revised zipper business forecasts, assessed by an independent valuer using discounted cash flow [Reasons and Circumstances for Impairment](index=1&type=section&id=Reasons%20and%20circumstances%20for%20impairment%20loss) Impairment resulted from management's revised financial forecasts for the zipper business, incorporating more conservative assumptions for 2023, including a shift to negative growth and lower gross margins 2023 Impairment Loss Details | Asset Category | Impairment Loss Amount (HKD Million) | | :--- | :--- | | Property, Plant, and Equipment | 25.5 | | Right-of-Use Assets | 28.5 | Key Financial Forecast Assumptions Comparison (2023 vs 2022) | Assumption | 2023 Forecast | 2022 Forecast | | :--- | :--- | :--- | | First-Year Growth Rate | -8% | +8% | | Fifth-Year Growth Rate | 3% | 2% | | Gross Profit Margin | 31% | 32% to 34% | | Discount Rate | 10% | 11% | | Terminal Growth Rate | 2% | 2% | [Impairment Assessment Methodology and Assumptions](index=2&type=section&id=Impairment%20assessment) An independent valuer assessed the zipper business's value in use via a five-year DCF model, incorporating specific revenue growth, gross margin, terminal growth, and a 10.02% WACC discount rate - The valuer used the **discounted cash flow (DCF) method** to estimate the value in use of assets or cash-generating units, complying with **Hong Kong Accounting Standard 36**[4](index=4&type=chunk) Key Financial Forecast Input Data for Valuation | Parameter | Input Data | | :--- | :--- | | Revenue Growth Rate | -9% for 2024, then 3% to 5% | | Gross Profit Margin | 31% | | Profit Margin | -4% to 0% | | Terminal Growth Rate | 2% | Key Parameters for Weighted Average Cost of Capital (WACC) Calculation | Parameter | Input Data | | :--- | :--- | | Risk-Free Rate | 2.56% | | Market Risk Premium | 10.02% | | Re-levered Beta | 0.57 | | Cost of Equity | 11.17% | | Cost of Debt | 4.90% | | **Weighted Average Cost of Capital (WACC)** | **10.02%** | [Update on Use of Proceeds from Fund-raising Activities](index=5&type=section&id=(2)%20Fund-raising%20Activities) The company updated the use of HKD 68.6 million from a 2022 share placement, with HKD 30 million remaining unutilized by year-end 2023, expected to be fully deployed by June 2024 for general operations and investments Use of Placement Proceeds and Progress (As of December 31, 2023) | Intended Use | Allocated Amount (HKD Million) | Utilized (HKD Million) | Unutilized (HKD Million) | Expected Utilization Time | | :--- | :--- | :--- | :--- | :--- | | General Working Capital, Business Opportunities, and Investments | 68.6 | 38.6 | 30.0 | June 30, 2024 | - There has been **no change** to the intended use of proceeds from the placement[9](index=9&type=chunk) [New Share Option Scheme Update](index=5&type=section&id=(3)%20New%20Share%20Option%20Scheme) The company adopted a new share option scheme on May 30, 2023, granting 55,776,480 options to directors, reaching the 10% authorized limit, with no cancellations by year-end 2023 - The company granted a total of **55,776,480 share options** to executive directors and the investment director in 2023, representing **10%** of the issued shares on the adoption date[10](index=10&type=chunk) - As of **November 29, 2023**, the maximum number of share options grantable under the new scheme has been reached[10](index=10&type=chunk) - For the year ended **December 31, 2023**, the number of granted share options cancelled was **zero**[10](index=10&type=chunk)[11](index=11&type=chunk)

Financial Performance - Revenue for the six months ended June 30, 2024, was HKD 160,386,000, representing a 30.0% increase from HKD 123,386,000 in the same period of 2023[1]. - Gross profit for the same period was HKD 88,910,000, up 108.7% from HKD 42,594,000, resulting in a gross margin of 55.4% compared to 34.5%[1]. - Net profit attributable to equity shareholders for the period was HKD 10,846,000, a significant increase of 220.0% from HKD 3,394,000 in 2023[2]. - Basic earnings per share increased to HKD 1.9 from HKD 0.6, reflecting a growth of 216.7%[2]. - The company reported a pre-tax profit of HKD 24,082,000, compared to HKD 5,861,000 in the previous year[2]. - The company’s total comprehensive income for the period was HKD 10,533,000, compared to HKD 5,910,000 in 2023[3]. - The group reported a total segment profit of HKD 47,740 thousand for the period ending June 30, 2024, compared to HKD 8,776 thousand in the same period of 2023, showcasing improved profitability[14]. - The profit attributable to equity shareholders increased to approximately HKD 10,850,000 for the six months ending June 30, 2024, compared to approximately HKD 3,390,000 for the same period in 2023, resulting in a profit margin of about 6.76%[36]. Assets and Liabilities - Total assets as of June 30, 2024, were HKD 346,120,000, a 24.5% increase from HKD 278,103,000 at the end of 2023[1]. - Cash and cash equivalents attributable to equity shareholders rose to HKD 75,977,000, a 20.0% increase from HKD 63,332,000[1]. - Total equity attributable to equity shareholders increased to HKD 157,941,000, up 28.0% from HKD 123,378,000[5]. - The group’s total assets for the reporting segments reached HKD 302,358 thousand as of June 30, 2024, compared to HKD 240,347 thousand as of June 30, 2023[12]. - The group’s total liabilities for the reporting segments amounted to HKD 155,456 thousand as of June 30, 2024, compared to HKD 79,428 thousand as of June 30, 2023, reflecting an increase in financial obligations[12]. Revenue Segments - The new property management services segment contributed HKD 45,271 thousand in revenue for the period ending June 30, 2024, which was not present in the previous year[15]. - The property management business contributed HKD 45,271,000 to total revenue for the six months ended June 30, 2024, while there was no revenue from this segment in the same period of 2023[31]. - The zipper business generated revenue of approximately HKD 115,115,000 for the six months ended June 30, 2024, a decrease of about 6.7% from HKD 123,386,000 in the same period of 2023[32]. - The revenue from the mainland China market for the zipper business was approximately HKD 108,337,000, accounting for 94.1% of total zipper revenue[32]. Expenses - The group incurred employee costs of HKD 64,700 thousand for the period ending June 30, 2024, up from HKD 51,051 thousand in the same period of 2023, reflecting a rise in operational expenses[16]. - Distribution costs increased by approximately 21.0% from about HKD 9,070,000 in 2023 to about HKD 10,970,000 for the six months ending June 30, 2024, primarily due to increased sales activities and advertising[35]. - Administrative expenses rose by approximately 46.5% from about HKD 32,570,000 in 2023 to about HKD 47,720,000 for the six months ending June 30, 2024, mainly due to increased professional fees related to business development and share-based payments of about HKD 5,520,000[35]. Cash Flow - The net cash inflow from operating activities for the six months ended June 30, 2024, is approximately HKD 10,820,000, a significant improvement from a net outflow of HKD 16,550,000 for the same period in 2023[44]. - The net cash outflow from investing activities for the six months ended June 30, 2024, is approximately HKD 18,500,000, primarily due to payments for the purchase of properties, plants, and equipment[44]. - As of June 30, 2024, cash and cash equivalents amount to approximately HKD 75,980,000, an increase of about HKD 12,650,000 compared to December 31, 2023[44]. Corporate Governance and Future Plans - The group has maintained strict corporate governance guidelines and has complied with all provisions of the corporate governance code, except for the absence of some independent non-executive directors at the annual general meeting[52]. - The company plans to adopt new accounting policies effective January 1, 2024, which are not expected to have a significant impact on the financial statements[9]. - The group plans to enhance automation, improve production processes, and strengthen financial management to address the complex operating environment and improve competitiveness[29]. - The group aims to explore other business or investment opportunities to establish a healthy and secure development model for stable returns to shareholders[30]. Shareholder Information - The company does not recommend any interim dividend for the six months ended June 30, 2024[26]. - The net proceeds from the placement of 16,733,000 new shares at HKD 1.21 per share amounted to approximately HKD 19,890,000, intended for general working capital and future business investments[55].

Financial Performance - The total revenue for the year ended December 31, 2023, was HKD 266,548,000, an increase of 23.7% from HKD 215,578,000 in 2022[4] - The gross profit for 2023 was HKD 110,540,000, representing a significant increase of 58.6% compared to HKD 69,710,000 in 2022, with a gross margin improvement from 32.3% to 41.5%[18] - The operating loss for the year was HKD 67,378,000, compared to an operating profit of HKD 4,395,000 in 2022, indicating a decline of approximately HKD 71,773,000[12] - The net loss attributable to equity shareholders for 2023 was HKD 69,043,000, compared to a loss of HKD 1,888,000 in 2022[4] - The group recorded a net loss of approximately HKD 79,869,000 for the year, compared to a profit of HKD 658,000 in 2022, indicating a substantial decline in overall performance[45] Revenue and Cost Analysis - The total sales cost for 2023 was approximately HKD 156,010,000, reflecting an increase of about 6.95% from HKD 145,870,000 in 2022[18] - Employee costs rose to approximately HKD 115,870,000 in 2023, up from HKD 93,290,000 in 2022, primarily due to an increase in the number of full-time employees and average salaries[33] - The net cash generated from operating activities for 2023 was HKD 1.30 million, a significant decrease from HKD 15.65 million in 2022, representing a decline of approximately 91.7%[56] - The net cash used in investing activities for 2023 was HKD (8.36) million, compared to HKD (13.65) million in 2022, indicating an improvement of approximately 38.5%[56] - The net cash used in financing activities for 2023 was HKD (33.38) million, a decrease from HKD 50.53 million in 2022, reflecting a change of approximately 165.9%[56] Asset and Liability Management - The total assets less current liabilities amounted to HKD 191,036,000, a decrease from HKD 228,200,000 in 2022[6] - Current assets as of December 31, 2023, totaled approximately HKD 107,680,000, with cash and cash equivalents amounting to HKD 63,330,000[29] - Lease liabilities increased to approximately HKD 72,010,000 in 2023 from HKD 43,090,000 in 2022, indicating a rise in the group's leasing commitments[25] - The group reported trade and other receivables of approximately HKD 103,750,000 as of December 31, 2023[29] - The company has a net inventory value of approximately HKD 27,090,000 as of December 31, 2023[101] Business Expansion and Strategy - The company has expanded into property management services starting from September 2023, which is expected to provide stable and robust income[17] - The group aims to diversify its business by introducing property management services, which are expected to provide stable cash flow and reduce operational risks[44] - The company plans to review its business strategies and explore other investment opportunities to ensure stable returns for shareholders[93] - The company is adopting a conservative approach towards the development of its zipper business due to ongoing geopolitical uncertainties and rising costs[92] Corporate Governance - The company adhered to all provisions of the corporate governance code for the year ending December 31, 2023, with exceptions noted[110] - The board consists of nine members, including four executive directors and four independent non-executive directors, ensuring a diverse governance structure[112] - The audit committee held three meetings during the year to review financial performance and compliance procedures[128] - The company has adopted a standard code of conduct for securities trading by directors, ensuring compliance and accountability[111] - The board is committed to maintaining high standards of corporate governance to protect shareholder interests[108] Environmental Compliance - The group adheres to ISO standards, such as ISO 14001, and has implemented an environmental management system to regulate its design, production, and sales processes[196] - Compliance with Chinese environmental laws, including the Environmental Protection Law and Solid Waste Pollution Prevention Law, is strictly maintained[197] - The company emphasizes the importance of resource recycling and aims to minimize environmental impact during daily operations[196] - The group evaluates the emissions of air pollutants, greenhouse gases, and wastewater to ensure compliance with Chinese regulations[197] - The company is committed to reducing waste and energy consumption as part of its environmental policy[196]

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]

[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)

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 ...

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]

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 ...

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].

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]