Financial Performance - The group recorded a net loss of approximately HKD 49.6 million for the first half of 2023, with non-controlling interests accounting for approximately HKD 10.5 million of the loss[23]. - For the six months ended June 30, 2023, the group's revenue from camera products and related accessories was approximately HKD 138.9 million, a decrease of about 47.5% compared to approximately HKD 264.6 million in the same period of 2022[49]. - The gross profit for the same period was HKD 19.8 million, representing a gross margin of 13.9%, down from 16.4% in the previous year, indicating a decline of 2.5 percentage points[45]. - The net loss for the period was HKD 49.6 million, a significant increase of 3,027.3% compared to a loss of HKD 1.6 million in the prior year[45]. - Revenue for the six months ended June 30, 2023, was HKD 142,940,000, a decrease of 46% compared to HKD 264,630,000 for the same period in 2022[189]. - Gross profit for the same period was HKD 19,800,000, down 54% from HKD 43,340,000 in 2022[189]. - Operating loss for the six months ended June 30, 2023, was HKD 48,636,000, compared to an operating loss of HKD 649,000 in 2022[189]. - Net loss attributable to the company's owners for the period was HKD 39,030,000, compared to a profit of HKD 1,611,000 in the previous year[189]. - Basic and diluted loss per share for the six months ended June 30, 2023, was HKD 4.0 cents, compared to earnings of HKD 0.2 cents in 2022[189]. - Total comprehensive loss for the period was HKD 60,682,000, significantly higher than HKD 16,730,000 in 2022[190]. Assets and Liabilities - The group’s total assets were approximately HKD 387.5 million as of June 30, 2023, down from HKD 541.7 million as of December 31, 2022[20]. - The group’s total liabilities were approximately HKD 215.6 million as of June 30, 2023, compared to HKD 251.8 million as of December 31, 2022[20]. - The company's total equity decreased to HKD 171,935 million from HKD 289,830 million, indicating a reduction of approximately 40.6%[193]. - The cash and cash equivalents decreased to HKD 67,290 million from HKD 81,447 million, a decline of about 17.3%[197]. - Trade and other receivables increased significantly to HKD 61,170 million from HKD 29,513 million, marking a growth of approximately 106.6%[197]. - The total liabilities increased to HKD 215,602 million from HKD 251,663 million, a decrease of approximately 14.3%[192]. - The company’s non-current liabilities decreased to HKD 15,370 million from HKD 69,003 million, reflecting a significant reduction of about 77.7%[192]. Employee and Operational Metrics - The group employed a total of 950 employees as of June 30, 2023, compared to 860 employees as of December 31, 2022[14]. - Sales and distribution expenses increased by approximately 44.3% to about HKD 20.3 million, primarily due to expenses related to the AI vending machine retail business[62]. - Administrative expenses rose by approximately 33.9% to about HKD 33.9 million, mainly due to increased costs associated with the AI vending machine retail operations[63]. - Research and development costs for the first half of 2023 were approximately HKD 19.9 million, a decrease of about 15.3% from HKD 23.5 million in the first half of 2022, primarily due to reduced salaries and benefits for R&D staff[98]. Cash Flow and Financing - The group’s cash flow from operating activities for the first half of 2023 was a net outflow of approximately HKD 60.5 million, primarily reflecting a pre-tax loss of approximately HKD 49.6 million[25]. - The group’s cash and cash equivalents decreased by approximately HKD 5.4 million during the first half of 2023, resulting in a closing balance of HKD 67.3 million[25]. - The group holds an 8.47% stake in startup Shenzhen Kandao Technology Co., Ltd., acquired for an initial amount of HKD 45.4 million[15]. - The group’s bank financing was approximately HKD 46.5 million, with a significant portion utilized compared to HKD 8.0 million at the end of 2022[34]. - The debt-to-equity ratio increased to approximately 27.2% as of June 30, 2023, up from 10.7% at the end of 2022, primarily due to a significant increase in outstanding bank borrowings[29]. Strategic Outlook - The group expects stable development trends in the second half of 2023, supported by enhanced product promotion efforts[32]. - The group has initiated several new projects expected to begin mass production in August 2023 or later, aiming to improve the camera products and related accessories business in the second half of the year[52]. - The company anticipates that strategic partnerships with major appliance and property management companies will enhance the development of its AI vending machine business in the second half of 2023[71]. - The company plans to deepen operations across its main product lines and enhance competitive advantages to improve market share and customer service[74]. - The company faces challenges in its camera products and related accessories business due to global de-globalization trends and high inflation rates in the US and EU[73]. Corporate Governance - The company emphasizes high levels of corporate governance as a foundation for effective management and successful business growth[166]. - The company has established written guidelines for employees regarding securities trading to ensure compliance with insider trading regulations[157]. - The company has not identified any instances of employees violating the written guidelines during the interim period of 2023[157]. - The company is committed to developing and maintaining sound corporate governance practices to protect shareholder interests and enhance corporate value[166].

[Financial Summary](index=1&type=section&id=%E8%B2%A1%E5%8B%99%E6%91%98%E8%A6%81) The Group's revenue and profit declined significantly in the first half of 2023 compared to the prior year period Financial Summary for the Six Months Ended June 30, 2023 | Metric | 2023 (HK$ '000) | 2022 (HK$ '000) | Change | | :--- | :--- | :--- | :--- | | Revenue | 142,940 | 264,630 | (46.0%) | | Cost of sales | (123,140) | (221,290) | (44.4%) | | Gross profit | 19,800 | 43,340 | (54.3%) | | Gross profit margin (%) | 13.9% | 16.4% | (2.5 p.p.t.) | | Loss for the period | (49,567) | (1,585) | 3,027.3% | | Loss attributable to owners of the Company | (39,030) | 1,611 | (2,522.7%) | | Loss attributable to non-controlling interests | (10,537) | (3,196) | 229.7% | | Basic and diluted (loss)/earnings per share | (4.0) HK cents | 0.2 HK cents | (2,100.0%) | [Condensed Consolidated Statement of Profit or Loss](index=2&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 statement details the Group's revenue, costs, and expenses, resulting in a significant net loss for the period Condensed Consolidated Statement of Profit or Loss (For the six months ended June 30, 2023) | Metric | 2023 (HK$ '000) | 2022 (HK$ '000) | | :--- | :--- | :--- | | Revenue | 142,940 | 264,630 | | Cost of sales | (123,140) | (221,290) | | Gross profit | 19,800 | 43,340 | | Other income and other gains | 8,383 | 19,535 | | Selling and distribution expenses | (20,299) | (14,067) | | Administrative expenses | (33,934) | (25,339) | | Research and development expenses | (19,893) | (23,498) | | Other expenses | (2,693) | (620) | | Operating loss | (48,636) | (649) | | Finance costs | (836) | (986) | | Share of (loss)/profit of an associate | (95) | 67 | | Loss before tax | (49,567) | (1,568) | | Income tax expense | – | (17) | | Loss for the period | (49,567) | (1,585) | | Attributable to owners of the Company | (39,030) | 1,611 | | Attributable to non-controlling interests | (10,537) | (3,196) | | Basic and diluted (loss)/earnings per share | (4.0) HK cents | 0.2 HK cents | [Condensed Consolidated Statement of Profit or Loss and Other Comprehensive Income](index=3&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 statement outlines the total comprehensive expense, including net loss and other comprehensive expenses like currency translation differences Condensed Consolidated Statement of Profit or Loss and Other Comprehensive Income (For the six months ended June 30, 2023) | Metric | 2023 (HK$ '000) | 2022 (HK$ '000) | | :--- | :--- | :--- | | Loss for the period | (49,567) | (1,585) | | **Other comprehensive expense:** | | | | Change in fair value of equity investments designated at FVOCI | (656) | (4,658) | | Exchange differences on translation of foreign operations | (10,459) | (10,487) | | Other comprehensive expense for the period, net of tax | (11,115) | (15,145) | | **Total comprehensive expense for the period** | **(60,682)** | **(16,730)** | | Attributable to owners of the Company | (49,778) | (13,553) | | Attributable to non-controlling interests | (10,904) | (3,177) | [Condensed Consolidated Statement of Financial Position](index=4&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 statement presents the Group's assets, liabilities, and equity as of June 30, 2023, showing a decrease in total net assets Condensed Consolidated Statement of Financial Position (As at June 30, 2023) | Metric | June 30, 2023 (HK$ '000) | December 31, 2022 (HK$ '000) | | :--- | :--- | :--- | | **Non-current Assets** | | | | Property, plant and equipment | 29,994 | 24,403 | | Provisional goodwill | 127 | 161,217 | | Intangible assets | 7,108 | 32,058 | | Right-of-use assets | 24,663 | 21,584 | | Equity investments designated at FVOCI | 20,425 | 21,081 | | Investment in an associate | 2,336 | 2,449 | | **Total Non-current Assets** | **84,653** | **262,792** | | **Current Assets** | | | | Inventories | 129,657 | 139,873 | | Trade and factoring receivables | 61,170 | 29,513 | | Prepayments and other receivables | 36,727 | 20,076 | | Financial assets at FVTPL | 5,297 | 5,222 | | Pledged bank deposits | 2,743 | 2,729 | | Cash and cash equivalents | 67,290 | 81,447 | | **Total Current Assets** | **302,884** | **278,860** | | **Current Liabilities** | | | | Trade payables | 67,800 | 64,963 | | Other payables and accruals | 100,392 | 95,050 | | Interest-bearing bank borrowings | 21,338 | 8,035 | | Lease liabilities | 10,702 | 14,771 | | **Total Current Liabilities** | **200,232** | **182,819** | | **Net Current Assets** | **102,652** | **96,041** | | **Total Assets less Current Liabilities** | **187,305** | **358,833** | | **Non-current Liabilities** | | | | Lease liabilities | 14,701 | 8,194 | | Deferred tax liabilities | 669 | 6,692 | | Contingent consideration | – | 54,117 | | **Total Non-current Liabilities** | **15,370** | **69,003** | | **Net Assets** | **171,935** | **289,830** | | **Equity** | | | | Share capital | 10,086 | 9,536 | | Reserves | 191,176 | 279,783 | | Non-controlling interests | (19,241) | 511 | | **Total Equity** | **171,935** | **289,830** | [Notes](index=6&type=section&id=%E9%99%84%E8%A8%BB) This section provides detailed disclosures on accounting policies, segment information, and specific financial statement line items [1. Corporate Information](index=6&type=section&id=1.%20%E5%85%AC%E5%8F%B8%E8%B3%87%E6%96%99) Sky Light Holdings Limited was incorporated in the Cayman Islands in 2013 and listed on the Hong Kong Stock Exchange in 2015 - The Company was incorporated in the Cayman Islands on December 18, 2013, and listed on the Main Board of The Stock Exchange of Hong Kong Limited on July 2, 2015[7](index=7&type=chunk) - The Group is principally engaged in the manufacturing and distribution of digital imaging products, home surveillance cameras, and other electronic products, as well as the operation of AI vending machines[8](index=8&type=chunk)[20](index=20&type=chunk)[41](index=41&type=chunk) [2. Basis of Preparation](index=6&type=section&id=2.%20%E7%B7%A8%E8%A3%BD%E5%9F%BA%E6%BA%96) The financial statements are prepared in accordance with HKAS 34 and the Listing Rules, using consistent accounting policies from the 2022 annual report - The condensed consolidated financial statements have been prepared in accordance with Hong Kong Accounting Standard 34 "Interim Financial Reporting" and the applicable disclosure requirements of the Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited[41](index=41&type=chunk) - The accounting policies used are consistent with those followed in the preparation of the 2022 annual financial statements, except for the adoption of new and amended HKFRSs effective for the current accounting period[21](index=21&type=chunk) [3. Adoption of New and Amended Hong Kong Financial Reporting Standards](index=7&type=section&id=3.%20%E6%8E%A1%E7%B4%8D%E6%96%B0%E8%A8%82%E5%8F%8A%E7%B6%93%E4%BF%AE%E8%A8%82%E9%A6%99%E6%B8%AF%E8%B2%A1%E5%8B%99%E5%A0%B1%E5%91%8A%E6%BA%96%E5%89%87) The Group adopted new and amended HKFRSs effective January 1, 2023, which did not have a significant impact on its financial performance or position - In the current interim period, the Group has applied, for the first time, the new and amended Hong Kong Financial Reporting Standards (HKFRSs) issued by the Hong Kong Institute of Certified Public Accountants that are effective for the annual period beginning on January 1, 2023[22](index=22&type=chunk) - The application of the amendments to HKFRSs has had **no significant impact** on the Group's financial performance and position for the current and prior periods[43](index=43&type=chunk) [4. Operating Segment Information](index=7&type=section&id=4.%20%E7%B6%93%E7%87%9F%E5%88%86%E9%83%A8%E8%B3%87%E6%96%99) The Group's operations consist of two reportable segments: manufacturing and sale of camera products and sale of AI vending machine products [(a) Revenue from External Customers](index=8&type=section&id=(a)%20%E4%BE%86%E8%87%AA%E5%A4%96%E9%83%A8%E5%AE%A2%E6%88%B6%E7%9A%84%E6%94%B6%E5%85%A5) The Group's revenue is primarily from camera products, with the EU, US, and Mainland China being the main geographical markets Revenue from External Customers (For the six months ended June 30, 2023) | Segment | 2023 (HK$ '000) | 2022 (HK$ '000) | | :--- | :--- | :--- | | Manufacturing and sale of camera products and related accessories | 138,863 | 264,630 | | AI vending machine business | 4,077 | – | | **Total** | **142,940** | **264,630** | Revenue by Customer Location (For the six months ended June 30, 2023) | Region | 2023 (HK$ '000) | 2022 (HK$ '000) | | :--- | :--- | :--- | | European Union | 73,134 | 88,009 | | United States of America | 32,618 | 130,345 | | Mainland China | 25,790 | 32,589 | | Other countries/regions | 11,398 | 13,687 | | **Total** | **142,940** | **264,630** | Sales Revenue from Single Customers (10% or more of total revenue) | Customer | 2023 (HK$ '000) | 2022 (HK$ '000) | | :--- | :--- | :--- | | Customer A | 57,394 | 77,181 | | Customer B | 13,201 | 64,796 | [(b) Non-current Assets](index=9&type=section&id=(b)%20%E9%9D%9E%E6%B5%81%E5%8B%95%E8%B3%87%E7%94%A2) The Group's non-current assets are primarily located in Mainland China and decreased from the end of 2022 Non-current Assets by Location (Excluding financial instruments, investment in associate, and provisional goodwill) | Region | June 30, 2023 (HK$ '000) | December 31, 2022 (HK$ '000) | | :--- | :--- | :--- | | Mainland China | 44,460 | 65,373 | | Hong Kong | 892 | 1,580 | | Other countries/regions | 16,413 | 11,092 | | **Total** | **61,765** | **78,045** | [5. Revenue](index=10&type=section&id=5.%20%E6%94%B6%E5%85%A5) The Group's revenue is mainly derived from the sale of industrial products, with all revenue recognized at a point in time Revenue Analysis (For the six months ended June 30, 2023) | Type of Goods or Services | 2023 (HK$ '000) | 2022 (HK$ '000) | | :--- | :--- | :--- | | Sale of industrial products | 138,395 | 257,720 | | Sale of goods through AI vending machines | 4,077 | – | | Provision of manufacturing services | 468 | 6,910 | | **Total revenue from contracts with customers** | **142,940** | **264,630** | | Timing of revenue recognition: At a point in time | 142,940 | 264,630 | - Performance obligations for the sale of industrial products are satisfied upon delivery, with payment generally due within 30 to 90 days[48](index=48&type=chunk) - Performance obligations for the sale of goods through AI vending machines are satisfied upon delivery of retail products, with payment due at the time of delivery[48](index=48&type=chunk) [6. Finance Costs](index=10&type=section&id=6.%20%E8%9E%8D%E8%B3%87%E6%88%90%E6%9C%AC) The Group's finance costs decreased slightly, comprising interest on bank borrowings and lease liabilities Finance Costs Analysis (For the six months ended June 30, 2023) | Item | 2023 (HK$ '000) | 2022 (HK$ '000) | | :--- | :--- | :--- | | Interest on bank borrowings | 288 | 152 | | Interest on lease liabilities | 548 | 834 | | **Total** | **836** | **986** | [7. Income Tax Expense](index=11&type=section&id=7.%20%E6%89%80%E5%BE%97%E7%A8%85%E9%96%8B%E6%94%AF) The Group is subject to income tax in various jurisdictions, with preferential tax rates available for certain high-tech subsidiaries in Mainland China - Subsidiaries in Mainland China are subject to a **25% corporate income tax**, with two high-tech enterprises enjoying a preferential rate of **15%**[51](index=51&type=chunk) - Hong Kong profits tax is provided at **16.5%**, with some subsidiaries eligible for a two-tiered profits tax rates regime where the first HK$2,000,000 is taxed at **8.25%**[30](index=30&type=chunk) - US subsidiaries are subject to a **21% federal tax** and a **7% state corporate income tax**[31](index=31&type=chunk) - The Vietnam subsidiary is subject to a **20% corporate income tax**, with tax incentives including a two-year exemption and a 50% reduction for the subsequent four years for eligible projects[31](index=31&type=chunk) [8. Loss for the Period](index=12&type=section&id=8.%20%E6%9C%9F%E5%85%A7%E8%99%A7%E6%90%8D) The Group's loss for the period was arrived at after charging or crediting various items, including cost of inventories sold and R&D expenses Items Deducted/(Credited) in Arriving at Loss for the Period (For the six months ended June 30, 2023) | Item | 2023 (HK$ '000) | 2022 (HK$ '000) | | :--- | :--- | :--- | | Cost of inventories sold | 123,140 | 221,290 | | Depreciation of property, plant and equipment | 8,141 | 7,090 | | Depreciation of right-of-use assets | 8,126 | 8,119 | | Amortisation of intangible assets | 2,179 | 1,007 | | Research and development expenses | 19,893 | 23,498 | | Employee benefit expense (excluding directors' and chief executive's remuneration) | 44,403 | 65,393 | | Net reversal of provision for inventories (included in cost of inventories sold) | 8,617 | (21,710) | | Impairment loss on trade and factoring receivables | 2,555 | 620 | | Net foreign exchange gains | (7,384) | (6,570) | | (Gain)/loss on disposal of property, plant and equipment | (230) | 204 | | Gain on disposal of non-current assets classified as held for sale | – | (10,790) | - Amortisation of software is included in "Research and development expenses," while amortisation of other intangible assets is included in "Selling and distribution expenses" in the condensed consolidated statement of profit or loss[32](index=32&type=chunk) - The reversal of provision for inventories in both periods was mainly due to the utilisation of inventories for which provision had been previously made[57](index=57&type=chunk) [9. Dividend](index=13&type=section&id=9.%20%E8%82%A1%E6%81%AF) The Board does not recommend the payment of any interim dividend for the period - The directors do not recommend the payment of any interim dividend for the period (six months ended June 30, 2022: Nil)[80](index=80&type=chunk) [10. (Loss)/Earnings Per Share](index=13&type=section&id=10.%20%E6%AF%8F%E8%82%A1%EF%BC%88%E8%99%A7%E6%90%8D%EF%BC%89%E2%95%95%E6%BA%A2%E5%88%A9) The Group reported a basic and diluted loss per share of 4.0 HK cents, with no adjustment for dilutive effects as they were anti-dilutive Calculation Data for Basic and Diluted (Loss)/Earnings Per Share (For the six months ended June 30, 2023) | Item | 2023 (HK$ '000) | 2022 (HK$ '000) | | :--- | :--- | :--- | | (Loss)/earnings for the purpose of basic and diluted (loss)/earnings per share | (39,030) | 1,611 | | Weighted average number of ordinary shares for basic and diluted (loss)/earnings per share | 984,004,122 | 952,739,455 | - For the six months ended June 30, 2023, no adjustment has been made to the basic loss per share amount presented as the impact of the share option scheme had an **anti-dilutive effect**[59](index=59&type=chunk) [11. Trade and Factoring Receivables](index=14&type=section&id=11.%20%E8%B2%BF%E6%98%93%E5%8F%8A%E4%BF%9D%E7%90%86%E6%87%89%E6%94%B6%E6%AC%BE%E9%A0%85) The Group's trade and factoring receivables increased significantly, with arrangements in place for factoring trade receivables of designated customers Trade and Factoring Receivables (As at June 30, 2023) | Item | June 30, 2023 (HK$ '000) | December 31, 2022 (HK$ '000) | | :--- | :--- | :--- | | Trade receivables | 44,599 | 25,779 | | Impairment loss | (10,099) | (7,538) | | **Net trade receivables** | **34,500** | **18,241** | | Factoring receivables | 26,815 | 11,423 | | Impairment loss | (145) | (151) | | **Net factoring receivables** | **26,670** | **11,272** | | **Total** | **61,170** | **29,513** | Ageing Analysis of Trade and Factoring Receivables (As at June 30, 2023) | Ageing | June 30, 2023 (HK$ '000) | December 31, 2022 (HK$ '000) | | :--- | :--- | :--- | | Within 1 month | 50,856 | 20,837 | | 1 to 2 months | 3,049 | 716 | | 2 to 3 months | 172 | 167 | | Over 3 months | 7,093 | 7,793 | | **Total** | **61,170** | **29,513** | - The Group has entered into receivable purchase arrangements with banks for factoring trade receivables of designated customers, with a total of **HK$26,815 thousand** factored as of June 30, 2023[83](index=83&type=chunk) [12. Pledged Bank Deposits](index=15&type=section&id=12.%20%E5%B7%B2%E6%8A%B5%E6%8A%BC%E9%8A%80%E8%A1%8C%E5%AD%98%E6%AC%BE) The Group's pledged bank deposits, used to secure banking facilities, remained stable compared to the end of 2022 Pledged Bank Deposits (As at June 30, 2023) | Item | June 30, 2023 (HK$ '000) | December 31, 2022 (HK$ '000) | | :--- | :--- | :--- | | Pledged bank deposits | 2,743 | 2,729 | - Pledged bank deposits represent deposits pledged to a bank to secure banking facilities granted to the Group[38](index=38&type=chunk) [13. Trade Payables](index=15&type=section&id=13.%20%E8%B2%BF%E6%98%93%E6%87%89%E4%BB%98%E6%AC%BE%E9%A0%85) The Group's trade payables are non-interest-bearing and generally have a settlement term of 30 to 150 days Ageing Analysis of Trade Payables (As at June 30, 2023) | Ageing | June 30, 2023 (HK$ '000) | December 31, 2022 (HK$ '000) | | :--- | :--- | :--- | | Within 1 month | 37,686 | 31,030 | | 1 to 2 months | 14,104 | 13,022 | | 2 to 3 months | 6,016 | 8,486 | | Over 3 months | 9,994 | 12,425 | | **Total** | **67,800** | **64,963** | - Trade payables are non-interest-bearing and are normally settled on terms of 30 to 150 days[63](index=63&type=chunk) [14. Interest-bearing Bank Borrowings](index=16&type=section&id=14.%20%E8%A8%88%E6%81%AF%E9%8A%80%E8%A1%8C%E5%80%9F%E6%AC%BE) The Group's interest-bearing bank borrowings increased significantly due to new factoring loans, all of which are repayable within one year Interest-bearing Bank Borrowings (As at June 30, 2023) | Borrowing Type | June 30, 2023 (HK$ '000) | December 31, 2022 (HK$ '000) | | :--- | :--- | :--- | | Bank loans — secured | 4,307 | 8,035 | | Factoring loans — secured | 17,031 | – | | **Total** | **21,338** | **8,035** | | Repayable: Within one year | 21,338 | 8,035 | - Bank loans are secured by pledges over the Group's life insurance policies and bank deposits, a personal guarantee from a controlling shareholder, and corporate guarantees from a company controlled by the shareholder and two Group subsidiaries[64](index=64&type=chunk) - Factoring loans are secured by a pledge over the Group's factoring receivables[87](index=87&type=chunk) - The effective interest rates per annum on secured bank and factoring loans ranged from **6.1% to 7.5%** (December 31, 2022: 1.5% to 6.0%)[65](index=65&type=chunk) [15. Capital Commitments](index=16&type=section&id=15.%20%E8%B3%87%E6%9C%AC%E6%89%BF%E6%93%94) The Group's capital commitments, primarily for the purchase of plant and machinery, were stable compared to year-end 2022 Capital Commitments (As at June 30, 2023) | Item | June 30, 2023 (HK$ '000) | December 31, 2022 (HK$ '000) | | :--- | :--- | :--- | | Contracted but not provided for: Purchase of plant and machinery | 2,121 | 2,219 | [Management Discussion and Analysis](index=17&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) Management discusses the Group's business performance, financial results, and future outlook [Business Review](index=17&type=section&id=%E6%A5%AD%E5%8B%99%E5%9B%9E%E9%A1%A7) The Group's performance was impacted by weak global demand for consumer electronics and customer destocking, though the new AI vending machine business recorded revenue [1. Camera Products and Related Accessories Business](index=17&type=section&id=1.%20%E7%9B%B8%E6%A9%9F%E7%94%A2%E5%93%81%E5%8F%8A%E7%9B%B8%E9%97%9C%E9%85%8D%E4%BB%B6%E6%A5%AD%E5%8B%99) Revenue from the camera business decreased by 47.5% due to weak global demand and customer destocking - In the first half of 2023, the camera products and related accessories business recorded revenue of approximately **HK$138.9 million**, a decrease of approximately **47.5%** from the same period in 2022[91](index=91&type=chunk) - The decrease in revenue was mainly due to continued weak global demand for consumer electronics, coupled with ongoing customer destocking[68](index=68&type=chunk) - The Group has initiated several new projects, which are expected to contribute to performance in the second half of the year[68](index=68&type=chunk) [2. Retail Business through AI Vending Machines](index=17&type=section&id=2.%20%E9%80%9A%E9%81%8E%E4%BA%BA%E5%B7%A5%E6%99%BA%E8%83%BD%E8%87%AA%E5%8B%95%E5%94%AE%E8%B2%A8%E6%A9%9F%E9%96%8B%E5%B1%95%E9%9B%B6%E5%94%AE%E6%A5%AD%E5%8B%99) The new AI vending machine business generated HK$4.1 million in revenue and is expected to grow through strategic partnerships - In November 2022, the Group acquired a **51% equity interest** in Wuhan Xiuhuo, which engages in the retail sale of food and beverages through AI vending machines[68](index=68&type=chunk) - In the first half of 2023, the Group's retail business from AI vending machines recorded revenue of approximately **HK$4.1 million**[68](index=68&type=chunk) - Wuhan Xiuhuo's strategic cooperation with China's largest home appliance company and largest property management company is expected to promote its rapid and stable development and contribute to the Group's performance in the second half of 2023[68](index=68&type=chunk) [Outlook](index=18&type=section&id=%E5%B1%95%E6%9C%9B) The Group will focus on deepening its core product lines and expanding its AI vending machine business to navigate economic challenges [1. Camera Products and Related Accessories Business](index=18&type=section&id=1.%20%E7%9B%B8%E6%A9%9F%E7%94%A2%E5%93%81%E5%8F%8A%E7%9B%B8%E9%97%9C%E9%85%8D%E4%BB%B6%E6%A5%AD%E5%8B%99) Despite challenges from deglobalization and high inflation, the business is expected to improve in the second half of 2023 with new projects launching - In 2023, **deglobalization** and **high inflation and interest rates** in the US and EU are the main challenges facing the Group's camera products business[69](index=69&type=chunk) - The inventory backlog of the Group's customers continues to affect their demand for the Group's products[69](index=69&type=chunk) - The Group has initiated several new projects that will begin mass production in or after August 2023, and expects the camera products business to **improve in the second half of the year**[94](index=94&type=chunk) [2. Retail Business through AI Vending Machines](index=18&type=section&id=2.%20%E9%80%9A%E9%81%8E%E4%BA%BA%E5%B7%A5%E6%99%BA%E8%83%BD%E8%87%AA%E5%8B%95%E5%94%AE%E8%B2%A8%E6%A9%9F%E9%96%8B%E5%B1%95%E9%9B%B6%E5%94%AE%E6%A5%AD%E5%8B%99) Wuhan Xiuhuo will actively pursue strategic cooperation with property management companies to expand its network and increase sales revenue - Wuhan Xiuhuo will actively pursue strategic cooperation with multiple property management companies to increase sales revenue[71](index=71&type=chunk) - The plan is to place more AI vending machines in residential buildings, office buildings, hotels, schools, hospitals, sports centers, and parks in China[71](index=71&type=chunk) [Financial Review](index=19&type=section&id=%E8%B2%A1%E5%8B%99%E5%9B%9E%E9%A1%A7) The Group's financial performance declined significantly, with a sharp drop in turnover and gross profit, leading to a substantial loss [Turnover](index=19&type=section&id=%E7%87%9F%E6%A5%AD%E9%A1%8D) The Group's turnover decreased by 46.0% primarily due to a significant reduction in shipments of home surveillance cameras - In the first half of 2023, the Group recorded a turnover of approximately **HK$142.9 million**, a significant decrease of approximately **46.0%** from the same period in 2022[72](index=72&type=chunk) - The decrease in turnover was mainly due to a significant reduction in the shipment volume of home surveillance cameras[72](index=72&type=chunk) Revenue Breakdown by Product Category (For the six months ended June 30, 2023) | Product Category | 2023 (HK$ '000) | % of Total Revenue (2023) | 2022 (HK$ '000) | % of Total Revenue (2022) | Revenue Change | | :--- | :--- | :--- | :--- | :--- | :--- | | Home surveillance cameras | 78,558 | 55.0% | 165,035 | 62.4% | (52.4%) | | Digital imaging products | 31,112 | 21.8% | 50,442 | 19.0% | (38.3%) | | Other products | 28,725 | 20.0% | 42,243 | 16.0% | (32.0%) | | Manufacturing service income | 468 | 0.3% | 6,910 | 2.6% | (93.2%) | | Retail business through AI vending machines | 4,077 | 2.9% | – | – | – | | **Total** | **142,940** | **100.0%** | **264,630** | **100.0%** | **(46.0%)** | Revenue Breakdown by Customer Location (For the six months ended June 30, 2023) | Region | 2023 (HK$ '000) | 2022 (HK$ '000) | | :--- | :--- | :--- | | European Union | 73,134 | 88,009 | | United States of America | 32,618 | 130,345 | | Mainland China | 25,790 | 32,589 | | Other countries and regions | 11,398 | 13,687 | | **Total** | **142,940** | **264,630** | [Cost of Sales](index=20&type=section&id=%E9%8A%B7%E5%94%AE%E6%88%90%E6%9C%AC) The cost of sales decreased by 44.4% due to lower shipment volumes, representing 86.1% of turnover - In the first half of 2023, the Group's cost of sales was approximately **HK$123.1 million**, a decrease of approximately **44.4%** from the same period in 2022[101](index=101&type=chunk) - The cost of sales represented approximately **86.1%** of turnover for the first half of 2023 (H1 2022: approx. 83.6%)[101](index=101&type=chunk) - The decrease in cost of sales was mainly due to a significant reduction in shipment sales volume[101](index=101&type=chunk) - Cost of sales includes raw materials and components, direct labor costs, and production overheads[126](index=126&type=chunk) [Gross Profit and Gross Profit Margin](index=21&type=section&id=%E6%AF%9B%E5%88%A9%E5%8F%8A%E6%AF%9B%E5%88%A9%E7%8E%87) Gross profit decreased by 54.3% and the gross profit margin fell to 13.9% due to an increase in costs from inventory provision reversals Gross Profit and Gross Profit Margin (For the six months ended June 30, 2023) | Metric | 2023 (HK$ '000) | 2022 (HK$ '000) | | :--- | :--- | :--- | | Revenue | 142,940 | 264,630 | | Cost of sales | (123,140) | (221,290) | | Gross profit | 19,800 | 43,340 | | Gross profit margin | 13.9% | 16.4% | - Gross profit decreased by approximately **54.3%**, and the gross profit margin decreased by **2.5 percentage points**, mainly due to an increase in costs resulting from the net reversal and provision of inventories[74](index=74&type=chunk) [Other Income and Other Gains and Losses](index=21&type=section&id=%E5%85%B6%E4%BB%96%E6%94%B6%E7%9B%8A%E5%8F%8A%E5%85%B6%E4%BB%96%E5%A2%9E%E7%9B%8A%E5%8F%8A%E8%99%A7%E6%90%8D) Other income decreased significantly due to a lower gain on the disposal of non-current assets held for sale - In the first half of 2023, the Group's other income and other gains and losses decreased significantly to approximately **HK$8.4 million** (H1 2022: approx. HK$19.5 million)[75](index=75&type=chunk) - The decrease was mainly due to a reduction of approximately **HK$10.8 million** in the gain on disposal of non-current assets classified as held for sale[75](index=75&type=chunk) - Other income and gains and losses mainly include bank interest income, foreign exchange gains/(losses), government subsidies, and gains on the disposal of non-current assets classified as held for sale[103](index=103&type=chunk) [Selling and Distribution Expenses](index=21&type=section&id=%E9%8A%B7%E5%94%AE%E5%8F%8A%E5%88%86%E9%8A%B7%E9%96%8B%E6%94%AF) Selling and distribution expenses increased by 44.3%, primarily driven by expenses related to the new AI vending machine business - In the first half of 2023, the Group's selling and distribution expenses increased significantly by approximately **44.3%** to approximately **HK$20.3 million** from approximately HK$14.1 million in H1 2022[129](index=129&type=chunk) - The increase was mainly due to an increase of approximately **HK$6.4 million** in expenses used for the retail business through AI vending machines[129](index=129&type=chunk) - Selling and distribution expenses mainly include salaries and benefits for sales and marketing staff, transportation costs, marketing, exhibition and advertising costs, and entertainment expenses[104](index=104&type=chunk) [Administrative Expenses](index=22&type=section&id=%E8%A1%8C%E6%94%BF%E9%96%8B%E6%94%AF) Administrative expenses increased by 33.9%, mainly due to expenses incurred by the new AI vending machine business - In the first half of 2023, the Group's administrative expenses increased significantly by approximately **33.9%** to approximately **HK$33.9 million** from approximately HK$25.3 million in H1 2022[130](index=130&type=chunk) - The increase was mainly due to an increase of approximately **HK$8.1 million** in funds used for the retail business through AI vending machines[130](index=130&type=chunk) - Administrative expenses mainly include salaries and benefits for management, administrative, and finance staff, rent and office expenses, professional fees, and business entertainment expenses[77](index=77&type=chunk) [Research and Development Costs](index=22&type=section&id=%E7%A0%94%E7%99%BC%E6%88%90%E6%9C%AC) R&D costs decreased by 15.3% primarily due to a reduction in salaries and benefits for R&D staff - In the first half of 2023, the Group recorded R&D costs of approximately **HK$19.9 million**, a decrease of approximately **15.3%** from approximately HK$23.5 million in H1 2022[131](index=131&type=chunk) - The decrease was mainly due to a reduction of approximately **HK$3.3 million** in salaries and benefits for the Group's R&D staff[131](index=131&type=chunk) - R&D costs include salaries and benefits for R&D and product planning staff, raw materials and components used in R&D and product planning, and other miscellaneous costs and expenses[78](index=78&type=chunk) [Other Expenses](index=22&type=section&id=%E5%85%B6%E4%BB%96%E9%96%8B%E6%94%AF) Other expenses increased significantly due to a higher provision for bad debts - In the first half of 2023, the Group's other expenses increased significantly to approximately **HK$2.7 million** from approximately HK$0.6 million in H1 2022[79](index=79&type=chunk) - The increase mainly included an increase of approximately **HK$1.9 million** in the provision for bad debts[79](index=79&type=chunk) - Other expenses mainly include foreign exchange losses and asset impairment losses[132](index=132&type=chunk) [Finance Costs](index=23&type=section&id=%E8%9E%8D%E8%B3%87%E6%88%90%E6%9C%AC) The Group's finance costs decreased slightly during the period - In the first half of 2023, the Group's finance costs decreased slightly to approximately **HK$0.8 million** (H1 2022: approx. HK$1.0 million)[107](index=107&type=chunk) [Net Loss](index=23&type=section&id=%E8%99%A7%E6%90%8D%E6%B7%A8%E9%A1%8D) The Group recorded a net loss of approximately HK$49.6 million for the period - The Group recorded a loss of approximately **HK$49.6 million** in the first half of 2023 (with a loss of approximately HK$10.5 million attributable to non-controlling interests)[108](index=108&type=chunk) [Liquidity and Capital Resources](index=23&type=section&id=%E6%B5%81%E5%8B%95%E8%B3%87%E9%87%91%E5%8F%8A%E8%B3%87%E6%9C%AC%E8%B3%87%E6%BA%90) The Group experienced a net cash outflow from operations, which was offset by net cash inflow from financing activities Consolidated Cash Flows (For the six months ended June 30, 2023) | Item | 2023 (HK$ '000) | 2022 (HK$ '000) | | :--- | :--- | :--- | | Net cash (used in)/from operating activities | (60,497) | 5,612 | | Net cash (used in)/from investing activities | (16,323) | 12,905 | | Net cash from/(used in) financing activities | 71,427 | (13,867) | | Net (decrease)/increase in cash and cash equivalents | (5,393) | 4,650 | | Cash and cash equivalents at beginning of period | 81,447 | 96,188 | | Effect of foreign exchange rate changes | (8,764) | (9,982) | | Cash and cash equivalents at end of period | 67,290 | 90,856 | - Net cash used in operating activities in H1 2023 was approximately **HK$60.5 million**, mainly reflecting the loss before tax, a decrease in inventories, and an increase in trade receivables and prepayments[134](index=134&type=chunk) - Net cash from financing activities in H1 2023 was approximately **HK$71.4 million**, mainly reflecting net proceeds from bank borrowings of approximately HK$13.3 million and proceeds from the issuance of shares of approximately HK$67.8 million[135](index=135&type=chunk) [Borrowings and Pledge of Assets](index=24&type=section&id=%E5%80%9F%E6%AC%BE%E5%8F%8A%E8%B3%87%E7%94%A2%E6%8A%B5%E6%8A%BC) The Group's borrowings are secured by various assets and guarantees, with all borrowings denominated in US dollars and repayable within one year - As of June 30, 2023, the Group had banking facilities of approximately **HK$46.5 million**, of which approximately **HK$21.3 million** had been utilized[112](index=112&type=chunk) - Bank loans are secured by pledges over the Group's life insurance policies and bank deposits, a personal guarantee from a controlling shareholder, and corporate guarantees from a company controlled by the shareholder and two Group subsidiaries[136](index=136&type=chunk) - Factoring loans of approximately **HK$17.0 million** are secured by a pledge over the Group's factoring receivables[136](index=136&type=chunk) - All borrowings are denominated in **US dollars**, with effective annual interest rates ranging from **6.1% to 7.5%** (December 31, 2022: 1.5% to 6.0%), and are repayable within one year[113](index=113&type=chunk) [Capital Expenditure](index=25&type=section&id=%E8%B3%87%E6%9C%AC%E9%96%8B%E6%94%AF) The Group's capital expenditure on fixed and intangible assets increased significantly during the period - In the first half of 2023, the Group invested approximately **HK$18.2 million** in fixed and intangible assets (H1 2022: approx. HK$2.1 million)[139](index=139&type=chunk) [Off-Balance Sheet Transactions](index=25&type=section&id=%E8%B3%87%E7%94%A2%E8%B2%A0%E5%82%B5%E8%A1%A8%E5%A4%96%E4%BA%A4%E6%98%93) The Group did not engage in any material off-balance sheet transactions during the period - In the first half of 2023, the Group did not enter into any material off-balance sheet transactions[140](index=140&type=chunk) [Foreign Exchange Risk and Exchange Rate Risk](index=25&type=section&id=%E5%A4%96%E5%8C%AF%E9%A2%A8%E9%9A%AA%E5%8F%8A%E5%8C%AF%E7%8E%87%E9%A2%A8%E9%9A%AA) The Group is exposed to transactional currency risk but did not use any derivative financial instruments for hedging purposes - The Group faces transactional currency risk from sales denominated in currencies other than the functional currency of the relevant operating units[140](index=140&type=chunk) - In the first half of 2023, approximately **76.8%** of sales were denominated in currencies other than the functional currency of the operating units making the sales[140](index=140&type=chunk) - During the first half of 2023, exchange rate fluctuations did not have a significant impact on the Group, and the Group did not engage in any derivative activities or use financial instruments to hedge its foreign exchange risk[115](index=115&type=chunk) [Gearing Ratio](index=25&type=section&id=%E8%B3%87%E7%94%A2%E8%B2%A0%E5%82%B5%E6%AF%94%E7%8E%87) The Group's gearing ratio increased significantly due to a notable rise in outstanding interest-bearing bank borrowings - As of December 31, 2022, and June 30, 2023, the Group's gearing ratio was approximately **10.7%** and **27.2%**, respectively[138](index=138&type=chunk) - The increase in the gearing ratio was mainly due to a significant increase in outstanding interest-bearing bank borrowings[138](index=138&type=chunk) [Events After the Reporting Period](index=26&type=section&id=%E5%A0%B1%E5%91%8A%E6%9C%9F%E5%BE%8C%E4%BA%8B%E9%A0%85) No significant events affecting the Group occurred after the reporting period - No significant events affecting the Group have occurred after the interim reporting period of 2023 and up to the date of this announcement[142](index=142&type=chunk) [Treasury Policy](index=26&type=section&id=%E8%B2%A1%E6%94%BF%E6%94%BF%E7%AD%96) The Group maintains a conservative treasury policy, investing only in low-risk products, and held no such investments during the period - The Group has implemented an internal treasury investment policy since January 2015, providing guidelines, regulations, and approval processes for treasury investment activities[116](index=116&type=chunk) - The Group is only permitted to invest in wealth management products in the two lowest risk levels as classified by banks, and in debt securities with a rating higher than "BBB" or "baa" or equivalent[143](index=143&type=chunk) - All treasury products must be issued by reputable listed banks with no default record, have a term of less than one year, or be readily convertible to cash in the market[143](index=143&type=chunk) - The outstanding balance of the Group's wealth management products shall not exceed **50%** of the sum of cash and cash equivalents and wealth management products, and no single investment shall exceed **35%** of the total investment[143](index=143&type=chunk) - In the first half of 2023, the Group did not hold any investments under the treasury policy[143](index=143&type=chunk) [Employees and Remuneration Policy](index=27&type=section&id=%E5%83%B1%E5%93%A1%E5%8F%8A%E8%96%AA%E9%85%AC%E6%94%BF%E7%AD%96) The Group employed 950 staff as of June 30, 2023, and aims to offer competitive remuneration, particularly for R&D personnel - As of June 30, 2023, the Group employed a total of **950** employees (December 31, 2022: 860)[158](index=158&type=chunk) - The Group's staff costs (excluding directors' remuneration and any pension scheme contributions) for the first half of 2023 were approximately **HK$44.4 million** (H1 2022: approx. HK$65.3 million)[158](index=158&type=chunk) - The Group strives to offer above-market-level remuneration to its R&D personnel to attract and retain top talent[158](index=158&type=chunk) - The Company has adopted a pre-IPO share option scheme and a share option scheme to provide additional incentives to employees[158](index=158&type=chunk) [Significant Investments Held](index=27&type=section&id=%E6%89%80%E6%8C%81%E9%87%8D%E5%A4%A7%E6%8A%95%E8%B3%87) The Group holds an 8.47% stake in startup Kandao, valued at HK$20.4 million, which is expected to create business synergies - The Group holds an **8.47%** equity interest in the start-up company Shenzhen Kandao Technology Co, Ltd ("Kandao"), acquired between November 2016 and January 2017[119](index=119&type=chunk) - As of June 30, 2023, the fair value of this investment was approximately **HK$20.4 million** (December 31, 2022: approx. HK$21.1 million), resulting in an unrealized loss of **HK$0.7 million** in the first half of 2023[160](index=160&type=chunk) - This investment represents **5.3%** of the Group's total assets[160](index=160&type=chunk) - Kandao focuses on the technology and hardware/software development of imaging electronic products, with main products including 6-lens 8K 3D professional panoramic cameras and 360-degree smart conference video systems[159](index=159&type=chunk) - The Board believes this investment creates **synergies** with the Group's business, expands sales channels, and has future growth potential[122](index=122&type=chunk)[148](index=148&type=chunk) [Future Plans for Material Investments or Capital Assets](index=28&type=section&id=%E6%9C%89%E9%97%9C%E9%87%8D%E5%A4%A7%E6%8A%95%E8%B3%87%E6%88%96%E8%B3%87%E6%9C%AC%E8%B3%87%E7%94%A2%E7%9A%84%E6%9C%AA%E4%BE%86%E8%A8%88%E5%8A%83) The Group has no plans for material investments or capital assets as of the announcement date - As of the date of this announcement, the Group does not have any plans for material investments or capital assets[123](index=123&type=chunk) [Material Acquisitions and Disposals of Subsidiaries, Associates and Joint Ventures](index=28&type=section&id=%E6%B6%89%E5%8F%8A%E9%99%84%E5%B1%AC%E5%85%AC%E5%8F%B8%E3%80%81%E7%9B%B8%E8%81%AF%E5%85%AC%E5%8F%B8%E5%8F%8A%E5%90%88%E7%87%9F%E4%BC%81%E6%A5%AD%E7%9A%84%E9%87%8D%E5%A4%A7%E6%94%B6%E8%B3%BC%E5%8F%8A%E5%87%BA%E5%94%AE) The Group's interest in SL Vietnam was diluted from 100% to 51%, which was treated as a deemed disposal - On June 1, 2023, SL Vietnam completed the June Subscription, where Sky Light Electronic and Tech Idea subscribed for new SLV shares[148](index=148&type=chunk) - The Group's interest in SL Vietnam was diluted from **100% to 51%**, and the subscription of 4,900 new SLV shares by Tech Idea was treated as a **deemed disposal** by the Company[162](index=162&type=chunk) - Other than the above, the Group had no material acquisitions or disposals of subsidiaries, associates, or joint ventures during the first half of 2023[125](index=125&type=chunk) [Contingent Liabilities](index=29&type=section&id=%E6%88%96%E7%84%B6%E8%B2%A0%E5%82%B5) The Group had no material contingent liabilities as of June 30, 2023 - As of June 30, 2023, the Group had no material contingent liabilities (December 31, 2022: Nil)[164](index=164&type=chunk) [Dividend](index=29&type=section&id=%E8%82%A1%E6%81%AF) The Board does not recommend the payment of an interim dividend for the first half of 2023 - The Board of Directors does not recommend the payment of an interim dividend for the first half of 2023 (H1 2022: Nil)[165](index=165&type=chunk) [Financial Position as at 30 June 2023](index=29&type=section&id=%E6%96%BC2023%E5%B9%B46%E6%9C%8830%E6%97%A5%E7%9A%84%E8%B2%A1%E5%8B%99%E7%8B%80%E6%B3%81) The Group's total equity stood at approximately HK$171.9 million as of June 30, 2023 - As of June 30, 2023, the Group's total equity was approximately **HK$171.9 million** (December 31, 2022: approx. HK$289.8 million)[166](index=166&type=chunk) - Total assets were approximately **HK$387.5 million** (December 31, 2022: approx. HK$541.7 million)[166](index=166&type=chunk) - Total liabilities were approximately **HK$215.6 million** (December 31, 2022: approx. HK$251.8 million)[166](index=166&type=chunk) [Purchase, Sale or Redemption of Listed Securities](index=29&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%E4%B8%8A%E5%B8%82%E8%AD%89%E5%88%B8) Neither the Company nor its subsidiaries purchased, sold, or redeemed any of the Company's listed securities during the period - During the first half of 2023, neither the Company nor any of its subsidiaries purchased, sold, or redeemed any of the Company's listed securities[150](index=150&type=chunk) [Other Information](index=29&type=section&id=%E5%85%B6%E4%BB%96%E8%B3%87%E6%96%99) This section covers corporate governance practices, director dealings, and other statutory disclosures [Corporate Governance Practices](index=30&type=section&id=%E4%BC%81%E6%A5%AD%E7%AE%A1%E6%B2%BB%E5%B8%B8%E8%A6%8F) The Company has complied with the Corporate Governance Code, except for the deviation where the roles of Chairman and CEO are not separated - The Company has adopted the principles and code provisions of the Corporate Governance Code contained in Appendix 14 to the Listing Rules[151](index=151&type=chunk) - During the first half of 2023, the Company has complied with all applicable code provisions of the Corporate Governance Code, except for code provision C.2.1 (roles of chairman and chief executive should be separate)[151](index=151&type=chunk) - The Board believes that Mr. Tang Wing Fai's concurrent roles as Chairman and CEO will provide the Company with **strong and consistent leadership**, facilitating more effective planning and management[169](index=169&type=chunk) - The Board believes there are sufficient safeguards to ensure a balance of power, as all major decisions are consulted with the Board, and the presence of three independent non-executive directors provides independent views[169](index=169&type=chunk) [Model Code for Securities Transactions by Directors](index=31&type=section&id=%E8%91%A3%E4%BA%8B%E9%80%B2%E8%A1%8C%E8%AD%89%E5%88%B8%E4%BA%A4%E6%98%93%E7%9A%84%E6%A8%99%E6%BA%96%E5%AE%88%E5%89%87) The Company has adopted the Model Code for securities transactions by directors, and all directors have confirmed compliance - The Company has adopted the Model Code for Securities Transactions by Directors of Listed Issuers as set out in Appendix 10 to the Listing Rules as its code of conduct for securities transactions by directors[153](index=153&type=chunk) - Upon specific inquiry, all directors confirmed that they had complied with the Model Code throughout the first half of 2023[153](index=153&type=chunk) - The Company has also established written guidelines for relevant employees who may possess inside information regarding securities transactions, with terms no less exacting than those in the Model Code[170](index=170&type=chunk) - During the first half of 2023, the Company was not aware of any non-compliance with the employee written guidelines[170](index=170&type=chunk) [Audit Committee](index=31&type=section&id=%E5%AF%A9%E6%A0%B8%E5%A7%94%E5%93%A1%E6%9C%83) The Audit Committee has reviewed the Group's interim results and is satisfied with the accounting treatments adopted - The Audit Committee consists of three independent non-executive directors, namely Ms. Lo Wan Man (Chairman), Professor Wang Jian, and Mr. Wong Wai Ming[171](index=171&type=chunk) - The Audit Committee has reviewed the Group's interim results for 2023 and is satisfied that they have been prepared in accordance with applicable accounting standards[154](index=154&type=chunk) - The Audit Committee has no disagreement with the accounting treatments adopted by the Company[154](index=154&type=chunk) [Publication of Interim Results and Interim Report](index=32&type=section&id=%E5%88%8A%E7%99%BC%E4%B8%AD%E6%9C%9F%E6%A5%AD%E7%B8%BE%E5%8F%8A%E4%B8%AD%E6%9C%9F%E5%A0%B1%E5%91%8A) The interim results announcement is available on the websites of the Stock Exchange and the Company - The Company's interim results announcement for the first half of 2023 has been published on the websites of the Stock Exchange (https://www.hkexnews.hk) and the Company (http://www.sky-light.com.hk)[173](index=173&type=chunk) - The Company's interim report for the first half of 2023 will be dispatched to shareholders and made available on the above websites in due course[155](index=155&type=chunk) [Appreciation](index=32&type=section&id=%E7%89%B9%E6%AD%A4%E6%84%9F%E8%AC%9D) The Chairman expresses gratitude to all stakeholders, business partners, and employees for their support and contributions - On behalf of the Board, Chairman Mr. Tang Wing Fai expresses his gratitude to all stakeholders and business partners for their unwavering support, and to the directors, management, and employees for their dedication and contribution to the business progress[156](index=156&type=chunk)[174](index=174&type=chunk)

Investment and Acquisitions - The company holds an 8.47% stake in Shenzhen Kandao Technology Co., Ltd., acquired for an initial amount of HKD 45.4 million between November 2016 and January 2017[1]. - As of December 31, 2022, the company's capital commitment related to this investment was approximately HKD 2.2 million, up from HKD 0.9 million on December 31, 2021[4]. - In November 2022, the company acquired a 51% stake in Wuhan Xiulife E-commerce Co., Ltd. for a total consideration of HKD 194,242,883, which included the issuance of 111,607,143 new shares at HKD 0.896 each and promissory notes totaling HKD 94,242,883[6]. - The acquisition was completed on November 30, 2022, with no other significant acquisitions or disposals of subsidiaries, associates, or joint ventures reported for the fiscal year 2022[6]. Financial Performance - The total revenue for the fiscal year 2022 was approximately HKD 417.1 million, a decrease of about 41.7% compared to HKD 715.1 million in fiscal year 2021[164]. - The cost of sales for 2022 was HKD 343.8 million, down 42.1% from HKD 593.3 million in 2021[157]. - The gross profit for 2022 was HKD 73.3 million, representing a decline of 39.8% from HKD 121.8 million in the previous year[157]. - The net loss for the year was HKD 31.2 million, a significant increase of 814.9% compared to a loss of HKD 3.4 million in 2021[157]. - The basic and diluted loss per share for 2022 was HKD 2.5 cents, compared to HKD 0.4 cents in 2021, reflecting a 525% increase in loss per share[157]. Corporate Governance - The company emphasizes maintaining high standards of corporate governance, adhering to the principles and code provisions of the Corporate Governance Code throughout the 2022 fiscal year, with one exception regarding the separation of roles between the Chairman and CEO[33]. - The company has adopted a standard code for monitoring directors' securities transactions, confirming full compliance throughout the 2022 fiscal year[37]. - The company has a nomination policy that aims to ensure a balanced mix of skills, experience, knowledge, and diversity among board members[56]. - The board consists of two executive directors, one non-executive director, and three independent non-executive directors, ensuring over one-third of the board is independent[43]. - The company has established three committees: Audit Committee, Remuneration Committee, and Nomination Committee, each with clear written terms of reference[76]. Risk Management - The company has established a risk management framework based on the "three lines of defense" model, ensuring effective risk identification and management[106]. - The internal audit department reported to the audit committee on the adequacy and effectiveness of internal controls throughout the fiscal year 2022[106]. - The audit committee has developed a whistleblowing policy to allow employees and other stakeholders to report any misconduct, ensuring transparency in investigations[115]. - The company aims to provide reasonable assurance against material misstatements or losses through its internal control framework, rather than absolute assurance[112]. - The group’s risk management and internal control systems were deemed sufficient and effective, including resources, staff qualifications, and training programs[120]. Future Outlook - The company anticipates stable development trends for its products in the upcoming year[2]. - The company expects improvements in manufacturing operations in the second half of 2023, despite challenges from inventory backlogs in the first half[173]. - New products are anticipated to be mass-produced in the second half of 2023, which is expected to help increase revenue and improve performance[173]. - The retail business through AI vending machines is expected to create new opportunities for growth in the post-COVID-19 recovery phase[181]. Shareholder Matters - The company does not plan to declare any final dividends for the fiscal year 2022, consistent with the previous fiscal year[9]. - The annual general meeting is scheduled for May 31, 2023[8]. - The company will suspend share transfer registration from May 25, 2023, to May 31, 2023, to determine eligibility for the upcoming annual general meeting[137].

香港交易及結算所有限公司及香港聯合交易所有限公司對本公告的內容概不負責，對 其準確性或完整性亦不發表任何聲明，並明確表示，概不對因本公告全部或任何部份 內容而產生或因倚賴該等內容而引致的任何損失承擔任何責任。 SKY LIGHT HOLDINGS LIMITED 天 彩 控 股 有 限 公 司 (於開曼群島註冊成立的有限公司) (股份代號： 3882) 有關 2022 年度業績公告的澄清公告 茲提述天彩控股有限公司(「本公司」）於二零二三年三月三十日刊發之截至二零二二 年十二月三十一日止年度之年度業績公告（「該業績公告」）。 本公司董事（「董事」）會（「董事會」） 謹此澄清「本集團的核數師，德博會計師 事務所有限公司（「德博」）已就本集團截至2022年12月31日止年度的該業績公告中 有關本集團截至2022年12月31日止年度的綜合財務狀況表、綜合利潤表、綜合全面收 益表及相關附註所列數字與本集團該年度的經審計綜合財務報表所列載數額符合一 致。德博就此執行的工作不構成鑒證業務，德博並未對該業績公告發出任何意見或鑒 證結論」。 除上文所披露外，該業績公告所有其他資料保持不變。 承董事會命 天彩控股有限公司 主席 ...

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。 SKY LIGHT HOLDINGS LIMITED 天 彩 控 股 有 限 公 司 （於開曼群島註冊成立的有限公司） （股份代號：3882） 截 至2022年12月31日 止 年 度 的 年 度 業 績 公 告 財務摘要 2022年 2021年 變動 千港元 千港元 收入 417,077 715,093 (41.7%) 銷售成本 (343,805) (593,335) (42.1%) 毛利 73,272 121,758 (39.8%) 毛利率(%) 17.6% 17.0% 0.6個百份點 年內虧損 (31,217) (3,412) 814.9% ...

Financial Performance - Revenue for the six months ended June 30, 2022, was approximately HKD 264.6 million, a decrease of 16.6% compared to HKD 317.2 million for the same period in 2021[7]. - Gross profit for the same period was HKD 43.34 million, down 25.1% from HKD 57.86 million in 2021, resulting in a gross margin of 16.4%[7]. - The company recorded a loss of HKD 1.585 million, an improvement of 80.2% compared to a loss of HKD 7.992 million in the previous year[7]. - The group's revenue for the first half of 2022 was approximately HKD 264.6 million, a significant decrease of about 16.6% compared to HKD 317.2 million in the first half of 2021, primarily due to a reduction in the quantity of home surveillance cameras sold[24]. - Revenue from home surveillance cameras was HKD 165.0 million, accounting for 62.4% of total revenue, down from HKD 208.4 million (65.7%) in the previous year, representing a decline of 20.8%[24]. - Gross profit for the first half of 2022 was approximately HKD 43.3 million, a decrease of about 25.1% from HKD 57.9 million in the first half of 2021, with the gross margin dropping from 18.2% to 16.4%[31]. - The group recorded a loss of approximately HKD 1.6 million for the first half of 2022, with a loss attributable to non-controlling interests of about HKD 3.2 million[39]. - The net loss for the period was HKD 1,585 thousand, significantly improved from a loss of HKD 7,992 thousand in 2021, representing a reduction of 80.2%[138]. - Total comprehensive loss for the period was HKD 16,730 thousand, compared to a loss of HKD 4,101 thousand in 2021[138]. - The company reported a significant increase in other income and gains to HKD 19,535 thousand from HKD 725 thousand in 2021[135]. - The company reported a net loss of 1,611 thousand HKD for the period, compared to a loss of 3,196 thousand HKD in the previous year, indicating an improvement of approximately 49%[160]. - Total comprehensive income for the period amounted to a loss of 14,281 thousand HKD, a significant increase from a loss of 3,804 thousand HKD in the same period last year[160]. Cash Flow and Assets - The group's operating cash flow for the first half of 2022 was approximately HKD 5.6 million, reflecting a pre-tax loss of about HKD 1.6 million and a significant decrease in inventory of approximately HKD 79.7 million[41]. - Cash and cash equivalents at the end of the first half of 2022 amounted to HKD 90.9 million, an increase of HKD 4.7 million from HKD 86.3 million at the end of the previous year[41]. - The company's total assets as of June 30, 2022, were reported at 752,853 thousand HKD, reflecting a decrease from 716,766 thousand HKD at the beginning of the year[160]. - The company generated cash inflow from investing activities of 12,905 thousand HKD, compared to an outflow of 2,432 thousand HKD in the prior year[163]. - The cash and cash equivalents at the end of the period stood at 90,856 thousand HKD, an increase from 86,290 thousand HKD at the end of the previous year[163]. Operational Strategies - The company plans to focus on developing innovative products with market value to improve financial performance[19]. - The company aims to actively expand into markets in Japan, Europe, and other Asian countries[21]. - The company will optimize internal operations to enhance service efficiency for customers[23]. - The company anticipates increased demand for video conferencing equipment due to the shift towards remote work caused by the COVID-19 pandemic[16]. - The company will take effective measures to mitigate risks associated with unfavorable economic factors such as de-globalization and high inflation[16]. - The company aims to strengthen competitive advantages across its product categories through deeper integration of its main product lines[22]. Shareholder Information - As of June 30, 2022, the total number of issued shares was 952,739,455[77]. - Mr. Tang Wing-fong holds 417,717,600 shares, representing approximately 69.09% of the company's total issued shares[75]. - The major shareholder, China Merchants Yonglong Trust Co., Ltd., holds 417,717,600 shares, accounting for 43.84% of the total issued shares[81]. - The beneficial owner, Fortune Six Investment Limited, also holds 417,717,600 shares, which is 43.84% of the total issued shares[82]. - Ms. Tang Kam-siu has a controlled corporation interest of 39,192,000 shares, representing approximately 4.11%[75]. Corporate Governance - The company adheres to high corporate governance standards, following the principles and code provisions of the Corporate Governance Code as set out in the Listing Rules Appendix 14[115]. - The company has maintained a sufficient public float of at least 25% of its issued share capital since January 1, 2022[125]. - The Audit Committee reviewed the interim report for the six months ended June 30, 2022, and found no objections to the accounting treatment methods used by the company[120]. - The company has adopted the standard code of conduct for securities trading by directors and confirmed compliance throughout the first half of 2022[118]. - The Nomination Committee is responsible for reviewing the board's structure and diversity, and it consists of three members, including the Chairman[121]. - The company has established a written guideline for employees regarding securities trading, which is not less stringent than the standard code[118]. - The independent review of the interim financial data was conducted according to the relevant accounting standards, with no significant issues found[133]. - The Chairman and CEO roles are held by the same individual, which the board believes provides unified leadership beneficial for the company's business outlook[116]. - The company has three independent non-executive directors on the board to ensure a balance of power[116]. Employee Information - The group employed a total of 1,074 employees as of June 30, 2022, down from 1,448 employees as of December 31, 2021, with employee costs amounting to approximately HKD 65.3 million[55]. - Employee benefits expenses (excluding directors and CEO remuneration) totaled HKD 65,393 thousand, down from HKD 70,384 thousand, reflecting a reduction of about 7.1%[196]. Taxation and Subsidies - The group’s subsidiary in China benefits from a preferential tax rate of 15% due to its recognition as a high-tech enterprise[196]. - The group’s subsidiaries in the United States are subject to a federal tax rate of 21% and a state tax rate of 8.84%[196]. - The group’s subsidiary in the UK is subject to a corporate tax rate of 19%[196]. - The company received government subsidies amounting to HKD 1,749,000, down from HKD 2,982,000 in the previous year[190]. - The company incurred income tax expenses of HKD 17,000 for the six months ended June 30, 2022, related to corporate income tax in China[193].

Financial Performance - Total revenue for the fiscal year 2021 was approximately HKD 715.1 million, an increase of 63.6% compared to HKD 437.1 million in 2020[13]. - Gross profit for 2021 was HKD 121.8 million, representing a 99.4% increase from HKD 61.1 million in 2020, with a gross margin of 17.0%[7]. - The company recorded a loss attributable to owners of approximately HKD 3.4 million in 2021, a significant reduction of 95.2% from a loss of HKD 71.1 million in 2020[7]. - The cost of sales for the fiscal year 2021 was approximately HKD 593.3 million, representing 83.0% of total revenue, an increase of 57.8% from HKD 376.0 million in 2020[32]. - Operating cash flow for 2021 was approximately HKD 5.9 million, reflecting a significant improvement from a cash outflow of HKD 11.2 million in 2020[44]. - The company reported a net loss of approximately HKD 3.4 million for the fiscal year 2021, compared to a profit attributable to non-controlling interests of approximately HKD 0.4 million[42]. Growth Expectations - The improvement in financial performance was attributed to enhanced operations at the Vietnam factory, internal efficiency improvements, and an optimized customer portfolio[14]. - The company expects continued growth in its main product lines, including home surveillance cameras and remote teaching equipment, in 2022[20]. - The company expects continued growth in the contribution from home surveillance cameras in the coming years[28]. Sales Performance - Sales of home surveillance cameras reached HKD 494.8 million in 2021, accounting for 69.2% of total sales, with a year-on-year growth of 174.4%[28]. - The company recorded a revenue of approximately HKD 715.1 million for the fiscal year 2021, an increase of about 63.6% compared to HKD 437.1 million in 2020, primarily driven by a significant rise in sales of home surveillance cameras[28]. Challenges and Risks - Challenges anticipated in 2022 include de-globalization, high inflation, semiconductor shortages, and the impact of COVID-19 in Vietnam[21]. Investment and Capital Expenditures - The net cash flow used in investment activities for the fiscal year 2021 was approximately HKD 20.8 million, primarily for purchasing property, plant, and equipment, and intangible assets, with about HKD 20.5 million spent on upgrades[47]. - Capital expenditures for fixed and intangible assets in fiscal year 2021 were approximately HKD 20.5 million, compared to about HKD 3.9 million in fiscal year 2020[52]. Corporate Governance - The company is committed to maintaining high standards of corporate governance, which is essential for effective management and business growth[102]. - The company has complied with the corporate governance code throughout the fiscal year, except for a deviation regarding the roles of the chairman and CEO[102]. - The company has established a risk management policy to achieve its strategic objectives, monitored by the board[107]. - The company has adopted a formal function outline that delineates the powers reserved for the board and those delegated to management, enhancing operational efficiency[107]. Board and Management Structure - The management team includes experienced professionals with over 20 years in digital imaging and financial management[80][81][90]. - The board consists of two executive directors, one non-executive director, and three independent non-executive directors, ensuring a high level of independence for decision-making[109]. - The company secretary, Mr. Lu, also serves as the CFO, ensuring a cohesive approach to financial management[99]. Risk Management - The company has established a risk management framework based on the "three lines of defense" model to oversee risk management and internal controls[178]. - The internal audit department conducts regular assessments of the effectiveness of internal controls and reports findings to the audit committee[180]. - The risk management office coordinates the company's risk management efforts and reports significant risks to the audit committee[180]. Shareholder Engagement - The company has adopted a dividend policy aimed at providing stable and sustainable returns to shareholders, considering financial status, operational needs, and future expansion plans when proposing dividends[195]. - The company holds an annual general meeting for shareholders, with specific notice periods required for both annual and special meetings[196]. - Shareholders holding at least 10% of the paid-up capital can request a special general meeting, which must be held within two months of the request[197].

取扱 2021 Sky Light Holdings Limited 天彩控股有限公司 股份代號 3882 於開曼群島註冊成立之有限公司 天彩控股有限公司 天彩控股有限公司 2021 中期報告 目錄 02 財務摘要 03 公司資料 05 管理層討論及分析 14 其他資料 24 獨立會計師審閱報告 26 簡明綜合損益表 簡明綜合損益及其他全面收益表 27 28 簡明綜合財務狀況表 30 簡明綜合權益變動表 31 簡明綜合現金流量表 32 簡明綜合財務報表附註 財務摘要 | --- | --- | --- | --- | |-------------------------------------------|--------------------------|------------------------------------------|----------------| | | 2021年 千港元 (未經審核) | 截至6月30日止六個月 \n2020 年 (未經審核) | 變動 | | 收入 | 317,228 | 157,568 | 101.3% | | 銷售成本 | (259,372) | (1 ...

Financial Performance - Total revenue for the fiscal year 2020 was approximately HKD 437.1 million, a decrease of about 20.4% compared to HKD 549.1 million in 2019[14] - The gross profit for 2020 was HKD 62.5 million, with a gross margin of 11.4%, down from 14.0% in 2019, reflecting a decline of 2.6 percentage points[8] - The net loss for the fiscal year 2020 was approximately HKD 71.1 million, compared to a loss of HKD 84.5 million in 2019, representing a decrease of 15.9%[8] - Revenue from ODM/JDM business for the fiscal year 2020 was approximately HKD 437.1 million, down about 20% from HKD 549.1 million in 2019[21] - In the fiscal year 2020, the company recorded a revenue of approximately HKD 437.1 million, a decrease of about 20.4% compared to HKD 549.1 million in 2019, primarily due to the impact of COVID-19 on consumer demand and shipping delays[27] - The sales of home surveillance cameras accounted for 42.3% of total revenue in 2020, down from 51.2% in 2019, reflecting a decline of 34.2%[27] Operational Challenges - The company faced challenges due to COVID-19, which severely impacted production in the first half of 2020, despite a recovery in customer orders in the second half[15] - Semiconductor chip shortages affected the ability to meet order demands, contributing to the revenue decline[21] - The company relocated about 50% of its production equipment to Vietnam, but faced delays due to COVID-19 travel restrictions[16] - The company anticipates challenges in 2021 due to semiconductor shortages and rising component prices, and will work closely with suppliers to mitigate risks[22] Production Capacity and Strategy - The Vietnam factory, with an area of approximately 7,000 square meters, achieved a monthly production capacity of 130,000 units by the end of 2020[21] - The company aims to optimize operations and focus on serving medium to large quality customers to enhance future business development[16] - The company plans to continue optimizing internal operations and expects an increase in demand for remote video conferencing products due to travel restrictions[22] Research and Development - Research and development costs decreased by approximately 13.5% to HKD 50.1 million in 2020, down from HKD 57.9 million in 2019, as the company implemented strict cost controls[37] - The company is investing HKD 50 million in R&D for new technologies, aiming to enhance product features and user experience[102] Market Expansion and Future Outlook - The company expects continued growth in its core businesses, including home monitoring cameras and remote teaching equipment, in 2021[21] - The company aims to enhance market share by actively expanding into Japan, Europe, and mainland China markets[25] - Market expansion efforts include entering two new international markets, targeting a 30% increase in market share within these regions[102] - The company is considering strategic acquisitions to bolster its product portfolio, with a budget of up to HKD 300 million allocated for potential deals[102] Financial Position and Cash Flow - The net cash flow from operating activities for the fiscal year 2020 was approximately -6.3 million HKD, reflecting a pre-tax adjusted loss of about 4.9 million HKD and a decrease in trade receivables of approximately 15.9 million HKD[44] - The net cash flow from investing activities for the fiscal year 2020 was approximately 2.9 million HKD, primarily including payments of about 3.9 million HKD for property, plant, and equipment upgrades[45] - The net cash flow used in financing activities for the fiscal year 2020 was approximately -20.5 million HKD, mainly due to repayment of bank borrowings of about 4.7 million HKD and lease principal payments of approximately 15.6 million HKD[45] - As of December 31, 2020, the group's cash and cash equivalents amounted to 100.2 million HKD, a decrease of 23.9 million HKD from the beginning of the year[44] - The debt-to-equity ratio decreased from approximately 6.1% as of December 31, 2019, to approximately 5.6% as of December 31, 2020, due to a significant reduction in outstanding bank borrowings[50] Corporate Governance - The management team includes experienced professionals with over 20 years in digital imaging and financial management[77][78][87] - The company maintains a significant shareholding structure, with the founder holding approximately 68.41% of the issued shares as of December 31, 2020[77] - The board of directors consists of two executive directors and three independent non-executive directors, ensuring a balanced decision-making process[107] - The company has adopted a formal function outline to delineate the powers of the board and management, enhancing operational efficiency[105] - The company has established a system of internal checks and balances to ensure competent individuals are appointed to the board and senior management[112] - Independent non-executive directors possess extensive professional knowledge and experience in accounting, finance, and business, ensuring independent opinions and judgments are influential in decision-making[115] Audit and Compliance - The Audit Committee held four meetings during the year to review and discuss the audited consolidated financial statements for the year ended December 31, 2019, and the unaudited interim financial statements for the six months ended June 30, 2020[140] - The company adopted relevant accounting standards and practices, and the Audit Committee reviewed the effectiveness of internal controls and risk management procedures[141] - The company engaged Ernst & Young as its external auditor for the fiscal year 2020, with audit fees amounting to HKD 2.3 million[155] - The audit committee reviewed the company's corporate governance policies and compliance with legal and regulatory requirements during the fiscal year[156] Risk Management - The company has established a clear organizational structure for risk management, with responsibilities defined at various levels[161] - The internal audit department reports to the audit committee on the effectiveness of internal controls at regular meetings throughout the year[161] - The company follows the COSO internal control framework to ensure effective risk management and internal controls[165] - The risk management office coordinates the company's risk management efforts and reports significant risks to the audit committee[161] - The company emphasizes transparency and accountability in its corporate governance policies, focusing on board quality and effective internal controls[156] Dividend Policy - The board does not recommend any final dividend for the fiscal year 2020, consistent with the previous fiscal year[74] - The company reported no final dividend for the fiscal year 2020, consistent with 2019[188] - As of December 31, 2020, the distributable reserves were approximately HKD 25.1 million, down from HKD 89.2 million in 2019[196] Employee and Social Responsibility - The group employed a total of 1,482 employees as of December 31, 2020, compared to 1,200 employees as of December 31, 2019, with employee costs for the fiscal year 2020 amounting to approximately 96.7 million HKD[59] - The company has implemented environmental measures and encourages employees to focus on environmental protection[200] - The company did not make any charitable donations in the fiscal year 2020, consistent with 2019[197]

Financial Performance - Total revenue for 2019 was approximately HKD 549.1 million, a decrease of 44.5% compared to HKD 989.7 million in 2018[6] - Gross profit for 2019 was HKD 62.5 million, down 63.9% from HKD 173.0 million in 2018, resulting in a gross margin of 11.4%[6] - The company recorded a net loss of HKD 84.5 million in 2019, a 66.7% improvement from a loss of HKD 253.7 million in 2018[6] - Revenue from the ODM/JDM business decreased significantly by approximately HKD 440.6 million to HKD 549.1 million, primarily due to tariffs imposed by the US[21] - Home surveillance cameras contributed approximately 51.2% of total revenue in 2019, with a revenue decline of HKD 379.0 million due to a 25% tariff on products sold to the US[21] - The total equity decreased by 11.8% to HKD 273.3 million from HKD 310.1 million in 2018[6] - The cost of sales for the fiscal year 2019 was approximately HKD 486.6 million, a decrease of about 40.4% from HKD 816.8 million in 2018, representing 88.6% of total revenue[29] - Other income and gains decreased significantly to approximately HKD 9.6 million in 2019, down about HKD 13.3 million from the previous year, mainly due to reduced foreign exchange gains[31] - Administrative expenses decreased by approximately 32.3% to about HKD 61.1 million in 2019, down from HKD 90.3 million in 2018, primarily due to cost optimization measures[35] - Research and development costs were approximately HKD 57.9 million in 2019, a significant decrease of about 41.4% from HKD 98.9 million in 2018, mainly due to staff reductions[36] Strategic Initiatives - The company plans to establish a new factory in Vietnam to mitigate tariff impacts and enhance production speed for US customers starting in 2020[14] - New product development is focused on the online education market, with a product launch expected in early April 2020[15] - The company aims to expand its sales channels in Europe, Japan, and China to reduce the impact of trade protectionism[15] - The company expects to expand its product line for the rapidly growing education market in China and aims to improve financial performance through operational optimization in China and Vietnam[22] - The company plans to actively explore markets in Japan, Europe, and mainland China to increase market share and provide quality products and solutions[22] Cash Flow and Financing - The net cash flow from operating activities for the fiscal year 2019 was approximately HKD 44.9 million, reflecting a significant improvement from a net cash outflow of HKD 87.7 million in 2018[43] - The net cash used in investing activities for fiscal year 2019 was approximately HKD 5.4 million, primarily for the purchase of property, plant, and equipment, and intangible assets totaling about HKD 13.8 million[44] - The net cash used in financing activities for fiscal year 2019 was approximately HKD 21.0 million, mainly due to the repayment of bank loans amounting to HKD 13.0 million[44] - As of December 31, 2019, the group's cash and cash equivalents increased to HKD 106.9 million from HKD 95.1 million at the beginning of the year[43] - The debt-to-equity ratio decreased from approximately 9.6% in 2018 to about 6.1% in 2019, primarily due to a significant reduction in interest-bearing bank borrowings[49] Governance and Management - The company has a strong governance structure with a board consisting of two executive directors, two non-executive directors, and three independent non-executive directors, ensuring over one-third of the board is independent[105] - The company has adopted the corporate governance code principles and has complied with all applicable governance code provisions, except for the separation of the roles of chairman and CEO[98] - The company emphasizes maintaining high levels of corporate governance as a foundation for effective management and successful business growth[98] - The board is responsible for overseeing the company's strategic development and monitoring operational and financial performance[103] - The company has established a formal authority framework that delineates powers reserved for the board and those delegated to management[103] - The audit committee is tasked with fulfilling the corporate governance functions as outlined in the governance code[104] - The company has a commitment to transparency and accountability to enhance shareholder value[98] - The management team is responsible for the daily operations and execution of the company's strategies[90] Risk Management - The company has a strong focus on risk management policies to achieve strategic objectives[103] - The company has established a risk management framework based on the "three lines of defense" model to ensure effective risk management and internal controls[167] - The internal audit department reports to the audit committee on the effectiveness of internal controls at regular meetings throughout the year[167] - The risk management office coordinates the company's risk management efforts and reports significant risks to the audit committee at scheduled meetings[167] - The company has adopted policies to assess and enhance the effectiveness of its risk management and internal control systems, requiring annual evaluations by management[173] - The company aims to provide reasonable assurance against material misstatements or losses, focusing on managing rather than eliminating risks[173] Shareholder Information - The board does not recommend any final dividend for the fiscal year 2019, consistent with the previous fiscal year[69] - The company will suspend share transfer registration from May 21 to May 26, 2020, to determine eligibility for the upcoming annual general meeting[196] - The company’s major shareholder, Mr. Tang, holds approximately 61.83% of the issued shares as of December 31, 2019[73] Committees and Meetings - The company has established three committees: Audit Committee, Remuneration Committee, and Nomination Committee, to oversee specific areas of governance[145] - The Audit Committee held three meetings during the year to review and discuss the audited consolidated financial statements for the year ended December 31, 2018, and the unaudited interim financial statements for the six months ended June 30, 2019[144] - The Remuneration Committee reviewed the remuneration of directors and senior management, with 3 individuals earning between HKD 500,001 and 1,000,000, and 4 individuals earning between HKD 1,000,001 and 1,500,000 for the year ended December 31, 2019[153] - The Nomination Committee held one meeting to review the board structure and composition, ensuring a balance of professional knowledge, skills, and experience[152] - The board held a total of 4 regular meetings during the year, with all directors attending at least 4 out of 4 meetings[136]