[Executive Summary](index=3&type=section&id=Executive%20Summary) The Group's revenue decreased by approximately 10% year-on-year, while loss attributable to owners of the Company also decreased Key Financial Highlights for the Six Months Ended June 30, 2019 | Metric | For the Six Months Ended June 30, 2019 (Thousand HKD) | For the Six Months Ended June 30, 2018 (Thousand HKD) | | :--- | :--- | :--- | | Revenue | 109,300 | 121,100 | | Loss attributable to owners of the Company | (19,700) | (25,900) | | Interim Dividend | Nil | Nil | - The Group's revenue decreased by approximately **10% year-on-year**, from approximately **HKD 121.1 million** in 2018 to approximately **HKD 109.3 million** in 2019[4](index=4&type=chunk) - Loss attributable to owners of the Company decreased year-on-year, from approximately **HKD 25.9 million** in 2018 to approximately **HKD 19.7 million** in 2019[4](index=4&type=chunk) [Financial Results](index=4&type=section&id=Financial%20Results) The Group's financial performance for the six months ended June 30, 2019, shows a decrease in revenue and a narrowing of losses compared to the prior year [Condensed Consolidated Statement of Comprehensive Income](index=4&type=section&id=Condensed%20Consolidated%20Statement%20of%20Comprehensive%20Income) The Group's revenue for the six months ended June 30, 2019, decreased by approximately 10% year-on-year, recording a gross loss and operating loss, but with a narrower loss compared to the same period last year, and reduced basic and diluted loss per share Key Data from Condensed Consolidated Statement of Comprehensive Income (For the Six Months Ended June 30) | Metric | 2019 (Thousand HKD) | 2018 (Thousand HKD) | | :--- | :--- | :--- | | Revenue | 109,293 | 121,066 | | Gross Loss | (1,417) | (5,324) | | Operating Loss | (19,435) | (25,980) | | Loss for the Period | (20,025) | (25,940) | | Loss attributable to owners of the Company | (19,730) | (25,940) | | Basic and Diluted Loss Per Share (HK cents) | (1.33) | (1.75) | - Revenue decreased from **HKD 121,066 thousand** in the same period of 2018 to **HKD 109,293 thousand** in 2019, a decrease of approximately **10%**[6](index=6&type=chunk) - Gross loss narrowed from **HKD 5,324 thousand** in the same period of 2018 to **HKD 1,417 thousand** in 2019[6](index=6&type=chunk) [Condensed Consolidated Statement of Financial Position](index=6&type=section&id=Condensed%20Consolidated%20Statement%20of%20Financial%20Position) The Group's financial position as of June 30, 2019, shows a decrease in total assets and equity, while total liabilities remained relatively stable [Overview of Condensed Consolidated Statement of Financial Position](index=6&type=section&id=Overview%20of%20Condensed%20Consolidated%20Statement%20of%20Financial%20Position) As of June 30, 2019, the Group's total assets and total equity both decreased, but total liabilities remained relatively stable, with non-current assets increasing due to right-of-use assets and intangible assets, while current assets decreased Key Data from Condensed Consolidated Statement of Financial Position | Metric | June 30, 2019 (Thousand HKD) | December 31, 2018 (Thousand HKD) | | :--- | :--- | :--- | | Non-current assets | 80,475 | 63,801 | | Current assets | 141,216 | 176,994 | | Total assets | 221,691 | 240,795 | | Total equity | 185,683 | 203,965 | | Total liabilities | 36,008 | 36,830 | | Right-of-use assets | 15,211 | — | | Intangible assets | 5,322 | 3,122 | | Lease liabilities (non-current) | 10,955 | — | | Lease liabilities (current) | 5,555 | — | - Non-current assets increased from **HKD 63,801 thousand** as of December 31, 2018, to **HKD 80,475 thousand** as of June 30, 2019, primarily due to the initial recognition of **HKD 15,211 thousand** in right-of-use assets and an increase in intangible assets[13](index=13&type=chunk) - Current assets decreased from **HKD 176,994 thousand** as of December 31, 2018, to **HKD 141,216 thousand** as of June 30, 2019[13](index=13&type=chunk) [Condensed Consolidated Statement of Changes in Equity](index=8&type=section&id=Condensed%20Consolidated%20Statement%20of%20Changes%20in%20Equity) This statement outlines changes in the components of the Company's equity for the six months ended June 30, 2019 [Overview of Condensed Consolidated Statement of Changes in Equity](index=8&type=section&id=Overview%20of%20Condensed%20Consolidated%20Statement%20of%20Changes%20in%20Equity) This condensed consolidated statement of changes in equity outlines the movements in each component of the Company's equity for the six months ended June 30, 2019, including share capital, reserves, and retained earnings, explaining the composition of other reserves and revaluation reserves - Other reserves include the difference between the share capital and total capital acquired from subsidiaries during the company's listing reorganization, and the amount of loans waived by controlling shareholders during common control mergers[30](index=30&type=chunk) - Revaluation reserve refers to the fair value reserve for financial assets measured at fair value through other comprehensive income[31](index=31&type=chunk) [Condensed Consolidated Statement of Cash Flows](index=9&type=section&id=Condensed%20Consolidated%20Statement%20of%20Cash%20Flows) This statement presents the cash flows from operating, investing, and financing activities for the six months ended June 30, 2019 [Overview of Condensed Consolidated Statement of Cash Flows](index=9&type=section&id=Overview%20of%20Condensed%20Consolidated%20Statement%20of%20Cash%20Flows) For the six months ended June 30, 2019, the Group generated net cash inflow from operating activities, with net cash outflows from investing and financing activities, but achieved a net increase in cash and cash equivalents overall, reversing the net decrease trend of the prior year Key Data from Condensed Consolidated Statement of Cash Flows (For the Six Months Ended June 30) | Metric | 2019 (Thousand HKD) | 2018 (Thousand HKD) | | :--- | :--- | :--- | | Net cash generated from / (used in) operating activities | 4,398 | (35,880) | | Net cash used in investing activities | (2,152) | (1,143) | | Net cash generated from / (used in) financing activities | 909 | (154) | | Net increase / (decrease) in cash and cash equivalents | 3,155 | (37,177) | | Cash and cash equivalents at end of period | 74,305 | 50,818 | - Operating activities shifted from a net cash outflow of **HKD 35,880 thousand** in the same period of 2018 to a net cash inflow of **HKD 4,398 thousand** in 2019[37](index=37&type=chunk) - Cash and cash equivalents at the end of the period increased from **HKD 50,818 thousand** in the same period of 2018 to **HKD 74,305 thousand** in 2019[53](index=53&type=chunk) [Notes to the Condensed Consolidated Interim Financial Statements](index=10&type=section&id=Notes%20to%20the%20Condensed%20Consolidated%20Interim%20Financial%20Statements) This section provides detailed notes explaining the basis of preparation, significant accounting policies, financial risk management, and other key financial information for the condensed consolidated interim financial statements [1. Basis of Preparation](index=10&type=section&id=1.%20Basis%20of%20Preparation) The Company, incorporated in the Cayman Islands and listed on GEM since February 7, 2014, primarily engages in display panel trading and processing, and optical product development and sales, with interim financial statements prepared in accordance with HKAS 34 and GEM Listing Rules and reviewed by the audit committee - The Company was incorporated in the Cayman Islands on June 13, 2013, and its shares have been listed on GEM since February 7, 2014[54](index=54&type=chunk) - The Group primarily engages in the trading and processing of display panels, the development and sale of optical products, and the trading of related electronic components[54](index=54&type=chunk) - The interim financial statements are prepared in accordance with Hong Kong Accounting Standard 34 and the GEM Listing Rules, and have been reviewed by the Company's audit committee[54](index=54&type=chunk)[55](index=55&type=chunk) [2. Significant Accounting Policies](index=10&type=section&id=2.%20Significant%20Accounting%20Policies) The Group first adopted and applied HKFRS 16 Leases, leading to significant changes in lease accounting, recognizing right-of-use assets and lease liabilities, and impacting retained earnings at the beginning of the period - The Group first adopted and applied Hong Kong Financial Reporting Standard 16 Leases from January 1, 2019[56](index=56&type=chunk) - Upon adoption of HKFRS 16, leases are recognized as right-of-use assets and corresponding liabilities, measured at present value[58](index=58&type=chunk) Impact of Adopting HKFRS 16 on Consolidated Statement of Financial Position (January 1, 2019) | Item | Impact (Thousand HKD) | | :--- | :--- | | Right-of-use assets | Increase 14,943 | | Deferred tax assets | Increase 55 | | Lease liabilities | Increase 15,966 | | Retained earnings | Decrease 968 | [3. Financial Risk Management and Financial Instruments](index=14&type=section&id=3.%20Financial%20Risk%20Management%20and%20Financial%20Instruments) The Group faces market, credit, liquidity, and price risks, with detailed disclosures on financial instrument classification, contractual maturities for liquidity risk, and fair value measurement hierarchies and valuation techniques - The Group's business is exposed to market risk (including foreign exchange risk and cash flow and fair value interest rate risk), credit risk, liquidity risk, and price risk[81](index=81&type=chunk) - Risk management policies have not changed since the year-end[82](index=82&type=chunk) [3.1 Financial Instruments by Category](index=14&type=section&id=3.1%20Financial%20Instruments%20by%20Category) The Group's financial instruments primarily include financial assets and liabilities measured at amortized cost, and financial assets measured at fair value through other comprehensive income or profit or loss Financial Assets (June 30, 2019 vs December 31, 2018) | Financial Asset Category | June 30, 2019 (Thousand HKD) | December 31, 2018 (Thousand HKD) | | :--- | :--- | :--- | | Financial assets measured at amortized cost | 91,482 | 93,609 | | Financial assets measured at fair value through other comprehensive income | 2,392 | 2,652 | | Financial assets measured at fair value through profit or loss | 55,248 | 54,988 | Financial Liabilities (June 30, 2019 vs December 31, 2018) | Financial Liability Category | June 30, 2019 (Thousand HKD) | December 31, 2018 (Thousand HKD) | | :--- | :--- | :--- | | Liabilities measured at amortized cost | 32,251 | 27,776 | [3.2 Financial Risk Factors](index=15&type=section&id=3.2%20Financial%20Risk%20Factors) The Group's business is exposed to market risk (including foreign exchange and interest rate risks), credit risk, liquidity risk, and price risk, with no changes in risk management policies since the last year-end - The Group's business is exposed to market risk (including foreign exchange risk and cash flow and fair value interest rate risk), credit risk, liquidity risk, and price risk[81](index=81&type=chunk) - Risk management policies have not changed since the year-end[82](index=82&type=chunk) [3.3 Liquidity Risk](index=15&type=section&id=3.3%20Liquidity%20Risk) The Group disclosed the contractual maturities of its non-derivative financial liabilities as of June 30, 2019, with a significant portion of lease liabilities due within one to five years Contractual Maturities of Non-derivative Financial Liabilities (June 30, 2019) | Liability Category | Less than 1 year (Thousand HKD) | Between 1 and 5 years (Thousand HKD) | Total contractual cash flows (Thousand HKD) | Carrying amount (Thousand HKD) | | :--- | :--- | :--- | :--- | :--- | | Trade payables | 5,250 | — | 5,250 | 5,250 | | Other payables | 2,423 | — | 2,423 | 2,423 | | Bank borrowings | 8,092 | — | 8,092 | 8,068 | | Lease liabilities | 6,346 | 12,003 | 18,349 | 16,510 | [3.4 Fair Value Measurement](index=16&type=section&id=3.4%20Fair%20Value%20Measurement) The Group categorizes financial instrument fair value measurement inputs into three levels and discloses financial assets measured on a recurring basis as of June 30, 2019, primarily investments in Mobvoi preferred shares and a private company's ordinary shares, providing valuation techniques and quantitative information on unobservable inputs - The Group classifies financial instruments into three levels for fair value measurement: Level 1 (quoted prices in active markets), Level 2 (observable inputs), and Level 3 (unobservable inputs)[85](index=85&type=chunk) Ending Balances of Financial Assets Measured at Fair Value | Category | June 30, 2019 (Thousand HKD) | June 30, 2018 (Thousand HKD) | | :--- | :--- | :--- | | Financial assets measured at fair value through profit or loss | 55,248 | 54,777 | | Financial assets measured at fair value through other comprehensive income | 2,392 | 2,678 | | Total | 57,640 | 57,455 | - The valuation of Mobvoi Inc. preferred shares uses business valuation (discounted cash flow) and equity value allocation (option pricing method), with the primary unobservable input being the weighted average cost of capital (**16.18%**)[92](index=92&type=chunk) [4. Revenue](index=18&type=section&id=4.%20Revenue) The Group's revenue primarily derives from the sale of display products, optical products, and related electronic components to external parties - Revenue refers to income derived from the sale of display products, optical products, and related electronic components to external parties[93](index=93&type=chunk) [5. Segment Information](index=19&type=section&id=5.%20Segment%20Information) The Group has two reportable operating segments, display products and optical products, with performance assessed based on revenue and results, and detailed disclosures on revenue by product, customer geographical location, and major customers, as well as non-current segment assets by asset location - The Group has two reportable operating segments: the display products segment and the optical products segment[97](index=97&type=chunk) - Directors assess the performance of operating segments based on the measurement of revenue and results for each segment[98](index=98&type=chunk) [5.1 Revenue from Major Products](index=19&type=section&id=5.1%20Revenue%20from%20Major%20Products) For the six months ended June 30, 2019, TFT-LCD panels and modules remained the primary revenue source but decreased year-on-year, while the electronic billboard business began to contribute revenue Revenue from Major Products (For the Six Months Ended June 30) | Product Category | 2019 (Thousand HKD) | 2018 (Thousand HKD) | | :--- | :--- | :--- | | TFT-LCD panels and modules | 98,669 | 104,779 | | Electronic billboards | 2,822 | — | | Light guide plates | 1,709 | 5,111 | | Optical products | 1,689 | 4,398 | | Driver ICs | 1,028 | 1,704 | | Polarizers | 488 | 2,389 | | Others | 2,888 | 2,685 | | Total | 109,293 | 121,066 | [5.2 Revenue by Geographical Location of Customers](index=20&type=section&id=5.2%20Revenue%20by%20Geographical%20Location%20of%20Customers) The Group's revenue primarily originates from customers in Hong Kong and Mainland China, with Hong Kong revenue decreasing year-on-year and Taiwan revenue increasing Revenue by Geographical Location of Customers (For the Six Months Ended June 30) | Geographical Location | 2019 (Thousand HKD) | 2018 (Thousand HKD) | | :--- | :--- | :--- | | Hong Kong | 90,911 | 102,304 | | People's Republic of China | 15,508 | 17,568 | | Taiwan | 2,874 | 1,194 | | Total | 109,293 | 121,066 | [5.3 Revenue from Major Customers](index=20&type=section&id=5.3%20Revenue%20from%20Major%20Customers) For the six months ended June 30, 2019, three major customers (Customers A, B, and C) contributed over 10% of total revenue, totaling HKD 43,355 thousand, all recognized within the display products segment Revenue from Major Customers (For the Six Months Ended June 30) | Customer | 2019 (Thousand HKD) | 2018 (Thousand HKD) | | :--- | :--- | :--- | | Customer A | 18,777 | — | | Customer B | 12,511 | 19,655 | | Customer C | 12,067 | — | | Total | 43,355 | 19,655 | - All three major customers mentioned above are included in the display products segment[102](index=102&type=chunk) [5.4 Non-current Segment Assets](index=21&type=section&id=5.4%20Non-current%20Segment%20Assets) The Group's non-current segment assets are primarily located in Hong Kong and Mainland China, with right-of-use assets and intangible assets showing growth in the first half of 2019 Non-current Segment Assets (Excluding Financial Assets and Deferred Tax Assets) | Asset Category | Hong Kong (Thousand HKD) | China (Thousand HKD) | Total (Thousand HKD) | | :--- | :--- | :--- | :--- | | Property, plant and equipment | 431 | 1,780 | 2,211 | | Right-of-use assets | 5,251 | 9,960 | 15,211 | | Intangible assets | 4,200 | 1,122 | 5,322 | [6. Net Other Income](index=21&type=section&id=6.%20Net%20Other%20Income) For the six months ended June 30, 2019, the Group's net other income was HKD 519 thousand, primarily comprising fair value changes of financial assets measured at fair value through profit or loss and net exchange gains Composition of Net Other Income (For the Six Months Ended June 30) | Item | 2019 (Thousand HKD) | 2018 (Thousand HKD) | | :--- | :--- | :--- | | Fair value changes of financial assets measured at fair value through profit or loss | 260 | 508 | | Net exchange gains / (losses) | 139 | (109) | | Others | 120 | 99 | | Total | 519 | 498 | [7. Finance Costs](index=21&type=section&id=7.%20Finance%20Costs) For the six months ended June 30, 2019, the Group's finance costs significantly increased to HKD 714 thousand, mainly due to interest expenses on bank borrowings and the initial recognition of interest expenses on lease liabilities Composition of Finance Costs (For the Six Months Ended June 30) | Item | 2019 (Thousand HKD) | 2018 (Thousand HKD) | | :--- | :--- | :--- | | Interest expense on bank borrowings | 255 | 5 | | Interest expense on lease liabilities | 459 | — | | Factoring fees | — | 3 | | Total | 714 | 8 | - Finance costs significantly increased from **HKD 8 thousand** in the same period of 2018 to **HKD 714 thousand** in 2019[108](index=108&type=chunk) - Interest expense on lease liabilities of **HKD 459 thousand** was initially recognized due to the adoption of Hong Kong Financial Reporting Standard 16[108](index=108&type=chunk) [8. Loss Before Income Tax](index=22&type=section&id=8.%20Loss%20Before%20Income%20Tax) The Group's loss before income tax for the six months ended June 30, 2019, was primarily influenced by factors such as cost of inventories sold, reversal of inventory provisions, depreciation of property, plant and equipment, and depreciation of right-of-use assets Components of Loss Before Income Tax (For the Six Months Ended June 30) | Item | 2019 (Thousand HKD) | 2018 (Thousand HKD) | | :--- | :--- | :--- | | Cost of inventories sold | 120,879 | 122,992 | | Net (reversal of provision) / provision for obsolete inventories | (12,706) | 203 | | Depreciation of property, plant and equipment | 828 | 958 | | Depreciation of right-of-use assets | 2,515 | — | - A reversal of provision for obsolete inventories of **HKD 12,706 thousand** was recorded in the first half of 2019, compared to a provision of **HKD 203 thousand** in the same period last year[110](index=110&type=chunk) - Depreciation of right-of-use assets of **HKD 2,515 thousand** was initially recognized due to the adoption of new accounting standards[110](index=110&type=chunk) [9. Income Tax](index=22&type=section&id=9.%20Income%20Tax) The Group's income tax for the six months ended June 30, 2019, was HKD 26 thousand, primarily consisting of deferred income tax, with no Hong Kong profits tax provision made during the period Income Tax Amount (For the Six Months Ended June 30) | Item | 2019 (Thousand HKD) | 2018 (Thousand HKD) | | :--- | :--- | :--- | | Current income tax | (2) | (2) | | Deferred income tax | 28 | 37 | | Total | 26 | 35 | - No provision for Hong Kong profits tax has been made as the Group had no estimated assessable profits arising in or derived from Hong Kong during the period[111](index=111&type=chunk) [10. Dividends](index=22&type=section&id=10.%20Dividends) The Board of Directors decided not to declare an interim dividend for the six months ended June 30, 2019, consistent with the same period last year - The Board of Directors did not declare an interim dividend for the six months ended June 30, 2019 (for the six months ended June 30, 2018: nil)[112](index=112&type=chunk) [11. Basic and Diluted Loss Per Share](index=23&type=section&id=11.%20Basic%20and%20Diluted%20Loss%20Per%20Share) For the six months ended June 30, 2019, the Company's basic and diluted loss per share was 1.33 HK cents, a decrease from 1.75 HK cents in the same period last year, with basic and diluted losses being consistent due to the absence of potentially dilutive ordinary shares Calculation of Basic and Diluted Loss Per Share (For the Six Months Ended June 30) | Metric | 2019 (Unaudited) | 2018 (Unaudited) | | :--- | :--- | :--- | | Loss attributable to owners of the Company (Thousand HKD) | (19,730) | (25,940) | | Weighted average number of ordinary shares in issue (Thousand shares) | 1,483,687 | 1,483,687 | | Basic and diluted loss per share (HK cents per share) | (1.33) | (1.75) | - As the Group had no potentially dilutive ordinary shares in issue for the six months ended June 30, 2019 and 2018, the basic loss per share was the same as the diluted loss per share[118](index=118&type=chunk) [12. Property, Plant and Equipment](index=23&type=section&id=12.%20Property,%20Plant%20and%20Equipment) As of June 30, 2019, the net book value of the Group's property, plant and equipment decreased, primarily due to depreciation and disposals, though minor additions were made during the period Movements in Net Book Value of Property, Plant and Equipment (For the Six Months Ended June 30) | Item | 2019 (Thousand HKD) | | :--- | :--- | | Opening balance as at January 1, 2019 | 3,031 | | Additions | 50 | | Depreciation | (828) | | Disposals | (49) | | Exchange differences | 7 | | Closing balance as at June 30, 2019 | 2,211 | - The net book value of property, plant and equipment decreased from **HKD 3,031 thousand** as of January 1, 2019, to **HKD 2,211 thousand** as of June 30, 2019[115](index=115&type=chunk) [13. Intangible Assets](index=24&type=section&id=13.%20Intangible%20Assets) As of June 30, 2019, the net book value of the Group's intangible assets significantly increased due to additions, with no changes in the prior year Movements in Net Book Value of Intangible Assets (For the Six Months Ended June 30) | Item | 2019 (Thousand HKD) | | :--- | :--- | | Opening balance as at January 1, 2019 | 3,122 | | Additions | 2,200 | | Amortization | — | | Closing balance as at June 30, 2019 | 5,322 | - The net book value of intangible assets increased from **HKD 3,122 thousand** as of January 1, 2019, to **HKD 5,322 thousand** as of June 30, 2019, primarily due to additions of **HKD 2,200 thousand**[127](index=127&type=chunk)[128](index=128&type=chunk)[130](index=130&type=chunk) [14. Trade and Other Receivables](index=24&type=section&id=14.%20Trade%20and%20Other%20Receivables) As of June 30, 2019, the Group's total trade and other receivables decreased, with reductions in both trade receivables and prepayments, deposits, and other receivables, and the aging analysis of trade receivables showing a decrease in short-term receivables Trade and Other Receivables (June 30, 2019 vs December 31, 2018) | Item | June 30, 2019 (Thousand HKD) | December 31, 2018 (Thousand HKD) | | :--- | :--- | :--- | | Trade receivables | 4,890 | 8,218 | | Bills receivable | 139 | — | | Prepayments, deposits and other receivables | 4,741 | 5,133 | | Total | 9,770 | 13,351 | Aging Analysis of Trade and Bills Receivables (June 30, 2019) | Aging | June 30, 2019 (Thousand HKD) | | :--- | :--- | | 0–30 days | 1,864 | | 31–60 days | 2,105 | | 61–90 days | 347 | | 91–180 days | 359 | | 181 days –12 months | 354 | | Total | 5,029 | - The Group generally grants credit terms of **30 to 90 days**[137](index=137&type=chunk) [15. Trade and Other Payables](index=25&type=section&id=15.%20Trade%20and%20Other%20Payables) As of June 30, 2019, the Group's total trade and other payables significantly decreased, mainly due to reductions in trade payables and customer deposits received, with the aging structure of trade payables showing a decrease in short-term payables Trade and Other Payables (June 30, 2019 vs December 31, 2018) | Item | June 30, 2019 (Thousand HKD) | December 31, 2018 (Thousand HKD) | | :--- | :--- | :--- | | Trade payables | 5,250 | 15,370 | | Customer deposits received | 3,756 | 9,032 | | Accruals and other payables | 2,424 | 3,448 | | Total | 11,430 | 27,850 | Aging Analysis of Trade Payables (June 30, 2019) | Aging | June 30, 2019 (Thousand HKD) | | :--- | :--- | | 0–30 days | 4,990 | | 31–60 days | 251 | | 61–90 days | 9 | | 91–180 days | — | | Total | 5,250 | [16. Bank Borrowings](index=26&type=section&id=16.%20Bank%20Borrowings) As of June 30, 2019, the Group's short-term bank loans decreased, with repayments being the primary activity during the period - As of June 30, 2019, the Group's short-term bank loans amounted to approximately **HKD 8,068 thousand** (December 31, 2018: **HKD 8,979 thousand**), bearing fixed interest rates, denominated in RMB, and repayable within a period not exceeding one year[139](index=139&type=chunk) Analysis of Bank Borrowings Movements (For the Six Months Ended June 30) | Item | 2019 (Thousand HKD) | | :--- | :--- | | Opening balance as at January 1, 2019 | 8,979 | | Repayment of bank loans | (911) | | Closing balance as at June 30, 2019 | 8,068 | [17. Related Party Transactions](index=26&type=section&id=17.%20Related%20Party%20Transactions) The Group disclosed key management personnel compensation, including short-term employee benefits and employee retirement benefits, with the total amount remaining similar to the prior year Key Management Personnel Compensation (For the Six Months Ended June 30) | Item | 2019 (Thousand HKD) | 2018 (Thousand HKD) | | :--- | :--- | :--- | | Short-term employee benefits | 3,843 | 3,816 | | Employee retirement benefits — defined contribution plans | 27 | 27 | | Total | 3,870 | 3,843 | [18. Contribution from Non-controlling Interests](index=26&type=section&id=18.%20Contribution%20from%20Non-controlling%20Interests) In March 2019, the Group entered into agreements with two independent third parties to invest in shares of its subsidiary, Perinnova Limited, with each investing USD 190,000 for a 19% stake, and the Group holding the remaining 62% - The Group entered into subscription and shareholders' agreements with two independent third parties (the "Investors") to invest in shares of Perinnova Limited, a subsidiary of the Group[141](index=141&type=chunk) - The subscription was completed in April 2019, with each investor investing **USD 190,000** (totaling approximately **HKD 2,964,000**) and holding **19%** equity, while the Group holds the remaining **62%** equity in Perinnova[141](index=141&type=chunk) [19. Major Non-cash Transactions](index=26&type=section&id=19.%20Major%20Non-cash%20Transactions) For the six months ended June 30, 2019, the Group's major non-cash transaction was the recognition of right-of-use assets of HKD 2,764,000 due to property lease arrangements - For the six months ended June 30, 2019, the Group entered into property lease arrangements and recognized right-of-use assets of **HKD 2,764,000**[142](index=142&type=chunk) [Management Discussion and Analysis](index=27&type=section&id=Management%20Discussion%20and%20Analysis) This section provides an overview of the Group's business performance, financial results, liquidity, and future prospects, along with employee information [Business Review](index=27&type=section&id=Business%20Review) The Group primarily engages in electronic product display component trading and optical product development and sales, with revenue and loss decreasing due to the shrinking Chinese mobile phone market, but with a narrower loss, and is actively expanding its product portfolio, particularly electronic billboards, and optimizing investments - The Group primarily engages in the trading of electronic product display components, and the development and sale of optical products and related electronic components[144](index=144&type=chunk) - For the six months ended June 30, 2019, the Group's revenue was approximately **HKD 109,293,000**, a year-on-year decrease of approximately **10%**; loss attributable to owners of the Company was approximately **HKD 19,730,000**, a year-on-year decrease in loss of approximately **HKD 6,210,000**[144](index=144&type=chunk) - The continuous contraction of the domestic mobile phone market in China has impacted the Group as an upstream mobile phone component supplier[144](index=144&type=chunk) [Display Products Segment](index=27&type=section&id=Display%20Products%20Segment) To counter the shrinking mobile display panel market, the Group expanded into medium to large-sized display products and launched electronic billboards, which have begun to contribute revenue, and secured investments from Innolux Corporation and Novatek Microelectronics Corporation - The Group expanded its product portfolio by selling medium to large-sized display products, such as display modules for laptops, monitors, and televisions[145](index=145&type=chunk) - Revenue from the display products segment was approximately **HKD 107,604,000**, a decrease of approximately **8%** compared to the same period in 2018, with TFT-LCD panel and module sales decreasing by approximately **6%**[145](index=145&type=chunk) - The Group launched electronic billboard products and secured investments from Innolux Corporation and Novatek Microelectronics Corporation through their subsidiaries in Perinnova, each holding a **19%** equity stake[147](index=147&type=chunk) [Optical Products Segment](index=28&type=section&id=Optical%20Products%20Segment) The optical products segment experienced a revenue decline this period, facing intense market price competition and insufficient development of virtual reality product content, which the Group plans to address through cost control and technological updates - The optical products segment recorded revenue of approximately **HKD 1,689,000**, a decrease of approximately **HKD 2,709,000** compared to the same period in 2018[148](index=148&type=chunk) - Intense market price competition and a lack of breakthrough in virtual reality product content development pose challenges to optical product sales[148](index=148&type=chunk) - The Group will control costs and update technology to capitalize on opportunities when stronger growth emerges in the extended reality and virtual reality markets[148](index=148&type=chunk) [Investments](index=28&type=section&id=Investments) The fair value of the Group's investment in Mobvoi remained stable as Mobvoi continued to launch new products and expand globally, while the investment in a Taiwanese private company saw a slight dilution of equity due to additional share allocation - There was no significant change in the fair value of the Group's investment in Mobvoi, with the shareholding ratio remaining at approximately **1.53%**[149](index=149&type=chunk) - Mobvoi continued to launch new models of smartwatches and AI watches for children, and expanded its market through collaborations with China Mobile, China Unicom, and Verizon[149](index=149&type=chunk) - The Group's equity investment in a Taiwanese private company engaged in separator film business was slightly diluted from approximately **3.33%** to approximately **3.03%**[149](index=149&type=chunk) [Prospects](index=29&type=section&id=Prospects) Looking ahead to the second half of 2019, the Group anticipates no significant changes in the Chinese mobile phone display panel market trend and will continue to focus on display products as its core business, adopting flexible strategies to diversify products, expand its customer base, and introduce new suppliers to explore new business opportunities - The Group anticipates no significant changes in the trend of the Chinese mobile phone display panel market in the second half of 2019[151](index=151&type=chunk) - The display products segment will continue to be the Group's core business, and flexible strategies will be adopted to broaden the revenue base and enrich the product portfolio, including electronic billboards[151](index=151&type=chunk) - The Group will focus on promoting product diversification, expanding its customer base from different regions, introducing new suppliers, and maintaining flexible business strategies to explore new business opportunities[151](index=151&type=chunk) [Financial Review](index=29&type=section&id=Financial%20Review) For the six months ended June 30, 2019, the Group's revenue decreased, but gross loss narrowed due to reduced inventory provisions, distribution and selling expenses and R&D expenses both decreased, while finance costs significantly increased due to the adoption of new accounting standards, ultimately leading to a reduction in loss attributable to owners of the Company [Revenue](index=29&type=section&id=Revenue) The Group's total revenue decreased by approximately 10% year-on-year, primarily due to reduced sales of TFT-LCD panels and modules, light guide plates, driver ICs, polarizers, and optical products, partially offset by increased electronic billboard revenue - For the six months ended June 30, 2019, the Group's total revenue was approximately **HKD 109,293,000**, a decrease of approximately **10%** compared to the same period in 2018[152](index=152&type=chunk) - The decrease in revenue was primarily due to reduced sales of TFT-LCD panels and modules, light guide plates, driver ICs, polarizers, and optical products, while revenue from electronic billboards increased[152](index=152&type=chunk) [Gross Loss](index=29&type=section&id=Gross%20Loss) The Group's gross loss for the six months ended June 30, 2019, was HKD 1,417,000, a significant reduction from HKD 5,324,000 in the prior year, mainly attributable to a decrease in inventory provisions - A gross loss of approximately **HKD 1,417,000** was recorded for the six months ended June 30, 2019 (same period in 2018: **HKD 5,324,000**)[153](index=153&type=chunk) - The reduction in gross loss was primarily due to a decrease in inventory provisions during the period[153](index=153&type=chunk) [Expenses](index=29&type=section&id=Expenses) The Group's distribution and selling expenses and research and development expenses both decreased, while general and administrative expenses remained similar to the prior year - Distribution and selling expenses were approximately **HKD 4,148,000**, a decrease of approximately **31%** compared to the same period in 2018, mainly due to reduced warehousing costs[154](index=154&type=chunk) - General and administrative expenses were approximately **HKD 13,428,000**, similar to the same period in 2018[154](index=154&type=chunk) - Research and development expenses were approximately **HKD 961,000**, a decrease of approximately **48%** compared to the same period in 2018, mainly due to reduced staff costs and development expenses[154](index=154&type=chunk) [Finance Costs](index=30&type=section&id=Finance%20Costs) The Group's finance costs primarily include interest expenses on bank loans and finance costs on lease liabilities recognized due to the adoption of HKFRS 16, leading to a significant increase in total finance costs - Finance costs for the period primarily included interest expense on bank loans of approximately **HKD 255,000** (same period in 2018: **HKD 5,000**)[156](index=156&type=chunk) - Finance costs on lease liabilities of approximately **HKD 459,000** were recognized in accordance with Hong Kong Financial Reporting Standard 16 (same period in 2018: nil)[156](index=156&type=chunk) [Loss for the Period Attributable to Owners of the Company](index=30&type=section&id=Loss%20for%20the%20Period%20Attributable%20to%20Owners%20of%20the%20Company) For the six months ended June 30, 2019, the loss attributable to owners of the Company was approximately HKD 19,730,000, a decrease of approximately HKD 6,210,000 compared to the prior year, mainly due to reduced gross loss and operating expenses - Loss attributable to owners of the Company was approximately **HKD 19,730,000**, a decrease of approximately **HKD 6,210,000** compared to the same period in 2018[157](index=157&type=chunk) - The reduction in loss was primarily due to a decrease in gross loss and operating expenses during the period[157](index=157&type=chunk) [Liquidity and Financial Resources](index=30&type=section&id=Liquidity%20and%20Financial%20Resources) The Group primarily obtains funding through operating cash and bank borrowings, maintaining a robust liquidity position, with a stable gearing ratio and no significant contingent liabilities or capital commitments, and continuously monitors foreign exchange risks primarily denominated in USD, HKD, RMB, and NTD - The Group's primary sources of funding are cash generated from operations and bank borrowings[158](index=158&type=chunk) Total Bank Deposits, Bank Balances and Cash (June 30, 2019 vs December 31, 2018) | Item | June 30, 2019 (Thousand HKD) | December 31, 2018 (Thousand HKD) | | :--- | :--- | :--- | | Total bank deposits, bank balances and cash | 83,548 | 81,488 | | Less: Restricted bank deposits included in current assets | (9,243) | (10,335) | | Cash and cash equivalents | 74,305 | 71,153 | - The Group has adopted a prudent financial management approach for its treasury policy, maintaining a robust liquidity position throughout the period[171](index=171&type=chunk) [Gearing Ratio](index=31&type=section&id=Gearing%20Ratio) As of June 30, 2019, the Group's gearing ratio was approximately 4.3%, remaining stable compared to 4.4% as of December 31, 2018 - As of June 30, 2019, the Group's gearing ratio (calculated as total interest-bearing bank borrowings divided by total equity) was approximately **4.3%** (December 31, 2018: **4.4%**)[169](index=169&type=chunk) [Pledged Assets](index=32&type=section&id=Pledged%20Assets) As of June 30, 2019, the Group had pledged bank deposits of approximately HKD 9,243,000 to banks to secure bank facilities granted to the Group - As of June 30, 2019, the Group had pledged bank deposits of approximately **HKD 9,243,000** (December 31, 2018: **HKD 10,335,000**) to banks to secure bank facilities granted to the Group[174](index=174&type=chunk) [Foreign Exchange](index=32&type=section&id=Foreign%20Exchange) The Group's business transactions, assets, and liabilities are primarily denominated in USD, HKD, RMB, and NTD, and while there is currently no foreign currency hedging policy, the Board of Directors continuously monitors related foreign currency risks - The Group's business transactions, assets, and liabilities are primarily denominated in USD, HKD, RMB, and NTD[175](index=175&type=chunk) - Currently, the Group does not have a foreign currency hedging policy, but the Board of Directors continuously monitors related foreign currency risks and considers hedging when necessary[175](index=175&type=chunk) [Employee Information](index=32&type=section&id=Employee%20Information) As of June 30, 2019, the Group's total number of employees increased to 75, with total staff costs decreasing, and competitive remuneration packages and benefits provided - As of June 30, 2019, the Group had a total of **75 employees** (December 31, 2018: **72 employees**)[180](index=180&type=chunk) - Total staff costs (including directors' emoluments) for the six months ended June 30, 2019, were approximately **HKD 11,033,000** (same period in 2018: **HKD 12,750,000**)[180](index=180&type=chunk) - The Group provides employees with competitive remuneration packages and various employee benefits consistent with industry practice, including medical benefits, social security, MPF, bonuses, and share option schemes[180](index=180&type=chunk) [Other Information](index=33&type=section&id=Other%20Information) This section covers information regarding directors' and substantial shareholders' interests, share option schemes, securities transactions, compliance with conduct codes, non-competition undertakings, competing interests, corporate governance, and audit committee details [Directors' and Chief Executive's Interests and/or Short Positions in the Shares, Underlying Shares and Debentures of the Company or any Associated Corporation](index=33&type=section&id=Directors'%20and%20Chief%20Executive's%20Interests%20and%2For%20Short%20Positions%20in%20the%20Shares,%20Underlying%20Shares%20and%20Debentures%20of%20the%20Company%20or%20any%20Associated%20Corporation) As of June 30, 2019, Mr. Cheng Wai Tak directly and indirectly held shares in the Company, including 62.24% through Winful Enterprises Limited and beneficially owned 0.15% of the shares Mr. Cheng Wai Tak's Long Positions in the Company's Shares (June 30, 2019) | Name of Director | Capacity | Number of Shares Held | Percentage | | :--- | :--- | :--- | :--- | | Mr. Cheng Wai Tak | Interest in controlled corporation | 923,427,151 | 62.24% | | | Beneficial owner | 2,220,000 | 0.15% | - Mr. Cheng Wai Tak is deemed to be interested in **923,427,151 shares** through Winful Enterprises Limited, which is wholly and beneficially owned by him[183](index=183&type=chunk) [Substantial Shareholders' Interests and/or Short Positions in the Shares and Underlying Shares of the Company](index=34&type=section&id=Substantial%20Shareholders'%20Interests%20and%2For%20Short%20Positions%20in%20the%20Shares%20and%20Underlying%20Shares%20of%20the%20Company) As of June 30, 2019, Winful Enterprises, as a substantial shareholder, directly and beneficially owned 62.24% of the Company's issued share capital, with Mr. Cheng Wai Tak deemed to be interested in the shares held by it Substantial Shareholders' Long Positions in the Company's Shares (June 30, 2019) | Name | Nature of Interest | Number of Shares Held | Percentage | | :--- | :--- | :--- | :--- | | Winful Enterprises | Directly and beneficially owned | 923,427,151 | 62.24% | - Pursuant to the Securities and Futures Ordinance, Mr. Cheng Wai Tak is deemed to be interested in the **923,427,151 shares** held by Winful Enterprises[190](index=190&type=chunk) [Share Option Scheme](index=34&type=section&id=Share%20Option%20Scheme) The Company's share option scheme was approved and adopted on January 20, 2014, but no share options have been granted since its adoption date - The Company's share option scheme was approved and adopted on January 20, 2014[191](index=191&type=chunk) - No share options have been granted under the share option scheme since its adoption date[192](index=192&type=chunk) [Directors' Right to Acquire Shares or Debentures](index=34&type=section&id=Directors'%20Right%20to%20Acquire%20Shares%20or%20Debentures) For the six months ended June 30, 2019, neither the Company, its parent company, nor any of its subsidiaries or fellow subsidiaries entered into any arrangements enabling directors to benefit from acquiring shares or debentures of the Company or any other body corporate - At no time during the six months ended June 30, 2019, was the Company, its parent company, or any of its subsidiaries or fellow subsidiaries a party to any arrangement to enable the directors to acquire benefits by means of the acquisition of shares in, or debentures of, the Company or any other body corporate[193](index=193&type=chunk) [Purchase, Sale or Redemption of Securities](index=35&type=section&id=Purchase,%20Sale%20or%20Redemption%20of%20Securities) For the six months ended June 30, 2019, the Company did not redeem any of its shares, nor did the Company or any of its subsidiaries purchase or sell any of the Company's shares - During the six months ended June 30, 2019, the Company did not redeem any of its shares, nor did the Company or any of its subsidiaries purchase or sell any of the Company's shares[195](index=195&type=chunk) [Compliance with the Code of Conduct for Securities Transactions by Directors](index=35&type=section&id=Compliance%20with%20the%20Code%20of%20Conduct%20for%20Securities%20Transactions%20by%20Directors) The Company has adopted a code of conduct for directors' securities transactions that is no less stringent than the GEM Listing Rules, and all directors confirmed compliance with this code during the reporting period - The Company has adopted a code of conduct regarding directors' securities transactions, the terms of which are no less stringent than the required standard of dealings set out in Rules 5.48 to 5.67 of the GEM Listing Rules[196](index=196&type=chunk) - All directors confirmed compliance with the required standard of dealings and the code of conduct for securities transactions by directors adopted by the Company for the six months ended June 30, 2019[196](index=196&type=chunk) [Non-Competition Undertaking](index=35&type=section&id=Non-Competition%20Undertaking) Mr. Cheng Wai Tak and Winful Enterprises, the Company's controlling shareholders, have entered into non-competition undertakings, committing not to directly or indirectly engage in activities competing with the Group's existing business under specific conditions, and not to interfere with the Group's restricted business - Mr. Cheng Wai Tak and Winful Enterprises, the controlling shareholders of the Company, have entered into deeds of non-competition undertaking[197](index=197&type=chunk) - Each covenantor undertakes not to directly or indirectly engage in, participate in, or hold any business that competes or may compete with the Group's restricted business under specific conditions[197](index=197&type=chunk) - Undertaking not to take any direct or indirect action that constitutes interference with or disruption of the restricted business, including but not limited to soliciting the Group's customers, suppliers, or employees[197](index=197&type=chunk) [Competing Interests](index=36&type=section&id=Competing%20Interests) For the six months ended June 30, 2019, neither the directors nor the Company's controlling shareholders held any business or interest that competed or might compete with the Group's business, and there were no other conflicts of interest - During the six months ended June 30, 2019, none of the directors or controlling shareholders of the Company held any business or interest that competed or might compete with the Group's business[200](index=200&type=chunk) - There were no, nor will there be, any other conflicts of interest with the Group[200](index=200&type=chunk) [Corporate Governance](index=36&type=section&id=Corporate%20Governance) The Company has complied with all code provisions of the Corporate Governance Code, with a deviation where the Chairman and Chief Executive Officer roles are held by the same person (Mr. Cheng Wai Tak), which the Board believes provides strong and unified leadership, but the long-term goal is to separate these positions - The Company has complied with all code provisions of the Corporate Governance Code, with a deviation where the roles of Chairman and Chief Executive Officer are held by the same person (Mr. Cheng Wai Tak)[201](index=201&type=chunk) - The Board believes that Mr. Cheng Wai Tak serving concurrently as Chairman and Chief Executive Officer provides strong and unified leadership for the Company, making business decisions and strategies more effective and efficient in planning and implementation[201](index=201&type=chunk) - The Company's long-term goal is for the roles of Chairman and Chief Executive Officer to be held by different individuals, once suitable candidates are identified[201](index=201&type=chunk) [Audit Committee](index=37&type=section&id=Audit%20Committee) The Company has established an Audit Committee, comprising three independent non-executive directors, with Mr. Wong Yick Chung as Chairman, and it has reviewed this report - The Audit Committee comprises three independent non-executive directors, with Mr. Wong Yick Chung, who possesses appropriate professional background in accounting and financial management, serving as Chairman[204](index=204&type=chunk) - The Audit Committee has reviewed this report and provided its advice and responses thereto[204](index=204&type=chunk) [Disclosure of Directors' Information](index=36&type=section&id=Disclosure%20of%20Directors'%20Information) Effective May 24, 2019, Mr. Wong Yick Chung was appointed as an independent non-executive director of Xinjiang Xinxin Mining Industry Co., Ltd - Effective May 24, 2019, Mr. Wong Yick Chung was appointed as an independent non-executive director of Xinjiang Xinxin Mining Industry Co., Ltd. (Stock Code: 3833)[202](index=202&type=chunk)

Financial Performance - For the three months ended March 31, 2019, the group recorded revenue of approximately HKD 65.6 million, a decrease from HKD 68.7 million for the same period in 2018[4] - The loss attributable to equity holders of the company for the three months ended March 31, 2019, was approximately HKD 8.0 million, compared to a loss of HKD 9.7 million for the same period in 2018[4] - The gross profit for the three months ended March 31, 2019, was HKD 1.1 million, compared to HKD 0.6 million for the same period in 2018[6] - Operating loss for the three months ended March 31, 2019, was HKD 7.7 million, an improvement from an operating loss of HKD 9.7 million in the same period of 2018[6] - The total comprehensive loss for the three months ended March 31, 2019, was HKD 7.9 million, compared to HKD 9.4 million for the same period in 2018[8] - Basic and diluted loss per share for the three months ended March 31, 2019, was HKD 0.54, compared to HKD 0.65 for the same period in 2018[12] - The group reported revenue from major products for the three months ended March 31, 2019, totaling HKD 65,627,000, a decrease of 4.1% from HKD 68,722,000 in the same period of 2018[28] - The revenue from TFT-LCD panels and modules was HKD 61,829,000, down from HKD 62,334,000 year-on-year[28] - The group reported a basic loss per share of HKD 0.54 for the three months ended March 31, 2019, compared to HKD 0.65 for the same period in 2018[34] Dividend and Shareholder Information - The board of directors did not declare an interim dividend for the three months ended March 31, 2019, consistent with the previous year[4] - The group did not declare an interim dividend for the three months ended March 31, 2019, consistent with the same period in 2018[32] - Winful Enterprises directly holds 923,427,151 shares, representing 62.24% of the company's issued share capital[53] - The company has not granted any options under its share option scheme since its adoption on January 20, 2014[55] - No shares were repurchased by the company or its subsidiaries during the three months ended March 31, 2019[57] Accounting and Financial Standards - The group’s financial performance has been prepared in accordance with Hong Kong Financial Reporting Standards and GEM Listing Rules[16] - The financial results have been reviewed by the company's audit committee[17] - The group recognized a net impact of a decrease of HKD 968,000 in retained earnings due to changes in accounting policies as of January 1, 2019[24] - The group’s lease liabilities increased by HKD 15,966,000 as of January 1, 2019, reflecting the adoption of new accounting standards[22] - The group’s usage assets increased by HKD 14,943,000 as of January 1, 2019, following the implementation of the new lease accounting standard[20] - The group’s deferred tax assets increased by HKD 55,000 as of January 1, 2019[21] Business Operations and Challenges - The company operates in the trading and processing of display panels, development and sales of optical products, and trading of related electronic components[16] - The company faced significant challenges in the optical products segment, with revenue dropping to approximately HKD 24,000 from HKD 1,303,000 in the same period of 2018[39] - The company has launched new display products, including electronic advertising boards, and received investments of USD 190,000 from Innolux Corporation and Novatek Microelectronics Corp., each holding a 19% stake in the electronic advertising board business[39] - The company expects no major changes in the Chinese mobile display panel market for the remainder of 2019 and plans to diversify its product offerings and expand its customer base[40] Expenses and Cost Management - Distribution and selling expenses decreased by approximately 28% to HKD 2,048,000 from HKD 2,827,000 in the same period of 2018, primarily due to reduced warehousing rental costs[44] - Research and development expenses were approximately HKD 519,000, a decrease of about HKD 465,000 from HKD 984,000 in the same period of 2018[44] Corporate Governance - The company has adopted a code of conduct for directors' securities transactions, confirming compliance during the reporting period[59] - The company has established an audit committee consisting of three independent non-executive directors, ensuring proper oversight[65]

Financial Performance - The Group's revenue for the year amounted to approximately HK$254.1 million, representing a decrease of 32% compared to 2017[37]. - The consolidated loss attributable to equity holders of the Company for the year was approximately HK$55.8 million, a decrease in loss of approximately HK$42.5 million compared to 2017[37]. - The Group's revenue for the year amounted to approximately HK$254,072,000, representing a 32% year-on-year decrease from HK$371,518,000 in 2017[53]. - Loss attributable to equity holders of the Company for the year was approximately HK$55,780,000, a decrease of approximately HK$42,549,000 compared to a loss of HK$98,329,000 in 2017[53]. - Total revenue for the year ended December 31, 2018, was approximately HK$254,072,000, a decrease of approximately 32% compared to HK$371,518,000 in 2017[86]. - Total cost of sales for the year ended December 31, 2018, amounted to approximately HK$268,428,000, a decrease of approximately 37% from HK$425,311,000 in 2017[87]. - Gross loss for the year ended December 31, 2018, was approximately HK$14,356,000, significantly improved from a gross loss of HK$53,793,000 in 2017[88]. - Loss per share for the year ended December 31, 2018, was HK(3.76) cents, a decrease of approximately 43% from HK(6.63) cents in 2017[112]. - Return on total assets improved to -23.2% for the year ended December 31, 2018, compared to -33.0% in 2017[112]. Market and Operational Challenges - The virtual reality (VR) market did not meet expectations, with growth slowing down following the alleviation of the price war in 2017[39]. - Market concentration to top brands in the mobile phone market has significantly impacted the Group's business[37]. - The Group's performance was affected by slowed GDP growth and Sino-American trade tensions, leading to decreased mobile phone shipments in China[37]. - Domestic mobile phone shipments in China dropped 15.6% to 414.2 million units in 2018, with the number of new model releases decreasing by 27.5%[54]. - A slowdown in the global economy, particularly in the PRC, may adversely affect the Group's business and results of operations due to decreased market demand and selling prices[76][78]. - The Group anticipates a challenging and competitive landscape in the display component markets as the mobile phone market matures[67][69]. Product and Business Development - The Group has expanded trades of medium-to-large sized display products applied on computer notebooks, monitors, and televisions to mitigate business difficulties[37]. - Digital information signage and electronic shelf display products were sought to be introduced during the year as part of performance improvement measures[38]. - The diversification of products has helped stabilize the declining sales despite the overall revenue drop[37]. - The Group has deepened cooperation with partners Innolux Corporation and Novatek Microelectronics Corp. through their investments in its subsidiary, focusing on electronic information signage and electronic shelf display products[46]. - The Group is entering the electronic information signage market, including digital signage and electronic shelf displays, to improve performance and explore new business opportunities[67][69]. - The Group aims to widen its revenue base by exploring new business relationships with suppliers and customers in mainland China and overseas[71][74]. Financial Position and Assets - Cash and cash equivalents decreased by 19% to HK$71,153,000 from HK$88,025,000[120]. - Net current assets decreased by 29% to HK$140,164,000 from HK$197,031,000[120]. - Total assets decreased by 19% to HK$240,795,000 from HK$298,353,000[120]. - Total equity attributable to equity holders decreased by 22% to HK$203,965,000 from HK$260,036,000[120]. - The current ratio decreased from 6.2 times to 4.8 times, a decline of 1.4 times[120]. - The quick ratio decreased from 4.1 times to 2.6 times, a decline of 1.5 times[120]. - As of December 31, 2018, the Group's bank borrowings amounted to approximately HK$8,979,000, with no borrowings in 2017[129]. Corporate Governance - The board of directors consists of three executive directors and three independent non-executive directors, all of whom attended 100% of the regular board meetings held during the year[196]. - The company has complied with all code provisions of the Corporate Governance Code throughout the year, with one noted deviation regarding the roles of the Chairman and Chief Executive Officer[175]. - The company has arranged appropriate insurance coverage for directors' and officers' liabilities, reviewed annually[191]. - The management provides monthly updates to the board to ensure effective governance and oversight[185]. - The company is committed to high standards of corporate governance to safeguard shareholder interests[174]. Employee and Operational Changes - The employee headcount decreased to 72 from 98 in 2017[139]. - As of December 31, 2018, the total number of employees in the Group was 72, a decrease from 98 in 2017, with total employee costs approximately HK$24.49 million, down from HK$25.20 million in 2017[144]. - Total staff costs for the year were approximately HK$24,492,000, a decrease from HK$25,198,000 in 2017[139]. - The Group has expanded its sales support team in the PRC, recruiting additional staff and providing relevant training to enhance customer service[163]. Strategic Decisions and Future Outlook - The Group plans to continue updating its optics technologies to maximize opportunities in the augmented reality and VR markets when they experience robust growth[72][74]. - The Group has introduced new products and suppliers during the review period, performing due diligence on new suppliers as necessary[167]. - The Group has established long-term business relationships with its main suppliers for over ten years and aims to maintain these relationships while exploring new markets[144]. - The Board did not recommend or declare any dividend for the year ended December 31, 2018[152]. - The Group did not have any significant capital commitments or material acquisitions and disposals of subsidiaries during the year ended December 31, 2018[149][156].