信义储电(08328) - 2024 - 中期业绩

Financial Highlights Key Financial Data The company's revenue grew by 17.2% to HKD 646,517 thousand, while profit attributable to owners and basic EPS declined by 9.5% and 9.3% respectively | Indicator | H1 2024 (HKD Thousand) | H1 2023 (HKD Thousand) | Change | | :--- | :--- | :--- | :--- | | Revenue | 646,517 | 551,422 | +17.2% | | Profit attributable to owners of the Company | 12,250 | 13,534 | -9.5% | | Earnings per share - Basic | 1.56 HK cents | 1.72 HK cents | -9.3% | Condensed Consolidated Financial Statements Condensed Consolidated Statement of Profit or Loss and Other Comprehensive Income In H1 2024, revenue grew to HKD 646,517 thousand and gross profit increased, but reduced other income led to lower profit and total comprehensive income for the period | Indicator | H1 2024 (HKD Thousand) | H1 2023 (HKD Thousand) | | :--- | :--- | :--- | | Revenue | 646,517 | 551,422 | | Cost of revenue | (534,764) | (492,098) | | Gross profit | 111,753 | 59,324 | | Other income | 10,628 | 42,872 | | Operating profit | 33,227 | 28,721 | | Profit for the period | 16,054 | 16,908 | | Total comprehensive income for the period | (23,948) | (16,592) | - Exchange differences on translation of financial statements of overseas operations resulted in negative other comprehensive income, HKD (37,851) thousand in H1 2024, similar to HKD (37,914) thousand in the prior period[3] Condensed Consolidated Statement of Financial Position As of June 30, 2024, total assets slightly decreased, non-current assets slightly increased, and net current assets significantly declined due to reduced current assets and liabilities | Indicator | June 30, 2024 (HKD Thousand) | December 31, 2023 (HKD Thousand) | | :--- | :--- | :--- | | Non-current assets | 1,286,634 | 1,212,973 | | Current assets | 891,223 | 1,120,370 | | Current liabilities | 811,099 | 907,376 | | Net current assets | 80,124 | 212,994 | | Net assets | 1,204,069 | 1,225,283 | - Cash and cash equivalents significantly decreased from HKD 206,549 thousand to HKD 48,782 thousand[5] Condensed Consolidated Statement of Changes in Equity In H1 2024, profit attributable to owners was HKD 12,250 thousand, but negative total comprehensive income of HKD 26,757 thousand led to a slight decrease in total equity | Indicator | H1 2024 (HKD Thousand) | H1 2023 (HKD Thousand) | | :--- | :--- | :--- | | Profit for the period attributable to owners of the Company | 12,250 | 13,534 | | Total comprehensive income for the period attributable to owners of the Company | (26,757) | (20,474) | | Proceeds from employee share option scheme | 296 | 183 | | Share-based payment expense | 2,233 | 2,577 | - Exchange reserve decreased by HKD 36,856 thousand due to exchange differences on translation of financial statements of overseas operations[7] Condensed Consolidated Statement of Cash Flows In H1 2024, operating cash flow turned positive, investing cash outflow decreased, but financing cash outflow significantly increased, leading to a larger net decrease in cash and cash equivalents | Indicator | H1 2024 (HKD Thousand) | H1 2023 (HKD Thousand) | | :--- | :--- | :--- | | Net cash generated from/(used in) operating activities | 26,907 | (153,524) | | Net cash used in investing activities | (53,729) | (90,878) | | Net cash (used in)/generated from financing activities | (128,402) | 196,276 | | Net decrease in cash and cash equivalents | (155,224) | (48,126) | | Cash and cash equivalents at end of period | 48,782 | 111,786 | - Repayment of bank borrowings significantly increased to HKD 337,150 thousand, which was the primary reason for the increase in cash outflow from financing activities[8] Notes to the Condensed Consolidated Interim Financial Information General Information The Group operates in automotive glass repair, energy storage, PV encapsulants, and solar EPC services, with financial data presented in HKD thousand and approved on August 2, 2024 - The Group's business is diversified, covering automotive glass repair, energy storage products, photovoltaic encapsulant manufacturing and sales, and solar EPC services[10] Basis of Preparation and Accounting Policies This interim financial information adheres to GEM Listing Rules and HKAS 34, maintaining consistent accounting policies, with new standards having no significant impact on performance or financial position - Newly adopted HKFRSs (e.g., HKAS 1 (Amendments), HKFRS 16 (Amendments)) have no significant impact on the Group's performance and financial position[12] Adoption of New or Revised HKFRSs - Effective 1 January 2024 The Group adopted new or revised HKFRSs on January 1, 2024, covering liability classification, non-current liability covenants, sale and leaseback lease liabilities, and supplier finance disclosures - Adopted standards include HKAS 1 (Amendments) on classification of liabilities as current or non-current, and HKFRS 16 (Amendments) on lease liabilities in a sale and leaseback[12] New or Revised HKFRSs Issued But Not Yet Effective Future HKFRSs, including HKAS 21 (Amendments), HKFRS 18, and HKFRS 19, are not expected to significantly impact the Group's financial performance or position - The Group has begun assessing the impact of future effective standards (e.g., HKFRS 18 Presentation and Disclosure in Financial Statements) and expects no significant impact[13][14] Revenue and Segment Information The Group's five operating segments are managed for performance, with H1 2024 total revenue up 17.2% driven by EPC and PV encapsulants, despite a decline in energy storage revenue - The Group's operating segments include energy storage business, EPC services, photovoltaic encapsulants, automotive glass repair and replacement services, and other segments[16] Segment Results In H1 2024, EPC and PV encapsulant revenue and gross profit grew significantly, energy storage revenue declined but gross profit rose, and automotive glass services saw growth in both | Segment | H1 2024 Revenue (HKD Thousand) | H1 2023 Revenue (HKD Thousand) | H1 2024 Gross Profit (HKD Thousand) | H1 2023 Gross Profit (HKD Thousand) | | :--- | :--- | :--- | :--- | :--- | | Energy Storage Business | 65,926 | 158,932 | 5,728 | 4,466 | | EPC Services | 323,963 | 215,494 | 89,516 | 43,705 | | Photovoltaic Encapsulants | 224,172 | 122,824 | 8,391 | (3,006) | | Automotive Glass Repair and Replacement Services | 25,976 | 23,675 | 7,340 | 6,496 | | Others | 6,480 | 30,497 | 778 | 7,663 | | Total | 646,517 | 551,422 | 111,753 | 59,324 | - In H1 2024, non-current asset additions for EPC services and photovoltaic encapsulants businesses were HKD 7,156 thousand and HKD 12,553 thousand, respectively[16] - In H1 2023, Customer A contributed HKD 116,157 thousand to the total revenue of the energy storage business, accounting for over 10% of total revenue[19] Classification of Revenue from Contracts with Customers Group revenue is geographically segmented, with H1 2024 China market revenue at HKD 396,828 thousand, Canada significantly growing to HKD 217,671 thousand, and other regions stable | Region | H1 2024 (HKD Thousand) | H1 2023 (HKD Thousand) | | :--- | :--- | :--- | | China | 396,828 | 375,121 | | Canada | 217,671 | 150,829 | | Hong Kong | 25,993 | 23,675 | | Others | 6,025 | 1,797 | | Total | 646,517 | 551,422 | Segment Assets and Liabilities As of June 30, 2024, total assets were HKD 2,177,683 thousand and total liabilities were HKD (567,881) thousand, with non-current assets mainly in China | Indicator | June 30, 2024 (HKD Thousand) | December 31, 2023 (HKD Thousand) | | :--- | :--- | :--- | | Reportable segment assets | 2,177,683 | 2,332,891 | | Reportable segment liabilities | (567,881) | (573,656) | | Region | June 30, 2024 Non-current Assets (HKD Thousand) | December 31, 2023 Non-current Assets (HKD Thousand) | | :--- | :--- | :--- | | China | 774,386 | 781,117 | | Canada | 7,555 | 5,070 | | Hong Kong | 22,004 | 21,826 | | Malaysia | 18,962 | 17,618 | | Total | 822,907 | 825,631 | Other Income and Other Net Gains H1 2024 other income significantly decreased to HKD 10,628 thousand due to reduced government grants, while other net gains were HKD 929 thousand from scrap sales and exchange gains | Indicator | H1 2024 (HKD Thousand) | H1 2023 (HKD Thousand) | | :--- | :--- | :--- | | Other Income | | | | Government grants | 1,756 | 40,727 | | Others | 8,872 | 2,145 | | Total | 10,628 | 42,872 | | Other Net Gains | | | | Net gain on disposal of obsolete facilities, scrap or property, plant and equipment | 411 | 2,517 | | Net exchange gain/(loss) | 518 | (456) | | Total | 929 | 2,061 | - H1 2024 government grants primarily included operating cost and tax subsidies from the Chinese government, while H1 2023 mainly comprised HKD 40,392 thousand in operating cost subsidies[25] Finance Income and Finance Costs H1 2024 finance income was HKD 675 thousand, and finance costs were HKD 9,216 thousand, with increased costs after capitalization due to a significant reduction in capitalized amounts | Indicator | H1 2024 (HKD Thousand) | H1 2023 (HKD Thousand) | | :--- | :--- | :--- | | Interest income from bank deposits | 675 | 845 | | Interest on bank borrowings | 9,295 | 12,440 | | Interest on lease liabilities | 564 | 242 | | Interest on discounted bills | 1,771 | 1,037 | | Less: Amount capitalised | (2,414) | (8,369) | | Finance Costs | 9,216 | 5,350 | - The weighted average interest rate for capitalized borrowing costs in H1 2024 was 2.02%, lower than 2.67% in H1 2023[26] Profit Before Income Tax Group profit before income tax is derived after deducting costs of inventories, depreciation, amortization, employee benefits, short-term leases, and R&D expenses | Indicator | H1 2024 (HKD Thousand) | H1 2023 (HKD Thousand) | | :--- | :--- | :--- | | Cost of inventories | 346,457 | 383,331 | | Depreciation expense | 28,419 | 18,960 | | Amortisation expense | 2,021 | 1,109 | | Employee benefit expenses | 52,802 | 47,662 | | Research and development expenses | 20,014 | 17,018 | Income Tax Expense H1 2024 income tax expense rose to HKD 8,632 thousand, with the effective tax rate increasing to 35.0% due to higher profit before tax and more high-tech enterprises in China | Indicator | H1 2024 (HKD Thousand) | H1 2023 (HKD Thousand) | | :--- | :--- | :--- | | Hong Kong profits tax | 234 | 121 | | China corporate income tax | 14,478 | 2,074 | | Canada corporate income tax | 1,664 | 621 | | Deferred tax (expense)/credit | (7,744) | 4,492 | | Total | 8,632 | 7,308 | - Four Chinese subsidiaries are recognized as high-tech enterprises, enjoying a preferential corporate income tax rate of 15%[29] - A Hong Kong subsidiary completed tax audits for the 2017/18 to 2020/21 assessment years, with additional tax and interest totaling HKD 302,000[30] Earnings Per Share H1 2024 basic and diluted earnings per share both decreased to 1.56 HK cents Basic Earnings Per Share Basic earnings per share is calculated using profit attributable to owners and weighted average ordinary shares, resulting in 1.56 HK cents for H1 2024 | Indicator | H1 2024 | H1 2023 | | :--- | :--- | :--- | | Profit attributable to owners of the Company (HKD Thousand) | 12,250 | 13,534 | | Weighted average number of ordinary shares outstanding (Thousand shares) | 785,437 | 785,161 | | Basic Earnings Per Share (HK cents) | 1.56 | 1.72 | Diluted Earnings Per Share H1 2024 diluted earnings per share was 1.56 HK cents, as unexercised share options were anti-dilutive | Indicator | H1 2024 | H1 2023 | | :--- | :--- | :--- | | Profit attributable to owners of the Company for diluted EPS (HKD Thousand) | 12,250 | 13,534 | | Weighted average number of ordinary shares outstanding (Thousand shares) | 785,437 | 785,161 | | Adjustment for share options (Thousand shares) | — | 4,494 | | Diluted Earnings Per Share (HK cents) | 1.56 | 1.71 | - In H1 2024, unexercised share options were anti-dilutive and thus had no impact on diluted earnings per share calculation[33] Dividends No interim dividends were declared for the six months ended June 30, 2024 - No interim dividends were declared in H1 2024, consistent with the prior period[35] Capital Expenditure H1 2024 capital expenditure focused on property, plant and equipment and intangible asset additions, with end-of-period carrying values of HKD 716,927 thousand and HKD 102,765 thousand | Indicator | Property, Plant and Equipment (HKD Thousand) | Intangible Assets (HKD Thousand) | | :--- | :--- | :--- | | Carrying amount at January 1, 2024 | 735,904 | 89,200 | | Additions | 27,084 | 18,089 | | Depreciation/Amortisation | (28,419) | (2,021) | | Carrying amount at June 30, 2024 | 716,927 | 102,765 | Contract Assets, Trade and Other Receivables and Prepayments As of June 30, 2024, finance lease receivables, trade receivables, and contract assets increased, while bills receivable significantly decreased | Indicator | June 30, 2024 (HKD Thousand) | December 31, 2023 (HKD Thousand) | | :--- | :--- | :--- | | Finance lease receivables | 446,031 | 377,140 | | Trade receivables | 381,115 | 334,567 | | Contract assets | 204,140 | 203,881 | | Bills receivable measured at fair value through other comprehensive income | 25,175 | 70,078 | | Prepayments | 36,013 | 28,239 | | Current portion | 682,316 | 665,326 | Trade Receivables The Group's credit terms are 30-90 days; as of June 30, 2024, total trade receivables were HKD 381,115 thousand, with HKD 257,141 thousand aged 0-90 days | Ageing | June 30, 2024 (HKD Thousand) | December 31, 2023 (HKD Thousand) | | :--- | :--- | :--- | | 0 to 90 days | 257,141 | 204,754 | | 91 to 180 days | 35,138 | 58,774 | | 181 to 365 days | 48,523 | 63,396 | | Over 365 days | 40,313 | 7,643 | | Total | 381,115 | 334,567 | Bills Receivable As of June 30, 2024, bills receivable are due within 6 months - Bills receivable have a maturity period of within 6 months[38] Transferred Financial Assets Not Fully Derecognised Unmatured bills receivable endorsed to suppliers and discounted with banks are not fully derecognized due to retained risks and rewards, with their carrying amounts still recognized - The carrying amounts of unmatured bills receivable endorsed and discounted by the Group were HKD 18,551 thousand and HKD 2,377 thousand, respectively, and were not derecognized due to the retention of major risks and rewards[39] Transferred Financial Assets Fully Derecognised The Group derecognized endorsed bills of HKD 26,369 thousand and discounted bills of HKD 198,591 thousand, transferring most risks and rewards, but retaining recourse risk in case of bank default - The Group derecognized endorsed bills with a total carrying amount of HKD 26,369 thousand and discounted bills of HKD 198,591 thousand, but retains continuing involvement recourse risk[40] Contract Liabilities, Trade and Other Payables As of June 30, 2024, the Group's trade payables, bills payable, contract liabilities, and accrued salaries and bonuses all decreased, totaling HKD 507,691 thousand | Indicator | June 30, 2024 (HKD Thousand) | December 31, 2023 (HKD Thousand) | | :--- | :--- | :--- | | Trade payables | 193,339 | 205,421 | | Bills payable | 157,574 | 122,586 | | Contract liabilities | 19,877 | 21,940 | | Accrued salaries and bonuses | 14,812 | 28,478 | | Other payables for acquisition of property, plant and equipment | 60,820 | 74,080 | | Total | 507,691 | 516,588 | - Of the trade payables, HKD 86,972 thousand were due within 30 days[41] Bank Borrowings As of June 30, 2024, total bank borrowings were HKD 404,708 thousand (HKD 291,938 thousand current), with unutilized bank facilities of HKD 1,088,646 thousand | Indicator | June 30, 2024 (HKD Thousand) | December 31, 2023 (HKD Thousand) | | :--- | :--- | :--- | | On demand or within one year | 291,938 | 376,991 | | In the second year | 78,632 | 85,115 | | In the third to fifth years | 34,138 | 70,058 | | Total | 404,708 | 532,164 | - The Group had HKD 1,088,646 thousand in unutilized bank facilities, higher than HKD 974,875 thousand as of December 31, 2023[43] - Bank borrowings are secured by corporate guarantees provided by the Company and a subsidiary[43] Share Capital As of June 30, 2024, issued and fully paid share capital was HKD 7,855 thousand, with 217,648 ordinary shares issued from share option exercises | Indicator | Number of Shares | HKD Thousand | | :--- | :--- | :--- | | Issued and fully paid at December 31, 2023 and January 1, 2024 | 785,315,981.38 | 7,853 | | Ordinary shares issued upon exercise of share options | 217,648 | 2 | | June 30, 2024 | 785,533,629.38 | 7,855 | Share Options In H1 2024, 2,200,000 share options were granted at HKD 1.78 per share, valid until March 31, 2028, with 17,760,873 unexercised as of June 30, 2024 | Indicator | H1 2024 Share Options (Units) | H1 2023 Share Options (Units) | | :--- | :--- | :--- | | At January 1 | 16,079,071 | 14,562,823 | | Granted | 2,200,000 | 2,200,000 | | Exercised | (217,648) | (148,854) | | Forfeited | (300,550) | (261,736) | | At June 30 | 17,760,873 | 16,352,233 | - 2,200,000 share options granted on March 4, 2024, had an exercise price of HKD 1.78 per share and a weighted average fair value of HKD 0.95[46][47] Fair Value Measurement The Group measures financial assets and liabilities across Level 1, 2, and 3 fair value hierarchies, with Level 2 for bills receivable at fair value through OCI and Level 3 for unlisted equity investments | Indicator | Level 1 (HKD Thousand) | Level 2 (HKD Thousand) | Level 3 (HKD Thousand) | | :--- | :--- | :--- | :--- | | Bills receivable at fair value through other comprehensive income at June 30, 2024 | — | 25,175 | — | | Financial assets at fair value through other comprehensive income at June 30, 2024 | — | — | 26,784 | - Level 3 fair value measurement for unlisted equity investments uses the discounted cash flow method, with key inputs including power generation, operating expenses, and discount rate[50][51] - In H1 2024, fair value changes of Level 3 unlisted equity investments were recognized as HKD (2,532) thousand in other comprehensive income[52] Related Party Transactions The Group conducted various related party transactions, including purchases, sales, management fees, and lease payments, with Xinyi Glass, Xinyi Solar, non-controlling interest entities, and director-controlled entities | Related Party | Transaction Type | H1 2024 (HKD Thousand) | H1 2023 (HKD Thousand) | | :--- | :--- | :--- | :--- | | Subsidiaries of Xinyi Glass Holdings Limited | Purchase of automotive glass | 3,670 | 2,993 | | | Sale of energy storage products | 5,992 | 2,014 | | | Management fee income | 921 | 4,531 | | Subsidiaries of Xinyi Solar Holdings Limited | Sale of energy storage products | 8,534 | 6,313 | | | Sale of photovoltaic encapsulants | 20 | 20 | | Key management personnel remuneration | | 6,091 | 5,068 | Capital Commitments As of June 30, 2024, contracted but unspent capital expenditure was HKD 5,460 thousand, mainly for production plant construction and property, plant and equipment purchases | Indicator | June 30, 2024 (HKD Thousand) | December 31, 2023 (HKD Thousand) | | :--- | :--- | :--- | | Capital expenditure contracted but not provided for | 5,460 | 14,640 | Management Discussion and Analysis Business Review and Outlook The Group transformed into a "3E" new energy solution provider, focusing on energy storage, EPC, and PV encapsulants, with future efforts on R&D, market expansion, and cost optimization - The Group has diversified into "3E" new energy businesses, primarily focusing on energy storage, EPC services, and EVA encapsulants[59] Storage Business The Group focuses on lithium battery energy storage and "PV-storage-charging" products; H1 2024 saw new product deliveries and R&D completion, with energy storage gross profit margin increasing despite fewer projects - The Group's commercial and industrial outdoor energy storage cabinets have begun shipping, further expanding product offerings[56] - The new 13.5 kWh household energy storage battery pack has been delivered, establishing strategic cooperation with inverter manufacturers[56] - Energy storage business revenue decreased, but gross profit margin increased by undertaking fewer low-margin projects[57] Photovoltaic Power Station Engineering, Procurement and Construction ("EPC") Services Business The Group's PV EPC services in China and Canada saw H1 2024 revenue grow 50.3% and gross profit margin rise to 27.6% due to lower module prices, with overseas expansion via an Indonesian joint venture - Photovoltaic EPC services business revenue increased by 50.3% year-on-year, with a gross profit margin of 27.6%[57] - The Group established a joint venture in Indonesia to expand its overseas photovoltaic EPC services business[57] Photovoltaic Film Business The Group produces EVA, POE, and EPE encapsulants in China and Malaysia; H1 2024 saw significant sales growth and gross profit achieved through customer certification, product integration, and efficiency measures - The Group's photovoltaic encapsulant products include EVA, POE, and EPE films, with production lines in Wuhu, China, and Malacca, Malaysia, boasting a total capacity of 50 GW[58] - In H1 2024, photovoltaic encapsulant sales increased, unit costs decreased, and the business achieved gross profit[58] Business Outlook The Group expects significant energy storage growth, focusing on R&D, market expansion, and PV-storage integration; PV encapsulants will target top manufacturers and overseas markets, with new product R&D and global PV-storage EPC expansion - The Group will focus on expanding overseas energy storage markets, strengthening product R&D and certification, and exploring the integration of energy storage and photovoltaics to achieve "PV-storage-charging" equipment integration[60] - The photovoltaic encapsulant business aims to complete certification with the top fifteen leading module manufacturers in China, and invest in Southeast Asian market certification and increased production[60] - The Group will develop photovoltaic and energy storage EPC (PV-storage EPC) services and plans to establish business hubs in overseas markets such as Indonesia, South Africa, the Philippines, and Australia[61] Financial Review H1 2024 revenue grew 17.2% driven by EPC and PV encapsulants; gross profit increased, but reduced other income, higher administrative and tax expenses led to a slight decrease in profit attributable to owners Revenue H1 2024 total revenue was HKD 646.5 million, up 17.2%, driven by significant growth in EPC and PV encapsulants, despite a decrease in energy storage revenue | Business Segment | H1 2024 (HKD Million) | H1 2023 (HKD Million) | Increase/(Decrease) (%) | | :--- | :--- | :--- | :--- | | Energy Storage Business | 65.9 | 158.9 | (58.5) | | EPC Services | 324.0 | 215.5 | 50.3 | | Photovoltaic Encapsulants | 224.2 | 122.8 | 82.6 | | Automotive Glass Repair and Replacement Services | 26.0 | 23.7 | 9.7 | | Others | 6.4 | 30.5 | (79.0) | | Total Revenue | 646.5 | 551.4 | 17.2 | - The increase in EPC services revenue was primarily due to the expansion of Canadian EPC services and increased installation volume of Chinese EPC services[63] - The increase in photovoltaic encapsulant revenue was mainly due to an increase in the number of customers who completed certification and product integration[63] - The decrease in energy storage business revenue was primarily due to fewer projects delivered in H1 2024 and fewer low-margin commercial and industrial energy storage projects undertaken[63] Cost of Revenue and Gross Profit H1 2024 gross profit significantly increased by HKD 52.5 million to HKD 111.8 million, with gross profit margin rising from 10.8% to 17.3%, driven by energy storage and EPC services - Energy storage business gross profit increased from HKD 4.5 million to HKD 5.7 million, mainly due to the sale of higher-margin energy storage products[64] - EPC services gross profit increased from HKD 43.7 million to HKD 89.5 million, primarily due to an increase in the number of projects with higher revenue and gross profit margins[64] - Photovoltaic encapsulant business shifted from a gross loss of HKD 3.0 million to a gross profit of HKD 8.4 million, mainly due to increased sales volume and implementation of cost-saving measures[64] Other Income H1 2024 other income decreased, mainly due to a lack of government grants for photovoltaic encapsulant production and sales - H1 2024 other income primarily included tax subsidies, additional input VAT deductions, and electricity sales revenue, while H1 2023 mainly consisted of government grants from the Chinese government[65] Other Net Gains H1 2024 other net gains primarily comprised gains from production scrap sales and net exchange gains - Other net gains include gains from the sale of production scrap and net exchange gains[66] Expenses Sales and marketing costs were stable, but administrative expenses increased by HKD 13.9 million to HKD 74.4 million, driven by higher employee benefits, R&D, and depreciation - The increase in administrative expenses was mainly due to an increase in the average number of employees, higher share-based compensation for share options, increased R&D expenses, and higher depreciation charges for property, plant and equipment[67] Finance Costs Finance costs after capitalization increased by HKD 3.8 million to HKD 9.2 million, mainly due to a reduction in eligible capitalized amounts - The increase in finance costs was mainly due to a decrease in the amount eligible for capitalization, with capitalized interest expenses in H1 2024 being HKD 2.4 million[68] Income Tax Expense H1 2024 income tax expense rose to HKD 8.6 million, with the effective tax rate increasing to 35.0% due to higher profit before income tax - The effective tax rate in H1 2024 was 35.0%, higher than 30.2% in H1 2023[69] Profit Attributable to Owners of the Company H1 2024 profit attributable to owners of the Company slightly decreased to HKD 12.3 million, influenced by operating performance - Profit attributable to owners of the Company slightly decreased to HKD 12.3 million, mainly due to factors such as reduced other income and increased administrative expenses[70] Financial Resources and Liquidity As of June 30, 2024, net current assets were HKD 80.1 million, cash and cash equivalents were HKD 48.8 million, and the gearing ratio was 29.6% | Indicator | June 30, 2024 (HKD Million) | December 31, 2023 (HKD Million) | | :--- | :--- | :--- | | Net current assets | 80.1 | 213.0 | | Cash and cash equivalents | 48.8 | 206.5 | | Bank borrowings | 404.7 | 532.2 | | Unutilized bank facilities | 1,088.6 | 974.9 | | Gearing ratio | 29.6% | 26.6% | - The increase in gearing ratio was primarily due to a decrease in cash and cash equivalents[71] Capital Structure The company's capital structure remained stable in H1 2024, with equity consisting solely of ordinary shares - The Group's capital structure is stable, with equity consisting solely of ordinary shares[72] Capital Expenditure and Commitments H1 2024 capital expenditure was HKD 27.3 million for new energy storage and EPC equipment, with HKD 5.5 million in contracted but unprovided commitments for PV encapsulant facilities | Indicator | H1 2024 (HKD Million) | H1 2023 (HKD Million) | | :--- | :--- | :--- | | Capital expenditure | 27.3 | 78.8 | - Contracted but unprovided capital commitments amounted to HKD 5.5 million, primarily for the construction of photovoltaic encapsulant production facilities and equipment procurement in China[73] Asset Pledges As of June 30, 2024, the Group had no assets pledged as collateral for bank financing - The Group has no assets pledged as collateral for bank financing[74] Employees and Remuneration Policy As of June 30, 2024, the Group had 521 full-time employees globally, offering training, competitive remuneration, discretionary bonuses, and retirement schemes | Region | Number of Employees at June 30, 2024 | Number of Employees at December 31, 2023 | | :--- | :--- | :--- | | China | 366 | 438 | | Hong Kong | 58 | 57 | | Malaysia and Canada | 97 | 102 | | Total | 521 | 597 | - The Group participates in relevant defined contribution retirement schemes and mandatory provident fund schemes for employees in China, Hong Kong, and Canada, respectively[75] Treasury Policy and Foreign Currency Exchange Rate Fluctuation Risk The Group transacts in HKD, RMB, and CAD; H1 2024 saw a HKD 36.9 million non-cash exchange loss due to RMB depreciation, increasing the consolidated exchange reserve debit balance, with potential future hedging - In H1 2024, a non-cash exchange loss of HKD 36.9 million was recorded due to the depreciation of RMB against HKD[76] - The Group's consolidated exchange reserve recorded a debit balance of HKD 112.7 million as of June 30, 2024[76] Use of Proceeds from Rights Issue The HKD 393.2 million net proceeds from the September 2022 rights issue were fully used by June 30, 2024, for additional working capital in the PV encapsulant business | Proposed Use | Net Proceeds (HKD Million) | Unutilized Balance as of December 31, 2023 (HKD Million) | Amount Utilized as of June 30, 2024 (HKD Million) | Unutilized Balance as of June 30, 2024 (HKD Million) | | :--- | :--- | :--- | :--- | :--- | | Additional working capital for developing photovoltaic encapsulant business | 393.2 | 59.8 | 59.8 | — | Significant Investments, Acquisitions and Disposals of Subsidiaries, and Plans for Future Significant Investments or Capital Assets As of June 30, 2024, the Group had no significant investments exceeding 5% of total assets, no major acquisitions or disposals, and no plans for future significant investments - The Group held no significant investments exceeding 5% of total assets, nor were there any significant acquisitions or disposals[78] Contingent Liabilities As of June 30, 2024, the Group had no significant contingent liabilities - The Group had no significant contingent liabilities[79] Events After the Reporting Period As of this announcement date, no significant events occurred after June 30, 2024 - No significant events occurred after the reporting period[80] Other Information Share Option Scheme Under the 2017 share option scheme, 2,200,000 options were granted in March 2024 to executive directors and employees, vesting over three years - 2,200,000 share options were granted in March 2024, vesting over three years, and valid until March 31, 2028[81] Purchase, Sale or Redemption of Listed Securities In H1 2024, neither the company nor its subsidiaries purchased, sold, or redeemed any of the company's listed securities - In H1 2024, the company and its subsidiaries did not engage in the purchase, sale, or redemption of listed securities[82] No Competing Business Directors, controlling shareholders, and their associates have no competing business interests or conflicts with the Group - Directors or controlling shareholders and their associates have no competing business or conflicts of interest with the Group's business[83] Corporate Governance The Directors confirm the company's compliance with the GEM Listing Rules' Corporate Governance Code throughout H1 2024 - The company complied with the GEM Listing Rules' Corporate Governance Code in H1 2024[84] Code of Conduct for Directors' Securities Transactions The company adopted a code of conduct for directors' securities transactions, with all directors confirming compliance in H1 2024 - All directors confirmed compliance with the company's adopted code of conduct for directors' securities transactions[85] Interim Dividend The Directors do not recommend any interim dividend payment for H1 2024 - No interim dividend will be distributed for H1 2024[86] Audit Committee The Audit Committee, comprising independent non-executive directors, reviews financial reporting, risk management, and internal controls, and has reviewed the company's H1 2024 unaudited interim results - The Audit Committee, composed of independent non-executive directors and chaired by Mr. Wang Guisheng, has reviewed the unaudited interim results for H1 2024[87] Publication of Interim Report The company's H1 2024 interim report, containing all required information, will be published on the Stock Exchange and company website in due course - The H1 2024 interim report will be published on the Stock Exchange and the company's website in due course[87] Board of Directors As of the announcement date, the Board of Directors includes executive, non-executive, and independent non-executive directors - The Board of Directors includes Mr. Wu Yinhe, Ms. Li Birong, Mr. Wang Mohan (Executive Directors), Tan Sri Dato' Dr. Teh Hong Piow P.S.M, D.M.S.M (JP) (Chairman), Mr. Lee Seng Kan (BBS) (Non-executive Directors), and Mr. Wang Guisheng, Mr. Wu Weixiong, Mr. Chan Hak Kan (SBS, JP) (Independent Non-executive Directors)[87]