Management Discussion and Analysis This section provides an overview of the Group's financial performance, business operations, future outlook, liquidity, capital expenditure, foreign exchange risks, and employee policies for the period Financial Review The Group achieved record-high revenue and net profit in H1 2021, driven by global economic recovery, increased factory capacity, and a comprehensive trade business portfolio H1 2021 Financial Performance Overview | Metric | H1 2021 (thousand HKD) | H1 2020 (thousand HKD) | Y-o-Y Growth Rate | | :----------- | :-------------------- | :-------------------- | :--------- | | Revenue | 741,658 | 430,952 | 72.1% | | Gross Profit | 242,730 | 129,377 | 87.6% | | Gross Margin | 32.7% | 30.0% | 2.7 percentage points | | Profit Attributable to Shareholders | 66,084 | 757 | 87.3 times | | Interim Dividend | HK 3 cents per share | HK 2 cents per share | 50.0% | | Cash on Hand | 217,300 | 219,500 (December 31, 2020) | -1.0% | | Unutilized Banking Facilities | 204,300 | 219,300 (December 31, 2020) | -6.9% | - Revenue and net profit reached record highs, primarily driven by global economic recovery, eased pandemic lockdowns, increased production capacity at the Bangladesh factory, and a comprehensive trade business product portfolio7 - Gross margin increased to 32.7%, attributed to more fast-track orders, effective cost control, and enhanced automation at the Bangladesh factory7 Business Review Manufacturing revenue grew significantly from increased customer procurement and expanded factory capacity, while the trade business turned profitable from eased lockdowns and online shopping trends - Employee numbers changed at Bangladesh and Shenzhen factories: Bangladesh factory employees increased to approximately 6,300 (December 31, 2020: 5,300), while Shenzhen factory employees decreased to approximately 400 (December 31, 2020: 500)9 - Bangladesh production contributed 50.1% of the Group's total revenue, an increase from 47.5% in the prior year period9 - The trade business benefited from the online consumption trend driven by the pandemic and industry consolidation, expanding its licensed brand portfolio10 Manufacturing and Trading Business Performance | Business Segment | Metric | H1 2021 (thousand HKD) | H1 2020 (thousand HKD) | Y-o-Y Growth Rate/Change | | :------- | :----------- | :-------------------- | :-------------------- | :-------------- | | Manufacturing Business | Revenue | 441,302 | 268,469 | 64.4% | | | Revenue from External Customers | 392,618 | 235,980 | 66.4% | | | % of Total Revenue | 52.9% | - | - | | | Operating Profit | 89,087 | 35,237 | 152.8% | | Trading Business | Revenue | 349,040 | 194,972 | 79.0% | | | % of Total Revenue | 47.1% | - | - | | | Operating Profit | 7,631 | (18,026) (Loss) | Turned from Loss to Profit | Outlook Despite challenges, management anticipates continued growth by optimizing capacity, improving efficiency, localizing supply chains, and expanding licensed brands - Management expects growth momentum to continue as the market adapts to the 'new normal' of living with the pandemic and customer order demand remains strong12 - To meet demand, the Group will continue to optimize its production capacity layout, including improving efficiency and capacity, despite the Bangladesh factory's approximately two-week shutdown due to pandemic lockdowns12 - To address raw material shortages, soaring prices, and rising freight costs, management is gradually implementing supply chain and procurement localization strategies12 - The trade business is expected to benefit from online shopping trends and market recovery, with the Group planning to strengthen and expand its licensed brand portfolio to consolidate its leading position12 Liquidity and Financial Resources As of June 30, 2021, the Group maintained a robust liquidity position with total cash and bank balances of HKD 222.2 million, ample banking facilities, and a reduced bank borrowings to equity ratio Overview of Liquidity and Financial Resources | Metric | June 30, 2021 (million HKD) | December 31, 2020 (million HKD) | Change Rate | | :--------------- | :----------------------- | :------------------------ | :----- | | Total Cash, Bank Balances, and Liquid Investment Portfolio | 222.2 | 226.0 | -1.7% | | Total Banking Facilities | 475.0 | 513.4 | -7.5% | | Unutilized Banking Facilities | 204.3 | 219.3 | -6.9% | | Bank Borrowings to Equity Ratio | 31.9% | 37.2% | -5.3 percentage points | - Approximately 60% of the liquid funds were denominated in USD, 26% in RMB, and 7% in HKD14 - The sound financial and liquidity position ensures the Group has sufficient resources to meet its commitments and working capital requirements14 Capital Expenditure The Group invested HKD 4.6 million in equipment and HKD 1.0 million in trading business systems, with approved capital commitments totaling HKD 51.4 million for production plants and equipment Capital Expenditure Overview | Item | H1 2021 (million HKD) | H1 2020 (million HKD) | Change Rate | | :----------- | :---------------------- | :---------------------- | :----- | | Additions to Equipment | 4.6 | 8.6 | -46.5% | | Trading Business Equipment and Systems | 1.0 | 1.7 | -41.2% | Approved Capital Commitments (as of June 30, 2021) | Item | Amount (million HKD) | | :----------- | :-------------- | | Production Plants and Equipment | 51.4 | | Trading Business Equipment Upgrades | 3.0 | Foreign Exchange Risk The Group's assets and liabilities are primarily denominated in HKD, USD, RMB, or BDT, with a 1% appreciation in RMB or BDT expected to decrease manufacturing gross margin by approximately 0.1% - The majority of the Group's assets and liabilities are denominated in HKD, USD, RMB, or Bangladeshi Taka17 - A 1% appreciation in RMB or Bangladeshi Taka is expected to result in an approximate 0.1% decrease in the manufacturing business's gross margin17 Employees and Remuneration Policy As of June 30, 2021, the Group had 6,929 global employees, with a significant increase in Bangladesh, and incurred approximately HKD 165.5 million in employee expenses, offering competitive remuneration and share options to key employees Employee Numbers and Expenses | Region | June 30, 2021 (Number of People) | June 30, 2020 (Number of People) | Change Rate | | :----------- | :------------------- | :------------------- | :----- | | China (including Hong Kong) | 482 | 663 | -27.3% | | Bangladesh | 6,290 | 4,087 | 54.0% | | USA and UK | 157 | 148 | 6.1% | | Total | 6,929 | 4,898 | 41.5% | | Employee Expenses | 165.5 million HKD | 113.4 million HKD | 46.0% | - The Group ensures competitive employee remuneration levels, determined by position and performance18 - Key employees, including directors, are granted share options under the share option scheme18 Interim Dividend and Closure of Register of Members This section details the interim dividend declaration and the temporary closure of the register of members to determine shareholders' entitlement Interim Dividend The Board declared an interim dividend of HK 3 cents per share, an increase from the prior year, payable on or after October 8, 2021 Interim Dividend | Item | 2021 (HK cents per share) | 2020 (HK cents per share) | Change Rate | | :------- | :---------------- | :---------------- | :----- | | Interim Dividend | 3 | 2 | 50.0% | - The interim dividend will be paid on or after October 8, 202119 Closure of Register of Members To determine eligibility for the interim dividend, the Company will temporarily suspend the registration of share transfers from September 14 to September 16, 2021 - The registration of share transfers will be suspended from September 14, 2021, to September 16, 2021 (both dates inclusive)20 - To qualify for the interim dividend, all transfer documents, accompanied by the relevant share certificates, must be lodged with the Hong Kong share registrar by 4:30 p.m. on September 13, 202120 Unaudited Condensed Consolidated Statement of Profit or Loss For H1 2021, the Group's revenue increased by 72.1% to HKD 741,658 thousand, gross profit rose 87.6% to HKD 242,730 thousand, and profit attributable to owners reached HKD 66,084 thousand Summary of Unaudited Condensed Consolidated Statement of Profit or Loss | Metric | H1 2021 (thousand HKD) | H1 2020 (thousand HKD) | Change Rate | | :--------------- | :-------------------- | :-------------------- | :----- | | Revenue | 741,658 | 430,952 | 72.1% | | Cost of Sales | (498,928) | (301,575) | 65.4% | | Gross Profit | 242,730 | 129,377 | 87.6% | | Operating Profit | 89,549 | 9,614 | 831.4% | | Profit Before Income Tax | 85,878 | 3,568 | 2304.0% | | Income Tax Expense | (15,196) | (2,228) | 581.2% | | Profit for the Period | 70,682 | 1,340 | 5174.8% | | Profit Attributable to Owners of the Company | 66,084 | 757 | 8630.0% | | Basic Earnings Per Share (HK cents) | 16.30 | 0.19 | 8478.9% | Unaudited Condensed Consolidated Statement of Comprehensive Income For H1 2021, the Group's profit for the period was HKD 70,682 thousand, with total comprehensive income reaching HKD 71,751 thousand after exchange differences, significantly improving from the prior year's comprehensive loss Summary of Unaudited Condensed Consolidated Statement of Comprehensive Income | Metric | H1 2021 (thousand HKD) | H1 2020 (thousand HKD) | Change | | :--------------- | :-------------------- | :-------------------- | :--- | | Profit for the Period | 70,682 | 1,340 | Increase | | Exchange Differences on Translation of Financial Statements of Overseas Operations | 1,069 | (3,684) | Improvement | | Total Comprehensive Income/(Loss) for the Period, Net of Tax | 71,751 | (2,344) | Turned from Loss to Profit | | Attributable to Owners of the Company | 67,064 | (2,801) | Turned from Loss to Profit | | Attributable to Non-controlling Interests | 4,687 | 457 | Increase | Unaudited Condensed Consolidated Statement of Financial Position As of June 30, 2021, the Group's total assets increased to HKD 1,488,837 thousand and total equity rose to HKD 848,227 thousand, indicating a robust financial position with significantly increased net current assets Summary of Unaudited Condensed Consolidated Statement of Financial Position | Metric | June 30, 2021 (thousand HKD) | December 31, 2020 (thousand HKD) | Change Rate | | :--------------- | :--------------------- | :---------------------- | :----- | | Assets | | | | | Non-current Assets | 553,987 | 564,855 | -1.9% | | Current Assets | 934,850 | 868,643 | 7.6% | | Total Assets | 1,488,837 | 1,433,498 | 3.9% | | Equity and Liabilities | | | | | Total Equity | 848,227 | 788,413 | 7.6% | | Non-current Liabilities | 49,205 | 52,799 | -6.8% | | Current Liabilities | 591,405 | 592,286 | -0.1% | | Total Liabilities | 640,610 | 645,085 | -0.7% | | Net Current Assets | 343,445 | 276,357 | 24.3% | Unaudited Condensed Consolidated Statement of Changes in Equity The Group's total equity increased during the period, primarily reflecting the contribution of profit for the period to retained earnings and changes in exchange reserves, with share capital remaining stable and other reserves growing - The statement of changes in equity presents the opening and closing balances and movements during the period for share capital, share premium, capital reserve, share-based payment reserve, other reserves, exchange reserve, retained earnings, total, non-controlling interests, and total equity3536 - Profit for the period and exchange differences are the main factors affecting total equity253536 Unaudited Condensed Consolidated Statement of Cash Flows For H1 2021, the Group generated HKD 66,272 thousand from operating activities, with net cash outflows from investing and financing, resulting in a slight decrease in cash and cash equivalents to HKD 217,294 thousand at period-end Summary of Unaudited Condensed Consolidated Statement of Cash Flows | Metric | H1 2021 (thousand HKD) | H1 2020 (thousand HKD) | Change | | :--------------- | :-------------------- | :-------------------- | :--- | | Net Cash Generated from Operating Activities | 66,272 | 63,515 | Increase | | Net Cash (Used in)/Generated from Investing Activities | (23,254) | 11,342 | Turned to Net Outflow | | Net Cash (Used in)/Generated from Financing Activities | (45,324) | 39,507 | Turned to Net Outflow | | Net (Decrease)/Increase in Cash and Cash Equivalents | (2,306) | 114,364 | Turned to Net Decrease | | Cash and Cash Equivalents at End of Period | 217,294 | 223,623 | Decrease | - Net cash outflow from investing activities was primarily due to the purchase of property, plant and equipment and financial assets measured at fair value through profit or loss40 - Net cash outflow from financing activities was mainly due to the repayment of bank borrowings and dividends paid, despite proceeds from new bank borrowings40 Notes to the Unaudited Condensed Consolidated Financial Information This section provides detailed notes on the Group's general information, accounting policies, financial risk management, revenue, segment information, and other key financial statement items 1. General Information Fei Da Hat Industry Holdings Limited is a Bermuda-incorporated listed company primarily engaged in investment holding, with subsidiaries involved in manufacturing, sales, trading, and distribution of headwear and other products - The Company is a listed limited liability company incorporated in Bermuda, with its shares listed on The Stock Exchange of Hong Kong Limited41 - The Company's principal business is investment holding, while its subsidiaries are primarily engaged in the manufacture and sale of headwear, and the trading and distribution of headwear and other products41 2. Basis of Preparation This interim condensed consolidated financial information is prepared in accordance with HKAS 34 'Interim Financial Reporting' and should be read in conjunction with the annual consolidated financial statements for the year ended December 31, 2020 - This interim condensed consolidated financial information has been prepared in accordance with Hong Kong Accounting Standard 34 'Interim Financial Reporting'44 - This information does not include all the notes normally included in annual consolidated financial statements and should be read in conjunction with the consolidated financial statements for the year ended December 31, 202044 3. Accounting Policies The accounting policies applied are consistent with the prior year's annual consolidated financial statements, except for income tax estimates and the adoption of new and revised standards, which did not require changes or retrospective adjustments - The accounting policies applied are consistent with those applied in the annual consolidated financial statements for the year ended December 31, 2020, except for income tax estimates and the adoption of new and revised standards45 - The Group was not required to change its accounting policies or make retrospective adjustments due to the adoption of new and revised standards48 - Standards that have been issued but are not yet effective for the Group are not expected to have a significant impact on the Group in the current or future reporting periods49 4. Estimates Preparation of interim financial information requires management's judgment, estimates, and assumptions, which may differ from actual results, with key estimation uncertainties consistent with prior year's annual financial statements - The preparation of interim condensed consolidated financial information requires management to make judgments, estimates, and assumptions, and actual results may differ from these estimates50 - The key sources of estimation uncertainty in applying accounting policies and making estimates are the same as those applied in the consolidated financial statements for the year ended December 31, 202050 5. Financial Risk Management The Group's operations are exposed to market, credit, and liquidity risks, with no significant changes in contractual undiscounted cash outflows of financial liabilities or risk management policies since the year-end - The Group's operations are exposed to market risk (including foreign exchange risk, interest rate risk, and price risk), credit risk, and liquidity risk51 - There have been no significant changes in the contractual undiscounted cash outflows of financial liabilities compared to the year-end, and no changes in any risk management policies since the year-end5253 5.2 Fair Value Estimation The Group estimates fair values of financial instruments using a three-level hierarchy, holding financial assets measured at fair value through profit or loss, primarily unlisted investment funds, unlisted equity investments, and listed securities Financial Assets Measured at Fair Value (June 30, 2021) | Category | Level 1 (thousand HKD) | Level 2 (thousand HKD) | Level 3 (thousand HKD) | Total (thousand HKD) | | :----------- | :------------- | :------------- | :------------- | :------------ | | Unlisted Investment Funds | — | — | 17,855 | 17,855 | | Unlisted Equity Investments | — | — | 8,943 | 8,943 | | Listed Securities | 4,879 | — | — | 4,879 | | Total Financial Assets | 4,879 | — | 26,798 | 31,677 | - During the period, there were no transfers between fair value hierarchy levels for financial assets, and no other changes in valuation methods61 5.3 Fair Value Measurements Using Significant Unobservable Inputs (Level 3) Level 3 fair value measurements include investments in limited partnership interests and unlisted equity, with fair values approximate to prior reporting dates due to no significant changes - Unlisted investment funds classified as financial assets measured at fair value through profit or loss refer to a 2.2618% investment in limited partnership interests in a fund62 - Unlisted equity investments refer to an 18% equity investment in an unlisted company incorporated in the USA, primarily engaged in the acquisition and management of retail plazas and related properties62 - The Group believes that as of June 30, 2021, the fair values of financial assets measured at fair value through profit or loss are approximate to their values at the previous annual reporting date/acquisition date, as there have been no significant changes in their values since then62 5.4 Fair Value of Financial Assets and Liabilities Measured at Amortized Cost The fair values of the Group's financial assets and liabilities measured at amortized cost, including trade receivables, cash, payables, lease liabilities, and borrowings, are approximate to their carrying amounts - The fair values of other financial assets, trade receivables, cash and cash equivalents, trade and other payables, amounts due to non-controlling interests, lease liabilities, and borrowings measured at amortized cost are approximate to their carrying amounts64 6. Revenue The Group's principal activities involve the manufacturing, trading, and retail of headwear, small leather goods, handbags, apparel, and accessories - The Group's principal activities are the manufacturing, trading, and retail of headwear, small leather goods, handbags, apparel, and accessories66 7. Segment Information Executive Directors, as chief operating decision-makers, determine operating segments based on reviewed reports, dividing the Group's business into manufacturing and trading, with performance assessed by segment profit/(loss) - The Executive Directors are identified as the chief operating decision-makers, determining operating segments based on reports reviewed for strategic decisions67 - The Group's operating segments include manufacturing business (with primary production facilities in Bangladesh and Shenzhen, China) and trading business (operated through subsidiaries focused on European and US markets)68 - Segment assets do not include investment properties, deferred income tax assets, financial assets measured at fair value through profit or loss, recoverable taxes, and cash and cash equivalents69 8. Profit Before Income Tax This section analyzes amounts deducted from or credited to profit before income tax, including depreciation, amortization, fair value losses, net exchange losses, inventory provisions, and net reversal/(impairment) of trade receivables Adjustments to Profit Before Income Tax | Item | H1 2021 (thousand HKD) | H1 2020 (thousand HKD) | | :--------------------------------- | :-------------------- | :-------------------- | | Fair Value Loss on Financial Assets Measured at Fair Value Through Profit or Loss | 1,677 | 2,029 | | Net Exchange Loss | 324 | 878 | | Depreciation of Property, Plant and Equipment | 18,871 | 19,053 | | Depreciation of Right-of-Use Assets | 10,022 | 7,832 | | Amortization of Other Intangible Assets | 9,218 | 9,336 | | Net Provision for Inventories | 733 | 3,416 | | Net (Reversal of)/Impairment Loss on Trade Receivables | (788) | 3,682 | Finance Costs — Net | Item | H1 2021 (thousand HKD) | H1 2020 (thousand HKD) | | :--------------- | :-------------------- | :-------------------- | | Interest on Bank Loans, Overdrafts and Other Borrowings | (2,706) | (5,009) | | Increase in Interest on Patent Fees Payable | (592) | (851) | | Interest on Lease Liabilities | (619) | (549) | | Finance Costs | (3,917) | (6,409) | | Finance Income | 246 | 363 | | Finance Costs — Net | (3,671) | (6,046) | - Net provision for inventories was HKD 733 thousand, a significant decrease from the prior year period, reflecting improved inventory conditions7374 - Trade receivables recorded a reversal of HKD 788 thousand, indicating an improvement in expected credit loss assessment7374 9. Income Tax Expense For the six months ended June 30, 2021, the Group's income tax expense significantly increased to HKD 15,196 thousand, primarily due to higher overseas taxation and underprovision for Hong Kong profits tax in prior years Breakdown of Income Tax Expense | Item | H1 2021 (thousand HKD) | H1 2020 (thousand HKD) | | :--------------- | :-------------------- | :-------------------- | | Current Year — Hong Kong Profits Tax | 1,001 | — | | Current Year — Overseas Taxation | 11,867 | 2,884 | | Underprovision/(Overprovision) in Prior Years — Hong Kong Profits Tax | 3,500 | (128) | | Deferred Income Tax | (1,172) | (528) | | Income Tax Expense | 15,196 | 2,228 | - Income tax expense is recognized based on management's estimate of the expected weighted average annual income tax rate for the entire financial year79 - Hong Kong profits tax is provided at a rate of 16.5%, and overseas profits tax is calculated at the prevailing tax rates in the countries where the Group operates79 10. Earnings Per Share For H1 2021, profit attributable to owners was HKD 66,084 thousand, with basic EPS of HK 16.30 cents, and no diluted EPS for H1 2020 due to anti-dilutive share options Basic Earnings Per Share | Metric | H1 2021 | H1 2020 | | :--------------- | :----------- | :----------- | | Profit Attributable to Owners of the Company (thousand HKD) | 66,084 | 757 | | Weighted Average Number of Ordinary Shares in Issue | 405,323,284 | 405,323,284 | | Basic Earnings Per Share (HK cents) | 16.30 | 0.19 | Diluted Earnings Per Share | Metric | H1 2021 | | :--------------- | :----------- | | Profit Attributable to Owners of the Company (thousand HKD) | 66,084 | | Weighted Average Number of Ordinary Shares for Diluted EPS Calculation | 405,463,756 | | Diluted Earnings Per Share (HK cents) | 16.30 | - For the six months ended June 30, 2020, the outstanding share options were not assumed to have been exercised as they would have an anti-dilutive effect on basic earnings per share85 11. Dividends During the period, the Board declared an interim dividend of HK 3 cents per share and paid a final dividend of HK 3 cents per share for 2020 Dividends Attributable to the Period | Item | H1 2021 (thousand HKD) | H1 2020 (thousand HKD) | | :--------------- | :-------------------- | :-------------------- | | Interim Dividend Declared of HK 3 cents per share (2020: HK 2 cents) | 12,160 | 8,106 | Dividends Approved and Paid During the Period Attributable to Prior Financial Year | Item | 2021 (thousand HKD) | 2020 (thousand HKD) | | :--------------- | :-------------- | :-------------- | | Final Dividend Paid for 2020 of HK 3 cents per share (2019: HK 3 cents) | 12,160 | 12,160 | 12. Capital Expenditure For H1 2021, the Group acquired HKD 5,645 thousand in property, plant, and equipment and HKD 6,247 thousand in intangible assets, with investment properties not revalued due to no significant value change Capital Expenditure | Item | H1 2021 (thousand HKD) | H1 2020 (thousand HKD) | | :--------------- | :-------------------- | :-------------------- | | Acquisition of Property, Plant and Equipment | 5,645 | 10,289 | | Acquisition of Intangible Assets | 6,247 | 22,871 | - Other intangible assets include acquired customer relationships of HKD 1,615 thousand and patent rights of HKD 21,337 thousand90 - Investment properties were not revalued during the period as there were no indications of significant changes in value since the last annual reporting date90 13. Right-of-Use Assets and Lease Liabilities As of June 30, 2021, total right-of-use assets were HKD 43,514 thousand and lease liabilities HKD 45,810 thousand, with right-of-use assets increasing by HKD 11,353 thousand and total cash outflow from leases at HKD 10,394 thousand Right-of-Use Assets and Lease Liabilities | Item | June 30, 2021 (thousand HKD) | December 31, 2020 (thousand HKD) | | :----------- | :--------------------- | :---------------------- | | Right-of-Use Assets | 43,514 | 42,183 | | Lease Liabilities (Non-current) | 29,970 | 27,374 | | Lease Liabilities (Current) | 15,840 | 16,294 | | Total Lease Liabilities | 45,810 | 43,668 | Lease-Related Statement of Profit or Loss Items | Item | H1 2021 (thousand HKD) | H1 2020 (thousand HKD) | | :--------------- | :-------------------- | :-------------------- | | Depreciation Expense of Right-of-Use Assets | 10,022 | 7,832 | | Interest Expense | 619 | 549 | | Short-term Lease Expenses | 564 | 213 | - The Group's lease liabilities of HKD 322 thousand as of June 30, 2021, are secured by right-of-use assets for a motor vehicle92 - Lease contracts typically range from 2 to 10 years, and the lease agreements impose no terms other than the lessor's security interest in the leased assets95 14. Trade Receivables and Other Financial Assets Measured at Amortized Cost As of June 30, 2021, the Group's net trade receivables were HKD 350,778 thousand, and other financial assets measured at amortized cost were HKD 11,071 thousand, with most trade receivables due within 90 days Trade Receivables and Other Financial Assets | Item | June 30, 2021 (thousand HKD) | December 31, 2020 (thousand HKD) | | :--------------- | :--------------------- | :---------------------- | | Net Trade Receivables | 350,778 | 335,320 | | Other Financial Assets Measured at Amortized Cost | 11,071 | 9,743 | Ageing Analysis of Trade Receivables | Ageing | June 30, 2021 (thousand HKD) | December 31, 2020 (thousand HKD) | | :----------- | :--------------------- | :---------------------- | | 0–30 Days | 129,479 | 117,463 | | 31–60 Days | 91,122 | 78,436 | | 61–90 Days | 63,350 | 52,138 | | 91–120 Days | 30,308 | 27,068 | | Over 120 Days | 44,371 | 68,097 | | Total | 358,630 | 343,202 | - The credit period for most of the Group's sales ranges from 30 to 180 days97 15. Share Capital The Company's authorized share capital is HKD 100,000 thousand, with issued and fully paid share capital of HKD 40,532 thousand, and 31,400 thousand outstanding share options as of June 30, 2021, with 27,726 thousand exercisable Share Capital Overview | Item | Number of Shares (thousands) | Amount (thousand HKD) | | :----------- | :-------------- | :------------ | | Authorized Share Capital | 1,000,000 | 100,000 | | Issued and Fully Paid Share Capital | 405,323,284 | 40,532 | Share Option Movements | Item | 2021 (thousands of shares) | Weighted Average Exercise Price (HKD) | | :----------- | :------------ | :-------------------- | | At January 1 | 31,400 | 1.365 | | At June 30 | 31,400 | 1.365 | | Share Options Vested at Closing | 27,726 | 1.343 | - The share option scheme aims to allow the Group to grant share options to selected participants as a reward or return for their contributions to the Group137 - For the six months ended June 30, 2021, no new share options were granted, and no share options were exercised105111 - As of June 30, 2021, the weighted average contractual life of the share options was 4.9 years110 16. Trade and Other Payables As of June 30, 2021, total trade and other payables were HKD 293,899 thousand, with a current portion of HKD 279,870 thousand, most trade payables due within 60 days, and contract liabilities increasing to HKD 2,186 thousand Trade and Other Payables | Item | June 30, 2021 (thousand HKD) | December 31, 2020 (thousand HKD) | | :--------------- | :--------------------- | :---------------------- | | Trade Payables | 159,585 | 140,232 | | Accruals and Other Payables | 134,314 | 150,817 | | Total | 293,899 | 291,049 | | Current Portion | 279,870 | 270,187 | Ageing Analysis of Trade Payables | Ageing | June 30, 2021 (thousand HKD) | December 31, 2021 (thousand HKD) | | :----------- | :--------------------- | :---------------------- | | 0–30 Days | 75,089 | 51,593 | | 31–60 Days | 40,513 | 43,910 | | 61–90 Days | 31,527 | 19,394 | | Over 90 Days | 12,456 | 25,335 | | Total | 159,585 | 140,232 | - Contract liabilities increased to HKD 2,186 thousand (December 31, 2020: HKD 471 thousand), and the Group expects to deliver goods within one year or less to satisfy the remaining performance obligations for these contract liabilities113 17. Borrowings As of June 30, 2021, the Group's total borrowings decreased to HKD 270,343 thousand, with HKD 38,334 thousand in bank borrowings repaid and HKD 15,000 thousand in new bank borrowings obtained during the period Analysis of Borrowing Movements | Item | H1 2021 (thousand HKD) | H1 2020 (thousand HKD) | | :--------------- | :-------------------- | :-------------------- | | Opening Balance | 293,677 | 272,919 | | Repayment of Bank Borrowings | (38,334) | (50,763) | | Proceeds from Bank Borrowings | 15,000 | 110,523 | | Closing Balance | 270,343 | 332,679 | 18. Capital Commitments As of the reporting date, the Group had contracted but not provided for capital expenditure amounting to HKD 38,330 thousand Capital Commitments | Item | December 31, 2020 (thousand HKD) | | :----------- | :---------------------- | | Contracted but Not Provided For | 38,330 | 19. Significant Related Party Transactions During the period, the Group engaged in significant related party transactions, including sales to a shareholder's affiliate, rental payments, and claims paid, with trade receivables from an affiliate totaling HKD 126,438 thousand at period-end Sales and Purchases of Goods and Services | Item | H1 2021 (thousand HKD) | H1 2020 (thousand HKD) | | :--------------- | :-------------------- | :-------------------- | | Sales of Goods to an Affiliate of a Shareholder | 281,907 | 146,735 | | Rental Paid for Office Premises to a Director and a Company Controlled by a Director | 881 | 881 | | Claims Paid to an Affiliate of a Shareholder | 660 | 664 | Period-End Balances for Sales of Goods and Services | Item | June 30, 2021 (thousand HKD) | December 31, 2020 (thousand HKD) | | :--------------- | :--------------------- | :---------------------- | | Trade Receivables from an Affiliate of a Shareholder | 126,438 | 171,961 | Key Management Personnel Remuneration | Item | H1 2021 (thousand HKD) | H1 2020 (thousand HKD) | | :----------- | :-------------------- | :-------------------- | | Short-term Employee Benefits | 16,617 | 13,784 | | Retirement Scheme Contributions | 77 | 81 | | Total | 16,694 | 13,865 | 20. Approval of Interim Condensed Financial Information This interim condensed consolidated financial information was approved by the Board of Directors on August 24, 2021 - This interim condensed consolidated financial information was approved by the Board of Directors on August 24, 2021126 Other Information Required by the Listing Rules This section provides additional information as required by the Listing Rules, including directors' and substantial shareholders' interests, details of the share option scheme, pre-emptive rights, and compliance with corporate governance codes Directors' Interests in Shares and Underlying Shares As of June 30, 2021, directors held interests in the Company's shares and underlying shares, with Mr. Yan Hei Cheung and Ms. Yan Po Ling collectively holding 65.70% of interests, including personal, other direct, and share option-related shares Directors' Long Positions in Shares and Underlying Shares of the Company (as of June 30, 2021) | Name of Director | Personal Interests (shares) | Other Direct Interests (shares) | Underlying Shares (shares) | Total (shares) | Percentage of Interest | | :----------------- | :------------ | :---------------- | :------------ | :---------- | :------------- | | Mr. Yan Hei Cheung | — | 221,508,000 | 44,800,000 | 266,308,000 | 65.70% | | Ms. Yan Po Ling | 37,808,000 | 183,700,000 | 44,800,000 | 266,308,000 | 65.70% | | Mr. James S. Patterson | — | — | 1,000,000 | 1,000,000 | 0.25% | | Mr. Yan Chiu Hon | — | — | 2,000,000 | 2,000,000 | 0.49% | | Mr. Lai Man Sing | — | — | 1,000,000 | 1,000,000 | 0.25% | - Mr. Yan Hei Cheung and Ms. Yan Po Ling ultimately and beneficially own 183,700,000 shares through Successful Years International Co., Ltd130 - Mr. Yan Hei Cheung and Ms. Yan Po Ling are entitled to subscribe for 2,000,000 and 3,000,000 shares, respectively, under the outstanding share options granted under the share option scheme132 Share Option Scheme The Company adopted a share option scheme on December 29, 2011, to reward eligible contributors, with an authorized limit of 40,532,828 shares, an exercise price based on the highest of three criteria, and a ten-year validity - The share option scheme was adopted on December 29, 2011, to grant share options to eligible employees, directors, suppliers, and customers135 - The scheme's authorized limit is 40,532,828 shares, representing 10% of the Company's issued shares as of May 16, 2018135 - The exercise price of the share options is the highest of the nominal value of the shares, the closing price of the shares as quoted on the Stock Exchange on the date of grant, and the average closing price of the shares as quoted on the Stock Exchange for the five trading days immediately preceding the date of grant137 Details of Outstanding Share Options (as of June 30, 2021) | Date of Grant | Exercisable Period | Exercise Price (HKD) | Number of Outstanding Shares (thousands) | Fair Value Per Share at Grant Date (HKD) | | :--------------- | :--------------------------- | :------------ | :---------------------- | :------------------------------ | | July 15, 2015 | July 15, 2016 to July 14, 2025 | 1.120 | 1,000 | 1.12 | | April 13, 2017 | April 13, 2017 to April 12, 2027 | 1.534 | 8,000 | 1.50 | | December 30, 2011 | December 30, 2012 to December 29, 2021 | 0.800 | 1,000 | 0.80 | | July 15, 2015 | July 15, 2016 to July 14, 2025 | 1.120 | 10,030 | 1.12 | | April 13, 2017 | April 13, 2017 to April 12, 2027 | 1.534 | 11,370 | 1.50 | Substantial Shareholders As of June 30, 2021, Ms. Yan Po Ling and Successful Years International Co., Ltd. were substantial shareholders, holding 54.65% and 45.32% interests respectively, with Mr. Christopher Koch and NEHK also holding significant interests and short positions Substantial Shareholders' Long Positions in Shares and Underlying Shares (as of June 30, 2021) | Name | Capacity | Personal Interests (shares) | Other Interests (shares) | Underlying Shares (shares) | Total (shares) | Percentage of Interest | | :------------------- | :--------------- | :------------ | :------------ | :------------ | :---------- | :------------- | | Ms. Yan Po Ling | Beneficial Owner | 37,808,000 | — | — | 37,808,000 | 9.33% | | | Interest in Controlled Corporation | — | 183,700,000 | — | 183,700,000 | 45.32% | | Total | | | | | 221,508,000 | 54.65% | | Successful Years International Co., Ltd. | Beneficial Owner | 183,700,000 | — | — | 183,700,000 | 45.32% | | Mr. Christopher Koch | Interest in Controlled Corporation | — | 79,601,000 | — | 79,601,000 | 19.64% | | NEHK | Interest in Controlled Corporation | 79,601,000 | — | — | 79,601,000 | 19.64% | Substantial Shareholders' Short Positions in Underlying Shares (as of June 30, 2021) | Name | Number of Underlying Shares (shares) | Percentage of Interest | | :------------------- | :---------------- | :------------- | | Mr. Christopher Koch | 39,800,000 | 9.82% | | NEHK | 39,800,000 | 9.82% | - Mr. Christopher Koch holds a 75% interest in the issued share capital of NEHK and is therefore deemed to be interested in 79,601,000 shares144 - NEHK has the right to sell up to 39,800,000 shares to Mr. Yan Hei Cheung and Ms. Yan Po Ling under the terms of a contingent purchase deed, constituting a short position145 Pre-emptive Rights The Company's bye-laws contain no pre-emptive rights provisions, and Bermuda law imposes no restrictions requiring the Company to offer new shares proportionally to existing shareholders - The Company's bye-laws contain no provisions for pre-emptive rights, nor does Bermuda law impose any restrictions requiring the Company to offer new shares proportionally to existing shareholders147 Purchase, Sale or Redemption of the Company's Listed Securities For the six months ended June 30, 2021, neither the Company nor any of its subsidiaries purchased, sold, or redeemed any of the Company's listed securities - For the six months ended June 30, 2021, neither the Company nor any of its subsidiaries purchased, sold, or redeemed any of the Company's listed securities148 Corporate Governance Code The Board believes the Company complied with the code provisions of the Corporate Governance Code set out in Appendix 14 of the Listing Rules for the six months ended June 30, 2021 - The Board believes that for the six months ended June 30, 2021, the Company complied with the code provisions of the Corporate Governance Code set out in Appendix 14 of the Listing Rules149 Model Code for Securities Transactions by Directors The Company adopted the Model Code for Securities Transactions by Directors as set out in Appendix 10 of the Listing Rules, and all directors confirmed compliance for the period ended June 30, 2021 - The Company has adopted the Model Code for Securities Transactions by Directors as set out in Appendix 10 of the Listing Rules151 - Following enquiry by the Company, all Directors have confirmed their compliance with the required standards set out in the Model Code for the period ended June 30, 2021151 Audit Committee The Company complied with Listing Rule 3.21 regarding the Audit Committee, comprising all independent non-executive directors, responsible for reviewing and monitoring financial reporting and internal controls, and has reviewed the interim financial information - The Company has complied with Listing Rule 3.21 regarding the establishment of an Audit Committee152 - The Audit Committee comprises all independent non-executive directors, with primary responsibilities to review and monitor the Group's financial reporting and internal control procedures152 - The Audit Committee has reviewed the interim condensed consolidated financial information for the period ended June 30, 2021152
飞达控股(01100) - 2021 - 中期财报