科劲国际(06822) - 2025 - 中期业绩

Financial Summary The group's financial performance for the six months ended June 30, 2025, showed a significant decline in revenue and a shift from profit to loss Financial Summary for the Six Months Ended June 30, 2025 | Metric | Six Months Ended June 30, 2025 (HKD thousands) | Six Months Ended June 30, 2024 (HKD thousands) | Change | | :--- | :--- | :--- | :--- | | Revenue | 249,838 | 332,923 | -25.0% | | Gross Profit | 51,096 | 87,481 | -41.6% | | (Loss)/Profit Attributable to Owners of the Company | (40,978) | 3,426 | -1,296.1% | | Basic and Diluted (Loss)/Earnings Per Share (HK cents) | (5.9) | 0.5 | - | Interim Results The interim results reflect a significant decline in profitability and asset values, with a shift from profit to loss for the period Condensed Consolidated Statement of Comprehensive Income The group recorded a loss of HKD 42,415 thousand for the period, a significant reversal from the prior year's profit, driven by revenue decline and increased expenses Key Data from Condensed Consolidated Statement of Comprehensive Income | Metric | Six Months Ended June 30, 2025 (HKD thousands) | Six Months Ended June 30, 2024 (HKD thousands) | Change | | :--- | :--- | :--- | :--- | | Revenue | 249,838 | 332,923 | -25.0% | | Cost of Sales | (198,742) | (245,442) | -19.0% | | Gross Profit | 51,096 | 87,481 | -41.6% | | Other Income and Net Gains and Losses | (6,831) | 3,683 | -285.5% | | Distribution Expenses | (18,384) | (19,596) | -6.2% | | Administrative Expenses | (65,408) | (59,642) | +9.7% | | (Loss)/Profit Before Income Tax | (42,661) | 7,651 | -657.5% | | (Loss)/Profit for the Period | (42,415) | 2,092 | -2127.8% | | (Loss)/Profit Attributable to Owners of the Company | (40,978) | 3,426 | -1296.1% | | Basic and Diluted (Loss)/Earnings Per Share (HK cents) | (5.9) | 0.5 | - | Condensed Consolidated Statement of Financial Position Total assets decreased, with significant reductions in non-current and current assets, while current liabilities increased, leading to a decline in net assets Key Data from Condensed Consolidated Statement of Financial Position | Metric | June 30, 2025 (HKD thousands) | December 31, 2024 (HKD thousands) | Change | | :--- | :--- | :--- | :--- | | Assets | | | | | Non-current Assets | 255,180 | 282,670 | -9.7% | | Current Assets | 490,917 | 497,619 | -1.3% | | Liabilities | | | | | Current Liabilities | 210,848 | 172,078 | +22.5% | | Non-current Liabilities | 18,499 | 23,185 | -20.3% | | Equity | | | | | Net Assets | 516,750 | 585,026 | -11.6% | | Total Equity | 516,750 | 585,026 | -11.6% | - Financial assets at fair value through profit or loss significantly decreased from HKD 29,469 thousand on December 31, 2024, to HKD 23 thousand on June 30, 2025[6][15] Notes to the Condensed Consolidated Interim Financial Statements These notes provide essential details on the group's operations, accounting policies, segment information, and financial position for the interim period 1. General Information The company is an investment holding company primarily engaged in trading, retail, wholesale, and distribution of kitchenware and household products, with no significant operational changes during the period - The company's principal activities are investment holding, with its major subsidiaries engaged in the trading, retail, wholesale, and distribution of kitchenware and household products, and raw material trading[8] - There were no significant changes in the group's operations during the period[8] - The company's ultimate holding company is City Concord Limited, controlled by Dr. Wong Siu Wah (Chairman and Chief Executive Officer)[9] 2. Basis of Preparation The condensed consolidated interim financial statements are prepared in accordance with HKAS 34 and Appendix 16 of the Listing Rules, providing explanations for significant changes since the 2024 annual report - The condensed consolidated interim financial statements are prepared in accordance with Appendix 16 of the Listing Rules and Hong Kong Accounting Standard 34 'Interim Financial Reporting' issued by the HKICPA[10] - The statements are unaudited but have been reviewed by the Company's Audit Committee[12] - The condensed consolidated interim financial statements are presented in Hong Kong Dollars, the Company's functional currency, with all values rounded to the nearest thousand[12] 3. Adoption of Hong Kong Financial Reporting Standards The group adopted the HKAS 21 amendment 'Lack of Exchangeability' during the interim period, which had no material impact on the reported amounts or disclosures - The group has adopted the amendment to Hong Kong Accounting Standard 21 'Lack of Exchangeability' issued by the HKICPA for the first time during the interim period[13] - The application of an amendment to a Hong Kong Financial Reporting Standard during the interim period had no material impact on the amounts reported and/or disclosures contained in the condensed consolidated interim financial statements[13] 4. Segment Information The group operates in kitchenware and household products trading and raw materials trading, with the former experiencing a significant decline in revenue and a shift to loss, while the latter saw growth 4. (i) Operating Segment Information The kitchenware and household products segment saw a 31.0% revenue decrease and a shift from profit to loss, while the raw materials trading segment experienced 69.1% revenue growth and a 264.5% increase in segment results - The group has two business components: (i) trading of kitchenware and household products, including drinkware, tools and gadgets, bakeware and accessories, and food preparation products; and (ii) trading of raw materials, primarily plastics and silicone[14] Operating Segment Revenue and Results | Metric | Six Months Ended June 30, 2025 (HKD thousands) | Six Months Ended June 30, 2024 (HKD thousands) | Change | | :--- | :--- | :--- | :--- | | Kitchenware and Household Products Trading | | | | | Revenue | 216,115 | 312,985 | -31.0% | | Segment Results | (45,428) | 9,582 | -574.1% | | Raw Materials Trading | | | | | Revenue | 33,723 | 19,938 | +69.1% | | Segment Results | 4,393 | 1,208 | +264.5% | | Total | | | | | Revenue | 249,838 | 332,923 | -25.0% | | Segment Results | (41,035) | 10,790 | -480.3% | Other Segment Information | Metric | Six Months Ended June 30, 2025 (HKD thousands) | Six Months Ended June 30, 2024 (HKD thousands) | | :--- | :--- | :--- | | Fair Value Loss on Investment Properties | (16,900) | (4,000) | | Depreciation of Property, Plant and Equipment | (13,257) | (9,093) | | Net Fair Value Gains on Financial Assets/Liabilities at Fair Value Through Profit or Loss | 5,686 | 2,717 | 4. (ii) Disaggregation of Revenue and Geographical Segment Information Revenue from external customers showed a significant 47.5% decrease in the US market but a 13.7% increase in the Asian market, with Hong Kong being the primary operational location for non-current assets Revenue by Geographical Region | Region | Six Months Ended June 30, 2025 (HKD thousands) | Six Months Ended June 30, 2024 (HKD thousands) | Change | | :--- | :--- | :--- | :--- | | United States | 94,925 | 181,110 | -47.5% | | Asia | 97,520 | 85,766 | +13.7% | | Europe | 42,381 | 53,859 | -21.3% | | Canada | 12,146 | 9,972 | +21.8% | | Other Locations | 2,866 | 2,216 | +29.3% | | Total | 249,838 | 332,923 | -25.0% | - Asian revenue primarily includes revenue from Mainland China and Hong Kong, increasing from HKD 73,665 thousand in the prior period to HKD 83,835 thousand in the current period[18] - As of June 30, 2025, and December 31, 2024, over 85% of the group's non-current assets (excluding financial instruments and deferred tax assets) were physically located in Hong Kong[19] 4. (iii) Information about Major Customers For the six months ended June 30, 2025, three major customers contributed over 10% of the group's revenue, all from the kitchenware and household products trading segment Major Customer Revenue Contribution | Customer | Six Months Ended June 30, 2025 (HKD thousands) | Six Months Ended June 30, 2024 (HKD thousands) | | :--- | :--- | :--- | | Company A | 38,195 | 74,917 | | Company B | 33,746 | 35,105 | | Company C | 36,565 | Not Applicable | - Revenue from these three customers (two for the six months ended June 30, 2024) was entirely derived from the segment engaged in trading kitchenware and household products[21] 5. Revenue The group's revenue primarily stems from the sale of kitchenware and household products (HKD 216,115 thousand) and raw materials (HKD 33,723 thousand) for the six months ended June 30, 2025 Revenue Composition | Revenue Source | Six Months Ended June 30, 2025 (HKD thousands) | Six Months Ended June 30, 2024 (HKD thousands) | | :--- | :--- | :--- | | Sale of Kitchenware and Household Products | 216,115 | 312,985 | | Sale of Raw Materials | 33,723 | 19,938 | | Total | 249,838 | 332,923 | - Revenue from the sale of kitchenware and household products and raw materials is recognized when control of the goods has been transferred to the customer, the customer has sufficient control over the goods, and the group has no unfulfilled obligations that could affect the customer's acceptance of the goods[20] 6. Other Income and Net Gains and Losses Net other income and gains/losses shifted to a loss of HKD 6,831 thousand for the six months ended June 30, 2025, primarily due to a significant increase in fair value losses on investment properties Composition of Other Income and Net Gains and Losses | Item | Six Months Ended June 30, 2025 (HKD thousands) | Six Months Ended June 30, 2024 (HKD thousands) | | :--- | :--- | :--- | | Bank Interest Income | 645 | 1,434 | | Dividend Income from Listed Equity Securities | 1,778 | – | | Rental Income | 1,311 | 1,561 | | Recoveries from Customers | 194 | – | | Government Grants | 89 | 1,469 | | Net Fair Value Gains on Financial Assets/Liabilities at Fair Value Through Profit or Loss | 5,686 | 2,717 | | Fair Value Loss on Investment Properties | (16,900) | (4,000) | | Others | 366 | 502 | | Total | (6,831) | 3,683 | - Fair value losses on investment properties increased from HKD 4,000 thousand in the prior period to HKD 16,900 thousand in the current period[22] 7. Finance Costs Finance costs decreased by 7.2% to HKD 3,374 thousand for the six months ended June 30, 2025, mainly due to reduced interest expenses on bank borrowings Composition of Finance Costs | Item | Six Months Ended June 30, 2025 (HKD thousands) | Six Months Ended June 30, 2024 (HKD thousands) | | :--- | :--- | :--- | | Interest expenses on financial liabilities measured at amortized cost: | | | | Bank Borrowings | 1,605 | 2,058 | | Bank Overdrafts | 746 | 384 | | Lease Liabilities | 1,023 | 1,195 | | Total | 3,374 | 3,637 | - The decrease in finance costs was primarily attributable to reduced interest expenses on bank borrowings[23] 8. Loss/Profit Before Income Tax The group reported a loss before income tax of HKD 42,661 thousand for the six months ended June 30, 2025, a reversal from the prior year's profit, influenced by inventory costs, depreciation, and employee benefits Factors Affecting Loss/Profit Before Income Tax | Item | Six Months Ended June 30, 2025 (HKD thousands) | Six Months Ended June 30, 2024 (HKD thousands) | | :--- | :--- | :--- | | Cost of Inventories Recognized as Expense | 190,812 | 233,612 | | Provision for Impairment Loss on Trade Receivables | 223 | 191 | | Depreciation of Property, Plant and Equipment | 13,257 | 9,093 | | Research Expenses | 15 | 108 | | Short-term Lease Expenses | 1,504 | 650 | | Low-value Lease Expenses | 78 | 107 | | Total Employee Benefit Expenses (including Directors' Emoluments) | 31,014 | 31,251 | | Net Exchange Gains/(Losses) | 1,039 | (662) | - Depreciation of property, plant and equipment increased from HKD 9,093 thousand in the prior period to HKD 13,257 thousand in the current period[24] - Net exchange gains shifted from a loss of HKD 662 thousand in the prior period to a gain of HKD 1,039 thousand in the current period[24] 9. Income Tax (Credit)/Expense The group recorded an income tax credit of HKD 246 thousand for the six months ended June 30, 2025, compared to an expense in the prior year, mainly due to increased deferred tax credit and reduced current tax Composition of Income Tax (Credit)/Expense | Item | Six Months Ended June 30, 2025 (HKD thousands) | Six Months Ended June 30, 2024 (HKD thousands) | | :--- | :--- | :--- | | Tax attributable to the group's operations comprises: | | | | Current Tax - Hong Kong Profits Tax | 1,639 | 4,577 | | Current Tax - Income Tax Outside Hong Kong | 32 | 417 | | Current Tax - Withholding Tax Outside Hong Kong | – | 1,832 | | (Under)/Over Provision in Prior Years - Hong Kong Profits Tax | (3) | 18 | | Deferred Tax - Credit for the Period | (1,914) | (1,285) | | Income Tax (Credit)/Expense | (246) | 5,559 | - Hong Kong profits tax is provided at a rate of 16.5% on estimated assessable profits for the year, with certain qualifying entities subject to an 8.25% tax rate on the first HKD 2,000,000 of assessable profits; Mainland China corporate income tax is calculated at 25%[25] - No US income tax was provided for the six months ended June 30, 2025, as there were no assessable profits derived from the US[26] 10. Loss/Earnings Per Share Basic and diluted loss per share was 5.9 HK cents for the six months ended June 30, 2025, a reversal from the prior year's earnings, primarily due to the loss attributable to owners of the company Basic Loss/Earnings Per Share Basic loss per share was 5.9 HK cents, calculated based on a loss attributable to owners of HKD 40,978 thousand and a weighted average of 700,000,000 ordinary shares outstanding Basic Loss/Earnings Per Share | Metric | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :--- | :--- | :--- | | (Loss)/Profit Attributable to Owners of the Company | (HKD 40,978,000) | HKD 3,426,000 | | Weighted Average Number of Ordinary Shares Outstanding | 700,000,000 shares | 700,000,000 shares | | Basic (Loss)/Earnings Per Share | (5.9 HK cents) | 0.5 HK cents | Diluted Loss/Earnings Per Share Diluted loss/earnings per share is the same as basic loss/earnings per share, as there were no outstanding potential dilutive ordinary shares during the periods - Diluted loss/earnings per share is the same as basic loss/earnings per share because there were no outstanding potential dilutive ordinary shares for the six months ended June 30, 2025, and 2024[29] 11. Dividends The Board does not recommend an interim dividend for the six months ended June 30, 2025, though a final dividend of 4.0 HK cents per share (totaling HKD 28,000 thousand) for the previous fiscal year was approved - The Board does not recommend the payment of an interim dividend for the six months ended June 30, 2025 (six months ended June 30, 2024: nil)[30] Dividend Payment Details | Item | Six Months Ended June 30, 2025 (HKD thousands) | Six Months Ended June 30, 2024 (HKD thousands) | | :--- | :--- | :--- | | Final dividend approved and payable for the previous financial year | 28,000 (4.0 HK cents per share) | 14,000 (2.0 HK cents per share) | 12. Property, Plant and Equipment The group acquired property, plant and equipment totaling approximately HKD 107 thousand for the six months ended June 30, 2025, a significant decrease from the prior year, and has pledged leased land and buildings as collateral for bank financing - For the six months ended June 30, 2025, the group acquired property, plant and equipment at a total cost of approximately HKD 107 thousand, compared to approximately HKD 341 thousand for the six months ended June 30, 2024[31] - As of June 30, 2025, the group had pledged leased land and buildings with a total carrying amount of approximately HKD 14,300 thousand as collateral for general bank financing granted to the group[31] 13. Inventories Total inventories decreased to HKD 82,940 thousand as of June 30, 2025, from HKD 90,708 thousand at December 31, 2024, primarily due to a reduction in raw materials Inventory Composition | Item | June 30, 2025 (HKD thousands) | December 31, 2024 (HKD thousands) | | :--- | :--- | :--- | | Goods Held for Resale | 33,810 | 34,446 | | Raw Materials | 49,130 | 56,262 | | Total | 82,940 | 90,708 | 14. Trade Receivables Net trade receivables decreased to HKD 169,405 thousand as of June 30, 2025, from HKD 198,169 thousand at December 31, 2024, with a significant increase in receivables over 90 days Trade Receivables and Impairment Provision | Item | June 30, 2025 (HKD thousands) | December 31, 2024 (HKD thousands) | | :--- | :--- | :--- | | Trade Receivables | 173,312 | 201,853 | | Less: Provision for Impairment Loss | (3,907) | (3,684) | | Net | 169,405 | 198,169 | Aging Analysis of Trade Receivables | Aging | June 30, 2025 (HKD thousands) | December 31, 2024 (HKD thousands) | | :--- | :--- | :--- | | 0 to 30 Days | 47,506 | 51,874 | | 31 to 60 Days | 43,793 | 82,467 | | 61 to 90 Days | 15,969 | 51,614 | | Over 90 Days | 62,137 | 12,214 | | Total | 169,405 | 198,169 | - Trade receivables over 90 days significantly increased from HKD 12,214 thousand on December 31, 2024, to HKD 62,137 thousand on June 30, 2025[33] 15. Financial Assets/Liabilities at Fair Value Through Profit or Loss Financial assets at fair value through profit or loss significantly decreased to HKD 23 thousand (primarily derivative financial instruments) as of June 30, 2025, from HKD 29,469 thousand (primarily listed equity securities) at year-end 2024, with a notable reduction in financial liabilities Financial Assets/Liabilities at Fair Value Through Profit or Loss | Item | June 30, 2025 (HKD thousands) | December 31, 2024 (HKD thousands) | | :--- | :--- | :--- | | Financial assets at fair value through profit or loss: | | | | - Listed Equity Securities | – | 29,469 | | - Derivative Financial Instruments | 23 | – | | Financial liabilities at fair value through profit or loss: | | | | - Derivative Financial Instruments | (148) | (2,519) | | Net | (125) | 26,950 | - Derivative financial instruments refer to USD-denominated forward foreign exchange contracts, with a notional amount decreasing from RMB 59,000,000 on December 31, 2024, to RMB 6,000,000 on June 30, 2025[34] 16. Trade Payables Trade payables decreased to HKD 33,857 thousand as of June 30, 2025, from HKD 39,918 thousand at December 31, 2024, with credit terms generally ranging from 0 to 90 days Aging Analysis of Trade Payables | Aging | June 30, 2025 (HKD thousands) | December 31, 2024 (HKD thousands) | | :--- | :--- | :--- | | 0 to 90 Days | 33,154 | 38,590 | | 91 to 180 Days | 703 | 1,197 | | 181 to 365 Days | – | 64 | | Over 365 Days | – | 67 | | Total | 33,857 | 39,918 | - The directors of the company believe that the carrying amounts of trade payables approximate their fair values[36] 17. Share Capital As of June 30, 2025, the company's authorized share capital remained at HKD 100,000 thousand (10,000,000 thousand shares), and issued and fully paid share capital at HKD 7,000 thousand (700,000 thousand shares), consistent with December 31, 2024 Share Capital Structure | Item | June 30, 2025 (thousand shares) | June 30, 2025 (HKD thousands) | December 31, 2024 (thousand shares) | December 31, 2024 (HKD thousands) | | :--- | :--- | :--- | :--- | :--- | | Authorized: Shares of HKD 0.01 par value each | 10,000,000 | 100,000 | 10,000,000 | 100,000 | | Issued and Fully Paid: Shares of HKD 0.01 par value each | 700,000 | 7,000 | 700,000 | 7,000 | Management Discussion and Analysis This section reviews the group's business and financial performance for the period, outlining future strategies, human resources, and liquidity management in a challenging global environment Business Review The first half of 2025 saw continued global market volatility, influenced by tightening monetary policies, geopolitical tensions, and uncertain US tariff policies, suppressing consumer spending in the North American mid-to-high-end retail market - In the first half of 2025, global market conditions and the operating environment remained volatile and uncertain, primarily due to tightening monetary policies worldwide and ongoing geopolitical tensions[38] - Uncertainty and repeated extensions of US tariff policies further disrupted trade flows and suppressed profit margins[38] - Consumer spending habits in the mid-to-high-end priced houseware and drinkware retail markets in North America were also suppressed[38] Financial Review The group's financial performance significantly deteriorated in the first half of 2025, shifting from profit to loss due to substantial revenue decline, narrower gross margins, fair value losses on investment properties, and increased operating costs Revenue (Financial Review) Revenue for the six months ended June 30, 2025, significantly decreased by 25.0% to HKD 249.8 million, primarily attributed to the uncertain outlook of US tariff policies Revenue Comparison | Metric | Six Months Ended June 30, 2025 (HKD millions) | Six Months Ended June 30, 2024 (HKD millions) | Change | | :--- | :--- | :--- | :--- | | Revenue | 249.8 | 332.9 | -25.0% | - This decrease in revenue was primarily due to the uncertain outlook of US tariff and expansion policies[39] Gross Profit and Gross Margin Gross profit decreased by 41.6% to HKD 51.1 million, and gross margin declined by 5.8 percentage points to 20.5% for the six months ended June 30, 2025, mainly due to reduced revenue and suppressed consumer spending Gross Profit and Gross Margin Comparison | Metric | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | Change | | :--- | :--- | :--- | | Gross Profit | 51.1 million HKD | 87.5 million HKD | -41.6% | | Gross Margin | 20.5% | 26.3% | -5.8 percentage points | - The decline in gross margin was primarily attributable to suppressed customer consumption during the period[40] Other Income and Net Gains and Losses (Financial Review) Other income and net gains and losses decreased by 285.5% to a loss of HKD 6.8 million for the six months ended June 30, 2025, mainly due to fair value losses on investment properties Other Income and Net Gains and Losses Comparison | Metric | Six Months Ended June 30, 2025 (HKD millions) | Six Months Ended June 30, 2024 (HKD millions) | Change | | :--- | :--- | :--- | :--- | | Other Income and Net Gains and Losses | (6.8) | 3.7 | -285.5% | - The decrease was primarily due to fair value losses on investment properties, affected by the unfavorable conditions in the industrial and commercial real estate market[41] Distribution Expenses Distribution expenses decreased by 6.2% to HKD 18.4 million for the six months ended June 30, 2025, primarily due to a corresponding reduction in marketing expenses and transportation costs with declining revenue Distribution Expenses Comparison | Metric | Six Months Ended June 30, 2025 (HKD millions) | Six Months Ended June 30, 2024 (HKD millions) | Change | | :--- | :--- | :--- | :--- | | Distribution Expenses | 18.4 | 19.6 | -6.2% | - This decrease was primarily attributable to a corresponding reduction in marketing expenses and transportation costs with the group's declining revenue[42] Administrative Expenses Administrative expenses increased by 9.7% to HKD 65.4 million for the six months ended June 30, 2025, mainly due to depreciation and other operating costs incurred after the advanced manufacturing center commenced nano-fiber production Administrative Expenses Comparison | Metric | Six Months Ended June 30, 2025 (HKD millions) | Six Months Ended June 30, 2024 (HKD millions) | Change | | :--- | :--- | :--- | :--- | | Administrative Expenses | 65.4 | 59.6 | +9.7% | - This increase was primarily due to depreciation and other operating costs incurred after the group's advanced manufacturing center in Tseung Kwan O Industrial Estate commenced nano-fiber production operations[43] Finance Costs (Financial Review) Finance costs decreased by 7.2% to HKD 3.4 million for the six months ended June 30, 2025, primarily due to a reduction in bank borrowing interest rates Finance Costs Comparison | Metric | Six Months Ended June 30, 2025 (HKD millions) | Six Months Ended June 30, 2024 (HKD millions) | Change | | :--- | :--- | :--- | :--- | | Finance Costs | 3.4 | 3.6 | -7.2% | - The decrease in finance costs was primarily attributable to a reduction in bank borrowing interest rates[44] Loss/Profit Attributable to Owners of the Company The company reported a loss attributable to owners of HKD 41.0 million for the six months ended June 30, 2025, a significant reversal from the prior year's profit, driven by reduced revenue, fair value losses on investment properties, and increased operating expenses Loss/Profit Attributable to Owners of the Company Comparison | Metric | Six Months Ended June 30, 2025 (HKD millions) | Six Months Ended June 30, 2024 (HKD millions) | Change | | :--- | :--- | :--- | :--- | | (Loss)/Profit Attributable to Owners of the Company | (41.0) | 3.4 | -1296.1% | - The shift from profit to loss was primarily due to reduced revenue resulting from the uncertain outlook of US tariff and expansion policies, as well as continuous fair value losses on investment properties during the period[45] - Additionally, depreciation and other operating expenses increased as the group's advanced manufacturing center in Tseung Kwan O Industrial Estate commenced nano-fiber production operations[45] Future Strategies The group is strategically adjusting by enhancing product lines through innovative design and technology upgrades, expanding its proprietary product portfolio, and entering new markets to offset demand slowdowns and capitalize on Asia-Pacific growth opportunities - The group is undergoing strategic adjustments, strengthening its product lines through innovative design and technological upgrades, expanding its proprietary product portfolio, and entering new markets[46] - This transformation helps offset the slowdown in demand caused by ongoing geopolitical tensions for brand owners, while focusing on growth opportunities in the Asia-Pacific market[46] - The first commercial launch of the nano-enhanced product line is planned for the fourth quarter of 2025, with these innovative technologies expected to significantly enhance the drinkware business[47] - The group anticipates these strategic initiatives will begin to positively impact performance in 2026[48] Employees and Remuneration Policy As of June 30, 2025, the group's employee count decreased to 151, with a slight reduction in total staff costs, as it aims to streamline its organizational structure and retain talent through competitive remuneration Employee Count and Costs | Metric | June 30, 2025 | June 30, 2024 | Change | | :--- | :--- | :--- | :--- | | Employee Count | 151 persons | 163 persons | -7.36% | | Total Staff Costs (HKD millions) | 31.0 | 31.3 | -0.96% | - The group will continue to streamline its organizational structure through natural attrition and workflow re-engineering to enhance operational efficiency[49] - The group offers competitive remuneration packages, including salaries, medical insurance, discretionary bonuses, and participates in MPF schemes for Hong Kong employees and state-operated retirement benefit schemes for Mainland China employees[49] Significant Investments Held and Future Plans for Material Investments in Capital Assets As of June 30, 2025, the group held no significant investments other than investment properties and financial assets at fair value through profit or loss as disclosed in the condensed consolidated statement of financial position - As of June 30, 2025, no significant investments were held other than investment properties and financial assets at fair value through profit or loss as disclosed in the condensed consolidated statement of financial position[51] Material Acquisitions and Disposals of Subsidiaries and Associates For the six months ended June 30, 2025, the group did not undertake any material acquisitions or disposals of subsidiaries and associates - For the six months ended June 30, 2025, the group did not undertake any material acquisitions or disposals of subsidiaries and associates[52] Liquidity, Financial Resources and Capital Structure The group manages its capital structure to ensure going concern and maximize shareholder returns, with increased cash and bank balances, higher bank borrowings, and an elevated gearing ratio, while maintaining ample bank financing facilities Cash and Bank Balances and Borrowings Cash and bank balances increased to HKD 183.0 million as of June 30, 2025, primarily denominated in USD, RMB, and HKD, while bank borrowings rose to HKD 115.3 million and bank overdrafts significantly decreased Cash and Borrowings Situation | Metric | June 30, 2025 (HKD millions) | December 31, 2024 (HKD millions) | Change | | :--- | :--- | :--- | :--- | | Cash and Bank Balances | 183.0 | 116.7 | +56.8% | | Bank Borrowings | 115.3 | 68.1 | +69.3% | | Bank Overdrafts | 1.0 | 28.6 | -96.5% | - For the six months ended June 30, 2025, the annual interest rates for both bank borrowings and bank overdrafts decreased[54] Cash Flow Operating activities generated HKD 51.2 million in cash for the six months ended June 30, 2025, a significant improvement from the prior year's cash used, primarily due to large customer orders received near period-end, while net cash from investing activities decreased and net cash from financing activities increased Cash Flow Comparison | Cash Flow Type | Six Months Ended June 30, 2025 (HKD millions) | Six Months Ended June 30, 2024 (HKD millions) | | :--- | :--- | :--- | | Cash from/(used in) Operating Activities | 51.2 (Generated) | (24.5) (Used) | | Net Cash from Investing Activities | 2.1 | 7.6 | | Net Cash Inflow/(Outflow) from Financing Activities | 39.3 (Inflow) | (26.6) (Outflow) | - Cash generated from operating activities was primarily attributable to large customer orders received by the group near the end of the period[55] - The decrease in net cash from investing activities was mainly due to reduced purchases of property, plant and equipment during the period[56] - The increase in net cash inflow from financing activities was due to an increase in bank borrowings during the period[56] Gearing Ratio The group's gearing ratio, calculated as total borrowings divided by total equity, increased to 28.4% as of June 30, 2025, from 22.5% at December 31, 2024 Gearing Ratio Comparison | Metric | June 30, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Gearing Ratio (including lease liabilities) | 28.4% | 22.5% | | Gearing Ratio (excluding lease liabilities) | 23.3% | 17.2% | Bank Facilities As of June 30, 2025, the group had total bank facilities of HKD 430.9 million, with HKD 116.3 million utilized, representing a utilization rate of 27.0%, indicating ample available financing Bank Facilities Situation | Metric | June 30, 2025 (HKD millions) | December 31, 2024 (HKD millions) | | :--- | :--- | :--- | | Total Bank Facilities | 430.9 | 430.9 | | Utilized Amount | 116.3 | 96.7 | | Utilization Rate | 27.0% | 22.4% | - Due to financial support from banks and a low utilization rate, the group has reserved ample financing facilities for future drawdown[58] Exposure to Foreign Exchange Risk The group is primarily exposed to foreign exchange risk in USD and RMB, as revenue is mainly USD-denominated while cost of sales is in HKD and RMB, and manages this risk primarily through forward foreign exchange contracts - The group's revenue is primarily denominated in USD, while its cost of sales is mainly denominated in HKD and RMB, thus exposing it primarily to foreign exchange risk in USD and RMB[59] - The group primarily uses forward foreign exchange contracts to hedge foreign exchange risk in its ordinary course of business[59] Pledge of Assets As of June 30, 2025, the group had pledged leased land and buildings, investment properties, and pledged bank deposits totaling approximately HKD 14.3 million, HKD 92.9 million, and HKD 20.7 million respectively, as collateral for general bank financing Pledged Assets Situation | Asset Type | June 30, 2025 (HKD millions) | December 31, 2024 (HKD millions) | | :--- | :--- | :--- | | Leased Land and Buildings | 14.3 | 14.5 | | Investment Properties | 92.9 | 109.8 | | Pledged Bank Deposits | 20.7 | 20.5 | Contingent Liabilities As of June 30, 2025, the group had no significant contingent liabilities - As of June 30, 2025, the group had no significant contingent liabilities (December 31, 2024: nil)[61] Capital Commitments As of June 30, 2025, the group's capital commitments amounted to approximately HKD 2.0 million, primarily for the purchase and addition of property, plant and equipment, consistent with the prior year-end Capital Commitments | Item | June 30, 2025 (HKD millions) | December 31, 2024 (HKD millions) | | :--- | :--- | :--- | | Purchase and Addition of Property, Plant and Equipment | 2.0 | 2.0 | Corporate Governance and Other Information This section details the company's commitment to corporate governance, compliance with trading standards, audit committee functions, dividend policy, and information dissemination practices Corporate Governance Code The company adheres to the Corporate Governance Code, with the exception of the combined roles of Chairman and CEO, which the Board believes ensures consistent leadership and effective strategic planning - The company has adopted the code provisions of the Corporate Governance Code set out in Appendix C1 Part 2 of the Listing Rules[63] - The company has complied with the Corporate Governance Code, except for code provision C.2.1, which stipulates that the roles of chairman and chief executive of a listed issuer should be separate and not performed by the same individual[63] - The Board believes that the benefits of combining the roles of Chairman and Chief Executive Officer ensure consistent leadership direction within the group, enabling more effective and swift overall strategic planning[64] Model Code for Securities Transactions by Directors The directors have adopted the Model Code for Securities Transactions by Directors of Listed Issuers and confirmed full compliance with its required standards during the period - The directors have adopted the Model Code for Securities Transactions by Directors of Listed Issuers set out in Appendix C3 of the Listing Rules as the code of conduct for directors' dealings in the company's securities[65] - Following specific enquiries with all directors, all directors have confirmed their full compliance with the required standards of dealing set out in the Model Code during the period and up to the date of this announcement[65] Audit Committee The Audit Committee, established in accordance with Listing Rule 3.21, is responsible for reviewing and overseeing the group's financial reporting, risk management, and internal controls, and has reviewed the interim financial statements - The company's Audit Committee was established in accordance with Listing Rule 3.21 and is responsible for reviewing and overseeing the group's financial reporting process, risk management, and internal controls[66] - The Audit Committee has reviewed the company's unaudited condensed interim financial statements for the six months ended June 30, 2025, and the accounting principles and practices adopted[66] Interim Dividend The Board does not recommend the payment of an interim dividend for the six months ended June 30, 2025 - The Board does not recommend the payment of an interim dividend for the six months ended June 30, 2025 (six months ended June 30, 2024: nil)[67] Purchase, Sale or Redemption of the Company's Listed Securities Neither the company nor its subsidiaries purchased, sold, or redeemed any of the company's listed securities during the six months ended June 30, 2025 - For the six months ended June 30, 2025, neither the company nor any of its subsidiaries purchased, sold, or redeemed any of the company's listed securities[68] Publication of Information on the HKEX and Company Website This results announcement is published on the HKEX and company websites, and the interim report for the six months ended June 30, 2025, will be dispatched to shareholders and posted on these websites in due course - This results announcement is published on the HKEX website www.hkexnews.hk and the company's website www.kingsflair.com.hk[69](index=69&type=chunk) - The company's interim report for the six months ended June 30, 2025, will be dispatched to shareholders and posted on the respective websites of the HKEX and the company in due course[69]