致丰工业电子(01710) - 2025 - 中期业绩

Announcement Overview This section provides an overview of the interim results announcement, including key financial highlights and the Board's dividend declaration Interim Results Announcement This announcement presents the unaudited condensed consolidated interim results of Trio Industrial Electronics Group Limited for the six months ended June 30, 2025 - Company name: Trio Industrial Electronics Group Limited (Stock Code: 1710)[2] - Reporting period: Six months ended June 30, 2025[2] Financial Summary The Board resolved to declare an interim dividend, with revenue growing by 4.0%, gross profit by 12.5%, gross margin increasing by 1.4 percentage points, and both loss before income tax and loss attributable to owners of the Company significantly reduced - The Board has resolved to declare an interim dividend of HK0.6 cents per ordinary share for the six months ended June 30, 2025 (2024: nil)[4] Financial Summary for the six months ended June 30, 2025 | Metric | 2025 (HK$ Thousand) | 2024 (HK$ Thousand) | Change (%) | | :--- | :--- | :--- | :--- | | Revenue | 404,700 | 389,200 | +4.0% | | Gross Profit | 76,100 | 67,600 | +12.5% | | Gross Margin | 18.8% | 17.4% | +1.4 percentage points | | Loss Before Income Tax | (16,900) | (28,300) | -40.4% | | Loss Attributable to Owners of the Company | (14,800) | (25,900) | -42.9% | Condensed Consolidated Financial Statements This section presents the Group's interim condensed consolidated statement of comprehensive income and statement of financial position, detailing financial performance and position Interim Condensed Consolidated Statement of Comprehensive Income For the six months ended June 30, 2025, the company's revenue increased to HK$404,711 thousand, gross profit rose to HK$76,064 thousand, operating loss significantly narrowed, and loss attributable to owners of the Company decreased to HK$14,757 thousand Interim Condensed Consolidated Statement of Comprehensive Income (For the six months ended June 30) | Metric | 2025 (HK$ Thousand) | 2024 (HK$ Thousand) | | :--- | :--- | :--- | | Revenue | 404,711 | 389,249 | | Cost of Sales | (328,647) | (321,629) | | Gross Profit | 76,064 | 67,620 | | Other Income | 2,098 | 1,272 | | Selling and Distribution Expenses | (9,716) | (8,320) | | Administrative Expenses | (80,712) | (89,657) | | Other Operating (Expenses)/Income, Net | (281) | 4,880 | | Operating Loss | (12,547) | (24,205) | | Finance Income | 1,251 | 1,127 | | Finance Expenses | (5,614) | (5,295) | | Loss Before Income Tax | (16,910) | (28,373) | | Income Tax Credit | 2,153 | 2,521 | | Loss for the Period Attributable to Owners of the Company | (14,757) | (25,852) | | Basic and Diluted Loss Per Share (HK Cents) | (1.48) | (2.59) | Interim Condensed Consolidated Statement of Financial Position As of June 30, 2025, the company's total non-current assets were HK$207,027 thousand, net current assets were HK$302,782 thousand, and net assets were HK$395,522 thousand, showing a decrease from December 31, 2024 Interim Condensed Consolidated Statement of Financial Position (As at June 30, 2025) | Metric | 2025年6月30日 (HK$ Thousand) | 2024年12月31日 (HK$ Thousand) | | :--- | :--- | :--- | | Assets | | | | Non-current Assets | 207,027 | 243,609 | | Current Assets | 558,406 | 574,081 | | Current Liabilities | | | | Current Liabilities | 255,624 | 256,867 | | Net Current Assets | 302,782 | 317,214 | | Total Assets Less Current Liabilities | 509,809 | 560,823 | | Non-current Liabilities | | | | Non-current Liabilities | 114,287 | 143,286 | | Equity | | | | Net Assets | 395,522 | 417,537 | | Total Equity | 395,522 | 417,537 | Notes to the Condensed Consolidated Interim Financial Information This section provides detailed notes to the interim financial information, covering accounting policies, segment data, and specific financial line items General Information The company is an investment holding company incorporated and listed in Hong Kong, primarily engaged in the manufacturing and sale of electronic products, with Trio Industrial Electronics Holdings Limited as its direct holding company - Company nature: A limited company incorporated in Hong Kong, listed on the Main Board of the Stock Exchange, acting as an investment holding company[8] - Principal business: Manufacturing and sale of electronic products[8] - Reporting currency: Interim financial information is presented in HK$ thousand[8] Basis of Preparation The interim financial information is prepared in accordance with the Listing Rules of the Stock Exchange and HKAS 34, consistent with the accounting policies in the prior year's annual report, except for adopted revised standards - Basis of preparation: Listing Rules of the Stock Exchange and HKAS 34 "Interim Financial Reporting"[9] - Accounting policies: Consistent with those in the annual report for the year ended December 31, 2024[9] Changes in Accounting Standards The Group has adopted revised standards on lack of exchangeability, with no significant impact expected; HKFRS 18, effective January 1, 2027, which is expected to have extensive presentation and disclosure impacts, has not yet been adopted Adopted Revised Standards The Group has adopted HKAS 21 and HKFRS 1 (Amendments) regarding lack of exchangeability, effective for financial periods beginning on or after January 1, 2025, with no significant impact expected - Adopted standards: HKAS 21 and HKFRS 1 (Amendments) concerning lack of exchangeability[10] - Impact assessment: No impact on amounts recognized in prior periods, and no significant impact expected on current or future periods[10] New and Revised Standards Not Yet Adopted The Group has not yet adopted HKFRS 18 "Presentation and Disclosure in Financial Statements," effective January 1, 2027, which is expected to have extensive presentation and disclosure impacts, with management currently assessing its detailed effects - Unadopted standard: HKFRS 18 – Presentation and Disclosure in Financial Statements[11] - Effective date: Annual periods beginning on or after January 1, 2027[11] - Expected impact: Will have extensive impacts on presentation and disclosure, but will not affect the recognition or measurement of items in the financial statements[11] Segment Information The Group is considered a single operating segment, primarily engaged in manufacturing and selling electronic products across China, Thailand, Ireland, and the UK; Europe remains the largest revenue source, but China's revenue growth is significant, and customer A's revenue contribution has substantially increased Operating Segments The Board considers the Group as a single operating segment, primarily engaged in the manufacturing and sale of electronic products, with operations across China, Thailand, Ireland, and the United Kingdom - Operating segment: The Group is considered a single operating segment[12] - Business locations: China, Thailand, Ireland, and the United Kingdom[12] Information About Major Customers For the six months ended June 30, 2025, Customer A's contribution to total revenue significantly increased, becoming the Group's largest customer, while contributions from Customers B and C decreased Revenue Contribution from Major Customers (For the six months ended June 30) | Customer | 2025 (HK$ Thousand) | 2024 (HK$ Thousand) | | :--- | :--- | :--- | | Customer A | 150,644 | 50,120 | | Customer B | 53,272 | 96,393 | | Customer C | 50,205 | 60,447 | | Customer D | Not Applicable | 60,294 | Geographical Revenue Segments Europe remains the Group's largest revenue source, but revenue from the China region has grown significantly, while revenue from North America, Southeast Asia, and other regions has decreased Geographical Revenue Segments (For the six months ended June 30) | Region | 2025 (HK$ Thousand) | 2024 (HK$ Thousand) | | :--- | :--- | :--- | | Europe | 342,433 | 335,560 | | North America | 30,354 | 30,434 | | China | 20,686 | 10,640 | | Southeast Asia | 3,673 | 3,912 | | Hong Kong | 2,527 | 2,166 | | Others | 5,038 | 6,537 | | Total | 404,711 | 389,249 | - Major markets: European customers contribute most of the revenue, followed by the US, China, Southeast Asia, and Hong Kong[14] Geographical Distribution of Non-current Assets The Group's non-current assets, primarily property, plant and equipment and right-of-use assets, are mainly located in Hong Kong, China, and Thailand - Hong Kong non-current assets: Carrying amount of land and buildings was HK$18,803 thousand (December 31, 2024: HK$19,340 thousand)[15] - Other major distributions: China and Thailand[15] Revenue and Other Income The Group's revenue primarily derives from goods sales, with other income including government grants and handling fee income, resulting in an overall increase in other income Revenue and Other Income (For the six months ended June 30) | Item | 2025 (HK$ Thousand) | 2024 (HK$ Thousand) | | :--- | :--- | :--- | | Revenue (Sales of goods) | 404,711 | 389,249 | | Total other income | 2,098 | 1,272 | | Of which government grants | 365 | 6 | | Of which handling fee income | 567 | 15 | - Revenue recognition: Revenue from sales of goods is recognized at a point in time[16] Expenses by Nature The Group's expenses primarily include cost of inventories, employee benefit expenses, depreciation, freight, and utility expenses, with employee benefit expenses significantly decreasing Expenses by Nature (For the six months ended June 30) | Item | 2025 (HK$ Thousand) | 2024 (HK$ Thousand) | | :--- | :--- | :--- | | Cost of inventories | 279,622 | 266,751 | | Employee benefit expenses | 80,857 | 98,965 | | Depreciation of property, plant and equipment | 8,298 | 8,561 | | Depreciation of right-of-use assets | 7,563 | 7,055 | | Freight and transport expenses | 6,032 | 5,304 | Other Operating (Expenses)/Income, Net This period recorded net other operating expenses, primarily due to increased impairment loss provision for trade receivables, impairment loss on intangible assets, and decreased net foreign exchange gains, contrasting with net operating income in the prior year Other Operating (Expenses)/Income, Net (For the six months ended June 30) | Item | 2025 (HK$ Thousand) | 2024 (HK$ Thousand) | | :--- | :--- | :--- | | Net foreign exchange gains | 2,906 | 3,676 | | Impairment loss (provision)/reversal for trade receivables | (1,366) | 1,146 | | Impairment loss on intangible assets | (1,791) | – | | Total | (281) | 4,880 | Finance Income and Expenses Finance income, primarily from bank interest, increased; finance expenses rose due to higher interest on lease liabilities, partially offset by reduced bank charges and interest on bank borrowings Finance Income and Expenses (For the six months ended June 30) | Item | 2025 (HK$ Thousand) | 2024 (HK$ Thousand) | | :--- | :--- | :--- | | Finance income (Bank interest income) | 1,251 | 1,127 | | Total finance expenses | (5,614) | (5,295) | | Of which interest on lease liabilities | (3,296) | (2,374) | | Net finance expenses | (4,363) | (4,168) | Income Tax Credit The Group recorded an income tax credit of HK$2,153 thousand for the six months ended June 30, 2025, primarily from deferred tax credits, with Hong Kong profits tax applying a two-tiered tax rate Income Tax Credit (For the six months ended June 30) | Item | 2025 (HK$ Thousand) | 2024 (HK$ Thousand) | | :--- | :--- | :--- | | Over-provision in prior years | 238 | – | | Deferred tax credit | 1,915 | 2,521 | | Total income tax credit | 2,153 | 2,521 | - Hong Kong profits tax: A two-tiered tax rate applies, with 8.25% on the first HK$2,000,000 of assessable profits and 16.5% on the remaining profits[19] Loss Per Share For the six months ended June 30, 2025, loss attributable to owners of the Company was HK$14,757 thousand, with basic loss per share of HK1.48 cents, an improvement from the prior year; diluted loss per share is the same as basic loss per share due to no potential dilutive ordinary shares Basic Loss Per Share For the six months ended June 30, 2025, loss attributable to owners of the Company was HK$14,757 thousand, with basic loss per share of HK1.48 cents, showing an improvement from the prior year Basic Loss Per Share (For the six months ended June 30) | Metric | 2025 | 2024 | | :--- | :--- | :--- | | Loss attributable to owners of the Company (HK$ Thousand) | (14,757) | (25,852) | | Weighted average number of ordinary shares in issue (Thousand shares) | 1,000,000 | 1,000,000 | | Basic loss per share (HK Cents) | (1.48) | (2.59) | Diluted Loss Per Share As there were no potential dilutive ordinary shares during the reporting period, diluted loss per share is the same as basic loss per share - No potential dilutive ordinary shares, diluted loss per share is the same as basic loss per share[22] Dividends The company declared and recognized a final dividend of HK1.2 cents per share for 2024, and subsequently declared an interim dividend of HK0.6 cents per share for 2025 after the reporting period Dividend Distribution (For the six months ended June 30) | Item | 2025 (HK$ Thousand) | 2024 (HK$ Thousand) | | :--- | :--- | :--- | | 2024 final dividend (HK1.2 cents per share) | 12,000 | – | | 2025 interim dividend (HK0.6 cents per share) | 6,000 | – | - Interim dividend: HK0.6 cents per ordinary share, declared after the reporting period and not recognized as a liability[24] Trade and Other Receivables As of June 30, 2025, net trade and other receivables totaled HK$250,643 thousand, with an increased impairment loss provision for trade receivables; trade receivables under 30 days increased, while those between 31-60 days and over 60 days decreased Trade and Other Receivables (As at June 30, 2025) | Item | 2025年6月30日 (HK$ Thousand) | 2024年12月31日 (HK$ Thousand) | | :--- | :--- | :--- | | Trade receivables | 248,682 | 251,380 | | Less: Impairment loss provision | (3,680) | (2,290) | | Trade receivables – net | 245,002 | 249,090 | | Other receivables | 5,641 | 6,720 | | Total | 250,643 | 255,810 | - Factoring arrangements: Some trade receivables are subject to factoring arrangements, but the Group has not transferred substantially all risks and rewards, thus continuing to recognize them[23] Ageing Analysis of Trade Receivables As of June 30, 2025, trade receivables under 30 days increased as a proportion, while those between 31-60 days and over 60 days decreased Ageing Analysis of Trade Receivables (As at June 30, 2025) | Ageing | 2025年6月30日 (HK$ Thousand) | 2024年12月31日 (HK$ Thousand) | | :--- | :--- | :--- | | 0-30 days | 106,898 | 81,833 | | 31-60 days | 47,947 | 99,327 | | Over 60 days | 93,837 | 70,220 | | Total | 248,682 | 251,380 | Trade and Other Payables As of June 30, 2025, total trade and other payables were HK$176,188 thousand, a decrease from December 31, 2024, primarily due to reduced trade payables; trade payables under 30 days increased, while those between 31-60 days and over 60 days decreased Trade and Other Payables (As at June 30, 2025) | Item | 2025年6月30日 (HK$ Thousand) | 2024年12月31日 (HK$ Thousand) | | :--- | :--- | :--- | | Trade payables | 138,883 | 174,487 | | Accruals | 20,844 | 18,044 | | Other payables and provisions | 16,461 | 1,903 | | Total | 176,188 | 194,434 | Ageing Analysis of Trade Payables As of June 30, 2025, trade payables under 30 days increased as a proportion, while those between 31-60 days and over 60 days decreased Ageing Analysis of Trade Payables (As at June 30, 2025) | Ageing | 2025年6月30日 (HK$ Thousand) | 2024年12月31日 (HK$ Thousand) | | :--- | :--- | :--- | | 0-30 days | 51,762 | 36,686 | | 31-60 days | 43,377 | 80,452 | | Over 60 days | 43,744 | 57,349 | | Total | 138,883 | 174,487 | Borrowings As of June 30, 2025, the Group's secured bank borrowings increased to HK$44,360 thousand, all classified as current liabilities due to repayment on demand clauses; most borrowings are due within one year, secured by property, plant and equipment, restricted bank deposits, and trade receivables, with an effective annual interest rate of 4.55% Secured Bank Borrowings (As at June 30, 2025) | Item | 2025年6月30日 (HK$ Thousand) | 2024年12月31日 (HK$ Thousand) | | :--- | :--- | :--- | | Secured bank borrowings | 44,360 | 21,250 | - Current liabilities classification: All borrowings are classified as current liabilities due to repayment on demand clauses[29] Borrowing Repayment Schedule As of June 30, 2025, most borrowings are due within one year, with a reduced proportion of long-term borrowings Borrowing Repayment Schedule (As at June 30, 2025) | Repayment Period | 2025年6月30日 (HK$ Thousand) | 2024年12月31日 (HK$ Thousand) | | :--- | :--- | :--- | | Within 1 year | 38,610 | 10,333 | | 1 to 2 years | 5,750 | 8,250 | | 2 to 5 years | – | 2,667 | | Total | 44,360 | 21,250 | Assets Pledged As of June 30, 2025, the Group's bank borrowings are secured by property, plant and equipment, restricted bank deposits, and trade receivables, with a significant increase in total pledged assets Carrying Amount of Pledged Assets (As at June 30, 2025) | Pledged Assets | 2025年6月30日 (HK$ Thousand) | 2024年12月31日 (HK$ Thousand) | | :--- | :--- | :--- | | Property, plant and equipment | 18,803 | 19,340 | | Restricted bank deposits | 15,463 | 15,392 | | Trade receivables | 28,277 | – | | Total | 62,543 | 34,732 | - Additional security: Unlimited indemnity given by the Company[30] Interest Rates The Group's bank borrowings bear interest at floating rates, with an effective annual interest rate of 4.55% for the period ended June 30, 2025, a decrease from December 31, 2024 - Interest rate type: All bank borrowings bear variable interest rates[31] - Effective annual interest rate: 4.55% as at June 30, 2025 (December 31, 2024: 6.23%)[31] Share Capital As of June 30, 2025, the company's issued and fully paid share capital comprised 1,000,000,000 ordinary shares, amounting to HK$281,507 thousand, consistent with the prior year-end Issued and Fully Paid Share Capital (As at June 30, 2025) | Item | 2025年6月30日 (Number of shares) | 2025年6月30日 (Amount HK$ Thousand) | 2024年12月31日 (Number of shares) | 2024年12月31日 (Amount HK$ Thousand) | | :--- | :--- | :--- | :--- | :--- | | Issued and fully paid ordinary shares | 1,000,000,000 | 281,507 | 1,000,000,000 | 281,507 | Commitments At the end of the reporting period, the Group's contracted but not yet incurred capital expenditures primarily related to property, plant and equipment, while total future minimum lease payments for unrecognized lease liabilities decreased - Commitment details: Detailed in Note 15 to the condensed consolidated interim financial information[63] Capital Commitments As of June 30, 2025, contracted but not yet incurred capital expenditures primarily for property, plant and equipment amounted to HK$886 thousand, an increase from the prior year-end Capital Commitments (As at June 30, 2025) | Item | 2025年6月30日 (HK$ Thousand) | 2024年12月31日 (HK$ Thousand) | | :--- | :--- | :--- | | Property, plant and equipment | 886 | 139 | Lease Commitments The Group has recognized right-of-use assets and lease liabilities, but total future minimum lease payments under irrevocable leases for unrecognized lease liabilities within one year amounted to HK$197 thousand - Total future minimum lease payments for unrecognized lease liabilities: HK$197 thousand within one year (December 31, 2024: HK$362 thousand)[34] Comparative Figures Comparative figures in the condensed consolidated statement of comprehensive income have been reclassified to conform with the current period's presentation, but the Board believes there is no material impact on the prior period's financial statements - Reclassified items: Reversal of impairment loss on inventories and write-down of obsolete inventories have been reclassified from "Other operating (expenses)/income, net" to "Cost of sales"[36] - Impact assessment: The Board believes the reclassification has no material impact on the condensed consolidated statement of comprehensive income for the corresponding period in 2024[35] Business Review This section reviews the Group's business operations, market environment, strategic initiatives, and overall operating performance during the period Business Overview The Group is a leading electronic manufacturing services provider specializing in custom industrial electronic components and products, serving a diverse customer base with global production facilities - Core business: Electronic Manufacturing Services (EMS), manufacturing and selling customized industrial electronic components and products[37] - Product range: Electromechanical assemblies, switching power supplies, smart chargers, and smart vending systems[37] - Industries served: Gaming and entertainment, healthcare, telecommunications, commercial freight, security control, and new energy[37] - Global footprint: Headquartered in Hong Kong, with production facilities in China, Thailand, the UK, and Ireland[37] Market Environment and Operating Performance European and North American markets faced volatile customer demand due to high interest rates, geopolitical tensions, and US tariff policy revisions; despite this, the Group's revenue grew by 4.0%, driven by increased smart vending system shipments and optimized manufacturing networks for supply chain resilience - Market challenges: European and North American markets affected by high interest rates, geopolitical tensions, and revisions to US tariff policies[38] - Revenue growth: Revenue increased by 4.0% to approximately HK$404,700 thousand for the six months ended June 30, 2025[38] - Growth driver: Primarily driven by increased shipments of smart vending systems[38] - Manufacturing network optimization: New factory in the UK commenced operations, enhancing European production capacity and diversifying production risks[38] Strategic Diversification and Cost Control The Group strategically entered the new energy sector with the "Deltrix" brand, expanding its product portfolio to smart energy storage and smart digital kiosks, advanced Central Asian platform development in Kazakhstan, and significantly reduced losses through stringent cost control - New energy strategy: Entered the new energy sector with the "Deltrix" brand, expanding products to smart energy storage and smart digital kiosks[39] - Central Asia platform development: Advancing the Central Asia platform in Kazakhstan, establishing a model electric vehicle charging ecosystem[39] - Loss reduction: Loss attributable to owners of the Company decreased by 42.9% to approximately HK$14,800 thousand, benefiting from cost control and operational efficiency[39] Financial Review This section provides a detailed analysis of the Group's financial performance, including revenue, costs, profits, and liquidity, for the reporting period Revenue For the six months ended June 30, 2025, the Group's total revenue grew by 4.0%, primarily driven by a significant increase in smart vending system sales, partially offset by decreased sales of smart chargers, switching power supplies, and electromechanical products; Europe and North America remain key markets, but sales to customers in China (including Hong Kong) surged by 81.3%, contributing significantly to overall revenue growth - Total revenue growth: For the six months ended June 30, 2025, revenue increased by approximately HK$15,500 thousand, a 4.0% growth, compared to the prior year[42] - Primary growth driver: Significant increase in sales of smart vending systems[42] - Offsetting factors: Decreased sales of smart chargers, switching power supplies, and electromechanical products[42] Revenue by Product Category Smart vending system revenue increased by 201.4% year-on-year, becoming the largest revenue source, while revenue from smart chargers and switching power supplies significantly decreased Revenue by Product Category (For the six months ended June 30) | Product Category | 2025 (HK$ Thousand) | Share (%) | 2024 (HK$ Thousand) | Share (%) | Change (HK$ Thousand) | Change (%) | | :--- | :--- | :--- | :--- | :--- | :--- | :--- | | Smart Vending Systems | 151,082 | 37.3 | 50,133 | 12.9 | 100,949 | +201.4 | | Electromechanical Products | 140,136 | 34.6 | 147,332 | 37.8 | (7,196) | -4.9 | | Switching Power Supplies | 56,422 | 13.9 | 90,644 | 23.3 | (34,222) | -37.8 | | Smart Chargers | 54,024 | 13.4 | 98,031 | 25.2 | (44,007) | -44.9 | | Others | 3,047 | 0.8 | 3,109 | 0.8 | (62) | -2.0 | | Total | 404,711 | 100.0 | 389,249 | 100.0 | 15,462 | +4.0 | Geographical Revenue Segments by Customer Location Europe and North America remain the primary markets, but sales to customers in China (including Hong Kong) surged by 81.3%, contributing significantly to total revenue growth Geographical Revenue Segments by Customer Location (For the six months ended June 30) | Region | 2025 (HK$ Thousand) | Share (%) | 2024 (HK$ Thousand) | Share (%) | Change (HK$ Thousand) | Change (%) | | :--- | :--- | :--- | :--- | :--- | :--- | :--- | | Europe | 342,433 | 84.6 | 335,560 | 86.2 | 6,873 | +2.0 | | North America | 30,354 | 7.5 | 30,434 | 7.8 | (80) | -0.3 | | China (including Hong Kong) | 23,213 | 5.7 | 12,806 | 3.3 | 10,407 | +81.3 | | Southeast Asia | 3,673 | 0.9 | 3,912 | 1.0 | (239) | -6.1 | | Others | 5,038 | 1.3 | 6,537 | 1.7 | (1,499) | -22.9 | | Total | 404,711 | 100.0 | 389,249 | 100.0 | 15,462 | +4.0 | - Major market share: Europe and North America collectively accounted for approximately 92.1% of total revenue (2024: 94.0%)[44] Cost of Sales Cost of sales increased by 2.2%, primarily due to higher material costs, partially offset by decreased direct labor costs resulting from a reduction in headcount - Cost of sales increase: Approximately 2.2%, mainly impacted by increased material costs[45] - Offsetting factor: Reduced direct labor costs due to a decrease in headcount[45] Gross Profit and Gross Margin The Group's gross profit increased by 12.5% to HK$76,100 thousand, and gross margin improved by 1.4 percentage points to 18.8%, reflecting cost control and efficiency enhancements - Gross profit growth: Approximately 12.5% to HK$76,100 thousand[46] - Gross margin improvement: Increased by 1.4 percentage points from 17.4% to 18.8%[46] Other Income Other income increased by approximately HK$800 thousand to HK$2,100 thousand, primarily benefiting from higher handling fee income and government grants - Other income increase: Approximately HK$800 thousand to HK$2,100 thousand[48] - Primary sources of increase: Handling fee income and government grants[48] Selling and Distribution Expenses Selling and distribution expenses increased to HK$9,700 thousand, primarily due to higher freight and transport costs and increased sales commissions driven by sales growth - Selling and distribution expenses increase: From HK$8,300 thousand to HK$9,700 thousand[49] - Main reasons: Higher freight and transport costs, and increased sales commissions[49] Administrative Expenses Administrative expenses decreased to HK$80,700 thousand, primarily due to reduced employee benefit expenses - Administrative expenses decrease: From HK$89,700 thousand to HK$80,700 thousand[50] - Main reason: Reduced employee benefit expenses[50] Other Operating (Expenses)/Income, Net This period recorded net other operating expenses of HK$300 thousand, contrasting with net income in the prior year, primarily due to increased impairment loss provision for trade receivables, impairment loss on intangible assets, and decreased net foreign exchange gains - Shift from income to expense: From net income of HK$4,900 thousand in the corresponding period of 2024 to net expense of HK$300 thousand in the corresponding period of 2025[51] - Main reasons: Increased impairment loss provision for trade receivables, impairment loss on intangible assets, and decreased net foreign exchange gains[51] Finance Income Finance income grew by 11.0% to HK$1,300 thousand, primarily from increased interest earned on bank time deposits - Finance income growth: Approximately 11.0% to HK$1,300 thousand[52] - Main reason: Increased bank time deposits[52] Finance Expenses Finance expenses increased by 6.0% to HK$5,600 thousand, primarily due to higher interest on lease liabilities from new and renewed factory leases, partially offset by reduced bank charges and interest on bank borrowings - Finance expenses increase: Approximately 6.0% to HK$5,600 thousand[53] - Main reason: Increased interest on lease liabilities[53] - Offsetting factors: Reduced bank charges and interest on bank borrowings[53] Liquidity and Capital Resources The Group primarily funds operations through cash flows from operating activities and bank borrowings, which significantly increased, yet maintains a positive net cash position with a current ratio of approximately 2.2 times - Funding sources: Cash flows from operating activities and bank borrowings[54] - Bank borrowings: Approximately HK$44,400 thousand (December 31, 2024: approximately HK$21,300 thousand)[54] - Undrawn borrowing facilities: Approximately HK$139,000 thousand (December 31, 2024: approximately HK$161,500 thousand)[54] - Cash and cash equivalents: Approximately HK$103,600 thousand (December 31, 2024: approximately HK$156,500 thousand)[54] - Net current assets: Approximately HK$302,800 thousand (December 31, 2024: approximately HK$317,200 thousand)[55] - Current ratio: Approximately 2.2 times[55] - Gearing ratio: Not applicable, as a positive net cash position is maintained[55] Financial Risk Management This section outlines the Group's approach to managing financial risks, including market, credit, and liquidity risks, and the strategies employed to mitigate them Risk Management Overview The Group faces market risks (foreign exchange, price, interest rate), credit risk, and liquidity risk, with risk management plans in place to mitigate potential adverse impacts - Major risk types: Market risk (foreign exchange, price, cash flow interest rate), credit risk, liquidity risk[56] - Management objective: To address financial market unpredictability and minimize adverse impacts[56] Market Risk The Group faces foreign exchange risk from multiple currency fluctuations, primarily involving USD, RMB, THB, GBP, and EUR, managed by closely monitoring exchange rate movements without forward foreign exchange contracts; price risk from equity instrument investments is managed through a diversified portfolio; interest rate risk primarily stems from floating-rate borrowings, with no interest hedging strategies adopted Foreign Exchange Risk The Group faces foreign exchange risk from multiple currency fluctuations, primarily involving USD, RMB, THB, GBP, and EUR, managed by closely monitoring exchange rate movements without forward foreign exchange contracts - Major currencies: USD, RMB, THB, GBP, and EUR[57] - Management strategy: Closely monitors foreign currency exchange rate movements, does not use forward foreign exchange contracts for hedging[57] Price Risk The Group is exposed to equity securities price risk from investments in equity instruments, mitigated by maintaining a diversified investment portfolio and regular review and monitoring - Risk source: Investments in equity instruments measured at fair value through profit or loss[58] - Management strategy: Maintains a diversified investment portfolio and regularly reviews and monitors it[58] Cash Flow Interest Rate Risk The Group's interest rate risk primarily arises from floating-rate borrowings, partially offset by bank cash held at floating rates, with no interest hedging strategies adopted - Risk source: Floating-rate borrowings[59] - Offsetting factor: Bank cash held at floating rates[59] - Hedging strategy: No interest hedging strategies adopted[59] - Bank borrowing interest rate: As at June 30, 2025, the effective annual interest rate was 4.55%[31][59] Credit Risk The Group's credit risk primarily stems from trade and other receivables, deposits, time deposits, and bank cash, with high credit risk concentration on its largest and top five customers, managed through regular assessment and credit limit management - Risk sources: Trade and other receivables, deposits, time deposits, and bank cash[60] - Bank credit risk: Very low credit risk due to counterparties being banks with high credit ratings[60] - Credit concentration: The largest customer accounted for 59.7% of total trade receivables, and the top five customers accounted for 87.9%[61] - Management strategy: Regularly assesses the recoverability of receivables and assigns a team to determine and approve credit limits[61] Liquidity Risk The Group manages liquidity risk through cash flow forecasting, orderly realization of short-term financial assets and receivables, and securing long-term financing, ensuring sufficient bank balances and credit facilities - Management measures: Cash flow forecasting, realization of short-term financial assets and receivables, and securing long-term financing[62] - Objective: To maintain financial flexibility and ensure business continuity[62] Other Information This section covers additional corporate information, including commitments, capital structure, future plans, corporate governance, and outlook Commitments Details of the Group's commitments as of June 30, 2025, are disclosed in Note 15 to the condensed consolidated interim financial information - Commitment details: Contained in Note 15 to the condensed consolidated interim financial information[63] Capital Structure The Group's capital structure comprises bank borrowings and equity attributable to owners of the Company, with the number of issued shares remaining unchanged as of June 30, 2025 - Capital composition: Bank borrowings and equity attributable to owners of the Company[64] - Issued shares: 1,000,000,000 shares[64] Significant Investments As of June 30, 2025, the Group held no significant investments - No significant investments[65] Significant Acquisitions or Disposals For the six months ended June 30, 2025, the Group made no significant acquisitions or disposals of any subsidiaries, associates, or joint ventures - No significant acquisitions or disposals of subsidiaries, associates, or joint ventures[66] Future Plans Apart from what has been disclosed in this announcement, the Group currently has no other specific plans for significant investments and capital assets - No other specific plans for significant investments and capital assets[67] Contingent Liabilities A Chinese subsidiary of the Group has a labor dispute with estimated potential undiscounted payments of approximately HK$7,200 thousand, but legal opinion suggests a favorable outcome for the Group, thus no provision has been recognized - Labor dispute: A Chinese subsidiary has a labor dispute with former employees[68] - Potential payment: Approximately HK$7,200 thousand (December 31, 2024: approximately HK$6,000 thousand)[68] - Provision status: No provision recognized, as legal opinion anticipates a favorable outcome for the Group[68] Treasury Management The Group's financing and treasury policies remain unchanged, aiming to ensure business continuity and maximize shareholder returns by optimizing the debt-to-equity balance, while prudently monitoring liquidity - Policy stability: No significant changes in financing and treasury policies[69] - Management objectives: To ensure business continuity and maximize shareholder returns by optimizing the balance between debt and equity[69] - Liquidity monitoring: Prudently monitors liquidity to ensure financing needs are met[69] Pledged Assets As of June 30, 2025, the Group's bank borrowings are secured by property, plant and equipment, restricted bank deposits, trade receivables, and an unlimited indemnity given by the Company Pledged Assets (As at June 30, 2025) | Pledged Assets | 2025年6月30日 (HK$ Thousand) | 2024年12月31日 (HK$ Thousand) | | :--- | :--- | :--- | | Property, plant and equipment | 18,800 | 19,300 | | Restricted bank deposits | 15,500 | 15,400 | | Trade receivables | 28,300 | 0 | - Additional security: Unlimited indemnity given by the Company[70] Employees and Remuneration Policy As of June 30, 2025, the Group had 1,260 employees, with total employee benefit expenses of HK$80,900 thousand, and its remuneration policy is based on qualifications, experience, performance, and market conditions - Number of employees: 1,260 (December 31, 2024: 1,310)[71] - Employee benefit expenses: Approximately HK$80,900 thousand (2024: approximately HK$99,000 thousand)[72] - Remuneration determination: Based on employee qualifications, experience, job performance, and market conditions[72] Outlook The Group remains cautiously optimistic about the global economy, planning to strengthen sales promotion, business development, and technology investment to seize new energy industry opportunities, expand new energy business in Central Asia and Southeast Asia, and build a "Greater Asia New Energy Business Circle" - Market outlook: Electronic manufacturing services business has a good order backlog, supported by health awareness, digital transformation, and new energy transition[73] - Strategic focus: Strengthening sales promotion, pursuing business development, and investing in advanced technology to enhance efficiency and service quality[73] - New energy expansion: Deploying EV charging and digital advertising facilities in Kazakhstan with Sinooil, and planning expansion into Uzbekistan and Southeast Asia[73][74] - Long-term vision: Promoting the development of a "Greater Asia New Energy Business Circle," integrating EV charging, energy storage, digital advertising, and smart service solutions[74] Dividend Policy The Board resolved to declare an interim dividend of HK0.6 cents per ordinary share for the six months ended June 30, 2025, expected to be paid on October 23, 2025; to determine eligibility for the interim dividend, the company will suspend share transfer registration from September 29 to October 2, 2025 Interim Dividend The Board resolved to declare an interim dividend of HK0.6 cents per ordinary share for the six months ended June 30, 2025, expected to be paid on October 23, 2025 - Interim dividend: HK0.6 cents per ordinary share (2024: nil)[75] - Payment date: Expected October 23, 2025[75] - Record date: October 2, 2025[75] Suspension of Share Register To determine eligibility for the interim dividend, the company will suspend share transfer registration from September 29 to October 2, 2025 - Suspension period: September 29 to October 2, 2025[76] - Deadline: Transfer documents must be submitted by 4:30 p.m. on September 26, 2025[76] Purchase, Sale or Redemption of the Company's Listed Securities 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 - No purchase, sale, or redemption of the Company's listed securities[77] Events After the Reporting Period As of the date of this announcement, there are no significant events after the reporting period affecting the Group, other than those already disclosed - No significant events after the reporting period[78] Corporate Governance The Company has complied with all code provisions of the Corporate Governance Code set out in Appendix C1 of the Listing Rules, committed to a high-quality board and transparency - Compliance status: All code provisions of Part 2 of the Corporate Governance Code have been complied with[79] Standard Code for Securities Transactions by Directors The Company has adopted the Standard Code set out in Appendix C3 of the Listing Rules, with all Directors confirming compliance and no non-compliance incidents during the reporting period - Code adopted: Standard Code set out in Appendix C3 of the Listing Rules[80] - Compliance status: All Directors confirmed compliance, with no non-compliance incidents[80] Audit Committee The Audit Committee has reviewed this preliminary interim results announcement and the unaudited interim financial information; the committee comprises three members, with Mr. Wong Kwok Kuen as Chairman - Establishment date: October 27, 2017[81] - Members: Mr. Wong Kwok Kuen (Chairman), Mr. Kan Pak Cheong, and Mr. Pao King Tao[81] - Responsibilities: Reviewed this preliminary interim results announcement and the unaudited interim financial information[82] Review of Unaudited Condensed Consolidated Interim Financial Information The unaudited interim financial information has been reviewed by the independent auditor, PricewaterhouseCoopers, in accordance with Hong Kong Standard on Review Engagements 2410 - Reviewing body: PricewaterhouseCoopers[83] - Review standard: Hong Kong Standard on Review Engagements 2410[83] Board of Directors The Board of Directors comprises executive directors, non-executive directors, and independent non-executive directors, with Mr. Wong Sze Chai as Chairman - Chairman and Executive Director: Mr. Wong Sze Chai[84][85] - Board composition: Executive Directors, Non-executive Directors, Independent Non-executive Directors[85]