天彩控股(03882) - 2023 - 中期业绩

Financial Summary The Group's revenue and profit declined significantly in the first half of 2023 compared to the prior year period Financial Summary for the Six Months Ended June 30, 2023 | Metric | 2023 (HK$ '000) | 2022 (HK$ '000) | Change | | :--- | :--- | :--- | :--- | | Revenue | 142,940 | 264,630 | (46.0%) | | Cost of sales | (123,140) | (221,290) | (44.4%) | | Gross profit | 19,800 | 43,340 | (54.3%) | | Gross profit margin (%) | 13.9% | 16.4% | (2.5 p.p.t.) | | Loss for the period | (49,567) | (1,585) | 3,027.3% | | Loss attributable to owners of the Company | (39,030) | 1,611 | (2,522.7%) | | Loss attributable to non-controlling interests | (10,537) | (3,196) | 229.7% | | Basic and diluted (loss)/earnings per share | (4.0) HK cents | 0.2 HK cents | (2,100.0%) | Condensed Consolidated Statement of Profit or Loss The statement details the Group's revenue, costs, and expenses, resulting in a significant net loss for the period Condensed Consolidated Statement of Profit or Loss (For the six months ended June 30, 2023) | Metric | 2023 (HK$ '000) | 2022 (HK$ '000) | | :--- | :--- | :--- | | Revenue | 142,940 | 264,630 | | Cost of sales | (123,140) | (221,290) | | Gross profit | 19,800 | 43,340 | | Other income and other gains | 8,383 | 19,535 | | Selling and distribution expenses | (20,299) | (14,067) | | Administrative expenses | (33,934) | (25,339) | | Research and development expenses | (19,893) | (23,498) | | Other expenses | (2,693) | (620) | | Operating loss | (48,636) | (649) | | Finance costs | (836) | (986) | | Share of (loss)/profit of an associate | (95) | 67 | | Loss before tax | (49,567) | (1,568) | | Income tax expense | – | (17) | | Loss for the period | (49,567) | (1,585) | | Attributable to owners of the Company | (39,030) | 1,611 | | Attributable to non-controlling interests | (10,537) | (3,196) | | Basic and diluted (loss)/earnings per share | (4.0) HK cents | 0.2 HK cents | Condensed Consolidated Statement of Profit or Loss and Other Comprehensive Income The statement outlines the total comprehensive expense, including net loss and other comprehensive expenses like currency translation differences Condensed Consolidated Statement of Profit or Loss and Other Comprehensive Income (For the six months ended June 30, 2023) | Metric | 2023 (HK$ '000) | 2022 (HK$ '000) | | :--- | :--- | :--- | | Loss for the period | (49,567) | (1,585) | | Other comprehensive expense: | | | | Change in fair value of equity investments designated at FVOCI | (656) | (4,658) | | Exchange differences on translation of foreign operations | (10,459) | (10,487) | | Other comprehensive expense for the period, net of tax | (11,115) | (15,145) | | Total comprehensive expense for the period | (60,682) | (16,730) | | Attributable to owners of the Company | (49,778) | (13,553) | | Attributable to non-controlling interests | (10,904) | (3,177) | Condensed Consolidated Statement of Financial Position The statement presents the Group's assets, liabilities, and equity as of June 30, 2023, showing a decrease in total net assets Condensed Consolidated Statement of Financial Position (As at June 30, 2023) | Metric | June 30, 2023 (HK$ '000) | December 31, 2022 (HK$ '000) | | :--- | :--- | :--- | | Non-current Assets | | | | Property, plant and equipment | 29,994 | 24,403 | | Provisional goodwill | 127 | 161,217 | | Intangible assets | 7,108 | 32,058 | | Right-of-use assets | 24,663 | 21,584 | | Equity investments designated at FVOCI | 20,425 | 21,081 | | Investment in an associate | 2,336 | 2,449 | | Total Non-current Assets | 84,653 | 262,792 | | Current Assets | | | | Inventories | 129,657 | 139,873 | | Trade and factoring receivables | 61,170 | 29,513 | | Prepayments and other receivables | 36,727 | 20,076 | | Financial assets at FVTPL | 5,297 | 5,222 | | Pledged bank deposits | 2,743 | 2,729 | | Cash and cash equivalents | 67,290 | 81,447 | | Total Current Assets | 302,884 | 278,860 | | Current Liabilities | | | | Trade payables | 67,800 | 64,963 | | Other payables and accruals | 100,392 | 95,050 | | Interest-bearing bank borrowings | 21,338 | 8,035 | | Lease liabilities | 10,702 | 14,771 | | Total Current Liabilities | 200,232 | 182,819 | | Net Current Assets | 102,652 | 96,041 | | Total Assets less Current Liabilities | 187,305 | 358,833 | | Non-current Liabilities | | | | Lease liabilities | 14,701 | 8,194 | | Deferred tax liabilities | 669 | 6,692 | | Contingent consideration | – | 54,117 | | Total Non-current Liabilities | 15,370 | 69,003 | | Net Assets | 171,935 | 289,830 | | Equity | | | | Share capital | 10,086 | 9,536 | | Reserves | 191,176 | 279,783 | | Non-controlling interests | (19,241) | 511 | | Total Equity | 171,935 | 289,830 | Notes This section provides detailed disclosures on accounting policies, segment information, and specific financial statement line items 1. Corporate Information Sky Light Holdings Limited was incorporated in the Cayman Islands in 2013 and listed on the Hong Kong Stock Exchange in 2015 - The Company was incorporated in the Cayman Islands on December 18, 2013, and listed on the Main Board of The Stock Exchange of Hong Kong Limited on July 2, 2015[7] - The Group is principally engaged in the manufacturing and distribution of digital imaging products, home surveillance cameras, and other electronic products, as well as the operation of AI vending machines[8][20][41] 2. Basis of Preparation The financial statements are prepared in accordance with HKAS 34 and the Listing Rules, using consistent accounting policies from the 2022 annual report - The condensed consolidated financial statements have been prepared in accordance with Hong Kong Accounting Standard 34 "Interim Financial Reporting" and the applicable disclosure requirements of the Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited[41] - The accounting policies used are consistent with those followed in the preparation of the 2022 annual financial statements, except for the adoption of new and amended HKFRSs effective for the current accounting period[21] 3. Adoption of New and Amended Hong Kong Financial Reporting Standards The Group adopted new and amended HKFRSs effective January 1, 2023, which did not have a significant impact on its financial performance or position - In the current interim period, the Group has applied, for the first time, the new and amended Hong Kong Financial Reporting Standards (HKFRSs) issued by the Hong Kong Institute of Certified Public Accountants that are effective for the annual period beginning on January 1, 2023[22] - The application of the amendments to HKFRSs has had no significant impact on the Group's financial performance and position for the current and prior periods[43] 4. Operating Segment Information The Group's operations consist of two reportable segments: manufacturing and sale of camera products and sale of AI vending machine products (a) Revenue from External Customers The Group's revenue is primarily from camera products, with the EU, US, and Mainland China being the main geographical markets Revenue from External Customers (For the six months ended June 30, 2023) | Segment | 2023 (HK$ '000) | 2022 (HK$ '000) | | :--- | :--- | :--- | | Manufacturing and sale of camera products and related accessories | 138,863 | 264,630 | | AI vending machine business | 4,077 | – | | Total | 142,940 | 264,630 | Revenue by Customer Location (For the six months ended June 30, 2023) | Region | 2023 (HK$ '000) | 2022 (HK$ '000) | | :--- | :--- | :--- | | European Union | 73,134 | 88,009 | | United States of America | 32,618 | 130,345 | | Mainland China | 25,790 | 32,589 | | Other countries/regions | 11,398 | 13,687 | | Total | 142,940 | 264,630 | Sales Revenue from Single Customers (10% or more of total revenue) | Customer | 2023 (HK$ '000) | 2022 (HK$ '000) | | :--- | :--- | :--- | | Customer A | 57,394 | 77,181 | | Customer B | 13,201 | 64,796 | (b) Non-current Assets The Group's non-current assets are primarily located in Mainland China and decreased from the end of 2022 Non-current Assets by Location (Excluding financial instruments, investment in associate, and provisional goodwill) | Region | June 30, 2023 (HK$ '000) | December 31, 2022 (HK$ '000) | | :--- | :--- | :--- | | Mainland China | 44,460 | 65,373 | | Hong Kong | 892 | 1,580 | | Other countries/regions | 16,413 | 11,092 | | Total | 61,765 | 78,045 | 5. Revenue The Group's revenue is mainly derived from the sale of industrial products, with all revenue recognized at a point in time Revenue Analysis (For the six months ended June 30, 2023) | Type of Goods or Services | 2023 (HK$ '000) | 2022 (HK$ '000) | | :--- | :--- | :--- | | Sale of industrial products | 138,395 | 257,720 | | Sale of goods through AI vending machines | 4,077 | – | | Provision of manufacturing services | 468 | 6,910 | | Total revenue from contracts with customers | 142,940 | 264,630 | | Timing of revenue recognition: At a point in time | 142,940 | 264,630 | - Performance obligations for the sale of industrial products are satisfied upon delivery, with payment generally due within 30 to 90 days[48] - Performance obligations for the sale of goods through AI vending machines are satisfied upon delivery of retail products, with payment due at the time of delivery[48] 6. Finance Costs The Group's finance costs decreased slightly, comprising interest on bank borrowings and lease liabilities Finance Costs Analysis (For the six months ended June 30, 2023) | Item | 2023 (HK$ '000) | 2022 (HK$ '000) | | :--- | :--- | :--- | | Interest on bank borrowings | 288 | 152 | | Interest on lease liabilities | 548 | 834 | | Total | 836 | 986 | 7. Income Tax Expense The Group is subject to income tax in various jurisdictions, with preferential tax rates available for certain high-tech subsidiaries in Mainland China - Subsidiaries in Mainland China are subject to a 25% corporate income tax, with two high-tech enterprises enjoying a preferential rate of 15%[51] - Hong Kong profits tax is provided at 16.5%, with some subsidiaries eligible for a two-tiered profits tax rates regime where the first HK$2,000,000 is taxed at 8.25%[30] - US subsidiaries are subject to a 21% federal tax and a 7% state corporate income tax[31] - The Vietnam subsidiary is subject to a 20% corporate income tax, with tax incentives including a two-year exemption and a 50% reduction for the subsequent four years for eligible projects[31] 8. Loss for the Period The Group's loss for the period was arrived at after charging or crediting various items, including cost of inventories sold and R&D expenses Items Deducted/(Credited) in Arriving at Loss for the Period (For the six months ended June 30, 2023) | Item | 2023 (HK$ '000) | 2022 (HK$ '000) | | :--- | :--- | :--- | | Cost of inventories sold | 123,140 | 221,290 | | Depreciation of property, plant and equipment | 8,141 | 7,090 | | Depreciation of right-of-use assets | 8,126 | 8,119 | | Amortisation of intangible assets | 2,179 | 1,007 | | Research and development expenses | 19,893 | 23,498 | | Employee benefit expense (excluding directors' and chief executive's remuneration) | 44,403 | 65,393 | | Net reversal of provision for inventories (included in cost of inventories sold) | 8,617 | (21,710) | | Impairment loss on trade and factoring receivables | 2,555 | 620 | | Net foreign exchange gains | (7,384) | (6,570) | | (Gain)/loss on disposal of property, plant and equipment | (230) | 204 | | Gain on disposal of non-current assets classified as held for sale | – | (10,790) | - Amortisation of software is included in "Research and development expenses," while amortisation of other intangible assets is included in "Selling and distribution expenses" in the condensed consolidated statement of profit or loss[32] - The reversal of provision for inventories in both periods was mainly due to the utilisation of inventories for which provision had been previously made[57] 9. Dividend The Board does not recommend the payment of any interim dividend for the period - The directors do not recommend the payment of any interim dividend for the period (six months ended June 30, 2022: Nil)[80] 10. (Loss)/Earnings Per Share The Group reported a basic and diluted loss per share of 4.0 HK cents, with no adjustment for dilutive effects as they were anti-dilutive Calculation Data for Basic and Diluted (Loss)/Earnings Per Share (For the six months ended June 30, 2023) | Item | 2023 (HK$ '000) | 2022 (HK$ '000) | | :--- | :--- | :--- | | (Loss)/earnings for the purpose of basic and diluted (loss)/earnings per share | (39,030) | 1,611 | | Weighted average number of ordinary shares for basic and diluted (loss)/earnings per share | 984,004,122 | 952,739,455 | - For the six months ended June 30, 2023, no adjustment has been made to the basic loss per share amount presented as the impact of the share option scheme had an anti-dilutive effect[59] 11. Trade and Factoring Receivables The Group's trade and factoring receivables increased significantly, with arrangements in place for factoring trade receivables of designated customers Trade and Factoring Receivables (As at June 30, 2023) | Item | June 30, 2023 (HK$ '000) | December 31, 2022 (HK$ '000) | | :--- | :--- | :--- | | Trade receivables | 44,599 | 25,779 | | Impairment loss | (10,099) | (7,538) | | Net trade receivables | 34,500 | 18,241 | | Factoring receivables | 26,815 | 11,423 | | Impairment loss | (145) | (151) | | Net factoring receivables | 26,670 | 11,272 | | Total | 61,170 | 29,513 | Ageing Analysis of Trade and Factoring Receivables (As at June 30, 2023) | Ageing | June 30, 2023 (HK$ '000) | December 31, 2022 (HK$ '000) | | :--- | :--- | :--- | | Within 1 month | 50,856 | 20,837 | | 1 to 2 months | 3,049 | 716 | | 2 to 3 months | 172 | 167 | | Over 3 months | 7,093 | 7,793 | | Total | 61,170 | 29,513 | - The Group has entered into receivable purchase arrangements with banks for factoring trade receivables of designated customers, with a total of HK$26,815 thousand factored as of June 30, 2023[83] 12. Pledged Bank Deposits The Group's pledged bank deposits, used to secure banking facilities, remained stable compared to the end of 2022 Pledged Bank Deposits (As at June 30, 2023) | Item | June 30, 2023 (HK$ '000) | December 31, 2022 (HK$ '000) | | :--- | :--- | :--- | | Pledged bank deposits | 2,743 | 2,729 | - Pledged bank deposits represent deposits pledged to a bank to secure banking facilities granted to the Group[38] 13. Trade Payables The Group's trade payables are non-interest-bearing and generally have a settlement term of 30 to 150 days Ageing Analysis of Trade Payables (As at June 30, 2023) | Ageing | June 30, 2023 (HK$ '000) | December 31, 2022 (HK$ '000) | | :--- | :--- | :--- | | Within 1 month | 37,686 | 31,030 | | 1 to 2 months | 14,104 | 13,022 | | 2 to 3 months | 6,016 | 8,486 | | Over 3 months | 9,994 | 12,425 | | Total | 67,800 | 64,963 | - Trade payables are non-interest-bearing and are normally settled on terms of 30 to 150 days[63] 14. Interest-bearing Bank Borrowings The Group's interest-bearing bank borrowings increased significantly due to new factoring loans, all of which are repayable within one year Interest-bearing Bank Borrowings (As at June 30, 2023) | Borrowing Type | June 30, 2023 (HK$ '000) | December 31, 2022 (HK$ '000) | | :--- | :--- | :--- | | Bank loans — secured | 4,307 | 8,035 | | Factoring loans — secured | 17,031 | – | | Total | 21,338 | 8,035 | | Repayable: Within one year | 21,338 | 8,035 | - Bank loans are secured by pledges over the Group's life insurance policies and bank deposits, a personal guarantee from a controlling shareholder, and corporate guarantees from a company controlled by the shareholder and two Group subsidiaries[64] - Factoring loans are secured by a pledge over the Group's factoring receivables[87] - The effective interest rates per annum on secured bank and factoring loans ranged from 6.1% to 7.5% (December 31, 2022: 1.5% to 6.0%)[65] 15. Capital Commitments The Group's capital commitments, primarily for the purchase of plant and machinery, were stable compared to year-end 2022 Capital Commitments (As at June 30, 2023) | Item | June 30, 2023 (HK$ '000) | December 31, 2022 (HK$ '000) | | :--- | :--- | :--- | | Contracted but not provided for: Purchase of plant and machinery | 2,121 | 2,219 | Management Discussion and Analysis Management discusses the Group's business performance, financial results, and future outlook Business Review The Group's performance was impacted by weak global demand for consumer electronics and customer destocking, though the new AI vending machine business recorded revenue 1. Camera Products and Related Accessories Business Revenue from the camera business decreased by 47.5% due to weak global demand and customer destocking - In the first half of 2023, the camera products and related accessories business recorded revenue of approximately HK$138.9 million, a decrease of approximately 47.5% from the same period in 2022[91] - The decrease in revenue was mainly due to continued weak global demand for consumer electronics, coupled with ongoing customer destocking[68] - The Group has initiated several new projects, which are expected to contribute to performance in the second half of the year[68] 2. Retail Business through AI Vending Machines The new AI vending machine business generated HK$4.1 million in revenue and is expected to grow through strategic partnerships - In November 2022, the Group acquired a 51% equity interest in Wuhan Xiuhuo, which engages in the retail sale of food and beverages through AI vending machines[68] - In the first half of 2023, the Group's retail business from AI vending machines recorded revenue of approximately HK$4.1 million[68] - Wuhan Xiuhuo's strategic cooperation with China's largest home appliance company and largest property management company is expected to promote its rapid and stable development and contribute to the Group's performance in the second half of 2023[68] Outlook The Group will focus on deepening its core product lines and expanding its AI vending machine business to navigate economic challenges 1. Camera Products and Related Accessories Business Despite challenges from deglobalization and high inflation, the business is expected to improve in the second half of 2023 with new projects launching - In 2023, deglobalization and high inflation and interest rates in the US and EU are the main challenges facing the Group's camera products business[69] - The inventory backlog of the Group's customers continues to affect their demand for the Group's products[69] - The Group has initiated several new projects that will begin mass production in or after August 2023, and expects the camera products business to improve in the second half of the year[94] 2. Retail Business through AI Vending Machines Wuhan Xiuhuo will actively pursue strategic cooperation with property management companies to expand its network and increase sales revenue - Wuhan Xiuhuo will actively pursue strategic cooperation with multiple property management companies to increase sales revenue[71] - The plan is to place more AI vending machines in residential buildings, office buildings, hotels, schools, hospitals, sports centers, and parks in China[71] Financial Review The Group's financial performance declined significantly, with a sharp drop in turnover and gross profit, leading to a substantial loss Turnover The Group's turnover decreased by 46.0% primarily due to a significant reduction in shipments of home surveillance cameras - In the first half of 2023, the Group recorded a turnover of approximately HK$142.9 million, a significant decrease of approximately 46.0% from the same period in 2022[72] - The decrease in turnover was mainly due to a significant reduction in the shipment volume of home surveillance cameras[72] Revenue Breakdown by Product Category (For the six months ended June 30, 2023) | Product Category | 2023 (HK$ '000) | % of Total Revenue (2023) | 2022 (HK$ '000) | % of Total Revenue (2022) | Revenue Change | | :--- | :--- | :--- | :--- | :--- | :--- | | Home surveillance cameras | 78,558 | 55.0% | 165,035 | 62.4% | (52.4%) | | Digital imaging products | 31,112 | 21.8% | 50,442 | 19.0% | (38.3%) | | Other products | 28,725 | 20.0% | 42,243 | 16.0% | (32.0%) | | Manufacturing service income | 468 | 0.3% | 6,910 | 2.6% | (93.2%) | | Retail business through AI vending machines | 4,077 | 2.9% | – | – | – | | Total | 142,940 | 100.0% | 264,630 | 100.0% | (46.0%) | Revenue Breakdown by Customer Location (For the six months ended June 30, 2023) | Region | 2023 (HK$ '000) | 2022 (HK$ '000) | | :--- | :--- | :--- | | European Union | 73,134 | 88,009 | | United States of America | 32,618 | 130,345 | | Mainland China | 25,790 | 32,589 | | Other countries and regions | 11,398 | 13,687 | | Total | 142,940 | 264,630 | Cost of Sales The cost of sales decreased by 44.4% due to lower shipment volumes, representing 86.1% of turnover - In the first half of 2023, the Group's cost of sales was approximately HK$123.1 million, a decrease of approximately 44.4% from the same period in 2022[101] - The cost of sales represented approximately 86.1% of turnover for the first half of 2023 (H1 2022: approx. 83.6%)[101] - The decrease in cost of sales was mainly due to a significant reduction in shipment sales volume[101] - Cost of sales includes raw materials and components, direct labor costs, and production overheads[126] Gross Profit and Gross Profit Margin Gross profit decreased by 54.3% and the gross profit margin fell to 13.9% due to an increase in costs from inventory provision reversals Gross Profit and Gross Profit Margin (For the six months ended June 30, 2023) | Metric | 2023 (HK$ '000) | 2022 (HK$ '000) | | :--- | :--- | :--- | | Revenue | 142,940 | 264,630 | | Cost of sales | (123,140) | (221,290) | | Gross profit | 19,800 | 43,340 | | Gross profit margin | 13.9% | 16.4% | - Gross profit decreased by approximately 54.3%, and the gross profit margin decreased by 2.5 percentage points, mainly due to an increase in costs resulting from the net reversal and provision of inventories[74] Other Income and Other Gains and Losses Other income decreased significantly due to a lower gain on the disposal of non-current assets held for sale - In the first half of 2023, the Group's other income and other gains and losses decreased significantly to approximately HK$8.4 million (H1 2022: approx. HK$19.5 million)[75] - The decrease was mainly due to a reduction of approximately HK$10.8 million in the gain on disposal of non-current assets classified as held for sale[75] - Other income and gains and losses mainly include bank interest income, foreign exchange gains/(losses), government subsidies, and gains on the disposal of non-current assets classified as held for sale[103] Selling and Distribution Expenses Selling and distribution expenses increased by 44.3%, primarily driven by expenses related to the new AI vending machine business - In the first half of 2023, the Group's selling and distribution expenses increased significantly by approximately 44.3% to approximately HK$20.3 million from approximately HK$14.1 million in H1 2022[129] - The increase was mainly due to an increase of approximately HK$6.4 million in expenses used for the retail business through AI vending machines[129] - Selling and distribution expenses mainly include salaries and benefits for sales and marketing staff, transportation costs, marketing, exhibition and advertising costs, and entertainment expenses[104] Administrative Expenses Administrative expenses increased by 33.9%, mainly due to expenses incurred by the new AI vending machine business - In the first half of 2023, the Group's administrative expenses increased significantly by approximately 33.9% to approximately HK$33.9 million from approximately HK$25.3 million in H1 2022[130] - The increase was mainly due to an increase of approximately HK$8.1 million in funds used for the retail business through AI vending machines[130] - Administrative expenses mainly include salaries and benefits for management, administrative, and finance staff, rent and office expenses, professional fees, and business entertainment expenses[77] Research and Development Costs R&D costs decreased by 15.3% primarily due to a reduction in salaries and benefits for R&D staff - In the first half of 2023, the Group recorded R&D costs of approximately HK$19.9 million, a decrease of approximately 15.3% from approximately HK$23.5 million in H1 2022[131] - The decrease was mainly due to a reduction of approximately HK$3.3 million in salaries and benefits for the Group's R&D staff[131] - R&D costs include salaries and benefits for R&D and product planning staff, raw materials and components used in R&D and product planning, and other miscellaneous costs and expenses[78] Other Expenses Other expenses increased significantly due to a higher provision for bad debts - In the first half of 2023, the Group's other expenses increased significantly to approximately HK$2.7 million from approximately HK$0.6 million in H1 2022[79] - The increase mainly included an increase of approximately HK$1.9 million in the provision for bad debts[79] - Other expenses mainly include foreign exchange losses and asset impairment losses[132] Finance Costs The Group's finance costs decreased slightly during the period - In the first half of 2023, the Group's finance costs decreased slightly to approximately HK$0.8 million (H1 2022: approx. HK$1.0 million)[107] Net Loss The Group recorded a net loss of approximately HK$49.6 million for the period - The Group recorded a loss of approximately HK$49.6 million in the first half of 2023 (with a loss of approximately HK$10.5 million attributable to non-controlling interests)[108] Liquidity and Capital Resources The Group experienced a net cash outflow from operations, which was offset by net cash inflow from financing activities Consolidated Cash Flows (For the six months ended June 30, 2023) | Item | 2023 (HK$ '000) | 2022 (HK$ '000) | | :--- | :--- | :--- | | Net cash (used in)/from operating activities | (60,497) | 5,612 | | Net cash (used in)/from investing activities | (16,323) | 12,905 | | Net cash from/(used in) financing activities | 71,427 | (13,867) | | Net (decrease)/increase in cash and cash equivalents | (5,393) | 4,650 | | Cash and cash equivalents at beginning of period | 81,447 | 96,188 | | Effect of foreign exchange rate changes | (8,764) | (9,982) | | Cash and cash equivalents at end of period | 67,290 | 90,856 | - Net cash used in operating activities in H1 2023 was approximately HK$60.5 million, mainly reflecting the loss before tax, a decrease in inventories, and an increase in trade receivables and prepayments[134] - Net cash from financing activities in H1 2023 was approximately HK$71.4 million, mainly reflecting net proceeds from bank borrowings of approximately HK$13.3 million and proceeds from the issuance of shares of approximately HK$67.8 million[135] Borrowings and Pledge of Assets The Group's borrowings are secured by various assets and guarantees, with all borrowings denominated in US dollars and repayable within one year - As of June 30, 2023, the Group had banking facilities of approximately HK$46.5 million, of which approximately HK$21.3 million had been utilized[112] - Bank loans are secured by pledges over the Group's life insurance policies and bank deposits, a personal guarantee from a controlling shareholder, and corporate guarantees from a company controlled by the shareholder and two Group subsidiaries[136] - Factoring loans of approximately HK$17.0 million are secured by a pledge over the Group's factoring receivables[136] - All borrowings are denominated in US dollars, with effective annual interest rates ranging from 6.1% to 7.5% (December 31, 2022: 1.5% to 6.0%), and are repayable within one year[113] Capital Expenditure The Group's capital expenditure on fixed and intangible assets increased significantly during the period - In the first half of 2023, the Group invested approximately HK$18.2 million in fixed and intangible assets (H1 2022: approx. HK$2.1 million)[139] Off-Balance Sheet Transactions The Group did not engage in any material off-balance sheet transactions during the period - In the first half of 2023, the Group did not enter into any material off-balance sheet transactions[140] Foreign Exchange Risk and Exchange Rate Risk The Group is exposed to transactional currency risk but did not use any derivative financial instruments for hedging purposes - The Group faces transactional currency risk from sales denominated in currencies other than the functional currency of the relevant operating units[140] - In the first half of 2023, approximately 76.8% of sales were denominated in currencies other than the functional currency of the operating units making the sales[140] - During the first half of 2023, exchange rate fluctuations did not have a significant impact on the Group, and the Group did not engage in any derivative activities or use financial instruments to hedge its foreign exchange risk[115] Gearing Ratio The Group's gearing ratio increased significantly due to a notable rise in outstanding interest-bearing bank borrowings - As of December 31, 2022, and June 30, 2023, the Group's gearing ratio was approximately 10.7% and 27.2%, respectively[138] - The increase in the gearing ratio was mainly due to a significant increase in outstanding interest-bearing bank borrowings[138] Events After the Reporting Period No significant events affecting the Group occurred after the reporting period - No significant events affecting the Group have occurred after the interim reporting period of 2023 and up to the date of this announcement[142] Treasury Policy The Group maintains a conservative treasury policy, investing only in low-risk products, and held no such investments during the period - The Group has implemented an internal treasury investment policy since January 2015, providing guidelines, regulations, and approval processes for treasury investment activities[116] - The Group is only permitted to invest in wealth management products in the two lowest risk levels as classified by banks, and in debt securities with a rating higher than "BBB" or "baa" or equivalent[143] - All treasury products must be issued by reputable listed banks with no default record, have a term of less than one year, or be readily convertible to cash in the market[143] - The outstanding balance of the Group's wealth management products shall not exceed 50% of the sum of cash and cash equivalents and wealth management products, and no single investment shall exceed 35% of the total investment[143] - In the first half of 2023, the Group did not hold any investments under the treasury policy[143] Employees and Remuneration Policy The Group employed 950 staff as of June 30, 2023, and aims to offer competitive remuneration, particularly for R&D personnel - As of June 30, 2023, the Group employed a total of 950 employees (December 31, 2022: 860)[158] - The Group's staff costs (excluding directors' remuneration and any pension scheme contributions) for the first half of 2023 were approximately HK$44.4 million (H1 2022: approx. HK$65.3 million)[158] - The Group strives to offer above-market-level remuneration to its R&D personnel to attract and retain top talent[158] - The Company has adopted a pre-IPO share option scheme and a share option scheme to provide additional incentives to employees[158] Significant Investments Held The Group holds an 8.47% stake in startup Kandao, valued at HK$20.4 million, which is expected to create business synergies - The Group holds an 8.47% equity interest in the start-up company Shenzhen Kandao Technology Co, Ltd ("Kandao"), acquired between November 2016 and January 2017[119] - As of June 30, 2023, the fair value of this investment was approximately HK$20.4 million (December 31, 2022: approx. HK$21.1 million), resulting in an unrealized loss of HK$0.7 million in the first half of 2023[160] - This investment represents 5.3% of the Group's total assets[160] - Kandao focuses on the technology and hardware/software development of imaging electronic products, with main products including 6-lens 8K 3D professional panoramic cameras and 360-degree smart conference video systems[159] - The Board believes this investment creates synergies with the Group's business, expands sales channels, and has future growth potential[122][148] Future Plans for Material Investments or Capital Assets The Group has no plans for material investments or capital assets as of the announcement date - As of the date of this announcement, the Group does not have any plans for material investments or capital assets[123] Material Acquisitions and Disposals of Subsidiaries, Associates and Joint Ventures The Group's interest in SL Vietnam was diluted from 100% to 51%, which was treated as a deemed disposal - On June 1, 2023, SL Vietnam completed the June Subscription, where Sky Light Electronic and Tech Idea subscribed for new SLV shares[148] - The Group's interest in SL Vietnam was diluted from 100% to 51%, and the subscription of 4,900 new SLV shares by Tech Idea was treated as a deemed disposal by the Company[162] - Other than the above, the Group had no material acquisitions or disposals of subsidiaries, associates, or joint ventures during the first half of 2023[125] Contingent Liabilities The Group had no material contingent liabilities as of June 30, 2023 - As of June 30, 2023, the Group had no material contingent liabilities (December 31, 2022: Nil)[164] Dividend The Board does not recommend the payment of an interim dividend for the first half of 2023 - The Board of Directors does not recommend the payment of an interim dividend for the first half of 2023 (H1 2022: Nil)[165] Financial Position as at 30 June 2023 The Group's total equity stood at approximately HK$171.9 million as of June 30, 2023 - As of June 30, 2023, the Group's total equity was approximately HK$171.9 million (December 31, 2022: approx. HK$289.8 million)[166] - Total assets were approximately HK$387.5 million (December 31, 2022: approx. HK$541.7 million)[166] - Total liabilities were approximately HK$215.6 million (December 31, 2022: approx. HK$251.8 million)[166] Purchase, Sale or Redemption of Listed Securities Neither the Company nor its subsidiaries purchased, sold, or redeemed any of the Company's listed securities during the period - During the first half of 2023, neither the Company nor any of its subsidiaries purchased, sold, or redeemed any of the Company's listed securities[150] Other Information This section covers corporate governance practices, director dealings, and other statutory disclosures Corporate Governance Practices The Company has complied with the Corporate Governance Code, except for the deviation where the roles of Chairman and CEO are not separated - The Company has adopted the principles and code provisions of the Corporate Governance Code contained in Appendix 14 to the Listing Rules[151] - During the first half of 2023, the Company has complied with all applicable code provisions of the Corporate Governance Code, except for code provision C.2.1 (roles of chairman and chief executive should be separate)[151] - The Board believes that Mr. Tang Wing Fai's concurrent roles as Chairman and CEO will provide the Company with strong and consistent leadership, facilitating more effective planning and management[169] - The Board believes there are sufficient safeguards to ensure a balance of power, as all major decisions are consulted with the Board, and the presence of three independent non-executive directors provides independent views[169] Model Code for Securities Transactions by Directors The Company has adopted the Model Code for securities transactions by directors, and all directors have confirmed compliance - The Company has adopted the Model Code for Securities Transactions by Directors of Listed Issuers as set out in Appendix 10 to the Listing Rules as its code of conduct for securities transactions by directors[153] - Upon specific inquiry, all directors confirmed that they had complied with the Model Code throughout the first half of 2023[153] - The Company has also established written guidelines for relevant employees who may possess inside information regarding securities transactions, with terms no less exacting than those in the Model Code[170] - During the first half of 2023, the Company was not aware of any non-compliance with the employee written guidelines[170] Audit Committee The Audit Committee has reviewed the Group's interim results and is satisfied with the accounting treatments adopted - The Audit Committee consists of three independent non-executive directors, namely Ms. Lo Wan Man (Chairman), Professor Wang Jian, and Mr. Wong Wai Ming[171] - The Audit Committee has reviewed the Group's interim results for 2023 and is satisfied that they have been prepared in accordance with applicable accounting standards[154] - The Audit Committee has no disagreement with the accounting treatments adopted by the Company[154] Publication of Interim Results and Interim Report The interim results announcement is available on the websites of the Stock Exchange and the Company - The Company's interim results announcement for the first half of 2023 has been published on the websites of the Stock Exchange (https://www.hkexnews.hk) and the Company (http://www.sky-light.com.hk)[173](index=173&type=chunk) - The Company's interim report for the first half of 2023 will be dispatched to shareholders and made available on the above websites in due course[155] Appreciation The Chairman expresses gratitude to all stakeholders, business partners, and employees for their support and contributions - On behalf of the Board, Chairman Mr. Tang Wing Fai expresses his gratitude to all stakeholders and business partners for their unwavering support, and to the directors, management, and employees for their dedication and contribution to the business progress[156][174]