China Fordoo : Interim Report 2019

About

China

Fordoo

China Fordoo Holdings Limited ("FORDOO") is a leading menswear company in China, which is principally engaged in manufacturing and wholesaling of menswear.

Contents

2

3

4

17

Corporate Information

Financial Highlights

Management Discussion and Analysis

Report on Review of Interim Condensed   Consolidated Financial Statements

18	Condensed Consolidated Statement of Profit or
	Loss and Other Comprehensive Income
19	Condensed Consolidated Statement of
	Financial Position
21	Condensed Consolidated Statement of
	Changes in Equity

22

23

47

Condensed Consolidated Cash Flow Statement

Notes to the Unaudited Interim Financial Report

Other Information

Corporate Information

Board of Directors and Committees

Executive Directors

Mr. Kwok Kin Sun (Chairman)

Mr. Kwok Hon Fung

Ms. Mo Wei

Independent Non-executive Directors

Mr. Cheung Chiu Tung

Mr. Poon Yick Pang Philip

Ms. Huang Yumin

Audit Committee

Mr. Poon Yick Pang Philip (Chairman)

Mr. Cheung Chiu Tung

Ms. Huang Yumin

Remuneration Committee

Mr. Cheung Chiu Tung (Chairman)

Mr. Poon Yick Pang Philip

Ms. Huang Yumin

Nomination Committee

Mr. Kwok Kin Sun (Chairman)

Mr. Poon Yick Pang Philip

Ms. Huang Yumin

Company Secretary

Mr. Lai Tsz Yin

Authorized Representatives

Mr. Lai Tsz Yin

Mr. Kwok Hon Fung

Auditor

Elite Partners CPA Limited, Certified Public Accountants

Legal Adviser As To Hong Kong Law

Chungs Lawyers

Registered Office

Cricket Square, Hutchins Drive

P. O. Box 2681

Grand Cayman, KY1-1111

Cayman Islands

Headquarters and Principal Place of Business in the People's Republic of China

Fordoo Industrial Zone E12

Xunmei Industrial Zone, Fengze District

Quanzhou City, Fujian Province, China

Principal Place of Business in Hong Kong

Office 812, Unit 1908, 19/F

9 Queen's Road Central

Central, Hong Kong

Cayman Islands Share Registrar

SMP Partners (Cayman) Limited Royal Bank House - 3rd Floor

24 Shedden Road, P.O. Box 1586

Grand Cayman KY1-1110, Cayman Islands

Hong Kong Share Registrar

Boardroom Share Registrars (HK) Limited

2103B, 21/F., 148 Electric Road

North Point, Hong Kong

Principal Bankers

China CITIC Bank Corporation Limited

China Construction Bank Corporation

IR Contact

Investor relations department, China Fordoo Holdings Limited Office 812, Unit 1908, 19/F

9 Queen's Road Central Central, Hong Kong Tel: [phone] Fax: [phone] E-mail: [e-mail]

Company Website

www.fordoo.cn

2	CHINA FORDOO HOLDINGS LIMITED
Interim Report 2019

Financial Highlights

• Revenue of the Group decreased by 51.5% to RMB152.2 million (2018: RMB314.1 million).
• Gross profit of the Group decreased by 47.0% to RMB55.6 million (2018: RMB104.8 million).
• Net loss of the Group was RMB56.0 million (2018: net loss of RMB7.1 million).
• Basic and diluted loss per share was RMB11.6 cents (2018: basic and diluted loss per share of RMB1.47 cents).

	For the six months ended
	30 June 2019	30 June 2018	Change
Profitability ratios
Gross profit margin	36.5%	33.4%	3.1 ppt
Net loss to revenue	-36.8%	-2.3%	-34.5 ppt
Return on equity (1)	-4.1%	-0.5%	-3.6 ppt
	As at	As at
	30 June 2019	30 June 2018
Liquidity ratios
Inventory turnover (Days) (2)	78	46
Trade receivables turnover (Days) (3)	182	129
Trade payables turnover (Days) (4)	57	28
		As at
	As at	31 December
	30 June 2019	2018
Capital ratios
Interest coverage ratios (5)	N/A	N/A
Net debt to equity ratio (6)	Net Cash	Net Cash
Gearing ratio (7)	37.9%	37.5%	0.4 ppt

Notes:

1. Net loss for the period divided by total equity.
2. Average of the inventory at the beginning and at the end of the period divided by cost of sales times number of days during the period.
3. Average of the trade receivables at the beginning and at the end of the period divided by revenue times number of days during the period.
4. Average of the trade payables at the beginning and at the end of the period divided by costs of sales times number of days during the period.
5. Profit before interest and tax for the period divided by interest expenses of the same period.
6. Net debt divided by total equity as of the end of the period. Net debt includes bank borrowings net of cash and cash equivalents, pledged bank deposits and fixed deposits held at bank. As at 30 June 2019 and 31 December 2018, the Group recorded a net cash position.
7. Total debts divided by the total equity as of the end of the period.

CHINA FORDOO HOLDINGS LIMITED	3
Interim Report 2019

Management Discussion and Analysis

Overview

The Group is one of the leading menswear enterprises in the PRC focusing on the design, sourcing, manufacturing and sales of its branded menswear products.

In the first half of 2019, with the continuous rise of e-commerce and the emergence of fast fashion apparel, which had completely changed the consumption patterns and consumer preferences, the business environment of the menswear industry was very difficult. Apart from this, due to the ongoing Sino-US trade war and the slowdown in China's economic growth, consumers' interest in well-known branded products has been reduced, they are more prone to buying more affordable products, such as fast fashion, which has made the business environment more complicated. In addition, the increase in operating costs has also made the situation even worse, especially in some first-tier cities in China.

To cope with the intense competition in the retail market and weak consumer sentiment, the Group continued to rationalize its distribution network by closing some of the underperforming retail outlets and to strengthen the corporation with its distributors and sub-distributors in order to improve operating efficiency. Furthermore, the Group persistently enhances its design and product development capabilities and is committed to increase its brand building strategies in order to substantially meet the needs of customers and raise their brand loyalty. The Group had started to diversify its businesses and activities into landes goose business and online platform and retail stores business for sale and distribute consumer goods in China in the second half of 2018. However, the scales of these new businesses were still in development stage and did not contribute substantial revenue to the Group for the period under review.

Financial Review

For the six months ended 30 June 2019, the Group turned to a loss of approximately RMB56.0 million as compared to net loss of RMB7.1 million for the corresponding period last year. The significant decline was mainly attributable to the effect of a significant decline in Group's revenue and gross profit due to the Group's consolidation strategy on its retail outlet network and the decrease in wholesale orders as a result of the termination of distribution relationships with some of the Group's distributors who had slow repayment history. As of 30 June 2019, the Group had 591 retail outlets (including 36 self-operated retail outlets in Beijing), representing a net decrease of 81 retail outlets from 672 retail outlets as at 31 December 2018.

The main operation of the Group is manufacturing and wholesaling of menswear in the People's Republic of China (the "PRC").

1. Segment revenue and results
   There are over 90% of the Group's revenue, operating results during the six months ended 30 June 2019 and 2018 were mainly derived from its manufacturing and wholesaling of menswear. Consequently, no operating segment analysis is presented.

4	CHINA FORDOO HOLDINGS LIMITED
Interim Report 2019

Management Discussion and Analysis

1. Segment assets and liabilities
   The following is an analysis of the Group's assets and liabilities by operating segments:

	Menswear	Others	Unallocated	Consolidated
	At	At	At	At	At	At	At	At
	30 June	31 December	30 June	31 December	30 June	31 December	30 June	31 December
	2019	2018	2019	2018	2019	2018	2019	2018
	RMB million	RMB million	RMB million	RMB million	RMB million	RMB million	RMB million	RMB million
Segment assets	1,282	1,399	55	63	799	801	2,136	2,263
Total liabilities	593	669	45	43	144	141	782	853

Note: Unallocated assets and liabilities mainly represent those relating to the commercial center project located in Hui'an, Fujian Province, the PRC, which is under the construction stage as at 30 June 2019.

1. Geographical information
   The following tables present the Group's geographical information in terms of revenue for the six months ended 30 June 2019 and 2018, and non-current assets as at 30 June 2019 and 31 December 2018.
   Revenue from external customers

	For the six months ended
	30 June 2019	30 June 2018
	RMB million	RMB million
China	142.7	201.4
Hong Kong	9.5	112.7
	152.2	314.1
The revenue information above is based on the locations of the Group's customer.

Non-current assets

The principal place of the Group's operations is in the PRC. For the purpose of segment information disclosure under IFRS8, the Group regards the PRC as its country of domicile. Over 90% of the Group's non-current assets are located in the PRC, being single geographical region.

CHINA FORDOO HOLDINGS LIMITED	5
Interim Report 2019

Management Discussion and Analysis

Revenue

Revenue decreased by approximately 52% from RMB314.1 million in the first half of 2018 to RMB152.2 million in the first half of 2019. The decrease in revenue was primarily due to the Group's continuing consolidation strategy on its retail outlet network and the decrease in wholesale orders as a result of the termination of distribution relationships with some of the Group's distributors who had slow repayment history.

Revenue by Product Type

		For the six months ended
	30 June 2019	30 June 2018	Change
	RMB million	% of revenue	RMB million	% of revenue	%
	(Unaudited)		(Unaudited)
Apparel
Men's trousers	105.2	69.1%	175.7	56.0%	-40.1%
Men's tops	34.7	22.8%	138.0	43.9%	-74.9%
Accessories	0.5	0.3%	0.4	0.1%	25.0%
Online platform and retail stores	6.5	4.3%	-	-	N/A
Foie gras and by products	5.3	3.5%	-	-	N/A
Total	152.2	100%	314.1	100.0%	-51.5%

Trousers remained the major turnover contributor of the Group and accounted for 69.1% of the total revenue during the first half of 2019 (the first half of 2018: 56.0%).

Revenue by Product Style

		For the six months ended
	30 June 2019	30 June 2018	Change
	RMB million	% of revenue	RMB million	% of revenue	%
	(Unaudited)		(Unaudited)
Apparel
Business Casual	78.3	51.4%	119.0	37.9%	-34.2%
Business Formal	33.3	21.9%	33.8	10.8%	-1.5%
Casual	28.3	18.6%	160.9	51.2%	-82.4%
Accessories	0.5	0.3%	0.4	0.1%	25.0%
Online platform and retail stores	6.5	4.3%	-	-	N/A
Foie gras and by products	5.3	3.5%	-	-	N/A
Total	152.2	100%	314.1	100.0%	-51.5%

Business casual series became our largest revenue contributor and accounted for 51.4% of the total revenue for the first half of 2019 (the first half of 2018: casual series with 51.2% of the total revenue).

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Interim Report 2019

Management Discussion and Analysis

Revenue by Region

		For the six months ended
	30 June 2019	30 June 2018	Change
	RMB million	% of revenue	RMB million	% of revenue	%
Region	(Unaudited)		(Unaudited)
Northern China (1)	14.8	9.7%	8.6	2.7%	72.1%
Northeastern China (2)	0.8	0.5%	0.9	0.3%	-11.1%
Eastern China (3)	51.4	33.8%	107.8	34.3%	-52.3%
Central Southern China (4)	4.0	2.6%	3.4	1.1%	17.7%
Southwestern China (5)	8.4	5.5%	6.7	2.1%	25.4%
Northwestern China (6)	5.4	3.6%	6.5	2.1%	-16.9%
Hong Kong	9.5	6.2%	112.7	35.9%	-91.6%
Subtotal	94.3	61.9%	246.6	78.5%	-61.8%
Online distributor	0.4	0.3%	-	-	N/A
Self-operated retail outlets	45.7	30.0%	67.5	21.5%	-32.3%
Total of Apparel	140.4	92.2%	314.1	100.0%	-55.3%
Online platform and retail stores	6.5	4.3%	-	-	N/A
Foie gras and by products	5.3	3.5%	-	-	N/A
Total	152.2	100.0%	314.1	100.0%	-51.5%

Notes:

1. Northern China includes Beijing, Hebei, Shanxi, Tianjin and Inner Mongolia.
2. Northeastern China includes Heilongjiang, Jilin and Liaoning.
3. Eastern China includes Jiangsu, Zhejiang, Shanghai, Anhui, Fujian, Shandong and Jiangxi.
4. Central Southern China includes Henan, Hubei, Hunan, Guangdong, Guangxi and Hainan.
5. Southwestern China includes Chongqing, Sichuan, Guizhou, Yunnan and Tibet.
6. Northwestern China includes Shaanxi, Gansu, Qinghai, Ningxia and Xinjiang.

Eastern China and self-operated retail outlets became the major revenue contributors (the first half of 2018: Hong Kong, Eastern

China and self-operated retail outlets), and together accounted for 63.8% (the first half of 2018: 91.7%) of the total revenue during the first half of 2019.

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Interim Report 2019

Management Discussion and Analysis

The following map shows the geographical distribution of the retail outlets of the Group in China as of 30 June 2019.

7 HEILONGJIANG

											5 JILIN
						27 INNER MONGOLIA
78	XINJIANG									17	LIAONING
							29	BEIJING
								3	TIANJIN
					7	SHANXI
				13 NINGXIA	42 HEBEI
	3							84	SHANDONG
	QINGHAI	5 GANSU
				33	SHAANXI	14 HENAN			53	JIANGSU
1
TIBET
					12	HUBEI		21	ANHUI	5	SHANGHAI
			8 SICHUAN	24 CHONGQING					3 ZHEJIANG
					0 HUNAN	1	JIANGXI
				4 GUIZHOU					52	FUJIAN
			5 YUNNAN	19		16
				GUANGXI	GUANGDONG

0 HAINAN

8	CHINA FORDOO HOLDINGS LIMITED
Interim Report 2019

Management Discussion and Analysis

Cost of Sales

Cost of sales decreased by approximately 53.8% from RMB209.3 million in the first half of 2018 to RMB96.7 million in the first half of 2019. The decrease was due to the drop in the product demand and hence was in line with the decrease in revenue during the first half of 2019.

The Group continued to source its products either by self-production or OEM purchase. We use our in-house manufacturing facilities to produce most of our core products and outsource production of accessories and certain apparel products as we continue to expand and diversify our product offering. Our flexible manufacturing process has enabled us to maintain our product quality and protect our intellectual property.

In the first half of 2019, self-production accounted for approximately 50.0% (the first half of 2018: 57.9%) of the total cost of sales, decreased by 7.9 percentage points. The decrease was mainly due to the decreased sales orders from customers. The amount of purchase of higher-value products from OEMs decreased by 50.7% comparing with the first half of 2018.

Gross Profit and Gross Profit Margin

Gross profit decreased by approximately 47.0% from RMB104.8 million in the first half of 2018 to RMB55.5 million in the first half of 2019, which was primarily attributable to a drop in product demand. Gross profit margin increased 3.1 percentage points from 33.4% in the first half of 2018 to 36.5% in the first half of 2019, which was primarily attributable to an increase in revenue from self- operated shops with higher profit margin.

Other Income and Other Gains or Losses

Other income and other gains or losses increased by approximately RMB3.4 million from RMB4.1 million in the first half of 2018 to RMB7.5 million in the first half of 2019. The increase was mainly due to the interest income of RMB2.9 million (the first half of 2018: RMB0.1 million) which were mainly due to the interest incomes of matured deposit, interest of RMB2.4 million from investment fund (the first half of 2018: Nil) and fair value gain of RMB1.4 million on biological assets (the first half 2018: Nil), offset by a net foreign exchange loss of RMB1.0 million (the first half of 2018: exchange gain of RMB2.9 million) which was mainly due to the settlement of US dollar trade receivables.

Selling and Distribution Expenses

Selling and distribution expenses increased by approximately RMB3.1 million from RMB25.9 million in the first half of 2018 to RMB29.0 million in the first half of 2019, accounting for approximately 19.0% of total revenue, representing a year-on-year increase of 10.8 percentage points. The increase in selling and distribution expenses was primarily due to: (i) the increase in salesmen salaries and insurance arising from the increase in headcourt of the acquired companies with revenue generated from online platform and retail stores in the second half of 2018; and (ii) the increase in advertising and promotional expenses; partially offset by the decrease in decoration expenses due to the consolidation strategy on the under-performing shops, which had already been partially offset by the costs-saving effect of the Group's consolidated strategy on retail outlets and termination of distributor relationship.

Included in the amount were advertising and promotional expenses of approximately RMB6.8 million in total, which accounted for approximately 4.4% of the total revenue, increase by 2.7 percentage points compared to the same period last year. The Group continued to take initiatives to promote its corporate image through multi-channel marketing campaigns.

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Interim Report 2019

Management Discussion and Analysis

Administrative and Other Operating Expenses

Administrative and other operating expenses increased by approximately RMB7.5 million from RMB75.9 million in the first half of 2018 to RMB83.4 million in the first half of 2019, accounting for approximately 53.8% of total revenue, representing a year-on-year increase of 29.7 percentage points. The increase mainly due to the increase in trade receivable provision as a result of the prudent account receivable provision policy and increase in salaries, partially offset by the decrease in research and development expenses.

Finance Costs

Finance costs increased by 25.8% from RMB12.4 million in the first half of 2018 to approximately RMB15.6 million in the first half of 2019, mainly due to higher average interest rate in the first half of 2019 and increase in corporate bonds.

Income Tax

Income tax decreased by 617.9% from RMB1.7 million in the first half of 2018 to negative income tax RMB9.0 million in the first half of 2019. The decrease in income tax was mainly due to the decrease of profit before taxation and the increase in deferred tax assets generated from the increase in trade receivables expected credit loss.

Loss Attributable to Shareholders of the Company

For the first half of 2019, loss attributable to the shareholders of the Company (the "Shareholders") was approximately RMB56.0 million (the first half of 2018: loss of RMB7.1 million).

Interim Dividend

The board (the "Board") of directors (the "Directors") of the Company has resolved not to declare the payment of any interim dividend for the six months ended 30 June 2019 (30 June 2018: Nil).

BUSINESS REVIEW

Distribution Network

The following table shows the changes in the number of stores in different regions during the six months ended 30 June 2019:

		Number of stores
	As of	Stores opened	Stores closed	As of
	1 January	during	during	30 June
Region	2019	the period	the period	2019
Northern China	103	2	31	74
Northeastern China	38	0	9	29
Eastern China	238	1	22	217
Central Southern China	72	2	13	61
Southwestern China	48	1	7	42
Northwestern China	137	2	7	132
Subtotal	636	8	89	555
Self-operated retail outlets	36	0	0	36
Total	672	8	89	591

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Interim Report 2019

Management Discussion and Analysis

As of 30 June 2019, we had a nationwide retail network of 591 retail outlets (including 36 self-operated retail outlets in Beijing) across over 250 cities and 29 provinces, autonomous regions and central government-administered municipalities in the PRC. There was a net decrease of 81 retail stores from 672 as at 31 December 2018, as we continued our consolidation strategy on the retail outlet network during the first half of 2019 and closed down inefficient retail stores.

As of 30 June 2019, 83.6% of the retail outlets were located in department stores or shopping malls whereas 16.4% of the retail outlets were standalone stores.

Distribution Channel Management

As of 30 June 2019, the Group's distribution network comprised 40 distributors (31 December 2018: 50 distributors) and 91 sub-

distributors (31 December 2018: 104). Among the 40 distributors, 11 had business relationships with us for more than eight years. We believe these strong, stable and long-standing relationships with our distributors were essential to our brand building efforts and strong operating track record. At the same time, in order to strengthen our distribution channel, we are inviting distributors with deep industry experience, stable working capital and managerial expertise to join our distribution network.

To facilitate the management of our distributors and retail outlets, we divide our distribution network into different regions in the PRC. We have assigned a management team dedicated to each region. Each team is responsible for soliciting and selecting potential distributor candidates, supervising and communicating with our distributors and monitoring and conducting on-site inspections of retail outlets within their respective region.

The Group will continue to provide training for its distributors and their management teams, aiming at elevating their retail management skills, sales technique as well as brand and product knowledge.

Marketing and Promotion

The Group believes that brand awareness is crucial to its long-term business development and a cornerstone of its future success. In the first half of 2019, the Group invested moderately in advertising and promotion to heighten its brand awareness, including engaging in online advertisement through internet, e.g. www.163.com, and software value-added services to promote our brand name.

The Group continued to upgrade its existing retail stores to enhance and reinforce its brand image. The Group opened 8 new stores and renovated 13 existing stores during the first half of 2019. We also endeavor to continue to gradually upgrade some of the stores operated by our distributors and their sub-distributors through store renovation and improvement of in-store design and layout.

Design and Product Development

The Group always put great emphasis on product design and quality, as we believe our ability and commitment to provide fashionable and comfortable products have been integral to our success. Initiatives include launching of our new men's casual fashion series and developing our own quality fabrics. As of 30 June 2019, our product design and development team consisted of 41 members. The key team members, who plan, implement, supervise and manage the design and development efforts, have an average of 10 years of experience in the fashion industry. We will continue to invest in our product design and research and development capabilities to capture fashion trends and product designs.

Sales Fairs

We generally organize sales fairs at our headquarters in Quanzhou to showcase our upcoming products for the spring/summer and autumn/winter collections to our existing and potential distributors and sub-distributors. We review our distributors' orders placed at our sales fair to ensure that they are reasonable and in line with the relevant distributor's capacity and development plans. The sales fairs for 2019 autumn/winter collections was held in March 2019, and the sales fairs for 2020 spring/summer collections will be held in August 2019.

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Interim Report 2019

Management Discussion and Analysis

PROSPECTS

The overall growth in the garment market has been relatively slow in recent years, but fast fashion and online sales have continued to rise. More new brands entering the market and international brands stepping up their presence in the mainland, market competition is heating up, while the degree of brand concentration is going down. The apparel industry enters a period of adjustment and transition. The Group's short to medium term performance may be affected by macroeconomic factors affecting China and global markets, including the slowdown in economic growth and the potential negative sentiment that may arise from trade tensions between China and the United States.

Despite the challenging operating environment, the Group's management remains optimistic about the long-term growth opportunities in the menswear market. The Group will continue to take initiatives to anticipate the fashion trends, consumer needs and preferences in the market and develop new products series with new and high-quality elements that appeal to the target customers, our marketing strategy and customer perception.

The Group endeavors to improve its product quality, deepen channels, reform supply chain and enhance its brand's strengths to further sharpen its competitive edge. Furthermore, the Group has been open to strategic investments and other possible investment opportunities to achieve better returns for shareholders and sustained long-term profit growth in the future.

Liquidity and Financial Resources

As at 30 June 2019, the Group had total bank and other borrowings and corporate bonds of approximately RMB513.2 million (31 December 2018: RMB529.3 million). The net cash position as at 30 June 2019 with comparative figures as at 31 December 2018 is as follows:

	As at	As at
	30 June	31 December
	2019	2018
	RMB million	RMB million
	(Unaudited)
Cash and bank balances (including pledged bank deposits)	598.6	624.5
Less: Total bank and other borrowings	(450.0)	(484.8)
Less: Amount due to Mr. Kwok Kin Sun & Mr. Kwok Hon Fung (Note)	(0.4)	(0.4)
Less: Corporate bonds	(63.2)	(44.5)
Net Cash	85.0	94.8

Note: The borrowings from the ultimate controlling parties, Mr. Kwok Kin Sun and Mr. Kwok Hon Fung, were primarily used to as short term working capital of the Group and repay certain bank borrowings. The amounts due to our controlling shareholders were unsecured, interest-free and had no fixed repayment terms, and are expected to be repaid in the second half of 2019.

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Interim Report 2019

Management Discussion and Analysis

The maturity profile of the total borrowings as at 30 June 2019 is as follows (with comparative figures as at 31 December 2018):

	As at 30 June 2019		As at 31 December 2018
	RMB million	%	RMB million	%
Bank and other borrowings and corporate bonds
- Within 1 year or on demand	440.0	85.8%	434.8	82.1%
- Over 1 but within 2 years	4.8	0.9%	26.5	5.0%
- Over 2 but within 5 years	52.3	10.2%	7.7	1.5%
- Over 5 years	16.1	3.1%	60.3	11.4%
Total	513.2	100%	529.3	100%

As at 30 June 2019, the bank and other borrowings were secured as follows (with comparative figures as at 31 December 2018):

	As at	As at
	30 June	31 December
	2019	2018
	RMB million	RMB million
Bank and other borrowings
- Secured	414.8	384.8
- Unsecured	35.2	100.0
Total	450.0	484.8

As at 30 June 2019, all the Group's bank and other borrowings were denominated in RMB and HK$ (31 December 2018: in both RMB

and HK$) and bear interest at fixed rate (31 December 2018: fixed rate), with interest rate ranging from 4.79% to 9.00% (31

December 2018: 3.75% to 9.00%) per annum.

As at 30 June 2019, the Group had a net cash balance of RMB85.0 million (31 December 2018: RMB94.8 million). The gearing ratio as at 30 June 2019 was 37.9%, an increase of 0.4 percentage point as compared to 37.5% as at 31 December 2018. It was relatively stable.

The cash flow generated from operating activities for the six months ended 30 June 2019 amounted to approximately RMB13.9 million (30 June 2018: RMB52.3 million). The decrease was mainly due to a decrease in operating profit before changes in working capital of approximately RMB5.1 million, offset by a decrease in working capital balance of RMB2.5 million and a year- on-year increase of income tax paid of RMB3.7 million.

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Interim Report 2019

Management Discussion and Analysis

The cash flow generated from investing activities for the six months ended 30 June 2019 amounted to approximately RMB51.9 million (30 June 2018: cash flow used in investing activities RMB32.4 million). The increase in the cash flow generated was mainly due to net decrease in fixed deposits held at bank with original maturity over three months and pledged bank deposit of RMB59.6 million, partially offset buy the payment for purchase of property, plant and equipment and payment of construction in progress of RMB10.6 million.

The cash flow used in financing activities for the six months ended 30 June 2019 amounted to approximately RMB32.0 million (30 June 2018: RMB17.0 million). The increase in the cash flow used was mainly due to a decrease in proceed from issue of corporate bonds of RMB15.8 million.

As at 30 June 2019, the Group's total equity decreased by approximately RMB56.2 million to approximately RMB1,353.5 million (31 December 2018: RMB1,409.7 million).

Trade Working Capital Ratios

The Group's average inventory turnover days was 78 days for the first half of 2019, as compared to 46 days for the same period last year. The increase was mainly due to the underperformed turnover level because of decreased orders from customers.

The Group's average trade receivables turnover days for the first half of 2019 was 182 days, representing an increase of 53 days from 129 days for the same period last year. As at 30 June 2019, the Group's total trade receivables decreased by approximately 40.3% year-on-year to RMB114.8 million (30 June 2018: RMB192.2 million). The increase in trade receivables turnover days was mainly due to the long outstanding trade receivables of some customers which have ceased trading with the Group. The ability to recover such overdue receivables is low and hence provision for partial receivables had been made.

The Group's average trade payables turnover days was 57 days for the first half of 2019, representing an increase of 29 days as compared to 28 days for the same period last year. We normally have 30 to 60 days credit period from our suppliers. The Group had negotiated with suppliers to obtain longer credit period to improve the liquidity and hence it increased the trade payables balance and the trade payables turnover days.

The Group recorded a net cash position as at 30 June 2019 and 30 June 2018.

The Group regularly and actively monitors its capital structure to ensure sufficient working capital to operate its business and to maintain a balanced capital structure between providing steady returns to its Shareholders and benefits to its other stakeholders and having adequate level of borrowing and security.

Charges on Group Assets

As at 30 June 2019, secured bank borrowings were secured by bank deposit, certain buildings, investment properties and lease prepayments with carrying value of RMB17.1 million (31 December 2018: RMB70.6 million), RMB213.6 million (31 December 2018: RMB218.9 million), RMB22.0 million (31 December 2018: RMB22.6 million) and RMB250.1 million (31 December 2018: RMB253.1 million), respectively. Save as disclosed above, there is no charge on Group assets.

Significant Investment, Material Acquisition and Disposal of Subsidiaries, Associates and Joint Ventures

During the first half of 2019, the Group had no significant investment, material acquisition or disposal of subsidiaries, associates and joint ventures.

14	CHINA FORDOO HOLDINGS LIMITED
Interim Report 2019

Management Discussion and Analysis

Future Plans for Material Investments and Capital Assets

Fordoo commercial center

Our Fordoo commercial center project in Hui'an is under the construction stage. The whole project is principally funded by cash generated from our operations and bank borrowings. To cooperate with the facilitates of the government, we expect the whole constructions will be completed by 2021.

Save as disclosed above, the Group did not have other plans for material investment or capital assets as at 30 June 2019.

Capital Commitments and Contingencies

As at 30 June 2019, the Group had a total capital commitment of RMB173.0 million (31 December 2018: RMB182.9 million). It was primarily related to the proposed construction of Fordoo commercial center in Hui'an, Fujian Province. All the capital commitments are expected to be financed by our operations and bank borrowings.

As at 30 June 2019, the Group had no material contingent liabilities.

Foreign Currency Exposure

The functional currency of the Company is the Hong Kong dollar and the figures in the Group's financial statements are translated into Renminbi for reporting and consolidation purpose. Foreign exchange differences arising from translation of financial statements are directly recognised in equity as a separate reserve. As the Group conducts business transaction principally in Renminbi, the exchange rate risk at the Group's operational level is not significant. The Group does not employ any financial instruments for hedging purpose.

Employees, Training, and Development

The Group had a total of 1,298 employees as at 30 June 2019 (31 December 2018: 1,460). The Group invested in regular training and other development courses for employees to enhance their technical and product knowledge as well as management skills. The Group offered competitive remuneration packages to its employees, including basic salary, allowances, insurance, commission or bonuses and entitlement to participate in the Group's share option scheme.

Use of Proceeds

The shares of the Company (the "Shares") were listed on the main board of The Stock Exchange of Hong Kong Limited (the "Stock Exchange") on 16 July 2014 with net proceeds (the "Net Proceeds") from the global offering of approximately HK$454.7 million (after deducting underwriting commissions and related expenses). Parts of the Net Proceeds were applied during the reporting period in accordance with the proposed applications set out in the section headed "Future Plans and Use of Proceeds" in the prospectus of the Company dated 30 June 2014 (the "Prospectus"). As at 30 June 2019, the Group had utilized HK$382.6 million of the Net Proceeds and unutilized Net Proceeds amounts to HK$72.1 million.

CHINA FORDOO HOLDINGS LIMITED	15
Interim Report 2019

Management Discussion and Analysis

The following table sets forth a breakdown of the use of the Net Proceeds as at 30 June 2019:

		Utilized	Unutilized
	Available	(as at	(as at
	for use	30 June 2019)	30 June 2019)
Use of net proceeds	HK$ million	HK$ million	HK$ million
Brand promotion and marketing	122.8	122.8	-
Research, design and product development	90.9	44.3	46.6
Repay a portion of our bank borrowings	90.9	90.9	-
Expand distribution network and provide storefront decoration	59.1	59.1	-
Install ERP system	45.5	20.0	25.5
Working capital and other general corporate purposes	45.5	45.5	-
	454.7	382.6	72.1

The unutilized Net Proceeds were deposited into interest bearing bank accounts with licensed commercial banks in China. The Directors intended to continue to apply the unused Net Proceeds in the manner as set out in the Prospectus.

16	CHINA FORDOO HOLDINGS LIMITED
Interim Report 2019

Report on Review of Interim Condensed Consolidated Financial Statements

Independent review report to the board of directors of

China Fordoo Holdings Limited

(Incorporated in the Cayman Islands with limited liability)

Introduction

We have reviewed the interim financial information set out on pages 23 to 46 which comprises the condensed consolidated statement of financial position of China Fordoo Holdings Limited (the "Company") as at 30 June 2019 and the related condensed consolidated statement of profit or loss and other comprehensive income, condensed consolidated statement of changes in equity and condensed consolidated cash flow statement for the six months period then ended and explanatory notes. The Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited require the preparation of an interim financial information to be in compliance with the relevant provisions thereof and International Accounting Standard 34, "Interim financial reporting", issued by the International Accounting Standards Board. The directors are responsible for the preparation and presentation of the interim financial information in accordance with International Accounting Standard 34.

Our responsibility is to express a conclusion on these interim condensed consolidated financial statements based on our review and to report our conclusion solely to you, as a body, in accordance with our agreed terms of engagement, and for no other purpose. We do not assume responsibility towards or accept liability to any other person for the contents of this report.

Scope of review

We conducted our review in accordance with Hong Kong Standard on Review Engagements 2410, "Review of interim financial information performed by the independent auditor of the entity", issued by the Hong Kong Institute of Certified Public Accountants. A review of the interim financial information consists of making enquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures. A review is substantially less in scope than an audit conducted in accordance with Hong Kong Standards on Auditing and consequently does not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit. Accordingly we do not express an audit opinion.

Conclusion

Based on our review, nothing has come to our attention that causes us to believe that the interim financial information as at 30 June 2019 is not prepared, in all material respects, in accordance with International Accounting Standard 34, "Interim financial reporting".

Elite Partners CPA Limited

Certified Public Accountants

Hong Kong, 28 August 2019

Yip Kai Yin

Practising Certificate Number: P05131

10/F, 8 Observatory Road,

Tsim Sha Tsui, Kowloon,

Hong Kong

CHINA FORDOO HOLDINGS LIMITED	17
Interim Report 2019

Condensed Consolidated Statement of

Profit or Loss and Other Comprehensive Income

For the six months ended 30 June 2019 - unaudited (Expressed in Renminbi)

		Six months ended 30 June
		2019	2018
	Notes	RMB'000	RMB'000
Revenue	4	152,248	314,098
Cost of sales		(96,692)	(209,343)
Gross profit		55,556	104,755
Other income and other gains or losses	5	7,516	4,068
Selling and distribution expenses		(28,980)	(25,863)
Administrative and other operating expenses		(83,387)	(75,880)
(Loss)/profit from operations		(49,295)	7,080
Finance costs	6(a)	(15,634)	(12,427)
Loss before taxation	6	(64,929)	(5,347)
Income tax	7	8,975	(1,733)
Loss for the period		(55,954)	(7,080)
Other comprehensive (expense)/income for the period
Item that may be reclassified subsequently to profit or loss:
Exchange differences on translation of financial statements of subsidiaries
outside the mainland of the People's Republic of China (the "PRC")		(317)	5,154
Total comprehensive expense for the period		(56,271)	(1,926)
Loss attributable to:
Equity holders of the Company		(55,883)	(7,080)
Non-controlling interest		(71)	-
		(55,954)	(7,080)
Total comprehensive expense attributable to:
Equity holders of the Company		(56,200)	(1,926)
Non-controlling interest		(71)	-
		(56,271)	(1,926)
Loss per share (RMB cents)
Basic and diluted	8	(11.6)	(1.47)

The notes on pages 23 to 46 form part of this interim financial report.

18	CHINA FORDOO HOLDINGS LIMITED
Interim Report 2019

Condensed Consolidated

Statement of Financial Position

At 30 June 2019 - unaudited (Expressed in Renminbi)

		At 30 June At 31 December
		2019	2018
	Notes	RMB'000	RMB'000
		Unaudited	Audited
Non-current assets
Property, plant and equipment	9	244,832	254,476
Biological assets		3,177	2,774
Construction in progress		370,498	359,906
Prepayment for construction in progress		150,000	150,000
Goodwill		46,976	46,976
Deposits placed for life insurance		6,904	6,858
Investment properties		21,962	22,556
Lease prepayments		-	253,938
Right-of-use assets		252,895	-
Intangible assets		136,120	158,012
Investment in an associate	10	-	-
Deposit for acquisition of intangible assets		12,917	12,917
Financial assets at amortised cost		39,612	41,612
Deferred tax assets	18(a)	65,330	58,469
		1,351,223	1,368,494
Current assets
Inventories	11	38,840	44,669
Biological assets		2,867	1,871
Trade, bills and other receivables	12	144,361	222,880
Pledged bank deposits	13	17,092	70,565
Fixed deposits held at bank with original maturity over three months	14	6,360	12,530
Cash and cash equivalents	14	575,118	541,359
		784,638	893,874
Current liabilities
Trade, bills and other payables	15	199,410	244,461
Bank and other borrowings	16	414,800	434,800
Corporate bonds	17	25,210	-
Lease liabilities		1,711	-
Tax liabilities		3,170	8,662
		644,301	687,923
Net current assets		140,337	205,951
Total assets less current liabilities		1,491,560	1,574,445
The notes on pages 23 to 46 form part of this interim financial report.

CHINA FORDOO HOLDINGS LIMITED	19
Interim Report 2019

Condensed Consolidated

Statement of Financial Position

At 30 June 2019 - unaudited (Expressed in Renminbi)

		At 30 June At 31 December
		2019	2018
	Notes	RMB'000	RMB'000
		Unaudited	Audited
Non-current liabilities
Bank and other borrowings	16	35,173	50,000
Corporate bonds	17	37,972	44,494
Lease liabilities		160	-
Deferred tax liabilities		64,800	70,225
		138,105	164,719
Net assets		1,353,455	1,409,726
Capital and reserves
Share capital		3,819	3,819
Reserves		1,346,140	1,402,340
Equity attributable to equity holders of the Company		1,349,959	1,406,159
Non-controlling interest		3,496	3,567
Total equity		1,353,455	1,409,726

20	CHINA FORDOO HOLDINGS LIMITED
Interim Report 2019

Condensed Consolidated

Statement of Changes in Equity

For the six months ended 30 June 2019 - unaudited (Expressed in Renminbi)

				Attributable to equity holders of the Company
							Share-based			Non-
		Share	Share	Statutory	Capital	Exchange	payment	Retained		controlling	Total
		capital	premium	reserve	reserve	reserve	reserve	profits	Sub-total	interest	equity
		RMB'000	RMB'000	RMB'000	RMB'000	RMB'000	RMB'000	RMB'000	RMB'000	RMB'000	RMB'000
	Notes	Note 20(b)	Note 20(c)(i)	Note 20(c)(ii)	Note 20(c)(iii)	Note 20(c)(iv)	Note 20(c)(v)
Balance at 1 January 2018
As originally presented		3,819	136,871	127,396	39,023	(15,805)	347	1,160,618	1,452,269	-	1,452,269
Initial application of IFRS9		-	-	-	-	-	-	(6,750)	(6,750)	-	(6,750)
As restated (Audited)		3,819	136,871	127,396	39,023	(15,805)	347	1,153,868	1,445,519	-	1,445,519
Changes in equity for the six months
ended 30 June 2018:
Loss for the period		-	-	-	-	-	-	(7,080)	(7,080)	-	(7,080)
Other comprehensive income
for the period		-	-	-	-	5,154	-	-	5,154	-	5,154
Total comprehensive expense		-	-	-	-	5,154	-	(7,080)	(1,926)	-	(1,926)
Equity-settledshare-based payments
for employees	20(c)(v)	-	-	-	-	-	27	-	27	-	27
Balance at 30 June 2018 (Unaudited)		3,819	136,871	127,396	39,023	(10,651)	374	1,146,788	1,443,620	-	1,443,620
Balance at 1 January 2019 (Audited)		3,819	136,871	128,898	39,023	(10,992)	611	1,107,929	1,406,159	3,567	1,409,726
Changes in equity for the six months
ended 30 June 2018:
Loss for the period		-	-	-	-	-	-	(55,883)	(55,883)	(71)	(55,954)
Other comprehensive expense
for the period		-	-	-	-	(317)	-	-	(317)	-	(317)
Total comprehensive expense		-	-	-	-	(317)	-	(55,883)	(56,200)	(71)	(56,271)
Lapse of share options		-	-	-	-	-	(445)	445	-	-	-
Balance at 30 June 2019 (Unaudited)		3,819	136,871	128,898	39,023	(11,309)	166	1,052,491	1,349,959	3,496	1,353,455

The notes on pages 23 to 46 form part of this interim financial report.

CHINA FORDOO HOLDINGS LIMITED	21
Interim Report 2019

Condensed Consolidated

Cash Flow Statement

For the six months ended 30 June 2019 - unaudited (Expressed in Renminbi)

		Six months ended 30 June
		2019	2018
	Note	RMB'000	RMB'000
Operating activities
Cash generated from operations		22,673	57,364
Income tax paid		(8,803)	(5,089)
Net cash generated from operating activities		13,870	52,275
Investing activities
Payment for the purchase of property, plant and equipment
and intangible assets		(31)	(2,055)
Proceeds from disposal of property, plant and equipment		44	-
Payments of construction in progress		(10,592)	(10,355)
Deposit placed for a life insurance policy		-	(6,576)
Decrease in fixed deposits held at bank with original maturity
over three months		6,170	7,755
Decrease/(increase) in pledged bank deposits		53,473	(21,221)
Interest received		2,866	47
Net cash generated from/(used in) investing activities		51,930	(32,405)
Financing activities
Proceeds from bank and other borrowings		122,500	167,500
Repayment of bank and other borrowings		(157,327)	(204,430)
Proceed from issue of corporate bonds		16,310	32,062
Interest paid		(13,524)	(12,097)
Net cash used in financing activities		(32,041)	(16,965)
Net increase in cash and cash equivalents		33,759	2,905
Cash and cash equivalents at 1 January	14	541,359	502,107
Cash and cash equivalents at 30 June	14	575,118	505,012

The notes on pages 23 to 46 form part this interim financial report.

22	CHINA FORDOO HOLDINGS LIMITED
Interim Report 2019

Notes to the Unaudited Interim

Financial Report

(Expressed in Renminbi unless otherwise indicated)

1 Basis of preparation

This interim financial information has been prepared in accordance with the applicable disclosure provisions of the Rules Governing the Listing of Securities on the Stock Exchange of Hong Kong Limited, including compliance with International Accounting Standard ("IAS") 34, Interim Financial Reporting, issued by the International Accounting Standards Board ("IASB"). It was authorised for issue on 28 August 2019.

The interim financial information has been prepared in accordance with the same accounting policies adopted in 2018 annual financial statements, except for the accounting policy changes that are expected to be reflected in the 2019 annual financial statements. Details of any changes in accounting policies are set out in note 2.

The preparation of an interim financial information in conformity with IAS 34 requires management to make judgements, estimates and assumptions that affect the application of policies and reported amounts of assets and liabilities, income and expenses on a year to date basis. Actual results may differ from these estimates.

This interim financial information contains condensed consolidated interim financial statements and selected explanatory notes. The notes include an explanation of events and transactions that are significant to an understanding of the changes in financial position and performance of China Fordoo Holdings Limited (the "Company") and its subsidiaries (together the "Group") since the 2018 annual consolidated financial statements. The condensed consolidated interim financial statements and notes thereon do not include all of the information required for a full set of consolidated financial statements prepared in accordance with International Financial Reporting Standards ("IFRSs").

The interim financial information is unaudited, but has been reviewed by Elite Partners CPA Limited in accordance with Hong Kong Standard on Review Engagements 2410, Review of interim financial information performed by the independent auditor of the entity, issued by the Hong Kong Institute of Certified Public Accountants.

2 Changes in accounting policies

The accounting policies adopted and methods of computation used in the condensed consolidated interim financial statements are the same as those followed in the preparation of the Group's annual financial statements for the year ended 31 December 2018, except for the adoption of new standards as set out below.

In the current interim period, the Group has adopted all the new standards, amendments and interpretations (the "new and amended IFRSs") issued by the IASB that are relevant to its operations and effective for its accounting period beginning on 1 January 2019. Except as described below, the adoption of these new and amended IFRSs did not result in significant changes to the Group's accounting policies and amounts reported for the current and prior accounting period.

The Group has not early applied any new and revised IFRSs that are not yet effective for the current period.

The Group has initially adopted IFRS 16 "Lease" from 1 January 2019 and the Group has changed its accounting policies as a result of adopting this standard. The impact of the adoption of this standard and the nature and effect of the change in accounting policies are further described below.

CHINA FORDOO HOLDINGS LIMITED	23
Interim Report 2019

Notes to the Unaudited Interim

Financial Report

(Expressed in Renminbi unless otherwise indicated)

2 Changes in accounting policies (Continued)

IFRS 16 - Lease

The Group has applied IFRS 16 for the first time in the current interim period. IFRS 16 superseded IAS 17 Leases ("IAS 17"), and the related interpretations.

1. Key changes in accounting policies resulting from application of IFRS 16
   The Group applied the following accounting policies in accordance with the transition provisions of IFRS 16.
   Definition of a lease
   A contract is, or contains, a lease if the contract conveys the right to control the use of an identified asset for a period of time in exchange for consideration. For contracts entered into or modified on or after the date of initial application, the Group assesses whether a contract is or contains a lease based on the definition under IFRS 16 at inception or modification date. Such contract will not be reassessed unless the terms and conditions of the contract are subsequently changed.
   As a lessee
   Allocation of consideration to components of a contract
   For a contract that contains a lease component and one or more additional lease or non-lease components, the Group allocates the consideration in the contract to each lease component on the basis of the relative stand-alone price of the lease component and the aggregate stand-alone price of the non-lease components.
   Short-term leases and leases of low-value assets
   The Group applies the short-term lease recognition exemption to leases that have a lease term of 12 months or less from the commencement date and do not contain a purchase option. It also applies the recognition exemption for lease of low-value assets. Lease payments on short-term leases and leases of low-value assets are recognised as expense on a straight-line basis over the lease term.
   Right-of-use assets
   Except for short-term leases and leases of low value assets, the Group recognises right-of-use assets at the commencement date of the lease (i.e. the date the underlying asset is available for use). Right-of-use assets are measured at cost, less any accumulated depreciation and impairment losses, and adjusted for any remeasurement of lease liabilities.
   The cost of right-of-use asset includes:
2. • the amount of the initial measurement of the lease liability;
   • any lease payments made at or before the commencement date, less any lease incentives received;
   • any initial direct costs incurred by the Group; and
   • an estimate of costs to be incurred by the Group in dismantling and removing the underlying assets, restoring the site on which it is located or restoring the underlying asset to the condition required by the terms and conditions of the lease.

24	CHINA FORDOO HOLDINGS LIMITED
Interim Report 2019

Notes to the Unaudited Interim

Financial Report

(Expressed in Renminbi unless otherwise indicated)

2 Changes in accounting policies (Continued)

IFRS 16 - Lease (Continued)

1. Key changes in accounting policies resulting from application of IFRS 16 (Continued) Right-of-useassets (Continued)
   Right-of-use assets in which the Group is reasonably certain to obtain ownership of the underlying leased assets at the end of the lease term is depreciated from commencement date to the end of the useful life. Otherwise, right-of-use assets are depreciated on a straight-line basis over the shorter of its estimated useful life and the lease term.
   The Group presents right-of-use assets as a separate line item on the condensed consolidated statement of financial position.
   Lease liabilities
   At the commencement date of a lease, the Group recognizes and measures the lease liability at the present value of lease payments that are unpaid at that date. In calculating the present value of lease payments, the Group uses the incremental borrowing rate at the lease commencement date if the interest rate implicit in the lease is not readily determinable.
   The lease payments include:
2. • fixed payments (including in-substance fixed payments) less any lease incentives receivable;
   • variable lease payments that depend on an index or a rate;
   • amounts expected to be paid under residual value guarantees;
   • the exercise price of a purchase option reasonably certain to be exercised by the Group; and
   • payments of penalties for terminating a lease, if the lease term reflects the Group exercising the option to terminate.

After the commencement date, lease liabilities are adjusted by interest accretion and lease payments. The Group remeasures lease liabilities (and makes a corresponding adjustment to the related right-of-use assets) whenever:

• the lease term has changed or there is a change in the assessment of exercise of a purchase option, in which case the related lease liability is remeasured by discounting the revised lease payments using a revised discount rate at the date of reassessment.
• the lease payments change due to changes in market rental rates following a market rent review/expected payment under a guaranteed residual value, in which cases the related lease liability is remeasured by discounting the revised lease payments using the initial discount rate.

CHINA FORDOO HOLDINGS LIMITED	25
Interim Report 2019

Notes to the Unaudited Interim

Financial Report

(Expressed in Renminbi unless otherwise indicated)

2 Changes in accounting policies (Continued)

IFRS 16 - Lease (Continued)

1. Key changes in accounting policies resulting from application of IFRS 16 (Continued) Lease modifications
   The Group accounts for a lease modification as a separate lease if:
2. • the modification increases the scope of the lease by adding the right to use one or more underlying assets; and
   • the consideration for the leases increases by an amount commensurate with the stand-alone price for the increase in scope and any appropriate adjustments to that stand-alone price to reflect the circumstances of the particular contract.

For a lease modification that is not accounted for as a separate lease, the Group remeasures the lease liability based on the lease term of the modified lease by discounting the revised lease payments using a revised discount rate at the effective date of the modification.

1. Transition and summary of effects arising from initial application of IFRS 16 Definition of a lease
   The Group has elected the practical expedient to apply IFRS 16 to contracts that were previously identified as leases applying IAS 17 and IFRIC-Int 4 Determining whether an Arrangement contains a Lease and not apply this standards to contracts that were not previously identified as containing a lease. Therefore, the Group has not reassessed contracts which already existed prior to the date of initial application.
   For contracts entered into or modified on or after 1 January 2019, the Group applies the definition of a lease in accordance with the requirements set out in IFRS 16 in assessing whether a contract contains a lease.
   As a lessee
   The Group has applied IFRS 16 retrospectively with the cumulative effect recognised at the date of initial application, 1 January 2019. Any difference at the date of initial application is recognised in the opening retained profits and comparative information has not been restated.
   When applying the modified retrospective approach under IFRS 16 at transition, the Group applied the following practical expedients to leases previously classified as operating leases under IAS 17, on lease-by-lease basis, to the extent relevant to the respective lease contracts:
2. 1. elected not to recognise right-of-use assets and lease liabilities for leases with lease term ends within 12 months of the date of initial application;
   2. excluded initial direct costs from measuring the right-of-use assets at the date of initial application;
   3. applied a single discount rate to a portfolio of leases with a similar remaining terms for similar class of underlying assets in similar economic environment;
   4. used hindsight based on facts and circumstances as at date of initial application in determining the lease term for the Group's leases with extension and termination options.

26	CHINA FORDOO HOLDINGS LIMITED
Interim Report 2019

Notes to the Unaudited Interim

Financial Report

(Expressed in Renminbi unless otherwise indicated)

2 Changes in accounting policies (Continued)

IFRS 16 - Lease (Continued)

1. Transition and summary of effects arising from initial application of IFRS 16 (Continued) On transition, the Group has made the following adjustments upon application of IFRS 16:
   The Group recognised lease liabilities of RMB942,000 and right-of-use assets of RMB254,898,000 at 1 January 2019.
   When recognising the lease liabilities for leases previously classified as operating leases, the Group has applied incremental borrowing rates of the relevant group entities at the date of initial application. The weighted average lessee's incremental borrowing rate applied is 4.59%.
   The following reconciliation explains how the operating lease commitments disclosed applying IAS 17 at the end of 31 December 2018 could be reconciled to the lease liabilities at the date of initial application recognised in the condense consolidated statement of financial position as at 1 January 2019:

		RMB'000
Operating lease commitment as of 31 December 2018	1,615
Less: recognition exemption - short-term leases	(581)
Less: future interest expenses	(92)
Total lease liabilities as of 1 January 2019	942
Lease liabilities
	Current	548
	Non-current	394
		942
The Carrying amount of right-of-use assets as at 1 January 2019 comprises as following:
		RMB'000
Right-of-use assets relating to operating leases recognised upon application of IFRS 16	942
Reclassified from prepaid rent	18
Reclassified from lease prepayments	253,938
		254,898

CHINA FORDOO HOLDINGS LIMITED	27
Interim Report 2019

Notes to the Unaudited Interim

Financial Report

(Expressed in Renminbi unless otherwise indicated)

3 Segment Information

Operating segments and the amounts of each segment item reported in the condensed consolidated interim financial statements are identified from the condensed consolidated interim financial statements provided regularly to the Group's most senior executive management for the purposes of allocating resources to, and assessing the performance of, the Group's various lines of business and geographical locations.

Individually material operating segments are not aggregated for financial reporting purposes unless the segments have similar economic characteristics and are similar in respect of the nature of products and services, the nature of production processes, the type or class of customers, the methods used to distribute the products or provide the services, and the nature of the regulatory environment. Operating segments which are not individually material may be aggregated if they share a majority of these criteria.

The main operation of the Group is manufacturing and wholesaling of menswear in the PRC.

(a) Segment revenue and results

	Menswear	Other		Unallocated	Consolidated
	Six months	Six months	Six months	Six months	Six months	Six months	Six months	Six months
	ended	ended	ended	ended	ended	ended	ended	ended
	30 June	30 June	30 June	30 June	30 June	30 June	30 June	30 June
	2019	2018	2019	2018	2019	2018	2019	2018
	RMB'000	RMB'000	RMB'000	RMB'000	RMB'000	RMB'000	RMB'000	RMB'000
	(Unaudited)	(Unaudited)	(Unaudited)	(Unaudited)	(Unaudited)	(Unaudited)	(Unaudited)	(Unaudited)
Revenue	140,463	314,098	11,785	-	-	-	152,248	314,098
Segment result before the following items	9,290	30,238	(10,532)	-	-	-	(1,242)	30,238
Amortisation of intangible assets	(21,892)	(21,867)	-	-	-	-	(21,892)	(21,867)
Allowance for doubtful debts, net	(29,708)	(889)	(100)	-	-	-	(29,808)	(889)
Segment result	(42,310)	7,482	(10,632)	-	-	-	(52,942)	7,482
Other revenue and unallocated gains
or loss					4,084	166	4,084	166
Corporate and other unallocated expenses					(16,071)	(12,995)	(16,071)	(12,995)
Loss before taxation							(64,929)	(5,347)
Income tax	9,014	(1,733)	(39)	-	-	-	8,975	(1,733)
Loss for the period							(55,954)	(7,080)

28	CHINA FORDOO HOLDINGS LIMITED
Interim Report 2019

Notes to the Unaudited Interim

Financial Report

(Expressed in Renminbi unless otherwise indicated)

3 Segment Information (Continued)

(b) Segment assets and liabilities

The following is an analysis of the Group's assets and liabilities by operating segments:

	Menswear	Other		Unallocated	Consolidated
	At	At	At	At	At	At	At	At
	30 June	31 December	30 June	31 December	30 June	31 December	30 June	31 December
	2019	2018	2019	2018	2019	2018	2019	2018
	(Unaudited)	(Audited)	(Unaudited)	(Audited)	(Unaudited)	(Audited)	(Unaudited)	(Audited)
	RMB'000	RMB'000	RMB'000	RMB'000	RMB'000	RMB'000	RMB'000	RMB'000
Segment assets	1,282,119	1,398,714	54,720	63,127	799,022	800,527	2,135,861	2,262,368
Total liabilities	592,983	669,112	45,211	42,769	144,212	140,761	782,406	852,642

Note: Unallocated assets and liabilities mainly represent those relating to a commercial center project located in Hui'an, the PRC, which is under the construction stage as at 30 June 2019.

(c) Geographical information

The following tables present the Group's geographical information in terms of revenue for the six months ended 30 June 2019 and 2018, and non-current assets as at 30 June 2019 and 31 December 2018.

Revenue from external customers
	Six months ended 30 June
	2019	2018
	RMB'000	RMB'000
	(Unaudited)	(Unaudited)
PRC	142,748	201,431
Hong Kong	9,500	112,667
	152,248	314,098
The revenue information above is based on the locations of the customers.

Non-current assets

The principal place of the Group's operation is in the PRC. For the purpose of segment information disclosures under IFRS 8, the Group regards the PRC as its country of domicile. Over 90% of the Group's non-current assets are located in the PRC, being single geographical region.

CHINA FORDOO HOLDINGS LIMITED	29
Interim Report 2019

Notes to the Unaudited Interim

Financial Report

(Expressed in Renminbi unless otherwise indicated)

4 Revenue

The principal activities of the Group are manufacturing and wholesaling of menswear in the PRC. Revenue represents the sales value of goods sold less discounts and Value Added Tax.

	Revenue by product type is as follows:
		Six months ended 30 June
		2019	2018
		RMB'000	RMB'000
		(Unaudited)	(Unaudited)
	Men's trousers	105,185	175,712
	Men's tops	34,703	137,973
	Accessories	548	413
	Online platform and retail stores	6,504	-
	Foie gras and by products	5,308	-
		152,248	314,098
5	Other income and other gains or losses
		Six months ended 30 June
		2019	2018
		RMB'000	RMB'000
		(Unaudited)	(Unaudited)
	Interest income	2,866	123
	Rental income from investment properties less direct outgoings	738	729
	Government grants	313	236
	Net foreign exchange (loss)/gain	(1,017)	2,926
	Loss on disposal of property, plant and equipment	(303)	(158)
	Consultancy service income	939	-
	Fair value gain on biological assets	1,399	-
	Others	2,581	212
		7,516	4,068

Government grants were received from several local government authorities, of which the entitlements were under the discretion of the relevant authorities.

30	CHINA FORDOO HOLDINGS LIMITED
Interim Report 2019

Notes to the Unaudited Interim

Financial Report

(Expressed in Renminbi unless otherwise indicated)

6 Loss before taxation

Loss before taxation is arrived at after charging:

		Six months ended 30 June
		2019	2018
		RMB'000	RMB'000
		(Unaudited)	(Unaudited)
(a)	Finance costs:
	Corporate bonds	3,271	330
	Interest on bank and other borrowings	12,309	12,097
	Interest on lease liabilities	54	-
		15,634	12,427
(b)	Staff costs:
	Contributions to defined contribution retirement plans	543	918
	Salaries, wages and other benefits	23,311	43,731
	Equity-settledshare-based payment expenses for employees	-	27
		23,854	44,676
(c)	Other items:
	Amortisation of lease prepayments	-	3,554
	Amortisation of intangible assets	21,892	21,867
	Depreciation of property, plant and equipment	9,328	9,045
	Depreciation of investment properties	594	594
	Depreciation of right-of-use assets	4,346	-
	Research and developments expenses (note (i))	4,129	8,616
	Cost of inventories (note (ii))	112,851	209,343
	Allowance for doubtful debts	29,808	889
	Operating lease payment	508	967
	Reversal of allowance for doubtful debts	(98)	(957)
	Write down of inventories	-	4,739

Notes:

1. Research and development costs include staff costs of employees in the design and product development department of RMB2,207,000 (six months ended 30 June 2018: RMB4,168,000) which are included in the staff costs as disclosed in note 6(b).
2. Cost of inventories includes RMB13,970,000 (six months ended 30 June 2018: RMB34,393,000) relating to staff cost, depreciation and amortisation expenses, which amount is also included in the respective total amounts disclosed separately above or in note 6(b) for each of these types of expenses.

CHINA FORDOO HOLDINGS LIMITED	31
Interim Report 2019

Notes to the Unaudited Interim

Financial Report

(Expressed in Renminbi unless otherwise indicated)

7 Income tax in the condensed consolidated statement of profit or loss and other comprehensive income

	Six months ended 30 June
	2019	2018
	RMB'000	RMB'000
	(Unaudited)	(Unaudited)
Current tax
Provision for PRC corporate income tax for the period	3,311	8,326
Deferred tax
Origination and reversal of temporary differences	(12,286)	(6,593)
	(8,975)	1,733

Notes:

1. Pursuant to the rules and regulations of the Cayman Islands and the British Virgin Islands ("BVI"), the Group is not subject to any income tax in the
   Cayman Islands and the BVI.
2. No provision was made for Hong Kong Profits Tax as the Group did not earn any assessable profit subject to Hong Kong Profits Tax during the six months ended 30 June 2019 and 2018.
3. Pursuant to the income tax rules and regulations of the PRC, provision for PRC corporate income tax is calculated based on the statutory rate of 25% of the assessable profits of the subsidiaries incorporated in the PRC.
4. According to the Corporate Income Tax law and its implementation rules, dividends receivable by non-PRC corporate residents from PRC enterprises are subject to withholding tax at a rate of 10%, unless reduced by tax treaties or arrangements, for profits earned since 1 January 2008. Deferred tax liabilities have been provided for in this regard based on the expected dividends to be distributed from these subsidiaries in the foreseeable future in respect of the profits generated since 1 January 2008.

32	CHINA FORDOO HOLDINGS LIMITED
Interim Report 2019

Notes to the Unaudited Interim

Financial Report

(Expressed in Renminbi unless otherwise indicated)

8 Loss per share

Basic loss per share is calculated by dividing the loss for the period attributable to equity holders of the Company by the weighted average number of ordinary shares outstanding during the period.

The computation of diluted loss per share for the period ended 30 June 2019 and year ended 31 December 2018 does not assumed the exercise of outstanding share options of the Company since the assumed exercise of the share options would result in the decrease in loss per share.

The calculation of basic and diluted loss per share is based on the following:
	Six months ended 30 June
	2019	2018
	(Unaudited)	(Unaudited)
Loss attributable to equity holders of the Company (RMB'000)	(55,883)	(7,080)
Weighted average number of shares for basic loss per share
('000 shares)	480,900	480,900
Adjustments for share options ('000 shares)	-	-
Weighted average number of shares for diluted loss per share
('000 shares)	480,900	480,900
Loss per share, basic (RMB)	(11.6) cents	(1.47) cents
Loss per share, diluted (RMB)	(11.6) cents	(1.47) cents

9 Property, plant and equipment

During the six months ended 30 June 2019, the Group acquired items of property, plant and equipment with a cost of RMB31,000 (six months ended 30 June 2018: RMB2,055,000).

Items of property, plant and equipment with a net book value of RMB347,000 (six months ended 30 June 2018: RMB184,000) were disposed of during the six months ended 30 June 2019.

CHINA FORDOO HOLDINGS LIMITED	33
Interim Report 2019

Notes to the Unaudited Interim

Financial Report

(Expressed in Renminbi unless otherwise indicated)

10 Investment in an associate

Details of the Group's investment in an associate is as follow:
	2019	2018
	RMB'000	RMB'000
	(Unaudited)	(Audited)
Cost of investment in an associate	2,000	2,000
Share of post-acquisition loss and other comprehensive expense	(2,000)	(2,000)
	-	-

Details of the associate of the Group at the end of the reporting period is as below:

			Proportion of
Name of	Country of	Principal place	ownership		Principal
associate	incorporation	of business	interest		activities
北京寅盛科技發展有限公司	The PRC	The PRC	50%	Development of online
						fashion platform
					2019	2018
					RMB'000	RMB'000
				(Unaudited)	(Audited)
The unrecognised shares of loss of an associate for the period			-	-
Cumulative unrecognised shares of loss of an associate				(4,406)	(4,406)

According to the memorandum and articles of association, all the resolution should pass by two-third of shareholders/ directors, which the Group own less than two-third of the voting right. Since the Group does not have the control power on making any decisions and rights to the net assets of arrangement, it is regarded as associate.

34	CHINA FORDOO HOLDINGS LIMITED
Interim Report 2019

Notes to the Unaudited Interim

Financial Report

(Expressed in Renminbi unless otherwise indicated)

11 Inventories

		At 30 June At 31 December
		2019	2018
		RMB'000	RMB'000
		(Unaudited)	(Audited)
	Raw materials	2,398	8,648
	Work in progress	4,234	3,425
	Finished goods	32,208	32,596
		38,840	44,669
12 Trade, bills and other receivables
		At 30 June At 31 December
		2019	2018
		RMB'000	RMB'000
		(Unaudited)	(Audited)
	Trade and bills receivables	378,603	425,974
	Loss allowance	(263,825)	(234,115)
	Trade and bills receivables net of allowance	114,778	191,859
	Prepayments to suppliers	11,925	15,640
	Other deposits, prepayments and receivables	17,658	15,381
		144,361	222,880

CHINA FORDOO HOLDINGS LIMITED	35
Interim Report 2019

Notes to the Unaudited Interim

Financial Report

(Expressed in Renminbi unless otherwise indicated)

12 Trade, bills and other receivables (Continued)

Ageing analysis

At the end of the reporting period, the ageing analysis of trade and bills receivables with net of allowance for doubtful debts, based on invoice date, is as follows:

	At 30 June At 31 December
	2019	2018
	RMB'000	RMB'000
	(Unaudited)	(Audited)
Within 3 months	75,732	136,736
More than 3 months but within 6 months	25,140	50,881
More than 6 months but within 1 year	13,906	4,242
	114,778	191,859

Trade receivables are normally due for settlement within 90-180 days (31 December 2018: 90-180 days) from the invoice date.

Impairment of trade receivables

Impairment losses in respect of trade receivables are recorded using an allowance account unless the recovery of the receivables is remote, in which case the receivables is written off directly.

The movement in the allowance for doubtful debts during the period/year is as follows:
		At 30 June At 31 December
		2019	2018
		RMB'000	RMB'000
		(Unaudited)	(Audited)
Balance as at 1 January		234,115	214,835
Impairment loss reversed		(98)	(1,026)
Impairment loss recognised		29,808	20,306
Balance as at 30 June/31 December		263,825	234,115

13 Pledged bank deposits

As at 30 June 2019, bank deposits have been pledged as security for bank borrowings, which were repayable within 1 year (see note 16(a)). The pledged bank deposits will be released upon the settlement of relevant bank borrowings.

36	CHINA FORDOO HOLDINGS LIMITED
Interim Report 2019

Notes to the Unaudited Interim

Financial Report

(Expressed in Renminbi unless otherwise indicated)

14 Cash and cash equivalents and fixed deposits held at banks comprise:

	At 30 June At 31 December
	2019	2018
	RMB'000	RMB'000
	(Unaudited)	(Audited)
Fixed deposit held at bank with original maturity within three months	10,764	14,800
Cash at bank and in hand	564,354	526,559
Cash and cash equivalents in the condensed consolidated statements of
financial position and condensed consolidated cash flow statement	575,118	541,359
Fixed deposits held at bank with original maturity over three months	6,360	12,530
	581,478	553,889

15 Trade, bills and other payables

	At 30 June At 31 December
	2019	2018
	RMB'000	RMB'000
	(Unaudited)	(Audited)
Trade payables	32,528	27,932
Bills payables	47,710	90,350
Accruals	57,456	60,683
Other payables	61,716	61,996
Final payment for acquisition of subsidiaries	-	3,500
	199,410	244,461

As of the end of the reporting period, the ageing analysis of the trade and bills payables, based on relevant invoice date, is as follows:

	At 30 June At 31 December
	2019	2018
	RMB'000	RMB'000
	(Unaudited)	(Audited)
Within 1 month	8,508	54,796
After than 1 month but within 3 months	15,377	33,486
Over 3 months but within 6 months	39,358	30,000
Over 6 months but within 1 year	16,995	-
	80,238	118,282

CHINA FORDOO HOLDINGS LIMITED	37
Interim Report 2019

Notes to the Unaudited Interim

Financial Report

(Expressed in Renminbi unless otherwise indicated)

16 Bank and other borrowings

1. As at 30 June 2019, the bank and other borrowings were repayable as follow:

	At 30 June At 31 December
	2019	2018
	RMB'000	RMB'000
	(Unaudited)	(Audited)
Within 1 year or on demand	414,800	434,800
After 1 year but within 2 years	-	50,000
After 2 years but within 5 years	35,173	-
	449,973	484,800

1. The bank and other borrowings were secured as follows:

	At 30 June At 31 December
	2019	2018
	RMB'000	RMB'000
	(Unaudited)	(Audited)
Bank and other borrowings
- Secured	414,800	384,800
- Unsecured	35,173	100,000
	449,973	484,800

1. Certain bank borrowings were secured by assets of the Group, the carrying amounts of these assets are as follows:

	At 30 June At 31 December
	2019	2018
	RMB'000	RMB'000
	(Unaudited)	(Audited)
Property, plant and equipment	213,602	233,771
Investment properties	21,962	22,556
Right-of-use assets	250,085	-
Lease prepayments	-	253,938
Pledge bank deposits	17,092	70,565
	502,741	580,830

38	CHINA FORDOO HOLDINGS LIMITED
Interim Report 2019

Notes to the Unaudited Interim

Financial Report

(Expressed in Renminbi unless otherwise indicated)

16 Bank borrowings (Continued)

1. The amounts of banking facilities and the utilisation at the end of the reporting period are set out as follows:

	At 30 June At 31 December
	2019	2018
	RMB'000	RMB'000
	(Unaudited)	(Audited)
Facility amount	964,900	964,900
Utilised facilities amount in respect of bank borrowings	414,800	459,149

17 Corporate bonds

	At 30 June At 31 December
	2019	2018
	RMB'000	RMB'000
	(Unaudited)	(Audited)
Unsecured corporate bonds	63,182	44,494
The Group's corporate bonds are repayable as follows:
	At 30 June At 31 December
	2019	2018
	RMB'000	RMB'000
	(Unaudited)	(Audited)
Within 1 year	25,210	-
After 1 year but within 2 years	4,738	26,543
After 2 years but within 5 years	17,100	7,696
After 5 years	16,134	10,255
	63,182	44,494

CHINA FORDOO HOLDINGS LIMITED	39
Interim Report 2019

Notes to the Unaudited Interim

Financial Report

(Expressed in Renminbi unless otherwise indicated)

17 Corporate bonds (Continued)

The movement of corporate bonds is as follows:
	At 30 June At 31 December
	2019	2018
	RMB'000	RMB'000
	(Unaudited)	(Audited)
As at 1 January	44,494	-
Proceeds from issuance of bonds	16,310	47,876
Imputed interests	1,862	(4,895)
Exchange realignment	516	1,513
As at 30 June/31 December	63,182	44,494

During the period ended 30 June 2019, the Group issued bonds with a principle amount in a total of HK$24,800,000 (31 December 2018: HK$56,564,000) carried interest at 0.1%-6.5% (31 December 2018: 5%-7.5%) per annum. Total transaction cost attributable to the issuance of the bonds amounted to HK$5,914,000 (31 December 2018: HK$6,710,000). The bonds are unsecured with maturity date falling on 2-8 years (31 December 2018: 2-8 years) of the issue date.

The effective interest rate of the bonds is ranging from 6.73% to 13.63% (31 December 2018: 9.2%-13.16%) per annum.

18 Income tax in the condensed consolidated statement of financial position

1. Deferred tax assets and liabilities recognised:
2. 1. Movement of each component of deferred tax assets and liabilities
      The components of deferred tax assets/(liabilities) recognised in condensed consolidated statement of financial position and the movement during the period are as follows:

		Deferred tax
	Withholding	liability on	Impairment
	tax on	intangible	on trade	Impairment
Deferred tax arising from:	dividends	assets	receivable	on inventory	Total
	RMB'000	RMB'000	RMB'000	RMB'000	RMB'000
At 1 January 2018 (Audited)	(37,740)	(49,729)	52,050	-	(35,419)
(Charged)/credited to condensed
consolidated statement of profit or loss
and other comprehensive income	-	5,425	(17)	1,185	6,593
At 30 June 2018 (Unaudited)	(37,740)	(44,304)	52,033	1,185	(28,826)
At 1 January 2019 (Audited)	(37,740)	(32,485)	58,469	-	(11,756)
Credited to condensed
consolidated statement of profit or loss
and other comprehensive income	-	5,425	6,861	-	12,286
At 30 June 2019 (Unaudited)	(37,740)	(27,060)	65,330	-	530

40	CHINA FORDOO HOLDINGS LIMITED
Interim Report 2019

Notes to the Unaudited Interim

Financial Report

(Expressed in Renminbi unless otherwise indicated)

18 Income tax in the condensed consolidated statement of financial position (Continued)

1. Deferred tax assets and liabilities recognised: (Continued)
2. 1. Reconciliation to the condensed consolidated statement of financial position

	At 30 June At 31 December
	2019	2018
	RMB'000	RMB'000
	(Unaudited)	(Audited)
Deferred tax assets recognised in the condensed consolidated
statement of financial position	65,330	58,469
Deferred tax liabilities recognised in the condensed consolidated
statement of financial position	(64,800)	(70,225)

(b) Deferred tax assets not recognised

At 30 June 2019, certain subsidiaries of the Group have not recognised deferred tax assets in respect of cumulative tax losses carried forward of RMB169,197,317 (31 December 2018: RMB104,447,000), of which RMB109,136,160 (31 December 2018: RMB62,541,000) will expire within 5 years under the current tax legislation. The cumulative tax losses have not been recognised as it is not probable that future taxable profits against which the losses can be utilised will be available in the relevant tax jurisdiction and entities.

(c) Deferred tax liabilities not recognised

Pursuant to the PRC Corporate Income Tax Law and its related regulations, the Group is subject to withholding tax at 10% (unless reduced by tax treaties/arrangements) on dividends receivable from its PRC subsidiaries in respect of their profits generated since 1 January 2008. As at 30 June 2019, deferred tax liabilities relating to the undistributed profits of the Company's PRC subsidiaries of RMB1,348,949,000 (31 December 2018: RMB,1,365,492,000) were not recognised as the Company controls the dividend policy of these subsidiaries and it has determined that those profits will not be distributed in the foreseeable future.

CHINA FORDOO HOLDINGS LIMITED	41
Interim Report 2019

Notes to the Unaudited Interim

Financial Report

(Expressed in Renminbi unless otherwise indicated)

19 Equity-settledshare-based payments for employees

The Company has adopted a share option scheme on 7 October 2015 whereby the directors of the Company are authorised, at their discretion, to invite certain employees of the Group, including certain directors of the Group, to take up share options at consideration of HK$1 each (equivalent to RMB0.821 at the date of grant). Each option gives the holder the right to subscribe for one ordinary share in the Company and will be settled gross in shares.

(a) Details of share options granted are as follows:

			Number of		Contractual
		Exercise	options	Vesting	life of
Date of grant		price	granted	periods	options
Options granted to directors of the company:
7 October 2015	Batch 1	HK$3.56	500,000	one year from the date of grant	5 years
7 October 2015	Batch 2	HK$3.56	500,000	two year from the date of grant	5 years
7 October 2015	Batch 3	HK$3.56	500,000	three year from the date of grant	5 years
Options granted to employees:
7 October 2015	Batch 1	HK$3.56	600,000	one year from the date of grant	5 years
7 October 2015	Batch 2	HK$3.56	600,000	two year from the date of grant	5 years
7 October 2015	Batch 3	HK$3.56	600,000	three year from the date of grant	5 years
		HK$3.56	3,300,000

(b) The number and weighted average exercise prices of share options

	At 30 June		At 31 December
	2019		2018
	(Unaudited)		(Audited)
	Weighted average	Number of	Weighted average	Number of
	Exercise price	options	exercise price	options
Outstanding at the 1 January	HK$3.56	700,000	HK$3.56	700,000
Lapsed during the period/year	HK$3.36	(400,000)	-	-
Outstanding at 30 June/31 December	HK$3.56	300,000	HK$3.56	700,000
Exercisable at 30 June/31 December	HK$3.56	300,000	HK$3.56	700,000

During the six months ended 30 June 2019, Nil (31 December 2018: Nil) share options were granted and 300,000 (31

December 2018: 700,000) of share options became exercisable as at 30 June 2019.

The shares options outstanding as at 30 June 2019 had an exercise price of HK$3.56 (2018: HK$3.56) and a weighted

average remaining contractual life of 3 years (31 December 2018: 3.5 years).

42	CHINA FORDOO HOLDINGS LIMITED
Interim Report 2019

Notes to the Unaudited Interim

Financial Report

(Expressed in Renminbi unless otherwise indicated)

20 Capital, reserves and dividends

(a) Dividends

No dividends were paid, declared or proposed during the period. The Directors do not recommend the payment of an interim dividend (2018: Nil).

(b) Share capital

Authorised and issued share capital

		At 30 June 2019		At 31 December 2018
		(Unaudited)			(Audited)
	Number	Amount	Number	Amount
	of shares	HK$'000	of shares	HK$'000
Authorised:
At 1 January/30 June/
31 December	1,000,000,000	10,000	1,000,000,000	10,000
	Number	Amount	Number	Amount
	of shares	HK$'000	RMB'000	of shares	HK$'000	RMB'000
Issued and fully paid:
At 1 January/30 June/
31 December	480,900,000	4,809	3,819	480,900,000	4,809	3,819

1. Nature and purpose of reserves
2. 1. Share premium
      The share premium represents the difference between the par value of the shares of the Company and proceeds received from the issuance of the shares of the Company.
      Under the Companies Law of the Cayman Islands, the share premium account of the Company may be applied for payment of distributions or dividends to the shareholders provided that immediately following the date on which the distribution or dividend is proposed to be paid, the Company is able to pay its debts as they fall due in the ordinary course of business.
   2. Statutory reserve
      As stipulated by regulations in the PRC, the Company's subsidiaries established and operated in the mainland China are required to appropriate 10% of their after-tax-profit (after offsetting prior year losses) as determined in accordance with the PRC accounting rules and regulations, to the statutory surplus reserve until the reserve balance reaches 50% of the registered capital. The transfer to this reserve must be made before distribution of profits to parent companies.
      The statutory reserve can be utilised, upon approval by the relevant authorities, to offset accumulated losses or to increase capital of the subsidiary, provided that the balance after such issue is not less than 25% of its registered capital.

CHINA FORDOO HOLDINGS LIMITED	43
Interim Report 2019

Notes to the Unaudited Interim

Financial Report

(Expressed in Renminbi unless otherwise indicated)

1. Capital, reserves and dividends (Continued)
2. 1. Nature and purpose of reserves (Continued)
   2. 1. Capital reserve
         On 30 April 2014, an amount payable of RMB39,023,000 had been waived by the ultimate controlling party, Mr.
         Kwok Kin Sun, and capitalised in capital reserve.
      2. Exchange reserve
         The exchange reserve comprises all foreign exchange differences arising from the translation of the financial statement of operations outside the mainland China.
      3. Share-basedpayment reserve
         Share-based payment reserve comprises the following:
      4. • The fair value of services provided by parties other than employees to the Group in connection with the listing of the Company and the services were settled by equity instrument of the Company. The relevant services are recognised in accordance with IFRS 2, Share-basedpayment. Share-based payment was vested pursuant to the listing of the Company on 16 July 2014. No transfer from the share-based reserve to the share premium account during the period of 2019.
         • The portion of the grant date fair value of share options granted to employees of the Group that has been recognised in accordance with the accounting policy adopted for the share-based payments.
3. Commitments
4. 1. Capital commitments

Capital commitments of the Group in respect of construction in progress outstanding at 30 June 2019 that were not provided for in the interim financial information were as follows:

At 30 June At 31 December

20192018

RMB'000 RMB'000

(Unaudited) (Audited)

Contracted for	172,983	182,866

44	CHINA FORDOO HOLDINGS LIMITED
Interim Report 2019

Notes to the Unaudited Interim

Financial Report

(Expressed in Renminbi unless otherwise indicated)

21 Commitments (Continued)

(b) Operating leases

The total future minimum lease payments under non-cancellable operating leases are payable as follows:

	At 30 June At 31 December
	2019	2018
	RMB'000	RMB'000
	(Unaudited)	(Audited)
Within 1 year	-	1,177
After 1 year but within 2 years	-	438
	-	1,615
None of the leases includes contingent rentals.

22 Material related party transactions

In addition to the related party information disclosed elsewhere in the condensed consolidated interim financial statements, the Group entered into the following material related party transactions.

(a) Key management personnel compensation

Remuneration for key management personnel of the Group for the period, including amounts paid to the Company's directors, is as follows:

	Six months ended 30 June
	2019	2018
	RMB'000	RMB'000
	(Unaudited)	(Audited)
Short-term employee benefits	1,043	1,416
Contributions to retirement benefit scheme	23	19
Equity-settledshare-based payment expenses for employees	-	27
	1,066	1,462
The total remuneration is included in "staff costs" (see note 6(b)).

CHINA FORDOO HOLDINGS LIMITED	45
Interim Report 2019

Notes to the Unaudited Interim

Financial Report

(Expressed in Renminbi unless otherwise indicated)

22 Material related party transactions (Continued)

(b) Balances with related parties

The Group had the following significant balances with its related parties as at 30 June 2019:

Due to controlling shareholders
	At 30 June At 31 December
	2019	2018
	RMB'000	RMB'000
	(Unaudited)	(Audited)
Non-trade related
Mr. Kwok Kin Sun (Note)	363	363
Mr. Kwok Hon Fung (Note)	2	2

Balances with shareholders were unsecured and non-interest-bearing and had no fixed repayment terms.

Note:

Mr. Kwok Kin Sun and Mr. Kwok Hon Fong are collectively the directors of the Company and the shareholders of the Group.

23 Events after the reporting date

Proposed Share Subdivision

On 28 August 2019, the Board proposed to subdivide each existing issued and unissued ordinary share of HK$0.01 each in the share capital of the Company into four ordinary shares of HK$0.0025 each in the share capital of the Company (the "Share Subdivision"). The Share Subdivision is subject to approval by shareholders at the extraordinary general meeting of the Company. The circular containing, amongst others, further details of the Share Subdivision will be despatched to Shareholders on or around Tuesday, 24 September 2019. For further details of the Share Subdivision, please refer to the announcement of the Company dated 28 August 2019.

46	CHINA FORDOO HOLDINGS LIMITED
Interim Report 2019

Other Information

Disclosure of Interests

Directors' and chief executive's interests and short positions in Shares, underlying Shares and debentures of the Company or any associated corporations

As at 30 June 2019, the interests and short positions of each Director and chief executive of the Company in the Shares, underlying Shares and debentures of the Company and its associated corporations (within the meaning of Part XV of the Securities and Futures Ordinance ("SFO")), as recorded in the register required to be kept by the Company pursuant to Section 352 of the SFO, or as otherwise notified to the Company and the Stock Exchange pursuant to the Model Code for Securities Transactions by Directors of Listed Issuers ("Model Code") set out in Appendix 10 to the Rules Governing the Listing of Securities on the Stock Exchange (the "Listing Rules"), were as follows:

Interests in Shares, underlying Shares and debentures and associated corporations:

			Number of
			underlying
		Number of	Shares under		Approximate
		issued ordinary	the share		percentage of
Name	Nature of interest	Shares held	options held (3)	Total	shareholding
Mr. Kwok Kin Sun(1)	Interest in a controlled corporation	231,550,000	-	231,550,000	48.15%
Mr. Kwok Hon Fung(2)	Interest in a controlled corporation	50,400,000	-	50,400,000	10.48%
Mr. Cheung Chiu Tung	Beneficial owner	-	300,000	300,000	0.0624%

Notes:

1. Mr. Kwok Kin Sun, the chairman of the Board and an executive Director, is deemed to be interested in all the Shares held by Everkept Limited ("Everkept") by reason of his 70% interest in the share capital of Everkept.
2. Mr. Kwok Hon Fung, an executive Director and the son of Mr. Kwok Kin Sun, is deemed to be interested in all the Shares held by Equal Plus Limited ("Equal Plus") by reason of his 100% interest in the share capital of Equal Plus.
3. These are Shares subject to the exercise of the share options granted by the Company under the Share Option Scheme on 7 October 2015. Details of the Share Option Scheme are set out in the section headed "Share Option Scheme" below.

Save as disclosed above, as at 30 June 2019, the Company was not aware of any person or corporation having an interest or a short position in the Shares, underlying Shares or debentures of the Company or any of its associated corporations that was required to be recorded pursuant to Section 352 of the SFO, or as otherwise notified to the Company and the Stock Exchange pursuant to the Model Code.

Directors' Rights to Acquire Shares or Debentures

Save as disclosed in "Share Option Scheme" below, during the reporting period, no rights to acquire benefits by means of acquisition of Shares in or debenture of the Company were granted to any Directors or their respective spouse or minor children, or were any such rights excised by them; nor was the Company, or any of its subsidiaries a party to any arrangement which enabled the Directors to acquire such rights in and other body corporate.

CHINA FORDOO HOLDINGS LIMITED	47
Interim Report 2019

Other Information

Substantial Shareholders' and Other Persons' Interests and short positions in the Shares and Underlying Shares of the Company

As at 30 June 2019, so far as the Directors are aware, having made all reasonable enquiries, the following interest of 5% or more of the issued share capital of the Company (other than the interests of the Directors and chief executives as disclosed above) were recorded in the register of interests required to be kept by the Company pursuant to Section 336 of Part XV of the SFO:

				Approximate
			Number of	percentage of
Name	Position	Nature of interest	Shares	shareholding
Donghai International Financial	Long	Security interest in Shares	231,550,000	48.15%
Holdings Company Limited
東海證券股份有限公司	Long	Security interest in Shares	231,550,000	48.15%
Ms. Wong Tung Yam(1)	Long	Interest of spouse	231,550,000	48.15%
Everkept	Long	Beneficial owner	231,550,000	48.15%
Equal Plus	Long	Beneficial owner	50,400,000	10.48%
Mighty Mark Investments Limited	Long	Beneficial owner	42,560,353	8.85%
Ms. Cheng Weihong(2)	Long	Interest in a controlled	42,560,353	8.85%
		corporation
Mr. TONG Shiping(3)	Long	Interest of spouse	42,560,353	8.85%
Asia United Fund	Long	Investment manager	42,105,805	8.76%

Note:

1. Ms. Wong Tung Yam, the spouse of Mr. Kwok Kin Sun, the chairman of the Board and an executive Director, is deemed to be interested in all the Shares in which
   Mr. Kwok Kin Sun is interested.
2. Ms. Cheng Weihong is deemed to be interested in all the Shares held by Mighty Mark Investments Limited ("Mighty Mark") by reason of her 100% interest in the share capital of Mighty Mark.
3. Mr. Tong Shiping, the spouse of Ms. Cheng Weihong, is deemed to be interested in all the Shares in which Ms. Cheng Weihong is interested.

Same as disclosed above, as at 30 June 2019, the Company was not aware of any person or corporation having an interest or a short position in the Shares and underlying Shares which were required to be disclosed to the Company under the provisions of Division 2 and 3 of Part XV of the SFO, or which were recorded in the register required to be under section 336 of Part XV of the SFO.

Sufficiency of Public Float

Based on the publicly available information and to the best of the Directors' knowledge, information and belief at the date of this report, the Company has maintained sufficient public float as required under the Listing Rules during the six months ended 30 June 2019.

Review of Interim Results

The Company has an audit committee (the "Audit Committee") which comprises three independent non-executive Directors, namely Mr. Poon Yick Pang Philip (Chairman of the Audit Committee), Mr. Cheung Chiu Tung and Ms. Huang Yumin. The Audit Committee has reviewed with the management the accounting principles and practices adopted by the Company and discussed auditing, financial reporting, internal control and risk management systems, and has reviewed the unaudited interim financial report for the six months ended 30 June 2019.

48	CHINA FORDOO HOLDINGS LIMITED
Interim Report 2019

Other Information

Share Option Scheme

The Company adopted a Share Option Scheme on 9 June 2014 (the "Share Option Scheme") for the purpose of providing incentives and rewards to eligible participants who contribute to the Group. On 7 October 2015, the Company granted options to subscribe for an aggregate of 3,300,000 ordinary Shares of HK$0.01 each in the share capital of the Company to Eligible Persons of the Group under the Share Option Scheme at an exercise price of HK$3.56 per Share. Details of the Share Option Scheme was set out in the 2018 Annual Report of the Company.

Details of movements of the share options during the six months ended 30 June 2019 are set out below:

								Number of Share Options
		Exercise				As at					As at
		price				1 January					30 June
Category	Date of grant	(HK$)	Exercisable period	2019	Granted	Exercised	Cancelled	Lapsed	2019
Director
Cheung Chiu Tung	7 October 2015	3.56	7	October 2016 to 6 October 2021	100,000	-	-	-	-	100,000
	7 October 2015	3.56	7 October 2017 to 6 October 2022	100,000	-	-	-	-	100,000
	7 October 2015	3.56	7	October 2018 to 6	October 2023	100,000	-	-	-	-	100,000
Sub-total						300,000	-	-	-	-	300,000
Employee	7 October 2015	3.56	7	October 2016 to 6	October 2021	-	-	-	-	-	-
	7 October 2015	3.56	7 October 2017 to 6 October 2022	200,000	-	-	-	(200,000)	-
	7 October 2015	3.56	7	October 2018 to 6	October 2023	200,000	-	-	-	(200,000)	-
Sub-total						400,000	-	-	-	(400,000)	-
Total						700,000	-	-	-	(400,000)	300,000

As disclosed above, the exercise period of 100,000 of Shares is from 7 October 2016 to 6 October 2021, the exercise period of 100,000 of Shares is from 7 October 2017 to 6 October 2022, and the exercise period of 100,000 of Shares is from 7 October 2018 to 6 October 2023, so the total number of Shares available for issue under the Share Option Scheme is 300,000, representing 0.06% of the Company's issued share capital as at 30 June 2019.

Purchase, Sale or Redemption of The Company's Listed Securities

Neither the Company nor any of its subsidiaries had purchased, sold or redeemed any of the Company's listed securities during the six months ended 30 June 2019.

CHINA FORDOO HOLDINGS LIMITED	49
Interim Report 2019

Other Information

Compliance with the Corporate Governance Code

The Company has complied with all applicable code provisions of the Corporate Governance Code as set out in Appendix 14 to the Listing Rules (the "Corporate Governance Code") during the six months ended 30 June 2019, except for a deviation from Code provision A.6.7.

Under Code provision A.6.7, independent non-executive directors and other non-executive directors should attend general meetings and develop a balance understanding of the view of the shareholders. Due to other pre-arranged business commitments, Mr. Cheung Chiu Tung and Ms. Huang Yumin, both independent non-executive Directors, were not able to attend the 2019 Annual General Meeting held on 31 May 2019.

In addition, the Board currently comprises three executive Directors and three independent non-executive Directors, with independent non-executive Directors representing 50% of the Board, which is higher than the requirement of the Listing Rules. Such a high percentage of independent non-executive Directors on the Board can ensure their views carrying significant weight and reflecting independence of the Board. On the above basis, the Board considers that the current structure will not impair the balance of power and the authority of the Board. The Board shall nevertheless review the structure and composition of the Board from time to time in light of prevailing circumstances, to maintain a high standard of corporate governance practices of the Company.

Compliance with the Model Code for Securities Transactions by Directors of Listed Issuers

The Company has adopted the code of conduct regarding securities transactions by directors (the "Code of Conduct") on terms no less than the required standard of dealings set out in the Model Code in Appendix 10 of the Listing Rules. Having made specific enquiries to all Directors, the Company confirmed that all Directors had complied with the required standard of dealings under the Code of Conduct throughout the reporting period.

Updates on Compliance and Regulatory Matters as Disclosed in the Prospectus

Our Directors are not aware of any legal, arbitration or administrative proceedings against us, including the matter described above, that will have a material adverse effect on our business, financial condition or results of operations.

Events After Reporting Period

Proposed Share Subdivision

On 28 August 2019, the Board proposed to subdivide each existing issued and unissued ordinary share of HK$0.01 each in the share capital of the Company into four ordinary shares of HK$0.0025 each in the share capital of the Company (the "Share Subdivision"). The Share Subdivision is subject to approval by shareholders at the extraordinary general meeting of the Company. The circular containing, amongst others, further details of the Share Subdivision will be despatched to Shareholders on or around Tuesday, 24 September 2019. For further details of the Share Subdivision, please refer to the announcement of the Company dated 28 August 2019.

On behalf of the Board

Kwok Kin Sun

Chairman and Executive Director

Hong Kong

28 August 2019

50	CHINA FORDOO HOLDINGS LIMITED
Interim Report 2019