Kader : INTERIM REPORT 2020

KADERHOLDINGSCOMPANYLIMITED

(Incorporated in Bermuda with limited liability)

INTERIMREPORT2020

(Stock Code : 180)

Interim Results For the Six Months Ended 30 June 2020

CONSOLIDATED STATEMENT OF PROFIT OR LOSS

For the six months ended 30 June 2020 - unaudited

		Six months ended 30 June
		2020		2019
	Note	HK$'000	HK$'000
Revenue	5 & 6	114,292		196,010
Other income		4,019		9,094
Changes in inventories of finished goods and
work in progress		8,401		13,001
Cost of purchase of finished goods		(12,166)	(8,525)
Raw materials and consumables used		(12,867)	(44,645)
Staff costs		(76,663)	(96,300)
Depreciation		(16,940)	(18,358)
Other operating expenses		(51,535)	(56,706)
Loss from operations		(43,459)	(6,429)
Finance costs	7(a)	(5,934)	(5,566)
Share of profits less losses of associates		(16,977)	(7,147)
Deficit on revaluation of investment properties	10(d)	(11,084)	-
Loss before taxation	7	(77,454)	(19,142)
Income tax expense	8	(313)	(1,129)
Loss for the period		(77,767)	(20,271)
Attributable to:
Equity shareholders of the Company		(78,229)	(20,735)
Non-controlling interests		462		464
Loss for the period		(77,767)	(20,271)
Loss per share	9
Basic		(8.23)¢		(2.18)¢
Diluted		(8.23)¢		(2.18)¢

The notes on pages 8 to 23 form part of this interim financial report. Details of dividends payable to equity shareholders of the Company are set out in note 15(a).

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CONSOLIDATED STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME

For the six months ended 30 June 2020 - unaudited

	Six months ended 30 June
	2020		2019
	HK$'000	HK$'000
Loss for the period	(77,767)	(20,271)
Other comprehensive income for the period:
(after tax and reclassification adjustments)
Item that may be reclassified subsequently to
profit or loss:
Exchange differences on translation of financial
statements of subsidiaries outside Hong Kong,
net of HK$Nil tax	(3,953)	265
Total comprehensive income for the period	(81,720)	(20,006)
Attributable to:
Equity shareholders of the Company	(82,146)	(20,459)
Non-controlling interests	426		453
Total comprehensive income for the period	(81,720)	(20,006)

The notes on pages 8 to 23 form part of this interim financial report.

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CONSOLIDATED STATEMENT OF FINANCIAL POSITION

As at 30 June 2020 - unaudited

		At	At
		30 June	31 December
		2020		2019
	Note	HK$'000	HK$'000
Non-current assets
Investment properties	10	1,996,924		2,007,898
Other property, plant and equipment	10	210,517		225,532
		2,207,441		2,233,430
Intangible assets		349		366
Interests in associates		76,990		82,855
Other financial assets		33,153		24,955
Deposits and prepayments		2,953		2,028
Deferred tax assets		9,492		9,709
		2,330,378		2,353,343
Current assets
Other financial assets		5,000		5,000
Trading securities		12,951		7,892
Inventories	11	238,436		239,679
Current tax recoverable		41		7,088
Loans to an associate		36,971		23,709
Trade and other receivables	12	86,175		129,210
Cash and cash equivalents	13	87,410		107,978
		466,984		520,556
Current liabilities
Trade and other payables and contract
liabilities	14	129,569		119,662
Bank loans		319,877		323,733
Lease liabilities		8,611		10,194
Current tax payable		30,856		20,799
		488,913		474,388
Net current (liabilities)/assets		(21,929)	46,168
Total assets less current liabilities carried
forward		2,308,449		2,399,511

- 3 -

CONSOLIDATED STATEMENT OF FINANCIAL POSITION (Continued)

As at 30 June 2020 - unaudited

		At		At
		30 June		31 December
		2020	2019
	Note	HK$'000		HK$'000
Total assets less current liabilities brought
forward		2,308,449	2,399,511
Non-current liabilities
Lease liabilities		46,091	55,412
Rental deposits		3,615	3,615
Deferred tax liabilities		24,330	24,377
Accrued employee benefits		64	38
		74,100	83,442
NET ASSETS		2,234,349	2,316,069
CAPITAL AND RESERVES
Share capital	15(b)	95,059	95,059
Reserves		2,136,138	2,218,284
Total equity attributable to equity
shareholders of the Company		2,231,197	2,313,343
Non-controlling interests		3,152	2,726
TOTAL EQUITY		2,234,349	2,316,069

The notes on pages 8 to 23 form part of this interim financial report.

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CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

For the six months ended 30 June 2020 - unaudited

						Attributable to equity shareholders of the Company
														Land and
														buildings									Non-
		Share	Share		Capital	Contributed	Exchange	revaluation		Retained					controlling		Total
		capital	premium		reserve		surplus		reserve		reserve		profits		Total		interests		equity
	Note	HK$'000	HK$'000		HK$'000		HK$'000		HK$'000		HK$'000		HK$'000		HK$'000		HK$'000		HK$'000
Balance at 1 January 2019		95,059		185,138		10,815		173,397	(66,073)	62,667	1,831,637		2,292,640		2,462		2,295,102
Changes in equity for the six months
ended 30 June 2019:
Total comprehensive income for the period		-	-		-		-	276			-	(20,735)	(20,459)	453		(20,006)
Dividends approved in
respect of the previous year	15(a)	-	-		-		-		-		-	(9,506)	(9,506)		-	(9,506)
Balances at 30 June 2019 and 1 July 2019
	95,059		185,138	10,815		173,397	(65,797)	62,667	1,801,396		2,262,675		2,915		2,265,590
Changes in equity for the six months
ended 31 December 2019:
Total comprehensive income for the period		-	-		-		-	44,297			-	6,371		50,668		(189)	50,479
Balances at 31 December 2019 and
1 January 2020		95,059		185,138	10,815	173,397	(21,500)	62,667	1,807,767		2,313,343		2,726		2,316,069
Changes in equity for the six months
ended 30 June 2020:
Total comprehensive income for the period		-	-		-		-	(3,917)		-	(78,229)	(82,146)	426		(81,720)
Balance at 30 June 2020
	95,059		185,138	10,815		173,397	(25,417)	62,667	1,729,538		2,231,197		3,152		2,234,349

The notes on pages 8 to 23 form part of this interim financial report.

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CONDENSED CONSOLIDATED CASH FLOW STATEMENT

For the six months ended 30 June 2020 - unaudited

	Six months ended 30 June
	2020		2019
Note	HK$'000	HK$'000
Operating activities
Cash generated from operations	11,610		8,750
Tax refunded/(paid)	17,261		(9,466)
Net cash generated from/(used in) operating
activities	28,871		(716)
Investing activities
Payment for the purchase of property, plant
and equipment	(10,531)	(13,244)
Proceeds from sale of property, plant and
equipment	30		1,275
Payment for the purchase of trading securities	(8,566)	(2,068)
Payment for the purchase of other financial
assets	(7,800)	(1,092)
Proceeds from sales of trading securities	5,473		767
Proceeds from sales of other financial assets	-	2,949
Increase in non-current deposits and
prepayments	(925)	(2)
Increase in amounts due from associates	(3)	(6)
Loans advanced to an associate	(13,262)	(452)
Loans repaid from an associate	-	5,935
Interest received	1,763		945
Net cash used in investing activities	(33,821)	(4,993)

- 6 -

CONDENSED CONSOLIDATED CASH FLOW STATEMENT (Continued)

For the six months ended 30 June 2020 - unaudited

		Six months ended 30 June
		2020		2019
	Note	HK$'000	HK$'000
Financing activities
Capital element of lease rentals paid		(4,308)	(4,987)
Interest element of lease rentals paid		(1,171)	(1,582)
Proceeds from new bank loans		239,000		190,000
Repayment of bank loans		(242,856)	(176,468)
Dividend paid to equity shareholders of the
Company		-	(9,506)
Interest paid		(4,763)	(3,984)
Net cash used in financing activities		(14,098)	(6,527)
Net decrease in cash and cash equivalents		(19,048)	(12,236)
Cash and cash equivalents at 1 January	13	107,978		95,886
Effect of foreign exchanges rates changes		(1,520)	45
Cash and cash equivalents at 30 June	13	87,410		83,695

The notes on pages 8 to 23 form part of this interim financial report.

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NOTES TO THE UNAUDITED INTERIM FINANCIAL REPORT

1. Reporting entity

Kader Holdings Company Limited is a company domiciled in Bermuda. The interim financial report of the Company as at and for the six months ended 30 June 2020 comprises the Company and its subsidiaries (together referred to as the "Group") and the Group's interests in associates.

The financial report of the Group as at and for the year ended 31 December 2019 are available upon request from the Company's principal office at 11/F, 22 Kai Cheung Road, Kowloon Bay, Kowloon, Hong Kong or at http://www.kaderholdings.com.

2. Basis of preparation

The interim financial report for the six months ended 30 June 2020 comprises the Group and the Group's interests in associates.

The interim financial report 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 Hong Kong Accounting Standard ("HKAS") 34, Interim financial reporting, issued by the Hong Kong Institute of Certified Public Accountants ("HKICPA").

The interim financial report was approved by the Board of Directors and authorised for issue on 28 August 2020.

The interim financial report has been prepared in accordance with the same accounting policies adopted in the 2019 annual financial statements, except for the accounting policy changes that are expected to be reflected in the 2020 annual financial statements. Details of any changes in accounting policies are set out in note 3.

The preparation of the interim financial report in conformity with HKAS 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.

The Group recorded a loss from operations of HK$43,459,000 during the six months ended 30 June 2020 and net current liabilities of HK$21,929,000 as at 30 June 2020. These financial statements have been prepared on a going concern basis notwithstanding the Group's loss from operations and the net current liabilities of the Group because the directors are of the opinion that the Group would have adequate funds to meet its liabilities as and when they fall due for at least twelve months from 30 June 2020.

This interim financial report contains condensed consolidated 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 the Group since the 2019 annual financial statements. The condensed consolidated interim financial statements and notes thereon do not include all of the information required for full set of financial statements prepared in accordance with Hong Kong Financial Reporting Standards ("HKFRSs").

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NOTES TO THE UNAUDITED INTERIM FINANCIAL REPORT (Continued)

3. Changes in accounting policies

The HKICPA has issued several amendments to HKFRSs that are first effective for the current accounting period of the Group. None of these developments has had a material effect on how the Group's results and the financial position for the current or prior periods have been prepared or presented in this interim financial report.

The Group has not applied any new standard or interpretation that is not yet effective for the current accounting period.

4. Estimates

The preparation of interim financial report requires management to make judgements, estimates and assumptions that affect the application of accounting policies and the reported amounts of assets and liabilities, income and expense. Actual results may differ from these estimates.

In preparing this interim financial report, the significant judgements made by management in applying the Group's accounting policies and the key sources of estimation uncertainty were the same as those that applied to the consolidated financial statements as at and for the year ended 31 December 2019.

5. Revenue and segment reporting

The Group manages its businesses by divisions, which are organised by business lines. In a manner consistent with the way in which information is reported internally to the Group's most senior executive management for the purposes of resource allocation and performance assessment, the Group has identified the following three reportable segments. No operating segments have been aggregated to form the following reportable segments.

Toys and model trains:	The manufacture and sale of plastic, electronic and stuffed toys
	and model trains. These products are manufactured in the Group's
	manufacturing facilities located in Mainland China.
Property investment:	The leasing of office premises and industrial building to generate
	rental income and to gain from the appreciation in the properties'
	value in the long term.
Investment holding:	The investment in securities.

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NOTES TO THE UNAUDITED INTERIM FINANCIAL REPORT (Continued)

5. Revenue and segment reporting (Continued)

(a)	Disaggregation of revenue
	Disaggregation of revenue from contracts with customers by significant category of
	revenue is as follows:
		Six months ended 30 June
		2020	2019
		HK$'000		HK$'000
	Revenue from contracts with customers
	within the scope of HKFRS 15
	- Sales of goods	94,443	172,939
	Revenue from other sources
	- Gross rentals from investment properties	19,849	23,071
		114,292	196,010

The Group's customer base is diversified and includes one (2019: one) customer with whom transactions have exceeded 10% of the Group's revenue. In 2020, revenue from sales of toys and model trains to this customer (2019: one), including sales to entities which are known to the Group to be under common control of this customer, amounted to approximately HK$17,534,000 (2019: HK$68,721,000) and arose in the North America (2019: North America) geographical region in which the toys and model trains division is active.

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NOTES TO THE UNAUDITED INTERIM FINANCIAL REPORT (Continued)

5. Revenue and segment reporting (Continued)

(b)	Segment results, assets and liabilities
	For the purpose of assessing segment performance and allocating resources between
	segments, the Group's senior executive management monitors the results, assets and
	liabilities attributable to each reportable segment on the following bases:
	Segment assets include all tangible assets and current assets with the exception of
	intangible assets, interests in associates, deferred tax assets, current tax recoverable,
	cash and cash equivalents, loans to an associate and other corporate assets. Segment
	liabilities include all liabilities with the exception of amount due to an associate,
	current tax payable, deferred tax liabilities and other corporate liabilities.
	Revenue and expenses are allocated to the reportable segments with reference to
	sales generated by those segments and the expenses incurred by those segments or
	which otherwise arise from the depreciation or amortisation of assets attributable to
	those segments.
	The measure used for reporting segment profit is "adjusted EBITDA" i.e. "adjusted
	earnings before interest, taxes, depreciation and amortisation", where "interest" is
	regarded as including investment income and "depreciation and amortisation" is
	regarded as including impairment losses on non-current assets. To arrive at adjusted
	EBITDA, the Group's earnings are further adjusted for items not specifically
	attributed to individual segments, such as share of profits less losses of associates
	and other head office or corporate administration costs.
	In addition to receiving segment information concerning adjusted EBITDA,
	management is provided with segment information concerning revenue (including
	inter-segment sales), interest income and expense from cash balances and
	borrowings managed directly by the segments, depreciation, amortisation and
	impairment losses and additions to non-current segment assets used by the segments
	in their operations. Inter-segment sales are priced with reference to prices charged
	to external parties for similar orders.

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NOTES TO THE UNAUDITED INTERIM FINANCIAL REPORT (Continued)

5. Revenue and segment reporting (Continued)

(b)	Segment results, assets and liabilities (Continued)
	Information regarding the Group's reportable segments as provided to the Group's
	most senior executive management for the purposes of resource allocation and
	assessment of segment performance for the period is set out below:
		Toys and model trains				Property investment	Investment holding				Total
	For the six months ended 30 June	2020		2019		2020	2019	2020		2019		2020		2019
						HK$'000 HK$'000				HK$'000 HK$'000	HK$'000			HK$'000				HK$'000 HK$'000
	Revenue from external customers	94,443		172,939		19,849		23,071		-				-	114,292		196,010
	Inter-segment revenue					-					-	929		868		-				-	929		868
	Reportable segment revenue	94,443		172,939		20,778	23,939	-				-	115,221		196,878
	Reportable segment (loss)/profit
	(adjusted EBITDA)	(41,434)	(12,273)	14,375	17,927	(3,462)	(2,802)	(30,521)	2,852
	Additions to non-current segment assets
	during the period	10,304		11,913		1,643	10,636	7,800		1,092		19,747		23,641
		Toys and model trains				Property investment	Investment holding				Total
						At				At				At			At	At			At				At			At
						30 June	31 December				30 June	31 December	30 June	31 December				30 June	31 December
		2020		2019		2020	2019		2020		2019		2020		2019
						HK$'000 HK$'000				HK$'000 HK$'000	HK$'000 HK$'000				HK$'000 HK$'000
	Reportable segment assets	509,232		584,877		2,036,725		2,030,291		356,801		366,538		2,902,758		2,981,706
	Reportable segment liabilities	744,841		783,943		44,084	43,187	5,517		6,111		794,442		833,241

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NOTES TO THE UNAUDITED INTERIM FINANCIAL REPORT (Continued)

5. Revenue and segment reporting (Continued)

(c)	Reconciliations of reportable segment revenues, profit, assets and liabilities
		Six months ended 30 June
		2020		2019
		HK$'000	HK$'000
	Revenue
	Reportable segment revenue	115,221		196,878
	Elimination of inter-segment revenue	(929)	(868)
	Consolidated revenue	114,292		196,010
	Profit
	Reportable segment (loss)/profit	(30,521)	2,852
	Elimination of inter-segment profit	-	-
	Reportable segment (loss)/profit derived from
	Group's external customers	(30,521)	2,852
	Other income	4,019		9,094
	Depreciation and amortisation	(16,957)	(18,375)
	Finance costs	(5,934)	(5,566)
	Share of profits less losses of associates	(16,977)	(7,147)
	Deficit on revaluation of investment properties	(11,084)	-
	Consolidated loss before taxation	(77,454)	(19,142)

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NOTES TO THE UNAUDITED INTERIM FINANCIAL REPORT (Continued)

5.	Segment reporting (Continued)
	(c)	Reconciliations of reportable segment revenues, profit, assets and liabilities
		(Continued)
			At	At
			30 June	31 December
			2020		2019
			HK$'000	HK$'000
		Assets
		Reportable segment assets	2,902,758		2,981,706
		Elimination of inter-segment receivables	(316,649)	(339,512)
			2,586,109		2,642,194
		Intangible assets	349		366
		Interests in associates	76,990		82,855
		Loans to an associate	36,971		23,709
		Current tax recoverable	41		7,088
		Deferred tax assets	9,492		9,709
		Cash and cash equivalents	87,410		107,978
		Consolidated total assets	2,797,362		2,873,899
		Liabilities
		Reportable segment liabilities	794,442		833,241
		Elimination of inter-segment payables	(316,649)	(339,512)
			477,793		493,729
		Amount due to an associate	30,034		18,925
		Current tax payable	30,856		20,799
		Deferred tax liabilities	24,330		24,377
		Consolidated total liabilities	563,013		557,830

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NOTES TO THE UNAUDITED INTERIM FINANCIAL REPORT (Continued)

6. Seasonality of operations

The Group's toys and model trains division, a separate business segment (see note 5), on average experiences higher sales in the second half of the year, compared to the first half of the year, due to increased demand for its products during the holiday season. As such, the first half of the year generally reports lower revenue and segment results for this segment than the second half.

7. Loss before taxation

Loss before taxation is arrived at after charging/(crediting):

		Six months ended 30 June
		2020		2019
		HK$'000	HK$'000
(a)	Finance costs	4,763
	Interest on bank loans		3,984
	Interest on lease liabilities	1,171		1,582
		5,934		5,566
(b)	Other items
74,554
	Cost of inventories (note 11)		119,921
	Amortisation of intangible assets	17		17
	Depreciation charge	11,082
	- owned property, plant and equipment		12,423
	- right-of-use assets	5,858		5,935
	Net gain on disposal of property, plant and	(30)
	equipment (note 10(c))	(1,273)
	Net realised and unrealised gains on trading	(1,907)
	securities	(958)
	Net realised and unrealised gains on investments not	(382)
	held for trading	(1,260)
	Dividend and interest income	(2,049)	(945)

1. Other operating expenses
   Other operating expenses for the period included:

Auditors' remuneration	2,408	2,093
Advertising and promotion	3,707	6,654
Building management office and security	2,165
service fees	2,106
Fuel, electricity and water	4,331	6,071
Government rent and rates	1,298	1,330
Insurance	2,056	2,115
Legal and professional fee	2,710	2,307
Postage, telephone and fax	1,075	1,130
Repair and maintenance	5,244	2,504
Royalties, commission and sales service fee	4,041	3,192
Subcontracting fee	9,669	12,039
Tools and consumables	765	1,797
Transportation and travelling	4,568	4,568

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NOTES TO THE UNAUDITED INTERIM FINANCIAL REPORT (Continued)

8.	Income tax expense
		Six months ended 30 June
		2020		2019
		HK$'000	HK$'000
	Current tax - Hong Kong Profits Tax	-	837
	Current tax - Outside Hong Kong	110		951
	Deferred tax	203		(659)
	Income tax expense	313		1,129

The provision for Hong Kong Profits Tax is calculated by applying the estimated annual effective tax rate of 16.5% (2019: 16.5%) to the six months ended 30 June 2020. Taxation for subsidiaries outside Hong Kong is similarly calculated using the estimated annual effective rates of taxation that are expected to be applicable in the relevant countries.

9. Loss per share

(a) Basic loss per share

The calculation of basic loss per share is based on the loss attributable to ordinary equity shareholders of the Company of HK$78,229,000 (six months ended 30 June 2019: HK$20,735,000) and the weighted average of 950,588,000 ordinary shares (six months ended 30 June 2019: 950,588,000 ordinary shares) in issue during the interim period.

(b) Diluted loss per share

The Company did not have any dilutive potential ordinary shares outstanding during both the current and prior periods. Accordingly, diluted loss per share is the same as the basic loss per share for both the current and prior periods.

- 16 -

NOTES TO THE UNAUDITED INTERIM FINANCIAL REPORT (Continued)

10.	Investment properties and other property, plant and equipment
	(a)	Right-of-use assets
		During the six months ended 30 June 2020, additions to right-of-use assets were
		HK$601,000 (six months ended 30 June 2019: HK$10,633,000). This amount
		included the additions of a leasehold property of HK$110,000 (six months ended 30
		June 2019: HK$10,633,000) and the remainder of HK$491,000 (six months ended
		30 June 2019: HK$Nil) related to the capitalised lease payments payable under new
		lease agreements of other items of plant and equipment.
	(b)	Acquisitions
		During the six months ended 30 June 2020, the Group acquired items of property,
		plant and equipment with an aggregate cost of HK$11,022,000 (six months ended
		30 June 2019: HK$22,547,000).
	(c)	Disposals
		Items of other property, plant and equipment with cost and net book value of
		HK$5,936,000 and HK$Nil respectively were disposed of during the six months
		ended 30 June 2020 (six months ended 30 June 2019: HK$15,541,000 and
		HK$3,000), resulting in a gain on disposal of HK$30,000 (six months ended 30
		June 2019: HK$1,273,000).
	(d)	Valuation
		The valuation of investment properties carried at fair value was updated at 30 June
		2020 by the Group's independent valuer using the same valuation techniques as
		were used by this valuer when carrying out the December 2019 valuations.

As a result of the update, a net loss of HK$11,084,000 (six months ended 30 June 2019: HK$Nil) has been recognised in profit or loss for the period in respect of investment properties.

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NOTES TO THE UNAUDITED INTERIM FINANCIAL REPORT (Continued)

11. Inventories

The analysis of the amount of inventories recognised as an expense and included in profit or loss is as follows:

	Six months ended 30 June
	2020		2019
	HK$'000	HK$'000
Carrying amount of inventories sold	73,537		119,616
Write-down of inventories	1,709		3,200
Reversal of write-down of inventories	(692)	(2,895)
	74,554		119,921

The reversal of write-down of inventories made in current and prior periods arose upon sale of these inventories.

12. Trade and other receivables

Included in trade and other receivables are trade debtors, based on the invoice date and net of loss allowance, with the following aging analysis as at end of the reporting period:

	At		At
	30 June		31 December
	2020	2019
	HK$'000		HK$'000
Within 1 month	19,085	44,732
Over 1 month but within 3 months	14,454	32,899
Over 3 months but within 12 months	1,366	18,335
Over 12 months	123	351
Total trade debtors, net of loss allowance	35,028	96,317
Amounts due from related companies	2,084	2,084
Other debtors and prepayments	49,063	30,809
	86,175	129,210

Credit evaluations are performed on all customers requiring credit over a certain amount. Most of the trade debtors are due within ninety days from the date of billing.

- 18 -

NOTES TO THE UNAUDITED INTERIM FINANCIAL REPORT (Continued)

13.	Cash and cash equivalents
		At	At
		30 June	31 December
		2020		2019
		HK$'000	HK$'000
	Deposits with other financial institution	1,227		477
	Cash at bank and on hand	86,183		107,501
	Cash and cash equivalents in the condensed
	consolidated cash flow statement	87,410		107,978

14. Trade and other payables and contract liabilities

Included in trade and other payables and contract liabilities are trade creditors with the following ageing analysis as at the end of the reporting period:

	At	At
	30 June	31 December
	2020		2019
	HK$'000	HK$'000
Within 1 month	10,049		8,264
Over 1 month but within 3 months	4,401		6,315
Over 3 months but within 6 months	1,948		1,833
Over 6 months	565		598
Total trade creditors	16,963		17,010
Other creditors and accrued charges	57,973		63,664
Contract liabilities	10,890		9,566
Rental deposits	12,840		9,628
Amounts due to related companies	869		869
Amount due to an associate	30,034		18,925
	129,569		119,662

- 19 -

NOTES TO THE UNAUDITED INTERIM FINANCIAL REPORT (Continued)

15. Capital, reserves and dividends

(a) Dividends

Dividends payable to equity shareholders attributable to the previous financial year, approved and paid during the interim period

Six months ended 30 June

2020

2019

HK$'000

HK$'000

Final dividend in respect of the previous

financial year, approved and paid during the

following interim period, of HK Nil cents

per ordinary share (six months ended

30 June 2019: HK1.0 cent per ordinary

share)

-

9,506

(b)

Share capital

2020

2019

Number of

Number of

shares

shares

'000

HK$'000

'000

HK$'000

Authorised:

Ordinary shares of

HK$0.10 each

1,000,000

100,000

1,000,000

100,000

Ordinary shares,

issued and fully paid

At 1 January and

30 June

950,588

95,059

950,588

95,059

(c)

Share premium

The application of the share premium account is governed by section 40 of the Companies Act 1981 of Bermuda.

- 20 -

NOTES TO THE UNAUDITED INTERIM FINANCIAL REPORT (Continued)

16. Fair value measurement of financial instruments

(a)	Financial assets measured at fair value
	Fair value hierarchy
	The following table presents the fair value of the Group's financial instruments
	measured at the end of the reporting period on a recurring basis, categorised into the
	three-level fair value hierarchy as defined in HKFRS 13, Fair value measurement.
	The level into which a fair value measurement is classified is determined with
	reference to the observability and significance of the inputs used in the valuation
	technique as follows:
	-	Level 1 valuations: Fair value measured using only Level 1 inputs i.e.
		unadjusted quoted prices in active markets for identical assets or liabilities
		at the measurement date
	-	Level 2 valuations: Fair value measured using Level 2 inputs i.e.
		observable inputs which fail to meet Level 1, and not using significant
		unobservable inputs. Unobservable inputs are inputs for which market data
		are not available
	-	Level 3 valuations: Fair value measured using significant unobservable
		inputs

	Fair value as at
	30 June		Fair value measurements as at
	2020		30 June 2020 categorised into
			Level 1	Level 2	Level 3
	HK$'000		HK$'000	HK$'000	HK$'000
Recurring fair value
measurements
Other financial assets:
- Listed equity securities	5,336	5,336	-	-
- Unlisted equity securities	20,797		-	19,237			1,560
- Unlisted debt securities	7,020		-	-	7,020
	33,153	5,336	19,237			8,580
Trading securities:
- Listed equity securities	12,951	12,951	-	-
	46,104	18,287	19,237			8,580

- 21 -

NOTES TO THE UNAUDITED INTERIM FINANCIAL REPORT (Continued)

16. Fair value measurement of financial instruments (Continued)

(a)	Financial assets measured at fair value (Continued)
		Fair value as at
		31 December		Fair value measurements as at
		2019		31 December 2019 categorised into
				Level 1	Level 2	Level 3
		HK$'000		HK$'000	HK$'000	HK$'000
	Recurring fair value
	measurements
	Other financial assets:
	- Listed equity securities	5,882	5,882	-	-
	- Unlisted equity securities	12,053		-	10,493			1,560
	- Unlisted debt securities	7,020		-	-	7,020
		24,955	5,882	10,493			8,580
	Trading securities:
	- Listed equity securities	4,759	4,759	-	-
	- Listed debt securities	784	784	-	-
	- Unlisted debt securities	2,349		-	2,349			-
		7,892	5,543	2,349			-
		32,847	11,425	12,842			8,580

During the six months ended 30 June 2020, there were no transfers between Level 1 and Level 2, nor transfers into or out of Level 3 (2019: HK$Nil). The Group's policy is to recognise transfers between levels of fair value hierarchy as at the end of the reporting period in which they occur.

Information about Level 2 fair value measurements

The fair value is based on price quoted by financial institutions.

Information about Level 3 fair value measurements

The Group's Level 3 financial instruments represent unlisted equity and debt securities which their fair values are based on unobservable inputs. The directors perform the valuation on Level 3 financial instruments for financial reporting purposes. Their fair values have been determined with reference to the pricing of the recent transactions.

- 22 -

NOTES TO THE UNAUDITED INTERIM FINANCIAL REPORT (Continued)

16. Fair value measurement of financial instruments (Continued)

(a)	Financial assets measured at fair value (Continued)
	The movement during the period in the balance of these Level 3 fair value
	measurements is as follows:
		Unlisted equity		Unlisted debt
		securities		securities
		HK$'000		HK$'000
	Balance as at 1 January 2019,
	30 June 2019 and 1 July 2019	-		-
	Payment for purchases	1,560	7,020
	Balance as at 31 December 2019,
	1 January 2020 and 30 June 2020	1,560	7,020
(b)	Fair values of financial instruments carried at other than fair value

The carrying amounts of the Group's financial instruments carried at cost or amortised cost are not materially different from their fair values as at 31 December 2019 and 30 June 2020.

17. Commitments

Capital commitments outstanding at 30 June 2020 not provided for in the interim financial report

	At		At
	30 June		31 December
	2020	2019
	HK$'000		HK$'000
Contracted for the purchase of property,
plant and equipment	18,992	7,020

18. Contingent liabilities

As at 30 June 2020, the Group did not have any significant contingent liabilities.

19. Material related party transactions

(a)	As at 30 June 2020, the Group advanced funds totalling HK$40,156,000 (31
	December 2019: HK$40,153,000) to certain associates in which some of the
	directors of the Company have beneficial interests.
(b)	During the six months ended 30 June 2020, the Group acquired sanitary wares
	amounted to HK$6,000 (six months ended 30 June 2019: HK$248,000) from a
	related party in which a director of the Company has beneficial interests.

- 23 -

INTERIM DIVIDEND

The Board of Directors has resolved not to declare the payment of an interim dividend for the six months ended 30 June 2020 (2019: HK$Nil).

MANAGEMENT DISCUSSION AND ANALYSIS

RESULTS

During the period under review, the Group recorded a consolidated revenue of approximately HK$114.29 million, which decreased by approximately 41.69% as compared to approximately HK$196.01 million reported for the corresponding period last year. The loss attributable to equity shareholders amounted to approximately HK$78.23 million (six months ended 30 June 2019: approximately HK$20.74 million). The outbreak and spreading of the COVID-19 pandemic has notable effects on the economic activities and has negative impact on the performance of the Group for the first half year of 2020.

BUSINESS REVIEW

Toys and Model Trains

During the first half year of 2020, the revenue was approximately HK$94.44 million, representing a decrease of approximately 45.39% as compared to the corresponding period last year.

The Group will continue to explore new sales opportunities and manufacture high quality products with competitive prices to sustain its business.

Property Investment

During the period under review, the Group's rental income amounted to approximately HK$19.85 million, representing a decrease of approximately 13.96% as compared to the corresponding period last year and the occupancy rate of its investment properties was approximately 69% (30 June 2019: approximately 61%).

- 24 -

FINANCIAL REVIEW

Liquidity and Financial Resources

As at 30 June 2020, the Group's net asset value per share was approximately HK$2.35 (31 December 2019: approximately HK$2.44). The Group had net current liabilities of approximately HK$21.93 million (31 December 2019: net assets of approximately HK$46.17 million). Total bank borrowings were approximately HK$319.88 million (31 December 2019: approximately HK$323.73 million) while the secured total banking facilities were approximately HK$763.64 million (31 December 2019: approximately HK$741.65 million). Included in total bank borrowings were revolving loans of approximately HK$284.00 million (31 December 2019: approximately HK$310.06 million) which are intended to be rolled over upon maturity. The Group's financial gearing, based on the total bank borrowings compared to the total equity, was approximately 14.32% (31 December 2019: approximately 13.98%). The majority of borrowings are on floating interest rate terms. The Group will negotiate with banks to increase the banking facilities for working capital needs, if necessary.

Capital Structure

During the period under review, there were no changes in the Company's share capital.

Charges on Group Assets

As at 30 June 2020, investment properties and certain leasehold land and buildings of the Group with a net book value of approximately HK$1,908.26 million (31 December 2019: approximately HK$1,909.35 million) were mortgaged to various banks to secure the banking facilities granted to the Group.

Material Acquisitions and Disposals

There were no material acquisitions and disposals during the six months ended 30 June 2020.

- 25 -

RISKS AND UNCERTAINTIES

The Group's financial position and results of operations may be affected by a number of risks and uncertainties pertaining to the Group's businesses. The following are the key risks and uncertainties identified by the Group:

Business Risk

Performance of the Group's core business will be affected by various factors, including but not limited to economic conditions which would not be completely mitigated even with strict operational procedures.

Interest Rate Risk

The Group's interest rate risk arises primarily from bank borrowings. The Group analyses its interest rate exposure on a dynamic basis and manages this risk in a cost-effective manner.

Liquidity risk

Liquidity risk is the potential that the Group will be unable to meet its obligations when they fall due because of an inability to obtain adequate funding. In managing the liquidity risk, the Group monitors the cash flows and will negotiate with banks to increase the banking facilities, if necessary.

Customer risk

The sales to one of the Group's customers represented approximately 19% of the Group's sales during the six months ended 30 June 2020. The Group has endeavoured to diversify its customer base and provided quality products and services to the customers to maintain good relationship with them so as to mitigate the customer risk.

Foreign Exchange Rate Risk

Major assets, liabilities and transactions of the Group are denominated in Hong Kong dollars, United States dollars, Sterling Pounds ("GBP"), Renminbi Yuan ("RMB"), Japanese Yen ("JPY") and Euro ("EUR"). As such, the Group faces a certain degree of exchange rate risk mainly arising from GBP, RMB, JPY and EUR denominated transactions for which the exchange rate volatility is relatively high.

- 26 -

EMPLOYEES AND REMUNERATION POLICIES

As at 30 June 2020, the Group employed 1,248 (30 June 2019: 1,730) full time management, administrative and production staff in Hong Kong Special Administrative Region ("HKSAR"), Mainland China, the United States and Europe. The Group has seasonal fluctuations in the number of workers employed in its production plants while the number of management and administrative staff remains stable. The staff costs for the six months ended 30 June 2020 amounted to approximately HK$76.66 million (six months ended 30 June 2019: approximately HK$96.30 million). The Group remunerates its employees based on their performance, experience and prevailing industry practices. In the area of staff training, the Group encourages staff to participate in courses on technical skills improvement and personal development.

PROSPECTS

The economic outlook for the period ahead will continue to be challenged by major domestic and international events including the outbreak and spreading of the COVID-19 pandemic, the United States and China tension and the Brexit which in turn adversely affect the general business environment. The Group will diversify its businesses, explore sales opportunities, raise production efficiency and strengthen the cost control measures in order to sustain its businesses. In addition, the Group obtained the approval from the Government of the HKSAR for revitalization of Kader Building. The whole process is expected to be completed by the end of 2022. The revitalization of Kader Building will enhance the Group's source of revenue and profitability.

- 27 -

DISCLOSURE OF INTERESTS

Directors' and Chief Executives' Interests and Short Positions in the Shares and Underlying Shares of the Company and the Associated Corporations

As at 30 June 2020, the interests and short positions of the directors and chief executives of the Company in the shares, underlying shares and debentures of the Company or any associated corporations (within the meaning of Part XV of the Securities and Futures Ordinance (the "SFO")) as recorded in the register required to be kept by the Company under section 352 of the SFO or as otherwise notified to the Company and The Stock Exchange of Hong Kong Limited (the "Stock Exchange") pursuant to the Model Code for Securities Transactions by Directors of Listed Issuers (the "Model Code") under the Rules Governing the Listing of Securities on the Stock Exchange (the "Listing Rules") were as follows:

(1) Interests in the Company

			Number of ordinary shares of HK$0.10 each
								% of total
			Personal	Family	Corporate	Total	issued share
Name of directors		interests	interests	interests	interests	capital
Mr. Kenneth Ting Woo-shou	288,929,941	2,075,183(i)	258,963,571(ii)	549,968,695		57.86%
Mrs. Nancy Ting Wang Wan-sun	2,075,183	-	-	2,075,183		0.22%
Mr. Ivan Ting Tien-li	21,530,432	-	-	21,530,432		2.26%
Mr. Bernie Ting Wai-cheung		-	-	-	-	-
Mr. Floyd Chan Tsoi-yin		-	-	-	-	-
Mr. Andrew Yao Cho-fai		-	-	-	-	-
Mr. Desmond Chum Kwan-yue		-	-	-	-	-
Ms. Sabrina Chao Sih-ming		-	-	-	-	-
Notes:
(i)	The spouse of Mr. Kenneth Ting Woo-shou is the beneficial shareholder.
(ii)	Included in the "Corporate Interests" above were 209,671,000 shares of the
	Company held by the Company's substantial shareholder, H.C. Ting's Holdings
	Limited, in which Mr. Kenneth Ting Woo-shou has a controlling interest through
	Border Shipping Limited; and 49,292,571 shares of the Company held by Glory
	Town Limited, in which Mr. Kenneth Ting Woo-shou has a controlling interest
	through Tyrol Investments Limited.

- 28 -

(2)	Interests in Associated Corporations
					Number of shares held
									% of
									interests in
					Personal	Family	Corporate	associated
	Name of associated corporations	Beneficial interests	Class of shares	interests	interests	interests	corporations
	Allman Holdings Limited ("Allman")	Mr. Ivan Ting Tien-li	Ordinary shares of	920(i)	-	-	63.89%
			("Ivan Ting")	US$1.00 each
	Pacific Squaw Creek, Inc. ("PSC")	Mr. Ivan Ting	Ordinary shares of	-	-	1,000(ii)	100.00%
				US$1.00 each
	Squaw Creek Associates, LLC ("SCA")	Mr. Ivan Ting	Not applicable(iii)	-	-	-	62.00%(v)
	SCA		Mr. Kenneth Ting Woo-shou	Not applicable(iii)	-	-	-	13.00%(vi)
			("Kenneth Ting")
	Snow King Properties, LLC ("SKP")	Mr. Ivan Ting	Not applicable(iv)	-	-	-	62.00%(v)
	SKP		Mr. Kenneth Ting	Not applicable(iv)	-	-	-	13.00%(vi)
	Notes:
	(i)	These interests are held by Mr. Ivan Ting.
	(ii)	These interests are held by Allman. Mr. Ivan Ting's beneficial interests in Allman
		are disclosed in note (i) above.
	(iii)	SCA does not have issued share capital, the percentage of interest in SCA represents
		the interest in capital account balance.
	(iv)	SKP does not have issued share capital, the percentage of interest in SKP represents
		the interest in capital account balance.
	(v)	These interests are held by PSC. Mr. Ivan Ting's beneficial interests in PSC are
		disclosed in note (ii) above.
	(vi)	These interests are held by Ting Corporation which is wholly owned by Mr.
		Kenneth Ting.

All the interests stated above represent long positions. As at 30 June 2020, no short positions were recorded in the register required to be kept under section 352 of the SFO.

Save as disclosed above, as at 30 June 2020, none of the directors and chief executives of the Company nor their spouses or children under 18 years of age has interests or short positions in the shares, underlying shares and debentures of the Company or any of its associated corporations, as recorded in the register required to be kept under section 352 of the SFO or as otherwise notified to the Company and the Stock Exchange pursuant to the Model Code.

- 29 -

Substantial Shareholders' and Other Person's Interests

As at 30 June 2020, substantial shareholders and other persons (other than directors or chief executives of the Company) who had interests or short positions in the shares, underlying shares and debentures of the Company which were recorded in the register kept by the Company under section 336 of the SFO were as follows:

		Number of ordinary shares of HK$0.10 each
		Personal	Family	Corporate	Total	% of total issued
Substantial shareholders and other persons	interests	interests	interests	interests	share capital
Forest Crimson Limited	-	-	209,671,000(i)	209,671,000	22.06%
Mr. Ting Hok-shou	13,800,238	571,429(ii)	39,098,281(iii)	53,469,948	5.62%
Ms. Emily Tsang Wing-hin	571,429	13,800,238(iv)	39,098,281(iii)	53,469,948	5.62%
Notes:
(i)	The 209,671,000 shares of the Company were held by the Company's substantial shareholder,
	H.C. Ting's Holdings Limited, in which Forest Crimson Limited has a controlling interest
	through Border Shipping Limited.
(ii)	The spouse of Mr. Ting Hok-shou, Ms. Emily Tsang Wing-hin, is the beneficial shareholder.
(iii)	Included in the "Corporate Interests" above were 3,913,997 shares of the Company held by
	Golden Tree Investment Company Limited, in which Mr. Ting Hok-shou and Ms. Emily
	Tsang Wing-hin together have controlling interest; and 35,184,284 shares of the Company
	held by Kimpont Limited, in which Mr. Ting Hok-shou and Ms. Emily Tsang Wing-hin
	together have controlling interest through Golden Tree Investment Company Limited and
	Yale Investment Corporation.
(iv)	The spouse of Ms. Emily Tsang Wing-hin is the beneficial shareholder.

Save as disclosed above, as at 30 June 2020, the Company was not notified by any persons (other than directors or chief executives of the Company) who had interests or short positions in the shares, underlying shares and debentures of the Company which were recorded in the register kept by the Company under section 336 of the SFO.

- 30 -

DIRECTORS' RIGHTS TO ACQUIRE SHARES OR DEBENTURES

At no time during the period was the Company or any of its subsidiaries a party to any arrangement to enable the directors of the Company to acquire benefits by means of the acquisition of shares in, or debentures of, the Company or any other body corporate.

PURCHASE, SALE OR REDEMPTION OF LISTED SECURITIES

Neither the Company nor any of its subsidiaries has purchased, sold or redeemed any of the Company's listed securities during the period under review.

CORPORATE GOVERNANCE

The Board of Directors regularly reviews its corporate governance practices to ensure its continuous compliance with the Corporate Governance Code ("CG Code") as set out in Appendix 14 to the Listing Rules. Throughout the period under review, the Group has complied with all code provisions in CG Code, except for the deviation from CG Code A.2.1 as described below:

Under CG Code A.2.1, the roles of chairman and chief executive should be separate and should not be performed by the same individual. Mr. Kenneth Ting Woo-shou has the combined role of Chairman and Managing Director. The Board considers that this structure will not impair the balance of power and authority between the Board and the management of the Group as non-executive director and independent non-executive directors ("INEDs") form the majority of the Board, with five out of eight of the directors of the Company being non-executive director and INEDs. The Board believes the appointment of Mr. Kenneth Ting Woo-shou to the posts of Chairman and Managing Director is beneficial to the Group as he has considerable industry experience.

AUDIT COMMITTEE

The Audit Committee of the Company has reviewed with management the key accounting policies and discussed auditing, internal controls and financial reporting matters, including a review of the interim results for the six months ended 30 June 2020.

MODEL CODE FOR SECURITIES TRANSACTIONS BY DIRECTORS

The Company has adopted the Model Code set out in Appendix 10 to the Listing Rules as its model code for securities transactions by the Company's directors and relevant employees who are or may be in possession of unpublished inside information. Based on specific enquiries made, all directors have confirmed that they have complied with the Model Code throughout the period under review.

- 31 -

CHANGES IN INFORMATION IN RESPECT OF DIRECTORS

The changes in the information of directors of the Company, which are required to be disclosed pursuant to Rule 13.51B(1) of the Listing Rules, are as follows:

Mr. Kenneth Ting Woo-shou, Chairman and Managing Director of the Company, resigned as an independent non-executive director of Wheelock and Company Limited ("Wheelock") on 27 July 2020. The listing of Wheelock on the Stock Exchange was withdrawn on the same day.

Mr. Andrew Yao Cho-fai, an independent non-executive director of the Company, retired as an independent non-executive director of Shanghai Dazhong Public Utilities (Group) Co., Ltd., a company listed on the Stock Exchange (stock code: 1635), on 22 June 2020.

By order of the Board

Kenneth Ting Woo-shou

Chairman

Hong Kong, 28 August 2020

As at the date hereof, the executive directors of the Company are Mr. Kenneth Ting Woo- shou, SBS, JP (Chairman and Managing Director), Mrs. Nancy Ting Wang Wan-sun and Mr. Ivan Ting Tien-li; the non-executive director of the Company is Mr. Bernie Ting Wai- cheung; and the independent non-executive directors of the Company are Mr. Floyd Chan Tsoi-yin, Mr. Andrew Yao Cho-fai, JP, Mr. Desmond Chum Kwan-yue and Ms. Sabrina Chao Sih-ming.

- 32 -