Perfectech International Holdings Limited
Incorporated in Bermuda with limited liability
Stock Code: 00765
2 0 2 0
I N T E R I M R E P O R T
CORPORATE INFORMATION
BOARD OF DIRECTORS
Executive Directors:
Mr. Li Shaohua
(Chief Executive Officer)
Mr. Poon Wai Yip, Albert
Non-executive Director:
Ms. Zhu Yuqi (Chairman)
(appointed on 19 June 2020)
Mr. Gao Xiaorui (Chairman)
(resigned on 19 June 2020)
Independent Non-executive Directors:
Mr. Lau Shu Yan
Mr. Xie Xiaohong
Mr. Qin Feng
(appointed on 26 August 2020)
Mr. Lam Tak Leung
(resigned on 26 August 2020)
AUDIT COMMITTEE
Mr. Lau Shu Yan (Committee Chairman)
Mr. Xie Xiaohong
Mr. Qin Feng
(appointed on 26 August 2020)
Mr. Lam Tak Leung
(resigned on 26 August 2020)
REMUNERATION COMMITTEE
Mr. Qin Feng (Committee Chairman)
(appointed on 26 August 2020)
Mr. Xie Xiaohong
Mr. Lau Shu Yan
Mr. Lam Tak Leung (Committee Chairman)
(resigned on 26 August 2020)
NOMINATION COMMITTEE
Ms. Zhu Yuqi (Committee Chairman)
(appointed on 19 June 2020)
Mr. Xie Xiaohong
Mr. Qin Feng
(appointed on 26 August 2020)
Mr. Gao Xiaorui (Committee Chairman)
(resigned on 19 June 2020)
Mr. Lam Tak Leung
(resigned on 26 August 2020)
COMPANY SECRETARY
Mr. Leung Tak Ho
AUTHORISED
REPRESENTATIVES
Mr. Li Shaohua
Mr. Leung Tak Ho
AUDITOR
HLM CPA Limited
Certified Public Accountants
LEGAL ADVISER
Cheung Tong & Rosa Solicitors
PRINCIPAL BANKERS
The Hongkong and Shanghai Banking
Corporation Limited
Hang Seng Bank Limited
PRINCIPAL SHARE REGISTRAR
MUFG Fund Services (Bermuda) Limited 4th floor North Cedar House
41 Cedar Avenue Hamilton HM12 Bermuda
HONG KONG BRANCH SHARE REGISTRAR
Tricor Standard Limited
Level 54, Hopewell Centre
183 Queen's Road East
Hong Kong
REGISTERED OFFICE
Victoria Place 5th Floor
31 Victoria Street Hamilton HM 10 Bermuda
HEAD OFFICE AND PRINCIPAL PLACE OF BUSINESS
15/F, Sun Hing Industrial Building
46 Wong Chuk Hang Road
Aberdeen
Hong Kong
WEBSITE
www.perfectech.com.hk
1
Perfectech International Holdings Limited Interim Report 2020
The board (the "Board") of directors (the "Directors", each a "Director") of Perfectech International Holdings Limited (the "Company") is pleased to present the unaudited condensed consolidated financial statements of the Company and its subsidiaries (the "Group") for the six months ended 30 June 2020.
CONDENSED CONSOLIDATED STATEMENT OF
PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME
For the six months ended 30 June 2020
(Unaudited) | |||
For the six months ended | |||
30 June | 2019 | ||
2020 | |||
Notes | HK$'000 | HK$'000 | |
Revenue | 3 & 4 | 71,344 | 64,555 |
Cost of sales | (46,305) | (56,680) | |
Gross profit | 25,039 | 7,875 | |
Other income, gains and losses | 5 | 1,741 | 1,902 |
Distribution costs | (1,405) | (1,521) | |
Loss from changes in fair value of | - | ||
an investment property | 10 | (1,900) | |
Administrative expenses | (26,326) | (35,235) | |
Impairment loss on property, plant and | - | ||
equipment | 10 | (1,056) | |
Finance costs | (1,442) | (674) | |
Loss before tax | 6 | (5,349) | (27,653) |
Income tax (expense) credit | 7 | (737) | 546 |
Loss for the period | (6,086) | (27,107) | |
Other comprehensive (expense) income for | |||
the period, net of tax | |||
Item that will not be reclassified to profit or | |||
loss: | |||
Surplus on revaluation of leasehold land | |||
and building held for own use upon | - | ||
change of use to earning rental | 16,101 | ||
Item that may be reclassified subsequently | |||
to profit or loss: | |||
Exchange difference on translation of | |||
overseas operations | (161) | 16 | |
Other comprehensive (expense) income for | 16,117 | ||
the period, net of tax | (161) | ||
Total comprehensive expense for the | |||
(10,990) | |||
period | (6,247) | ||
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Perfectech International Holdings Limited Interim Report 2020
CONDENSED CONSOLIDATED STATEMENT OF
PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME
For the six months ended 30 June 2020
(Unaudited) | |||
For the six months ended | |||
30 June | |||
2020 | 2019 | ||
Note | HK$'000 | HK$'000 | |
Loss for the period attributable to: | |||
Owners of the Company | (7,151) | (26,485) | |
Non-controlling interests | 1,065 | (622) | |
Loss for the period | (6,086) | (27,107) | |
Total comprehensive expense for the period | |||
attributable to: | |||
Owners of the Company | (7,296) | (10,372) | |
Non-controlling interests | 1,049 | (618) | |
Total comprehensive expense for the period | (6,247) | (10,990) | |
Loss per share | 9 | ||
Basic (HK cents per share) | (2.19) | (8.10) | |
Diluted (HK cents per share) | (2.19) | (8.10) | |
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Perfectech International Holdings Limited Interim Report 2020
CONDENSED CONSOLIDATED STATEMENT OF
FINANCIAL POSITION
At 30 June 2020
(Unaudited) | (Audited) | ||
30 June | 31 December | ||
2020 | 2019 | ||
Notes | HK$'000 | HK$'000 | |
NON-CURRENT ASSETS | |||
Property, plant and equipment | 10 | 58,315 | 61,455 |
Investment property | 10 | 38,000 | 39,900 |
Right-of-use assets | 12,748 | 15,051 | |
Deferred tax assets | 3,688 | 3,688 | |
112,751 | 120,094 | ||
CURRENT ASSETS | |||
Inventories | 23,065 | 16,196 | |
Trade and other receivables | 11 | 20,762 | 15,415 |
Tax recoverable | 6 | 855 | |
Bank balances and cash | 65,687 | 70,403 | |
109,520 | 102,869 | ||
CURRENT LIABILITIES | |||
Trade and other payables | 12 | 28,303 | 21,541 |
Lease liabilities | 317 | 415 | |
Amount due to a director | |||
of subsidiaries | 13 | 48,520 | 47,587 |
Bank borrowings | 5,000 | 5,000 | |
Tax liabilities | 323 | 64 | |
82,463 | 74,607 | ||
NET CURRENT ASSETS | 27,057 | 28,262 | |
TOTAL ASSETS LESS CURRENT | |||
LIABILITIES | 139,808 | 148,356 | |
NON-CURRENT LIABILITIES | |||
- | |||
Deferred tax liabilities | 4 | ||
Lease liabilities | 12,834 | 14,915 | |
12,838 | 14,915 | ||
NET ASSETS | 126,970 | 133,441 | |
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Perfectech International Holdings Limited Interim Report 2020
CONDENSED CONSOLIDATED STATEMENT OF
FINANCIAL POSITION
At 30 June 2020
(Unaudited) | (Audited) | |
30 June | 31 December | |
2020 | 2019 | |
HK$'000 | HK$'000 | |
CAPITAL AND RESERVES | ||
Share capital | 32,692 | 32,692 |
Reserves | 79,583 | 86,879 |
Equity attributable to owners of the Company | 112,275 | 119,571 |
Non-controlling interests | 14,695 | 13,870 |
TOTAL EQUITY | 126,970 | 133,441 |
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Perfectech International Holdings Limited Interim Report 2020
CONDENSED CONSOLIDATED STATEMENT OF
CHANGES IN EQUITY
For the six months ended 30 June 2020
(Unaudited) | |||||||||
Equity | |||||||||
attributable | |||||||||
Capital | Property | to owners | Non- | ||||||
Share | Share | redemption | revaluation | Translation | Accumulated | of the | controlling | ||
capital | premium | reserve | reserve | reserve | losses | Company | interests | Total | |
HK$'000 | HK$'000 | HK$'000 | HK$'000 | HK$'000 | HK$'000 | HK$'000 | HK$'000 | HK$'000 | |
At 1 January 2020 | 32,692 | 118,895 | 10,337 | 16,701 | (3,530) | (55,524) | 119,571 | 13,870 | 133,441 |
Loss for the period | - | - | - | - | - | (7,151) | (7,151) | 1,065 | (6,086) |
Other comprehensive expense for the | |||||||||
period | - | - | - | - | (145) | - | (145) | (16) | (161) |
Total comprehensive expense for the | |||||||||
period | - | - | - | - | (145) | (7,151) | (7,296) | 1,049 | (6,247) |
Dividends paid to non-controlling | |||||||||
interests of subsidiaries | - | - | - | - | - | - | - | (224) | (224) |
At 30 June 2020 | |||||||||
32,692 | 118,895 | 10,337 | 16,701 | (3,675) | (62,675) | 112,275 | 14,695 | 126,970 | |
At 1 January 2019 | 32,692 | 118,895 | 10,337 | - | (3,127) | (486) | 158,311 | 16,169 | 174,480 |
Loss for the period | - | - | - | - | - | (26,485) | (26,485) | (622) | (27,107) |
Other comprehensive income for the | |||||||||
period | - | - | - | 16,101 | 12 | - | 16,113 | 4 | 16,117 |
Total comprehensive expense for the | |||||||||
period | - | - | - | 16,101 | 12 | (26,485) | (10,372) | (618) | (10,990) |
At 30 June 2019 | 32,692 | 118,895 | 10,337 | 16,101 | (3,115) | (26,971) | 147,939 | 15,551 | 163,490 |
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Perfectech International Holdings Limited Interim Report 2020
CONDENSED CONSOLIDATED STATEMENT OF
CASH FLOWS
For the six months ended 30 June 2020
(Unaudited) | ||
For the six months ended | ||
30 June | ||
2020 | 2019 | |
HK$'000 | HK$'000 | |
NET CASH USED IN OPERATING ACTIVITIES | (2,332) | (26,986) |
NET CASH USED IN INVESTING ACTIVITIES | (1,246) | (903) |
NET CASH (USED IN) FROM FINANCING ACTIVITIES | (941) | 21,250 |
NET DECREASE IN CASH AND CASH EQUIVALENTS | (4,519) | (6,639) |
CASH AND CASH EQUIVALENTS AT 1 JANUARY | 70,403 | 71,468 |
Effect of change in foreign exchange rates | (197) | 16 |
CASH AND CASH EQUIVALENTS AT 30 JUNE | 65,687 | 64,845 |
ANALYSIS OF CASH AND CASH EQUIVALENTS | ||
Bank overdraft | - | (2,437) |
Bank balances and cash | 65,687 | 67,282 |
65,687 | 64,845 | |
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Perfectech International Holdings Limited Interim Report 2020
NOTES TO THE
CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
1. BASIS OF PREPARATION
The condensed consolidated financial statements have been prepared in accordance with the applicable disclosure requirements of Appendix 16 to the Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited ("Listing Rules") and with Hong Kong Accounting Standard (the "HKAS") 34 Interim Financial Reporting issued by the Hong Kong Institute of Certified Public Accountants ("HKICPA").
The condensed consolidated financial statements are unaudited but have been reviewed by the audit committee of the Company (the "Audit Committee").
2. PRINCIPAL ACCOUNTING POLICIES
The condensed consolidated financial statements have been prepared on the historical cost basis except for investment property which is measured at fair value.
Other than changes in accounting policies resulting from application of amendments to Hong Kong Financial Reporting Standards ("HKFRSs"), the accounting policies and methods of computation used in the condensed consolidated financial statements for the six months ended 30 June 2020 are the same as those presented in the Group's annual financial statements for the year ended 31 December 2019.
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Perfectech International Holdings Limited Interim Report 2020
NOTES TO THE
CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
2. PRINCIPAL ACCOUNTING POLICIES (CONTINUED)
Application of amendments to HKFRSs
In the current period, the Group has applied, for the first time, the following amendments to HKFRSs issued by the HKICPA that are mandatorily effective for the annual period beginning on or after 1 January 2020 for the preparation of the Group's condensed consolidated financial statements:
Amendments to HKFRS 3 | Definition of a Business |
Amendments to HKAS 1 and HKAS 8 | Definition of Material |
Amendments to HKFRS 9, HKAS 39 | Interest Rate Benchmark Reform |
and HKFRS 7 |
The application of the amendments to HKFRSs in the current period has had no material impact on the Group's financial performance and positions for the current and prior periods and/or on the disclosures set out in these condensed consolidated financial statements.
3. REVENUE
Revenue represents the amounts received and receivable for goods sold by the Group to outside customers, less returns and trade discounts during the period.
(Unaudited) | ||
For the six months ended | ||
30 June | ||
2020 | 2019 | |
HK$'000 | HK$'000 | |
Revenue from contracts with customers | ||
recognised at a point in time under | ||
HKFRS 15: | ||
Novelties and decoration products | 1,827 | 3,044 |
Toy products | 69,517 | 61,511 |
71,344 | 64,555 | |
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Perfectech International Holdings Limited Interim Report 2020
NOTES TO THE
CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
4. SEGMENT REPORTING
For management purposes, the Group is currently organised into two operating segments, namely the manufacture and sale of novelties and decoration products and the manufacture and sales of toy products.
The following is an analysis of the Group's revenue and results by reportable segment:
For the six months ended 30 June 2020 (Unaudited)
Novelties | |||
and | |||
decoration | Toy | ||
products | products | Consolidated | |
HK$'000 | HK$'000 | HK$'000 | |
REVENUE | |||
External sales and total revenue | 1,827 | 69,517 | 71,344 |
RESULT | |||
Segment results | (2,522) | 7,638 | 5,116 |
Loss from changes in fair value of | |||
an investment property | (1,900) | ||
Impairment loss on property, | |||
plant and equipment | (1,056) | ||
Unallocated corporate expenses, net | (6,067) | ||
Finance costs | (1,442) | ||
Loss before tax | |||
(5,349) | |||
Income tax expense | (737) | ||
Loss for the period | |||
(6,086) | |||
10
Perfectech International Holdings Limited Interim Report 2020
NOTES TO THE
CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
4. SEGMENT REPORTING (CONTINUED)
At 30 June 2020 (Unaudited) | |||
Novelties | |||
and | |||
decoration | Toy | ||
products | products | Consolidated | |
HK$'000 | HK$'000 | HK$'000 | |
ASSETS | |||
Segment assets | 27,289 | 95,276 | 122,565 |
Unallocated corporate assets | 99,706 | ||
Consolidated total assets | |||
222,271 | |||
LIABILITIES | |||
Segment liabilities | 25,985 | 68,372 | 94,357 |
Unallocated corporate liabilities | 944 | ||
Consolidated total liabilities | |||
95,301 | |||
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Perfectech International Holdings Limited Interim Report 2020
NOTES TO THE
CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
4. SEGMENT REPORTING (CONTINUED)
For the six months ended 30 June 2019 (Unaudited)
Novelties | |||
and | |||
decoration | Toy | ||
products | products | Consolidated | |
HK$'000 | HK$'000 | HK$'000 | |
REVENUE | |||
External sales and total revenue | 3,044 | 61,511 | 64,555 |
RESULT | |||
Segment results | (3,742) | (11,135) | (14,877) |
Unallocated corporate expenses, net | (12,102) | ||
Finance costs | (674) | ||
Loss before tax | (27,653) | ||
Income tax credit | 546 | ||
Loss for the period | (27,107) | ||
12
Perfectech International Holdings Limited Interim Report 2020
NOTES TO THE
CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
4. SEGMENT REPORTING (CONTINUED)
At 31 December 2019 (Audited) | |||
Novelties | |||
and | |||
decoration | Toy | ||
products | products | Consolidated | |
HK$'000 | HK$'000 | HK$'000 | |
ASSETS | |||
Segment assets | 29,357 | 81,972 | 111,329 |
Unallocated corporate assets | 111,634 | ||
Consolidated total assets | 222,963 | ||
LIABILITIES | |||
Segment liabilities | 25,311 | 62,597 | 87,908 |
Unallocated corporate liabilities | 1,614 | ||
Consolidated total liabilities | 89,522 | ||
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Perfectech International Holdings Limited Interim Report 2020
NOTES TO THE
CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
4. SEGMENT REPORTING (CONTINUED)
Geographical Information
The Group's revenue from external customers by location of operations are detailed below:
(Unaudited) | ||
For the six months ended | ||
30 June | ||
2020 | 2019 | |
HK$'000 | HK$'000 | |
Revenue by geographical market: | ||
Hong Kong | 1,860 | 4,269 |
Europe | 2,079 | 4,775 |
United States of America | 2,346 | 277 |
Asia (other than Hong Kong) | 64,781 | 55,167 |
Others | 278 | 67 |
71,344 | 64,555 | |
The following is an analysis of the carrying amount of segment assets analysed by the geographical areas in where the assets are located:
Carrying amount of | ||
segment assets | ||
(Unaudited) | (Audited) | |
30 June | 31 December | |
2020 | 2019 | |
HK$'000 | HK$'000 | |
Hong Kong | 147,927 | 155,060 |
The People's Republic of China (the "PRC") | 74,344 | 67,903 |
222,271 | 222,963 | |
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Perfectech International Holdings Limited Interim Report 2020
NOTES TO THE
CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
5. OTHER INCOME, GAINS AND LOSSES
(Unaudited) | ||
For the six months ended | ||
30 June | ||
2020 | 2019 | |
HK$'000 | HK$'000 | |
Interest income from financial assets held for | ||
cash management purposes | 173 | 307 |
Rental income from investment property | 408 | 204 |
Scrap sales (Note) | - | 630 |
Gain on disposal of property, | ||
plant and equipment | 35 | 84 |
Net foreign exchange losses | (340) | (791) |
Gain on termination of a lease | 28 | - |
Tooling income (Note) | 347 | 1,137 |
Laboratory Testing Income (Note) | 198 | 178 |
Government subsidies | 726 | - |
Others (Note) | 166 | 153 |
1,741 | 1,902 | |
Note: Those income are the revenue from contracts with customers recognised at a point in time under HKFRS 15.
6. LOSS BEFORE TAX
Loss before tax has been arrived at after charging:
(Unaudited) | ||
For the six months ended | ||
30 June | ||
2020 | 2019 | |
HK$'000 | HK$'000 | |
Depreciation | ||
- property, plant and equipment | 3,574 | 3,903 |
- right-of-use assets | 360 | 586 |
3,934 | 4,489 | |
15
Perfectech International Holdings Limited Interim Report 2020
NOTES TO THE
CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
7. INCOME TAX EXPENSE (CREDIT)
Current tax:
Hong Kong Profits Tax
PRC Enterprise Income Tax
Underprovision in prior years:
Hong Kong Profits Tax
PRC Enterprise Income tax
Deferred tax
Origination (reversal) of temporary differences
Total income tax expense (credit) recognised in profit or loss
(Unaudited)
For the six months ended
30 June
20202019
HK$'000 HK$'000
- -
- -
624-
101-
828
10928
4(574)
737(546)
8. DIVIDENDS
The Board has resolved not to declare any interim dividend for the six months ended 30 June 2020 (2019: Nil).
9. LOSS PER SHARE
The calculation of the basic and diluted loss per share is based on the Group's loss for the period attributable to owners of the Company of approximately HK$7,151,000 (2019: HK$26,485,000) and the weighted average number of ordinary shares of 326,923,607 (2019: 326,923,607).
Diluted loss per share for the periods ended 30 June 2020 and 2019 was the same as basic loss per share as there were no dilutive potential ordinary shares in issue for both periods.
16
Perfectech International Holdings Limited Interim Report 2020
NOTES TO THE
CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
10. PROPERTY, PLANT AND EQUIPMENT AND INVESTMENT PROPERTY
During the period, the Group acquired property, plant and equipment of approximately HK$1,456,000 (2019: HK$1,341,000).
During the period, the Group recognised impairment loss on leasehold land and building of approximately HK$1,056,000 (2019: Nil). The estimate of recoverable amount of the leasehold land and building was based on its fair value less cost of disposal. The fair value of the leasehold land and building at 30 June 2020 was determined by the Directors with reference to recent transaction prices in the market for similar properties.
During the period, the Group also recongised loss from changes in fair value of investment property of approximately HK$1,900,000 (2019: Nil). The fair value of the investment property at 30 June 2020 was determined by the Directors with reference to recent transaction prices in the market for similar properties.
11. TRADE AND OTHER RECEIVABLES
Included in trade and other receivables are trade receivables of HK$18,597,000 (31 December 2019: HK$9,675,000). The Group allows an average credit period of 60 days to its trade customers. The following is an aging analysis of the Group's trade receivables, presented based on the invoice date and net of allowance for expected credit loss at the end of the reporting period:
(Unaudited) | (Audited) | |
30 June | 31 December | |
2020 | 2019 | |
HK$'000 | HK$'000 | |
0-60 days | 17,430 | 9,637 |
61-90 days | 1,126 | - |
91-120 days | 41 | 38 |
18,597 | 9,675 | |
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Perfectech International Holdings Limited Interim Report 2020
NOTES TO THE
CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
12. TRADE AND OTHER PAYABLES
Included in trade and other payables are trade payables of HK$14,303,000 (31 December 2019: HK$9,498,000). The following is an aging analysis of the Group's trade payables, presented based on invoice date at the end of reporting period:
(Unaudited) | (Audited) | |
30 June | 31 December | |
2020 | 2019 | |
HK$'000 | HK$'000 | |
0-60 days | 12,062 | 7,577 |
61-90 days | 1,588 | 1,390 |
91-120 days | 135 | 13 |
Over 120 days | 518 | 518 |
14,303 | 9,498 | |
13. AMOUNT DUE TO A DIRECTOR OF SUBSIDIARIES
The amount represented advance from Mr. Poon Siu Chung (a former director of certain subsidiaries of the Company who passed away on 28 October 2019) which is now due to Ms. Lau Kwai Ngor, the wife of Mr. Poon Siu Chung, to whom such advance has been assigned by operation of law. It was conducted on normal commercial terms, bearing interest at a rate of 4% per annum, unsecured, and repayable on demand.
14. CAPITAL COMMITMENTS
Capital commitments in respect of the acquisition of property, plant and equipment:
Contracted but not provided for
(Unaudited) | (Audited) |
30 June | 31 December |
2020 | 2019 |
HK$'000 | HK$'000 |
- 762
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Perfectech International Holdings Limited Interim Report 2020
NOTES TO THE
CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
15. RELATED PARTY TRANSACTIONS
- During the period, the Group had the following transactions with related parties who are not members of the Group:
(Unaudited) | ||
For the six months ended | ||
30 June | ||
2020 | 2019 | |
HK$'000 | HK$'000 | |
Rental expenses paid to: | ||
Mr. Poon Siu Chung (Note) | - | 60 |
Interest expenses payable to: | ||
Ms. Lau Kwai Ngor (Note) | 933 | - |
Note: Mr. Poon Siu Chung, who passed away on 28 October 2019, was a former director of certain subsidiaries of the Company. Ms. Lau Kwai Ngor, the wife of Mr. Poon Siu Chung, who is a beneficiary of Mr. Poon Siu Chung's estate.
-
Compensation of key management personnel
The remuneration of Directors and other members of key management during the period were as follows:
(Unaudited) | ||
For the six months ended | ||
30 June | ||
2020 | 2019 | |
HK$'000 | HK$'000 | |
Short-term benefits | 4,480 | 4,012 |
Post-employment benefits | 40 | 39 |
4,520 | 4,051 | |
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Perfectech International Holdings Limited Interim Report 2020
SHARE OPTION SCHEME
A share option scheme (the "Scheme") of the Company was adopted on 30 May 2012. The key terms of the Scheme had been summarised in the annual report of the Company for the year ended 31 December 2019.
At 30 June 2020, the number of shares available for issue under the Scheme were 32,692,360, representing approximately 10% of the shares of the Company in issue at that date.
There were no movements in the Company's share options during the six months ended 30 June 2020. There were no outstanding share options of the Company as at 1 January 2020 and 30 June 2020.
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Perfectech International Holdings Limited Interim Report 2020
DIRECTORS' AND CHIEF EXECUTIVE'S
INTERESTS IN SHARES AND OPTIONS
At 30 June 2020, none of the Directors and chief executive of the Company or their respective associates had any interests or short positions in any shares, underlying shares or debentures of the Company or any of its associated corporations (as defined in Part XV of the Securities and Futures Ordinance (the "SFO")) as recorded in the register maintained under Section 352 of Part XV 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 ("Model Code") as set out in Appendix 10 to the Listing Rules.
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Perfectech International Holdings Limited Interim Report 2020
SUBSTANTIAL SHAREHOLDERS
At 30 June 2020, the register of substantial shareholders' interests maintained by the Company pursuant to Section 336 of the SFO showed that the following shareholders had notified the Company of the relevant interests in the issued shares of the Company as follows:
Long position in shares of the Company
No. of | |||||
underlying | % of issued | ||||
shares held | share capital of | ||||
No. of shares | under equity | the Company | |||
Shareholders | Capacity | held | derivatives | Total | (approximately) |
Mr. Zhai Jun | Interest of controlled | 125,297,040 | - | 125,297,040(1) | 38.33 |
corporation | |||||
Star Fly Limited | Beneficial owner | 125,297,040 | - | 125,297,040(1) | 38.33 |
Mr. Gao Xiaorui | Interest of controlled | 119,297,041 | - | 119,297,041(2) | 36.49 |
corporation | |||||
Fresh Choice Holdings | Beneficial owner | 119,297,041 | - | 119,297,041(2) | 36.49 |
Limited |
Notes:
- For the purpose of Part XV of the SFO, as at 30 June 2020, Mr. Zhai Jun was deemed to be interested in the 125,297,040 shares of the Company held by Star Fly Limited. Star Fly Limited is a limited company incorporated in the British Virgin Islands wholly owned by Mr. Zhai Jun.
- For the purpose of Part XV of the SFO, as at 30 June 2020, Mr. Gao Xiaorui was deemed to be interested in 119,297,041 shares of the Company held by Fresh Choice Holdings Limited. Fresh Choice Holdings Limited is a limited company incorporated in the British Virgin Islands owned as to 90% by Mr. Gao Xiaorui and 10% by Mr. Wu Zhenlong.
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Perfectech International Holdings Limited Interim Report 2020
MANAGEMENT DISCUSSION AND ANALYSIS
INTERIM DIVIDEND
The Board has resolved not to declare any interim dividend for the six months ended 30 June 2020 (2019: Nil).
BUSINESS AND FINANCIAL REVIEW
Affected by the unresolved Sino-American trade disputes, the political instability in Europe and the outbreak of Coronavirus Disease 2019 (the "COVID-19") pandemic, the global economy remained sluggish and the Group's operating environment remained challenging in the first half of 2020. During the six months ended 30 June 2020, the Group's revenue rose by 11% year-on-year to approximately HK$71,344,000 (2019: HK$64,555,000) despite facing the tough operating environment. Revenue rose was driven by higher sales of toy products, which offset decline in sales of novelties and decorations products. The Group recorded a loss for the period attributable to owners of the Company of approximately HK$7,151,000 (2019: HK$26,485,000). The basic and diluted loss per share were both at 2.19 HK cents (2019: both 8.10 HK cents).
For the six months ended 30 June 2020, the Group's core business recorded a profit of HK$5,116,000 (2019: loss of HK$14,877,000). Detailed performance of each segment of the core business is discussed below.
Toy products
The revenue of toy products segment increased by about 13% year-on-year to approximately HK$69,517,000 (2019: HK$61,511,000), and accounted for about 97% of total revenue of the Group. The increase in revenue of this segment was largely driven by the higher sales in Asia (other than Hong Kong) and the United States of America, which offset the decline in sales in Europe and Hong Kong. The segment recorded a profit of approximately HK$7,638,000 for the six months ended 30 June 2020 while it incurred a loss of HK$11,135,000 in the same period last year. The result of this segment has improved as the Group streamlined the production process and cost structure after the Group relocated all production plants together at Zhongshan, the PRC, in recent years. In this regard, the Group has made provision for a special incentive bonus of approximately HK$2,000,000 as incentive for relocation of the relevant employees with a view to recognising their efforts in ensuring the smooth transition during the process of plant relocation.
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MANAGEMENT DISCUSSION AND ANALYSIS
BUSINESS AND FINANCIAL REVIEW (CONTINUED)
Novelties and decorations products
The revenue of the novelties and decoration products segment decreased by about 40% year-on-year to approximately HK$1,827,000 (2019: HK$3,044,000), which was mainly attributable to the decline in sales in Europe. The loss of this segment slightly reduced to approximately HK$2,522,000 (2019: HK$3,742,000), as a result of strict cost management implemented by the Group.
Distribution costs and administrative expenses
Distribution costs decreased by about 8% year-on-year to approximately HK$1,405,000 (2019: HK$1,521,000) as a result of stringent cost control measures implemented by the Group. Administrative expenses mainly represented staff costs (including directors' emoluments), legal and professional fee, depreciation of property, plant and equipment and right-of-use assets and other administrative expenses. The amount decreased by about 25% year-on-year to approximately HK$26,326,000 (2019: HK$35,235,000), which was mainly attributable to the decrease in legal and professional costs incurred by the Group of approximately HK$7,700,000 and the effective cost management implemented by the Group during the period.
Finance costs
Finance costs increased to approximately HK$1,442,000 (2019: HK$674,000), as a result of the increase in interest on amount due to a director of subsidiaries during the period.
Significant investments, acquisitions and disposals
There was no significant investment held as at 30 June 2020, nor other material acquisitions and disposals of subsidiaries, associates and/or joint ventures during the six months ended 30 June 2020.
Liquidity and financial resources
As at 30 June 2020, the Group had amount due to a director of subsidiaries of approximately HK$48,520,000 (31 December 2019: HK$47,587,000) and short term bank borrowings of approximately HK$5,000,000 (31 December 2019: HK$5,000,000). The Group's gearing ratio, calculated on the basis of the aggregate of the amount due to a director of subsidiaries and bank borrowings over the equity attributable to owners of the Company, was approximately 48% (31 December 2019: 44%).
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MANAGEMENT DISCUSSION AND ANALYSIS
BUSINESS AND FINANCIAL REVIEW (CONTINUED)
Liquidity and financial resources (Continued)
As at 30 June 2020, the Group had bank balances and cash of approximately HK$65,687,000 (31 December 2019: HK$70,403,000). With total current assets as at
30 June 2020 of approximately HK$109,520,000 (31 December 2019: HK$102,869,000) as well as available banking facilities, the Group had sufficient financial resources to satisfy its commitments and working capital requirements.
Pledge of Assets
As at 30 June 2020, the Group had pledged its leasehold land and building with carrying value of approximately HK$32,000,000 (31 December 2019: HK$33,703,000) and investment property of approximately HK$38,000,000 (31 December 2019: HK$39,900,000) to secure banking facilities granted to the Group.
Contingent Liabilities
There have been no changes in the Group's contingent liabilities since the year ended 31 December 2019.
Net asset value
The | net asset value per share | as at 30 June 2020 was approximately HK$0.34 |
(31 | December 2019: HK$0.37), | calculated on the basis of the equity attributable to |
owners of the Company of approximately HK$112,275,000 (31 December 2019: HK$119,571,000) over the actual number of shares in issue on that date of 326,923,607 (31 December 2019: 326,923,607).
Employees and remuneration policies
As at 30 June 2020, the Group employed approximately 720 (31 December 2019: 680) full time employees. The Group remunerates its employees primarily based on prevailing industry practice as well as individual merits. The Group has also established a share option scheme for its full time employees.
Foreign currency exposure
The Group's sales and purchases are mainly denominated in Hong Kong Dollar and United States Dollar (the "US Dollar"). As all of its factories are located in the PRC, expenses incurred there are denominated in Renminbi.
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MANAGEMENT DISCUSSION AND ANALYSIS
BUSINESS AND FINANCIAL REVIEW (CONTINUED)
Foreign currency exposure (Continued)
Since Hong Kong Dollar remains pegged to US Dollar, the Group does not foresee a substantial exposure in this area, and will closely monitor the trend of Renminbi to see if any action is required.
As at 30 June 2020, the Group did not enter into any financial instrument for the hedging of exposure in foreign currencies.
Future plans for material investments
As referred to in the Company's announcement titled "Inside Information in Relation to Framework Sale and Purchase Agreement" dated 15 August 2019 and further discussed in the annual report of the Company for the year ended 31 December 2019, on 15 August 2019, the Company entered into a framework sale and purchase agreement with Sino-Science Netherlands Petroleum B.V., a company incorporated under the laws of Netherlands ("SSNP"), pursuant to which the Company has conditionally agreed to acquire more than 50% of the total participating interests or shares of Sozak Oil and Gas LLP ("Sozak"), a limited liability partnership established under the laws of Kazakhstan ("Proposed Acquisition"). Sozak is principally engaged in the exploration of oil and natural gas in South-Kazakhstan and Kyzylorda region and the petroleum assets are located in the Marsel Block in the Chu-Sarysu Basin of Kazakhstan which is currently under appraisal. The consideration for the Proposed Acquisition shall be paid by the Company through a combination of cash, the allotment and issue of new shares of the Company and/or other forms of securities issued by the Company at a price to be agreed upon by SSNP and the Company. The material terms of the Proposed Acquisition are yet to be agreed and are subject to the execution of the final definitive agreement.
Up to the date of this report, the Directors are still in the course of negotiating material terms with SSNP and making appropriate arrangements for the Proposed Acquisition, with the aim of materialising the Proposed Acquisition as soon as practicable.
As mentioned in the annual report of the Company for the year ended 31 December 2019, it is the intention of the Group to actively identify good merger and acquisition opportunities in order to acquire new business or assets that will bring additional value and new income streams to the Group. Leveraging on the extensive experience in the areas of oil and natural gas industry and corporate management, the Board believes that the Proposed Acquisition will help the Company navigate its business focus towards natural gas and clean energy to meet the growing natural gas demand in the PRC, and create long-term returns for the shareholders of the Company with enhanced values.
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Perfectech International Holdings Limited Interim Report 2020
MANAGEMENT DISCUSSION AND ANALYSIS
BUSINESS AND FINANCIAL REVIEW (CONTINUED)
Prospect
The unresolved Sino-American trade disputes, the political instability in Europe and the outbreak of COVID-19 pandemic are expected to continue to cast uncertainty and challenges to the Group's operating environment in this year. The Directors are moving ahead cautiously. The Group will continue to optimise its product mix to meet the demand of the customers, strengthen production and operational efficiency, as well as implement stringent cost management in order to minimise the impact of these challenges.
Meanwhile, the Directors endeavour to materialise the Proposed Acquisition in order to bring additional value and new income streams to the Group, and create long-term returns for the shareholders of the Company with enhanced values.
With the joint efforts of all of its employees, the Group endeavors to maintain a good business relationship with its customers, business partners and shareholders to maximise its corporate value and deliver promising returns to its shareholders.
PURCHASE, SALE AND REDEMPTION OF THE COMPANY'S LISTED SECURITIES
During the six months ended 30 June 2020, neither the Company nor any of its subsidiaries had purchased, sold or redeemed any of the Company's listed securities whether on the Stock Exchange or otherwise.
COMPLIANCE WITH THE CORPORATE GOVERNANCE CODE
The Company has adopted the corporate governance code and amended it from time to time, based on the code provisions (the "Code Provisions") of the latest revised code on corporate governance as set out in Appendix 14 to the Listing Rules.
Throughout the six months ended 30 June 2020, the Company has complied with the Code Provisions.
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Perfectech International Holdings Limited Interim Report 2020
MANAGEMENT DISCUSSION AND ANALYSIS
MODEL CODE FOR SECURITIES TRANSACTIONS BY DIRECTORS
The Board has adopted a code of conduct regarding Directors' securities transaction on terms no less exacting than the required standard as set out in the Model Code.
Specific enquiries have been made with all Directors and they have confirmed that throughout the six months ended 30 June 2020, they complied with the required standard set out in the Model Code and the Company's code of conduct regarding Directors' securities transactions.
AUDIT COMMITTEE
The Audit Committee comprises three independent non-executive Directors, Mr. Xie Xiaohong, Mr. Qin Feng and Mr. Lau Shu Yan, who is also the chairman of the Audit Committee. The Audit Committee has reviewed the Group's interim report for the six months ended 30 June 2020.
DIRECTORS OF THE COMPANY
At the date of this report, the Board is composed of Mr. Li Shaohua and Mr. Poon Wai Yip, Albert as executive Directors, Ms. Zhu Yuqi as non-executive Director, and Mr. Xie Xiaohong, Mr. Lau Shu Yan and Mr. Qin Feng as independent non-executive Directors.
By order of the Board
Perfectech International Holdings Limited
Zhu Yuqi
Chairman
Hong Kong, 28 August 2020
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Perfectech International Holdings Limited Interim Report 2020
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Perfectech International Holdings Ltd. published this content on 17 September 2020 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 17 September 2020 08:49:06 UTC