TEN PAO GROUP HOLDINGS LIMITED TEN PAO GROUP HOLDINGS LIMITED
天 寶 集 團 控 股 有 限 公 司
(Incorporated in the Cayman Islands with limited liability) Stock code: 1979
2020 |
INTERIM
REPORT
CONTENTS
Corporate Information | 2 |
Financial Highlights | 4 |
Management Discussion and Analysis | 5 |
Corporate Governance and Other Information | 15 |
Report on Review of Interim Financial Information | 24 |
Interim Condensed Consolidated Statement of Profit or Loss | 26 |
Interim Condensed Consolidated Statement of | |
Comprehensive Income | 27 |
Interim Condensed Consolidated Balance Sheet | 28 |
Interim Condensed Consolidated Statement of | |
Changes in Equity | 31 |
Interim Condensed Consolidated Statement of Cash Flows | 33 |
Notes to the Interim Financial Information | 35 |
CORPORATE INFORMATION
BOARD OF DIRECTORS
Executive Directors
Mr. Hung Kwong Yee
(Chairman and Chief Executive Officer)
Mr. Hung Sui Tak
Ms. Yang Bingbing
Independent Non-executive Directors
Mr. Lam Cheung Chuen
Mr. Chu Yat Pang Terry
Mr. Lee Kwan Hung (alias, Eddie Lee)
BOARD COMMITTEES
Audit Committee
Mr. Chu Yat Pang Terry (Chairperson) Mr. Lam Cheung Chuen
Mr. Lee Kwan Hung (alias, Eddie Lee)
Remuneration Committee
Mr. Lee Kwan Hung (alias, Eddie Lee) (Chairperson)
Mr. Hung Kwong Yee
Mr. Lam Cheung Chuen
Mr. Chu Yat Pang Terry
Nomination Committee
Mr. Hung Kwong Yee (Chairperson)
Mr. Chu Yat Pang Terry
Mr. Lam Cheung Chuen
Mr. Lee Kwan Hung (alias, Eddie Lee)
COMPANY SECRETARY
Mr. Tse Chung Shing, ACCA
AUTHORIZED
REPRESENTATIVES
Mr. Hung Kwong Yee
Mr. Tse Chung Shing
REGISTERED OFFICE
Cricket Square
Hutchins Drive
P.O. Box 2681
Grand Cayman, KY1-1111
Cayman Islands
HEADQUARTERS AND PRINCIPAL PLACE OF BUSINESS IN HONG KONG
Rooms 610-612, 6th Floor Kwong Sang Hong Centre 151-153 Hoi Bun Road Kwun Tong
Kowloon Hong Kong
PRINCIPAL PLACE OF BUSINESS IN THE PEOPLE'S REPUBLIC OF CHINA (THE "PRC")
Dongjiang Industrial Estate
Shuikou Street
Huicheng District
Huizhou City 516005
Guangdong Province
PRC
2 | TEN PAO GROUP HOLDINGS LIMITED Interim Report 2020 |
Corporate Information
SHARE REGISTRARS | PRINCIPAL BANKERS |
Principal Share Registrar | Bank of China (Hong Kong) Limited |
Conyers Trust Company (Cayman) Limited | DBS Bank (Hong Kong) Limited |
Cricket Square | Hongkong and Shanghai Banking |
Hutchins Drive | Corporation Limited |
P.O. Box 2681 | Standard Chartered Bank (Hong Kong) |
Grand Cayman, KY1-1111 | Limited |
Cayman Islands | STOCK CODE |
Hong Kong Branch Share Registrar | 1979 |
Tricor Investor Services Limited | COMPANY'S CORPORATE WEBSITE |
Level 54 | |
Hopewell Centre | www.tenpao.com |
183 Queen's Road East | INVESTOR RELATIONS CONTACT |
Hong Kong | |
www.tenpao.com/investor.html | |
HONG KONG LEGAL ADVISOR | |
Deacons | |
5/F, Alexandra House | |
18 Chater Road | |
Central | |
Hong Kong | |
AUDITOR | |
PricewaterhouseCoopers |
Certified Public Accountants
22/F, Prince's Building
Central
Hong Kong
Interim Report 2020 TEN PAO GROUP HOLDINGS LIMITED | 3 |
FINANCIAL HIGHLIGHTS
Six months ended 30 June | ||||
2020 | 2019 | Change | ||
(Unaudited) | (Unaudited) | |||
Revenue | HK$'000 | 1,763,650 | 1,834,665 | -3.9% |
Operating profit | HK$'000 | 119,693 | 107,159 | +11.7% |
Profit for the period attributable | ||||
to the owners of the | ||||
Company | HK$'000 | 95,106 | 81,093 | +17.3% |
Gross profit margin | % | 17.4 | 16.6 | +0.7% point |
Operating profit margin | % | 6.8 | 5.8 | +1.0% point |
Profit margin attributable to | ||||
owners of the Company | % | 5.4 | 4.4 | +1.0% point |
Earnings per share | ||||
- basic and diluted per share | HK cents | 10 | 8 | |
Interim dividend per share | HK cents | 3.0 | 2.5 | |
30 June | 31 December | |||
2020 | 2019 | Change | ||
Gearing ratio | % | 39.5 | 23.3 | +16.2% point |
Current ratio | times | 1.18 | 1.17 | +0.9% |
Average inventory turnover | ||||
period | days | 67 | 65 | +3.1% |
Average trade receivables | ||||
turnover period | days | 95 | 84 | +13.1% |
Average trade payables | ||||
turnover period | days | 124 | 114 | +8.8% |
4 | TEN PAO GROUP HOLDINGS LIMITED Interim Report 2020 |
MANAGEMENT DISCUSSION AND ANALYSIS
OVERVIEW
Ten Pao Group Holdings Limited ("Ten Pao" or the "Company", together with its subsidiaries, the "Group") is a market leading provider of smart power supply solutions, with an abundance of industry experience spanning forty years and an excellent customer base. Through an exceptional research and development ("R&D") team, a one-stop production model, a diverse product portfolio and value-adding services that are tailored and swiftly responsive to customer needs, we have earned affirmation from the industry. Presently, we are the major supplier for numerous domestic and international brands and are instrumental in the rapid development of the industry.
In the first half of 2020, the global COVID-19 ("coronavirus") pandemic, geopolitical tensions and the resulting trade conflicts brought about a challenging business environment. The Group remained steadfast in strengthening its capabilities in the face of macroeconomic challenges and was proactive in implementing a series of responsive measures in the six-month period ended 30 June 2020 (the "Period"). These measures include enhancing the overall efficiency of automation at our production bases, strategically optimising the customer portfolio, strengthening inventory management efficiency, implementing effective cost controls and improving our cash flow. As a result, the Group was able to maintain a stable business performance and a healthy cash flow during the Period.
For the six months ended 30 June 2020, Group revenue decreased slightly by 3.9% to HK$1,763.7 million when compared to the same period of last year. This was mainly attributable to the adverse impact of the temporary suspension of the Group's manufacturing facility in Huizhou, the PRC in the first quarter as a result of the PRC government's order in preventing and combating the coronavirus. Despite the decrease in revenue, gross profit for the Period amounted to HK$306.1 million which approximated to that of the same period of last year, and gross profit margin increased by 0.7 percentage point to 17.4%, which are attributable to measures including tightened cost control policies and increased rate of automated production. Net profit before tax was HK$115.9 million, and net profit attributable to owners of the Company increased by 17.3% to HK$95.1 million when compared to the same period of last year. Earnings per share amounted to HK10 cents (2019: HK8 cents).
Interim Report 2020 TEN PAO GROUP HOLDINGS LIMITED | 5 |
Management Discussion and Analysis
To reward the Company's shareholders for their continuing support, the board (the "Board") of directors (the "Directors") of the Company has resolved to pay an interim dividend of HK3 cents per ordinary share for the six months ended 30 June 2020 (2019: HK2.5 cents per ordinary share).
MARKET AND BUSINESS REVIEW
During the Period, the coronavirus pandemic brought pressure on the manufacturing industry in different ways. At the production level, as a means to keep the pandemic at bay, the PRC government issued a notice to extend the Lunar New Year Holidays of 2020. The Group's manufacturing plants in the PRC temporarily suspended operations in February this year, and gradually resumed some operations in March. However, the spread of the pandemic globally since March led to international logistics delays which affected the transportation of finished products and raw materials. The Group, as a supply chain partner of various consumer goods brands, was inevitably affected by the above factors. During the Period, the Group was in active communication with its customers and redeployed resources, and hence, successfully recovered most of the production progress in the second quarter and maintained its business stability.
For the six months ended 30 June 2020, revenue from the Group's business segment of smart chargers and controllers for power tools was approximately HK$710.0 million, decreased by 5.2% when compared to the same period of last year. Despite a slight decrease was recorded in this segment revenue due to external factors, the segment revenue remained relatively stable. This was primarily attributable to the Group's efforts not only in maintaining a good cooperative relationship with existing customers, but also in actively deepening the level of cooperation, and at the same time adopting flexible marketing strategies to continue to expand a customer base that has growth potential. Customers of this segment are mainly international corporations with excellent foundations, high risk-bearing capabilities, as well as diversified distribution channels. Leveraging our close business relationship with core customers and the high quality of the Group's products and services, orders from this segment of smart chargers and controllers for power tools remained steady. Continual enhancement of production automation also helped maintain segment profit at HK$143.0 million.
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Management Discussion and Analysis
The Group's business segment of switching power supply units for consumer products covers telecommunications equipment, media and entertainment equipment, household appliances, and lighting equipment etc.. For the six months ended 30 June 2020, segment revenue decreased by 3.0% when compared to the same period of last year. This was mainly attributable to the sales decrease recorded in the lighting equipment segment, whilst the decrease was mitigated by the sales increment in the telecommunication segment and media and entertainment segment. During the Period, thanks to the Group's forward-looking strategic plan of setting up a manufacturing plant in Dazhou City, Sichuan in 2019, in close proximity to the main production centres of a number of telecommunications equipment customers, the Group was able to capture this opportunity to successfully obtain additional orders. Following years of in-depth cooperation with two of the top five well-known mobile phone manufacturers in the PRC, one of which entered into a further trusting relationship with the Group and began to place a larger volume of orders with the Group for its flagship products and new products, casting a vote of trust in the product quality of Ten Pao. Regarding market trends, the PRC's 5G telecommunications technology continued to develop during the Period, sparking a wave of 5G mobile phone replacement, as well as speeding up the development of ultra-fast charging and flash-charging products. As for the lighting equipment segment, some customer groups were based in Africa, Europe, the U.S. and other regions where the pandemic was relatively more serious, thus affecting sales in these areas. However, due to the Group's efforts in customer portfolio diversification and active expansion of sales contribution from domestic customers, the impact on revenue for this segment was lessened.
For the past few years, the Group has put much effort in consolidating resources to enhance cost efficiency. In terms of cost control, the Group's tendering system for qualified suppliers has matured. This, coupled with a policy of supplier diversification, provided further safeguard for Ten Pao's products. Standardisation of design also helped the Group to control material costs, which enhanced the Group's bargaining power with suppliers. The Group's tendering system for suppliers played a significant role at this time, enabling Ten Pao to maintain a stable gross profit margin in a difficult period. Additionally, the Group raised the
Interim Report 2020 TEN PAO GROUP HOLDINGS LIMITED | 7 |
Management Discussion and Analysis
proportion of automated production lines during the Period. This not only improved the consistency and reliability of product quality, but also eased the impact of rising labour costs and greatly enhanced production efficiency. As a result of the above, gross profit margin for the Period increased.
To support the sustainable development of the Group's business, Ten Pao has in the past few years gradually expanded its domestic and overseas production layout. As geopolitics brings changes to the market, diversification of production sites helps consolidate the Group's global production network, ease the impact of geopolitical tensions, and at the same time, promote the Group's local business development. During the Period, phase three expansion of the plant in Hungary was successfully completed and the set-up of production lines is currently in progress. The plant in Hungary is expected to contribute additional production capacity starting from the third quarter of this year. In the PRC, the production base in Dazhou, Sichuan Province has commenced operation. Its proximity to the production centres of various manufacturers of consumer electronics brands will give Ten Pao a competitive edge to bring in more new customers and orders. The production capacity of the Dazhou plant is gradually being released, with its phase 2 expected to enter production in the second half of 2020. The Vietnam production base has also begun to contribute production capacity during the Period and the Group will continue to explore the opportunity to expand the manufacturing capacity there.
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Management Discussion and Analysis
PROSPECT
The coronavirus pandemic and global geopolitical instability are expected to place further downward pressure on economic growth in the second half of 2020. To sustain the Group's competitive strength, resilience and profitability, we have been attentively monitoring changes in the external environment, adopting flexible response measures, maintaining cost efficiency and diversifying our global production capacity. At the same time, the Group is also actively exploring market opportunities and potential. Apart from continuing to launch new products in line with environmental protection policies related to 5G telecommunication technology research and development and green mobility development, the Group has invested resources to explore business opportunities in other industries, in preparation for the steady development of Ten Pao in the long term.
Ten Pao has been devoting resources to technological innovation and product R&D in the 5G smartphone power supply market to capitalise on market opportunities. According to a market research report by Strategy Analytics, with the commercialisation of 5G telecommunication technology, the global demand for 5G smartphones is expected to surge by 12 times in 2020, indicating a strong appetite from the market that could well stimulate the demand for its complementary power supply products. Moreover, the high level of energy consumption in 5G smartphones, together with the growing market demand for higher power, fast-charging,flash-charging and wireless-charging products, will continue to fuel the technological upgrading and sales of such products. As a close working partner of renowned manufacturers of 5G smartphones, Ten Pao will continue to innovate and optimise our expertise in power supply technology and our existing product portfolio to provide the market with even better solutions for quality power supply and, riding on the wave of the replacement cycle for 5G smartphones, to strive for greater market share. At the same time, the Group will invest more R&D resources in related flash-charging technology, driving the market towards an era of greater convenience and faster speed in electricity supply. Apart from smartphones, 5G technology advancement also encourages technological innovation and application in many other commercial
Interim Report 2020 TEN PAO GROUP HOLDINGS LIMITED | 9 |
Management Discussion and Analysis
areas, including the Internet of Things (IoT). Ten Pao will commit additional resources to the R&D of technology in these areas to further expand its product offerings and increase its market share.
Green mobility remains an objective that is being proactively promoted by the PRC government. In October 2019, the PRC government issued the "General Proposal of Quality Green Living" (綠色生活創建行動總體方案), which has stated guidelines to expedite the construction of power charging infrastructures, with the goal of raising the green mobility ratio within urban cities by 2020. In addition, the PRC government has plans to subsidise the construction and operation of electrical power charging infrastructures, further lifting the demand and market potential for smart charging products for electric vehicles (EVs) and portable power supply/charging products. The Group will continue to expand our research capability in green mobility and related products, and to actively develop this blue ocean market. Meanwhile, the Group had entered into an agreement with a renowned energy company for the grant of license to use its logo in certain kinds of consumer electronic products and merchandising rights in the market. These products are scheduled to launch to the market in the first half of 2021.
To align with Ten Pao's sales growth and to diversify regional risks, the Group will continue to carefully plan our domestic and overseas production layout. In terms of domestic facilities, the second phase of the Dazhou plant in Sichuan is expected to commence production by the second half of 2020; while construction of a new plant on the additional land purchased in Huizhou will kick off in the second half of 2020, with completion and commencement of operation expected in 2022, bringing additional production capability to the Huizhou headquarters. In terms of overseas production capacity, in addition to the Hungary and Vietnam bases, the Group is also actively exploring the possibility of setting up a production base in India, which will support Ten Pao in developing the South Asian market. Moreover, the Group will invest more resources to increase the proportion of automated production lines to maximise manufacturing efficiency and profitability.
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Management Discussion and Analysis
Over the past 40 years, the Group has been committed to product innovation and technological advancement of one-stop smart power supply solutions, allowing us to realise our full potential and gain a lead in the dynamic market. Our management team, with its rich industry experience and market exposure, has also provided us with reliable market insight and risk management capability, enabling the Group to gain a firm foothold amidst the challenges and economic ups and downs of the past years. Looking ahead, Ten Pao will uphold its pragmatic business philosophy, and continue to capture every market opportunity and potential to strengthen the Group's profitability and consolidate its leading position in the switching power supply industry, and hence, leading to sustainable returns for its shareholders.
LIQUIDITY AND FINANCIAL RESOURCES
The Group maintains a strong and healthy balance sheet. As at 30 June 2020, net current assets amounted to HK$263.2 million as compared with HK$229.0 million as at 31 December 2019. As of 30 June 2020, current ratio was 1.18 times (31 December 2019: 1.17 times) (current ratio is calculated by using the following formula: current assets/current liabilities).
Gearing ratio was 39.5% as at 30 June 2020 (31 December 2019: 23.3%)
(gearing ratio is calculated by using the following formula: total borrowings/total equity). During the Period, the Group's production in the PRC was temporarily suspended after the Lunar New Year holiday due to the coronavirus and only resumed full production capacity in the second quarter. Therefore, a majority part of the shipment was made in the second quarter and hence the account receivables increased accordingly. Additional borrowings was used to finance such credits given to customers.
Net cash generated from operating activities was HK$38.9 million for the six months ended 30 June 2020 (six months ended 30 June 2019: HK$14.6 million), which was mainly due to the improvement in the operating results during the Period. The Group achieved an operating profit of HK$119.7 million for the six months ended 30 June 2020 (six months ended 30 June 2019: HK$107.2 million).
Interim Report 2020 TEN PAO GROUP HOLDINGS LIMITED | 11 |
Management Discussion and Analysis
Net cash used in investing activities for the six months ended 30 June 2020 was HK$128.0 million (six months ended 30 June 2019: HK$44.6 million) as the Group has acquired more property, plant and equipment, amounting to HK$61.7 million (six months ended 30 June 2019: HK$50.8 million) and purchased a piece of land in the PRC at a total consideration of HK$95.0 million during the six months ended 30 June 2020.
During the six months ended 30 June 2020, net cash generated from financing activities was HK$39.1 million (six months ended 30 June 2019: HK$22.5 million) as the net borrowings was HK$132.0 million for the six months ended 30 June 2020 as compared with HK$55.2 million for the six months ended 30 June 2019.
DEBT MATURITY PROFILE
The maturity profile of the Group's borrowing is set out below:
30 June | 31 December | ||||
2020 | 2019 | ||||
HK$'000 | HK$'000 | ||||
(Unaudited) | (Audited) | ||||
Within 1 year | 177,143 | 120,227 | |||
Between 1 | and 2 | years | 53,086 | 30,360 | |
Between 2 | and 5 | years | 62,766 | 11,220 | |
292,995 | 161,807 |
FINANCIAL RISK MANAGEMENT
Foreign Exchange Risk
The Group operates mainly in the PRC, with a notable portion of its revenue derived from its export sales to overseas countries. The Group is exposed to foreign exchange risks, in particular fluctuations in currency exchange rates of HK$ and USD against RMB.
12 | TEN PAO GROUP HOLDINGS LIMITED Interim Report 2020 |
Management Discussion and Analysis
The Group generates a notable portion of revenue and receivables in USD and HK$, while our cost of sales is primarily denominated in RMB. For the six months ended 30 June 2020, the Group's revenue denominated in USD and HK$ amounted to approximately 69.7% of its total revenue (six months ended 30 June 2019: 67.9%).
The Group manages its foreign exchange risk by performing regular reviews of the Group's net foreign exchange exposures and it may enter into certain forward foreign exchange contracts, when necessary, to manage its exposure against foreign currencies and to mitigate the impact on exchange rate fluctuations. During the six months ended 30 June 2020, no forward foreign exchange contracts had been entered into by the Group as the Group did not consider there was any risk associated with exchange rate fluctuation that may adversely affect the results of the Group.
Cash Flow and Fair Value Interest Rate Risk
As the Group has no significant interest-bearing assets (other than bank balances and cash), the Group's income and operating cash flows are substantially independent of changes in market interest rates. As of 30 June 2020, the Group had bank borrowings of HK$293.0 million (31 December 2019: HK$161.8 million) which were primarily denominated in HK$, RMB and USD.
Credit Risk
The Group has no significant concentrations of credit risk. The carrying amounts of trade receivables, deposits and other receivables, bank balances and cash included in the interim condensed consolidated balance sheet represented the Group's maximum exposure to credit risk in relation to its financial assets. The Group has policies in place to ensure credit terms are only granted to customers with an appropriate credit history, and credit evaluations on them were performed periodically, taking into account their financial position, past experience and other factors. For customers to whom no credit terms were offered, the Group generally requires them to pay deposits and/or advances prior to the
Interim Report 2020 TEN PAO GROUP HOLDINGS LIMITED | 13 |
Management Discussion and Analysis
delivery of products. The Group typically does not require collaterals from customers. Provisions are made for the balances when they are past due and the management considers the default risk is high.
As at 30 June 2020, all of the bank balances, term deposits and restricted bank deposits of the Group were deposited with highly reputable and sizable banks and financial institutions without significant credit risk in the PRC and Hong Kong. The management does not expect to incur any losses from non- performance by these banks and financial institutions. As at 30 June 2020 and 31 December 2019, the Group held cash and bank balances and restricted bank deposits totalling HK$183.4 million and HK$171.1 million, respectively, with four major banks in the PRC and Hong Kong.
Liquidity Risk
The liquidity position of the Group is monitored closely by its management. The Group monitors and maintains a level of cash and cash equivalents deemed adequate by the management to finance its operations and mitigate the effects of fluctuations in cash flows.
CONTINGENT LIABILITIES
As at 30 June 2020, the Group did not have any significant contingent liabilities (31 December 2019: Nil).
FUTURE PLANS FOR MATERIAL INVESTMENTS OR CAPITAL ASSETS
The Group did not have plans for material investments or capital assets during the six months ended 30 June 2020.
MATERIAL ACQUISITIONS AND DISPOSALS OF SUBSIDIARIES, ASSOCIATES AND JOINT VENTURES
The Group did not have any material acquisitions and disposals of subsidiaries, associates and joint ventures for the six months ended 30 June 2020.
14 | TEN PAO GROUP HOLDINGS LIMITED Interim Report 2020 |
CORPORATE GOVERNANCE AND
OTHER INFORMATION
HUMAN RESOURCES
The Group employed a total of approximately 6,400 full-time employees as of 30 June 2020. The Group believes human resources are its valuable assets and maintains its solid commitment to attracting, developing and retaining talented employees, in addition to providing dynamic career opportunities and a favorable working environment to its employees. The Group constantly provides training with diverse operational functions and offers competitive remuneration packages and incentives to all employees. The Group regularly reviews its human resources policies for addressing corporate development needs. The total labour costs for the six months ended 30 June 2020 was HK$290.0 million, as compared to HK$291.2 million for the same period last year.
CORPORATE GOVERNANCE PRACTICES
The Board and the management are committed to abiding by the principles of good corporate governance with emphasis on transparency and accountability. The Board has established an audit committee (the "Audit Committee"), a nomination committee and a remuneration committee with defined terms of reference in accordance with the requirements set out in the Corporate Governance Code (the "CG Code") contained in Appendix 14 to the Rules (the "Listing Rules") Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited (the "Stock Exchange").
The Board has reviewed the Company's corporate governance practices and is satisfied that the Company has been in compliance with the code provisions set out in the CG Code throughout the six months ended 30 June 2020 and up to the date of this interim report, with the exception of code provision A.2.1.
Interim Report 2020 TEN PAO GROUP HOLDINGS LIMITED | 15 |
Corporate Governance and Other Information
According to code provision A.2.1, the roles of chairman and chief executive should be separate and should not be performed by the same person. The Company deviates from this code provision because Mr. Hung Kwong Yee ("Chairman Hung") performs both the roles of the chairman of the Board and the chief executive officer of the Company. Chairman Hung, the founder of the Group with the established market reputation in the switching power supply industry in the PRC, has extensive experience in the Group's business operation and management in general. The Board believes that vesting the two roles in the same person provides the Company with strong and consistent leadership and facilitates the implementation and execution of the Group's business strategies and, hence, is in the best interests of the Group. Under the leadership of Chairman Hung, the Board works effectively and performs its responsibilities with all key and appropriate issues discussed in a timely manner. In addition, as all major decisions are made in consultation with members of the Board and relevant Board committees, and there are three independent non-executive Directors on the Board offering independent perspectives, the Board is of the view that there are adequate safeguards in place to ensure sufficient balance of powers within 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.
MODEL CODE FOR SECURITIES TRANSACTIONS
The Company has adopted the Model Code for Securities Transactions by Directors of Listed Issuers (the "Model Code") contained in Appendix 10 to the Listing Rules as the code of conduct governing Directors' dealings in the Company's securities. Employees of the Group (the "Relevant Employees") who, because of their office or employment, are likely to possess inside information in relation to the Company or its securities are also subject to compliance with the Model Code. Following specific enquiry, all the Directors have confirmed their compliance with the Model Code throughout the six months ended 30 June 2020 and up to the date of this interim report. In addition, no incident of non- compliance of the Model Code by the Relevant Employees was noted by the Company during the six months ended 30 June 2020 and up to the date of this interim report.
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Corporate Governance and Other Information
INTERIM DIVIDEND
The Board has resolved to distribute an interim dividend of HK3 cents per ordinary share for the six months ended 30 June 2020 (2019: HK2.5 cents per ordinary share) to the Company's shareholders. The interim dividend is expected to be paid on 27 October 2020 to all shareholders whose names appear on the register of members of the Company on 9 October 2020.
CLOSURE OF REGISTER OF MEMBERS
The register of members of the Company will be closed from 7 October 2020 (Wednesday) to 9 October 2020 (Friday), both days inclusive, for the purpose of determining the entitlement to the interim dividend for the six months ended 30 June 2020. In order to be qualified for the said interim dividend, unregistered holders of shares of the Company should ensure all share transfer documents accompanied by the corresponding share certificates are lodged with the Company's branch share registrar and transfer office in Hong Kong, Tricor Investor Services Limited, at Level 54, Hopewell Centre, 183 Queen's Road East, Hong Kong, for registration not later than 4:30 p.m. (Hong Kong time) on 6 October 2020 (Tuesday).
PURCHASE, SALE OR REDEMPTION OF THE COMPANY'S LISTED SECURITIES
Neither the Company nor any of its subsidiaries purchased, sold or redeemed any of the Company's listed securities during the six months ended 30 June 2020.
AUDIT COMMITTEE AND REVIEW OF FINANCIAL STATEMENTS
The Audit Committee comprises three independent non-executive Directors, namely Mr. Chu Yat Pang Terry (chairman), Mr. Lam Cheung Chuen and Mr. Lee Kwan Hung.
Interim Report 2020 TEN PAO GROUP HOLDINGS LIMITED | 17 |
Corporate Governance and Other Information
The Audit Committee has reviewed the Company's unaudited interim condensed consolidated financial statements for the six months ended 30 June 2020 and this interim report in conjunction with the Company's management. The Audit Committee has also reviewed the effectiveness of the risk management and internal control systems of the Group and considered them effective.
In addition, the independent auditor of the Company, PricewaterhouseCoopers, has reviewed the unaudited interim financial information for the six months ended 30 June 2020 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.
SUFFICIENCY OF PUBLIC FLOAT
Based on the information that is publicly available to the Company and within the knowledge of the Directors as at the latest practicable date prior to the issue of this interim report, the Company has met the Listing Rule requirement of having a sufficient public float, i.e. at least 25% of the Company's total number of issued shares (being the minimum prescribed percentage under the Listing Rules) were held by the public.
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Corporate Governance and Other Information
DIRECTORS' AND CHIEF EXECUTIVE'S INTERESTS AND SHORT POSITIONS IN SHARES, UNDERLYING SHARES AND DEBENTURES
As at 30 June 2020, the interests and short positions of the Directors and the chief executive of the Company in the shares, underlying shares and debentures of the Company or any of its associated corporations (within the meaning of Part XV of the Securities and Futures Ordinance, Chapter 571 of the Laws of Hong Kong (the "SFO")), as recorded in the register of the Company 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, were as follows:
Long position in ordinary shares of the Company
Approximate | ||||
percentage* | ||||
Number of ordinary | of the Company's | |||
Name of Director | Capacity | Note | shares interested | issued share capital |
Chairman Hung | Beneficial owner | 13,052,000 | 1.30% | |
Interest of a controlled corporation | 1 | 338,012,000 | 33.79% | |
Founder of a discretionary trust | 2 | 300,000,000 | 29.99% | |
Total | 651,064,000 | 65.08% | ||
Yang Bingbing | Beneficial owner | 420,000 | 0.04% | |
Lam Cheung Chuen | Beneficial owner | 1,000,000 | 0.10% |
Interim Report 2020 TEN PAO GROUP HOLDINGS LIMITED | 19 |
Corporate Governance and Other Information
Notes:
- These shares are held by Even Joy Holdings Limited, a company wholly owned by Chairman Hung. By virtue of the SFO, Chairman Hung is deemed to be interested in these shares held by Even Joy Holdings Limited.
- These shares are held by TinYing Investments Limited, a company wholly owned by TinYing Holdings Limited, which is in turn wholly owned by Vistra Trust (BVI) Limited acting as the trustee of The TinYing Trust (the "Family Trust"). The Family Trust is a discretionary trust established by Chairman Hung as settlor. The beneficiaries of the Family Trust are Chairman Hung, certain of his family members and other persons who may be added or amended from time to time. By virtue of the SFO, Chairman Hung, TinYing Holdings Limited and Vistra Trust (BVI) Limited are deemed to be interested in these shares held by TinYing Investments Limited.
- The percentage represents the number of ordinary shares of the Company interested divided by the number of the Company's issued shares as at 30 June 2020.
Save as disclosed above, as at 30 June 2020, none of the Directors or chief executive of the Company had any interests or short positions in the shares, underlying shares or debentures of the Company or any of its associated corporations (within the meaning of Part XV of the SFO), as recorded in the register of the Company 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.
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Corporate Governance and Other Information
INTERESTS AND SHORT POSITIONS OF SUBSTANTIAL SHAREHOLDERS IN SHARES AND UNDERLYING SHARES
As at 30 June 2020, so far as is known to the Directors, the following corporations or persons (other than a Director or the chief executive of the Company) had an interest or a short position in the shares or underlying shares of the Company, as recorded in the register of the Company required to be kept under Section 336 of the SFO:
Long position in ordinary shares of the Company
Approximate | ||||
percentage* of the | ||||
Number of ordinary | Company's issued | |||
Name of shareholder | Capacity | Note | shares interested | share capital |
Even Joy Holdings Limited | Beneficial owner | 1 | 338,012,000 | 33.79% |
TinYing Investments Limited | Beneficial owner | 1 | 300,000,000 | 29.99% |
TinYing Holdings Limited | Interest of a controlled | 1 | 300,000,000 | 29.99% |
corporation | ||||
Vistra Trust (BVI) Limited | Trustee of a discretionary trust | 1 | 300,000,000 | 29.99% |
Fidelity China Special | Beneficial owner | 70,084,000 | 7.01% | |
Situations Plc | ||||
FIL Limited | Interest of controlled | 2 | 70,428,000 | 7.04% |
corporations | ||||
Pandanus Partners L.P. | Interest of controlled | 2 | 70,428,000 | 7.04% |
corporations | ||||
Pandanus Associates Inc. | Interest of controlled | 2 | 70,428,000 | 7.04% |
corporations |
Interim Report 2020 TEN PAO GROUP HOLDINGS LIMITED | 21 |
Corporate Governance and Other Information
Notes:
1 These interests are also disclosed as the interests of Chairman Hung in the above section headed "Directors' and chief executive's interests and short positions in shares, underlying shares and debentures".
2. According to the disclosure of interests notice filed by Pandanus Associates Inc. ("Pandanus") on 22 March 2019, these shares are held by FIL Investment Management (Hong Kong) Limited ("FIL HK"), a wholly-owned subsidiary of FIL Asia Holdings Pte Limited ("FIL Asia"), which is in turn wholly-owned by FIL Limited ("FIL"). FIL is 38.10% controlled by Pandanus Partners L.P. ("Pandanus L.P."), which is in turn wholly-owned by Pandanus. By virtue of the SFO, Pandanus, Pandanus L.P., FIL and FIL Asia are deemed to be interested in these shares held by FIL HK.
- The percentage represents the number of ordinary shares of the Company interested divided by the number of the Company's issued shares as at 30 June 2020.
Save as disclosed above, as at 30 June 2020, other than the Directors and the chief executive of the Company whose interests are set out in the above paragraph headed "Directors' and chief executive's interests and short positions in shares, underlying shares and debentures", no person had any interest or short position in the shares or underlying shares of the Company recorded in the register of the Company required to be kept pursuant to Section 336 of the SFO.
SHARE OPTION SCHEME
The Company adopted a share option scheme on 23 November 2015 (the "Share Option Scheme"), which falls within the ambit of, and is subject to the regulations under Chapter 17 of the Listing Rules. The purpose of the Share Option Scheme is to recognise and acknowledge the contributions the eligible participants (the "Eligible Participants") have had or may have made to the Group. The Share Option Scheme will provide the Eligible Participants an opportunity to have a personal stake in the Company with a view to achieving the following objectives: (i) motivating the Eligible Participants to optimise their performance efficiency for the benefit of the Group; and (ii) attracting and retaining or otherwise maintaining on-going business relationships with the Eligible Participants whose contributions are or will be beneficial to the long-term growth of the Group.
22 | TEN PAO GROUP HOLDINGS LIMITED Interim Report 2020 |
Corporate Governance and Other Information
Eligible Participants of the Share Option Scheme include: (i) any full-time or part- time employees, executives or officers of the Company or any of its subsidiaries;
- any Directors (including independent non-executive Directors) or any directors of the Company's subsidiaries; (iii) any advisers, consultants, suppliers, customers and agents to the Company or any of its subsidiaries; and (iv) such other persons who, in the sole opinion of the Board, will contribute or have contributed to the Group.
Since the adoption of the Share Option Scheme, a total of 19,348,000 share options have been granted, of which 456,000 share options were exercised and all the remaining 18,892,000 share options were lapsed in accordance with the terms of the Share Option Scheme. No movement of share options for the six months ended 30 June 2020 is shown in this interim report since (i) there were no outstanding share options at the beginning of the said six-month period; and (ii) there was no grant of share options during the said six-month period.
UPDATE ON DIRECTOR'S INFORMATION
Set out below is the change in the Director's information, which is required to be disclosed pursuant to Rule 13.51B(1) of the Listing Rules:
- With effect from 19 June 2020, Mr. Lee Kwan Hung (an independent non- executive Director) retired from office as an independent non-executive director of Landsea Green Properties Co., Ltd., a company listed on the Main Board of the Stock Exchange (stock code: 106), upon conclusion of its annual general meeting.
Save as disclosed above, there is no other information which is required to be disclosed under Rule 13.51B(1) of the Listing Rules.
Interim Report 2020 TEN PAO GROUP HOLDINGS LIMITED | 23 |
REPORT ON REVIEW OF INTERIM FINANCIAL INFORMATION
To the Board of Directors of Ten Pao Group Holdings Limited
(incorporated in the Cayman Islands with limited liability)
INTRODUCTION
We have reviewed the interim financial information set out on pages 26 to 76, which comprises the interim condensed consolidated balance sheet of Ten Pao Group Holdings Limited (the "Company") and its subsidiaries (together, the "Group") as at 30 June 2020 and the interim condensed consolidated statement of profit or loss, the interim condensed consolidated statement of comprehensive income, the interim condensed consolidated statement of changes in equity and the interim condensed consolidated statement of cash flows for the six-month period then ended, and a summary of significant accounting policies and other explanatory notes. The Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited require the preparation of a report on interim financial information to be in compliance with the relevant provisions thereof and Hong Kong Accounting Standard 34 "Interim Financial Reporting" issued by the Hong Kong Institute of Certified Public Accountants. The directors of the Company are responsible for the preparation and presentation of this interim financial information in accordance with Hong Kong Accounting Standard 34 "Interim Financial Reporting". Our responsibility is to express a conclusion on this interim financial information 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.
24 | TEN PAO GROUP HOLDINGS LIMITED Interim Report 2020 |
Report on Review of Interim Financial Information
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 interim financial information consists of making inquiries, 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 of the Group is not prepared, in all material respects, in accordance with Hong Kong Accounting Standard 34 "Interim Financial Reporting".
PricewaterhouseCoopers
Certified Public Accountants
Hong Kong, 21 August 2020
Interim Report 2020 TEN PAO GROUP HOLDINGS LIMITED | 25 |
INTERIM CONDENSED CONSOLIDATED STATEMENT OF PROFIT OR LOSS
(All amounts in HK dollar thousands unless otherwise stated)
Six months ended 30 June | ||||
Notes | 2020 | 2019 | ||
(Unaudited) | (Unaudited) | |||
Revenue | 7 | 1,763,650 | 1,834,665 | |
Cost of sales | 9 | (1,457,547) | (1,529,546) | |
Gross profit | 306,103 | 305,119 | ||
Other income | 8 | 5,462 | 6,705 | |
Other gains/(losses) - net | 8 | 6,880 | (5,912) | |
Selling expenses | 9 | (78,120) | (74,841) | |
Administrative expenses | 9 | (119,858) | (122,707) | |
Net impairment losses on financial | ||||
assets | (774) | (1,205) | ||
Operating profit | 119,693 | 107,159 | ||
Finance income | 10 | 649 | 264 | |
Finance expenses | 10 | (4,460) | (4,414) | |
Finance expenses - net | (3,811) | (4,150) | ||
Profit before income tax | 115,882 | 103,009 | ||
Income tax expenses | 11 | (20,999) | (21,916) | |
Profit for the period | ||||
attributable to: | ||||
Owners of the Company | 95,106 | 81,093 | ||
Non-controlling interests | (223) | - | ||
94,883 | 81,093 | |||
Earnings per share for the period | ||||
- basic and diluted per share | 12 | HK$0.10 | HK$0.08 | |
The above condensed consolidated statement of profit or loss should be read in conjunction with the accompanying notes.
26 | TEN PAO GROUP HOLDINGS LIMITED Interim Report 2020 |
INTERIM CONDENSED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
(All amounts in HK dollar thousands unless otherwise stated)
Six months ended 30 June | |||
2020 | 2019 | ||
(Unaudited) | (Unaudited) | ||
Profit for the period | 94,883 | 81,093 | |
Other comprehensive income | |||
Items that may be reclassified subsequently to | |||
profit or loss | |||
Currency translation differences | (19,062) | (4,756) | |
Total comprehensive income for the period | |||
attributable to： | |||
Owners of the Company | 76,044 | 76,337 | |
Non-controlling interests | (223) | - | |
75,821 | 76,337 | ||
The above condensed consolidated statement of comprehensive income should be read in conjunction with the accompanying notes.
Interim Report 2020 TEN PAO GROUP HOLDINGS LIMITED | 27 |
INTERIM CONDENSED CONSOLIDATED BALANCE SHEET
(All amounts in HK dollar thousands unless otherwise stated)
30 June | 31 December | |||
Notes | 2020 | 2019 | ||
(Unaudited) | (Audited) | |||
ASSETS | ||||
Non-current assets | ||||
Land use rights | 14 | 4,758 | 4,763 | |
Property, plant and equipment | 14 | 510,891 | 495,038 | |
Right-of-use assets | 15 | 107,844 | 11,881 | |
Investment properties | 16 | 7,200 | 7,500 | |
Intangible assets | 14 | 11,153 | 10,600 | |
Deferred income tax assets | 27 | 28,187 | 22,517 | |
Financial assets at fair value through | ||||
other comprehensive income | 20 | 16,690 | 17,017 | |
Financial assets at fair value through | ||||
profit or loss - non-current | 21 | 3,075 | 3,043 | |
Prepayments for the purchase of | ||||
property, plant and equipment | 5,482 | 27,721 | ||
695,280 | 600,080 | |||
Current assets | ||||
Inventories | 17 | 507,222 | 574,382 | |
Trade and other receivables | 18 | 1,047,425 | 867,514 | |
Amounts due from related parties | 29(b) | 1,266 | 1,320 | |
Financial assets at fair value through | ||||
profit or loss - current | 21 | 5,474 | - | |
Cash and cash equivalents | 106,143 | 158,031 | ||
Restricted bank deposits | 22 | 77,299 | 13,058 | |
1,744,829 | 1,614,305 | |||
Total assets | 2,440,109 | 2,214,385 | ||
28 | TEN PAO GROUP HOLDINGS LIMITED Interim Report 2020 |
Interim Condensed Consolidated Balance Sheet (All amounts in HK dollar thousands unless otherwise stated)
30 June | 31 December | |||
Notes | 2020 | 2019 | ||
(Unaudited) | (Audited) | |||
EQUITY | ||||
Capital and reserves attributable to | ||||
owners of the Company | ||||
Share capital | 23 | 10,005 | 10,005 | |
Share premium | 23 | 125,788 | 125,788 | |
Other reserves | 18,218 | 37,280 | ||
Retained earnings | 588,903 | 521,810 | ||
Non-controlling interests | (516) | (293) | ||
Total equity | 742,398 | 694,590 | ||
LIABILITIES | ||||
Non-current liabilities | ||||
Non-current bank borrowings | 24 | 115,852 | 41,580 | |
Lease liabilities - non-current | 15 | 5,864 | 5,775 | |
Derivative financial instruments | ||||
- non-current | 19 | 2,887 | 153 | |
Deferred income tax liabilities | 27 | 63,393 | 59,726 | |
Deferred government grants | 25 | 28,114 | 27,225 | |
216,110 | 134,459 |
Interim Report 2020 TEN PAO GROUP HOLDINGS LIMITED | 29 |
Interim Condensed Consolidated Balance Sheet
(All amounts in HK dollar thousands unless otherwise stated)
30 June | 31 December | |||
Notes | 2020 | 2019 | ||
(Unaudited) | (Audited) | |||
Current liabilities | ||||
Trade and other payables | 26 | 1,245,526 | 1,215,452 | |
Contract liabilities | 12,367 | 8,948 | ||
Amounts due to related parties | 29(c) | 22,074 | 22,164 | |
Dividend payable | 16 | 12 | ||
Income tax liabilities | 23,949 | 17,214 | ||
Lease liabilities - current | 15 | 526 | 1,319 | |
Short-term bank borrowings | 24 | 107,275 | 63,091 | |
Current portion of non-current bank | ||||
borrowings | 24 | 69,868 | 57,136 | |
1,481,601 | 1,385,336 | |||
Total liabilities | 1,697,711 | 1,519,795 | ||
Total equity and liabilities | 2,440,109 | 2,214,385 | ||
The above condensed consolidated balance sheet should be read in conjunction with the accompanying notes.
30 | TEN PAO GROUP HOLDINGS LIMITED Interim Report 2020 |
INTERIM CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
(All amounts in HK dollar thousands unless otherwise stated)
Other Reserves | |||||||||||
Financial Assets | |||||||||||
at Fair Value | |||||||||||
Through Other | Non- | ||||||||||
For the six months ended | Share | Share | Statutory | Capital | Comprehensive | Exchange | Share | Retained | Controlling | Total | |
30 June 2020 (unaudited) | Capital | Premium | Reserves | Reserves | Income (FVOCI) | Reserves | Options | Total Earnings | Total | Interests | Equity |
Balance at 1 January 2020
Comprehensive income
Profit for the period
Other comprehensive income
Currency translation difference
Total comprehensive income
Contributions by and distributions to owners of the Company recognised directly in equity
Dividends (Note 13)
Total contributions by and distributions to owners of the Company for the period
10,005 | 125,788 | 68,547 | 338 | 236 | (37,309) | 5,468 | 37,280 | 521,810 | 694,883 | (293) | 694,590 |
- | - | - | - | - | - | - | - | 95,106 | 95,106 | (223) | 94,883 |
- | - | - | - | (7) | (19,055) | - | (19,062) | - | (19,062) | - | (19,062) |
- | - | - | - | (7) | (19,055) | - | (19,062) | 95,106 | 76,044 | (223) | 75,821 |
- | - | - | - | - | - | - | - | (28,013) | (28,013) | - | (28,013) |
- | - | - | - | - | - | - | - | (28,013) | (28,013) | - | (28,013) |
Balance at 30 June 2020 (unaudited) | 10,005 | 125,788 | 68,547 | 338 | 229 | (56,364) | 5,468 | 18,218 | 588,903 | 742,914 | (516) 742,398 |
Interim Report 2020 TEN PAO GROUP HOLDINGS LIMITED | 31 |
Interim Condensed Consolidated Statement of Changes in Equity
(All amounts in HK dollar thousands unless otherwise stated)
Other Reserves | |||||||||
For the six months ended | Share | Share | Statutory | Capital | Exchange | Share | Retained | Total | |
30 June 2019 (unaudited) | Capital | Premium | Reserves | Reserves | Reserves | Options | Total | Earnings | Equity |
Balance at 1 January 2019 | 10,005 | 125,788 | 31,977 | 338 | (21,892) | 5,468 | 15,891 | 431,651 | 583,335 |
Comprehensive income | |||||||||
Profit for the period | - | - | - | - | - | - | - | 81,093 | 81,093 |
Other comprehensive income | |||||||||
Currency translation difference | - | - | - | - | (4,756) | - | (4,756) | - | (4,756) |
Total comprehensive income | - | - | - | - | (4,756) | - | (4,756) | 81,093 | 76,337 |
Contributions by and distributions to owners | |||||||||
of the Company recognised directly | |||||||||
in equity | |||||||||
Dividends | - | - | - | - | - | - | - | (25,011) | (25,011) |
Total contributions by and distributions to | |||||||||
owners of the Company for the period | - | - | - | - | - | - | - | (25,011) | (25,011) |
Transaction with owners | |||||||||
Appropriation to statutory reserves | - | - | 4,475 | - | - | - | 4,475 | (4,475) | - |
Balance at 30 June 2019 (unaudited) | |||||||||
10,005 | 125,788 | 36,452 | 338 | (26,648) | 5,468 | 15,610 | 483,258 | 634,661 | |
32 | TEN PAO GROUP HOLDINGS LIMITED Interim Report 2020 |
INTERIM CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
(All amounts in HK dollar thousands unless otherwise stated)
Six months ended 30 June | ||||
Notes | 2020 | 2019 | ||
(Unaudited) | (Unaudited) | |||
Cash flows from | ||||
operating activities | ||||
Cash generated from operations | 58,967 | 38,177 | ||
Interest paid | (4,540) | (4,493) | ||
Income tax paid | (15,525) | (19,132) | ||
Net cash generated from | ||||
operating activities | 38,902 | 14,552 | ||
Cash flows from investing activities | ||||
Purchase of property, plant and | ||||
equipment | (61,652) | (50,809) | ||
Purchase of intangible assets | (2,231) | (1,738) | ||
Purchase of right-of-use assets | (69,044) | - | ||
Proceeds from disposal of property, | ||||
plant and equipment | 3,621 | 5,470 | ||
Addition of financial assets at fair | ||||
value through profit or loss | (5,474) | - | ||
Grants from government related to | ||||
assets | 25 | 6,826 | 2,519 | |
Net cash used in investing activities | (127,954) | (44,558) |
Interim Report 2020 TEN PAO GROUP HOLDINGS LIMITED | 33 |
Interim Condensed Consolidated Statement of Cash Flows
(All amounts in HK dollar thousands unless otherwise stated)
Six months ended 30 June | ||||
Notes | 2020 | 2019 | ||
(Unaudited) | (Unaudited) | |||
Cash flows from financing activities | ||||
Proceeds from bank borrowings | 24 | 816,875 | 765,261 | |
Repayments of bank borrowings | 24 | (684,914) | (710,106) | |
Dividends paid | 13 | (28,009) | (25,008) | |
Increase in restricted bank deposits | (64,241) | (7,408) | ||
Principal elements of lease payments | (661) | (194) | ||
Net cash generated from financing | ||||
activities | 39,050 | 22,545 | ||
Net decrease in cash and cash | ||||
equivalents | (50,002) | (7,461) | ||
Cash and cash equivalents at | ||||
beginning of the period | 158,031 | 193,797 | ||
Exchange losses on cash and cash | ||||
equivalents | (1,886) | (299) | ||
Cash and cash equivalents at end of | ||||
the period | 106,143 | 186,037 | ||
Analysis of balance of cash and cash | ||||
equivalents: | ||||
Cash and cash on hand | 106,143 | 186,037 | ||
The above condensed consolidated statement of cash flows should be read in conjunction with the accompanying notes.
34 | TEN PAO GROUP HOLDINGS LIMITED Interim Report 2020 |
NOTES TO THE INTERIM FINANCIAL INFORMATION
(All amounts in HK dollar thousands unless otherwise stated)
1 GENERAL INFORMATION
Ten Pao Group Holdings Limited (天寶集團控股有限公司) (the "Company") was incorporated in the Cayman Islands on 27 January 2015 as an exempted company with limited liability under the Companies Law, Cap 22 (Law 3 of 1961, as consolidated and revised) of the Cayman Islands. The address of the Company's registered office is Cricket Square, Hutchins Drive, P.O. Box 2681, Grand Cayman KY1-1111, Cayman Islands.
The Company, an investment holding company, and its subsidiaries (collectively, the "Group") are principally engaged in the developing, manufacturing and sales of switching power supply units for consumer products and smart chargers and controllers for industrial use in the People's Republic of China (the "PRC"). The controlling shareholder of the Group is Mr. Hung Kwong Yee (洪光椅) (the "Controlling Shareholder" or "Chairman Hung").
On 11 December 2015, shares of the Company were listed on The Stock Exchange of Hong Kong Limited (the "Stock Exchange").
This interim financial information (the "Interim Financial Information") is presented in Hong Kong dollar ("HK$") thousands, unless otherwise stated.
This Interim Financial Information was approved for issue on 21 August 2020 and has not been audited.
2 BASIS OF PREPARATION
This Interim Financial Information for the six months ended 30 June 2020 (the "Period") has been prepared in accordance with Hong Kong Accounting Standard "HKAS" 34 "Interim Financial Reporting" issued by Hong Kong Institute of Certified Public Accountants. This Interim Financial Information should be read in conjunction with the annual financial statements for the year ended 31 December 2019 (the "2019 Financial Statements"), which have been prepared in accordance with Hong Kong Financial Reporting Standards ("HKFRSs").
Interim Report 2020 TEN PAO GROUP HOLDINGS LIMITED | 35 |
Notes to the Interim Financial Information
(All amounts in HK dollar thousands unless otherwise stated)
3 ACCOUNTING POLICIES
The accounting policies applied are consistent with those of the 2019 Financial Statements, as described in those annual financial statements, except for the adoption of amendments to HKASs effective for the financial year beginning 1 January 2020.
- New and amended standards adopted by the Group
- Definition of Material - amendments to HKAS1 and HKAS 8
- Definition of a Business - amendments to HKFRS 3
- Revised Conceptual Framework for Financial Reporting
- Interest Rate Benchmark Reform - amendments to HKFRS 9, HKAS 39 and HKFRS 7
- New and amended standards not yet adopted by the Group
Effective for annual | ||
periods beginning | ||
on or after | ||
Amendments to | Sale or Contribution | The effective date has |
HKFRS 10 and | of Assets between | now been deferred |
HKAS 28 | an Investor and its | |
Associate or Joint | ||
Venture | ||
HKFRS 17 | Insurance Contracts | 1 January 2021 |
The Group is in the process of making an assessment of the impact of these new and revised HKFRSs upon initial application. So far the Group has identified no aspects of the new and revised standards and interpretations that are expected to have significant financial impact on the Group's performance and position.
36 | TEN PAO GROUP HOLDINGS LIMITED Interim Report 2020 |
Notes to the Interim Financial Information
(All amounts in HK dollar thousands unless otherwise stated)
4 ESTIMATES
The preparation of the Interim Financial Information requires management to make judgments, 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 Information, the significant judgments 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 2019 Financial Statements.
5 FINANCIAL RISK MANAGEMENT
5.1 Financial risk factors
The Group's activities expose it to a variety of financial risks: market risk (including foreign exchange risk, price risk, cash flow and fair value interest rate risk), credit risk and liquidity risk.
This Interim Financial Information does not include all financial risk management information and disclosures required in the annual financial statements, and should be read in conjunction with the 2019 Financial Statements.
There have been no changes in the risk management function since 31 December 2019 or in any risk management policies since 31 December 2019.
5.2 Liquidity risk
Compared to the year ended 31 December 2019, there was no material change in the contractual undiscounted cash outflows for financial liabilities. The Group exercises prudent liquidity risk management by maintaining sufficient cash and bank balances. The Group's liquidity risk is further mitigated through the availability of financing through its own cash resources and the availability of banking facilities to meet its financial commitments. In the opinion of the directors, the Group does not have any significant liquidity risk.
Interim Report 2020 TEN PAO GROUP HOLDINGS LIMITED | 37 |
Notes to the Interim Financial Information
(All amounts in HK dollar thousands unless otherwise stated)
5 FINANCIAL RISK MANAGEMENT (CONTINUED)
5.3 Fair value estimation
The table below analyses financial instruments carried at fair value, by the levels of inputs to valuation techniques. The inputs to valuation techniques are categorised into three levels within a fair value hierarchy, as follows:
- Level 1 - Quoted prices unadjusted in active markets for identical assets or liabilities.
- Level 2 - Inputs other than quoted prices included within level 1 that are observable for the asset or liability, either directly that is, as prices or indirectly that is, derived from prices.
- Level 3 - Inputs for the asset or liability that are not based on observable market data that is, unobservable inputs.
38 | TEN PAO GROUP HOLDINGS LIMITED Interim Report 2020 |
Notes to the Interim Financial Information
(All amounts in HK dollar thousands unless otherwise stated)
5 FINANCIAL RISK MANAGEMENT (CONTINUED)
5.3 Fair value estimation (Continued)
The following table presents the Group's assets and liabilities that are measured at fair value as at 30 June 2020 and 31 December 2019.
As at 30 June 2020 (unaudited) | |||||
Level 1 | Level 2 | Level 3 | Total | ||
HK$'000 HK$'000 HK$'000 HK$'000 | |||||
Recurring fair value | |||||
measurements | |||||
Assets | |||||
Financial assets at fair | |||||
value through profit | |||||
or loss - current | - | - | 5,474 | 5,474 | |
Financial assets at fair | |||||
value through profit | |||||
or loss | |||||
- non-current | - | - | 3,075 | 3,075 | |
Financial assets at fair | |||||
value through | |||||
comprehensive | |||||
income | |||||
- non-current | - | - | 16,690 | 16,690 | |
Liabilities | |||||
Derivative financial | |||||
instruments | - | 2,887 | - | 2,887 | |
Interim Report 2020 TEN PAO GROUP HOLDINGS LIMITED | 39 |
Notes to the Interim Financial Information
(All amounts in HK dollar thousands unless otherwise stated)
5 FINANCIAL RISK MANAGEMENT (CONTINUED)
5.3 Fair value estimation (Continued)
As at 31 December 2019 (audited) | ||||
Level 1 | Level 2 | Level 3 | Total | |
HK$'000 HK$'000 HK$'000 HK$'000 | ||||
Recurring fair value | ||||
measurements | ||||
Assets | ||||
Financial assets at fair | ||||
value through profit | ||||
or loss | ||||
- non-current | - | - | 3,043 | 3,043 |
Financial assets at fair | ||||
value through | ||||
comprehensive | ||||
income | ||||
- non-current | - | - | 17,017 | 17,017 |
Liabilities | ||||
Derivative financial | ||||
instruments | - | 153 | - | 153 |
- Financial instruments in level 1
The fair value of financial instruments traded in active markets is based on quoted market prices at the end of the reporting period. A market is regarded as active if quoted prices are readily and regularly available from an exchange, dealer, broker, industry group, pricing service, or regulatory agency, and those prices represent actual and regularly occurring market transactions on an arm's length basis. The quoted market price used for financial assets held by the Group is the current bid price. These instruments are included in level 1.
40 | TEN PAO GROUP HOLDINGS LIMITED Interim Report 2020 |
Notes to the Interim Financial Information
(All amounts in HK dollar thousands unless otherwise stated)
5 FINANCIAL RISK MANAGEMENT (CONTINUED)
5.3 Fair value estimation (Continued)
-
Financial instruments in level 2
The fair value of financial instruments that are not traded in an active market is determined by using valuation techniques. These valuation techniques maximise the use of observable market data where it is available and rely as little as possible on entity specific estimates. If all significant inputs required to fair value an instrument are observable, the instrument is included in level 2. - Financial instruments in level 3
If one or more of the significant inputs is not based on observable market data, the instrument is included in level 3.
Specific valuation techniques used to value financial instruments include:
- Quoted market prices or dealer quotes for similar instruments.
- The fair value of interest rate swaps is calculated as the present value of the estimated future cash flows based on observable yield curves.
- The fair value of the remaining financial instruments is determined using discounted cash flow analysis.
There were no transfers of financial assets between level 2 and level 3 fair value hierarchy classifications during the Period.
Note that all the resulting fair value estimates are included in level 2 except for unlisted equity investments, insurance for the Controlling Shareholder and wealth management products as explained below.
Interim Report 2020 TEN PAO GROUP HOLDINGS LIMITED | 41 |
Notes to the Interim Financial Information
(All amounts in HK dollar thousands unless otherwise stated)
5 FINANCIAL RISK MANAGEMENT (CONTINUED)
5.3 Fair value estimation (Continued)
Quantitative information about fair value measurements using significant unobservable inputs Level 3
Fair value | Valuation | Unobservable | ||
Description | HK$'000 | technique | input | Assumption |
Insurance for the Controlling | ||||
Shareholder | ||||
As at 31 December 2019 | 3,043 | Discounted | Discount rate | 3.65% |
cash flow | Death benefit | 80% of | ||
insurance fee | ||||
Holding time | Hold before | |||
99 years old | ||||
As at 30 June 2020 | 3,075 | Discounted | Discount rate | 3.65% |
cash flow | Death benefit | 80% of | ||
insurance fee | ||||
Holding time | Hold before | |||
99 years old | ||||
Unlisted equity investments | ||||
As at 31 December 2019 | 17,017 | Discounted | Net profit rate | 6.2%-13.5% |
cash flow | Discount rate | 15.00% | ||
As at 30 June 2020 | 16,690 | Discounted | Net profit rate | 5.9%-12.4% |
cash flow | Discount rate | 15.00% | ||
Wealth management products | ||||
As at 30 June 2020 | 5,474 | Discounted | Discount rate | 2.4% |
cash flow | Holding time | 181 days |
42 | TEN PAO GROUP HOLDINGS LIMITED Interim Report 2020 |
Notes to the Interim Financial Information
(All amounts in HK dollar thousands unless otherwise stated)
5 FINANCIAL RISK MANAGEMENT (CONTINUED)
5.3 Fair value estimation (Continued)
The following table presents the changes in level 3 instruments for the half-year ended 30 June 2020:
Unlisted | Insurance for | Wealth | ||
equity | the Controlling | management | ||
investments | Shareholder | products | Total | |
HK$'000 | HK$'000 | HK$'000 | HK$'000 | |
Opening Balance | ||||
31 December 2019 | ||||
(audited) | 17,017 | 3,043 | - | 20,060 |
Gains recognised in other | ||||
loss - net | - | 32 | - | 32 |
Additions | - | - | 5,474 | 5,474 |
Currency translation | ||||
differences | (327) | - | - | (327) |
Closing balance | ||||
30 June 2020 | ||||
(unaudited) | 16,690 | 3,075 | 5,474 | 25,239 |
Interim Report 2020 TEN PAO GROUP HOLDINGS LIMITED | 43 |
Notes to the Interim Financial Information
(All amounts in HK dollar thousands unless otherwise stated)
5 FINANCIAL RISK MANAGEMENT (CONTINUED)
5.3 Fair value estimation (Continued)
-
Valuation inputs and relationships to fair value (FV)
The following table summarises the quantitative information about the significant unobservable inputs used in level 3 fair value measurements of equity investments at fair value through other comprehensive income ("FVOCI"). See (ii) for the valuation techniques adopted.
Fair value at | Range of inputs | |||||
30 Jun | 31 Dec | Unobservable | (probability-weighted | |||
average) | ||||||
Description | 2020 | 2019 | inputs* | Relationship of unobservable | ||
HK$'000 | HK$'000 | 2020 | 2019 | inputs to fair value | ||
Unlisted equity | 16,690 | 17,017 | Discount rate for | 14%-16% | 14%-16% | Lower discount rate for |
investments | discounting | discounting estimated cash | ||||
estimated | flows (-1%) and higher | |||||
cash flows | net profit rate (+1%) | |||||
would increase FV by | ||||||
HK$2,562,000; | ||||||
Net profit rate | 7.7%-9.7% | 7.7%-9.7% | Higher discount rate for | |||
discounting estimated cash |
flows (+1%) and lower net profit rate (-1%) would decrease FV by HK$2,191,000.
- There were no significant inter-relationships between unobservable inputs that materially affect fair values.
44 | TEN PAO GROUP HOLDINGS LIMITED Interim Report 2020 |
Notes to the Interim Financial Information
(All amounts in HK dollar thousands unless otherwise stated)
5 FINANCIAL RISK MANAGEMENT (CONTINUED)
5.3 Fair value estimation (Continued)
-
Valuation processes
The finance department of the Group includes a team that performs the valuations of non-property items required for financial reporting purposes, including level 3 fair values. This team reports directly to the chief financial officer (CFO) and the audit committee (AC). Discussions of valuation processes and results are held between the CFO, AC and the valuation team at least once every six months, in line with the Group's half-yearly reporting periods.
The main level 3 inputs used by the Group are derived and evaluated as follows: - Discount rates for financial assets are determined using a capital asset pricing model to calculate a pre-tax rate that reflects current market assessments of the time value of money and the risk specific to the asset.
- Net profit rate for unlisted equity investments are estimated based on market information for similar types of companies.
Interim Report 2020 TEN PAO GROUP HOLDINGS LIMITED | 45 |
Notes to the Interim Financial Information
(All amounts in HK dollar thousands unless otherwise stated)
6 SEASONALITY
The Group's sales volume has historically been affected by seasonality. As the Group's products are used by the Group's customers in their respective manufacturing processes, the demand for the Group's products fluctuates in accordance with fluctuations in the demand for their products. A significant portion of the Group's downstream industries have generally been in higher demand in the second half of each calendar year due to the seasonal purchase patterns of consumers such as Thanksgiving Day and Christmas holidays. As a result, the Group recorded higher revenue in the second half of the year than that of the first half of the year during each year.
Under the outbreak of COVID-19 in early 2020, domestic consumption and production have been affected in the short run. Started from the end of February, the development of the COVID-19 outbreak is having increasing impact. The impact was mainly reflected in the three segments: (i) electrical home appliances (ii) smart chargers and controllers (iii) lighting. The orders were delayed in the first quarter due to the delayed delivery. In the second quarter, the orders gradually returned to normal.
46 | TEN PAO GROUP HOLDINGS LIMITED Interim Report 2020 |
Notes to the Interim Financial Information
(All amounts in HK dollar thousands unless otherwise stated)
7 SEGMENT INFORMATION
The chief operating decision-makers have been identified as the executive Directors. The executive Directors review the Group's internal reporting in order to assess performance and allocate resources and have determined the operating segments based on the internal reports that are used to make strategic decisions. The executive Directors considered the nature of the Group's business and determined that the Group's electric charging products can be categorised into six reportable segments as follows: (i) telecommunication, (ii) media and entertainment, (iii) electrical home appliances, (iv) smart chargers and controllers, (v) lighting, and (vi) others.
Segment information for the interim condensed consolidated statement of profit or loss is set out below:
Electrical | Smart | |||||||
Media and | home | chargers and | ||||||
Telecommunication | entertainment | appliances | controllers | Lighting | Others | Total | ||
Six months ended | ||||||||
30 June 2020 (unaudited) | ||||||||
Revenue | ||||||||
Revenue from external customers | ||||||||
- At a point in time | 599,289 | 167,783 | 89,884 | 710,015 | 146,850 | 49,829 | 1,763,650 | |
Segment results | 70,794 | 33,181 | 18,098 | 142,972 | 28,625 | 12,433 | 306,103 | |
5,462 | ||||||||
Other income | ||||||||
Other gains - net | 6,880 | |||||||
Selling expenses | (78,120) | |||||||
Administrative expenses | (119,858) | |||||||
Net impairment losses on financial | ||||||||
assets | (774) | |||||||
Finance expenses - net | (3,811) | |||||||
Profit before income tax | 115,882 | |||||||
Interim Report 2020 TEN PAO GROUP HOLDINGS LIMITED | 47 |
Notes to the Interim Financial Information
(All amounts in HK dollar thousands unless otherwise stated)
7 SEGMENT INFORMATION (CONTINUED)
Smart | |||||||
Electrical | chargers | ||||||
Media and | home | and | |||||
Telecommunication | entertainment | appliances | controllers | Lighting | Others | Total | |
Six months ended | |||||||
30 June 2019 | |||||||
(unaudited) | |||||||
Revenue | |||||||
Revenue from external | |||||||
customers - At a point | |||||||
in time | 542,890 | 124,944 | 108,859 | 748,984 | 250,116 | 58,872 | 1,834,665 |
Segment results | 63,142 | 23,606 | 15,810 | 140,499 | 47,689 | 14,373 | 305,119 |
Other income | 6,705 | ||||||
Other losses - net | (5,912) | ||||||
Selling expenses | (74,841) | ||||||
Administrative expenses | (122,707) | ||||||
Net impairment losses on | |||||||
financial assets | (1,205) | ||||||
Finance expenses - net | (4,150) | ||||||
Profit before income tax | 103,009 | ||||||
Non-current assets, other than financial instruments and deferred income tax assets, by country:
30 June | 31 December | ||
2020 | 2019 | ||
(Unaudited) | (Audited) | ||
PRC (excluding Hong Kong) | 559,182 | 486,382 | |
Hungary | 71,801 | 53,540 | |
Hong Kong | 16,311 | 17,544 | |
Others | 34 | 37 | |
647,328 | 557,503 | ||
48 | TEN PAO GROUP HOLDINGS LIMITED Interim Report 2020 |
Notes to the Interim Financial Information
(All amounts in HK dollar thousands unless otherwise stated)
8 OTHER INCOME AND OTHER GAINS/(LOSSES) - NET
Six months ended 30 June | |||
2020 | 2019 | ||
(Unaudited) | (Unaudited) | ||
Other income | |||
Sales of scrap materials | 1,412 | 1,069 | |
Sales of raw materials, sample | |||
and molds | 705 | 1,400 | |
Others | 3,345 | 4,236 | |
5,462 | 6,705 | ||
Other gains/(losses) - net | |||
Fair value changes on derivative financial | |||
instruments | (2,734) | (313) | |
Fair value changes on financial assets at | |||
fair value through profit or loss | 31 | 28 | |
Fair value changes on investment | |||
properties (Note 16) | (300) | 1,300 | |
Net foreign exchange gains/(losses) | 344 | (9,338) | |
Government grants | 6,642 | 2,483 | |
Loss on disposal of property, plant and | |||
equipment | (237) | (429) | |
Others | 3,134 | 357 | |
6,880 | (5,912) | ||
Interim Report 2020 TEN PAO GROUP HOLDINGS LIMITED | 49 |
Notes to the Interim Financial Information
(All amounts in HK dollar thousands unless otherwise stated)
9 | EXPENSES BY NATURE | |||
Six months ended 30 June | ||||
2020 | 2019 | |||
(Unaudited) | (Unaudited) | |||
Changes in inventories of finished goods | ||||
and work in progress | 74,460 | 29,316 | ||
Raw materials and consumables used | 1,132,288 | 1,247,832 | ||
Allowance for impairment of inventory | 11,737 | 5,754 | ||
Employee benefit expenses | 251,686 | 248,401 | ||
Depreciation, amortisation and | ||||
impairment charges | 36,158 | 40,096 | ||
Water and electricity expenses | 14,399 | 14,875 | ||
Transportation and travelling expenses | 13,998 | 16,790 | ||
Maintenance expenses | 10,641 | 10,139 | ||
Consultancy fee | 6,766 | 5,917 | ||
Entertainment expenses | 1,468 | 2,132 | ||
Research and development expenses | ||||
- Employee benefit expenses | 38,290 | 42,755 | ||
- Depreciation and amortisation | 4,788 | 3,968 | ||
- Raw materials, consumables used and | ||||
others | 11,615 | 13,078 | ||
Commission expenses | 9,180 | 12,296 | ||
Certificate and detection fees | 3,498 | 2,915 | ||
Business tax and surcharge | 6,547 | 7,081 | ||
Other taxes and levies | 2,121 | 1,964 | ||
Operating lease payments | 8,883 | 6,727 | ||
Advertising costs | 2,960 | 1,613 | ||
Commercial insurance | 3,433 | 3,901 | ||
Communication expenses | 1,694 | 1,424 | ||
Bank charges | 737 | 1,961 | ||
Auditors' remuneration | 2,355 | 2,681 | ||
Other expenses | 5,823 | 3,478 | ||
Total cost of sales, selling expenses | ||||
and administrative expenses | 1,655,525 | 1,727,094 | ||
50 | TEN PAO GROUP HOLDINGS LIMITED Interim Report 2020 |
Notes to the Interim Financial Information (All amounts in HK dollar thousands unless otherwise stated)
10 FINANCE INCOME AND EXPENSES
Six months ended 30 June | ||||
2020 | 2019 | |||
(Unaudited) | (Unaudited) | |||
Finance expenses: | ||||
Interest on bank borrowings | (4,444) | (4,399) | ||
Interest on lease liabilities (Note 15) | (16) | (15) | ||
(4,460) | (4,414) | |||
Finance income: | ||||
Interest income | 649 | 264 | ||
Net finance expenses | (3,811) | (4,150) | ||
11 INCOME TAX EXPENSES | ||||
Six months ended 30 June | ||||
2020 | 2019 | |||
(Unaudited) | (Unaudited) | |||
Current income tax | ||||
- PRC corporate income tax | 12,823 | 14,125 | ||
- Hong Kong profits tax | 9,437 | 3,027 | ||
Subtotal | 22,260 | 17,152 | ||
Deferred income tax (Note 27) | (1,261) | 4,764 | ||
20,999 | 21,916 | |||
Interim Report 2020 TEN PAO GROUP HOLDINGS LIMITED | 51 |
Notes to the Interim Financial Information
(All amounts in HK dollar thousands unless otherwise stated)
11 INCOME TAX EXPENSES (CONTINUED)
Subsidiaries in Hong Kong are subject to 16.5% income tax rate before 2018. Under the current Hong Kong Inland Revenue Ordinance, from the year of assessment 2018/2019 onwards, the subsidiaries in Hong Kong are subject to profits tax at the rate of 8.25% on assessable profits up to HK$2,000,000 (2019 interim: 16.5%), and 16.5% on any part of assessable profits over HK$2,000,000. The payments of dividends by these companies to their shareholders are not subject to any Hong Kong withholding tax.
PRC corporate income tax ("CIT") is provided on the assessable income of entities within the Group incorporated in the PRC, calculated in accordance with the relevant regulations of the PRC after considering the available tax benefits.
Pursuant to the PRC Corporate Income Tax Law passed by the Tenth National People's Congress on 16 March 2007, the CIT rate for domestic and foreign enterprises has been unified at 25%, effective from 1 January 2008.
Ten Pao Electronic (Huizhou) Co., Ltd. was set up as a foreign investment manufacturing enterprise in the PRC. Ten Pao Electronic (Huizhou) Co., Ltd. was recognised as "New and High Technology Enterprises" and thus enjoys a preferential CIT rate of 15%. Its CIT rate for the Period was 15% (2019 interim: 15%).
52 | TEN PAO GROUP HOLDINGS LIMITED Interim Report 2020 |
Notes to the Interim Financial Information
(All amounts in HK dollar thousands unless otherwise stated)
12 EARNINGS PER SHARE
-
Basic earnings per share
Basic earnings per share is calculated by dividing the profit for the Period by the weighted average number of ordinary shares in issue for the Period.
Six months ended 30 June | ||
2020 | 2019 | |
(Unaudited) | (Unaudited) | |
Profit attributable to owners of the | ||
Company (HK$'000) | 95,106 | 81,093 |
Weighted average number of | ||
shares issued (thousands) | 1,000,456 | 1,000,456 |
Basic earnings per share (HK cents) | 10 | 8 |
- Diluted earnings per share
Diluted earnings per share is calculated by adjusting the weighted average number of ordinary shares outstanding to assume conversion of all dilutive potential ordinary shares.
The Company has one category of dilutive potential ordinary shares: share options. The number of shares that would have been issued assuming the exercise of the share options less the number of shares that could have been issued at fair value (determined as the average market share price of the Company's shares) for the same amount of proceed are share issues for no consideration which causes dilution to earnings per share. Diluted earnings per share is the same as basic earnings per share due to the absence of dilutive ordinary shares during the Period as all the outstanding share options were lapsed on 15 September 2019.
Interim Report 2020 TEN PAO GROUP HOLDINGS LIMITED | 53 |
Notes to the Interim Financial Information
(All amounts in HK dollar thousands unless otherwise stated)
13 DIVIDENDS
The board of directors has resolved on 21 August 2020 to declare an interim dividend of HK 3.0 cents per ordinary share for the six months ended 30 June 2020 (2019 interim: HK$2.5 cents per ordinary share). This interim dividend, amounting to HK$30 million (2019 interim:HK$25 million), has not been recognised as a liability in this Interim Financial Information.
On 29 May 2020, a final dividend of HK 2.8 cents per ordinary share in respect of the year ended 31 December 2019, amounting to HK$28,013,000, was approved by the then shareholders of the Company, and HK$28,009,000 was paid on 30 June 2020.
14 LAND USE RIGHTS, PROPERTY, PLANT AND EQUIPMENT AND INTANGIBLE ASSETS
Property, | ||||
Land use | plant and | Intangible | ||
rights | equipment | Assets | ||
Net book amount as at | ||||
31 December 2019 | 4,763 | 495,038 | 10,600 | |
Additions | - | 94,994 | 2,231 | |
Disposals | - | (3,384) | - | |
Transfers | - | (28,364) | - | |
Impairment charges | - | 473 | - | |
Currency translation | ||||
differences | (5) | (9,785) | (164) | |
Depreciation/amortisation | - | (38,081) | (1,514) | |
Net book amount as at | ||||
30 June 2020 | ||||
(unaudited) | 4,758 | 510,891 | 11,153 | |
54 | TEN PAO GROUP HOLDINGS LIMITED Interim Report 2020 |
Notes to the Interim Financial Information
(All amounts in HK dollar thousands unless otherwise stated)
14 LAND USE RIGHTS, PROPERTY, PLANT AND EQUIPMENT AND INTANGIBLE ASSETS (CONTINUED)
Property, | |||
Land use | plant and | Intangible | |
rights | equipment | Assets | |
Net book amount as at | |||
31 December 2018 as | |||
originally presented | 9,936 | 419,730 | 7,075 |
Effects of the adoption of | |||
HKFRS 16 | (5,047) | - | - |
Net book amount as at | |||
1 January 2019 | 4,889 | 419,730 | 7,075 |
Additions | - | 141,999 | 6,360 |
Disposals | - | (7,295) | - |
Transfers | - | - | - |
Impairment charges | - | (3,641) | - |
Currency translation | |||
differences | (126) | 21,867 | (155) |
Depreciation/amortisation | - | (77,622) | (2,680) |
Net book amount as at | |||
31 December 2019 | |||
(audited) | 4,763 | 495,038 | 10,600 |
As at 30 June 2020, the Group's interests in land use rights represented freehold land in Hungary.
Interim Report 2020 TEN PAO GROUP HOLDINGS LIMITED | 55 |
Notes to the Interim Financial Information
(All amounts in HK dollar thousands unless otherwise stated)
15 LEASES
This note provides information for leases where the Group is a lessee. For leases where the Group is a lessor, see Note 16.
-
Amounts recognised in the balance sheet
The interim condensed consolidated balance sheet shows the following amounts relating to leases:
30 June | 31 December | ||
2020 | 2019 | ||
HK$'000 | HK$'000 | ||
(Unaudited) | (Audited) | ||
Right-of-use assets | |||
Land use rights | 101,372 | 4,781 | |
Buildings | 6,472 | 7,100 | |
107,844 | 11,881 | ||
Lease liabilities | |||
Current | 526 | 1,319 | |
Non-current | 5,864 | 5,775 | |
6,390 | 7,094 | ||
56 | TEN PAO GROUP HOLDINGS LIMITED Interim Report 2020 |
Notes to the Interim Financial Information
(All amounts in HK dollar thousands unless otherwise stated)
15 LEASES (CONTINUED)
-
Amounts recognised in the statement of profit or loss
The interim condensed consolidated statement of profit or loss shows the following amounts relating to leases:
Six months ended 30 June | |||
2020 | 2019 | ||
HK$'000 | HK$'000 | ||
(Unaudited) | (Unaudited) | ||
Depreciation and amortisation | |||
charge of right-of-use assets | |||
Land use rights | 735 | 79 | |
Buildings | 697 | 188 | |
1,432 | 267 | ||
Interest expenses (included in | |||
finance expenses-net)(Note 10) | 16 | 15 | |
Expenses relating to short-term | |||
leases (included in cost of sales, | |||
selling expenses and | |||
administrative expenses) | 8,883 | 6,727 |
Interim Report 2020 TEN PAO GROUP HOLDINGS LIMITED | 57 |
Notes to the Interim Financial Information
(All amounts in HK dollar thousands unless otherwise stated)
16 INVESTMENT PROPERTIES
30 June | 31 December | ||
2020 | 2019 | ||
(Unaudited) | (Audited) | ||
At fair value | |||
At beginning of period | 7,500 | 6,400 | |
Net (losses)/gains from fair value | |||
adjustment | (300) | 1,100 | |
At end of period | 7,200 | 7,500 | |
As at 30 June 2020, the Group had no unprovided contractual obligations for future repairs and maintenance (31 December 2019: Nil).
The valuation of the Group's investment properties was performed by Dudley Surveyors Limited at 30 June 2020 and 31 December 2019, to determine the fair value of the investment properties. The revaluation gains or losses are included in 'Other gains/(losses) - net' in the interim condensed consolidated statement of profit or loss. The following table analyses the investment properties carried at fair value, by valuation method.
Office units - Hong Kong | ||||
Quoted prices | ||||
in active | Significant | |||
markets for | other | Significant | ||
identical | observable | unobservable | ||
assets | inputs | inputs | ||
Description | Level 1 | Level 2 | Level 3 | Total |
Recurring fair value measurements | ||||
method | ||||
Investment properties: | ||||
As at 30 June 2020 (unaudited) | - | 7,200 | - | 7,200 |
As at 31 December 2019 (audited) | - | 7,500 | - | 7,500 |
58 | TEN PAO GROUP HOLDINGS LIMITED Interim Report 2020 |
Notes to the Interim Financial Information (All amounts in HK dollar thousands unless otherwise stated)
16 INVESTMENT PROPERTIES (CONTINUED)
There were no transfers between Level 1, 2 and 3 during the Period (31 December 2019: Nil).
As at 30 June 2020, the Group's bank borrowings were secured over investment properties with the carrying amounts of HK$7,200,000 (31 December 2019: HK$7,500,000) (Note 24(a)).
The investment properties are leased to tenants under operating leases with rentals payable monthly. Minimum lease payments receivable on leases of investment properties are as follows:
30 June | 31 December | ||
2020 | 2019 | ||
HK$'000 | HK$'000 | ||
(Unaudited) | (Audited) | ||
Within 1 year | 22 | 88 | |
Between 1 and 2 years | - | - | |
22 | 88 | ||
Interim Report 2020 TEN PAO GROUP HOLDINGS LIMITED | 59 |
Notes to the Interim Financial Information
(All amounts in HK dollar thousands unless otherwise stated)
17 INVENTORIES
30 June | 31 December | ||||
2020 | 2019 | ||||
(Unaudited) | (Audited) | ||||
Raw materials | 234,342 | 216,092 | |||
Work in progress | 97,080 | 64,580 | |||
Finished goods | 222,106 | 329,066 | |||
553,528 | 609,738 | ||||
Less: allowance for impairment | (46,306) | (35,356) | |||
507,222 | 574,382 | ||||
18 TRADE AND OTHER RECEIVABLES | |||||
30 June | 31 December | ||||
2020 | 2019 | ||||
(Unaudited) | (Audited) | ||||
Trade receivables | 1,015,965 | 838,549 | |||
Less: allowance for impairment | (2,689) | (15,186) | |||
Trade receivables, net | 1,013,276 | 823,363 | |||
Bills receivable | - | 4,064 | |||
Prepayments | 10,952 | 13,976 | |||
Deposits | 10,112 | 10,933 | |||
Advances to employees | 1,214 | 922 | |||
Others | 11,871 | 14,256 | |||
1,047,425 | 867,514 | ||||
60 | TEN PAO GROUP HOLDINGS LIMITED Interim Report 2020 |
Notes to the Interim Financial Information
(All amounts in HK dollar thousands unless otherwise stated)
18 TRADE AND OTHER RECEIVABLES (CONTINUED)
The credit period granted to customers is generally between 30 and 90 days based on invoices date. The ageing analysis of the trade receivables from the date of sales is as follows:
30 June | 31 December | |||
2020 | 2019 | |||
(Unaudited) | (Audited) | |||
Less than 3 months | 940,396 | 778,366 | ||
More than 3 | months but not exceeding | |||
1 year | 75,569 | 46,981 | ||
More than 1 | year | - | 13,202 | |
1,015,965 | 838,549 | |||
The Group's sales are made to various customers. While there is concentration of credit risk within a few major customers, these customers are reputable with good track record. As at 30 June 2020, the Group has written off allowance for impairment of HK$12,977,000 (31 December 2019: Nil).
As at 30 June 2020, the carrying amounts of the receivable were approximate to their fair values.
As at 30 June 2020, the Group's bank borrowings were secured over trade and other receivables with the carrying amounts of HK$152,717,000 (31 December 2019: HK$305,302,000) (Note 24(a)).
Interim Report 2020 TEN PAO GROUP HOLDINGS LIMITED | 61 |
Notes to the Interim Financial Information
(All amounts in HK dollar thousands unless otherwise stated)
19 DERIVATIVE FINANCIAL INSTRUMENTS
30 June | 31 December | |||
2020 | 2019 | |||
(Unaudited) | (Audited) | |||
Derivative financial | liabilities | |||
- Non-current | 2,887 | 153 | ||
Notional | ||||
Amount | amount | |||
As at 30 June 2020 (unaudited) | ||||
Derivative financial | liabilities | |||
- Non-current | ||||
Types of contracts | ||||
Interest rate swap contracts | 2,887 | 164,123 | ||
As at 31 December 2019 (audited) | ||||
Derivative financial | liabilities | |||
- Non-current | ||||
Types of contracts | ||||
Interest rate swap contracts | 153 | 52,533 | ||
Changes in fair values of derivative financial instruments are recorded in 'Other gains/(losses) - net' in the interim condensed consolidated statement of profit or loss.
62 | TEN PAO GROUP HOLDINGS LIMITED Interim Report 2020 |
Notes to the Interim Financial Information
(All amounts in HK dollar thousands unless otherwise stated)
20 FINANCIAL ASSETS AT FAIR VALUE THROUGH OTHER COMPREHENSIVE INCOME
Equity investments at FVOCI comprise the following individual investments:
30 June | 31 December | ||
2020 | 2019 | ||
(Unaudited) | (Audited) | ||
Non-current assets | |||
Unlisted equity investments | |||
GCteq Wireless | 5,630 | 5,741 | |
EOLOCK Co. | 11,060 | 11,276 | |
16,690 | 17,017 | ||
The following table presents the changes in FVOCI for the six months ended 30 June 2020 and 30 June 2019:
Six months ended 30 June | |||
2020 | 2019 | ||
(Unaudited) | (Unaudited) | ||
Opening balance as at 1 January | 17,017 | 17,119 | |
Currency translation differences | (327) | (68) | |
Closing balance as at 30 June | 16,690 | 17,051 | |
Information about the methods and assumptions used in determining fair value is provided in Note 5.3.
As at 30 June 2020, the management of the Group has assessed the fair value of financial assets at FVOCI and held the view of no significant changes between investment cost and fair value.
Interim Report 2020 TEN PAO GROUP HOLDINGS LIMITED | 63 |
Notes to the Interim Financial Information
(All amounts in HK dollar thousands unless otherwise stated)
21 FINANCIAL ASSETS AT FAIR VALUE THROUGH PROFIT OR LOSS
30 June 31 December
2020 2019
(Unaudited) (Audited)
Fair value of insurance contract for a member of key management
Fair value of wealth management products
3,075 3,043
5,474-
8,549 3,043
Changes in fair value of financial assets at fair value through profit or loss are recorded in 'Other gains/(losses) - net' in the interim condensed consolidated statement of profit or loss (Note 8).
The fair value of the insurance is based on the unobservable inputs.
As at 30 June 2020, the Group's bank borrowings were secured over financial assets at fair value through profit or loss with the carrying amounts of HK$3,075,000 (31 December 2019: HK$3,043,000) (Note 24(a)).
22 RESTRICTED BANK DEPOSITS
As | at 30 June 2020, bank deposits | amounting to HK$48,425,000 |
(31 | December 2019: HK$11,734,000) are | deposits held by the bank in a |
segregated account as security for borrowings from the bank (Note 24(a)). The remaining bank deposits amounting to HK$28,874,000 (31 December 2019: HK$1,324,000) are deposits held by the bank in a segregated account as security for notes payable (Note 26).
As at 30 June 2020, the weighted average interest rate was 1.09% (31 December 2019: 3.46%).
64 | TEN PAO GROUP HOLDINGS LIMITED Interim Report 2020 |
Notes to the Interim Financial Information
(All amounts in HK dollar thousands unless otherwise stated)
23 SHARE CAPITAL AND SHARE PREMIUM
Ordinary shares, issued and fully paid:
Number of | |||
ordinary | Share | ||
shares | Share capital | premium | |
(thousands) | (HK$'000) | (HK$'000) | |
As at 30 June 2020 | |||
(unaudited) and | |||
31 December 2019 | |||
(audited) | 1,000,456 | 10,005 | 125,788 |
Detailed movement of issued shares are analysed as follows:
Number of | Share | Share | ||||
Shares | capital | premium | Total | |||
(thousands) | HK$'000 | HK$'000 | HK$'000 | |||
As at 1 January 2019, | ||||||
30 | June 2019 | (unaudited), | ||||
1 January 2020 and | ||||||
30 | June 2020 | (unaudited) | 1,000,456 | 10,005 | 125,788 | 135,793 |
Interim Report 2020 TEN PAO GROUP HOLDINGS LIMITED | 65 |
Notes to the Interim Financial Information
(All amounts in HK dollar thousands unless otherwise stated)
24 BORROWINGS
30 June | 31 December | ||
2020 | 2019 | ||
(Unaudited) | (Audited) | ||
Non-current | |||
Bank borrowings | |||
- secured (a) | 185,720 | 98,716 | |
Less: current portion of non-current | |||
borrowings | (69,868) | (57,136) | |
115,852 | 41,580 | ||
Current | |||
Bank borrowings | |||
- secured (a) | 92,239 | 63,091 | |
- unsecured | 15,036 | - | |
Total short-term bank borrowings | 107,275 | 63,091 | |
Current portion of non-current | |||
borrowings | 69,868 | 57,136 | |
177,143 | 120,227 | ||
Total borrowings | 292,995 | 161,807 | |
66 | TEN PAO GROUP HOLDINGS LIMITED Interim Report 2020 |
Notes to the Interim Financial Information
(All amounts in HK dollar thousands unless otherwise stated)
24 BORROWINGS (CONTINUED)
Movement in borrowings is as follows:
Six months ended 30 June
2020 2019 (Unaudited) (Unaudited)
Opening balance as at 1 January Proceeds from borrowings Repayments of borrowings Currency translation differences
Closing balance as at 30 June
161,807 207,597
816,875 765,261
(684,914) (710,106)
- (377)
292,995 262,375
- As at 30 June 2020, bank borrowings amounting to HK$277,959,000 (31 December 2019: HK$161,807,000) are secured over the following assets:
30 June | 31 December | ||
2020 | 2019 | ||
(Unaudited) | (Audited) | ||
Restricted bank deposits (Note 22) | 48,425 | 13,058 | |
Financial assets at fair value | |||
through profit or loss (Note 21) | 3,075 | 3,043 | |
Investment properties (Note 16) | 7,200 | 7,500 | |
Trade and other receivables | |||
(Note 18) | 152,717 | 305,302 | |
211,417 | 328,903 | ||
Interim Report 2020 TEN PAO GROUP HOLDINGS LIMITED | 67 |
Notes to the Interim Financial Information
(All amounts in HK dollar thousands unless otherwise stated)
24 BORROWINGS (CONTINUED)
- The carrying amounts of the borrowings are denominated in the following currencies:
30 June | 31 December | ||
2020 | 2019 | ||
(Unaudited) | (Audited) | ||
HK$ | 191,574 | 114,885 | |
RMB | 49,617 | 31,034 | |
USD | 51,804 | 15,888 | |
292,995 | 161,807 | ||
25 DEFERRED GOVERNMENT GRANTS
30 June | 31 December | ||
2020 | 2019 | ||
(Unaudited) | (Audited) | ||
Opening net book amount | 27,225 | 9,390 | |
Receipt of grants | 6,826 | 24,170 | |
Credited to statement of profit or loss | (5,468) | (6,023) | |
Currency translation differences | (469) | (312) | |
Closing net book amount | 28,114 | 27,225 | |
The amount of receipt of grants represented the subsidies granted by the local government authorities in Hungary relating to the establishment of plant, purchasing equipment and upgrading production lines amounting to EUR 783,000 (equivalent to HK$6,826,000) in 2020.
The deferred government grants will be amortised to "Other gains/(losses)
- net" from the point at which the relevant assets are ready for use on a straight-line basis over the related assets' useful lives.
68 | TEN PAO GROUP HOLDINGS LIMITED Interim Report 2020 |
Notes to the Interim Financial Information (All amounts in HK dollar thousands unless otherwise stated)
26 TRADE AND OTHER PAYABLES
30 June | 31 December | ||
2020 | 2019 | ||
(Unaudited) | (Audited) | ||
Trade payables | 947,350 | 1,011,732 | |
Notes payable | 90,649 | 7,391 | |
Wages and staff welfare benefits payable | 152,810 | 155,380 | |
Accrual for expenses and other payables | 54,717 | 40,949 | |
1,245,526 | 1,215,452 | ||
The ageing analysis of trade payables is as follows:
30 June | 31 December | ||
2020 | 2019 | ||
(Unaudited) | (Audited) | ||
Less than 3 months | 746,861 | 760,195 | |
More than 3 months but not exceeding | |||
1 year | 200,489 | 251,537 | |
947,350 | 1,011,732 | ||
The fair values of trade and other payables approximated their carrying amounts as at 30 June 2020 and 31 December 2019.
Interim Report 2020 TEN PAO GROUP HOLDINGS LIMITED | 69 |
Notes to the Interim Financial Information
(All amounts in HK dollar thousands unless otherwise stated)
27 DEFERRED INCOME TAX ASSETS AND LIABILITIES
The movements in deferred income tax assets and liabilities before offsetting are as follows:
Six months ended 30 June | |||
2020 | 2019 | ||
(Unaudited) | (Unaudited) | ||
Deferred income tax assets | |||
Opening balance as at 1 January | 22,517 | 19,383 | |
Recognized in the profit or loss | 6,129 | 1,892 | |
Currency translation differences | (459) | (118) | |
Closing balance as at 30 June | 28,187 | 21,157 | |
Six months ended 30 June | |||
2020 | 2019 | ||
(Unaudited) | (Unaudited) | ||
Deferred income tax liabilities | |||
Opening balance as at 1 January | 59,726 | 54,128 | |
Recognized in the profit or loss | 4,868 | 6,656 | |
Currency translation differences | (1,201) | (345) | |
Closing balance as at 30 June | 63,393 | 60,439 | |
Deferred income tax assets are recognized for tax losses carry-forward to the extent that the realization of the related tax benefits through the future taxable profits is probable.
70 | TEN PAO GROUP HOLDINGS LIMITED Interim Report 2020 |
Notes to the Interim Financial Information
(All amounts in HK dollar thousands unless otherwise stated)
27 DEFERRED INCOME TAX ASSETS AND LIABILITIES (CONTINUED)
As at 30 June 2020, the Group did not recognize deferred income tax asset of HK$893,000 (31 December 2019: HK$2,876,000) in respect of the tax losses amounting to HK$4,579,000 (31 December 2019: HK$15,869,000), as their recoverability is uncertain.
As of 30 June 2020, the Group had tax loss carryforwards of HK$25,068,000 (31 December 2019: HK$24,393,000) which can be carried forward to offset future taxable income. The net operating tax loss carryforwards, including subsidiaries in the PRC and Hungary, will begin to expire as follows:
30 June | 31 December | |
2020 | 2019 | |
HK$ | HK$ | |
(Unaudited) | (Audited) | |
2021 | 3,023,000 | 3,023,000 |
2022 | 3,226,000 | 3,226,000 |
2023 | 3,857,000 | 3,857,000 |
2024 | 10,486,000 | 14,287,000 |
2025 | 4,476,000 | - |
25,068,000 | 24,393,000 | |
Interim Report 2020 TEN PAO GROUP HOLDINGS LIMITED | 71 |
Notes to the Interim Financial Information
(All amounts in HK dollar thousands unless otherwise stated)
28 COMMITMENTS
-
Operating lease commitments
The group leases premises under non-cancellable operating leases agreements.
The Group had future aggregate minimum lease payments under non-cancellable operating leases as follows:
30 June | 31 December | |||
2020 | 2019 | |||
(Unaudited) | (Audited) | |||
Not later than one year | 5,325 | 10,888 | ||
(b) Capital commitments | ||||
30 June | 31 December | |||
2020 | 2019 | |||
(Unaudited) | (Audited) | |||
In respect of the acquisitions of | ||||
plant and equipment, contracted | ||||
but not provided for | 5,587 | 71,241 | ||
72 | TEN PAO GROUP HOLDINGS LIMITED Interim Report 2020 |
Notes to the Interim Financial Information
(All amounts in HK dollar thousands unless otherwise stated)
29 RELATED PARTY TRANSACTIONS
The following is a summary of significant related party transactions entered into the ordinary course of business between the Group and its related parties.
- Transactions with related parties during the Period
- Purchases of goods and services
Six months ended 30 June | |||
2020 | 2019 | ||
(Unaudited) | (Unaudited) | ||
Purchase of goods | |||
Golden Ocean Copper | |||
Manufacture Co., Limited | 27,900 | 29,399 | |
Huizhou Xinyang Cables Co., | |||
Limited | - | 28 | |
27,900 | 29,427 | ||
Goods and services are bought from entities controlled by the Controlling Shareholder on normal commercial terms and conditions.
Interim Report 2020 TEN PAO GROUP HOLDINGS LIMITED | 73 |
Notes to the Interim Financial Information
(All amounts in HK dollar thousands unless otherwise stated)
29 RELATED PARTY TRANSACTIONS (CONTINUED)
- Transactions with related parties during the Period (Continued)
- Operating lease expenses
Six months ended 30 June | |||
2020 | 2019 | ||
(Unaudited) | (Unaudited) | ||
Huizhou Golden Ocean Wire | |||
Co., Limited | 1,673 | 1,325 | |
Huizhou Tiannengyuan | |||
Charging Technology | |||
Co., Ltd. | 2,709 | 2,290 | |
Sky Fortune Enterprise | |||
Limited | 348 | 312 | |
Golden Lake (HK) Company | |||
Limited | - | 132 | |
4,730 | 4,059 | ||
The amounts represented rental expenses for land and buildings for factory and office purposes in accordance with the lease agreements.
74 | TEN PAO GROUP HOLDINGS LIMITED Interim Report 2020 |
Notes to the Interim Financial Information
(All amounts in HK dollar thousands unless otherwise stated)
29 RELATED PARTY TRANSACTIONS (CONTINUED)
- Balances due from related parties
30 June 2020 | 31 December 2019 | ||||
Maximum | Maximum | ||||
balance | balance | ||||
outstanding | outstanding | ||||
during the | during the | ||||
Period | year | ||||
(Unaudited) | (Audited) | ||||
Huizhou Tiannengyuan | |||||
Charging | |||||
Technology | |||||
Co., Ltd. | 1,150 | 1,150 | 1,172 | 1,172 | |
Sky Fortune Enterprise | |||||
Limited | 116 | 116 | 104 | 104 | |
Golden Lake (HK) | |||||
Company Limited | 44 | - | 44 | 44 | |
1,310 | 1,266 | 1,320 | 1,320 | ||
The balances due from related parties were mainly denominated in RMB. They were unsecured, interest-free, trading in nature and repayable on demand. Their fair values approximated their carrying amounts at 30 June 2020.
Interim Report 2020 TEN PAO GROUP HOLDINGS LIMITED | 75 |
Notes to the Interim Financial Information
(All amounts in HK dollar thousands unless otherwise stated)
29 RELATED PARTY TRANSACTIONS (CONTINUED)
- Balances due to related parties
30 June | 31 December | ||
2020 | 2019 | ||
(Unaudited) | (Audited) | ||
Huizhou Golden Ocean Wire Co., | |||
Limited | 741 | 232 | |
Golden Ocean Copper Manufacture | |||
Co., Limited | 21,333 | 21,932 | |
22,074 | 22,164 | ||
The balances due to related parties were mainly denominated in RMB. They were unsecured, interest-free, trading in nature and due within 3 months. The fair values approximated their carrying amounts at 30 June 2020.
76 | TEN PAO GROUP HOLDINGS LIMITED Interim Report 2020 |
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