Wong International : INTERIM REPORT FOR 2020

WONG'S INTERNATIONAL HOLDINGS LIMITED

王 氏 國 際 集 團 有 限 公 司

(Incorporated in Bermuda with limited liability)

INTERIM REPORT FOR 2020

This interim report is printed on environmentally friendly paper

UNAUDITED INTERIM RESULTS

The board of directors (the "Board" or "Directors") of Wong's International Holdings Limited (the "Company") hereby present the unaudited condensed consolidated interim financial information of the Company and its subsidiaries (the "Group") for the six months ended 30 June 2020 as follows:

CONDENSED CONSOLIDATED INTERIM INCOME STATEMENT

FOR THE SIX MONTHS ENDED 30 JUNE 2020

			Unaudited
		2020			2019
	Note		HK$'000			HK$'000
Revenue	6	1,438,904			2,001,020
Other income		9,212			4,344
Changes in inventories of finished
	(41,920)
goods and work in progress			(35,164)
Raw materials and consumables used		(1,011,007)		(1,380,578)
Cost of stock of completed properties			-		(132,015)
Employee benefit expenses		(208,722)		(232,613)
Depreciation	7	(35,118)	(34,209)
Other operating expenses	7	(77,322)	(96,842)
Change in fair value of		(353,220)
investment properties	13	62,925
Other gains - net	8	10,372			5,431
Impairment losses on trade receivables	15	(920)	(287)
Operating (loss)/profit		(269,741)	162,012
Finance income	9	10,854			9,342
Finance costs	9	(31,137)	(32,037)
Share of loss of an associate		(891)	(1,055)
Share of (losses)/profits of		(303,881)
joint ventures	14	123,071
(Loss)/profit before income tax		(594,796)	261,333
Income tax expense	10	(18,370)	(15,009)
(Loss)/profit after income tax		(613,166)	246,324
(Loss)/profit attributable to
owners of the Company		(613,166)	246,324
Non-controlling interests			-			-
		(613,166)	246,324
Dividends	11	9,570			16,747
(Loss)/earnings per share
attributable to owners of the
Company during the period
Basic	12		(HK$1.28)			HK$0.51
Diluted	12		(HK$1.28)			HK$0.51

The notes on pages 7 to 29 are an integral part of this condensed consolidated interim financial information.

1

CONDENSED CONSOLIDATED INTERIM STATEMENT OF COMPREHENSIVE INCOME

FOR THE SIX MONTHS ENDED 30 JUNE 2020

			Unaudited
			2020			2019
			HK$'000	HK$'000
(Loss)/profit for the period	(613,166)		246,324
Other comprehensive (loss)/income:
Items that may be reclassified to profit or loss:
Cash flow hedge - fair value losses for
		the period	(23,084)		(5,498)
Cash flow hedge - deferred income tax
		recognised	3,809			907
	Currency translation differences
		- Group	(30,476)		(2,778)
		- Associates	(53)		(76)
Item that will not be reclassified to profit or loss:
Changes in fair value of financial assets at fair
	value through other comprehensive income	25			104
Other comprehensive loss for the period,
	net of tax	(49,779)		(7,341)
Total comprehensive (loss)/income for the period	(662,945)		238,983
Attributable to:
Owners of the Company	(662,945)		238,983
	Non-controlling interests	-	-
Total comprehensive (loss)/income for the period	(662,945)		238,983

The notes on pages 7 to 29 are an integral part of this condensed consolidated interim financial information.

2

CONDENSED CONSOLIDATED INTERIM STATEMENT OF FINANCIAL POSITION

AS AT 30 JUNE 2020

				Unaudited		Audited
				As at		As at
				30 June		31 December
				2020	2019
			Note	HK$'000		HK$'000
ASSETS
Non-current assets		238,529
	Property, plant and equipment	13	220,157
	Investment properties	13	2,180,406	2,534,016
	Right-of-use assets		118,572	125,796
	Investments in associates		25,117	26,062
	Interests in joint ventures	14	2,201,131	2,505,012
Financial assets at fair value through		4,473
		other comprehensive income		4,349
Deferred income tax assets		29,408	27,642
Deposits and other receivables		12,143	20,537
	Derivative financial instruments		-	76
	Restricted cash		2,742	14,369
				4,812,521	5,478,016
Current assets		384,989
	Inventories		319,234
Stock of completed properties		236,350	236,350
	Trade receivables	15	876,020	876,131
Prepayments, deposits and other		76,373
		receivables		74,858
Financial assets at fair value through		28
		other comprehensive income		126
Amounts due from associates		14	14
Current income tax recoverable		7,564	1,727
	Restricted cash		22,772	11,580
	Short-term bank deposits		787,164	641,886
Cash and cash equivalents		380,258	543,314
				2,771,532	2,705,220
Total assets		7,584,053	8,183,236

3

CONDENSED CONSOLIDATED INTERIM STATEMENT OF FINANCIAL POSITION

AS AT 30 JUNE 2020

(continued)

				Unaudited		Audited
				As at		As at
				30 June		31 December
				2020	2019
			Note	HK$'000		HK$'000
EQUITY
Equity attributable to owners of
	the Company		47,848
	Share capital	18	47,848
	Other reserves		432,750	481,572
	Retained earnings		9,570
		- Dividends		14,355
		- Others		3,838,752	4,462,445
				4,328,920	5,006,220
Non-controlling interests		4	4
Total equity		4,328,924	5,006,224
LIABILITIES
Non-current liabilities		27,225
	Derivative financial instruments		4,217
Accruals and other payables		12,981	15,844
	Lease liabilities		31,476	30,583
Deferred income tax liabilities		72,930	72,293
	Borrowings	17	1,170,297	1,226,565
				1,314,909	1,349,502
Current liabilities		720,861
	Trade payables	16	673,649
Accruals and other payables		183,729	187,838
	Contract liabilities		170,213	147,465
	Lease liabilities		12,123	19,756
Current income tax liabilities		85,269	89,181
	Borrowings	17	768,025	709,621
				1,940,220	1,827,510
Total liabilities		3,255,129	3,177,012
Total equity and liabilities		7,584,053	8,183,236
Net current assets		831,312	877,710
Total assets less current liabilities		5,643,833	6,355,726

The notes on pages 7 to 29 are an integral part of this condensed consolidated interim financial information.

4

CONDENSED CONSOLIDATED INTERIM STATEMENT OF CHANGES IN EQUITY

FOR THE SIX MONTHS ENDED 30 JUNE 2020

							Unaudited
	Attributable to owners of the Company	Non-
	Share				Share	Other			controlling
	capital				premium	reserves	interests	Total
	HK$'000				HK$'000	HK$'000	HK$'000	HK$'000
As at 1 January 2020	47,848	153,025	4,805,347	4	5,006,224
Comprehensive income	-				-	(613,166)	-	(613,166)
Loss for the period
Other comprehensive income	-				-	(30,529)	-	(30,529)
Currency translation differences
Changes in fair value of financial assets
at fair value through other	-				-	25	-	25
comprehensive income
Cash flow hedge - fair value losses	-				-	(23,084)	-	(23,084)
for the period
Cash flow hedge - deferred income tax	-				-	3,809	-	3,809
recognised
Total other comprehensive loss	-				-	(49,779)	-	(49,779)
Total comprehensive loss	-				-	(662,945)	-	(662,945)
Transactions with owners
Dividend declared to owners	-				-	(14,355)	-	(14,355)
of the Company
Total transactions with owners	-				-	(14,355)	-	(14,355)
As at 30 June 2020	47,848	153,025	4,128,047	4	4,328,924
As at 1 January 2019	47,848	153,025	4,619,312	4	4,820,189
Effect on adoption of HKFRS 16	-				-	(235)	-	(235)
Restated as at 1 January 2019	47,848	153,025	4,619,077	4	4,819,954
Comprehensive income
Profit for the period	-				-	246,324	-	246,324
Other comprehensive income
Currency translation differences	-				-	(2,854)	-	(2,854)
Changes in fair value of financial assets
at fair value through other
comprehensive income	-				-	104	-	104
Cash flow hedge - fair value losses
for the period	-				-	(5,498)	-	(5,498)
Cash flow hedge - deferred income tax
recognised	-				-	907	-	907
Total other comprehensive loss	-				-	(7,341)	-	(7,341)
Total comprehensive income	-				-	238,983	-	238,983
Transactions with owners
Dividend paid to owners of the Company	-				-	(26,317)	-	(26,317)
Total transactions with owners	-				-	(26,317)	-	(26,317)
As at 30 June 2019	47,848	153,025	4,831,743	4	5,032,620

The notes on pages 7 to 29 are an integral part of this condensed consolidated interim financial information.

5

CONDENSED CONSOLIDATED INTERIM CASH FLOW STATEMENT

FOR THE SIX MONTHS ENDED 30 JUNE 2020

		Unaudited
		For the six months
		ended 30 June
		2020			2019
		HK$'000	HK$'000
Cash flows from operating activities
Net cash generated from operating activities	41,298			252,722
Cash flows from investing activities	(48,813)
Purchase of property, plant and equipment		(2,645)
Proceeds from disposal of property,	210
	plant and equipment			193
Dividend received from an associate	-	1,500
Increase in amounts due from associates	-	(3)
Increase in short-term bank deposits	(148,303)		(40,347)
Decrease/(increase) in restricted cash	435			(11,769)
Proceeds from disposal of non-current assets	-
	classified as held for sale	88,383
Repayment from joint ventures	-	10,710
	Interest received	10,854			9,342
Net cash (used in)/generated from
	investing activities	(185,617)		55,364
Cash flows from financing activities	22,404
Increase in trust receipt bank loans - net			33,172
	New bank loans	445,000			693,000
Repayment of bank loans	(465,268)		(835,942)
Principal elements of lease payment	(5,489)		(5,796)
	Dividends paid	-	(26,317)
Net cash used in financing activities	(3,353)		(141,883)
Net (decrease)/increase in cash
	and cash equivalents	(147,672)		166,203
Cash and cash equivalents at beginning of
	the period	543,314			447,737
Currency translation differences	(15,384)		(4,506)
Cash and cash equivalents at end of the period	380,258			609,434
Analysis of cash and cash equivalents:
313
	Cash on hand			304
	Cash at bank	379,945			609,130
Cash and cash equivalents at end of the period	380,258			609,434

The notes on pages 7 to 29 are an integral part of this condensed consolidated interim financial information.

6

NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL INFORMATION

1. GENERAL INFORMATION
   Wong's International Holdings Limited (the "Company") and its subsidiaries (together the "Group") are principally engaged in the development, manufacture, marketing and distribution of electronics products as well as property holding.
   This condensed consolidated interim financial information has not been audited.
2. BASIS OF PREPARATION
   This unaudited condensed consolidated interim financial information ("Interim Financial Information") for the six months ended 30 June 2020 has been prepared in accordance with Hong Kong Accounting Standard ("HKAS") 34, "Interim financial report" issued by the Hong Kong Institute of Certified Public Accountants ("HKICPA"). The Interim Financial Information should be read in conjunction with the annual financial statements for the year ended 31 December 2019, which have been prepared in accordance with Hong Kong Financial Reporting Standards ("HKFRSs").
3. SIGNIFICANT ACCOUNTING POLICIES
   This Interim Financial Information has been prepared under the historical cost convention, as modified by the revaluation of financial assets and financial liabilities (including derivative financial instruments) at fair value through profit or loss, financial assets at fair value through other comprehensive income and investment properties, which are carried at fair value.
   Except as described below, the accounting policies applied are consistent with those of the annual financial statements for the year ended 31 December 2019, as described in those annual financial statements.
   Amended standards adopted by the Group

The following amendments to standards and revised conceptual framework are mandatory for first time for the financial year beginning 1 January 2020:

Amendments to HKFRS 3 (Revised)	Definition of a Business
Amendments to HKAS 1 and HKAS 8	Definition of Material
Conceptual Framework for Financial	Revised Conceptual Framework
Reporting 2018	for Financial Reporting
Amendments to HKAS 39, HKFRS 7	Interest Rate Benchmark Reform
and HKFRS 9
Amendments to HKFRS 16	COVID-19-related Rent Concessions

There are no amendments to standards and revised conceptual framework that are effective for the first time for this interim period that could be expected to have a material impact on the Group.

7

NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL INFORMATION

3 SIGNIFICANT ACCOUNTING POLICIES (continued) Standards issued but not yet applied by the Group

The following new standards and amendments to standards have been issued but are not effective for the financial year beginning 1 January 2020 and have not been early adopted by the Group:

		Effective for
		annual periods
		beginning on
		or after
Amendments to annual	Annual Improvements 2018-2020	1 January 2022
improvements project	cycle
Amendments to HKAS 16	Property, Plant and Equipment	1 January 2022
Amendments to HKAS 37	Onerous Contracts	1 January 2022
Amendments to HKFRS 3	Reference to the Conceptual	1 January 2022
	Framework
HKFRS 17	Insurance Contracts	1 January 2023
Amendments to HKAS 1	Presentation of Financial Statements	1 January 2023
	on Classification of Liabilities
Amendments to HKFRS 10	Sale or Contribution of Assets	To be determined
and HKAS 28	between an Investor and its
	Associate or Joint Venture

The Directors of the Company are in the process of assessing the financial impact of the adoption of the above new standards and amendments to standards. The Directors of the Company will adopt the new standards and amendments to standards when they become effective.

4 ESTIMATES

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

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

8

NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL INFORMATION

5 FINANCIAL RISK MANAGEMENT AND FINANCIAL INSTRUMENTS

1. Financial risk factors
   The Group's activities expose it to a variety of financial risks: market risk (including currency risk and cash flow interest rate risk), credit risk and liquidity risk.
   The condensed consolidated 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 Group's annual financial statements as at 31 December 2019.
   The Group has entered into interest rate swap contracts to partially hedge against the risk of interest increase from the Group's variable rate borrowings.
   There have been no changes in the risk management department since year end.
2. Fair value estimation
   The table below analyses financial instruments carried at fair value by valuation method. The different levels have been defined as follows:
3. • Quoted prices (unadjusted) in active markets for identical assets or liabilities (Level 1).
   • 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 2).
   • Inputs for the asset or liability that are not based on observable market data (that is, unobservable inputs) (Level 3).

9

NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL INFORMATION

5 FINANCIAL RISK MANAGEMENT AND FINANCIAL INSTRUMENTS (continued)

5.2 Fair value estimation (continued)

The following table presents the Group's financial assets and liabilities that are measured at fair value at 30 June 2020.

		Level 1	Level 2	Level 3	Total
		HK$'000	HK$'000	HK$'000	HK$'000
Assets
Financial assets at fair value
	through other comprehensive
	income	29		-	4,472	4,501
Liabilities
Derivative financial instrument	-	27,225	-	27,225

The following table presents the Group's financial assets and liabilities that are measured at fair value at 31 December 2019.

		Level 1	Level 2	Level 3	Total
		HK$'000	HK$'000	HK$'000	HK$'000
Assets
Financial assets at fair value
	through other comprehensive
	income	156		-	4,319	4,475
Liabilities
Derivative financial instrument	-	4,217	-	4,217

There were no transfers between Levels 1, 2 and 3 during the period.

There were no other changes in valuation techniques during the period.

5.3 Valuation techniques used to derive Level 2 fair values

Level 2 derivative financial instruments comprise interest rate swaps. The fair value of interest rate swaps 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.

10

NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL INFORMATION

5 FINANCIAL RISK MANAGEMENT AND FINANCIAL INSTRUMENTS (continued)

5.4 Valuation techniques used to derive Level 3 fair values

If one or more of the significant inputs is not based on observable market data, the instrument is included in Level 3.

The following table presents the changes in Level 3 instruments:

	2020	2019
	HK$'000		HK$'000
At 1 January	4,319	4,162
Changes in fair value of financial assets at fair
value through other comprehensive income	153	157
At 30 June	4,472	4,319

5.5 Group's valuation processes

The Group's finance team performs the valuations of financial assets required for financial reporting purposes. This team reports directly to the management. Discussions of valuation processes and results are held between the management and the team at least once bi-annually, in line with the Group's reporting dates.

The fair value of the following financial assets and liabilities approximate their carrying amounts:

• Trade and other receivables;
• Restricted cash;
• Short-termbank deposits;
• Cash and cash equivalents;
• Trade and other payables;
• Lease liabilities; and
• Borrowings.

11

NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL INFORMATION

6 SEGMENT INFORMATION

The Group's senior executive management is considered as the Chief Operating Decision Maker ("CODM"). The Group is currently organised into two operating divisions:

Electronic Manufacturing Service ("EMS") - manufacture and distribution of electronic products for EMS customers.

Property Holding - development, sale and lease of properties.

The CODM reviews the performance of the Group on a regular basis and reviews the Group's internal reporting in order to assess performance and allocate resources. The CODM assesses the performance of the operating segments based on a measure of segment results. This measurement basis includes profit or loss of the operating segments before other income, other gains - net, finance income, finance costs and share of loss of an associate but excludes corporate and unallocated expenses. Other information provided to the CODM is measured in a manner consistent with that in the Interim Financial Information.

		Property
	EMS	holding
For the six months ended 30 June 2020	division	division	Total
	HK$'000	HK$'000	HK$'000

External revenue

• Revenue from contracts with customers
• Timing of revenue recognition

		- At a point of time	1,404,503		-	1,404,503
Revenue from other sources
		- Rental income	-	34,401	34,401
Segment results	48,238	(630,387)	(582,149)
Depreciation	33,901	20	33,921
Share of losses of joint ventures	-	(303,881)	(303,881)
Change in fair value of investment properties	-	(353,220)	(353,220)
Capital expenditure	48,813		-	48,813

12

NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL INFORMATION

6	SEGMENT INFORMATION (continued)
				Property
		EMS		holding
	For the six months ended 30 June 2019	division		division	Total
		HK$'000		HK$'000	HK$'000
	External revenue
	Revenue from contracts with customers
	Timing of revenue recognition
	- At a point of time	1,815,066	149,699	1,964,765
	Revenue from other sources
	- Rental income	-	36,255	36,255
	Segment results	64,676	224,263	288,939
	Depreciation	32,990	21	33,011
	Share of profits of joint ventures	-	123,071	123,071
	Change in fair value of investment properties	-	62,925	62,925
	Capital expenditure	2,645		-	2,645
				Property
		EMS		holding
		division		division	Total
		HK$'000		HK$'000	HK$'000
	As at 30 June 2020
	Segment assets	2,792,591	2,432,981	5,225,572
	Interests in joint ventures	-	2,201,131	2,201,131
	Total reportable segment assets	2,792,591	4,634,112	7,426,703
	As at 31 December 2019
	Segment assets	2,708,691	2,787,668	5,496,359
	Interests in joint ventures	-	2,505,012	2,505,012
	Total reportable segment assets	2,708,691	5,292,680	8,001,371

13

NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL INFORMATION

6 SEGMENT INFORMATION (continued)

Segment assets consist primarily of property, plant and equipment, investment properties, right-of-use assets, interests in joint ventures, restricted cash, inventories, stock of completed properties, trade receivables, prepayments, deposits and other receivables, cash and cash equivalents and short-term bank deposits, but exclude investments in associates, financial assets at fair value through other comprehensive income, derivative financial instruments, deferred income tax assets, amounts due from associates, current income tax recoverable and corporate and unallocated assets.

A reconciliation of reportable segment results to (loss)/profit before income tax is provided as follows:

	For the six months ended 30 June
	2020		2019
	HK$'000	HK$'000
Reportable segment results	(582,149)	288,939
Other income	9,212		4,344
Other gains - net	10,372		5,431
Finance costs - net	(20,283)	(22,695)
Share of loss of an associate	(891)	(1,055)
Corporate and unallocated expenses	(11,057)	(13,631)
(Loss)/profit before income tax	(594,796)	261,333
Reportable segments assets are reconciled to total assets as follows:
	As at	As at
	30 June	31 December
	2020		2019
	HK$'000	HK$'000
Reportable segment assets	7,426,703		8,001,371
Investments in associates	25,117		26,062
Financial assets at fair value through other
comprehensive income	4,501		4,475
Derivative financial instruments	-	76
Deferred income tax assets	29,408		27,642
Amounts due from associates	14		14
Current income tax recoverable	7,564		1,727
Corporate and unallocated assets	90,746		121,869
Total assets per condensed consolidated
statement of financial position	7,584,053		8,183,236

14

NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL INFORMATION

6 SEGMENT INFORMATION (continued) Reconciliations of other material items are as follows:

	For the six months ended 30 June
	2020	2019
	HK$'000		HK$'000
Depreciation
- Reportable segment total	33,921	33,011
- Corporate headquarters	1,197	1,198
	35,118	34,209
Capital expenditure
- Reportable segment total	48,813	2,645

The Company is domiciled in Bermuda. Analysis of the Group's revenue by geographical market, which is determined by the destination of the invoices billed, is as follows:

	For the six months ended 30 June
	2020	2019
	HK$'000		HK$'000
North America	325,098	480,449
Asia (excluding Hong Kong)	682,542	739,180
Europe	224,344	299,674
Hong Kong	206,920	481,717
	1,438,904	2,001,020

For the six months ended 30 June 2020, revenue of approximately HK$563,184,000 was derived from the top external customer. For the six months ended 30 June 2019, revenues of approximately HK$666,032,000, HK$219,096,000 and HK$206,926,000 were derived from the top three external customers respectively. These customers individually account for 10 percent or more of the Group's revenue. These revenues are attributable to the EMS division.

15

NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL INFORMATION

6 SEGMENT INFORMATION (continued)

Analysis of the Group's non-current assets by geographical market is as follows:

	As at		As at
	30 June		31 December
	2020	2019
	HK$'000		HK$'000
North America	19	6
Asia (excluding Hong Kong)	305,470	314,735
Europe	7	30
Hong Kong	4,477,617	5,135,603
	4,783,113	5,450,374

Non-current assets comprise property, plant and equipment, investment properties, right- of-use assets, investments in associates, interests in joint ventures, financial assets at fair value through other comprehensive income, derivative financial instruments, deposits and other receivables and restricted cash. They exclude deferred income tax assets.

16

NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL INFORMATION

7 (LOSS)/PROFIT BEFORE INCOME TAX (Loss)/profit before income tax is analysed as follows:

	For the six months ended 30 June
	2020	2019
	HK$'000		HK$'000
Depreciation of property, plant and equipment	24,824	27,152
Depreciation of right-of-use assets	10,294	7,057
Depreciation	35,118	34,209
Auditor's remuneration	980	1,095
Bank charges	805	970
Building management fees	6,946	7,107
Chemicals and consumables	11,671	12,794
Commission fees	-	4,762
Cleaning expenses	1,772	1,767
Entertainment expenses	214	501
Government rent and rates	1,556	1,627
Government surcharges	3,184	6,246
Insurance charges	1,084	1,182
Legal and professional fees	2,006	4,793
Motor vehicle expenses	2,108	2,364
Office and factories expenses	1,892	1,870
Operating lease rental in respect of short-term lease	616	109
Recruitment, training and other staff welfares
expenses	5,241	4,604
Repairs and maintenances	6,591	10,154
Security expenses	1,587	1,720
Travelling expenses	1,207	1,527
Transportation	15,126	15,916
Utility expense	8,917	11,196
Others	3,819	4,538
Other operating expenses	77,322	96,842
Total	112,440	131,051

17

NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL INFORMATION

8	OTHER GAINS - NET
			For the six months ended 30 June
			2020		2019
			HK$'000	HK$'000
	Gains/(losses) on financial instrument - net
		- Unrealised	76		16
		- Realised	(77)	(18)
	Gains on disposal of property, plant and equipment	209		129
	Exchange gains - net	10,164		5,304
			10,372		5,431
9	FINANCE COSTS - NET
			For the six months ended 30 June
			2020		2019
			HK$'000	HK$'000
	Finance income
	- Interest income on short-term bank deposits	10,854		9,342
	Finance costs
	- Interest expenses on bank borrowings	(28,252)	(30,418)
	- Interest expenses on interest rate swap	(1,641)	(1,137)
	- Interest expenses on lease liabilities	(1,244)	(482)
	Total finance costs	(31,137)	(32,037)
	Finance costs - net	(20,283)	(22,695)

18

NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL INFORMATION

10 INCOME TAX EXPENSE

Hong Kong profits tax has been provided at the rate of 16.5% (2019: 16.5%) on the estimated assessable profit arising in or derived from Hong Kong.

The Group's subsidiaries in Mainland China are subject to the China Corporate Tax ("CIT") at the rate of 25% (2019: 25%) on the estimated profits, except for Welco Technology (Suzhou) Limited ("WTSZ"), a wholly-owned subsidiary of the Group. WTSZ is eligible for preferential CIT Rate of 15% (2019:15%) under the New and High Technology Enterprises status till 31 December 2020.

The amount of income tax charged to the condensed consolidated interim income statement represents:

	For the six months ended 30 June
	2020		2019
	HK$'000	HK$'000
Current income tax
- Hong Kong profits tax	5,205		33,074
- Overseas taxation	11,850		11,020
Over-provision in prior periods
- Current income tax	(919)	(1,144)
Deferred income tax	2,234		(27,941)
	18,370		15,009

Income tax expense is recognised based on management's best estimate of the weighted average annual income tax rate expected for the full financial year.

11	DIVIDENDS
		For the six months ended 30 June
		2020	2019
		HK$'000		HK$'000
	Interim dividend - HK$0.02
	(2019: HK$0.035) per share	9,570	16,747

On 25 August 2020, the Board has resolved to pay an interim dividend of HK$0.02 per share (2019: HK$0.035 per share) which is payable on Wednesday, 30 September 2020 to the shareholders whose names appear on the Register of Members of the Company on Wednesday, 16 September 2020. This interim dividend, amounting to HK$9,570,000 (2019: HK$16,747,000) has not been recognised as a liability in this Interim Financial Information. It will be recognised in shareholders' equity in the year ending 31 December 2020.

19

NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL INFORMATION

12 (LOSS)/EARNINGS PER SHARE

1. Basic
   Basic (loss)/earnings per share is calculated by dividing the (loss)/profit attributable to owners of the Company by the weighted average number of ordinary shares in issue during the period.

		For the six months ended 30 June
		2020		2019
	(Loss)/profit attributable to owners of
	the Company (HK$'000)	(613,166)	246,324
	Weighted average number of ordinary
	shares in issue (in thousands)	478,484		478,484
	Basic (loss)/earnings per share (HK$)	(1.28)	0.51
(b)	Diluted

No diluted (loss)/earnings per share is presented for both periods because there is no dilutive potential ordinary shares outstanding throughout both periods.

13	CAPITAL EXPENDITURE
						Leasehold
		Property,			land and
		plant and	Investment	land use
	For the six months ended 30 June 2020	equipment	properties	rights
		HK$'000	HK$'000	HK$'000
	Opening net book amount as at 1 January 2020	220,157		2,534,016	-
	Additions	48,813		-	-
	Fair value losses	-	(353,220)	-
	Disposals	(1)	-	-
	Depreciation	(24,824)	-	-
	Currency translation differences	(5,616)	(390)	-
	Closing net book amount as at 30 June 2020	238,529		2,180,406	-

20

NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL INFORMATION

13	CAPITAL EXPENDITURE (continued)
						Leasehold
		Property,			land and
		plant and	Investment	land use
	For the six months ended 30 June 2019	equipment	properties	rights
		HK$'000	HK$'000	HK$'000
	Opening net book amount as at 1 January 2019	308,617		2,506,097	16,831
	Additions	2,645		-	-
	Transfer from stock of completed properties
	upon commencement of lease	(61,814)	-	(16,831)
	Fair value gains	-	62,925	-
	Disposals	(64)	-	-
	Depreciation	(27,152)	-	-
	Currency translation differences	109		(50)	-
	Closing net book amount as at 30 June 2019	222,341		2,568,972	-

The valuations of the investment properties at 30 June 2020 were carried out by an independent firm of surveyors, Roma Appraisals Limited, who is a fellow member of the Hong Kong Institute of Surveyors. The fair value measurement information for these investment properties in accordance with HKFRS 13 is given below.

		Fair value measurements
	Quoted prices
		in active	Significant
		markets for	other		Significant
		identical	observable	unobservable
		assets	inputs		inputs
		(Level 1)	(Level 2)		(Level 3)
		HK$'000	HK$'000		HK$'000
As at 30 June 2020
Recurring fair value measurements
Investment properties		-	-	2,180,406
As at 31 December 2019
Recurring fair value measurements
Investment properties		-	-	2,534,016

There were no transfers among Level 1, Level 2 and 3 during the period.

21

NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL INFORMATION

13 CAPITAL EXPENDITURE (continued)

Fair value measurements using significant unobservable inputs (Level 3)

	Investment properties
			Outside
	Hong Kong	Hong Kong	Total
	HK$'000	HK$'000	HK$'000
At 1 January 2020	2,510,700		23,316			2,534,016
Fair value losses	(353,000)	(220)		(353,220)
Currency translation differences	-	(390)		(390)
At 30 June 2020	2,157,700		22,706			2,180,406

Total unrealised gains for the period

• included in the condensed consolidated
• income statement for assets held at the
• end of the period, under 'Change in fair

value of investment properties'	(353,000)	(220)	(353,220)
At 1 January 2019	2,483,800		22,297		2,506,097
Fair value gains	62,000		925		62,925
Currency translation differences	-	(50)	(50)
At 30 June 2019	2,545,800		23,172		2,568,972

Total unrealised gains for the period

• included in the condensed consolidated
• income statement for assets held at the
• end of the period, under 'Change in fair

value of investment properties'	62,000	925	62,925

Fair values of completed investment properties have been valued by the direct comparison approach assuming sale of the properties in their existing states with the benefit of vacant possession and by making reference to comparable sales transactions as available in the relevant market.

22

NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL INFORMATION

1. CAPITAL EXPENDITURE (continued)
   The valuations have been made on the assumption that the owners sell the properties in the open market without the benefit of deferred term contracts, leasebacks, joint ventures, management agreements or any similar arrangements which would serve to increase the values of such properties. In addition, no account has been taken of any option or right of pre-emption concerning or affecting the sale of the properties and no allowance has been made for the properties to be sold in one lot or to a single purchaser.
   There were no changes in valuation techniques during the period.
   As at 30 June 2020, certain bank borrowings are secured by property, plant and equipment, right-of-use assets, investment properties and stock of completed properties with a carrying amount of approximately HK$2,464,898,000 (31 December 2019: HK$2,819,115,000) (Note 17).
2. INTERESTS IN JOINT VENTURES

	As at		As at
	30 June	31 December
	2020		2019
	HK$'000		HK$'000
Share of net assets	1,034,329		1,338,210
Loans to joint ventures	1,166,802		1,166,802
	2,201,131		2,505,012
Movements in share of net assets is analysed as follows:
	2020		2019
	HK$'000		HK$'000
At 1 January	1,338,210		1,233,289
Share of (losses)/profits of joint ventures	(303,881)	123,071
At 30 June	1,034,329		1,356,360

Share of (losses)/profits of joint ventures included the share of fair value losses, net of deferred income tax, of investment properties owned by the joint ventures of approximately HK$323,717,000 (2019: share of fair value gains, net of deferred income tax, of investment properties of HK$106,489,000).

23

NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL INFORMATION

14 INTERESTS IN JOINT VENTURES (continued)

As at 30 June 2020, the Group had interests in the following principal joint ventures, which are unlisted:

		Proportion
	Place of	of ownership		Nature of the	Measurement
Name of company	incorporation	interest %	Principal activities	relationship	method
Talent Chain	BVI	35.70	Investment holding	Note	Equity
Investments Limited
Crown Opal	Hong Kong	35.70	Property holding	Note	Equity
Investment Limited
Open Vantage Limited	BVI	35.70	Property investment	N/A	Equity

Note: Crown Opal Investment Limited, a subsidiary of Talent Chain Investments Limited, is engaged in the business of property holding.

The loans to joint ventures are unsecured, interest-free and will not be repaid in the coming twelve months. The Directors consider that the carrying amounts of the loans to the joint ventures approximate their fair values. The amounts are denominated in Hong Kong dollars.

Talent Chain Investments Limited, Crown Opal Investment Limited and Open Vantage Limited are private companies and there is no quoted market price available for their shares.

24

NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL INFORMATION

15 TRADE RECEIVABLES
	As at		As at
	30 June	31 December
	2020		2019
	HK$'000		HK$'000
Trade receivables	879,504		878,695
Less: allowance for impairment of trade receivables	(3,484)	(2,564)
	876,020		876,131

The credit period allowed by the Group to its trade customers mainly ranges from 30 days to 120 days and no interest is charged.

Ageing analysis of the Group's trade receivables by invoice date is as follows:

	As at		As at
	30 June	31 December
	2020	2019
	HK$'000		HK$'000
0 - 60 days	526,162	550,971
61 - 90 days	208,598	154,132
Over 90 days	144,744	173,592
	879,504	878,695

The movements on the Group's allowance for impairment of trade receivables are as follows:

	2020	2019
	HK$'000		HK$'000
At 1 January	2,564	1,866
Impairment losses recognised	920	287
At 30 June	3,484	2,153

The Group applies the HKFRS 9 simplified approach to measuring expected credit losses which uses a lifetime expected loss allowance for all trade receivables. The carrying amounts of the Group's trade receivables approximated their fair values as at 30 June 2020.

25

NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL INFORMATION

16 TRADE PAYABLES

Ageing analysis of the Group's trade payables by invoice date is as follows:

	As at		As at
	30 June	31 December
	2020	2019
	HK$'000		HK$'000
0 - 60 days	645,792	520,152
61 - 90 days	46,198	100,299
Over 90 days	28,871	53,198
	720,861	673,649

The carrying amounts of the Group's trade payables approximated their fair values as at 30 June 2020.

17	BORROWINGS
		As at		As at
		30 June	31 December
		2020	2019
		HK$'000		HK$'000
	Trust receipt bank loans, unsecured	260,177	237,773
	Short-term bank loans, unsecured	335,000	320,000
	Portion of long-term loans due for repayment
	within one year, secured	172,848	151,848
	Portion of long-term loans due for repayment
	after one year, secured	1,170,297	1,226,565
	Total borrowings	1,938,322	1,936,186
	Non-current	1,170,297	1,226,565
	Current	768,025	709,621
	Total borrowings	1,938,322	1,936,186

26

NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL INFORMATION

1. BORROWINGS (continued)
   As at 30 June 2020, the long-term bank loans of HK$1,343,145,000 (31 December 2019: HK$1,378,413,000) were secured by the following:
2. • Charges over property, plant and equipment with carrying amount of approximately HK$21,206,000 (31 December 2019: HK$21,499,000), right-of- use assets with carrying amount of approximately HK$59,342,000 (31 December 2019: HK$60,166,000), investment properties with carrying amount of approximately HK$2,148,000,000 (31 December 2019: HK$2,501,100,000) and stock of completed properties with carrying amount of approximately
     HK$236,350,000 (31 December 2019: HK$236,350,000);
   • A share charge over the Group's 25.7% share of Talent Chain Investments Limited, a joint venture of the Group;
   • A guarantee limited to HK$760,000,000 from Easywise Limited, an indirect wholly-owned subsidiary of the Company.
3. SHARE CAPITAL

	Number		Nominal
	of shares		value
			HK$'000
Ordinary shares of HK$0.10 each
Authorised:
At 1 January 2019 and 30 June 2019	700,000,000	70,000
At 1 January 2020 and 30 June 2020	700,000,000	70,000
Issued and fully paid:
At 1 January 2019 and 30 June 2019	478,483,794	47,848
At 1 January 2020 and 30 June 2020	478,483,794	47,848

27

NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL INFORMATION

19 COMMITMENTS

1. Capital commitments in respect of property, plant and equipment are as follows:

	As at		As at
	30 June	31 December
	2020	2019
	HK$'000		HK$'000
Contracted but not provided for	575	14,095
Authorised but not contracted for	-		-
	575	14,095

1. The Group's future rental income receivables under various non-cancellable operating leases in respect of rented premises are analysed as follows:

	As at		As at
	30 June	31 December
	2020	2019
	HK$'000		HK$'000
Within one year	47,068	56,136
In the second to fifth year inclusive	9,509	23,434
	56,577	79,570

Operating lease receipts represents rentals receivable by the Group for leasing its investment properties. Leases and rentals are negotiated and fixed for an average of 2.3 years (2019: 2.3 years).

28

NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL INFORMATION

20 RELATED PARTY TRANSACTIONS

As at 30 June 2020, the largest shareholder of the Company was Mr. Wong Chung Mat, Ben (personally and via Salop Investment Limited, a company wholly-owned and controlled by him).

1. Balances with related parties
   The amounts due from associates are repayable on demand, unsecured, interest- free and without pre-determined repayment terms.
   The loans to joint ventures are set out in Note 14 to the condensed consolidated interim financial information. .
2. Key management compensation

	For the six months ended 30 June
	2020	2019
	HK$'000		HK$'000
Salaries and allowances	8,374	8,376
Bonus	5,585	6,488
Pension costs
- defined contribution schemes	18	24
	13,977	14,888

21 THE COVID-19 PANDEMIC'S IMPACT

The outbreak of the Coronavirus ("COVID-19") had brought unprecedented challenges and added uncertainties to the economy. During the six months ended 30 June 2020, the performance of the Group's EMS division and Property Holding division were materially affected by COVID-19.

Currently, there is no vaccine or specific anti-viral treatment for COVID-19 that is ready for massive usage. Presently, it has remained uncertain when the pandemic will end.

Since the outbreak of COVID-19, the Group kept continuous attention on the situation of the COVID-19 and reacted actively to its impact on the financial position and operating results of the Group. Directors will continue to closely monitor the development of COVID-19 and assess the financial position and operation result of the Group.

29

INTERIM DIVIDEND

On 25 August 2020, the Board has resolved to pay an interim dividend of HK$0.02 per share (2019: HK $ 0 . 035 per share) which is payable on Wednesday, 30 September 2020 to the shareholders whose names appear on the Register of Members of the Company on Wednesday, 16 September 2020.

CLOSURE OF REGISTER OF MEMBERS

The Register of Members of the Company will be closed from Monday, 14 September 2020 to Wednesday, 16 September 2020, both days inclusive, during which period no transfer of shares shall be effected. To qualify for the above interim dividend, all transfers accompanied by the relevant share certificates must be lodged with the Company's Hong Kong branch share registrar, Tricor Standard Limited, at Level 54, Hopewell Centre, 183 Queen's Road East, Hong Kong for registration not later than 4:30 p.m. on Friday, 11 September 2020.

REVIEW OF BUSINESS ACTIVITIES

Review of Results

The loss attributable to owners of the Company for the six months ended 30 June 2020 amounted to HK$613.2 million, as compared to the profit attributable to owners of the Company of HK$246.3 million for the corresponding period last year. This was mainly attributable to the fair value losses of the Group's investment properties and share of losses in the Group's joint ventures (the "Joint Ventures") which were due to the fair value losses of investment properties held by the Joint Ventures. The fair value losses of investment properties held by the Group and the Joint Ventures were HK$676.9 million as compared to the fair value gains of HK$169.4 million for the corresponding period last year. The fair value losses reflect the commercial property market conditions which were adversely affected by the outbreak of COVID-19. Loss per share for the six months was HK$1.28 as compared to earnings per share of HK$0.51 for the corresponding period last year.

The Group's revenue for the six months ended 30 June 2020 was HK$1,438.9 million, as compared to HK$2,001.0 million for the corresponding period last year. Operating loss for the six months ended 30 June 2020 was HK$269.7 million, as compared to operating profit of HK$162.0 million for the corresponding period last year. The operating loss was driven by fair value losses of investment properties held by the Group and the Joint Ventures.

30

REVIEW OF BUSINESS ACTIVITIES (continued)

Electronic Manufacturing Service ("EMS") Division

Revenue for the EMS Division for the six months ended 30 June 2020 was HK$1,404.5 million, as compared to HK$1,815.1 million for the corresponding period last year. The segment profit attributable to the EMS Division was HK$48.2 million, a 25.4% decrease as compared to HK$64.7 million for the corresponding period last year. The decrease in the segment net profit was attributable to reduction in demand as a result of the current trade tension between Mainland China and the US and the Group's manufacturing operations in January to March 2020 gravely impacted by the COVID-19.

Property Holding Division

The Property Holding Division reported revenue of HK$34.4 million, as compared to HK$186.0 million for the corresponding period last year. The decrease in revenue was mainly due to revenue of HK$149.7 million recognised from the sale of 6/F of One Harbour Square in the corresponding period last year. The segment loss for the period was HK$630.4 million as compared to segment profit of HK$224.3 million for the corresponding period last year. The segment loss was driven by fair value losses of investment properties held by the Group and the Joint Ventures.

LIQUIDITY AND FINANCIAL RESOURCES

As at 30 June 2020, the Group had a total of HK$3,272.8 million of banking facilities. Total bank borrowings were HK$1,938.3 million (2019 December: HK$1,936.2 million). Cash and cash equivalents and short-term bank deposits were HK$1,167.4 million at 30 June 2020 (2019 December: HK$1,185.2 million). Cash flow generated from operations for the period was HK$41.3 million.

As at 30 June 2020, the Group had net bank borrowings of HK$770.9 million, as compared to HK$751.0 million at 31 December 2019. Sufficient banking facilities and bank balance are available to meet the cash needs of the Group for its manufacturing operations as well as Property Holding Division.

Net gearing ratio for the Group as at 30 June 2020 is 0.19 (2019 December: 0.16). The net gearing ratio was calculated as net debt divided by total equity. Net debt is calculated as total borrowings and lease liabilities less cash and cash equivalents and short-term bank deposits.

31

FOREIGN EXCHANGE AND RISK MANAGEMENT

Most of the Group's sales are conducted in United States dollars and costs and expenses are mainly in United States dollars, Hong Kong dollars, Japanese Yen, Vietnam Dong and Chinese Renminbi. Consistent with its prudent policy on financial risk management, the Group does not use any foreign exchange hedging products. The Group recognise the currency risk in the fluctuation of Chinese Renminbi and will closely monitor and actively manage the risk involved.

CAPITAL STRUCTURE

There has been no material change in the Group's capital structure since 31 December 2019 which consists of bank borrowings, cash and cash equivalents, short-term bank deposits and equity attributable to owners of the parent, comprising issued share capital and reserves.

EMPLOYEES

As at 30 June 2020, the Group employed approximately 3,983 employees. The Group adopts a remuneration policy which is commensurate with job nature, qualification and experience of employees. In addition to the provision of annual bonuses and employee related insurance benefits, discretionary bonuses are also rewarded to employees based on individual performance. The remuneration packages and policies are reviewed periodically. The Group also provides in-house and external training programs to its employees.

PROSPECTS

Intense trade tensions between US and China as well as the long-drawn-outCOVID-19 pandemic have continued to impact the world market for electronic products, and the Directors expect that such unfavorable conditions will adversely affect the profitability of the EMS business in the second half of 2020.

Strategically, the EMS business has established a manufacturing facility in Hai Duong Province, Vietnam to cater mainly for the needs of US customers. This new facility is also expected to provide an additional alternative to existing customers, and bring in new sales opportunities. Due to widespread pandemic lockdowns in the past few months, certain aspects of the preparation work for the new facility have been delayed, but such delays are expected to be temporary.

The EMS business will continue to place emphasis on customer base expansion, cost control, operating efficiency and enhancement of value added services, including product design and technology services, to customers.

32

PROSPECTS (continued)

Due to recent political happenings, valuation of commercial property in Hong Kong has been falling and this may necessitate the booking of substantial fair market value losses in future in relation to the investment properties held by the Group. However, losses of this nature are unrealized and do not have any impact on the Group's cash flow. The rental income derived by the Group from the investment properties held has remained stable with no significant changes notwithstanding the drop in the valuation of those properties.

AWARD AND RECOGNITION

The Company and its wholly-owned subsidiary, Wong's Electronics Company Limited, were awarded the Caring Company Logo by The Hong Kong Council of Social Service for the eighth consecutive year. These serve as recognition of the Group's active participation in community activities and good corporate citizenship.

INTERESTS OF DIRECTORS AND CHIEF EXECUTIVES

As at 30 June 2020, the interests or short positions of the Directors and chief executives 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 ("SFO")) as recorded in the register required to be kept under Section 352 of the SFO or as otherwise notified to the Company and The Stock Exchange of Hong Kong Limited (the "Stock Exchange") pursuant to the Model Code for Securities Transactions by Directors of Listed Issuers (the "Model Code"), were as follows:

33

INTERESTS OF DIRECTORS AND CHIEF EXECUTIVES

(continued)

Long positions in shares of the Company

			Approximate
		Number of	percentage of
Name of Directors	Capacity	ordinary shares	the issued shares
Wong Chung Mat, Ben	Beneficial owner and interest of	136,828,569	28.60%
	controlled corporation (Note)
Wong Yin Man, Ada	Beneficial owner	1,000,000	0.21%
Chan Tsze Wah, Gabriel	Beneficial owner	1,837,500	0.38%
Wan Man Keung	Beneficial owner	1,000,000	0.21%
Yu Sun Say	Beneficial owner	500,000	0.10%

Note:

Mr. Wong Chung Mat, Ben was deemed (by virtue of the SFO) to be interested in 136,828,569 shares in the Company. These shares were held in the following capacity:

1. 1,000,000 shares were held by Mr. Wong Chung Mat, Ben personally.
2. 135,828,569 shares were held by Salop Investment Limited, which was wholly-owned and controlled by Mr. Wong Chung Mat, Ben.

Save as disclosed herein, as at 30 June 2020, none of the Directors or chief executives of the Company or their respective associates 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 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.

34

INTERESTS OF SUBSTANTIAL SHAREHOLDERS

So far as is known to the Directors or chief executives of the Company, as at 30 June 2020, persons (other than the Directors or chief executives of the Company) who had interests or short positions in the shares or underlying shares of the Company as recorded in the register required to be kept under Section 336 of the SFO were as follows:

Long positions in shares of the Company

				Approximate
Name of			Number of	percentage of
substantial shareholders	Capacity	ordinary shares	the issued shares
Salop Investment Limited	Beneficial owner (Note 1)	135,828,569	28.39%
HSBC International Trustee	Trustee (Note 2)	119,307,699	24.93%
Limited
Wong Chung Ah, Johnny	Beneficial owner, interest of	90,163,532	18.84%
	spouse and founder of a
	discretionary trust (Note 3)
Kong King International	Beneficial owner (Note 3(c))	87,928,532	18.38%
Limited
Mountainview International	Trustee (Note 3(c))	87,928,532	18.38%
Limited
Wong Chung Yin, Michael	Beneficial owner and joint	78,526,001	16.41%
		interest (Note 4)
Woo Sin Ming	Joint interest and interest of	78,526,001	16.41%
		spouse (Note 4)
Wong Chung Yan, Claudia	Beneficial owner and	38,320,881	8.01%
		interest of controlled
		corporation (Note 5)
Floral Inc.	Beneficial owner (Note 5(b))	35,073,052	7.33%
Everitt, Chung Chui	Founder of a discretionary	31,379,167	6.56%
		trust (Note 6)
Sycamore Assets Limited	Beneficial owner (Note 6)	31,379,167	6.56%

35

INTERESTS OF SUBSTANTIAL SHAREHOLDERS (continued)

Long positions in shares of the Company (continued)

Notes:

1. Salop Investment Limited was a company wholly-owned and controlled by Mr. Wong Chung Mat, Ben. Please refer to the Note under the section headed "Interests of Directors and chief executives".
2. HSBC International Trustee Limited was deemed (by virtue of the SFO) to be interested in 119,307,699 shares in the Company. These shares were held in the following capacity:
3. 1. 87,928,532 shares were held by Kong King International Limited under a discretionary trust, of which HSBC International Trustee Limited was the trustee. Please refer to Note 3(c) below.
   2. 31,379,167 shares were held by Sycamore Assets Limited under a discretionary trust, of which HSBC International Trustee Limited was the trustee. Please refer to Note 6 below.
4. Mr. Wong Chung Ah, Johnny was deemed (by virtue of the SFO) to be interested in
   90,163,532 shares in the Company. These shares were held in the following capacity:
5. 1. 1,000,000 shares were held by Mr. Wong Chung Ah, Johnny personally.
   2. 1,235,000 shares were held by Ms. Luk Kit Ching, wife of Mr. Wong Chung Ah, Johnny.
   3. 87,928,532 shares were held by Kong King International Limited under a discretionary trust, of which Mr. Wong Chung Ah, Johnny was regarded as the founder (by virtue of the SFO) and HSBC International Trustee Limited was the trustee. Kong King International Limited was wholly-owned by Mountainview International Limited, which was wholly-owned by HSBC International Trustee Limited. Each of Mr. Wong Chung Ah, Johnny, Kong King International Limited, Mountainview International Limited and HSBC International Trustee Limited was deemed to be interested in the same block of 87,928,532 shares. Please refer to Note 2(a) above.
6. Mr. Wong Chung Yin, Michael and his wife, Ms. Woo Sin Ming, were deemed (by virtue of the SFO) to be interested in the same block of 78,526,001 shares in the Company. These shares were held in the following capacity:
7. 1. 50,458,041 shares were held by Mr. Wong Chung Yin, Michael personally.
   2. 28,067,960 shares were held by Mr. Wong Chung Yin, Michael and Ms. Woo Sin Ming jointly.

36

INTERESTS OF SUBSTANTIAL SHAREHOLDERS (continued)

Long positions in shares of the Company (continued)

Notes: (continued)

1. Ms. Wong Chung Yan, Claudia was deemed (by virtue of the SFO) to be interested in
   38,320,881 shares in the Company. These shares were held in the following capacity:
2. 1. 3,247,829 shares were held by Ms. Wong Chung Yan, Claudia personally.
   2. 35,073,052 shares were held by Floral Inc., which was wholly-owned and controlled by Ms. Wong Chung Yan, Claudia. Each of Ms. Wong Chung Yan, Claudia and Floral Inc. was deemed to be interested in the same block of 35,073,052 shares.
3. Mrs. Everitt, Chung Chui was deemed (by virtue of the SFO) to be interested in 31,379,167 shares in the Company which were held by Sycamore Assets Limited under a discretionary trust, of which Mrs. Everitt, Chung Chui was regarded as the founder (by virtue of the SFO) and HSBC International Trustee Limited was the trustee. Sycamore Assets Limited was wholly-owned by HSBC International Trustee Limited. Each of Mrs. Everitt, Chung Chui, Sycamore Assets Limited and HSBC International Trustee Limited was deemed to be interested in the same block of 31,379,167 shares. Please refer to Note 2(b) above.

Save as disclosed herein, the Directors are not aware of any other persons who, as at 30 June 2020, had interests or short positions in the shares or underlying shares of the Company as recorded in the register required to be kept under Section 336 of the SFO.

SHARE OPTIONS

The Company's old share option scheme (the "Old Scheme") was expired on 2 June 2020. The Company has adopted a new share option scheme (the "New Scheme") on 26 June 2020. There was no outstanding options granted under the Old Scheme and no option has been granted under the New Scheme since its adoption date and up to 30 June 2020.

PURCHASE, SALE OR REDEMPTION OF THE COMPANY'S LISTED SECURITIES

During the six months ended 30 June 2020, neither the Company nor any of its subsidiaries purchased, sold or redeemed any of the Company's listed securities.

37

CORPORATE GOVERNANCE CODE

During the six months ended 30 June 2020, the Company has complied with the code provisions under the Corporate Governance Code (the "CG Code") as set out in Appendix 14 to the Rules Governing the Listing of Securities on the Stock Exchange (the "Listing Rules"), except for the following deviations:

Code provision A.2.1

Code provision A.2.1 provides that the roles of chairman and chief executive should be separate and should not be performed by the same individual.

Mr. Wong Chung Mat, Ben is the Group's Chairman and Chief Executive Officer and has occupied these two positions since February 2003. In allowing the two positions to be occupied by the same person, the Company has considered the following:

1. Both positions require in-depth knowledge and considerable experience of the Group's business. Candidates with the suitable knowledge, experience and leadership are difficult to find both within and outside the Group. If either of the positions is occupied by an unqualified person, the Group's performance could be gravely compromised.
2. The Company believes that the supervision of the Board and its Independent Non-executive Directors can provide an effective check and balance mechanism and ensures that the interests of the shareholders are adequately represented.

Code provision A.4.1

Code provision A.4.1 provides that non-executive directors should be appointed for a specific term, subject to re-election.

None of the existing Independent Non-executive Directors of the Company is appointed for a specific term. However, every Director of the Company is now subject to retirement by rotation and re-election under Bye-law 112 of the Bye-laws of the Company. As such, the Company considers that sufficient measures have been taken to ensure that the Company's corporate governance practices are no less exacting than those in the CG Code.

38

CORPORATE GOVERNANCE CODE (continued)

Code provisions A.5.1 to A.5.4

Code provisions A.5.1 to A.5.4 provide that a nomination committee should be established with specific terms of reference which should be made available on the websites of the Stock Exchange and the listed issuer, and that sufficient resources should be provided to such committee to perform its duties.

The Company does not have present intention to establish a Nomination Committee in view that the Board itself shall discharge all duties expected to be dealt with by a Nomination Committee. In addition, a Policy and Procedure for Nomination of Directors have been set out in writing and adopted by the Board to serve as a guideline in order to ensure that there is a formal, considered and transparent procedure for the appointment of new Directors with suitable experience and capabilities to maintain and improve the competitiveness of the Company.

COMPLIANCE WITH THE MODEL CODE FOR SECURITIES TRANSACTIONS BY DIRECTORS OF LISTED ISSUERS

The Company has adopted the Model Code as set out in Appendix 10 to the Listing Rules. Having made specific enquiry to all Directors, all Directors confirmed that they had complied with the required standard set out in the Model Code during the six months ended 30 June 2020.

UPDATE ON DIRECTOR'S INFORMATION UNDER RULE 13.51B(1) OF THE LISTING RULES

Mr. Wong Chung Mat, Ben, Chairman and Chief Executive Officer of the Company, is a director of Salop Hong Kong Limited, which became a substantial shareholder of the Company on 23 July 2020.

39

AUDIT COMMITTEE

The Audit Committee, which comprises of three Independent Non-executive Directors, has reviewed with management the accounting principles and practices adopted by the Group and discussed auditing, internal controls and financial reporting matters including a review of the unaudited interim financial information for the six months ended 30 June 2020.

By order of the Board

WONG CHUNG MAT, BEN

Chairman and Chief Executive Officer

Hong Kong, 25 August 2020
BOARD OF DIRECTORS
Executive Directors:	Independent Non-executive Directors:
Mr. Wong Chung Mat, Ben	Dr. Li Ka Cheung, Eric GBS, OBE, JP
(Chairman and Chief Executive Officer)	Dr. Yu Sun Say GBM, JP
Ms. Wong Yin Man, Ada	Mr. Alfred Donald Yap JP
Dr. Chan Tsze Wah, Gabriel	Mr. Cheung Chi Chiu, David
Mr. Wan Man Keung
Mr. Hung Wing Shun, Edmund

40