PROSPEROUS INDUSTRIAL (HOLDINGS) LIMITED
其利工業集團有限公司
(Incorporated in the Cayman Islands with limited liability)
Stock code: 1731
Interim Report
2020
CONTENTS
Corporate Information | 2 |
Condensed Consolidated Statement of Profit or Loss and | |
Other Comprehensive Income | 3 |
Condensed Consolidated Statement of Financial Position | 5 |
Condensed Consolidated Statement of Changes in Equity | 7 |
Condensed Consolidated Statement of Cash Flows | 8 |
Notes to Condensed Consolidated Financial Information | 9 |
Management Discussion and Analysis | 21 |
Other Information | 27 |
Prosperous Industrial (Holdings) Limited Interim Report 2020 | 1 |
CORPORATE INFORMATION
EXECUTIVE DIRECTORS | AUTHORISED |
Mr. Yeung Shu Kin (Chairman) | REPRESENTATIVES |
Mr. Yeung Shu Kai | Mr. Yeung Wang Tony |
Mr. Yeung Wang Tony | Ms. Zhang Xiao |
NON-EXECUTIVE DIRECTORS | AUDITOR |
Mr. Chau Chi Ming | Ernst & Young |
Mr. Tsai Nai-Yung | |
REGISTERED OFFICE | |
INDEPENDENT NON- | Cricket Square, Hutchins Drive |
EXECUTIVE DIRECTORS | P.O. Box 2681 |
Mr. Chiu Che Chung Alan | Grand Cayman, KY1-1111 |
Mr. Ko Siu Tak | Cayman Islands |
Mr. Yip Kwok Cheung | |
HEADQUARTER AND | |
AUDIT COMMITTEE | PRINCIPAL PLACE OF |
Mr. Ko Siu Tak (Committee Chairman) | BUSINESS IN HONG KONG |
Mr. Chiu Che Chung Alan | Unit 1-2, 1/F, Join-In Hang Sing Centre |
Mr. Yip Kwok Cheung | 71-75 Container Port Road |
Kwai Chung, New Territories | |
NOMINATION COMMITTEE | Hong Kong |
Mr. Yip Kwok Cheung (Committee Chairman) | |
Mr. Chiu Che Chung Alan | COMPANY'S WEBSITE |
Mr. Yeung Shu Kin | www.pihl.hk |
REMUNERATION COMMITTEE | PRINCIPAL SHARE REGISTRAR |
Mr. Chiu Che Chung Alan | Conyers Trust Company (Cayman) Limited |
(Committee Chairman) | |
Mr. Ko Siu Tak | HONG KONG BRANCH SHARE |
Mr. Yeung Shu Kin | REGISTRAR |
Tricor Investor Services Limited | |
COMPANY SECRETARY | PRINCIPAL BANKER |
Ms. Zhang Xiao | |
Shanghai Commercial Bank Limited | |
STOCK CODE | |
1731 |
2 | Prosperous Industrial (Holdings) Limited Interim Report 2020 |
INTERIM RESULTS
The board (the "Board") of directors (the "Directors") of Prosperous Industrial (Holdings) Limited (the "Company") is pleased to announce the unaudited condensed consolidated results of the Company and its subsidiaries (collectively referred to as the "Group") for the six months ended 30 June 2020 with comparative figures for the corresponding period in
2019 as follows:
CONDENSED CONSOLIDATED STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME
For the six months ended 30 June 2020
For the six months | |||
ended 30 June | |||
Notes | 2019 | ||
2020 | |||
(Unaudited) | (Unaudited) | ||
US$'000 | US$'000 | ||
REVENUE | 4 | 98,493 | 123,413 |
Cost of sales | (77,949) | (97,387) | |
Gross profit | 20,544 | 26,026 | |
Other income and gains, net | 5 | 1,129 | 1,425 |
Selling and distribution expenses | (5,559) | (8,061) | |
Administrative expenses | (9,866) | (12,856) | |
Other expenses, net | (216) | (487) | |
Finance costs | 6 | (290) | (300) |
PROFIT BEFORE TAX | 7 | 5,742 | 5,747 |
Income tax | 8 | (712) | (1,680) |
PROFIT FOR THE PERIOD ATTRIBUTABLE | |||
TO SHAREHOLDERS OF THE COMPANY | 5,030 | 4,067 | |
Prosperous Industrial (Holdings) Limited Interim Report 2020 | 3 |
CONDENSED CONSOLIDATED STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME
For the six months ended 30 June 2020
For the six months | |||
ended 30 June | |||
Notes | 2019 | ||
2020 | |||
(Unaudited) | (Unaudited) | ||
US$'000 | US$'000 | ||
OTHER COMPREHENSIVE INCOME | |||
Other comprehensive income/(loss) that | |||
may be reclassified to profit or loss | |||
in subsequent periods: | |||
Exchange differences: | |||
Exchange differences on translation of | |||
foreign operations | (747) | 98 | |
Other comprehensive income/(loss) that | |||
will not be reclassified to profit or loss | |||
in subsequent periods: | |||
Revaluation surplus | 5,214 | - | |
Deferred tax debited to asset | |||
revaluation reserve | (1,304) | - | |
Net other comprehensive income that | |||
will not be reclassified to profit or loss | |||
in subsequent periods | 3,910 | - | |
OTHER COMPREHENSIVE INCOME | |||
FOR THE PERIOD, NET OF TAX | 3,163 | 98 | |
TOTAL COMPREHENSIVE INCOME | |||
FOR THE PERIOD ATTRIBUTABLE TO | |||
SHAREHOLDERS OF THE COMPANY | 8,193 | 4,165 | |
EARNINGS PER SHARE ATTRIBUTABLE TO | |||
SHAREHOLDERS OF THE COMPANY | 10 | ||
Basic and diluted (US cents) | 0.45 | 0.36 | |
4 | Prosperous Industrial (Holdings) Limited Interim Report 2020 |
CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL POSITION
As at 30 June 2020
As at | As at | |||
30 June | 31 December | |||
Notes | 2020 | 2019 | ||
(Unaudited) | (Audited) | |||
US$'000 | US$'000 | |||
NON-CURRENT ASSETS | ||||
Property, plant and equipment | 11 | 22,372 | 28,306 | |
Investment property | 9,436 | - | ||
Right-of-use assets | 20,141 | 21,878 | ||
Intangible assets | 478 | 502 | ||
Equity investment at fair value through | ||||
other comprehensive income | 2 | 2 | ||
Prepayments, deposits and | ||||
other receivables | 1,671 | 1,931 | ||
Deferred tax assets | 435 | 209 | ||
Total non-current assets | 54,535 | 52,828 | ||
CURRENT ASSETS | ||||
Inventories | 19,204 | 33,339 | ||
Trade and bills receivables | 12 | 46,394 | 42,252 | |
Prepayments, deposits and | ||||
other receivables | 8,400 | 9,012 | ||
Income tax recoverable | 71 | 71 | ||
Cash and bank balances | 56,770 | 51,060 | ||
Total current assets | 130,839 | 135,734 | ||
CURRENT LIABILITIES | ||||
Trade and bills payables | 13 | 9,155 | 17,620 | |
Other payables and accruals | 12,342 | 15,968 | ||
Lease liabilities | 1,892 | 1,893 | ||
Income tax payables | 10,584 | 10,223 | ||
Total current liabilities | 33,973 | 45,704 | ||
Prosperous Industrial (Holdings) Limited Interim Report 2020 | 5 |
CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL POSITION
As at 30 June 2020
As at | As at | ||
30 June | 31 December | ||
Notes | 2020 | 2019 | |
(Unaudited) | (Audited) | ||
US$'000 | US$'000 | ||
NET CURRENT ASSETS | 90,030 | ||
96,866 | |||
TOTAL ASSETS LESS | |||
CURRENT LIABILITIES | 151,401 | 142,858 | |
NON-CURRENT LIABILITIES | |||
Defined benefit obligations | 752 | 749 | |
Lease liabilities | 6,673 | 7,664 | |
Deferred tax liabilities | 1,338 | - | |
Total non-current liabilities | 8,763 | 8,413 | |
Net assets | 142,638 | 134,445 | |
EQUITY ATTRIBUTABLE TO | |||
SHAREHOLDERS OF THE COMPANY | |||
Issued capital | 14 | 1,436 | 1,436 |
Reserves | 141,202 | 133,009 | |
Total equity | 142,638 | 134,445 | |
6 | Prosperous Industrial (Holdings) Limited Interim Report 2020 |
CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
For the six months ended 30 June 2020
Defined | Exchange | Asset | ||||||||
Issued | Share | Capital | Statutory | benefit plan | fluctuation | revaluation | Retained | Total | ||
capital | premium | reserve | reserves | reserve | reserve | reserve# | profits | equity | ||
(Unaudited) | (Unaudited) | (Unaudited) | (Unaudited) | (Unaudited) | (Unaudited) | (Unaudited) | (Unaudited) | (Unaudited) | ||
US$'000 | US$'000 | US$'000 | US$'000 | US$'000 | US$'000 | US$'000 | US$'000 | US$'000 | ||
At 1 January 2020 | 1,436 | 28,633* | 19,052* | 274* | 391* | (509)* | - | 85,168* | 134,445 | |
Profit for the period | - | - | - | - | - | - | - | 5,030 | 5,030 | |
Other comprehensive income/(loss) | ||||||||||
for the period: | ||||||||||
- Revaluation surplus | - | - | - | - | - | - | 5,214 | - | 5,214 | |
- Deferred tax debited to asset revaluation | ||||||||||
reserve | - | - | - | - | - | - | (1,304) | - | (1,304) | |
- Exchange differences on translation of | ||||||||||
foreign operations | - | - | - | - | - | (747) | - | - | (747) | |
Total comprehensive income/(loss) | ||||||||||
for the period | - | - | - | - | - | (747) | 3,910 | 5,030 | 8,193 | |
At 30 June 2020 | 1,436 | 28,633* | 19,052* | 274* | 391* | (1,256)* | 3,910* | 90,198* | 142,638 | |
- These reserve accounts comprise the consolidated reserves of US$141,202,000 (31 December 2019: US$133,009,000) in the condensed consolidated statement of financial position as at 30 June 2020.
- The asset revaluation reserve arose from a change in use from an owner-occupied building and the related prepaid land lease payment to an investment property carried at fair value during the period ended 30 June 2020.
For the six months ended 30 June 2019
Defined | Exchange | |||||||
Issued | Share | Capital | Statutory | benefit plan | fluctuation | Retained | Total | |
capital | premium | reserve | reserves | reserve | reserve | profits | equity | |
(Unaudited) | (Unaudited) | (Unaudited) | (Unaudited) | (Unaudited) | (Unaudited) | (Unaudited) | (Unaudited) | |
US$'000 | US$'000 | US$'000 | US$'000 | US$'000 | US$'000 | US$'000 | US$'000 | |
At 1 January 2019 | 1,436 | 28,633 | 19,052 | 262 | 366 | (28) | 92,880 | 142,601 |
Profit for the period | - | - | - | - | - | - | 4,067 | 4,067 |
Other comprehensive income for the period: | ||||||||
- Exchange differences on translation of foreign operations | - | - | - | - | - | 98 | - | 98 |
Total comprehensive income for the period | - | - | - | - | - | 98 | 4,067 | 4,165 |
Final and special 2018 dividends (note 9) | - | - | - | - | - | - | (7,134) | (7,134) |
At 30 June 2019 | 1,436 | 28,633 | 19,052 | 262 | 366 | 70 | 89,813 | 139,632 |
Prosperous Industrial (Holdings) Limited Interim Report 2020 | 7 |
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
For the six months ended 30 June 2020
For the six months | ||
ended 30 June | ||
2019 | ||
2020 | ||
(Unaudited) | (Unaudited) | |
US$'000 | US$'000 | |
CASH FLOWS FROM OPERATING ACTIVITIES | ||
Net cash flows from/(used in) operating activities | 7,974 | (15,305) |
CASH FLOWS FROM INVESTING ACTIVITIES | ||
Purchases of items of property, plant and equipment | (550) | (2,677) |
Proceeds from disposal of items of property, | ||
plant and equipment | 266 | 2 |
Additions to intangible assets | (39) | (7) |
Decrease in time deposits with maturity | ||
of more than three months when acquired | 12,851 | 4,505 |
Interest received | 192 | 240 |
Net cash flows from investing activities | 12,720 | 2,063 |
CASH FLOWS FROM FINANCING ACTIVITIES | ||
Finance costs paid | (290) | (300) |
Dividends paid | - | (7,134) |
Principal portion of lease payments | (929) | (1,733) |
Net cash flows used in financing activities | (1,219) | (9,167) |
NET INCREASE/(DECREASE) IN CASH AND | ||
CASH EQUIVALENTS | 19,475 | (22,409) |
Cash and cash equivalents at beginning of period | 38,209 | 59,267 |
Effect of foreign exchange rate changes, net | (914) | (50) |
CASH AND CASH EQUIVALENTS AT END OF | ||
PERIOD | 56,770 | 36,808 |
ANALYSIS OF BALANCES OF CASH AND | ||
CASH EQUIVALENTS | ||
Cash and bank balances as stated in the | ||
condensed consolidated statement of | ||
financial position | 56,770 | 36,808 |
8 | Prosperous Industrial (Holdings) Limited Interim Report 2020 |
NOTES TO CONDENSED CONSOLIDATED FINANCIAL INFORMATION
For the six months ended 30 June 2020
1. CORPORATE INFORMATION
Prosperous Industrial (Holdings) Limited (the "Company") is a limited liability company incorporated in the Cayman Islands and the shares of which are listed on the Main Board of The Stock Exchange of Hong Kong Limited (the "Stock Exchange"). The registered office address of the Company is Cricket Square, Hutchins Drive, P.O. Box 2681, Grand Cayman, KY1-1111, Cayman Islands, and the principal place of business of the Company is located at Unit 1-2, 1/F, Join-In Hang Sing Centre, 71-75 Container Port Road, Kwai Chung, New Territories, Hong Kong.
The Company is an investment holding company. During the six months ended 30 June 2020, the Company and its subsidiaries (collectively, the "Group") were principally involved in the manufacturing and sale of sports bags, handbags and luggage bags.
In the opinion of the directors of the Company, the immediate holding company and the ultimate holding company of the Company is Prosperous Holdings (Overseas) Limited, which is incorporated in the British Virgin Islands (the "BVI").
2.1 BASIS OF PREPARATION
The unaudited interim condensed consolidated financial information of the Group for the six months ended 30 June 2020 has been prepared in accordance with HKAS 34 Interim Financial Reporting and the applicable disclosure requirements of Appendix 16 to the Rules Governing the Listing of Securities on the Stock Exchange.
The unaudited interim condensed consolidated financial information does not include all the information and disclosures required in the annual financial statements, and should be read in conjunction with the Group's annual consolidated financial statements for the year ended 31 December 2019.
This interim condensed consolidated financial information is presented in the United States Dollar ("US$") and all values are rounded to the nearest thousand ("US$'000") except when otherwise indicated.
This interim condensed consolidated financial information has not been audited, but has been reviewed by the Company's audit committee.
Prosperous Industrial (Holdings) Limited Interim Report 2020 | 9 |
NOTES TO CONDENSED CONSOLIDATED FINANCIAL INFORMATION
For the six months ended 30 June 2020
2.2 CHANGES IN ACCOUNTING POLICIES AND DISCLOSURES
The accounting policies adopted in the preparation of the interim condensed consolidation financial information are consistent with those applied in the preparation of the Group's annual consolidated financial statements for the year ended 31 December 2019, except for the adoption of accounting policy for investment properties and the following revised Hong Kong Financial Reporting Standards ("HKFRSs") for the first time for the current period's financial information.
Amendments to HKFRS | 3 | Definition of a Business |
Amendments to HKFRS | 9, | Interest Rate Benchmark Reform |
HKAS 39 and HKFRS 7 | ||
Amendments to HKAS 1 and HKAS 8 | Definition of Material |
The nature and impact of the revised HKFRSs are described below:
- Amendments to HKFRS 3 clarify and provide additional guidance on the definition of a business. The amendments clarify that for an integrated set of activities and assets to be considered a business, it must include, at a minimum, an input and a substantive process that together significantly contribute to the ability to create output. A business can exist without including all of the inputs and processes needed to create outputs. The amendments remove the assessment of whether market participants are capable of acquiring the business and continue to produce outputs. Instead, the focus is on whether acquired inputs and acquired substantive processes together significantly contribute to the ability to create outputs. The amendments have also narrowed the definition of outputs to focus on goods or services provided to customers, investment income or other income from ordinary activities. Furthermore, the amendments provide guidance to assess whether an acquired process is substantive and introduce an optional fair value concentration test to permit a simplified assessment of whether an acquired set of activities and assets is not a business. The Group has applied the amendments prospectively to transactions or other events that occurred on or after 1 January 2020. The amendments did not have any impact on the financial position and performance of the Group.
- Amendments to HKFRS 9, HKAS 39 and HKFRS 7 address the effects of interbank offered rate reform on financial reporting. The amendments provide temporary reliefs which enable hedge accounting to continue during the period of uncertainty before the replacement of an existing interest rate benchmark. In addition, the amendments require companies to provide additional information to investors about their hedging relationships which are directly affected by these uncertainties. The amendments did not have any impact on the financial position and performance of the Group as the Group does not have any interest rate hedge relationships.
10 | Prosperous Industrial (Holdings) Limited Interim Report 2020 |
NOTES TO CONDENSED CONSOLIDATED FINANCIAL INFORMATION
For the six months ended 30 June 2020
2.2 CHANGES IN ACCOUNTING POLICIES AND DISCLOSURES (continued)
- Amendments to HKAS 1 and HKAS 8 provide a new definition of material. The new definition states that information is material if omitting, misstating or obscuring it could reasonably be expected to influence decisions that the primary users of general purpose financial statements make on the basis of those financial statements. The amendments clarify that materiality will depend on the nature or magnitude of information. The amendments did not have any impact on the Group's interim condensed consolidated financial information.
Accounting policy for investment property
Investment properties are interests in land and buildings (including the leasehold property held as
- right-of-useasset which would otherwise meet the definition of an investment property) held to earn rental income and/or for capital appreciation, rather than for use in the production or supply of goods or services or for administrative purposes; or for sale in the ordinary course of business. Such properties are measured initially at cost, including transaction costs. Subsequent to initial recognition, investment properties are stated at fair value, which reflects market conditions at the end of the reporting period.
Gains or losses arising from changes in the fair values of investment properties are included in profit or loss in the year in which they arise.
Any gains or losses on the retirement or disposal of an investment property are recognised in profit or loss in the year of the retirement or disposal.
If a property occupied by the Group as an owner-occupied property becomes an investment property, the Group accounts for such property in accordance with the accounting policy under "Property, plant and equipment and depreciation" up to the date of change in use, and any difference at that date between the carrying amount and the fair value of the property is dealt with as movements in the asset revaluation reserve.
3. OPERATING SEGMENT INFORMATION
No operating segment information is presented as the Group only operates in one single operating segment, i.e., manufacturing and sale of sports bags, handbags and luggage bags.
Prosperous Industrial (Holdings) Limited Interim Report 2020 | 11 |
NOTES TO CONDENSED CONSOLIDATED FINANCIAL INFORMATION
For the six months ended 30 June 2020
4. REVENUE
Revenue represents sales of sports bags, handbags and luggage bags. Disaggregation of revenue
For the six months ended 30 June | ||
2019 | ||
2020 | ||
(Unaudited) | (Unaudited) | |
US$'000 | US$'000 | |
By geographical markets | ||
The USA | 35,405 | 51,671 |
Mainland China | 14,396 | 21,708 |
Belgium | 12,135 | 9,220 |
Netherlands | 8,886 | 6,825 |
Japan | 6,865 | 8,729 |
Hong Kong | 1,910 | 2,174 |
Others | 18,896 | 23,086 |
Total revenue from contracts with customers | 98,493 | 123,413 |
By product category | ||
Outdoor and sporting bags | 71,445 | 80,933 |
Functional bags | 10,154 | 17,811 |
Fashion and casual bags | 15,079 | 21,307 |
Others | 1,815 | 3,362 |
Total revenue from contracts with customers | 98,493 | 123,413 |
12 | Prosperous Industrial (Holdings) Limited Interim Report 2020 |
NOTES TO CONDENSED CONSOLIDATED FINANCIAL INFORMATION
For the six months ended 30 June 2020
5. OTHER INCOME AND GAINS, NET
An analysis of the Group's other income and gains, net is as follows:
For the six months ended 30 June | ||
2019 | ||
2020 | ||
(Unaudited) | (Unaudited) | |
US$'000 | US$'000 | |
Other income | ||
Bank interest income | 192 | 240 |
Government grants* | 119 | 165 |
Charges levied on customers | 202 | - |
Rental income | 64 | - |
Others | 292 | 645 |
869 | 1,050 | |
Gains, net | ||
Foreign exchange difference, net | 243 | 63 |
Gain on sales of samples and mold | - | 271 |
Gain on sales of scrap materials | 17 | 41 |
260 | 375 | |
Other income and gains, net | 1,129 | 1,425 |
- Subsidies are received by a subsidiary from various government authorities in Mainland China for the development of its business. The subsidies are interest-free and are recognised as "Other income" in profit or loss when they have become unconditional.
Prosperous Industrial (Holdings) Limited Interim Report 2020 | 13 |
NOTES TO CONDENSED CONSOLIDATED FINANCIAL INFORMATION
For the six months ended 30 June 2020
6. FINANCE COSTS
For the six months ended 30 June | ||
2019 | ||
2020 | ||
(Unaudited) | (Unaudited) | |
US$'000 | US$'000 | |
Factoring charges on certain designated | ||
trade receivables (note 12) | 10 | 1 |
Interest on lease liabilities | 267 | 299 |
Others | 13 | - |
290 | 300 | |
7. PROFIT BEFORE TAX
The Group's profit before tax is arrived at after charging/(crediting):
For the six months ended 30 June
Cost of inventories sold
Depreciation of property, plant and equipment Less: Amount included in cost of inventories sold
Depreciation of right-of-use assets
Less: Amount included in cost of inventories sold
Amortisation of intangible assets Research and development costs Reversal of impairment of trade receivables*
2020 | 2019 |
(Unaudited) | (Unaudited) |
US$'000 | US$'000 |
75,674 | 95,428 |
2,340 | 2,463 |
(1,386) | (1,911) |
954 | 552 |
1,3091,217
- (539)
420678
191245
1,300 | 1,787 |
(17) | - |
- The amount is included in "Other expenses, net" on the face of the condensed consolidated statement of profit or loss and other comprehensive income.
14 | Prosperous Industrial (Holdings) Limited Interim Report 2020 |
NOTES TO CONDENSED CONSOLIDATED FINANCIAL
INFORMATION
For the six months ended 30 June 2020
8. INCOME TAX
Hong Kong profits tax has been provided at the rate of 16.5% (2019: 16.5%) on the estimated assessable profits arising in Hong Kong during the period. Taxes on profits assessable elsewhere have been calculated at the rates of tax prevailing in the countries/jurisdictions in which the Group operates, based on existing legislation, interpretations and practices in respect thereof.
An analysis of the Group's income tax is as follows:
For the six months ended 30 June | ||
2019 | ||
2020 | ||
(Unaudited) | (Unaudited) | |
US$'000 | US$'000 | |
Current: | ||
Charge for the period | 899 | 1,359 |
Underprovision in prior years | - | 2 |
899 | 1,361 | |
Deferred tax | (187) | 319 |
Total tax expense for the period | 712 | 1,680 |
9. DIVIDENDS
For the six months ended 30 June | ||
2019 | ||
2020 | ||
(Unaudited) | (Unaudited) | |
US$'000 | US$'000 | |
Final dividend declared and paid - Nil (2019: | ||
HK1.5 cents (equivalent to approximately | ||
US0.19 cents) per ordinary share | - | 2,140 |
Special dividend declared and paid - Nil (2019: | ||
HK3.5 cents (equivalent to approximately | ||
US0.45 cents) per ordinary share | - | 4,994 |
- | 7,134 | |
The Board of the Company does not recommend the payment of an interim dividend for the six months ended 30 June 2020 (six months ended 30 June 2019: Nil).
Prosperous Industrial (Holdings) Limited Interim Report 2020 | 15 |
NOTES TO CONDENSED CONSOLIDATED FINANCIAL INFORMATION
For the six months ended 30 June 2020
-
EARNINGS PER SHARE ATTRIBUTABLE TO SHAREHOLDERS OF THE COMPANY
The calculation of the basic earnings per share for the period is based on the unaudited profit for the period attributable to shareholders of the Company of US$5,030,000 (six months ended 30 June 2019: US$4,067,000), and the weighted average number of ordinary shares in issue of 1,120,000,000 (six months ended 30 June 2019: 1,120,000,000) during the period.
No adjustment has been made to the basic earnings per share presented for the six months ended 30 June 2020 and 2019 in respect of a dilution as the Group had no potentially dilutive ordinary shares in issue during each of these periods. - PROPERTY, PLANT AND EQUIPMENT AND INVESTMENT PROPERTY
During the period, the Group spent approximately US$550,000 (six months ended 30 June 2019: US$2,677,000) on property, plant and equipment, disposed of property, plant and equipment with a total net carrying amount of approximately US$587,000 (six months ended 30 June 2019: US$556,000) and wrote off property, plant and equipment with a total net carrying amount of nil (six months ended 30 June 2019: US$380,000).
During the period, the Group rented out one of its occupied properties to an independent third party for earning rental income. At the date of change in use, this property became an investment property. Upon the transfer from property, plant and equipment of US$3,913,000 and the related right-of-use land of US$308,000 to investment property, this property was revalued at US$9,436,000 with a revaluation surplus of US$5,214,000 (six months ended 30 June 2019: Nil) credited to the asset revaluation reserve. - TRADE AND BILLS RECEIVABLES
As at | As at | |
30 June | 31 December | |
2020 | 2019 | |
(Unaudited) | (Audited) | |
US$'000 | US$'000 | |
Trade receivables | 47,513 | 43,395 |
Bills receivable | 13 | 6 |
Less: Impairment | (1,132) | (1,149) |
46,394 | 42,252 | |
16 | Prosperous Industrial (Holdings) Limited Interim Report 2020 |
NOTES TO CONDENSED CONSOLIDATED FINANCIAL INFORMATION
For the six months ended 30 June 2020
12. TRADE AND BILLS RECEIVABLES (continued)
An ageing analysis of the trade and bills receivables as at end of the reporting period, based on the invoice date, is as follows:
As at | As at | |
30 June | 31 December | |
2020 | 2019 | |
(Unaudited) | (Audited) | |
US$'000 | US$'000 | |
Within 1 month | 18,228 | 26,738 |
1 to 2 months | 21,936 | 9,677 |
2 to 3 months | 4,230 | 4,834 |
Over 3 months | 2,000 | 1,003 |
46,394 | 42,252 | |
The Group has entered into a trade receivable factoring arrangement (the "Arrangement") and transferred certain trade receivables from a designated customer to a bank. Under the Arrangement, the Group will not be required to reimburse the bank for loss of interest if the trade debtor has late or default of payments. Since the trade receivables factored to the bank are non- recourse, the Group has transferred the significant risks and rewards relating to these receivables, the factored trade receivables met the criteria of derecognition. Therefore, the Group derecognised the full carrying amount of the trade receivables. During the six months ended 30 June 2020, trade receivables with an aggregate amount of US$4,542,000 (31 December 2019: Nil) were factored to the bank and were fully derecognised.
Prosperous Industrial (Holdings) Limited Interim Report 2020 | 17 |
NOTES TO CONDENSED CONSOLIDATED FINANCIAL INFORMATION
For the six months ended 30 June 2020
13. TRADE AND BILLS PAYABLES
Trade and bills payables of the Group are unsecured, interest-free, and are normally settled on terms of 45 to 60 days.
An ageing analysis of the trade and bills payables of the Group as at the end of the reporting period, based on the invoice date, is as follows:
As at | As at | |
30 June | 31 December | |
2020 | 2019 | |
(Unaudited) | (Audited) | |
US$'000 | US$'000 | |
Within 1 month | 3,597 | 13,432 |
1 to 2 months | 2,342 | 3,622 |
2 to 3 months | 2,810 | 528 |
Over 3 months | 406 | 38 |
9,155 | 17,620 | |
14. SHARE CAPITAL
As at | As at | |
30 June | 31 December | |
2020 | 2019 | |
(Unaudited) | (Audited) | |
Authorised: | ||
100,000,000,000 ordinary shares of | ||
HK$0.01 each | HK$1,000,000,000 | HK$1,000,000,000 |
As at | ||
As at | ||
30 June | 31 December | |
2020 | 2019 | |
(Unaudited) | (Audited) | |
US$'000 | US$'000 | |
Issued and fully paid: | ||
1,120,000,000 ordinary shares of HK$0.01 each | 1,436 | 1,436 |
18 | Prosperous Industrial (Holdings) Limited Interim Report 2020 |
NOTES TO CONDENSED CONSOLIDATED FINANCIAL INFORMATION
For the six months ended 30 June 2020
15. RELATED PARTY DISCLOSURES
- The Group entered into the following material transactions with related parties during the period:
For the six months | ||||
ended 30 June | ||||
Notes | 2019 | |||
2020 | ||||
(Unaudited) | (Unaudited) | |||
US$'000 | US$'000 | |||
A company beneficially owned by | ||||
certain directors of the Company | ||||
Lease payment | (i) | 124 | 124 | |
Subsidiaries of a company with | ||||
significant influence over | ||||
the Company | ||||
Public facility maintenance expenses | (iii) | 79 | 78 | |
Utility expenses and other charges | (iii) | 258 | 266 | |
Shuttle bus service expenses | (i) | 125 | 177 | |
Building management expenses | (ii) | 72 | 70 | |
Notes:
- These transactions were determined with reference to prevailing market rates.
- These transactions were carried out at mutually-agreed prices.
- The public facility maintenance expenses and utilities expenses were reimbursed to the related parties on an actual cost basis.
Prosperous Industrial (Holdings) Limited Interim Report 2020 | 19 |
NOTES TO CONDENSED CONSOLIDATED FINANCIAL INFORMATION
For the six months ended 30 June 2020
15. RELATED PARTY DISCLOSURES (continued)
- The compensation of the key management personnel of the Group is summarised as follows:
For the six months | |||
ended 30 June | |||
2019 | |||
2020 | |||
(Unaudited) | (Unaudited) | ||
US$'000 | US$'000 | ||
Short term employee benefits | 609 | 662 | |
Defined contribution scheme contributions | 18 | 18 | |
Total compensation paid/payable to | |||
key management personnel | 627 | 680 | |
16. APPROVAL OF THE CONDENSED CONSOLIDATED FINANCIAL INFORMATION
The interim condensed consolidated financial information was approved and authorised for issue by the board of directors of the Company on 28 August 2020.
20 | Prosperous Industrial (Holdings) Limited Interim Report 2020 |
MANAGEMENT DISCUSSION AND ANALYSIS
Business and financial review
The Group is a leading manufacturer that designs, develops and manufactures recreational bags and packs, mainly backpacks, it also provides quality supply chain management services for renowned multinational sports and lifestyle brands. During the six months ended 30 June 2020 (the "Period"), over 99% of the Group's revenue was generated from sales of bags and packs manufactured for brand owner customers.
During the Period, the manufacturing and retail industry faced challenges arose from the outbreak of COVID-19, in addition to the persisting USA-China trade tension. Lockdowns, travel restrictions, social distancing and other public health measures as implemented by local governments around the world have hampered the consumer spending globally. Entering the second quarter of 2020, some shipments to the USA and Europe have been deferred at the request of the Group's customers. Furthermore, while it remains uncertain as to the time of recovery of the retail industry from the COVID-19 pandemic, some of the Group's customers have cut back on their order estimates.
Facing this challenging business environment, the Group reacted by adjusting its production capacity downward, temporarily suspending its production base in Cambodia which mainly caters for orders from the USA. The Group also took a more prudent approach towards its capital expenditure, including suspending its expansion of production facilities in Cambodia, to mitigate the impact of the COVID-19 pandemic on the Group's cash flows.
Prosperous Industrial (Holdings) Limited Interim Report 2020 | 21 |
Total revenue of the Group for the Period was approximately US$98.5 million, representing
- decrease of approximately US$24.9 million or 20.2% from approximately US$123.4 million as recorded in the six months ended 30 June 2019 (the "Corresponding Period"). The decrease was mainly due to the cut back in sales order as a result of the weakened consumer spending due to the outbreak of COVID-19. Sales quantity decreased from approximately 13.3 million pieces for the Corresponding Period to approximately 11.1 million pieces for the Period, representing a decrease of approximately 2.2 million pieces or 16.5%. The average selling price per piece declined and the sales mix of different product category concentrated more towards outdoor & sporting bags and packs while shifting away from functional bags and packs in order to better utilise production capacity of the Group's multi-regional manufacturing platform. The breakdown of the revenue, sales quantity and average selling price by product category are set out below:
Six months ended 30 June 2020 | Six months ended 30 June 2019 | |||||||
Average | Average | |||||||
Sales | selling | Sales | selling | |||||
Revenue | quantity | price | Revenue | quantity | price | |||
US$'000 | % | Pc'000 | US$/pc | US$'000 | % | Pc'000 | US$/pc | |
Product category | ||||||||
Outdoor & sporting | 71,445 | 73 | 7,530 | 9.5 | 80,933 | 66 | 8,567 | 9.4 |
Functional | 10,154 | 10 | 1,686 | 6.0 | 17,811 | 14 | 2,089 | 8.5 |
Fashion & casual | 15,079 | 15 | 1,707 | 8.8 | 21,307 | 17 | 2,402 | 8.9 |
Others | 1,815 | 2 | 167 | 10.9 | 3,362 | 3 | 250 | 13.4 |
Total | 98,493 | 100 | 11,090 | 8.9 | 123,413 | 100 | 13,308 | 9.3 |
The Group's cost of sales for the Period amounted to approximately US$77.9 million, representing a decrease of approximately US$19.5 million or 20.0% from approximately US$97.4 million for the Corresponding Period. The decrease was in line with the decrease of sales and the Group's gross profit margin remained stable at 20.9% as compared 21.1% for the Corresponding Period.
The Group's administrative expenses for the Period amounted to approximately US$9.9 million, decreased by approximately US$3.0 million or 23.3% from approximately US$12.9 million for Corresponding Period as there was one-off costs for the cessation of operation of production plants in Dongkeng, Dongguan and Xinfeng, Jiangxi amounting to approximately US$2.9 million in the Corresponding Period.
Selling and distribution expenses for the Period amounted to approximately US$5.6 million, decreased by approximately US$2.5 million or 30.9% from approximately US$8.1 million for the Corresponding Period. The decrease was mainly due to the drop in sales quantity and decreased use of airfreight for shipping products to customers during the Period.
22 | Prosperous Industrial (Holdings) Limited Interim Report 2020 |
Profit attributable to shareholders of the Company increased by approximately US$0.9 million or 22.0% to approximately US$5.0 million for the Period, compared with approximately US$4.1 million for the Corresponding Period. Basic earnings per share for the Period increased by 0.09 US cent to 0.45 US cent as compared to 0.36 US cent for the Corresponding Period.
Liquidity, financial resources and capital expenditure
The Group's financial position remained solid. As at 30 June 2020, the Group had cash and cash equivalents of approximately US$56.8 million. The Group had no external borrowings as at 30 June 2020. As a result, the gearing ratio of the Group was zero (31 December 2019: zero), calculated as total debt, excluding lease liabilities, divided by total equity.
During the six months ended 30 June 2020, the Group incurred capital expenditure of US$0.6 million, mainly attributable to acquisition of property, plant and equipment.
Memorandum of understanding on cooperative development
On 25 June 2019, Guangzhou Glorieux Traveling Articles Co., Ltd.*(廣州澤榮旅行 用品有限公司)("Guangzhou Glorieux"), a wholly owned subsidiary of the Company, entered into a memorandum of understanding (the "MOU") with Guangzhou Poly Urban Redevelopment Investment Company Limited*(廣州保利城改投資有限公司)("Poly Urban Redevelopment"), an independent third party, in relation to the cooperative development of a parcel of land (the "Land") owned by Guangzhou Glorieux. Pursuant to the MOU, Guangzhou Glorieux and Poly Urban Redevelopment will cooperate to formulate a plan to redevelop the Land (the "Redevelopment Project"). The Land is located at the south side of Nancun Road, Xingye Road, Nancun Town, Panyu District, Guangzhou City, the PRC and is currently used as a factory site. The Redevelopment Project shall be subject to separate legally binding agreements on terms and conditions to be mutually agreed by the signing parties of the MOU.
As no separate legally binding agreements were entered into between the parties and the MOU has lapsed on 24 June 2020.
Contingent liabilities
As at 30 June 2020, the Group did not have any significant contingent liabilities (31 December 2019: Nil).
- For identification purpose only
Prosperous Industrial (Holdings) Limited Interim Report 2020 | 23 |
Capital commitment
As at 30 June 2020, the Group did not have any significant capital commitments (31 December 2019: Nil).
Segmental Information
No operating segmental information of the Group was presented for the six months ended 30 June 2020 as the Group only operates in one single operating segment, i.e. manufacturing and sale of sports bags, handbags and luggage bags.
Employee information
As at 30 June 2020, the Group had approximately 8,500 employees. Salaries and benefits of the Group's employees were kept at a market level and employees were rewarded on a performance-related basis. Remuneration is reviewed annually. Staff benefits include contribution to mandatory contribution fund, discretionary bonus and share options. During the six months ended 30 June 2020, no share options were granted to employees of the Group.
Significant investments held
As at 30 June 2020, there were no material investments held by the Group.
Charge on the Group's assets
As at 30 June 2020, the Group did not have any charges on its assets (31 December 2019: Nil).
Foreign currency exposure
The Group's purchases and operating costs are mainly denominated in Renminbi, Vietnamese Dong while most of the Group's sales proceeds are received in US$. As such, the Group is exposed to foreign currency risk. Any appreciation of Renminbi, Vietnamese Dong against US$ may adversely affect the profitability. The Group currently does not have a foreign currency hedging policy. The Group will continue to monitor its foreign currency exposure closely and consider hedging significant foreign currency exposure should the need arise.
24 | Prosperous Industrial (Holdings) Limited Interim Report 2020 |
Outlook and prospects
Looking ahead, the uncertainties surrounding the COVID-19 pandemic will continue to affect the global economic activities, and will inevitably have negative impact on the Group's performance for the months to come. Nevertheless, the Group is positioned to participate in the eventual recovery of customer demand. The operation of its Cambodia production base is expected to resume gradually in mid-September 2020, subject to the availability of the workers and orders from customers. And the Group will reconsider to resume the remaining Phase 2 expansion should the business environment improves. Meanwhile, the Group will continue to monitor the situation and work closely with its partners to mitigate the adverse impact arising from the COVID-19 pandemic.
Use of proceeds from listing
The Company raised approximately HK$202.2 million from the listing in July 2018. On 20 December 2019, the Directors resolved to change the use and allocation of the net proceeds as disclosed in the section headed "Future Plans and Use of Proceeds" of the prospectus dated 29 June 2018 (the "Prospectus") (the "First Revised Use of Net Proceeds") in order to reallocate the Group's production capacity by scaling down the operation in the PRC production bases and expanding its Vietnam and Cambodia production bases. On 22 May 2020, the Directors further resolved to change the use and allocation of the net proceeds (the "Second Revised Use of Net Proceeds") in order to strengthen its working capital position and liquidity by deferring its further expansion plan in Cambodia and retail business in MAISON PROMAX and instead apply the unutilised amount to general working capital. The Directors considered the aforementioned changes were in the best interest of the Company and the Shareholders as a whole. The Change would allow the Company to deploy its financial resources more effectively. For details, please refer to the announcements of the Company dated 20 December 2019 and 22 May 2020, respectively.
As at 30 June 2020, the amount of the net proceeds which remained unutilised amounted to approximately HK$55.5 million. The remaining unutilised net proceeds are expected to be utilised within 3 years up to 2023.
Prosperous Industrial (Holdings) Limited Interim Report 2020 | 25 |
Set out below are details of the use of proceeds up to 30 June 2020:
Second | |||||||||
Original | First Revised | Revised | Utilised | Unutilised | |||||
allocation of | Use of Net | Use of Net | amount up to | amount up to | |||||
net proceeds | Proceeds | Proceeds | 30 June 2020 | 30 June 2020 | |||||
HK$ million | HK$ million | HK$ million | HK$ million | HK$ million | |||||
Further enhancement of manufacturing | |||||||||
capacity and flexibility by expanding | |||||||||
manufacturing platforms in Cambodia | 135.5 | 135.5 | 77.2 | 77.2 | - | ||||
Enhancement of production efficiency | |||||||||
and capabilities and enhancement | |||||||||
of quality control by replacing | |||||||||
and upgrading existing production | |||||||||
machinery and acquisition of additional | |||||||||
machinery, and setting up a research | |||||||||
and development centre and | |||||||||
additional testing laboratories | 30.8 | 14.5 | 14.5 | 14.5 | - | ||||
Enhancing brand recognition | |||||||||
for MAISON PROMAX and | |||||||||
expansion of retail business | 12.5 | 12.5 | 5.8 | 5.8 | - | ||||
Enhancing IT infrastructure | 23.4 | 8.7 | 8.7 | 1.9 | 6.8 | ||||
Reallocation of production capacity | - | 31.0 | 31.0 | 21.4 | 9.6 | ||||
General working capital | - | - | 65.0 | 25.9 | 39.1 | ||||
Total | 202.2 | 202.2 | 202.2 | 146.7 | 55.5 | ||||
26 | Prosperous Industrial (Holdings) Limited Interim Report 2020 |
OTHER INFORMATION
CORPORATE GOVERNANCE PRACTICES
The Company places high value on the corporate governance practice and is committed to achieving high standards of corporate governance with a view to safeguarding the interests of the shareholders of the Company as a whole.
The Company has adopted the principles and code provisions of 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") as the basis of the Company's corporate governance practice, and the CG Code has been applicable to the Company. During the six months ended 30 June 2020, the Company has complied with the CG Code. The Board will continue to review and monitor the corporate governance status of the Company for the purpose of complying with the CG Code and maintaining a high standard of corporate governance of the Company.
MODEL CODE OF CONDUCT OF DIRECTORS' SECURITIES TRANSACTIONS
The Company has adopted a code of conduct regarding Directors' transactions in securities of the Company (the "Company's Code") on terms no less exacting than the required standard set out in the Model Code for Securities Transactions by Directors of Listed Issuers (the "Model Code"). After specific enquiry made by the Company, all of the Directors confirmed that they have complied with the required standard set out in the Model Code and the Company's Code during the six months ended 30 June 2020.
INTERIM DIVIDEND
The Board resolved not to declare any interim dividend for the period ended 30 June 2020 (six months ended 30 June 2019: Nil).
SUFFICIENCY OF PUBLIC FLOAT
Based on the information that is publicly available to the Company and within the knowledge of the Directors, as of the date of this report, the Company maintained the prescribed public float of no less than 25% as required under the Listing Rules.
Prosperous Industrial (Holdings) Limited Interim Report 2020 | 27 |
MATERIAL ACQUISITION AND DISPOSAL OF SUBSIDIARIES, ASSOCIATES AND JOINT VENTURES
During the Period, there was no material acquisition or disposal of subsidiaries, associates or joint ventures by the Company.
SHARE OPTION SCHEME
The Company has conditionally adopted the share option scheme (the "Scheme") on 19 June 2018 which is valid and effective for a period of 10 years from 13 July 2018. The purpose of the Scheme is to give the eligible persons an opportunity to have a personal stake in the Company and help motivate them to optimise their future contributions to the Group and/or to reward them for their past contributions, to attract and retain or otherwise maintain on-going relationships with such eligible persons who are significant to and/or whose contributions are or will be beneficial to the performance, growth or success of the Group, and additionally in the case of executives, to enable the Group to attract and retain individuals with experience and ability and/or to reward them for their past contributions. The principal terms of the Scheme are summarised in the paragraph headed "Share Option Scheme" in Appendix IV to the Prospectus.
No share option was granted, exercised or cancelled by the Company under the Scheme up to the date of this report and there was no outstanding share option as at the date of this report.
28 | Prosperous Industrial (Holdings) Limited Interim Report 2020 |
DIRECTORS' AND CHIEF EXECUTIVE'S INTERESTS AND SHORT POSITIONS IN SHARES, UNDERLYING SHARES AND DEBENTURES OF THE COMPANY OR ANY ASSOCIATED CORPORATION
As at 30 June 2020, the interests and short positions of the Directors and chief executive of the Company in the shares, underlying shares and debentures of the Company or any associated corporation (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 required to be kept under Section 352 of the SFO or otherwise notified to the Company and the Stock Exchange pursuant to the Model Code set out in Appendix 10 to the Listing Rules, were as follows:
Long positions in the shares and underlying shares of associated corporation of the Company
Number of | Approximate % | |||
Name of Director and | Name of associated | ordinary | of total issued | |
Chief Executive | corporation of the Company | Nature of interest | shares held | shares1 |
Mr. Yeung Shu Kin | Prosperous Holdings | Personal interest | 12 | 12% |
(Overseas) Limited | ||||
("Prosperous BVI") | ||||
Mr. Yeung Shu Kai | Prosperous BVI | Personal interest | 6 | 6% |
Mr. Yeung Shu Hung | Prosperous BVI | Personal interest | 6 | 6% |
Note:
1. As at 30 June 2020, the total number of issued shares of Prosperous BVI was 100.
Save as disclosed above, as at 30 June 2020, none of the Directors or chief executive of the Company had or was deemed to have any interests or short positions in the shares, underlying shares or debentures of the Company and its associated corporations (within the meaning of Part XV of the SFO) which were required to be recorded in the register of interests required to be kept under Section 352 of the SFO or were otherwise notified to the Company and the Stock Exchange pursuant to the Model Code.
Prosperous Industrial (Holdings) Limited Interim Report 2020 | 29 |
SUBSTANTIAL SHAREHOLDERS' INTEREST AND SHORT POSITIONS IN SHARES AND UNDERLYING SHARES
So far as known to the Directors or chief executive of the Company, as at 30 June 2020, the following corporates and persons (other than the Directors or chief executive of the Company) had interests or short positions in the shares of the Company and underlying shares of the Company which would fall to be disclosed to the Company under provisions of Divisions 2 and 3 of Part XV of the SFO, or which were recorded in the register required to be kept by the Company under Section 336 of the SFO as follows:
Long Positions in Shares
Approximate | |||
percentage of | |||
shareholding | |||
Number of | in the | ||
Name | Capacity/Nature of interest | shares | Company |
Prosperous BVI | Beneficial Owner | 588,000,000 | 52.5% |
Mr. Yeung Ming Sum Richard | Interest in a controlled corporation | 588,000,000 | 52.5% |
("Mr. Yeung") (1) | |||
Mrs. Yeung Wor Foon Stella | Interest in a controlled corporation | 588,000,000 | 52.5% |
("Mrs. Yeung") (1) | |||
Great Pacific Investment Limited | Beneficial Owner | 252,000,000 | 22.5% |
("Great Pacific") (2) | |||
Pou Hing Industrial Co. Limited | Interest in a controlled corporation | 252,000,000 | 22.5% |
("Pou Hing") (2) | |||
Yue Yuen Industrial (Holdings) | Interest in a controlled corporation | 252,000,000 | 22.5% |
Limited ("Yue Yuen") (2) | |||
Wealthplus Holdings Limited (3) | Interest in a controlled corporation | 252,000,000 | 22.5% |
Pou Chen Corporation (3) | Interest in a controlled corporation | 252,000,000 | 22.5% |
30 | Prosperous Industrial (Holdings) Limited Interim Report 2020 |
Notes:
- Prosperous BVI is owned as to 23% by Mr. Yeung, 23% by Mrs. Yeung, 12% by Mr. Yeung Shu Kin, 12% by Mr. Yeung Wang Tony, 12% by Mr. Yeung Theodore Tat, 6% by Mr. Yeung Shu Hung, 6% by Mr. Yeung Shu Kai and 6% by Mr. Yeung Chak Fung. Prosperous BVI is the beneficial owner of 588,000,000 shares of the Company and Mr. Yeung is the spouse of Mrs. Yeung. By virtue of the SFO, Mr. Yeung and Mrs. Yeung together are deemed to be interested in all of the shares of the Company held by Prosperous BVI.
- Great Pacific is a wholly-owned subsidiary of Yue Yuen and the beneficial owner of 252,000,000 shares of the Company. By virtue of the SFO, Yue Yuen is deemed to be interested in all of the shares of the Company held by Great Pacific as Great Pacific is a wholly-owned subsidiary of Pou Hing and Pou Hing is a wholly-owned subsidiary of Yue Yuen. Yue Yuen is a company incorporated in Bermuda with limited liability and whose shares are listed on the Stock Exchange.
- Pou Chen Corporation is a shareholder of Yue Yuen, is interested as to 51.11% of Yue Yuen through its two wholly-owned subsidiaries, Wealthplus Holdings Limited (interested as to 47.95% of Yue Yuen) and Win Fortune Investments Limited (interested as to 3.16% of Yue Yuen). By virtue of the SFO and with reference to note (2), Pou Chen Corporation is deemed to be interested in the shares of the Company held by Great Pacific. Pou Chen Corporation is incorporated in Taiwan and is listed on the Taiwan Stock Exchange of the Taiwan Stock Exchange Corporation (stock code: 9904 TSE).
Save as disclosed above, and as at the date of this report, the Directors were not aware of any persons (other than the Directors and chief executive of the Company) who had any interests or short positions in the shares of the Company or underlying shares of the Company which would fall to be disclosed under Divisions 2 and 3 of Part XV of the SFO, or which were recorded in the register required to be kept by the Company under Section 336 of the SFO.
DIRECTORS' RIGHTS TO ACQUIRE SHARES OR DEBT SECURITIES
Other than the Scheme and as disclosed under the section "Directors' and Chief Executive's Interests and Short Positions in Shares, Underlying Shares and Debentures of the Company or any Associated Corporation" above, at no time during the six months ended 30 June 2020 and up to the date of this report, was the Company or any of its subsidiaries, or any of its fellow subsidiaries, a party to any arrangement to enable the Directors or chief executive of the Company or their respective associates (as defined in the Listing Rules) to have any right to subscribe for securities of the Company or any of its associated corporations (within the meaning of Part XV of the SFO) or to acquire benefits by means of acquisitions of shares in, or debentures of, the Company or any other body corporate.
Prosperous Industrial (Holdings) Limited Interim Report 2020 | 31 |
PURCHASE, SALE OR REDEMPTION OF LISTED SECURITIES OF THE COMPANY
Neither the Company nor any of its subsidiaries had purchased, sold or redeemed any of the Company's listed securities during the Period.
AUDIT COMMITTEE AND REVIEW OF INTERIM FINANCIAL RESULTS
Pursuant to Rule 3.21 of the Listing Rules, the Company established an audit committee (the "Audit Committee") with written terms of reference aligned with the CG Code. The Audit Committee comprises three independent non-executive Directors, namely Mr. Ko Siu Tak, Mr. Chiu Che Chung Alan and Mr. Yip Kwok Cheung. The Audit Committee is chaired by Mr. Ko Siu Tak and is responsible for assisting the Board in safeguarding the Group's assets by providing an independent review of the effectiveness of the financial reporting process and the internal controls and risk management systems of the Group. It also performs other duties and responsibilities as assigned by the Board.
The Audit Committee has discussed with the management of the Group and reviewed the unaudited interim financial results of the Group for the six months ended 30 June 2020, including the accounting principles and practices adopted by the Group, and discussed financial related matters. The Audit Committee is of the view that such statements have complied with the applicable accounting standards and that adequate disclosures have been made
On behalf of the Board
Prosperous Industrial (Holdings) Limited
Yeung Shu Kin
Chairman
Hong Kong
28 August 2020
32 | Prosperous Industrial (Holdings) Limited Interim Report 2020 |
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