Comtec Solar Systems Group Limited - Interim / Quarterly Report 2021

Hong Kong Exchanges and Clearing Limited and The Stock Exchange of Hong Kong Limited take no responsibility for the contents of this announcement, make no representation as to its accuracy or completeness and expressly disclaim any liability whatesoever for any loss howsoever arising from or in reliance upon the whole or any part of the contents of this announcement.

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SINO ICT HOLDINGS LIMITED 芯成科技控股有限公司

(Incorporated in Bermuda with limited liability)

(Stock Code: 00365)

INTERIM RESULTS ANNOUNCEMENT FOR THE SIX MONTHS ENDED 30 JUNE 2021

INTERIM RESULTS

The board (the “Board”) of directors (the “Directors”) of Sino ICT Holdings Limited (the “Company”) hereby announces the unaudited consolidated results (the “Results”) of the Company and its subsidiaries (collectively the “Group”) for the six months ended 30 June 2021 (the “Period”). The Results have not been audited but they have been reviewed by the Company’s Audit Committee on 20 August 2021.

CONDENSED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

Notes Revenue 5 Cost of Sales Gross profit Other income 6 Otther gains/(losses), net 7 Distribution costs Administrative costs Operating profit	Six months ended 30 June 2021 (Unaudited) HK$’000 196,127 (101,069) 95,058 5,899 641 (27,798) (28,810) 44,990	Six months ended 30 June 2020 (Unaudited) HK$’000 160,211 (76,003) 84,208 7,191 (970) (15,395) (27,208) 47,826

CONDENSED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME (CONTINUED)

Notes Finance income 8 Finance costs 8 Finance costs, net 8 Profit before income tax Income tax expense 10 Profit for the Period attributable to equity holders of the Company Other comprehensive income Item that may reclassified subsequently to profit or loss Exchange differences on translation of foreign operations Other comprehensive income for the Period, net of tax Total comprehensive income Total comprehensive income attributable to: Equity holders of the Company Basic earnings per share 11 Diluted earnings per share 11	Six months ended 30 June 2021 (Unaudited) HK$’000 407 (7,620) (7,213) 37,777 (4,890) 32,887 79 79 32,966 32,966 2.26 Cents 2.26 Cents	Six months ended 30 June 2020 (Unaudited) HK$’000 267 (9,295) (9,028) 38,798 (7,446) 31,352 1,073 1,073 32,425 32,425 2.15 Cents 2.15 Cents

CONDENSED CONSOLIDATED BALANCE SHEET

Notes ASSETS Non-current assets Property, plant and equipment Investment property Right-of-use assets Intangible assets Deferred income tax assets Other non-current assets Investment in associates Current assets Inventories Trade receivables and other receivables 12 Financial assets at fair value through profit or loss Cash and cash equivalents TOTAL ASSETS EQUITY AND LIABILITIES Equity attributable to equity holders of the Company Share capital and share premium Other reserves Accumulated losses TOTAL EQUITY	At 30 June 2021 (Unaudited) HK$’000 71,208 26,943 28,211 24,367 5,746 — 258,379 414,854 62,853 216,930 582 351,309 631,674 1,046,528 240,740 610,193 (508,753) 342,180	At 31 December 2020 (Audited) HK$’000 73,146 26,943 27,290 22,281 9,578 4,904 247,684 411,826 35,227 145,909 43,635 116,609 341,380 753,206 240,740 610,114 (541,640) 309,214

CONDENSED CONSOLIDATED BALANCE SHEET (CONTINUED)

Notes LIABILITIES Non-current liabilities Long-term borrowings 14 Lease liabilities Deferred income Deferred income tax liabilities Current liabilities Trade payables and other payables 13 Lease liabilities Contract liabilities Short-term borrowings 14 Current income tax liabilities Non-current liabilities due within one year 9 TOTAL LIABILITIES TOTAL EQUITY AND LIABILITIES	At 30 June 2021 (Unaudited) HK$’000 — 8,815 1,092 5,450 15,357 556,658 10,477 13,596 94,119 14,141 — 688,991 704,348 1,046,528	At 31 December 2020 (Audited) HK$’000 92,103 8,357 1,163 6,966 108,589 111,316 10,360 56,097 1,899 13,164 142,567 335,403 443,992 753,206

Notes:

1 . GENERAL INFORMATION

Sino ICT Holdings Limited (the “Company”), which was formerly known as Sun East Technology (Holdings) Limited and Unisplendour Technology (Holdings) Limited, is a limited liability company incorporated in Bermuda. Its registered office is located at Clarendon House, 2 Church Street, Hamilton HM 11, Bermuda and its principal place of business is Unit 02-03, 69/F, ICC-International Commerce Centre, 1 Austin Road West, Tsim Sha Tsui, Kowloon, Hong Kong. The Company’s shares are listed on The Stock Exchange of Hong Kong Limited (the “Stock Exchange”).

The Company and its subsidiaries (collectively the “Group” hereafter) are principally engaged in SMT equipment manufacturing and securities investment.

On 17 September 2019, UNIC Capital Management Co., Ltd. (“UNIC Capital”), Sino Xin Ding Limited (“Sino Xin Ding”) and the Company jointly announced that Unis Technology Strategy Investment Limited (“Unis Strategy Investment Company”), Sino Xin Ding and Beijing Unis Capital Management Co., Ltd. (the parent company of Unis Strategy Investment Company) entered into a share purchase agreement, pursuant to which Sino Xin Ding conditionally agreed to acquire from Unis Strategy Investment Company the sale shares, being 986,829,420 shares and representing approximately 67.82% of the total issued share capital of the Company, for a total consideration of HK$990 million (equivalent to approximately HK$1.00 per sale share). Completion of the share purchase agreement took place on 26 September 2019. Upon completion, Sino Xin Ding became the direct controlling shareholder of the Company and UNIC Capital is the actual controlling shareholder of the Company. Pursuant to Rule 26.1 of The Codes on Takeovers and Mergers and Share Buy-backs, UNIC Capital and Sino Xin Ding were required to make a mandatory unconditional general offer in cash for all the issued shares. On 4 November 2019 (the last date for acceptance of the offer), UNIC Capital and Sino Xin Ding had received valid acceptances in respect of 346,810 shares, aggregating the shares of the Company already held by UNIC Capital and Sino Xin Ding representing 67.847% of the issued share capital of the Company. On 30 June 2021, Sino Xin Ding accounted for 67.847% of the issued capital of the Company.

The interim results announcement is presented in Hong Kong dollar (unless otherwise stated). The interim results announcement was approved for issue by the Board of the Company on 20 August 2021.

2 . BASIS OF PREPARATION

The unaudited condensed consolidated interim financial statements of the Group for the six months ended 30 June 2021 have been prepared in accordance with Hong Kong Accounting Standard (“HKAS”) 34 “Interim Financial Reporting”. The condensed consolidated interim financial statements should be read in conjunction with the consolidated financial statements for the year ended 31 December 2020, which were prepared in accordance with Hong Kong Financial Reporting Standards (“HKFRSs”).

2 . 1 Going concern

The Group’s forecasts and projections, taking account of reasonably possible changes in trading performance, show that the Group should be able to operate within the level of its current facilities. After making enquiries, the Directors have a reasonable expectation that the Group has adequate resources to continue in operational existence for the foreseeable future. The Group therefore adopts the going concern basis in preparing its condensed consolidated interim financial statements.

3 . ACCOUNTING POLICIES

Except as for the adoption of new and revised HKFRSs issued by the Hong Kong Institute of Certified Public Accountants (“HKICPA”), which are effective for the six months ended 30 June 2021, the accounting policies applied in preparing the condensed consolidated interim financial statements are consistent with those of the financial statements for the year ended 31 December 2020, as described in the annual financial statements.

The adoption of these new standards, amendments and improvements to HKFRSs and HKAS did not have any significant impact on the Group’s financial performance and position for the six months ended 30 June 2021.

4 . ESTIMATES

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

In preparing these condensed consolidated interim financial statements, the significant judgements made by management in applying the Group’s accounting policies and the key sources of estimation uncertainty were consistent with those applied to the consolidated financial statements for the year ended 31 December 2020 with the exception of changes in estimates that are required in determining the provision for income taxes and disclosure of exception items.

5 . SEGMENT INFORMATION

The executive directors are the Group’s chief decision-makers. Management has determined the operating segments based on the report reviewed by the executive directors for the purposes of allocating resources and assessing performance. During the six months ended 30 June 2021, the Group’s operating segments of the followings:

(1) Production and sales of industrial products; and
(2) Securities investment.

The executive directors assess the performance of the operating segments based on the revenue and profit before tax in each segment. The executive directors do not focus on the total liabilities of the segments. The unallocated activities primarily consist of corporate headquarter which manage and support the segments. The assets are mainly the monetary funds used by the Company for daily operations, office equipment and investments in associates. The liabilities are mainly bank borrowings granted to the Company.

The segment information for the six months ended 30 June 2021 is presented as follows:

Segment revenue Segment profit Other income Other gains/(losses), net Distribution costs Administrative costs Financial costs, net Profit/(loss) before income tax		Six months ended 30 June 2021 (Unaudited)	Six months ended 30 June 2021 (Unaudited)
	Production and sales of industrial products HK$’000 179,248 78,355 3,607 1,050 27,798 13,957 1,894 39,363	Securities investment HK$’000 14,038 13,862 — — — — 3 13,859	Unalllocated activities HK$’000 2,841 2,841 2,292 (409) — 14,853 5,316 (15,445)	Total HK$’000 196,127 95,058 5,899 641 27,798 28,810 7,213
				37,777

5 . SEGMENT INFORMATION (CONTINUED)

The segment information for the six months ended 30 June 2020 is presented as follows:

Segment revenue Segment profit Other inome Other (losses)/gains, net Distribution costs Administrative costs Financial costs, net Profit/(loss) before income tax		Six months ended 30 June 2020 (Unaudited)	Six months ended 30 June 2020 (Unaudited)	Total HK$’000 160,211 84,208 7,191 (970) 15,395 27,208 9,028 38,798
	Production and sales of industrial products HK$’000 113,921 38,359 2,610 (982) 15,395 12,542 2,433 9,617	Securities investment HK$’000 46,018 45,577 — — — — 242 45,335	Unallocated activities HK$’000 272 272 4,581 12 — 14,666 6,353 (16,154)

6 . OTHER INCOME

Income from sales of scraps Government grants Share of results of associates	Six months ended 30 June 2021 (Unaudited) HK$’000 21 3,586 2,292 5,899	Six months ended 30 June 2020 (Unaudited) HK$’000 — 2,610 4,581 7,191

7 . OTHER GAINS/(LOSSES), NET

Reversal of bad debt written off Others	Six months ended 30 June 2021 (Unaudited) HK$’000 80 561 641	Six months ended 30 June 2020 (Unaudited) HK$’000 467 (1,437) (970)

8 . FINANCE COSTS, NET

Finance income: – Interest income from bank deposits Finance costs: – Interest expenses on bank and other borrowings Finance costs, net	Six months ended 30 June 2021 (Unaudited) HK$’000 407 (7,620) (7,213)	Six months ended 30 June 2020 (Unaudited) HK$’000 267 (9,295) (9,028)

9 . CONVERTIBLE BONDS

On 30 May 2016, the Company issued 730,000,000 ordinary shares at a price of HK$0.4 per share and zero coupon convertible bonds with face value of HK$148,000,000 to Unis Strategy Investment Company. The bonds shall be matured in five years from the date of issue at their face value of HK$148,000,000 or converted into ordinary shares of the Company at HK$0.4 per share (subject to adjustment) by the holder before the maturity date of the bonds. Such transaction was approved at the special general meeting held on 9 May 2016. The management initially recognised the convertible bonds issued in whole as financial liabilities at fair value through profit or loss based on analysis and assessment on relevant terms of the agreement and in consideration of the substance of the agreement.

On 30 March 2017, the special general meeting approved the supplementary agreement for the convertible bonds signed by the Company and Unis Strategy Investment Company. The supplementary agreement removes the relevant terms in relation to the conversion price adjustment under the original agreement. Accordingly, the convertible bonds issued by the Company pursuant to the original agreement were derecognised. According to the amended terms, the convertible bonds issued by the Company were recognised as compound financial instruments. As at 30 March 2017, such financial liability at fair value through profit or loss of HK$678,487,000 was derecognised. Pursuant to the amended terms and the fair value at the date, the Company has recognised the convertible bonds as compound financial instruments, among which, the fair value of the liability component was HK$100,546,000, the fair value of the equity component was HK$577,941,000, and the liability component of the compound financial instruments were subsequently measured by the cost method. In 2017, the recognised gains from change in fair value of convertible bonds for the year were HK$78,405,000, the recognised interest expense was HK$7,423,000, and the recognised book value of the convertible bonds as at 31 December 2017 was HK$107,969,000. As at 31 December 2018, the recognised book value of the convertible bonds was HK$118,463,000. As at 31 December 2019, the recognised book value of the convertible bonds was HK$129,978,000. As at 31 December 2020, the recognised book value of the convertible bonds was HK$142,567,000.

During the Period, the convertible bonds matured on 30 May 2021 and were repaid as scheduled.

10 . INCOME TAX EXPENSE

Hong Kong profits tax had been provided at the rate of 16.5% (six months ended 30 June 2020: 16.5%) on the estimated assessable profit for the Period. The applicable preferential tax rate of 日東智能裝備科技(深圳)有限公司, a subsidiary of the Group in Mainland China, was 15% (six months ended 30 June 2020: 15%), and other subsidiaries of the Group in Mainland China were taxed at a rate of 25% (six months ended 30 June 2020: 25%). Taxation on overseas profits had been calculated on the estimated assessable profit for the year at the rates of taxation prevailing in the countries in which the Group operates.

Current income tax: Current tax profits for the Period Income tax expense	Six months ended 30 June 2021 (Unaudited) HK$’000 4,890 4,890	Six months ended 30 June 2020 (Unaudited) HK$’000 7,446 7,446

11 . EARINGS PER SHARE

Basic earnings per share is calculated by dividing the earnings attributable to equity holders of the Company by the weighted average number of ordinary shares in issue during the Period.

Earnings attributable to equity holders of the Company Weighted average number of ordinary shares in issue (in thousands) Basic earnings per share Diluted earnings per share	Six months ended 30 June 2021 (Unaudited) HK$’000 32,887 1,455,000 2.26 Cents 2.26 Cents	Six months ended 30 June 2020 (Unaudited) HK$’000 31,352 1,455,000 2.15 Cents 2.15 Cents

12 . TRADE AND BILLS RECEIVABLES

At 30 June 2021 and 31 December 2020, the ageing analysis of the trade and bills receivables based on invoice date is as follows:

Less than 3 months 3 to 6 months More than 6 months	At 30 June 2021 (Unaudited) HK$’000 43,622 17,039 24,180 84,841	At 31 December 2020 (Audited) HK$’000 37,027 28,561 34,402 99,990

13 . TRADE AND BILLS PAYABLES

At 30 June 2021 and 31 December 2020, the ageing analysis of trade and bills payables based on the invoice dates is as follows:

Within 90 days 91 to 120 days Over 120 days	At 30 June 2021 (Unaudited) HK$’000 57,139 1,395 8,145 66,679	At 31 December 2020 (Audited) HK$’000 38,593 908 8,680 48,181

14 . BORROWINGS

Secured bank loans due for repayment within one year Secured bank loans due for repayment within two years The bank loans granted are secured by the Group’s properties.	At 30 June 2021 (Unaudited) HK$’000 94,119 — 94,119	At 31 December 2020 (Audited) HK$’000 1,899 92,103 94,002

15 . COMMITMENTS

Operating lease commitments – the Group as lessee

The Group leases certain office premises or staff quarter under non-cancellable operating lease arrangements. The lease terms are within one year, and the majority of lease agreements are renewable at the end of the lease period at market rate.

The aggregate future minimum lease payments under non-cancellable operating leases are as follows:

	At	At
	30 June 2021	31 December 2020
	(Unaudited)	(Audited)
	HK$’000	HK$’000
Within one year	133	70

15 . COMMITMENTS (CONTINUED)

Operating lease commitment – the Group as lessor

The Group leases certain factory buildings and staff quarters under non-cancellable operating lease agreement. The minimum rents to be collected in the future are as follows:

Within one year More than one year but not more than five years	At 30 June 2021 (Unaudited) HK$’000 7,665 27,670 35,335	At 31 December 2020 (Audited) HK$’000 6,315 33,654 39,969

MANAGEMENT DISCUSSION AND ANALYSIS

Business Review

During the Period, the Group was principally engaged in SMT equipment manufacturing and related business, and securities investment business.

In the first half of 2021, as the pace of global vaccine development and vaccination accelerated, major countries and economies gradually emerged from the pandemic, accelerating the recovery of long-suppressed market demand and injecting abundant vitality into economic development. The SMT equipment manufacturing industry was less affected by the pandemic and recovered quickly, thanks to the light manpower and highly integrated nature of the electronics industry, as well as the growing rigid demand for technological development. In addition, the management closely monitored market changes, always focused on product research and development (R&D), while actively expanding sales network. As a result, the Group continued to maintain significant growth in sales volume and steadily improved profitability in the SMT industry in the face of the global pandemic and the effective control of the pandemic in China, laying a solid foundation for the next phase of business expansion.

Overall, the Group recorded a total revenue of approximately HK$196,127,000 for the six months ended 30 June 2021, representing a significant increase of approximately 22.42% compared with approximately HK$160,211,000 for the same period last year. This was mainly attributable to the Group’s main business, SMT equipment manufacturing and related business, which seized the opportunity of increased demand in the domestic market due to the effective control of the pandemic in China, greatly boosted its sales through various means such as participation in exhibitions, change in credit conditions and training on sales techniques. Furthermore, the Group’s overall gross profit and profit attributable to equity holders for the Period increased to approximately HK$95,058,000 and approximately HK$32,887,000 respectively, representing increases of approximately 12.88% and 4.90% year-on-year by strengthening supply chain management, enhancing the quality of procurement and enhancing negotiation capability during the Period.

SMT Equipment Manufacturing and Related Business

During the Period, revenue from the SMT equipment manufacturing and related business segment accounted for over 90% of the Group’s total revenue and contributed over 80% of the gross profit, which was the core of the Group’s business development.

Since its roots in the SMT equipment manufacturing industry in the 1980s, the Group has been relying on its rich R&D, management and marketing resources accumulated in this field, and always insists on developing its own brand as the foundation, persistently enhancing the value of its own brand and establishing an extensive and profound upstream and downstream industrial chain. Thanks to the scientific development strategy implemented by the management and the concerted efforts of various stakeholders, the SMT equipment manufacturing and related business segment achieved a spectacular year-on-year revenue growth of approximately 57.34% to approximately HK$179,248,000 for the Period; The segment’s gross profit was approximately HK$78,355,000, representing an increase of 104% compared with the same period last year, while the gross profit margin increased to approximately 44% from approximately 34% in the same period last year, placing it at an industry-leading level. In view of the extraordinary increase in sales volume, the segment’s distribution costs and administrative costs, although higher than the previous year, were within control. Finance costs decreased by 22% compared with last year due to lower interest rates on loans. In conclusion, the segment’s overall profit before income tax increased significantly by approximately 309% to approximately HK$39,363,000 as compared with approximately HK$9,617,000 in the same period last year.

The management deeply understands that the fundamental driving force of corporate development lies in strong product R&D capabilities, and that continuous innovation in technology is required to achieve continuous improvement in market share and corporate image. During the Period, the Group was granted 10 new patents, including 3 invention patents, 5 utility model patents and 2 appearance patents. During the Period, the Group also launched a die bonder for IC, SIP and QFN processes, which can be applied to the bonding process of various IC chips such as communication modules, power modules, LED and sensors, etc. The final products of the die bonder are suitable for IC modules in smartphones, computers, automotive electronics and Internet of Things (IoT) devices, etc.

In terms of marketing, the Group has been actively participating in major exhibitions in the industry to seize the valuable opportunities to showcase and promote its principal products and new R&D equipment to target customers, as well as to understand the market trends and customer needs, and to enhance the rapport between the R&D side and the consumer side. With the pandemic easing in China, the Group participated in SEMICON China 2021 - International Semicon Exhibition in Shanghai and the 30th China International Electronics Manufacturing Equipment and Microelectronics Industry Exhibition in the first half of 2021 to further build up its corporate image as a mid-to-high-end SMT equipment manufacturer, and to proactively seek opportunities to bridge the gap between SMT equipment manufacturing and R&D production of semicon equipment.

Securities Investment Business

For the securities investment segment, the Group has maintained a low-frequency trading strategy, focusing on upstream and downstream companies that are synergistic with the Company’s principal business, SMT equipment manufacturing, and investing in high-tech companies listed on the Stock Exchange, mainly highquality companies in the semiconductor industry. In view of the volatile market conditions and suppressed investment climate in recent years, the Company also closely monitors market changes and prudently manages its investment activities in the segment to minimise investment risks. During the six months ended 30 June 2021, the Group capitalised on the market’s enthusiasm and good expectations for the chip industry, revitalised its investments in securities on a risk-controlled basis, and sold its holdings in securities investments decisively, quickly and accurately, thereby better locking in investment profits and avoiding the volatile impact on the Company’s profits brought about by fluctuations in the share prices of its holdings.

Specifically, on 18 January 2021, the Group disposed of an aggregate of 1,956,000 shares of SMIC in the open market at an average disposal price of HK$29.19 per share for gross proceeds of approximately HK$56,914,000 (net of transaction costs) and an investment gain of HK$13,868,000. As the global economy continued to be in a downturn due to the COVID-19 pandemic and the recent performance of the Hong Kong stock market was not satisfactory, the Group disposed most of its shares based on the market performance of the Hong Kong stock market as well as the shares held by it, and as at 30 June 2021, the Company’s financial assets measured at fair value through profit or loss totalled approximately HK$582,000, which further reduced the proportion of the Company’s total assets to less than 1% and was very effective in controlling the risks associated with price and position volatility.

The Group has put in place a rigorous reporting mechanism for its securities investment business. The management will continue to closely monitor the performance of various investment activities in order to minimise investment risks and protect the safety of investments.

Name of investee SMIC (stock code: 981.hk) GOME FIN TECH (stock code: 628.hk) GUODIAN TECH (stock code: 1296.hk)	Total investment gain for the six months ended 30 June 2021 (Unaudited) HK$’000 13,862 4 172 14,038

The Group’s investments in the listed shares were recorded as financial assets at fair value through profit or loss on the consolidated balance sheet, which was approximately HK$582,000 as at 30 June 2021:

Name of investee GOME FIN TECH GUODIAN TECH	Financial assets at fair value through profit or loss as at 30 June 2021 (Unaudited) HK$’000 217 365 582	Approximate percentage of total financial assets at fair value through profit or loss % 37.29 62.71 100

FINANCIAL REVIEW

Income

An analysis of the Group’s income by business segments for the Period is as follows:

SMT equipment manufacturing and related business Securities investment Comprehensive services	Six months ended 30 June 2021 (Unaudited) HK$’000 179,248 14,038 2,841 196,127	Six months ended 30 June 2020 (Unaudited) HK$’000 113,921 46,018 272 160,211

Other gains

During the Period, the Group recorded other gains of approximately HK$5,899,000 mainly attributable to government grants and gains from investments in associates.

Distribution costs

During the Period, the Group recorded distribution costs of approximately HK$27,798,000, representing an increase of approximately HK$12,403,000 as compared to the six months ended 30 June 2020, mainly due to the increase in sales.

Administrative costs

During the Period, the Group recorded administrative costs of approximately HK$28,810,000, representing an increase of approximately HK$1,602,000 as compared to the six months ended 30 June 2020.

Finance costs, net

During the Period, the net finance costs amounted to approximately HK$7,213,000, representing a decrease of approximately HK$1,815,000 as compared to the six months ended 30 June 2020, mainly due to the reduction in amortisation of interest due to the return of bonds payable.

Profit for the Period

As a result of the foregoing, the profit attributable to the equity holders of the Company for the Period was approximately HK$32,887,000, representing an increase of HK$1,535,000 as compared to the six months ended 30 June 2020.

Earning before interest, tax, depreciation and amortisation

The following table illustrates the Group’s earning before interest, tax, depreciation and amortisation for the respective periods. The Group’s earning ratio before interest, tax, depreciation and amortisation was approximately 24.48% for the Period.

Profit for the Period attributable to equity holders of the Company Finance costs, net Income tax expense Depreciation and amortisation Earning before interest, tax, depreciation and amortisation	Six months ended 30 June 2021 (Unaudited) HK$’000 32,887 7,213 4,890 3,020 48,010	Six months ended 30 June 2020 (Unaudited) HK$’000 31,352 9,028 7,446 2,288 50,114

Gearing ratio

With reference to the total borrowings to the total equity attributable to the equity holders of the Company as at 30 June 2021, the gearing ratio of the Group was 27.51%.

Operating capital management

At 30 June 2021, the Group held cash and bank balances of approximately HK$351,309,000, representing an increase of approximately HK$234,700,000 comparing with approximately HK$116,609,000 as at the beginning of the Period. During the Period, the Group recorded the average debtors turnover days of approximately 162 days (31 December 2020: 107 days), the average creditor turnover days of approximately 207 days (31 December 2020: 112 days), and the average inventory turnover days of approximately 177 days (31 December 2020: 83 days).

Charges on the Groups assets

At 30 June 2021, the Group’s banking facilities including its import/export loan, letter of credit, documentary credits, trust receipt and bank borrowings were secured by:

(i) a first legal charge on the Group’s certain land and properties, which had an aggregate net book value at the reporting date of HK$80,666,000.

Equity and liabilities

At 30 June 2021, the Group’s net assets was approximately of HK$342,180,000, compared with the net assets of approximately HK$309,214,000 at 31 December 2020. The increase in equity was mainly attributed to the profit for the Period of approximately HK$32,887,000 and the gains from the translation of foreign currency financial statements of approximately HK$79,000.

Employees

At 30 June 2021, the Group employed approximately 337 staff and workers in Mainland China and approximately 20 staff in Hong Kong. The Group continues to maintain and enhance the capability of its employees by providing sufficient regular training to them. The Group remunerates its employees based on industry’s practice. In Mainland China, the Group provides staff welfare and bonuses to its employees in accordance with the prevailing labour law. In Hong Kong, the Group provides employee benefits including retirement scheme and performance bonuses.

PRINCIPAL RISKS AND UNCERTAINTIES

Operational risk

The Group is exposed to operational risk in relation to each business segment of the Group. To manage operational risk, the management of each business segment is responsible for monitoring the operation and assessing operational risk of their respective business segments. They are responsible for implementing the Group’s risk management policies and procedures and shall report any irregularities in connection with the operation of the projects to the directors and seek directions.

The Group emphasises on ethical value and prevention of fraud and bribery, and has established a whistleblower program, including communication with other departments and business segments and units, to report any irregularities. In this regard, the directors consider that the Group’s operational risk is effectively mitigated.

Financial risk

The Group is exposed to credit risk, liquidity risk, foreign exchange risk, and price risk, etc.

Credit risk

In order to minimise credit risk, the Directors closely monitor the overall level of credit exposure and the management is responsible for the determination of credit approvals and monitoring the implementation of the collection procedure to ensure that follow-up actions are taken to recover overdue debts. In addition, the Group reviews the recoverable amount of each individual trade debt at the end of the Period to ensure that adequate impairment losses have been made for irrecoverable amounts. In this regard, the Directors consider that the Group’s credit risk has been significantly reduced.

Liquidity risk

The Directors have built an appropriate liquidity risk management framework to meet the Group’s short, medium and long-term funding and liquidity management requirements. In the management of liquidity risk, the Group monitors and maintains a level of cash and cash equivalents deemed adequate by the management to finance the Group’s operations and mitigate the effects of fluctuations in cash flows. In this regard, the Directors consider that the Group’s liquidity risk has been effectively managed.

Foreign exchange risk

The Group is exposed to foreign exchange risk arising from various currency risks as its certain business, assets and liabilities are denominated in Renminbi, Hong Kong dollar, US dollar and so on. During the Period, the Group did not utilise any financial instruments for hedging purposes, and the Group will continue to closely monitor its foreign exchange risk associated to the currencies, and will take appropriate hedging measures when necessary.

Price risk

Since the business of the Group’s securities investment segment is derived from the investment in stocks listed on the Main Board of the Stock Exchange, the price fluctuations of the shares held by the Group will affect the Group’s after-tax profits. In order to manage the risk of fluctuations of securities price, the Group will diversify its investment portfolio according to the historical fluctuations of the stocks held and the risk control policies of the Company to avoid or reduce the risks arising from stock price fluctuations.

PURCHASE, SALE OR REDEMPTION OF LISTED SECURITIES OF THE COMPANY

During the six months ended 30 June 2021, neither the Company nor any of its subsidiaries had purchased, sold or redeemed any of the Company’s listed securities.

DIVIDEND

The Board does not recommend the payment of an interim dividend for the six months ended 30 June 2021 (for the six months ended 30 June 2020: nil).

MODEL CODE FOR SECURITIES TRANSACTIONS BY DIRECTORS

The Company has adopted the Model Code for Securities Transactions by Directors of Listed Issuers (the “Model Code”) as set out in Appendix 10 to the Listing Rules as a code of conduct securities transactions by directors of the Company. All the members of the Board have confirmed, following specific enquiry by the Company, that they have complied with the required standards set out in the Model Code throughout the six months ended 30 June 2021.

CORPORATE GOVERNANCE PRACTICES

The Company acknowledges the importance of good corporate governance practices and procedures and regards a pre-eminent board of directors, sound internal controls and accountability to all shareholders as the core elements of its corporate governance principles. The Company endeavors to ensure that its businesses are conducted in accordance with relevant rules and regulations, and applicable codes and standards. The Company has adopted the Code Provisions of the Corporate Governance Code (the “Code”) as set out in Appendix 14 to the Listing Rules.

The Board periodically reviews the corporate governance practices of the Company to ensure its continuous compliance with the Code. The Company was in compliance with the Code for the six months ended 30 June 2021.

Audit Committee

The Company has established the Audit Committee (the “Committee”) in accordance with the requirements of the Code, for the purpose of reviewing and providing supervision over the Group’s financial reporting process and internal controls. The Committee comprises one non-executive director and two independent non-executive directors of the Company. The Group’s interim results for the six months ended 30 June 2021 has been reviewed by the Committee. The Committee is of the opinion that these statements comply with the applicable accounting standards, regulations and the Stock Exchange’s requirements, and that adequate disclosures have been made.

PUBLICATION OF INTERIM REPORT ON THE STOCK EXCHANGE’S WEBSITE

The Company’s interim report containing all the information required by the Listing Rules will be published on the website of the Stock Exchange (www.hkex.com.hk) and the website of the Company (www.sino-ict.com) and be despatched to shareholders in due course.

CAUTION STATEMENT

The Board wishes to remind investors that the above unaudited interim financial results and operational statistics for the six months ended 30 June 2021 and the six months ended 30 June 2020 are based on the Group’s internal information. Investors should note that undue reliance on or use of such information may cause investment risks. Investors are advised to exercise caution when dealing in the securities of the Company.

This announcement contains forward-looking statements regarding the objectives and expectations of the Group with respect to its opportunities and business prospects. Such forward-looking statements do not constitute guarantees of future performance of the Group and are subject to factors that could cause the Company’s actual results, plans and objectives to differ materially from those expressed in the forward-looking statements. These factors include, but not limited to, general industry and economic conditions, shifts in customer demands, and changes in government policies. The Group undertakes no obligation to update or revise any forward-looking statements to reflect subsequent events or circumstances.

By Order of the Board of Directors

Sino ICT Holdings Limited

Du Yang

Chairman

Hong Kong, 20 August 2021

As at the date of this announcement, the directors are Mr. Du Yang, Mr. Yuan I-Pei and Mr. Xia Yuan as executive directors; Mr. Li Yongjun and Mr. Li Jinxian as non-executive directors; and Mr. Cui Yuzhi, Mr. Bao Yi and Mr. Ping Fan as independent nonexecutive directors.