Niche-Tech Semiconductor Materials Limited — Interim / Quarterly Report 2021

Aug 9, 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 whatsoever for any loss howsoever arising from or in reliance upon the whole or any part of the contents of this announcement.

NICHE-TECH GROUP LIMITED 駿碼科技集團有限公司

(Incorporated in the Cayman Islands with limited liability)

(Stock Code: 8490)

ANNOUNCEMENT OF INTERIM RESULTS FOR THE SIX MONTHS ENDED 30 JUNE 2021

The board (the “ Board ”) of directors (the “ Directors ”) of Niche-Tech Group Limited (the “ Company ”) is pleased to announce the unaudited interim results of the Company and its subsidiaries (together as the “ Group ”) for the six months ended 30 June 2021. This announcement, containing the full text of the 2021 interim report of the Group, complies with the relevant requirements of the Rules Governing the Listing of Securities on GEM of The Stock Exchange of Hong Kong Limited (the “ GEM Listing Rules ”) in relation to information to accompany preliminary announcements of interim results. Printed version of the 2021 interim report of the Company containing the information required by the GEM Listing Rules will be dispatched to the shareholders of the Company in due course.

By Order of the Board Niche-Tech Group Limited Chow Bok Hin Felix Executive Chairman and Executive Director

Hong Kong, 9 August 2021

As at the date of this announcement, the executive Directors are Mr. Chow Bok Hin Felix, Professor Chow Chun Kay Stephen and Mr. Shi Yiwu, non-executive Director is Mr. Li Chiu Fan, and the independent non-executive Directors are Professor Ng Wang Wai Charles, Mr. Tai Chun Kit and Mr. Poon Lai Yin Michael.

This announcement, for which the Directors collectively and individually accept full responsibility, includes particulars given in compliance with the GEM Listing Rules for the purpose of giving information with regard to the Company. The Directors, having made all reasonable enquiries, confirm that to the best of their knowledge and belief the information contained in this announcement is accurate and complete in all material respects and not misleading or deceptive, and there are no other matters the omission of which would make any statement herein or this announcement misleading.

This announcement will remain on the GEM’s website at http://www.hkgem.com on the “Latest Listed Company Information” page for a minimum period of seven days from the date of its publication. This announcement will also be published on the Company’s website at http://www.nichetech.com.hk.

CHARACTERISTICS OF GEM (“GEM”) OF THE STOCK EXCHANGE OF HONG KONG LIMITED (THE “STOCK EXCHANGE”)

GEM has been positioned as a market designed to accommodate small and mid-sized companies to which a higher investment risk may be attached than other companies listed on the Stock Exchange. Prospective investors should be aware of the potential risks of investing in such companies and should make the decision to invest only after due and careful consideration.

Given that the companies listed on GEM are generally small and mid-sized companies, there is a risk that securities traded on GEM may be more susceptible to high market volatility than securities traded on the Main Board of the Stock Exchange and no assurance is given that there will be a liquid market in the securities traded on GEM.

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

This report, for which the board (the “ Board ”) of directors (the “ Directors ”) of NicheTech Group Limited (the “ Company ”) collectively and individually accept full responsibility, includes particulars given in compliance with the Rules Governing the Listing of Securities on GEM (the “ GEM Listing Rules ”) for the purpose of giving information with regard to the Company and its subsidiaries (together, the “ Group ”). The Directors, having made all reasonable enquiries, confirm that to the best of their knowledge and belief the information contained in this report is accurate and complete in all material respects and not misleading or deceptive, and there are no other matters the omission of which would make any statement herein or this report misleading.

CONTENTS

Condensed Consolidated Statement of 2 Profit or Loss and Other Comprehensive Income Condensed Consolidated Statement of 4 Financial Position Condensed Consolidated Statement of 6 Changes in Equity Condensed Consolidated Statement of 7 Cash Flows

8 Notes to the Condensed Consolidated Financial Statements

22 Management Discussion and Analysis

32 Other Information

CONDENSED CONSOLIDATED STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME

NOTES	Three months ended Six months ended 30.6.2021 30.6.2020 30.6.2021 30.6.2020 HK$’000 HK$’000 HK$’000 HK$’000 (unaudited) (unaudited) (unaudited) (unaudited)
Revenue 4 Cost of sales Gross profit Other income, other gains and losses 5 Impairment losses (recognised) reversed under expected credit loss model Selling and distribution expenses Administrative expenses Finance costs 6 Profit (loss) before taxation Income tax expense 7 Profit (loss) for the period 8	67,305 33,554 122,290 69,235 (52,795) (27,138) (95,745) (55,948)
	14,510 6,416 26,545 13,287 528 1,485 795 3,744 (178) (145) 134 (635) (3,142) (2,017) (5,753) (4,630) (7,684) (7,262) (14,710) (12,927) (362) (507) (656) (797)
	3,672 (2,030) 6,355 (1,958) (1,214) (210) (2,192) (782)
	2,458 (2,240) 4,163 (2,740)

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CONDENSED CONSOLIDATED STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME

NOTES	Three months ended Six months ended 30.6.2021 30.6.2020 30.6.2021 30.6.2020 HK$’000 HK$’000 HK$’000 HK$’000 (unaudited) (unaudited) (unaudited) (unaudited)
Other comprehensive income (expenses) Item that will not be reclassified to profit or loss: Exchange differences arising on translation from functional currency to presentation currency Item that may be reclassified subsequently to profit or loss: Exchange differences arising on translation of foreign operations Other comprehensive income (expenses) for the period Total comprehensive income (expenses) for the period Earnings (loss) per share – basic_(HK cents) _10	3,406 339 1,799 (4,201) (567) (117) (295) 437
	2,839 222 1,504 (3,764)
	5,297 (2,018) 5,667 (6,504)
	0.35 (0.32) 0.59 (0.39)

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CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL POSITION

NOTES	30.6.2021 31.12.2020 HK$’000 HK$’000 (unaudited) (audited)
NON-CURRENT ASSETS Plant and equipment 11 Right-of-use assets Intangible assets 11 Deposits paid for acquisition of plant and equipment and intangible assets Rental deposits Deferred tax assets CURRENT ASSETS Inventories Trade and bills receivables 12(a) Other receivables, prepayments and deposits 12(b) Bank deposits Bank balances and cash CURRENT LIABILITIES Trade and other payables 13 Contract liabilities Lease liabilities 15 Deferred income Tax payable Bank borrowings 14(a) Bank overdraft 14(b) NET CURRENT ASSETS TOTAL ASSETS LESS CURRENT LIABILITIES	44,992 49,355 15,150 12,090 61,219 59,945 2,000 2,000 665 665 2,155 2,138
	126,181 126,193
	35,872 35,649 108,615 83,521 1,218 791 17,529 26,503 34,650 32,188
	197,884 178,652
	17,826 14,446 642 1,814 3,331 1,923 1,410 1,399 2,499 1,324 19,694 11,461 20,588 21,447
	65,990 53,814
	131,894 124,838
	258,075 251,031

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CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL POSITION

NOTES	30.6.2021 31.12.2020 HK$’000 HK$’000 (unaudited) (audited)
NON-CURRENT LIABILITIES Lease liabilities 15 Deferred income NET ASSETS CAPITAL AND RESERVES Share capital 16 Reserves TOTAL EQUITY	14,444 12,415 5,906 6,558
	20,350 18,973
	237,725 232,058
	7,055 7,055 230,670 225,003
	237,725 232,058

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CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

For the six months ended 30 June 2021

	Share capital Share premium Other reserve Capital reserve Exchange reserve Statutory reserve Retained earnings (Accumulated losses) Total equity HK$’000 HK$’000 HK$’000 HK$’000 HK$’000 HK$’000 HK$’000 HK$’000
At 1 January 2020 (audited) Loss for the period Exchange differences arising on translation from functional currency to presentation currency Exchange differences arising on translation of foreign operations Total comprehensive expense for the period At 30 June 2020 (unaudited) At 1 January 2021 (audited) Profit for the period Exchange differences arising on translation from functional currency to presentation currency Exchange differences arising on translation of foreign operations Total comprehensive income for the period At 30 June 2021 (unaudited)	7,055 128,115 100,000 1 (19,058) 7,248 8,066 231,427
	– – – – – – (2,740) (2,740) – – – – (4,201) – – (4,201) – – – – 437 – – 437
	– – – – (3,764) – (2,740) (6,504)
	7,055 128,115 100,000 1 (22,822) 7,248 5,326 224,923
	7,055 128,115 100,000 1 (4,315) 8,564 (7,362) 232,058
	– – – – – – 4,163 4,163 – – – – 1,799 – – 1,799 – – – – (295) – – (295)
	– – – – 1,504 – 4,163 5,667
	7,055 128,115 100,000 1 (2,811) 8,564 (3,199) 237,725

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CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS

	Six months ended 30.6.2021 30.6.2020 HK$’000 HK$’000 (unaudited) (unaudited)
NET CASH (USED IN) FROM OPERATING ACTIVITIES NET CASH (USED IN) FROM INVESTING ACTIVITIES NET CASH FROM (USED IN) FINANCING ACTIVITIES NET (DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS Effect of foreign exchange rate changes CASH AND CASH EQUIVALENTS AT 1 JANUARY CASH AND CASH EQUIVALENTS AT 30 JUNE Represented by: Bank deposits Bank balances and cash Bank overdraft	(8,282) 25,033
	(3,854) 4,631
	6,926 (25,143)
	(5,210) 4,521 (443) (257) 37,244 51,785
	31,591 56,049
	17,529 36,937 34,650 19,112 (20,588) –
	31,591 56,049

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NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

For the six months ended 30 June 2021

1. GENERAL INFORMATION

The Company was incorporated in the Cayman Islands as an exempted company with limited liability on 21 February 2017 under the Companies Law, Cap. 22 (Law 3 of 1961, as consolidated and revised) of the Cayman Islands. The shares (the “ Shares ”) of the Company have been listed on GEM since 30 May 2018.

The Company is an investment holding company. The Group is principally engaged in the development, manufacture and sales of semiconductor packaging materials.

The functional currency of the Company is Renminbi (“ RMB ”). The unaudited condensed consolidated financial statements are presented in Hong Kong dollars (“ HK$ ”) as the Group’s management believes HK$ is the appropriate presentation currency for the users of the condensed consolidated financial statements.

2. BASIS OF PREPARATION

The unaudited condensed consolidated financial statements have been prepared in accordance with the Hong Kong Accounting Standards (“ HKAS ”) 34 “Interim Financial Reporting” issued by the Hong Kong Institute of Certified Public Accountants (“ HKICPA ”). In addition, the unaudited condensed consolidated financial statements include applicable disclosures required by Chapter 18 of the GEM Listing Rules.

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NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

For the six months ended 30 June 2021

3. PRINCIPAL ACCOUNTING POLICIES

The unaudited condensed consolidated financial statements have been prepared on the historical cost basis.

Other than changes in accounting policies resulting from application of new and amendments to Hong Kong Financial Reporting Standards (“ HKFRSs ”), the accounting policies and methods of computation used in the unaudited condensed consolidated financial statements for the six months ended 30 June 2021 are the same as those followed in the preparation of the consolidated financial statements of the Group for the year ended 31 December 2020.

The HKICPA has issued certain new and revised HKFRSs. For those which are effective for accounting periods beginning on 1 January 2021, the adoption has no material impact on how the results and financial positions of the Group for the current and prior periods have been prepared and presented. For those which are not yet effective and have not been early adopted in prior accounting periods, the Group is in the process of assessing their impact on the Group’s results and financial positions.

4. REVENUE AND SEGMENT INFORMATION

An analysis of revenue by major products is as follows:

	Three months ended Six months ended 30.6.2021 30.6.2020 30.6.2021 30.6.2020 HK$’000 HK$’000 HK$’000 HK$’000 (unaudited) (unaudited) (unaudited) (unaudited)
Bonding wire Encapsulant Others	48,899 24,629 89,318 53,592 16,140 5,982 28,427 10,873 2,266 2,943 4,545 4,770
	67,305 33,554 122,290 69,235

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NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

For the six months ended 30 June 2021

The Group’s operating segment is determined based on information reported to the chief operating decision maker (the “ CODM ”), being the executive directors of the Company, for the purpose of resource allocation and performance assessment. For management purpose, the Group operates in one business unit based on its products and its sole operating segment is the development, manufacture and sales of semiconductor packaging materials. The CODM monitors the revenue, results, assets and liabilities of its business unit as a whole and regularly reviews financial information prepared in accordance with the accounting policies that are in accordance with HKFRSs, and without further discrete information. Accordingly, no analysis of segment information other than entity-wide information is presented.

Geographical information

The Group’s revenue is mainly derived from customers located in the People’s Republic of China (the “ PRC ”) and Hong Kong. Information about the Group’s revenue by the geographical location in which the customers operate is detailed below:

	Three months ended Six months ended 30.6.2021 30.6.2020 30.6.2021 30.6.2020 HK$’000 HK$’000 HK$’000 HK$’000 (unaudited) (unaudited) (unaudited) (unaudited)
PRC excluding Hong Kong Hong Kong	66,504 33,254 120,899 68,681 801 300 1,391 554
	67,305 33,554 122,290 69,235

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NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

For the six months ended 30 June 2021

5. OTHER INCOME, OTHER GAINS AND LOSSES

	Three months ended Six months ended 30.6.2021 30.6.2020 30.6.2021 30.6.2020 HK$’000 HK$’000 HK$’000 HK$’000 (unaudited) (unaudited) (unaudited) (unaudited)
Bank interest income Government subsidy income Loss on disposal of plant and equipment Net foreign exchange gains Others	15 153 34 355 355 742 710 3,038 (14) – (36) – 217 590 127 336 (45) – (40) 15
	528 1,485 795 3,744

6. FINANCE COSTS

FINANCE COSTS
	Three months ended Six months ended 30.6.2021 30.6.2020 30.6.2021 30.6.2020 HK$’000 HK$’000 HK$’000 HK$’000 (unaudited) (unaudited) (unaudited) (unaudited)
Interests on bank borrowings Interests on bank overdraft Interests on lease liabilities Interests on discounted bills with recourse	86 206 156 300 28 – 52 – 210 163 390 322 38 138 58 175
	362 507 656 797

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NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

For the six months ended 30 June 2021

7. INCOME TAX EXPENSE

INCOME TAX EXPENSE
	Three months	ended	Six months	ended
	30.6.2021	30.6.2020	30.6.2021	30.6.2020
	HK$’000	HK$’000	HK$’000	HK$’000
	(unaudited)	(unaudited)	(unaudited)	(unaudited)
The income tax expense comprises:
PRC Enterprise Income Tax (“EIT”)	1,214	210	2,192	782

Under the Law of the PRC on Enterprise Income Tax (“ EIT Law ”) and Implementation Regulation of the EIT Law, the standard tax rate of PRC entities is 25% for both periods. Pursuant to the relevant laws and regulations in the PRC, 汕頭市駿碼凱撒有限公司 is granted tax incentives as a High and New Technology Enterprise and is entitled to a concessionary tax rate of 15% for 3 years from November 2018 to November 2021.

Hong Kong Profits Tax is calculated at 16.5% of the estimated assessable profits for both periods. No provision for Hong Kong Profits Tax is made since the relevant group entities had no assessable profits for both periods.

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NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

For the six months ended 30 June 2021

8. PROFIT (LOSS) FOR THE PERIOD

	Three months ended Six months ended 30.6.2021 30.6.2020 30.6.2021 30.6.2020 HK$’000 HK$’000 HK$’000 HK$’000 (unaudited) (unaudited) (unaudited) (unaudited)
Profit (loss) for the period has been arrived at after charging: Directors’ remuneration: Fees Other emoluments, salaries and other benefits Retirement benefit scheme contributions Other staff costs: Staff salaries and allowances Retirement benefit scheme contributions Total staff costs Capitalised in intangible assets Capitalised in inventories	120 90 240 200 964 684 1,904 1,508 15 7 30 19
	1,099 781 2,174 1,727
	7,060 5,619 13,324 11,347 668 (16) 1,313 469
	7,728 5,603 14,637 11,816
	8,827 6,384 16,811 13,543 (935) (508) (1,669) (1,399) (2,278) (1,378) (4,289) (2,887)
	5,614 4,498 10,853 9,257

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NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

For the six months ended 30 June 2021

	Three months ended Six months ended 30.6.2021 30.6.2020 30.6.2021 30.6.2020 HK$’000 HK$’000 HK$’000 HK$’000 (unaudited) (unaudited) (unaudited) (unaudited)
Depreciation of plant and equipment Capitalised in intangible assets Capitalised in inventories Amortisation of intangible assets Capitalised in inventories Depreciation of right-of-use assets Capitalised in intangible assets Capitalised in inventories Auditors’ remuneration Cost of inventories recognised as cost of sales Research and development costs (Excluding depreciation and staff costs) recognised as expenses (included in administrative expenses) Minimum operating lease rentals in respect of rented premises	2,382 1,935 4,745 3,916 (406) (351) (789) (730) (1,001) (714) (1,996) (1,437)
	975 870 1,960 1,749
	1,964 1,836 3,912 3,321 (1,910) (1,579) (3,804) (3,014)
	54 257 108 307
	853 572 1,457 1,255 (77) (46) (149) (110) (132) (116) (263) (233)
	644 410 1,045 912
	237 300 475 600 52,795 27,138 95,745 55,948 (9) 214 290 355 23 44 48 80

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NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

For the six months ended 30 June 2021

9. DIVIDENDS

The Board have resolved to declare an interim dividend for the year ending 31 December 2021 of HK$0.00295 per Share (six months ended 30 June 2020: nil) to the shareholders whose names appear on the register of members of the Company on Thursday, 26 August 2021. The dividend warrants will be dispatched on or around Friday, 3 September 2021.

The aggregate amount of interim dividend amounted to approximately HK$2.1 million (six months ended 30 June 2020: nil) will be paid from the share premium of the Company.

10. EARNINGS (LOSS) PER SHARE

	Three months ended Six months ended 30.6.2021 30.6.2020 30.6.2021 30.6.2020 HK$’000 HK$’000 HK$’000 HK$’000 (unaudited) (unaudited) (unaudited) (unaudited)
Earnings (loss): Earnings (loss) for the purpose of basic earnings (loss) per share: Profit (loss) for the period attributable to owners of the Company 2,458 (2,240) 4,163 (2,740) Number of shares: Weighted average number of ordinary shares for the purpose of basic earnings (loss) per share 705,500,000 705,500,000 705,500,000 705,500,000	2,458 (2,240) 4,163 (2,740)

No diluted earnings (loss) per share is presented for periods ended 30 June 2021 and 2020 as there is no potential ordinary shares in issue during both periods.

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NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

For the six months ended 30 June 2021

11. MOVEMENTS IN PLANT AND EQUIPMENT AND INTANGIBLE ASSETS

During the current interim period, the Group acquired plant and equipment and intangible assets of approximately HK$73,000 and approximately HK$4,768,000 respectively (six months ended 30 June 2020: approximately HK$2,628,000 and approximately HK$6,950,000 respectively).

During the current interim period, the Group disposed of certain plant and equipment with an aggregate carrying amount of approximately HK$535,000 (six months ended 30 June 2020: nil).

12. TRADE AND BILLS RECEIVABLES AND OTHER RECEIVABLES, PREPAYMENTS AND DEPOSITS

(a) Trade and bills receivables

EPAYMENTS AND DEPOSITS Trade and bills receivables
	30.6.2021 31.12.2020 HK$’000 HK$’000 (unaudited) (audited)
Trade receivables Less: Allowance for credit losses Bills receivables	69,850 62,348 (6,400) (6,574)
	63,450 55,774 45,165 27,747
	108,615 83,521

The Group’s trading terms with its customers are mainly on credit, except for certain customers where payment in advance is required. The credit period is generally 30 to 120 days. Each customer is granted with a credit limits. The Group seeks to maintain strict control over its outstanding receivables to minimise credit risk.

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NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

For the six months ended 30 June 2021

The following is an aged analysis of trade receivables, net of allowance for credit losses, based on the invoice date at the end of the reporting periods:

	30.6.2021 31.12.2020 HK$’000 HK$’000 (unaudited) (audited)
1 – 30 days 31 – 60 days 61 – 90 days Over 90 days	28,298 23,115 15,026 11,905 14,064 11,535 6,062 9,219
	63,450 55,774

The maturity period of bills receivables as at 30 June 2021 and 31 December 2020 were within 365 days.

(b) Other receivables, prepayments and deposits

	30.6.2021 31.12.2020 HK$’000 HK$’000 (unaudited) (audited)
Prepayments Deposits Other receivables	1,036 608 64 64 118 119
	1,218 791

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NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

For the six months ended 30 June 2021

13. TRADE AND OTHER PAYABLES

TRADE AND OTHER PAYABLES
	30.6.2021 31.12.2020 HK$’000 HK$’000 (unaudited) (audited)
Trade payables 13,359 10,085 Accrued expenses 3,320 3,879 Other payables 1,147 482 17,826 14,446 The trade suppliers either require cash on delivery from the Group or allow credit period ranging from 7 days to 90 days to the Group. The following is an aged analysis of trade payables presented based on the invoice date at the end of the reporting periods:	13,359 10,085 3,320 3,879 1,147 482
	17,826 14,446

	30.6.2021 31.12.2020 HK$’000 HK$’000 (unaudited) (audited)
1 – 30 days 31 – 60 days 61 – 90 days Over 90 days	8,041 6,317 2,804 2,607 1,806 644 708 517
	13,359 10,085

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NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

For the six months ended 30 June 2021

14. BANK BORROWINGS/BANK OVERDRAFT

(a) Bank Borrowings

NK BORROWINGS/BANK OVERDRAFT Bank Borrowings
	30.6.2021 31.12.2020 HK$’000 HK$’000 (unaudited) (audited)
Fixed-rate bank borrowings Variable-rate bank borrowings	5,126 3,150 14,568 8,311
	19,694 11,461

The Group’s variable-rate bank borrowings carried interests from 3.34% to 3.47% over Hong Kong Interbank Offered Rate (“ HIBOR ”) per annum (31 December 2020: 3.05% over HIBOR per annum) quoted by certain banks in Hong Kong and were repayable on demand.

The Group’s fixed-rate bank borrowings as at 30 June 2021 carried interests at effective rates (which were also the contracted rates) of 3.74% per annum (31 December 2020: 3.24% per annum).

(b) Bank Overdraft

As at 30 June 2021, the bank overdraft amounted to approximately HK$20,588,000 (equivalent to approximately RMB17,143,000) (31 December 2020: approximately HK$21,447,000 (equivalent to approximately RMB18,000,000)), which is repayable on demand clause and repayable within 90 days, carrying interest rate at 4.5% per annum (31 December 2020: 4.5% per annum).

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NOTES TO THE CONDENSED CONSOLIDAT FINANCIAL STATEMEN For the six months ended 30 June	NOTES TO THE CONDENSED CONSOLIDAT FINANCIAL STATEMEN For the six months ended 30 June	NOTES TO THE CONDENSED CONSOLIDAT FINANCIAL STATEMEN For the six months ended 30 June	ED TS 2021
15. LEASE LIABILITIES Current Non-current 16. SHARE CAPITAL Ordinary shares of HK$0.01 each Authorised: At 30 June 2021 (unaudited) and 31 December 2020 (audited) Issued and fully paid: At 30 June 2021 (unaudited) and 31 December 2020 (audited)		30.6.2021 31.12.2020 HK$’000 HK$’000 (unaudited) (audited)
		3,331 1,923 14,444 12,415
		17,775 14,338
		Number of shares Share capital HK$’000
	Ordinary shares of HK$0.01 each Authorised: At 30 June 2021 (unaudited) and 31 December 2020 (audited) Issued and fully paid: At 30 June 2021 (unaudited) and 31 December 2020 (audited)	2,000,000,000 20,000
		705,500,000 7,055

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NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

For the six months ended 30 June 2021

17. CAPITAL COMMITMENTS

CAPITAL COMMITMENTS
	30.6.2021 31.12.2020 HK$’000 HK$’000 (unaudited) (audited)
Capital expenditure contracted for but not provided for in the condensed consolidated financial statements in respect of: – intangible assets – plant and equipment	1,100 1,400 – 51
	1,100 1,451

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MANAGEMENT DISCUSSION AND ANALYSIS

BUSINESS REVIEW

The Group is an established semiconductor packaging materials manufacturer specializing in the development, manufacture, and sales of the bonding wire and encapsulant with headquarters in Hong Kong and production facilities in Shantou, the PRC. During the six months ended 30 June 2021 (the “ Period ”), the Group continued to sell its products directly to more than 400 customers, including renowned manufacturers of LEDs, camera modules, and ICs primarily in the PRC.

During the Period, the Group recorded a significant sales growth against the corresponding period of 2020 (“ 1H2020 ”) due to the PRC domestic market gradually recovering from the adverse impact of novel coronavirus (“ COVID-19 ”) pandemic. During the Period, the Group’s revenue and gross profit increased by approximately 76.6% and 99.8%, respectively. Such increase was primarily attributable to (i) the strong customer demand from both Semi-Conductor and LED Industries, especially for mini-LED display products and (ii) the Group’s better product mix and strong new product sales which led to higher gross profit margin from the Group’s revenue.

The Group will continue to focus on innovation of materials for advanced semiconductors which could be applied to LED, artificial intelligence and 5G industries.

FINANCIAL OVERVIEW

Revenue

The Group’s revenue principally represents income derived from its main products, namely bonding wire and encapsulant. During the Period, the Group recorded a revenue of approximately HK$122.3 million, increased by 76.6% from approximately HK$69.2 million recorded in 1H2020. The increase in the revenue of both bonding wire and encapsulant products was due to the strong customer demand from both Semi-Conductor and LED Industries which resulted in strong demand of the products of the Group, benefiting from the recovery of the PRC market from the impact of COVID-19.

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MANAGEMENT DISCUSSION AND ANALYSIS

Cost of sales and gross profit

The Group’s cost of sales mainly comprised direct material costs, direct labor costs and manufacturing overhead. During the Period, the Group’s cost of sales increased by 71.1% to approximately HK$95.7 million (1H2020: approximately HK$55.9 million), which was in line with the increase in revenue. The gross profit of the Group increased by 99.8% to approximately HK$26.5 million for the Period (1H2020: approximately HK$13.3 million). The gross profit margin was approximately 21.7% for the Period (1H2020: approximately 19.2%). During the Period, better product mix and strong new product sales resulted in improvement on the gross profit margin of the Group.

Other income, other gains and losses

Other income, other gains and losses of approximately HK$0.8 million were recorded during the Period (1H2020: approximately HK$3.7 million). An one-off government subsidy income of approximately HK$2.0 million was received from the PRC government as a support for the unemployment insurance to enterprises for stabilizing employment during 1H2020. No such government subsidy was received during the Period.

Expenses

Selling and distribution expenses amounted to approximately HK$5.8 million for the Period (1H2020: approximately HK$4.6 million), mainly due to the increase in freight and travelling expenses as a result of increase in sales volume.

Administrative expenses for the Period were approximately HK$14.7 million (1H2020: approximately HK$12.9 million). The increase in administrative expenses was mainly due to the increase in depreciation, amortization and staff costs.

Profit (Loss) and other comprehensive income (expenses) for the Period

Summing up the combined effects of the foregoing, the profit attributable to owners of the Company for the Period was approximately HK$4.2 million (1H2020: loss of approximately HK$2.7 million). EBITDA for the Period was approximately HK$17.1 million (1H2020: approximately HK$7.3 million).

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MANAGEMENT DISCUSSION AND ANALYSIS

FUTURE STRATEGIES AND PROSPECTS

Despite the possibility of another wave of pandemic and uncertainties caused by the U.S.-Sino trade tensions, the Group remains confident about the industry and the Group’s future development. According to the report “ Mid-Year Total Semiconductor Equipment Forecast – OEM Perspective ” launched by SEMI, the global semiconductor equipment sales is expected to increase by around 34% to US$95.3 billion in 2021, and reach a new record of US$100 billion in 2022. With the strong growth of semiconductor equipment, the demand for semiconductor packaging related encapsulants is likely to increase. Besides, with the launch of vaccines and sequentially implementation of economic recovery measures, the adverse impact of COVID-19 has been mitigated and the global economy has recovered gradually. In particular, economic activities in the PRC have been rebounding substantially due to the country’s effective control of COVID-19. In addition, the Chinese government has paid great attention and put strong support on the rapid growth of the 5G industry. Under such background, the market’s demand for bonding wires and semiconductor packaging related encapsulants are expected to grow remarkably in the coming years.

To seize the opportunities arising from the expected market recovery and the fast-growing 5G industry, the Group will launch three series of new products of Die Attach Adhesive, namely Non-conductive Epoxy Based Adhesive, Non-conductive Silicon Based Adhesive and Electrical Conductive Silver Adhesive for LED applications as scheduled, and will extend the product application to cover other semiconductors and 5G industries after formulary modification. Besides, the Group has developed a new copper alloy bonding wire specially for IC products, which has been tried and accredited by customers. It is expected to contribute to the Group’s revenue in the coming years. The production of the Group’s pioneer mini-LED display encapsulant products has been delayed due to COVID-19 for more than half year. The Directors believe these new products will become another growth momentum for the Group in the future.

Looking ahead, the Directors are optimistic toward the future of the industry. The Group will continue to enhance its R&D capabilities, in order to develop advanced and high-quality products to meet the demand from the emerging markets of 5G network, automotive electrification, industrial automation, internet of things and artificial intelligence. Meanwhile, the Group is actively seeking any possible mergers and acquisitions. With the launch of vaccines and substantial economic recovery measures, the Directors strongly believe that the Group’s established position in the bonding wire and encapsulant industry, competitive strengths and flexible business strategies, will facilitate its long-term growth.

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MANAGEMENT DISCUSSION AND ANALYSIS

HUMAN RESOURCES MANAGEMENT

As at 30 June 2021, the Group employed 177 full-time employees (as at 31 December 2020: 173). The remuneration of employees is disclosed in note 8 to the unaudited condensed consolidated financial statements. The Group’s remuneration policy is determined with reference to the experience and qualifications of the individual’s performance. The Group would ensure that all employees are provided with adequate training and continuous professional development opportunities according to their needs. The Group has adopted a share option scheme to reward individual staff for their contribution to the Group.

FINANCIAL RESOURCES, LIQUIDITY, GEARING RATIO AND CAPITAL STRUCTURE

The Group finances its operations primarily through cash generated from operating activities and interest-bearing bank borrowings. The Group recorded net current assets of approximately HK$131.9 million as at 30 June 2021 (as at 31 December 2020: approximately HK$124.8 million). As at 30 June 2021, the Group’s current ratio was approximately 3.0 (as at 31 December 2020: approximately 3.3) and the Group’s gearing ratio calculated based on the total borrowings divided by total equity at the end of the Period was approximately 16.9% (as at 31 December 2020: approximately 14.2%). As at 30 June 2021, the Group’s bank borrowings and bank overdraft amounted to approximately HK$40.3 million (as at 31 December 2020: approximately HK$32.9 million). As at 30 June 2021, the Group has total banking facilities of approximately HK$99.6 million (as at 31 December 2020: approximately HK$98.9 million).

As at 30 June 2021, the capital structure of the Group consisted of equity attributable to owners of the Company of approximately HK$237.7 million (as at 31 December 2020: approximately HK$232.1 million), which comprised issued share capital and reserves. The Shares were listed on GEM on 30 May 2018. There has been no change in the capital structure of the Group since then.

TREASURY POLICY

The Directors will continue to follow a prudent policy in managing the Group’s cash balances and maintain a strong and healthy liquidity to ensure that the Group is well placed to take advantage of future growth opportunities.

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MANAGEMENT DISCUSSION AND ANALYSIS

MATERIAL ACQUISITIONS AND DISPOSALS OF SUBSIDIARIES, ASSOCIATES AND JOINT VENTURES

There were no material acquisitions and disposals of subsidiaries, associates and joint ventures during the Period.

FUTURE PLANS FOR MATERIAL INVESTMENTS AND CAPITAL ASSETS

Save as disclosed in this report, the Group does not have other plans for material investments and capital assets during the Period.

SIGNIFICANT INVESTMENTS HELD

During the Period, the Group did not hold any significant investments.

PRINCIPAL RISKS AND UNCERTAINTIES

The Board believes that all the major risk factors relevant to the Group have already been disclosed in the section headed “Risk factors” of the Company’s prospectus dated 17 May 2018 (the “ Prospectus ”). Please refer thereto for more information.

EXPOSURE TO FOREIGN EXCHANGE RISK

The Group’s income, cost of sales, administrative expenses, investment and borrowings are mainly denominated in United State Dollar, HK$ and RMB. Fluctuations of the exchange rates of RMB could affect the operating costs of the Group. Currencies other than RMB were relatively stable during the Period. The Group currently does not have a foreign currency hedging policy. However, the management will continue to monitor foreign exchange exposure and will take prudent measure to minimise the currency translation risk. The Group will consider hedging significant foreign currencies should the need arise.

CHARGES ON ASSETS

There was no significant pledge on the Group’s assets as at 30 June 2021 (as at 31 December 2020: nil).

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MANAGEMENT DISCUSSION AND ANALYSIS

INTERIM DIVIDEND AND CLOSURE OF REGISTER OF MEMBERS

The Board has declared an interim dividend of HK$0.00295 (1H2020: nil) per Share for the year ending 31 December 2021 payable on Friday, 3 September 2021 to shareholders whose names appear on the register of members of the Company on Thursday, 26 August 2021. The register of members of the Company will be closed from Tuesday, 24 August 2021 to Thursday, 26 August 2021, both days inclusive, during which period no Share transfer will be effected. In order to qualify for the interim dividend, all transfer documents, accompanied by the relevant share certificates, must be lodged with the Company’s Hong Kong share registrar, Boardroom Share Registrars (HK) Limited, at 2103B, 21/F, 148 Electric Road, North Point, Hong Kong for registration not later than 4:30 p.m. on Monday, 23 August 2021.

CONTINGENT LIABILITIES

As at 30 June 2021, the Group did not have any material contingent liabilities or guarantees (as at 31 December 2020: nil).

SEGMENT INFORMATION

Segment information for the Group is presented as disclosed on note 4 to the unaudited condensed consolidated financial statements.

EVENT AFTER THE REPORTING PERIOD

On 30 July 2021, an indirectly wholly-owned subsidiary of the Company, Niche-Tech (Hong Kong) Limited (“ Niche-Tech (HK) ”), and a company indirectly owned as to 40% by Mr. Chow (as defined below) and 60% by Professor Chow (as defined below), Niche-Tech Investment Holdings Limited (“ BVI Holdings ”), entered into a conditional agreement pursuant to which Niche-Tech (HK) agreed to purchase and BVI Holdings agreed to sell a technology for the manufacture of a composite metal material bonding wire for a consideration of HK$7.5 million.

Details of the above connected transaction were disclosed in the Company’s announcement dated 30 July 2021.

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MANAGEMENT DISCUSSION AND ANALYSIS

COMPARISON BETWEEN BUSINESS OBJECTIVES AND ACTUAL BUSINESS PROGRESS

The following table is a comparison between the Group’s business objectives as set out in the prospectus dated 17 May 2018 regarding the Listing (the “ Prospectus ”) and the Group’s actual business progress for the period from the listing date (i.e. 30 May 2018) (the “ Listing ”) of the Shares on GEM to 30 June 2021.

Business objectives

Actual business progress up to 30 June 2021

Expand production capacity and

upgrade manufacturing facilities

• Acquire machineries and equipment and upgrade manufacturing facilities for new production lines

The Group had upgraded and expanded the production lines and related facilities for both G&S bonding wire and encapsulant in 2019, which commenced commercial production in 2020. The Group had continued to add related machineries at the bottleneck of the production lines to meet the demand of customers’ orders since 2020.

• Acquire machineries and equipment for quality control

The Group acquired and installed certain equipment to enhance the quality control over the production process and finished products’ inspection for both bonding wire and encapsulant products.

Devote R&D resources

• Acquire machineries and equipment for R&D enhancement

The Group had purchased certain machineries and equipment for the improvement of existing R&D facilities.

• Engage external consultants for R&D projects

The Group had engaged an assistant professor from Anhui University of Technology as the R&D consultants to assist in the Group’s R&D activities for the new encapsulant projects. The Group also had engaged a professor from National Cheng Kung University (Taiwan) and an expert in metal materials as the R&D consultants to assist in the Group’s R&D activities for the new Bonding wire projects. The Group had also engaged an independent consultant to assist new project in the field of solar energy.

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MANAGEMENT DISCUSSION AND ANALYSIS

Business objectives	Actual businessprogress up to 30 June 2021
Increase sales and marketing	The Group engaged a personnel relation advisor to
activities	perform branding and digital marketing work.
General working capital	The Group relocated its headquarter to Hong Kong
	Science Park and hired R&D expert and related
	personnel after Listing. Additional working capital was
	required as a result of increase in production capacity.

The progress of the utilisation of proceeds from the Listing has been delayed due to the following two aspects:

• (i) Due to the unprecedented COVID-19 pandemic, the economic activities and demand of semiconductors slowed down globally in the first half of 2020. Unavoidably, the demand of the export of semiconductor packaging materials of the Group’s customers declined notably, which has affected the Group’s sales orders and production during the year 2020.

• (ii) The Sino-U.S. trade tensions have continued and uncertainties are still surrounding the global economy and bringing negative impact to the industries and exporters. Under such circumstances, the export business of the Group’s customers went slack and the demand of the Group’s products decreased inevitably.

USE OF PROCEEDS FROM THE LISTING

The net proceeds from the Listing received by the Company were approximately HK$83.5 million (after deduction of Listing expenses). The net proceeds had been intended to be used in accordance with the proposed implementation plans as disclosed under the section headed “Statement of Business Objectives and Use of Proceeds” in the Prospectus. Since the Shares have been listed on GEM for over three years and having considered the changes in the business environment, in order to utilise the net proceeds in a more effective way and to facilitate efficient management of the Company’s financial resources, the Board has resolved to reallocate the unutilised net proceeds on 30 July 2021. Details of the utilisation of the net proceeds from the Listing to 30 June 2021, and the change in the use of the net proceeds at 30 July 2021 are as follows:

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MANAGEMENT DISCUSSION AND ANALYSIS

					Unutilised	Expected timeline
				Change	revised	for the proposed
	Original	Utilised Net	Unutilised Net	in allocation of	Net Proceeds	application of the
	allocation of	Proceeds up to	Proceeds as at	Net Proceeds	as at	unutilised Net
	Net Proceeds	30 June 2021	30 June 2021	at 30 July 2021	30 July 2021	Proceeds
	HK$ million	HK$ million	HK$ million	HK$ million	HK$ million	(Note 1)
Expand production capacity
and upgrade manufacturing
facilities
– Acquire or invest on bonding	–	–	–	19.4	19.4	30 July 2021 to 31
wire business or related						December 2022
business
– Acquire machineries and	3.4	3.4	–	0.7	0.7	30 July 2021 to 31
equipment for quality control						December 2022
– Acquire machineries and	41.9	20.0	21.9	(20.1)	1.8	30 July 2021 to 31
equipment and upgrading						December 2022
manufacturing facilities for
new production lines
Devote R&D resources
– Acquire new intellectual	–	–	–	10.2	10.2	30 July 2021 to 31
property or develop new						December 2022
intellectual property
– Acquire machineries	19.5	8.2	11.3	(8.3)	3.0	30 July 2021 to 31
and equipment for R&D						December 2022
enhancement
– Engage external consultants for	5.9	2.5	3.4	(1.9)	1.5	30 July 2021 to 31
R&D projects						December 2022
Increase sales and marketing	5.9	3.6	2.3	–	2.3	30 July 2021 to 31
activities						December 2022
General working capital	6.9	6.9	–	–	–
Total	83.5	44.6	38.9	–	38.9

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MANAGEMENT DISCUSSION AND ANALYSIS

As at 30 June 2021, approximately HK$44.6 million out of the net proceeds from the Listing had been used. The majority of the unused net proceeds have been placed as interest bearing deposits with licensed banks in Hong Kong.

Note:

1. The expected timeline for utilising the remaining unused net proceeds is based on the best estimation of the future market conditions made by the Group. It will be subject to change based on the current and future development of market conditions.

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OTHER INFORMATION

DISCLOSURE OF INTERESTS

(a) Director’s and chief executives’ interests and short positions in the Shares, underlying shares and debentures of the Company and its associated corporations

As at 30 June 2021, the interests and short positions of the Directors and chief executives of the Company in the Shares, underlying shares and debentures of the Company and its associated corporations (within the meaning of Part XV of the Securities and Futures Ordinance, Chapter 571 of the laws of Hong Kong (the “ SFO ”)), which are required (a) to be notified to the Company and the Stock Exchange pursuant to Divisions 7 and 8 of Part XV of the SFO (including interests or short positions which they are taken or deemed to have under such provisions of the SFO); or (b) to be recorded in the register required to be kept under Section 352 of the SFO; or (c) as otherwise to be notified to the Company and the Stock Exchange pursuant to the required standard of dealings by directors as referred to in Rules 5.46 to 5.67 of the GEM Listing Rules were as follows:

(i) Long positions in the Shares

			Percentage of
		Number of	issued share
	Nature of interest/	Ordinary	capital of the
Name of Directors	holding capacity	Shares held	Company
			(Note 1)
Mr. Chow Bok Hin Felix	Interest in a controlled	357,000,000	50.60%
(“Mr. Chow”)	corporation_(Note 2)_
Professor Chow Chun Kay	Interest in a controlled	357,000,000	50.60%
Stephen (“Professor Chow”)	corporation_(Note 2)_
	Beneficial owner	510,000	0.07%
Mr. Li Chiu Fan	Beneficial owner	16,050,000	2.27%

Notes:

• (1) As at 30 June 2021, the Company’s issued share capital was HK$7,055,000 divided into 705,500,000 Shares of HK$0.01 each.

• (2) BVI Holdings is indirectly owned as to 40% by Mr. Chow and 60% by Professor Chow. By virtue of SFO, Mr. Chow and Professor Chow are deemed to be interested in the Shares held by BVI Holdings.

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OTHER INFORMATION

(ii) Interests in shares of the associated corporations of the Company

			Number of
			shares held/
			interested in
	Name of associated	Nature of interest/	the associated	Percentage of
Name	corporation	holding capacity	corporations	shareholding
Professor Chow	Chows Investment Group	Beneficial owner	6	60.00%
(Notes 1 and 2)	Limited
Mr. Chow	Chows Investment Group	Beneficial owner	4	40.00%
(Notes 1 and 2)	Limited
Professor Chow	BVI Holdings	Interest in a controlled	10,000,000	100.00%
(Notes 1 and 2)		corporation
Mr. Chow	BVI Holdings	Interest in a controlled	10,000,000	100.00%
(Notes 1 and 2)		corporation
Notes:

• (1) Chows Investment Group Limited holds 100% interest in BVI Holdings. BVI Holdings in turn holds 50.60% interest in the Company. Therefore, Chows Investment Group Limited and BVI Holdings are the associated corporations of the Company for the purpose of the SFO.

• (2) Mr. Chow and Professor Chow are interested in as to 40% and 60% of the issued share capital of Chows Investment Group Limited respectively. Chows Investment Group Limited holds 100% interest in BVI Holdings. Mr. Chow and Professor Chow are therefore deemed to be interested in 100% of BVI Holdings for the purpose of the SFO.

Save as disclosed above, as at 30 June 2021, none of the Directors nor chief executives of the Company had or was deemed to have any other interests and short positions in the Shares, underlying shares and debentures of the Company or its associated corporations (within the meaning of Part XV of the SFO) which are required (a) to be notified to the Company and the Stock Exchange pursuant to Divisions 7 and 8 of Part XV of the SFO (including interests or short positions which they are taken or deemed to have under such provisions of the SFO); or (b) to be recorded in the register required to be kept under Section 352 of the SFO; or (c) as otherwise to be notified to the Company and the Stock Exchange pursuant to the required standard of dealings by directors as referred to in Rules 5.46 to 5.67 of the GEM Listing Rules.

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33 Interim Report 2021

OTHER INFORMATION

(b) Substantial Shareholders and other persons’ interests and short positions in the Shares or underlying Shares of the Company

So far as is known to the Directors, as at 30 June 2021, the persons (other than Directors or chief executive of the Company) had, or were deemed to have, interests or short positions (directly or indirectly) in the Shares or underlying shares of the Company that would fall to be disclosed to the Company and the Stock Exchange under the provision 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 pursuant to Section 336 of the SFO were as follows:

Long positions in the Shares

			Percentage of
			issued share
	Nature of interest/	Number of	capital of the
Name of Shareholder	holding capacity	Shares	Company
			(Note 1)
BVI Holdings	Beneficial owner	357,000,000	50.60%
Chows Investment Group	Interest of controlled	357,000,000	50.60%
Limited_(Note 2)_	corporation
Mrs. Chow Fung Wai Lan Rita	Interest of spouse	357,510,000	50.67%
(“Mrs. Chow”)(Note 3)
Mrs. Chow Kuo Li Jen_(Note 4)_	Interest of spouse	357,000,000	50.60%
Mr. Ma Ah Muk (“Mr. Ma”)	Beneficial owner	152,490,000	21.61%
Ms. Cheng Pak Ching_(Note 5)_	Interest of spouse	152,490,000	21.61%

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OTHER INFORMATION

Notes:

• (1) As at 30 June 2021, the Company’s issued ordinary share capital was HK$7,055,000 divided into 705,500,000 Shares of HK$0.01 each.

• (2) Chows Investment Group Limited holds 100% interest in BVI Holdings and is therefore deemed to be interested in the 357,000,000 Shares held by BVI Holdings for the purpose of the SFO.

• (3) Mrs. Chow is the spouse of Professor Chow. Mrs. Chow is deemed to be interested in all the Shares in which Professor Chow is interested in for the propose of the SFO.

• (4) Mrs. Chow Kuo Li Jen is the spouse of Mr. Chow. Mrs. Chow Kuo Li Jen is deemed to be interested in all the Shares in which Mr. Chow is interested in for the propose of the SFO.

• (5) Ms. Cheng Pak Ching is the spouse of Mr. Ma. Ms. Cheng Pak Ching is deemed to be interested in all the Shares in which Mr. Ma is interested in for the purpose of the SFO.

Save as disclosed above, as at 30 June 2021, the Directors were not aware of any other persons (other than the Directors or the chief executive of the Company) who had, or was deemed to have, interest or short positions in the Shares or underlying shares of the Company would fall to be required to be disclosed to the Company and the Stock Exchange under the 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 pursuant to Section 336 of the SFO.

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OTHER INFORMATION

SHARE OPTION SCHEME

Pursuant to the Company’s share option scheme (the “ Scheme ”) adopted on 8 May 2018 for the primary purpose of providing incentives to eligible persons including directors, eligible employees, consultants or advisers of the Group. The Directors, employees, consultants or advisers of the Group may, at the discretion of the Directors, be granted options (the “ Options ”) to subscribe for Shares in the Company at a price determined by its Directors, but shall not be less than the highest of (i) the closing price of the Shares as stated in the Stock Exchange’s daily quotation sheet on the date of the offer of grant, which must be a trading day; (ii) the average closing price of the Shares as stated in the Stock Exchange’s daily quotation sheet for the five trading days immediately preceding the date of the offer of grant; and (iii) the nominal value of the Shares on the date of grant of the Options.

Without prior approval from the Company’s shareholders, the total maximum number of Shares in respect of which Options may be granted under the Scheme is not permitted to exceed 10% of the Shares in issue at the time dealing in the Shares first commenced on GEM which amounted to 68,000,000 Shares, representing not more than 10% of the Shares in issue as at the date of this report. The maximum number of Shares in respect of which Options may be granted to any individual in any one year is not permitted to exceed 1% of the Shares in issue at any point in time.

Unless terminated by resolution in general meeting, the Scheme will remain in force for a period of ten years from the date of the Listing. Options granted must be taken up not later than 30 days after the date of grant. A consideration of HK$1 is payable on acceptance of the offer of grant of the Options.

The exercisable period of the Options, which shall not exceed 10 years from the date of grant, is determined by the Board at their discretion.

No Options have been granted by the Company under the Scheme since its adoption date and up to the date of this report. Therefore, no Options lapsed or were exercised or cancelled during the Period and there were no outstanding Options as at 30 June 2021.

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OTHER INFORMATION

COMPETING INTERESTS

None of the Directors nor the controlling shareholders of the Company or any of their respective close associates (as defined in the GEM Listing Rules) had any business or interest in a business that compete or may compete with the business of the Group and any other conflicts of interest which any such person has or may have with the Group during the Period.

CODE OF CORPORATE GOVERNANCE PRACTICES

The Company complied with the Corporate Governance Code (the “ CG Code ”) as set out in Appendix 15 of the GEM Listing Rules for the Period.

A.2 and A.2.1 of the CG Code stipulate that there should be a clear division of the management of the Board and the day-to-day management of the business. The Group has not appointed the chief executive officer. Day-to-day management of the business of the Group is carried out by the senior management and monitored by the executive Directors, while prior approvals by all executive Directors are required for all strategic decisions which are also considered and confirmed in formal Board meeting. The balance of power and authority of the Company is ensured by the operations of the Board which comprises experienced and competent individuals, with three of them being independent non-executive Directors. The Group believes that the existing management structure and decision making procedures are adequate and in the best interest of the Group to cope with the ever-changing economic environment.

The Company regularly reviews its corporate governance practices to ensure that the Company continues to meet the requirements of the CG Code.

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OTHER INFORMATION

DIRECTORS’ SECURITIES TRANSACTIONS

The Company has adopted a code of conduct regarding securities transactions by the Directors (the “ Code of Conduct ”) on terms no less exacting than the required standard of dealings set out in Rules 5.48 to 5.67 of the GEM Listing Rules (the “ Required Standard Dealings ”). The Company had also made specific enquiry of all the Directors and each of them confirmed that they have complied with the Code of Conduct and Required Standard Dealings throughout the Period. Further, the Company was not aware of any non-compliance with the Required Standard Dealings regarding securities transactions by the Directors for the Period.

PURCHASE, SALE OR REDEMPTION OF LISTED SECURITIES

Neither the Company nor any of its subsidiaries purchased, sold or redeemed any of the Company’s listed securities during the Period.

AUDIT COMMITTEE

The Company has established an audit committee of the Board (the “ Audit Committee ”) with written terms of reference in compliance with the GEM Listing Rules and code provisions C.3.3 of the CG Code set out in Appendix 15 of the GEM Listing Rules. The primary duties of the Audit Committee are to review and supervise the financial reporting process and internal control systems of the Group. The members of the Audit Committee include three independent non-executive Directors, namely Mr. Poon Lai Yin Michael, Professor Ng Wang Wai Charles and Mr. Tai Chun Kit. Mr. Poon Lai Yin Michael is the chairman of the Audit Committee.

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Interim Report 2021 38

OTHER INFORMATION

The Audit Committee has reviewed the unaudited condensed consolidated results of the Company for the Period and this report and is of the opinion that such results and report have been complied with the applicable accounting standards and the requirements under the GEM Listing Rules, and that adequate disclosures have been made.

By Order of the Board Niche-Tech Group Limited Chow Bok Hin Felix

Executive Chairman and Executive Director

Hong Kong, 9 August 2021

As at the date of this report, the executive Directors are Mr. Chow Bok Hin Felix, Professor Chow Chun Kay Stephen and Mr. Shi Yiwu, non-executive Director is Mr. Li Chiu Fan, and the independent non-executive Directors are Professor Ng Wang Wai Charles, Mr. Tai Chun Kit and Mr. Poon Lai Yin Michael.

This report will remain on the GEM’s website at http://www.hkgem.com on the “Latest Listed Company Information” page for a minimum period of seven days from the date of its publication. This report will also be published on the Company’s website at http://www.nichetech.com.hk.

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