KUANGCHI SCIENCE LIMITED CONTENTS
Corporate Information | 2 |
Management Discussion and Analysis | 4 |
Directors' and Chief Executives' Interests in Shares | 11 |
Substantial Shareholders' Interests in Shares | 13 |
Corporate Governance and Other Information | 17 |
Condensed Consolidated Statement of Profit or Loss | 19 |
Condensed Consolidated Statement of Comprehensive Income | 21 |
Condensed Consolidated Statement of Financial Position | 22 |
Condensed Consolidated Statement of Changes in Equity | 24 |
Condensed Consolidated Statement of Cash Flows | 26 |
Notes to the Interim Condensed Consolidated Financial Information | 27 |
2 KUANGCHI SCIENCE LIMITED
CORPORATE INFORMATION
BOARD OF DIRECTORS
Executive Directors
Dr. Liu Ruopeng (Chairman)
Dr. Luan Lin (Chief Executive Officer & Chief Technology Officer)
Dr. Zhang Yangyang
Dr. Ji Chunlin (appointed on 1 February 2020) Mr. Dorian Barak (resigned on 31 January
2020)
Non-executive Director
Mr. Li Chiu Ho (appointed on 23 March 2020)
Independent Non-executive
Directors
Dr. Wong Kai Kit
Mr. Choi Wing Koon
Dr. Deng Ke (appointed on 27 July 2020) Dr. Liu Jun (resigned on 27 July 2020)
COMPANY SECRETARY
Mr. Cheng Chi Chung Kevin
AUDITOR
Crowe (HK) CPA Limited
Certified Public Accountants
REGISTERED OFFICE
Clarendon House
2 Church Street, Hamilton HM11
Bermuda
HEAD OFFICE IN HONG KONG
Unit 1220, 12/F., Leighton Centre
77 Leighton Road, Causeway Bay
Hong Kong
AUDIT COMMITTEE
Mr. Choi Wing Koon (Chairman)
Dr. Wong Kai Kit
Dr. Deng Ke
REMUNERATION COMMITTEE
Dr. Wong Kai Kit (Chairman)
Dr. Zhang Yangyang
Dr. Deng Ke
NOMINATION COMMITTEE
HEAD OFFICE IN SHENZHEN
2/F, Software Building
No. 9 Gaoxin Zhong 1st Road Nanshan District, Shenzhen Guangdong Province, PRC Postal code: 518057
Email: info@kuang-chi.com
Website: www.kuangchiscience.com
Tel: (86) 0755 8664 9703
Fax: (86) 0755 8664 9700
Dr. Liu Ruopeng (Chairman)
Dr. Wong Kai Kit
Dr. Deng Ke
Interim Report 2020 3
CORPORATE INFORMATION
REGISTRARS
Hong Kong
Tricor Secretaries Limited
Level 54, Hopewell Centre
183 Queen's Road East, Hong Kong
Bermuda
Conyers Corporate Services (Bermuda) Limited
Clarendon House, 2 Church Street
Hamilton HM 11 Bermuda
PRINCIPAL BANKERS
Bank of China (Hong Kong) Limited
China Construction Bank
PingAn Bank Co., Ltd.
STOCK CODE
439
4 KUANGCHI SCIENCE LIMITED
MANAGEMENT DISCUSSION AND ANALYSIS
PERFORMANCE REVIEW AND PROSPECTS
The Group is principally engaged in the research and development as well as manufacture of innovative products for the future technology business, and the provision of other innovative technology service solutions (the "Future Technology Business").
During the Period, the Group's turnover amounted to HK$61,379,000, representing an increase of 74.11% compared with the period ended 30 June 2019 (30 June 2019: the turnover was HK$35,252,000). Net loss for the Period was HK$11,617,000, representing a decrease of 87.14% compared with the period ended 30 June 2019 (30 June 2019: net loss was HK$90,328,000). Compared with the same period of 2019, the Group saw a significant fall in the losses during the Period owing to increase in its gross profit margin from 8% in the corresponding period in 2019 to 29% for the current Period. The substantial increase in gross profit margin was attributable to the Group's launch of a novel type of Wearable Smart Helmets (developed from wearable smart helmets purchased from the Kuang-Chi Technologies Co., Ltd's group pursuant to the Master Procurement Agreement dated 30 March 2020, details refer to the Company's circular dated 6 May 2020) during the Period, sales of which accounted for 75.6% of the Group's revenue for the Period. Moreover, as a result of the Group's optimization of the business and enhancement of the internal management, R&D expenses and administrative expenses for the Period were reduced by approximately 63.4% and approximately 28.7%, respectively, as compared with the same period in 2019.
The Future Technology Business - in-depth development of the vertical business sectors
The Group focuses on future technology business. It is currently developing and integrating different future technologies, like "AI" technology and "future space" technology, and strives to build future intelligent cities and provides a comprehensive range of innovative products, services and solutions, thereby enhancing service efficiency, satisfying residents' needs, improving the quality of life and, in particular, solving various problems that are faced by the mankind.
With regard to the "AI" technology, the Group has long been committed to the research, manufacture and application development of "AI" technology-related algorithms, which is a platform for big data analysis and professional AI-infused products for the vertical sectors based on such algorithms and platform. The Group's AI algorithms were first applied to aeronautic equipments such as Cloud and long-endurance drones and such technology has been subsequently developed into our principal business, thus enabling the Group to create an AI system with AI algorithms as the core technology. The AI system could access a variety of fixed or mobile front-end hardware devices and empower these devices with AI. On this basis, and with the Group's long-term experience in system integration, the Group has integrated front-end hardware to create an integrated solution comprising professional system integration, installation, debugging, operation and maintenance services.
Interim Report 2020 5
MANAGEMENT DISCUSSION AND ANALYSIS
When the Wearable Smart Helmet, the Group's first mobile front-end hardware device, was accessed and empowered, its powerful integrated functions have effectively enhanced various features such as real-time dynamic acquisition of data and intelligent analysis of big data, and effectively increased business efficiency.
During the Period, the Group carried out in-depth innovations in the technology for mobile front-end hardware devices by launching a novel type of Wearable Smart Helmet - a thermal imaging smart helmet with a view to providing assistance in the fight against the pandemic. The novel thermal imaging smart helmet has a number of cutting-edge technologies (such as infrared thermal imaging, augmented reality display, communication sensing, materials for the development of the cutting-edge aerospace technology, and various "AI" algorithms). It has a contactless temperature measurement feature. In airports, transportation hubs, subways, shopping malls and other places where it is easy for crowds to gather, contactless temperature measurement devices can quickly screen out people with a fever, thus significantly increasing the efficiency of temperature measurement and minimizing the risk associated with public gatherings. This is a major reason why the Wearable Smart Helmets were purchased by many customers as anti-pandemic products. During the Period, the Wearable Smart Helmets were sold to 36 countries and regions at home and abroad, achieving a substantial increase in sales compared with the sales of Wearable Smart Helmets during the corresponding period in 2019.
During the Period, the project sites of the Group, namely the Bund area in Shanghai, the railway station along Yangtze River and Jialing River in Chongqing, the commercial street in Foshan of Shunde, etc., served as the main sites for demonstrating the application of the Group's product "AI Overlay Network" in China, and continue to exert strong application value and receive recognition from our customers, thus laying a sound foundation for the Company to promote the "AI" technology for national applications on an ongoing basis. The Group will continue to devote its efforts to the development of, and the making of, a breakthrough in new technologies, which will be integrated consistently to create stronger total solutions so as to enhance business capabilities.
The management believes that with the evolution of the 5G network, the Company's "AI" technology will gradually be applied to more vertical industries in line with its own development goals and industrial needs, in particular the acceleration of the build-up of smart cities. AI will become a new impetus that boosts economic and social development, generates enormous demand for AI applications and holds market prospects in the field of smart cities.
During the Period, the Group had not committed further resources to the subsequent R&D of the "Future Space" technology. Instead, existing R&D achievements such as "Cloud", "Drone" and other aerospace products were primarily utilized to provide a data basis for the "AI" technology.
6 KUANGCHI SCIENCE LIMITED
MANAGEMENT DISCUSSION AND ANALYSIS
Trade receivables
With reference to the 2019 Annual Report, details about the impairment losses on trade receivables and contract assets were updated as follows:
For the customer located in Chengdu, PRC (the "Chengdu Customer"), the Group and the management had initiated a number of negotiations with the Chengdu Customer during the first half of 2020. During the Period, the Group received RMB45.0 million (equivalent to HK$50.3 million) from the Chengdu Customer, being partial settlement of outstanding trade receivables due to the Group. The management will continue to communicate and negotiate with this customer in the second half of the year regarding the remaining outstanding trade receivables.
For the customer located in Guizhou (the "Guizhou Customer") and another customer located in Dongguan (the "Dongguan Customer"), both in the PRC, their business operations in the PRC were generally hit by the pandemic to a certain extent during the Period. Moreover, a number of areas were under a partial lockdown to prevent the spread of the virus, which led to difficulties for the management to continue the negotiations with the Dongguan Customer and the Guizhou Customer. During the Period, our project team mainly held video conferences with these customers regarding the payment recovery plan, and introduced our novel smart wearable products to them. It is expected that the customers will fully cooperate with us in the negotiation, and they also expressed keen interest in our new products. Those customers need to conduct internal research and report to their superiors. The management will continue to communicate and negotiate with these customers in the second half of the year to resolve the problem regarding their outstanding trade receivables, or to recover the receivables through other means. Since the outstanding amounts due from the Dongguan Customer and the Guizhou Customer were not yet settled during the Period, accordingly, full impairment provisions remained for the relevant trade receivables and contract assets.
Manpower development and build-up
With regard to manpower build-up, the Group strengthened the talent nurturing system and designed new employee development system and mechanism to enhance staff quality. The Group continues to focus on attracting and nurturing high-calibre employees as a core strategy by recruiting people who are experienced in the "AI" technology and high-tech software development- related fields around the globe. During the Period, the Group focused on the build-up of a team of high-calibre employees, kept optimizing the composition of our employees, strengthened the vitality of our employees, modified the employee succession plans in a timely manner in line with the Company's business development, and raised cost efficiency. As at 30 June 2020, the Group successively recruited 178 high-calibre people, of whom 105 were R&D employees, and more than 21% of them have a masters degree or above. This has provided a strong talent foundation for the Group, which in turn strengthened its core competitiveness.
Interim Report 2020 7
MANAGEMENT DISCUSSION AND ANALYSIS
INTERIM DIVIDEND
The Board resolved not to declare any interim dividend for the Period (2019: Nil).
CAPITAL STRUCTURE
As at 30 June 2020, the Company had 6,156,928,860 ordinary shares of HK$0.01 each in issue.
LIQUIDITY AND FINANCIAL RESOURCES
As at 30 June 2020, the Group's total shareholders' funds amounted to approximately HK$900,747,000 (31 December 2019: HK$1,048,372,000). Total assets were approximately HK$1,603,892,000 (31 December 2019: HK$1,842,236,000) and total liabilities were approximately HK$703,145,000 (31 December 2019: HK$793,864,000).
As at 30 June 2020, the Group had cash and cash equivalents of approximately HK$113,982,000
(31 December 2019: HK$245,879,000) and no pledged bank deposits (31 December 2019: HK$193,000). The gearing ratio as of 30 June 2020, defined as the percentage of the total interest bearing debt, including lease liabilities and bank and other borrowings of approximately HK$1,162,000 (31 December 2019: HK$1,766,000) and HK$496,178,000 (31 December 2019: HK$504,405,000), respectively to net asset value, was approximately 55.21% (31 December 2019: 48.28%).
Most of the assets, liabilities and transactions of the Group are primarily denominated in HK$, RMB and USD. The Group has not entered into any instruments on the foreign exchange exposure. The Group will closely monitor exchange rate movement and will take appropriate activities to reduce the exchange risk.
Particulars of bank and other borrowings of the Group as at 30 June 2020 are set out in note 22 to the consolidated financial information.
CHARGES ON ASSETS
As at 30 June 2020, the Group's bank borrowings of approximately HK$167,318,000 (31 December 2019: HK$169,155,000) were secured by the right-of-use assets and the construction-in-progress amounted to HK$76,626,000 (31 December 2019: HK$79,251,000) and HK$371,519,000 (31 December 2019: HK$363,659,000) respectively, entire equity interest in one of the Company's subsidiary and were guaranteed by the Company and a company controlled by Dr. Liu Ruopeng.
8 KUANGCHI SCIENCE LIMITED
MANAGEMENT DISCUSSION AND ANALYSIS
As at 30 June 2020, the Group's other borrowings of approximately HK$328,860,000 (31 December 2019: HK$335,250,000) were secured by the Group's investment in Kuang-Chi Technologies Co., Ltd. classified as financial assets at fair value through other comprehensive income with a carrying amount of HK$568,471,000 (31 December 2019: HK$731,390,000) and guaranteed by the Company's shareholders and a company controlled by Dr. Liu Ruopeng.
CONTINGENT LIABILITIES
As at 30 June 2020, the Group had no significant contingent liabilities (31 December 2019: Nil).
RISK MANAGEMENT
During the period under review, the Group regularly reviewed the risk and credit control systems in order to improve the overall controlling system and mitigate credit risk. This also ensures that the Group is capable of effectively conducting business operations and facilitates further development. There have been no significant changes in the Group's risk management policy since the year-end date last year.
IMPACTS OF COVID-19 PANDEMIC
The Group's operation was mainly located in Shenzhen, China. Due to the impacts of COVID-19 pandemic since early 2020, the Group strictly followed relevant prevention and quarantine measures imposed by the government. We arranged special vehicles to take employees to and from work, kept monitoring employees' body temperature within the work area and provided them with essential protective items (e.g. face mask and hand sanitizer). Through the above measures, the Company became one of the first lot of entities in Shenzhen who could resume normal operation since the outbreak of pandemic. The Group resumed operation in the second week after the Chinese New Year holiday.
Due to the market demands of the Smart Wearable Helmet, the Group's revenue increased significantly compared with corresponding period of 2019.
Interim Report 2020 9
MANAGEMENT DISCUSSION AND ANALYSIS
SIGNIFICANT INVESTMENTS, MATERIAL ACQUISITIONS OR DISPOSALS
Investment in Kuang-Chi Technologies Co., Ltd. ("KCT")
KCT, a PRC company listed on the Shenzhen Stock Exchange (stock code: 002625), is principally engaged in developing innovative advanced technology and its core business is in metamaterial intelligent structure and equipment research, as well as the manufacture of seat function components for automobiles. The Group held 71,528,751 ordinary shares of KCT, which represented approximately 3.32% of the KCT issued shares. The carrying amount of KCT as at 30 June 2020 is HK$568,471,000 (31 December 2019: HK$731,390,000), which represented 35.44% (31 December 2019: 39.70%) of the total assets of the Group. A fair value loss of HK$126,972,000 for the six months ended 30 June 2020 (31 December 2019: a fair value loss of HK$59,950,000) was recognised in other comprehensive loss. No dividend from KCT for the six months ended 30 June 2020 (31 December 2019: Nil) was received by the Group.
Please refer to 2019 Annual Report for other details of our investment in KCT.
Save as disclosed above, the Group did not have any other significant investments and there are no other material acquisition or disposal of subsidiaries and associated company during the Period.
EVENT AFTER THE REPORTING PERIOD
There was no material event occurred after the Period.
CHARGES ON THE GROUP'S ASSETS
As at 30 June 2020, certain assets of the Group were pledged to secure banking facilities granted to the Group as follows:
Unaudited | Audited | |
30 June 2020 31 December 2019 | ||
HK$'000 | HK$'000 | |
Financial assets at fair value through | ||
other comprehensive income - Shares in KCT | 568,471 | 731,390 |
Pledged bank deposits | - | 193 |
Construction in progress | 371,519 | 363,659 |
Right-of-use assets | 76,626 | 79,251 |
1,016,616 | 1,174,493 | |
As at 30 June 2020, the Group had no significant contingent liabilities (31 December 2019: Nil).
10 KUANGCHI SCIENCE LIMITED
MANAGEMENT DISCUSSION AND ANALYSIS
EMPLOYEES AND REMUNERATION POLICY
As at 30 June 2020, the Group had approximately 178 employees (31 December 2019: 239 employees). The Group provides competitive remuneration packages to employees with the share option scheme and the restricted shares award scheme. The Group also provides attractive discretionary bonus payable to those with outstanding performance and contribution to the Group.
SHARE OPTION SCHEMES AND RESTRICTED SHARE AWARD SCHEME
Share Option Scheme of the Company
The Company maintains a share option scheme of the Company ("Share Option Scheme") for the purpose of providing incentives and rewards to eligible participants who contribute to the success of the operations of the Group. Details about the terms of the Share Option Scheme were disclosed in the 2019 Annual Report.
As at the date of this report, the total number of share options available for issue under the scheme is 270,606,779 shares. The share options granted under the Share Option Scheme lapsed on 29 September 2019 and no further share option was granted under the Share Option Scheme for the six months end 30 June 2020. None of the Directors or their spouses and children under the age of 18 had any right to subscribe for the securities of the Company, or had exercised any such share options during the Period.
Restricted Share Award Scheme
The Company maintains a restricted share award scheme (the "RSA Scheme") to recognize and motivate the contribution of the participants and to provide them with a direct economic interest in attaining the long-term business objectives of the Company. Details about the terms of the RSA Scheme were disclosed in the 2019 Annual Report.
During the Period, no restricted shares were granted by the Company. During the Period, no equity shares were purchased nor issued by the Company for the purposes of the RSA Scheme.
Interim Report 2020 11
DIRECTORS' AND CHIEF EXECUTIVES' INTERESTS IN SHARES
As at 30 June 2020, the following Directors or chief executives of the Company or his associates had interests or short positions in the shares, underlying shares and debentures of the Company or any of its associated corporations, as notified to the Company and The Stock Exchange of Hong Kong Limited (the "Stock Exchange") pursuant to Divisions 7 and 8 of Part XV of the Securities and Futures Ordinance (the "SFO"), or as recorded in the register to be kept under Section 352 of the SFO or as notified to the Company and the Stock Exchange pursuant to the Model Code for Securities Transactions by Directors of Listed Issuers (the "Model Code").
Number of | ||||||
underlying | ||||||
Number of Shares held | Shares held | |||||
Approximate | ||||||
percentage | ||||||
Name of Director/ | Personal | Corporate | Personal | of total issued | ||
Chief executive | interest | interests | interest | Total | Shares | |
Dr. Liu Ruopeng | - | 3,078,500,000 (L) | - | 3,078,500,000 (L) | 50.00% | |
("Dr. Liu") | (note 2) | |||||
1,067,862,045 (S) | 1,067,862,045 (S) | 17.34% | ||||
(note 3) |
Notes:
- "L" represents long position in shares/underlying shares and "S" represents short position in Shares.
- This represents the interests in 3,078,500,000 shares of the Company directly held by two companies: - (1.) 3,078,000,000 shares held by New Horizon Wireless Technology Limited ("New Horizon"), being a wholly-owned subsidiary of Wireless Connection Innovative Technology Limited which is owned as to 51% by Kuang-Chi Innovative Technology Limited and as to 49% by Shenzhen Kuang-Chi Hezhong Technology Limited. Kuang-Chi Innovative Technology Limited is a subsidiary of Shenzhen Dapeng Kuang-Chi Technology Limited, which is in turn a subsidiary of Shenzhen Dapeng Kuang-Chi Lianzhong Technology Partnership (Limited Liability Partnership) of which Dr. Liu is the controlling shareholder, and Dr. Liu is the controlling shareholder of Shenzhen Kuang-Chi Hezhong Technology Limited; and (2.) 500,000 shares held by Sky Aisa Holdings Limited ("Sky Asia"), being a wholly-owned subsidiary of Shenzhen KuangChi Youlu Technology Co., Ltd, which is wholly owned by Shenzhen Kuang-Chi Hezhong Technology Limited, and as mentioned above, Dr. Liu is the controlling shareholder. Accordingly, Dr. Liu is deemed to be interested in the same number of shares of the Company held by New Horizon and Sky Asia respectively.
12 KUANGCHI SCIENCE LIMITED
DIRECTORS' AND CHIEF EXECUTIVES' INTERESTS IN SHARES
- This represents the share charge given by New Horizon in favour of Everbright Fortune over 1,067,862,045 Shares owned by New Horizon.
- As of 30 June 2020, the issued shares of the company were 6,156,928,860.
Save as disclosed above, as at 30 June 2020, no interests or short positions were held or deemed or taken to be held under Part XV of the SFO by any director or chief executive of the Company or their respective associates in the shares, underlying shares or debentures of the Company or any of its associated corporations (within the meaning of Part XV of the SFO) which were required to be notified to the Company and the Stock Exchange pursuant to Part XV of the SFO or pursuant to the Model Code or which were required to be entered in the register maintained by the Company pursuant to section 352 of the SFO.
Interim Report 2020 13
SUBSTANTIAL SHAREHOLDERS' INTERESTS IN SHARES
As at 30 June 2020, the following shareholders had interests, directly or indirectly, or short positions in the shares and underlying shares of the Company would fall to be disclosed to the Company and the Stock Exchange under provisions of Divisions 2 and 3 of Part XV of the SFO or as recorded in the register required to be kept by the Company under Section 336 of the SFO:
Approximate | |||||
Number of | percentage | ||||
Name of Substantial | Number of | underlying | of total | ||
Shareholder | Capacity | Shares held | Shares held | Total | issued Shares |
Ms. Huang Weizi | Interest of spouse | 3,078,500,000 (L) | - | 3,078,500,000 (L) | 50.00% |
(note 2) | |||||
1,067,862,045 (S) | 1,067,862,045 (S) | 17.34% | |||
New Horizon | Beneficial owner | 3,078,000,000 (L) | - | 3,078,000,000 (L) | 49.99% |
1,067,862,045 (S) | 1,067,862,045 (S) | 17.34% | |||
(note 3) | |||||
Wireless Connection | Interest of controlled | 3,078,000,000 (L) | - | 3,078,000,000 (L) | 49.99% |
Innovative | corporation | 1,067,862,045 (S) | 1,067,862,045 (S) | 17.34% | |
Technology Limited | |||||
深圳大鵬光啟科技有限 | Interest of controlled | 3,078,000,000 (L) | - | 3,078,000,000 (L) | 49.99% |
公司(*Shenzhen Dapeng | corporation | 1,067,862,045 (S) | 1,067,862,045 (S) | 17.34% | |
Kuang-Chi Technology | |||||
Limited) | |||||
深圳大鵬光啟聯眾科技 | Interest of controlled | 3,078,000,000 (L) | - | 3,078,000,000 (L) | 49.99% |
合夥企業（有限合夥） | corporation | 1,067,862,045 (S) | 1,067,862,045 (S) | 17.34% | |
(*Shenzhen Dapeng | |||||
Kuang-Chi Lianzhong | |||||
Technology Partnership | |||||
(Limited Liability | |||||
Partnership) |
14 KUANGCHI SCIENCE LIMITED
SUBSTANTIAL SHAREHOLDERS' INTERESTS IN SHARES
Approximate | |||||
Number of | percentage | ||||
Name of Substantial | Number of | underlying | of total | ||
Shareholder | Capacity | Shares held | Shares held | Total | issued Shares |
深圳光啟合眾科技有限 | Interest of controlled | 3,078,500,000 (L) | - | 3,078,500,000 (L) | 50.00% |
公司(*Shenzhen Kuang- | corporation | 1,067,862,045 (S) | 1,067,862,045 (S) | 17.34% | |
Chi Hezhong Technology | |||||
Limited) | |||||
深圳光啟創新技術有限公司 Interest of controlled | 3,078,000,000 (L) | - | 3,078,000,000 (L) | 49.99% | |
(*Shenzhen Kuang-Chi | corporation | 1,067,862,045 (S) | 1,067,862,045 (S) | 17.34% | |
Innovative Technology | |||||
Limited) | |||||
上海光大富尊璟琿投資中心 Person having | 1,067,862,045 (L) | - | 1,067,862,045 (L) | 17.34% | |
（有限合伙）(*Shanghai | a security interest | (note 9) | |||
Everbright Fortune | in Shares | ||||
Jinghui Investment | |||||
Center (Limited Liability | |||||
Partnership)) (note 4) | |||||
光大富尊泰鋒投資管理 | Interest of controlled | 1,067,862,045 (L) | - | 1,067,862,045 (L) | 17.34% |
（上海）有限公司 | corporation | (note 9) | |||
(*Everbright Fortune | |||||
Evertop Investment | |||||
Management (Shanghai) | |||||
Co., Ltd) (note 5) | |||||
光大富尊投資有限公司 | Interest of controlled | 1,067,862,045 (L) | - | 1,067,862,045 (L) | 17.34% |
(*Everbright Fortune | corporation | (note 9) | |||
Investment Co., Ltd) | |||||
(note 6) |
Interim Report 2020 15
SUBSTANTIAL SHAREHOLDERS' INTERESTS IN SHARES
Approximate | ||||||
Number of | percentage | |||||
Name of Substantial | Number of | underlying | of total | |||
Shareholder | Capacity | Shares held | Shares held | Total | issued Shares | |
光大証券股份有限公司 | Interest of controlled | 1,067,862,045 | (L) | - | 1,067,862,045 (L) | 17.34% |
(*Everbright Securities | corporation | (note 9) | ||||
Company Limited) | ||||||
Central Faith | Beneficial owner | 972,981,013 | (L) | - | 972,981,013 (L) | 15.80% |
International Ltd. | and Interest | (note 9) | ||||
of controlled | ||||||
corporation | ||||||
World Treasure Global | Beneficial owner | 618,981,013 | (L) | - | 618,981,013 (L) | 10.05% |
Limited (note 7) | (note 9) | |||||
Ye Cheng (note 8) | Interest of controlled | 347,471,988 | (L) | - | 347,471,988 (L) | 5.64% |
corporation | (note 9) |
* For identification purpose only
16 KUANGCHI SCIENCE LIMITED
SUBSTANTIAL SHAREHOLDERS' INTERESTS IN SHARES
Notes:
- "L" represents long position in shares/underlying shares and "S" represents short position in Shares.
- This represents the interest in the shares of the Company held by New Horizon and Sky Asia. Ms. Huang Weizi ("Ms. Huang"), being the spouse of Dr. Liu, is deemed to be interested in the same number of Shares held by New Horizon and Sky Asia.
- This represents the share charge given by New Horizon in favour of Everbright Fortune over 1,067,862,045 Shares owned by New Horizon.
- 50% of equity interest of Shanghai Everbright Fortune Jinghui Investment Center (Limited Liability Partnership) is held by Everbright Fortune Evertop Investment Management (Shanghai) Co., Ltd.
- 85% of equity interest of Everbright Fortune Evertop Investment Management (Shanghai) Co., Ltd is held by Everbright Fortune Investment Co., Ltd.
- 100% of equity interest of Everbright Fortune Investment Co., Ltd. is held by Everbright Securities Company Limited.
- World Treasure Global Limited is a wholly owned subsidiary of Central Faith International Ltd.
- Mr. Ye Cheng is the sole owner of Cutting Edge Global Limited which have direct interest on 206,818,877 shares and LUCKY TIME GLOBAL LIMITED which have direct interest on 140,653,111 shares.
- Based on the disclosure of interests' forms submitted by the substantial shareholders respectively as of 30 June 2020.
- As of 30 June 2020, the issued shares of the company were 6,156,928,860.
Save as disclosed above, as at 30 June 2020, the Company was not aware of any other person (other than the directors or chief executives of the Company) who had an interest, directly or indirectly, or short position in the shares and underlying shares of the Company which would fall to be disclosed to the Company and the Stock Exchange under provisions of Divisions 2 and 3 of Part XV of the SFO or as recorded in the register required to be kept by the Company under Section 336 of the SFO.
Interim Report 2020 17
CORPORATE GOVERNANCE AND OTHER INFORMATION
CORPORATE GOVERNANCE PRACTICES
The Board acknowledges the importance of the highest standards of corporate governance as the Board believes effective corporate governance practices are fundamental to enhancing the shareholders' value and safeguarding the interests of the shareholders. Accordingly, the Company has adopted sound corporate governance principles that emphasize effective internal controls and the Company's accountability to all shareholders.
Save as disclosed in this report, throughout the Period under review, the Company has complied with all applicable code provisions of the Corporate Governance Code and Corporate Governance Report as set out in Appendix 14 to the Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited (the "Listing Rules") (the "CG Code") and where appropriate, adopted some of the recommended best practices as set out in the CG Code. Set out below are the details of the deviations from the code provisions:
CG code provision E.1.2.
CG Code provision E.1.2 stipulates that the chairman of the Board should attend the annual general meeting. Dr. Liu Ruopeng, the Chairman of the Board, did not attend the annual general meeting held on 29 June 2020 due to other business commitments.
The Company periodically reviews its corporate governance practices to ensure that they continue to meet the requirements of the CG Code.
CODE OF CONDUCT REGARDING SECURITIES TRANSACTIONS BY DIRECTORS
The Company has adopted the Model Code for Securities Transactions by Board of Listed Issuers as set out in Appendix 10 to the Listing Rules (the "Model Code") as its code of conduct regarding securities transactions by the Directors. All Directors have confirmed, following specific enquiry procedures by the Company, that they had complied with the requirements as set out in the Model Code throughout the Period.
18 KUANGCHI SCIENCE LIMITED
CORPORATE GOVERNANCE AND OTHER INFORMATION
CHANGE OF DIRECTORS' INFORMATION
Change in Director's biographical details since the date of the 2019 Annual Report and up to the date of this report, which are required to be disclosed pursuant to rule 13.51B(1) of the Listing Rules are set out below:
- Dr. Liu Jun resigned as an independent non-executive Director, a member of each of the Audit Committee, the Remuneration Committee and the Nomination Committee with effect from 27 July 2020 due to his other business commitments; and
- Dr. Deng Ke has been appointed as an independent non-executive Director, a member of each of the Audit Committee, the Remuneration Committee and the Nomination Committee with effect from 27 July 2020.
Save as disclosed above, during the Period there was no other change of Directors' information which is required to be disclosed in accordance with Rule 13.51B(1) of the Listing Rules.
PURCHASE, SALE OR REDEMPTION OF LISTED SECURITIES
During the Period, neither the Company nor any of its subsidiaries purchased, sold or redeemed any of the Company's listed securities.
SUFFICIENCY OF PUBLIC FLOAT
Based on the information that is publicly available to the Company and within the knowledge of the Directors, as at the date of this report, the Company has maintained sufficient public float as required under the Listing Rules.
REVIEW OF INTERIM RESULTS
The Audit Committee of the Company has reviewed with the management the accounting principles and practices adopted by the Group and the interim results of the Group for the six months ended 30 June 2020. The Audit Committee is satisfied with the review and the Board is also satisfied with the Audit Committee's report.
On behalf of the Board
KuangChi Science Limited
Dr. Liu Ruopeng
Chairman and Executive Director
Hong Kong, 26 August 2020
Interim Report 2020 19 | |||||
CONDENSED CONSOLIDATED STATEMENT OF | |||||
PROFIT OR LOSS | |||||
FOR THE SIX MONTHS ENDED 30 JUNE 2020 | |||||
Six months ended 30 June | |||||
2020 | 2019 | ||||
Notes | HK$'000 | HK$'000 | |||
(unaudited) | (unaudited) | ||||
Continuing Operations | |||||
Revenue | 6 | 61,379 | 35,252 | ||
Cost of sales | (43,567) | (32,433) | |||
Gross profit | 17,812 | 2,819 | |||
Other income | 7 | 1,093 | 5,874 | ||
Other (losses)/gains, net | 8 | (95) | 333 | ||
Reversal of provision of allowance for | |||||
expected credit loss on trade receivables | 27,750 | 13,150 | |||
Provision for expected credit loss on contract | |||||
assets | - | (2,115) | |||
Selling and distribution expenses | (8,606) | (12,181) | |||
Research and development expenses | (13,683) | (37,354) | |||
Administrative expenses | (24,283) | (34,061) | |||
Operating loss | (12) | (63,535) | |||
Finance income | 226 | 2,022 | |||
Finance costs | (11,000) | (13,281) | |||
Finance costs, net | (10,774) | (11,259) | |||
Share of results of associates | - | (12,471) | |||
Loss before tax | (10,786) | (87,265) | |||
Income tax expense | 10 | (636) | (975) | ||
Loss from continuing operations | (11,422) | (88,240) | |||
Loss from discontinued operation | 12 | (195) | (2,088) | ||
Loss for the period | (11,617) | (90,328) | |||
20 KUANGCHI SCIENCE LIMITED
CONDENSED CONSOLIDATED STATEMENT OF
PROFIT OR LOSS
FOR THE SIX MONTHS ENDED 30 JUNE 2020
Six months ended 30 June | |||||
2020 | 2019 | ||||
Notes | HK$'000 | HK$'000 | |||
(unaudited) | (unaudited) | ||||
(Loss)/profit for the period from continuing | |||||
operations attributable to: | |||||
Owners of the Company | (11,347) | (90,572) | |||
Non-controlling interests | (75) | 2,332 | |||
(11,422) | (88,240) | ||||
Loss for the period from discontinued | |||||
operations attributable to: | |||||
Owners of the Company | (101) | (1,087) | |||
Non-controlling interests | (94) | (1,001) | |||
(195) | (2,088) | ||||
(Loss)/profit for the period attributable to: | |||||
Owners of the Company | (11,448) | (91,659) | |||
Non-controlling interests | (169) | 1,331 | |||
(11,617) | (90,328) | ||||
Loss per share | |||||
From continuing and discontinued | |||||
operations | |||||
Basic (HK cents per share) | 13 | (0.19) | (1.49) | ||
Diluted (HK cents per share) | 13 | (0.19) | (1.49) | ||
From continuing operations | |||||
Basic (HK cents per share) | 13 | (0.18) | (1.47) | ||
Diluted (HK cents per share) | 13 | (0.18) | (1.47) | ||
The above condensed consolidated statement of profit or loss should be read in conjunction with the accompanying notes.
Interim Report 2020 21
CONDENSED CONSOLIDATED STATEMENT OF
COMPREHENSIVE INCOME
FOR THE SIX MONTHS ENDED 30 JUNE 2020
Six months ended 30 June | |||
2020 | 2019 | ||
HK$'000 | HK$'000 | ||
(unaudited) | (unaudited) | ||
Loss for the period | (11,617) | (90,328) | |
Other comprehensive loss | |||
Items that may be reclassified to profit or loss: | |||
Exchange differences on translating foreign operations | (9,036) | 1,670 | |
Items that will not be subsequently reclassified | |||
to profit or loss: | |||
Changes in fair value of financial assets | |||
at fair value through other comprehensive income, | |||
net of deferred tax | (126,972) | (37,269) | |
Other comprehensive loss, net of tax | (136,008) | (35,599) | |
Total comprehensive loss for the period | (147,625) | (125,927) | |
Total comprehensive loss for the period attributable to: | |||
Owners of the Company | (147,271) | (125,604) | |
Non-controlling interests | (354) | (323) | |
(147,625) | (125,927) | ||
The above condensed consolidated statement of comprehensive income should be read in conjunction with the accompanying notes.
22 KUANGCHI SCIENCE LIMITED
CONDENSED CONSOLIDATED STATEMENT OF
FINANCIAL POSITION
AT 30 JUNE 2020
30 June | 31 December | ||
2020 | 2019 | ||
Notes | HK$'000 | HK$'000 | |
(unaudited) | (audited) | ||
ASSETS | |||
NON-CURRENT ASSETS | |||
Property, plant and equipment | 14 | 385,923 | 380,264 |
Right-of-use assets | 15 | 147,958 | 157,729 |
Intangible assets | 16 | 2,494 | 5,023 |
Investment in associates | - | - | |
Financial assets at fair value through | |||
other comprehensive income | 17 | 568,471 | 731,390 |
Long-term deposits and prepayments | 18 | - | 1,118 |
Total non-current assets | 1,104,846 | 1,275,524 | |
CURRENT ASSETS | |||
Inventories | 20,221 | 1,406 | |
Contract assets | 14,024 | 14,281 | |
Trade and other receivables | 18 | 350,819 | 304,953 |
Loan receivables | 19 | - | - |
Pledged bank deposits | - | 193 | |
Cash and cash equivalents | 113,982 | 245,879 | |
Total current assets | 499,046 | 566,712 | |
Total assets | 1,603,892 | 1,842,236 | |
Interim Report 2020 23 | ||||
CONDENSED CONSOLIDATED STATEMENT OF | ||||
FINANCIAL POSITION | ||||
AT 30 JUNE 2020 | ||||
30 June | 31 December | |||
2020 | 2019 | |||
Notes | HK$'000 | HK$'000 | ||
(unaudited) | (audited) | |||
EQUITY | 20 | |||
Share capital | 61,569 | 61,569 | ||
Other reserves | 21 | 1,285,386 | 1,421,209 | |
Accumulated losses | (447,465) | (458,702) | ||
Equity attributable to owners of the Company | 899,490 | 1,024,076 | ||
Non-controlling interests | 1,257 | 24,296 | ||
Total equity | 900,747 | 1,048,372 | ||
LIABILITIES | ||||
NON-CURRENT LIABILITIES | 22 | |||
Bank and other borrowings | 156,356 | 157,980 | ||
Lease liabilities | 15 | 57 | 554 | |
Deferred income tax liabilities | 35,942 | 59,421 | ||
Total non-current liabilities | 192,355 | 217,955 | ||
CURRENT LIABILITIES | 23 | |||
Trade and other payables | 113,997 | 182,166 | ||
Contract liabilities | 15 | 6,462 | 7,872 | |
Lease liabilities | 1,105 | 1,212 | ||
Deferred government grants | 36,595 | 26,004 | ||
Income tax payable | 22 | 12,809 | 12,230 | |
Bank and other borrowings | 339,822 | 346,425 | ||
Total current liabilities | 510,790 | 575,909 | ||
Total liabilities | 703,145 | 793,864 | ||
Total equity and liabilities | 1,603,892 | 1,842,236 | ||
The above condensed consolidated statement of financial position should be read in conjunction with the accompanying notes.
24 KUANGCHI SCIENCE LIMITED
CONDENSED CONSOLIDATED STATEMENT OF
CHANGES IN EQUITY
FOR THE SIX MONTHS ENDED 30 JUNE 2020
Non- | |||||||
Share | Other | Accumulated | controlling | ||||
capital | reserves | losses | Subtotal | interests | Total | ||
HK$'000 | HK$'000 | HK$'000 | HK$'000 | HK$'000 | HK$'000 | ||
(Note 20) | (Note 21) | ||||||
At 1 January 2020 | 61,569 | 1,421,209 | (458,702) | 1,024,076 | 24,296 | 1,048,372 | |
Loss for the period | - | - | (11,448) | (11,448) | (169) | (11,617) | |
Other comprehensive | |||||||
loss for the period: | |||||||
- Currency translation | |||||||
differences | - | (8,851) | - | (8,851) | (185) | (9,036) | |
- Changes in fair value of | |||||||
financial assets at fair | |||||||
value through other | |||||||
comprehensive income, | |||||||
net of deferred tax | - | (126,972) | - | (126,972) | - | (126,972) | |
Total comprehensive loss | |||||||
for the period | - | (135,823) | (11,448) | (147,271) | (354) | (147,625) | |
Disposal of a non-wholly | |||||||
owned subsidiary | - | - | 22,685 | 22,685 | (22,685) | - | |
At 30 June 2020 | |||||||
(unaudited) | 61,569 | 1,285,386 | (447,465) | 899,490 | 1,257 | 900,747 | |
Interim Report 2020 25 | |||||||
CONDENSED CONSOLIDATED STATEMENT OF | |||||||
CHANGES IN EQUITY | |||||||
FOR THE SIX MONTHS ENDED 30 JUNE 2020 | |||||||
Non- | |||||||
Share | Other | Accumulated | controlling | ||||
capital | reserves | losses | Subtotal | interests | Total | ||
HK$'000 | HK$'000 | HK$'000 | HK$'000 | HK$'000 | HK$'000 | ||
(Note 20) | (Note 21) | ||||||
At 1 January 2019 | 61,569 | 1,549,961 | (221,479) | 1,390,051 | 41,864 | 1,431,915 | |
Loss for the period | - | - | (91,659) | (91,659) | 1,331 | (90,328) | |
Other comprehensive loss | |||||||
for the period: | |||||||
- Currency translation | |||||||
differences | - | 3,324 | - | 3,324 | (1,654) | 1,670 | |
- Changes in fair value of | |||||||
financial assets at fair | |||||||
value through other | |||||||
comprehensive income, | |||||||
net of deferred tax | - | (37,269) | - | (37,269) | - | (37,269) | |
Total comprehensive loss | |||||||
for the period | - | (33,945) | (91,659) | (125,604) | (323) | (125,927) | |
At 30 June 2019 | |||||||
(unaudited) | 61,569 | 1,516,016 | (313,138) | 1,264,447 | 41,541 | 1,305,988 | |
The above condensed consolidated statement of changes in equity should be read in conjunction with the accompanying notes.
26 KUANGCHI SCIENCE LIMITED
CONDENSED CONSOLIDATED STATEMENT OF
CASH FLOWS
FOR THE SIX MONTHS ENDED 30 JUNE 2020
Six months ended 30 June | |||
2020 | 2019 | ||
HK$'000 | HK$'000 | ||
(unaudited) | (unaudited) | ||
CASH FLOW FROM OPERATING ACTIVITIES | |||
NET CASH (USED IN)/GENERATED FROM | |||
OPERATING ACTIVITIES | (116,003) | 58,439 | |
CASH FLOW FROM INVESTING ACTIVITIES | |||
Purchase of plant and equipment | (15,600) | (26,365) | |
Interest received | 226 | 2,022 | |
Net proceeds from time deposits | 193 | 114 | |
Receipt of loan receivables | - | 9,731 | |
NET CASH USED IN INVESTING ACTIVITIES | (15,181) | (14,498) | |
CASH FLOW FROM FINANCING ACTIVITIES | |||
Proceeds from bank borrowings | 2,773 | 27,901 | |
Repayments of lease liabilities | (675) | (1,471) | |
NET CASH GENERATED FROM FINANCING | |||
ACTIVITIES | 2,098 | 26,430 | |
NET (DECREASE)/INCREASE IN CASH AND | |||
CASH EQUIVALENTS | (129,086) | 70,371 | |
CASH AND CASH EQUIVALENTS AT | |||
THE BEGINNING OF THE PERIOD | 245,879 | 429,611 | |
Effect of foreign exchange rate changes | (2,811) | (1,806) | |
CASH AND CASH EQUIVALENTS AT | |||
THE END OF THE PERIOD | 113,982 | 498,176 | |
The above condensed consolidated statement of cash flows should be read in conjunction with the accompanying notes.
Interim Report 2020 27
NOTES TO THE INTERIM CONDENSED CONSOLIDATED FINANCIAL INFORMATION
1 GENERAL INFORMATION
KuangChi Science Limited (the "Company") is a limited company incorporated in Bermuda and its shares are listed on the Main Board of The Stock Exchange of Hong Kong Limited (the "Stock Exchange"). The address of its registered office of the Company is Clarendon House, 2 Church Street, Hamilton HM11, Bermuda. The principal place of its business is located at Unit 1220, 12/F, Leighton Centre, 77 Leighton Road, Causeway Bay, Hong Kong.
The Company is an investment holding company. The principal activities of the Company and its subsidiaries (together the "Group") are in the research and development, and manufacturing of innovative products for future technology business, and provision of other innovative technology service solution.
The interim condensed consolidated financial information is presented in Hong Kong dollars ("HK$"), unless otherwise stated.
The interim condensed consolidated financial information has been approved for issue by the Board on 26 August 2020. The interim condensed consolidated financial information has not been audited or reviewed by the external auditor.
2 BASIS OF PREPARATION
The interim condensed consolidated financial information for the six months ended 30 June 2020 has been prepared in accordance with Hong Kong Accounting Standard ("HKAS") 34, "Interim Financial Reporting" issued by the Hong Kong Institute of Certified Public Accountants ("HKICPA") as well as with the applicable disclosure requirements of Appendix 16 to the Rules Governing the Listing of Securities on the Stock Exchange (the "Listing Rules").
This interim condensed consolidated financial information should be read in conjunction with the annual financial statements for the year ended 31 December 2019, which have been prepared in accordance with Hong Kong Financial Reporting Standards ("HKFRSs") issued by HKICPA.
The interim condensed consolidated financial information has been prepared on the historical cost basis, except for financial assets at fair value through other comprehensive income which are measured at fair values.
28 KUANGCHI SCIENCE LIMITED
3 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
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 interim condensed consolidated financial information for the six months ended 30 June 2020 are the same as those presented in the Group's annual financial statements for the year ended 31 December 2019.
-
New and amended standards adopted by the Group
In the Period, the Group has applied the following new standards and amendments to HKFRSs for the first time for their reporting period commencing 1 January 2020:
Amendments to HKFRS 3 | Definition of a Business |
Amendments to HKAS 1 and HKAS 8 | Definition of material |
The adoption of these amendments to standards did not result in a significant impact to the Group's financial position and results.
-
Impact of standards issued but not yet applied by the Group
The following new standards and amendment to standards and interpretations have been issued but are not mandatory for the financial period beginning 1 January 2020 and have not been early adopted:
HKFRS 17 | Insurance contracts(1) |
HKFRS 10 and HKAS 28 | Sale or contribution of assets between an investor |
(Amendment) | and its associate and joint venture(2) |
(1)
(2)
Effective for the Group for annual period beginning on 1 January 2023. Effective date to be determined.
Management is assessing the impact of the above amendments to standards and interpretations, which have been issued but are not yet effective for 2020, on the operations of the Group, and is yet to be in the position to conclude the impact.
There are no other HKFRSs or HK (IFRIC) interpretations that are effective for the first time for this interim period that could be expected to have a material impact on the Group.
Interim Report 2020 29
4 ESTIMATES
The preparation of the interim condensed consolidated financial information requires management to make judgements, estimates and assumptions that affect the application of accounting policies and the reported amounts of assets and liabilities, income and expense. Actual results may differ from these estimates.
In preparing the interim condensed consolidated financial information, the significant judgements made by management in applying the accounting policies of the Group and the key sources of estimation uncertainty were the same as those that applied to the consolidated financial statements for the year ended 31 December 2019.
5 F I N A N C I A L R I S K M A N A G E M E N T A N D F I N A N C I A L INSTRUMENTS
-
Financial risk factors
The activities of the Group expose it to a variety of financial risks: market risk (including currency risk and interest rate risk), credit risk and liquidity risk.
The interim condensed consolidated financial information does not include all financial risk management information and disclosures required in the annual financial statements and should be read in conjunction with the annual financial statements of the Group for the year ended 31 December 2019. - Fair value estimation
-
Fair value hierarchy
To provide an indication about the reliability of the inputs used in determining fair value, the Group classifies its financial instruments into the three levels prescribed under the accounting standards. An explanation of each level follows the underneath table.
-
Fair value hierarchy
30 KUANGCHI SCIENCE LIMITED
5 F I N A N C I A L R I S K M A N A G E M E N T A N D F I N A N C I A L INSTRUMENTS (Continued)
5.2 Fair value estimation (Continued)
- Fair value hierarchy (Continued)
The following table presents the financial assets and financial liabilities of the Group which are measured and recognised at fair value at 30 June 2020 and 31 December 2019 on a recurring basis:
Level 1 | Level 2 | Level 3 | Total | ||
HK$'000 | HK$'000 | HK$'000 | HK$'000 | ||
At 30 June 2020 | |||||
Financial assets | |||||
Financial assets at fair | |||||
value through | |||||
other comprehensive | |||||
income | |||||
- Listed equity security | 568,471 | - | - | 568,471 | |
- Unlisted equity | |||||
securities | - | - | - | - | |
At 31 December 2019 | |||||
Financial assets | |||||
Financial assets at fair | |||||
value through other | |||||
comprehensive income | |||||
- Listed equity security | 731,390 | - | - | 731,390 | |
- Unlisted equity | |||||
securities | - | - | - | - | |
The policy of the Group is to recognise transfers into and transfers out of fair value hierarchy levels as at the end of the reporting period.
Interim Report 2020 31
5 F I N A N C I A L R I S K M A N A G E M E N T A N D F I N A N C I A L INSTRUMENTS (Continued)
5.2 Fair value estimation (Continued)
- Fair value hierarchy (Continued)
The table below analyses financial instruments carried at fair value, by valuation method. The different levels have been defined as follows:
Level 1: The fair value of financial instruments traded in active markets (such as publicly traded derivatives and equity securities) is based on quoted market prices at the end of the reporting period. The quoted market price used for financial assets held by the Group is the current bid price. These instruments are included in level 1.
Level 2: The fair value of financial instruments that are not traded in an active market (for example, over-the-counter derivatives) is determined using valuation techniques which maximise the use of observable market data and rely as little as possible on entity- specific estimates. If all significant inputs required to fair value an instrument are observable, the instrument is included in level 2.
Level 3: If one or more of the significant inputs is not based on observable market data, the instrument is included in level 3. This is the case for unlisted equity securities. - Valuation processes
The finance department of the Group includes a team that performs the valuation of financial asset required for financial reporting purposes, including Level 3 fair values. This team reports directly to the Chief Financial Officer ("CFO") and the Audit Committee ("AC"). Discussion of valuation processes and results are held between the CFO, AC and the valuation team.
32 KUANGCHI SCIENCE LIMITED
6 SEGMENT INFORMATION
The financial information provided to the chief operating decision-maker ("CODM") does not contain profit or loss information of each product line or each market segment and the CODM review the operating results of the Group on a consolidated basis. Therefore, the operation of the Group constitutes one single reportable segment and no further analysis of segments is presented.
- An analysis of the Group's revenue for the period is as follows:
Unaudited | |||
Six months ended 30 June | |||
2020 | 2019 | ||
HK$'000 | HK$'000 | ||
From continuing operations | |||
Revenue from contracts with customers | |||
within the scope of HKFRS 15 | |||
Disaggregated by major products or service lines | |||
- Sale of chips | - | 7,311 | |
- Sale of super intelligent tracking system | 14,950 | 27,090 | |
- Sale of wearable smart helmets | 46,429 | 851 | |
61,379 | 35,252 | ||
Interim Report 2020 33
6 SEGMENT INFORMATION (Continued)
- Geographical information
The Group operates in two principal geographical areas - the PRC and Hong Kong.
Information about the revenue from operations of the Group from external customers is presented based on the location of the goods delivered. Information about the non- current assets of the Group is presented based on the geographical locations of the assets.
Revenue from | ||||
external customers | Non-current assets* | |||
Six months ended 30 June | 30 June | 31 December | ||
2020 | 2019 | 2020 | 2019 | |
HK$'000 | HK$'000 | HK$'000 | HK$'000 | |
(unaudited) | (unaudited) | (unaudited) | (audited) | |
PRC | 41,444 | 27,941 | 535,955 | 543,425 |
Hong Kong | - | 7,311 | 420 | 709 |
Other overseas | ||||
countries | 19,935 | - | - | - |
61,379 | 35,252 | 536,375 | 544,134 | |
- Non-currentassets exclude financial assets at fair value through other comprehensive income and investment in associates.
34 KUANGCHI SCIENCE LIMITED
7 OTHER INCOME | ||||
Unaudited | ||||
Six months ended 30 June | ||||
2020 | 2019 | |||
HK$'000 | HK$'000 | |||
From continuing operations | ||||
Government grants | 1,048 | 4,158 | ||
Sundry income | 45 | 1,716 | ||
1,093 | 5,874 | |||
8 OTHER (LOSSES)/GAINS, NET
Unaudited | |||
Six months ended 30 June | |||
2020 | 2019 | ||
HK$'000 | HK$'000 | ||
From continuing operations | |||
Exchange (losses)/gains, net | (53) | 333 | |
Loss on disposal of a subsidiary | (42) | - | |
(95) | 333 | ||
Interim Report 2020 35
9 OPERATING LOSS
Operating loss has been arrived at after charging or (crediting):
Unaudited | ||||
Six months ended 30 June | ||||
2020 | 2019 | |||
HK$'000 | HK$'000 | |||
From continuing operations | ||||
Cost of inventories sold | 43,567 | 32,433 | ||
Salaries, wages and other benefits | 16,362 | 49,466 | ||
Amortisation of intangible assets | 2,440 | 2,565 | ||
Depreciation of property, plant and equipment | 2,071 | 2,666 | ||
Amortisation of right-of-use assets | 6,798 | 5,858 | ||
Directors' emoluments | 664 | 2,269 | ||
Operating lease expenses for office premises and | ||||
warehouses relating to short-term leases | 4,623 | 6,351 | ||
Reversal of provision of allowance for | ||||
expected credit loss on trade receivables | (27,750) | (13,150) | ||
Provision of allowance for expected credit loss on | ||||
contract assets | - | 2,115 | ||
36 KUANGCHI SCIENCE LIMITED
10 INCOME TAX EXPENSE
Unaudited | |||
Six months ended 30 June | |||
2020 | 2019 | ||
HK$'000 | HK$'000 | ||
From continuing operations | |||
Current income tax expenses | |||
Hong Kong profits tax | 579 | 973 | |
PRC Corporate Income Tax | 57 | 2 | |
636 | 975 | ||
Notes:
- During the six months ended 30 June 2020 and 2019, Hong Kong profits tax has been provided for at the rate of 16.5% on the estimated assessable profit.
-
The PRC Corporate Income Tax represents taxation charged on assessable profits for the period at the rates of taxation prevailing in the cities in the PRC in which the Group operates.
The tax rate applicable to subsidiaries in the PRC is 25% (2019: 25%), except for the PRC subsidiaries established in Qianhai and a PRC subsidiary that was approved as High and New Technology Enterprise which is subject to PRC Corporate Income Tax at a rate of 15% for 3 years from 2019 to 2022 (2019: 15%).
11 DIVIDEND
No dividend was paid, declared or proposed by the Company during the six months ended 30 June 2020.
Interim Report 2020 37
12 DISCONTINUED OPERATION
At a special meeting of shareholders of Martin Aircraft Company Limited ("MACL") held on 1 May 2018, the shareholders approved the removal of MACL from the official list of the Australian Security Exchange (the "ASX") and the delisting of its ordinary shares. As part of the delisting process, MACL has arranged to transition its shares to the USX (a New Zealand unlisted share trading platform) to allow shareholders to continue to trade their shares. MACL was delisted from ASX on 4 June 2018 and the trading of MACL's shares on USX commenced on 7 June 2018.
MACL faced difficulties in developing its products into commercial use and all business operations were stopped in late 2018. Therefore, MACL was classified as a discontinued operation. During the six months ended 30 June 2020, the Company fully disposed its investment in MACL.
13 LOSS PER SHARE
From continuing operations
The calculation of the basic and diluted loss per share attributable to owners of the Company is based on the following data:
Unaudited | ||||
Six months ended 30 June | ||||
2020 | 2019 | |||
HK$'000 | HK$'000 | |||
Loss for the period attributable to owners of the | ||||
Company | (11,448) | (91,659) | ||
Add: loss for the period from discontinued | ||||
operations | 101 | 1,087 | ||
Loss for the purpose of basic and diluted loss per | ||||
share from continuing operations | (11,347) | (90,572) | ||
Unaudited | ||||
Six months ended 30 June | ||||
2020 | 2019 | |||
Number of shares | '000 | '000 | ||
Weighted average number of ordinary shares | ||||
for the purpose of basic loss per share | 6,156,929 | 6,156,929 | ||
Effect of dilutive potential ordinary shares: | ||||
- Share options of the Company | - | - | ||
Weighted average number of ordinary shares | ||||
for the purpose of diluted loss per share | 6,156,929 | 6,156,929 | ||
38 KUANGCHI SCIENCE LIMITED
13 LOSS PER SHARE (Continued)
From continuing and discontinued operations
The calculation of the basic and diluted loss per share from continuing and discontinued operations attributable to owners of the Company is based on the following data:
Unaudited | ||||
Six months ended 30 June | ||||
2020 | 2019 | |||
HK$'000 | HK$'000 | |||
Loss for the period attributable to owners of the | ||||
Company | (11,448) | (91,659) | ||
For the six months ended 30 June 2020 and 2019, the computation of diluted loss per share does not assume the exercise of the outstanding share options of the Company since the assumed exercise would result in a decrease in loss per share.
Interim Report 2020 39
14 | PROPERTY, PLANT AND EQUIPMENT | |||||||||
Plant and | Furniture | Office | Leasehold | Motor | Construction | |||||
Buildings | machinery | and fixture | equipment | improvements | vehicles | in progress | Total | |||
HK$'000 | HK$'000 | HK$'000 | HK$'000 | HK$'000 | HK$'000 | HK$'000 | HK$'000 | |||
COST | ||||||||||
At 1 January 2019 | - | 22,789 | 216 | 19,998 | 8,125 | 6,128 | 287,221 | 344,477 | ||
Additions | - | 35 | - | 4,468 | - | - | 82,912 | 87,415 | ||
Additions through acquisition of | ||||||||||
subsidiaries | 8,014 | - | - | - | - | - | - | 8,014 | ||
Disposal | - | (1,107) | - | (363) | (7,996) | (364) | - | (9,830) | ||
Currency translation differences | - | (212) | (3) | (294) | (41) | (92) | (6,474) | (7,116) | ||
At 31 December 2019 and | ||||||||||
1 January 2020 | 8,014 | 21,505 | 213 | 23,809 | 88 | 5,672 | 363,659 | 422,960 | ||
Additions | - | - | - | 177 | - | - | 15,423 | 15,600 | ||
Disposals | - | (12,960) | - | (8,230) | (88) | (491) | - | (21,769) | ||
Currency translation differences | (153) | (163) | (3) | (294) | - | (85) | (7,563) | (8,261) | ||
At 30 June 2020 | 7,861 | 8,382 | 210 | 15,462 | - | 5,096 | 371,519 | 408,530 | ||
ACCUMULATED | ||||||||||
DEPRECIATION AND | ||||||||||
IMPAIRMENT | ||||||||||
At 1 January 2019 | - | 16,929 | 192 | 13,891 | 4,273 | 4,220 | - | 39,505 | ||
Depreciation | - | 2,158 | 21 | 3,311 | 3,834 | 909 | - | 10,233 | ||
Disposals | - | (1,107) | - | (336) | (7,996) | (364) | - | (9,803) | ||
Provision for impairment | - | 2,370 | 3 | 827 | - | - | - | 3,200 | ||
Currency translation differences | - | (166) | (3) | (177) | (23) | (70) | - | (439) | ||
At 31 December 2019 and | ||||||||||
1 January 2020 | - | 20,184 | 213 | 17,516 | 88 | 4,695 | - | 42,696 | ||
Depreciation | 197 | 366 | - | 1,222 | - | 286 | - | 2,071 | ||
Disposals | - | (12,960) | - | (8,230) | (88) | (492) | - | (21,770) | ||
Currency translation differences | (1) | (139) | (3) | (177) | - | (70) | - | (390) | ||
At 30 June 2020 | 196 | 7,451 | 210 | 10,331 | - | 4,419 | - | 22,607 | ||
CARRYING AMOUNTS | ||||||||||
At 30 June 2020 | 7,665 | 931 | - | 5,131 | - | 677 | 371,519 | 385,923 | ||
At 31 December 2019 | 8,014 | 1,321 | - | 6,293 | - | 977 | 363,659 | 380,264 | ||
40 KUANGCHI SCIENCE LIMITED
15 LEASES
(a) Right-of-use assets
Leased | Leasehold | |||
properties | lands | Total | ||
HK$'000 | HK$'000 | HK$'000 | ||
Balance as at 1 January 2020 | 12,525 | 145,204 | 157,729 | |
Amortisation charge | (4,090) | (2,708) | (6,798) | |
Exchange translation | (214) | (2,759) | (2,973) | |
Balance as at 30 June 2020 | ||||
(unaudited) | 8,221 | 139,737 | 147,958 | |
(b) Lease liabilities
Unaudited | Audited | |
30 June | 31 December | |
2020 | 2019 | |
HK$'000 | HK$'000 | |
Non-current | 57 | 554 |
Current | 1,105 | 1,212 |
1,162 | 1,766 | |
- Amounts recognised in the condensed consolidated statement of profit or loss
Unaudited | |||
Six months ended 30 June | |||
2020 | 2019 | ||
HK$'000 | HK$'000 | ||
Amortisation charge of right-of-use assets | 6,798 | 5,858 | |
Interest on lease liabilities | 71 | 1,198 | |
Expense relating to short-term leases | |||
(note 9) | 4,623 | 6,351 | |
11,492 | 13,407 | ||
Interim Report 2020 41
16 INTANGIBLE ASSETS AND GOODWILL
Capitalised | Technical | |||||
development | knowhow | |||||
Goodwill | cost | Software | and patents | Total | ||
HK$'000 | HK$'000 | HK$'000 | HK$'000 | HK$'000 | ||
COST | ||||||
At 1 January 2019 | 30,723 | 104,358 | 5,690 | 85,182 | 225,953 | |
Currency translation differences | (71) | (1,490) | (82) | (448) | (2,091) | |
At 31 December 2019 and | ||||||
1 January 2020 | 30,652 | 102,868 | 5,608 | 84,734 | 223,862 | |
Disposal of a subsidiary | (30,652) | (95,261) | (5,193) | (64,460) | (195,566) | |
Currency translation | ||||||
differences | - | (7,607) | (415) | (5,436) | (13,458) | |
At 30 June 2020 | - | - | - | 14,838 | 14,838 | |
ACCUMULATED | ||||||
AMORTISATION AND | ||||||
IMPAIRMENT | ||||||
At 1 January 2019 | 30,723 | 104,358 | 5,690 | 74,998 | 215,769 | |
Amortisation | - | - | - | 5,043 | 5,043 | |
Currency translation differences | (71) | (1,490) | (82) | (330) | (1,973) | |
At 31 December 2019 and | ||||||
1 January 2020 | 30,652 | 102,868 | 5,608 | 79,711 | 218,839 | |
Amortisation | - | - | - | 2,440 | 2,440 | |
Disposal of a subsidiary | (30,652) | (95,261) | (5,193) | (64,460) | (195,566) | |
Currency translation | ||||||
differences | - | (7,607) | (415) | (5,347) | (13,369) | |
At 30 June 2020 | - | - | - | 12,344 | 12,344 | |
CARRYING AMOUNTS | ||||||
At 30 June 2020 | - | - | - | 2,494 | 2,494 | |
At 31 December 2019 | - | - | - | 5,023 | 5,023 | |
42 KUANGCHI SCIENCE LIMITED
17 FINANCIAL ASSETS AT FAIR VALUE THROUGH OTHER COMPREHENSIVE INCOME
Unaudited | Audited | |
30 June | 31 December | |
2020 | 2019 | |
HK$'000 | HK$'000 | |
Listed security: | ||
- Equity security (note) | 568,471 | 731,390 |
Unlisted securities: | ||
- Equity securities | - | - |
568,471 | 731,390 | |
Note: As at 30 June 2020, the Group hold 71,528,751 (31 December 2019: 71,528,751) ordinary shares of Kuang-Chi Technologies Co., Ltd. ("KCT"), representing 3.32% (31 December 2019: 3.32%) of the issued ordinary shares of KCT. Shenzhen Kuang-Chi Hezhong Technology Limited, which is partially owned by the directors of the Company, Dr. Liu Ruopeng and Dr. Luan Lin with shareholding of 35.09% and 15.79% respectively, holds more than 5% shareholding of KCT. KCT is a company listed on the Shenzhen Stock Exchange. During the year ended 31 December 2018, a capital restructuring was done, pursuant to which additional 7 ordinary shares were allotted for every 10 ordinary shares held. These investments are not held for trading, instead, they are held for long- term strategic purposes. The directors of the Company have elected to designate these investments in financial assets at fair value to other comprehensive income as they believe that recognising short-term fluctuations in these investments in profit or loss would not be consistent with the Group's strategy of holding these investments for long-term purposes and realising their performance potential in the long run.
Interim Report 2020 43 | |||||
18 TRADE AND OTHER RECEIVABLES | |||||
Unaudited | Audited | ||||
30 June | 31 December | ||||
2020 | 2019 | ||||
HK$'000 | HK$'000 | ||||
Trade receivables | 92,903 | 330,492 | |||
Less: allowance for expected credit loss | (28,989) | (57,600) | |||
Trade receivables, net | 63,914 | 272,892 | |||
Deposits and other receivables (note) | 254,240 | 3,326 | |||
Prepayment to suppliers | 18,203 | 13,477 | |||
Prepaid rentals | 2,690 | 4,603 | |||
Value-added tax and other tax recoverable | 11,772 | 11,773 | |||
350,819 | 306,071 | ||||
Less: non-current portion | - | (1,118) | |||
350,819 | 304,953 | ||||
Note:
Included in deposits and other receivables of HK$252,692,000 was related to the trading business of the Group. The Group provides electronic chip procurement services to the customers.
The following is an ageing analysis of trade receivables presented based on date of revenue recognition and net of allowance as at 30 June 2020 and 31 December 2019:
Unaudited | Audited | |
30 June | 31 December | |
2020 | 2019 | |
HK$'000 | HK$'000 | |
0 to 90 days | 3,799 | 171,730 |
91 to 180 days | - | 77 |
181 to 365 days | 23,847 | 35,549 |
1 to 2 years | 3,554 | 13,625 |
2 to 3 years | 12,145 | 43,135 |
Over 3 years | 20,568 | 8,776 |
63,914 | 272,892 | |
44 KUANGCHI SCIENCE LIMITED
18 TRADE AND OTHER RECEIVABLES (Continued)
Movements in the loss allowance account for the trade receivables and contract assets are as follows:
Trade | Contract | |||
receivables | assets | Total | ||
HK$'000 | HK$'000 | HK$'000 | ||
At 1 January 2019 | 25,788 | 626 | 26,414 | |
Provision for/(reversal of) impairment | ||||
loss | 32,595 | (329) | 32,266 | |
Currency translation differences | (783) | (7) | (790) | |
At 31 December 2019 and | ||||
1 January 2020 | 57,600 | 290 | 57,890 | |
Reversal of impairment loss (note) | (27,750) | - | (27,750) | |
Currency translation differences | (861) | (1) | (862) | |
At 30 June 2020 | 28,989 | 289 | 29,278 | |
Note:
During the six months ended 30 June 2020, the Group successfully recovered total trade receivables of approximately RMB48,000,000 related to sale of cloud in previous years, and accordingly reversed the related provision of allowance for credit loss on trade receivables of approximately HK$27,750,000.
Interim Report 2020 45 | |||||
19 LOAN RECEIVABLES | |||||
Unaudited | Audited | ||||
30 June | 31 December | ||||
2020 | 2019 | ||||
Notes | HK$'000 | HK$'000 | |||
Loans to third parties | (a) | 2,368 | 2,368 | ||
Loan to an associate | (b) | 22,378 | 22,378 | ||
24,746 | 24,746 | ||||
Less: provision for impairment of | |||||
loan receivables | (a), (b) | (24,746) | (24,746) | ||
- | - | ||||
Notes:
- As at 30 June 2020 and 31 December 2019, the balance represented a loan to Beyond Verbal of HK$2,368,000, which is unsecured, interest bearing at 6% per annum and mature on 31 March 2018. The loan was fully impaired in 2017 as management considered the recoverability of the loans is remote. No repayment was made by Beyond Verbal during the Period.
-
As at 30 June 2020 and 31 December 2019, the balance represented a loan to Solar Ship of HK$22,378,000, which is secured by all of the present and future undertaking and personal property of the associate. CAD2,500,000 (approximately HK$15,759,000) of the loan is interest-free and CAD1,050,000 (approximately HK$6,619,000) is interest-bearing at 10% per annum, both of which are repayable on demand.
During the year ended 31 December 2017, management recognised full provision for impairment to the loans to Solar Ship. No repayment was made by Solar Ship during the Period.
46 KUANGCHI SCIENCE LIMITED
20 SHARE CAPITAL | |||
Ordinary shares | Number of shares | Equivalent to | |
HK$'000 | |||
Authorised: | |||
Ordinary shares of HK$0.01 each at 1 January 2019, | |||
30 June 2019, 1 January 2020 and 30 June 2020 | 7,316,666,668 | 73,167 | |
Issued and fully paid: | |||
At 1 January 2019, 30 June 2019, 1 January 2020 | |||
and 30 June 2020 | 6,156,928,860 | 61,569 | |
21 | OTHER RESERVES | ||||||||
Financial | |||||||||
assets | |||||||||
at fair value | |||||||||
through other | Share-based | ||||||||
Share | comprehensive | Capital | Contributed | payment | Exchange | ||||
premium | income | reserve | surplus | reserve | translation | Total | |||
HK$'000 | HK$'000 | HK$'000 | HK$'000 | HK$'000 | HK$'000 | HK$'000 | |||
(Note a) | (Note b) | (Note c) | |||||||
At 1 January 2020 | 2,339,550 | (970,933) | 17,900 | 103,941 | - | (69,249) | 1,421,209 | ||
Currency translation differences | - | - | - | - | - | (8,851) | (8,851) | ||
Fair value changes of financial assets | |||||||||
at fair value through other | |||||||||
comprehensive income, | |||||||||
net of deferred tax | - | (126,972) | - | - | - | - | (126,972) | ||
Other comprehensive loss for the period | - | (126,972) | - | - | - | (8,851) | (135,823) | ||
At 30 June 2020 (unaudited) | 2,339,550 | (1,097,905) | 17,900 | 103,941 | - | (78,100) | 1,285,386 | ||
Interim Report 2020 47
21 | OTHER RESERVES (Continued) | ||||||||
Financial | |||||||||
assets | |||||||||
at fair value | |||||||||
through other | Share-based | ||||||||
Share | comprehensive | Capital | Contributed | payment | Exchange | ||||
premium | income | reserve | surplus | reserve | translation | Total | |||
HK$'000 | HK$'000 | HK$'000 | HK$'000 | HK$'000 | HK$'000 | HK$'000 | |||
(Note a) | (Note b) | (Note c) | |||||||
At 1 January 2019 | 2,339,550 | (902,684) | 17,900 | 103,941 | 46,545 | (55,291) | 1,549,961 | ||
Currency translation differences | - | - | - | - | - | (13,958) | (13,958) | ||
Fair value changes of financial | |||||||||
assets at fair value through other | |||||||||
comprehensive income, | |||||||||
net deferred tax | - | (75,335) | - | - | - | - | (75,335) | ||
Other comprehensive loss for | |||||||||
the year | - | (75,335) | - | - | - | (13,958) | (89,293) | ||
Transfer of fair value reserve upon | |||||||||
the disposal of equity investments | |||||||||
at fair value through other | |||||||||
comprehensive income | - | 7,086 | - | - | - | - | 7,086 | ||
Transfer of share-based payment | |||||||||
reserve upon the expiry of share | |||||||||
options | - | - | - | - | (46,545) | - | (46,545) | ||
At 31 December 2019 | 2,339,550 | (970,933) | 17,900 | 103,941 | - | (69,249) | 1,421,209 | ||
Notes:
- The balance of capital reserve represents the capital reserve arising from the Group's restructuring which took place in 1992.
- The balance of contributed surplus arose as a result of the Company's capital reduction exercises which took place in the financial years of 2003 and 2006.
- The balance of share-based payment reserve represents share options granted on 30 September 2015.
48 KUANGCHI SCIENCE LIMITED
22 BANK AND OTHER BORROWINGS
Unaudited | Audited | |
30 June | 31 December | |
2020 | 2019 | |
HK$'000 | HK$'000 | |
Bank borrowings | ||
- Within 1 year | 10,962 | 11,175 |
- Between 1 and 2 years | 10,962 | 11,175 |
- Between 2 and 5 years | 65,772 | 67,050 |
- Over 5 years | 79,622 | 79,755 |
167,318 | 169,155 | |
Other borrowings | ||
- Within 1 year | 328,860 | 335,250 |
328,860 | 335,250 | |
Total bank and other borrowings | 496,178 | 504,405 |
As at 30 June 2020, the bank borrowings carried interest of approximately 6.7% to 7.4% p.a. (31 December 2019: 6.7% to 7.4% p.a.) which were secured by the right-of-use assets and the construction-in-progress, amounting to HK$76,626,000 (31 December 2019: HK$79,251,000) and HK$371,519,000 (31 December 2019: HK$363,659,000) respectively, and were guaranteed by the Company and a company which is controlled by Dr. Liu Ruopeng.
As at 30 June 2020, the other borrowings carried interest at fixed interest rate of 6.5% p.a. (31 December 2019: 6.5% p.a.) which were secured by the Group's investment in KCT classified as financial assets at fair value to other comprehensive income with a carrying amount of HK$568,471,000 (31 December 2019: HK$731,390,000) and were guaranteed by the Company's shareholders and a company which is controlled by Dr. Liu Ruopeng.
As at 30 June 2020, the total available banking facilities granted to the Group were approximately HK$548,100,000 (31 December 2019: HK$316,186,000), of which HK$375,301,000 (31 December 2019: HK$147,031,000) were not utilised.
Interim Report 2020 49 | |||||
23 TRADE AND OTHER PAYABLES | |||||
Unaudited | Audited | ||||
30 June | 31 December | ||||
2020 | 2019 | ||||
HK$'000 | HK$'000 | ||||
Trade payables | 34,108 | 22,127 | |||
Accrued employee benefits | 4,670 | 12,240 | |||
Value-added tax and other tax payable | 8,481 | 6,693 | |||
Other payables and accruals | 15,451 | 34,131 | |||
Consideration payable for acquisition of | |||||
subsidiaries | - | 49,070 | |||
Accrued construction costs | 51,287 | 57,905 | |||
113,997 | 182,166 | ||||
The following is an ageing analysis of trade payables presented based on the invoice date at the end of each reporting period.
Unaudited | Audited | |
30 June | 31 December | |
2020 | 2019 | |
HK$'000 | HK$'000 | |
0 - 90 days | 20,628 | 6,869 |
Over 90 days | 13,480 | 15,258 |
34,108 | 22,127 | |
50 KUANGCHI SCIENCE LIMITED
24 CAPITAL COMMITMENTS
Capital expenditure contracted for at the end of the period/year but not yet incurred is as follows:
Unaudited | Audited | |
30 June 2020 31 December 2019 | ||
HK$'000 | HK$'000 | |
Significant capital expenditure contracted for | ||
at the end of the reporting period but not | ||
recognized as liabilities | 33,806 | |
Property, plant and equipment | 35,464 | |
25 RELATED PARTY TRANSACTIONS
- Related party balances
Unaudited | Audited |
30 June 2020 | 31 December 2019 |
HK$'000 | HK$'000 |
Trade payables
- 深圳超材料技術有限公司
（「深圳超材料」） | 19,898 | (83) | |
- Related party transactions
Unaudited | ||||
Six months ended 30 June | ||||
2020 | 2019 | |||
Name of parties | Nature of transactions | HK$'000 | HK$'000 | |
深圳超材料 | Purchase of Wearable Smart | 54,796 | ||
Helmets and other materials | 6,538 | |||
Note:
The director and controlling shareholder of the Company, Dr. Liu Ruopeng, is a controlling shareholder of 深圳超材料. The above transactions were conducted in the normal course of the business of the Company and charged at terms mutually agreed by the parties concerned.
Saved as disclosed above and elsewhere in the interim condensed consolidated financial information, there was no other related party transaction during the periods ended 30 June 2020 and 2019.
26 SUBSEQUENT EVENT
There were no material events occurred after the period ended 30 June 2020.
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KuangChi Science Ltd. published this content on 21 September 2020 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 21 September 2020 08:39:01 UTC
