Gold Peak Industries : Interim Report 2019/2020

(Incorporated in Hong Kong under the Companies Ordinance)

(Stock Code : 40)

Interim Report 2019/2020

Corporate Information

BOARD OF DIRECTORS	Executive
	Victor LO Chung Wing, Chairman & Chief Executive
	Richard KU Yuk Hing
	Brian LI Yiu Cheung, Executive Vice President
	Michael LAM Hin Lap
	Brian WONG Tze Hang

	Non-executive
	LEUNG Pak Chuen, Non-Executive Vice Chairman
	LUI Ming Wah*
	Frank CHAN Chi Chung*
	CHAN Kei Biu*
	Timothy TONG Wai Cheung*
	Karen NG Ka Fai
	*  Independent Non-Executive Director
AUDIT COMMITTEE	LUI Ming Wah, Chairman
	Frank CHAN Chi Chung
	CHAN Kei Biu
	LEUNG Pak Chuen
REMUNERATION COMMITTEE	Frank CHAN Chi Chung, Chairman
	LUI Ming Wah
	CHAN Kei Biu
	Victor LO Chung Wing
	LEUNG Pak Chuen
NOMINATION COMMITTEE	Victor LO Chung Wing, Chairman
	LUI Ming Wah
	Frank CHAN Chi Chung
	CHAN Kei Biu
	LEUNG Pak Chuen
AUDITOR	Deloitte Touche Tohmatsu
SECRETARY AND REGISTERED OFFICE	Louis WONG Man Kon
	9/F, Building 12W, 12 Science Park West Avenue
	Phase 3, Hong Kong Science Park
	Pak Shek Kok, New Territories, Hong Kong
	Tel: [phone]
	Fax: [phone]
	E-mail: [e-mail]
	Website: www.goldpeak.com
SHARE REGISTRAR AND	Tricor Abacus Limited
TRANSFER OFFICE	Level 54, Hopewell Centre
	183 Queen's Road East, Hong Kong
STOCK CODES	Hong Kong Stock Exchange	40
	Bloomberg	40 HK
	Reuters	0040 HK

KEY DATES
Closure of Register:	18 to 23 December 2019
Interim Dividend:	Payable on 10 January 2020

Group Structure

Gold Peak Industries (Holdings) Limited

(Hong Kong-listed)

85.5%*

GP Industries Limited

(Singapore-listed)

GP Batteries				Automotive wire
International	Electronics &		harness and
Limited	Acoustics		other Industrial
		Investments
("GP Batteries")

Primary specialty

Primary cylindrical

Rechargeable

& others

Group Profile

Gold Peak Group is an Asian multinational group which owns high-quality industrial investments via GP Industries Limited ("GP Industries"), its major industrial investment vehicle. The Group has built renowned brand names for its major product categories, such as GP batteries, KEF premium consumer speakers and CELESTION professional speaker drivers.

The parent company, Gold Peak Industries (Holdings) Limited, was established in 1964 and has been listed on the Stock Exchange of Hong Kong since 1984. Currently, Gold Peak holds an approximately 85.5%* interest in GP Industries which is publicly listed in Singapore.

GP Industries is engaged in the development, manufacture and distribution of a wide range of products including electronics and acoustics products, and automotive wire harness. GP Batteries is engaged in the development, manufacture and marketing of batteries and battery-related products.

• As at 25 November 2019

Interim Report 2019/20

1

The Board of Directors of Gold Peak Industries (Holdings) Limited (the "Company") is pleased to announce the unaudited consolidated results of the Company and its subsidiaries (the "Group") for the six months ended 30 September 2019.

Highlights

• Revenue decreased by 7.3% to HK$3,218 million
• Profit for the period attributable to owners of the Company increased by 680.2% to HK$174.7 million
• Earnings per share: 22.26 Hong Kong cents (2018/19: 2.85 Hong Kong cents)
• Interim dividend per share: 2.0 Hong Kong cents (2018/19: 1.7 Hong Kong cents)

Summary of Results

For the six months ended 30 September 2019, the Group's revenue amounted to HK$ 3,218 million, a decrease of 7.3% as compared with HK$3,470 million for the same period last year. The unaudited consolidated profit attributable to owners of the Company amounted to HK$174.7 million, an increase of 680.2% compared to the corresponding period in the previous year. The earnings per share for the period amounted to 22.26 HK cents as compared with 2.85 HK cents for the same period last year.

Business Review

GP Industries Limited ("GP Industries") (85.5% owned by Gold Peak as at 30 September 2019)

GP Industries' revenue for the six months ending 30 September 2019 ("H1FY2020") was S$562.3 million, a 5.5% decline compared to the revenue reported for the corresponding period ending 30 September 2018 ("H1FY2019").

Despite a decrease in revenue, gross profit for H1FY2020 increased by 4.3% to S$147.8 million as gross profit margin improved from 23.8% in H1FY2019 to 26.3% in H1FY2020. This increase was mainly due to improved gross profit margin, as a result of a more favorable Chinese Renminbi against US dollar exchange rate, lower price for some raw materials, and the Management's focus on cost efficiency improvements and on better quality businesses.

GP Industries' other operating income increased by S$45.0 million in H1FY2020, mainly attributable to a gain of S$48.4 million from disposal of land and buildings by a wholly- owned subsidiary, GP Electronics (Huizhou) Co., Ltd. ("GPHC"). Other operating expenses increased by S$23.0 million, due mainly to a provision for restructuring costs of S$17.5 million for relocation of the operations of GPHC and a S$4.1 million realised loss on derivative financial instruments due to depreciation of Renminbi.

2 Gold Peak Industries (Holdings) Limited

Profit before taxation increased by S$32.2 million, from S$30.6 million to S$62.8 million. Taxation expenses increased by S$9.7 million to S$18.2 million due mainly to taxation expense on GPHC's property disposal gain.

GP Industries' profit after taxation attributable to equity holders for H1FY2020 was S$38.7 million, an increase of S$24.7 million from S$14.0 million in H1FY2019.

Batteries Business

• Revenue of the Batteries Business declined by 6.9% to S$429.3 million.
• Sales of primary batteries decreased by 9.7% while sales of rechargeable batteries increased by 9.0%.
• Sales in Asia and Americas decreased by 11.9% and 10.7% respectively while sales in Europe increased by 6.5%.
• The associates of the Batteries Business contributed more profit in aggregate.
• GP Industries' interest in STL Technology Co., Ltd ("STL") decreased from 34.27% to 30.08% as a result of new shares issued by STL and the disposal of 100,000 old STL shares in connection with the public listing of STL shares on the mainboard of the Taipei Exchange. The listing contributed to a gain of S$1.6 million for GP Industries.

Electronics and Acoustics Business

• Revenue of the Electronics and Acoustics Business increased by 1.5% to S$113.6 million.
• Sales of electronics products decreased by 0.6% while sales of acoustics products grew by 3.7%.
• Sales of acoustics products to Europe and Asia increased by 4.9% and 12.4% respectively while sales to the Americas declined by 5.1%.
• The associated companies which manufacture parts and components contributed less profit during this period.
• GPHC reported a property disposal gain of S$48.4 million and a provision for restructuring costs of S$17.5 million in connection with the relocation of part of its operations to Thailand and to set up another factory in a new location in China.

Automotive Wire Harness Business

• Revenue of the Automotive Wire Harness Business declined by 11.3% to S$19.4 million.
• Sales to the Americas and China decreased by 3.8% and 25.6% respectively.

Other Industrial Investments

• Linkz Industries Limited recorded declines in revenue and profit contribution.
• Profit contribution from Meiloon Industrial Co., Ltd. rose as revenue increased.

Interim Report 2019/20

3

Financial Review

During the period, the Group's net bank borrowings increased by HK$163 million to HK$2,139 million. As at 30 September 2019, the aggregate of the Group's shareholders' funds and non-controlling interests was HK$2,257 million and the Group's gearing ratio (the ratio of consolidated net bank borrowings to shareholders' funds and non-controlling interests) was 0.95 (31 March 2019: 0.89). The gearing ratios of the Company and GP Industries were 0.53 (31 March 2019: 0.55) and 0.61 (31 March 2019: 0.55) respectively.

At 30 September 2019, 67% (31 March 2019: 66%) of the Group's bank borrowings was

revolving or repayable within one year whereas 33% (31 March 2019: 34%) was repayable from one to five years. Most of these bank borrowings are in US dollars, Singapore dollars and Hong Kong dollars.

The Group's exposure to foreign currencies arises mainly from the net cash flow and the translation of net monetary assets or liabilities of its overseas subsidiaries. The Group continued to manage foreign exchange risks prudently. Forward contracts, borrowings in local currencies and local sourcing have been arranged to minimise the impact of currency fluctuation.

Employees and Remuneration Policies

As at 30 September 2019, the Group's major business divisions employed about 7,720 (31 March 2019: 7,940) people worldwide. Remuneration policies are reviewed regularly to ensure that compensation and benefit packages are in line with the market in the respective countries where the Group has operations.

Prospects

Amidst the US-China trade dispute and geo-political uncertainties, the Group will continue to enhance the competitiveness of its businesses by investing in technology and new product development, further automating its factories and continuing to build its brands and distribution networks in key markets. The Batteries Business is expanding the capacity for manufacturing miniature rechargeable Lithium batteries to capture market opportunities which arise from increasing popularity of IoT (internet of things) and wearable electronic devices.

As part of the strategy, the Group continues to expand its manufacturing facilities outside China to diversify its manufacturing base and to leverage on the competitive advantages of other Asian countries. The additional manufacturing facilities set up by the Batteries Business in Malaysia and Vietnam are near completion and are expected to start operation in the coming quarters. The formation of a 51%-owned subsidiary in Thailand for manufacturing electronics and acoustics products is progressing as planned and is expected to start operation in the coming quarters.

Both the Group's batteries business and audio business have experienced softened demand in many key markets during recent months. Developments regarding Brexit may also bring some uncertainties. The outcome of the US-China trade negotiations is still uncertain.

Volatility in certain raw material prices and the exchange rates of key trading currencies may also affect the Group's results while a weakened Renminbi against US dollar helps to offset some of the negative impacts of the US-China trade dispute and increases in raw material prices.

4 Gold Peak Industries (Holdings) Limited

Unaudited Condensed Consolidated Statement of Profit or Loss

		For the six months ended
		30 September
		2019		2018
	Notes	HK$'000	HK$'000
Revenue	3 & 4	3,217,933		3,469,997
Cost of sales		(2,372,119)	(2,643,274)
Gross profit		845,814		826,723
Other income	5	353,328		113,661
Selling and distribution expenses		(362,389)	(403,827)
Administrative expenses		(363,522)	(395,628)
Other expenses	6	(136,438)	(6,800)
Finance costs		(91,772)	(87,272)
Share of results of associates		86,414		70,304
Profit before taxation	7	331,435		117,161
Taxation	8	(90,746)	(35,759)
Profit for the period		240,689		81,402
Attributable to:
Owners of the Company		174,682		22,388
Non-controlling interests		66,007		59,014
		240,689		81,402
Interim dividend		15,694		13,340
Earnings per share - Basic	9	22.26 HK cents	2.85 HK cents

Interim Report 2019/20

5

Unaudited Condensed Consolidated Statement of Profit or Loss and Other Comprehensive Income

	For the six months ended
	30 September
	2019			2018
	HK$'000	HK$'000
Profit for the period	240,689			81,402
Other comprehensive expense:
Items that may be reclassified subsequently
to profit or loss:
Exchange differences arising from translation
of foreign operations	(113,204)		(160,077)
Translation deficit reclassified to profit or loss upon
deregistration of a subsidiary	(126)		-
Net change in fair value of cash flow hedges	(599)		(453)
Share of other comprehensive expense of associates	(39,540)		(73,367)
	(153,469)		(233,897)
Items that will not be reclassified subsequently to
profit or loss:
Fair value loss on equity instruments at fair value
through other comprehensive income	(1,861)		(7,322)
Other comprehensive expense for the period	(155,330)		(241,219)
Total comprehensive income (expense) for the period	85,359			(159,817)
Total comprehensive income (expense) attributable to:
Owners of the Company	63,211			(149,381)
Non-controlling interests	22,148			(10,436)
	85,359			(159,817)

6 Gold Peak Industries (Holdings) Limited

Unaudited Condensed Consolidated Statement of Financial Position

		30 September		31 March
		2019	2019
	Notes	HK$'000		HK$'000
Non-current assets
Property, plant and equipment	10	1,607,736	1,594,734
Right﹣of﹣use assets	2 & 11	173,590		-
Interests in associates		1,520,690	1,484,262
Equity instruments at fair value through
other comprehensive income		72,207	77,376
Intangible assets		1,286	1,324
Goodwill		79,066	79,066
Deferred tax assets		26,082	22,488
Non-current receivables		44,050		-
Non-current deposits		25,544	12,980
		3,550,251	3,272,230
Current assets
Inventories		1,030,447	1,056,122
Trade and other receivables and
prepayments	12	1,496,495	1,288,376
Dividend receivable		-	27,364
Taxation recoverable		16,128	21,861
Derivative financial instruments		-	87
Bank balances, deposits and cash		1,178,191	1,448,715
		3,721,261	3,842,525
Assets classified as held for sale		44,036	196,493
		3,765,297	4,039,018
Current liabilities
Creditors and accrued charges	13	1,405,928	1,567,864
Contract liabilities		6,968	15,835
Lease liabilities		62,749		-
Taxation payable		36,707	41,785
Derivative financial instruments		-	80
Obligations under finance leases - amount
due within one year		-	1,266
Bank loans and import loans		2,216,533	2,257,104
		3,728,885	3,883,934
Net current assets		36,412	155,084
Total assets less current assets		3,586,663	3,427,314

Interim Report 2019/20

7

Unaudited Condensed Consolidated Statement of Financial Position

(Continued)

		30 September		31 March
		2019	2019
	Notes	HK$'000		HK$'000
Non-current liabilities
Lease liabilities		85,628		-
Obligations under finance leases - amount
due after one year		-	3,269
Bank and other loans		1,100,879	1,167,627
Deferred tax liabilities		41,192	24,098
Provision for restructuring		99,810		-
Derivative financial instruments		2,617	2,065
		1,330,126	1,197,059
Net assets		2,256,537	2,230,255
Capital and reserves
Share capital	15	921,014	921,014
Reserves		525,354	491,476
Equity attributable to owners of the
Company		1,446,368	1,412,490
Non-controlling interests		810,169	817,765
Total equity		2,256,537	2,230,255

8 Gold Peak Industries (Holdings) Limited

Unaudited Condensed Consolidated Cash Flow Statement

	For the six months ended
	30 September
	2019		2018
	HK$'000	HK$'000
Net cash used in operating activities	(1,672)	(64,529)
Net cash (used in) from investing activities	(24,861)	312,989
Net cash (used in) from financing activities	(201,639)	1,570
(Decrease) increase in cash and cash equivalents	(228,172)	250,030
Cash and cash equivalents at beginning
of the period	1,448,715		1,059,224
Effect of foreign exchange rate changes	(42,352)	(37,872)
Cash and cash equivalents at the end
of the period	1,178,191		1,271,382
Cash and cash equivalents at the end of
the period comprise:
Bank balances, deposits and cash	1,178,191		1,272,887
Bank overdrafts	-	(1,505)
	1,178,191		1,271,382

Interim Report 2019/20

9

Unaudited Condensed Consolidated Statement of Changes in Equity

								Properties
	Share	Legal	Revaluation	Translation
	Capital	Reserve				Reserve	Reserve
	HK$'000	HK$'000				HK$'000	HK$'000
For the six months ended 30 September 2019
At 31 March 2019, as previously reported	921,014		13,601	37,804	(302,264)
Adjustments on the initial application of HKFRS 16 (Note 2)	-	-				-	-
At 1 April 2019, as restated	921,014		13,601	37,804	(302,264)
Transfer of reserves	-	-				-	-
Share of change in net assets of associates	-	-				-	-
Dividend paid
- 2019 final dividend	-	-				-	-
Dividend declared
- 2020 interim dividend	-	-				-	-
Dividend paid to non-controlling interests	-	-				-	-
Total comprehensive income for the period	-	-				-	(109,345)
At 30 September 2019	921,014		13,601	37,804	(411,609)
For the six months ended 30 September 2018
At 31 March 2018	921,014		13,601	37,804	(166,679)
Acquisition of additional interests in a subsidiary	-	-				-	-
Dividend paid
- 2018 final dividend	-	-				-	-
Dividend declared
- 2019 interim dividend	-	-				-	-
Dividend paid to non-controlling interests	-	-				-	-
Total comprehensive income for the period	-	-				-	(165,129)
At 30 September 2018	921,014		13,601	37,804	(331,808)

10 Gold Peak Industries (Holdings) Limited

						Attributable
	Investment					to Owners	Non-
Revaluation	Capital	Dividend	Hedging	Retained	of the	controlling
	Reserve	Reserve	Reserve	Reserve	Profits	Company	Interests	Total
	HK$'000	HK$'000	HK$'000	HK$'000	HK$'000	HK$'000	HK$'000	HK$'000

16,172		277,161	19,617	(1,767)	431,152	1,412,490	817,765	2,230,255
-	-	-	-	(9,716)	(9,716)	(1,170)	(10,886)
16,172		277,161	19,617	(1,767)	421,436	1,402,774	816,595	2,219,369
-	17,294	-	-	(17,294)	-	-	-
-	-	-	-	-	-	680		680
-	-	(19,617)	-	-	(19,617)	-	(19,617)
-	-	15,694	-	(15,694)	-	-	-
-	-	-	-	-	-	(29,254)	(29,254)
(1,613)	-	-	(513)	174,682	63,211		22,148	85,359
14,559		294,455	15,694	(2,280)	563,130	1,446,368	810,169	2,256,537

22,929		272,958	9,416	-	408,781	1,519,824	832,933	2,352,757
-	(802)	-	-	-	(802)	261	(541)
-	-	(9,416)	-	-	(9,416)	-	(9,416)
-	-	13,340	-	(13,340)	-	-	-
-	-	-	-	-	-	(52,428)	(52,428)
(6,259)	-	-	(387)	22,394	(149,381)	(10,436)	(159,817)
16,670		272,156	13,340	(387)	417,835	1,360,225	770,330	2,130,555

Interim Report 2019/20

11

Notes to the Unaudited Condensed Consolidated Financial Statements

1. Basis of preparation
   The unaudited condensed consolidated financial statements have been prepared in accordance with Hong Kong Accounting Standard ("HKAS") 34 "Interim financial reporting" issued by the Hong Kong Institute of Certified Public Accountants (the "HKICPA") and the applicable disclosure requirements of Appendix 16 to the Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited (the "Listing Rules").
   The financial information relating to the year ended 31 March 2019 that is included in the half-year interim report 2019/2020 as comparative information does not constitute the Company's statutory annual consolidated financial statements for that year but is derived from those financial statements. Further information relating to these statutory financial statements required to be disclosed in accordance with section 436 of the Companies Ordinance (Chapter 622 of the Laws of Hong Kong) (the "Companies Ordinance") is as follows:
   The Company has delivered the financial statements for the year ended 31 March 2019 to the Registrar of Companies as required by section 662(3) of, and Part 3 of Schedule 6 to, the Companies Ordinance.
   The Company's auditor has reported on the financial statements for the year ended 31 March 2019. The auditor's report was unqualified; did not include a reference to any matters to which the auditor drew attention by way of emphasis without qualifying its report; and did not contain a statement under sections 406(2), 407(2) or (3) of the Companies Ordinance.
2. Principal accounting policies
   The condensed consolidated financial statements have been prepared on the historical cost basis except for certain properties and financial instruments, which are measured at fair values or revalued amounts, as appropriate.
   Other than changes in accounting policies resulting from application of new Hong Kong Financial Reporting Standard ("HKFRS"), the accounting policies and method of computation used in the unaudited condensed consolidated financial statements for the six months ended 30 September 2019 are the same as those followed in the preparation of the Group's annual financial statements for the year ended 31 March 2019.
   Application of new and amendments to HKFRSs
   In the current interim period, the Group has applied, for the first time, the following new and amendments to HKFRSs and an interpretation issued by the HKICPA which are mandatorily effective for the annual period beginning on or after 1 April 2019 for the preparation of the Group's condensed consolidated financial statements:

HKFRS 16 HK(IFRIC)-Int 23 Amendments to HKFRS 9 Amendments to HKAS 19 Amendments to HKAS 28 Amendments to HKFRSs

Leases

Uncertainty over Income Tax Treatments Prepayment Features with Negative Compensation Plan Amendment, Curtailment or Settlement Long-term Interests in Associates and Joint Ventures Annual Improvements to HKFRSs 2015-2017 Cycle

Except as described below, the application of the new and amendments to HKFRSs and an interpretation in the current period has had no material impact on the Group's financial performance and positions for the current and prior periods and/or on the disclosures set out in these condensed consolidated financial statements.

12 Gold Peak Industries (Holdings) Limited

Notes to the Unaudited Condensed Consolidated Financial Statements

(Continued)

2. Principal accounting policies (Continued)

2.1 Impacts and changes in accounting policies of application on HKFRS 16 Leases

The Group has applied HKFRS 16 for the first time in the current interim period. HKFRS 16 superseded HKAS 17 Leases ("HKAS 17"), and the related interpretations.

2.1.1 Key changes in accounting policies resulting from application of HKFRS 16

The Group applied the following accounting policies in accordance with the transition provisions of HKFRS 16.

Definition of a lease

A contract is, or contains, a lease if the contract conveys the right to control the use of an identified asset for a period of time in exchange for consideration.

The Group assesses whether a contract is or contains a lease based on the definition under HKFRS 16 at inception or modification date. Such contract will not be reassessed unless the terms and conditions of the contract are subsequently changed.

As a lessee

Allocation of consideration to components of a contract

For a contract that contains a lease component and one or more additional lease or non-lease components, the Group allocates the consideration in the contract to each lease component on the basis of the relative stand-alone price of the lease component and the aggregate stand-alone price of the non-lease components.

Short-term leases and leases of low-value assets

The Group applies the short-term lease recognition exemption to leases of land and building, furniture and fixtures, plant and machinery and motor vehicles that have a lease term of 12 months or less from the commencement date and do not contain a purchase option. It also applies the recognition exemption for lease of low-value assets. Lease payments on short-term leases and leases of low-value assets are recognised as expense on a straight-line basis over the lease term.

Interim Report 2019/20

13

Notes to the Unaudited Condensed Consolidated Financial Statements

(Continued)

2. Principal accounting policies (Continued)

2.1 Impacts and changes in accounting policies of application on HKFRS 16 Leases (Continued)

2.1.1 Key changes in accounting policies resulting from application of HKFRS 16 (Continued) As a lessee (Continued)

Right﹣of﹣use assets

Except for short-term leases and leases of low value assets, the Group recognises right﹣of﹣use assets at the commencement date of the lease (i.e. the date the underlying asset is available for use). Right﹣of﹣use assets are measured at cost, less any accumulated depreciation and impairment losses, and adjusted for any remeasurement of lease liabilities.

The cost of right﹣of﹣use asset includes:

• the amount of the initial measurement of the lease liability;
• any lease payments made at or before the commencement date, less any lease incentives received;
• any initial direct costs incurred by the Group; and
• an estimate of costs to be incurred by the Group in dismantling and removing the underlying assets, restoring the site on which it is located or restoring the underlying asset to the condition required by the terms and conditions of the lease.

Right﹣of﹣use assets in which the Group is reasonably certain to obtain ownership of the underlying leased assets at the end of the lease term is depreciated from commencement date to the end of the useful life. Otherwise, right﹣of﹣use assets are depreciated on a straight-line basis over the shorter of its estimated useful life and the lease term.

The Group presents right﹣of﹣use assets as a separate line item on the consolidated statement of financial position.

Leasehold land and building

For payments of a property interest which includes both leasehold land and building elements, the entire property is presented as property, plant and equipment of the Group when the payments cannot be allocated reliably between the leasehold land and building elements, except for those that are classified and accounted for as investment properties.

Refundable rental deposits

Refundable rental deposits paid are accounted under HKFRS 9 Financial Instruments ("HKFRS 9") and initially measured at fair value. Adjustments to fair value at initial recognition are considered as additional lease payments and included in the cost of right﹣of﹣use assets.

Lease liabilities

At the commencement date of a lease, the Group recognises and measures the lease liability at the present value of lease payments that are unpaid at that date. In calculating the present value of lease payments, the Group uses the incremental borrowing rate at the lease commencement date if the interest rate implicit in the lease is not readily determinable.

The lease payments include:

• fixed payments (including in-substance fixed payments) less any lease incentives receivable;
• variable lease payments that depend on an index or a rate;

14 Gold Peak Industries (Holdings) Limited

Notes to the Unaudited Condensed Consolidated Financial Statements

(Continued)

2. Principal accounting policies (Continued)

2.1 Impacts and changes in accounting policies of application on HKFRS 16 Leases (Continued)

2.1.1 Key changes in accounting policies resulting from application of HKFRS 16 (Continued) As a lessee (Continued)

Lease liabilities (Continued)

• amounts expected to be paid under residual value guarantees;
• the exercise price of a purchase option reasonably certain to be exercised by the Group; and
• payments of penalties for terminating a lease, if the lease term reflects the Group exercising the option to terminate.

After the commencement date, lease liabilities are adjusted by interest accretion and lease payments.

The Group remeasures lease liabilities (and makes a corresponding adjustment to the related right﹣of﹣use assets) whenever the lease term has changed or there is a change in the assessment of exercise of a purchase option, in which case the related lease liability is remeasured by discounting the revised lease payments using a revised discount rate at the date of reassessment.

Lease modifications

The Group accounts for a lease modification as a separate lease if:

• the modification increases the scope of the lease by adding the right to use one or more underlying assets; and
• the consideration for the leases increases by an amount commensurate with the stand-alone price for the increase in scope and any appropriate adjustments to that stand-alone price to reflect the circumstances of the particular contract.

For a lease modification that is not accounted for as a separate lease, the Group remeasures the lease liability based on the lease term of the modified lease by discounting the revised lease payments using a revised discount rate at the effective date of the modification.

Taxation

For the purposes of measuring deferred tax for leasing transactions in which the Group recognises the right﹣of﹣use assets and the related lease liabilities, the Group first determines whether the tax deductions are attributable to the right﹣of﹣use assets or the lease liabilities.

For leasing transactions in which the tax deductions are attributable to the lease liabilities, the Group applies HKAS 12 "Income Taxes" requirements to right﹣of﹣use assets and lease liabilities separately. Temporary differences relating to right﹣of﹣use assets and lease liabilities are not recognised at initial recognition and over the lease terms due to application of the initial recognition exemption.

Sales and leaseback transactions

In accordance with the transition provisions of HKFRS 16, sale and leaseback transactions entered into before the date of initial application were not reassessed. Upon application of HKFRS 16, the Group applies the requirements of HKFRS 15 to assess whether sales and leaseback transaction constitutes a sale. During the period, the Group entered into a sale and leaseback transaction in relation to certain land and buildings. The transactions fulfils HKFRS 15 criteria for the disposal of property, plant and equipment under HKAS 16 and the sales and leaseback period will be accounted according to HKFRS 16.

Interim Report 2019/20

15

Notes to the Unaudited Condensed Consolidated Financial Statements

(Continued)

2. Principal accounting policies (Continued)

2.1 Impacts and changes in accounting policies of application on HKFRS 16 Leases (Continued)

2.1.2 Transition and summary of effects arising from initial application of HKFRS 16 Definition of a lease

The Group has elected the practical expedient to apply HKFRS 16 to contracts that were previously identified as leases applying HKAS 17 and HK(IFRIC)-Int 4 Determining whether an Arrangement contains a Lease and not apply these standards to contracts that were not previously identified as containing a lease. Therefore, the Group has not reassessed contracts which already existed prior to the date of initial application.

For contracts entered into or modified on or after 1 April 2019, the Group applies the definition of a lease in accordance with the requirements set out in HKFRS 16 in assessing whether a contract contains a lease.

As a lessee

The Group has applied HKFRS 16 retrospectively with the cumulative effect recognised at the date of initial application, 1 April 2019. Any difference at the date of initial application is recognised in the opening retained profits and comparative information has not been restated.

When applying the modified retrospective approach under HKFRS 16 at transition, the Group applied the following practical expedients to leases previously classified as operating leases under HKAS 17, on lease-by-lease basis, to the extent relevant to the respective lease contracts:

1. relied on the assessment of whether leases are onerous by applying HKAS 37 Provisions, Contingent Liabilities and Contingent Assets as an alternative of impairment review;
2. elected not to recognise right﹣of﹣use assets and lease liabilities for leases with lease term ending within 12 months of the date of initial application;
3. excluded initial direct costs from measuring the right﹣of﹣use assets at the date of initial application;
4. applied a single discount rate to a portfolio of leases with a similar remaining terms for similar class of underlying assets in similar economic environment; and
5. used hindsight based on facts and circumstances as at date of initial application in determining the lease term for the Group's leases with extension and termination options.

On transition, the Group has made the following adjustments upon application of HKFRS 16:

As at 1 April 2019, the Group recognised additional lease liabilities and measured right﹣of﹣use assets at the carrying amounts as if HKFRS 16 had been applied since commencement dates, but discounted using the incremental borrowing rates of the relevant group entities at the date of initial application by applying HKFRS 16.C8(b)(i) transition.

16 Gold Peak Industries (Holdings) Limited

Notes to the Unaudited Condensed Consolidated Financial Statements

(Continued)

2. Principal accounting policies (Continued)

2.1 Impacts and changes in accounting policies of application on HKFRS 16 Leases (Continued)

2.1.2 Transition and summary of effects arising from initial application of HKFRS 16 (Continued) As a lessee (Continued)

When recognising the lease liabilities for leases previously classified as operating leases, the Group has applied incremental borrowing rates of the relevant group entities at the date of initial application. The weighted average incremental borrowing rate applied is approximately 4.6%.

Operating lease commitments disclosed as at 31 March 2019

Lease liabilities discounted at relevant incremental borrowing rates Less: Recognition exemption - short-term leases

Recognition exemption - low value assets

Others

Lease liabilities relating to operating leases recognised upon application of HKFRS 16

Add: Obligations under finance leases recognised at 31 March 2019 (note a)

Lease liabilities as at 1 April 2019

Analysed as

Current

Non-current

At

1 April 2019

HK$'000

133,031

125,292

(6,913)

(307)

(46)

118,026

4,535

122,561

53,313

69,248

122,561

Interim Report 2019/20

17

Notes to the Unaudited Condensed Consolidated Financial Statements

(Continued)

2. Principal accounting policies (Continued)

2.1 Impacts and changes in accounting policies of application on HKFRS 16 Leases (Continued)

2.1.2 Transition and summary of effects arising from initial application of HKFRS 16 (Continued) As a lessee (Continued)

The carrying amount of right﹣of﹣use assets as at 1 April 2019 comprises the following:

		Right-of-use
		assets
		HK$'000
Right﹣of﹣use assets relating to operating leases recognised upon application
of HKFRS 16	107,227
Amounts included in property, plant and equipment under HKAS 17
- Assets previously under finance leases (note a)	20,166
Adjustment included in property, plant and equipment under HKAS 17
- Restoration and reinstatement costs	1,157
Adjustment on rental deposits at 1 April 2019 (note b)	676
	129,226
By class:
Land and buildings	105,200
Machinery & equipment	18,446
Motor vehicles	5,272
Office equipment	308
	129,226

Note:(a) In relation to assets previously under finance leases, the Group recategorised the carrying amounts of the relevant assets which were still under lease as at 1 April 2019 amounting to HK$ 20,166,000 as right﹣of﹣use assets. In addition, the Group reclassified the obligations under finance leases of HK$1,266,000 and HK$3,269,000 to lease liabilities as current and non-current liabilities respectively at 1 April 2019.

1. Before the application of HKFRS 16, the Group considered refundable rental deposits paid as rights and obligations under leases to which HKAS 17 applied. Based on the definition of lease payments under HKFRS 16, such deposits are not payments relating to the right to use of the underlying assets and were adjusted to reflect the discounting effect at transition. Accordingly, HK$676,000 was adjusted to refundable rental deposits paid and right﹣of﹣use assets.

The following table summarises the impact of transition to HKFRS 16 on retained profits at 1 April 2019.

		Impact of
		adopting
		HKFRS 16 at
		1 April 2019
		HK$'000
Retained profits
Recognition of the differences between right﹣of﹣use assets and lease liabilities	9,716

18 Gold Peak Industries (Holdings) Limited

Notes to the Unaudited Condensed Consolidated Financial Statements

(Continued)

2. Principal accounting policies (Continued)

2.1 Impacts and changes in accounting policies of application on HKFRS 16 Leases (Continued)

2.1.2 Transition and summary of effects arising from initial application of HKFRS 16 (Continued) As a lessee (Continued)

The following adjustments were made to the amounts recognised in the consolidated statement of financial position at 1 April 2019. Line items that were not affected by the changes have not been included.

	Carrying
	amounts		Carrying
	previously	Impacts of	amounts under
	reported at	adopting	HKFRS 16 at
	31 March 2019	HKFRS 16	1 April 2019
	HK$'000	HK$'000	HK$'000
Non-current assets
Property, plant and equipment	1,594,734	(21,323)	1,573,411
Right﹣of﹣use assets	-	129,226	129,226
Interests in associates	1,484,262	(87)	1,484,175
Current assets
Trade and other receivables and
prepayments	1,288,376	(676)	1,287,700
Current liabilities
Lease liabilities	-	53,313	53,313
Obligations under finance leases -
amount due within one year	1,266	(1,266)	-
Non-current liabilities
Lease liabilities	-	69,248	69,248
Obligations under finance leases -
amount due after one year	3,269	(3,269)	-
Capital and reserves
Retained profits	431,152	(9,716)	421,436
Non-controlling interests	817,765	(1,170)	816,595

Note: For the purpose of reporting cash flows from operating activities under indirect method for the six months ended 30 September 2019, movements in working capital have been computed based on opening statement of financial position as at 1 April 2019 as disclosed above.

As a lessor

In accordance with the transitional provisions in HKFRS 16, the Group is not required to make any adjustment on transition for leases in which the Group is a lessor but account for these leases in accordance with HKFRS 16 from the date of initial application and comparative information has not been restated.

Interim Report 2019/20

19

Notes to the Unaudited Condensed Consolidated Financial Statements

(Continued)

3. Segment information

The following is an analysis of the Group's revenue and results by operating segments and reporting segments for the period under review:

For the six months ended 30 September 2019

									Total
							Other	reportable
	Electronics	Batteries	investments	segments	Eliminations	Total
		HK$'000	HK$'000		HK$'000	HK$'000		HK$'000	HK$'000
Revenue
External sales	761,402	2,456,531		-	3,217,933		-	3,217,933
Inter-segment sales	11		34			-	45		(45)	-
Segment revenue	761,413	2,456,565		-	3,217,978	(45)	3,217,933
Results
Segment results	336,930	217,608	(16)	-		-	554,522
Interest income														9,424
Other expenses														(136,438)
Finance costs														(91,772)
Unallocated expenses														(4,301)
Profit before taxation														331,435
For the six months ended 30 September 2018
									Total
							Other	reportable
		Electronics	Batteries	investments	segments	Eliminations	Total
		HK$'000	HK$'000		HK$'000	HK$'000		HK$'000	HK$'000
Revenue
External sales	780,589	2,689,408		-	3,469,997		-	3,469,997
Inter-segment sales	6		-		-	6	(6)	-
Segment revenue	780,595	2,689,408		-	3,470,003	(6)	3,469,997
Results
Segment results	61,487	181,445	(16)	-		-	242,916
Interest income														5,732
Other expenses														(6,800)
Finance costs														(87,272)
Unallocated expenses														(37,415)
Profit before taxation														117,161

20 Gold Peak Industries (Holdings) Limited

Notes to the Unaudited Condensed Consolidated Financial Statements

(Continued)

4. Revenue

The following is an analysis of the Group's revenue recognised at a point in time from its major products:

	For the six months ended
	30 September
	2019			2018
	HK$'000	HK$'000
Electronics segment:
Electronics and acoustics products	650,299			652,897
Automotive wire harness products	111,103			127,692
	761,402			780,589
Batteries segment:
Batteries and battery related products	2,456,531			2,689,408
Revenue from contracts with customers	3,217,933			3,469,997

The following table provides an analysis of the Group's revenue from external customers based on location of customers:

	For the six months ended
	30 September
	2019			2018
	HK$'000	HK$'000
The PRC
- Hong Kong	198,967			205,600
- Mainland China	1,046,990		1,182,732
Other Asian countries	210,519			290,676
Europe	939,784			904,199
Americas	781,407			835,401
Others	40,266			51,389
	3,217,933			3,469,997

Interim Report 2019/20

21

Notes to the Unaudited Condensed Consolidated Financial Statements

(Continued)

5. Other income

For the six months ended

30 September

20192018

HK$'000 HK$'000

Other income includes:

Gain on disposal of property, plant and equipment and assets classified as held for sale

Compensation income

Gain from deemed disposal/partial disposal of interest in associates Exchange gain

1. Other expenses
   Other expenses include:
   Realised loss on derivative financial instruments Restructuring charges
   Closure and relocation costs
2. Profit before taxation
   Profit before taxation has been arrived at after charging:
   Amortisation of intangible assets Depreciation of property, plant and equipment Depreciation of right﹣of﹣use assets
3. Taxation

277,257	3,286
-	46,308
9,286		-
24,863	39,161

For the six months ended

30 September

20192018

HK$'000 HK$'000

23,428		-
99,810		-
13,200	6,800

For the six months ended

30 September

20192018

HK$'000 HK$'000

3838

76,94181,376

31,565-

For the six months ended

30 September

20192018

HK$'000 HK$'000

Hong Kong Profits Tax	5,311	1,199
Taxation in jurisdictions other than Hong Kong	72,450	39,708
Deferred taxation	12,985	(5,148)
	90,746	35,759

Hong Kong Profits Tax is calculated at 16.5% (six months ended 30 September 2018: 16.5%) of the estimated assessable profit for the period.

Taxation in jurisdictions other than Hong Kong is calculated at the rates prevailing in the respective jurisdictions.

22 Gold Peak Industries (Holdings) Limited

Notes to the Unaudited Condensed Consolidated Financial Statements

(Continued)

9. Earnings per share

The calculation of the basic earnings per share attributable to the owners of the Company is based on the following data:

	For the six months ended
	30 September
	2019			2018
	HK$'000	HK$'000
Earnings
Profit for the period attributable to owners of the Company	174,682			22,388
	'000	'000
Number of shares
Number of shares in issue during the period for the purpose of
basic earnings per share	784,693			784,693

No computation of diluted earnings per share for the periods ended 30 September 2019 and 30 September 2018 is disclosed as there are no potential ordinary shares in issue during both periods.

1. Property, plant and equipment
   During the period, the Group spent approximately HK$210,172,000 (six months ended 30 September 2018: HK$98,388,000) on property, plant and equipment to expand its business.
2. Right﹣of﹣use assets
   During the period, a wholly-owned subsidiary of GP Industries, GP Electronics (Huizhou) Co., Ltd. ("GPHC") disposed of certain land and buildings located in Huizhou, China ("the Disposed Property"). The Disposed Property was classified under assets classified as held for sale as at 31 March 2019. The disposal agreement allows GPHC to continue to use the Disposed Property without paying any rent for a period of five years from June 2019 to June 2024. The market value of the expected rent free use of the Disposed Property from June 2019 to June 2022, the intended removal date, is HK$36,592,000. As such, the Group recognised right﹣of﹣use assets of HK$36,592,000 for the expected rent free use of the Disposed Property.
   During the period, the Group also entered into other new lease agreements for the use of land and buildings, machinery and equipment, motor vehicles and office equipment. The Group is required to make periodic payments. On lease commencement, the Group recognised right﹣of﹣use assets of HK$40,831,000 and lease liabilities of HK$40,453,000.
3. Trade and other receivables and prepayments
   The Group allows its trade customers with credit periods normally ranging from 30 days to 120 days. The following is an aging analysis of trade and bills receivables at the end of the reporting period:

	30 September	31 March
	2019		2019
	HK$'000	HK$'000
Trade and bills receivables	1,076,426	953,353
Less: Allowance for credit losses	(23,049)	(24,224)
	1,053,377		929,129
Other receivables, deposits and prepayments	468,662		372,227
	1,522,039		1,301,356
Less: Non current portion of deposits	(25,544)	(12,980)
	1,496,495		1,288,376

Interim Report 2019/20

23

Notes to the Unaudited Condensed Consolidated Financial Statements

(Continued)

12. Trade and other receivables and prepayments (Continued)

	30 September		31 March
	2019	2019
	HK$'000		HK$'000
Trade and bills receivables
0-60 days	821,151	681,073
61-90 days	73,731	83,477
Over 90 days	158,495	164,579
	1,053,377	929,129

13. Creditors and accrued charges

The following is an aging analysis of creditors at the end of the reporting period:

	30 September		31 March
	2019	2019
	HK$'000		HK$'000
Trade payables
0-60 days	775,210	696,145
61-90 days	108,641	109,085
Over 90 days	55,916	70,125
	939,767	875,355
Other payables and accrued charges	466,161	692,509
	1,405,928	1,567,864

14. Fair value measurement of financial instruments

Some of the Group's financial assets are measured at fair value at the end of each reporting period. The following table gives information about how the fair values of these financial assets are determined (in particular, the valuation technique(s) and inputs used), as well as the level of the fair value hierarchy into which the fair value measurements are categorised (levels 1 to 3) based on the degree to which the inputs to the fair value measurements is observable.

• Level 1 fair value measurements are those derived from quoted prices (unadjusted) in active market for identical assets or liabilities.
• Level 2 fair value measurements are those derived from inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly (i.e. as prices) or indirectly (i.e. derived from prices).
• Level 3 fair value measurements are those derived from valuation techniques that include inputs for the asset or liability that are not based on observable market data (unobservable inputs).

24 Gold Peak Industries (Holdings) Limited

Notes to the Unaudited Condensed Consolidated Financial Statements

(Continued)

14. Fair value measurement of financial instruments (Continued)

					Basis of fair value		Relationship of
		Fair value as at		measurement /	Significant	unobservable
Financial assets/	30 September	31 March	Fair value	valuation technique(s)	unobservable	input(s) to
financial liabilities	2019	2019	hierarchy	and key input(s)	input(s)	fair value
		HK$'000	HK$'000
1.	Listed equity	10,529	11,490	Level 2	The fair value of the equity	N/A	N/A
	securities classified				securities is estimated by the
	as equity instrument				price quotation available on the
	at fair value through				Emerging Market Board in Taiwan,
	other comprehensive				which does not trade actively.
	income ("FVTOCI")
2.	Foreign currency	Assets	Assets	Level 2	Discounted cash flow.	N/A	N/A
	forward contracts	-	87
	classified as				Future cash flows are estimated
	derivative financial	Liabilities	Liabilities		based on closing forward
	instruments	-	80		price (from observable forward
					exchange rate at the end of the
					reporting period) and contract
					forward rates, discounted at a
					rate that reflects the credit risk of
					various counterparties.
3.	Interest rate swap	Liabilities	Liabilities	Level 2	Discounted cash flow.	N/A	N/A
	contract classified as	(under hedge	(under hedge
	derivative financial	accounting)	accounting)		Future cash flows are estimated
	instruments	2,617	2,065		based on forward interest rates
					(from observable yield curves at
					the end of the reporting period)
					and contracted interest rates,
					discounted at an applicable
					discount rate taking into account
					the credit risk of the counter-
					parties and of the Group as
					appropriate.
4.	Equity instruments at	52,687	56,141	Level 3	Asset-based approach.	Price per square	The higher the
	FVTOCI					meter. Using	price per square
					The fair value of the target	market direct	meter, the higher
					company was determined by the	comparable	the fair value.
					asset-based approach using the	and taking into
					adjusted net asset value. Net	account of
					asset value of the target company	location and
					was adjusted through fair value	other individual
					adjustments held by the target	factors such as
					company primarily by the direct	size, building
					comparison approach.	facilities, levels,
						age of building,
						etc.

Interim Report 2019/20

25

Notes to the Unaudited Condensed Consolidated Financial Statements

(Continued)

14. Fair value measurement of financial instruments (Continued)

					Basis of fair value		Relationship of
		Fair value as at		measurement /	Significant	unobservable
Financial assets/	30 September	31 March	Fair value	valuation technique(s)	unobservable	input(s) to
financial liabilities	2019	2019	hierarchy	and key input(s)	input(s)	fair value
		HK$'000	HK$'000
5.	Equity instruments at	4,738	5,267	Level 3	Market approach.	The discount	The higher the
	FVTOCI					of lack of	discount of lack
					The market approach was used	marketability	of marketability,
					to determine the valuation by the	and applied	the lower the fair
					average estimated values using	multiples.	value.
					the following multiples: enterprise
					value to earnings before		The higher the
					interest, taxes, depreciation and		applied multiples,
					amortisation ratio, enterprise		the higher the
					value to earnings before interest,		fair value.
					taxes ratio and price to earning
					ratio of selected comparable
					listed companies in a similar
					business and similar business
					model and adjusted for the lack of
					marketability.
6.	Equity instruments at	4,253	4,478	Level 3	Combination of asset-based	The discount	The higher the
	FVTOCI				approach and market approach.	of lack of	discount of lack
						marketability	of marketability,
					The fair value of the target	and applied	the lower the fair
					company was determined by	multiples.	value.
					the asset-based approach using
					the adjusted net asset value		The higher the
					with adjustments for the lack of		applied multiples,
					marketability. Net asset value of		the higher the
					the target company was adjusted		fair value.
					through fair value adjustments of
					each sub-entity held by the target
					company primarily by the market
					approach using enterprise value
					to sales ratio or enterprise value
					to earnings before interest, taxes
					ratio of selected comparable
					listed companies in a similar
					business and similar business
					model and adjusted for the lack of
					marketability.

There is no transfer between different levels of the fair value hierarchy during the six months ended 30 September 2019 and the year ended 31 March 2019.

The fair value of other financial assets and financial liabilities are determined in accordance with general accepted pricing models based on discounted cash flow analysis. The directors of the Company consider that the carrying amounts of these financial assets and financial liabilities recorded at amortised cost approximate their fair values.

26 Gold Peak Industries (Holdings) Limited

Notes to the Unaudited Condensed Consolidated Financial Statements

(Continued)

15. Share Capital
	Number of
	shares
	'000		HK$'000
Issued and fully paid ordinary shares:
At 1 April 2018, 30 September 2018, 31 March 2019 and
30 September 2019	784,693	921,014

There were no changes in the Company's issued and fully paid share capital in both periods.

16. Contingencies and commitments
(a)	Contingent liabilities
		30 September	31 March
		2019		2019
		HK$'000	HK$'000
	Guarantees given to banks in respect of
	banking facilities to associates	16,517		16,538
	Others	7,840		7,850
(b)	Capital commitments
		30 September	31 March
		2019		2019
		HK$'000	HK$'000
	Capital expenditure in respect of acquisition of property,
	plant and equipment contracted for but not provided in the
	unaudited condensed consolidated financial statements	38,119		17,550

17. Related party transactions

During the period, the Group entered into the following transactions with its associates:

	For the six months ended
	30 September
	2019			2018
	HK$'000	HK$'000
Sales to associates	75,526			90,608
Purchases from associates	244,210			250,170
Management fee income received from associates	1,403			1,379

As at the end of the reporting period, the Group has the following balances with its associates under trade and other receivables and prepayments and creditors and accrued charges:

	30 September	31 March
	2019		2019
	HK$'000	HK$'000
Trade receivables due from associates	89,561		93,901
Other receivables due from associates	5,890		4,339
Trade payables due to associates	93,517		110,774
Other payables due to associates	1,577		1,008

Interim Report 2019/20

27

Interim Dividend

The Directors have declared an interim dividend of 2.0 HK cents (2018/19: 1.7 HK cents) per share. This amounts to a total dividend payment of approximately HK$15,694,000 (2018/19: HK$13,340,000) based on the total number of shares in issue as at 25 November 2019, being the latest practicable date prior to the publication of the announcement of the interim results. Dividend will be paid on 10 January 2020 to registered shareholders of the Company as at 23 December 2019.

Closure of Register

The Register of Shareholders of the Company will be closed from 18 to 23 December 2019, both days inclusive, for the purpose of distributing dividends. No transfer of shareholding will be effected during this period.

In order to qualify for the interim dividend, all transfers accompanied by the relevant share certificates must be lodged with the Company's Registrar, Tricor Abacus Limited at Level 54, Hopewell Centre, 183 Queen's Road East, Hong Kong not later than 4:30 p.m. on 17 December 2019.

Disclosure of Interest

As at 30 September 2019, the interests and short positions of the directors and the chief executive of the Company in the shares, underlying shares and debentures of the Company and any of its associated corporations (within the meaning of Part XV of the Securities and Futures Ordinance (the "SFO")) which were required to be 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 SFO (including interests and short positions which they were taken or deemed to have under such provisions of the SFO) or which were required, pursuant to section 352 of the SFO, to be entered in the register referred to therein, or which were required, pursuant to Appendix 10 "Model Code for Securities Transactions by Directors of Listed Issuers" set out in the Listing Rules to be notified to the Company and the Stock Exchange were as follows:

28 Gold Peak Industries (Holdings) Limited

Disclosure of Interest (Continued)

Directors' and Chief Executive's Interests in Securities of the Company and its Associated Corporations

1. Interests in shares of the Company (long positions)
   As at 30 September 2019, the interests of the directors and the chief executive in the ordinary share of the Company were as follows:

		Number of
		ordinary	Percentage of
		shares held
		issued share
		Personal	capital of
Name of director	interests	the Company
				%
Victor LO Chung Wing	194,788,054	24.82
Richard KU Yuk Hing	2,629,684	0.34
Brian LI Yiu Cheung	300,000	0.04
Michael LAM Hin Lap	-	-
Brian WONG Tze Hang	-	-
LEUNG Pak Chuen	4,575,114	0.58
LUI Ming Wah	-	-
Frank CHAN Chi Chung	-	-
CHAN Kei Biu	-	-
Timothy TONG Wai Cheung	-	-
Karen NG Ka Fai	40,646,524	5.18

Interim Report 2019/20

29

Disclosure of Interest (Continued)

1. Interests in shares of the Company's associated corporations (long positions)
   As at 30 September 2019, the direct beneficial interests of the directors and the chief executive in the shares of Gold Peak Industries (Taiwan) Limited ("GPIT"), a 79.6% owned subsidiary of GP Industries Limited ("GP Ind"), and GP Ind, an 85.5% owned subsidiary of the Company, were as follows:

		Number of ordinary shares and
		percentage of their issued share capital held
		GPIT			GP Ind
Name of director	Number	%	Number	%
Victor LO Chung Wing	-	-	300,000	0.06
Richard KU Yuk Hing	200,000	0.10		340,000	0.07
Brian LI Yiu Cheung	-	-	1,465,000	0.30
Michael LAM Hin Lap	-	-	-	-
Brian WONG Tze Hang	-	-	-	-
LEUNG Pak Chuen	-	-	1,608,000	0.33
LUI Ming Wah	-	-	-	-
Frank CHAN Chi Chung	-	-	-	-
CHAN Kei Biu	-	-	-	-
Timothy TONG Wai Cheung	-	-	-	-
Karen NG Ka Fai	276,667	0.14		94,603	0.02

Saved as disclosed above, as at 30 September 2019, none of the directors or chief executive of the Company had any interest or short position 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 Divisions 7 and 8 of Part XV of the SFO (including interests and short positions which they were taken or deemed to have under such provisions of the SFO) or which were required, pursuant to section 352 of the SFO, to be entered in the register referred to therein, or which were required, pursuant to Appendix 10 "Model Code for Securities Transactions by Directors of Listed Issuers" set out in the Listing Rules, to be notified to the Company and the Stock Exchange.

30 Gold Peak Industries (Holdings) Limited

Substantial Shareholders

As at 30 September 2019, the following persons (not being a director or chief executive of the Company) had an interest or short position in the shares or underlying shares of the Company which would fall to be disclosed to the Company under section 336 of the SFO, or who were, directly or indirectly, interested in 5% or more of the issued share capital carrying rights to vote in all circumstances at general meetings of the Company:

						Percentage of
				Number of		issued share
				ordinary	capital of the
Name of shareholder		Capacity		shares held		Company
TO May Mee		Beneficial owner	81,888,764	10.44%
				(Note 1)
Jessica NG Sheen Fai		Beneficial owner	40,646,524	5.18%
				(Note 1)
Ring Lotus Investment Limited		Interests of controlled	60,288,143	7.68%
("Ring Lotus")		corporation		(Note 2)
HSBC International Trustee		Trustee	60,288,143	7.68%
Limited ("HSBC Trustee")				(Note 2)

Notes:

1. Madam TO May Mee and Ms. Jessica NG Sheen Fai are the mother and sister, respectively, of Ms. Karen NG Ka Fai, a non-executive director of the Company.
2. According to the two corporate substantial shareholder notices filed by Ring Lotus and HSBC Trustee respectively, HSBC Trustee was deemed to be interested in 60,288,143 shares in its capacity as the trustee of these shares, which were in turn owned by Ring Lotus, a company wholly-owned by HSBC Trustee, as interests of controlled corporation.

Saved as disclosed above, as at 30 September 2019, the directors and the chief executive of the Company are not aware of any person (other than a director or chief executive of the Company) who had any interest or short position in the shares or underlying shares of the Company which would fall to be disclosed to the Company under the provisions of Part XV of the SFO, or who was, directly or indirectly, interested in 5% or more of the issued share capital carrying rights to vote in all circumstances at general meetings of the Company.

Purchase, Sale or Redemption of the Company's Listed Securities

Neither the Company nor any of its subsidiaries purchased, sold or redeemed any of the Company's listed securities during the six months ended 30 September 2019.

Interim Report 2019/20

31

Corporate Governance Practices

The Company has complied with the code provisions of the Code on Corporate Governance Practices as set out in Appendix 14 of the Listing Rules during the six months ended 30 September 2019, except for the deviation from Code Provision A.2.1 which stipulates that the roles of chairman and chief executive officer should be separate and should not be performed by the same individual. Mr. Victor LO Chung Wing is currently the Chairman and Chief Executive of the Company. The Board considers that the present structure will not impair the balance of power and authority between the Board and the management of the Group as the Group's principal businesses are separately listed and run by a different board of directors.

Directors' Dealing in Securities of the Company

The Company has adopted the "Model Code for Securities Transactions by Directors of Listed Issuers" set out in Appendix 10 to the Listing Rules (the "Model Code") as its code of conduct regarding the directors' securities transactions. Having made specific enquiry of all directors of the Company, the Company confirmed that all directors have complied with the required standards set out in the Model Code during the six months ended 30 September 2019.

Audit Committee

The Company has an audit committee which was established in compliance with Rule

3.21 of the Listing Rules for the purpose of reviewing and providing supervision over the Group's financial reporting process and internal controls. The audit committee comprises three independent non-executive directors and one non-executive director of the Company. The unaudited condensed consolidated financial statements for the six months ended 30 September 2019 have been reviewed by the Company's audit committee.

Board of Directors

As at the date of this report, the Board of Directors of the Company consists of Messrs. Victor LO Chung Wing (Chairman & Chief Executive), Richard KU Yuk Hing, Brian LI Yiu Cheung, Michael LAM Hin Lap and Brian WONG Tze Hang as Executive Directors, Messrs. LUI Ming Wah, Frank CHAN Chi Chung, CHAN Kei Biu and Timothy TONG Wai Cheung as Independent Non-Executive Directors, Mr. LEUNG Pak Chuen (Non-Executive Vice Chairman) and Ms. Karen NG Ka Fai as Non-Executive Directors.

By Order of the Board

Louis WONG Man Kon

Company Secretary

Hong Kong, 26 November 2019

www.goldpeak.com

32 Gold Peak Industries (Holdings) Limited