Golden Power : Interim Report 2020

I N T E R I M R E P O R T 2 0 2 0

Golden Power Group Holdings Limited

金力集團控股有限公司

(Incorporated in the Cayman Islands with limited liability) Stock Code : 3919

FINANCIAL HIGHLIGHTS

• The Group recorded an unaudited revenue of approximately HK$148.36 million for the six months ended 30 June 2020 (six months ended 30 June 2019: approximately HK$156.41 million), representing a decrease of approximately 5.15% over the same period in 2019.
• The unaudited profit attributable to the equity holders of the Company for the six months ended 30 June 2020 was approximately HK$4.16 million while that for the six months ended 30 June 2019 the unaudited profit was approximately HK$2.78 million, representing an increase in profit of approximately 49.64% over the same period in 2019.
• The basic earnings per share for the six months ended 30 June 2020 was HK1.73 cents (six months ended 30 June 2019: basic earnings per share of HK1.16 cents).
• The board of directors of the Company resolved not to declare an interim dividend for the six months ended 30 June 2020 (six months ended 30 June 2019: nil).

Golden Power Group Holdings Limited

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INTERIM RESULTS

The board of directors (the "Board") of the Company is pleased to announce the unaudited condensed consolidated interim results (the "Results") of the Company and its subsidiaries (collectively the "Group") for the six months ended 30 June 2020 (the "Period") together with the corresponding comparative figures of the six months ended 30 June 2019 as follows:

Condensed Consolidated Statement of Profit or Loss and Other Comprehensive Income

For the six months ended 30 June 2020

		For the
		six months ended 30 June
		2020	2019
	Notes	HK$'000	HK$'000
		(unaudited)	(unaudited)
Revenue	5	148,362	156,410
Cost of sales		(108,900)	(120,586)
Gross profit		39,462	35,824
Other revenue		3,869	5,683
Other losses - net		(2,261)	(576)
Selling expenses		(9,523)	(7,612)
General and administrative
expenses		(24,704)	(26,885)
Finance costs		(1,132)	(3,072)
Profit before income tax	6	5,711	3,362
Income tax expenses	7	(1,552)	(587)
Profit for the period
attributable to the equity
holders of the Company		4,159	2,775

2 Interim Report 2020

		For the
		six months ended 30 June
		2020	2019
	Notes	HK$'000	HK$'000
		(unaudited)	(unaudited)
Other comprehensive income/
(loss)
Items that may be reclassified
subsequently to profit or loss:
Exchange differences arising on
translation of financial
statements of foreign
operations		521	(1,964)
Other comprehensive income/
(loss) for the period,
net of tax		521	(1,964)
Total comprehensive income for
the period attributable
to equity holders
of the Company		4,680	811
Earnings per Share
(HK cents)	8
- Basic		1.73	1.16
- Diluted		-	-

Golden Power Group Holdings Limited

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Condensed Consolidated Statement of Financial Position

As at 30 June 2020

		At 30 June	At 31 December
		2020	2019
	Notes	HK$'000	HK$'000
		(unaudited)	(audited)
Non-current assets		283,918
Property, plant and equipment	10	279,444
Investment properties		108,500	108,500
Intangible assets		213	108
Prepaid land lease payments		4,386	4,568
Right-of-use assets		4,400	2,620
Deposits paid for property,		2,524
plant and equipment		3,782
Deferred tax assets		8,685	9,013
		412,626	408,035
Current assets		42,865
Inventories		40,077
Trade and bill receivables	11	58,390	47,835
Deposits, prepayments, and		24,823
other receivables		20,610
Income tax recoverable		431	2,039
Cash and bank balances		16,707	18,227
		143,216	128,788
Current liabilities		80,611
Trade payables	12	72,532
Other payables and accruals		17,885	12,615
Contract liabilities		2,073	3,133
Bank borrowings, secured		135,828	140,350
Lease liabilities		1,895	2,671
Income tax payable		491	194
		238,783	231,495
Net current liabilities		(95,567)	(102,707)
Total assets less current
liabilities		317,059	305,328
Non-current liabilities		51,893
Bank borrowings, secured		47,104
Lease liabilities		2,175	-
Deferred tax liabilities		3,516	3,429
		57,584	50,533
Net assets		259,475	254,795
Capital and reserves		2,400
Share capital	14	2,400
Reserves		257,075	252,395
Total equity		259,475	254,795

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Condensed Consolidated Statement of Cash Flows

For the six months ended 30 June 2020

	For the
	six months ended 30 June
	2020		2019
	HK$'000		HK$'000
	(unaudited)		(unaudited)
Net cash generated from operating
activities	14,525		7,646
Net cash used in investing activities	(17,101)		(25,531)
Net cash generated from financing
activities	535		24,540
Net (decrease)/increase in cash and
cash equivalents	(2,041)		6,655
Cash and cash equivalents as at
beginning of the period	18,227		19,105
Effect of foreign exchange rate
changes	521		(1,964)
Cash and cash equivalents as at the
end of the period	16,707		23,796
Cash and cash equivalents as at the
end of the period comprise:
Cash and bank balances	16,707		23,796

Golden Power Group Holdings Limited

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Condensed Consolidated Statement of Changes in Equity

For the six months ended 30 June 2020

				Property
	Share	Share	Capital	revaluation	Statutory	Exchange	Retained	Total
	capital	premium	reserve	reserve	reserve	reserve	profits	equity
	HK$'000 HK$'000	HK$'000	HK$'000	HK$'000	HK$'000 HK$'000 HK$'000
At 1 January 2019 (audited)	2,400	90,043	29,819	51,697	5,914	(3,160)	74,177	250,890
Profit for the period	-	-	-	-	-	-	2,775	2,775
Exchange differences arising on
translation of financial
statements of foreign	-	-	-	-	-		-
operations	(1,964)	(1,964)
Total comprehensive income for	-	-	-	-	-
the period	(1,964)	2,775	811
At 30 June 2019 (unaudited)	2,400	90,043	29,819	51,697	5,914	(5,124)	76,952	251,701
At 1 January 2020 (audited)	2,400	90,043	29,819	51,697	5,914	(6,635)	81,557	254,795
Profit for the period	-	-	-	-	-	-	4,159	4,159
Exchange differences arising on
translation of financial
statements of foreign	-	-	-	-	-		-
operations	521	521
Total comprehensive income for	-	-	-	-	-
the period	521	4,159	4,680
At 30 June 2020 (unaudited)	2,400	90,043	29,819	51,697	5,914	(6,114)	85,716	259,475

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NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

1. General

The Company was incorporated in the Cayman Islands on 7 June 2012 as an exempted company with limited liability under the Companies Law (as revised) of the Cayman Islands. The registered office of the Company is located at Clifton House, 75 Fort Street, P.O. Box 1350, Grand Cayman KY1-1108, Cayman Islands. The headquarters and principal place of business of the Company in Hong Kong are located at Flat C, 20/F, Block 1, Tai Ping Industrial Centre, 57 Ting Kok Road, Tai Po, New Territories, Hong Kong. The shares in the share capital of the Company (the "Share(s)") have been listed and traded on the GEM of the Stock Exchange of Hong Kong Limited (the "Stock Exchange") since 5 June 2015 (the "Listing Date") and were successfully transferred to the Main Board of the Stock Exchange (the "Transfer of Listing") on 10 November 2017.

The Group is principally engaged in the manufacture and sale of a broad range of batteries for various electronic devices to the People's Republic of China (the "PRC" or "China"), Hong Kong and international markets under both its own brand "Golden Power" and the brands of its private label and OEM customers. The products are mainly categorised into two segments, namely (i) disposable batteries; and (ii) rechargeable batteries and other battery-related products. The disposable batteries are categorised into two sub-segments, namely (i) cylindrical batteries; and

1. micro-buttoncells. Other battery-related products include battery chargers, battery power packs and electric fans.

The Group manufactures and sells different battery models in different sizes which can be applied to a wide range of electronic devices, such as battery-operated toys, watches and clocks, remote controls, alarms, healthcare products and calculators. With the policies and regulations in the European Union and the PRC, the trend in the global battery market evolving towards hazardous substance-free batteries has continued. The Group has therefore developed hazardous substance-free batteries under the Group's "ecototal" series which are mercury-free,cadmium-free and lead- free.

Golden Power Group Holdings Limited

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2. Basis of preparation of financial statements

1. The unaudited condensed consolidated financial statements ("Interim Financial Statements") have been prepared in accordance with the applicable disclosure requirements of Appendix 16 to the Rules Governing the Listing of Securities on the Stock Exchange of Hong Kong Limited ("Stock Exchange") (the "Listing Rules") and Hong Kong Accounting Standard ("HKAS") 34 "Interim Financial Reporting" issued by the Hong Kong Institute of Certified Public Accountants ("HKICPA").
   The Interim Financial Statements should be read in conjunction with the 2019 annual financial statements. The accounting policies and methods of computation used in the preparation of the Interim Financial Statements are consistent with those used in the annual financial statements for the year ended 31 December 2019, except for the adoption of the new and revised HKFRSs (which include all HKFRSs, Hong Kong Accounting Standards ("HKASs") and Interpretations) issued by the HKICPA that are initially adopted for the current periods financial statements.

1. The Group has initially adopted the following new and revised HKFRSs for the financial period beginning on or after 1 January 2020:

Amendments to HKFRS 3	Definition of a Business
Amendments to HKFRS 9,	Interest Rate Benchmark Reform
HKAS 39 and HKFRS 7
Amendments to HKFRS 16	Covid-19-Related Rent Concession
	(early adopt)
Amendments to HKAS 1	Definition of Material
and HKAS 8

The adoption of the new and revised HKFRSs did not have any significant financial impacts on the Interim Financial Statements.

1. The HKICPA has issued certain new and revised HKFRSs. For those which are not yet effective and have not been early adopted in prior and current accounting periods, the Group is in the process of assessing their impact on the Group's results and financial position.

8 Interim Report 2020

1. When preparing the Results, the Group's ability to continue as a going concern has been assessed. As at 30 June 2020, the Group had net current liabilities of HK$95.57 million. The Results have been prepared on a going concern basis due to the reasons that (i) as at 30 June 2020, the Group had unutilized banking facilities of HK$18.42 million; (ii) given the Group maintained strong business relationship with its bankers and based on past experiences, the Directors expect that the Group is able to renew all the banking facilities when they expire; and (iii) the Group, from time to time, reviews the portfolio of investment properties and may adjust the investment strategies in order to enhance the cash flow position of the Group whenever it is necessary.
   After taking into consideration of the above factors and funds expected to be generated internally from operations based on the Directors' estimation on the future cash flows of the Group, the Directors are satisfied that the Group will have sufficient financial resources to meet its financial obligations as they fall due in the foreseeable future and consider that it is appropriate for the Results to be prepared on a going concern basis because there is no material uncertainty that may cast significant doubt on the Group's ability to continue as a going concern.
   Should the Group be unable to continue in business as a going concern, adjustments would have to be made to restate the value of assets to their recoverable amounts, to reclassify non-current assets and non-current liabilities as current assets and current liabilities respectively and to provide for any further liabilities which might arise.

3. Critical accounting estimates and judgement

In preparing the Interim Financial Statements, the significant judgements made by management in applying the Group's accounting policies 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.

Golden Power Group Holdings Limited

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4. Segment information

For the purposes of assessing segment performance and allocating resources, the Group's senior executive management monitors the results attributable to each reportable segment. Revenue and expenses are allocated to the reportable segments with reference to sales generated by the respective segments and the expenses incurred by the respective segments or which otherwise arise from the depreciation or amortisation of assets attributable to the respective segments. The measure used for reporting segment result is gross profit. A measurement of segment assets and liabilities is not provided regularly to the Group's senior executive management and accordingly, no segment assets and liabilities information is presented.

			Rechargeable
			batteries and
For the six months ended	Cylindrical	Micro-button	other battery-
30 June 2020	batteries	cells	related products	Total
(unaudited)	HK$'000	HK$'000	HK$'000	HK$'000
Segment revenue	91,814	52,088	4,460	148,362
Segment results	19,976	18,584	902	39,462
Unallocated other revenue				3,869
Unallocated other losses
- net				(2,261)
Unallocated corporate expenses				(34,227)
Finance costs				(1,132)
Profit before income tax				5,711
Income tax expenses				(1,552)
Profit for the period				4,159
			Rechargeable
			batteries and other
For the six months ended	Cylindrical	Micro-button	battery-related
30 June 2019	batteries	cells	products	Total
(unaudited)	HK$'000	HK$'000	HK$'000	HK$'000
Segment revenue	108,411	46,470	1,529	156,410
Segment results	17,597	17,829	398	35,824
Unallocated other revenue				5,683
Unallocated other losses
- net				(576)
Unallocated corporate expenses				(34,497)
Finance costs				(3,072)
Profit before income tax
			3,362
Income tax expenses				(587)
Profit for the period
			2,775

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5. Revenue

Geographical information

		For the
		six months ended 30 June
		2020		2019
		HK$'000		HK$'000
		(unaudited)		(unaudited)
	Africa	61		55
	Hong Kong	18,901		38,148
	Asia (except the PRC and Hong Kong)	22,981		16,935
	Australia	2,089		2,216
	The PRC	42,222		46,437
	Europe (except Eastern Europe)	34,039		17,121
	East Europe	2,471		5,425
	Middle East	1,346		2,863
	North America	14,213		20,714
	South America	10,039		6,496
		148,362		156,410
6.	Profit before income tax
		For the
		six months ended 30 June
		2020		2019
		HK$'000		HK$'000
		(unaudited)		(unaudited)
	Profit before income tax is arrived at
	after charging:
	Finance costs
	Bank loans interest	773		2,933
	Interest on import loans	322		22
	Interest on lease liabilities	34		96
	Bank overdraft interest	3		21
	Total interest expenses	1,132		3,072
	Other items
	Depreciation of property, plant and
	equipment	10,796		7,563
	Depreciation of right-of-use assets	1,117		1,431
	Cost of inventories recognised as expenses	108,900		120,586

Golden Power Group Holdings Limited

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7.	Income tax expenses
		For the
		six months ended 30 June
		2020		2019
		HK$'000		HK$'000
		(unaudited)		(unaudited)
	Current tax - Hong Kong profits tax
	Provision for the period	476		205
	Current tax - PRC enterprise income tax
	("EIT")			-
	Provision for the period	633
		1,109		205
	Deferred taxation	443		382
	Total income tax expenses	1,552		587

Pursuant to Hong Kong and PRC rules and regulations, the Group entities incorporated in Hong Kong and the PRC are subject to Hong Kong profits tax at 16.5% and Enterprise Income Tax ("EIT") at 25% on the estimated assessable profits respectively except for one Hong Kong subsidiary of the Group which is a qualifying entity under the two-tiered profits tax rate regime.

Pursuant to the approval document issued by the Ministry of Science and Technology in Guangdong Province on 9 November 2017, Goldtium (Jiangmen) Energy Products Company Limited was recognised as a High and New Technology Enterprise and was entitled to a preferential EIT rate at 15% for the three years commencing from 1 January 2017 and ended on 31 December 2019. The Directors expect that the subsidiary is able to renew its status as a High and New Technology Enterprise in 2020.

Pursuant to the approval document issued by the Ministry of Science and Technology in Guangdong Province on 28 November 2018, Dongguan Victory Battery Industries Company Limited was recognised as a High and New Technology Enterprise and was entitled to a preferential EIT rate at 15% for the three years commencing from 1 January 2018 and ended on 31 December 2020.

Pursuant to the rules and regulations of the Cayman Islands and the British Virgin Islands, the Group is not subject to any income tax in the Cayman Islands and the British Virgin Islands for the six months ended 30 June 2020 and 2019, respectively.

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8. Earnings per Share

The calculation of the basic earnings per Share attributable to the equity holders of the Company is based on the following data:

	For the
	six months ended 30 June
	2020		2019
	HK$'000		HK$'000
	(unaudited)		(unaudited)
Profit for the period attributable to equity	4,159
holders of the Company		2,775
	'000		'000
Weighted average number of Shares
for the purpose of calculating basic
earnings per Share	240,000		240,000

Diluted earnings per Share has not been disclosed as no dilutive potential equity shares has been in existence for the six months ended 30 June 2020 and 2019, respectively.

1. Dividends
   The Board resolved not to declare any interim dividend for the six months ended 30 June 2020 (six months ended 30 June 2019: nil).
2. Property, plant and equipment
   During the six months ended 30 June 2020, the Group acquired property, plant and equipment of approximately HK$14.63 million for equipment and machinery (six months ended 30 June 2019: approximately HK$21.78 million). The acquisition of property, plant and machinery can expand production capacity and improve production efficiency.

Golden Power Group Holdings Limited

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11. Trade and bill receivables

An ageing analysis of trade and bill receivables, based on the invoice date and net of loss allowance on trade receivables, is as follows:

	At 30 June	At 31 December
	2020	2019
	HK$'000	HK$'000
	(unaudited)	(audited)
Trade and bill receivables
0-30 days	37,067	26,661
31-60 days	12,840	14,393
61-90 days	6,480	5,935
91-120 days	1,814	506
Over 120 days	189	340
Total	58,390	47,835

The Group normally allows credit terms to well-established customers ranging from 30 to 120 days. The Group seeks to maintain strict control over its outstanding receivables. Overdue balances are reviewed regularly by the Directors of the Group.

12. Trade payables

An ageing analysis of trade payables, based on the date of receipt of goods purchased, is as follows:

	At 30 June	At 31 December
	2020	2019
	HK$'000	HK$'000
	(unaudited)	(audited)
Trade payables
0-30 days	33,367	20,141
31-90 days	31,886	34,934
91-180 days	12,982	13,542
Over 180 days	2,376	3,915
Total	80,611	72,532

The Group is generally given credit terms from 60 days after monthly statement ("AMS") to 150 days AMS.

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13. Related party transactions

The Group had the following material transactions and balances with related parties during the relevant periods:

Remuneration for the key management personnel, including amounts paid to the Directors and certain of the highest paid employees, are as follows:

	For the
	six months ended 30 June
	2020		2019
	HK$'000		HK$'000
	(unaudited)		(unaudited)
Salaries, allowances and other benefits in kind	4,381		4,352
Discretionary bonuses	644		640
Contributions to defined contribution plans	72		81
	5,097		5,073

14. Share capital

As at 30 June 2020, the issued share capital of the Company was HK$2,400,000 divided into 240,000,000 shares in one class of HK$0.01 each. During the Period, there is no change in the issued share capital or the number of issued share of the Company.

Golden Power Group Holdings Limited

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MANAGEMENT DISCUSSION AND ANALYSIS

BUSINESS OVERVIEW

The Group is principally engaged in the manufacture and sale of a broad range of batteries for various electronic devices to the PRC, Hong Kong and international markets both under its own brand "Golden Power" and the brands of its private label and OEM customers. The products of the Group are mainly categorised into two segments (i) disposable batteries; and (ii) rechargeable batteries and other battery-related products. The disposable batteries are categorised into two sub-segments namely (i) cylindrical batteries; and (ii) micro-button cells. Other battery-related products include battery chargers, battery power packs and electric fans.

The revenue of cylindrical batteries for the Period has decreased by approximately HK$16.60 million as compared to the same period in 2019, representing an approximately 15.31% decrease. The decrease in such revenue was mainly due to the decrease in alkaline batteries sales in the PRC, Australia, Hong Kong, North America and the Middle East.

The revenue of micro-button cells and rechargeable batteries and other battery-related products for the Period increased by approximately HK$8.55 million as compared to the same period in 2019, representing an approximately 17.81% increase. The increase in such revenue was mainly due to the increase in sales in Asia, the PRC and Europe.

The Group recorded a gross profit for the Period of approximately HK$39.46 million (2019: approximately HK$35.82 million), representing an increase of approximately HK$3.64 million or 10.16% as compared to the same period in 2019, which was mainly due to the decrease in cost of sales by approximately HK$11.69 million from approximately HK$120.59 million for the six months ended 30 June 2019 to approximately HK$108.90 million for the Period, representing a decrease of approximately 9.69%. The decrease was mainly attributable to the decrease in rent and rates and decrease in prices on raw materials as a whole. The direct labour cost for production was relatively stable from HK$6.93 million in the six months ended 30 June 2019 to HK$7.48 million in the Period. The production material costs decreased from HK$68.48 million in the corresponding period in 2019 to HK$61.13 million in the Period, representing a decrease of 10.73% during the Period. The decrease in production materials costs was mainly attributable to the decrease in the price of materials.

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The unaudited profit attributable to the shareholders of the Company for the six months ended 30 June 2020 was approximately HK$4.16 million while that for the six months ended 30 June 2019 the unaudited profit was approximately HK$2.78 million, representing an increase in profit of approximately 49.64% over the same period in 2019. The profit incurred by the Group during the Period was mainly attributable to the increase in gross profit with reasons detailed above and reduction in the expenses associated with travelling, exhibition expenses and business trip during the Period.

Going forward, the Group will continue to adopt stringent cost control and adopt appropriate strategies to enhance its operation efficiency. The trade tension between the US and China, the volatility of foreign currencies, the COVID-19 pandemic outbreak (the "Pandemic") during the Period and commodity prices may continue to cause some uncertainties in the markets, which might affect the Group's sales orders for the second half of 2020. However, the Group will continue to put more effort in promoting the sales of disposable batteries on the new products segments, including hearing aid battery, as well as healthcare devices market.

FINANCIAL REVIEW

Revenue and profit attributable to equity holders

Revenue for the Period was approximately HK$148.36 million (six months ended 30 June 2019: approximately HK$156.41 million), representing a decrease of approximately 5.15% as compared to the same period in 2019. The rental income, which contributed towards other revenue of the Group, was HK$1.79 million during the six months ended 30 June 2020 (six months ended 30 June 2019: HK$2.33 million).

Profit attributable to equity holders of the Company for the Period was approximately HK$4.16 million while for the same period in 2019, the profit attributable to equity holders of the Company was approximately HK$2.78 million, representing an increase in profit of approximately 49.64% over the same period in 2019.

Gross Profit

The Group recorded a gross profit of approximately HK$39.46 million for the Period (six months ended 30 June 2019: approximately HK$35.82 million), representing an increase of approximately 10.16%. The increase in gross profit for the Period was mainly due to saving in rent and rates, subcontracting fee, utilities and decrease in prices of raw materials during the Period.

Golden Power Group Holdings Limited

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Expenses

During the Period, the selling expenses of the Group has increased by 25.10% to approximately HK$9.52 million, as compared to approximately HK$7.61 million for the corresponding period in 2019. The increase in selling expenses was mainly due to the increase in marketing and promotion expenses during the Period. The Group's general and administrative expenses has decreased by approximately HK$2.19 million to approximately HK$24.70 million during the Period as compared to approximately HK$26.89 million for the same period in 2019. The decrease in general and administrative expenses was mainly due to the decrease in legal and professional fee, travelling and staff related expenses during the Period.

LIQUIDITY AND FINANCIAL RESOURCES

The Group operates a conservative set of treasury policies to ensure that no unnecessary risks are taken with the Group's assets. No investment in financial instruments other than cash is currently used.

The bank borrowings are repayable as follows:

		At 30 June		At 31 December
		2020	2019
		HK$'000		HK$'000
		(unaudited)		(audited)
Within 1 year
- Short-term loans	117,403		114,166
- Current portion of long-term	18,425
loans		26,184
		135,828		140,350
Over 1	year but within 2 years	19,673	14,512
Over 2	years but within 5 years	26,682	26,205
Over 5	years	5,538	6,387
		187,721	187,454

As at 30 June 2020, the Group had borrowings of approximately HK$187.72 million (as at 31 December 2019: approximately HK$187.45 million). The debt ratio, calculated as total liabilities over total assets, of the Group as at 30 June 2020 was approximately 0.53 (as at 31 December 2019: approximately 0.53).

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As at 30 June 2020, the Group had cash and cash equivalents (the "Liquidity Resources") of approximately HK$16.71 million (as at 31 December 2019: approximately HK$18.23 million) which were mainly denominated in HKD and RMB.

The Group had capital expenditures contracted for approximately HK$7.01 million for the acquisition of auxiliary and other machineries for producing mercury-free,cadmium-free and lead-free alkaline cylindrical and micro-button cells batteries. Save as disclosed, the Group had no material capital expenditure commitments as at 30 June 2020.

CAPITAL STRUCTURE

During the Period, there was no change in the capital structure of the Company. The capital structure of the Group consists of bank borrowings, net of bank balances and cash and equity attributable to shareholders of the Company comprising issued share capital and reserves. The issued share capital of the Company comprises Shares only. Total equity of the Company amounted to approximately HK$259.48 million as at 30 June 2020 (as at 31 December 2019: approximately HK$254.80 million).

GEARING RATIO

The Group expresses its gearing ratio as a percentage of total debts divided by total equity. As at 30 June 2020, the Group's gearing ratio was approximately 0.81 (as at 31 December 2019: approximately 0.81).

CHARGES ON ASSETS

The Group's bank borrowing facilities were secured mainly by the Group's plant and office building (including investment properties) with carrying value of approximately HK$150.83 million as at 30 June 2020 (as at 31 December 2019: approximately HK$152.45 million).

CONTINGENT LIABILITIES

The Group had no material contingent liabilities as at 30 June 2020 (as at 31 December 2019: nil).

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SIGNIFICANT INVESTMENTS HELD

The Company during the Period held significant investments of (i) the Company's investment in various subsidiaries; and (ii) the investment in three investment properties located at Flat B and Flat D of 20/F., Block 1, Tai Ping Industrial Centre, No. 57 Ting Kok Road, Tai Po, New Territories, and shop 29 on G/F Fortune Plaza, No. 4 On Chee Road, Tai Po, New Territories (the "Shop") which are held by Golden Power Properties Limited and China Scene Limited (both are indirect wholly-owned subsidiaries of the Company), respectively, and leased to three separate independent third parties under two-year tenancy agreements entered on 23 May 2018 for warehouse purpose and 16 July 2019 with monthly rentals at market rate. On 18 June 2020, the Shop was leased to an independent third party under a new two- year tenancy agreement for commercial purpose with monthly rent at market rate. Other than those disclosed above, the Group did not hold any significant investments as at 30 June 2020.

MATERIAL ACQUISITIONS AND DISPOSALS OF SUBSIDIARIES, ASSOCIATES AND JOINT VENTURES

The Group did not have any material acquisitions and disposals of subsidiaries, associates or joint ventures during the Period.

FUTURE PLANS FOR MATERIAL INVESTMENTS AND CAPITAL ASSETS

Save as disclosed in the 2019 annual report of the Company and this report, the Group did not have any plans for material investments or capital assets as at 30 June 2020.

EMPLOYEES AND REMUNERATION POLICIES

The Directors believe that the quality of the employees is an important factor in sustaining the Group's growth and improving its profitability. The Group's remuneration package is structured with reference to the individual performance, working experience and prevailing salary levels in the market. In addition to basic salaries and mandatory provident fund, staff benefits include medical coverage scheme and the share option scheme.

As at 30 June 2020, the Group had a total of 541 employees (as at 30 June 2019: 572 employees). The Group's staff costs, including Directors' emoluments, amounted to approximately HK$23.37 million during the Period (six months ended 30 June 2019: approximately HK$25.52 million).

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PRINCIPAL RISKS AND UNCERTAINTIES

The followings are some principal risks and uncertainties faced by the Group, which may materially adversely affect its business, financial condition or results of operations:

The operation and financial performance of the Group may be affected by the Pandemic or other public health events as production may be required to be suspended due to administrative and governmental health control measures. The global economy and the general consumers' demand may be adversely affected by the outbreak of the Pandemic.

The Group has no long-term sales contracts with most of the major customers. If the business relationships with the major customers deteriorates or if any of the major customers reduces substantially its purchases from the Group or terminates its business relationship with the Group entirely, the business, results of operations and financial condition may be adversely affected.

The demand for disposable batteries in general and alkaline cylindrical batteries depends on the need for such disposable batteries to operate various electronic devices, the demand for which is in turn affected by technological advances and consumer preferences. Further, technological advances and increasing environmental awareness may cause consumer demand to shift from alkaline cylindrical batteries to other disposable batteries, from disposable batteries to rechargeable batteries as a substitute or even to other forms of electronic products or energy which do not require the use of batteries.

The Group's revenue was denominated in RMB, HKD and US dollars and the cost of sales was primarily denominated in RMB and the remaining denominated in HKD, US dollars and Euros. The value of RMB against HKD and other currencies may fluctuate and is affected by, among other things, changes in political and economic conditions in the PRC.

The Group's business is subject to seasonality, so that the first quarter of a year may record relatively lower revenue. In particular, the revenue generated during the month of Chinese New Year may be significantly lower than the average revenue generated during a year.

Golden Power Group Holdings Limited

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The Group manufactures some of the products on a made-to-stock basis (that is the Group manufactures before the customers place orders with it) with reference to the sales forecast prepared in the light of the customers' historical buying pattern, particularly batteries to be sold to the customers under the Group's branded business which adopt its original design and specifications. If the sales forecast turns out to be inaccurate and the customers do not place orders with the Group in the volumes as expected, the products produced may not be absorbed by other customers, and the Group's business, results of operations and financial condition may be adversely affected.

For more details about the general risks and uncertainties in relation to the Group, please refer to the Prospectus of the Company dated 29 May 2015.

FOREIGN CURRENCY RISK

The reporting currencies of the Group is HKD.

The Group has transactional currency exposures. Such exposures arise from the business operations in the PRC denominated in RMB. As at 30 June 2020, the Group had an exchange rate exposure to foreign currency risk as most of its business transactions, assets and liabilities were principally denominated in the functional currencies, i.e. RMB and HKD.

The Group ensures that the net exposure is kept to an acceptable level, by buying or selling foreign currencies at spot rate or entering into appropriate forward contracts when necessary.

As at 30 June 2020, the Group did not have any foreign investments which have been hedged by currency borrowing and hedging instruments.

USE OF PROCEEDS FROM LISTING AND THE RIGHTS ISSUE

The net proceeds from the Listing, after deducting related expenses, amounted to approximately HK$40.16 million. After the Listing, the net proceeds have been applied in accordance with the section headed "Future Plans and Use of Proceeds" as set out in the Prospectus.

22 Interim Report 2020

All net proceeds from the Listing have been used up by 31 December 2015 according to our implementation plans disclosed in the Prospectus. The net proceeds from the Rights Issue, after deducting related expenses, amounted to approximately HK$31 million. The net proceeds of the Rights Issue have been fully applied by 31 December 2017 in accordance with the intended use of proceeds as set out in the prospectus of the Rights Issue dated 27 March 2017.

DIRECTORS' AND CHIEF EXECUTIVE'S INTERESTS AND SHORT POSITIONS IN SHARES, UNDERLYING SHARES AND DEBENTURES

Interests in the Company

As at 30 June 2020, the interests or short positions of the Directors or the chief executive of the Company in the Shares, underlying Shares or debentures of the Company (within the meaning of Part XV of the Securities and Futures Ordinance (Chapter 571 of the Laws of Hong Kong) (the "SFO"))

1. 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 or short positions which they were taken or deemed to have under such provisions of the SFO); or (ii) which were required, pursuant to Section 352 of the SFO, to be entered into the register referred to therein; or (iii) which were required to be notified to the Company and the Stock Exchange pursuant to the standard of dealings by the Directors as referred to in the Listing Rules, were as follows:

Long positions in the Shares

		Total number	Approximate
	Nature of	of Shares held	percentage of
Name	interest	(long position)	shareholding
Chu King Tien	Interest in a	130,500,000	54.38%
(Chairman and	controlled	Shares
Executive	corporation
Director)	(Note)
Chu Shuk Ching	Beneficial owner	2,000,000	0.83%
(Executive		Shares
Director and
Chief Executive
Officer)

Golden Power Group Holdings Limited

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Note:

These Shares are held by Golden Villa Ltd., which is wholly and beneficially owned by Mr. Chu King Tien. By virtue of the SFO, Mr. Chu King Tien is deemed to be interested in all the Shares held by Golden Villa Ltd. in the Company.

Interests in associated corporations of the Company

As at 30 June 2020, the interests or short positions of the Directors or chief executive of the Company in the shares, underlying shares or debentures of the Company's associated corporations (within the meaning of Part XV of the SFO (i) 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 or short positions which they were taken or deemed to have under such provisions of the SFO); or (ii) which were required, pursuant to Section 352 of the SFO, to be entered in the register referred to therein; or (iii) which were required to be notified to the Company and the Stock Exchange pursuant to the standard of dealings by the Directors as referred to in the Listing Rules, were as follows:

Long positions in the shares of the associated corporations

	Name of		Number of	Approximate
Name of	associated	Nature of	shares	percentage of
Director	corporation	interest	(long position)	shareholding
Mr. Chu King	Golden Villa Ltd.	Beneficial owner	50,000	100%
Tien

Save as disclosed above, as at 30 June 2020, the Directors were not aware of any other persons who had or deemed or taken to have any interests or short positions in the Shares, underlying Shares or debentures of the Company which would fall to be disclosed to the Company under the provisions of Divisions 2 and 3 of Part XV of the SFO or which were required to be recorded in the register of interests required to be kept by the Company under Section 336 of the SFO.

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SUBSTANTIAL SHAREHOLDERS' AND OTHER PERSONS' INTERESTS AND SHORT POSITIONS IN SHARES, UNDERLYING SHARES AND DEBENTURES

So far as the Directors are aware, as at 30 June 2020, the following persons (other than the Directors and chief executive of the Company) had or deemed or taken to have an interest and/or short position in the Shares, the underlying Shares or debentures of the Company which were required to be recorded in the register of interests required to be kept by the Company pursuant to Section 336 of the SFO, or which would fall to be disclosed under the provisions of Divisions 2 and 3 of Part XV of the SFO.

Long positions in the Shares

		Total number	Approximate
	Nature of	of Shares held	percentage of
Name	interest	(long position)	shareholding
Golden Villa Ltd.	Beneficial owner	130,500,000	54.38%
		Shares
Ms. Mo Yuk Ling	Interest of	130,500,000	54.38%
	spouse	Shares
	(Note)

Note:

Ms. Mo Yuk Ling is the spouse of Mr. Chu King Tien. Under the SFO, Ms. Mo Yuk Ling is deemed to be interested in the same number of shares in which Mr. Chu King Tien is interested.

Save as disclosed above, as at 30 June 2020, the Directors were not aware of any other persons who had or deemed or taken to have any interests or short positions in the Shares, underlying Shares or debentures of the Company which would fall to be disclosed to the Company under the provisions of Divisions 2 and 3 of Part XV of the SFO or which were recorded in the register of interests required to be kept by the Company under Section 336 of the SFO.

SUBSEQUENT EVENT

Save as disclosed above, there are no important events subsequent to the end of the Period and up to the date of this report.

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PURCHASE, SALE OR REDEMPTION OF THE COMPANY'S LISTED SECURITIES

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

SHARE OPTION SCHEME

A share option scheme (the "Scheme") was conditionally adopted by the written resolutions of the Company's sole shareholder passed on 15 May 2015. The terms of the Scheme are in accordance with the provisions of Chapter 17 of the Main Board Listing Rules. The principal terms of the Scheme are summarised in the section headed "D. Share Option Scheme" in Appendix V of the Prospectus. As of the date of this report, no option had been granted, agreed to be granted, exercised, cancelled or lapsed under the Scheme.

MODEL CODE FOR DIRECTORS' SECURITIES TRANSACTIONS

The Company has adopted the Model Code for Securities Transactions by Directors of Listed Issuers (the "Model Code") as set out in Appendix 10 of the Listing Rules as the required standard for securities transactions by Directors. The Company has made specific enquiries of all Directors and all Directors confirmed that they have complied with the required standards set out in the Model Code regarding Directors' securities transactions throughout the Period.

CORPORATE GOVERNANCE CODE

The Company has adopted the code principles of the Corporate Governance Code (the "CG Code") as set out in Appendix 14 of the Listing Rules. The Company is committed to ensuring a high corporate governance standard and transparency and accountability to shareholders of the Company. The Board is of the opinion that the Company has complied with the applicable code provisions under the CG Code throughout the Period.

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DIRECTORS' MATERIAL INTERESTS IN CONTRACTS

Save as disclosed above or in the Prospectus or the Rights Issue prospectus dated 27 March 2017, no Director had any material interests in any contract of significance to the business of the Group to which the Company or any of its subsidiaries was a party during the Period.

COMPETING BUSINESS

During the Period, the Directors are not aware of any business or interest of the Directors, the controlling shareholder(s) of the Company and their respective close associates (as defined under the Listing Rules) that compete or may compete with the business of the Group and any other conflict of interest which any such person has or may have with the Group.

AUDIT COMMITTEE

The Company has established an audit committee (the "Audit Committee") on 15 May 2015 with written terms of reference in compliance with the Listing Rules. The Audit Committee has three members comprising all the independent non-executive Directors, namely, Mr. Hui Kwok Wah (who act as the chairman of the Audit Committee), Mr. Ma Sai Yam and Mr. Chow Chun Hin, Leslie.

All members of the Audit Committee possess appropriate knowledge and financial experience to perform their duties. The composition of the Audit Committee meets the requirements of Rule 3.21 of the Listing Rules. The primary duties of the Audit Committee, among other things, are to ensure the adequacy and effectiveness of the accounting and financial controls of the Group, oversee the performance of internal control systems and financial reporting process, monitor the integrity of the financial statements and compliance with statutory and listing requirements and oversee the independence and qualifications of the external auditors and objectivity and the effectiveness of the audit process in accordance with applicable standards.

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The Results have not been audited by the Company's auditor but have been reviewed by the Audit Committee, which was of the opinion that the preparation of such results complied with the applicable accounting standards, the Listing Rules and legal requirements, and adequate disclosures have been made.

By Order of the Board

Golden Power Group Holdings Limited

Chu King Tien

Chairman and Executive Director

Hong Kong, 20 August 2020

As at the date of this report, the executive Directors are Mr. Chu King Tien, Ms. Chu Shuk Ching, Mr. Tang Chi Him and Mr. Chu Ho Wa, the independent non-executive Directors are Mr. Hui Kwok Wah, Mr. Ma Sai Yam and Mr. Chow Chun Hin Leslie.

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