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MarketScreener Homepage  >  Equities  >  Hong Kong Stock Exchange  >  SIM Technology Group Limited    2000   BMG814741010

SIM TECHNOLOGY GROUP LIMITED

(2000)
  Report
End-of-day quote. End-of-day quote Hong Kong Stock Exchange - 01/22
0.335 HKD   0.00%
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2020SIM TECHNOLOGY : Interim report 2020
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SIM Technology : INTERIM REPORT 2020

09/23/2020 | 04:35am EST

CHAIRMAN'S STATEMENT

On behalf of the board ("Board") of the directors ("Directors") of SIM Technology Group Limited ("Company"), I am presenting the interim results of the Company and its subsidiaries (collectively referred to as the "Group") for the six months ended 30 June 2020 ("1H-2020").

BUSINESS REVIEW

The Group experienced its most difficult half-year period since its founding in 1H-2020 due to the worldwide spread of the COVID-19 pandemic and the increasing volatility in the global political and economic environment as a result of the worsening of China-US relations. The Group was unable to resume production in the first quarter of 2020 due to the pandemic and its business was basically stagnant. In particular, the Group suffered a huge loss in January and February 2020 because its outgoings remained significant. The situation had gradually improved starting from March as the Group began to process the large amount of previously accumulated orders. Although the Group's main business segments recorded a monthly profit in May and June of the second quarter of 2020, the amount of profit was unable to completely offset the huge loss incurred in the first quarter of 2020 and the Group still recorded on overall loss in 1H-2020. The performance of all business segments of the Group also deteriorated year-on-year.

Handsets and IOT terminals business

In 1H-2020, sales revenue of the handsets and IOT terminals business segment amounted to HK$244.9 million, representing a decline of 14.6% against the same period last year. Gross profit was HK$24.5 million, an increase of 160.4% when compared with last year. Gross profit margin also rose by 6.7 percentage points year-on-year to 10.0%. In fact, gross profit margin of this segment for 1H-2020 was at a normal level this year, but was on the low side in 2019. This was because several projects were cancelled last year and the capitalization of research and development (R&D) expenses had already been timely written off. Since April this year, with the resumption of order in society and in the operation of most of the supply chain, the Group sped up shipment of accumulated orders and saw notable growth in sales in the second quarter of 2020 when compared with the first quarter of 2020 and the corresponding period last year.

SIM TECHNOLOGY GROUP LIMITED INTERIM REPORT 2020

1

CHAIRMAN'S STATEMENT

Looking ahead to the second half of the year, the worsening relations between China and the US and the uncertainties related to the development of the COVID-19 pandemic will continue to adversely affect the terminals business segment. The number of new orders placed by overseas clients has been significantly less than expected. Except for the additional orders received for certain products due to the pandemic, shipment of a majority of projects has already decelerated since July 2020. Uncertainties still loom over the Group's operations in the second half of the year.

To cope with the unprecedentedly severe challenges in the external operating environment, the Group has implemented a series of measures that are aimed at broadening sources of income, reducing expenditure as well as enhancing efficiency. The Group has also adjusted the strategies for its clients, markets and products based on actual conditions. For example, it has stepped up its investment in self-developed products and focused on data and wearable products based on market and client surveys and analysis. It has also centralised R&D resources and completed various reference designs and samples for promotion to potential clients. It is hoped that these measures will positively impact the volume of shipment in the second half of 2020 as they help lower the investment risks of clients and shorten the cycle of product development and launch. To address the downturn in domestic and overseas markets, the Group will target China's new infrastructure market and seize related opportunities, as well as actively extend its reach to the Mainland market and clients there. The Group expects to gradually launch its new projects in year 2021.

The deteriorating external economic environment and the pandemic have presented some difficulties to the operations of the terminals segment in the second half of the year as well as next year. The Group will adjust the product and market directions of this business segment according to actual conditions while adhering to its set strategies in order to overcome the effects brought about by a variety of unfavourable factors and ensure the accomplishment of its set business goals for the year.

2 SIM TECHNOLOGY GROUP LIMITED INTERIM REPORT 2020

CHAIRMAN'S STATEMENT

EMS business

The electronics manufacturing services (EMS) business segment achieved sales revenue of HK$34.5 million for 1H-2020, representing a year-on-year decrease of 32.5%. Gross profit declined by 29.3% year-on-year to HK$1.5 million. The substantial decrease of sales revenue was due to the effects of the pandemic. As the Group's factories in three locations in China were unable to resume operation and production timely, the production capacity was idle for two months during the first quarter of 2020. Meanwhile, given the tough external operating environment, the markets of its existing clients also slowed down. Consequently, overall performance of this business segment was below the Group's expectation.

The Group will not change its overall strategy for its EMS business in the future. In addition to maintaining a good relationship with its existing EMS clients, it will explore prospects to secure more new clients and new processing product categories. It will continue to increase investment to expand the deployment of automation and artificial intelligence in production operations in order to lower labour costs and improve quality control over its products. Furthermore, it will also build new production bases and relocate assembly and packaging processes to other regions with lower labour costs. In the future, the Group will continue to provide higher quality services to clients while controlling its costs and boosting its competitiveness.

IOT system and O2O business

The Group has continued streamlining the offline business of its O2O automated vending machine platform, gradually switching the business focus away from the automated vending machines and placing it on the O2O business of the IOT system platform that provides better prospects. Regarding the "Internet of Vehicles" business, the Group has achieved landmark progress. In future, the Group will combine together the IOT business with the terminals business segment in order to provide clients with "cloud + terminal" one-stop solutions.

SIM TECHNOLOGY GROUP LIMITED INTERIM REPORT 2020

3

CHAIRMAN'S STATEMENT

Intelligent manufacturing business

During 1H-2020, revenue of this segment dropped by 20.9% year-on-year to HK$36.7 million. Gross profit decreased by 24.3% year-on-year to HK$10.9 million. Gross profit margin declined slightly when compared with the same period last year. Under the influence of the external market factors and the pandemic, most of the players in the manufacturing industry in China suspended operations and production in the first quarter of 2020, and the clients temporarily suspended their purchases of intelligent equipment while some postponed their orders. The work resumption rate in enterprises along the upstream supply chain has not been high. Shortages of key materials in the intelligent equipment industry may lead to the rise of prices, resulting in higher procurement costs and thus lowering gross profit margin of this business segment.

Despite the extremely difficult external operating environment and the unsatisfactory performance of this business segment, the Group has still adhered to its business philosophy of delivering value to and achieving mutually beneficial outcomes with clients. In the first half of the year, the Group focused on further developing the areas and industries in which it specialises. It also increased investment in the R&D and marketing of the automated optical inspection (AOI) test equipment for the glass covers for the smart handset industry and the audio video interleave (AVI) test equipment for the printed circuit board (PCB) industry. As a result of these efforts, it has achieved positive results. By meeting the clients' demand and helping them overcome the challenges they faced during the COVID-19 pandemic via a timely provision of a variety of products, solutions and services, the Group gained their recognition and support, thereby laying the groundwork for future orders when the demand and production resume.

Following full resumption of production and operations and as the consumer electronics industry enters its mid-year peak season, manufacturing companies are expected to face difficulties in recruitment and management along with high labor costs, but the challenges will strengthen clients' determination to adopt intelligent manufacturing equipment, thus creating new market opportunities for the Group's business. In addition, two new products developed by the Group in the past two years, the AOI for the glass cover of mobile phones and the AVI test equipment for the PCB industry will be launched in the second half of 2020. The Group still has confidence in the outlook of the intelligent manufacturing business.

4 SIM TECHNOLOGY GROUP LIMITED INTERIM REPORT 2020

CHAIRMAN'S STATEMENT

Property development

As at 30 June 2020, "The Riverside Country"(晨興翰林水郡), in Shenyang City, the PRC, has a total of 1,842 residential units in all its four phases, of which 1,839 units have been sold.

As at 30 June 2020, "Seven River in Sweet"(七里香溪), in Taizhou City, the PRC, has a total of 748 residential units, 9 shops and 22 commercial units completed in all its two phases, of which 748 residential units, 7 shops and 22 commercial units have been sold and delivered to the buyers.

A substantial amount of the above properties was sold and delivered to the buyers in 1H- 2018 and only a small amount of the remaining properties was sold and delivered in 1H- 2020, resulting in a huge decrease in revenue to HK$1.1 million (2019: HK$5.6 million) with a gross profit margin of-25.7% (2019: 23.9%).

Property management

As at 30 June 2020, the revenue of property management was mainly derived from the leasing of SIM Technology Building Block A and Block B in Shanghai, factory units in Shanghai and Shenyang and commercial properties in Shenyang. A total area of approximately 55,000 square meters was leased out. To utilize our resources more effectively, the Group is developing the property management business by leasing out the spare space at its factories and other buildings.

The revenue of properties management for 1H-2020 amounted to HK$18.4 million (2019: HK$21.0 million) with a gross profit margin of 95.9% (2019: 94.5%).

SIM TECHNOLOGY GROUP LIMITED INTERIM REPORT 2020

5

CHAIRMAN'S STATEMENT

Prospects

The Group is faced with unprecedented and fundamental changes on a scale unseen in nearly a century, highlighted by the China-US trade war and the COVID-19 pandemic, which together have brought negative impact on its business and the industries in which it operates. Its markets have not yet recovered as the pandemic is not under control overseas and the Group is unable to secure new foreign clients and new projects for existing clients have been put on hold.

The Group's operational strategy for the next phase of development will base around the major domestic cycle in China, which means focusing on domestic clients mainly, striving to secure business opportunities presented by the big projects in the country. Due to the influence of the pandemic, domestic cycles will be developed and the Group is targeting clients in Shanghai, Beijing, Shenzhen and their neighboring areas in particular. However, overseas markets will not be overlooked, so the foreign and domestic cycles can complement each other, giving the Group an opportunity to secure new projects from existing clients.

The Group will steadily pursue advancement in its business in a pragmatic manner. Efforts will be made to reduce expenses and expand income sources, close unprofitable business, make and manage investment in new projects. The Group will also focus on its technological platform, target industries, premium clients and hit products. Beyond this, the Group will strive to strengthen internal capabilities amidst such adverse conditions, control costs and improve efficiency across its operations effectively. As long as the external environment does not deteriorate further, the Management hopes it can achieve a turnaround in the coming year.

Appreciation

The Board would like to thank our shareholders, customers, suppliers, bankers and professional advisers for their support of the Group and to extend our appreciation to all our staff for their dedication and contribution throughout the reporting period.

Yeung Man Ying

Chairman

Hong Kong, 25 August 2020

6 SIM TECHNOLOGY GROUP LIMITED INTERIM REPORT 2020

MANAGEMENT DISCUSSION AND ANALYSIS

FINANCIAL REVIEW

For 1H-2020, the revenue of the Group was HK$431.7 million (2019: HK$517.2 million), in which the revenue from handsets and IOT terminals business, EMS business, IOT system and O2O business and intelligent manufacturing business (together, "core business") decreased by 16.0% to HK$412.2 million (2019: HK$490.6 million) as compared with that of 1H-2019. The revenue from the sale of residential properties and property management (together "non-core business") decreased by 26.7% to HK$19.5 million in 1H-2020 as compared with that in 1H- 2019 (2019: HK$26.6 million).

The gross profit for 1H-2020 for core business of the Group increased period-to-period by 36.4% to HK$43.8 million (2019: HK$32.1 million). The gross profit margin for core business increased to 10.6% (2019: 6.6%). The overall gross profit margin of the Group for 1H-2020 increased to 14.2% (2019: 10.3%).

As a result of the decrease in revenue in 1H-2020, the Group achieved a loss attributable to owners of the Company of HK$47.0 million (2019: HK$92.8 million). The basic loss per share for 1H-2020 was HK1.9 cents (2019: HK3.7 cents).

Segment results of core business

Six months ended

Six months ended

30 June 2020

30 June 2019

Gross

Gross

Gross

profit

Gross

profit

Revenue

profit

margin

Revenue

profit

margin

HK$'M HK$'M

%

HK$'M

HK$'M

%

Handsets and IOT terminals

business

245

25

10.0

287

10

3.3

EMS business

34

1

4.4

51

2

4.1

IOT system and O2O business

96

7

7.2

106

6

5.8

Intelligent manufacturing

business

37

11

29.6

46

14

31.0

Total

412

44

10.6

490

32

6.6

SIM TECHNOLOGY GROUP LIMITED INTERIM REPORT 2020

7

MANAGEMENT DISCUSSION AND ANALYSIS

Handsets and IOT terminals business

The Group was unable to resume production in the first quarter of 2020 due to the pandemic and its business was basically stagnant. The revenue of handsets and IOT terminals business for 1H-2020 decreased by 14.6% to HK$244.9 million (2019: HK$286.8 million) as compared to that of 1H-2019. The gross profit margin for this segment increased to 10.0% in 1H- 2020 (2019: 3.3%). Gross profit margin for the year was at a normal level this year, but was on the low side in 2019. This was because several projects were cancelled last year and the capitalization of R&D expenses had already been timely written off. The revenue of ODM business contributed to approximately 90% of the revenue of this segment in 1H-2020 (2019: 88%).

EMS business

Due to the effects of the pandemic, the Group's factories in three locations in China were unable to resume operation and production timely, the production capacity was idle for two months during the first quarter of 2020. In addition, given the tough external operating environment, the markets of its existing clients also slowed down. As a result, the revenue of this segment decreased year-on-year by 32.5% to HK$34.5 million in 1H-2020 however the gross profit margin slightly increased year-on-year to 4.4% (2019: 4.1%).

IOT system and O2O business

During 1H-2020, the Group has continued streamlining the offline business of its O2O automated vending machine platform and gradually switched the business focus away from the automated vending machines. The revenue of this segment recorded was HK$96.1 million (2019: HK$106.2 million) and the gross profit margin slightly increased to 7.2% (2019: 5.8%).

Intelligent manufacturing business

During 1H-2020, under the influence of the external market factors and the pandemic, most of the players in the manufacturing industry in China suspended operations and production in the first quarter of 2020 and the clients temporarily suspended their purchases of intelligent equipment while some postponed their orders. As a result, the revenue of this segment decreased to HK$36.7 million (2019: HK$46.4 million). In addition, the work

8 SIM TECHNOLOGY GROUP LIMITED INTERIM REPORT 2020

MANAGEMENT DISCUSSION AND ANALYSIS

resumption rate in enterprises along the upstream supply chain has not been high. Shortages of key materials in the intelligent equipment industry may lead to the rise of prices, resulting in higher procurement costs and thus lowering gross profit margin of this business segment. The gross profit margin slightly decreased to 29.6% in 1H-2020 (2019: 31.0%).

LIQUIDITY, FINANCIAL RESOURCES AND CAPITAL STRUCTURE

Liquidity

As at 30 June 2020, the Group had bank balances and cash of HK$561.1 million (31 December 2019: HK$611.7 million), of which 56.3% was held in US dollars, 43.7% was held in Renminbi and the remaining balance was held in Hong Kong dollars, and short-term deposits of HK$323.6 million (31 December 2019: $296.4 million) among which 79.5% was held in US dollars and 20.5% was held in Renminbi. As at 30 June 2020, the Group also had pledged bank deposits of HK$32.1 million (31 December 2019: HK$31.2 million) in Renminbi for the purpose of the Group's borrowings. The Group intends to finance its working capital and capital expenditure plans from such bank balances. The Group has pledged certain of its assets (including investment properties, property, plant and equipment, right-of-use assets and pledged bank deposits) to secure the bank borrowings. The total bank borrowings of the Group amounted to HK$60.7 million as at 30 June 2020 (31 December 2019: HK$77.9 million), all of which was denominated in Renminbi. All of the bank borrowings were at floating interest rates and repayable within one year.

Operating efficiency

The turnover period of inventory, trade and notes receivables, trade and notes payables of the Group for the core business are presented below:

30 June

31 December

2020

2019

Days

Days

Inventory turnover period

136

102

Trade and notes receivables turnover period

106

74

Trade and notes payables turnover period

145

79

SIM TECHNOLOGY GROUP LIMITED INTERIM REPORT 2020

9

MANAGEMENT DISCUSSION AND ANALYSIS

The outbreak of COVID-19 pandemic since early 2020 had caused delays of production and delivery to the Group, thus the inventory turnover days for 1H-2020 increased as compared to that of year 2019.

As affected by the COVID-19 pandemic, certain debtors' repayment schedules had been slowed down. In addition, the proportion of accounts receivables with longer credit period increased in 1H-2020. As a result, the trade and notes receivables turnover days increased for 1H-2020 as compared to that of year 2019.

As affected by the COVID-19 pandemic, certain creditors' repayment schedules had been slowed down in 1H-2020 as compared to that of year 2019. As a result, the trade and notes payables turnover days increased for 1H-2020 as compared to that of year 2019.

As at 30 June 2020, the current ratio, calculated as current assets over current liabilities, was 3.0 times (31 December 2019: 2.9 times).

The Group reckons that inventory turnover period, trade and notes receivables turnover period, and trade and notes payables turnover period help the Group to understand its ability to convert inventory into cash and sales cash conversion cycle. Through reviewing the turnover periods, the Group can improve its operational efficiency. The current ratio can help the Group to understand its ability to pay short-term and long-term obligations.

Treasury policies

The Group adopts a prudent approach in its treasury policy. The Group's surplus funds are mainly held under fixed and savings deposits in reputable banks to earn interest income.

Certain sales and purchases of inventories of the Group are denominated in US dollars. Furthermore, certain trade receivables, trade payables and bank balances are denominated in US dollars, therefore exposing the Group to fluctuations in exchange rates. During 1H- 2020, the Group did not use any financial instrument for hedging purpose but it will consider entering into non-deliverable foreign exchange forward contracts to eliminate the foreign exchange exposures in US dollars when necessary.

10 SIM TECHNOLOGY GROUP LIMITED INTERIM REPORT 2020

MANAGEMENT DISCUSSION AND ANALYSIS

Capital structure

As at 30 June 2020, the Company had 2,365,086,300 ordinary shares of HK$0.10 each in issue.

No shares of the Company have been issued during 1H-2020.

CASH FLOW STATEMENT HIGHLIGHTS

The following is the highlights of the cash flow statement of the Group for 1H-2020 and 1H- 2019:

1H-20201H-2019

HK$'M HK$'M

Net cash from operating activities Capital expenditure Development costs

Net (decrease) increase in bank borrowings Net decrease in other liabilities

Cash transferred to non-controlling interest upon share reduction in registered capital of a subsidiary that does not result in losing control

Proceeds from disposal of financial assets at fair value through profit or loss

Repayment of lease liabilities Dividend paid

Interest paid Repurchase of shares Others

Net (decrease) increase in cash and cash equivalents (including pledged bank deposits and short-term bank deposits)

41.5 205.9

(2.1) (20.8)

(39.1)

(63.1)

(15.9)

15.2

  • (30.1)
  • (45.4)

16.0

-

(4.8)

(3.3)

  • (25.0)
    (0.7)(0.4)

(16.8)

(16.2)

(0.6)

4.8

(22.5)

21.6

SIM TECHNOLOGY GROUP LIMITED INTERIM REPORT 2020

11

MANAGEMENT DISCUSSION AND ANALYSIS

GEARING RATIO

As at 30 June 2020, the total assets of the Group were HK$2,761.7 million (31 December 2019: HK$2,866.9 million) and the bank borrowings were HK$60.7 million (31 December 2019: HK$77.9 million). The gearing ratio of the Group, calculated as total bank borrowings over total assets, was 2.2% (31 December 2019: 2.7%).

The Group reviews its gearing ratio on a regular basis. According to the capital plan for the future, the Group tries to maximise revenue for Shareholders with capital risk awareness in mind. Capital structure is being constantly adjusted according to changes in the operational environment.

EMPLOYEES

As at 30 June 2020, the Group had approximately 1,610 (31 December 2019: 1,760) employees. The Group operates a Mandatory Provident Fund retirement benefits scheme for all its employees in Hong Kong, and provides its PRC employees with welfare schemes as required by the applicable laws and regulations of the PRC. The Group has a comprehensive training system in place that establishes a network-based career path for employees, including position and ability management, skills enhancement programme, various training opportunities, online learning programme for staff, internal promotion system, key employees development programme, succession plans for key positions and leadership development programme. The Group also offers discretionary bonuses and may grant share options under the share option scheme of the Company to its employees by reference to individual performance and the performance of the Group.

EMOLUMENT POLICY

The emolument policy of the employees of the Group is set by the human resources department. The Group seeks to provide remuneration packages on the basis of merit, qualifications and competence of the employees.

The emoluments of the Directors and senior management of the Company are reviewed by the remuneration committee of the Board, having regard to factors including the Group's operating results, responsibilities of the Directors and senior management and comparable market statistics.

12 SIM TECHNOLOGY GROUP LIMITED INTERIM REPORT 2020

MANAGEMENT DISCUSSION AND ANALYSIS

The Company has adopted a share option scheme to motivate the eligible persons referred to in the scheme, which include executive Directors and employees of the Group, to optimise their future contributions to the Group and reward them for their efforts.

FUTURE PLANS FOR MATERIAL INVESTMENT

As stated in the circular of the Company dated 18 January 2018, the Group intends to apply part of the net proceeds from the Disposal for purchase of a piece of the land for the Group's operations centre in Dongguan, the PRC and the related construction costs.

Save as disclosed above, the Group did not have any plans for material investment or capital assets during 1H-2020.

MATERIAL ACQUISITION AND DISPOSAL OF SUBSIDIARIES AND ASSOCIATED COMPANIES

During 1H-2020, the Group did not have any material acquisition or disposal of subsidiaries or associated companies.

SIGNIFICANT INVESTMENT

As at 30 June 2020, the Group did not have any significant investment.

CONTINGENT LIABILITIES

As at 30 June 2020, the Group did not have any material contingent liabilities.

EVENT AFTER THE REPORTING PERIOD

There have been no significant events since the end of 1H-2020.

SIM TECHNOLOGY GROUP LIMITED INTERIM REPORT 2020

13

INTERIM FINANCIAL STATEMENTS

CONDENSED CONSOLIDATED STATEMENT OF PROFIT OR LOSS

FOR THE SIX MONTHS ENDED 30 JUNE 2020

Six months ended 30 June

2020

2019

HK$'000

HK$'000

NOTES

(unaudited)

(unaudited)

Revenue

3

431,739

517,177

Cost of sales and services

(370,615)

(463,875)

Gross profit

61,124

53,302

Other income

5

19,721

14,679

Reversal of impairment losses, net of

impairment (impairment losses under

expected credit model, net of reversal)

13

1,267

(27,357)

Other gains and losses

5

(19,214)

3,678

Research and development expenses

(40,852)

(48,836)

Selling and distribution costs

(18,400)

(36,836)

Administrative expenses

(47,594)

(49,971)

Share of results of associates

(223)

(1,039)

Finance costs

(1,389)

(640)

Loss before taxation

(45,560)

(93,020)

Taxation

6

2,667

3,192

Loss for the period

7

(42,893)

(89,828)

Loss for the period attributable to:

Owners of the Company

(46,990)

(92,789)

Non-controlling interests

4,097

2,961

(42,893)

(89,828)

Loss per share (HK cents)

9

Basic

(1.9)

(3.7)

Diluted

(1.9)

(3.7)

14 SIM TECHNOLOGY GROUP LIMITED INTERIM REPORT 2020

INTERIM FINANCIAL STATEMENTS

CONDENSED CONSOLIDATED STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME

FOR THE SIX MONTHS ENDED 30 JUNE 2020

Six months ended 30 June

2020

2019

HK$'000

HK$'000

NOTE

(unaudited)

(unaudited)

Loss for the period

7

(42,893)

(89,828)

Other comprehensive expense for the period:

Items that will not be subsequently reclassified

to profit or loss for the period:

Surplus on transfer of right-of-use assets

and property, plant and equipment

to

investment properties at fair value

2,495

23,146

Fair value (loss) gain on investment in

equity instrument at fair value through

other comprehensive income

(10)

3,607

Deferred tax relating to items that will not

be reclassified to profit or loss

(621)

(6,689)

Exchange difference arising on translation

to presentation currency

(21,261)

4,070

Other comprehensive (expense) income

for the period

(19,397)

24,134

Total comprehensive expense for the period

(62,290)

(65,694)

Total comprehensive (expense) income

attributable to:

Owners of the Company

(66,099)

(68,242)

Non-controlling interests

3,809

2,548

(62,290)

(65,694)

SIM TECHNOLOGY GROUP LIMITED INTERIM REPORT 2020

15

INTERIM FINANCIAL STATEMENTS

CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL POSITION

AT 30 JUNE 2020

30 June

31 December

2020

2019

HK$'000

HK$'000

NOTES

(unaudited)

(audited)

Non-current assets

593,756

Investment properties

10

608,388

Property, plant and equipment

10

241,816

267,712

Right-of-use assets

10

72,659

55,098

Intangible assets

10

111,982

116,704

Deferred tax assets

11

43,425

44,092

Finance lease receivables

185

188

Interests in associates

10

6,424

6,647

Equity instruments at fair value through

648

other comprehensive income ("FVTOCI")

21

669

Other receivables

7,283

7,412

Consideration receivables

3,311

4,043

1,081,489

1,110,953

Current assets

302,309

Inventories

14

250,771

Finance lease receivables

165

169

Properties held for sale

10,751

12,711

Trade and notes receivables

12A

220,088

282,462

Contract assets

12B

4,562

11,201

Other receivables, deposits and prepayments

218,150

230,478

Amounts due from non-controlling

-

shareholders of subsidiaries

16

4,496

Consideration receivables

1,689

1,857

Financial assets at fair value through

5,712

profit or loss

21

22,512

Pledged bank deposits

32,134

31,226

Short-term bank deposits

323,633

296,380

Bank balances and cash

561,059

611,714

1,680,252

1,755,977

16 SIM TECHNOLOGY GROUP LIMITED INTERIM REPORT 2020

INTERIM FINANCIAL STATEMENTS

30 June

31 December

2020

2019

HK$'000

HK$'000

NOTES

(unaudited)

(audited)

Current liabilities

243,346

Trade and notes payables

15

224,322

Contract liabilities

172,888

202,255

Other payables, deposits received

38,523

and accruals

54,273

Bank borrowings

17

60,693

77,936

Lease liabilities

8,536

6,319

Tax payable

38,475

40,224

562,461

605,329

Net current assets

1,117,791

1,150,648

Total assets less current liabilities

2,199,280

2,261,601

Capital and reserves

236,508

Share capital

18

243,072

Reserves

1,772,906

1,849,269

Equity attributable to owners

2,009,414

of the Company

2,092,341

Non-controlling interests

22,139

18,330

Total equity

2,031,553

2,110,671

Non-current liabilities

21,241

Lease liabilities

2,865

Deferred tax liabilities

11

109,042

112,413

Deferred income

37,444

35,652

167,727

150,930

2,199,280

2,261,601

SIM TECHNOLOGY GROUP LIMITED INTERIM REPORT 2020

17

INTERIM FINANCIAL STATEMENTS

CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

FOR THE SIX MONTHS ENDED 30 JUNE 2020

Attributable to owners of the Company

Non-

Statutory

Share

Properties

Asset

Capital

Share

Share

surplus

Other

option

revaluation

revaluation

redemption

Translation

Accumulated

controlling

capital

premium

reserve

reserve

reserve

reserve

reserve

reserve

reserve

profits

Total

interests

Total

HK$'000

HK$'000

HK$'000

HK$'000

HK$'000

HK$'000

HK$'000

HK$'000

HK$'000

HK$'000

HK$'000

HK$'000

HK$'000

(Note a)

(Note b)

At 1 January 2019 (audited)

252,025

824,207

53,123

95,282

19,231

139,557

17,184

6,212

132,799

619,414

2,159,034

63,405

2,222,439

(Loss) profit for the period

-

-

-

-

-

-

-

-

-

(92,789)

(92,789)

2,961

(89,828)

Other comprehensive income

(expense) for the period

-

-

-

-

-

17,359

2,705

-

4,483

-

24,547

(413)

24,134

Total comprehensive income

(expense) for the period

-

-

-

-

-

17,359

2,705

-

4,483

(92,789)

(68,242)

2,548

(65,694)

Share options lapsed

-

-

-

-

(190)

-

-

-

-

190

-

-

-

Gain on partial disposal of equity

instruments at FVTOCI

-

-

-

-

-

-

(9,322)

-

-

9,322

-

-

-

Reduction in registered capital

in a non-wholly owned

subsidiary

-

-

-

-

-

-

-

-

-

-

-

(45,354)

(45,354)

Transfer to statutory surplus

reserve

-

-

3,519

-

-

-

-

-

-

(3,519)

-

-

-

Repurchase of ordinary shares

(6,193)

(13,673)

-

-

-

-

-

6,193

-

(6,193)

(19,866)

-

(19,866)

Dividends paid

-

-

-

-

-

-

-

-

-

(24,993)

(24,993)

-

(24,993)

Dividend paid to non-controlling

shareholders of a subsidiary

-

-

-

-

-

-

-

-

-

-

-

(142)

(142)

At 30 June 2019 (unaudited)

245,832

810,534

56,642

95,282

19,041

156,916

10,567

12,405

137,282

501,432

2,045,933

20,457

2,066,390

At 1 January 2020 (audited)

243,072

806,123

64,250

95,282

19,041

202,921

2,181

15,165

120,003

524,303

2,092,341

18,330

2,110,671

(Loss) profit for the period

-

-

-

-

-

-

-

-

-

(46,990)

(46,990)

4,097

(42,893)

Other comprehensive income

-

-

-

-

-

1,871

(7)

-

(20,973)

-

(19,109)

(288)

(19,397)

(expense) for the period

Total comprehensive income

-

-

-

-

-

1,871

(7)

-

(20,973)

(46,990)

(66,099)

3,809

(62,290)

(expense) for the period

Share options lapsed

-

-

-

-

(486)

-

-

-

-

486

-

-

-

Transfer to statutory surplus

-

-

1,129

-

-

-

-

-

-

(1,129)

-

-

-

reserve

Repurchase of ordinary shares

(6,564)

(10,264)

-

-

-

-

-

6,564

-

(6,564)

(16,828)

-

(16,828)

At 30 June 2020 (unaudited)

236,508

795,859

65,379

95,282

18,555

204,792

2,174

21,729

99,030

470,106

2,009,414

22,139

2,031,553

18 SIM TECHNOLOGY GROUP LIMITED INTERIM REPORT 2020

INTERIM FINANCIAL STATEMENTS

Notes:

  1. As stipulated by the relevant laws and regulations of the People's Republic of China ("PRC"), before distribution of the net profit each year, the subsidiaries established in the PRC shall set aside 10% of their net profit after taxation for the statutory surplus reserve fund (except where the reserve has reached 50% of the subsidiaries' registered capital). The reserve fund can only be used, upon approval by the board of directors of the relevant subsidiaries and by the relevant authority, to offset accumulated losses or increase capital.
  2. Other reserve was arisen from the reorganisation in preparation for the listing of the Company's shares on the Main Board of The Stock Exchange of Hong Kong Limited (the "Stock Exchange") and the difference between the considerations paid and the relevant non-controlling interests upon the acquisition of additional interests in subsidiaries.

SIM TECHNOLOGY GROUP LIMITED INTERIM REPORT 2020

19

INTERIM FINANCIAL STATEMENTS

CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS

FOR THE SIX MONTHS ENDED 30 JUNE 2020

Six months ended 30 June

2020

2019

HK$'000

HK$'000

(unaudited)

(unaudited)

OPERATING ACTIVITIES

Operating cash flows before movements in working

capital

26,794

31,726

Decrease in properties held for sales

1,743

3,907

(Decrease) increase in contract liabilities

(25,914)

38,753

Other movements in working capitals

33,210

126,448

Cash generated from operations

35,833

200,834

Interest received

6,311

3,680

Tax (paid) refund

(617)

1,378

NET CASH FROM OPERATING ACTIVITIES

41,527

205,892

INVESTING ACTIVITIES

Proceeds from disposal of financial assets at fair value

through profit or loss

16,038

-

Purchase of equity instruments at FVTOCI

-

(945)

Proceeds from disposal of equity instruments at FVTOCI

-

28,320

Purchase of property, plant and equipment

(2,056)

(20,753)

Proceeds on disposal of property, plant and equipment

238

311

Expenditure paid for intangible assets

(39,053)

(63,112)

Investment in an associate

-

(4,576)

Net cash outflow on acquisition of a subsidiary

-

(18,412)

Receipt of consideration receivables

664

-

Placement of pledged bank deposits

(33,238)

(21,620)

Withdrawal of pledged bank deposits

31,784

58,644

Placement of short-term bank deposits

(323,783)

-

Withdrawal of short-term bank deposits

294,680

-

NET CASH USED IN INVESTING ACTIVITIES

(54,726)

(42,143)

20 SIM TECHNOLOGY GROUP LIMITED INTERIM REPORT 2020

INTERIM FINANCIAL STATEMENTS

Six months ended 30 June

2020

2019

HK$'000

HK$'000

(unaudited)

(unaudited)

FINANCING ACTIVITIES

60,830

New bank borrowings raised

107,326

Repayments of bank borrowings

(76,756)

(92,081)

Decrease in other liabilities

-

(30,082)

Interest paid

(733)

(397)

Dividend paid

-

(24,993)

Dividend paid to non-controlling shareholders of a subsidiary

-

(142)

Cash transferred to non-controlling interest of a subsidiary upon

share reduction in registered capital of a subsidiary that does

not result in losing control

-

(45,354)

Repayment of lease liabilities

(4,809)

(3,260)

Repurchase of shares

(16,828)

(16,195)

NET CASH USED IN FINANCING ACTIVITIES

(38,296)

(105,178)

NET (DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS

(51,495)

58,571

CASH AND CASH EQUIVALENTS AT BEGINNING

OF THE PERIOD

611,714

647,776

EFFECT OF FOREIGN EXCHANGE RATE CHANGES

840

(501)

CASH AND CASH EQUIVALENTS AT THE END OF THE PERIOD,

REPRESENTED BY BANK BALANCES AND CASH

561,059

705,846

SIM TECHNOLOGY GROUP LIMITED INTERIM REPORT 2020

21

INTERIM FINANCIAL STATEMENTS

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS FOR THE SIX MONTHS ENDED 30 JUNE 2020

1. GENERAL INFORMATION AND BASIS OF PREPARATION

The Company was incorporated in Bermuda as an exempted company under the Companies Act 1981 of Bermuda (as amended) with limited liability.

The Company is an investment holding company. The principal activities of its subsidiaries are carrying out handsets and internet of things ("IOT") terminals business, electronic manufacturing services ("EMS") business, IOT system and online-to-offline ("O2O") business, intelligent manufacturing business, property development and property management in the PRC.

The functional currency of the Company is Renminbi ("RMB"). The condensed consolidated financial statements are presented in Hong Kong dollars ("HK$"), as the Directors of the Company consider that it is a more appropriate presentation for a company listed on The Stock Exchange of Hong Kong Limited ("Stock Exchange") and for the convenience of the shareholders.

The condensed consolidated financial statements of the Group have been prepared in accordance with International Accounting Standard ("IAS") 34 "Interim Financial Reporting" issued by the International Accounting Standards Board ("IASB") as well as the applicable disclosure requirements of Appendix 16 to the Rules Governing the Listing of Securities on the Stock Exchange.

1A. SIGNIFICANT EVENTS AND TRANSACTIONS IN THE CURRENT INTERIM PERIOD

The outbreak of COVID-19 and the subsequent quarantine measures as well as the travel restrictions imposed by many countries have had negative impact to the global economy, business environment and directly and indirectly affect the operation of the Group. The Group stopped its manufacturing activities in handset and IOT terminal business, EMS business, and Intelligent manufacturing business from January to February 2020 due to mandatory government quarantine measures imposed by the relevant authorities in the People Republic of China ("PRC").

22 SIM TECHNOLOGY GROUP LIMITED INTERIM REPORT 2020

INTERIM FINANCIAL STATEMENTS

The outbreak of the COVID-19 not only threatened the operations of many industries and businesses, but also adversely impacted the economic development in the PRC. In face of the slowdown in the economic growth in the PRC, impacts including reduction in revenue and production and delay in shipment during the close-down period.

On the other hand, the PRC government has announced some financial measures and supports for corporate to overcome the negative impact arising from the pandemic. On 30 January 2020, the Ministry of Human Resources and Social Security issued an announcement regarding the administration of Chinese social security contributions during the period of prevention and containment of the spread of COVID-19, decided to reduce or waive employer obligations on social security contributions for a specified period from February to December 2020 to ease the burden of enterprises during this difficult time. Approximate HK$13,876,000 of the retirement benefits costs were waived from February to June 2020.

In addition, during the current interim period, its PRC subsidiaries received HK$192,000 subsidies from the PRC local government for financial assistance to the Group, which has been recognised as other income during the interim period.

2. PRINCIPAL ACCOUNTING POLICIES

The condensed consolidated financial statements have been prepared on the historical cost basis, except for investment properties and certain financial instruments that are measured at fair values at the end of each reporting period.

Other than the change in accounting policies resulting from application of new and amendments to International Financial Reporting Standards ("IFRSs") accounting policies and methods of computation used in the condensed consolidated financial statements for the six months ended 30 June 2020 are the same as those followed in the preparation of the Group's annual financial statements for the year ended 31 December 2019.

SIM TECHNOLOGY GROUP LIMITED INTERIM REPORT 2020

23

INTERIM FINANCIAL STATEMENTS

Application of new and amendments to IFRS Standards

In the current interim period, the Group has applied, for the first time, the following new and amendments to IFRSs issued by the International Accounting Standards Board ("IASB") which are mandatory effective for the annual period beginning on or after 1 January 2020 for the preparation of the Group's condensed consolidated financial statements:

Amendments to IAS 1 and IAS 8

Definition of Material

Amendments to IFRS 3

Definition of a Business

Amendments to IFRS 9, IAS 39 and IFRS 7

Interest Rate Benchmark Reform

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

2.1 Impacts of application on Amendments to IAS 1 and IAS 8 "Definition of Material"

The amendments provide a new definition of material that states "information is material if omitting, misstating or obscuring it could reasonably be expected to influence decisions that the primary users of general purpose financial statements make on the basis of those financial statements, which provide financial information about a specific reporting entity". The amendments also clarify that materiality depends on the nature or magnitude of information, either individually or in combination with other information, in the context of the financial statements taken as a whole.

The application of the amendments in the current period had no impact on the condensed consolidated financial statements. Changes in presentation and disclosures on the application of the amendments, if any, will be reflected on the consolidated financial statements for the year ending 31 December 2020.

24 SIM TECHNOLOGY GROUP LIMITED INTERIM REPORT 2020

INTERIM FINANCIAL STATEMENTS

2.2 Impacts and accounting policies on application of Amendments to IFRS 3 "Definition of a business"

  1. Accounting policies
    Business combinations or asset acquisitions Operational concentration test
    Effective from 1 January 2020, the Group can elect to apply an optional concentration test, on a transaction-by-transaction basis, that permit a simplified assessment of whether an acquired set of activities and assets is not a business. The concentration test is met if substantially all of the fair value of the gross assets required is concentrated in a single identifiable asset or group of similar identifiable assets. The gross assets under assessment exclude cash and cash equivalent, deferred tax assets, and goodwill resulting from the effects of deferred tax liabilities. If the concentration test is met, the set of activities and assets is determined not to be a business and no further assessment is needed.
  2. Transition and summary effects
    The amendments had no impact on the condensed consolidated financial statements of the Group.

SIM TECHNOLOGY GROUP LIMITED INTERIM REPORT 2020

25

INTERIM FINANCIAL STATEMENTS

3. REVENUE

Disaggregation of revenue from contracts with customers For the six months ended 30 June 2020 (unaudited)

Handsets

IOT

and IOT

system

Intelligent

terminals

EMS

and O2O

manufacturing

Property

Property

business

business

business

business

development

management

HK$'000

HK$'000

HK$'000

HK$'000

HK$'000

HK$'000

Types of goods or services

Sale of handsets and IOT terminals

244,933

-

-

-

-

-

Electronic manufacturing services

-

34,525

-

-

-

-

Sale of goods to vending machine

customers and franchisee

-

-

81,268

-

-

-

Procurement agency service

-

-

14,814

-

-

-

Sale of intelligent manufacturing products

-

-

-

36,691

-

-

Sale of properties

-

-

-

-

1,146

-

Property rental

-

-

-

-

-

18,362

Total

244,933

34,525

96,082

36,691

1,146

18,362

Revenue from contracts with customers

and timing of revenue recognition

A point in time

244,933

-

96,082

36,691

1,146

N/A

Over time

-

34,525

-

-

-

N/A

Total

244,933

34,525

96,082

36,691

1,146

N/A

26 SIM TECHNOLOGY GROUP LIMITED INTERIM REPORT 2020

INTERIM FINANCIAL STATEMENTS

For the six months ended 30 June 2019 (unaudited)

Handsets

IOT

and IOT

system

Intelligent

terminals

EMS

and O2O

manufacturing

Property

Property

business

business

business

business

development

management

HK$'000

HK$'000

HK$'000

HK$'000

HK$'000

HK$'000

Types of goods or services

Sale of handsets and IOT terminals

286,753

-

-

-

-

-

Electronic manufacturing services

-

51,170

-

-

-

-

Sale of goods to vending machine

customers and franchisee

-

-

97,247

-

-

-

Equipment finance lease service

-

-

78

-

-

-

Procurement agency service

-

-

8,925

-

-

-

Sale of intelligent manufacturing products

-

-

-

46,377

-

-

Sale of properties

-

-

-

-

5,616

-

Property rental

-

-

-

-

-

21,011

Total

286,753

51,170

106,250

46,377

5,616

21,011

Revenue from contracts with customers

and timing of revenue recognition

A point in time

286,753

-

106,172

46,377

5,616

N/A

Over time

-

51,170

-

-

-

N/A

Total

286,753

51,170

106,172

46,377

5,616

N/A

Geographical markets

The Group's revenue are substantially generated from the PRC, the country of domicile from which the group entities derive revenue. No further analysis is presented.

SIM TECHNOLOGY GROUP LIMITED INTERIM REPORT 2020

27

INTERIM FINANCIAL STATEMENTS

4. SEGMENT INFORMATION

Segment information is presented based on internal reports about components of the Group that are regularly reviewed by the chief operating decision maker, being the executive directors of the Company, for the purpose of allocating resources to segments and assessing their performance.

During the six month ended 30 June 2020, the Group was organised into six (six months ended 30 June 2019: six) reportable and operating segments, being handsets and IOT terminals business, EMS business, IOT system and O2O business, intelligent manufacturing business, property development and property management.

The following is an analysis of the Group's revenue and results by reportable and operating segments:

For the six months ended 30 June 2020 (unaudited)

Handsets

IOT

and IOT

system

Intelligent

terminals

EMS

and O2O

manufacturing

Property

Property

business

business

business

business

development

management

Consolidated

HK$'000

HK$'000

HK$'000

HK$'000

HK$'000

HK$'000

HK$'000

(Note)

Revenue

External sales

244,933

34,525

96,082

36,691

1,146

18,362

431,739

Segment (loss) profit

(22,324)

255

(4,865)

(4,174)

(998)

(1,600)

(33,706)

Other income and other

gains and losses

(5,369)

Share of results of associates

(223)

Corporate expenses

(4,873)

Finance costs

(1,389)

Loss before taxation

(45,560)

28 SIM TECHNOLOGY GROUP LIMITED INTERIM REPORT 2020

INTERIM FINANCIAL STATEMENTS

For the six months ended 30 June 2019 (unaudited)

Handsets

IOT

and IOT

system

Intelligent

terminals

EMS

and O2O

manufacturing

Property

Property

business

business

business

business

development

management

Consolidated

HK$'000

HK$'000

HK$'000

HK$'000

HK$'000

HK$'000

HK$'000

(Note)

Revenue

External sales

286,753

51,170

106,250

46,377

5,616

21,011

517,177

Segment (loss) profit

(59,689)

491

(8,121)

(5,584)

(2,646)

10,953

(64,596)

Other income and other

gains and losses

(20,177)

Share of results of associates

(1,039)

Corporate expenses

(6,568)

Finance costs

(640)

Loss before taxation

(93,020)

Note: The IOT system and 020 business is still in a developing stage in both periods. The revenue of this segment represents the income generated from equipment finance lease service, sale of goods to vending machine customers and franchisees, and provision of procurement agency service.

Segment result represents the financial result by each segment without allocation of interest income, unallocated foreign exchange loss, net gain or loss on financial assets at fair value through profit or loss, write-off of amounts due from non-controlling shareholders of subsidiaries and other receivables, share of results of associates, certain other income, corporate expenses, finance costs and taxation.

SIM TECHNOLOGY GROUP LIMITED INTERIM REPORT 2020

29

INTERIM FINANCIAL STATEMENTS

The following is an analysis of the Group's assets and liabilities by reportable and operating segments:

30 June

31 December

2020

2019

HK$'000

HK$'000

(unaudited)

(audited)

Segment assets

Handsets and IOT terminals business

653,041

657,760

EMS business

146,475

174,595

IOT system and O2O business

108,177

108,110

Intelligent manufacturing business

162,669

174,523

Property development

15,821

17,634

Property management

611,974

631,693

Total segment assets

1,698,157

1,764,315

Unallocated assets

1,063,584

1,102,615

Total assets

2,761,741

2,866,930

Segment liabilities

Handsets and IOT terminals business

372,878

368,890

EMS business

66,940

39,717

IOT system and O2O business

17,714

17,022

Intelligent manufacturing business

71,884

66,156

Property development

6,646

9,791

Property management

7,026

7,026

Total segment liabilities

543,088

508,602

Unallocated liabilities

187,100

247,657

Total liabilities

730,188

756,259

30 SIM TECHNOLOGY GROUP LIMITED INTERIM REPORT 2020

INTERIM FINANCIAL STATEMENTS

For the purposes of monitoring segment performances and allocating resources between segments, all assets are allocated to reportable and operating segments other than certain property, plant and equipment, certain right-of-use assets, interests in associates, entrusted loan receivables, consideration receivables, amounts due from non-controlling shareholders of subsidiaries, pledged bank deposits, bank balances and cash, financial assets at fair value through profit or loss, financial assets at fair value through other comprehensive income, deferred tax assets and certain other receivables, deposits and prepayments. Assets used jointly by operating segments are allocated on the basis of the revenues earned by individual operating segments.

For the purposes of monitoring segment performances and allocating resources between segments, all liabilities are allocated to reportable and operating segments other than certain lease liabilities, certain other payables, accruals, tax payable, bank borrowings and deferred tax liabilities.

5. OTHER INCOME/OTHER GAINS AND LOSSES

Six months ended 30 June

2020

2019

HK$'000

HK$'000

(unaudited)

(unaudited)

Other income

Refund of Value Added Tax ("VAT") (Note i)

1,904

2,010

Government grants (Note ii)

5,808

5,155

Interest income earned on bank balances

11,296

7,226

Others

713

288

19,721

14,679

SIM TECHNOLOGY GROUP LIMITED INTERIM REPORT 2020

31

INTERIM FINANCIAL STATEMENTS

Six months ended 30 June

2020

2019

HK$'000

HK$'000

(unaudited)

(unaudited)

Other gains and losses

Gain (loss) on disposal of property, plant

and equipment

126

(885)

Net foreign exchange loss

(8,585)

(6,069)

Changes in fair values of investment properties

(8,924)

3,078

Write off of other receivables

(1,896)

-

Write off of amount due from non-controlling

shareholders of subsidiaries

(4,496)

-

Net (loss) gain arising on financial assets measured

at fair value through profit or loss

(762)

2,954

Others

5,323

4,600

(19,214)

3,678

Notes:

  1. Shanghai Simcom Limited ("Shanghai Simcom") and Shanghai Pami Intelligent Technology Co. Limited are engaged in the business of distribution of self-developed and produced software and the development of automated test equipment and software. Under the current PRC tax regulation, they are entitled to a refund of VAT paid for sales of self-developed and produced software and the development of automated test software in the PRC.
  2. During the six months ended 30 June 2020, the amount includes HK$4,344,000 (six months ended 30 June 2019: HK$3,716,000) unconditional government grants received during the period which was granted to encourage for the Group's research and developments activities in the PRC.
    As at 30 June 2020, an amount of HK$39,589,000 (31 December 2019: HK$41,495,000) remained to be amortised and is included in other payables (for current portion) and deferred income (for non-current portion).

32 SIM TECHNOLOGY GROUP LIMITED INTERIM REPORT 2020

INTERIM FINANCIAL STATEMENTS

6. TAXATION

Six months ended 30 June

2020

2019

HK$'000

HK$'000

(unaudited)

(unaudited)

Taxation comprises:

PRC Enterprise Income Tax ("EIT")

485

(3,865)

PRC Land Appreciation Tax ("LAT")

(49)

(3,931)

Overprovisions on PRC LAT in previous years

-

8,761

Deferred tax credit

2,231

2,227

Taxation for the period

2,667

3,192

No provision for Hong Kong Profits Tax has been made for both periods as the Group has no assessable profits arising in Hong Kong.

EIT is calculated at the rates prevailing in the relevant districts of the PRC taking relevant tax incentives into account. Shanghai Simcom, Shenyang SIM Simcom Technology Limited, Shanghai Sunrise Simcom Limited and Shanghai Jizhi Automation Technology Co. Limited are classified as New and High Technology Enterprise and is entitled to adopt a tax rate of 15%. The relevant annual tax rate used for EIT for the Group's subsidiaries ranged from 15% to 25% (six months ended 30 June 2019: 15% to 25%).

The provision of LAT is estimated according to the requirements set forth in the relevant tax laws and regulations of the PRC, which is charged at progressive rates ranging from 30% to 60% (six months ended 30 June 2019: 30% to 60%) of the appreciation value, with certain allowable deductions.

SIM TECHNOLOGY GROUP LIMITED INTERIM REPORT 2020

33

INTERIM FINANCIAL STATEMENTS

7. LOSS FOR THE PERIOD

Six months ended 30 June

2020

2019

HK$'000

HK$'000

(unaudited)

(unaudited)

Loss for the period is arrived at after charging:

Amortisation of intangible assets

41,756

(included in cost of sales and services)

59,532

Less: Amount capitalised in development costs

(3,354)

(3,403)

Less: Amount capitalised in inventories

(38,402)

(56,129)

Impairment loss recognised in respect of intangible

-

-

-

assets (included in cost of sales and services)

21,072

Depreciation of property, plant and equipment

21,272

27,529

Less: Amount capitalised in development costs

(1,365)

(2,284)

Less: Amount capitalised in inventories

(12,820)

(13,701)

7,087

11,544

Depreciation of right-of-use assets

6,221

4,550

Staff costs including directors' emoluments

102,675

125,477

Less: Amount capitalised in development costs

(24,880)

(42,428)

Less: Amount capitalised in inventories

(9,127)

(7,725)

68,668

75,324

Costs of inventories recognised as an expense

336,151

(included in cost of sales and services)

410,554

Costs of properties sold (included in cost

1,440

of sales and services)

4,275

Cost of manufacturing services

33,024

(included in cost of sales and services)

49,046

34 SIM TECHNOLOGY GROUP LIMITED INTERIM REPORT 2020

INTERIM FINANCIAL STATEMENTS

  1. DIVIDENDS
    No dividends were paid, declared or proposed during the interim period (six months ended 30 June 2019: special dividends of HK1 cent per share amounting to HK$24,993,000).
    The Directors do not recommend the payment of an interim dividend for the six months ended 30 June 2020 (six months ended 30 June 2019: Nil).
  2. LOSS PER SHARE
    The calculation of the basic and diluted loss per share attributable to the owners of the Company is based on the following data:

Six months ended 30 June

2020

2019

HK$'000

HK$'000

(unaudited)

(unaudited)

Loss

Loss for the purposes of basic and diluted loss per

share (loss for the period attributable to the

(46,990)

owners of the Company)

(92,789)

'000

'000

Number of shares

Weighted average number of ordinary shares for

2,410,381

the propose of diluted loss per share

2,493,872

SIM TECHNOLOGY GROUP LIMITED INTERIM REPORT 2020

35

INTERIM FINANCIAL STATEMENTS

For the six months ended 30 June 2020 and 2019, the computation of diluted loss per share does not assume the exercise of share options since such assumed exercise would reduce loss per shares of the Company for the period.

10. MOVEMENTS IN INVESTMENT PROPERTIES, PROPERTY, PLANT AND EQUIPMENT, INTANGIBLE ASSETS AND RIGHT-OF-USE ASSETS

Investment properties

The fair value of the Group's investment properties at 30 June 2020 and 31 December 2019 have been arrived at on the basis of a valuation carried out on that date by Vigers Appraisal & Consulting Limited, an independent qualified professional valuer not related to the Group.

The fair value was determined based on the income capitalisation approach, where the market rentals of all lettable units of the properties are assessed and discounted at the market yield expected by investors for this type of properties. The market rentals are assessed based on estimates of future cash flows, supported by the terms of existing lease and reasonable and supportable assumptions that represent what knowledgeable willing parties would assume about rental income for future leases in the light of current conditions. The rate is determined by reference to the yields derived from analysing the sales transactions of similar commercial properties in Shanghai and Shenyang. There has been no change from the valuation technique used in the prior year.

In estimating the fair value of the properties, the highest and best use of the properties is their current use. At the end of the reporting period, the chief financial officer of the Group works closely with the independent qualified professional valuer to establish and determine the appropriate valuation techniques and inputs. Where there is a material change in the fair value of the assets, the causes of the fluctuations will be reported to the management of the Group.

36 SIM TECHNOLOGY GROUP LIMITED INTERIM REPORT 2020

INTERIM FINANCIAL STATEMENTS

During the current interim period, the Group has transferred certain buildings from property, plant and equipment and right-of-use assets with aggregate carrying amount of HK$2,427,000 (six months ended 30 June 2019: HK$4,738,000) to investment properties because its use has changed as evidenced by the end of owner-occupation. The difference between the carrying amounts and the fair value of the relevant properties at the date of transfer amounts to HK$2,495,000 (six months ended 30 June 2019: HK$23,146,000) and is recognised in other comprehensive income.

The fair value of investment properties as at 30 June 2020 is HK$593,756,000 (31 December 2019: HK$608,388,000) and a fair value loss of HK$8,924,000 (six months ended 30 June 2019: fair value gain of HK$3,078,000) have been recognised directly in profit or loss for the six months ended 30 June 2020.

Property, plant and equipment

During the current interim period, additions to the Group's property, plant and equipment amounted to HK$2,056,000 (six months ended 30 June 2019: HK$20,753,000).

During the current interim period, the Group disposed of certain property, plant and equipment with an aggregate carrying amount of HK$112,000 (six months ended 30 June 2019: HK$1,196,000) for cash proceeds of HK$238,000 (six months ended 30 June 2019: HK$311,000), resulting in a gain on disposal of HK$126,000 (six months ended 30 June 2019: loss on disposal of HK$885,000).

For the six months ended 30 June 2019, the Group and an independent third party set up an entity named 瀋陽智慧谷置業有限公司, in which the Group owned 49% of

the equity interests and accounted for as an associate. The Group invested in 瀋陽智 慧谷置業有限公司 by injection of a land and a property with carrying amount of

HK$9,977,000 and HK$10,162,000. As at the date of incorporation, remeasurement gain on the land and property of HK$4,603,000 was credited to other gain and losses.

SIM TECHNOLOGY GROUP LIMITED INTERIM REPORT 2020

37

INTERIM FINANCIAL STATEMENTS

Intangible assets

During the current interim period, additions to the Group's intangible assets amounted to HK$39,053,000 (six months ended 30 June 2019: HK$63,112,000) including addition to development costs of HK$39,012,000 (six months ended 30 June 2019: HK$63,112,000) for development projects on the products.

Right-of-use assets

During the current interim period, the Group entered into certain new lease agreements for the use of office premises and warehouses for one to five years which constitute lease modification. The Group is required to make fixed monthly payments during the contract period. On lease commencement, the Group recognised right-of-use assets and lease liability amounted to HK$24,951,000 (six months ended 30 June 2019: HK$5,865,000).

11. DEFERRED TAXATION

The following is the analysis of the deferred tax balances for financial reporting purposes:

30 June

31 December

2020

2019

HK$'000

HK$'000

(unaudited)

(audited)

Deferred tax assets

43,425

44,092

Deferred tax liabilities

(109,042)

(112,413)

(65,617)

(68,321)

38 SIM TECHNOLOGY GROUP LIMITED INTERIM REPORT 2020

INTERIM FINANCIAL STATEMENTS

12A. TRADE AND NOTES RECEIVABLES

The normal credit period given on sale of goods and services relating to handsets and IOT terminals business, EMS business, IOT system and 020 business and intelligent manufacturing business is 0-90 days. A longer period is granted to a few customers with whom the Group has a good business relationship and which are in sound financial condition. There is no credit given to sales of properties.

The following is an aged analysis of trade receivables, net of allowance for credit losses, as well as notes receivables presented based on the invoice dates at the end of the reporting period, which approximated the revenue recognition dates:

30 June

31 December

2020

2019

HK$'000

HK$'000

(unaudited)

(audited)

Trade receivables

117,300

0-30 days

184,216

31-60 days

34,564

41,753

61-90 days

20,237

15,293

91-180 days

26,625

14,893

Over 180 days

34,673

48,061

233,399

304,216

Less: Accumulated for credit losses

(16,709)

(28,387)

216,690

275,829

Notes receivables (Note)

-

0-30 days

726

31-60 days

-

1,619

61-90 days

-

55

91-180 days

3,178

4,009

Over 180 days

220

224

3,398

6,633

Trade and notes receivables

220,088

282,462

Note: Notes receivables represent the promissory notes issued by banks received from the customers.

SIM TECHNOLOGY GROUP LIMITED INTERIM REPORT 2020

39

INTERIM FINANCIAL STATEMENTS

12B. CONTRACT ASSETS

30 June

31 December

2020

2019

HK$'000

HK$'000

(unaudited)

(audited)

Current:

Sale of intelligent manufacturing products

4,462

11,076

Electronic manufacturing services

100

125

4,562

11,201

The contract assets primarily related to the Group's right to consideration for work completed and not billed because the rights are conditioned on i) the completion of retention period at the reporting date on the sale of intelligent manufacturing products; and ii) the delivery of finished goods at the reporting date on the electronic manufacturing services. The contract assets are transferred to trade receivables when the rights become unconditional. The Group typically transfers contract assets to trade receivables within 12 months.

40 SIM TECHNOLOGY GROUP LIMITED INTERIM REPORT 2020

INTERIM FINANCIAL STATEMENTS

13. REVERSAL OF IMPAIRMENT LOSSES, NET OF IMPAIRMENT (IMPAIRMENT LOSSES UNDER EXPECTED CREDIT MODEL, NET OF REVERSAL)

Six months ended 30 June

2020

2019

HK$'000

HK$'000

(unaudited)

(unaudited)

Impairment losses (reversed) recognized in respect of

Entrusted loan receivbles

-

26,287

Trade receivables

(1,267)

1,070

(1,267)

27,357

The basis of determining the inputs and assumptions and the estimation techniques used in the consolidated financial statements for the six months ended 30 June 2020 are the same as those followed in the preparation of the Group's annual financial statements for the year ended 31 December 2019.

14. INVENTORIES

30 June

31 December

2020

2019

HK$'000

HK$'000

(unaudited)

(audited)

Raw materials

152,778

151,950

Work in progress

34,491

32,160

Finished goods

115,040

66,661

302,309

250,771

SIM TECHNOLOGY GROUP LIMITED INTERIM REPORT 2020

41

INTERIM FINANCIAL STATEMENTS

15. TRADE AND NOTES PAYABLES

Trade and notes payables (other than for the construction of properties held for sale) principally comprise amounts outstanding for trade purchases. The normal credit period taken for trade purchases is 30-90 days.

Payables and accrued expenditure on construction of properties held for sale comprise construction costs and other project-related expenses which are payable based on project progress measured by the Group.

An aged analysis of the Group's trade and notes payables at the end of the reporting period presented based on the invoice dates for trade payables or dates of issuance for notes payables is as follows:

30 June

31 December

2020

2019

HK$'000

HK$'000

(unaudited)

(audited)

Trade payables

0-30 days

132,636

149,035

31-60 days

11,466

19,724

61-90 days

3,597

2,636

Over 90 days

70,487

47,858

218,186

219,253

Notes payables

0-30 days

-

5,069

91-180 days

25,160

-

Trade and notes payables

243,346

224,322

42 SIM TECHNOLOGY GROUP LIMITED INTERIM REPORT 2020

INTERIM FINANCIAL STATEMENTS

  1. AMOUNTS DUE FROM NON-CONTROLLING SHAREHOLDERS OF SUBSIDIARIES
    Amounts due from non-controlling shareholders of subsidiaries are unsecured, interest- free and repayable on demand.
  2. BANK BORROWINGS
    During the current period, the Group obtained new short-term borrowings with total amount of HK$60,830,000 (six months ended 30 June 2019: HK$107,326,000). The bank borrowings carry fixed interest rate at 3.9% per annum (six months ended 30 June 2019: variable interest rate at Loan Prime Rate plus a spread ranged from 3.9% to 7.6% per annum) and are repayable within one year. Pursuant to the loan agreements, the bank borrowings were secured by investment properties, property, plant and equipment, right-of-use assets and pledged bank deposits.
  3. SHARE CAPITAL

Number

Share

of shares

capital

'000

HK$'000

Ordinary shares of HK$0.1 each

Authorised:

At 1 January 2020 and 30 June 2020

3,000,000

300,000

Issued:

At 1 January 2020

2,430,724

243,072

Shares repurchased and cancelled

(65,640)

(6,564)

At 30 June 2020

2,365,084

236,508

SIM TECHNOLOGY GROUP LIMITED INTERIM REPORT 2020

43

INTERIM FINANCIAL STATEMENTS

19. COMMITMENTS

30 June

31 December

2020

2019

HK$'000

HK$'000

(unaudited)

(audited)

Expenditure in respect of investments in associates

contracted for but not provided in the condensed

consolidated financial statements

4,414

4,492

20. RELATED PARTY TRANSACTIONS

The remuneration of key management during the period was as follows:

Six months ended 30 June

2020

2019

HK$'000

HK$'000

(unaudited)

(unaudited)

Short term benefits

1,506

1,565

Post-employment benefits

66

68

1,572

1,633

Six months ended 30 June

2020

2019

HK$'000

HK$'000

(unaudited)

(unaudited)

Intelligent manufacturing business income

from an associate

3,717

-

44 SIM TECHNOLOGY GROUP LIMITED INTERIM REPORT 2020

INTERIM FINANCIAL STATEMENTS

30 June

31 December

2020

2019

HK$'000

HK$'000

(unaudited)

(audited)

Trade receivable from an associate

3,709

-

The trade receivable from an associate are unsecured, interest free with 90 days credit terms.

21. FAIR VALUE MEASUREMENT OF FINANCIAL INSTRUMENTS

Fair value of the Group's financial assets that are measured at fair value on a recurring basis.

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 and financial liabilities 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); and
  • 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).

SIM TECHNOLOGY GROUP LIMITED INTERIM REPORT 2020

45

INTERIM FINANCIAL STATEMENTS

Fair value as at

30 June

31 December

2020

2019

HK$'000

HK$'000

Fair value

Valuation techniques and

(unaudited)

(audited)

hierarchy

key input(s)

Financial assets:

Equity instruments at fair

648

669

Level 3

Market approach - in this approach,

value through other

price to book value (PB multiple)

comprehensive income

adjusted with discount for lack of

marketability was adopted for the

valuation of the ownership of the

investee base on PB multiple of a

group of comparable companies in

the market in the similar business.

Financial assets at fair value

5,712

22,512

Level 1

Quoted bid prices in an active

through profit or loss

market.

Fair value of the Group's financial assets and financial liabilities that are not measured at fair value on a recurring basis.

The management of the Group considers that the carrying amounts of financial assets and financial liabilities recorded at amortised cost in the condensed consolidated statement of financial position approximate their fair values.

46 SIM TECHNOLOGY GROUP LIMITED INTERIM REPORT 2020

OTHER INFORMATION

DIRECTORS' AND CHIEF EXECUTIVES' INTERESTS AND SHORT POSITION IN SHARES

At 30 June 2020, the interests and short positions of the Directors and chief executives of the Company in the shares, underlying shares and debentures of the Company or any of its associated corporation (within the meaning of Part XV of the Securities and Future Ordinance (CAP 571, Laws of Hong Kong) ("SFO")), as recorded in the register required to be kept by the Company pursuant to Section 352 of the SFO, or as otherwise notified to the Company and The Stock Exchange of Hong Kong Limited ("Stock Exchange") pursuant to the Model Code for Securities Transactions by Directors of Listed Issuers ("Model Code") as set out in Appendix 10 to the Rules Governing the Listing of Securities on the Stock Exchange (the "Listing Rules"), were as follows:

Long position in the shares of the Company

Approximate

Total number of

percentage of

ordinary shares

interest in

Name of director

Nature of interest

of the Company

Total

the Company

(note 3)

Mr Wong Cho Tung

Corporate interest (note 1)

1,209,084,000

1,209,084,000

51.12%

Personal interest

3,098,000

3,098,000

0.13%

Total

1,212,182,000

51.25%

Ms Yeung Man Ying

Corporate interest (note 2)

734,857,000

734,857,000

31.07%

Personal interest

3,418,000

3,418,000

0.14%

Total

738,275,000

31.21%

Mr Liu Jun

Personal interest

1,000,000

1,000,000

0.04%

SIM TECHNOLOGY GROUP LIMITED INTERIM REPORT 2020

47

OTHER INFORMATION

Notes:

  1. Mr Wong Cho Tung ("Mr Wong") controls more than one-third of the voting power of Info Dynasty Group Limited ("Info Dynasty"). Mr Wong is therefore deemed to be interested in all the 734,857,000 shares held by Info Dynasty in the Company by virtue of Part XV of the SFO. Mr Wong is the sole director of Intellipower Investments Limited ("Intellipower") and Simcom Limited ("Simcom (BVI)") is wholly-owned by Mr Wong. Therefore, Mr Wong is deemed to be interested in all the 454,227,000 shares and 20,000,000 shares held by Intellipower and Simcom (BVI) respectively in the Company by virtue of Part XV of the SFO respectively.
  2. Ms Yeung Man Ying ("Mrs Wong"), the spouse of Mr Wong, controls more than one-third of the voting power of Info Dynasty. Mrs Wong is therefore deemed to be interested in all the 734,857,000 shares held by Info Dynasty by virtue of Part XV of the SFO.
  3. Calculation of percentage of interest in the Company is based on the issued share capital of 2,365,086,300 shares of the Company as at 30 June 2020.

As at 30 June 2020, save as disclosed above, none of the Directors, chief executives of the Company or their associates had any interests or short positions, whether beneficial or non-beneficial, in the shares, underlying shares or debentures of the Company or any of its associated corporations as recorded in the register required to be kept under section 352 of the SFO, or as otherwise notified to the Company and the Stock Exchange pursuant to the Model Code.

48 SIM TECHNOLOGY GROUP LIMITED INTERIM REPORT 2020

OTHER INFORMATION

SUBSTANTIAL SHAREHOLDERS' OR OTHERS' INTERSETS IN THE SECURITIES OF THE COMPANY

As at 30 June 2020, the interests of the substantial Shareholders and other persons (other than Directors or chief executives of the Company) in the shares and underlying shares of the Company as recorded in the register required to be kept by the Company pursuant to section

336 of the SFO were as follows:

Long position in the shares of the Company

Total number

Approximate

of ordinary

percentage of

shares of

interest in

Name of shareholder

Nature of interest

the Company

the Company

(note 1)

Info Dynasty (note 2)

Personal interest

734,857,000

31.07%

Intellipower (note 3)

Personal interest

454,227,000

19.21%

Notes:

  1. Calculation of percentage of interest in the Company is based on the issued share capital of 2,365,086,300 shares of the Company as at 30 June 2020.
  2. The relationship between Info Dynasty and Mr Wong and the relationship between Info Dynasty and Mrs Wong is disclosed under the paragraph headed " Directors and Chief Executives' Interests and Short Position in Shares" above.
  3. The relationship between Intellipower and Mr Wong is disclosed under the paragraph headed " Directors and Chief Executives' Interests and Short Position in Shares"

Save as disclosed above, as at 30 June 2020, no other substantial Shareholders or persons had any interests or short positions in the shares and underlying shares of the Company as recorded in the register required to be kept by the Company under the section 336 of the SFO.

SIM TECHNOLOGY GROUP LIMITED INTERIM REPORT 2020

49

OTHER INFORMATION

SHARE OPTIONS

The Company has granted share options under its share option scheme adopted in accordance with Chapter 17 of the Listing Rules. Details of outstanding share options and the movements during 1H-2020 are as follows:

Lapsed/

Exercised

expired

Category of

Date of

Outstanding at

during

during

Outstanding at

participants

grant

1 January 2020

the period

the period

30 June 2020

Employees of the Group

19.7.2013

12,600,000

-

(2,700,000)

9,900,000

Consultants

19.7.2013

45,400,000

-

45,400,000

Total

58,000,000

-

(2,700,000)

55,300,000

Notes:

  1. In relation to each grantee of options granted on 19 July 2013, 25% of options will vest in each of the four years from 15 April 2014. The exercise price per share is HK$0.346 and the exercise period is 15 April 2014 to 18 July 2023.
  2. There was no share options granted during 1H-2020.

Save as disclosed above, at no time during 1H-2020 was the Company or any of its subsidiaries a party to any arrangements that would enable the Directors or the chief executive of the Company to acquire benefits by means of acquisition of shares in, or debt securities (including debentures) of, the Company or any other body corporate and save as disclosed in this report, none of the Directors, the chief executive, their spouses or children under the age of 18, had any right to subscribe for securities of the Company, or had exercised any such right during 1H-2020.

50 SIM TECHNOLOGY GROUP LIMITED INTERIM REPORT 2020

OTHER INFORMATION

PURCHASE, SALE OR REDEMPTION OF LISTED SECURITIES OF THE COMPANY

During 1H-2020, the Company repurchased 65,638,000 shares of the Company on the Stock Exchange and the shares repurchased were cancelled subsequently. Details of the repurchase are as follows:

Aggregate

price paid

Number

(inclusive

Month of

of shares

Price per share

of related

repurchase

repurchased

Highest

Lowest

expenses)

'000

HK$

HK$

HK$'000

January 2020

8,794

0.285

0.265

2,455

April 2020

8,338

0.249

0.198

1,778

May 2020

28,506

0.265

0.248

7,398

June 2020

20,000

0.265

0.249

5,197

65,638

16,828

Other than the shares repurchased by the Company as disclosed above, neither the Company nor any of its subsidiaries purchased, redeemed or sold any of the Company's listed securities during 1H-2020.

SIM TECHNOLOGY GROUP LIMITED INTERIM REPORT 2020

51

OTHER INFORMATION

CORPORATE GOVERNANCE CODE

Save as mentioned below, the Company has complied with the code provisions laid down in the Corporate Governance Code ("Corporate Governance Code") as set out in Appendix 14 to the Listing Rules for 1H-2020.

In respect of code provisions A.5.1 to A.5.4 of the Corporate Governance Code, the Company does not have a nomination committee. At present, the Company does not consider it necessary to have a nomination committee as the full Board is responsible for reviewing the structure, size and composition of the Board and the appointment of new Directors from time to time to ensure that it has a balanced composition of skills and experience appropriate for the requirements of the businesses of the Company, and the Board as a whole is also responsible for assessing the independence of the independent nonexecutive Directors and reviewing the succession plan for the Directors, in particular the chairman of the Board.

According to the code provision E.1.2 of the Corporate Governance Code, the chairman of the Board shall attend the annual general meeting of the Company and arrange for the chairmen of the audit, remuneration and nomination committees (as appropriate) or in the absence of the chairman of such committees, another member of the committee or failing this his duly appointed delegate, to be available to answer questions at the annual general meeting.

At the annual general meeting of the Company held on 16 June 2020 ("2020 AGM"), Ms Yeung Man Ying, the chairman of the Board, was unable to attend due to an unexpected business engagement. Mr Liu Jun, an executive Director and the chief executive officer of the Group, chaired the 2020 AGM on behalf of the chairman of the Board pursuant to the bye-laws of the Company and was available to answer questions. Mr Liu Hing Hung, an independent non-executive Director and the chairman of the remuneration committee of the Board and the audit committee of the Board ("Audit Committee"), was also available at the 2020 AGM to answer questions from Shareholders.

52 SIM TECHNOLOGY GROUP LIMITED INTERIM REPORT 2020

OTHER INFORMATION

COMPLIANCE WITH THE MODEL CODE

The Company has adopted the Model Code as its own code for securities transactions. All Directors have confirmed, following specific enquiry by the Company with all Directors, that each of them has fully complied with the required standard as set out in the Model Code during 1H-2020.

AUDIT COMMITTEE

The Audit Committee has reviewed with the management the accounting principles and practice adopted by the Group and reviewed the unaudited condensed consolidated interim financial information of the Group for 1H-2020. In addition, the unaudited condensed consolidated interim financial information of the Group for 1H-2020 have been reviewed by our auditor, Messrs. Deloitte Touche Tohmatsu. The Audit Committee comprises all three independent non-executive Directors.

SIM TECHNOLOGY GROUP LIMITED INTERIM REPORT 2020

53

CORPORATE INFORMATION

BOARD OF DIRECTORS

Executive Directors

Ms YEUNG Man Ying (Chairman)

Mr WONG Cho Tung (President)

Ms TANG Rongrong

(resigned as Executive Director with effect from 10 September 2020)

Mr LIU Jun (Chief executive officer)

Independent non-executive Directors Mr LIU Hing Hung

Mr WANG Tianmiao

Mr WU Zhe

AUDIT COMMITTEE

Mr LIU Hing Hung (Chairman)

Mr WANG Tianmiao

Mr WU Zhe

REMUNERATION COMMITTEE

Mr LIU Hing Hung (Chairman)

Mr WANG Tianmiao

Mr WU Zhe

Mr WONG Cho Tung

COMPANY SECRETARY

Ms CHAN Chi Yin

AUDITORS

Deloitte Touche Tohmatsu

LEGAL ADVISER AS TO

HONG KONG LAW

LCH Lawyers LLP

PRINCIPAL BANKERS

Hang Seng Bank Limited

Bank of Communications

Shanghai Pudong Development Bank

BERMUDA REGISTERED OFFICE

Clarendon House

2 Church Street

Hamilton HM11

Bermuda

HONG KONG REGISTERED OFFICE

Unit 1206, 12th Floor

Billion Trade Centre

31 Hung To Road

Kwun Tung

Hong Kong

SHANGHAI HEAD OFFICE

Block A, SIM Technology Building

No. 633 Jinzhong Road

Changning District

Shanghai

PRINCIPAL SHARE REGISTRAR

AND TRANSFER OFFICE

Butterfield Fund Services (Bermuda) Limited

Rosebank Centre

11 Bermudiana Road

Pembroke

Bermuda

HONG KONG BRANCH SHARE REGISTRAR AND TRANSFER OFFICE

Computershare Hong Kong Investor Services

Limited

Shops 1712-1716, 17th Floor

Hopewell Centre

183 Queen's Road East

Wanchai

Hong Kong

WEBSITE ADDRESS

http://www.sim.com

STOCK CODE

2000

54 SIM TECHNOLOGY GROUP LIMITED INTERIM REPORT 2020

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Sales 2019 1 282 M 165 M 165 M
Net income 2019 -76,9 M -9,93 M -9,93 M
Net cash 2019 843 M 109 M 109 M
P/E ratio 2019 -8,35x
Yield 2019 -
Capitalization 791 M 102 M 102 M
EV / Sales 2018 0,10x
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Nbr of Employees 1 610
Free-Float 48,5%
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Jun Gao Chief Executive Officer
Cho Tung Wong Group President & Executive Director
Man Ying Yeung Chairman
Chi Yin Chan Chief Financial Officer & Secretary
Jun Liu Group Chief Technical Officer & Executive Director
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