Vincent Medical : INTERIM REPORT 2020

September 10, 2020 at 04:36 am EDT

Interim Report 2020

CONTENTS

Corporate Information
Financial Highlights
Our COVID-19 Journey

8 Management Discussion and Analysis

16 Other Information

Independent Review Report
Condensed Consolidated Statement of Profit or Loss
Condensed Consolidated Statement of Profit or Loss and Other Comprehensive Income
Condensed Consolidated Statement of Financial Position
Condensed Consolidated Statement of Changes in Equity
Condensed Consolidated Statement of Cash Flows
Notes to the Condensed Consolidated Financial Statements

CORPORATE INFORMATION

BOARD OF DIRECTORS

Executive Directors

Mr. CHOI Man Shing (Chairman)

Mr. TO Ki Cheung (Chief Executive Officer)

Mr. KOH Ming Fai

Mr. FU Kwok Fu

Non-executive Director

Mr. GUO Pengcheng

Independent Non-executive Directors

Mr. MOK Kwok Cheung Rupert

Mr. AU Yu Chiu Steven

Prof. YUNG Kai Leung

BOARD COMMITTEE

Audit Committee

Mr. AU Yu Chiu Steven (Chairman)

Mr. MOK Kwok Cheung Rupert

Prof. YUNG Kai Leung

Nomination Committee

Mr. CHOI Man Shing (Chairman)

Mr. MOK Kwok Cheung Rupert

Prof. YUNG Kai Leung

Remuneration Committee

Mr. MOK Kwok Cheung Rupert (Chairman)

Mr. CHOI Man Shing

Prof. YUNG Kai Leung

Risk Management Committee

Mr. KOH Ming Fai (Chairman)

Mr. KWOK Kam Ming

Ms. HU Fang

Mr. ZHANG Changqing

Mr. LAI Hoi Ming

Environmental, Social and Governance Committee

Mr. FU Kwok Fu (Chairman)

Mr. LAI Hoi Ming

Ms. TSUI Lai Ki Vicki

COMPANY SECRETARY

Ms. TSUI Lai Ki Vicki

AUTHORISED REPRESENTATIVES

Mr. CHOI Man Shing

Mr. TO Ki Cheung

REGISTERED OFFICE

Cricket Square, Hutchins Drive,

P. O. Box 2681, Grand Cayman,

KY1-1111, Cayman Islands

HEADQUARTERS AND PRINCIPAL PLACE OF BUSINESS IN HONG KONG

Flat B2, 7th Floor, Phase 2, Hang Fung Industrial Building, 2G Hok Yuen Street,

Hung Hom, Kowloon, Hong Kong

AUDITOR

RSM Hong Kong

29th Floor, Lee Garden Two,

28 Yun Ping Road,

Causeway Bay, Hong Kong

PRINCIPAL SHARE REGISTRAR

Conyers Trust Company (Cayman) Limited

Cricket Square, Hutchins Drive,

P. O. Box 2681, Grand Cayman,

KY1-1111, Cayman Islands

HONG KONG BRANCH SHARE REGISTRAR AND TRANSFER OFFICE

Tricor Investor Services Limited

Level 54, Hopewell Centre,

183 Queen's Road East,

Hong Kong

PRINCIPAL BANKERS

The Hongkong and Shanghai Banking Corporation Limited Hang Seng Bank Limited

Bank of China (Hong Kong) Limited

INVESTOR RELATIONS CONTACTS

IR Department - Vincent Medical Holdings Limited

Telephone	:	(852) 2365 5688
Fax	:	(852) 2765 8428
Email	:	investors@vincentmedical.com

STOCK CODE

1612

COMPANY WEBSITE

www.vincentmedical.com

2	Vincent Medical Holdings Limited INTERIM REPORT 2020

FINANCIAL HIGHLIGHTS

					For the six months ended 30 June (unaudited)
					2020	2019		Change
						HK$'000	HK$'000
Revenue		502,346	246,524	+103.8%
Gross profit		225,304	83,698	+169.2%
Profit for the Period		109,476	15,510	+605.8%
Profit attributable to owners of the Company	91,842	13,667	+572.0%
Earnings per share
Basic (HK cents)		14.40	2.14	+572.9%
Dividend per share (HK cents)			nil	nil		n/a
REVENUE ANALYSIS

			By Product Category
	1H2020					1H2019
7%	17%				10%

								31%
			4%
72%					42%

								17%
	Respiratory		Imaging disposables		Orthopaedic and rehabilitation		Others

			By Business Segment
	1H2020					1H2019
								25%
					75%
50%			50%

OBM		OEM

INTERIM REPORT 2020 Vincent Medical Holdings Limited

Our COVID-19 Journey

Early

resumption

of production after Chinese New Year

Accelerating

global product

registration

2,500 sq.m. cleanroom expansion

Contributing to

worldwide

government

stockpile

Protecting health and safety of sta

Production

ramp-up

Battling COVID-19

Our workhorse inspired VHB20 Heated Humidifier, is one of the very few devices in the field that is able to deliver "True Relative Humidity" at >98%.

When connected to a ventilator, it adds moisture to the gas supply to facilitate mucociliary transport and clearance, as well as extra comfort to a patient receiving respiratory assist.

Our inspired IICTM effectively heats the breathing tube and maintaining the temperature in order to keeps water vapor from condensing, which can occur when warm interior and cold exterior temperatures come to touch. Effective heating

will help maintain moisture in gas from in the inspiratory limb to reach the patient. In combination of our high filtration inspired Vent-XTM vapor expellant technology, we are able to reduce and control condensation in the expiratory limb, preventing condensate from flowing back into a ventilator.

Our range of bacteria filters are also used in this humidification system between the expiratory limb of the breathing circuit and the ventilator, to catch any bacteria or virus traveling in water droplets that may be present in the contamination as well as infection against the next patient or caregivers in close proximity with the equipment.

As High Flow Nasal Oxygenation (HFNO) flourishes in all international clinical guidelines as a preferred treatment protocol for Novel Coronavirus, 6,000 units of our inspired O2FLOTM has been distributed around the world in over 30 countries to help treat patients with mild to moderate symptoms in hospitals as well as homecare environments.

Heated and humidified gas when supplied in high flow by a powerful turbine, combined with external oxygen supply, washes out the de-oxygenated deadspace in the upper airway of a patient. By maintaining a continuous positive airway pressure in the respiratory tract, work of breathing is reduced. Oxygen enriched gas, inspired at ease, improves and encourages effective alveoli recruitment.

This relieves hypoxemia - the most common and one of the first COVID symptoms. More importantly, when administered at stages early enough, HFNO can save a patient from mechanical ventilation, which is often traumatic both physically and mentally.

For more information about our latest products, please visit www.inspired-medical.com.

MANAGEMENT DISCUSSION AND ANALYSIS

INTERIM RESULTS

The board (the "Board") of directors (the "Directors") of Vincent Medical Holdings Limited (the "Company") is pleased to present the unaudited condensed consolidated interim results of the Company and its subsidiaries (collectively the "Group") for the six months ended 30 June 2020 ("1H2020" or the "Period"), together with the comparative figures for the six months ended 30 June 2019 ("1H2019"). This report has been reviewed by RSM Hong Kong, the external auditor of the Company, and the Company's audit committee (the "Audit Committee").

1H2020 was transformational for Vincent Medical, as the Group's revenue and profitability soared to record high. Total revenue increased by 103.8% to HK$502.3 million (1H2019: HK$246.5 million), with the original brand manufacturing ("OBM") segment becoming the key growth engine, surpassing the revenue contribution from the original equipment manufacturing ("OEM") segment. Overall gross profit margin significant increased by 10.9 percentage points to 44.9% (1H2019: 34.0%), leading to an exponential growth of 5.7 times in profit attributable to owners of the Company to HK$91.8 million (1H2019: HK$13.7 million). Basic earnings per share of the Company (the "Share(s)") surged 5.7 times to HK14.40 cents (1H2019: HK2.14 cents). The Board did not recommend the payment of an interim dividend to the shareholders of the Company (the "Shareholders") for 1H2020 (1H2019: Nil).

REVIEW OF OPERATIONS

As one of the key global suppliers of respiratory devices and disposables, the COVID-19 pandemic has greatly increased product demand, providing a window for Vincent Medical to contribute and the catalyst for the fast growth in 1H2020.

Towards the end of January 2020, the Group started to see an increasing demand for its respiratory devices from the People's Republic of China (the "PRC"), and has then initiated its crisis management procedure.

Despite the temporary supply shortage in the PRC, the Group strived to ramp up its manufacturing capabilities immediately after Chinese New Year. With the production and supply chain gradually returned to normal, the Group was able to triple its production capacity by June 2020 thanks to the swift response from our devoted staff, along with the support from the local government.

While the Group strived to safeguard the supply of critical devices and consumables to its worldwide partners, safety of staff is always the number one priority. The Group implemented proactive measures to protect the health and safety of our workers including visitor and travel restrictions, social distancing at production facilities, remote work for office-based colleagues, temperature monitoring and supply of personal protective equipment (PPE) to staff and their families.

The significant increase in profitability in 1H2020 was a testament to the Group's long-term strategy of respiratory-focused research and development ("R&D") to optimise product portfolio, its efficient and agile manufacturing capabilities, as well as the solid foundation of its operation.

OBM Segment

During the Period, the OBM segment has become the major revenue contributor to the Group, accounting for slightly over

50.0% (1H2019: 24.6%) of the Group's total revenue. The significant revenue jump of 313.8% to HK$251.2 million (1H2019: HK$60.7 million) was primarily driven by the increasing global demand for respiratory devices and ventilation disposables (breathing circuits and filters) to treat COVID-19 patients, as well as the growth in disposables sales benefited from the increasing number of installed base of the inspiredTM VHB series humidifiers (the "VHB Humidifier") and the inspiredTM O2FLO high flow respiratory humidifier (the "O2FLO"), a standalone nasal high-flow therapy device with dedicated disposables in the existing and new markets.

Segment gross profit margin surged by 16.9 percentage points to 56.3% (1H2019: 39.4%), attributable to the strong growth in sales of the higher-margin O2FLO and the VHB Humidifier.

8	Vincent Medical Holdings Limited INTERIM REPORT 2020

MANAGEMENT DISCUSSION AND ANALYSIS

The following table sets forth the revenue breakdown of the Group's OBM segment by product category:

				For the six months ended 30 June (unaudited)
	2020		2019			Change
			% of segment			% of segment
		HK$'000		revenue		HK$'000	revenue
Respiratory products
- Electronic devices	127,098	50.6%	10,035		16.5%	+1,166.5%
- Disposables	120,573	48.0%	44,808		73.8%	+169.1%

	247,671	98.6%	54,843		90.3%	+351.6%
Orthopaedic and

rehabilitation products	3,547	1.4%	5,868		9.7%	-39.6%

Total	251,218	100.0%	60,711		100.0%	+313.8%

Demand for the Group's respiratory devices and disposables across the globe has accelerated in a way that was unprecedented, with sales gaining further momentum in the second quarter of 2020 due to the virus outbreak in Europe, the United States (the "US") and the rest of the world. While there was a huge demand for invasive mechanical ventilator, the active humidification system, a key component of hospital-use mechanical ventilators, was also in huge demand. For patients who are critically ill and require the support of ventilators, the VHB Humidifier is the servo feedback system which is a critical part of the life supporting system for them. Supported by the related disposables including humidification chambers, breathing circuits and filters, the VHB Humidifier provides warm and humidified air to intubated patients, and is a standard of care in mechanical ventilation. During the Period, the Group delivered a total of 95,572 units (1H2019: 3,840 units) of VHB Humidifiers to support ventilator makers, with sales from the VHB Humidifier and the related disposables recorded a significant growth of 587.9% to HK$119.7 million (1H2019: HK$17.4 million).

Meanwhile, the O2FLO has gained traction in the treatment of patients with COVID-19. A series of published evidence, guidance documents issued by the government and health administration and clinical case studies have indicated that high-flow nasal cannula may reduce the need for invasive ventilation and escalation of therapy compared with conventional oxygen therapy in patients with acute hypoxemic respiratory failure and has now become one of the key treatments used in helping patients with milder COVID-19 symptoms.

Since the official launch of the O2FLO in November 2019, the Group has accumulated an installed base of over 6,000 units in over 30 countries, including the PRC, Japan, Saudi Arabia, India, United Kingdom, Germany, Turkey and South Africa. This unit also requires the use of dedicated single-use disposables such as humidification chambers, nasal cannula, breathing circuits and filters, in order to deliver the optimal airflow to patients. During the Period, the Group delivered 4,306 units (1H2019: 200 units) of the O2FLO and the sales of O2FLO's dedicated disposables and accessories reached HK$25.6 million (1H2019: HK$0.2 million).

In addition to the VHB Humidifier and the O2FLO, the HypnusTM positive airway pressure device 7 series and 8 series were one of the first non-invasive ventilators being used in the treatment of COVID-19 patients in the PRC. During the Period, 5,607 units (1H2019: 2,346 units) of the HypnusTM devices were sold.

As for the sales of orthopaedic and rehabilitation products, it was negatively impacted by COVID-19 as planned non-urgent surgical procedures and the relevant marketing activities were postponed.

INTERIM REPORT 2020 Vincent Medical Holdings Limited

MANAGEMENT DISCUSSION AND ANALYSIS

The table below sets forth the revenue breakdown of the Group's OBM segment by location of customers:

					For the six months ended 30 June (unaudited)
	2020		2019		Change
				% of segment			% of segment
		HK$'000		revenue		HK$'000	revenue
The PRC	141,020	56.1%	32,031		52.8%	+340.3%
Europe	36,978		14.7%	9,705		16.0%	+281.0%
Saudi Arabia	30,554		12.2%	271		0.4%	+11,174.5%
North America	8,021		3.2%	5,020		8.3%	+59.8%
India	6,908		2.8%	817		1.3%	+745.5%
Others (including Israel,
Latin America and etc.)	27,737		11.0%	12,867		21.2%	+115.6%

Total	251,218	100.0%	60,711		100.0%	+313.8%

The PRC market continues to be the major market for the OBM segment, with sales grew by 340.3% to HK$141.0 million (1H2019: HK$32.0 million). With our persistent efforts to expand and penetrate key markets, the installed base of inspiredTM brand devices recorded a significant growth, resulting in an increasing regional market share at a fast pace. Nonetheless, the Group has further strengthened its cooperation with its business partners and distributors in overseas markets, and gained a sustainable revenue of HK$110.2 million (1H2019: HK$28.7 million) from the international market for the first time. With the grant of Emergency Use Authorization (the "EUA") from the Food and Drug Administration of the US (the "FDA") on the O2FLO and certain disposables, the Group is in negotiation with its partners in North America for the launch of those products.

OEM Segment

For the Group's OEM segment, demand for certain respiratory products has also increased significantly, including the Ventec One-CircuitTM for the VOCSN ventilator, the Ventway Sparrow® ventilator and other respiratory disposable products for its long-term OEM customers. The Group has in turn, boosted its production capacity and to help address the higher demand of such OEM products.

The following table sets forth the revenue breakdown of the Group's OEM segment by product category:

						For the six months ended 30 June (unaudited)
		2020		2019		Change
					% of segment			% of segment
			HK$'000		revenue		HK$'000	revenue
	Respiratory products	115,751	46.1%	49,126		26.4%	+135.6%
	Imaging disposable products	83,602		33.3%	76,752		41.3%	+8.9%
	Orthopaedic and
	rehabilitation products	17,493		7.0%	36,174		19.5%	-51.6%
	Other products (including moulds,
	surgical disposables, patient
	warming blankets and infusion
	regulators)	34,282		13.6%	23,761		12.8%	+44.3%

	Total	251,128		100.0%	185,813		100.0%	+35.2%
10

Vincent Medical Holdings Limited	INTERIM REPORT 2020

MANAGEMENT DISCUSSION AND ANALYSIS

Higher revenue contribution from respiratory products were mainly attributable to the additional orders for the Ventec One-CircuitTM and other respiratory disposables from the Group's major OEM customers. Imaging disposable products also recorded a 8.9% growth in revenue as the supply of certain raw materials resumed in the second quarter of 2020. In aggregate, the growth in these two product categories was able to more than offset the decrease in revenue from orthopaedic and rehabilitation products, which was suffering from a decrease in demand due to the postponement of orthopaedic procedures under COVID-19. The OEM segment gross profit margin increased to 33.4% (1H2019: 32.2%), primarily attributable to product mix enhancement and greater economics of scale in production.

The table below sets forth the revenue breakdown of the Group's OEM segment by location of customers:

				For the six months ended 30 June (unaudited)
	2020		2019			Change
			% of segment			% of segment
		HK$'000		revenue		HK$'000	revenue
North America	199,690	79.5%	150,602		81.1%	+32.6%
Israel	18,564	7.4%	1,775		0.9%	+945.9%
Europe	17,625	7.0%	10,246		5.5%	+72.0%
Japan	8,404	3.4%	8,008		4.3%	+4.9%
Others (including Hong Kong,
Australia and etc.)	6,845	2.7%	15,182		8.2%	-54.9%

Total	251,128	100.0%	185,813		100.0%	+35.2%

During the Period, the Group's OEM sales to North America increased by 32.6% to HK$199.7 million, mainly attributable to the additional orders for ventilator related disposables from customers. Sales to Israel increased by 945.9% attributable primarily to the manufacturing of the Ventway Sparrow® ventilator and the related disposables.

Investments and collaboration

On 29 June 2020, the FDA cleared the Somnera™ positive airway pressure delivery system of Fresca Medical, Inc. ("Fresca"). This is the second FDA approval, a "510(k) clearance", following the granting of our de novo application in mid of 2018. The clearance covers the commercial version of Fresca's system, including the auto-adjusting pressure algorithm, cloud features, "go to sleep" ramp, elegant touchscreen-controlled airbox, and the molded/manufactured versions of all of the system components. The Fresca team is now focusing on ramping up the manufacturing capability and supporting its market launch.

During the Period, the Ventway Sparrow® ventilator of Inovytec Medical Solutions Ltd. ("Inovytec") received strong market demand as this compact, ultra-handy and user-friendly ventilator is suitable for chronic or life support-ventilation of COVID-19 patients. Ventway Sparrow® ventilator received the EUA in March 2020. As a key manufacturer for Inovytec, the Group has expanded its production line for Ventway Sparrow® ventilator and its dedicated disposables.

With an accumulated active user base of over one million individual households and over 1,500 corporate users, 廣州柏頤信息科技有限公司 (translated as "Guangzhou 100ecare Technology Co. Ltd.", "100ecare") was selected as one of the top 10 "2020 Elderly Care Service Enterprise" in the PRC. In May 2020, 100ecare launched its new "Home Security Alarm" service to connect elderly care service centers with the elderlies at home, by utilizing its smart elderly healthcare platform to consolidate the service needs of elderlies and alert the relevant service support centers in real time.

INTERIM REPORT 2020 Vincent Medical Holdings Limited

MANAGEMENT DISCUSSION AND ANALYSIS

OUTLOOK

The pandemic will continue in the second half of 2020 and has already changed the global healthcare system. While we are not certain when COVID-19 will be under control, what is certain is that global demand for COVID-19 related medical devices will continue to increase and Vincent Medical continues in supplying these respiratory devices. With over 20 years in respiratory and humidification, a key supplier to the major global respiratory companies and an increasing distribution network into 70 countries, the Group expects continuous growth for the second half of 2020. Vincent Medical will continue to drive market expansion while building an even stronger intellectual property and patent portfolio. The acceleration of demand has seen a faster installed base of the inspiredTM brand products and in particularly with the VHB Humidifier and O2FLO. The greater use and acceptance of inspiredTM products globally will increase over time and allow the Group to penetrate further with future product portfolio expansion.

Going forward, Vincent Medical will continue to pursue a growth strategy of "device + disposables" through the introduction of new devices, as well as deriving recurring income from dedicated disposables. The pandemic has put the spotlight on the use of high flow oxygen therapy in the treatment of respiratory failure, yet the full potential of high flow oxygen therapy has yet to be realised as the therapy can be used in numerous respiratory treatments beyond COVID-19. We will see accelerated adoption and expansion of the use throughout the hospital and there are signs that such treatments have potential for home use in the future. We will certainly see more and more clinical papers and discussions on high flow oxygen therapy in the near future. To further capture such growing market, the Group will continue to invest in product innovation and aims to be a significant player with strategic collaboration with global medical technology companies and distributors.

On cost and efficiency, the Group will continue to improve its production and operation efficiency in order to support sustainable business growth and further improvement in profitability. It will also strive to streamline its corporate structure and exercise caution over the management of working capital.

The Group would not be able to achieve the above without the support of its stakeholders. As such, the Group would like to recognise its suppliers, customers, business partners, government agencies - and especially, its employees - for their enormous contributions during this challenging time. Everyone at Vincent Medical have worked tirelessly and selflessly in fighting COVID-19 everyday. As one of the key respiratory suppliers, the Group will continue to do everything to support the healthcare system in fighting against the pandemic.

FINANCIAL REVIEW

REVENUE

Total revenue increased by 103.8% to HK$502.3 million (1H2019: HK$246.5 million), largely driven by the surging demand for respiratory products, the launch of new products under the OBM segment and new orders under the OEM segment.

GROSS PROFIT AND GROSS PROFIT MARGIN

Gross profit margin significantly improved to 44.9% (1H2019: 34.0%), largely reflecting the enhancement of product mix with much stronger sales from electronic devices and greater economies of scale in production as revenue continued to increase with a relatively stable cost of revenue. Gross profit recorded a strong growth of 169.2% to HK$225.3 million (1H2019: HK$83.7 million).

SELLING AND DISTRIBUTION EXPENSES

Selling and distribution expenses increased by 42.3% to HK$22.2 million (1H2019: HK$15.6 million) with its percentage of

revenue decreased to 4.4% (1H2019: 6.3%), primarily attributable to the increase in sales volume yet under an effective control of selling and distribution expenses.

12	Vincent Medical Holdings Limited INTERIM REPORT 2020

MANAGEMENT DISCUSSION AND ANALYSIS

ADMINISTRATIVE EXPENSES

Administrative expenses increased by 53.4% to HK$73.5 million (1H2019: HK$47.9 million), primarily attributable to increased R&D expenses and higher administrative personnel related expenses due to increased number of staff and general increase in average salary. Administrative expenses for the Period accounted for 14.6% of revenue (1H2019: 19.4%).

INCOME TAX EXPENSE

Income tax expense increased by 473.5% to HK$19.5 million (1H2019: HK$3.4 million), implying an effective tax rate for the

Group of 15.1% for the Period (1H2019: 18.0%).

PROFIT ATTRIBUTABLE TO OWNERS OF THE COMPANY

Profit attributable to owners of the Company increased by 570.1% to HK$91.8 million (1H2019: HK$13.7 million), attributable primarily to the strong growth in revenue, greater economies of scale in production and effective control of expenses during the Period.

PROPERTY, PLANT AND EQUIPMENT

During the Period, the Group expanded its production capacity through the purchase of additional machineries, tooling and equipment and the fitting of an additional floor of production area. Capital expenditure on property, plant and equipment for the Period were HK$21.6 million (1H2019: HK$16.5 million). As at 30 June 2020, property, plant and equipment was HK$80.6 million (31 December 2019: HK$68.7 million).

INVENTORIES

Inventories as at 30 June 2020 was HK$224.6 million (31 December 2019: HK$118.5 million). The increase was attributable to the additional safety stock in raw materials in response to the surging market demand.

TRADE RECEIVABLES

Trade receivables as at 30 June 2020 was HK$191.5 million (31 December 2019: HK$112.7 million), in line with the higher sales during the Period.

HUMAN RESOURCES

As at 30 June 2020, the total number of full-time employees of the Group was 2,151 (31 December 2019: 1,149). The remuneration of employees was determined according to their experience, qualifications, result of operations of the Group and market condition. We offered senior management performance-based bonus and share options to reward and retain a high calibre management team. We also adopted commission and incentive plans to motivate and reward our sales and marketing team.

During the Period, staff costs including Directors' emoluments (excluding capitalised salaries and wages of R&D staff) amounted to HK$108.1 million (1H2019: HK$74.3 million), representing 21.5% (1H2019: 30.1%) of the Group's revenue. The increase was mainly due to the increase in the number of employees, salary adjustment and rise in overtime wages.

INTERIM REPORT 2020 Vincent Medical Holdings Limited

MANAGEMENT DISCUSSION AND ANALYSIS

LIQUIDITY AND FINANCIAL RESOURCES AND BORROWINGS

Bank and cash balances as at 30 June 2020 was HK$109.9 million (31 December 2019: HK$70.0 million). This was a result of the net cash inflow from operating activities of HK$71.7 million, net cash outflow from investing activities of HK$29.3 million, net cash inflow from financing activities of HK$1.0 million and the negative effect of foreign exchange rate changes of HK$3.5 million. Most of the bank and cash balances were denominated in HKD, US dollars ("USD") and Renminbi ("RMB").

Net cash outflow from investing activities during the Period were mainly due to the purchase of property, plant and equipment of HK$21.6 million and additions to other intangible assets of HK$7.9 million, while net cash inflow from financing activities mainly arose from net cash inflow of HK$16.8 million from borrowings, net off by dividend paid to owners of the Company and principal elements of lease payment.

As at 30 June 2020, total borrowings amounted to HK$47.0 million (31 December 2019: HK$30.6 million). The increase was primarily due to new bank loans of HK$18.2 million raised during the Period. The net gearing ratio, which was calculated on the basis of the amount of total borrowings divided by the total equity attributable to owners of the Company, was 0.11 (31 December 2019: 0.09). As at 30 June 2020, the Group had unutilised bank facilities of HK$20.0 million.

CAPITAL STRUCTURE

As at 30 June 2020, the issued share capital of the Company was approximately HK$6.4 million, comprising 637,650,000 Shares of nominal value of HK$0.01 per Share.

SIGNIFICANT INVESTMENTS

As at 30 June 2020, the Company considered that the significant investments were as follows:

Equity investments at fair value through other comprehensive income

		Approximate
Name of		percentage of		Fair value of	Assets ratio defined
company	Principal business	shareholding	Total investment	the equity investment	under the Listing Rules
				30 June	31 December	30 June	31 December
				2020	2019	2020	2019
				(unaudited)	(audited)	(unaudited)	(audited)
Inovytec	An Israeli medical device company	13.68%	US$3.0 million	US$1.9 million	US$1.9 million	1.8%	2.6%
	specialises in the development,		(equivalent to	(equivalent to	(equivalent to
	production and marketing of devices		HK$23.4 million)	HK$15.1 million)	HK$15.1 million)
	for out-of-hospital critical care,
	respiratory, cardiac, central nervous
	system and trauma emergencies.
Fresca	A US California-based sleep solution and	17.5%	US$3.0 million	US$0.8 million	US$1.1 million	0.7%	1.5%
	connected health company that is		(equivalent to	(equivalent to	(equivalent to
	developing a system for the treatment		HK$23.4 million)	HK$5.9 million)	HK$8.6 million)
	of obstructive sleep apnea.

14	Vincent Medical Holdings Limited INTERIM REPORT 2020

MANAGEMENT DISCUSSION AND ANALYSIS

Investment in a joint venture

		Approximate
Name of		percentage of		Carrying amount	Assets ratio defined
company	Principal business	shareholding	Total investment	of investment	under the Listing Rules
				30 June	31 December	30 June	31 December
				2020	2019	2020	2019
				(unaudited)	(audited)	(unaudited)	(audited)
100ecare	A PRC-based company specialises in	10%	RMB8.0 million	RMB8.4 million	RMB8.4 million	1.1%	1.6%
	design, development and sale of a		(equivalent to	(equivalent to	(equivalent to
	series of wearable smart devices, and		HK$9.2 million)	HK$9.2 million)	HK$9.4 million)
	operate a cloud-based safety and
	healthcare platform targeting the
	elderly population in the PRC.

For additional information regarding the performance during the Period and prospects of the above significant investments, please refer to the paragraph headed "Investments and Collaboration" above.

MATERIAL ACQUISITIONS AND DISPOSALS

During the Period, the Group had no material acquisitions or disposals of subsidiaries and associated companies.

EVENTS AFTER THE REPORTING PERIOD

On 25 August 2020 (after trading hours), the Company entered into a memorandum of understanding with Bayer Medical Care, Inc. whereby the parties agreed to enter into an agreement in respect of the possible acquisition by the Company or its subsidiary of the 1,718,861 shares in Vincent Medical Manufacturing Co., Limited (永勝醫療製品有限公司), representing approximately 19.90% of its issued shares, and 3.98% equity interest in 東莞永勝醫療製品有限公

司 (translated as "Vincent Medical (Dongguan) Mfg. Co. Ltd."). For details, please refer to the Company's announcement dated 25 August 2020.

On 25 August 2020, an environmental, social and governance committee of the Company (the "ESG Committee") has been established with its written terms of reference. The purpose of the ESG Committee is to advise and assist the Board in managing matters relating to the environmental, social and governance of the Group, such as governance, policies, initiatives, performance and reporting. Mr. Fu Kwok Fu, an executive Director, has been appointed as the chairman of the ESG Committee. Mr. Lai Hoi Ming, the Group's chief financial officer and Ms. Tsui Lai Ki Vicki, the Group's company secretary have been appointed as members of the ESG Committee, all with effect from 25 August 2020.

Saved as disclosed above, there were no other significant events after the reporting period and up to the date of this report.

CHARGES ON THE GROUP'S ASSETS

As at 30 June 2020, none of the assets of the Group were pledged.

FOREIGN EXCHANGE EXPOSURE

While some of the Group's costs and expenses are denominated in RMB, there was a substantial amount of sales denominated in USD given the export-oriented nature of the business. Thus, any appreciation of RMB against USD may subject the Group to increased costs and lower profitability. The Directors have assessed the impact of such foreign currency risk and considered that it may materially affect the Group's profitability. The Group currently does not have a foreign currency hedging policy in respect of foreign currency transactions, assets and liabilities. The Group monitors its foreign currency exposure closely and will consider hedging significant foreign currency exposure should the need arise.

CONTINGENT LIABILITIES

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

INTERIM REPORT 2020 Vincent Medical Holdings Limited

OTHER INFORMATION

INTERIM DIVIDEND

The Board did not recommend the payment of an interim dividend for the six months ended 30 June 2020 (1H2019: Nil).

DIRECTORS' AND CHIEF EXECUTIVES' INTERESTS AND/OR SHORT POSITIONS IN SHARES, UNDERLYING SHARES AND DEBENTURES OF THE COMPANY

As at 30 June 2020, to the best knowledge of the Directors and chief executives of the Company, the interests or short positions of the Directors and chief executives of the Company in the Shares, underlying Shares and debentures of the Company or its associated corporations (within the meaning of Part XV of the Securities and Futures Ordinance ("SFO")) which had been notified to the Company and The Stock Exchange of Hong Kong Limited (the "Stock Exchange") pursuant to Divisions 7 and 8 of Part XV of the SFO (including interests or short positions which they were taken or deemed to have under such provisions of the SFO) or which were required to be disclosed pursuant to Section 352 of the SFO, to be entered in the register referred to therein, or which were required to be notified to the Company and the Stock Exchange, pursuant to the Model Code for Securities Transactions by Directors of Listed Issuers (the "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:

Interests in Shares and underlying Shares

			Approximate
			percentage of
Name of Director	Capacity/Type of interest	Number of Shares (L)	shareholding
		(Note 1)	(Note 6)
Mr. Choi Man Shing	Beneficial owner/interest of	385,191,890	60.41%
	controlled corporations	(Note 2)
Mr. To Ki Cheung	Beneficial owner	20,174,110	3.16%
		(Note 3)
Mr. Koh Ming Fai	Beneficial owner/interest of spouse	7,144,000	1.12%
		(Note 4)
Mr. Fu Kwok Fu	Beneficial owner	6,970,000	1.09%
		(Note 5)
Prof. Yung Kai Leung	Beneficial owner	1,200,000	0.19%

16	Vincent Medical Holdings Limited INTERIM REPORT 2020

OTHER INFORMATION

Notes:

The letter "L" denotes the person's long position in the Shares or the underlying Shares.
These interests represented:
1. 3,002,000 Shares held by Mr. Choi Man Shing ("Mr. Choi"), the chairman and an executive Director of the Company;
2. 381,939,890 Shares held by VINCENT RAYA INTERNATIONAL LIMITED ("VRI"). Mr. Choi holds 57.89% of the issued share capital of VRI. By virtue of the SFO, Mr. Choi is deemed to be interested in all the Shares in which VRI is interested; and
3. 250,000 Shares held by VINCENT RAYA CO., LIMITED (永勝宏基集團有限公司) ("VRHK"). VRI holds the entire issued share capital of VRHK and therefore by virtue of the SFO, Mr. Choi is deemed to be interested in all the Shares in which VRHK is interested.
These interests represented:
1. 17,647,778 Shares held by Mr. To Ki Cheung, the Chief Executive Officer and executive Director of the Company;
2. 526,332 options granted to Mr. To Ki Cheung, which are subject to certain vesting conditions pursuant to the pre-IPO share option scheme of the Company, details of which are set out in the section headed "Share Option Schemes" below; and
3. 2,000,000 options granted to Mr. To Ki Cheung, which are subject to certain vesting conditions pursuant to the share option scheme of the Company, details of which are set out in the section headed "Share Option Schemes"below.
These interests represented:
1. 4,941,166 Shares held by Mr. Koh Ming Fai, an executive Director;
2. 174,000 Shares held by the spouse of Mr. Koh Ming Fai. By virtue of the SFO, Mr. Koh is deemed to be interested in all the Shares in which his spouse is interested;
3. 528,834 options granted to Mr. Koh Ming Fai, which are subject to certain vesting conditions pursuant to the pre-IPO share option scheme of the Company, details of which are set out in the section headed "Share Option Schemes" below; and
4. 1,500,000 options granted to Mr. Koh Ming Fai, which are subject to certain vesting conditions pursuant to the share option scheme of the Company, details of which are set out in the section headed "Share Option Schemes" below.
These interests represented:
1. 4,941,166 Shares held by Mr. Fu Kwok Fu, an executive Director;
2. 528,834 options granted to Mr. Fu Kwok Fu, which are subject to certain vesting conditions pursuant to the pre-IPO share option scheme of the Company, details of which are set out in the section headed "Share Option Schemes" below; and
3. 1,500,000 options granted to Mr. Fu Kwok Fu, which are subject to certain vesting conditions pursuant to the share option scheme of the Company, details of which are set out in the section headed "Share Option Schemes" below.
Approximate percentage calculated based on the 637,650,000 Shares in issue as at 30 June 2020.

INTERIM REPORT 2020 Vincent Medical Holdings Limited

OTHER INFORMATION

Save as disclosed above and to the best knowledge of the Directors, as at 30 June 2020, none of the Directors or chief executives of the Company had any interests or short positions in the Shares, underlying Shares or debentures of the Company or its associated corporations (within the meaning of Part XV of the SFO) which were required to be notified to the Company and the Stock Exchange pursuant to Divisions 7 and 8 of Part XV of the SFO (including interests or short positions which they were taken or deemed to have under such provisions of the SFO) or which were required, pursuant to Section 352 of the SFO, to be entered in the register referred to therein, or which were required to be notified to the Company and the Stock Exchange pursuant to the Model Code.

SUBSTANTIAL SHAREHOLDERS' INTERESTS AND/OR SHORT POSITIONS IN SHARES AND UNDERLYING SHARES OF THE COMPANY

As at 30 June 2020, so far as the Directors are aware, the following persons (other than the Directors or chief executives of the Company), were directly or indirectly, interested in 5% or more of the Shares or short positions in the Shares and the underlying Shares of the Company, which were required to be disclosed under provisions of Divisions 2 and 3 of Part XV of the SFO, or which were required, pursuant to Section 336 of the SFO, to be entered in the register referred to therein:

Interests in Shares and underlying Shares

			Approximate
			percentage of
Name of Shareholder	Capacity/Type of interest	Number of Shares (L)	shareholding
		(Note 1)	(Note 5)
Ms. Liu Pui Ching	Interest of spouse/interest of	385,191,890	60.41%
	controlled corporations	(Note 2)
VRI	Beneficial owner/interest of a	382,189,890	59.94%
	controlled corporation	(Note 3)
China Orient Asset Management	Interest of controlled corporations	33,000,000	5.18%
Corporation		(Note 4)
Dong Yin Development (Holdings)	Interest of a controlled corporation	33,000,000	5.18%
Limited		(Note 4)
Bright Way Enterprise Inc.	Beneficial owner	33,000,000	5.18%
		(Note 4)

Notes:

The letter "L" denotes the person/entity's long position in the Shares or the underlying Shares.
These interests represented:
1. 3,002,000 Shares held by Mr. Choi. Mr. Choi is the spouse of Ms. Liu Pui Ching ("Ms. Liu"). By virtue of the SFO, Ms. Liu is deemed to be interested in all the Shares in which Mr. Choi is interested;
2. 381,939,890 Shares held by VRI. Ms. Liu holds 42.11% of the issued share capital of VRI. By virtue of the SFO, Ms. Liu is deemed to be interested in all the Shares in which VRI is interested; and
3. 250,000 Shares held by VRHK. VRI holds the entire issued share capital of VRHK and therefore by virtue of the SFO, Ms. Liu is deemed to be interested in all the Shares in which VRHK is interested.

18	Vincent Medical Holdings Limited INTERIM REPORT 2020

OTHER INFORMATION

These interests represented:
1. 381,939,890 Shares held by VRI; and
2. 250,000 Shares held by VRHK. VRI holds the entire issued share capital of VRHK and therefore by the virtue of the SFO, VRI is deemed to be interested in all the Shares held by VRHK.
China Orient Asset Management Corporation holds 100% interest of Dong Yin Development (Holdings) Limited, which in turns holds 100% interest of Bright Way Enterprise Inc. Therefore, each of China Orient Asset Management Corporation and Dong Yin Development (Holdings) Limited is deemed to be interested in the same 33,000,000 Shares held by Bright Way Enterprise Inc.. Subsequent to the reporting period, Bright Way Enterprise Inc. has disposed 6,400,000 Shares, of which its shareholding was decreased from 5.18% to 4.17% based on the issued share capital as at 30 June 2020. By virtue of the SFO, China Orient Asset Management Corporation, Dong Yin Development (Holdings) Limited and Bright Way Enterprise Inc. ceased to be the substantial shareholders of the Company after the relevant event.
Approximate percentage calculated based on the 637,650,000 Shares in issue as at 30 June 2020.

Save as disclosed above, as at 30 June 2020, the Directors were not aware of any other corporation or individual (other than the Directors or chief executives of the Company) who had an interest or a short position in the Shares or underlying Shares of the Company as recorded in the register of required to be kept pursuant to Section 336 of the SFO.

SHARE OPTION SCHEMES

Pre-IPO Share Option Scheme adopted on 17 June 2016

A pre-IPO share option scheme (the "Pre-IPOShare Option Scheme") was adopted by the Company on 17 June 2016. The purpose of the Pre-IPO Share Option Scheme is to recognise and acknowledge the contributions made by certain executives, Directors, employees and/or consultants of the Group to the growth of the Group by granting options to them as rewards and further incentives. The Pre-IPO Share Option Scheme will expire in 16 June 2026 and the remaining life of the Pre-IPO Share Option Scheme as at the date of this report is around 6 years.

Pursuant to the Pre-IPO Share Option Scheme, on 17 June 2016, the Company conditionally granted the options to subscribe for an aggregate of 19,684,000 Shares to a total of 91 grantees at exercise price of HK$0.80 per Share which is an amount equal to 80% of the final price (i.e. HK$1.00) for each offer share of the Hong Kong public offering and the international placing in connection with the Company's listing of the Shares on the main board of the Stock Exchange on 13 July 2016. Save for the options which have been granted on 17 June 2016, no further options will be granted under the Pre-IPO Share Option Scheme.

For the six months ended 30 June 2020, none of the share options under the Pre-IPO Share Option Scheme were exercised and a total of 460,000 share options were lapsed as a result of voluntary resignation of the relevant option holders. As at 30 June 2020, the maximum number of Shares which might be issued upon exercise of all outstanding options granted under the Pre-IPO Share Option Scheme was 15,604,000 Shares, representing approximately 2.4% of the Company's issued share capital as at 30 June 2020.

INTERIM REPORT 2020 Vincent Medical Holdings Limited

OTHER INFORMATION

Details of the outstanding share options under the Pre-IPO Share Option Scheme during the Period are as follows:

				Number of Shares underlying the share options granted
				Outstanding			Outstanding
				as at	Exercised	Lapsed	as at
				1 January	during the	during the	30 June
Grantee	Date of grant	Vesting schedule	Exercise period	2020	Period	Period	2020

Directors
Mr. To Ki Cheung	17 June 2016	25% of options will vest
		on each of 13 July 2017,
		2018, 2019 and 2020
		respectively

25% of options will be 526,332 - - 526,332 exercisable from each of

13 July 2017, 2018, 2019 and 2020 respectively to 16 June 2026

Mr. Koh Ming Fai	17 June 2016	25% of options will vest
		on each of 13 July 2017,
		2018, 2019 and 2020
		respectively

25% of options will be 528,834 - - 528,834 exercisable from each of

13 July 2017, 2018, 2019 and 2020 respectively to 16 June 2026

Mr. Fu Kwok Fu	17 June 2016	25% of options will vest
		on each of 13 July 2017,
		2018, 2019 and 2020
		respectively

25% of options will be 528,834 - - 528,834 exercisable from each of

13 July 2017, 2018, 2019 and 2020 respectively to 16 June 2026

In aggregate
Consultant
In aggregate	17 June 2016	25% of options will vest
		on each of 13 July 2017,
		2018, 2019 and 2020
		respectively
Senior management and
other employees

	1,584,000	-	-	1,584,000
25% of options will be	528,000	-	-	528,000

exercisable from each of 13 July 2017, 2018, 2019 and 2020 respectively to 16 June 2026

In aggregate	17 June 2016	25% of options will vest
		on each of 13 July 2017,
		2018, 2019 and 2020
		respectively

25% of options will be 13,952,000 - (460,000) 13,492,000

exercisable from each of 13 July 2017, 2018, 2019 and 2020 respectively to 16 June 2026

Total	16,064,000		-	(460,000)	15,604,000

20	Vincent Medical Holdings Limited INTERIM REPORT 2020

OTHER INFORMATION

Share option scheme adopted on 24 June 2016

A share option scheme (the "Share Option Scheme") was adopted by the Company on 24 June 2016. The purpose of the Share Option Scheme is to recognise and acknowledge the contributions of eligible participants of the Share Option Scheme including any executive, Director, employee, advisor, consultant, professional, agent, contractor, customer, provider of goods and/or services or business or joint-venture partner to the Group (the "Eligible Participant(s)") by granting options to them as incentives or rewards. HK$1.00 is payable by an Eligible Participant upon acceptance of an offer of option. The Share Option Scheme will expire on 23 June 2026 and the remaining life of the Share Option Scheme as at the date of this report is around 6 years.

The exercise price per Share shall be determined by the Board and notified to the grantee at the time of offer of the options. The exercise price should at least be the highest of:

the nominal value of the Shares;
the closing price of the Shares as stated in the Stock Exchange's daily quotations sheet on the date of offer, which must be a day on which the Stock Exchange is open for the business of dealing in securities (the "Business Day"); and
the average closing prices of the Shares as stated in the Stock Exchange's daily quotations sheets for the five Business Days immediately preceding the date of offer,

or (where applicable) such price as from time to time adjusted pursuant to the Share Option Scheme.

As at the date of this report, the total number of Shares which may be issued upon exercise of all options to be granted under the Share Option Scheme shall not in aggregate exceed 63,800,000 Shares, being 10% of the total number of Shares in issue at the time dealings in the Shares first commenced on the Stock Exchange. The total number of Shares issued and to be issued upon the exercise of the options granted or to be granted under the Share Option Scheme and any other schemes of the Company (including exercised, cancelled and outstanding options) to each Eligible Participant in any 12 consecutive months up to and including the date of grant shall not exceed 1% of the Shares in issue as at the date of grant.

For the six months ended 30 June 2020, no share option was granted under the Share Option Scheme and none of the share options under the Share Option Scheme were exercised and lapsed. As at 30 June 2020, the maximum number of Shares which might be issued upon exercise of all outstanding options granted under the Share Option Scheme was 15,400,000 Shares, representing approximately 2.4% of the Company's issued share capital as at 30 June 2020.

INTERIM REPORT 2020 Vincent Medical Holdings Limited

OTHER INFORMATION

Details of the outstanding share options under the Share Option Scheme during the Period as follows:

				Number of Shares underlying the share options granted
				Outstanding
				as at	Exercised	Lapsed	Outstanding
				1 January	during the	during the	as at 30 June
Grantee	Date of grant	Vesting schedule	Exercise period	2020	Period	Period	2020

Directors
Mr. To Ki Cheung	28 May 2018	25% of options will vest

on each of 28 May 2019, 2020, 2021 and 2022 respectively

25% of options will be 2,000,000 - - 2,000,000 exercisable from each of

28 May 2019, 2020, 2021 and 2022 respectively to 23 June 2026

Mr. Koh Ming Fai 28 May 2018 25% of options will vest on each of 28 May 2019, 2020, 2021 and 2022 respectively

25% of options will be 1,500,000 - - 1,500,000 exercisable from each of

28 May 2019, 2020, 2021 and 2022 respectively to 23 June 2026

Mr. Fu Kwok Fu 28 May 2018 25% of options will vest on each of 28 May 2019, 2020, 2021 and 2022 respectively

25% of options will be 1,500,000 - - 1,500,000 exercisable from each of

28 May 2019, 2020, 2021 and 2022 respectively to 23 June 2026

In aggregate
Consultant
In aggregate	25 March 2019	25% of options will vest
		on each of 25 March
		2020, 2021, 2022 and
		2023 respectively

	5,000,000	-	-	5,000,000
25% of options will be	300,000	-	-	-
exercisable from each of				(Note)
25 March 2020, 2021, 2022
and 2023 respectively to
23 June 2026

Senior management and 28 May 2018	25% of options will vest
other employees	on each of 28 May 2019,
	2020, 2021 and 2022
	respectively

25% of options will be 7,300,000 - - 7,300,000 exercisable from each of

28 May 2019, 2020, 2021 and 2022 respectively to 23 June 2026

25 March 2019 25% of options will vest on each of 25 March 2020, 2021, 2022 and 2023 respectively

25% of options will be	2,800,000	-	-	3,100,000
exercisable from each of				(Note)

25 March 2020, 2021, 2022 and 2023 respectively to 23 June 2026

In aggregate	10,100,000	-	-	10,400,000

Total	15,400,000	-	-	15,400,000

Note:

The consultant joined the Group as a senior project engineer during the Period. Therefore, the outstanding balance of 300,000 share options under the category of "Consultant" as at 30 June 2020 were included in the category of "Senior management and other employees".

22	Vincent Medical Holdings Limited INTERIM REPORT 2020

OTHER INFORMATION

Further details of the share options are set out in Note 17 to the condensed consolidated financial statements of this report.

CHANGE OF DIRECTORS' INFORMATION

Subsequent to publication of the 2019 annual report, the change of Directors' information, which are required to be disclosed pursuant to Rule 13.51(2) and Rule 13.51B(1) of the Listing Rules, is set out below:

Name of Director	Details of change
Fu Kwok Fu	Appointed as the chairman of the ESG Committee with effect from 25 August 2020

The biographies of Directors are available in "About Us" section of the Company's website.

CORPORATE GOVERNANCE PRACTICES

The Board is committed to maintaining the highest possible standards of corporate governance, and strives to maintain transparent, responsible and value-driven management practices that will enhance and safeguard the interests of the Shareholders. The Board believes that effective and high quality corporate governance is an essential platform for creating value for the Shareholders. The Board is committed to continuously reviewing and improving the Group's corporate governance practices, and maintaining the highest standards of ethical corporate behaviour across the organisation.

The Company has adopted the Corporate Governance Code and Corporate Governance Report (the "CG Code") as contained in Appendix 14 to the Listing Rules as its own code of corporate governance. The corporate governance principles of the Company emphasise a quality Board, sound internal controls and risk management, and transparency and accountability to all Shareholders.

In the opinion of the Directors, the Company has complied with the code provisions set out in the CG Code throughout the Period and up to the date of this report.

MODEL CODE FOR SECURITIES TRANSACTIONS BY DIRECTORS

The Company has adopted the Model Code as its own code of conduct for dealing in securities of the Company by the Directors. Having made specific enquiries with all Directors, all Directors confirmed that they have complied with the required standard set out in the Model Code regarding their securities transactions throughout the Period and up to the date of this report.

AUDIT COMMITTEE

The Company established the Audit Committee with written terms of reference which deal clearly with its authority and duties. The Audit Committee currently consists of three independent non-executive Directors, namely Mr. Au Yu Chiu Steven, Mr. Mok Kwok Cheung Rupert and Prof. Yung Kai Leung.

The Group's unaudited consolidated interim results for the six months ended 30 June 2020 have been reviewed by the Audit Committee.

RSM Hong Kong, the Company's auditor, has reviewed the unaudited consolidated interim results of the Group for the six months ended 30 June 2020 in accordance with Hong Kong Standard on Review Engagements 2410, "Review of Interim Financial Information Performed by the Independent Auditor of the Entity" issued by the Hong Kong Institute of Certified Public Accountants. The auditor's independent review report is set out on page 25 of this report.

INTERIM REPORT 2020 Vincent Medical Holdings Limited

OTHER INFORMATION

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

Neither the Company nor any of its subsidiaries has purchased, sold or redeemed any of the Company's listed securities for the six months ended 30 June 2020.

SUFFICIENCY OF PUBLIC FLOAT

Based on the information that is publicly available to the Company and within the knowledge of the Board, the Company had maintained a sufficient public float of not less than 25% of its total issued Shares as required under the Listing Rules throughout the Period and up to the date of this report.

PUBLICATION OF INTERIM REPORT

The interim report of the Company for the six months ended 30 June 2020 containing all the relevant information required by the Listing Rules and the relevant laws and regulations has been published on the websites of the Stock Exchange (http://www.hkexnews.hk) and the Company (http://www.vincentmedical.com).

By Order of the Board

Vincent Medical Holdings Limited

Choi Man Shing

Chairman and Executive Director

Hong Kong, 25 August 2020

24	Vincent Medical Holdings Limited INTERIM REPORT 2020

INDEPENDENT REVIEW REPORT

TO THE BOARD OF DIRECTORS OF VINCENT MEDICAL HOLDINGS LIMITED (Incorporated in the Cayman Islands with limited liability)

Introduction

We have reviewed the interim financial information set out on pages 26 to 44 which comprises the condensed consolidated statement of financial position of the Company and its subsidiaries as at 30 June 2020 and the related condensed consolidated statement of profit or loss, condensed consolidated statement of profit or loss and other comprehensive income, condensed consolidated statement of changes in equity and condensed consolidated statement of cash flows for the six-month period then ended, and a summary of significant accounting policies and other explanatory notes. The Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited require the preparation of a report on interim financial information to be in compliance with the relevant provisions thereof and Hong Kong Accounting Standard 34 "Interim Financial Reporting" ("HKAS 34") issued by the Hong Kong Institute of Certified Public Accountants (the "HKICPA"). The directors are responsible for the preparation and presentation of this interim financial information in accordance with HKAS 34. Our responsibility is to express a conclusion on this interim financial information based on our review and to report our conclusion solely to you, as a body, in accordance with our agreed terms of engagement, and for no other purpose. We do not assume responsibility towards or accept liability to any other person for the contents of this report.

Scope of Review

We conducted our review in accordance with Hong Kong Standard on Review Engagements 2410 "Review of Interim Financial Information Performed by the Independent Auditor of the Entity" issued by the HKICPA. A review of interim financial information consists of making inquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures. A review is substantially less in scope than an audit conducted in accordance with Hong Kong Standards on Auditing and consequently does not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit. Accordingly, we do not express an audit opinion.

Conclusion

Based on our review, nothing has come to our attention that causes us to believe that the interim financial information is not prepared, in all material respects, in accordance with HKAS 34.

RSM Hong Kong

Certified Public Accountants

Hong Kong

25 August 2020

INTERIM REPORT 2020 Vincent Medical Holdings Limited

CONDENSED CONSOLIDATED STATEMENT OF PROFIT OR LOSS

FOR THE SIX MONTHS ENDED 30 JUNE 2020

			Six months ended 30 June
		2020		2019
	Note		HK$'000		HK$'000
			(unaudited)		(unaudited)
Revenue	5	502,346		246,524
Cost of sales		(277,042)	(162,826)

Gross profit		225,304		83,698
Other income, other gains and losses		2,040		1,348
Selling and distribution expenses		(22,203)	(15,617)
Administrative expenses		(73,549)	(47,942)

Profit from operations		131,592		21,487
Finance costs		(1,551)	(1,451)
Share of losses of associates		(428)	(455)
Share of losses of joint ventures		(624)	(677)

Profit before tax		128,989		18,904
Income tax expense	6	(19,513)	(3,394)

Profit for the period	7	109,476		15,510
Attributable to:

Owners of the Company		91,842		13,667
Non-controlling interests		17,634		1,843

		109,476		15,510
Earnings per share	9

Basic			HK14.40 cents		HK2.14 cents

Diluted			n/a		n/a

26	Vincent Medical Holdings Limited INTERIM REPORT 2020

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
		(unaudited)		(unaudited)
Profit for the period	109,476	15,510
Other comprehensive income:

Items that will not be reclassified to profit or loss:
Fair value changes of equity investments at fair value through other
comprehensive income ("FVTOCI")	(2,678)	2,684
Items that will be reclassified to profit or loss:

Exchange differences on translating foreign operations	(4,607)	(1,017)
Share of other comprehensive income of associates and joint ventures		-	39

	(4,607)	(978)

Other comprehensive income for the period, net of tax	(7,285)	1,706

Total comprehensive income for the period	102,191	17,216
Attributable to:

Owners of the Company	85,349	15,281
Non-controlling interests	16,842	1,935

	102,191	17,216

INTERIM REPORT 2020 Vincent Medical Holdings Limited

CONDENSED CONSOLIDATED STATEMENT OF

FINANCIAL POSITION

AT 30 JUNE 2020

				30 June			31 December
		Note	2020		2019
			HK$'000			HK$'000
				(unaudited)			(audited)
	ASSETS
	Non-current assets		80,600
	Property, plant and equipment	10		68,732
	Right-of-use assets	11	20,305		21,408
	Goodwill			-			-
	Other intangible assets		34,743		31,123
	Investments in associates		4,775		5,204
	Investments in joint ventures		16,130		17,027
	Equity investments at FVTOCI		40,521		43,199
	Deferred tax assets		1,856		1,892

	Total non-current assets		198,930		188,585
	Current assets
		224,598
	Inventories			118,544
	Trade receivables	12	191,485		112,707
	Contract assets		9,397		12,991
	Prepayments, deposits and other receivables	13	115,154		67,541
	Bank and cash balances		109,897		69,951

	Total current assets		650,531		381,734

	TOTAL ASSETS		849,461		570,319
	EQUITY AND LIABILITIES
		6,377
	Share capital	16		6,377
	Reserves		424,841		346,074

	Equity attributable to owners of the Company		431,218		352,451
	Non-controlling interests		76,435		61,696

	Total equity		507,653		414,147
	Non-current liabilities
		7,767
	Lease liabilities			11,528
	Deferred tax liabilities		5,424		5,830

	Total non-current liabilities		13,191		17,358
	Current liabilities
		145,274
	Trade payables	14		43,277
	Other payables and accruals	15	97,684		41,899
	Lease liabilities		13,498		10,675
	Borrowings		46,965		30,598
	Current tax liabilities		25,196		12,365

	Total current liabilities		328,617		138,814

	TOTAL EQUITY AND LIABILITIES		849,461		570,319

	Net current assets		321,914		242,920

	Total assets less current liabilities		520,844		431,505
28	Vincent Medical Holdings Limited INTERIM REPORT 2020

CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

															FOR THE SIX MONTHS ENDED 30 JUNE 2020

								Attributable to owners of the Company
											Foreign
				Share	Share-based				currency							Non-
		Share	premium		payment		Merger	translation	FVTOCI	Retained			controlling	Total
		capital	account		reserve		reserve	reserve	reserve	profits	Total	interests	equity
		HK$'000	HK$'000		HK$'000		HK$'000	HK$'000	HK$'000	HK$'000	HK$'000	HK$'000	HK$'000
At 1 January 2019 (audited)	6,377	151,957		8,514	12,094	(6,741)	(6,323)	208,573	374,451	59,742	434,193
Total comprehensive income

for the period		-	-		-		-	(1,070)	2,684	13,667	15,281	1,935	17,216
Share-based payments		-	-	1,347		-	-	-	-	1,347	-	1,347
Dividend paid		-	(10,202)		-		-	-	-	-	(10,202)	-	(10,202)

Changes in equity for the period		-	(10,202)	1,347		-	(1,070)	2,684	13,667	6,426	1,935	8,361

At 30 June 2019 (unaudited)	6,377	141,755		9,861	12,094	(7,811)	(3,639)	222,240	380,877	61,677	442,554


At 1 January 2020 (audited)	6,377	141,755		10,620	12,094		(11,065)	(27,428)	220,098	352,451	61,696	414,147
Total comprehensive income

for the period		-	-		-		-	(3,815)	(2,678)	91,842	85,349	16,842	102,191
Capital contribution from
non-controlling shareholders		-	-		-		-	-	-	-	-	138	138
Share-based payments		-	-	650		-	-	-	-	650	-	650
Dividend paid		-	(7,014)		-		-	-	-	-	(7,014)	-	(7,014)
Purchases of non-controlling interests		-	-		-		-	-	-	(218)	(218)	(2,241)	(2,459)

Changes in equity for the period		-	(7,014)	650		-	(3,815)	(2,678)	91,624	78,767	14,739	93,506

At 30 June 2020 (unaudited)	6,377	134,741		11,270	12,094		(14,880)	(30,106)	311,722	431,218	76,435	507,653

INTERIM REPORT 2020 Vincent Medical Holdings Limited

CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS

FOR THE SIX MONTHS ENDED 30 JUNE 2020

		Six months ended 30 June
	2020		2019
		HK$'000		HK$'000
		(unaudited)		(unaudited)
NET CASH GENERATED FROM OPERATING ACTIVITIES	71,717		24,299

Purchases of property, plant and equipment	(21,585)	(16,459)
Additions to other intangible assets	(7,852)	(2,350)
Other investing cash flows (net)	159		69

NET CASH USED IN INVESTING ACTIVITIES	(29,278)	(18,740)

Borrowings raised	18,216			-
Repayment of borrowings	(1,406)	(907)
Principal elements of lease payment	(6,473)	(5,638)
Capital contribution from non-controlling shareholders	138			-
Purchases of non-controlling interests	(2,459)		-
Dividend paid to owners of the Company	(7,014)	(10,202)

NET CASH GENERATED FROM/(USED IN) FINANCING ACTIVITIES	1,002		(16,747)

NET INCREASE/(DECREASE) IN CASH AND CASH EQUIVALENTS	43,441		(11,188)
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD	69,951		81,141
EFFECT OF FOREIGN EXCHANGE RATE CHANGES	(3,495)	(622)

CASH AND CASH EQUIVALENTS AT END OF PERIOD, REPRESENTED BY	109,897		69,331

Bank and cash balances	109,897		69,331

30	Vincent Medical Holdings Limited INTERIM REPORT 2020

NOTESTOTHE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE SIX MONTHS ENDED 30 JUNE 2020

1. BASIS OF PREPARATION

These condensed consolidated financial statements have been prepared in accordance with Hong Kong Accounting Standard 34 "Interim Financial Reporting" issued by the Hong Kong Institute of Certified Public Accountants (the "HKICPA") and the applicable disclosures required by the Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited.

These condensed consolidated financial statements should be read in conjunction with the 2019 annual financial statements. The accounting policies (including the significant judgements made by management in applying the Group's accounting policies and the key sources of estimation uncertainty) and methods of computation used in the preparation of these condensed consolidated financial statements are consistent with those used in the annual financial statements for the year ended 31 December 2019 except as stated below.

Provision for warranty cost

Provision for warranty cost is recognised when the Group has a present legal or constructive obligation as a result of past events, it is more likely than not that an outflow of resources will be required to settle the obligation and the amount has been reliably estimated.

The Group recognises the estimated liability to repair or replace products still under warranty at the end of reporting period. This provision is calculated based on historical experience of the level of repairs and replacements.

2. ADOPTION OF NEW AND REVISED HONG KONG FINANCIAL REPORTING STANDARDS

In the current period, the Group has adopted all the new and revised Hong Kong Financial Reporting Standards ("HKFRSs") issued by the HKICPA that are relevant to its operations and effective for its accounting year beginning on 1 January 2020. HKFRSs comprise Hong Kong Financial Reporting Standards; Hong Kong Accounting Standards; and Interpretations. The Group has not early adopted any other standard, interpretation or amendment that has been issued but is not yet effective.

The accounting policies applied in these condensed consolidated financial statements are the same as those applied in the Group's consolidated financial statements as at and for the year ended 31 December 2019. A number of new or amended standards are effective from 1 January 2020 but they do not have a material effect on the Group's consolidated financial statements.

3. FAIR VALUE MEASUREMENTS

The carrying amounts of the Group's financial assets and financial liabilities as reflected in the condensed consolidated statement of financial position approximate their respective fair values.

Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The following disclosures of fair value measurements use a fair value hierarchy that categorises into three levels the inputs to valuation techniques used to measure fair value:

Level 1 inputs:	quoted prices (unadjusted) in active markets for identical assets or liabilities that the
	Group can access at the measurement date.
Level 2 inputs:	inputs other than quoted prices included within level 1 that are observable for the
	asset or liability, either directly or indirectly.
Level 3 inputs:	unobservable inputs for the asset or liability.

INTERIM REPORT 2020 Vincent Medical Holdings Limited

NOTESTOTHE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE SIX MONTHS ENDED 30 JUNE 2020

3. FAIR VALUE MEASUREMENTS (CONTINUED)

The Group's policy is to recognise transfers into and transfers out of any of the three levels as of the date of the event or change in circumstances that caused the transfer.

The following table shows the carrying amounts and fair value of financial assets, including their levels in the fair value hierarchy. It does not include fair value information for financial assets not measured at fair value of the carrying amount is a reasonable approximation of fair value. Further, for the current year the fair value disclosure of lease liabilities is also not required.

Disclosures of level in fair value hierarchy at 30 June 2020:

	Fair value measurements as at 30 June 2020
			(unaudited)
Description	Level 1	Level 2	Level 3		Total
	HK$'000	HK$'000	HK$'000		HK$'000
Recurring fair value measurements:

Financial assets at FVTOCI
- Unlisted equity securities	-	-	40,521	40,521



	Fair value measurements as at 31 December 2019
			(audited)
Description	Level 1	Level 2	Level 3		Total
	HK$'000	HK$'000	HK$'000		HK$'000
Recurring fair value measurements:
Financial assets at FVTOCI
- Unlisted equity securities	-	-	43,199	43,199

Reconciliation of financial assets measured at fair value based on Level 3:

Financial assets at FVTOCI

30 June 31 December

20202019

HK$'000 HK$'000

(unaudited) (audited)

At beginning of period/year	43,199	64,304
Total gains or losses recognised in other
comprehensive income	(2,678)	(21,105)

At end of period/year	40,521	43,199

The total gains or losses recognised in other comprehensive income are presented in fair value changes of equity investments at FVTOCI in the condensed consolidated statement of profit or loss and other comprehensive income.

32	Vincent Medical Holdings Limited INTERIM REPORT 2020

NOTESTOTHE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE SIX MONTHS ENDED 30 JUNE 2020

3. FAIR VALUE MEASUREMENTS (CONTINUED)

Disclosure of valuation process used by the Group and valuation techniques and inputs used in fair value measurements at 30 June 2020:
The Group's chief financial officer is responsible for the fair value measurements of financial assets and financial liabilities required for financial reporting purposes, including Level 3 fair value measurements. The chief financial officer reports directly to the Board of Directors for these fair value measurements. Discussions of valuation processes and results are held between the chief financial officer and the Board of Directors at least twice a year.
For Level 3 fair value measurements, the Group will normally engage external valuation experts with the recognised professional qualifications and recent experience to perform the valuations.
Level 3 fair value measurements

				Effect on	Fair value
				fair value

	Valuation	Unobservable		for increase	30 June	31 December
Description	technique	inputs	Range	of input	2020	2019
					HK$'000	HK$'000
					(unaudited)	(audited)
Unlisted equity securities	Discounted	Weighted average	30% - 50%	Decrease	40,521	43,199
classified as financial	cash flows	cost of capital	(31 December
assets at FVTOCI			2019:
			34% - 50%)
		Discount for lack	20% - 25%	Decrease
		of marketability	(31 December
			2019:
			20% - 25%)
		Long-term	2%	Increase
		growth rate	(31 December
			2019: 2%)
Unlisted equity securities	Cost approach	n/a	n/a	n/a	-	-
classified as financial
assets at FVTOCI

There were no changes in the valuation techniques used.

INTERIM REPORT 2020 Vincent Medical Holdings Limited

NOTESTOTHE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE SIX MONTHS ENDED 30 JUNE 2020

4. SEGMENT INFORMATION

Information about reportable segment profit or loss:

		OBM	OEM	Total
		HK$'000	HK$'000	HK$'000
		(unaudited)	(unaudited)	(unaudited)
Six months ended 30 June 2020
Revenue from external customers	251,218	251,128		502,346
Segment profit	77,036	57,689		134,725
Six months ended 30 June 2019


Revenue from external customers	60,711		185,813		246,524
Segment (loss)/profit	(5,061)	28,567		23,506
Reconciliation of reportable segment profit or loss:


						Six months ended 30 June
						2020			2019
						HK$'000	HK$'000
						(unaudited)	(unaudited)
Total profit or loss of reportable segments						134,725			23,506
Interest income						48			69
Interest expenses						(1,551)		(1,451)
Share-based payments						(650)		(1,347)
Share of losses of associates						(428)		(455)
Share of losses of joint ventures						(624)		(677)
Unallocated corporate income						2,312			523
Unallocated corporate expenses						(4,843)		(1,264)

Consolidated profit before tax						128,989			18,904

34	Vincent Medical Holdings Limited INTERIM REPORT 2020

NOTESTOTHE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE SIX MONTHS ENDED 30 JUNE 2020

4. SEGMENT INFORMATION (CONTINUED)

Revenue from major customers:

		Six months ended 30 June
	2020	2019
		HK$'000		HK$'000
		(unaudited)		(unaudited)
OEM segment
Customer A	91,034	78,694
Customer B (Note)		n/a	37,630
Customer C	54,877		-

Note:

Revenue from Customer B represented less than 10% of the Group's revenue for the six months ended 30 June 2020.

5. REVENUE

The Group's operations and main revenue streams are those described in the last annual financial statements. The Group's revenue is derived from contracts with customers.

In the following table, revenue is disaggregated by product category, geographical market and timing of revenue recognition.

						Six months ended 30 June (unaudited)
		OBM				OEM			Total
	2020			2019	2020		2019	2020		2019
		HK$'000	HK$'000		HK$'000	HK$'000	HK$'000	HK$'000
By product category
Respiratory products	247,671			54,843	115,751		49,126	363,422		103,969
Imaging disposable products		-			-	83,602		76,752	83,602		76,752
Orthopaedic and rehabilitation
products	3,547			5,868	17,493		36,174	21,040		42,042
Other products		-			-	34,282		23,761	34,282		23,761

	251,218			60,711	251,128		185,813	502,346		246,524

INTERIM REPORT 2020 Vincent Medical Holdings Limited

NOTESTOTHE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE SIX MONTHS ENDED 30 JUNE 2020
5.	REVENUE (CONTINUED)

							Six months ended 30 June (unaudited)
			OBM				OEM				Total
		2020		2019	2020			2019	2020			2019
			HK$'000	HK$'000		HK$'000	HK$'000		HK$'000	HK$'000
	By geographical market
	United States	6,532		2,952	199,690			150,602	206,222			153,554
	The People's Republic of China
	(the "PRC")	141,020		32,031		-			-	141,020			32,031
	Saudi Arabia	30,554		271		-			-	30,554			271
	Israel	4,850		1,371	18,564			1,775	23,414			3,146
	The Netherlands	746		-	11,761			7,516	12,507			7,516
	Japan	3,265		2,658	8,404			8,008	11,669			10,666
	Australia	1,291		749	5,813			12,056	7,104			12,805
	Others	62,960		20,679	6,896			5,856	69,856			26,535

		251,218		60,711	251,128			185,813	502,346			246,524
	By timing of revenue

	recognition
	Products transferred at a point
	in time	251,218		60,711	167,526			109,061	418,744			169,772
	Products transferred over time		-			-	83,602			76,752	83,602			76,752

		251,218		60,711	251,128			185,813	502,346			246,524

The following table provides information about receivables and contract assets from contracts with customers:

		30 June	31 December
	2020	2019
		HK$'000	HK$'000
		(unaudited)	(audited)
Receivables, which included in "trade receivables"	191,485	112,707
Contract assets	9,397	12,991

Contract assets primarily consist of unbilled amount resulting from sales of OEM products transferred over time. Contract assets are transferred to receivables when the rights become unconditional. This usually occurs when the Group issues an invoice to the customer.

36	Vincent Medical Holdings Limited INTERIM REPORT 2020

NOTESTOTHE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

			FOR THE SIX MONTHS ENDED 30 JUNE 2020
6.	INCOME TAX EXPENSE

			Six months ended 30 June
		2020	2019
			HK$'000	HK$'000
			(unaudited)	(unaudited)
	Current tax
	- Hong Kong Profits Tax	8,671	2,071
	- PRC Corporate Income Tax	11,174	973
	Deferred tax	(332)	350

		19,513	3,394

Under the two-tiered profits tax regime, profits tax rate for the first HK$2.0 million of assessable profits of the qualifying corporation established in Hong Kong will be lowered to 8.25%, and profits above that amount will be subject to the tax rate of 16.5%. For the other Hong Kong established subsidiaries, Hong Kong Profits Tax has been provided at a rate of 16.5% (six months ended 30 June 2019: 16.5%) on the estimated assessable profits.

PRC Corporate Income Tax has been provided at tax rates ranging from 15% to 25% for the six months ended 30 June 2020 (six months ended 30 June 2019: 10% to 25%).

7. PROFIT FOR THE PERIOD

The Group's profit for the period is arrived at after charging:

		Six months ended 30 June
	2020	2019
		HK$'000		HK$'000
		(unaudited)		(unaudited)
Allowance for inventories (included in cost of inventories sold)	6,399		-
Amortisation	3,119	1,122
Cost of inventories sold	277,042	162,826
Depreciation of property, plant and equipment	7,569	7,371
Depreciation of right-of-use assets	6,689	5,157
Directors' emoluments	3,159	3,061
Equity-settledshare-based payments	650	1,347
Exchange loss, net (included in other gains and losses)	914	1,668
Impairment of trade receivables (included in other gains and losses)	144		-
Research and development expenditure	15,754	11,696
Staff costs including directors' emoluments	108,105	74,319
Write off of inventories (included in cost of inventories sold)		-	982
Write off of property, plant and equipment
(included in other gains and losses)	768	27

INTERIM REPORT 2020 Vincent Medical Holdings Limited

NOTESTOTHE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE SIX MONTHS ENDED 30 JUNE 2020

8. DIVIDEND

The Board of Directors of the Company has resolved not to declare any interim dividend for the six months ended 30 June 2020 (six months ended 30 June 2019: Nil).

The final dividend of HK1.10 cents amounting to approximately HK$7,014,000 for the year ended 31 December 2019 has been approved and paid on 18 June 2020.

9. EARNINGS PER SHARE

The calculation of basic and diluted earnings per share is based on the following:

		Six months ended 30 June
	2020	2019
		HK$'000	HK$'000
		(unaudited)	(unaudited)
Earnings

Profit attributable to owners of the Company, used in the basic and
diluted earnings per share calculation	91,842	13,667


		'000	'000
Number of shares

Weighted average number of ordinary shares for the purpose of
calculating basic earnings per share	637,650	637,650
Effect of dilutive potential ordinary shares arising from share options
issued by the Company (Note)		n/a	n/a
Weighted average number of ordinary shares for the purpose of

calculating diluted earnings per share		n/a	n/a

Note:

No diluted earnings per share are presented as the Company did not have any dilutive ordinary shares during the six months ended 30 June 2020 and 2019.

10. PROPERTY, PLANT AND EQUIPMENT

During the six months ended 30 June 2020, the Group acquired property, plant and equipment of approximately HK$21,585,000 (six months ended 30 June 2019: HK$16,459,000).

11. RIGHT-OF-USE ASSETS

During the six months ended 30 June 2020, the Group entered into new lease agreements for offices and factory premises for 2 years. The Group makes fixed payments during the contract period. On lease commencement, the Group recognised approximately HK$5,715,000 of right-of-use assets and lease liabilities.

38	Vincent Medical Holdings Limited INTERIM REPORT 2020

NOTESTOTHE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE SIX MONTHS ENDED 30 JUNE 2020

12. TRADE RECEIVABLES

The general credit terms of the Group granted to its customers range from 30 to 90 days. The Group seeks to maintain strict control over its outstanding receivables. Overdue balances are reviewed regularly by the directors.

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

		30 June	31 December
	2020	2019
		HK$'000	HK$'000
		(unaudited)	(audited)
0 to 30 days	65,980	26,905
31 to 60 days	61,741	24,548
61 to 90 days	37,462	28,712
Over 90 days	26,302	32,542

	191,485	112,707

13. PREPAYMENTS, DEPOSITS AND OTHER RECEIVABLES

		30 June	31 December
	2020	2019
		HK$'000	HK$'000
		(unaudited)	(audited)
Deposit for an investment	7,837	7,837
Deposits for license and distribution rights	11,626	13,427
Deposits for purchases of property, plant and equipment	19,500	10,939
Deposits for purchases of goods	46,062	15,239
Prepaid expenses	6,163	6,120
Rental and other deposits	3,172	2,091
Value-added tax and other receivables	20,794	11,888

	115,154	67,541

INTERIM REPORT 2020 Vincent Medical Holdings Limited

NOTESTOTHE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE SIX MONTHS ENDED 30 JUNE 2020

14. TRADE PAYABLES

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

30 June 2020

HK$'000 (unaudited)

31 December 2019

HK$'000 (audited)

	0 to 30 days	100,796		24,508
	31 to 60 days	25,007		7,795
	Over 60 days	19,471		10,974

		145,274		43,277
15. OTHER PAYABLES AND ACCRUALS



			30 June		31 December
		2020		2019
			HK$'000		HK$'000
			(unaudited)		(audited)
	Accrued staff costs	41,651		19,446
	Other accrued expenses	7,668		6,324
	Other payables	13,227		8,690
	Provision for warranty cost	4,600			-
	Contract liabilities	30,538		7,439

		97,684		41,899
16. SHARE CAPITAL



			30 June		31 December
		2020		2019
			HK$'000		HK$'000
			(unaudited)		(audited)
	Authorised:
	10,000,000,000 ordinary shares of HK$0.01 each	100,000		100,000
	Issued and fully paid:

	637,650,000 (at 31 December 2019: 637,650,000)
	ordinary shares at HK$0.01 each	6,377		6,377

40	Vincent Medical Holdings Limited INTERIM REPORT 2020

NOTESTOTHE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE SIX MONTHS ENDED 30 JUNE 2020

17. SHARE OPTIONS

Pre-IPO share option scheme adopted on 17 June 2016

A pre-IPO share option scheme (the "Pre-IPOShare Option Scheme") was approved and adopted on 17 June 2016. The purpose of the Pre-IPO Share Option Scheme is to recognise and acknowledge the contributions made by certain executives, directors, employees and/or consultants of the Group to the growth of the Group by granting options to them as rewards and further incentives. The Pre-IPO Share Option Scheme will expire on 16 June 2026.

Each option granted under the Pre-IPO Share Option Scheme is subject to the following vesting schedule:

		Percentage of
Tranche	Vesting Date	an option vested
First	First anniversary of 13 July 2016 (the "Listing Date")	25%
Second	Second anniversary of the Listing Date	25%
Third	Third anniversary of the Listing Date	25%
Fourth	Fourth anniversary of the Listing Date	25%

Each vested tranche of an option is exercisable during a period from and including the vesting date of the relevant tranche to and including the business day immediately preceding the tenth anniversary of the date of grant of the option.

The subscription price per share shall be HK$0.80. On 17 June 2016, 19,684,000 options were granted. No further options will be offered or granted under the Pre-IPO Share Option Scheme.

Details of each tranche of options are as follows:

Tranche	Date of grant	Vesting period	Exercise period	Exercise price
				HK$
First	17 June 2016	17 June 2016 to	13 July 2017 to	0.80
	13 July 2017	16 June 2026

Second	17 June 2016	17 June 2016 to	13 July 2018 to	0.80
	13 July 2018	16 June 2026

Third	17 June 2016	17 June 2016 to	13 July 2019 to	0.80
	13 July 2019	16 June 2026

Fourth	17 June 2016	17 June 2016 to	13 July 2020 to	0.80
	13 July 2020	16 June 2026

If the options remain unexercised after a period of ten years from the date of grant, the options will be expired. Options are lapsed if the directors, employees and/or consultants leave the Group.

INTERIM REPORT 2020 Vincent Medical Holdings Limited

NOTESTOTHE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE SIX MONTHS ENDED 30 JUNE 2020

17. SHARE OPTIONS (CONTINUED)

Pre-IPO share option scheme adopted on 17 June 2016 (continued)

Details of the movement of share options during the period are as follows:

				Weighted
		Number of	average
		share options	exercise price
				HK$
Outstanding at the beginning of the period	16,064,000		0.80
Lapsed during the period	(460,000)	0.80

Outstanding at the end of the period	15,604,000		0.80

Exercisable at the end of the period	11,703,000		0.80

Share option scheme adopted on 24 June 2016

A share option scheme (the "Share Option Scheme") was approved and adopted on 24 June 2016. Pursuant to the Share Option Scheme, the Board of Directors may, as its discretion, grant share options to any executive, director, employee, advisor, consultant, professional, agent, contractor, customer, provider of goods and/or services or partner of the Group. The Share Option Scheme will expire on 23 June 2026.

The subscription price per share shall be determined by the Board of Directors and notified to the grantee at the time of offer of the option.

On 28 May 2018, the Group granted 14,300,000 share options with exercise price of HK$0.80 per share to certain directors and employees. 25% of the options will vest on each of 28 May 2019, 2020, 2021 and 2022 respectively and will be exercisable from each of 28 May 2019, 2020, 2021 and 2022 respectively to 23 June 2026.

On 25 March 2019, the Group further granted 4,600,000 share options with exercise price of HK$0.80 per share to certain employees and consultant. 25% of the options will vest on each of 25 March 2020, 2021, 2022 and 2023 respectively and will be exercisable from each of 25 March 2020, 2021, 2022 and 2023 respectively to 23 June 2026.

If the options remain unexercised after 23 June 2026, the options will be expired. Options are lapsed if the directors and/or employees leave the Group.

Details of the movement of share options during the period are as follows:

			Weighted
		Number of	average
		share options	exercise price
			HK$
Outstanding at the beginning and end of the period	15,400,000	0.80

Exercisable at the end of the period	6,925,000	0.80

42	Vincent Medical Holdings Limited INTERIM REPORT 2020

NOTESTOTHE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE SIX MONTHS ENDED 30 JUNE 2020

18. RELATED PARTY TRANSACTIONS

The Group had the following transactions and balances with its related parties during the period:

		Six months ended 30 June
	2020	2019
		HK$'000		HK$'000
		(unaudited)		(unaudited)
Sales of goods to an associate	1,333		-
Purchases of goods from a joint venture	558		-
Purchases of goods from a related company	1,194	134
Catering service fee paid to a related company	595	520
Rental expenses paid to related companies	5,201	5,144
Metal supplies and processing service fee to a related company	4,486	2,633
Electronic assembly service fee to a related company	5,755		-

30 June

2020 HK$'000 (unaudited)

31 December

2019 HK$'000 (audited)

Trade receivables from an associate	1,857	495
Prepayments and deposits paid to an associate	49	2,081
Other payables to an associate	1,743		-
Other payables to a related company	7,073	2,913
Other receivables from a related company	84	84

Note:

Mr. Choi Man Shing, an executive director of the Company has beneficial interest in these related companies.

19. CONTINGENT LIABILITIES

The Group did not have any significant contingent liabilities at 30 June 2020 (at 31 December 2019: Nil).

INTERIM REPORT 2020 Vincent Medical Holdings Limited

NOTESTOTHE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE SIX MONTHS ENDED 30 JUNE 2020

20. CAPITAL COMMITMENTS

Capital commitments contracted for at the end of reporting period but not yet incurred are as follows:

		30 June		31 December
	2020		2019
		HK$'000		HK$'000
		(unaudited)		(audited)
Property, plant and equipment	14,882		7,018
Intangible assets		-	6,107

	14,882		13,125

21. EVENTS AFTER THE REPORTING PERIOD

by the Company or its subsidiary of the 1,718,861 shares in Vincent Medical Manufacturing Co., Limited (永勝醫療製品有限公司), representing approximately 19.90% of its issued shares, and 3.98% equity interest in 東莞永勝醫療製品有限公司 (translated as "Vincent Medical (Dongguan) Mfg. Co. Ltd."). For details, please refer to the Company's announcement dated 25 August 2020.

Saved as disclosed above, there were no other significant events after the reporting period and up to the date of this report.

22. APPROVAL OF FINANCIAL STATEMENTS

The interim financial statements were approved and authorised for issue by the Board of Directors on 25 August 2020.

44	Vincent Medical Holdings Limited INTERIM REPORT 2020

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Vincent Medical Holdings Ltd. published this content on 10 September 2020 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 10 September 2020 08:34:25 UTC

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Mar. 21	Vincent Medical Swings to Profit in 2023 as Revenue Jumps 14%	MT
Mar. 20	Vincent Medical Holdings Limited Proposes Final Dividend for the Year Ended 31 December 2023, Payable on 21 June 2024	CI

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