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MarketScreener Homepage  >  Equities  >  Hong Kong Stock Exchange  >  Xinyi Glass Holdings Limited    868   KYG9828G1082

XINYI GLASS HOLDINGS LIMITED

(868)
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Xinyi Glass : INTERIM RESULTS FOR THE SIX MONTHS ENDED 30 JUNE 2020

08/03/2020 | 08:26am EST

Hong Kong Exchanges and Clearing Limited and The Stock Exchange of Hong Kong Limited take no responsibility for the contents of this announcement, make no representation as to its accuracy or completeness and expressly disclaim any liability whatsoever for any loss howsoever arising from or in reliance upon the whole or any part of the contents of this announcement.

XINYI GLASS HOLDINGS LIMITED

信義玻璃控股有限公司

(Incorporated in the Cayman Islands with limited liability)

(Stock Code: 00868)

INTERIM RESULTS

FOR THE SIX MONTHS ENDED 30 JUNE 2020

  • Total sales for the six months ended 30 June 2020 reached HK$7,134.0 million, representing a decrease of 4.2%, as compared with total sales of HK$7,449.9 million for the six months ended 30 June 2019.
  • Net profit attributable to the equity holders of the Company for the six months ended 30 June 2020 reached HK$1,382.4 million, representing a decrease of 34.9%, as compared with net profit of HK$2,124.8 million for the six months ended 30 June 2019.
  • Basic earnings per Share for the six months ended 30 June 2020 was 34.4 HK cents, as compared with basic earnings per Share of 53.1 HK cents for the six months ended 30 June 2019.
  • The Directors declare an interim dividend of 17.0 HK cents per Share for the six months ended 30 June 2020.

The board (the "Board") of directors (the "Directors") of Xinyi Glass Holdings Limited (the "Company") is pleased to announce the unaudited consolidated interim results of the Company and its subsidiaries (collectively, the "Group") for the six months ended 30 June 2020, together with the comparative figures for the six months ended 30 June 2019, as follow:

- 1 -

Condensed Consolidated Balance Sheet

(All amounts in Hong Kong dollar thousands unless otherwise stated)

As at

30 June 31 December

2020

2019

Note

(Unaudited)

(Audited)

ASSETS

Non-current assets

Property, plant and equipment

6

14,775,439

14,202,835

Right-of-use assets

5(A)

3,487,039

3,593,739

Investment properties

7

1,620,399

1,671,971

Prepayments for property, plant and equipment and

right-of-use assets

9

755,807

769,043

Intangible assets

64,290

65,334

Financial assets at fair value through other

comprehensive income

21

34,301

51,752

Investments in associates

8

5,798,724

5,554,275

Loan to associates

986

1,004

Deferred income tax assets

44,090

39,023

26,581,075

25,948,976

Current assets

Inventories

2,000,223

2,044,629

Loans to associates

25,350

32,681

Trade and other receivables

9

3,878,880

3,085,866

Financial assets at fair value through profit and loss

21

186,295

-

Pledged bank deposits

10

44,489

44,222

Fixed deposits

10

301,271

-

Cash and bank balances

10

4,678,584

5,097,924

11,115,092

10,305,322

Total assets

37,696,167

36,254,298

- 2 -

As at

30 June 31 December

2020

2019

Note

(Unaudited)

(Audited)

EQUITY

Capital and reserves attributable to the equity

holders of the Company

Share capital

11

402,254

401,922

Share premium

11

392,492

388,161

Other reserves

12

187,723

867,623

Retained earnings

19,356,020

19,188,635

20,338,489

20,846,341

Non-controlling interests

85,627

81,085

Total equity

20,424,116

20,927,426

LIABILITIES

Non-current liabilities

Bank and other borrowings

14

8,376,184

6,350,418

Deferred income tax liabilities

394,126

419,404

Lease liabilities

5(B)

4,208

3,364

Other payables

13

70,849

131,996

8,845,367

6,905,182

Current liabilities

Trade, other payables and contract liabilities

13

4,927,556

3,349,206

Current income tax liabilities

626,072

609,661

Lease liabilities

5(B)

3,956

3,730

Bank and other borrowings

14

2,869,100

4,459,093

8,426,684

8,421,690

Total liabilities

17,272,051

15,326,872

Total equity and liabilities

37,696,167

36,254,298

Total assets less current liabilities

29,269,483

27,832,608

- 3 -

Condensed Consolidated Income Statement

(All amount in Hong Kong dollar thousands unless otherwise stated)

Unaudited

Six months ended

30 June

Note

2020

2019

Revenue

4

7,133,956

7,449,940

Cost of sales

15

(4,692,299)

(4,761,024)

Gross profit

2,441,657

2,688,916

Other income

4

244,520

159,331

Other (losses)/gains - net

16

(48,093)

616,219

Selling and marketing costs

15

(470,158)

(449,398)

Administrative expenses

15

(785,968)

(853,246)

Operating profit

1,381,958

2,161,822

Finance income

17

26,416

43,672

Finance costs

17

(122,992)

(140,751)

Share of profits of associates

8

356,189

290,323

Profit before income tax

1,641,571

2,355,066

Income tax expense

18

(253,567)

(228,714)

Profit for the period

1,388,004

2,126,352

Profit attributable to:

- Equity holders of the Company

1,382,387

2,124,768

- Non-controlling interest

5,617

1,584

Profit for the period

1,388,004

2,126,352

Earnings per Share for profit attributable to the

equity holders of the Company during the period

(expressed in Hong Kong cents per Share)

- Basic

20

34.4

53.1

- Diluted

20

34.3

52.9

- 4 -

Condensed Consolidated Statement of Comprehensive Income (All amount in Hong Kong dollar thousands unless otherwise stated)

Unaudited

Six months ended

30 June

2020

2019

Profit for the period

1,388,004

2,126,352

Other comprehensive income

Items that will not be reclassified subsequently to the

consolidated income statement:

Change in fair value of financial assets at fair value

through other comprehensive income

(17,451)

(2,407)

Items that may be reclassified subsequently to the

consolidated income statement:

Disposal of interests in an associate

-

12,421

Dilution of interests in an associate

-

6,100

Currency translation differences

(571,974)

(44,802)

Share of other comprehensive income of investments

accounted for using the equity method

(110,123)

(25,092)

Total comprehensive income for the period

688,456

2,072,572

Total comprehensive income for the period attributable to:

- Equity holders of the Company

683,268

2,070,780

- Non-controlling interests

5,188

1,792

688,456

2,072,572

- 5 -

Condensed Consolidated Statement of Changes in Equity (All amount in Hong Kong dollar thousands unless otherwise stated)

Unaudited

Attributable to equity holders of the Company

Non-

Share

Share

Other

Retained

controlling

Total

Note

capital

premium

reserves

earnings

Total

interests

equity

Balance at 31 December 2019 and

1 January 2020

401,922

388,161

867,623

19,188,635

20,846,341

81,085

20,927,426

Comprehensive income

Profit for the period

-

-

-

1,382,387

1,382,387

5,617

1,388,004

Other comprehensive income

Changes in value of financial assets at FVOCI

-

-

(17,451)

-

(17,451)

-

(17,451)

Share of other comprehensive income

of investments accounted for using

equity method

-

-

(110,123)

-

(110,123)

-

(110,123)

Currency translation differences

-

-

(571,545)

-

(571,545)

(429)

(571,974)

Total comprehensive income

-

-

(699,119)

1,382,387

683,268

5,188

688,456

Transactions with owners

Employees share option scheme:

- Proceeds from shares issued

11(a)

953

69,010

(10,664)

-

59,299

-

59,299

- Value of employee services

-

-

21,225

-

21,225

-

21,225

- Release on forfeiture of share options

-

-

(131)

131

-

-

-

Repurchase and cancellation of shares

11(b)

(621)

(64,679)

621

(621)

(65,300)

-

(65,300)

Transfer to reserves

-

-

8,168

(8,168)

-

-

-

Dividend paid to non-controlling interest

-

-

-

-

-

(646)

(646)

Dividends relating to 2019

19

-

-

-

(1,206,344)

(1,206,344)

-

(1,206,344)

Total transactions with owners

332

4,331

19,219

(1,215,002)

(1,191,120)

(646)

(1,191,766)

Balance at 30 June 2020

402,254

392,492

187,723

19,356,020

20,338,489

85,627

20,424,116

- 6 -

Unaudited

Attributable to equity holders of the Company

Non-

Share

Share

Other

Retained

controlling

Total

Note

capital

premium

reserves

earnings

Total

interests

equity

Balance at 31 December 2018 and

1 January 2019

399,320

249,821

938,284

17,037,302

18,624,727

77,534

18,702,261

Comprehensive income

Profit for the period

-

-

-

2,124,768

2,124,768

1,584

2,126,352

Other comprehensive income

Changes in value of financial assets at FVOCI

-

-

(2,407)

-

(2,407)

-

(2,407)

Disposal of interests in an associate

-

-

12,421

-

12,421

-

12,421

Dilution of interests in an associate

-

-

6,100

-

6,100

-

6,100

Share of other comprehensive income

of investments accounted for using

equity method

-

-

(25,092)

-

(25,092)

-

(25,092)

Currency translation differences

-

-

(45,010)

-

(45,010)

208

(44,802)

Total comprehensive income

-

-

(53,988)

2,124,768

2,070,780

1,792

2,072,572

Transactions with owners

Employees share option scheme:

- Proceeds from shares issued

1,568

88,466

(17,145)

-

72,889

-

72,889

- Value of employee services

-

-

20,372

-

20,372

-

20,372

- Release on forfeiture of share options

-

-

(25)

25

-

-

-

Transfer to reserves

-

-

7,229

(7,229)

-

-

-

Dividend paid to non-controlling interest

-

-

-

-

-

(1,261)

(1,261)

Dividends relating to 2018

19

-

-

-

(1,082,087)

(1,082,087)

-

(1,082,087)

Total transactions with owners

1,568

88,466

10,431

(1,089,291)

(988,826)

(1,261)

(990,087)

Balance at 30 June 2019

400,888

338,287

894,727

18,072,779

19,706,681

78,065

19,784,746

- 7 -

Condensed Consolidated Cash Flow Statement

(All amount in Hong Kong dollar thousands unless otherwise stated)

Unaudited

Six months ended

30 June

2020

2019

Cash flows from operating activities

Cash generated from operations

1,562,100

1,994,494

Interest paid

(165,883)

(162,781)

Income tax paid

(253,699)

(318,465)

Cash flows from operating activities - net

1,142,518

1,513,248

Cash flows from investing activities

Prepayment of right-of-use assets in relation to land use rights

(33,140)

(5,803)

Purchase of property, plant and equipment

(1,418,458)

(1,171,040)

Loan repayment from an associate

6,780

60

Purchase of financial assets at fair value through profit or loss

(288,444)

(332,795)

Proceeds from disposal of financial assets at fair value through

profit or loss

82,757

81,691

Addition to investment in associates

(204,864)

(770,263)

Proceeds from disposal of interests in an associate

-

1,164,457

Dividend received from associates

206,095

-

Increase in fixed deposits

(301,271)

(56,711)

Interests received

21,183

43,672

Other investing activities

18,451

(28,239)

Cash flows used in investing activities - net

(1,910,911)

(1,074,971)

Cash flows from financing activities

Proceeds from bank borrowings

3,735,059

2,632,000

Repayment of banks borrowings

(3,299,286)

(2,201,179)

Repayment of lease liabilities

466

-

Dividends paid to non-controlling interests

(646)

(1,261)

Share repurchased and cancelled

(65,300)

-

Net proceeds from issuance of ordinary shares by share options

59,299

72,889

Cash flows from financing activities - net

429,592

502,449

Net (decrease)/ increase in cash and cash equivalents

(338,801)

940,726

Cash and cash equivalents at beginning of the period

5,097,924

4,598,506

Effect of foreign exchange rate changes

(80,539)

(6,699)

Cash and cash equivalents at end of the period

4,678,584

5,532,533

- 8 -

Notes to the Condensed Consolidated Financial Information

  1. GENERAL INFORMATION
    Xinyi Glass Holdings Limited (the "Company") and its subsidiaries (together, the "Group") is principally engaged in the production and sales of automobile glass, architectural glass and float glass products through production complexes located in the People's Republic of China (the "PRC").
    The principal place of business of the Group in Hong Kong is situated at Unit 2101-2108, 21st Floor, Rykadan Capital Tower, 135 Hoi Bun Road, Kwun Tong, Kowloon, Hong Kong.
    This unaudited condensed consolidated interim financial information is presented in thousands of Hong Kong dollars (HK$'000), unless otherwise stated. This unaudited condensed consolidated interim financial information has been approved for issue by the Directors on 3 August 2020.
  2. BASIS OF PREPARATION
    This unaudited condensed consolidated interim financial information for the six months ended 30 June 2020 has been prepared in accordance with the applicable disclosure provisions of the Rules Governing the Listing of Securities on the Stock Exchange of Hong Kong Limited and Hong Kong Accounting Standards ("HKAS") 34, 'Interim financial reporting' issued by the Hong Kong Institute of Certified Public Accountants ("HKICPA"). This unaudited condensed consolidated interim financial information should be read in conjunction with the annual financial statements of the Group for the year ended 31 December 2019, which have been prepared in accordance with Hong Kong Financial Reporting Standards ("HKFRSs").
  3. ACCOUNTING POLICIES
    Except as described below, the accounting policies adopted are consistent with those of the annual financial statements of the Group for the year ended 31 December 2019, as described in 2019 annual financial statements.
    Taxes on income in the interim period are accrued using the tax rate that would be applicable to expected total annual earnings.

- 9 -

NEW AND AMENDED STANDARDS ADOPTED BY THE GROUP

The following new amendments to standards and interpretations are mandatory for accounting periods beginning on or after 1 January 2020. The adoption of these amendments to standards does not have any significant impact to the results and financial position of the Group.

Effective for

accounting periods

beginning on or after

HKAS1 and HKAS 8

Definition of Material

1 January 2020

(Amendment)

HKFRS 3 (Amendment)

Definition of a Business

1 January 2020

HKFRS 10 and HKAS 28

Sale or Contribution of Assets Between an

To be determined

(Amendment)

Investor and its Associate or Joint Venture

HKFRS 17

Insurance Contracts

1 January 2021

Conceptual Framework for

Revised Conceptual Framework for

1 January 2020

Financial Reporting 2018

Financial Reporting

Note:

There are no other amended standards or interpretations that are effective for the first time for this interim period that could be expected to have a material impact on the Group.

The Group has not applied any new standards and interpretations that are not effective for current accounting period.

4 SEGMENT INFORMATION

Management has determined the operating segments based on the reports reviewed by the executive Directors that are used to make strategic decisions.

The executive Directors consider the business from an operational entity perspective. Generally, the executive Directors consider the performance of business of each entity within the Group separately. Thus, each entity within the Group is an individual operating segment.

Among these operating segments, these operating segments are aggregated into three segments based on the products sold: (1) float glass; (2) automobile glass; and (3) architectural glass.

The executive Directors assess the performance of the operating segments based on a measure of gross profit. The Group does not allocate other operating costs to its segments as this information is not reviewed by the executive Directors.

- 10 -

Sales between segments are carried out at terms mutually agreed by the relevant parties. The revenue from external parties reported to the executive Directors is measured in a manner consistent with that in the consolidated income statement.

The unaudited segment information for the period ended 30 June 2020:

Automobile

Architectural

Float glass

glass

glass

Unallocated

Total

Segment revenue

4,229,858

2,161,148

1,681,845

-

8,072,851

Inter-segment revenue

(938,895)

-

-

-

(938,895)

Revenue from external customers

3,290,963

2,161,148

1,681,845

-

7,133,956

Cost of sales

(2,478,242)

(1,152,804)

(1,061,253)

-

(4,692,299)

Gross profit

812,721

1,008,344

620,592

-

2,441,657

Depreciation of property, plant and

equipment (Note 15)

311,233

84,935

73,104

2,897

472,169

Amortisation

- leasehold land and land use rights

(Note 15)

11,247

2,737

1,909

26,485

42,378

- intangible assets (Note 15)

-

1,039

-

-

1,039

Provision for/(reversal of provision for)

impairment of trade and other

receivables, net (Note 15)

-

2,264

(708)

-

1,556

Assets and liabilities

Automobile

Architectural

Float glass

glass

glass

Unallocated

Total

Total assets

16,660,212

5,557,696

2,733,675

12,744,584

37,696,167

Total assets included:

Investments in associates (Note 8)

-

-

-

5,798,724

5,798,724

Loans to associates

-

-

-

26,336

26,336

Investment properties

-

-

-

1,620,399

1,620,399

Additions to non-current assets (other

than financial assets at fair value

through other comprehensive income

("FVOCI") and deferred income

tax assets)

636,543

96,292

284,096

621,100

1,638,031

Total liabilities

1,750,733

1,245,358

864,674

13,411,286

17,272,051

- 11 -

The unaudited segment revenue for the period ended 30 June 2019 and the audited segment assets and liabilities as at 31 December 2019:

Automobile

Architectural

Float glass

glass

glass

Unallocated

Total

Segment revenue

4,434,671

2,204,292

1,717,199

-

8,356,162

Inter-segment revenue

(906,222)

-

-

-

(906,222)

Revenue from external customers

3,528,449

2,204,292

1,717,199

-

7,449,940

Cost of sales

(2,541,608)

(1,191,958)

(1,027,458)

-

(4,761,024)

Gross profit

986,841

1,012,334

689,741

-

2,688,916

Depreciation of property, plant

and equipment (Note 15)

280,339

66,379

117,047

2,902

466,667

Amortisation

- leasehold land and land use

rights (Note 15)

9,659

1,876

1,883

27,834

41,252

- intangible assets (Note 15)

-

1,083

-

-

1,083

Reversal of provision for

impairment of trade and other

receivables, net (Note 15)

-

(230)

(367)

-

(597)

Assets and liabilities

Automobile

Architectural

Float glass

glass

glass

Unallocated

Total

Total assets

15,170,220

6,911,576

1,971,055

12,201,447

36,254,298

Total assets included:

Investments in associates (Note 8)

-

-

-

5,554,275

5,554,275

Loans to associates

-

-

-

33,685

33,685

Investment properties

-

-

-

1,671,971

1,671,971

Additions to non-current assets

(other than financial assets at

fair value through other

comprehensive income ("FVOCI")

and deferred income tax assets)

2,594,937

208,775

96,035

200,007

3,099,754

Total liabilities

1,817,197

1,319,422

487,641

11,702,612

15,326,872

- 12 -

A reconciliation of segment gross profit to profit before income tax is provided as follows:

Unaudited

For the six months ended

30 June

2020

2019

Segment gross profit

2,441,657

2,688,916

Unallocated:

Other income

244,520

159,331

Other (losses)/gains, net

(48,093)

616,219

Selling and marketing costs

(470,158)

(449,398)

Administrative expenses

(785,968)

(853,246)

Finance income

26,416

43,672

Finance costs

(122,992)

(140,751)

Share of profits of associates

356,189

290,323

Profit before income tax

1,641,571

2,355,066

- 13 -

Reportable segments assets/(liabilities) for the period ended 30 June 2020 and the year ended 31 December

2019 are reconciled to total assets/(liabilities) as follows:

Assets

Liabilities

2020

2019

2020

2019

(Unaudited)

(Audited)

(Unaudited)

(Audited)

Segment assets/(liabilities)

24,951,583

24,052,851

(3,860,765)

(3,624,260)

Unallocated:

Property, plant and equipment

1,395,639

1,403,437

-

-

Right-of-use assets

2,042,131

2,107,433

-

-

Investment properties

1,620,399

1,671,971

-

-

Prepayments for property, plant and

equipment and right-of-use assets

2,468

1,791

-

-

Financial assets at FVOCI

34,301

51,752

-

-

Financial assets at fair value

through profit and loss

186,295

-

-

-

Investments in associates

5,798,724

5,554,275

-

-

Balances with associates

26,336

33,685

-

-

Prepayments, deposits and

other receivables

925,098

674,396

-

-

Cash and bank balances

713,193

702,707

-

-

Other payables

-

-

(438,848)

(351,442)

Dividend payables

-

-

(1,206,344)

-

Current income tax liabilities

-

-

(127,091)

(122,996)

Deferred income tax liabilities

-

-

(393,719)

(418,663)

Bank and other borrowings

-

-

(11,245,284)

(10,809,511)

Total assets/(liabilities)

37,696,167

36,254,298

(17,272,051)

(15,326,872)

Breakdown of the revenue from the sales of products is as follows:

Unaudited

For the six months ended

30 June

2020 2019

Sales of float glass

3,290,963

3,528,449

Sales of automobile glass

2,161,148

2,204,292

Sales of architectural glass

1,681,845

1,717,199

Total

7,133,956

7,449,940

- 14 -

The Group's revenue is mainly derived from customers located in the Greater China (including Hong Kong and PRC), North America and Europe while the Group's business activities are conducted predominately in the Greater China. An analysis of the Group's sales by geographical locations of its customers is as follows:

Unaudited

For the six months ended

30 June

2020

2019

Greater China

4,745,058

4,897,517

North America

953,066

888,057

Europe

254,584

289,552

Other countries

1,181,248

1,374,814

7,133,956

7,449,940

An analysis of the Group's non-current assets other than financial assets at fair value through other comprehensive income (there are no employment benefit assets and rights arising under insurance contracts) by geographical area in which the assets are located is as follows:

As at

30 June

31 December

2020

2019

(Unaudited)

(Audited)

Greater China

24,584,311

23,819,648

North America

17,251

15,071

Malaysia

1,944,627

2,061,732

Other countries

585

773

26,546,774

25,897,224

- 15 -

5 LEASES

5 (A) The information for leases where the Group is a lessee is analyses as follows:

Leasehold

lands and

land-use

rights

Buildings

Total

Period ended 30 June 2020 (Unaudited)

Opening net book amount

3,588,141

5,598

3,593,739

Currency translation differences

(63,818)

-

(63,818)

Additions

930

3,320

4,250

Depreciation charges

(44,875)

(2,257)

(47,132)

Closing net book amount

3,480,378

6,661

3,487,039

5 (B) Lease liabilities

As at

30 June

31 December

2020

2019

(Unaudited)

(Audited)

Current

3,956

3,730

Non-current

4,208

3,364

As at 30 June/31 December

8,164

7,094

Notes:

  1. In previous year, the consideration paid for the leasehold land use rights acquired by the Group are treated as prepayments for operating leases and presented as leasehold lands and land use rights. Leasehold land use rights previously presented as a separate item on the consolidated balance sheet is grouped as part of right-of-use assets with effect from 1 January 2019.
  2. Lands in the PRC are state-owned. The Group acquired leasehold lands from mainland China government by one-off prepayment with lease terms of 1 to 50 years. The leasehold lands were classified as "right-of-use assets". The Group also leases various offices and warehouses. Rental contracts are typically made for fixed periods of 1 year to 5.2 years.
    Lease terms are negotiated on an individual basis and contain a wide range of different terms and conditions. The lease agreements do not impose any covenants other than the security interests in the leased assets that are held by the lessor. Leased assets may not be used as security for borrowing purposes.

- 16 -

  1. Depreciation charges of HK$4,754,000 were capitalised as direct cost of construction in progress during the period ended 30 June 2020 when the building thereon were not yet ready for production purposes. For the period ended 30 June 2020, depreciation of the Group's right-of- use assets amounted to HK$42,378,000 were charged to the consolidated income statement (Note
    1. .

6 PROPERTY, PLANT AND EQUIPMENT

Six months ended 30 June 2020 (Unaudited)

Construction

Freehold

Plant and

Office

in progress

land

Buildings

machinery

equipment

Total

Opening net book amount

as at 1 January 2020

1,725,445

143,411

3,349,977

8,965,282

18,720

14,202,835

Currency translation

differences

(31,014)

(6,798)

(76,770)

(194,454)

(464)

(309,500)

Additions

1,322,257

-

70

112,831

8,053

1,443,211

Transfers

(510,161)

-

67,748

441,904

509

-

Disposals

-

-

-

(9,535)

(27)

(9,562)

Depreciation charge

-

-

(89,877)

(458,532)

(3,136)

(551,545)

Closing net book amount

as at 30 June 2020

2,506,527

136,613

3,251,148

8,857,496

23,655

14,775,439

Note:

Depreciation is calculated using the straight-line method to allocate their costs, net of residual values, over their estimated useful lives, as follows:

-

Buildings

20-30 years

-

Plant and machinery (note a)

5-20 years

-

Office equipment

3-7 years

The assets' residual values and useful lives are reviewed, and adjusted if appropriate, at the end of each reporting period.

  1. Only solar energy related equipment is applicable to depreciation of useful lives of 20 years.

- 17 -

7

INVESTMENT PROPERTIES

As at

30 June

31 December

2020

2019

(Unaudited)

(Audited)

As at 1 January

1,671,971

1,674,495

Currency translation differences

(28,604)

(32,396)

Additions

18

-

Disposal

(22,986)

-

Fair value gains

-

22,061

Transferred from property, plant and equipment

-

6,983

Transferred from right-of-use assets

-

828

As at 30 June/31 December

1,620,399

1,671,971

As at 30 June 2020, the Group has five investment properties in the PRC and an investment property in Hong Kong.

The Group's investment properties were valued at 31 December 2019 by independent professionally qualified valuer who holds a recognised relevant professional qualification and have recent experience in the locations and segments of the investment properties valued. For all investment properties, their current use equates to the highest and best use.

The Group's finance department reviews the valuations performed by the independent valuer for financial reporting purposes. This team reports directly to the chief financial officer and group senior management for discussions in relation to the valuation processes and the reasonableness of the valuation results.

- 18 -

The Group's interest in the investment properties at their net book amount is analysed as follows:

As at

As at

30 June

31 December

2020

2019

Level 3

Level 3

Fair value hierarchy:

- Commercial building under Construction - Xiamen, the PRC

1,301,726

1,325,376

- Commercial building 1 - Shenzhen, the PRC

23,245

47,072

- Commercial building 3 - Shenzhen, the PRC

117,441

119,576

- Office unit - Wuhu, the PRC

105,019

106,928

- Office unit - Hong Kong

70,160

70,160

1,617,591

1,669,112

At cost

- Commercial building 2 - Shenzhen, the PRC

2,808

2,859

1,620,399

1,671,971

There were no transfers between level 1, 2 and 3 during the period.

8

INVESTMENTS IN ASSOCIATES

As at

30 June

31 December

2020

2019

(Unaudited)

(Audited)

At 1 January

5,554,275

4,679,890

Currency translation differences

(386)

(483)

Addition to investment in an associate

204,864

798,226

Dilution of interests in an associate

-

153,801

Disposal of interests in an associate

-

(666,376)

Share of profits of associates

356,189

639,608

Dividend received

(206,095)

(227,274)

Share of other comprehensive income

(110,123)

(95,041)

Share of gain on changes in ownership in subsidiaries of an associate

-

271,924

At 30 June/31 December

5,798,724

5,554,275

- 19 -

9

TRADE AND OTHER RECEIVABLES

As at

30 June

31 December

2020

2019

(Unaudited)

(Audited)

Trade receivables (note (a))

1,566,919

1,451,494

Less: provision for impairment of trade receivables

(40,475)

(41,481)

1,526,444

1,410,013

Bills receivables (note (b))

984,287

303,812

Trade and bills receivables - net

2,510,731

1,713,825

Prepayments, deposits and other receivables

2,123,956

2,141,084

4,634,687

3,854,909

Less: non-current portion

Prepayments for property, plant and equipment and land use rights

(755,807)

(769,043)

3,878,880

3,085,866

  1. The credit period granted by the Group to its customers is generally from 30 to 90 days. At 30 June
    2020 and 31 December 2019 the ageing analysis of the Group's trade receivables was as follows:

As at

30 June

31 December

2020

2019

(Unaudited)

(Audited)

0-90 days

1,132,447

1,003,803

91-180 days

219,149

166,458

181-365 days

107,192

185,198

1-2 years

92,483

77,939

Over 2 years

15,648

18,096

1,566,919

1,451,494

  1. All the bills receivables are issued by licensed banks in the PRC with maturities ranging within six months.

- 20 -

10 CASH AND BANK BALANCES

Cash and bank balances include the following for the purpose of the condensed consolidated cash flows:

As at

30 June

31 December

2020

2019

(Unaudited)

(Audited)

Cash and bank balances and pledged bank deposits

5,024,344

5,142,146

Less:

- Pledged bank deposits (note a)

(44,489)

(44,222)

- Fixed deposits (note b)

(301,271)

-

Cash and bank balances

4,678,584

5,097,924

Notes:

a. The pledged bank deposits represents deposits pledged as collateral principally as security for import duties payable to the US Customs.

  1. The fixed deposits represent deposits held at call with banks and other short-term liquid investments with original maturities over three months.

11 SHARE CAPITAL

The share capital of the Company comprised ordinary shares (the "Shares") of HK$0.1 each.

Ordinary

Number

shares of

Share

Note

of Shares

HK$0.1 each

Premium

Total

Authorised:

As at 31 December 2019

and 30 June 2020

20,000,000,000

2,000,000

-

2,000,000

Issued and fully paid:

As at 1 January 2020

4,019,216,147

401,922

388,161

790,083

Issues of Shares under

an employees' share

option scheme

(a)

9,533,500

953

69,010

69,963

Repurchase and

cancellation of shares

(b)

(6,212,000)

(621)

(64,679)

(65,300)

As at 30 June 2020

4,022,537,647

402,254

392,492

794,746

- 21 -

Notes:

  1. Details of the movements in the number of share options outstanding and their related weighted average exercise prices are as follows:

For the six months ended 30 June

2020

2019

Average

Average

exercise

exercise

price in

price in

HK dollar

Options

HK dollar

Options

per Share

(thousands)

per Share

(thousands)

At 1 January

9.35

91,012

7.75

90,708

Granted

8.82

32,000

9.53

33,900

Exercised

6.23

(9,533)

4.66

(15,678)

Lapsed

8.15

(1,887)

7.94

(3,532)

Expired

4.81

(143)

4.55

(21)

At 30 June

9.49

111,449

8.78

105,377

Out of the 111,449,000 outstanding options, 18,918,000 options were exercisable as at 30 June 2020. Options exercised in 2020 resulted in 9,533,000 Shares being issued at a weighted average price at the time of exercise of HK$6.23 each.

Share options outstanding at the end of the period have the following expiry date and exercise price:

Exercise price

in HK dollar

Options

per Share

(thousands)

Expiry date

31 March 2021

7.28

18,918

31 March 2022

11.74

27,566

31 March 2023

9.53

33,166

31 March 2024

8.82

31,799

111,449

- 22 -

The weighted average fair value of options granted during the period determined using the Black- Scholes valuation model, which was performed by an independent valuer, Greater China Appraisal Limited. The value of share options granted during the period was based on the following assumptions:

Date of grant

17 March 2020

Option valued

HK$1.0608

Share price at the date of grant

HK$8.29

Exercisable price

HK$8.82

Expected volatility

33.8280%

Annual risk-free interest rate

0.8032%

Life of option

3 years and 6 months

Dividend yield

6.6345%

  1. During the period ended 30 June 2020, 6,212,000 shares repurchased by the Company and were cancelled in January 2020. Accordingly, the share capital of the Company was reduced by the nominal value of these shares and premiums paid on these shares upon the repurchase were charged against share premium account. An amount equivalent to the par value of the shares cancelled was transferred from the Company's retained earnings to the capital redemption reserve.

Number of

Month of

Shares of

Highest price

Lowest price

Aggregate

Repurchase

HK$0.10 each

per Share

per Share

consideration

HK$'000

January 2020

6,212,000

HK$10.60

HK$10.40

65,300

- 23 -

12

OTHER RESERVES

Foreign

Statutory

Enterprise

currency

Share

Property

Capital

reserve

expansion

translation

Capital

options

revaluation

redemption

FVOCI

Retained

fund

fund

reserve

reserve

reserve

reserve

reserve

reserve

Subtotal

earnings

Total

Balance at 1 January 2020

1,900,633

46,867

(1,624,684)

405,241

66,993

37,227

21,490

13,856

867,623

19,188,635

20,056,258

Profit for the period

-

-

-

-

-

-

-

-

-

1,382,387

1,382,387

Change in value of financial

assets at FVOCI

-

-

-

-

-

-

-

(17,451)

(17,451)

-

(17,451)

Share of the other comprehensive

income of investments

accounted for using the

equity method

-

-

(110,123)

-

-

-

-

-

(110,123)

-

(110,123)

Currency translation differences

-

-

(571,545)

-

-

-

-

-

(571,545)

-

(571,545)

Employees' share option scheme:

- Proceeds from shares issued

-

-

-

-

(10,664)

-

-

-

(10,664)

-

(10,664)

- Value of employee services

-

-

-

-

21,225

-

-

-

21,225

-

21,225

- Release on forfeiture of

share options

-

-

-

-

(131)

-

-

-

(131)

131

-

Repurchase and cancellation

of shares

-

-

-

-

-

-

621

-

621

(621)

-

Transfer to reserves

8,168

-

-

-

-

-

-

-

8,168

(8,168)

-

Dividend relating to 2019

-

-

-

-

-

-

-

-

-

(1,206,344)

(1,206,344)

Balance at 30 June 2020

1,908,801

46,867

(2,306,352)

405,241

77,423

37,227

22,111

(3,595)

187,723

19,356,020

19,543,743

- 24 -

13 TRADE AND OTHER PAYABLES

As at

30 June

31 December

2020

2019

(Unaudited)

(Audited)

Trade payables (note (a))

1,177,760

1,045,222

Bill payables (note (b))

673,155

498,670

1,850,915

1,543,892

Other payables

2,798,067

1,589,263

Contract liabilities

349,423

348,047

Less: non-current portion

(70,849)

(131,996)

Current portion

4,927,556

3,349,206

Notes:

  1. At 30 June 2020 and 31 December 2019, the ageing analysis of the trade payables was as follows:

As at

30 June

31 December

2020

2019

(Unaudited)

(Audited)

0-90 days

1,071,765

848,049

91-180 days

21,467

40,328

181-365 days

41,003

100,255

1-2 years

19,868

36,379

Over 2 years

23,657

20,211

1,177,760

1,045,222

  1. Bills payable have maturities ranging within 6 months.

- 25 -

14 BANK AND OTHER BORROWINGS

As at

30 June

31 December

2020

2019

(Unaudited)

(Audited)

Non-current

Bank borrowings, guaranteed (note (a))

11,245,284

10,609,511

Less: Current portion

(2,869,100)

(4,259,093)

Shown as non-current liabilities

8,376,184

6,350,418

Current

Short term bank borrowings, guaranteed

-

200,000

Current portion of long-term bank borrowings, guaranteed

2,869,100

4,259,093

Shown as current liabilities

2,869,100

4,459,093

Total bank and other borrowings

11,245,284

10,809,511

Note:

  1. The bank borrowings were secured by corporate guarantees provided by the Company and its subsidiaries.
    At 30 June 2020 and 31 December 2019, the Group's bank borrowings were repayable as follows:

As at

30 June

31 December

2020

2019

(Unaudited)

(Audited)

Within 1 year

2,869,100

4,459,093

Between 1 and 2 years

4,335,118

2,986,967

Between 2 and 5 years

4,041,066

3,363,451

11,245,284

10,809,511

- 26 -

At 30 June 2020 and 31 December 2019, the carrying amounts of the Group's bank borrowings are denominated in the following currencies:

As at

30 June 31 December

2020 2019

(Unaudited) (Audited)

HKD

11,245,284

10,809,511

The carrying amounts of bank borrowings approximate their fair values as at 30 June 2020 and 31 December 2019.

The effective interest rates (inclusive of HIBOR rate) at the balance sheet date were as follows:

30 June

31 December

2020

2019

HK$

HK$

Bank borrowings

2.66%

2.84%

Note: The current PBOC prime rate of Renminbi loan for 1 year is 4.35% (for reference only).

15 EXPENSES BY NATURE

Expenses included in cost of sales, selling and marketing costs and administrative expenses are analysed as follows:

Unaudited

For the six months ended

30 June

2020

2019

Depreciation and amortisation

515,586

509,002

Employee benefit expenses

712,218

693,980

Cost of inventories

3,551,380

3,668,882

Other selling expenses (including transportation and advertising costs)

238,980

250,517

Operating lease payments in respect of land and buildings

1,356

1,250

Provision for/(reversal of provision for) impairment of

trade and other receivables, net

1,556

(597)

Other expenses, net

927,349

940,634

Total cost of sales, selling and marketing costs and

administrative expenses

5,948,425

6,063,668

- 27 -

16 OTHER (LOSSES)/GAINS - NET

Unaudited

For the six months ended

30 June

2020

2019

Losses on disposal and written-off of property,

plant and equipment, net

(1,891)

(27,732)

Loss on impairment of inventories

-

(3,639)

Unrealised fair value losses on financial assets at FVTPL

(61,955)

(18,690)

Gain on disposal of financial assets at FVTPL

1,984

10,663

Gain on dilution of interests in an associate

-

147,701

Gain on disposal of interests in an associate

-

485,659

Other foreign exchange gains, net

10,813

11,283

Others

2,956

10,974

(48,093)

616,219

17 FINANCE INCOME AND FINANCE COSTS

FINANCE INCOME

Unaudited

For the six months ended

30 June

2020

2019

Interest income on short-term bank deposits

26,416

43,672

Note: The average deposit interest rate in the PRC was approximately 3.5% per annum during the reporting period.

FINANCE COST

Unaudited

For the six months ended

30 June

2020

2019

Interest on bank borrowings

166,487

163,222

Less: interest expenses capitalised under construction in progress

(43,495)

(22,471)

122,992

140,751

- 28 -

18 INCOME TAX EXPENSE

Unaudited

For the six months ended

30 June

2020

2019

Current income tax

- Hong Kong profits tax (Note a)

8,002

8,435

- PRC corporate income tax (Note b)

200,896

219,856

- Overseas income tax (Note c)

1,740

412

- Withholding tax on remitted earnings (Note d)

49,728

-

Deferred income tax

- Origination of temporary differences

(6,799)

11

253,567

228,714

Note:

  1. Hong Kong profits tax
    Hong Kong profits tax has been provided at the rate of 16.5% (2019: 16.5%) on the estimated assessable profits for the period.
  2. PRC corporate income tax ("CIT")
    CIT is provided on the estimated taxable profits of the subsidiaries established in the PRC for the period, calculated in accordance with the relevant tax rules and regulations. The applicable CIT rates for major subsidiaries located in Deyang, Dongguan, Jiangmen, Shenzhen, Tianjin, Wuhu and Yingkou are 25% (2019: 25%). Thirteen (2019: thirteen) major subsidiaries in Deyang, Dongguan, Jiangmen, Shenzhen, Tianjin, Wuhu and Yingkou enjoy high-tech enterprise income tax benefit and are entitled to a preferential tax treatment of reduction in CIT rate to 15%.
  3. Overseas income tax
    Taxation on overseas profits has been calculated on the estimated assessable profits for the periods ended 30 June 2020 and 2019 at the rates of taxation prevailing in the countries in which the Group operates.
  4. Withholding tax on remitted earnings
    Withholding tax on remitted earnings from the PRC companies was ranging from 5% to 10%, and there is no withholding tax on remitted earnings from the Malaysian companies.

- 29 -

19 DIVIDENDS

For the six months ended

30 June

2020

2019

Final dividend payable for 2019 of 30.0 HK cents

(2018: 27.0

HK cents) per Share

1,206,344

1,082,087

Proposed interim dividend of 17.0 HK cents

(2019: 25.0

HK cents) per Share

685,489

1,001,847

1,891,833

2,083,934

Note:

At a meeting of the Board held on 3 August 2020, the Directors declared an interim dividend of 17.0 HK cents per Share for the six months ended 30 June 2020. The amount of 2020 proposed interim dividend is based on 4,032,289,847 shares in issue as at 31 July 2020.

This interim dividend is not reflected as a dividend payable in this unaudited condensed consolidated financial information, but will be deducted from the retained earnings of the Company in the year ending 31 December 2020.

20 EARNINGS PER SHARE BASIC

Basic earnings per Share are calculated by dividing the profit attributable to equity holders of the Company by the weighted average number of Shares in issue during the period.

Unaudited

For the six months ended

30 June

2020 2019

Profit attributable to equity holders of the Company (HK$'000)

1,382,387

2,124,768

Weighted average number of Shares in issue (thousands)

4,017,849

4,001,054

Basic earnings per Share (HK cents per Share)

34.4

53.1

- 30 -

DILUTED

Diluted earnings per Share is calculated by adjusting the weighted average number of ordinary shares outstanding to assume conversion of all dilutive potential shares. The Group has following dilutive potential ordinary shares: share options in issue. The calculation for share options is determined by the number of Shares that could have been acquired at fair value (determined as the average market price of the Company's Shares for the period) based on the monetary value of the subscription rights attached to the outstanding share options. The number of Shares calculated as above is compared with the number of Shares that would have been issued assuming the exercise of the share options.

Unaudited

For the six months ended

30 June

2020

2019

Earnings

Profit attributable to equity holders of the Company (HK$'000)

1,382,387

2,124,768

Share of profit of an associate as a result of diluted earnings at

associate level (HK$'000)

(218)

(49)

1,382,169

2,124,719

Weighted average number of Shares in issue (thousands)

4,017,849

4,001,054

Adjustments for:

Share options (thousands)

6,625

15,463

Weighted average number of Shares for diluted earnings

per Share (thousands)

4,024,474

4,016,517

Diluted earnings per Share (HK cents per Share)

34.3

52.9

21 FAIR VALUE MEASUREMENT OF FINANCIAL INSTRUMENTS FAIR VALUE ESTIMATION

The table below analyses financial instruments carried at fair value, by valuation method. The different levels have been defined as follows:

  • Quoted prices (unadjusted) in active markets for identical assets or liabilities (level 1).
  • Inputs other than quoted prices included within level 1 that are observable for the asset or liability, either directly (that is, as prices) or indirectly (that is, derived from prices) (level 2).
  • Inputs for the asset or liability that are not based on observable market data (that is, unobservable inputs) (level 3).

- 31 -

The following table presents the Group's assets and liabilities that are measured at fair value at 30 June 2020 and 31 December 2019.

Level 1

Level 2

Level 3

Total

At 30 June 2020

Assets

Financial assets at FVOCI

- Equity securities

34,301

-

-

34,301

Financial assets at FVTPL

- Equity securities

186,295

-

-

186,295

Level 1

Level 2

Level 3

Total

At 31 December 2019

Assets

Financial assets at FVOCI

- Equity securities

51,752

-

-

51,752

The fair value of financial instruments traded in active markets is based on quoted market prices at the balance sheet date. A market is regarded as active if quoted prices are readily and regularly available from an exchange, dealer, broker, industry group, pricing service, or regulatory agency, and those prices represent actual and regularly occurring market transactions on an arm's length basis. Instruments included in level 1 at 30 June 2020 comprised financial assets at FVOCI and financial assets at FVTPL.

The fair value of financial instruments that are not traded in an active market (for example, over-the- counter derivatives) is determined by using valuation techniques. These valuation techniques maximise the use of observable market data where it is available and rely as little as possible on entity specific estimates. If all significant inputs required to fair value an instrument are observable, the instrument is included in level 2.

If one or more of the significant inputs is not based on observable market data, the instrument is included in level 3.

- 32 -

Specific valuation techniques used to value financial instruments include:

  • Quoted market prices or dealer quotes for similar instruments.
  • Other techniques, such as discounted cash flow analysis, are used to determine fair value for the remaining financial instruments.

During six months ended 30 June 2020, there were no transfer between Level 1 and Level 2, or transfer into or out of Level 3 (2019: Nil). The group's policy is to recognise transfers between levels of fair value hierarchy as at the end of the reporting period in which they occur.

22 COMMITMENTS CAPITAL COMMITMENTS

Capital expenditure at the end of reporting date but not yet incurred is as follows:

As at

30 June 31 December

2020 2019

(Unaudited)

(Audited)

Contracted but not provided for property, plant and equipment,

intangible assets and right-of-use assets

1,003,284

1,413,803

- 33 -

23 RELATED PARTY TRANSACTION

The following transactions were carried out with related parties:

(A) TRANSACTION WITH RELATED PARTIES

Unaudited

For the six months ended

30 June

2020

2019

Purchases of goods from associates

- Tianjin Wuqing District Xinke Natural Gas

Investment Company Limited

64,803

125,510

- Beihai Yiyang Mineral Company Limited

121,466

107,801

- Dongyuan County Xinhuali Quartz Sand Company Limited

10,708

23,846

- A subsidiary of Xinyi Solar

1,082

1,041

Purchases of goods from a related party

- An entity controlled by the ultimate controlling parties

154

735

Management fee paid to a related party

- An entity controlled by the ultimate controlling parties

726

783

Processing fee from lithium battery energy storage product

paid to a related party

- An entity controlled by the ultimate controlling parties

658

15,638

Sales of goods to an associate

- A subsidiary of Xinyi Solar

12,012

46,833

Sales of goods to related parties

- Entities controlled by the ultimate controlling parties

1,474

1,484

- An entity controlled by the ultimate controlling parties

2,406

2,393

Sales of machineries to an associate

- A subsidiary of Xinyi Solar

26,713

36,579

Consultancy income received from an associate

- A subsidiary of Xinyi Solar

430

427

Rental income received from an associate

- A subsidiary of Xinyi Solar

2,659

2,790

Rental income received from a related party

- An entity controlled by the ultimate controlling parties

150

134

Rental expenses paid to an associate

- A subsidiary of Xinyi Solar

509

534

Share option income received from a related party

- An entity controlled by the ultimate controlling parties

-

14

Purchase of property, plant and equipment from an associate

- A subsidiary of Xinyi Solar

-

191

EPC service fee paid to an associate

- A subsidiary of Xinyi Solar

-

216

Purchase of consumables from an associate

- A subsidiary of Xinyi Solar

-

776

Management fee paid to an associate

- A subsidiary of Xinyi Solar

1,294

630

- 34 -

(B) PERIOD/YEAR-END BALANCES WITH RELATED PARTIES

As at

30 June

31 December

2020

2019

(Unaudited)

(Audited)

Balance with/loan advance to an associate

- Dongyuan County Xinhuali Quartz Sand Company Limited

26,336

33,684

Receivable from an associate arising from sales of

machineries and land parcel

- A subsidiary of Xinyi Solar

71,157

90,247

Receivable from an associate arising from provision of

consultancy services

- A subsidiary of Xinyi Solar

72

72

Receivable from a related party arising from sales of goods

- A subsidiary of Xinyi Solar

4,361

-

- An entity controlled by the ultimate controlling parties

3,047

2,862

Payable to a related party arising from processing fees

- An entity controlled by the ultimate controlling parties

(1,232)

(1,364)

Receivable/(Payable) to an associate arising from purchase

of goods

- Beihai Yiyang Mineral Company Limited

558

(263)

- 35 -

MANAGEMENT DISCUSSION AND ANALYSIS

Financial Review

During the six months ended 30 June 2020, the revenue and the net profit of the Group were HK$7,134.0 million and HK$1,382.4 million, respectively, representing a decrease of 4.2% and a decrease of 34.9% as compared with HK$7,449.9 million and HK$2,124.8 million, respectively, for the six months ended 30 June 2019.

Revenue

The decrease in the revenue for the six-month period under review was mainly attributable to the drop in all our three glass business divisions due to the impact of COVID-19. The lower average selling price due to the competitive market environment in the second quarter of the year and depreciation of the Renminbi contributed to the float glass revenue decline of 6.7% as compared with the same period in 2019.

The decrease of automobile glass revenue was mainly attributable to the volume drop in the domestic sales of automobile glass due to the impact of COVID-19 during the period.

Government policies towards the PRC property market have not eased and construction activities there remained very competitive during the six-month period under review. With the government policies on environmental protection and the encouragement of energy-saving buildings in the PRC, the Directors expect that the demand for the Group's low emission ("Low-E") glass will continue to increase. As a leading domestic Low-E glass manufacturer, the Group enjoys economies of scale and a nationwide sales and delivery network. The slight decrease of sales was mainly attributable to the delay of shipments by the impact of COVID-19 and depreciation of the Renminbi as compared with the same period in 2019.

Gross Profit

The Group's gross profit for the six months ended 30 June 2020 decreased by 9.2% to HK$2,441.7 million as compared with HK$2,688.9 million for the same period in the previous year. The gross profit margin decreased to 34.2% during the six-month period under review as compared with 36.1% in 2019.

The drop in the float glass gross margin was a result of the lower selling price in the competitive market environment in the PRC and overseas markets. The slight increase of gross profit margins of the automobile glass was mainly due to the depreciation of the Renminbi as around 83.8% of automobile glass was contributed by the overseas sales. The drop of gross profit margin of the architectural glass businesses was mainly due to more price incentives given to the customers during the period.

- 36 -

Other Income

Other income increased to HK$244.5 million, as compared with HK$159.3 million for the same period last year. The increase was mainly attributable to more government grants and income from sale of electricity during the period.

Other (Losses)/Gains - Net

Other losses for the six months ended 30 June 2020 were HK$48.1 million, as compared with other gains of HK$616.2 million for the six months ended 30 June 2019. The significant decrease was mainly due to the unrealized fair value losses on financial assets at FVTPL, without the one off gain on disposal of equity interest in an associate and without the one off gain on dilution of interest in an associate of HK$485.7 million and HK$147.7 million respectively incurred in the same period in 2019.

Selling and Marketing Expenses

Selling and marketing expenses increased by 4.6% to HK$470.2 million for the period under review. The increase was mainly due to the rate of additional US import tariff during the Sino-US trade war being adjusted from 10% to 25% in May 2019.

Administrative Expenses

Administrative expenses decreased by 7.9% to HK$786.0 million for the six months ended 30 June 2020. The decrease was principally attributable to lower expenses incurred for research and development and local PRC government taxes and charges affected by the COVID-19 pandemic during the six-month period under review.

Finance Costs

Finance costs decreased by 12.6% to HK$123.0 million for the six months ended 30 June 2020. The decrease was principally due to the lower overall bank borrowing rate during the six-month period under review. Also, the higher interest expenses were capitalised as part of the total cost in the purchase of plant and machinery and the construction of factory buildings in the Group's PRC and Malaysia new production complexes, and these expenses were charged to the income statements of the Group following the commencement of commercial production at the relevant production facilities. Interest amounting to HK$43.5 million was capitalised under construction-in-progress for the six months ended 30 June 2020.

Earnings Before Interest, Taxation, Depreciation and Amortisation ("EBITDA")

EBITDA decreased by 23.9% to HK$2,253.7 million for the six months ended 30 June 2020, as compared with HK$2,961.1 million during the same period in 2019.

- 37 -

Taxation

Tax expense amounted to HK$253.6 million for the six months ended 30 June 2020. The effective tax rate of the Group was increased to 15.4% compared with the same period of 2019 (excluding the non-taxable income from dilution and disposals of Xinyi Solar shares). The increase was mainly attributable to the PRC dividend withholding tax paid during the period. Most of the Group's PRC subsidiaries are qualified as high technology enterprises with a preferential profit tax rate of 15% under the applicable PRC corporate income tax laws and regulations.

Net Profit

Net profit for the six months ended 30 June 2020 was HK$1,382.4 million, representing an decrease of 34.9% as compared with the same period in 2019. The net profit margin for the period under review dropped to 19.4% from 28.5%, principally due to the decreases in the gross profits of float glass, automobile glass and architectural glass.

CAPITAL EXPENDITURE

For the six months ended 30 June 2020, the Group incurred an aggregate capital expenditure amounting to HK$1,451.6 million for the purchase of plant and machinery and the construction of factory premises at its production complexes in China and Malaysia.

NET CURRENT ASSETS AND CURRENT RATIO

As at 30 June 2020, the Group had net current assets of HK$2,688.4 million, with the current ratio of 1.32 (2019: 1.22). The rise of net current ratio represented more liquid assets and the stronger financial position maintained in the current period. The Group has adequate funds to meet the payment obligation of the current liabilities.

FINANCIAL RESOURCES AND LIQUIDITY

During the six months ended 30 June 2020, the Group's primary sources of funding included cash generated from operating activities and credit facilities provided by principal banks in Hong Kong, China and Malaysia. As at 30 June 2020, the net cash inflow from operating activities amounted to approximately HK$1,142.5 million (2019: HK$1,513.2 million) and the Group had cash and cash equivalents of HK$5,024.3 million (2019: HK$5,142.1 million).

BANK BORROWINGS

As at 30 June 2020, total bank borrowings were HK$11,245.3 million. Despite the increase in the total liabilities, the net debt gearing ratio, calculated based on net total borrowings divided by total shareholders' equity (excluding 2020 declared interim dividends and 2019 proposed final dividend respectively), was at 30.5% as at 30 June 2020, as compared with 27.1% as at 31 December 2019. The increase of net gearing ratio was principally due to lower net profit and lower cash balances incurred during the period.

- 38 -

CONTINGENT LIABILITIES

As at 30 June 2020, the Group did not have any significant contingent liabilities (30 June 2019: Nil).

MATERIAL ACQUISITIONS AND DISPOSAL OF SUBSIDIARIES

Save as disclosed in this announcement, there was no material acquisition and disposal of subsidiaries and associated companies during the six months ended 30 June 2020.

Interim Dividend and Closure of Register of Members

Even though the Group recorded a decrease in net profit for the six months ended 30 June 2020 as compared with the six months ended 30 June 2019, the Directors consider that the Group has achieved a reasonable level of profitability. The Directors are pleased to declare an interim dividend of 17.0 HK cents per Share for the six months ended 30 June 2020 (2019: 25.0 HK cents) to be paid to all shareholders (the "Shareholders") of the Company whose names are recorded on the register of members of the Company as at the close of business on Friday, 21 August 2020. The interim dividend is payable on or before Tuesday, 1 September 2020.

The Company's register of members will be closed from Wednesday, 19 August 2020 to Friday, 21 August 2020 (both days inclusive), and during this period no transfer of Shares will be registered. In order to qualify for the interim dividend, all transfers of Shares accompanied by the relevant Share certificates must be lodged with the Company's branch share registrar in Hong Kong, Computershare Hong Kong Investor Services Limited, at Rooms 1712-1716, 17th Floor, Hopewell Centre, 183 Queen's Road East, Wanchai, Hong Kong, for registration by 4:30 p.m. on Tuesday, 18 August 2020.

Treasury Policies and Exposure to Fluctuation in Exchange Rates

The Group's transactions are mainly denominated in Renminbi, US dollars, Malaysia Ringgit, Euro, Australian dollars, Japanese Yen and Hong Kong dollars, with principal production activities conducted in China. As at 30 June 2020, the Group's bank borrowings were denominated in Hong Kong dollars bearing effective interest rates at 2.66% per annum. Hence, the Group's exposure to foreign exchange fluctuations was limited. The Group has not experienced any material difficulty and liquidity problems resulting from foreign exchange fluctuations. The Group may use financial instruments for hedging purposes as and when required. During the six months ended 30 June 2020, the Group did not use any financial instrument for hedging purposes.

Employees and Remuneration Policy

As at 30 June 2020, the Group had 12,912 full-time employees of whom 12,185 were based in China and 727 in Hong Kong and other countries and territories respectively. The Group maintains a good professional relationship with its employees providing them with a positive working environment. It provides employees with training on the latest business and professional knowledge including

- 39 -

applications of the Group's products and developing skills in maintaining good client relationships. Remuneration packages offered to the Group's employees are consistent with prevailing market levels and are reviewed on a regular basis. Discretionary bonuses may be provided to selected employees taking into consideration the Group's performance and that of the individual employee.

Pursuant to the applicable laws and regulations in the PRC, the Group has arranged for participation of its employees in relevant required retirement contribution schemes administered by the Chinese government. As for the Group's employees in Hong Kong, all the arrangements pursuant to the mandatory provident fund requirements set forth under the Mandatory Provident Fund Schemes Ordinance (Chapter 485 of the Laws of Hong Kong) have been duly implemented.

The Company has adopted a share option scheme on 18 January 2015 (the "2015 Share Option Scheme") for the purpose of providing incentives and rewards to eligible participants who have contributed to the success of the Group's operations. The Directors may, at their discretion, invite any employees and other selected participants to accept options to be granted by the Group for subscription for the Shares. As at the date of this announcement, 28,000,000 options, 28,500,000 options, 29,264,000 options, 29,600,000 options, 33,900,000 options and 32,000,000 options were granted under the 2015 Share Option Scheme on 2 March 2015, 16 March 2016, 1 March 2017, 27 February 2018, 26 February 2019 and 17 March 2020 respectively, and 111,449,000 options were outstanding as at 30 June 2020.

PURCHASE, SALE OR REDEMPTION OF SHARES

The Company repurchased its own Shares on the Stock Exchange in January 2020 and 6,212,000 Shares were cancelled in the same month. Accordingly, the issue share capital of the Company was reduced by the nominal value of the repurchased Shares and the premium paid on these Shares upon the repurchase was charged against the share premium account. An amount equivalent to the par value of the Shares repurchased and cancelled was transferred from the Company's retained earnings to the capital redemption reserve. The table below sets forth further information of such repurchases:

Number of

Repurchased

Aggregate

Shares

Highest Price

Lowest Price

Share Price

Month of Repurchase

HK$0.10 each

per Share

per Share

Paid

HK$

HK$

HK$'000

January 2020

6,212,000

10.60

10.40

65,300

Save as disclosed above, there was no purchase, sale or redemption by the Company, or any of its subsidiaries, of any listed securities of the Company during the six-month period ended 30 June 2020.

- 40 -

BUSINESS REVIEW

The development of the PRC glass industry has been influenced by COVID-19,supply-side reform, environmental, economic and monetary policies, the Sino-US trade war and fluctuation of the exchange rate of the Renminbi

The growth of the PRC economy has slowed down with the impact of the COVID-19 pandemic during the period. The Group's operations in the automobile glass, architectural glass and the float glass segments faced different challenges and opportunities. Nonetheless, the Group managed to achieve a reasonable operating result primarily attributable to its stringent control over production costs, the depreciation of the Renminbi, more value-added glass products and upgraded product structure, a better variety mix of float glass, flexible production logistics and a more effective marketing strategy for the architectural glass and automobile glass divisions.

The PRC property new project start-ups and construction volume have experienced a moderate drop in the first half of the year while the construction projects completion rate has undergone continuous improvement starting from the second quarter of the year due to the impact of COVID-19. Most of the building projects have resumed operation after the delay arising from the lockdown in the first quarter of the year. This was a good indicator of the increased demand of the construction energy-savingLow-E glass in the middle of the year. Therefore, the Group's has maintained a reasonable sales revenue of the architectural glass segment through its aggressive marketing strategy and better value- added products as well as advanced product structure.

The float glass sector has experienced a difficult time of decreased demand during the lockdown period to cope with the COVID-19 pandemic. However, the demand in float glass has experienced a significant rebound after the average selling price dropped significantly in April 2020. With the improvement of new building construction completion rate starting in May 2020, followed by the good recovery of the selling price of float glass. The strong market rebound in May and June of the year has offset to some extent the slowdown in the first quarter of the year.

In order to mitigate the impact of COVID-19 and the additional import tariffs imposed by the US government, the Group has proactively implemented flexible marketing and production strategies for its automobile glass business. Its sales team uses both the video and voice conferencing tools to explore business opportunities with overseas customers around the clock. In addition, new product development continues for applications in advanced driver assistance systems ("ADAS"), head-up display ("HUD"), sound proofing, coating, sunroof and value-added parts which are suitable for new and existing car models. At the same time, the Group has been approaching new domestic and overseas customers and strengthening the existing customer base to explore opportunities to increase the sales volume of its new and existing product models. Currently, the Group's automobile glass products are sold in more than 130 countries.

- 41 -

As one of the major players in the global glass industry, the Group has secured its market-leading position and enhanced its economies of scale through strategic expansion in a timely manner of production capacities across different product segments and the construction of new production complexes incorporating streamlined production processes at different locations both in the PRC and overseas. The Group has also implemented a series of measures enhancing control on the supply and consumption of raw materials, the re-cycling of principal raw materials, the re-engineering of production flow to boost production efficiency and using solar power and low-temperature recycling residual heat to generate electricity and hot water for internal consumption.

To maintain its competitiveness, the Group has successfully developed and launched a wide range of high value-added and specialty glass products while adopting proactive pricing and flexible marketing strategies to take advantage of the supportive measures implemented under the Thirteenth Five-Year Plan of the PRC government.

Improved productivity, technology and economies of scale to enhance production efficiency by research and development investments

The Group's continuous research and development investments in production engineering, information technology, big data and operational management, along with the continuous improvement in the production process, automation and well-planned equipment maintenance programs, have enhanced its productivity and yield rate, which, in turn, have reduced overall labour, production and energy costs during the period under review.

The Group's engineering and design division has designed the latest world class and larger capacity float glass production lines in both the PRC and overseas. The economies of scale have enabled significant savings in procurement costs, production and fixed costs and increased efficiency in fuel consumption. To further control energy costs, the Group is harnessing clean environmentally-friendly energy through implementing rooftop solar power generation systems and low-temperature recycling residual heat power co-generation systems.

In addition, using natural gas as the fuel for the production of high-quality float glass can reduce carbon emissions for a better air quality environment, improve float glass quality and enhance the energy cost structure of the Group.

Expansion of high value-added product mix and global coverage enhances overall competitiveness

During the period under review, the consolidated revenue generated from the Group's automobile glass, architectural glass and high-quality float glass businesses has achieved a reasonable result in comparison with peers during the COVID-19 pandemic and competitive market conditions. This performance demonstrates that the Group's combination of its diversified business segments, global market coverage, upgraded product structure and the expanded high value-added product mix can alleviate the operational pressure in any specific business segment or country despite an uncertain and competitive market environment.

- 42 -

BUSINESS OUTLOOK

The Group will continue to adopt flexible production, logistics and marketing strategies by increasing the extent of automation and upgrading through adopting advanced technologies at its facilities to further improve operational efficiency in order to maintain its leadership and competitive position at the forefront of global glass manufacturers.

The PRC government has continued the tightened policy on constructing new float glass production lines, acquisition of existing idle capacity and phasing out the obsolete and non-compliant float glass production lines because of stricter environmental standards on emissions. The Group is embarking on prudent and flexible strategies in response to the current situation of the float glass market in the PRC and the global markets.

The industry expects the low soda ash price range would be maintained in comparison with that of 2019 due to the over-supply in the PRC. The energy cost would also be lower when compared with 2019 due to lower consumption globally by the impact of COVID-19. Thus, the Group is cautiously optimistic about the float glass market as well as the average selling price trend in the second half of 2020.

The impact of the COVID-19 pandemic starting in the first quarter of 2020 has slowed down business activities in the PRC and global market. The Group has maintained a safety level of raw materials that ensures no interruption of its operations and production. The Group expects the market demand would be return to normal in the second half of 2020.

The Group will operate its first silica sand mine in Beihai, Guangxi by the end of 2020. This means the Group will has a higher integration of glass production flow and better control of major raw material cost and quality. The Group will continue to explore more opportunities on new sources of raw materials in the future.

The second float glass line in Beihai, Guangxi has started production in the second quarter of 2020. The rest of the production lines at Beihai and Zhangjiagang, Jiangsu are planned to commence full operations by the second half of 2020. It will strengthen the Group's market coverage in both the Eastern and Western PRC.

The Sino-US trade war had an impact on the added import tariff pressure on both the US aftermarket automobile glass customers and our Company until the completion of the trade negotiation with the US.

The Group is building up a new automobile glass factory in Malacca, Malaysia. This new production capacity will commence operation in first half of 2021 and will serve the overseas customers.

- 43 -

The market expects the PRC government would adopt further proactive monetary policies to add more liquidity to boost the market in 2020 and lead more construction activities to recover from the impact of the COVID-19 pandemic. Such policies would be positive to the demand of float glass and architectural glass businesses.

At the same time, the Directors are optimistic about the continued good performance of its automobile glass aftermarket business in the global market and the prospects of increased sales in the energy- saving and single and double insulated Low-E glass segments in the future.

After years of expanding its production facilities in the major economic zones of the PRC and South East Asia, the Group is ready to explore acquisitions and new expansion opportunities in the PRC and overseas where provide attractive and larger market environment, lower raw materials, production and energy costs, and offer favourable tax treatment and other incentives.

The Group will continue to ensure that adequate resources are allocated to research and development, enhancing product quality and for the introduction of new products, as well as exploring new markets, boosting production efficiency and conducting staff training in order to maintain its competitiveness and, ultimately, boost its profitability.

CONCLUSION

The Group continues to tackle the challenges amidst changes in the global market environment and the effects of COVID-19 by bolstering its efficiency and increasing its profitability through more effective management across its information technology, operations and marketing activities, as well as expansion of its business and continued collaboration with its customers and suppliers. The Directors believe that these approaches enable the Group to maximise the benefits from the domestic and emerging market and overseas business opportunities alike and are also cautiously optimistic about its long-term business development prospects.

The Group is continuing to adopt proven business strategies to sustain and strengthen growth with new business ideas. To maintain its industry-leading position, the Group is at the same time exploring expanding its presence in the global glass market across a wider spectrum of industries, applications and products as well as other opportunities mutually beneficial for business partnerships.

COMPLIANCE WITH THE CODE ON CORPORATE GOVERNANCE

In the opinion of the Directors, the Company has complied with the applicable code provisions of the Code on Corporate Governance Code as set forth in Appendix 14 to The Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited (the "Listing Rules") during the six months ended 30 June 2020.

- 44 -

MODEL CODE FOR SECURITIES TRANSACTIONS

The Company has adopted The Model Code for Securities Transactions by Directors of Listed Issuers (the "Model Code") as set forth in Appendix 10 to the Listing Rules as the code for securities transactions by the Directors. Directors are reminded of their obligations under the Model Code on a regular basis. The Company has made specific enquiries with the Directors and all of the Directors have confirmed that they have complied with the required standard set forth in the Model Code throughout the six-month period ended 30 June 2020.

REVIEW OF THE INTERIM RESULTS

The Company's interim results for the six months ended 30 June 2020 have not been audited but have been reviewed by the Company's audit committee, comprising the five independent non-executive Directors.

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 Appendix 16 to the Listing Rules and other applicable laws and regulations will be dispatched to the Shareholders and published on the websites of the Stock Exchange and the Company in due course.

By Order of the Board

XINYI GLASS HOLDINGS LIMITED

Dr. LEE Yin Yee, B.B.S.

Chairman

Hong Kong, 3 August 2020

As at the date of this announcement, Dr. LEE Yin Yee, B.B.S., Mr. TUNG Ching Bor, Tan Sri Datuk TUNG Ching Sai P.S.M, D.M.S.M and Mr. LEE Shing Kan were the executive Directors; Mr. LI Ching Wai, Mr. LI Ching Leung, Mr. SZE Nang Sze and Mr. NG Ngan Ho were the non-executive Directors; and Mr. LAM Kwong Siu, G.B.S., Mr. WONG Chat Chor Samuel, Dr. WONG Ying Wai, G.B.S., JP, Dr. TRAN Chuen Wah, John and Mr. TAM Wai Hung, David were the independent non-executive Directors.

This announcement will be published on the website of the Stock Exchange at www.hkex.com.hk and on the website of the Company at www.xinyiglass.com.

- 45 -

Disclaimer

Xinyi Glass Holdings Ltd. published this content on 03 August 2020 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 03 August 2020 12:26:22 UTC


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Financials
Sales 2020 18 117 M 2 337 M 2 337 M
Net income 2020 5 723 M 738 M 738 M
Net Debt 2020 5 704 M 736 M 736 M
P/E ratio 2020 14,1x
Yield 2020 3,28%
Capitalization 80 709 M 10 412 M 10 412 M
EV / Sales 2020 4,77x
EV / Sales 2021 3,80x
Nbr of Employees 12 912
Free-Float 43,0%
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Mean consensus BUY
Number of Analysts 13
Average target price 22,52 HKD
Last Close Price 19,98 HKD
Spread / Highest target 51,7%
Spread / Average Target 12,7%
Spread / Lowest Target -49,5%
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Managers and Directors
NameTitle
Ching Sai Tung Chief Executive Officer & Executive Director
Yin Yee Lee Executive Chairman
Sik Yuen Lau Chief Financial Officer & Secretary
Ngan Ho Ng Non-Executive Director
Shing Kan Lee Executive Director
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