Datronix : INTERIM REPORT 2020

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A W A R D S

ASTRONICS	ASTRONICS
"Best Value Added"	"Customer Intimacy Strategy"

MEDTRONIC	PHYSIO CONTROL	LUTRON
"Outstanding	"Supplier of the Year"	"Preferred Supplier"
Performance"

LUTRON	DATAFORTH	LUTRON
"Customer Service"	"Vendor of the Year"	"Outstanding New
		Supplier"

A W A R D S

XICOM	MICRO SYSTEMS
"Outstanding Performance"	ENGINEERING
	"Special Recognition Award"

MEDTRONIC	LUTRON
"Supplier of the Year"	"Supplier of the Year"

VICOR	XICOM
"Outstanding Supplier	"President's Award"
Achievement Award"

C u s t o m e r Recognition For Quality, Service, Value

Polycom

Ericsson

Milwaukee

Preferred supplier	Physio Control	Preferred supplier
General Electric	(Div. of Medtronic)	Primex Aerospace

Digital Equipment corp	Xerox	United Technologies

A W A R D S

Xerox

Xerox

ICL/Fujitsu

Xerox

Xerox

Xerox

Tektronix	Sola Electric	Tektronix

C u s t o m e r Recognition For Quality, Service, Value

Honeywell

Honeywell

Harris

Honeywell

Honeywell

Delco

Honeywell	Hughes Aircraft	IBM
	General Motors

CORPORATE INFORMATION

BOARD OF DIRECTORS

Executive Directors

SIU Paul Y. (Chairman)

SHUI Wai Mei (Vice Chairman)

SHEUNG Shing Fai

SIU Nina Margaret

Independent Non-executive Directors

CHUNG Pui Lam

LEE Kit Wah

WONG Wah Sang, Derek

AUDIT COMMITTEE

LEE Kit Wah

CHUNG Pui Lam

WONG Wah Sang, Derek

REMUNERATION COMMITTEE

CHUNG Pui Lam

LEE Kit Wah

WONG Wah Sang, Derek

SIU Paul Y.

NOMINATION COMMITTEE

CHUNG Pui Lam

LEE Kit Wah

WONG Wah Sang, Derek

SHEUNG Shing Fai

QUALIFIED ACCOUNTANT

MOK Sim Wa

COMPANY SECRETARY

LEUNG Sau Fong

AUTHORISED REPRESENTATIVES

SIU Paul Y.

SHEUNG Shing Fai

AUDITOR

BDO Limited

25/F Wing On Centre

111 Connaught Road Central

Hong Kong

REGISTERED OFFICE

Clarendon House

2 Church Street

Hamilton HM11

Bermuda

PRINCIPAL PLACE OF BUSINESS IN HONG KONG

19th Floor

North Point Industrial Building

499 King's Road

North Point Hong Kong

PRINCIPAL SHARE REGISTRAR AND TRANSFER OFFICE

MUFG Fund Services (Bermuda) Limited

Cedar House

41 Cedar Avenue

Hamilton HM 12

Bermuda

HONG KONG BRANCH SHARE REGISTRAR AND TRANSFER OFFICE

Hong Kong Registrars Limited

Shops 1712-1716, 17th Floor

Hopewell Centre

183 Queen's Road East

Hong Kong

PRINCIPAL BANKERS

The Hongkong and Shanghai Banking

• Corporation Limited Bank of Communications

WEBSITE

www.datronixhldgs.com.hk

Interim Report 2020

1

DATRONIX HOLDINGS LIMITED

GENERAL

The Group is principally engaged in the design, manufacture and sale of magnetics used in consumer electronics, data processing appliances and other electronics systems for coupling, isolation, filtering, interfacing and timing control applications. All of the Group's magnetics are sold under its own brandname "Datatronics". A majority of the Group's products are customized magnetics tailored-made according to the requirements and specifications of its customers. The Group also offered standard catalogue magnetics to its customers.

The Group focuses on the high-end segment of the magnetics industry. It has a customer base over 300 customers comprising manufacturers of telecommunication and data processing equipment, technology equipment, motor vehicles and medical equipment.

The Group's world-class design and manufacturing capabilities, together with the breadth of its product offerings, provide her with a competitive advantage that enable her to anticipate and deliver highly customized solutions for their customers' product needs. In addition, their global presence enables them to participate in many relevant product and geographic markets and provide her with proximity to their global customer base.

THE GROUP'S PRODUCT LINE

The Company designs and manufactures both standard and customized magnetic components in a large variety of products:

• Transformers
• Lan Filter Modules
• Digital Delay Modules
• Inductors/Chokes
• ASDL Transformer
• Planar Magnetics
• Magnetics for Aviation Applications
• Magnetic Components for DC/DC Converters
• Magnetics for Hybrid Network Assemblies
• Magnetics for Power Conversion
• Magnetics for Energy Savings
• Magnetics for Medical Devices/Equipment
• Magnetics for Internet Equipment
• Magnetics for Data Acquisition/Transmitter and Signal Conditioning

DATRONIX HOLDINGS LIMITED

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Interim Report 2020

GENERAL

MARKETS SERVED

The Company's products to-day find application in a wide range of state-of-the-art electronic equipment that include the following:

• Telecommunications
• Communications
• Instrumentation
• Industrial Equipment
• Computers & Networking
• Internet Equipment
• Medical Devices/Equipment
• Automotive

The Group's products meet or exceed numerous performance, safety, quality specification and standard that include the following:

• TS16949
• IEC950
• UL/CSA
• ISO9001
• VDE

Interim Report 2020

3

DATRONIX HOLDINGS LIMITED

GENERAL

The directors consider the followings to be the key factors contributing to the Group's success:

• the extensive experience and expertise of the Group's management team in the magnetics industry;
• its well-established business relationship with customers;
• its forefront technology and technical know-how to assist and bridge its customers to new technologies;
• its ability to satisfy customers' needs by offering customized products that meet their reliability, quality and delivery requirements;
• its logistic center located in Southern California, U.S. to support delivery and service to customers;
• the wide range of product it offers;
• "Just-in-time"delivery and "Ship-to-stock" Program certified with numerous key customers;
• its reputation for high quality and high reliability products;
• "One stop solution";
• capacity to grow due to more demands for high reliability products in U.S. and Europe;
• cost competitive;
• the barrier of entrance for competitors is very high; and
• its established relationship with major suppliers which enables the Group to obtain a stable supply of materials for the Group's products.

DATRONIX HOLDINGS LIMITED

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Interim Report 2020

MANAGEMENT DISCUSSION AND ANALYSIS

BUSINESS REVIEW

The worldwide outbreak of the COVID-19 during the first half of 2020 has severely impacted the already distressed economy and political tension between the US and China. In response to the pandemic outbreak in the first quarter of 2020, our production has to temporary shutdown in China and operations have been disrupted. Global demand and economic activities had continued to show sign of weakness. As a result, Datronix earnings and results had been negatively affected.

Datronix reported revenue for the first half of 2020 at HK$108.9 million, while revenue recorded HK$146.7 million for the same period of last year. Gross profit reported at HK$34.8 million compare to HK$49.2 million, for the same period of last year. Gross margin was at 31.9% for the first six months of 2020, whereas for the same period of 2019, gross margin was at 33.5%. Our result for the first half of 2020 was a loss of HK$6.6 million, compared to last year profit of HK$8.6 million. The margin was at -6.1% and 5.9% respectively for the first half of 2020 and 2019.

Our financial position remained healthy with no debt issuance for the first half of 2020.

MARKET REVIEW

Communication and Networking

Communication segment contributed HK$32.1 million of sales for the first six months of 2020, reduced 21% compared to HK$40.9 million for the comparable period of last year. This segment contributed 29% of the Group's total revenue.

Data Processing

Data processing segment contributed 7% of the Group's revenue. Sales for this segment were HK$7.0 million for the first half of 2020, compare to HK$9.4 million for the first six months ended 2019.

Industrial Application

For the first six months of 2020, industrial application segment sales were HK$37.1 million, compared to HK$55.9 million, a decrease of 33% compare to the same period of 2019. This segment contributed 34% of the Group's total revenue.

High Precision and Reliability Segment

This segment demands precise technology, advance technical know-how and good workmanship by the Group. The segment reported HK$32.7 million for first half of 2020, compared to $40.5 million for the first six months in 2019. This segment contributed 30% of our total sales.

Interim Report 2020

5

DATRONIX HOLDINGS LIMITED

MANAGEMENT DISCUSSION AND ANALYSIS

FINANCIAL REVIEW

For the six months period ended 30 June 2020, Group sales reported HK$108.9 million, a decrease of HK$37.8 million, compared to same period of 2019. Our gross profit was HK$34.8 million, compared to HK$49.2 million for the first half of 2019. Gross margin decreased from 33.5% to 31.9%.

Operating result of first half of 2020 decreased from a profit of HK$11.2 million to a loss of HK$5.1 million when compared to same period of 2019. The net loss reported HK$6.6 million, compared to a net profit of HK$8.6 million for the six months period ended 30 June 2019. Loss per share for the first half of 2020 was HK2.1 cents, compared to earnings per share of HK2.7 cents for the first half of 2019.

The Group maintained a healthy financial position with sufficient cash and no debt instrument was issued.

LIQUIDITY, FINANCIAL RESOURCES AND CAPITAL STRUCTURE

As at 30 June 2020, the Group had a total equity of approximately HK$848.1 million (31 December 2019: HK$864.1 million), and cash and cash equivalents of approximately HK$275.1 million (31 December 2019: HK$333.8 million), which were predominately denominated in US dollars and Renminbi.

For the six months ended 30 June 2020, the Group had not arranged any banking facilities and other resources for financing. With the above cash on hand, the Group has adequate resources to meet its working capital needs in the near future.

Capital expenditure for the period under review amounted to approximately HK$66.2 million (six months ended 30 June 2019: HK$31.4 million).

EMPLOYEES AND REMUNERATION POLICIES

As at 30 June 2020, the Group employed approximately 1,011 personnel around the world, with approximately 96 in Hong Kong, 794 in the People's Republic of China and 121 overseas. The Group has a staff education sponsorship program and also provides training courses to staff on operational system, product and technology development, and product safety.

CAPITAL COMMITMENTS

As at 30 June 2020, the Group has capital commitment contracted but not provided for in the financial statements in respect of property, plant and equipment approximately HK$74.2 million (31 December 2019: HK$92.4 million).

CONTINGENT LIABILITIES

The Group did not have any material contingent liability as at 30 June 2020 (31 December 2019: Nil).

LOOKING FORWARD

The repercussion of uncertainties on the COVID-19 pandemic and the trade war will continue to poised challenges to the Group. The timing for recovery and the resumption of normalized business activities have yet too early to be determined. Datronix is committed to stay resilient and flexible and take on any opportunities when it comes. Our challenge is to optimize our results in the face of it.

DATRONIX HOLDINGS LIMITED

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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
		(Unaudited)	(Unaudited)
	Note	HK$'000	HK$'000
Revenue	3	108,945	146,670
Cost of sales		(74,175)	(97,503)
Gross profit		34,770	49,167
Other revenue and gain	3	6,107	6,377
Distribution and selling expenses		(9,736)	(8,686)
Administrative expenses		(36,180)	(35,670)
Finance costs		(24)	-
(Loss)/Profit before income tax expense	5	(5,063)	11,188
Income tax expense	6	(1,565)	(2,600)
(Loss)/Profit for the period and attributable to
owners of the Company		(6,628)	8,588
Other comprehensive income, net of tax
Item that may be reclassified subsequently to profit or loss:
Exchange differences on translating foreign operations		(3,054)	(443)
Other comprehensive income for the period and
attributable to owners of the Company, net of tax		(3,054)	(443)
Total comprehensive income for the period and
attributable to owners of the Company		(9,682)	8,145
(Loss)/Earnings per share
- Basic and diluted	8	(HK$0.021)	HK$0.027

Interim Report 2020

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DATRONIX HOLDINGS LIMITED

CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL POSITION

As at 30 June 2020

		30 June	31 December
		2020	2019
		(Unaudited)	(Audited)
	Note	HK$'000	HK$'000
NON-CURRENT ASSETS
Property, plant and equipment	9	421,775	361,470
Investment property		97,800	97,800
Payment for acquisition of a land use right and a property		-	34,666
Prepayments for acquisition of property, plant and
equipment		4,675	10,158
Goodwill		9,486	9,486
Deferred tax asset		160	160
		533,896	513,740
CURRENT ASSETS
Inventories		88,095	79,620
Trade receivables	10	27,882	33,090
Amount due from ultimate holding company		91	91
Amount due from related companies		203	203
Tax prepayment		1,197	-
Prepayments, deposits and other receivables		9,491	8,231
Cash and cash equivalents		275,098	333,776
		402,057	455,011
CURRENT LIABILITIES
Trade and other payables	11	27,710	40,500
Amount due to a related company		-	523
Lease liabilities		436	436
Current tax liabilities		925	3,802
		29,071	45,261
NET CURRENT ASSETS		372,986	409,750
TOTAL ASSETS LESS CURRENT LIABILITIES		906,882	923,490
NON-CURRENT LIABILITIES
Lease liabilities		644	859
Employee benefits		18,495	18,806
Deferred tax liabilities		39,685	39,685
		58,824	59,350
NET ASSETS		848,058	864,140
EQUITY
Share capital	12	32,000	32,000
Reserves		816,058	832,140
TOTAL EQUITY		848,058	864,140

DATRONIX HOLDINGS LIMITED

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Interim Report 2020

CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY (UNAUDITED)

For the six months ended 30 June 2020

		Equity attributable to owners of the Company
				Property
	Share	Share	Capital	revaluation	Exchange	Retained
	capital	premium	reserve	reserve	reserve	earnings	Total
	HK$'000	HK$'000	HK$'000	HK$'000	HK$'000	HK$'000	HK$'000
At 1 January 2019	32,000	57,099	(23,724)	230,196	7,047	558,164	860,782
Profit for the period	-	-	-	-	-	8,588	8,588
Exchange differences on translating
foreign operations	-	-	-	-	(443)	-	(443)
Total comprehensive income for the period	-	-	-	-	(443)	8,588	8,145
Dividend paid	-	-	-	-	-	(4,800)	(4,800)
At 30 June 2019	32,000	57,099	(23,724)	230,196	6,604	561,952	864,127
At 1 January 2020	32,000	57,099	(23,724)	222,348	5,410	571,007	864,140
(Loss)/Profit for the period	-	-	-	-	-	(6,628)	(6,628)
Exchange differences on translating
foreign operations	-	-	-	-	(3,054)	-	(3,054)
Total comprehensive income for the period	-	-	-	-	(3,054)	(6,628)	(9.682)
Dividend paid	-	-	-	-	-	(6,400)	(6,400)
At 30 June 2020	32,000	57,099	(23,724)	222,348	2,356	557,979	848,058

Interim Report 2020

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DATRONIX HOLDINGS LIMITED

CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS

For the six months ended 30 June 2020

		Six months ended 30 June
		2020	2019
		(Unaudited)	(Unaudited)
		HK$'000	HK$'000
Net cash (used in)/generated from operating activities	(26,417)	13,325
Net cash used in investing activities	(21,259)	(38,589)
Net cash used in financing activities	(6,400)	(4,800)
Net decrease in cash and cash equivalents	(54,076)	(30,064)
Effect of foreign exchange rate changes	(4,601)	(694)
Cash and cash equivalents at beginning of the period	333,776	404,991
Cash and cash equivalents at end of the period	275,098	374,233

DATRONIX HOLDINGS LIMITED

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Interim Report 2020

NOTES TO THE INTERIM FINANCIAL STATEMENTS

1. BASIS OF PREPARATION

The unaudited condensed consolidated interim financial statements have been prepared in accordance with the applicable disclosure requirements of the Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited (the "Listing Rules"), Hong Kong Accounting Standard ("HKAS") 34 "Interim financial reporting" and other relevant HKASs, Interpretations and Hong Kong Financial Reporting Standards (hereinafter collectively referred to as the "HKFRSs") issued by the Hong Kong Institute of Certified Public Accountants ("HKICPA").

2. ACCOUNTING POLICIES

The accounting policies and basis of preparation adopted in these condensed consolidated interim financial statements are consistent with those adopted in the Group's annual consolidated financial statements for the year ended 31 December 2019 except as described below.

In the current period, the Group has adopted, for the first time, the new/revised Hong Kong Financial Reporting Standards, which includes all applicable individual Hong Kong Financial Reporting Standards, Hong Kong Accounting Standards and Interpretations issued by HKICPA, that are effective for accounting periods beginning on 1 January 2020 and which are relevant to its operations. The new/revised HKFRSs adopted by the Group in the unaudited condensed consolidated interim financial statements are set out below:

Amendments to HKFRS 3	Definition of a Business
Amendments to HKAS 1 and HKAS 8	Definition of Material
Amendments to HKFRS 9, HKAS 39	Interest Rate Benchmark Reform
and HKFRS 7

3. REVENUE AND OTHER REVENUE

1. Revenue

Revenue represents the net invoiced value of goods sold.

(b) Other revenue

	Six months ended 30 June
	2020	2019
	HK$'000	HK$'000
Bank interest income	2,361	4,298
Exchange gain, net	-	381
Income from disposal of scrap materials	308	210
Rental income	1,488	1,488
Employment support scheme	1,950	-
	6,107	6,377

Interim Report 2020

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DATRONIX HOLDINGS LIMITED

NOTES TO THE INTERIM FINANCIAL STATEMENTS

4. SEGMENT INFORMATION

The Group determines its operating segments based on the reports reviewed by the chief operating decision-maker that are used to make strategic decisions.

The Group is principally engaged in manufacturing and trading of electronic components in both Hong Kong and overseas markets. The Group's chief operating decision maker regularly reviews the consolidated financial information of the Group as a whole to assess the performance and consider there is only one operating segment for the Group.

Geographical information

The Group comprises the following main geographical segments:

		Revenue from external customers
		Six months ended 30 June
		2020	2019
		HK$'000	HK$'000
Hong Kong (place of domicile)	139	322
The PRC	10,515	13,143
The United States	91,085	128,478
European Union	1,941	2,249
Other countries	5,265	2,478
		108,806	146,348
		108,945	146,670

DATRONIX HOLDINGS LIMITED

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Interim Report 2020

NOTES TO THE INTERIM FINANCIAL STATEMENTS

5. (LOSS)/PROFIT BEFORE INCOME TAX EXPENSE

(Loss)/Profit before income tax expense is stated after charging/(crediting) the following:

	Six months ended 30 June
	2020	2019
	HK$'000	HK$'000
Cost of inventories recognized as expenses	74,175	97,503
Amortisation of payment for leasehold land held for own
use under operating leases	-	300
Depreciation charge of:
- owned property, plant and equipment	1,519	3,140
- right-of-use assets included within
- ownership interest in leasehold land and buildings
held for own use carried at fair value	2,141	-
- ownership interests in leasehold land held for own
use carried at cost	381	-
- other properties leased for own use carried at cost	224	-
Exchange loss/(gain), net (note 3)	997	(381)

Interim Report 2020

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DATRONIX HOLDINGS LIMITED

NOTES TO THE INTERIM FINANCIAL STATEMENTS

6. INCOME TAX EXPENSE

The amount of income tax charged to the condensed consolidated statement profit or loss and other comprehensive income represents:

		Six months ended 30 June
		2020	2019
		HK$'000	HK$'000
Current tax - Hong Kong profits tax
- provision for the period	63	1,023
Current tax - Overseas
- provision for the period	1,471	1,475
- under provision in respect of prior years	31	102
		1,565	2,600

Hong Kong profits tax was calculated at the rate of 16.5% on the estimated assessable profits arising in or derived from Hong Kong during the period. Overseas taxation was calculated at the rates applicable in the respective jurisdictions.

The charge for the period can be reconciled to the (loss)/profit per the condensed consolidated income statement as follows:

		Six months ended 30 June
		2020	2019
		HK$'000	HK$'000
(Loss)/Profit before taxation	(5,063)	10,625
Effect of tax at Hong Kong profits tax rate of 16.5%	(832)	1,754
Effect of different tax rates of subsidiaries operating in other
jurisdictions	152	43
Tax effect on non-taxable income	(661)	(1,414)
Tax effect of unused tax losses	2,413	1,743
Tax effect of expenses not deductible for tax purposes	462	372
Under provision in prior periods	31	102
		1,565	2,600

DATRONIX HOLDINGS LIMITED

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Interim Report 2020

NOTES TO THE INTERIM FINANCIAL STATEMENTS

7. INTERIM DIVIDEND

	Six months ended 30 June
	2020	2019
	HK$'000	HK$'000
Interim dividend declared, HK$0.01 (2019: HK$ Nil)
per ordinary share	3,200	-

At the board meeting held on 21 August 2020, the Board has resolved to declare an interim dividend of HK$0.01 (2019: HK$ Nil) per share in respect of the six months ended 30 June 2019, to shareholders whose names appear on the register of members of the Company on Friday, 18 September 2020.

8. (LOSS)/EARNINGS PER SHARE

The calculation of basic earnings per share for the six months ended 30 June 2020 was based on the loss attributable to the owners of the Company of approximately HK$6,628,000 (six months ended 30 June 2019 was based on the profit attributable to the owners of the Company approximately HK$8,588,000) and on the weighted average number of 320,000,000 (2019: 320,000,000) shares in issue during the period.

Diluted earnings per share is the same as basic earnings per share as there were no potential dilutive ordinary shares outstanding for both periods presented.

9. PROPERTY, PLANT AND EQUIPMENT

The total cost of additions to property, plant and equipment of the Group during the six months ended 30 June 2020 was HK$66,160,000 (six months ended 30 June 2019: HK$4,792,000). There were no material disposals and write-offs of property, plant and equipment during the six months ended 30 June 2020 and 30 June 2019.

Interim Report 2020

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DATRONIX HOLDINGS LIMITED

NOTES TO THE INTERIM FINANCIAL STATEMENTS

10. TRADE RECEIVABLES

Customers are generally offered a credit period ranging from 30 days to 90 days. The aging analysis of trade receivables, based on invoice dates, is as follows:

		30 June	31 December
		2020	2019
		(Unaudited)	(Audited)
		HK$'000	HK$'000
Within 30 days	16,717	18,057
31 to 60 days	8,778	9,177
61 to 90 days	2,275	4,442
Over 90 days	2,126	1,931
		29,896	33,607
Less: Loss allowances for impairment	(2,014)	(517)
		27,882	33,090

11. TRADE AND OTHER PAYABLES

		30 June	31 December
		2020	2019
		(Unaudited)	(Audited)
		HK$'000	HK$'000
Trade payables	12,673	11,171
Other payables and accruals	13,410	12,450
Fee and retention payables for construction of
manufacturing plants	1,627	16,879
		27,710	40,500
The aging analysis of trade payables is as follows:
		30 June	31 December
		2020	2019
		(Unaudited)	(Audited)
		HK$'000	HK$'000
Within 30 days	6,146	5,795
31 to 60 days	4,018	3,378
61 to 90 days	1,801	1,062
Over 90 days	708	936
		12,673	11,171

DATRONIX HOLDINGS LIMITED

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Interim Report 2020

NOTES TO THE INTERIM FINANCIAL STATEMENTS

12. SHARE CAPITAL

	Number
	of shares	Amount
		HK$'000
Authorised ordinary shares of HK$0.1 each
At 1 January 2020 and 30 June 2020	1,000,000,000	100,000
Issued and fully paid ordinary shares of HK$0.1 each
At 1 January 2020 and 30 June 2020	320,000,000	32,000

13. RELATED PARTY TRANSACTIONS

During the six months ended 30 June 2020, the Group's sales to Datatronics Romoland, Inc. ("DRI"), a company in which Mr. Siu Paul Y., a director, has beneficial interest, amounted to HK$18,589,000 (six months ended 30 June 2019: HK$24,769,000). The transactions constituted a continuing connected transaction under Chapter 14A of the Listing Rules and were carried out in the ordinary course of business and on normal commercial terms.

14. CAPITAL COMMITMENTS

As at 30 June 2020, the Group has capital commitment contracted but not provided for in the financial statements in respect of property, plant and equipment approximately HK$74,208,000 (31 December 2019: HK$92,400,000).

15. CONTINGENT LIABILITIES

The Group did not have any material contingent liability as at 30 June 2020 (31 December 2019: Nil).

Interim Report 2020

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DATRONIX HOLDINGS LIMITED

OTHER INFORMATION

DIRECTORS' INTEREST IN SHARES

As at 30 June 2018, the directors had the following interests in the shares of the Company and its associated corporations (within the meaning of Part XV of the Securities and Futures Ordinance (the "SFO")) as recorded in the register kept by the Company pursuant to Section 352 of the SFO:

Long positions

(a) The Company

		Ordinary shares of HK$0.1 each
	Personal	Family	Corporate
	interests	interests	interests	Total
Mr. Siu Paul Y.	-	-	231,412,000	231,412,000
			(Note 1)

1. Associated corporation

		Non-voting deferred shares of HK$1 each
	Name of	Personal	Family	Corporate
	corporation	interests	interests	interests	Total
Mr. Siu Paul Y.	Datatronic Limited	1	-	199,999	200,000
				(Note 2)

Notes:

1. These shares are held by Onboard Technology Limited, a company incorporated in the British Virgin Islands, and in which Mr. Siu Paul Y. and Ms. Shui Wai Mei beneficially own 90% and 10% of its issued share capital respectively, representing 72.32% of the issued share capital of the Company.
2. These shares are held by Data Express Limited, a company incorporated in the Republic of Liberia, whose entire issued share capital is beneficially owned by Mr. Siu Paul Y..

Save as disclosed above, no interests and short positions were held or deemed or taken to be held under Part XV of the SFO by any director or chief executives of the Company or their respective associates in the shares and underlying shares of the Company or its associated corporations which were required to be notified to the Company and the Stock Exchange pursuant to Part XV of the SFO or pursuant to the Model Code of Securities Transactions by Directors of Listed Companies or which are required pursuant to Section 352 of the SFO to be entered in the register referred to therein. Nor any of the directors and chief executives (including their spouses and children under the age of 18), had, as at 30 June 2020, any interest in, or had been granted any right to subscribe for the securities and options of the Company and its associated corporations within the meaning of the SFO, or had exercised any such rights.

DATRONIX HOLDINGS LIMITED

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Interim Report 2020

OTHER INFORMATION

SUBSTANTIAL SHAREHOLDERS

As at 30 June 2020, the Company has not been notified by any persons (other than the directors or chief executives of the Company) who had interests or short positions in the shares or underlying shares of the Company which were recorded in the register required to be kept by the Company under Section 336 of the SFO.

INTERIM DIVIDEND

At the board meeting held on 21 August 2020, the Board has resolved to declare an interim dividend of HK$0.01 (2019: HK$ Nil) per share, totaling HK$3,200,000 (2019: HK$ Nil) in respect of the six months ended 30 June 2020 to shareholders whose names appear on the register of members of the Company on Friday, 18 September 2020.

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

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

SHARE OPTION SCHEME

The Company adopted a share option scheme on 6 June 2001 which remained in force for period of 10 years from the date of adoption. The share option scheme expired on 6 June 2011.

AUDIT COMMITTEE

The audit committee has reviewed the unaudited interim results and discussed with the Board the financial reporting process and internal control system of the Group.

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DATRONIX HOLDINGS LIMITED

OTHER INFORMATION

CORPORATE GOVERNANCE

The Company has complied with the Code on Corporate Governance Practices as set out in Appendix 14 to the Listing Rules throughout the accounting period covered by the interim report, except for the following deviations:

Code Provision A.2.1

Under the provision A.2.1, the roles of chairman and chief executive officer should be separate and should not be performed by the same individual.

The roles of chairman and chief executive officer of the Company have been performed by Mr. Siu Paul Y.. The Board considered that the non-segregation has the advantage of a strong and consistent leadership which is conducive to making and implementing decisions quickly and consistently.

Code Provision A.4.1

The non-executive directors were not appointed for specific terms but are subject to retirement by rotation and re-election at the annual general meetings of the Company in accordance with the Bye-laws of the Company.

Code Provision A.4.2

Under the provision A.4.2, all directors appointed to fill a casual vacancy should be subject to election by shareholders at the first general meeting after their appointment and every director, including those appointed for a specific term, should be subject to retirement by rotation at least once every three years.

In accordance with the Bye-laws of the Company, the chairman of the Company will not be subject to retirement by rotation or be taken into account in determining the number of directors to retire in each year.

MODEL CODE FOR SECURITIES TRANSACTIONS BY DIRECTORS

The Company has adopted the Model Code for Securities Transactions by Directors of Listed Issuers (the "Model Code") as set out in Appendix 10 to the Listing Rules. All directors have confirmed, following specific enquiry of all directors, that they have fully complied with the required standard set out in the Model Code throughout the period under review.

By order of the Board

SIU Paul Y.

Chairman

Hong Kong, 21 August 2020

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Interim Report 2020