Home Control International : 2020 INTERIM REPORT

HOME CONTROL INTERNATIONAL LIMITED

(incorporated in the Cayman Islands with limited liability)

Stock Code : 1747

20

20 I N T E RI M REPORT

Contents

• Corporate Information

• Financial Summary

• Management Discussion and Analysis

16 Corporate Governance and Other Information

24 Review Report of Interim Financial Information

1. Interim Condensed Consolidated Statement of Profi t or Loss and Other Comprehensive Income
2. Interim Condensed Consolidated Statement of Financial Position

29 Interim Condensed Consolidated Statement of Changes in Equity

31 Interim Condensed Consolidated Statement of Cash Flows

33 Notes to Interim Condensed Consolidated Financial Information

Corporate Information

BOARD OF DIRECTORS	AUTHORISED REPRESENTATIVES
Executive Director	Mr. Kwok King Kingsley CHAN
Mr. Alain PERROT (Chief Executive Officer)	Ms. Sum Yi TSUI
Non-executive Directors	REGISTERED OFFICE
Mr. Yu GAO (Chairman)	Sertus Chambers, Governors Square
Mr. Kwok King Kingsley CHAN	Suite # 5-204, 23 Lime Tree Bay Avenue
	P.O. Box 2547
Independent Non-executive Directors	Grand Cayman, KY1-1104
Mr. Werner Peter VAN ECK	Cayman Islands
Mr. Shou Kang CHEN
Mr. Edmond Ming Siang JAUW	HEADQUARTERS AND PRINCIPAL PLACE
	OF BUSINESS IN SINGAPORE
AUDIT COMMITTEE	151 Lorong Chuan
Mr. Shou Kang CHEN (Chairman)	#04-03A
Mr. Werner Peter VAN ECK	New Tech Park
Mr. Edmond Ming Siang JAUW	Singapore 556741
REMUNERATION COMMITTEE	PRINCIPAL PLACE OF BUSINESS IN HONG
Mr. Shou Kang CHEN (Chairman)	KONG REGISTERED UNDER PART 16 OF
Mr. Werner Peter VAN ECK	THE COMPANIES ORDINANCE
Mr. Kwok King Kingsley CHAN	Room 1901, 19/F, Lee Garden One,
	33 Hysan Avenue, Causeway Bay, Hong Kong
NOMINATION COMMITTEE
Mr. Yu GAO (Chairman)	CAYMAN ISLANDS PRINCIPAL SHARE
Mr. Edmond Ming Siang JAUW	REGISTRAR AND TRANSFER OFFICE
Mr. Werner Peter VAN ECK	Sertus Incorporations (Cayman) Limited
	Sertus Chambers, Governors Square
COMPANY SECRETARY	Suite # 5-204, 23 Lime Tree Bay Avenue
Ms. Sum Yi TSUI ACS, ACIS	P.O. Box 2547
	Grand Cayman, KY1-1104
	Cayman Islands

2	HOME CONTROL INTERNATIONAL LIMITED INTERIM REPORT 2020

Corporate Information

HONG KONG SHARE REGISTRAR	AUDITOR
Tricor Investor Services Limited	Ernst & Young
Level 54, Hopewell Centre	22/F, CITIC Tower
183 Queen's Road East	1 Tim Mei Avenue
Hong Kong	Central
	Hong Kong
PRINCIPAL BANK
Citibank N.A. Singapore Branch	COMPLIANCE ADVISER
8 Marina View	Elstone Capital Limited
#17-01 Asia Square Tower 1	Suite 1612, 16/F
Singapore 018960	West Tower, Shun Tak Centre
	168-200 Connaught Road Central
LEGAL ADVISERS TO THE COMPANY	Hong Kong
As to Hong Kong law
Lu & Partners LLP in Association with HAIWEN	STOCK CODE
Unit 1902, 19/F	1747
New World Tower
16-18 Queen's Road Central	COMPANY'S WEBSITE
Hong Kong	www.omniremotes.com

INTERIM REPORT 2020 HOME CONTROL IN ERNATIO

3

Financial Summary

The table below sets forth the adjusted net profit and adjusted earnings before interest, tax, depreciation and amortisation (EBITDA) of Home Control International Limited (the "Company") and its subsidiaries (collectively referred to as the "Group", "We" or "Our"):

	Six months ended 30 June
	2020	2019
	(unaudited)	(unaudited)
	US$ million	US$ million
Revenue	69.8	81.4
Reported Net Profit	1.5	(1.2)
Add: Restructuring severance expense	0.2	-
Add: Listing expense	-	1.8
Adjusted Net Profit	1.7	0.6
Add: Income tax expense	0.5	0.4
Add: Finance costs	1.1	1.7
Add: Withholding tax	0.0	0.1
Add: Depreciation and amortisation	2.0	2.1
Adjusted EBITDA	5.3	4.9

4	HOME CONTROL INTERNATIONAL LIMITED INTERIM REPORT 2020

Management Discussion and Analysis

1. OVERVIEW

We are a globally leading home control solution provider headquartered in the Republic of Singapore ("Singapore"), with worldwide presence in North America, Europe, Asia and Latin America. Originally established as the home control division of Koninklijke Philips N.V. ("Philips") prior to the acquisition of the entire stake of Home Control Singapore Pte. Ltd. by the Company from Philips in April 2015, we have been operating in this industry for almost 30 years. Under the brand "Omni Remotes", we develop and offer high quality and bespoke remote controls for a vast array of pay television (TV) operators and consumer electronics brands. Our products are shipped to over 40 countries, with a blue-chip customer base that includes AT&T Services Inc. in North America, Sky CP Limited, British Telecommunications PLC, Vodafone Group Services Limited, and Liberty Global Services B.V. in Europe, as well as Reliance Retail Limited, Bharti Airtel Limited, Beijing Xiaomi Electronic Products Co., Ltd. and Hisense Electric Co., Ltd. in Asia.

We maintain a strong focus on innovation, with over 200 invention patents and owning one of the most comprehensive Infrared (IR) and code databases in the world. Simple Setup, our intelligent multi-device control solution, was deployed to several customers in 2019. The next-generation Simple Setup Hybrid offers the responsiveness of an on-device database in tandem with the vast coverage of a global cloud database. This unique solution is expected to launch with a major operator in 2020. The Company is progressing with advanced user input, recognition and far field voice solutions, with customer trial intents line up in 2020. Our strategy to offer a new off-the-shelf Android TV remote control, the VINO portfolio, built from the ground up for the streaming segment, continue its design wins worldwide. We will expand the portfolio in second half of 2020 to cater for the increasing demand made possible by our leading industrial design and ease of integration.

2. BUSINESS REVIEW

In the second quarter of 2020, some of our customers' rollout and installation were impacted when their countries began the COVID-19lock-down control orders. This translated to postponement of some shipments from the second quarter to the third quarter of 2020, and the Group's revenue for the six months ended 2020 came in at approximately US$69.8 million, representing a decrease of 14.2% from US$81.4 million in the same period in 2019.

Since the beginning of the outbreak of COVID-19 in early 2020, the Company has been able to take swift actions to minimize the overall impact to the business. With a combination of product mix and overall cost control, the Group has turned in better profit for the first six months ended 2020 as compared to the first six months ended 2019. Product mix has improved mainly due to the move to selling higher margin products, as shown from the improvement in gross margin from 17.5% for the six months ended 2019 to 20.4% for the six months ended 2020.

Net income reversed from a loss of US$1.2 million for the six months ended 30 June 2019 to a profit of US$1.5 million of the same period in 2020.

Net cash from operating activities improved significantly due to improvement in profitability for the six months ended 30 June 2020 compared to the same period in 2019.

INTERIM REPORT 2020 HOME CONTROL INTERNATIONAL LIMITED

5

Management Discussion and Analysis

3. PROSPECT AND OUTLOOK

If the outbreak situation does not get worse, the Group expects to maintain its cost control & profit momentum similar to the first half of 2020. In addition, the Company has secured refinancing of bank loan with lower interest rate starting from the second half of 2020 for further cost savings. The reason for securing new bank loan is to partially repay the existing bank loan with a higher interest rate and to plan ahead in case of good opportunities.

In the first half of 2020, the overall cash flow of the Group has improved, which provides the resilience the Company needs to continue navigating through this striving period. The Company will continue to exercise prudency while exploring new avenue to deliver shareholder values.

Other than investments in research & development ("R&D"), sales force expansion, as well as improvements to our supply chain for our existing business, the Company has initiated a program for the vertical markets. Our new COVID-19 contact tracing system is highly scalable and secure, comprising wearable devices as well as a cloud management system. According to a Mercer survey, over half of US companies are planning contact tracing for employees, with IDC estimating a potential market worth US$4.3 billion. Our solution is expected to hit the market by end of the third quarter of 2020, and early feedback from global customers has been very positive so far.

At present, the Group expects the ongoing COVID-19 outbreak to have continuous impact on its business. It is difficult to estimate the full impact given the dynamic nature of these circumstances. The Group will keep continuous attention on the situation of the COVID-19, assess and react actively to its impacts. The Company has fully adhered to government measures and recommendations, with all sites and subsidiaries operational without impact to any function serving the business and the customers.

FINANCIAL REVIEW

Revenue

Revenue of the Group for the six months ended 30 June in 2020 decreased by approximately 14.2% compared to the six months ended 30 June 2019, which was mainly contributed by COVID-19.

6	HOME CONTROL INTERNATIONAL LIMITED INTERIM REPORT 2020

Management Discussion and Analysis

The following table sets forth the breakdown of revenue of the Group by the geographical location of customers for the six months ended 30 June 2020 and 30 June 2019, respectively.

	For six months ended	For six months ended
	30 June		30 June
	2020		2019		Changes
	US$'000	%	US$'000	%	US$'000	%
North America	29,102	41.7%	33,669	41.4%	(4,567)	(13.6%)
Europe	20,867	29.9%	19,169	23.6%	1,698	8.9%
Asia	12,794	18.3%	19,233	23.6%	(6,439)	(33.5%)
Latin America	7,036	10.1%	9,305	11.4%	(2,269)	(24.4%)
Total	69,799	100.0%	81,376	100.0%	(11,577)	(14.2%)

Cost of sales

The cost of sales of the Group mainly consists of components including finished goods from ODM (original design manufacturing), outsourcing and overheads. The cost of sales amounted to approximately US$55.6 million and approximately US$67.2 million for the six months ended 30 June 2020 and the six months ended 30 June 2019 respectively, representing approximately 79.6% and approximately 82.5% of the total revenue for the corresponding periods.

The following table sets forth the breakdown of the cost of sales for the six months ended 30 June 2020 and the six months ended 30 June 2019, respectively.

	For six months ended	For six months ended
	30 June		30 June
	2020		2019
	US$'000	%	US$'000	%
Cost of Components	45,557	82.0%	56,865	84.7%
Outsourcing	7,652	13.8%	8,040	12.0%
Overheads	2,371	4.2%	2,263	3.3%
	55,580	100.0%	67,168	100.0%

INTERIM REPORT 2020 HOME CONTROL INTERNATIONAL LIMITED

7

Management Discussion and Analysis

Gross profit

As a result of the changes in the revenue and cost of sales above, the Group's gross profit was approximately US$14.2 million for the six months ended 30 June 2020, which was on par with the gross profit of US$14.2 million for the six months ended 30 June 2019.

Other income and gains

Other income and gains of the Group increased from approximately US$0.0 million for the six months ended 30 June 2019 to approximately US$0.3 million for the six months ended 30 June 2020. The increase was primarily because of an increase in government grants.

Selling and distribution expenses

Selling and distribution expenses of the Group decreased from approximately US$4.1 million for the six months ended 30 June 2019 to approximately US$3.6 million for the six months ended 30 June 2020. The decrease in selling and distribution expenses was mainly due to approximately US$0.2 million decrease in travelling expenses because of COVID-19, approximately US$0.1 million decrease in distribution expenses and approximately US$0.1 million decrease in employee benefit expenses.

Administrative expenses

Administrative expenses of the Group decreased by approximately 24.1% from approximately US$8.3 million for the six months ended 30 June 2019 to approximately US$6.3 million for the six months ended 30 June 2020. The decrease was mainly due to the decrease in listing expenses of approximately US$1.8 million incurred for the six months ended 30 June 2020.

Other expenses

Other expenses of the Group increased from approximately US$0.9 million for the six months ended 30 June 2019 to approximately US$1.4 million for the six months ended 30 June 2020. Other expenses of the Group for the six months ended 30 June 2020 mainly consist of restructuring expenses of US$0.2 million, R&D project related costs of US$0.2 million, legal expenses of US$0.3 million, withholding tax of US$22,000, Human Resources Management system costs of US$0.1 million, samples and model makings costs of US$0.1 million, foreign exchange differences of US$22,000 and other miscellaneous expenses. The increase was mainly due to approximately US$0.2 million increase in restructuring expenses, approximately US$0.2 million increase in legal expenses and approximately US$0.1 million increase in project related costs.

For comparison purpose, other expenses of the Group for the year ended 31 December 2019 amounted to US$1.8 million, which mainly consist of restructuring expenses of US$0.1 million, R&D project related cost of US$0.5 million, legal expenses of US$0.1 million, withholding tax of US$0.2 million, Human Resources Management system costs of US$0.1 million, samples and model makings costs of US$0.1 million, foreign exchange differences of US$0.1 million and other miscellaneous expenses.

8	HOME CONTROL INTERNATIONAL LIMITED INTERIM REPORT 2020

Management Discussion and Analysis

Finance costs

Comparing to the six months ended 30 June 2019, finance cost of the Group incurred during the six months ended 30 June 2020 decreased by approximately US$0.6 million. The decrease was mainly due to approximately US$0.5 million decrease in interest on bank borrowings.

Profit before tax

Profit before tax of the Group for the six months ended 30 June 2020 was approximately US$2.0 million which was approximately US$2.8 million higher than the loss before tax of approximately US$0.8 million for the six months ended 30 June 2019. This was mainly due to an approximately US$2.0 million decrease in administrative expenses, approximately US$0.6 million decrease in finance costs and approximately US$0.5 million decrease in selling and distribution expenses.

Income tax expense

The Group's income tax expense increased from approximately US$0.4 million for the six months ended 30 June 2019 to approximately US$0.5 million for the six months ended 30 June 2020. The income tax expense for the six months ended 30 June 2020 was higher mainly because of higher chargeable income for the six months ended 30 June 2020.

Profit for the period

As a result of the above, the Group recorded a net profit after tax of approximately US$1.5 million for the six months ended 30 June 2020, as compared to a net loss after tax of approximately US$1.2 million for the six months ended 30 June 2019.

Earnings per share

The basic and diluted earnings per share of the Group for the six months ended 30 June 2020 is US0.30 cents and US0.30 cents, respectively.

LIQUIDITY AND CAPITAL RESOURCES

As at 30 June 2020, the Group had cash and cash equivalents and pledged deposits of approximately US$22.4 million. The board (the "Board") of directors (the "Directors") of the Company is of the opinion that the financial position of the Group is strong and healthy, and the Group has sufficient resources to support its operations and meet its foreseeable capital expenditures.

INTERIM REPORT 2020 HOME CONTROL INTERNATIONAL LIMITED

9

Management Discussion and Analysis

Cash flow

The following table sets forth a summary of the cash flows of the Group for the six months ended 30 June 2020 and 30 June 2019, respectively:

	For the six months ended
	30 June	30 June
	2020	2019
	US$'000	US$'000
Net cash from operating activities	3,063	521
Net cash used in investing activities	(1,464)	(1,566)
Net cash used in financing activities	(7,834)	(1,028)
Net decrease in cash and cash equivalents	(6,235)	(2,073)
Cash and cash equivalents at beginning of the period	28,766	19,854
Effects of exchange rate changes on cash and cash equivalents	(98)	(7)
Cash and cash equivalents at end of the period	22,433	17,774
Analysis of balances of cash and cash equivalents
Cash and cash equivalents as stated in the statement of financial position	22,147	17,774
Pledged for bank loans	286	-
Cash and cash equivalents as stated in the statement of cash flows	22,433	17,774

Net cash flow generated from operating activities

The Group generates cash from operating activities primarily from sales of goods. Cash flows from operating activities reflects profit before taxation for the six months ended 30 June 2020 adjusted for (i) non-cash item such as depreciation of property, plant and equipment, and amortization of intangible assets, plant and equipment and other items, which lead to the operating profit before changes in working capital; (ii) effects of cash flows arising from changes in working capital, including changes in inventories, trade and other receivables and trade and other payables and other items, which lead to cash generated from operations; and income tax paid and other items, which result in net cash generated from operating activities.

For the six months ended 30 June 2020, the Group's net cash generated from operating activities was approximately US$3.1 million, primarily reflected (i) cash generated before working capital changes of approximately US$5.4 million;

1. decrease in trade receivables of approximately US$5.9 million; partially offset by decrease in trade payables of approximately US$7.9 million, and payment for tax of approximately US$0.4 million.

10	HOME CONTROL INTERNATIONAL LIMITED INTERIM REPORT 2020

Management Discussion and Analysis

Net cash flow used in investing activities

Cash flow used in investing activities mainly relates to purchase and disposal of property, plant and equipment. For the six months ended 30 June 2020, the Group's net cash used in investing activities was approximately US$1.5 million, which was primarily attributable to purchases of property, plant and equipment of approximately US$1.5 million.

Net cash flow used in financing activities

Cash flows used in financing activities mainly includes proceeds from interest-bearing bank loans and repayment of interest-bearing bank loans. For the six months ended 30 June 2020, the Group's net cash flow used in financing activities was approximately US$7.8 million, mainly attributable to US$7.3 million repayment of interest bearing bank loans, US$0.8 million interest paid and repayment of lease obligations of US$0.3 million.

NET CURRENT ASSETS

The Group's net current asset decreased by approximately US$5.4 million from approximately US$20.9 million as at 31 December 2019 to approximately US$15.5 million as at 30 June 2020. The decrease was primarily due to (i) a decrease in trade receivables of approximately US$5.9 million; (ii) a decrease in cash and cash equivalents of approximately US$6.3 million; (iii) an increase in other payables and accruals and dividend payable of approximately US$1.0 million, partially offset by a decrease in trade payables of approximately US$7.9 million.

CAPITAL EXPENDITURE

The Group's capital expenditure consisted of purchase costs relating to property, plant and equipment. For the six months ended 30 June 2020, the Group's capital expenditure amounted to approximately US$1.5 million for the acquisition of property, plant and equipment. The Group funded such capital expenditure primarily with cash generated from operating activities.

Capital and investment commitments

As at 30 June 2020, the Group did not have any capital and investment expenditure contracted for as at the end of the reporting period but not recognised in the financial statements.

BANK LOANS AND CONTINGENT LIABILITIES

Bank loans

The Group's bank loans primarily consisted of short and long-term trade financing from bank loans. As at 30 June 2020 and 31 December 2019, the Group had approximately US$33.3 million and approximately US$39.4 million respectively from bank loans.

As at 30 June 2020, the following were pledged to secure the Group's bank loans:

1. Charge over 375,000,000 shares of the Company ("Shares") held by NHPEA IV Home Control Netherlands B.V. ("NHPEA"), the controlling shareholder of the Company.
2. Share charge over Home Control Singapore Pte. Ltd..
3. Share pledge over Home Control Europe NV.

INTERIM REPORT 2020 HOME CONTROL INTERNATIONAL LIMITED

11

Management Discussion and Analysis

1. Share pledge over Premium Home Control Solutions LLC.
2. A minimum bank balance in the amount equivalent to the interest payable for the next six months and the Group's deposits amounting to US$286,000.

As at 30 June 2020, the Group had available bank facilities of US$45,000,000 and US$35,000,000 has been drawn down under the facilities.

Contingent liabilities

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

Gearing ratio

Gearing ratio equals total debt divided by the adjusted total assets of the Group. Total debt includes all interest-bearing bank loans. Adjusted total assets excludes goodwill. The gearing ratios as at 31 December 2019 and 30 June 2020 are approximately 39.7% and approximately 38.4%, respectively.

FUTURE PLANS FOR MATERIAL INVESTMENTS AND CAPITAL ASSETS

The Group did not have other plans for material investments or capital assets as at 30 June 2020.

MATERIAL INVESTMENTS, ACQUISITIONS AND DISPOSALS OF SUBSIDIARIES AND ASSOCIATED COMPANIES

There were no other significant investments held, no material acquisitions or disposals of subsidiaries, associates and joint ventures during the six months ended 30 June 2020.

FOREIGN EXCHANGE RISK MANAGEMENT

The functional currency of the Group is the United States of America ("U.S.") dollar ("US$"). The sales of the Group are mainly denominated in U.S. dollars while purchases are mainly denominated in U.S. dollars or Renminbi ("RMB") (only in the case of sales and purchases in the People's Republic of China (the "PRC")). In addition, the Group has its headquarters in Singapore and operating subsidiaries in the U.S., Belgium, the PRC and Brazil, of which overheads are settled in local currencies and therefore the Group is exposed to foreign exchange risks. Fluctuations in foreign exchange rates may be caused by various factors such as change in government policies, change in domestic and international economic and political conditions, and is always unpredictable. The Group had not entered into any agreements to hedge its exchange rate exposure, as the Group's results of operations has generally been partially mitigated by the natural offset of foreign currency receivables with foreign currency payables. Going forward, the Group expects that exchange rates of Singapore dollars ("SGD"), RMB and US$ will continue to fluctuate. Changes in the foreign exchange rates between the Group's functional currencies and reporting currency may have an adverse impact on the Group's finance costs, sales and product margins, and may reduce the value of, and dividends payable on, the Shares. The Group's business and financial position may be materially and adversely affected. The management of the Group will continue to monitor the Group's foreign currency exchange exposure and will take prudent measures to minimise that currency exchange risk.

12	HOME CONTROL INTERNATIONAL LIMITED INTERIM REPORT 2020

Management Discussion and Analysis

EMPLOYEES, REMUNERATION POLICY AND SHARE OPTION SCHEME

As at 30 June 2020, the Group had 192 employees (31 December 2019: 191 employees). The employees benefit expense incurred during the six months ended 30 June 2020 was approximately US$6.9 million. As required by the applicable laws and regulations, the Group participates in various employee social security plans for our employees that are administered by local government. The Group's remuneration policy rewards employees and Directors based on individual's performance, demonstrated capabilities, involvement, market comparable information and the performance of the Group. The Group improves the professional skills and management level of its employees through internal and external training. To ensure that the Group attracts and retains competent staff, remuneration packages are reviewed on a regular basis. Performance bonuses are offered to qualified employees based on individual and the Group's performance. We did not experience any material labour disputes during the six months ended 30 June 2020. The Company adopted a share option scheme on 1 May 2015 as incentive for eligible employees.

OFF-BALANCE SHEET COMMITMENTS AND ARRANGEMENTS

As of the date of this report, the Group had not entered into any off-balance sheet transactions.

USE OF PROCEEDS FROM LISTING

The Shares were listed on the Main Board of The Stock Exchange of Hong Kong Limited (the "Stock Exchange") on 14 November 2019 (the "Listing") and the net proceeds raised from this initial public offering after deducting underwriting fees and other related listing expenses amounted to approximately HK$84.93 million (equivalent to approximately US$10.83 million) (the "IPO Proceeds").

As stated in the prospectus of the Company (the "Prospectus") dated 31 October 2019, the IPO Proceeds have been and will be used in the same manner as set out under the section headed "Future Plans and Use of Proceeds" in the Prospectus. The Directors are not aware of material change to the planned use of net proceeds as at the date of this report.

INTERIM REPORT 2020 HOME CONTROL INTERNATIONAL LIMITED

13

Management Discussion and Analysis

As at 30 June 2020, the Group had utilised the IPO Proceeds as set out in the table below:

		Planned use of	Planned use of
		IPO Proceeds	IPO Proceeds
		(adjusted on a	(adjusted on a	Utilized
		pro rata basis	pro rata basis	IPO Proceeds	Expected timeline
		on the actual	on the actual	up to	for the unutilized
		net proceeds)	net proceeds)	30 June 2020	IPO Proceeds
		HK$'million	US$'million	US$'million
1	Strategic investments or	23.01	2.93	0.00	The unutilized IPO
	acquisitions in the OTT system				Proceeds will be used
	and/or smart home security				as per the Prospectus.
	products
2	Repayment of bank borrowing	21.12	2.69	2.69	-
3	R&D and develop the products	14.27	1.82	0.00	The unutilized IPO
	for OTT segment and extend				Proceeds will be used
	product lines in smart home				as per the Prospectus.
	products
4	Expansion of professional sales	13.8	1.76	0.00	The unutilized IPO
	force to support business				Proceeds will be used
	expansion				as per the Prospectus.
5	Strengthen the supply chain	6.57	0.84	0.84	-
	management and investment
	by extending beyond the PRC
6	Working capital and general	6.16	0.79	0.00	The unutilized IPO
	corporate purposes				Proceeds will be used
					as per the Prospectus.
		84.93	10.83	3.53

The Directors expect to improve the overall performance of the Group through the upcoming utilisation of the net proceeds from the Listing.

14	HOME CONTROL INTERNATIONAL LIMITED INTERIM REPORT 2020

Management Discussion and Analysis

The unutilized IPO Proceeds will be applied in the same manner as set out in the Prospectus and are expected to be fully utilized by the end of year 2021. The outbreak of COVID-19 has hindered business discussions and due diligence procedures, however the Directors will review the Group's business strategies and specific needs from time to time, and closely monitor the outbreak of COVID-19 and the Company will make further announcement if there are any changes in the use of IPO Proceeds as and when appropriate.

The business objectives, future plans and planned use of proceeds as stated in the Prospectus were based on the best estimation and assumption of future market conditions made by the Group at the time of preparing the Prospectus while the proceeds were applied based on the actual development of the Group's business and the industry.

EVENTS AFTER THE REPORTING PERIOD

No other significant events that require additional disclosures or adjustments occurred after the six months period ended 30 June 2020.

INTERIM REPORT 2020 HOME CONTROL INTERNATIONAL LIMITED

15

Corporate Governance and Other Information

CORPORATE GOVERNANCE CODE

The Group is committed to the establishment of good corporate governance practices and procedures with a view to being a transparent and responsible organization which is open and accountable to the Shareholders. The Board strives for adhering to the principles of corporate governance and has adopted sound corporate governance practices to meet the legal and commercial standards, focusing on areas such as internal control, fair disclosure and accountability to all Shareholders to ensure the transparency and accountability of all operations of the Company. The Company believes that effective corporate governance is an essential factor to create more value for its Shareholders. The Board will continue to review and improve the corporate governance practices of the Group from time to time to ensure that the Group is led by an effective Board in order to optimise return for Shareholders.

The Company has adopted a corporate governance policy with provisions no less exacting than the code on corporate governance practices ("Corporate Governance Code") as set out in Appendix 14 to the Rules Governing the Listing of Securities on the Main Board of the Stock Exchange (the "Listing Rules") and complied with all the applicable code provisions set out in the Corporate Governance Code throughout the six months ended 30 June 2020.

INTERIM DIVIDEND

The Board did not recommend to declare any interim dividend for the six months ended 30 June 2020 (for the six months ended 30 June 2019: Nil).

MODEL CODE FOR SECURITIES TRANSACTIONS BY DIRECTORS OF LISTED ISSUERS

The Company has adopted the model code for securities transactions by directors of listed issuers as set out in Appendix 10 to the Listing Rules (the "Model Code") as its code of conduct regarding securities transactions by the Directors and relevant employees. Upon specific enquiry of all Directors, all Directors have confirmed that they complied with the required standards set out in the Model Code for the six months ended 30 June 2020.

16	HOME CONTROL INTERNATIONAL LIMITED INTERIM REPORT 2020

Corporate Governance and Other Information

DISCLOSURE PURSUANT TO RULES 13.17 AND 13.18 OF THE LISTING RULES

On 15 May 2020, NHPEA, the controlling shareholder of the Company (the "Controlling Shareholder"), charged 375,000,000 ordinary shares of the Company, representing approximately 74.76% of the total issued share capital of the Company as at the date of this report, in favour of a bank (the "Lender"), as security for medium-term loan facilities in an aggregate amount of US$45,000,000 provided by the Lender to the Company and its wholly-owned subsidiary (the "Facility"). The Lender is an authorized institution as defined in the Banking Ordinance, Chapter 155 of the Laws of Hong Kong. The final repayment date of the Facility is 14 December 2023, save for extension or early termination or repayment of the Facility.

Pursuant to the terms of the Facility, in the event the Controlling Shareholder ceases to own at least 70% of the voting shares of the Company, the Company shall promptly notify the Lender upon becoming aware of the event; and if the Lender so requires, the Lender may cancel the Facility and declare all outstanding loans, together with accrued interest, and all other amounts accrued thereunder to be immediately due and payable.

To gradually diversify the Company's lending relationships and to partially replace the existing loan facilities obtained prior to the Listing ("Existing Loan Facilities") with new loan facilities that offer lower borrowing cost and more flexible terms for a listed company, on 8 July 2020, the Company as borrower entered into a new facility agreement ("Facility Agreement") with a bank (the "Bank") as lender in relation to term loan facilities of up to US$6,000,000 (or its equivalent amount in other currencies) (the "New Facility"). The maturity date of the New Facility is 30 June 2021, which can be extended thereafter at the Bank's discretion. The purpose of the New Facility is for general working capital purposes. The aggregate outstanding drawdown amount under the Existing Loan Facilities and the New Facility will in any event not exceed the current level of debt of the Company as at the date of this report, being approximately US$35,000,000.

Pursuant to the Facility Agreement, the Company undertakes, among others, that the Controlling Shareholder, shall maintain not less than 70% ownership of the Company. A breach of such undertaking will constitute an event of default under the Facility Agreement and all amounts (including principal and interest accrued thereon) due and owing by the Company to the Bank under the Facility Agreement shall become immediately due and payable by the Company without further demand.

INTERIM REPORT 2020 HOME CONTROL INTERNATIONAL LIMITED

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Corporate Governance and Other Information

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

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

SHARE OPTION SCHEME

The Company has adopted a share option scheme (the "Scheme") on 1 May 2015, under which share options are granted to employees, officers or Directors of the Company for the purpose of attracting, retaining and to provide additional incentives to employees, officers and Directors and to promote the success of the Group's business. The options vest upon meeting certain key performance index, subject to the discretion of the Board and the provisions of the Scheme. The contractual life of each option granted is 7 years. There are no cash settlement alternatives.

The Scheme is not subject to the provisions of Chapter 17 of the Listing Rules as it does not involve grant of options by the Company to subscribe for its shares after the Company became a listed issuer.

The maximum number of shares of the Company that may be issued by the Company upon the exercise of all options granted under the Scheme is 40,841,584 shares, representing approximately 8.14% of the Shares in issue as at 30 June 2020. All the options under the Scheme were granted to grantees prior to the Listing and no further options will be granted under the Scheme after the Listing. Subject to the terms and conditions set forth under the Scheme, the exercise price of all the share options granted under the Scheme is approximately US$0.0877 per share of the Company (equivalent to approximately HK$0.689 per share of the Company).

There has been no cancellation or modification of the Scheme during the six months ended 30 June 2020.

18	HOME CONTROL INTERNATIONAL LIMITED INTERIM REPORT 2020

Corporate Governance and Other Information

The following table discloses movements in the underlying shares of the Company of the outstanding options granted and vested to all grantees under the Scheme during the six months ended 30 June 2020:

	Number of		Number of
	Shares to be		Shares to be
	issued upon full	No. of shares	issued upon full
	exercise of	exercised	exercise of
	the relevant	during the	the relevant
	share options	six months	share options
	as at	ended	as at
Grantee	1 January 2020	30 June 2020	30 June 2020
Director
Mr. Alain PERROT	5,717,822	-	5,717,822
Senior Management
Mr. Jean Paul L. ABRAMS	4,084,158	-	4,084,158
Mr. Kwok Hoong SIU (蕭國雄)	1,633,663	-	1,633,663
Employees and other grantee
Mr. Pang Hwa HO (何邦華)	1,633,663	-	1,633,663
Mr. Yuechun ZHU (朱閱春)	1,633,663	-	1,633,663
Total	14,702,969	-	14,702,969

Save as disclosed above, no share options were granted, exercised, lapsed or cancelled under the Scheme during the six months ended 30 June 2020.

INTERIM REPORT 2020 HOME CONTROL INTERNATIONAL LIMITED

19

Corporate Governance and Other Information

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

As at 30 June 2020, the interests and short positions of the Directors and the chief executive of the Company in the shares, underlying shares or debentures of the Company and its associated corporations (within the meaning of Part XV of the Securities and Futures Ordinance (Chapter 571 of the Laws of Hong Kong) (the "SFO")) as recorded in the register required to be kept by the Company pursuant to section 352 of the SFO or as otherwise notified to the Company and the Stock Exchange pursuant to the Model Code, were as follows:

1. Interest in the Shares

		Number of	Approximate
		Shares or	percentage of
		underlying	interest in the
Name of Director	Nature of interest	Shares (Note 1)	Company (Note 1)
Alain PERROT (Note 2)	Beneficial owner	5,717,822 (L)	1.14%

Notes:

1. As at 30 June 2020, the Company issued 501,633,663 shares. The letter (L) denotes the entity's long position in the relevant shares.
2. Mr. PERROT is interested in the management option granted under the Scheme to, subject to the terms and conditions thereunder, subscribe for 5,717,822 shares of the Company.

20	HOME CONTROL INTERNATIONAL LIMITED INTERIM REPORT 2020

Corporate Governance and Other Information

1. Interest in associated corporation

				Approximate
				percentage
			Number of	of interest in
	Name of associated	Nature of	shares	the associated
Name of Director	corporation	Interest	interested (Note 1)	corporation
Alain PERROT (Note 2)	Omni Remotes do Brasil Ltda	Beneficial owner	100	1%
	NHPEA	N/A(Note 2)	N/A(Note 2)	N/A(Note 2)

Notes:

1. All interests stated are long positions.
2. Mr. Alain PERROT's interest in NHPEA is a cash-settled derivative interest in NHPEA by way of an agreement between him and Morgan Stanley Private Equity Asia IV, L.L.C..

Save as disclosed above, as at 30 June 2020, none of the Directors or chief executive of the Company had any interest or short position in the shares, underlying shares and debentures of the Company and its associated corporations (within the meaning of Part XV of the SFO) as recorded in the register required to be kept by the Company pursuant to section 352 of the SFO or as otherwise notified to the Company and the Stock Exchange pursuant to the Model Code.

INTERIM REPORT 2020 HOME CONTROL INTERNATIONAL LIMITED

21

Corporate Governance and Other Information

SUBSTANTIAL SHAREHOLDERS INTERESTS AND SHORT POSITIONS IN SHARES OR UNDERLYING SHARES

As at 30 June 2020, to the best knowledge of the Directors, the following persons (other than the Directors or the chief executive of the Company) had interests or short positions of 5% or more of the issued share capital of the Company as recorded in the register required to be kept by the Company under section 336 of the SFO, or otherwise notified to the Company and the Stock Exchange under the provisions of Divisions 2 and 3 of Part XV of the SFO:

		Number of
		Shares or	Approximate
		underlying	percentage of
Name of Shareholders	Nature of interest	Shares (Note 1)	shareholding (Note 1)
Morgan Stanley	Interest of controlled corporation	375,000,000 (L)	74.76%
		(Notes 2 and 3)
MS Holdings Incorporated	Interest of controlled corporation	375,000,000 (L)	74.76%
		(Notes 2 and 3)
Morgan Stanley Private Equity	Interest of controlled corporation	375,000,000 (L)	74.76%
Asia IV, Inc.		(Notes 2 and 3)
Morgan Stanley Private Equity	Interest of controlled corporation	375,000,000 (L)	74.76%
Asia IV, L.L.C.		(Notes 2 and 3)
North Haven Private Equity	Interest of controlled corporation	375,000,000 (L)	74.76%
Asia IV, L.P.		(Notes 2 and 3)
North Haven Private Equity	Interest of controlled corporation	375,000,000 (L)	74.76%
Asia IV Holdings Limited		(Notes 2 and 3)
NHPEA IV Holding Cooperatief U.A.	Interest of controlled corporation	375,000,000 (L)	74.76%
		(Notes 2 and 3)
NHPEA	Beneficial owner	375,000,000 (L)	74.76%
		(Notes 2 and 3)

22	HOME CONTROL INTERNATIONAL LIMITED INTERIM REPORT 2020

Corporate Governance and Other Information

Notes:

1. As at 30 June 2020, the Company issued 501,633,663 shares. The letter (L) denotes the entity's long position in the relevant shares.
2. Such 375,000,000 shares belong to the same batch of shares.
3. Pursuant to Section 336 of the SFO, if certain conditions are met, the shareholders of the Company (the "Shareholders") are required to submit a disclosure of interest notice. In the event of changes in the shareholding of the Shareholders in the Company, the Shareholders will not be required to notify the Company and the Stock Exchange unless certain conditions are met. Therefore, the latest shareholding of the Shareholders in the Company may be different from the shareholding submitted to the Stock Exchange.

Save as disclosed above, as at 30 June 2020, the Directors are not aware of any other persons (other than the Directors or chief executive of the Company) who had interests or short positions in the shares or underlying shares of the Company as recorded in the register required to be kept by the Company under section 336 of the SFO, or otherwise notified to the Company and the Stock Exchange under the provisions of Divisions 2 and 3 of Part XV of the SFO.

REVIEW OF FINANCIAL INFORMATION BY THE AUDIT COMMITTEE

The Company has established an audit committee (the "Audit Committee") with written terms of reference in compliance with the Corporate Governance Code. As at the date of this report, the Audit Committee consists of the three independent non-executive Directors, namely, Mr. Shou Kang CHEN (being the chairman of the Audit Committee), Mr. Werner Peter VAN ECK and Mr. Edmond Ming Siang JAUW.

The Audit committee has reviewed the unaudited consolidated financial statements of the Group for the six months ended 30 June 2020 and discussed with the management the accounting principles and practices adopted by the Group, risk management and internal controls and financial reporting matters of the Group and this report.

INTERIM REPORT 2020 HOME CONTROL INTERNATIONAL LIMITED

23

Review Report of Interim Financial Information

Independent review report

To the board of directors of Home Control International Limited

(Incorporated in the Cayman Islands with limited liability)

INTRODUCTION

We have reviewed the interim financial information set out on pages 26 to 50, which comprises the condensed consolidated statement of financial position of Home Control International Limited (the "Company") and its subsidiaries (the "Group") as at 30 June 2020 and the related condensed consolidated statements of profit or loss and other comprehensive income, changes in equity and cash flows for the six-month period then ended, and explanatory notes. The Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited require the preparation of a report on interim financial information to be in compliance with the relevant provisions thereof and International Accounting Standard 34 Interim Financial Reporting ("IAS 34") issued by the International Accounting Standards Board. The directors of the Company are responsible for the preparation and presentation of this interim financial information in accordance with IAS 34. Our responsibility is to express a conclusion on this interim financial information based on our review. Our report is made solely to you, as a body, in accordance with our agreed terms of engagement, and for no other purpose. We do not assume responsibility towards or accept liability to any other person for the contents of this report.

SCOPE OF REVIEW

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

24	HOME CONTROL INTERNATIONAL LIMITED INTERIM REPORT 2020

Review Report of Interim Financial Information

CONCLUSION

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

Ernst & Young

Certified Public Accountants

Hong Kong

20 August 2020

INTERIM REPORT 2020 HOME CONTROL INTERNATIONAL LIMITED

25

Interim Condensed Consolidated Statement of Profit or Loss and Other Comprehensive Income

For the six months ended 30 June 2020

		2020	2019
		(Unaudited)	(Unaudited)
	Notes	US$'000	US$'000
Revenue	4	69,799	81,376
Cost of sales		(55,580)	(67,168)
Gross profit		14,219	14,208
Other income	4	271	4
Selling and distribution expenses		(3,627)	(4,111)
Administrative expenses		(6,348)	(8,312)
Other expenses		(1,388)	(912)
Finance costs		(1,122)	(1,669)
Profit/(loss) before tax	5	2,005	(792)
Income tax expense	6	(502)	(418)
Profit/(loss) for the period attributable to owners of
the parent		1,503	(1,210)
Other comprehensive income
Other comprehensive income that may be reclassified to
profit or loss in subsequent periods:
Exchange differences on translation of foreign operations		44	4
Other comprehensive income for the period		44	4
Total comprehensive income/(loss) for the period
attributable to owners of the parent		1,547	(1,206)
Earnings/(loss) per share attributable to
ordinary equity holders of the parent
Basic	14	US0.30 cents	US(0.29) cents
Diluted	14	US0.30 cents	US(0.29) cents

26	HOME CONTROL INTERNATIONAL LIMITED INTERIM REPORT 2020

Interim Condensed Consolidated Statement of Financial Position

30 June 2020

		30 June	31 December
		2020	2019
		(Unaudited)	(Audited)
	Notes	US$'000	US$'000
Non-current assets
Property, plant and equipment	7	7,116	7,828
Other intangible assets		161	251
Goodwill		8,877	8,877
Deferred tax assets		294	278
Prepayments, other receivables and other assets		366	150
Other investments	8	4,854	4,854
Total non-current assets		21,668	22,238
Current assets
Inventories		19,358	19,002
Trade receivables	9	30,990	36,916
Prepayments, other receivables and other assets		1,216	1,208
Pledged deposits	10	286	286
Cash and cash equivalents	10	22,147	28,480
Total current assets		73,997	85,892
Total assets		95,665	108,130
Current liabilities
Trade payables	11	35,360	43,307
Other payables and accruals		4,977	5,314
Dividend payable	15	1,371	-
Contract liabilities		926	436
Interest-bearing bank loans	12	14,346	14,346
Lease liabilities		186	386
Provisions		144	121
Tax payable		1,191	1,038
Total current liabilities		58,501	64,948
Net current assets		15,496	20,944
Total assets less current liabilities		37,164	43,182

INTERIM REPORT 2020 HOME CONTROL INTERNATIONAL LIMITED

27

Interim Condensed Consolidated Statement of Financial Position

30 June 2020

		30 June	31 December
		2020	2019
		(Unaudited)	(Audited)
	Notes	US$'000	US$'000
Non-current liabilities
Interest-bearing bank loans	12	18,961	25,094
Lease liabilities		295	284
Provisions		511	572
Deferred tax liabilities		359	370
Total non-current liabilities		20,126	26,320
Net assets		17,038	16,862
Equity
Equity attributable to owners of the parent
Share capital	13	5,017	5,017
Reserves		12,021	11,845
Total equity		17,038	16,862

28	HOME CONTROL INTERNATIONAL LIMITED INTERIM REPORT 2020

Interim Condensed Consolidated Statement of Changes in Equity

For the six months ended 30 June 2020

					Employee	Exchange
	Share	Share	Statutory	Accumulated	share option	fluctuation	Capital
	capital	premium*	reserve*	losses*	reserve*	reserve*	reserve*	Total
	US$'000	US$'000	US$'000	US$'000	US$'000	US$'000	US$'000	US$'000
At 1 January 2020 (Audited)	5,017	9,573	33	(1,415)	570	(536)	3,620	16,862
Profit for the period	-	-	-	1,503	-	-	-	1,503
Other comprehensive income for the period:
Exchange differences related to foreign operations	-	-	-	-	-	44	-	44
Total comprehensive income for the period	-	-	-	1,503	-	44	-	1,547
Final 2019 dividends declared (Note 15)	-	-	-	(1,371)	-	-	-	(1,371)
At 30 June 2020 (Unaudited)	5,017	9,573	33	(1,283)	570	(492)	3,620	17,038

INTERIM REPORT 2020 HOME CONTROL INTERNATIONAL LIMITED

29

Interim Condensed Consolidated Statement of Changes in Equity

For the six months ended 30 June 2020

					Employee	Exchange
	Share	Share	Statutory	Accumulated	share option	fluctuation	Capital
	capital	premium	reserve	losses	reserve	reserve	reserve	Total
	US$'000	US$'000	US$'000	US$'000	US$'000	US$'000	US$'000	US$'000
At 1 January 2019 (Audited)	1	3,990	29	(4,153)	560	(402)	-	25
Profit for the period	-	-	-	(1,210)	-	-	-	(1,210)
Other comprehensive income for the period:
Exchange differences related to foreign
operations	-	-	-	-	-	4	-	4
Total comprehensive income for the period	-	-	-	(1,210)	-	4	-	(1,206)
Transfer to statutory reserve	-	-	6	(6)	-	-	-	-
Equity-settled share option arrangements	-	-	-	-	9	-	-	9
Capital contribution by a related party	-	-	-	-	-	-	1,696	1,696
At 30 June 2019 (Unaudited)	1	3,990	35	(5,369)	569	(398)	1,696	524

• These reserve accounts comprise the consolidated reserves of US$12,021,000 in the consolidated statement of financial position as at 30 June 2020.

30	HOME CONTROL INTERNATIONAL LIMITED INTERIM REPORT 2020

Interim Condensed Consolidated Statement of Cash Flows

For the six months ended 30 June 2020

		2020	2019
		(Unaudited)	(Unaudited)
	Notes	US$'000	US$'000
Cash flows from operating activities
Profit/(loss) before tax		2,005	(792)
Adjustments for:
Depreciation of property, plant and equipment	5	1,664	1,475
Depreciation of right-of-use assets	5	238	218
Amortisation of other intangible assets	5	92	449
Amortisation of loan arrangement fee		327	327
Equity-settled share option expenses		-	9
Provision for restructuring and severance costs	5	23	33
Loss on disposal of property, plant and equipment	5	108	20
Interest expenses		791	1,323
Listing expenses		-	1,770
Effect of exchange rate changes		158	(578)
		5,406	4,254
(Increase)/decrease in inventories		(356)	587
Decrease in trade receivables		5,926	930
Decrease/(Increase) in prepayments and other receivables		319	(170)
Decrease in trade payables		(7,947)	(2,067)
Decrease in other payables and accruals		(337)	(2,596)
Increase in contract liabilities		490	-
Cash generated from operating activities		3,501	938
Net income tax paid		(376)	(369)
Long service awards paid		(62)	(15)
Restructuring and severance costs paid		-	(33)
Net cash from operating activities		3,063	521

INTERIM REPORT 2020 HOME CONTROL INTERNATIONAL LIMITED

31

Interim Condensed Consolidated Statement of Cash Flows

For the six months ended 30 June 2020

	2020	2019
	(Unaudited)	(Unaudited)
	US$'000	US$'000
Cash flows from investing activities
Purchases of property, plant and equipment	(1,462)	(1,547)
Purchases of other intangible assets	(2)	(19)
Net cash used in investing activities	(1,464)	(1,566)
Cash flows from financing activities
New bank loans	549	-
Repayment of bank loans	(7,296)	-
Principal portion of lease payments	(255)	(147)
Interest portion of lease liabilities	(16)	(19)
Interest paid	(816)	(862)
Net cash used in financing activities	(7,834)	(1,028)
Net decrease in cash and cash equivalents	(6,235)	(2,073)
Cash and cash equivalents at beginning of period	28,766	19,854
Effects of exchange rate changes on cash and cash equivalents	(98)	(7)
Cash and cash equivalents at end of period	22,433	17,774
Analysis of balances of cash and cash equivalents
Cash and cash equivalents as stated in the statement of financial
position	22,147	17,774
Pledged deposits for bank loans	286	-
Cash and cash equivalents as stated in the statement of cash
flows	22,433	17,774

32	HOME CONTROL INTERNATIONAL LIMITED INTERIM REPORT 2020

Notes to Interim Condensed Consolidated

Financial Information

For the six-month period ended 30 June 2020

1. BASIS OF PREPARATION

The financial statements have been prepared in accordance with International Financial Reporting Standards ("IFRS") as issued by the International Accounting Standards Board. Accordingly, the interim condensed consolidated financial statements of the Group have been prepared in accordance with International Accounting Standard 34 Interim Financial Reporting.

The interim condensed consolidated financial statements do not include all the information and disclosures required in the annual financial statements, and should be read in conjunction with the Group's audited consolidated financial statements for the year ended 31 December 2019.

The financial statements have been prepared under the historical cost convention. These financial statements are presented in United States dollars and all values are rounded to the nearest thousand except when otherwise indicated.

2. CHANGES IN ACCOUNTING POLICIES AND DISCLOSURES

The accounting policies adopted in the preparation of the interim condensed consolidated financial information are consistent with those applied in the preparation of the Group's annual consolidated financial statements for the year ended 31 December 2019, except for the adoption of the following revised International Financial Reporting Standards ("IFRSs") for the first time for the current period's financial information.

Amendments to IFRS 3	Definition of a Business
Amendments to IFRS 9, IAS 39 and	Interest Rate Benchmark Reform
IFRS 7
Amendment to IFRS 16	COVID-19-Related Rent Concessions (early adopted)
Amendments to IAS 1 and IAS 8	Definition of Material

Other than as explained below regarding the impact of amendment to IFRS 16, the directors do not anticipate that the application of the revised IFRSs above will have a material effect on the Group's interim condensed consolidated financial information.

Amendment to IFRS 16 provides a practical expedient for lessees to elect not to apply lease modification accounting for rent concessions arising as a direct consequence of the COVID-19 pandemic. The practical expedient applies only to rent concessions occurring as a direct consequence of the COVID-19 pandemic and only if (i) the change in lease payments results in revised consideration for the lease that is substantially the same as, or less than, the consideration for the lease immediately preceding the change; (ii) any reduction in lease payments affects only payments originally due on or before 30 June 2021; and (iii) there is no substantive change to other terms and conditions of the lease. The amendment is effective retrospectively for annual periods beginning on or after 1 June 2020 with earlier application permitted.

During the period ended 30 June 2020, certain monthly lease payments for the leases of the Group's office premises have been waived by the lessors as a result of the COVID-19 pandemic and there are no other changes to the terms of the leases. The Group has early adopted the amendment on 1 January 2020 and elected not to apply lease modification accounting for all rent concessions granted by the lessors as a result of the COVID-19 pandemic during the period ended 30 June 2020. Accordingly, a reduction in the lease payments arising from the rent concessions of US$39,000 has been crediting to profit or loss for the period ended 30 June 2020.

INTERIM REPORT 2020 HOME CONTROL INTERNATIONAL LIMITED

33

Notes to Interim Condensed Consolidated Financial Information

For the six-month period ended 30 June 2020

3. OPERATING SEGMENT INFORMATION

An operating segment, in part, is a component of an enterprise whose operating results are regularly reviewed by management to make decisions about resources to be allocated to the segment and assess its performance. Operating segments may be aggregated only to a limited extent. Management reviews the financial information about revenues for purpose of making operating decisions and assessing financial performance. Accordingly, the Group only have a single operating and reportable segment. Therefore, no further information about the operating segment is presented other than the entity-wide disclosures.

Entity-wide Disclosures

Geographical information
(a)	Revenue from external customers
		For the six months ended
		30 June
		2020		2019
		US$'000		US$'000
		(Unaudited)		(Unaudited)
	North America	29,102		33,669
	Europe	20,867		19,169
	Asia	12,794		19,233
	Latin America	7,036		9,305
		69,799		81,376

The revenue information above is based on the locations of the customers.

1. Non-currentassets

	30 June	31 December
	2020	2019
	US$'000	US$'000
	(Unaudited)	(Audited)
North America	71	21
Europe	266	270
Asia	7,306	7,938
	7,643	8,229

The non-current asset information above is based on the locations of the non-current assets and excludes other investments, deferred tax assets and goodwill.

34	HOME CONTROL INTERNATIONAL LIMITED INTERIM REPORT 2020

Notes to Interim Condensed Consolidated Financial Information

For the six-month period ended 30 June 2020

3. OPERATING SEGMENT INFORMATION (Continued)

Information about major customers

Revenue from each major customer which accounted for 10% or more of the Group's revenue for the six months ended 30 June 2020 and 2019 is set out below:

	For the six months ended
	30 June
	2020		2019
	US$'000		US$'000
	(Unaudited)		(Unaudited)
Customer 1	17,841		13,736
Customer 2	10,073		N/A*
Customer 3	N/A*		13,352

• The corresponding revenue from the customer is not disclosed as the revenue did not individually account for 10% or more of the Group's revenue for the period.

4. REVENUE AND OTHER INCOME

An analysis of revenue is as follows:

	For the six months ended
	30 June
	2020		2019
	US$'000		US$'000
	(Unaudited)		(Unaudited)
Revenue from contracts with customers
Sale of goods	69,658		81,177
Royalty income	141		199
	69,799		81,376

INTERIM REPORT 2020 HOME CONTROL INTERNATIONAL LIMITED

35

Notes to Interim Condensed Consolidated Financial Information

For the six-month period ended 30 June 2020

4. REVENUE AND OTHER INCOME (Continued)

Revenue from contracts with customers

(i)	Disaggregated revenue information
		For the six months ended
		30 June
		2020		2019
		US$'000		US$'000
		(Unaudited)		(Unaudited)
	Timing of revenue recognition
	At a point in time
	- Sale of goods	69,658		81,177
	Overtime
	- Royalty income	141		199
	Total revenue from contracts with customers	69,799		81,376

1. Performance obligations
   Information about the Group's performance obligations is summarised below:
   Sale of goods
   The performance obligation is satisfied upon delivery of the goods and payment is generally due within 30 to 90 days from delivery, except for new customers, where payment in advance is normally required.
   Royalty income
   The performance obligation is satisfied over time as the Group's licensing of patents to be used for the manufacturing of products by the licensee.

36	HOME CONTROL INTERNATIONAL LIMITED INTERIM REPORT 2020

Notes to Interim Condensed Consolidated Financial Information

For the six-month period ended 30 June 2020

4. REVENUE AND OTHER INCOME (Continued)

An analysis of other income is as follows:

	For the six months ended
	30 June
	2020		2019
	US$'000		US$'000
	(Unaudited)		(Unaudited)
Government grants (Note)	262		-
Others	9		4
	271		4

Note: The government grants represent subsidies received from the local governments to support the entities to keep the business running and to retain their employees during the period of economic uncertainty due to the situation of the COVID-19 pandemic. There are no unfulfilled conditions or contingencies relating to these grants.

INTERIM REPORT 2020 HOME CONTROL INTERNATIONAL LIMITED

37

Notes to Interim Condensed Consolidated Financial Information

For the six-month period ended 30 June 2020

5. PROFIT/(LOSS) BEFORE TAX

The Group's profit/(loss) before tax is arrived at after charging/(crediting):

	For the six months ended
	30 June
	2020		2019
	US$'000		US$'000
	(Unaudited)		(Unaudited)
Cost of inventories sold	45,557		56,865
Depreciation of property, plant and equipment	1,664		1,475
Depreciation of right-of-use assets	238		218
Loss on disposal of property, plant and equipment	108		20
Amortisation of other intangible assets*	92		449
Foreign exchange differences, net	22		41
Withholding tax	22		78
Auditor's remuneration	95		61
Restructuring and severance costs	23		33
Research and development costs	2,994		3,129
Expenses for low value leases	4		3
Employee benefits expense (including director's and
chief executive's remuneration):
Wage and salaries	5,902		5,967
Pension scheme contributions	836		682
Other employee benefits	154		130
Equity-settled share option expense	-		9
	6,892		6,788
Listing expenses	-		1,770

• The amortisation of other intangible assets for the period amounting to US$92,000 (six months ended 30 June 2019: US$114,000) and nil (six months ended 30 June 2019: US$335,000) is included in "Administrative expenses" and "Cost of sales" in the statement of profit or loss and other comprehensive income.

38	HOME CONTROL INTERNATIONAL LIMITED INTERIM REPORT 2020

Notes to Interim Condensed Consolidated Financial Information

For the six-month period ended 30 June 2020

6. INCOME TAX

The Group is subject to income tax on an entity basis on profit arising in or derived from the jurisdictions in which members of the Group are domiciled and operate.

The Group calculates the period income tax expense using the tax rate that would be applicable to the expected total annual earnings. The major components of income tax expense are as follows:

	For the six months ended
	30 June
			2019
	2020
	US$'000		US$'000
	(Unaudited)		(Unaudited)
Current tax - Singapore
200
Charge for the period		34
Overprovision in prior periods	(55)		(196)
Current tax - United States of America	209
Charge for the period		227
Current tax - Elsewhere	175
Charge for the period		307
	529		372
Deferred tax	(27)		46
- Singapore
Total tax charge for the period	502		418

7. PROPERTY, PLANT AND EQUIPMENT

					Right-of-use assets
			Machinery
	Furniture	Specific	and	Construction-	Re-	Office	Motor
	and fittings	tools	equipment	in-progress	instatement	premises	vehicles	Total
	US$'000	US$'000	US$'000	US$'000	US$'000	US$'000	US$'000	US$'000
Cost
At 1 January 2019 (Audited)	132	5,061	4,048	675	216	2,177	389	12,698
Additions	-	2,193	2,020	552	-	-	73	4,838
Transfer	-	595	-	(595)	-	-	-	-
Disposals	-	(3,064)	(172)	-	-	-	-	(3,236)
Exchange differences	-	17	8	-	-	-	-	25
At 31 December 2019 and	132	4,802	5,904	632	216	2,177	462	14,325
1 January 2020 (Audited)
Additions	-	-	32	1,214	-	67	-	1,313
Transfer	-	497	395	(892)	-	-	-	-
Disposals	-	(989)	(3)	(82)	-	-	-	(1,074)
Exchange differences	-	(6)	(28)	-	-	-	-	(34)
At 30 June 2020 (Unaudited)	132	4,304	6,300	872	216	2,244	462	14,530

INTERIM REPORT 2020 HOME CONTROL INTERNATIONAL LIMITED

39

Notes to Interim Condensed Consolidated Financial Information

For the six-month period ended 30 June 2020

7. PROPERTY, PLANT AND EQUIPMENT (Continued)

					Right-of-use assets
			Machinery
	Furniture	Specific	and	Construction-	Re-	Office	Motor
	and fittings	tools	equipment	in-progress	instatement	premises	vehicles	Total
	US$'000	US$'000	US$'000	US$'000	US$'000	US$'000	US$'000	US$'000
Accumulated depreciation
At 1 January 2019 (Audited)	15	3,260	1,159	-	116	1,370	182	6,102
Charge for the period	44	1,707	1,237	-	35	366	107	3,496
Disposals	-	(3,007)	(101)	-	-	-	-	(3,108)
Exchange differences	-	(1)	8	-	-	-	-	7
At 31 December 2019 and
1 January 2020 (Audited)	59	1,959	2,303	-	151	1,736	289	6,497
Charge for the period	22	1,034	608	-	18	162	58	1,902
Disposals	-	(966)	-	-	-	-	-	(966)
Exchange differences	-	(5)	(14)	-	-	-	-	(19)
At 30 June 2020 (Unaudited)	81	2,022	2,897	-	169	1,898	347	7,414
Net carrying amount
At 31 December 2019 (Audited)	73	2,843	3,601	632	65	441	173	7,828
At 30 June 2020 (Unaudited)	51	2,282	3,403	872	47	346	115	7,116

8. OTHER INVESTMENTS

30 June 31 December

20202019

US$'000 US$'000

(Unaudited) (Audited)

Unlisted investments, at cost	4,854	4,854

The above investments were treasury management principal protected products issued by a financial institution. The investments bear interest of 3% per annum and with a maturity period of 1.5 years from 14 November 2019 and will be roll over automatically unless there is a mutual agreement to terminate the products. They were classified as financial assets at amortised cost as their contractual cash flows are solely payments of principal and interest.

40	HOME CONTROL INTERNATIONAL LIMITED INTERIM REPORT 2020

Notes to Interim Condensed Consolidated Financial Information

For the six-month period ended 30 June 2020

9. TRADE RECEIVABLES

	30 June	31 December
	2020	2019
	US$'000	US$'000
	(Unaudited)	(Audited)
Trade receivables	31,524	37,450
Impairment	(534)	(534)
	30,990	36,916

Trade receivables are non-interest bearing and are generally on 30 to 90 days' terms. They are recognised at their original invoice amounts on initial recognition.

An ageing analysis of the trade receivables as at the end of the reporting period, based on the payment due date and net of loss allowance, is as follows:

	30 June	31 December
	2020	2019
	US$'000	US$'000
	(Unaudited)	(Audited)
Not past due	21,772	28,254
Past due 0-90 days	7,598	7,501
Past due above 90 days	1,620	1,161
	30,990	36,916

INTERIM REPORT 2020 HOME CONTROL INTERNATIONAL LIMITED

41

Notes to Interim Condensed Consolidated Financial Information

For the six-month period ended 30 June 2020

9. TRADE RECEIVABLES (Continued)

The movements in the loss allowance for impairment of trade receivables are as follows:

	30 June	31 December
	2020	2019
	US$'000	US$'000
	(Unaudited)	(Audited)
At beginning of period/year	534	456
Impairment losses recognised	-	135
Write-off	-	(57)
At end of period/year	534	534

10. CASH AND CASH EQUIVALENTS AND PLEDGED DEPOSITS

	30 June	31 December
	2020	2019
	US$'000	US$'000
	(Unaudited)	(Audited)
Cash and bank balances	22,433	28,766
Less: Pledged deposits:
Pledged for bank loans	(286)	(286)
Cash and cash equivalents	22,147	28,480
Denominated in:
United States dollars ("US$")	18,143	23,805
Singapore dollars ("S$")	414	388
Euros ("EUR")	130	912
British Pound Sterling ("GBP")	425	531
Brazilian Real ("BRL")	307	302
Chinese Renminbi ("RMB")	521	329
Indian Rupee ("INR")	20	20
Hong Kong dollars ("HK$")	2,473	2,479
	22,433	28,766

42	HOME CONTROL INTERNATIONAL LIMITED INTERIM REPORT 2020

Notes to Interim Condensed Consolidated Financial Information

For the six-month period ended 30 June 2020

10. CASH AND CASH EQUIVALENTS AND PLEDGED DEPOSITS (Continued)

Cash at banks earn interest at floating rates based on daily bank deposit rates. The bank balances are deposited with creditworthy banks with no recent history of default.

The RMB is not freely convertible into other currencies. However, under Mainland China's Foreign Exchange Control Regulations and Administration of Settlement, Sale and Payment of Foreign Exchange Regulations, the Group is permitted to exchange RMB for other currencies through banks authorised to conduct foreign exchange business. The remittance of funds out of Mainland China is subject to exchange restrictions imposed by the PRC government.

As at 30 June 2020, the Group's pledged deposits amounting to US$286,000 (31 December 2019: US$286,000) were pledged to secure the bank loans granted to the Group (Note 12).

11. TRADE PAYABLES

30 June 31 December

20202019

US$'000 US$'000

(Unaudited) (Audited)

Trade payables	35,360	43,307

An ageing analysis of the trade payables as at the end of the reporting period, based on the payment due date, is as follows:

	30 June	31 December
	2020	2019
	US$'000	US$'000
	(Unaudited)	(Audited)
Not past due	26,167	32,111
Past due 0-90 days	9,193	11,196
	35,360	43,307

The trade payables are non-interest-bearing and are normally settled on 90-day terms.

INTERIM REPORT 2020 HOME CONTROL INTERNATIONAL LIMITED

43

Notes to Interim Condensed Consolidated Financial Information

For the six-month period ended 30 June 2020

12. INTEREST-BEARING BANK LOANS

	As at 30 June 2020 (Unaudited)
	Contractual
	interest rate	Maturity
	(%)	US$'000
Current
Loan from bank - secured	LIBOR+3.0	2020	14,346
Non-current
Loan from bank - secured	LIBOR+3.0	2021-2023	18,412
Loan from bank - unsecured*	1.0	2022	549
			18,961
			33,307
	As at 31 December 2019 (Audited)
	Contractual
	interest rate	Maturity
	(%)		US$'000
Current
Loan from bank - secured	LIBOR+3.0	2020	14,346
Non-current
Loan from bank - secured	LIBOR+3.0	2021-2023	25,094
			39,440

44	HOME CONTROL INTERNATIONAL LIMITED INTERIM REPORT 2020

Notes to Interim Condensed Consolidated Financial Information

For the six-month period ended 30 June 2020

12. INTEREST-BEARING BANK LOANS (Continued)

	30 June	31 December
	2020	2019
	US$'000	US$'000
	(Unaudited)	(Audited)
Loan from bank repayable:
Within one year or on demand	14,346	14,346
In the second year	2,346	2,346
In the third to fifth years, inclusive	16,615	22,748
	33,307	39,440

• Paycheck Protection Program Loan approved by the Small Business Association (SBA) with an interest rate of 1%, and includes a "forgiveness" clause which states that the borrower may apply for forgiveness of the loan amount if the amount is used for payroll costs, any payment of interest on a covered mortgage obligation, any payment on a covered rent obligation and any covered utility payment.

The bank loan of the Group has been presented net of the loan arrangement fee.

The bank loan was secured by the following:

1. Charge over 375,000,000 Shares held by NHPEA IV Home Control Netherlands B.V., the controlling shareholder of the Company (Note 16).
2. Share charge over Home Control Singapore Pte. Ltd..
3. Share pledge over Home Control Europe NV.
4. Share pledge over Premium Home Control Solutions LLC.
5. A minimum bank balance in the amount equivalent to the interest payable for the next six months and the Group's deposits amounting to US$286,000 (31 December 2019: US$286,000).

INTERIM REPORT 2020 HOME CONTROL INTERNATIONAL LIMITED

45

Notes to Interim Condensed Consolidated Financial Information

For the six-month period ended 30 June 2020

13. SHARE CAPITAL

	30 June	31 December
	2020	2019
	US$'000	US$'000
	(Unaudited)	(Audited)
Authorised:
5,000,000,000 (31 December 2019: 5,000,000,000)
ordinary shares of US$0.01 each	50,000	50,000
Issued and fully paid:
501,633,633 (31 December 2019: 501,633,633)
ordinary shares of US$0.01 each	5,017	5,017

14. EARNINGS/(LOSS) PER SHARE ATTRIBUTABLE TO ORDINARY EQUITY HOLDERS OF THE PARENT

The calculation of the basic earnings per share amounts is based on profit for the period attributable to ordinary equity holders of the parent, and the weighted average number of ordinary shares of 501,633,663 (2019: 412,500,000, as adjusted to reflect the capitalization issue during the six months ended 30 June 2019) in issue.

The calculation of the diluted earnings per share amounts is based on the profit for the period attributable to ordinary equity holders of the parent. The weighted average number of ordinary shares used in the calculation is the number of ordinary shares in issue during the period, as used in the basic earnings per share calculation, and the weighted average number of ordinary shares assumed to have been issued at no consideration on the deemed exercise of all dilutive potential ordinary shares into ordinary shares.

No adjustment has been made to the basic loss per share amount presented for the period ended 30 June 2019 in respect of a dilution as the impact of the share options outstanding had an anti-dilutive effect on the basic loss per share amount presented.

46	HOME CONTROL INTERNATIONAL LIMITED INTERIM REPORT 2020

Notes to Interim Condensed Consolidated Financial Information

For the six-month period ended 30 June 2020

14. EARNINGS/(LOSS) PER SHARE ATTRIBUTABLE TO ORDINARY EQUITY HOLDERS OF THE PARENT (Continued)

The calculations of basic and diluted earnings/(loss) per share are based on:

	For the six months ended
	30 June
	2020		2019
	US$'000		US$'000
	(Unaudited)		(Unaudited)
Earnings/(loss)
Profit/(loss) attributable to ordinary equity holders of the parent,
used in the basic earnings/(loss) per share calculation	1,503		(1,210)

	For the six months ended
	30 June
	2020		2019
	(Unaudited)	(Unaudited)
Shares
Weighted average number of ordinary shares in issue during
the period used in the basic earnings/(loss) per share calculation	501,633,663		412,500,000
Effect of dilution - weighted average number of ordinary shares:
Share options	1,920,380		-
	503,554,043		412,500,000

15. DIVIDENDS

For the six months

ended 30 June

20202019

US$'000 US$'000

(Unaudited) (Unaudited)

Final declared and paid - US0.27 cents per ordinary share	1,371	-

INTERIM REPORT 2020 HOME CONTROL INTERNATIONAL LIMITED

47

Notes to Interim Condensed Consolidated Financial Information

For the six-month period ended 30 June 2020

15. DIVIDENDS (Continued)

At the Annual General Meeting held on 26 June 2020, the shareholders approved a final dividend of US0.27 cents per ordinary share, which amounted to US$1,371,000 in respect of the profit for the year ended 31 December 2019. The dividend is paid on 31 July 2020.

16. RELATED PARTY TRANSACTIONS

1. In addition to the transactions detailed elsewhere, the Group had the following transactions with related parties during the six months ended 30 June 2019 and 30 June 2020:

For the six months ended

30 June

20202019

US$'000 US$'000

(Unaudited) (Unaudited)

Listing expenses payable/paid by a related party	-	1,696

1. Other transactions with related parties:
   The controlling shareholder, NHPEA IV Home Control Netherlands B.V., charged 375,000,000 ordinary shares of the Company as security of the Group's bank loan facilities of up to US$45,000,000 from 15 May 2020.
2. Compensation of key management personnel of the Group:

	For the six months ended
	30 June
	2020		2019
	US$'000		US$'000
	(Unaudited)		(Unaudited)
Short-term employee benefits	823		796
Pension scheme contributions	101		134
Total compensation paid to key management personnel	924		930

48	HOME CONTROL INTERNATIONAL LIMITED INTERIM REPORT 2020

Notes to Interim Condensed Consolidated Financial Information

For the six-month period ended 30 June 2020

17. FINANCIAL INSTRUMENTS BY CATEGORY

The carrying amounts of each of the categories of financial instruments as at the end of the reporting period are as follows:

	Financial assets
	at amortised cost
	30 June	31 December
	2020	2019
	US$'000	US$'000
	(Unaudited)	(Audited)
Financial assets
Trade receivables	30,990	36,916
Financial assets included in prepayments,
other receivables and other assets	82	292
Cash and cash equivalents	22,147	28,480
Pledged deposits	286	286
Other investments	4,854	4,854
	58,359	70,828
	Financial liabilities
	at amortised cost
	30 June	31 December
	2020	2019
	US$'000	US$'000
	(Unaudited)	(Audited)
Financial liabilities
Trade payables	35,360	43,307
Financial liabilities included in other payables and accruals	3,310	2,914
Dividend payable	1,371	-
Interest-bearing bank loans	33,307	39,440
Lease liabilities	481	670
	73,829	86,331

INTERIM REPORT 2020 HOME CONTROL INTERNATIONAL LIMITED

49

Notes to Interim Condensed Consolidated Financial Information

For the six-month period ended 30 June 2020

18. FAIR VALUE AND FAIR VALUE HIERARCHY OF FINANCIAL INSTRUMENTS

Management has determined that the carrying amounts of cash and cash equivalents, pledged deposits, trade receivables, financial assets included in prepayments, other receivables and other assets, trade payables, financial liabilities included in other payables and accruals, dividend payables, current portion of interest-bearing bank loans, reasonably approximate to their fair values because these financial instruments are mostly short term in nature. The carrying amounts of long-terminterest-bearing bank loans, which incur interest at floating interest rates, also approximate to their fair values as the interest rate is periodically adjusted to the market rate.

The fair values of the financial assets and liabilities are included at the amount at which the instrument could be exchanged in a current transaction between willing parties, other than in a forced or liquidation sale.

19. EVENTS AFTER THE REPORTING PERIOD

No other significant events that require additional disclosures or adjustments occurred after the six months ended 30 June 2020.

50	HOME CONTROL INTERNATIONAL LIMITED INTERIM REPORT 2020