Karrie International : UNAUDITED INTERIM RESULTS FOR THE SIX MONTHS ENDED 30 SEPTEMBER 2019

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

Karrie International Holdings Limited

嘉 利 國 際 控 股 有 限 公 司 *

(Incorporated in Bermuda with limited liability)

(Stock Code: 1050)

UNAUDITED INTERIM RESULTS

FOR THE SIX MONTHS ENDED 30 SEPTEMBER 2019

	For the six months ended
	30 September
	2019	2018	Changes
Revenue (HK$'000)	1,424,748	1,300,003	+10%
Profit attributable to equity shareholders	114,415	88,069	+30%
(HK$'000)
Basic earnings per share (HK cents)	5.7	4.4	+30%
Interim dividend per share (HK cents)	4.0	3.0	+33%

INTERIM RESULTS

The board (the "Board") of directors (the "Directors") of Karrie International Holdings Limited (the "Company") announced the unaudited consolidated interim results of the Company and its subsidiaries (the "Group") for the six months ended 30 September 2019 as follows:

- 1 -

UNAUDITED CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL POSITION

As at 30 September 2019 (Expressed in Hong Kong dollars)

		30 September	31 March
		2019		2019
	Note		$'000	$'000
ASSETS
Non-current assets		15,954
Land use rights			16,190
Property, plant and equipment		446,200		451,025
Right-of-use assets		5,544		-
Investment properties		297,033		318,600
Intangible assets		8,433		9,168
Investments in an associate		15,802		16,327
Other financial assets		19,430		19,325
Other non-current assets	4	46,422		32,000
Deferred tax assets		5,001		5,001
		859,819		867,636
Current assets		413,371
Inventories			335,491
Property development		673,674		689,437
Trade and bills receivable	4	314,789		279,285
Prepayments, deposits and other receivables	4	52,770		45,904
Amounts due from related companies		140,427		21,503
Current tax recoverable		3,152		632
Cash and bank deposits		254,936		224,030
		1,853,119		1,596,282
Total assets		2,712,938		2,463,918
EQUITY
Capital and reserves attributable to equity
shareholders of the Company		199,384
Share capital			199,183
Other reserves		191,005		254,217
Retained earnings		727,388		713,460
Total equity		1,117,777		1,166,860

- 2 -

UNAUDITED CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL POSITION (CONTINUED)

As at 30 September 2019 (Expressed in Hong Kong dollars)

		30 September	31 March
		2019		2019
	Note		$'000	$'000
LIABILITIES
Current liabilities
Trade payables	5	281,066		155,469
Accruals and other payables		500,619		437,151
Bank borrowings	6	79,250		66,588
Lease liabilities		3,284		-
Amount due to an associate		1,154		35
Amounts due to related companies		488		394
Current tax payable		80,798		72,606
		946,659		732,243
Non-current liabilities
Bank borrowings	6	635,295		553,754
Lease liabilities		2,334		-
Provision for long service payments		7,380		7,388
Deferred tax liabilities		3,493		3,673
		648,502		564,815
Total liabilities		1,595,161		1,297,058
Total equity and liabilities			2,712,938		2,463,918
Net current assets			906,460		864,039
Total assets less current liabilities		1,766,279		1,731,675

- 3 -

UNAUDITED CONDENSED CONSOLIDATED STATEMENT OF PROFIT OR LOSS

For the six months ended 30 September 2019 (Expressed in Hong Kong dollars)

		For the six months ended
		30 September
		2019		2018
	Note	$'000	$'000
Revenue	3	1,424,748		1,300,003
Cost of revenue		(1,185,595)	(1,121,197)
Gross profit		239,153		178,806
Distribution and selling expenses		(14,309)	(11,498)
General and administrative expenses		(51,596)	(62,546)
Other income/gains	7	2,951	3,575
Operating profit		176,199		108,337
Finance income		2,560		1,347
Finance costs		(13,631)	(7,255)
Finance costs, net	9	(11,071)	(5,908)
Share of profits of an associate		598		132
Profit before taxation		165,726		102,561
Income tax	10	(51,311)	(14,492)
Profit for the period		114,415		88,069
Profit for the period attributable to equity
	114,415
shareholders of the Company			88,069
Earnings per share attributable to equity
shareholders of the Company		5.7
Basic earnings per share (HK cents)	11		4.4
Diluted earnings per share (HK cents)	11	5.7		4.4

- 4 -

UNAUDITED CONDENSED CONSOLIDATED STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME

For the six months ended 30 September 2019 (Expressed in Hong Kong dollars)

	For the six months ended
	30 September
	2019			2018
	$'000	$'000
Profit for the period	114,415			88,069
Other comprehensive income for the period:
Items that may be reclassified subsequently to
profit or loss:
Exchange differences on translation of financial
statements of operations outside Hong Kong,
net of $Nil tax	(65,043)		(63,523)
Fair value losses on other financial assets,
net of $Nil tax	(102)		(122)
Other comprehensive income for the period	(65,145)		(63,645)
Total comprehensive income for the period	49,270			24,424
Total comprehensive income for the period attributable to
equity shareholders of the Company	49,270			24,424

- 5 -

NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL INFORMATION

(Expressed in Hong Kong dollars)

1. BASIS OF PREPARATION
   The interim financial results set out in the announcement do not constitute the Group's interim financial report for the six months ended 30 September 2019 but are extracted from that interim financial report.
   This interim financial report for the six months ended 30 September 2019 has been prepared in accordance with the applicable disclosure provisions of the Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited (the "Stock Exchange"), including compliance with Hong Kong Accounting Standard 34, Interim Financial Reporting, issued by the Hong Kong Institute of Certified Public Accountants ("HKICPA"). The interim financial report is unaudited but has been reviewed by the Group's audit committee.
   This interim financial report should be read in conjunction with the annual financial statements for the year ended 31 March 2019, which have been prepared in accordance with Hong Kong Financial Reporting Standards ("HKFRS").
   This interim financial report has been prepared in accordance with the same accounting policies adopted in the annual financial statements for the year ended 31 March 2019, except for the accounting policy changes that are expected to be reflected in the annual financial statements for the year ending 31 March 2020. Details of the changes in accounting policies are set out in note 2.
2. CHANGES IN ACCOUNTING POLICIES
   The HKICPA has issued a new HKFRS, HKFRS16, Leases, and a number of amendments to HKFRSs that are first effective for the current accounting period of the Group.
   Except for HKFRS 16, Leases, none of the developments have had a material effect on how the Group's results and financial position for the current or prior periods have been prepared or presented in the interim financial report. The Group has not applied any new standard or interpretation that is not yet effective for the current accounting period.

- 6 -

HKFRS 16, Leases

HKFRS 16 replaces HKAS 17, Leases, and the related interpretations, HK(IFRIC) 4, Determining whether an arrangement contains a lease , HK(SIC) 15, Operating leases

• incentives , and HK(SIC) 27, Evaluating the substance of transactions involving the legal form of a lease. It introduces a single accounting model for lessees, which requires a lessee to recognize a right-of-use asset and a lease liability for all leases, except for leases that have a lease term of 12 months or less ("short-termleases") and leases of low value assets. The lessor accounting requirements are brought forward from HKAS 17 substantially unchanged.

The Group has initially applied HKFRS 16 as from 1 April 2019. The Group has elected to use the modified retrospective approach and has therefore recognised the cumulative effect of initial application as an adjustment to the opening balance of equity at 1 April 2019. Comparative information has not been restated and continues to be reported under HKAS 17.

Further details of the nature and effect of the changes to previous accounting policies and the transition options applied are set out below:

1. Changes in the accounting policies
2. 1. New definition of a lease
      The change in the definition of a lease mainly relates to the concept of control. HKFRS 16 defines a lease on the basis of whether a customer controls the use of an identified asset for a period of time, which may be determined by a defined amount of use. Control is conveyed where the customer has both the right to direct the use of the identified asset and to obtain substantially all of the economic benefits from that use.
      The Group applies the new definition of a lease in HKFRS 16 only to contracts that were entered into or changed on or after 1 April 2019. For contracts entered into before 1 April 2019, the Group has used the transitional practical expedient to grandfather the previous assessment of which existing arrangements are or contain leases.
      Accordingly, contracts that were previously assessed as leases under HKAS 17 continue to be accounted for as leases under HKFRS 16 and contracts previously assessed as non-lease service arrangements continue to be accounted for as executory contracts.

- 7 -

1. Lessee accounting
   HKFRS 16 eliminates the requirement for a lessee to classify leases as either operating leases or finance leases, as was previously required by HKAS 17. Instead, the Group is required to capitalise all leases when it is the lessee, including leases previously classified as operating leases under HKAS 17, other than those short-term leases and leases of low-value assets. As far as the Group is concerned, these newly capitalised leases are primarily in relation to property, plant and equipment.
   When the Group enters into a lease in respect of a low-value asset, the Group decides whether to capitalise the lease on a lease-by lease basis. For the Group, low-value assets are typically office equipment. The lease payments associated with those leases which are not capitalised are recognised as an expense on a systematic basis over the lease term.
   Where the lease is capitalised, the lease liability is initially recognised at the present value of the lease payments payable over the lease term, discounted using the interest rate implicit in the lease or, if that rate cannot be readily determined, using a relevant incremental borrowing rate. After initial recognition, the lease liability is measured at amortised cost and interest expense is calculated using the effective interest method. Variable lease payments that do not depend on an index or rate are not included in the measurement of the lease liability and hence are charged to profit or loss in the accounting period in which they are incurred.
   The right-of-use asset recognised when a lease is capitalised is initially measured at cost, which comprises the initial amount of the lease liability plus any lease payments made at or before the commencement date, and any initial direct costs incurred. Where applicable, the cost of the right-of- use assets also includes an estimate of costs to dismantle and remove the underlying asset or to restore the underlying asset or the site on which it is located, discounted to their present value, less any lease incentives received.
   The right-of-use asset is subsequently stated at cost less accumulated depreciation and impairment losses.
   The lease liability is remeasured when there is a change in future lease payments arising from a change in an index or rate, or there is a change in the Group's estimate of the amount expected to be payable under a residual value guarantee, or there is a change arising from the reassessment of whether the Group will be reasonably certain to exercise a purchase, extension or termination option. When the lease liability is remeasured in this way, a corresponding adjustment is made to the carrying amount of the right-of-use asset, or is recorded in profit or loss if the carrying amount of the right-of-use asset has been reduced to zero.

- 8 -

1. 1. Lessor accounting
      The Group leases out a number of items of plant, machinery, tools and equipment as the lessor of operating leases. The accounting policies applicable to the Group as a lessor remain substantially unchanged from those under HKAS 17.
2. Transitional impact
   At the date of transition to HKFRS 16 (i.e. 1 April 2019), the Group determined the length of the remaining lease terms and measured the lease liabilities for the leases previously classified as operating leases at the present value of the remaining lease payments, discounted using the relevant incremental borrowing rates at 1 April 2019. The weighted average of the incremental borrowing rates used for determination of the present value of the remaining lease payments was 3.39%.
   To ease the transition to HKFRS 16, the Group applied the recognition exemption and practical expedients at the date of initial application of HKFRS 16 when measuring the lease liabilities at the date of initial application of HKFRS 16, the Group applied a single discount rate to a portfolio of leases with reasonably similar characteristics (such as leases with a similar remaining lease term for a similar class of underlying asset in a similar economic environment).
   The following table reconciles the operating lease commitments as at 31 March
   2019 to the opening balance for lease liabilities recognised as at 1 April 2019:

	$'000
Operating lease commitments at 31 March 2019	10,157
Less: commitment relating to leases exempted from capitalisation	(2,140)
	8,017
Less: total future interest expenses	(314)
Total lease liabilities recognised as at 1 April 2019	7,703

The right-of-use assets in relation to leases previously classified as operating leases have been recognised at an amount equal to the amount recognised for the remaining lease liabilities.

- 9 -

The following table summarises the impacts of the adoption of HKFRS 16 on the Group's condensed consolidated statement of financial position:

	Carrying		Carrying
	amount at	Capitalisation	amount at
	31 March	of operating	1 April
	2019	lease contracts	2019
	$'000	$'000	$'000
Line items in the condensed
consolidated statement of
financial position impacted
by the adoption of HKFRS
16:
Right-of-use assets	-	7,703	7,703
Non-current assets	867,636	7,703	875,339
Total assets	2,463,918	7,703	2,471,621
Lease liabilities (current)	-	(3,522)	(3,522)
Current liabilities	(732,243)	(3,522)	(735,765)
Lease liabilities (non-current)	-	(4,181)	(4,181)
Non-current liabilities	(564,815)	(4,181)	(568,996)
Total liabilities	(1,297,058)	(7,703)	(1,304,761)
Total equity and liability	(2,463,918)	(7,703)	(2,471,621)
Net current assets	864,039	(3,522)	860,517
Total assets less current
liabilities	1,731,675	4,181	1,735,856

- 10 -

The analysis of the net book value of the Group's right-of-use assets by class of underlying asset and the remaining contractual maturities of the Group's lease liabilities at the end of the reporting period and at the date of transition to HKFRS

16 is as follows:

		At	At
	30 September	1 April
	2019		2019
		$'000	$'000
Non-current assets	5,544		7,703
Right-of-use assets
Current liabilities
(3,284)	(3,522)
Lease liabilities
Non-current liabilities
(2,334)	(4,181)
Lease liabilities

1. Lease liabilities
   The remaining contractual maturities of the Group's lease liabilities at the end of the reporting period and at the date of transition to HKFRS 16 is as follows:

		At 30 September 2019	At 1 April 2019
		Present			Present
	value of the	Total	value of the		Total
		minimum	minimum	minimum		minimum
		lease	lease	lease		lease
		payments	payments	payments		payments
		$'000	$'000	$'000		$'000
Within 1 year	3,284		3,343		3,522	3,587
After 1 year but within 2 years	2,062		2,165		3,021	3,174
After 2 years but within 5 years	272		293		1,160	1,256
	5,618	5,801	7,703	8,017
Less: total future interest expenses				(183)		(314)
Present value of lease liabilities				5,618			7,703

- 11 -

1. Impact on the financial result and cash flows of the Group
   After the initial recognition of right-of-use assets and lease liabilities as at 1 April 2019, the Group as a lessee is required to recognise interest expense accrued on the outstanding balance of the lease liability, and the depreciation of the right-of- use asset, instead of the previous policy of recognising rental expenses incurred under operating leases on a straight-line basis over the lease term. This results in a negative impact on the reported profit for the period in the Group's condensed consolidated statement of profit or loss, as compared to the results if HKAS 17 had been applied during the year.
   In the cash flow statement, the Group as a lessee is required to split rentals paid under capitalised leases into their capital element and interest element. These elements are classified as financing cash outflows, similar to how leases previously classified as finance leases under HKAS 17 were treated, rather than as operating cash outflows, as was the case for operating leases under HKAS 17. Although total cash flows are unaffected, the adoption of HKFRS 16 therefore results in a change in presentation of cash flows within the cash flow statement.
   The following tables may give an indication of the estimated impact of adoption of HKFRS 16 on the Group's financial result and cash flows for the six months ended 30 September 2019, by adjusting the amounts reported under HKFRS 16 in these interim financial statements to compute estimates of the hypothetical amounts that would have been recognised under HKAS 17 if this superseded standard had continued to apply to 2019 instead of HKFRS 16, and by comparing these hypothetical amounts for 2019 with the actual 2018 corresponding amounts which were prepared under HKAS 17.

- 12 -

		2019				2018
			Deduct:
			Estimated
			amounts
			related to
			operating
		Add back:	leases as if	Hypothetical	Compared
	Amounts	HKFRS 16	under	amounts for	to amounts
	reported	depreciation	HKAS 17	2019 as if	reported for
	under	and interest	(note (i)	under	2018 under
	HKFRS 16	expense	below)	HKAS 17	HKAS 17
	(A)	(B)	(C)	(D=A+B-C)
	$'000	$'000	$'000	$'000	$'000
Financial result for the six months
ended 30 September 2019 impacted
by the adoption of HKFRS 16:
Operating profit	176,199	1,682	(1,717)	176,164		108,337
Finance costs, net	(11,071)	112	-	(10,959)	(5,908)
Profit before taxation	165,726	1,794	(1,717)	165,803		102,561
Profit for the period	114,415	1,794	(1,717)	114,492		88,069
Operating profit of segment result for
the six months ended 30 September
2019 (note 3) impacted by
the adoption of HKFRS 16:
Metal and plastic business	100,634	1,682	(1,717)	100,599		89,970

- 13 -

		2019			2018
		Estimated
		amounts
		related to
		operating	Hypothetical	Compared
	Amounts	leases as if	amounts	to amounts
	reported	under HKAS	for 2019	reported for
	under	17 (note	as if under	2018 under
	HKFRS 16	(i)&(ii) below)	HKAS 17	HKAS 17
	(A)	(B)	(C=A+B)
	$'000	$'000	$'000	$'000
Line items in the condensed
consolidated cash flow
statement for the six months
ended 30 September 2019
impacted by the adoption of
HKFRS 16:
Cash generated from operations	112,081	(1,717)	110,364		223,138
Net cash generated from
operating activities	105,723	(1,717)	104,006		215,985
Capital element of lease
rentals paid	(1,605)	1,605	-	-
Interest element of lease
rentals paid	(112)	112	-	-
Net cash used in financing
activities	(28,551)	1,717	(26,834)	(193,862)

Note (i): The "estimated amounts related to operating leases" is an estimate of the amounts of the cash flows in 2019 that relate to leases which would have been classified as operating leases, if HKAS 17 had still applied in 2019. This estimate assumes that there were no differences between rentals and cash flows and that all of the new leases entered into in 2019 would have been classified as operating leases under HKAS 17, if HKAS 17 had still applied in 2019. Any potential net tax effect is ignored.

Note (ii): In this impact table these cash outflows are reclassified from financing to operating in order to compute hypothetical amounts of net cash generated from operating activities and net cash used in financing activities as if HKAS 17 still applied.

- 14 -

3 SEGMENT REPORTING

The Group's chief operating decision-maker ("Management") reviews the Group's internal reports periodically in order to assess performance and allocate resources. Management has determined the operating segments based on these reports.

The Group is organised on a worldwide basis into three (2018: three) major operating segments. They are (i) metal and plastic business; (ii) electronic manufacturing services business; and (iii) real estate business.

Management considers the business from both geographic and products and services perspective. From a products and services perspective, management assesses the performance of metal and plastic business, electronic manufacturing services business and real estate business. And there is further evaluation on a geographic basis (Japan, Hong Kong, the People's Republic of China (the "PRC"), Asia (excluding Japan, Hong Kong and the PRC), North America and Western Europe). Management assesses the performance of the operating segments based on operating profit. Segment information provided to management for decision making is measured in a manner consistent with that in the interim financial report.

A measurement of segment assets and liabilities is not provided regularly to the Group's most senior executive management and accordingly, no segment assets or liabilities information is presented.

Segment results for the six months ended 30 September 2019 are as follows:

		For the six months ended 30 September 2019
				Electronic
	Metal and	manufacturing
	plastic		services	Real estate
	business		business	business	Others	Total
	$'000		$'000	$'000	$'000	$'000
Segment revenue
Revenue from external
customers	761,320		544,089	119,339	-	1,424,748
Inter-segment revenue	20,725			-	-	-	20,725
Reportable segment revenue	782,045			544,089	119,339	-	1,445,473
Gross profit	147,578		23,407	68,168	-	239,153
Distribution and selling
expenses and general and
administrative expenses	(48,855)	(8,943)	(8,100)	(7)	(65,905)
Other income/gains	1,911		198	842	-	2,951
Operating profit/(loss)	100,634		14,662	60,910	(7)	176,199

- 15 -

			For the six months ended 30 September 2018
				Electronic
	Metal and		manufacturing
	plastic		services	Real estate
	business		business	business	Others	Total
	$'000		$'000	$'000	$'000	$'000
Segment revenue
Revenue from external
customers	735,810		552,344	11,849	-	1,300,003
Inter-segment revenue	21,801			-	-	-	21,801
Reportable segment revenue	757,611			552,344	11,849	-	1,321,804
Gross profit	144,083		30,620	4,103	-	178,806
Distribution and selling
expenses and general and
administrative expenses	(56,369)	(13,141)	(4,510)	(24)	(74,044)
Other income/gains	2,256	420	899	-	3,575
Operating profit/(loss)	89,970		17,899	492	(24)	108,337

A reconciliation of operating profit to profit before taxation is provided as follows:

	For the six months ended
	30 September
	2019		2018
	$'000	$'000
Operating profit	176,199		108,337
Finance income	2,560		1,347
Finance costs	(13,631)	(7,255)
Share of profits of an associate	598	132
Profit before taxation	165,726		102,561

- 16 -

4 TRADE AND BILLS RECEIVABLE, PREPAYMENTS, DEPOSITS AND OTHER RECEIVABLES

	30 September	31 March
	2019		2019
		$'000	$'000
Trade and bills receivable	315,108		282,614
Other receivables	33,789	37,663
	348,897		320,277
Less: Loss allowance for trade and bills receivable	(319)	(3,329)
	348,578		316,948
Prepayments	29,236	23,720
Deposits	36,167	16,521
	413,981		357,189
Less: Other non-current assets (Note)	(46,422)	(32,000)
	367,559		325,189
Representing:
Trade and bills receivable, net of allowance	314,789		279,285
Prepayments, deposits and other receivables	52,770	45,904
	367,559		325,189

Note : Other non-current assets represent deposits paid for the purchase of property, plant and equipment amounted to approximately $27,282,000 (31 March 2019: $11,468,000), and a government grant receivable from Jiangsu Yixing Economic Development Zone Investment and Development Company Limited amounted to approximately $19,140,000 (31 March 2019: $20,532,000) in relation to the acquisition of a piece of land in Yixing, Jiangsu, the PRC.

- 17 -

The Group generally grants credit periods ranging from 30 to 90 days, except for two of the customers who is granted a credit period of 150 days. An ageing analysis of trade, bills and other receivables, based on invoice date, is as follows:

	30 September	31 March
	2019		2019
		$'000	$'000
0 to 90 days	293,741		256,327
91 to 180 days	53,750		58,773
181 to 360 days	1,372	2,009
Over 360 days	34	3,168
	348,897		320,277

The maximum exposure to credit risk at the reporting date is the carrying value of trade and bills receivable, deposits and other receivables stated above. The Group does not hold any collateral as security.

5 TRADE PAYABLES

Trade payables ageing analysis, based on invoice date, is as follows:

	30 September	31 March
	2019		2019
		$'000	$'000
0 to 90 days	280,427		154,666
91 to 180 days	7		692
181 to 360 days	632	90
Over 360 days		-	21
	281,066		155,469

- 18 -

6	BANK BORROWINGS
		30 September	31 March
		2019		2019
			$'000	$'000
	Portion of bank borrowings repayable within
	one year and classified as current liabilities	79,250		66,588
	Portion of bank borrowings repayable after
	one year and classified as non-current liabilities	635,295	553,754
	Total bank borrowings	714,545		620,342
	Representing:
	Secured	277,045		239,442
	Unsecured	437,500	380,900
	Total bank borrowings	714,545		620,342

As at 30 September 2019, banking facilities of $537,000,000 (31 March 2019: $558,600,000) were secured by the property under development for sale of $420,940,000 (31 March 2019: $385,464,000) and the share capital of the two wholly- owned subsidiaries of the Company, Castfast Industrial (Yan Tien) Limited and 東莞 嘉創房地產開發有限公司, such facilities were utilised to the extent of $277,045,000 (31 March 2019: $239,442,000).

At 30 September 2019, bank borrowings totaling $79,250,000 (31 March 2019: $66,588,000) have a contractual maturity within one year or are subject to repayment on demand clauses. Some of the Group's banking facilities are subject to the fulfilment of covenants relating to certain of the Group's statement of financial position ratios. If the Group were to breach the covenants the drawn down facilities would become payable on demand. The Group regularly monitors its compliance with these covenants. As at 30 September 2019 and 31 March 2019 none of the covenants relating to drawn down facilities had been breached.

- 19 -

7 OTHER INCOME/GAINS
	For the six months ended
	30 September
	2019			2018
	$'000	$'000
Rental income	2,005			2,049
Gain on disposal of property, plant and equipment	187		315
Others	759		1,211
	2,951			3,575

8	EXPENSES BY NATURE
		For the six months ended
		30 September
		2019	2018
		$'000	$'000
	Depreciation of property, plant and equipment	26,561	25,620
	Amortisation of land use rights	236	236
	Amortisation of intangible assets	751	661
	Amortisation of right-of-use assets	1,682	-
	Employee benefit expenses (including directors'
	remuneration)	173,979	164,320

- 20 -

9	FINANCE COSTS, NET
		For the six months ended
		30 September
		2019			2018
		$'000	$'000
	Finance income
	Interest income from financial assets measured
	at amortised cost	2,353			1,130
	Other interest income from financial assets
	measured at fair value through other
	comprehensive income (recycling)	207			217
		2,560			1,347
	Finance costs
	Interest expense on financial liabilities measured at
	amortised cost	(23,118)		(17,120)
	Interest expense on lease liabilities	(112)		-
	Less: Interest expenses capitalised into property
	under development for sale	9,599			9,865
		(13,631)		(7,255)
	Finance costs, net	(11,071)		(5,908)

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10 INCOME TAX

Hong Kong Profits Tax has been provided at the rate of 16.5% (six months ended 30 September 2018: 16.5%) on the estimated assessable profit for the period for all group companies incorporated in Hong Kong.

The Group's operations in the PRC are subject to Corporate Income Tax Law of the PRC at the standard tax rate of 25%. Land Appreciation Tax is levied on properties in mainland China developed by the Group for sale, at progressive rates ranging from 30% to 60% on the appreciation of land value, which under the applicable regulations is calculated based on the revenue from sale of properties less deductible expenditure including lease charges of land use rights, borrowing costs and all property development expenditure.

The amount of tax charged to the unaudited condensed consolidated statement of profit or loss represents:

	For the six months ended
	30 September
	2019			2018
	$'000	$'000
Current taxation	7,332
Hong Kong Profits Tax			6,247
PRC Taxes	43,979		8,245
	51,311			14,492

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11 EARNINGS PER SHARE

Basic earnings per share is calculated by dividing the profit attributable to equity shareholders of the Company by the weighted average number of ordinary shares in issue during the period.

Diluted earnings per share is calculated by dividing the profit attributable to equity shareholders of the Company by the weighted average number of ordinary shares in issue after adjusting for the potential dilutive effect of the outstanding options during the period.

	For the six months ended
	30 September
	2019		2018
Profit attributable to equity shareholders of the	114,415
Company ($'000)		88,069
Weighted average number of ordinary shares in issue
1,992,221		1,993,042
(in thousand shares)
Effect of outstanding share options	15,616	16,214
(in thousand shares)
Weighted average number of ordinary shares (diluted)	2,007,837
in issue (in thousand shares)		2,009,256
Basic earnings per share (HK cents)	5.7		4.4
Diluted earnings per share (HK cents)	5.7		4.4

12 DIVIDENDS

The final dividend for the year ended 31 March 2019 amounting to $99,692,000 representing HK5.0 cents per share, was paid in September 2019 (2018: $94,691,000, representing HK4.75 cents per share, was paid in September 2018).

The special dividend for the year ended 31 March 2019 declared of HKnil cent per ordinary share (2018: $50,861,000 representing HK2.55 cents per share, was paid in April 2018).

The Board declared an interim dividend of HK4.0 cents per share for the six months ended 30 September 2019 (six months ended 30 September 2018: HK3.0 cents per share). The interim dividend amounting to $79,754,000 (six months ended 30 September 2018: $59,788,000) has not been recognised as liability at the end of the reporting period.

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Dividend

The Board declared an interim dividend of HK4.0 cents per share for the six months ended 30 September 2019 (the "Period") (for the six months ended 30 September 2018: HK3.0 cents) to all shareholders whose names appear on the register of members of the Company on 13 December 2019. The interim dividend will be payable to those entitled on or about 31 December 2019.

Closure of Register of Members

The register of members of the Company will be closed from Thursday, 12 December 2019 to Friday, 13 December 2019 (both dates inclusive), during which period no transfer of shares will be registered. In order to qualify for the proposed interim dividend, all properly completed transfer forms accompanied by the relevant share certificates must be lodged with the Company's Hong Kong branch share registrar, Computershare Hong Kong Investor Services Limited at Shops 1712-1716, 17th Floor, Hopewell Centre, 183 Queen's Road East, Wanchai, Hong Kong not later than 4:30 p.m. on Wednesday, 11 December 2019.

Business Review

For the six months ended 30 September 2019, the turnover of the Group was HK$1,424,748,000 (for the six months ended 30 September 2018: HK$1,300,003,000), which increased by approximately 10% when compared with the corresponding period last year. Profit attributable to the equity shareholders of the Company amounted to HK$114,415,000 (for the six months ended 30 September 2018: HK$88,069,000), which increased by approximately 30% when compared with the corresponding period of last year. The increase in the profit during the Period was mainly due to the Real Estate Business gradually bringing substantial revenue to the Group.

1. Industrial Business:
   1. For the six months ended 30 September 2019, the turnover of the overall industrial business was HK$1,305,409,000 (for the six months ended 30 September 2018: HK$1,288,154,000), which slightly increased by approximately 1% when compared with the corresponding period last year. For the six months ended 30 September 2019, the operating profit of the overall industrial business was HK$115,296,000 (for the six months ended 30 September 2018: HK$107,869,000), which increased by approximately 7% when compared with the corresponding period last year. The direct impact of the trade dispute between China and the United States on the Group's business is relatively minor as only an insignificant portion of the Group's industrial products are directly exported to the United States. However, against the backdrop of an uncertain global economic outlook, it is an arduous and satisfactory achievement that the turnover of the industrial business has been maintained and achieved a slight increase. The increase in the operating profit of industrial business was mainly due to the continuous tight cost control of the Group and the depreciation of RMB during the Period.

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1. For the six months ended 30 September 2019, the turnover of the metal and plastic business was HK$761,320,000 (for the six months ended 30 September 2018: HK$735,810,000), which slightly increased by approximately 3% when compared with the corresponding period last year. Metal and plastic business is the main source of profit of the industrial business. Despite the challenging environment, the turnover achieved a slight increase, which was mainly due to the stable order from existing customers and the Group securing orders from new customers.
2. For the six months ended 30 September 2019, the turnover of the electronic manufacturing services business was HK$544,089,000 (for the six months ended 30 September 2018: HK$552,344,000), which slightly decreased by approximately 1% when compared with the corresponding period last year. The electronic manufacturing services business was generally in line with that of last year and remained stable.
3. Amid the China-US trade dispute and uncertain economic prospects, the Group's industrial business has still achieved a slight growth. Thanks to our staff members and their combined effort in the deepening of automation and reduction of production processes, we have effectively improved production efficiency, mitigated the pressure from the continuously growing labour cost and boosted competitiveness among the industry.
4. The Group maintained good partnership with its existing renowned technology enterprise customers, and secured orders from existing customers for new- generation server casings till 2022. Furthermore, the Group has secured orders for casings and parts from another global large-scale server supplier, and is expected to receive orders for its new-generation server casings, which will provide new growth driver for the industrial business. Meanwhile, the Group proactively develops parts products for potential enterprises and other industries.
5. During the Period, the Group continued to optimize its working environment to attract talents, in order to build a talent pool and provide continuous supply of talents for the ongoing development of the Group. In the meantime, the Group has an attitude of zero tolerance to industrial accidents, and has endeavored to stop such accidents by improving protective facilities, enhancing the safety awareness of the staff and improving the safety management system, with a focus on the occupational safety and health of the staff.

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1. Real Estate Business:
2. 1. The Real Estate Business has begun to reap its harvest with a revenue of HK$119,339,000 (for the six months ended 30 September 2018: HK$11,849,000) recorded for the Period. The significant increase was mainly due to the delivery of, and recognition of revenue from, over 90 units of Phase 3 of the joint residential project Castfast Villas (嘉輝豪庭) ("Phase 3 project"). A total area of 9,300 square metres was delivered with an average selling price of approximately RMB25,800 per square metre.
   2. The construction work of the Phase 3 project was completed and the project has entered the delivery stage. The project, from which the Group would enjoy 50% of the profit, has a saleable floor area of approximately 61,000 square metres with a total of more than 600 units. As at 30 September 2019, the total number of units delivered was over 260, with an area of over 25,000 square metres and the average selling price of approximately RMB24,600 per square metre. The relevant revenue was recognized in the previous year and the Period. Except for the above, approximately over 280 units with an area of over 28,600 square metres were pre-sold up to 31 October 2019 and the average selling price was approximately RMB27,300 per square metre. Over 90% of the units of the project were sold. The revenue therefrom will be gradually recognized after the completion and delivery thereby contributing to the Group's profit.
   3. The development of the residential project of Phases 4 and 5 of Castfast Villas (嘉輝豪庭), which was redeveloped from the old Guanjingtou Plant, is making progress as scheduled. Wholly-owned by the Group, the project was named One Peak (逸峯) and has a saleable floor area of approximately 120,000 square metres and 1,000 units. The first phrase of pre-sale began in early November 2019, where Building no. 1 and no.11 of over 110 units with a total area of approximately over 10,700 square metres were offered for sale. As at 15 November 2019, approximately over 40 units were pre-sold with an area of approximately over 4,000 square metres and an average selling price of approximately over RMB28,000 per square metre. The remaining units of the project will gradually be launched for sale. It is expected that the project would be completed and delivered in the first half of 2021.
   4. Meanwhile, the pre-sale of the residential project of Castfast Mansion in Buluo County, Huizhou is expected to commence at the beginning of next year. The project has a total of approximately 300 units and a floor area of approximately over 30,000 square metres. The Real Estate Business had made good progress and contributed to the Group's profit. It is believed that the profit it contributed will gradually increase, providing shareholders with substantial earnings.

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Prospects

1. Against the backdrop of the uncertainties concerning the China-US trade dispute, Brexit, social unrest in Hong Kong and prevailing weak economy and trade, the economic prospects seem dim. The Group continues to self-strengthen by expanding automatic production, effectively allocating resources and solidifying its industrial business to maintain competitive and its position as a global leading mechanical parts manufacturer. The Group had gained the trust of international renowned technology enterprises and secured orders for new-generation server casings till 2022. Moreover, apart from existing orders, the Group had secured new orders for server casings from another global server supplier. The Group is cautiously optimistic in respect of the development of its industrial business.
2. The Group has established a professional real estate management team, proactively promoted urban renewal, adopted flexible strategies for selling properties to provide a good living environment with a mission of "Building house for good living community, not commodity". The central government formulated measures for stabilizing property prices in order to support a healthy and steady development of the real estate market in the Mainland. The Group has put their hopes on the search of suitable development projects, making its Real Estate Business the main growth driver of the Group.

Conclusion

Rome was not built in a day. Facing challenges of uncertain business environment and soaring pressure, the Group must maintain its core value and uphold its philosophy of overcoming obstacles in unity. Believing that nothing is impossible with diligence, the Group will break new grounds.

On the road to its 40th anniversary, the Group never focuses only on short term development, but has shown visions and insights. Major decisions include expanding automatic production, adjusting business allocation and diversifying its source of revenue. Furthermore, the Group fulfilled its corporate social responsibility by promoting clean production and implementing community integration policy, in order to facilitate its sustainable development. It is believed that the Group can rely on its established industrial business for stable income, and utilize its flexible, opportune and diversified businesses as growth driver, in order to continuously refine its business portfolio, release its value and build a century-old enterprise.

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Liquidity resources and financing policies

The unaudited net interest-bearing borrowings (represent bank borrowings less cash and bank deposits) as at 30 September 2019 were approximately HK$459,609,000 (as at 30 September 2018: HK$342,115,000) and the net interest-bearing borrowings ratio (represent the proportion of total net interest-bearing borrowings over total equity) was 41% (as at 30 September 2018: 32%) whereas the ratio of non-current assets to total equity was approximately 77%. Hence, the management considers the Group's financial position is healthy.

The interest bearing borrowings were HK$714,545,000. The cash in hand and the bank balances amounted to HK$254,936,000 with unutilised banking facilities of HK$826,545,000 in total. The Company is confident that these are sufficient to meet the funding needs for the current and future operation and those for the investments of the Group.

Exchange Rate Exposure

Most of the Group's assets, liabilities and transactions are denominated in HKD, USD and RMB. Foreign currency risk arises from commercial transactions, recognised assets and liabilities and net investments in foreign operations that are denominated in a currency other than the Group's functional currency, which in turn exerts pressure on the Group's production cost. To mitigate the impact of exchange rate fluctuation of the RMB on its business, if necessary, the Group will actively communicate with its customers in order to adjust the selling prices of its products and may use foreign exchange forward contracts to hedge against foreign currency risk (if and when necessary).

CONTINGENT LIABILITY

As at 30 September 2019, the Group had no significant contingent liabilities.

EMPLOYEE AND REMUNERATION POLICIES

The number of employees had increased from approximately 3,100 at the end of the same period of last year to approximately 3,500 at the end of the Period. With a strong reputation in the local community, the Group had not experienced any major difficulties in recruiting employees.

Employee remuneration packages are determined in accordance with prevailing market standards and employees' performance and experiences. The Group will also grant bonuses to employees with outstanding performance based on the Company's audited business performance and the appraisal and reward system. Other employee benefits include medical insurance and mandatory provident fund.

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In addition, to cope with domestic development in the PRC and the actual need for talent- retaining, the Group establishes a "Cooperative Home & Car Ownership Scheme" to encourage and finance potential elites in buying a flat and a car as a means to retain talents who may otherwise be lost in the competitive labour market.

PURCHASE, SALE OR REDEMPTION OF SHARES

During the six months ended 30 September 2019, the Company repurchased its 714,000 listed shares on The Stock Exchange of Hong Kong Limited (the "Stock Exchange"), of which these Shares were cancelled during the Period. Accordingly the issued share capital of the Company was reduced by the nominal value of these shares. Details of the repurchases during the six months ended 30 September 2019 are summarised as follows:

	Number	Highest	Lowest		Aggregate
	of Shares	price per	price per	consideration
Date of repurchases	repurchased	Share	Share		paid
		(HK$)	(HK$)		(HK$)
27 June 2019	438,000	1.14	1.11	491,540
28 June 2019	184,000	1.13	1.12	206,240
5 August 2019	92,000	1.07	1.06	97,820
Total:	714,000			795,600

AUDIT COMMITTEE

In accordance with the requirements of the Rules Governing the Listing of Securities on the Stock Exchange of Hong Kong Limited (the "Listing Rules"), the Company established an Audit Committee in January 1999 which now comprises one non-executive Director and three independent non-executive Directors. The audit committee of the Company (the "Audit Committee") is responsible for dealing with matters relating to the audit area, which include reviewing and supervising the Company's financial reporting process and internal control, in order to protect the interests of the shareholders of the Company. The unaudited interim results for the Period of the Company now reported on have been reviewed by the Audit Committee.

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COMPLIANCE WITH THE CODE ON CORPORATE GOVERNANCE PRACTICES

Saved as explained below, the Company had complied with the code provisions of the Corporate Governance Practices Code ("CG Code") as set out in Appendix 14 of the Listing Rules during the Period:

• Code Provision A.2.1 of the CG Code stipulates that the roles of chairman and chief executive should be separate and should not be performed by the same individual. The Company does not segregate the roles of its Chairman and Chief Executive Officer and Mr. Ho Cheuk Fai ("Mr. Ho") currently holds both positions.
  Being the founder of the Group, Mr. Ho has substantial experience in the manufacturing industry, as well as in the property development and culture related industries. At the same time, Mr. Ho has the appropriate management skills and business acumen that are the pre-requisites for assuming the role of the Chief Executive Officer. The Board believes that vesting the roles of both the Chairman and the Chief Executive Officer in the same person would provide the Group with strong and consistent leadership and allow the Group to be more effective and efficient in developing long-term business strategies and executing business plans. Hence, the Board considers that there is no need to segregate the roles of the Chairman and the Chief Executive Officer and both roles should continue to be performed by Mr. Ho.
• According to Code Provision A.4.1 of CG Code, non-executive director should be appointed for a specific term, subject to re-election. Mr. Ho Cheuk Ming was re- designated as Non-executive Director on 1 June 2007 and he was appointed as Deputy Chairman on 1 May 2011 without a specific term. Mr. Ho Kai Man was re-designated as the Non-executive Director on 1 November 2012 without a specific term. Although Mr. Ho Cheuk Ming and Mr. Ho Kai Man are not appointed for a specific term, they are subject to retirement by rotation according to the Bye-laws of the Company.

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• Code Provision A.4.2 of CG Code stipulates that every director, including those appointed for a specific term, should be subject to retirement by rotation at least once every three years.
  According to the Company's Bye-laws, at each annual general meeting, one-third of the Directors for the time being or, if their number is not 3 or a multiple of 3, the number nearest to one-third but not greater than one-third shall retire from office provided that notwithstanding anything in the Company's Bye-laws, the Chairman of the Board and/or the Managing Director of the Company shall not, whilst holding such office, be subject to retirement by rotation or be taken into account in determining the number of Directors to retire in each year. Furthermore, any Director appointed to fill a casual vacancy or as an addition to the Board should hold office only until the next following annual general meeting and would then be eligible for re-election. The Chairman and/or the Managing Director of the Group will consider to voluntarily retire at the annual general meeting at least once every three years in line with Code Provision A.4.2 of the CG Code. As such, the Company considers that sufficient measures have been taken to ensure good corporate governance of the Company.
• According to Code Provision A.5 of the CG Code, the Company should establish a nomination committee, which is chaired by the chairman of the Board or an independent non-executive Director and comprises a majority of the independent non-executive Directors. The Company has not established a nomination committee due to the fact that the function of the nomination committee was delegated to the Board, which is responsible for reviewing its own structure, size and composition in accordance with the board diversity policy adopted by the Company (the "Policy") annually; considering the re-appointment of Directors; and evaluating the Policy as well as assessing the independence of independent non-executive Directors. The Board has taken sufficient measures to avoid the conflict of interests in carrying out such functions. For instance, the relevant Director would abstain from voting for any resolution relating to his or her own re-appointment. As such, the Board is of the view that the members of the Board possess the necessary experience and knowledge to discharge the functions of a nomination committee. The Board shall review the composition and operation of the Board from time to time and shall consider establishing a nomination committee if such need arises.

The Company will continue to review its practices from time to time to achieve a high standard of corporate governance.

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COMPLIANCE WITH THE MODEL CODE

During the Period, the Company has adopted stringent procedures in governing the Directors' securities transactions in compliance with the requirements contained in the Model Code for Securities Transactions by Directors of Listed Companies (the "Model Code") as set out in Appendix 10 to the Listing Rules. Upon due enquiry by the Company, all Directors had confirmed that, they had complied with the required standards as set out in the Model Code throughout the Period.

PUBLICATION OF INTERIM REPORT ON THE WEBSITE OF THE STOCK EXCHANGE

All the information required by paragraphs 46(1) to 46(9) of Appendix 16 of the Listing Rules will be published on the website of the Stock Exchange in due course.

By order of the Board

Karrie International Holdings Limited

HO CHEUK FAI

Chairman

Hong Kong, 25 November 2019

As at the date of this announcement, the executive Directors are Mr. Ho Cheuk Fai, Ms. Chan Ming Mui, Silvia, Mr. Zhao Kai and Mr. Chan Raymond; the non-executive Directors are Mr. Ho Cheuk Ming and Mr. Ho Kai Man; the independent non-executive Directors are Mr. So Wai Chun, Mr. Fong Hoi Shing and Mr. Yam Chung Shing.

• For identification purposes only

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