Kingboard : INTERIM REPORT 2020

建 滔 集 團 有 限 公 司

KINGBOARD HOLDINGS LIMITED

(Incorporated in the Cayman Islands with limited liability)

Stock Code: 148

INTERIM REPORT

2020

LEADING

THE FUTURE

01

INTERIM RESULTS

KINGBOARD HOLDINGS LIMITED

The board of directors (the "Board") of Kingboard Holdings Limited (the "Company") is pleased to announce the unaudited consolidated results of the Company and its subsidiaries (collectively referred to as the "Group") for the six months ended 30 June 2020 together with the comparative figures for the corresponding period in 2019 as follows:

Condensed Consolidated Statement of Profit or Loss

			Six months ended 30 June
		2020		2019
	Notes		HK$'000		HK$'000
			(Unaudited)		(Unaudited)
Revenue	3	19,925,648		18,246,352
Cost of sales and services rendered			(14,924,582)	(14,424,921)
Gross profit			5,001,066			3,821,431
Other income, gains and losses	5	68,664		62,423
Distribution costs		(495,619)	(539,117)
Administrative expenses		(1,037,081)	(964,019)
(Loss) Gain on fair value changes of equity instruments
at fair value through profit or loss		(1,001,730)	88,633
Gain on disposal of debt instruments at fair value
through other comprehensive income		84,557		3,912
Finance costs	6	(287,993)	(361,464)
Share of results of joint ventures		39,852		46,079
Share of result of an associate			(5,776)	34,721
Profit before taxation			2,365,940			2,192,599
Income tax expense	7		(825,380)	(408,843)
Profit for the period			1,540,560			1,783,756
Profit for the period attributable to:
Owners of the Company		1,059,192		1,441,626
Non-controlling interests		481,368		342,130
			1,540,560			1,783,756
			HK$		HK$
			(Unaudited)		(Unaudited)
Earnings per share	9
Basic			0.964			1.331
Diluted		0.963		1.331

INTERIM REPORT 2020

02	KINGBOARD HOLDINGS LIMITED

Condensed Consolidated Statement of Profit or Loss and Other Comprehensive Income

		Six months ended 30 June
	2020		2019
		HK$'000		HK$'000
		(Unaudited)		(Unaudited)
Profit for the period	1,540,560		1,783,756
Other comprehensive (expense) income for the period:
Item that will not be reclassified to profit or loss:
Translation reserve:
Exchange differences arising from translation to
presentation currency	(476,430)	(3,533)
Items that may be reclassified subsequently to
profit or loss:
Investment revaluation reserve:
Fair value (loss) gain on debt instruments
at fair value through other comprehensive income	(32,076)	471,000
Reclassify to profit or loss upon disposal of debt
instruments at fair value through other comprehensive
income	(84,557)	(3,912)
	(116,633)	467,088
Other comprehensive (expense) income for the period
(net of tax)	(593,063)	463,555
Total comprehensive income for the period	947,497		2,247,311
Total comprehensive income for the period attributable to:
Owners of the Company	538,933		1,871,866
Non-controlling interests	408,564		375,445
	947,497		2,247,311

INTERIM REPORT 2020

03		KINGBOARD HOLDINGS LIMITED
Condensed Consolidated Statement of Financial Position
					31 December
			30 June
		2020		2019
	Notes		HK$'000		HK$'000
			(Unaudited)		(Audited)
Non-current assets
Investment properties		18,876,810		19,082,748
Properties, plant and equipment	10	14,341,911		14,800,958
Right-of-use assets		1,588,249		1,692,326
Goodwill		2,670,528		2,670,528
Intangible asset		57,600		60,840
Interest in an associate		336,611		397,950
Interests in joint ventures		2,540,580		2,536,434
Equity instruments at fair value through
profit or loss		3,017,698		2,366,024
Equity instruments at fair value through
other comprehensive income		162,918		162,918
Debt instruments at fair value through
other comprehensive income		833,479		7,016,503
Loan receivable		600,000		600,000
Entrusted loans	11	432,328		465,859
Deposits paid for acquisition of properties,
plant and equipment		630,137		611,724
Deferred tax assets		3,344		2,539
		46,092,193		52,467,351
Current assets
Inventories		2,999,927		2,962,386
Properties held for development		19,145,935		21,115,592
Trade and other receivables and prepayments	11	8,198,096		8,771,416
Bills receivables	11	3,628,908		4,085,752
Equity instruments at fair value through
profit or loss		885,090		491,397
Debt instruments at fair value through
other comprehensive income		1,070,942		866,041
Taxation recoverable		10,063		18,227
Bank balances and cash		7,004,074		6,256,964
		42,943,035		44,567,775

INTERIM REPORT 2020

04		KINGBOARD HOLDINGS LIMITED
					31 December
			30 June
		2020		2019
	Notes		HK$'000		HK$'000
			(Unaudited)		(Audited)
Current liabilities
Trade and other payables	12	5,155,006		5,841,173
Bills payables	12	341,833		359,920
Contract liabilities		3,665,604		6,374,105
Taxation payable		1,377,206		1,369,201
Bank borrowings - amount due within one year		7,934,749		7,862,991
Lease liabilities		2,617		2,906
		18,477,015		21,810,296
Net current assets		24,466,020		22,757,479
Total assets less current liabilities		70,558,213		75,224,830
Non-current liabilities
Deferred tax liabilities		693,464		697,954
Bank borrowings - amount due after one year		13,228,240		16,546,918
Lease liabilities		8,107		10,308
		13,929,811		17,255,180
		56,628,402		57,969,650
Capital and reserves
Share capital		110,375		110,576
Reserves		49,255,663		50,077,989
Equity attributable to owners of the Company		49,366,038		50,188,565
Non-controlling interests		7,262,364		7,781,085
Total equity		56,628,402		57,969,650

INTERIM REPORT 2020

2020 REPORT INTERIM

Condensed Consolidated Statement of Changes in Equity

												Attributable to owners of the Company
									Share-
							Capital	based					Special				Property	Investment								Non-
			Share	Share	redemption	payments			Goodwill	surplus	Statutory			revaluation	revaluation	Translation	Retained			controlling	Total
			capital	premium	reserve	reserve			reserve	account	reserve			reserve	reserve	reserve	profits	Sub-total	interests	equity
			HK$'000	HK$'000	HK$'000	HK$'000			HK$'000	HK$'000	HK$'000			HK$'000	HK$'000	HK$'000	HK$'000	HK$'000	HK$'000	HK$'000
Balance at 1 January 2020	110,576		6,566,852	(11,900)	25,491	1,895,594	10,594		1,472,950	280,581	121,445		(529,188)	40,245,570	50,188,565		7,781,085		57,969,650
Profit for the year	-	-	-	-			-	-	-			-	-	-	1,059,192	1,059,192		481,368		1,540,560
Fair value loss on debt instruments at fair
value through other comprehensive income	-	-	-	-			-	-	-			-	(20,955)	-		-	(20,955)	(11,121)	(32,076)
Reclassify to profit or loss upon disposal of
debt instruments at fair value through
other comprehensive income	-	-	-	-			-	-	-			-	(64,157)	-		-	(64,157)	(20,400)	(84,557)
Exchange difference arising from translation
to presentation currency	-	-	-	-			-	-	-			-	-	(435,147)		-	(435,147)	(41,283)	(476,430)
Total comprehensive income for the year	-	-	-	-			-	-	-			-	(85,112)	(435,147)	1,059,192	538,933		408,564		947,497
Final dividend or the year ended
31 December 2019	-	-	-	-			-	-	-			-	-	-	(1,214,455)	(1,214,455)	-	(1,214,455)
Acquisitions of additional interests in
subsidiaries	-	-	-	-	(117,863)	-	-			-	-	-		-	(117,863)	(347,734)	(465,597)
Disposal of interests in a subsidiary	-	-	-	-			-	-	-			-	-	-		-	-	55,296		55,296
Dividends paid to non-controlling
shareholders
of subsidiaries	-	-	-	-			-	-	-			-	-	-		-	-	(634,847)	(634,847)
Repurchase and cancellation of
ordinary shares	(201)	(42,752)	13,811	-			-	-	-			-	-	-		-	(29,142)	-	(29,142)
Transfers to reserve	-	-	-	-			-	-	140,115			-	-	-	(140,115)	-	-	-
			(201)	(42,752)	13,811	-	(117,863)	-	140,115			-	-	-	(1,354,570)	(1,361,460)	(927,285)	(2,288,745)
Balance at 30 Jun 2020	110,375		6,524,100	1,911	25,491	1,777,731	10,594	1,613,065	280,581	36,333		(964,335)	39,950,192	49,366,038		7,262,364		56,628,402

05

LIMITED HOLDINGS KINGBOARD

2020 REPORT INTERIM

										Attributable to owners of the Company
						Capital			Special			Property		Investment										Non-
		Share		Share	redemption	Goodwill		surplus	Statutory	revaluation		revaluation	Translation		Retained					controlling		Total
		capital		premium	reserve	reserve		account	reserve	reserve		reserve	reserve		profits		Sub-total	interests		equity
		HK$'000		HK$'000	HK$'000	HK$'000		HK$'000	HK$'000	HK$'000		HK$'000	HK$'000		HK$'000		HK$'000	HK$'000		HK$'000
Balance at 1 January 2019	108,315	6,074,903	1,911	1,728,844	10,594	1,213,203	256,370	(390,431)	(143,033)	38,472,309		47,332,985	7,300,286		54,633,271
Profit for the period	-		-	-	-		-	-	-		-	-	1,441,626		1,441,626	342,130		1,783,756
Fair value gain on debt instruments at fair value through
other comprehensive income	-		-	-	-		-	-	-	438,343	-		-	438,343	32,657		471,000
Reclassify to profit or loss upon disposal of debt instrument
at fair value through other comprehensive income	-		-	-	-		-	-	-	(3,103)	-		-	(3,103)	(809)	(3,912)
Exchange differences arising from translation to
presentation currency	-		-	-	-		-	-	-		-	(5,000)		-	(5,000)	1,467		(3,533)
Total comprehensive income for the period	-		-	-	-		-	-	-	435,240	(5,000)	1,441,626		1,871,866	375,445	2,247,311
Final dividend for the year ended 31 December 2018	-		-	-	-		-	-	-		-	-	(758,206)	(758,206)	-	(758,206)
Acquisitions of additional interests in subsidiaries	-		-	-	24,081		-	-	-		-	-		-	24,081	(320,226)	(296,145)
Disposal of partial interests in a subsidiary	-		-	-	167,696		-	-	-		-	-		-	167,696	440,435		608,131
Dividends paid to non-controlling shareholders of
subsidiaries	-		-	-	-		-	-	-		-	-		-			-	(353,383)	(353,383)
Transfers to reserve	-		-	-	-		-	101,907	-		-	-	(101,907)			-	-		-
		-		-	-	191,777		-	101,907		-		-	-	(860,113)	(566,429)	(233,174)	(799,603)
Balance at 30 Jun 2019	108,315	6,074,903	1,911		1,920,621	10,594	1,315,110		256,370	44,809	(148,033)	39,053,822		48,638,422	7,442,557		56,080,979

06

LIMITED HOLDINGS KINGBOARD

07	KINGBOARD HOLDINGS LIMITED
Condensed Consolidated Statement of Cash Flow
		Six months ended 30 June
	2020		2019
		HK$'000		HK$'000
		(Unaudited)		(Unaudited)
Net cash from operating activities	3,302,645		4,512,020
Net cash from (used in) investing activities	3,268,127		(4,284,589)
Net cash used in financing activities	(5,823,662)	(669,140)
Net increase (decrease) in cash and cash equivalents	747,110		(441,709)
Cash and cash equivalents at the beginning of the period	6,256,964		7,473,324
Cash and cash equivalents at the end of the period,
representing bank balances and cash	7,004,074		7,031,615

INTERIM REPORT 2020

08	KINGBOARD HOLDINGS LIMITED

Notes:

1. Basis of preparation
   The condensed consolidated financial statements have been prepared in accordance with Hong Kong Accounting Standard ("HKAS") 34 "Interim Financial Reporting" issued by the Hong Kong Institute of Certified Public Accountants ("HKICPA") as well as with the applicable disclosure requirements of Appendix 16 to the Rules Governing the Listing of Securities (the "Listing rules") on The Stock Exchange of Hong Kong Limited (the "Stock Exchange").
2. Principal accounting policies
   The condensed consolidated financial statements have been prepared on the historical cost basis, except for investment properties and certain financial instruments, which are measured at fair values.
   Other than additional accounting policies resulting from application of amendments to Hong Kong Financial Reporting Standards ("HKFRS") and application of certain accounting policy which became relevant to the Group, the accounting policies and methods of computation used in the condensed consolidated financial statements for the six months ended 30 June 2020 are the same as those presented in the Group's annual financial statements for the year ended 31 December 2019.
   Application of amendments to HKFRS
   In the current interim period, the Group has applied the Amendments to References to the Conceptual Framework in HKFRS Standards and the following amendments to HKFRSs issued by the HKICPA, for the first time, which are mandatorily effective for the annual period beginning on or after 1 January 2020 for the preparation of the Group's condensed consolidated financial statements:

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

Except as described below, the application of the Amendments to References to the Conceptual Framework in HKFRS Standards and the amendments to HKFRSs in the current period has had no material impact on the Group's financial positions and performance for the current and prior periods and/ or on the disclosures set out in these condensed consolidated financial statements.

INTERIM REPORT 2020

09	KINGBOARD HOLDINGS LIMITED

1. Principal accounting policies - continued
   Impacts of application on Amendments to HKAS 1 and HKAS 8 "Definition of Material"
   The amendments provide a new definition of material that states "information is material if omitting, misstating or obscuring it could reasonably be expected to influence decisions that the primary users of general purpose financial statements make on the basis of those financial statements, which provide financial information about a specific reporting entity." The amendments also clarify that materiality depends on the nature or magnitude of information, either individually or in combination with other information, in the context of the financial statements taken as a whole.
   The application of the amendments in the current period had no impact on the condensed consolidated financial statements. Changes in presentation and disclosures on the application of the amendments, if any, will be reflected on the consolidated financial statements for the year ending 31 December 2020.
2. Segment information
   HKFRS 8 "Operating Segments" requires operating segments to be identified on the basis of internal reports about components of the Group that are regularly reviewed by the executive directors of the Company, who are Chief Operating Decision Maker ("CODM"), in order to allocate resources to segments and to assess their performance. Specifically, the Group's reportable segments under HKFRS 8 organised into six main operating divisions - (i) manufacture and sale of laminates, (ii) manufacture and sale of PCBs, (iii) manufacture and sale of chemicals, (iv) sales and rental of properties ("properties"), (v) investments (mainly investment income from debt instruments at fair value through other comprehensive income, equity instruments at fair value through profit or loss and equity instruments at fair value through other comprehensive income) and (vi) others (mainly including service income, manufacture and sale of magnetic products and hotel business). The management aggregated the sales of properties and rental income business into one reportable segment because the financial performance of both businesses are affected by changes in the property market. In addition, the management aggregated service income, hotel business and manufacture and sale of magnetic products into one reportable segment because the revenue, results, assets and liabilities of each business are insignificant to the Group. No other operating segment identified by the CODM have been aggregated in arriving at the reportable segments of the Group.
   The accounting policies the Group used for segment reporting under HKFRS 8 are the same as those used in its HKFRS consolidated financial statements. The CODM assesses segment profit or loss using a measure of operating profit whereby certain items are not included in arriving at the segment results of the operating segments (share of result of an associate, share of results of joint ventures, finance costs and unallocated corporate income and expenses).

INTERIM REPORT 2020

10	KINGBOARD HOLDINGS LIMITED

3. Segment information - continued

Segment revenues and results by reportable segments are presented below:

		Laminates		PCBs		Chemicals		Properties	Investments	Others	Eliminations	Consolidated
		HK$'000		HK$'000		HK$'000		HK$'000		HK$'000	HK$'000		HK$'000		HK$'000
	(Unaudited)	(Unaudited)	(Unaudited)	(Unaudited)	(Unaudited)	(Unaudited)	(Unaudited)	(Unaudited)
Six months ended
30 June 2020
Segment revenue
External sales	5,592,085	4,271,597	4,828,399	4,857,901	155,419		220,247		-	19,925,648
Inter-segment sales		1,093,822		-	295,562		-		-	4,688	(1,394,072)		-
Total
	6,685,907		4,271,597		5,123,961		4,857,901		155,419		224,935		(1,394,072)	19,925,648
Result
Segment result	1,083,613	303,266	279,323	1,906,073	(761,752)	5,329				2,815,852
Unallocated corporate
income																35,375
Unallocated corporate
expenses																(231,370)
Finance costs																(287,993)
Share of results of
joint ventures																39,852
Share of result of
an associate																(5,776)
Profit before taxation
															2,365,940

INTERIM REPORT 2020

11	KINGBOARD HOLDINGS LIMITED

3. Segment information - continued

	Laminates		PCBs		Chemicals		Properties	Investments		Others	Eliminations	Consolidated
	HK$'000		HK$'000		HK$'000		HK$'000		HK$'000		HK$'000		HK$'000		HK$'000
	(Unaudited)		(Unaudited)		(Unaudited)		(Unaudited)		(Unaudited)		(Unaudited)		(Unaudited)		(Unaudited)
Six months ended
30 June 2019
Segment revenue
External sales	6,107,758	4,337,534	6,225,181	896,590	398,680	280,609			-	18,246,352
Inter-segment sales	1,030,295		-	311,868		-		-	554		(1,342,717)		-
Total	7,138,053	4,337,534	6,537,049	896,590	398,680	281,163		(1,342,717)	18,246,352
Result
Segment result	997,442	270,772	378,282	577,012	491,226	(19,742)				2,694,992
Unallocated corporate
income																22,194
Unallocated corporate
expenses																(243,923)
Finance costs																(361,464)
Share of result of
joint ventures																46,079
Share of result of
an associate																34,721
Profit before taxation																2,192,599

Inter-segment sales are charged on a cost-plus basis with an arm's length margin.

4. Depreciation

During the reporting period, depreciation of approximately HK$799,440,000 (six months ended 30 June 2019: HK$930,261,000) was charged in respect of the Group's properties, plant and equipment.

INTERIM REPORT 2020

12		KINGBOARD HOLDINGS LIMITED
5.	Other income, gains and losses
			Six months ended 30 June
					2019
		2020
			HK$'000		HK$'000
			(Unaudited)		(Unaudited)
	Other income, gains and losses include:
	Interest income on bank balances and deposits	33,198		35,479
	Interest income on entrusted loans	11,791		17,775
	Interest income from loan receivable	14,383			-
	Others	9,292		9,169
		68,664		62,423
6.	Finance costs
			Six months ended 30 June
				2019
		2020
			HK$'000		HK$'000
			(Unaudited)		(Unaudited)
	Interest on bank borrowings	311,656		392,993
	Imputed interest on contract liabilities	3,375		2,137
	Interest on lease liabilities	234		260
	Less: Amounts capitalised in the construction in progress	(6,059)	(6,760)
	Amounts capitalised in the properties held for development	(21,213)	(27,166)
		287,993		361,464

Bank and other borrowing costs capitalised during the reporting period include imputed interest on contract liabilities of HK$3,375,000 (six months ended 30 June 2019: HK$2,137,000) as well as, bank borrowing costs arising from the general borrowing pool which were calculated by applying a weighted average capitalisation rate of 2.4% (six months ended 30 June 2019: 2.9%) per annum to expenditure on qualifying assets.

INTERIM REPORT 2020

13		KINGBOARD HOLDINGS LIMITED
7.	Income tax expense
			Six months ended 30 June
					2019
		2020
			HK$'000		HK$'000
			(Unaudited)		(Unaudited)
	The amount comprises:
	PRC Enterprise Income Tax	540,258		362,409
	PRC Land Appreciation Tax ("LAT")	134,036		38,767
	Hong Kong Profits Tax	147,446		9,273
	Taxation arising in other jurisdictions		11,098		10,863
			832,838			421,312
	Deferred taxation	(7,458)	(12,469)
		825,380		408,843

Under the Law of the PRC on Enterprise Income Tax (the "EIT Law") and Implementation Regulation of the EIT Law, the tax rate of the PRC subsidiaries is 25% from 1 January 2008 onwards.

The provision of LAT is estimated according to the requirements set forth in the relevant PRC tax laws and regulations. LAT has been levied at progressive rates ranging from 30% to 60% on the appreciation of land value, represented by the excess of sales proceeds of properties over prescribed direct costs. Prescribed direct costs are defined to include costs of land, development and construction costs, as well as certain costs relating to the property development. According to the State Administration of Taxation's official circulars, LAT shall be payable provisionally upon sales of the properties, followed by final ascertainment of the gain at the completion of the properties development.

On 21 March 2018, the Hong Kong Legislative Council passed The Inland Revenue (Amendment) (No. 7) Bill 2017 (the "Bill") which introduces the two-tiered profits tax rates regime. The Bill was signed into law on 28 March 2018 and was gazetted on the following day. Under the two-tiered profits tax rates regime, the first HK$2 million of profits of the qualifying group entity will be taxed at 8.25%, and profits above HK$2 million will be taxed at 16.5%. The profits of group entities not qualifying for the two-tiered profits tax rates regime will continue to be taxed at a flat rate of 16.5%.

The directors of the Company considered the amount involved upon implementation of the two-tiered profits tax rates regime as insignificant to the consolidated financial statements. Hong Kong Profits Tax is calculated at 16.5% of the estimated assessable profit for both periods.

Taxation arising in other jurisdictions is calculated at the rates prevailing in the relevant jurisdictions.

INTERIM REPORT 2020

14	KINGBOARD HOLDINGS LIMITED

1. Interim dividend
   The directors of the Company (the "Directors") have resolved to declare an interim dividend for the six months ended 30 June 2020 of HK$0.28 per share (2019: interim dividend of HK$0.28 per share) to the shareholders of the Company whose names appear on the register of members of the Company on Friday, 4 December 2020. The dividend warrants will be dispatched on or around Monday, 11 January 2021.
2. Earnings per share
   The calculations of basic and diluted earnings per share attributable to the owners of the Company are based on the following data:

		Six months ended 30 June
	2020		2019
		HK$'000		HK$'000
		(Unaudited)		(Unaudited)
Earnings for the purpose of calculating basic and
diluted earnings per share	1,059,192		1,441,626
		Number of shares
				30 June 2019
		30 June 2020
		(Unaudited)		(Unaudited)
Weighted average number of ordinary shares for
the purpose of basic earnings per share	1,099,291,456		1,083,152,236
Effect of dilutive potential ordinary shares arising
from share options	437,432			-
Weighted average number of ordinary shares for the purpose of
diluted earnings per share	1,099,728,888		1,083,152,236

10. Additions to properties, plant and equipment

During the reporting period, the Group spent approximately HK$939,564,000 (six months ended 30 June 2019: HK$1,197,751,000) on acquisition of properties, plant and equipment.

INTERIM REPORT 2020

15	KINGBOARD HOLDINGS LIMITED

11. Trade and other receivables and prepayments, entrusted loans and bills receivables

		30 June		31 December
	2020		2019
		HK$'000		HK$'000
		(Unaudited)		(Audited)
Trade receivables	7,004,481		7,904,344
Less: Allowance for credit losses		(1,130,906)	(1,139,894)
Total receivables, net		5,873,575			6,764,450
Advance to suppliers	377,809		338,991
Entrusted loans (Note)	461,507		505,083
Prepayment and deposits	798,512		745,897
Value added tax recoverables	667,826		592,133
Loan receivables	150,000			-
Other receivables	301,195		290,721
	8,630,424		9,237,275
Less: Non-current portion of entrusted loans (Note)	(432,328)	(465,859)
	8,198,096		8,771,416

Note: The entrusted loans of HK$461,507,000 (31 December 2019: HK$505,083,000) are due from certain purchasers of the properties developed by the Group in the PRC through four (31 December 2019: four) commercial banks in the PRC (the "Lending Agents"). The entrusted loans carry interest at variable rates ranging from 3.92% to 5.39% (31 December 2019: 3.92% to 5.39%) per annum payable on monthly basis and the principal will be payable on or before 2034 (31 December 2019: 2034). The purchasers of the Group's properties has pledged to the Lending Agents the respective properties purchased. These properties are located at Kunshan, PRC.

INTERIM REPORT 2020

16	KINGBOARD HOLDINGS LIMITED

11. Trade and other receivables and prepayments, entrusted loans and bills receivables - continued

The Group allows credit period of up to 120 days (31 December 2019: 120 days), depending on the products sold, to its trade customers. The following is an aging analysis of trade receivables net of allowance for credit losses based on invoice date at the end of the reporting period:

		30 June		31 December
	2020		2019
		HK$'000		HK$'000
		(Unaudited)		(Audited)
0-90 days	4,611,898		5,465,173
91-120 days	831,527		652,244
121-150 days	306,352		449,808
151-180 days	57,874		111,067
Over 180 days	65,924		86,158
	5,873,575		6,764,450

Bills receivables of the Group are aged within 90 days (31 December 2019: 90 days) at the end of the reporting period.

INTERIM REPORT 2020

17	KINGBOARD HOLDINGS LIMITED
12. Trade and other payables and bills payables
					31 December
		30 June
	2020		2019
		HK$'000		HK$'000
		(Unaudited)		(Audited)
Trade payables	2,732,139		3,134,885
Accrued expenses	789,169		886,941
Payable for acquisition of properties, plant and equipment	427,972		497,637
Other tax payables	631,878		652,392
VAT payables	209,257		259,849
Land appreciation tax payables	72,956		75,582
Other payables	291,635		333,887
	5,155,006		5,841,173

The following is an aging analysis of the trade payables based on invoice date at the end of the reporting period:

		30 June		31 December
	2020		2019
		HK$'000		HK$'000
		(Unaudited)		(Audited)
0-90 days	2,101,085		2,455,074
91-180 days	319,848		304,775
Over 180 days	311,206		375,036
	2,732,139		3,134,885

All bills payables of the Group are aged within 90 days (31 December 2019: 90 days) at the end of the reporting period.

INTERIM REPORT 2020

18	KINGBOARD HOLDINGS LIMITED

13. Share options

1. Employees' share option scheme of the Company
   The existing share option scheme of the Company (the "Scheme") was approved by shareholders of the Company at the annual general meeting held on 27 May 2019. The purpose of the Scheme is to provide incentive or reward to the Eligible Participants (as defined below) for their contribution to, and continuing efforts to promote the interests of the Group.
   Under the Scheme which is valid for a period of 10 years, the Board may, at its discretion, grant options to subscribe for shares in the Company to eligible participants ("Eligible Participants") who contribute to the long-term growth and profitability of the Company. Eligible Participants include (i) any employee (whether full time or part time) of the Company, any of its subsidiaries or any entity in which the Group holds any equity interests ("Invested Entity"), including any executive director of the Company, any of such subsidiaries or any Invested Entity; (ii) any non-executive directors (including independent non-executive directors) of the Company, its subsidiaries or any Invested Entity; (iii) any supplier of goods or services to any member of the Group or any Invested Entity; (iv) any customer of the Group or any Invested Entity; (v) any shareholder of any member of the Group or any Invested Entity or any holder of any securities issued by any member of the Group or any Invested Entity; and (vi) any person or entity who from time to time determined by the Board as having contributed or may contribute to the development and growth of the Group based on his or its performance and/or years of service, or is regarded as valuable resources of the Group based on his/its working experience, knowledge in the industry and other relevant factors. The subscription price for the Company's shares shall be a price at least equal to the highest of the nominal value of the Company's shares, the average of the closing prices of the Company's shares quoted on the Stock Exchange on the five trading days immediately preceding the date of an offer of the grant of the options and the closing price of the Company's shares quoted on the Stock Exchange on the date of an offer of the grant of the options. The options must be taken up within 28 business days from the date of grant upon payment of HK$1 and are exercisable over a period to be determined and notified by the Directors to each grantee, which period may commence from the date of acceptance of the offer of the grant of the options but shall end in any event not later than ten years from the date of the grant of the options of the Scheme.
   The total number of the Company's shares which may be issued upon exercise of all options to be granted under the Scheme and any other schemes of the Group (excluding options lapsed in accordance with the terms of the Scheme and any other schemes of the Group) must not in aggregate exceed 10% of the Company's shares in issue as at the date of adoption of the Scheme. The limit on the number of the Company's shares which may be issued upon exercise of all outstanding options granted and yet to be exercised under the Scheme and any other schemes of the Group must not exceed 30% of the Company's shares in issue from time to time. The total number of the Company's shares issued and to be issued upon exercise of the options granted to each grantee (including both exercised and outstanding options) under the Scheme or other schemes of the Group in any 12-month period up to the date of grant must not exceed 1% of the Company's shares in issue at the date of grant unless approved by the Company's shareholders in general meeting.

INTERIM REPORT 2020

19	KINGBOARD HOLDINGS LIMITED

13. Share options - continued

1. Employees' share option scheme of the Company - continued
   A summary of the movements of the number of share options under the Scheme for the period is as follows:

	Balance at		Granted	Exercised		Balance at	Exercise
	1 January		during	during		30 June	price	Exercisable
Date of grant	2020		the period	the period	2020	per share	period
Granted to directors on:
14 August 2019
Mr. Ho Yin Sang	1,500,000		-	-	1,500,000		HK$17.304	14 August 2019
										to 13 August
										2029
Ms. Cheung Wai Lin,	1,750,000		-	-	1,750,000		HK$17.304	14 August 2019
Stephanie										to 13 August
										2029
Mr. Cheung Ka Shing	1,980,000		-	-	1,980,000		HK$17.304	14 August 2019
										to 13 August
										2029
Granted to employees on:
14 August 2019	440,000		-	-	440,000	HK$17.304	14 August 2019
	(Note ii)									to 13 August
										2029
	5,670,000		-	-	5,670,000
Exercisable at
1 January 2020	5,670,000
30 June 2020	5,670,000

Notes:

1. During the year ended 31 December 2019, 29,500,000 options were granted by the Company on 14 August 2019 under the share option scheme of the Company, of which 28,750,000 options were granted to directors and/or their associate(s) and 750,000 were granted to employees (excluding any associate of directors). The closing price of the Company's shares on 13 August 2019 (namely the date immediately before the aforesaid grant date) is HK$16.78. The estimated fair value of the aforesaid options was HK$132,625,000, of which HK$129,253,000 was attributable to the options granted to directors and/or their associate(s) while HK$3,372,000 was attributable to the options granted to employees. The fair value of each of the abovementioned options was identical, namely HK$4.50.
2. Share options held by Ms. Cheung Wai Kam, an employee and associate of director.

Save as disclosed, there has been no option granted and outstanding under the Scheme. During the Period, no option has lapsed or has been cancelled or exercised under the Scheme.

INTERIM REPORT 2020

20	KINGBOARD HOLDINGS LIMITED

13. Share options - continued

1. Employees' share option scheme of Elec & Eltek International Company Limited ("EEIC")
   In 2018, a new share option scheme, the 2018 Elec & Eltek Employees' Share Option Scheme (the "2018 EEIC Scheme") was approved by the Shareholders at the annual general meeting of the Company held on 27 April 2018 and was adopted by the shareholders of EEIC on 12 September 2018 upon fulfilment of all the conditions precedent as set out the 2018 EEIC Scheme. Since its adoption, no options have been granted by EEIC pursuant to the 2018 EEIC Scheme as at the date of this report.
   The purpose of the 2018 EEIC Scheme is to provide an opportunity for employees within the EEIC group who have contributed significantly to the growth and performance of the EEIC group and who satisfy the eligibility criteria as set out in Rule 4 of the 2018 EEIC Scheme, to participate in the equity of the EEIC, so as to motivate them to greater dedication, loyalty and higher standards of performance, and to give recognition to past contributions and services. Additionally, the 2018 EEIC Scheme will help the EEIC group to attract and retain the services of appropriate, qualified and experienced employees who would be able to contribute to the EEIC group's business and operations,
   Subject to note (1) to rule 17.03(9) of the Listing Rules, the 2018 EEIC Scheme entitles the option holders to exercise their options and subscribe for new ordinary shares in EEIC either at the "Market Price", which is defined as the average of the last dealt prices of EEIC's shares (as determined by reference to the Official List published by the SGX-ST) for a period of five consecutive market days immediately preceding the relevant date of grant, or at a discount to the Market Price (as defined earlier), provided that the discount shall not exceed 20% of the Market Price.
   Options granted at the Market Price or at a discount to the Market Price may be exercised after the first or second anniversary respectively, of the date of grant and expiring on the fifth anniversary of the date of grant.
   The duration of the 2018 EEIC Scheme is ten years from the date of adoption of the 2018 EEIC Scheme. The total number of shares that may be issued shall not exceed 18,691,996 shares (which represents 10% of the total number of shares in issue of EEIC as at 9 March 2018, being the "Latest Practicable Date" stipulated in the circular to shareholders of EEIC dated 26 March 2018).
   Share options may be accepted within 30 days after the relevant date of grant accompanied by, inter alia, payment of SGD$1.00 (or its equivalent) as consideration by the participants.

INTERIM REPORT 2020

21	KINGBOARD HOLDINGS LIMITED

13. Share options - continued

1. Employees' share option scheme of Kingboard Laminates Holdings Limited ("KLHL")
   The share option scheme of KLHL ("2017 KLHL Scheme") was approved by the shareholders of the Company and the shareholders of KLHL on 29 May 2017, and the 2017 KLHL Scheme took effect upon receiving approval from the Listing Committee of the Stock Exchange on 2 November 2017. The purpose of the 2017 KLHL Scheme is to provide incentive or rewards to the eligible participants of the 2017 KLHL Scheme for their contribution to, and continuing efforts to promote the interests of the KLHL Group (as defined below).
   The 2017 KLHL Scheme is valid for a period of ten years. The directors of KLHL may, at its discretion, grant options to subscribe for shares in KLHL to eligible participants who contribute to the long-term growth and profitability of KLHL and include (i) any employee or proposed employee (whether full-time or part-time and including any executive director), consultants or advisers of or to KLHL, any of its subsidiaries or any entity ("KLHL's Invested Entity") in which KLHL and its subsidiaries (collectively referred to as the "KLHL Group") hold an equity interest; (ii) any non- executive directors (including independent non-executive directors) of KLHL, any of its subsidiaries or any KLHL's Invested Entity; (iii) any supplier of goods or services to any member of the KLHL Group or any KLHL's Invested Entity; (iv) any customer of the KLHL Group or any KLHL's Invested Entity; (v) any person or entity that provides research, development or other technological support to the KLHL Group or any KLHL's Invested Entity; and (vi) any shareholder of any member of the KLHL Group or any KLHL's Invested Entity.
   The subscription price of KLHL's share in respect of any option granted under the 2017 KLHL Scheme must be at least the highest of (i) the closing price of the shares of KLHL as stated in the Stock Exchange's daily quotations sheet on the date of grant of the option, which must be a business day; (ii) the average closing price of the shares of KLHL as stated in the Stock Exchange's daily quotations sheets for the five business days immediately preceding the date of grant of the option; and (iii) the nominal value of the shares of KLHL.
   The option may be accepted by a participant within 28 days from the date of the offer for the grant of the option upon the payment of a consideration of HK$1. An option may be exercised at any time during a period to be determined and notified by the directors of KLHL to each grantee, and in the absence of such determination, from the date upon which the offer for the grant of the option is accepted but shall end in any event not later than 10 years from the date of grant of the option subject to the provisions for early termination thereof. The directors of KLHL may, at their absolute discretion, fix any minimum period for which an option must be held, any performance targets that must be achieved and any other conditions that must be fulfilled before the options can be exercised upon the grant of an option to a participant.
   The total number of shares of KLHL which may be issued upon exercise of all options to be granted under the KLHL Scheme and any other share option scheme of KLHL (excluding, for this purpose, options lapsed in accordance with the terms of the 2017 KLHL Scheme and any other share option scheme of KLHL) must not in aggregate exceed 10% of the total number of shares of KLHL in issue as at the date of approval of the 2017 KLHL Scheme.
   The maximum number of shares of KLHL which may be issued upon exercise of all outstanding options granted and yet to be exercised under the 2017 KLHL Scheme and any other share option scheme of KLHL must not exceed 30% of the issued share capital of KLHL from time to time.

INTERIM REPORT 2020

22	KINGBOARD HOLDINGS LIMITED

13. Share options - continued

1. Employees' share option scheme of Kingboard Laminates Holdings Limited ("KLHL") - continued
   The total number of shares of KLHL issued and to be issued upon exercise of the options granted (including both exercised and outstanding options) to each participant in any 12-month period must not exceed 1% of the share capital of KLHL then in issue unless approved by the shareholders of KLHL and the Company in general meetings.

A summary of movements of the number of share options under the KLHL Scheme for the Period is as follows:

	Balance at		Granted	Exercised		Balance at	Exercise
	1 January		during	during		30 June	price	Exercisable
Date of grant	2020		the period	the period	2020	per share	period
Granted to the directors
of KLHL on (Note i):
3 April 2019	26,200,000		-	-	26,200,000		HK$8.39	3 April 2019 to
										2 April 2029
										(Note iii)
Granted to employees
on (Note ii):
3 April 2019	12,800,000		-	-	12,800,000		HK$8.39	3 April 2019 to
										2 April 2029
										(Note iii)
	39,000,000		-	-	39,000,000
Exercisable at
1 January 2020	39,000,000
30 June 2020	39,000,000

Notes:

1. Including the interests of 550,000 share options of Mr. Leung Tai Chiu, a director of KHL and of KLHL.
2. Including the interests of 11,300,000 share options of spouse of Mr. Ho Yin Sang, a director of the Company. The spouse of Mr. Ho Yin Sang is an employee of KLHL.
3. During the year ended 31 December 2019, 39,000,000 options were granted by the KLHL on 3 April 2019 under the 2017 KLHL scheme of the KLHL, of which 26,200,000 options were granted to directors of KLHL and 12,800,000 were granted to employees of KLHL. The closing price of the KLHL's shares on 2 April 2019 (namely the date immediately before the aforesaid grant date) is HK$8.49. The estimated fair value of the aforesaid options was HK$96,609,000, of which HK$64,901,000 was attributable to the options granted to directors of KLHL while HK$31,708,000 was attributable to the options granted to employees of KLHL. The fair value of each of the abovementioned options was identical, namely HK$2.48.

Save as disclosed, there has been no option granted or outstanding under the KLHL Scheme. During the Period, no option has lapsed or has been cancelled or exercised under the KLHL Scheme.

INTERIM REPORT 2020

23	KINGBOARD HOLDINGS LIMITED
14. Capital and other commitments
					31 December
		30 June
	2020		2019
		HK$'000		HK$'000
		(Unaudited)		(Audited)
Capital expenditure contracted for but not provided
in the consolidated financial statements in respect of:
- acquisition of properties, plant and equipment	221,357		350,709
Other expenditure contracted for but not provided
in the consolidated financial statements in respect of:
- acquisition and other expenditures relating to
properties held for development	1,302,115		1,625,343
	1,523,472		1,976,052

15. Related party transactions

The Group entered into the following significant transactions with related parties during the period:

		Six months ended 30 June
	2020		2019
		HK$'000		HK$'000
		(Unaudited)		(Unaudited)
Sales of goods to subsidiaries of a shareholder with
significant influence to the Group	120,830		281,234
Purchase of goods from subsidiaries of a shareholder with
significant influence to the Group	413,801		389,403
Sales of goods to a non-controlling shareholder of a subsidiary	21,644		25,566
Purchase of goods from an associate	189,611		194,728

Included in trade and other receivables and prepayments as at 30 June 2020 was an amount due from

• non-controllingshareholder of a subsidiary of approximately HK$5,120,000 (31 December 2019: HK$6,349,000).

Included in trade and other payables as at 30 June 2020 was an amount due to an associate of approximately HK$4,168,000 (31 December 2019: HK$5,049,000) and a joint venture of HK$137,500,000 (31 December 2019: HK$137,500,000).

INTERIM REPORT 2020

24	KINGBOARD HOLDINGS LIMITED

1. Contingent liabilities
   The Group provided guarantees amounting to approximately HK$471,518,000 as at 30 June 2020 (31 December 2019: HK$708,163,000) to facilitate mortgage bank loans applications of purchasers of the properties that were developed by the Group. In the opinion of the Directors, the fair values of these financial guarantee contracts of the Group are insignificant at initial recognition and the Directors consider that the possibility of default of the parties involved is remote. Accordingly, no value has been recognised at the inception of the guarantee contracts and at the end of the reporting period as at 30 June 2020 and 31 December 2019.
   Guarantees are given to banks with respect to loans procured by the purchasers of properties that were developed by the Group. Such guarantees will be released by banks upon delivery of the properties to the purchasers and completion of the registration of the relevant mortgaged properties.
2. Event after the reporting period
   As disclosed in the announcement of the Company dated 3 April 2020, Elec & Eltek International Company Limited ("E&E"), a subsidiary of the Company listed on the main board of the SGX-ST and the main board of the Stock Exchange, has been in the process of proposed privatization ("Proposed Privatization") by way of voluntary conditional cash offer ("Offer"). As at the closing of the Offer which took place on 6 August 2020, the Company (through its wholly-owned subsidiaries) owned an aggregate holding of approximately 98.32% in E&E. As at the date hereof, the relevant documentation together with the prescribed notices under the Singapore Companies Act in relation to the exercise of the right of compulsory acquisition to compulsorily acquire all the shares of the shareholders of E&E who have not accepted the Offer have been despatched. An application has been made for the withdrawal of the listing of E&E from the Stock Exchange pursuant to Rule 6.15 of the Listing Rules, and an application has been made for the withdrawal of listing of E&E from SGX-ST pursuant to the SGX-ST Listing Manual, both subject to and following the completion of the compulsory acquisition. For the details and subsequent development of Proposed Privatization after the Reporting Period, please refer to the abovementioned announcement and the announcements of E&E after 30 June 2020.

INTERIM REPORT 2020

25

BUSINESS REVIEW

KINGBOARD HOLDINGS LIMITED

On behalf of the board ("Board") of directors ("Directors") of Kingboard Holdings Limited, I am delighted to report a satisfactory performance for the Company and its subsidiaries (the "Group") for the six months ended 30 June 2020 (the 'Period'). During the Period, a public health crisis descended upon the world without early warning. The manufacturing industry has taken substantial knocks amid the spread of the COVID-19 pandemic. Nevertheless the Group faced up to the challenges through coordinated efforts to prevent infection while securing production, enabling the Group to drive work and production resumption at all factories in an orderly manner. As the pandemic continued to intensify with logistics channels under pressure, overseas markets were greatly affected. However, with the situation in Mainland China being gradually brought under control, the domestic market recorded a swift recovery. The Group's management also seized the opportunities presented by market revival and industrial sector rebound, in order to minimise the impacts of the pandemic. In the face of complex market challenges, the Group expanded business around its diversified portfolio. The properties segment obtained a handsome sales performance, making up for the sales drop in the manufacturing and industrial segments. The Group's revenue consequently increased 9% year on year to HK$19,925.6 million. However during the Period, fair value changes of equity instruments at fair value through profit or loss incurred a loss owing to the fluctuations of the securities market amidst the COVID-19 pandemic and the consequent development and occurrences, thus profit attributable to the owners of the Company decreased by 27% to HK$1,059.2 million. The Board has proposed an interim dividend of HK$0.28 per share.

FINANCIAL HIGHLIGHTS

	Six months ended 30 June
	2020	2019	Change
	HK$'million	HK$'million
Revenue	19,925.6	18,246.4	+9%
EBITDA	3,479.2	3,505.6	-1%
Net profit attributable to owners of
the Company	1,059.2	1,441.6	-27%
Basic earnings per share	HK$0.964	HK$1.331	-28%
Interim dividend per share	HK$0.28	HK$0.28	-
Net asset value per share	HK$44.7	HK$44.9	-
Net gearing	25%	37%

INTERIM REPORT 2020

26	KINGBOARD HOLDINGS LIMITED

PERFORMANCE

The Group maintained its position as the world's top laminates producer for the fifteenth consecutive year. During the Period, despite a slide in market demands, especially from overseas, as a result of the pandemic, the division took full advantage of its vertically integrated production capability to ensure adequate product supply at the time of market rejuvenation, thereby enabling it to tap into the domestic market and clearing away the hindrance created by the pandemic. Because of a fall in product unit price, segment revenue (including inter-segment sales) was down by 6% to HK$6,685.9 million, but earnings before interest, tax, depreciation and amortisation ("EBIDTA") still saw a 7% increase to HK$1,365.6 million on the back of sound cost management.

The performance of the printed circuit board ("PCB") division was generally similar to that of the laminates division. But as the demand for distant work arrangements rose abruptly, orders for such electronic products as computers and video-conferencing facilities increased markedly, demand for medical and related equipment has also increased significantly, offsetting the reduction of certain overseas orders. At the same time, the division's development towards advanced PCBs harvested fruitful results, leading to a quick enhancement of its product mix for an increased profit margin. The turnover of the PCB division fell slightly by 2% to HK$4,271.6 million, while EBIDTA grew by 7% to HK$606.2 million.

The chemicals business was dragged down by a slowdown in economic activities and a plunge in petroleum prices. The selling price of key chemical products declined compared to the same period last year. Hence the chemicals division's turnover (including inter-segment sales) dropped 22% to HK$5,124.0 million. EBIDTA also decreased by 32% to HK$476.5 million.

Regarding the property business, the partial booking of income from the Kau To project in Shatin, Hong Kong, together with the booking of completed and delivered units in Eastern China, has led to a surge in the turnover from property sales to HK$4,329.7 million. Affected by the pandemic, rental income decreased by a modest 5% to HK$528.2 million. On the whole, division turnover increased by 442% to HK$4,857.9 million, with EBIDTA up by 229% to HK$1,908.4 million.

INTERIM REPORT 2020

27

INVESTMENTS

KINGBOARD HOLDINGS LIMITED

As at 30 June 2020, the Group held in aggregate approximately HK$4,066 million and HK$1,904 million respectively of equity and debt instruments, representing approximately 4.6% and 2.1% respectively of the total assets of the Group as at 30 June 2020, which consisted of mostly securities listed on Main Board of the Stock Exchange and bonds issued mainly by companies listed on the Main Board of the Stock Exchange. The Group acquired its equity and debt instruments through on-market purchases. The Group will from time to time monitor the movement of prices in securities and bonds and may adjust its investment portfolio as and when appropriate.

There was no securities investment in an investee company with a value of 5 per cent. or more of the Group's total assets as at 30 June 2020. The following table sets out the main investments of debt instruments held by the Group as at the end of the Period:

						Percentage
						to the
			Percentage			Group's
			of securities			total
			held (of the		Fair value	assets	Gain/(loss)	Unrealised
		Number of	securities		as at	as of	on disposal	gain/(loss)
	Principal business(es) of	securities	of the same	Investment	30 June	30 June	during	during
Investment	underlying company	held	class)	cost	2020	2020	the Period	the Period	Investment strategy
		'000		HK$'000	HK$'000		HK$'000	HK$'000
bonds with fixed	residential property	20,500	4.8%	159,431	170,070	0.2%	46,659	10,639	To enhance diversity
coupon interest	development focusing								of the investment
7.125% per annum	on urbanization; running								portfolio of the Group
and maturity date	a centralised and								while maintaining
in January 2022	standardised business								and generating
listed on Singapore	model that comprises								stable income; long-
Exchange Securities	property development,								term investment for
Trading Limited	construction, decoration,								interest income
("SGX") issued by	property investment, as
Country Garden	well as hotel development
Holdings Company	and management
Limited ("Country
Garden")

INTERIM REPORT 2020

28							KINGBOARD HOLDINGS LIMITED
						Percentage
						to the
			Percentage			Group's
			of securities			total
			held (of the		Fair value	assets	Gain/(loss)	Unrealised
		Number of	securities		as at	as of	on disposal	gain/(loss)
	Principal business(es) of	securities	of the same	Investment	30 June	30 June	during	during
Investment	underlying company	held	class)	cost	2020	2020	the Period	the Period	Investment strategy
		'000		HK$'000	HK$'000		HK$'000	HK$'000
Bonds with fixed	development and sale of	17,000	2.8%	125,394	115,566	0.1%	(67,713)	(9,828)	To enhance diversity
coupon rate of	properties, property								of the investment
5.875% per annum	investment, hotel								portfolio of the Group
and maturity date	operations and other								while maintaining
in February 2023	property development								and generating
listed on SGX by	related services in the								stable income; long-
Guangzhou R&F	PRC								term investment for
Properties Co., Ltd.									interest income
(Guangzhou R&F)
Bonds with fixed	development and sale of	12,041	2.4%	93,708	97,342	0.1%	16,499	3,634	To enhance diversity
coupon rate of	properties, property								of the investment
8.75% per annum	investment, hotel								portfolio of the Group
and maturity date	operations and other								while maintaining
in January 2021	property development								and generating
listed on SGX by	related services in the								stable income; long-
Guangzhou R&F	PRC								term investment for
									interest income
Bonds with fixed	development and sale of	26,000	4.3%	202,800	200,765	0.2%	290	(2,035)	To enhance diversity
coupon rate of 7%	properties, property								of the investment
per annum and	investment, hotel								portfolio of the Group
maturity date in April	operations and other								while maintaining
2021 listed on SGX	property development								and generating
by Guangzhou R&F	related services in the								stable income; long-
	PRC								term investment for
									interest income

INTERIM REPORT 2020

29							KINGBOARD HOLDINGS LIMITED
						Percentage
						to the
			Percentage			Group's
			of securities			total
			held (of the		Fair value	assets	Gain/(loss)	Unrealised
		Number of	securities		as at	as of	on disposal	gain/(loss)
	Principal business(es) of	securities	of the same	Investment	30 June	30 June	during	during
Investment	underlying company	held	class)	cost	2020	2020	the Period	the Period	Investment strategy
		'000		HK$'000	HK$'000		HK$'000	HK$'000
Bonds with fixed	development and sale of	18,500	9.3%	143,965	156,125	0.2%	16,583	12,160	To enhance diversity
coupon rate of	properties, property								of the investment
8.875% per annum	investment, hotel								portfolio of the Group
and maturity date	operations and other								while maintaining
in September 2021	property development								and generating
listed on SGX by	related services in the								stable income; long-
Guangzhou R&F	PRC								term investment for
									interest income
Bonds with fixed	Property development in	7,000	1.1%	54,564	59,629	0.1%	(759)	5,065	To enhance diversity
coupon rate of 6%	the PRC with a leading								of the investment
per annum and	position in Guangzhou								portfolio of the Group
maturity date in									while maintaining
January 2022 listed									and generating
on Stock Exchange									stable income; long-
issued by KWG									term investment for
Group Holdings									interest income
Limited ("KWG")
Bond with fixed coupon	Property development in	96,000	17.5%	748,800	770,949	0.9%	-	22,149	To enhance diversity
rate of 9.85% per	the PRC with a leading								of the investment
annum and maturity	position in Guangzhou								portfolio of the Group
date in November									while maintaining
2020 listed on Stock									and generating
Exchange issued by									stable income; long-
KWG									term investment for
									interest income

INTERIM REPORT 2020

30	KINGBOARD HOLDINGS LIMITED

Based on the announcement of Country Garden Holdings Company Limited (stock code: 2007) ("CGH") dated 20 September 2018 and 2 October 2018, senior notes ("CGH January 2022 Senior Notes") were issued by CGH in September 2018, and due in January 2022. The CGH January 2022 Senior Notes are listed on the SGX and carries an interest of 7.125% per annum and interests are payable semi-annually. The proceeds from the CGH January 2022 Senior Notes were intended to be used for refinancing CGH's existing offshore indebtedness. According to the 2020 interim results announcement of CGH, as at 30 June 2020, its group's net gearing ratio increased from approximately 46% that as at 31 December 2019 to approximately 58%.

Based on the announcements of Guangzhou R&F Properties Co., Ltd. (stock code: 2777) ("GRFP") dated 13 November 2017, 4 January 2019, 18 April 2018 and 19 September 2018:

1. the senior notes ("GRFP February 2023 Senior Notes") were issued by GRFP in November 2017, and due in February 2023. The GRFP February 2023 Senior Notes are listed on SGX and carries an interest of 5.875% per annum and interests are payable semi-annually. The proceeds from the GRFP February 2023 Senior Notes was intended to be used to refinance debt and for general corporate purposes of GRFP; (ii) the senior notes ("GRFP January 2021 Senior Notes") were issued by GRFP in January 2019, and due in January 2021. The GRFP January 2021 Senior Notes are listed on SGX and carries an interest of 8.75% per annum and interests are payable semi-annually. The proceeds from the GRFP January 2021 Senior Notes was mainly for offshore refinancing; (iii) the senior notes due April 2021 ("GRFP April 2021 Senior Notes") were issued by GRFP in April 2018, and due in April 2021. The GRFP April 2021 Senior Notes is listed on the SGX and carries an interest of 7% per annum and interests are payable semi- annually. The proceeds from GRFP April 2021 Senior Notes was intended to finance debt and for general corporate purposes; and (iv) the senior notes due September 2021 ("GRFP September 2021 Senior Notes") were issued by GRFP in September 2018, and due in September 2021. The GRFP September 2021 Senior Notes is listed on the SGX and carries an interest of 8.875% per annum and interests are payable semi-annually. The net proceeds from GRFP September 2021 Senior Notes was mainly for offshore refinancing. According to the 2020 interim results announcement of GRFP, the net debt to total equity ratio of GRFP decreased from 199% at 31 December 2019 to 177% at 30 June 2020.

Based on the announcement of KWG Group Holdings Limited (stock code: 1813) ("KWG") dated

16 March 2017 and 15 November 2018: (i) the senior notes ("KWG January 2022 Senior Notes") were issued by KWG in March 2017, and due in January 2022. The KWG January 2022 Senior Notes are listed on Stock Exchange and carries an interest of 6% per annum and interests are payable semi-annually. The proceeds from the KWG January 2022 Senior Notes was intended to be used for refinancing certain of KWG's existing indebtedness and for its general working capital purposes; and (ii) the senior notes ("KWG November 2020 Senior Notes") were issued by KWG in November 2018, and due in November 2020. The KWG November 2020 Senior Notes are listed on the Stock Exchange and carries an interest of 9.85% per annum and interests are payable semi-annually. The proceeds from the KWG November 2020 Senior Notes was intended to be used for refinancing certain of KWG's offshore debt. According to the 2020 interim results announcement of KWG, as at 30 June 2020, its net gearing ratio decreased from approximately 75% as at 31 December 2019 to approximately 59%.

INTERIM REPORT 2020

31	KINGBOARD HOLDINGS LIMITED

For further information of the business and financial performance of the above companies, please refer to the report and announcements referred in the above paragraphs for details. Please also refer to the respective publications of the above companies from time to time for updates on their prospects and performances. The report and announcements referred above do not form part of this interim report and do not constitute any publication issued by, or any opinion, advice or view of, the Company or any of its directors.

The Company's equity instruments amounting to approximately HK$4,066 million, representing approximately 4.6% of the total assets of the Group as at 30 June 2020, consisted primarily of listed shares of a cluster of wide-ranging primarily blue-chip listed issuers. The Company's investment strategy of these equity investment is to make mid- to long-term investments in the prospects of primarily reputable sizeable issuers on recognizable stock exchange for creating values for its Shareholders, with the risks involved balanced and moderated by the diversity of the portfolio and the corporate governance and disclosures of such issuers.

LIQUIDITY AND CAPITAL RESOURCES

The Group's integrated financial and liquidity position remained robust. As at 30 June 2020, Group net current assets and current ratio were approximately HK$24,466.0 million (31 December 2019: HK$22,757.5 million) and 2.32 (31 December 2019: 2.04) respectively.

The net working capital cycle maintained at 54 days as at 30 June 2020 and 31 December 2019 on the following key metrics:

• Inventories, in terms of stock turnover days, were 37 days (31 December 2019: 34 days).
• Trade receivables, in terms of debtor turnover days, were 54 days (31 December 2019: 60 days).
• Trade and bills payable (excluding bills payable for properties, plant and equipment), in terms of creditor turnover days, were 37 days (31 December 2019: 40 days).

The Group's net gearing ratio (ratio of bank borrowings net of bank balances and cash to total equity) was 25% (31 December 2019: 31%). The proportion of short-term to long-term bank borrowings stood at 37%:63% (31 December 2019: 32%:68%). As at 30 June 2020, the bank borrowing are all variable-rate borrowing which carry interest ranging from Hong Kong Inter- Bank Offer Rate ("HIBOR")+0.78% to HIBOR+1.75% (31 December 2019: HIBOR+0.78% to HIBOR+1.75%) per annum and London Inter-Bank Offer Rate ("LIBOR")+1.75% (31 December 2019: LIBOR+1.75% per annum) and Loan Prime Rate ("LPR")+1.355% per annum (31 December 2019: LPR+1.355%).

INTERIM REPORT 2020

32KINGBOARD HOLDINGS LIMITED

Included in bank borrowings are the following amounts denominated in currencies other than the functional currency of the group entities to which they relate:

		30 June		31 December
	2020		2019
		HK$'000		HK$'000
		(Unaudited)		(Audited)
US$	354,882		106,200
HK$	20,107,547		23,681,049
The maturity profile of the Group's borrowing is set out below:
					31 December
		30 June
	2020		2019
		HK$'000		HK$'000
		(Unaudited)		(Audited)
Within one year	7,934,749		7,862,991
More than one year but not more than two years	10,045,351		6,639,447
More than two years but not more than five years	3,182,889		9,907,471
	21,162,989		24,409,909

During the Period, the Group invested approximately HK$900 million and HK$1 billion in new production capacity and property construction expenses respectively. With a sound balance sheet and abundant contingency funds, the Group is in an excellent position to respond flexibly to the challenges and opportunities in the market.

The Group continued to adopt a prudent financial management policy. The Group did not enter into any derivative financial instrument, nor did the Group enter into any hedging arrangements for hedging foreign currency risk during the Period. The Group's revenue, mostly denominated in Hong Kong dollars, RMB and US dollars, was fairly matched with the currency requirements of its operating expenses.

INTERIM REPORT 2020

33	KINGBOARD HOLDINGS LIMITED

HUMAN RESOURCES

As at 30 June 2020, the Group employed a global workforce of approximately 36,000 (31 December 2019: 39,000). In addition to offering competitive salary packages, the Group grants share options and discretionary bonuses to eligible employees based on the Group's overall financial achievements and employees' individual performance.

PROSPECTS

Heading into the second half of the year, macro changes in the international climate such as the Sino-US trade dispute and the paradigm shift in the industry will mean more complex internal and external environments for the Group. Premised on a vertically integrated supply chain, the Group stays committed to pursuing a business portfolio diversification strategy. Through closely observing China's new economic strategy, which focuses on a strong 'domestic circulation' while promoting a 'dual circulation' policy that seeks mutually beneficial external development, the Group sets its sights on achieving stable performance and sustainable growth. In addition, the epidemic situation in some European countries has been controlled and economic activities have been restarted. The demand in the electronics industry chain, including the automotive industry, has increased, driving the increase in the business volume of the group's laminates and PCB segments.

Output volume of laminates exceeded 12 million square meters both in June and July 2020. Recently, the price of some upstream materials has increased, and the copper foil was in short supply. It is expected that the prices of laminates and copper foil products have room for upward adjustment. The laminates division is planning to increase the capacities of copper foil and glass epoxy laminates ("FR4"), by 900 tonnes and 480,000 square metres per month respectively. In fully exploiting the competitive advantage of such upstream materials as copper foil, glass yarn and glass fabric, the Group will continue to strengthen its core competencies in laminates. In a further step, it will seek accreditation from customers to drive the sales of high value-added products. The division will upgrade its product portfolio according to market changes, expand customer coverage on the back of cost advantages, and further its value-adding abilities based on scale.

5G network and artificial intelligence are prime examples of the accelerating development of new technologies. The ever-expanding reach of electronic products will bring huge growth potential to the Group's PCB business. Currently, the PCB division collects solid gains from aspects such as base station infrastructure, servers, computers and home appliances. The division will focus on boosting product performance and improving operating mechanisms. With the objective of being market-oriented and efficiency-driven, the division will devise a master plan for bolstering the brands under the Group, namely Elec & Eltek, Techwise and Express Electronics, thus building up a network of Kingboard PCBs for higher market penetration. E&E, a subsidiary of the Company listed on the main board of the SGX-ST and the main board of the Stock Exchange, has been in the process of proposed privatization by way of voluntary conditional cash offer. As

INTERIM REPORT 2020

34	KINGBOARD HOLDINGS LIMITED

at the closing of the Offer which took place on 6 August 2020, the Company (through its wholly- owned subsidiaries) owned an aggregate holding of approximately 98.32% in E&E. For details, please refer to Note 17 of this report.

The mainland economy is displaying strong resilience and positive signs of recovery. The establishment of ecological infrastructure, and the battle to fight air, water and soil pollution, will remain as the country's priorities in 2020. The chemicals segment will spare no effort in making sure production safety and emission standards are met, and will take steps to reduce energy consumption through enhancing plant efficiency and improving resources utilisation.

The property division will continue with the scheduled sales of its residential projects in Eastern China, with the aim of speeding up capital recovery. The Group is also actively mapping out a plan to promote its residential project in Hong Kong, and is confident that the project will continue to yield considerable returns.

APPRECIATION

On behalf of the Board, I would like to take this opportunity to express my sincere gratitude to our shareholders, customers, banks, the management and employees for their unreserved support to the Group during the Period.

CLOSURE OF REGISTER OF MEMBERS

The register of members of the Company will be closed from Thursday, 3 December 2020 to Friday, 4 December 2020 (both days inclusive) during which period no transfers of shares will be registered. In order to qualify for receiving the interim dividend, the Company's shareholders are reminded to ensure that all transfers of shares, accompanied by the relevant share certificates and transfer forms, must be lodged with the Company's branch share registrar in Hong Kong, Tricor Secretaries Limited, at Level 54, Hopewell Centre, 183 Queen's Road East, Hong Kong for registration not later than 4:00 p.m. on Wednesday, 2 December 2020.

INTERIM REPORT 2020

35

DIRECTORS' INTERESTS IN SHARES

KINGBOARD HOLDINGS LIMITED

As at 30 June 2020, the interests of the Directors 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 ("SFO")), as recorded in the register maintained 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 for Securities Transactions by Directors of Listed Issuers, were as follows:

Long position

1. Ordinary shares of HK$0.10 each of the Company ("Shares")

			Approximate
			percentage of
		Number	the issued
		of issued	share capital of
Name of Director	Capacity	Shares held	the Company
			(%)
Mr. Cheung Kwok Wing (Note 1)	Beneficial owner/	7,628,405	0.691
	Interest of spouse
Mr. Chang Wing Yiu (Note 2)	Beneficial owner/	9,087,228	0.823
	Interest of spouse
Mr. Cheung Kwong Kwan	Beneficial owner	4,457,000	0.404
Mr. Ho Yin Sang (Note 3)	Beneficial owner/	3,746,700	0.339
	Interest of spouse
Ms. Cheung Wai Lin,	Beneficial owner/	709,000	0.064
Stephanie (Note 4)	Interest of spouse
Mr. Cheung Ka Shing	Beneficial owner	1,481,000	0.134
Mr. Cheung Ming Man	Beneficial owner	35,000	0.003
Dr. Chong Kin Ki	Beneficial owner	200,000	0.018
Mr. Chan Wing Kee	Beneficial owner	285,000	0.026

Notes:

1. Out of the 7,628,405 Shares, 7,342,905 Shares were held by Mr. Cheung Kwok Wing and 285,500 Shares were held by his spouse.
2. Out of the 9,087,228 Shares, 8,416,488 Shares were held by Mr. Chang Wing Yiu and 670,740 Shares were held by his spouse.
3. Out of the 3,746,700 Shares, 3,312,500 Shares were held by Mr. Ho Yin Sang and 434,200 Shares were held by his spouse.
4. Out of the 709,000 Shares, 689,000 Shares were held by Ms. Cheung Wai Lin, Stephanie and 20,000 Shares were held by her spouse.

INTERIM REPORT 2020

36	KINGBOARD HOLDINGS LIMITED

1. Share options of the Company ("Share Options")

			Approximate
			percentage
			of the issued
		Interest in	share capital
		underlying	of the
		Shares	Company
		pursuant	as at the end of
		to the	the Reporting
Name of Director	Capacity	Share Options	Period
			(%)
Mr. Ho Yin Sang (Note)	Beneficial owner/	1,940,000	0.176
	Interest of spouse
Ms. Cheung Wai Lin, Stephanie	Beneficial owner	1,750,000	0.159
Mr. Cheung Ka Shing	Beneficial owner	1,980,000	0.179

Note: Out of the 1,940,000 Share Options, 1,500,000 were held by Mr. Ho Yin Sang and 440,000 Share Options were held by his spouse.

1. Ordinary shares of HK$0.10 each ("KLHL Shares") in KLHL, a non-wholly owned subsidiary of the Company

			Approximate
		Number of	percentage of
		issued	the issued
		KLHL Shares	share capital of
Name of Director	Capacity	held	KLHL
			(%)
Mr. Cheung Kwok Wing (Note 1)	Beneficial owner/	1,949,500	0.063
	Interest of spouse
Mr. Chang Wing Yiu (Note 2)	Beneficial owner/	8,300,000	0.269
	Interest of spouse
Mr. Ho Yin Sang	Interest of spouse	543,000	0.018
Mr. Cheung Ka Shing	Beneficial owner	379,000	0.012

Notes:

1. Out of the 1,949,500 shares, 1,469,500 shares were held by Mr. Cheung Kwok Wing and 480,000 shares were held by his spouse.
2. Out of the 8,300,000 shares, 7,500,000 shares were held by Mr. Chang Wing Yiu and 800,000 shares were held by his spouse.

INTERIM REPORT 2020

37	KINGBOARD HOLDINGS LIMITED

1. Share options of KLHL ("KLHL Share Options")

			Approximate
			percentage of the
			issued share
			capital of KLHL
		Interest in underlying	as at the end of
		KLHL Shares pursuant to	the Reporting
Name of Director	Capacity	KLHL Share Options	Period
			(%)
Mr. Ho Yin Sang	Interest of spouse	11,300,000	0.366
Mr. Leung Tai Chiu	Beneficial owner	550,000	0.018

1. Non-votingdeferred shares of HK$1 each in the share capital of Kingboard Laminates Limited, a non-wholly owned subsidiary of the Company

		Number of non-voting
Name of Director	Capacity	deferred shares held
		(Note)
Mr. Cheung Kwok Wing	Beneficial owner	1,904,400
Mr. Chang Wing Yiu	Beneficial owner	423,200
Mr. Cheung Kwong Kwan	Beneficial owner	846,400
Mr. Ho Yin Sang	Beneficial owner	529,000

Note: None of the non-voting deferred shares of Kingboard Laminates Limited are held by the Group. Such deferred shares carry no rights to receive notice of or to attend or vote at any general meeting of Kingboard Laminates Limited and have practically no rights to dividends or to participate in any distribution on winding up.

1. Ordinary shares ("EEIC Shares") in the share capital of EEIC, a non-wholly owned subsidiary of the Company

			Approximate
			percentage of
		Number of	the issued
		issued EEIC	share capital of
Name of Director	Capacity	Shares held	EEIC
		(Note)	(%)
Mr. Cheung Kwok Wing	Beneficial owner	1,547,200	0.827
Mr. Chang Wing Yiu	Beneficial owner	486,600	0.260
Mr. Ho Yin Sang	Beneficial owner	486,600	0.260

Note: With the voluntary conditional cash offer in respect of these shares by GF Securities (Hong Kong) Brokerage Limited on behalf of Elec & Eletek International Holdings Limited accepted.

Other than as disclosed above, none of the Directors nor their associates had any interests or short positions in any shares, underlying shares or debentures of the Company or any of its associated corporations (within the meaning of Part XV of the SFO) as at 30 June 2020.

INTERIM REPORT 2020

38	KINGBOARD HOLDINGS LIMITED

SUBSTANTIAL SHAREHOLDERS' INTERESTS

So far as is known to the Directors, as at 30 June 2020, shareholders who had interests or short positions in the shares or underlying shares of the Company which were disclosed to the Company under the provisions of Divisions 2 and 3 of Part XV of the SFO or which were recorded in the register of substantial shareholders maintained by the Company pursuant to Section 336 of the SFO, other than the interests disclosed above in respect of certain Directors, were as follows:

				Approximate
				percentage of
		Number of	the issued
		issued Shares	share capital of
Name of shareholder	Nature of interest	held	the Company
				(%)
Hallgain Management Limited	Beneficial owner	431,500,000	(L)	39.09	(L)
("Hallgain") (Note)
FMR LLC	Investment manager	110,740,321	(L)	10.03	(L)
Fidelity Puritan Trust	Investment manager	88,588,921	(L)	8.03	(L)

1. The letter "L" denotes a long position.

Note:

As at 30 June 2020: (i) no shareholder of Hallgain was entitled to exercise, or control the exercise of, directly or indirectly, one-third or more of the voting power at general meetings of Hallgain, and Hallgain and its directors were not accustomed to act in accordance with any shareholder's direction; and (ii) Mr. Cheung Kwok Wing, being a Director, was also a director of Hallgain.

Other than as disclosed above, the Company had not been notified of any other relevant interests or short positions in the issued share capital of the Company as at 30 June 2020 which would fall to be disclosed to the Company under the provisions of Divisions 2 and 3 of Part XV of the SFO, or which were recorded in the register required to be kept by the Company under Section 336 of the SFO.

INTERIM REPORT 2020

39	KINGBOARD HOLDINGS LIMITED

PURCHASE, SALE OR REDEMPTION OF COMPANY'S LISTED SECURITIES

During the period ended June 30, 2020, the Company purchased 1,409,500 Shares on the Stock Exchange for an aggregate consideration of HK$29,142,420 before expenses pursuant to the share buy-back mandates approved by our shareholders at the annual general meetings held on May 27, 2019 and May 25, 2020. The bought-back Shares were subsequently cancelled. The purchase was effected by the Board for the enhancement of shareholder value in the long term. Details of the shares purchases are as follows:

	Purchase consideration
	per share
	Highest	Lowest	No. of shares		Aggregate
Date of for purchase	price paid	price paid	purchased		consideration
	HK$	HK$			HK$
January 9, 2020	24.85	24.20	500,000	12,314,450
March 30, 2020	17.82	17.62	580,000	10,297,830
April 2, 2020	17.76	17.76	29,500	523,920
June 12, 2020	20.25	19.80	300,000	6,006,220
Total			1,409,500	29,142,420

Save as disclosed above, neither the Company nor any of its subsidiaries has purchased, sold or redeemed any of the Company's shares during period ended 30 June 2020.

AUDIT COMMITTEE

The Audit Committee has reviewed with the management the accounting principles and practices adopted by the Group and discussed auditing, internal control and financial reporting matters including the review of the unaudited interim financial statements of the Group for the six months ended 30 June 2020.

INTERIM REPORT 2020

40	KINGBOARD HOLDINGS LIMITED

COMPLIANCE WITH THE CORPORATE GOVERNANCE CODE

The Company has adopted and complied with the code provisions as set out in the Corporate Governance Code (the "CG Code") under Appendix 14 to the Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited (the "Listing Rules") throughout the six months ended 30 June 2020, save for the deviation from paragraph A.4.1 of the CG Code since the independent non-executive Directors are not appointed for a specific term. Notwithstanding the aforesaid deviation, all the Directors (including the independent non-executive Directors) are subject to retirement by rotation and re-election at the Company's annual general meeting in accordance with the Company's articles of association. As such, the Company considers that steps have been taken with a view to ensuring that the Company's corporate governance practices are in line with the principles of the CG Code.

COMPLIANCE WITH THE MODEL CODE

The Company has adopted a code of conduct regarding securities transactions by Directors on terms no less exacting than the required standard of the Model Code for Securities Transactions by Directors of Listed Issuers as set out in Appendix 10 to the Listing Rules (the "Model Code"). Having made specific enquiry of all Directors, each Director has confirmed that he or she has complied with the required standard set out in the Model Code and the code of conduct regarding Director's securities transactions adopted by the Company throughout the six months ended 30 June 2020.

By Order of the Board

Kingboard Holdings Limited

Cheung Kwok Wing

Chairman

Hong Kong, 28 August 2020

Board of Directors:

Executive Directors

Mr. Cheung Kwok Wing (Chairman)

Mr. Chang Wing Yiu (Managing Director)

Mr. Cheung Kwong Kwan

Mr. Ho Yin Sang

Ms. Cheung Wai Lin, Stephanie

Mr. Cheung Ka Shing

Mr. Chen Maosheng

Independent Non-Executive Directors

Mr. Cheung Ming Man

Dr. Chong Kin Ki

Mr. Leung Tai Chiu

Mr. Chan Wing Kee

INTERIM REPORT 2020