Tak Lee Machinery : INTERIM RESULTS ANNOUNCEMENT FOR THE SIX MONTHS ENDED 31 JANUARY 2021, DECLARATION OF INTERIM DIVIDEND AND CLOSURE OF REGISTER OF MEMBERS

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Tak Lee Machinery Holdings Limited ᅃлዚ૛છٰϞࠢʮ̡

(Incorporated in the Cayman Islands with limited liability)

(Stock Code: 2102)

INTERIM RESULTS ANNOUNCEMENT FOR THE SIX MONTHS ENDED 31 JANUARY 2021,

DECLARATION OF INTERIM DIVIDEND AND

CLOSURE OF REGISTER OF MEMBERS

FINANCIAL HIGHLIGHTS

• • The Group recorded a revenue of approximately HK$262.2 million for the six months ended 31 January 2021, representing a decrease of approximately 25.3% compared with approximately HK$351.0 million reported for the six months ended 31 January 2020.

• • The Group's profit and total comprehensive income increased by approximately 11.9% from approximately HK$27.7 million for the six months ended 31 January 2020 to approximately HK$31.0 million for the six months ended 31 January 2021.

• • Earnings per share for the six months ended 31 January 2021 was approximately HK3.10 cents (six months ended 31 January 2020: approximately HK2.77 cents).

• • The Board has resolved to declare an interim dividend of HK1.5 cents per ordinary share of the Company, payable to the shareholders of the Company whose names appear on the register of members of the Company at the close of business on Thursday, 15 April 2021. It is expected that the interim dividend will be paid in cash on or about Tuesday, 27 April 2021.

The board of directors (the "Board" and the "Directors", respectively) of Tak Lee Machinery Holdings Limited (the "Company") is pleased to announce the unaudited condensed consolidated results of the Company and its subsidiaries (collectively, the "Group") for the six months ended 31 January 2021, together with the comparative figures for the corresponding period in 2020.

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

For the six months ended 31 January 2021

Six months ended

31 January 2021

2020

Note	HK$'000	HK$'000
(unaudited)	(unaudited)
Revenue	3	262,201	351,002
Cost of revenue	(213,443)	(294,681)
Gross profit	48,758	56,321
Other income and net gains	3	8,136	1,560
Allowance for trade and lease receivables	(477)	(685)
Administrative and other operating expenses	(19,419)	(20,106)
Profit from operations	36,998	37,090
Finance costs	(1,296)	(3,566)
Profit before tax	35,702	33,524
Income tax expense	4	(4,745)	(5,836)
Profit and total comprehensive income
for the period attributable to owners
of the Company	5	30,957	27,688
Earnings per share
- Basic and diluted (HK cents per share)	6	3.10	2.77
2

INTERIM CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL POSITION

At 31 January 2021

At 31 January	At 31 July
2021	2020
Note	HK$'000	HK$'000
(unaudited)	(audited)
Non-current assets
Property, plant and equipment	7	125,484	148,282
Right-of-use assets	7	16,686	15,994
Deposits paid for property, plant and equipment	1,155	-
143,325	164,276
Current assets
Inventories	149,082	134,106
Trade and lease receivables	8	166,579	160,014
Prepayments, deposits and other receivables	26,562	12,692
Bank and cash balances	71,951	69,265
414,174	376,077
Current liabilities
Trade payables	9	7,969	8,561
Other payables and accruals	8,492	10,543
Contract liabilities	11,169	12,662
Lease liabilities	1,856	3,004
Current tax liabilities	14,332	6,519
Bank borrowings	68,257	72,896
112,075	114,185
Net current assets	302,099	261,892
Total assets less current liabilities	445,424	426,168
Non-current liabilities
Lease liabilities	2,943	892
Deferred tax liabilities	19,606	23,358
22,549	24,250
NET ASSETS	422,875	401,918
Capital and reserves
Share capital	10	10,000	10,000
Reserves	412,875	391,918
TOTAL EQUITY	422,875	401,918

INTERIM CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

For the six months ended 31 January 2021

Share	Share	Merger	Retained
capital	premium	reserve	earnings	Total
HK$'000	HK$'000	HK$'000	HK$'000	HK$'000
At 1 August 2020 (audited)	10,000	92,661	2,620	296,637	401,918
Profit and total comprehensive income
for the period	-	-	-	30,957	30,957
Dividends paid	-	-	-	(10,000)	(10,000)
At 31 January 2021 (unaudited)	10,000	92,661	2,620	317,594	422,875
At 1 August 2019 (audited)	10,000	92,661	2,620	260,352	365,633
Profit and total comprehensive income
for the period	-	-	-	27,688	27,688
At 31 January 2020 (unaudited)	10,000	92,661	2,620	288,040	393,321
4

NOTES TO THE INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

• 1. GENERAL INFORMATION

  The Company was incorporated in the Cayman Islands as an exempted company with limited liability under the Companies Law of the Cayman Islands on 11 December 2015. Its shares were initially listed on GEM of The Stock Exchange of Hong Kong Limited (the "Stock Exchange") on 27 July 2017 and were transferred from GEM to the Main Board of the Stock Exchange on 6 October 2020 (the "Transfer of Listing"). The address of its registered office is Cricket Square, Hutchins Drive, P.O. Box 2681, Grand Cayman KY1-1111, Cayman Islands. The address of its principal place of business is D.D.111, Lot No. 117, Sheung Che Village, Pat Heung, Yuen Long, New Territories, Hong Kong.

  The Company is an investment holding company. The Group is principally engaged in the sales of heavy equipment and spare parts, leasing of heavy equipment and provision of maintenance and ancillary services in Hong Kong.

  In the opinion of the Directors, the immediate and ultimate holding company of the Company is Generous Way Limited, a company incorporated in the British Virgin Islands ("BVI").

  The interim condensed consolidated financial statements of the Group for the six months ended 31 January 2021 (the "Interim Condensed Consolidated Financial Statements") are presented in Hong Kong dollars ("HK$"), which is the same as the functional currency of the Company.

• 2. BASIS OF PREPARATION AND PRINCIPAL ACCOUNTING POLICIES

  These Interim Condensed Consolidated Financial Statements have been prepared in accordance with Hong Kong Accounting Standard 34 "Interim Financial Reporting" issued by the Hong Kong Institute of Certified Public Accountants (the "HKICPA") and the applicable disclosures required by the Rules Governing the Listing of Securities on the Stock Exchange (the "Listing Rules").

  The Interim Condensed Consolidated Financial Statements have been prepared on the historical cost basis.

  Other than additional accounting policies resulting from application of amendments to Hong Kong Financial Reporting Standards ("HKFRS"), the accounting policies and methods of computation used in the Interim Condensed Consolidated Financial Statements are the same as those presented in the Group's annual financial statements for the year ended 31 July 2020.

  Application of amendments to HKFRSs

  In 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 August 2020 for the preparation of the Interim Condensed Consolidated Financial Statements:

Amendments to HKAS 1 and HKAS 8	Definition of Material
Amendments to HKFRS 3	Definition of Business
Amendments to HKFRS 9, HKAS39	Interest Rate Benchmark Reform
and HKFRS 7
Amendments to HKFRS 16	COVID-19 - Related Rent Concessions
5

• 2. BASIS OF PREPARATION AND PRINCIPAL ACCOUNTING POLICIES (continued) Application of amendments to HKFRSs (continued)

  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 performance and positions for the current and prior periods and/or on the disclosures set out in these Interim Condensed Consolidated Financial Statements.

  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 mark 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 of 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 Interim Condensed Consolidated Financial Statements.

• 3. REVENUE AND SEGMENT INFORMATION

  Disaggregation of revenue from contracts with customers by major products or service lines is as follows:

Six months ended

31 January 2021

2020

HK$'000	HK$'000
(unaudited)	(unaudited)
Revenue
Sales of heavy equipment and spare parts	147,597	264,775
Lease of heavy equipment	109,041	83,904
Provision of maintenance and ancillary services	5,563	2,323
262,201	351,002
Other income and net gains
Compensation income from suppliers	150	292
Net gain on disposals of property, plant and equipment	498	315
Interest income	-	1
Foreign exchange gain, net	-	870
Government grants	7,142	-
Others	346	82
8,136	1,560

REVENUE AND SEGMENT INFORMATION (continued)

Segment information

Management has determined the operating segments based on the reports reviewed by the Directors, the chief operating decision-maker, that are used to make strategic decisions. The Directors consider the business from a product/service perspective. Principal activities of the segments are as follows:

Sales of heavy equipment and spare parts	- Sales of heavy equipment and spare parts
in Hong Kong
Lease of heavy equipment	- Leasing of heavy equipment in Hong Kong
Provision of maintenance and ancillary	- Providing maintenance and ancillary
services	services in Hong Kong

Segment revenue is measured in a manner consistent with that in the interim condensed consolidated statement of profit or loss and other comprehensive income.

The Directors assess the performance of the operating segments based on a measure of segment results. Unallocated income, unallocated corporate expenses, finance costs, income tax expense and other major items that are isolated and non-recurring in nature are not included in segment results.

(i)Information about reportable segment profit or loss:

Sales of heavy equipment and spare parts HK$'000 (unaudited)Lease ofMaintenanceheavy and ancillaryequipment

HK$'000 (unaudited)services HK$'000 (unaudited)

Unallocated

HK$'000 (unaudited)Total HK$'000 (unaudited)

For the six months ended 31 January 2021

Disaggregated by timing of revenue recognition Point in time

Over time

147,597 -

External revenue

147,597

- 109,041 109,041

5,563 - 153,160

- - 109,041

5,563 - 262,201

Segment results

9,757

33,025

404

(7,484) 35,702

For the six months ended 31 January 2020 Disaggregated by timing of revenue recognition Point in time

Over time

264,775 -

External revenue

264,775

- 83,904 83,904

2,323 - 267,098

- - 83,904

2,323 - 351,002

Segment results

15,764

30,080

183

(12,503) 33,524

• 3. REVENUE AND SEGMENT INFORMATION (continued) Segment information (continued)

  (ii) Geographical information

  Since all of the Group's revenue was generated in Hong Kong and all of the Group's identifiable assets and liabilities were located in Hong Kong, no geographical information is presented.

• 4. INCOME TAX EXPENSE

  The income tax expense in the interim condensed consolidated statement of profit or loss and other comprehensive income represents:

Six months ended

31 January 2021

2020

HK$'000	HK$'000
(unaudited)	(unaudited)
Current tax
Provision for the period	8,497	1,373
Deferred tax	(3,752)	4,463
4,745	5,836

The Company was incorporated in the Cayman Islands and TLMC Company Limited, a wholly-owned subsidiary of the Company, was incorporated in the BVI. Both companies are tax exempted as no business was carried out in the Cayman Islands and the BVI under the tax laws of the Cayman Islands and the BVI.

Under the two-tiered profits tax rates regime, profits tax rate for the first HK$2 million of assessable profits of qualifying corporations established in Hong Kong will be lowered to 8.25%, and profits above that amount will be subject to the tax rate of 16.5%. The two-tiered profits tax rates regime is applicable to the Group for the six months ended 31 January 2021 and only one subsidiary in the Group could elect for the two-tiered profits tax rates regime and the election, once made, is irrevocable.

PROFIT FOR THE PERIOD

The Group's profit for the period is stated after charging/(crediting) the following:

Six months ended

31 January

2021

2020

HK$'000	HK$'000
(unaudited)	(unaudited)
Auditor's remuneration	278	511
Cost of inventories sold	126,359	225,552
Depreciation
- Property, plant and equipment	15,931	17,016
- Right-of-use assets	2,179	1,323
Foreign exchange loss/(gain), net	188	(870)
Transfer of Listing expenses	2,339	2,004
Net gain on disposals of property, plant and equipment	(498)	(315)
Operating lease charges in respect of office premises	321	720
Allowance/(reversal of allowance) for inventories
(included in cost of inventories sold), net	(43)	179
Impairment/(reversal of impairment) of property,
plant and equipment, net	(2)	177
Staff costs (including Directors' emoluments)
- Salaries, allowances and bonus	57,710	39,573
- Retirement benefit scheme contributions	1,898	1,211
- Quarters expenses	1,008	1,002
60,616	41,786

• 6. EARNINGS PER SHARE

  The calculation of basic and diluted earnings per share attributable to owners of the Company is based on the following data:

  Six months ended

  31 January 2021

  2020

  HK$'000 (unaudited)

  HK$'000 (unaudited)

  Earnings:

  Profit attributable to owners of the Company for the purpose of calculating basic earnings per share

  30,957

  27,688

  '000

  '000

  Number of shares:

  Weighted average number of ordinary shares for profit attributable to owners of the Company for the purpose of calculating basic earnings per share

  1,000,000

  1,000,000

  Note:

  The calculation of the basic earnings per share is based on the profit attributable to the owners of the Company for the six months ended 31 January 2021 of approximately HK$30,957,000 (six months ended 31 January 2020: approximately HK$27,688,000) and the weighted average 1,000,000,000 ordinary shares (six months ended 31 January 2020: 1,000,000,000 ordinary shares) in issue during the period.

  The diluted earnings per share is equal to the basic earnings per share as there were no dilutive

• potential ordinary shares in issue during the six months ended 31 January 2020 and 2021.

• 7. PROPERTY, PLANT AND EQUIPMENT/RIGHT-OF-USE ASSETS

  During the six months ended 31 January 2021, the Group acquired items of property, plant and equipment with cost of approximately HK$690,000 (six months ended 31 January 2020: approximately HK$3,439,000). Items of property, plant and equipment with a net book value of approximately HK$nil (six months ended 31 January 2020: approximately HK$1,550,000) were disposed of during the six months ended 31 January 2021, resulting in a net gain on disposal of approximately HK$498,000 (six months ended 31 January 2020: approximately HK$315,000).

  During the six months ended 31 January 2021, the Group reclassified some of the inventories to property, plant and equipment as machinery for lease when the relevant heavy equipment was leased to its customers. The value of heavy equipment reclassified amounted to approximately HK$4,429,000 (six months ended 31 January 2020: approximately HK$45,987,000).

• 7. PROPERTY, PLANT AND EQUIPMENT/RIGHT-OF-USE ASSETS (continued)

  During the six months ended 31 January 2021, the Group reclassified machinery for lease under property, plant and equipment to inventories held for sale at their carrying amounts of approximately HK$12,029,000 (six months ended 31 January 2020: approximately HK$42,307,000) when the machinery for lease ceased to be leased and became held for sale.

  For both periods, the Group leased several premises for fixed term ranging from 2 to 3 years. Lease terms were negotiated on an individual basis and contain a wide range of different terms and conditions. During the six months ended 31 January 2021, the Group recognised approximately HK$2,751,000 (six months ended 31 January 2020: approximately HK$3,247,000) of right-of-use assets and approximately HK$2,871,000 (six months ended 31 January 2020: approximately HK$3,286,000) of lease liabilities.

• 8. TRADE AND LEASE RECEIVABLES

  At 31 January	At 31 July
  2021	2020
  HK$'000	HK$'000
  (unaudited)	(audited)
  Trade and lease receivables	168,851	161,809
  Allowance for doubtful debts	(2,272)	(1,795)
  166,579	160,014

  The Group's credit terms generally range from 30 to 90 days. Each customer has a maximum credit limit. For new customers, payment in advance or cash on delivery is normally required.

  The ageing analysis of trade and lease receivables, based on the invoice date, before provision for impairment, is as follows:

At 31 January	At 31 July
2021	2020
HK$'000	HK$'000
(unaudited)	(audited)
0 to 90 days	103,322	96,419
91 to 180 days	34,378	48,383
181 to 365 days	24,874	14,594
Over 365 days	6,277	2,413
168,851	161,809

• 9. TRADE PAYABLES

  The credit period on trade payables ranges from 0 to 30 days.

  The ageing analysis of trade payables, based on the date of receipt of goods, is as follows:

  At 31 January 2021

  HK$'000 (unaudited)

  At 31 July 2020

  HK$'000 (audited)

  0 to 90 days

  7,969 8,301

  91 to 180 days - 230

  Over 180 days - 30

• 10. SHARE CAPITAL

  Authorised:

  Ordinary shares of HK$0.01 each

  As at 31 July 2019, 31 July 2020, 1 August 2020 and 31 January 2021

  (unaudited)

  Issued and fully paid:

  Ordinary shares of HK$0.01 each

  As at 31 July 2019, 31 July 2020, 1 August 2020 and 31 January 2021

  (unaudited)

• 11. DIVIDEND

7,969 8,561

Number of shares

Amount HK$'000

10,000,000,000 100,000

1,000,000,000 10,000

Six months ended 31 January

2021

2020

HK$'000

HK$'000

Dividend paid 2020 final dividend of HK1.0 cent per ordinary share (2019: nil)

Dividend declared

Interim dividend of HK1.5 cents per ordinary share (six months ended 31 January 2020: nil)

10,000

15,000

-

-

The interim dividend declared has not been recognised as a liability at the end of the reporting period.

12.

13.

OPERATING LEASE ARRANGEMENTS The Group as lessor

At the end of the period, the total future minimum lease payments under non-cancellable operating leases are receivable as follows:

At 31 January	At 31 July
2021	2020
HK$'000	HK$'000
(unaudited)	(audited)
Within one year	35,000	70,235
CAPITAL COMMITMENTS
At 31 January	At 31 July
2021	2020
HK$'000	HK$'000
(unaudited)	(audited)
Contracted but not provided for:
Purchase of plant and machinery	959	-

MANAGEMENT DISCUSSION AND ANALYSIS BUSINESS REVIEW AND OUTLOOK

The Group is a heavy equipment sales and leasing service provider in Hong Kong with over 20 years of presence in the industry. The Group is principally engaged in (i) the sales of new and used earthmoving equipment and spare parts, (ii) the leasing of earthmoving equipment, and (iii) the provision of maintenance and ancillary services for earthmoving equipment users. The Group also offers some heavy equipment other than earthmoving equipment for sales and leasing.

The Group recorded an increase in profit attributable to owners of the Company for the six months ended 31 January 2021 (the "Period") by approximately 11.9% to approximately HK$31.0 million from approximately HK$27.7 million for the six months ended 31 January 2020.

The increase in net profit of the Group for the Period was mainly attributed to (i) the growth in the leasing business of the Group, which was driven by the demand arising from the progress of large-scale infrastructure and reclamation projects in Hong Kong such as the Three Runway System of the Hong Kong International Airport and the Route 6 Development; and (ii) the receipt of subsidies under the Employment Support Scheme of the Hong Kong Government.

Earnings per share for the Period was approximately HK3.10 cents, representing an increase of approximately 11.9% compared with approximately HK2.77 cents for the same period in 2020.

The outbreak of the Coronavirus Disease 2019 ("COVID-19") poses threats to the local economy. As the development of such epidemic remains to be unpredictable, the extent of its impact on the economy of Hong Kong is subject to many uncertainties. The industry in which the Group operates may be directly or indirectly affected. Nonetheless, based on the government's plan, the Group remains cautiously optimistic on the outlook and the prospects for sales and leasing of heavy equipment. According to the 2021-22 Budget Speech, the government will continue to invest in infrastructure projects. In the next few years, the average annual capital works expenditure is expected to exceed HK$100 billion and the annual total construction output will increase to around HK$300 billion. Besides, due to the commencement of several large-scale infrastructure projects, such as the Three Runway System of the Hong Kong International Airport, the Route 6 Development and the Tung Chung New Town Extension, the Group is expecting a stable growth in the heavy equipment industry in Hong Kong in the coming future. Hence, the Group believes that the demand for its heavy equipment will remain strong in the coming years. To capture opportunities, the Group is committed to the diversification of its supplier base and product offering. While monitoring closely the impact of COVID-19 on the industry the Group operates in, the Group will continue to implement its corporate strategies to preserve and strive for the growth of the Group in the long term. The Group will continue to identify suitable suppliers and products in pursuit of more dealerships or distributorships of heavy equipment, which would further boost its competitive edge in the long run.

FINANCIAL REVIEW Revenue

The Group recorded a decrease in revenue for the Period by approximately 25.3% to approximately HK$262.2 million from approximately HK$351.0 million for the six months ended 31 January 2020. The decrease was mainly attributable to the decrease in sales of heavy equipment and spare parts of approximately HK$117.2 million, which was partially offset by an increase in leasing income of approximately HK$25.1 million and an increase in income from provision of maintenance and ancillary services by approximately HK$3.3 million.

Cost of revenue

The Group's cost of revenue amounted to approximately HK$213.4 million for the Period, representing a decrease of approximately 27.6% (six months ended 31 January 2020: approximately HK$294.7 million). Cost of revenue mainly comprised costs of machinery, equipment and spare parts, depreciation, freight and transportation costs, repairs and maintenance costs, staff costs for operators, technicians and inspectors and sub-leasing fee. The decrease was mainly driven by a decrease in sales of heavy equipment and spare parts by approximately 45.0% for the Period. Nevertheless, the cost of leasing business increased by approximately 48.6%, which was mainly attributable to an increase in staff cost of operators.

Gross profit and gross profit margin

The Group's gross profit decreased by approximately 13.3% from approximately HK$56.3 million for the six months ended 31 January 2020 to approximately HK$48.8 million for the Period, with gross profit margin at approximately 18.6% (six months ended 31 January 2020: approximately 16.0%). The decrease in gross profit was mainly attributable to a decrease in gross profit of the sales of heavy equipment and spare parts by approximately HK$8.4 million. Despite the decrease in gross profit of the sales business, the gross profit of leasing business and the provision of maintenance and ancillary services increased by approximately HK$0.6 million and HK$0.3 million, respectively.

Other income and net gains

Other income and net gains increased by approximately 406.3% from approximately HK$1.6 million for the six months ended 31 January 2020 to approximately HK$8.1 million for the Period. The increase was mainly due to the receipt of subsidies under the Employment Support Scheme of the Hong Kong Government of approximately HK$7.1 million.

Administrative and other operating expenses

The administrative and other operating expenses decreased by approximately HK$0.7 million or approximately 3.5% from approximately HK$20.1 million for the six months ended 31 January 2020 to approximately HK$19.4 million for the Period. The decrease in administrative and other operating expenses was mainly attributable to the decrease in audit and legal and professional fees (including fees for the Transfer of Listing) of approximately HK$0.7 million, insurance expenses of approximately HK$0.8 million, marketing expenses of approximately HK$0.4 million, operating lease charges of approximately HK$0.4 million and travelling expenses of approximately HK$0.3 million, which was partially offset by the increase in staff costs (including Directors' emoluments) of approximately HK$1.6 million and net foreign exchange loss of approximately HK$0.2 million.

Finance costs

The finance costs decreased by approximately HK$2.3 million or approximately 63.9% from approximately HK$3.6 million for the six months ended 31 January 2020 to approximately HK$1.3 million for the Period. The decrease was in line with the decrease in average bank borrowings for the Period as compared to those of the same period last year.

Income tax expense

The income tax expense decreased by approximately HK$1.1 million or approximately 18.7% for the Period compared with the same period last year. The decrease was mainly due to a decrease in deferred tax liabilities of approximately HK$3.8 million as a result of a decrease in accelerated tax depreciation charge for the Period.

Profit and total comprehensive income for the Period

As a result of the foregoing, the Group's profit and total comprehensive income for the Period increased by approximately 11.9% from approximately HK$27.7 million for the six months ended 31 January 2020 to approximately HK$31.0 million for the Period, with the net profit margin of the Group increased to approximately 11.8% for the Period as compared to approximately 7.9% for the six months ended 31 January 2020.

Liquidity and financial resources

The Group financed the operations primarily with cash flow from operations and bank borrowings. The current ratio (as calculated by dividing the total current assets by the total current liabilities) of the Group as at 31 January 2021 was approximately 3.7 times (31 July 2020: approximately 3.3 times). As at 31 January 2021, the Group had bank and cash balances of approximately HK$72.0 million (31 July 2020: approximately HK$69.3 million). The increase in bank and cash balances was mainly due to the operating cash inflow during the Period.

As at 31 January 2021, the Group had bank borrowings with maturity less than 1 year of approximately HK$68.3 million (31 July 2020: approximately HK$72.9 million). The gearing ratio, calculated based on the total debts (including bank borrowings and lease liabilities) divided by the total equity at the end of the period/year and multiplied by 100%, was approximately 17.3% as at 31 January 2021 (31 July 2020: approximately 19.1%). The Group's financial position is sound and strong. With available bank and cash balances and banking facilities, the Group has sufficient liquidity to satisfy the funding requirements.

Capital structure

The issued shares of the Company were initially listed on GEM of the Stock Exchange on 27 July 2017. The listing was transferred from GEM to the Main Board of the Stock Exchange on 6 October 2020. There has been no change in the Company's capital structure before and after the Transfer of Listing. The capital structure of the Group consists of equity attributable to the owners of the Company, which comprises issued share capital and reserves. The Directors review the Group's capital structure regularly. As part of this review, the Directors consider the cost of capital and the risks associated with each class of capital. The Group will adjust its overall capital structure through the payment of dividends, issuance of new shares and inception or repayment of bank borrowings.

As at 31 January 2021, the Company's issued share capital amounted to HK$10,000,000 and there were a total of 1,000,000,000 issued ordinary shares with a nominal value of HK$0.01 each.

Foreign exchange exposure

The Group has certain exposure to foreign currency risk as most of the business transactions, assets and liabilities are principally denominated in HK$, Japanese Yen ("JPY"), Renminbi ("RMB"), Euro ("EUR") and US dollar ("USD"). There is a currency difference between the Group's revenue receipts (which are denominated in HK$) and some of the payments for purchases (which are denominated in JPY, RMB, EUR and USD). The Group currently does not have a foreign currency hedging policy. The Group will continue to monitor its foreign currency exposure closely and will consider hedging significant foreign currency exposure should the need arise.

Material acquisitions or disposals, significant investments, and plans for material investments or capital assets

During the Period, the Group did not have any material acquisitions or disposals of subsidiaries, associates and joint ventures. As at 31 January 2021, the Group had capital commitments contracted for but not yet incurred of approximately HK$1.0 million. Save as disclosed above, as at 31 January 2021, the Group did not have any significant investments or any other plans for material investments or capital assets.

Charges of assets and contingent liabilities

As at 31 January 2021, the Group did not have any charges on the Group's assets for its bank borrowings.

As at 31 January 2021, the Group did not have any material contingent liabilities (31 July 2020: Nil).

Employees and remuneration policies

As at 31 January 2021, the Group employed 240 (31 July 2020: 211) full-time employees. The total staff costs (including Directors' remuneration) were approximately HK$60.6 million for the Period (six months ended 31 January 2020: approximately HK$41.8 million). The Group determines the employees' remuneration based on factors such as their performance, qualification, position, duty, contributions and years of experience, local market conditions and the Group's results. The remuneration policy is reviewed by the Board regularly. The remuneration package includes salary, allowances and bonus. The Group also makes contributions to the mandatory provident fund schemes. The Company adopted a share option scheme on 30 June 2017 for the purpose of enabling the Company to grant options to, among others, the employees and directors of the Group as incentives or rewards for their contribution or potential contribution to the Group. The Group also arranges technical trainings to its existing employees on the operations of its existing and newly introduced heavy vehicles and other heavy equipment provided by the manufacturers.

INTERIM DIVIDEND

The Board has resolved to declare an interim dividend of HK1.5 cents per ordinary share for the Period (the "Interim Dividend"), payable in cash on or about Tuesday, 27 April 2021 to the shareholders of the Company (the "Shareholders") whose names appear on the register of members of the Company (the "Register of Members") on Thursday, 15 April 2021.

CLOSURE OF REGISTER OF MEMBERS

For the purpose of ascertaining the Shareholders' entitlement to the Interim Dividend, the Register of Members will be closed from Monday, 12 April 2021 to Thursday, 15 April 2021, both days inclusive, during which period no transfer of the Company's shares shall be registered. In order to qualify for the Interim Dividend, all properly completed transfer forms accompanied by the relevant share certificates must be lodged with the Company's branch share registrar and transfer office in Hong Kong, Tricor Investor Services Limited, at Level 54, Hopewell Centre, 183 Queen's Road East, Hong Kong, for registration no later than 4:30 p.m. on Friday, 9 April 2021.

CORPORATE GOVERNANCE PRACTICES

Code provision A.2.1 of the Corporate Governance Code (the "CG Code") contained in each of Appendix 14 to the Listing Rules and Appendix 15 to the Rules Governing the Listing of Securities on GEM of the Stock Exchange (the "GEM Listing Rules") (applicable to the Company during the relevant periods after and before the Transfer of Listing) stipulates that the roles of chairman and chief executive should be separate and should not be performed by the same individual. Mr. Chow Luen Fat ("Mr. Chow") is the chairman of the Board and the chief executive officer of the Company. In view of the fact that Mr. Chow is one of the founders of the Group and has been operating and managing the Group since its establishment in 2001, all the other Directors believe that the vesting of the roles of chairman and chief executive officer in Mr. Chow is beneficial to the business operations and management of the Group and will provide a strong and consistent leadership to the Group. Accordingly, the Company has not segregated the roles of its chairman and chief executive officer as required by the said code provision.

Save for the deviation from code provision A.2.1 as mentioned above, the Board is satisfied that the Company had complied with all applicable code provisions of the CG Code during the Period.

SHARE OPTION SCHEME

The share option scheme of the Company (the "Share Option Scheme") is a share incentive scheme adopted on 30 June 2017. No share options were granted or agreed to be granted under the Share Option Scheme for the period from the date of its adoption to 31 January 2021 and up to the date of this announcement. As such, no share options were outstanding as at 31 January 2021 and no share options were exercised, cancelled or lapsed under the Share Option Scheme from the date of its adoption to the end of the Period on 31 January 2021 and up to the date of this announcement.

INTERESTS IN COMPETING BUSINESS

During the Period, the Directors were not aware of any business or interest of the Directors, the controlling shareholders of the Company and their respective close associates (as defined under the Listing Rules and the GEM Listing Rules, which were respectively applicable to the Company during the relevant periods after and before the Transfer of Listing) that had competed or might compete with the business of the Group and any other conflicts of interests which any such person had or might have with the Group.

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

Neither the Company nor any of its subsidiaries had purchased, sold or redeemed any of the listed securities of the Company during the Period.

COMPLIANCE WITH CODE OF CONDUCT FOR SECURITIES TRANSACTIONS BY DIRECTORS

The Company has adopted the required standard of dealings as contained in Rules 5.48 to 5.67 of the GEM Listing Rules (the "Required Standard of Dealings") as its required standard for Directors' dealings in the securities of the Company prior to the Transfer of Listing. Following the Transfer of Listing, the Company has adopted the Model Code for Securities Transactions by Directors of Listed Issuers as set out in Appendix 10 to the Listing Rules (the "Model Code") as its code of conduct for securities transactions by Directors. Following a specific enquiry made by the Company on each of the Directors, each Director has confirmed that he/she had complied with the Required Standard of Dealings and the Model Code (before and after the Transfer of Listing respectively) during the Period.

PRINCIPAL RISKS AND UNCERTAINTIES

The Group's financial condition, results of operations, businesses and prospects would be affected by a number of risks and uncertainties. All the risks relating to the Group's business have been set out in the section headed "Risk Factors" in the prospectus of the Company dated 17 July 2017 and the section headed "Material Risks Associated With The Group's Business" in the announcement of the Company dated 24 September 2020.

IMPORTANT EVENTS AFTER THE REPORTING PERIOD

The Board is not aware of any important event affecting the Group, which have occurred subsequent to 31 January 2021 and up to the date of this announcement.

REVIEW OF INTERIM RESULTS

The interim results of the Group for the Period have not been audited, but have been reviewed by the audit committee of the Company (the "Audit Committee") comprising three independent non-executive Directors, namely Mr. Law Tze Lun, Sir Kwok Siu Man KR and Dr. Wong Man Hin Raymond. Mr. Law Tze Lun is the chairman of the Audit Committee.

By order of the Board

Tak Lee Machinery Holdings Limited

Chow Luen Fat

Chairman and Chief Executive Officer

Hong Kong, 23 March 2021

As at the date of this announcement, the executive Directors are Mr. Chow Luen Fat (chairman and chief executive officer), Ms. Liu Shuk Yee and Ms. Ng Wai Ying; the non-executive Director is Ms. Cheng Ju Wen; and the independent non-executive Directors are Sir Kwok Siu Man KR, Mr. Law Tze Lun and Dr. Wong Man Hin Raymond.