CHOW TAI FOOK JEWELLERY GROUP LIMITED 大福珠寶集團有限 …ir.ctfjewellerygroup.com/2019112816480132209079563_en.pdf · Jewellery collectibles 1,520.1 1,520.1 Prepayment for

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

(Incorporated in the Cayman Islands with limited liability)

Stock Code: 1929

CHOW TAI FOOK JEWELLERY GROUP LIMITED周大福珠寶集團有限公司

INTERIM RESULTS FOR THE SIX MONTHS ENDED 30 SEPTEMBER 2019AND

THE UNAUDITED KEY OPERATIONAL DATA FROM 1 OCTOBER TO 21 NOVEMBER 2019• TheGroup’srevenuewasstableatHK$29,533millionduring1HFY2020thankstothePOS

openingsandsteadySameStoreSalesGrowth(1)(“SSSG”)oftheMainlandChinasegment

• SSSG inMainlandChina stoodat1.8%whereasSameStoreSales inHongKongandMacaudecreasedby27.5%

• TheGroup’scoreoperatingprofitmargin(2) increasedto11.9%thanks to theadjustedgrossprofitmargin(3)improvement

• TheGroup’sprofitbeforetaxationdroppedby19.2%,mainlyimpactedbytheunrealisedlossofgold loansofHK$917millionarising fromthesurge in internationalgoldpriceduringtheperiod

• TheGroup’sretailnetworkexpandedto3,490POSasat30September2019,withanetadditionof356POSin1HFY2020

FINANCIAL HIGHLIGHTS2019 2018

Forthesixmonthsended30September HK$ million HK$ million YoYchange Revenue 29,533 29,703 -0.6%Grossprofit 8,147 8,529 -4.5% Gross profit margin 27.6% 28.7% Adjusted gross profit margin(3) 30.7% 28.1%Coreoperatingprofit(2) 3,527 2,989 +18.0% Core operating profit margin(2) 11.9% 10.1%Profitbeforetaxation 2,200 2,722 -19.2%Profitattributabletoshareholders oftheCompany 1,533 1,936 -20.8%Earningspershare—Basic(HK$) 0.15 0.19 -20.8%Interimdividendpershare(4)(HK$) 0.12 0.15

(1) “Same Store Sales” (“SSS”) for 1HFY2020 is the revenue from the self-operated points of sale (“POS”) existing as at 30 September 2019 and which have been opened prior to 1 April 2018, measured at constant exchange rates. Revenue from wholesale and other channels are excluded. “Same Store Sales Growth” is a comparison between Same Store Sales of a particular period and sales from comparable POS in the corresponding period in previous financial year, measured at constant exchange rates

(2) Core operating profit and the corresponding margin, a non-IFRS measure, being the aggregate of gross profit and other income, less selling and distribution costs and general and administrative expenses and unrealised loss (gain) on gold loans, which the Company believes is useful in gaining a more complete understanding of its operational performance and the underlying trend of its core businesses

(3) Adjusted gross profit margin, a non-IFRS measure, eliminates the effect of unrealised loss (gain) on gold loans, which the Company believes is useful in gaining a more complete understanding of its operational performance and the underlying trend of its businesses

(4) The dividend payout ratio for 1HFY2020 is approximately 78.3%

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INTERIM RESULTS FOR THE SIX MONTHS ENDED 30 SEPTEMBER 2019

Theboardofdirectors(the“Board”or“Directors”)ofChowTaiFookJewelleryGroupLimited(the“Company”,“we”or“ChowTaiFook”) ispleasedtoannouncetheunaudited interimresultsof theCompanyand its subsidiaries (collectively, the“Group”) for thesixmonthsended30September2019 (“1HFY2020”), togetherwith comparative figures for the sixmonthsended30September2018(“1HFY2019”)asfollows:

CONDENSED CONSOLIDATED STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOMEFor the six months ended 30 September 2019

Six months ended30 September

2019 2018Notes HK$ million HK$ million

(unaudited) (unaudited)

Revenue 2 29,533.2 29,702.9Costofgoodssold (21,386.7) (21,174.4)

Gross profit 8,146.5 8,528.5Otherincome 213.0 167.2Sellinganddistributioncosts (4,318.4) (4,111.0)Generalandadministrativeexpenses (1,431.1) (1,405.9)Othergainsandlosses (142.0) (333.7)Otherexpenses (52.2) (28.0)Shareofresultsofanassociate 2.0 –Interestincome 37.0 58.7Financecosts (255.1) (153.9)

(255.1)

Profit before taxation 3 2,199.7 2,721.9Taxation 4 (620.3) (728.1)

Profit for the period 1,579.4 1,993.8

Other comprehensive expense: Itemsthatmaybereclassifiedsubsequently toprofitorloss: Exchangedifferencesarisingontranslation offoreignoperations (798.0) (1,707.7)

Other comprehensive expense for the period (798.0) (1,707.7)

Total comprehensive income for the period 781.4 286.1

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CONDENSED CONSOLIDATED STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME (Continued)For the six months ended 30 September 2019

Six months ended30 September

2019 2018Note HK$ million HK$ million

(unaudited) (unaudited)

Profit for the period attributable to: ShareholdersoftheCompany 1,532.6 1,936.3 Non-controllinginterests 46.8 57.5

1,579.4 1,993.8

Total comprehensive income for the period attributable to: ShareholdersoftheCompany 766.7 290.7 Non-controllinginterests 14.7 (4.6)

781.4 286.1

Earnings per share — Basic and Diluted 5 HK15.3 cents HK19.4cents

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CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL POSITIONAt 30 September 2019

At At30 September 31March

2019 2019Note HK$ million HK$ million

(unaudited) (audited)

Non-current assetsProperty,plantandequipment 5,190.5 5,488.0Landuserights – 177.2Right-of-useassets 2,265.4 –Investmentproperties 213.7 219.2Goodwill 231.5 257.8Otherintangibleassets 229.0 253.7Jewellerycollectibles 1,520.1 1,520.1Prepaymentforacquisitionofproperty, plantandequipment 82.3 38.7Financialassetsatfairvaluethrough profitorloss 21.0 11.2Investmentinassociates 11.7 –Amountsduefromassociates 40.0 54.7Loanreceivables 17.9 18.7Deferredtaxassets 663.4 420.1

10,486.5 8,459.4

Current assetsInventories 7 42,520.1 39,486.1Tradeandotherreceivables 6,145.8 6,638.7Loanreceivables 8.6 12.3Cashandcashequivalents 5,151.0 7,640.6

53,825.5 53,777.7

Current liabilitiesTradeandotherpayables 12,091.5 10,684.3Amountsduetonon-controllingshareholders ofsubsidiaries 85.2 136.7Taxationpayable 621.8 1,178.4Bankborrowings 10,483.0 7,460.0Goldloans 10,454.8 8,011.5Leaseliabilities 976.3 –

34,712.6 27,470.9

Net current assets 19,112.9 26,306.8

Total assets less current liabilities 29,599.4 34,766.2

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2019 2019HK$ million HK$ million(unaudited) (audited)

Non-current liabilitiesBankborrowings 597.3 2,596.7Leaseliabilities 1,241.0 –Retirementbenefitobligations 234.2 238.8Deferredtaxliabilities 459.6 456.4Otherliabilities 65.6 71.3

2,597.7 3,363.2

Net assets 27,001.7 31,403.0

Share capital 10,000.0 10,000.0Reserves 16,372.8 20,750.7

Equity attributable to shareholders of the Company 26,372.8 30,750.7Non-controlling interests 628.9 652.3

27,001.7 31,403.0

CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL POSITION (Continued)At 30 September 2019

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NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTSFor the six months ended 30 September 2019

1. SIGNIFICANT ACCOUNTING POLICIES

Thecondensedconsolidatedfinancialstatementshavebeenpreparedonthehistoricalcostbasisexceptthatcertainfinancialinstrumentsandliabilities,whicharemeasuredatfairvalues,andinaccordancewiththeInternationalFinancialReportingStandards(“IFRSs”).

Exceptasdescribedbelow, theprincipalaccountingpoliciesadopted in thecondensedconsolidatedfinancial statementsareconsistentwith those followed in thepreparationof theCompany’sannualconsolidatedfinancialstatementsfortheyearended31March2019.

TheGrouphasapplied the following standardsandamendments for the first time for their annualreportingperiodcommencing1April2019:

IFRS16 LeasesIFRIC23 UncertaintyoverIncomeTaxTreatmentsAmendmentstoIFRS9 PrepaymentFeatureswithNegativeCompensationAmendmentstoIAS28 Long-termInterestsinAssociatesandJointVenturesAmendmentstoIAS19 PlanAmendment,CurtailmentorSettlementAmendmentstoIFRSs AnnualImprovementstoIFRSStandards2015–2017Cycle

TheGrouphad to change its accountingpolicies as a resultof adopting IFRS16.Mostof theotheramendmentslistedabovedidnothaveanyimpactontheamountsrecognisedinpriorperiodsandarenotexpectedtosignificantlyaffectthecurrentorfutureperiods.

TheGrouphasadopted IFRS16retrospectively from1April2019,buthasnotrestatedcomparatives forthe2019 reportingperiod,aspermittedunder thespecific transitionprovisions in thestandard.Thereclassificationsandtheadjustmentsarising fromthenew leasingrulesarethereforerecognised intheopeningstatementoffinancialpositionon1April2019.

Onadoptionof IFRS16, theGrouprecognised lease liabilities inrelationto leaseswhichhadpreviouslybeenclassifiedas“operatingleases”undertheprinciplesofIAS17Leases.Theseliabilitiesweremeasuredatthepresentvalueoftheremainingleasepayments,discountedusingthelessee’sincrementalborrowingrateasof1April2019.Theweightedaverage lessee’s incrementalborrowingrateappliedtothe leaseliabilitieson1April2019was2.93%.

Adjustments recognised on adoption of IFRS 16

(i) Practical expedients applied

InapplyingIFRS16forthefirsttime,theGrouphasusedthefollowingpracticalexpedientspermittedbythestandard:

• applyingasinglediscountratetoaportfolioofleaseswithreasonablysimilarcharacteristics

• accountingforoperatingleaseswitharemainingleasetermoflessthan12monthsasat1April2019asshort-termleases

• applyingtherecognitionexemptionforleaseoflowvalueassets

• excludinginitialdirectcostsforthemeasurementoftheright-of-useassetatthedateof initialapplication,and

• usinghindsightindeterminingtheleasetermwherethecontractcontainsoptionstoextendorterminatethelease.

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1. SIGNIFICANT ACCOUNTING POLICIES (Continued)

Adjustments recognised on adoption of IFRS 16 (Continued)

(ii) Measurement of lease liabilities

Thetablebelowexplainsthedifferencebetweenoperatingleasecommitmentsdisclosedat31March2019byapplyingIAS17andleaseliabilitiesrecognisedat1April2019byapplyingIFRS16:

HK$ million

Operatingleasecommitmentsdisclosedasat31March2019 2,741.1

Less: Contractreassessedasserviceagreement (116.8) Shorttermleasesrecognisedonastraightlinebasisasexpense (82.6)

Operatingleaseliabilitiesbeforediscountingasat31March2019 2,541.7Effectfromdiscountingatincrementalborrowingrateasat1April2019(1) (210.7)

Lease liability recognised as at 1 April 2019 2,331.0

Ofwhichare: Currentleaseliabilities 1,056.4 Non-currentleaseliabilities 1,274.6

2,331.0

(1) Theweightedaverageincrementalborrowingratewas2.93%

(iii) Measurement of right-of-use assets

Theassociatedright-of-useassets for leasesweremeasuredonaretrospectivebasisas if thenewruleshadalwaysbeenapplied.

Therecognisedright-of-useassetsrelatetothefollowingtypesofassets:

At 30 September

2019

At1April2019

HK$ million HK$ million

Properties,plantandequipment 2,103.6 2,219.5Landuserights 161.8 177.2

Total right-of-use assets 2,265.4 2,396.7

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1. SIGNIFICANT ACCOUNTING POLICIES (Continued)

Adjustments recognised on adoption of IFRS 16 (Continued)

(iv) Adjustments recognised in the consolidated statement of financial position on 1 April 2019

Thechange inaccountingpolicyaffected the following items in the consolidated statementoffinancialpositionon1April2019:

At1April2019

HK$ million

Decreaseinlanduserights (177.2)Increaseinright-of-useassets 2,396.7Increaseindeferredtaxassets 23.4Decreaseinotherreceivables (26.6)Increaseinotherpayables (29.9)Increaseinleaseliabilities (2,331.0)

(144.6)

Thenetimpactonretainedearningson1April2019wasadecreaseofHK$144.6million.

(v) Lessor accounting

TheGroupdidnotneedtomakeanyadjustmentstotheaccounting forassetsheldas lessorunderoperatingleasesasaresultoftheadoptionofIFRS16.

2. REVENUE AND SEGMENT INFORMATION

Revenuerepresents thenetamountsreceivedandreceivable forgoodssoldandservicesprovided lessreturnsandnetoftradediscounts.

Forthepurposesof resourceallocationandperformanceassessment, informationreportedtothechiefoperatingdecisionmaker (the“CODM”),whichcomprisesexecutivedirectorsof theCompany,mainlyfocusesonthe locationofmanagement.Revenuederivedfromeach locationofmanagement is furtheranalysed intothosefromretailandwholesalemarketswhenreviewedbyCODM.TheGroup’sreportableandoperatingsegments for thesixmonthsended30September2019and2018 includedtwosegments,namely(i)businessintheMainlandChinaand(ii)businessinHongKong,Macauandothermarkets.

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2. REVENUE AND SEGMENT INFORMATION (Continued)

(a) Analysis of the Group’s revenue and results by reportable segment

For the six months ended 30 September (unaudited)

Mainland ChinaHong Kong, Macau and

other markets Total2019 2018 2019 2018 2019 2018

HK$ million HK$ million HK$ million HK$ million HK$ million HK$ million

Revenue Externalsales(note i) —Retail 13,765.4 13,094.4 8,803.8 11,070.4 22,569.2 24,164.8 —Wholesale(note ii) 6,458.7 4,927.3 505.3 610.8 6,964.0 5,538.1

Segment/grouprevenue 20,224.1 18,021.7 9,309.1 11,681.2 29,533.2 29,702.9Inter-segmentsales(note iii) – – 1,506.8 1,887.2 1,506.8 1,887.2

20,224.1 18,021.7 10,815.9 13,568.4 31,040.0 31,590.1

Adjustedgrossprofit (beforeelimination) 6,444.6 5,356.7 2,610.7 3,149.9 9,055.3 8,506.6Inter-segmenteliminations – 1.3 8.4 (169.7) 8.4 (168.4)

Adjustedgrossprofit (note i) 6,444.6 5,358.0 2,619.1 2,980.2 9,063.7 8,338.2Otherincome 121.4 102.1 91.6 65.1 213.0 167.2Sellinganddistributioncostsand generalandadministrative expenses (3,723.5) (3,397.7) (2,026.0) (2,119.2) (5,749.5) (5,516.9)

Coreoperatingprofit (segmentresult) 2,842.5 2,062.4 684.7 926.1 3,527.2 2,988.5

Unrealised(loss)/gainongold(note iv) (917.2) 190.3Others(note v) (192.2) (361.7)Interestincome 37.0 58.7Financecosts (255.1) (153.9)

Profitbeforetaxation 2,199.7 2,721.9

Othersegmentinformation includedinmeasurementof coreoperatingprofit (segmentresult):

Concessionairefees 865.0 852.6 0.7 7.2 865.7 859.8Operatingleasepaymentsin respectofrentedpremises 76.8 166.8 41.1 602.3 117.9 769.1Staffcosts 1,476.3 1,255.5 814.6 779.0 2,290.9 2,034.5Depreciationandamortisation 452.5 316.6 693.5 145.0 1,146.0 461.6

Notes:

(i) Included intheexternalsalesandadjustedgrossprofitHK$333.0million (2018:HK$336.0million)andHK$123.1million (2018:HK$123.1million)aregenerated fromHeartsOnFireCompany,LLC,respectively.

(ii) Wholesalerevenuerepresentsrevenuefromjewellerytrading,salestofranchiseesandretailersandprovisionofservicestofranchisees.

(iii) Inter-segmentsalesarechargedatapricemutuallyagreedbybothparties.

(iv) AfairvaluelossongoldloansofHK$1,303.1millionasdisclosedinnote3(2018:afairvaluegainongoldloansofHK$205.9million)wasrecorded,ofwhichHK$917.2million(2018:HK$190.3million)hasnotyetbeenrealisedduetotimingdifference in therecognitionof the impactofchanges ingoldpricebetweengoldloans(shortposition)andgoldinventories(longposition).

(v) Othersrepresentothergainsandlosses,otherexpensesandshareofresultsofanassociate.

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2. REVENUE AND SEGMENT INFORMATION (Continued)

(a) Analysis of the Group’s revenue and results by reportable segment (Continued)

Adjustedgrossprofitrepresentsthegrossprofitgeneratedfromeachsegmentwithoutallocationofunrealised (loss)/gainongold.Coreoperatingprofit represents theprofit generated fromeachsegmentwithoutallocationofunrealised(loss)/gainongold,othergainsandlosses,otherexpenses,shareof resultsofanassociate, interest incomeandfinancecosts.This is themeasurereportedtotheCODMforthepurposesofresourceallocationandperformanceassessment.

(b) Analysis of the Group’s assets by reportable segment:

Mainland ChinaHong Kong, Macau and

other markets TotalAt

30 September2019

At31March

2019

At30 September

2019

At31March

2019

At30 September

2019

At31March

2019HK$ million HK$ million HK$ million HK$ million HK$ million HK$ million(unaudited) (audited) (unaudited) (audited) (unaudited) (audited)

Property,plantandequipment 3,503.1 3,769.8 1,687.4 1,718.2 5,190.5 5,488.0Right-of-useassets 600.3 – 1,665.1 – 2,265.4 –Investmentproperties – – 213.7 219.2 213.7 219.2Jewellerycollectibles – – 1,520.1 1,520.1 1,520.1 1,520.1Inventories 23,574.6 20,838.1 18,945.5 18,648.0 42,520.1 39,486.1

Totalsegmentassets 27,678.0 24,607.9 24,031.8 22,105.5 51,709.8 46,713.4

Segment liabilities

NoliabilitiesareincludedinthemeasuresoftheGroup’ssegmentreportingthatarereviewedbytheCODM.Accordingly,nosegmentliabilitiesarepresented.

(c) Analysis of the Group’s assets by geographical area

TheGroup’snon-currentassets,excluding loanreceivables, investments inassociates,amountsduefromassociates, financial assetsat fair value throughprofitor lossanddeferred taxassets,bygeographicalareasareasfollows:

At30 September

2019

At31March

2019HK$ million HK$ million(unaudited) (audited)

MainlandChina 4,703.5 4,544.2HongKong,Macauandothermarkets 5,029.0 3,410.5

9,732.5 7,954.7

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(d) Disaggregation of revenue from contracts with customers

TheGroupderivesrevenuefromthetransferofgoodsandservicesatapointintimeandovertimeinthefollowingmajorproductcategories:

Six months ended 30 September2019 2018

HK$ million HK$ million(unaudited) (unaudited)

At a point in timeRetailsalesof —Gem-setjewellery 5,288.2 5,608.7 —Goldproducts 12,886.1 14,358.0 —Platinum/Karatgoldproducts 2,523.0 2,556.0 —Watches 1,871.9 1,642.1

22,569.2 24,164.8

Wholesaletofranchisees/retailers 6,750.2 5,143.9Jewellerytrading 102.7 309.3

Over timeServiceincomefromfranchisees 111.1 84.9

29,533.2 29,702.9

3. PROFIT BEFORE TAXATION



Profitbeforetaxationhasbeenarrivedataftercharging/(crediting):

Staffcosts 2,290.9 2,034.5Concessionairefees 865.7 859.8Operatingleasepaymentsinrespectofrentedpremises 117.9 769.1Depreciationofproperty,plantandequipment 473.1 419.6Depreciationofinvestmentproperties 5.5 7.1Depreciationofright-of-useassets 642.7 –Amortisationoflanduserights – 7.2Amortisationofotherintangibleassets 24.7 27.7Impairmentofgoodwill(includedinotherexpenses) 26.3 –Impairmentofamountduefromanassociate 4.8 –Reversalofallowancesoninventories(includedincostofgoodssold) (45.9) (153.2)Reversaloflossallowance (5.9) (1.3)Fairvalueloss/(gain)ongoldloans(includedincostofgoodssold) 1,303.1 (205.9)

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4. TAXATION



Thetaxationchargecomprises:

Currenttax:EnterpriseIncomeTax(“EIT”)inMainlandChina 510.6 455.8HongKongProfitsTax 65.6 247.6Macaucomplementarytax 19.5 23.0Taxationinotherjurisdictions 0.8 2.4

596.5 728.8

Deferredtaxcredit (27.4) (9.3)Withholdingtax(1) 51.2 8.6

620.3 728.1

(1) Withholdingtaxmainlyrepresentswithholdingtaxonintra-grouplicenceincomeandinterestincomefromMainlandChinasubsidiaries.

HongKongProfitsTaxiscalculatedat16.5%oftheestimatedassessableprofitforbothperiods.

UndertheEnterpriseIncomeTaxLaw(the“EITLaw”)ofthePeople’sRepublicofChinaandImplementationRegulationoftheEITLaw,thetaxrateofthesubsidiariesinMainlandChinais25.0%forbothperiods.

For certain subsidiariesof theCompany inMainlandChina, theyareentitled to the tax incentives inconnectionwiththedevelopmentofthewesternpartofMainlandChina.Theapplicabletaxrateis15.0%forbothperiods.

Macaucomplementary tax is calculatedat themaximumprogressive rateof12.0%on theestimatedassessableprofitforbothperiods.

5. EARNINGS PER SHARE

The calculationof thebasic earningsper share for theperiod is basedon the consolidatedprofitattributabletoshareholdersoftheCompanyfortheperiodandonthe10,000,000,000(sixmonthsended30September2018:10,000,000,000)sharesinissueduringtheperiod.

Dilutedearningspershareisthesameasbasicearningspershareastherewasnopotentialordinarysharedilutionduringbothperiods.

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6. DIVIDENDS


HK cents per share HK$ million

HK cents per share HK$ million

Dividendspaidandrecognisedasdistribution duringtheperiod:Forprioryear: –Finaldividends 20.0 2,000.0 15.0 1,500.0 –Specialdividends 30.0 3,000.0 30.0 3,000.0

5,000.0 4,500.0

On28November2019, thedirectorsof theCompanyhavedeterminedtodeclarean interimdividendofHK12.0centspershare,totallingHK$1,200.0millionforthesixmonthsended30September2019.

7. INVENTORIES


2019 2019HK$ million HK$ million(unaudited) (audited)

Rawmaterialsfor: Gem-setjewellery 6,332.5 5,810.6 Goldproducts 1,185.2 1,719.0 Platinum/Karatgoldproducts 378.0 391.6

7,895.7 7,921.2

Finishedgoods: Gem-setjewellery 16,188.4 15,583.5 Goldproducts 13,614.8 11,706.6 Platinum/Karatgoldproducts 3,032.5 2,443.7 Watches 1,591.4 1,672.2

34,427.1 31,406.0

Packagingmaterials 197.3 158.9

42,520.1 39,486.1

TheGroupreversedHK$45.9millionof inventorywrite-down(30September2018:HK$153.2million)andrecognised in“costofgoodssold” inconsolidatedstatementofprofitor loss for theperiodended30September2019.

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MANAGEMENT DISCUSSION AND ANALYSIS

BUSINESS REVIEW

TheGroup’s revenuewas stableduring1HFY2020, thanks toourexpansion strategy inMainlandChina,whichmadeup68.5%oftheGroup’srevenue.Ourcontinuousenhancementonproductofferingsandretailexperiencealsosupportedtheoperationstogaugecustomers’demand.

Revenue BreakdownGroup

Revenue by reportable segment

2015 2016 2017 2018 20190

5,000

15,000

10,000

25,000

20,000

35,000

30,00029,533

59.2%

40.8%

59.7%

40.3%

60.4%

39.6%

60.7%

39.3%

68.5%

31.5%

28,124

21,526

24,754

29,703

12.2%

0.6%

20.3%

(HK$ million)Six months ended 30 September

YoY change

Mainland China

Hong Kong, Macau and other markets

• TheGroup’s revenuewas stableatHK$29,533million in1HFY2020.MainlandChinadeliveredadecent revenuegrowthof 12.2%during theperiod, supportedbyPOSopeningsandsteadySSSG.ItscontributiontotheGroup’srevenuewasliftedto68.5%.

• InHongKong,Macauandothermarkets, revenuedroppedby20.3% largelydue toatoughbaseofcomparison,weakenedconsumersentimentandasurge in internationalgoldprice.

Revenue by product (excluding jewellery trading and service income from franchisees)

2015 2016 2017 2018 2019

0.5%

2.6%

0

5,000

15,000

10,000

25,000

20,000

35,000

30,000 29,319

26.6%

55.7%

12.7%5.0%

27.2%

53.6%

12.9%6.3%

24.2%

57.8%

11.3%6.7%

23.3%

58.9%

11.4%

28,023

21,301

24,127 23.4%

60.5%

10.5%5.6%

29,309

6.4%

0.0%

9.2%14.0%


YoY change

Platinum/Karat gold products

Watches

Gem-set jewellery

Gold products

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• Revenueofgoldproductsdeclinedby2.6%amidarelativelyhigherbaseofcomparisonand thewaninggolddemandresulted fromasurge in internationalgoldprice.Goldproducts’contributiontotheGroup’srevenuewasreducedby160basispointsyear-on-yearto58.9%.

• Revenueofwatches increasedby14.0%during theperiodas the supply situationimprovedandthedemandremainedresilientin1HFY2020.

Mainland China

Revenue by operation model

2015 2016 2017 2018 2019

5.1%

31.1%

0

5,000

15,000

10,000

20,000

25,000

20,224

77.7%

22.3%

79.0%

21.0%

76.9%

23.1%

72.7%

27.3%

68.1%

31.9%

16,659

12,851

14,944

18,022

12.2%


Retail

Wholesale

YoY change

• InMainland China, our retail revenue represents sales from self-operated POS,e-commerceandotherdirectchannels,whilewholesale revenue represents sales tofranchiseesandprovisionofservicestofranchisees.

• Revenue inMainlandChina increasedby12.2% in1HFY2020.Onaconstantexchangeratebasis,revenuegrew17.4%duringtheperiod.

• Wholesalerevenuecontinuedtodemonstratearobustgrowthof31.1%,boostedbyourexpansionofPOSinlowertierandcountylevelcitiesthroughfranchisees.Asaresult,itsrevenuecontributionexpandedfurtherby460basispointsto31.9%duringtheperiod.

• FranchisedCHOWTAIFOOKJEWELLERYPOS incounty levelcitiesaremainlyoperatedunder sell-inmodelwhere sales is recognisedwhenproducts aredelivered toourfranchisees.Fortheremaining franchisedPOS inMainlandChina,whichmakingupthemajority,sales isrecognisedonconsignment.Weretain inventoryownershipuntilsalestransactionsarecompletedwith retail consumers,uponwhichwholesale revenue isrecognised. As at 30 September 2019,wehad 1,624 franchised CHOWTAI FOOKJEWELLERYPOS.27.8%outof the franchisedCHOWTAIFOOK JEWELLERYPOSwereoperatedunderthesell-inmodelandtherestwasunderconsignment.

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Revenue by operation model

2015 2016 2017 2018 2019

20.5%

20.3%

17.3%0

2,000

6,000

4,000

10,000

8,000

14,000

12,000

9,309

96.6%

3.4%

94.7%

5.3%

91.3%

8.7%

94.8%

5.2%

94.6%

5.4%

11,464

8,675

9,810

11,681


YoY change

Retail

Wholesale

• InHongKong,Macauandothermarkets,ourretail revenuerepresentssales fromself-operated POS, e-commerce and other direct channels,whilewholesale revenuerepresentssalestofranchisees,salestoretailersandsalesfromjewellerytrading.

• Retail revenuedeclinedby20.5% in1HFY2020,whilewholesalerevenuefellby17.3%duetoadropinthesalesofjewellerytradingduringtheperiod.

SSSGGroup

SSSG by major market26.0%

1Q 2Q 3Q 4Q 1Q 2Q

5.7%

-6.0%

9.1%

-6.8%

-42.3%

10.5%

-10.9%0.7%

3.8%

23.0%

-7.4%

Mainland China

Hong Kong and Macau

FY2019 FY2020

1HFY2019 1HFY2020

SSSG SSSGSSS volume

growth MainlandChina 4.9% 1.8% 11.7%HongKongandMacau 24.4% 27.5% 29.7%

• Thevolatilemacrobackdropandasurgeininternationalgoldpricedampenedconsumerdemand in bothMainlandChina andHong Kong andMacau, in particular during2QFY2020.Volumedeclinedby11.7%and29.7%inMainlandChinaandHongKongandMacau,respectivelyin1HFY2020.

–17–

• InMainlandChina,SameStoreASP recordeda robust increase in1HFY2020.SSSG in1HFY2020 stoodat1.8%. Includingoure-commercebusiness,MainlandChinaSSSGapproximated2.3%,withSSSvolumedeclinedby9.0%.

• Ontheotherhand,SSS inHongKongandMacaudroppedby27.5%duringtheperiod,duetoatoughbaseofcomparisonandsluggishbusinessenvironment.

Mainland China

SSSG of major products

10.8%

1Q 2Q 3Q 4Q 1Q 2Q

1.0%

-5.4%

13.5%

-15.4%

-0.4%

12.4%

8.0%

0.1%

-3.8%

11.1%

-11.0%Gem-set jewellery

Gold products

FY2019 FY2020

1HFY2020 1HFY2019

SSSGSSS volume

growthSame Store

ASPSameStore

ASP(1)

Gem-setjewellery 4.1% 4.3% HK$6,300 HK$6,300Goldproducts 2.0% 21.9% HK$4,900 HK$3,900Platinum/Karatgoldproducts 5.9% 0.3% HK$1,800 HK$1,700Watches 13.8% 3.3% HK$17,500 HK$14,800 Overall 1.8% 11.7%

(1) Same Store ASP on 1HFY2020 Same Store basis

• InMainlandChina, gem-set jewellery, platinum/karat goldproducts andwatchesdeliveredapositiveSSSGduring1HFY2020.

• Demand forgoldproductswasdampenedby thesurge inaverage internationalgoldpriceof10.7%year-on-year in theperiod.Yet,goldproductsASPenjoyedanupliftof25.5%asCTF•HUÁCollectioncontinuedtogainpopularityandtheaverageweightpergoldproductsoldincreasedduringtheperiod.

• Gem-set jewellerySSSdeliveredapositivegrowthof4.1% in1HFY2020, fuelledbyahealthyvolumegrowth.SameStoreASPtrendremainedsteadyduringtheperiod.

–18–

Hong Kong and Macau

SSSG of major products

30.9%

1Q 2Q 3Q 4Q 1Q 2Q

-2.3%

-5.6%2.6%

-34.8%

-49.2%

-12.7%

-15.7%

-10.4%

26.4%

40.7%

-8.2%

Gem-set jewellery

Gold products

FY2019 FY2020

1HFY2020 1HFY2019

SSSGSSS volume

growthSame Store

ASPSameStore

ASP(1)

Gem-setjewellery 24.6% 24.7% HK$10,400 HK$10,400Goldproducts 33.1% 37.8% HK$8,800 HK$8,200Platinum/Karatgoldproducts 21.8% 19.5% HK$1,900 HK$1,900Watches 12.1% 6.2% HK$64,700 HK$54,100

Overall 27.5% 29.7%

(1) Same Store ASP on 1HFY2020 Same Store basis

• InHongKongandMacau,goldproductsunderperformedotherproductcategoriesduring1HFY2020,withvolumedeclinedby37.8%year-on-yearatSameStorelevel.

• Theweakenedconsumer sentiment continued to take tollon thegem-set jewelleryperformance,resultedinaSSSdropof24.6%duringtheperiod.

Mainland China BusinessPOS movement by store brand(1) — Mainland China

31.3.2018 31.3.2019 During 1HFY2020 30.9.2019As at Total Total Addition Reduction Net Total

CHOWTAIFOOKJEWELLERY(2) 2,317 2,803 407 (74) 333 3,136CTFWATCH 106 113 3 (3) – 113TMARK – 4 – – – 4HEARTSONFIRE 6 3 – (2) (2) 1SOINLOVE 9 27 9 – 9 36MONOLOGUE 11 38 12 (2) 10 48

(1) Shop-in-Shop (“SIS”) and Counter-in-Shop (“CIS”) excluded(2) ARTRIUM and JEWELRIA POS included

–19–

RSV by product

24.7%

57.8%

12.1%

5.4%25.0%

12.8%

5.7%

56.5%

1HFY2019 1HFY2020 RSV YoY change

Gem-setjewellery 14.9%Goldproducts 10.9%Platinum/Karatgoldproducts 19.2%Watches 19.3%

Overall 13.3%

RSV by channel

89.5%

5.7%4.8%

6.2%4.7%

89.1%

1HFY2019 1HFY2020 RSV YoY change

CHOWTAIFOOKJEWELLERY 12.8%Otherstorebrands(3) 23.7%E-commerce(4) 10.7%

Overall 13.3%

(3) CTF WATCH, T MARK, HEARTS ON FIRE, SOINLOVE and MONOLOGUE included(4) Major platforms included Chow Tai Fook eShop, Tmall, JD.com, Vipshop; online order distribution excluded (i.e. routing online orders

to POS for delivery service)

The following analyses focus on CHOWTAI FOOK JEWELLERY POSwhich contributedapproximately90%oftheRSVinMainlandChina:

CHOW TAI FOOK JEWELLERY POS

RSV and POS by tier of cities(1)

1HFY2020

42.7%20.8%

24.4%

12.0%

16.3%

17.4%

16.7%

49.6%

% of POS % of RSVRSV YoY

changeNet POS

movement

TierIcities 6.7% 47TierIIcities 11.3% 103TierIIIcities 18.0% 90TierIVcitiesandothers 19.1% 93

(1) As an initiative to better reflect the economic development and strategic significance of cities in Mainland China, we have adopted the city-tier ranking published by Yicai Global since 1HFY2020. New first-tier cities were grouped under Tier II cities in our analysis. Please refer to the ranking released on 24 May 2019

• During1HFY2020,weopenedanetof333CHOWTAIFOOKJEWELLERYPOSinMainlandChina.

–20–

• Approximately55.0%ofthenetopeningswerelocatedinTierIII,IVandothercities.TierIII,IVandothercitiesachievedarobusthigh-teensRSVgrowthduringtheperiod,mainlydrivenbythenewopeningsandarelativelystrongerSameStoreperformance.

• Byoperationmodel,97.6%ofthenetopeningswere infranchisedformatand51.4%ofthesefranchisedPOSwereundersell-inmodel.

RSV and POS by operation model

1HFY2020


changeNet POS

movement

Self-operated 4.8% 8Franchised 26.7% 325

48.2%

51.8%

41.1%

58.9%

RSV and POS by self-operated model

53.4%

42.7%

3.9%41.4%

5.0%

53.5%

1HFY2020


changeNet POS

movement

Self-operated(Departmentstore) 3.2% 23Self-operated(Shoppingmall) 20.1% 36Self-operated(Standalonestore) 10.8% 5

• In1HFY2020,self-operatedPOSatshoppingmalloutperformedtheotherformatswithaRSVgrowthof20.1%,partlydueto itsmoreappealingshoppingexperienceandpartlyduetonewopenings.

• Weconsolidatedanetof28standalonestoresandPOSatdepartmentstoresduring1HFY2020.

–21–

E-commerce business

RSV by product

RSV by product

67.9%

20.6%11.5%

0.0%

0.5%

19.3%15.7%

64.5%

1HFY2019 1HFY2020

Gem-setjewelleryGoldproductsPlatinum/KaratgoldproductsWatches

1HFY2020 1HFY2019RSV YoY

change ASP ASP

Gem-setjewellery 49.6% HK$1,600 HK$1,600Goldproducts 4.3% HK$1,500 HK$1,600Platinum/Karatgoldproducts 3.0% HK$900 HK$800

Overall 9.7% HK$1,400 HK$1,300

E-commerce business performance1HFY2020

(1) Source: Chow Tai Fook eShop, Tmall and JD.com(2) Source: Official Sina Weibo, Tencent Weibo and WeChat accounts

RSV

YoY change

of respective RSV of respective retail sales volume

9.7%

E-commerce platforms

90+

5.1% 14.0%4.9% 14.1%

1,400 1,300

Number of followers(2)

9,643,000+

Unique daily visitors(1)

487,000

ASP

1HFY2020 1HFY2019 1HFY2020

1HFY2020HK$

1HFY2019

1HFY2019HK$

–22–

• RSVofoure-commercebusinessrose9.7% in1HFY2020,backedbya49.6%growthofgem-setjewellery.

• Contributionofthee-commercebusinesstotheRSVinMainlandChinawas4.9%duringtheperiod. Intermsofretailsalesvolume, itsaccountedfor14.1%ofMainlandChina’soperationsduring theperiod,with13.5%and0.6%of thecontributioncoming frome-commerceplatformsandonlineorderdistribution,respectively.

Hong Kong, Macau and Other Markets BusinessPOS movement by store brand(1) — Hong Kong, Macau and other markets

As at 31.3.2018 31.3.2019 During 1HFY2020 30.9.2019

Total Total Addition Reduction Net Total

CHOW TAI FOOK JEWELLERY(2) 122 130 12 (3) 9 139HongKong,China 80 80 6 (1) 5 85Macau,China 19 19 – (2) (2) 17Othermarkets 23 31 6 – 6 37

T MARK – 1 – – – 1

HEARTS ON FIRE 14 15 – (4) (4) 11

MONOLOGUE – – 1 – 1 1

(1) SIS and CIS excluded(2) ARTRIUM POS included

• ForCHOWTAIFOOKJEWELLERY,weselectivelyopenedanetof3POSinHongKongandMacau in1HFY2020,primarily located inshoppingmalls.AMONOLOGUEPOSalso firstopenedinHongKongduringtheperiod.

• Meanwhile,we continued toexpand foothold inothermarkets, 6CHOWTAI FOOKJEWELLERYPOSopenedduring theperiod, coveringneighbouringcountries suchasKorea,thePhilippinesandSingapore.

Hong Kong and Macau business

RSV by product

1HFY2019 1HFY2020RSV YoY

change

Gem-setjewellery 23.5%Goldproducts 22.6%Platinum/Karatgoldproducts 22.1%Watches 8.8%

Overall 21.1%

21.6%

64.5%

8.5%5.4%

20.9%8.4%

7.5%

63.3%

–23–

(1) Value of retail sales of jewellery, watches and clocks, and valuable gifts in Hong Kong according to Census and Statistics Department of the HKSAR Government

(2) Source: Commerce and Economic Development Bureau of the HKSAR Government and Macao Statistics and Census Service

RSV and POS by geography

1HFY2020


changeNet POS

movement

HongKong 24.9% 6Macau 5.9% 2

83.8%

16.2%

81.4%

18.6%

• Customer traffic inHongKongandMacausoftenedand fellby18.3%year-on-year in1HFY2020.

• Yet,MacauoutperformedHongKongduring theperiodandregisteredapositiveRSVgrowthof5.9%.

• ThepercentageofRSVsettledbyChinaUnionPay,Alipay,WeChatPayorRMBto thetotalRSVofHongKongandMacaumarket,aproxyforsalescontributionfromMainlandtourists,loweredfrom45.4%in1HFY2019to39.7%in1HFY2020.

Our Hong Kong and Macau performance

Retail sales of jewellery industry in Hong Kong(1)

RSV settled by China UnionPay, Alipay,WeChat Pay or RMB

Number of Mainland visitors(2)

Customer traffic at POS

Hong Kong and Macau industry performance

YoY change

24.1%Hong Kong Macau

YoY change YoY change

8.6% 14.9%

YoY change

18.3% 45.4%39.7%1HFY20191HFY2020

1HFY2020

1HFY2020

–24–

FINANCIALS

DespitetheuncertainmacroeconomicsandsituationinHongKong,ourprofitabilityremainedstable,benefittingfromthepositivefundamentalsandsteadygrowthoftheMainlandChinasegment.

Profitability

Overall Core operating profit(2) by reportable segment

28.1%30.7%

18.6% 19.5%

10.1%11.9%

2017 2018 2019

19.7%

9.7%

28.7%

Six months ended 30 September

Adjusted gross profit margin(1)

Selling and distribution costs and general and administrative expenses(”SG&A”) as a % to revenue

Core operating profit margin(2)

2017 2018 20190

500

1,500

1,000

3,000

2,500

2,000

2,843

685

2,062

926

1,853

543

37.8%

26.1%


YoY change

Mainland China


Mainland China Hong Kong, Macau and other markets

29.7%31.9%

18.9% 18.4%

11.4%

14.1%

30.7%

19.2%

12.4%

2017 2018 2019


Adjusted gross profit margin(1)

SG&A as a % to revenue

Core operating profit margin(2)

28.1%

21.8%

7.4%

25.5%

18.1%

7.9%

25.5%

20.5%

5.5%

2017 2018 2019


(1) Adjusted gross profit and the corresponding margin, a non-IFRS measure, eliminates the effect of unrealised loss (gain) on gold loans, which the Company believes is useful in gaining a more complete understanding of its operational performance and the underlying trend of its businesses

(2) Core operating profit and the corresponding margin, a non-IFRS measure, being the aggregate of adjusted gross profit and other income, less SG&A, which the Company believes is useful in gaining a more complete understanding of its operational performance and the underlying trend of its core businesses

–25–

Group

• Adjustedgrossprofitmargin increased in1HFY2020,thankstothe improvement in like-for-likegrossprofitmarginofgoldproductsresultedfromthesurgeofinternationalgoldprice.Coreoperatingprofitmarginbenefitted fromtheadjustedgrossprofitmarginimprovementdespiteSG&Aalsoedgedhigheryear-on-year.

• MainlandChinacontinuedtobeourmainprofitcontributorandaccountedforaround81%of theGroup’scoreoperatingprofit in1HFY2020,whileHongKong,Macauandothermarketsregisteredasignificantdecline incoreoperatingprofitby26.1%duetotheuncertainsituationinHongKong.

Mainland China

• Adjustedgrossprofitmarginexpandedby220basispoints in1HFY2020as like-for-likegrossprofitmargin improvedwhencomparedtothesameperiod lastyear,whileSG&Aratioalsoimprovedby50basispointsduetooperatingleverage.

• Asa result, coreoperatingprofit grewby37.8% in1HFY2020and its correspondingmarginwasliftedby270basispoints.


• Adjustedgrossprofitmargin improvedby260basispointsto28.1%,drivenbyboththesurge ingoldpriceandthe improvement ingrossprofitmarginofour jewellerytradingbusiness.

• SG&Aratioincreasedby370basispointsto21.8%duetooperatingdeleverage.

• Coreoperatingprofitdroppedsignificantlyby26.1%in1HFY2020and itscorrespondingmargindeclinedby50basispointsto7.4%.

Gross profit margin

Unrealisedloss(gain)

Six months ended 30 September 2017 2018 2019

Grossprofitmargin 28.9% 28.7% 27.6%Unrealisedloss(gain)ongoldloans (0.2)% (0.6)% 3.1%Adjustedgrossprofitmargin 28.7% 28.1% 30.7%

• Impactfromtheunrealisedlossongoldloansincreasedduetothesurgeininternationalgold price aswell as the increase in gold loan balance during 1HFY2020.During1HFY2020, fair value lossongold loansofHK$1,303millionwas recorded,ofwhichHK$917millionwasunrealised.

–26–

• Unrealised loss (gain) for theperiodrepresentstheneteffectof (i) thereversalof theloss (gain) recordedduetothetimingdifference inrecognisingtheeffectof longandshortposition ingoldwhenwe takea snapshotpositionat theendof thepreviousfinancialyear;and(ii)theloss(gain)arisingfromsuchtimingdifferenceattheendofthecurrentfinancialperiod.

• Weusegold loans (shortposition ingold) foreconomichedgepurposetomitigatethefinancial impactof thegoldprice fluctuations inourgold inventories (longposition).Whilethelong-termeffectoflongandshortpositionsingoldisexpectedtonetouteachother through thesalesofgoldproducts,a loss (gain)mayarisedue toashort-termtimingdifferencebetweenthetimewhena loss (gain)ongold loans is recorded inthecostofgoodssoldandthetimewhensalesofhedgedgold inventoriesarerecognised,whenwetakeasnapshotpositionattheendofthereportingperiod.

Changes in adjusted gross profit margin

2018 201925.0%

26.0%

29.0%

28.0%

27.0%

31.0%

30.0%

28.1%

30.7%

0.1%

1.1%

1.2%

0.4%


Change in Mainland China/Hong Kong,Macau and other markets mix

Changes in gross pro�t margin by product

Changes in wholesale contribution

Changes in product mix in retail business

• Atgroup level,1HFY2020adjustedgrossprofitmarginwasupby260basispointsyear-on-year.Animprovementingrossprofitmarginbyproduct inbothretailandwholesalebusinessesledtoanexpansionofmargin.

London gold price

1.4.2018 1.4.2019 30.9.20191,100

1,150

1,200

1,250

1,300

1,350

1,400

1,450

1,500

1,550

1,600

(US$ per ounce)

Average of T-150/T-180 days(1)

London gold price

(1) Average of T-150/T-180 days refers to the average gold price of previous 150 or 180 days on rolling basis, being a proxy of the average price of our hedged inventories. As gold inventories turnover lengthened in 1HFY2020, average of T-150 days and T-180 days was used for FY2019 and 1HFY2020, respectively

–27–

Impact of IFRS 16 Leases

• IFRS16– Leaseswas firstapplied to supersade IAS17– Leases in theconsolidatedfinancialstatementsforthesixmonthsended30September2019.

• Weelectedtoadoptthe“modifiedretrospective”approachforthetransitiontoIFRS16underwhichtheprior-periodcomparativefinancialinformationwasnotrestated.

• ThisnewstandardhasnoimpactontheGroup’soperationsnorcashflows.

• The tablebelow illustrates the impactof thenewstandardon theGroup’s financialperformance:

Six months ended30 September(HK$ million) 2018

2019(Pre-

IFRS 16Leases)

YoYChange

Post-IFRS 16/

Pre-IFRS 16

2019(Post-

IFRS 16Leases)

YoYChange

Revenue 29,703 29,533 0.6% – 29,533 0.6%Adjusted gross profit 8,338 9,064 8.7% – 9,064 8.7% Adjustedgrossprofit margin 28.1% 30.7% 2.6%pts – 30.7% 2.6% ptsSG&A 5,517 5,773 4.6% (24) 5,750 4.2% SG&Atorevenueratio 18.6% 19.5% 0.9%pts – 19.5% 0.9% pts Depreciationand amortisation(ROU) N/A N/A N/A 636 636 N/A Rentalexpenses 769 761 1.0% (643) 118 84.7%Core operating profit 2,989 3,503 17.2% 24 3,527 18.0% Coreoperatingprofit margin 10.1% 11.9% 1.8%pts – 11.9% 1.8% ptsFinance costs 154 222 44.5% 33 255 65.8% Financecostsonleases N/A N/A N/A 33 33 N/AProfit before taxation 2,722 2,209 18.9% (9) 2,200 19.2%

• RevenuestayedunchangedunderIFRS16.

• ForSG&A,therewasasignificantincreaseindepreciationexpensesoftheleasedassetsofwhichthemajorityoftheincreasewasoffsetbythedecreaseinrentalexpenses.

• Theimpactoncoreoperatingprofitwasimmaterial.

–28–

SG&A

SG&A by reportable segment

38.4%

61.6%

2017 2018 20190

5,7505,517

41.2%

58.8%

4,887

1,000

2,000

3,000

4,000

5,000

6,000

35.2%

64.8%

4.2%

9.6%

4.4%


YoY change

Mainland China


SG&A to revenue ratio

7.2% 7.8%

2.6%

2.9%0.4%2.9%

1.4%0.9%

3.7%

1.1%

3.0% 2.8%

0.5% 1.0%

0.7%

6.0%0

5,7505,517

7.4%

3.3%

3.3%1.5%0.7%

3.0%0.5%

4,887

1,000

2,000

3,000

4,000

5,000

6,000

18.6%19.5%

2017 2018 2019

19.7%

4.2%

7.5%

84.7%161.1%

13.4%107.6%


YoY change

Staff costs and related expenses

Concessionaire fees

Rental expenses

Advertising and promotion expenses

Packaging materials

As a % of respective revenue

Other SG&A(1)

Depreciation and amortisation (Right-of-use assets, “ROU”)

Depreciation and amortisation (Property, plant and equipment)

(1) Other SG&A mainly represented bank charges incurred for sales transaction settlement, royalty fees for the sales of licensed products, certificate expenses and utilities

• SG&Aexpenses increasedby4.2%toHK$5,750million in1HFY2020whileSG&Aratioincreased90basispointsto19.5%.

• With theadoptionof IFRS16,depreciationandamortisation increasedwhile rentalexpensesdecreased,bothsignificantlychangedwhencompared to1HFY2019. If theimpactfromIFRS16wasexcluded,depreciationandamortisationwouldincreaseby7.1%anditscorrespondingratiotorevenuewouldbe1.5%whichissimilartothefirsthalfofthepasttwofinancialyears.

• Packagingmaterials increasedby50basispoints to1.0%asweenhancedourproductpackagingduringtheperiodtoliftbrandvalueandprovidebettercustomerexperiences.

–29–

Staff costs and related expenses

Mainland China

36.2%

60.6%

3.3%2017 2018 2019

0

1,476

32.8%

63.5%

3.6%

1,303

34.3%

62.3%

3.4%

1,133

500

1,000

1,500

7.6%7.3%7.2%

21,000 13.3%

24.8%

8.0%

3.0%

3.3%

(HK$ million)Six months ended 30 September 1HFY2020

YoY change

Average number ofemployees(1)

YoY change

Variable staff costs

Fixed staff costs

Other staff related expenses(2)


Hong Kong and Macau

39.6%

53.6%

6.8%2017 2018 2019

0

719

500

1,000

7.1%

8.4%

6.7% 3,270

36.9%

57.5%

5.5%

62539.5%

54.0%

6.5%

725

3.7%

0.8%

0.4%

1.7%

4.1%

(HK$ million)Six months ended 30 September 1HFY2020

YoY change

Average number ofemployees(1)

YoY change

Variable staff costs

Fixed staff costs

Other staff related expenses(2)


(1) Employees in production function excluded(2) Other staff related expenses mainly included staff messing, medical care, educational expenses, etc.

• InMainlandChina,staffcostsandrelatedexpenseswereupby13.3%in1HFY2020.Theincremental expensesweremostly related to the variable performance basedcomponent,whichwasinlinewiththebusinessgrowthinMainlandChina.

• InHongKongandMacau,staffcostsandrelatedexpenseswereslightlydecreasedby0.8%.Thevariablestaffcostswas flatyear-on-yearassomeshort-termsales incentivesweregiventostaff,particularlythefrontlinestaff,toboosttheirmorale.

–30–

Concessionaire fees and lease-related expenses(1)

Mainland China

2017 2018 20190

865801 853

500

1,000

8.6%8.8% 8.7%

1.5%


YoY change

Concessionaire fees


Hong Kong and Macau

2017 2018 20190

561667

575

500

1,000

7.4%

5.2%6.2%

100.0% 100.0%

7.0%

89.2%

3.8%

2.5%


Depreciation and amortisation (ROU)

Finance costs on leases

Rental expenses


YoY change

(1) Under IFRS 16 — leases, depreciation and amortisation (ROU) and finance costs on leases replace the majority of rental expenses and therefore we combined these three elements for the analysis of lease-related expenses in Hong Kong and Macau

• InMainlandChina,concessionairefeesslightlyincreasedby1.5%assalesimproved.Thehigherconcessionairefeesratiowasmainlyduetotheshiftofsalesmixtowardsgem-setproductswhicharegenerallysubjecttohigherrates.

• Lease-relatedexpenses fellby2.5%asthebenefitofPOSclosures inFY2019was fullyreflectedin1HFY2020.Yetlease-relatedexpensesratioexpandedby100basispointsto6.2% in1HFY2020due to theoperatingdeleverage.Theaverage incrementon leaserenewalduring1HFY2020was20%,orinarangeofapproximately0%to50%.

–31–

Other income, other gains and losses and other expenses


2017 2018 2019 2019 vs 2018HK$million HK$million HK$ million YoY change

Otherincome 186 167 213 27.4%Othergainsandlosses 111 (334) (142) 57.4%Otherexpenses (24) (28) (52) 86.4%

• Other incomemainlyarosefromthegovernmentgrantsreceivedbythesubsidiaries inMainlandChina.

• OthergainsandlossesmainlyrepresentedanetforeignexchangelossofHK$142million(1HFY2019:anet foreignexchange lossofHK$326million)dueto thedepreciationofRMBduringtheperiod.

• Otherexpensesmainlyrepresentedthegoodwill impairmentofHK$26millionandtheamortisationofother intangibleassetsofHK$20millionarising fromtheacquisitionofHeartsOnFire.

Interest income, finance costs and taxation


2017 2018 2019 2019 vs 2018HK$million HK$million HK$ million YoY change

Interestincomefrombanks 38 49 37 24.2%Otherinterestincome 6 10 – 100.0%Financecostsonbankborrowings (44) (94) (131) 39.5%Financecostsongoldloans (48) (60) (91) 52.3%Financecostsonleases N/A N/A (33) N/ATaxation (675) (728) (620) 14.8%

• Financecostsongold loans increasedby52.3%wasmainlyduetoa relativelyhigheraverage ratiobetweengold loansandgold inventory in1HFY2020as compared to1HFY2019astheGroupstockedupmoregoldinventoriesamidPOSopeningsinMainlandChina.

• Financecostsonbankborrowingsincreasedby39.5%asbothbankborrowingsandbankborrowingratesincreasedduring1HFY2020.

• Effective tax rate increased from26.7%to28.2% in1HFY2020as thecontributionofMainlandChinasegmentonprofitbeforetaxationincreasedin1HFY2020.

–32–

Inventory Turnover and Capital Structure

Inventory balances and turnover period

Inventory balances by product(1)

54.4%53.2%

34.1% 35.0%

4.3% 3.8%7.2% 8.1%

0

42,32339,327

53.3%

34.4%

4.7%7.5%

38,356

5,000

15,000

10,000

20,000

30,000

25,000

35,000

40,000

45,000

30.9.2018 31.3.2019 30.9.2019

7.6%

5.3%

10.2%

20.3%4.8%

(HK$ million)As at

30.9.2019/31.3.2019Six months change

Gem-set jewellery

Gold products

Platinum/Karat gold products

Watches

Inventory turnover period by category(2)

239

294

60 68

0

362

299

261

70

331

50

150

100

200

300

350

250

400

(Day) 30.9.2019/31.3.2019Six months change

Finished goods

Raw materials

63 days

55 days

8 days

1HFY2019 FY2019 1HFY2020

(1) Packaging materials excluded(2) Being inventory balances, excluding packaging materials, at the end of the reporting period divided by cost of goods sold for the

period, multiplied by 365 (for FY)/183 (for 1HFY)

• Inventorybalances,excludingpackagingmaterials, increasedby7.6%and stoodatHK$42,323millionasat30September2019.

• Inventoryturnoverperiodprolongedby31dayswhencomparedtothatof1HFY2019asinventorybalancesincreasedasat30September2019.

• Asat30September2019,approximatelyHK$5,689millionor13.4%ofourtotalinventorybalanceswereheldby franchisedPOS(31March2019:approximatelyHK$4,590millionor11.6%wereheldbyfranchisedPOS).

• Iftheinventorybalancesheldbyfranchiseeswereexcluded,inventoryturnoverperiodin1HFY2020wouldreduceto313days(1HFY2019:299days).

–33–

Capital structure

As at31.3.2019

HK$million%to

totalequity30.9.2019

HK$ million% to

total equity

Increase(decrease)

HK$ millionDenominated

currency(1)Interest rate

structure(1)

Non-currentassets 8,459 26.9% 10,487 38.8% 2,027 N/A N/A

Inventories 39,486 125.7% 42,520 157.5% 3,034 N/A N/A

Cashandcashequivalents(2) 7,641 24.3% 5,151 19.1% (2,490) MainlyHKD,RMBand

USD

Mainlyvariable

interestrate

Totalborrowings(3) 18,069 57.5% 21,535 79.8% 3,467 Bankborrowings 10,057 32.0% 11,080 41.0% 1,024 HKD Variable

interestrate Goldloans 8,012 25.5% 10,455 38.7% 2,443 RMBand

USDFixed

interestrate

Netdebt(4) 10,428 33.2% 16,384 60.7% 5,957 N/A N/A

Workingcapital(5) 26,307 83.8% 19,113 70.8% (7,194) N/A N/A

Totalequity 31,403 100.0% 27,002 100.0% (4,401) N/A N/A

(1) Information about denominated currency and interest rate structure related to the condition as at 30 September 2019(2) Bank balances and cash equivalents included(3) As at 30 September 2019, bank borrowings amounted to HK$10,483 million and all the gold loans would be matured within 12 months

while bank borrowings amounted to HK$597 million would be matured in more than 2 years but not exceeding 5 years(4) Aggregate of bank borrowings, gold loans, net of cash and cash equivalents(5) Being net current assets

• Weprincipallymeetourworkingcapitalandother liquidity requirements throughacombinationof capital contributions, including cash flows fromoperations, bankborrowingsandgold loans.Gold loansarealsoused foreconomichedgepurpose tomitigatethefinancialimpactofthepricefluctuationsintheGroup’sgoldinventories.

• TheGroup’sdailyoperationwasmainly financedbyoperatingcash flows,andmainlyreliedonshort-termborrowingstosatisfyinventoryfinancingneedsduringpeakseasons,workingcapital for futureexpansionplansandunexpectedneeds.TheGrouphasnotexperiencedanydifficultiesinrepayingitsborrowings.

• TheGroup’s incomeandexpenditureweremostlydenominated inHKDandRMB,whileitsassetsandliabilitiesweremostlydenominatedinHKD,RMBandUSD.

–34–

Effect of RMB fluctuation

• Aspartofourbusinessoperationwas inMainlandChina, thefluctuation inRMBwouldpostsomeimpacttoourperformance.

• TransactionsenteredbytheHongKongentitiesbutdenominated inRMB, includingtheinter-grouptransactionswiththeMainlandChinasubsidiaries,areconverted intoHKD,the functional currency of theGroup, initially using the spot rate at the date oftransactionandtheunsettledtransactionsareretranslatedatclosingexchangerateatthebalancesheetdate.Suchtranslationdifferencesbetweenthespotrateandclosingexchange rateare recognised inprofitor loss,negativelyaffectingourprofit for theperiodwhenRMBdepreciated.

• Exchangedifferencealsoariseswhen i) incomesandexpensesof theMainlandChinasegmentaretranslatedintoHKD,thepresentationcurrencyoftheGroup,attheaverageexchangerate,while thecorrespondingassetsand liabilitiesare translatedatclosingexchangerateandii)changeinclosingexchangeratesatthecurrentfinancialperiodofthenetassetsof theMainlandChinasegment fromtheclosing ratesat thepreviousfinancialyear.Suchdifferencesarerecognisedinthetranslationreserveinequity.

• The tablesbelow illustrate the fluctuationofRMBand the impactonour financialperformance:

30.9.2019/31.3.2019Closing exchange rate

six months change

1HFY2020 vs 1HFY2019Average exchange rate

YoY change

RMBtoHKD 4.9% 4.4%

2018 2019

Six months ended 30 September Asreported

Constantexchangeratebasis As reported

Constantexchangerate basis

RevenueYoYchange 20.0% 17.7% 0.6% 2.6%CoreoperatingprofitYoYchange 24.7% 22.1% 18.0% 22.4%Changesininventorybalances (30Septembervs31March) 10.0% 15.3% 7.7% 10.6%Changesincashandcash equivalents (30Septembervs31March) 39.2% 35.2% 32.6% 30.9%

• Revenueandcoreoperatingprofitonconstantexchangeratebasisarecalculatedbytranslatingcurrentperiod’s revenueandcoreoperatingprofitof theMainlandChinasegment inRMBintoHKDusingthepriorperiod’saverageRMBtoHKDexchangerates.Webelieveusingconstantexchangeratebasiscouldenhancethecomparabilitybetweentwofinancialperiods.

–35–

Cash Flows and Others

Cash flows

2017 2018 2019Six months ended 30 September HK$million HK$million HK$ million

Operatingcashflowsbeforemovementsin workingcapital 2,869 3,124 4,902Leasespaid(1) N/A N/A (621)Netcashusedininventories(2) (2,948) (2,992) (2,701)Netcashfrom(usedin) otheroperatingactivities (187) 317 706Purchaseofjewellerycollectibles (553) – –Capitalexpenditure (410) (528) (444)

Pro forma free cash flows(3) (1,229) (79) 1,842Netchangeinbankborrowings 1,297 1,860 1,023Dividendspaid (3,027) (4,561) (5,038)Othermovements 95 (333) (317)

Net decrease in bank balances and cash (2,864) (3,113) (2,490)

Major cash flows items for 1HFY2020

31.3.2019 30.9.2019

0

2,500

5,000

7,500

10,000

15,000

12,500

7,641

4,902 621

706

317

4441,023 5,038

2,701

5,151

1,842

Other movements

Dividends paid

Net increase in bank borrowings

Capital expenditure

Net cash from other operating activities

Net cash used in inventories(2)

Leases paid(1)

Operating cash �ows before movements in working capital

(HK$ million)

As at As at

Pro forma free cash �ows(3)

(1) With adoption of IFRS 16, leases paid was included in financing activities(2) Net cash used in inventories included net change in inventories, gold loan raised and repayment of gold loans(3) Net cash from (used in) operating activities less leases paid, purchase of jewellery collectibles, capital expenditure and net movements

for gold loans

–36–

Capital expenditure

• TheGroup’scapitalexpenditure incurredduring1HFY2020amountedtoHK$444million(1HFY2019:HK$528million).

Capital expenditure by nature

2017

528

2018 2019

600

400

200

0

63.3%

28.0%

8.7%

410

64.5%

18.8%

16.7%

85.1%

11.0%3.9%

444

(HK$ million) Six months ended 30 September

Furniture, �xtures and equipment and leasehold improvements

Land and buildings and construction in progress

Plant and machinery and motor vehicles

Capital expenditure by function

528

600

400

200

0

20.6%

56.6%

8.9%

13.8%

4447.9%

72.5%

8.7%

10.9%

2017 2018 2019

410

28.6%

38.7%

14.9%

17.8%


Projects

POS

Productions

Of�ces

–37–

CORPORATE STRATEGIES

Business Development

Ourbusinessencounteredarathersoftperformancein1HFY2020ashighbaseofcomparison,ongoingUS-ChinatradeconflictsandcautiousconsumersentimentstretchedouroperationsduringtheperiodwiththescenariobeingaggravatedbythesituationinHongKong.

Weremainprudent inFY2020amidst theescalatingmacrouncertaintieswithcost savingmeasures inplace,whileweremainagile inorder tocapturenewopportunities throughcontinuousmarketpenetrationandtherolloutofourmulti-brandstrategy toexpandourcustomerbase inMainlandChina.Meanwhile,ourexpansionplan intoothermarkets, inparticularAsiancountries,over thepast fewyears ison trackandhasbeeneffective incapitalisingonthegrowthpotentialfromMainlandtourists.

Wecontinuetoenrichourcustomerexperiencethroughtheimplementationofour“Smart+2020” strategic framework.Our response to the transforming retail industryhasgainedpositivefeedbackandhasenabledustomaintainourindustryleadership.

Mainland China

CHOW TAI FOOK JEWELLERY and endorsed brands

• POSwithelevated shop images includingARTRIUMand JEWELRIAexpanded tonewlocationsmainlyinTierItoIIcitiesforcustomerswithsophisticateddemands.

• Expansionthroughpenetrationto lowertiercitieswas furtherexecutedby franchiseesleveraging their localknowledgeandaccess.County levelexpansionplansarebeingimplementedonscheduleinnewlocations.

• Duringtheperiod, therewere319netPOSopeningsofCHOWTAIFOOKJEWELLERY,1and13netPOSopeningsofARTRIUMandJEWELRIA,respectively.

Other brands

• In linewithourmulti-brandstrategy,wehave in thepipeline therolloutofdifferentbrands inorder to furtherenrich customer choiceandcater fordifferent customerdemands.

• 10MONOLOGUEand9SOINLOVEPOSwereopenedduringtheperiod.

–38–

Retail network in Mainland China

CHOW TAI FOOK Brands Other Brands

Asat30September2019

Total POS in Mainland China

3,338 POS

3,088 POS

JEWELRIA

POS45

POS

CTF WATCH

113

POS

ARTRIUM

3 CIS

T MARK

POS4 721

CHOW TAI FOOK JEWELLERY

SIS/CISPOS1 173HEARTS ON FIRE

POS

SOINLOVE

POS

MONOLOGUE

4836

Hong Kong, Macau and Other Markets

Hong Kong and Macau


• Anet of 3 CHOWTAI FOOK JEWELLERYPOSwereopenedduring 1HFY2020. Theirpresencecapturednewdemandfromdifferentlocations.

• Wecontinuedtorefreshourcustomerexperiencesat thestore level,suchasthenewexperience shop locatedatVictoriaDockside inTsimShaTsui,HongKongand theupgradeofsomeselectivePOSwithnewshoplayouts.

• Responding to thecurrent situation inHongKong, theGroupwill seekPOSnetworkoptimisationinHongKongtoenhancestoreprofitability.

Other brands

• MONOLOGUE, targetingyoungmillennials,was first introduced inHongKongwith itsPOSopenedinTsimShaTsui,HongKongthisAugust.

Other markets

• 4POSwereopened inKorea, thePhilippinesandSingapore,and2POSwereopened indutyfreeshops inMainlandChinaduring1HFY2020.Weareproactive inexpandingourretailnetworkintoneighbouringcountrieswhichofferhighfuturegrowthpotential.

–39–

Total POS in Hong Kong, Macau and other markets

152 POS

Other Brands

POSPOS

T MARK

1 CIS44MONOLOGUE

1

CIS

T MARK

17

HEARTS ON FIRE

POS1 SIS/CIS25

HEARTS ON FIRE

POS10 SIS/CIS1

CHOW TAI FOOK Brands

CHOW TAI FOOK Brands

Hong Kong and Macau

Other markets

37 POS

ARTRIUM

POS1



101 POS

Other Brands

Asat30September2019

Retail network in Hong Kong, Macau and other markets

Wholesale Business

• Withour strong global retail network,we are capableof extendingour jewellerywholesalebusinessaroundtheworld.

• BasedintheUnitedStates,ChowTaiFookNorthAmerica(“CTFNA”)continuestoactasabusinesshubandsinglesourcewholesaler thatbringsprofitandgrowthto jewelleryretailersacrosstheNorthAmericanmarket.

–40–

“Smart+ 2020” Strategic Framework

Our“Smart+2020”frameworkisathree-yearstrategicworkplansupportedbyourdedicatedSmartworkingteams,whicharetaskedwiththedeliveryofeachstrategy fromconceptionthroughtoexecution.

Customer Experience

Brands and Products Culture

Retail Experience Insights

Customisation

Innovation Technology Sustainability

–41–

Brands and Products



• Therevamp initiativescontinued inselectiveCHOWTAIFOOKJEWELLERYPOStooffervariedstore layoutswith interactivetechnology.For instance,somewere installedwithcloudkiosksandself-serviceexperiencecornerstoenhancethecustomerexperience.

• CTF • HUÁCollectionbuilton itssuccessbypresentingthenaturalbalanceofculture,heritageandmodernaestheticsin1HFY2020.CTF • HUÁCollectioncontributed30.6%oftheRSVofourgoldproducts inMainlandChinaduringtheperiodcomparedto11.6%sameperiod lastyear. Itsnewdesign Imperial Jade • HUÁCollection iscrafted inpuregoldwithprecious jadedemonstratingexquisitecraftsmanshipanddeepaffiliationwithancientChineseculture.

ARTRIUM

• ThelatestARTRIUM,inanelegantshowroomstyle,wasopenedinGuangzhou,MainlandChina this June.Theshowroom’sprivatesettingprovidesanexclusiveexperience tocustomersandallows them toappreciate fine jewellery in anelegantand tranquilambience.

JEWELRIA

• JEWELRIAcapturesproductofferings fromselect internationaldesignersand jewellerybrands.AnnoushkaandKagayoiaretwo internationalbrandsthathaverecently joinedthe JEWELRIA family.Theyprovidea senseofdelightfulnovelty toour sophisticatedcustomers.RenowneddesignerAnnoushkaDucasMBEestablishedAnnoushkabrandwhichdisplaysplayfulness,wearability anddaily glamour through thebold colourcombinations.Kagayoi,ajewellerybrandfromJapanfoundedin1861,embodiesKyoto’suniqueaestheticsenseanddeepheritage.

T MARK

• TMARKdiamondisawardedthecertificationofISO18323:2015–Jewellery–ConsumerConfidenceintheDiamondIndustrybytheInternationalOrganisationforStandardisation(“ISO”) for transparent traceability of natural diamonds. This certification awardtherefore furtherenhancestheconsumerconfidence inourbrand’sdiamond integrityandtransparency.

• ApersonalisedT MARKembossmentservicehaslaunchedinOctobertoenableselectedcustomerstocustomisetheirowncodesfortheirT MARKdiamonds.

• In 1HFY2020, T MARKproducts accounted for 19.2%and28.1%of theRSVof ourdiamondproductsinMainlandChinaandHongKongandMacau,respectively.

• RSVraisedby10.2% inMainlandChina,whereas itdropped15.0% inHongKongandMacau.

–42–

HEARTS ON FIRE

• ThebrandisdelightedtointroduceanewjewellerycollectiondesignedbyHayleyPaige,oneof themostsought-afterbridaldressdesigners fromtheUnitedStates.ThenewHayleyPaige forHEARTSONFIRECollection combined thewhimsical andmodernaestheticsofPaige’sdressesthattranslatedintoauniqueandcaptivatingbridaljewelleryline,wasunveiledinOctober2019.

• In1HFY2020,HEARTSONFIREaccountedfor1.4%and3.9%of theRSVofourdiamondproductsinMainlandChinaandHongKongandMacau,respectively.

• RSV dropped 33.9% and 21.8% inMainland China and Hong Kong andMacau,respectively.TheHEARTSONFIREretailnetworkinMainlandChinaisbeingrestructuredtotargetsophisticatedcustomersinthehigh-endmarkets.

SOINLOVE and MONOLOGUE

• Wehavebeenadventurous inexploring innovativepromotional channels toconnectSOINLOVEandMONOLOGUEwithyoungercustomers.

• Forinstance,MONOLOGUExCoca-Colapop-upswereheldinTierIcitiessuchasBeijingandShanghai,showcasingtheexclusive jewellerycollection.Moreover,seizingonthewaveofe-sports,MONOLOGUEsponsoredthee-sports festival inHongKong inAugust2019withe-sportsloversasitstargetaudiences.

Retail Experience

• Buildingonouromni-channel retailing initiatives, cloud kiosk is oneof the latestexamplesofourrelentlessinnovation.Itisanonline-to-offline(“O2O”)hublinkingonlineordersatphysical locationstooure-commerceplatform.Thankstothis flexiblesetup,therewereover200spots,primarilyatourPOS inMainlandChinaasof30September2019,wherecustomerscanexperienceashorter transaction timeandwiderproductselectionanytimeandanywhere.

• Toincreaseourbrandvisibilityandawareness,pop-upstoreswithdifferentthemesandlayoutswere introduced innumerouscitiesacrossMainlandChina,andtheydeliverednovelandengagingcustomerexperience.

Customer relationship management

• Digitalisation of customer relationship programme inMainland China facilitatesmembers’privilegestobeconsolidatedandmanagedunderoneaccountwithallbrandsundertheGroup.Redemptionof lifestyleprivileges increasestheattractivenessofourcustomerrelationshipprogramme.

–43–

1HFY20201HFY2020

24.1% 32.9%Members’repeatpurchase asa%ofrespectiveRSV

Members’repeatpurchase asa%ofrespectiveRSV

Numberofmembers

2,380,000Mainland China

Asat30September2019

1,130,000Hong Kong and Macau

Asat30September2019

Numberofmembers

Customisation

• C2Mexperience centre has been in operation since September 2019. The centrefacilitatescustomerswhopurchaseontheD-ONEplatformtowitness their jewelleryproductionjourneyinperson.Selectedautomatedequipmentisdeployedtoupgradetheproductionframeworkat theC2Mcentreandexpeditetheproductionprocess,sothatcustomisationorderscanbefinalisedwithin24hours.

• D-ONEplatformisnowavailable forcustomersoneShopand inphysicalstores inHongKong.TherecentlyopenedexperienceshopatVictoriaDockside,TsimShaTsui, is thefirstPOSinHongKongtobeequippedwiththeD-ONEplatform.

Insights

• Ongoingeffortsinusingbigdataanalyticsenableustoevaluatecustomersatisfactiononproductsandservicesinordertogenerateusefulinsightsforenhancingstafftrainingandproductquality,aswellasoptimisinginventoryreplenishment.

Culture

Celebrating our 90th Anniversary

• Enteringour90thAnniversary,aseriesofroadshowshasbeentakingplacein10citiesinMainlandChinatoexhibittheaestheticsofjewelleriesfromdifferenteras.

Loupe

• Offeringacommondesign incubationspacefortalents inthe jewellery industry,Loupe,anexternal innovation incubator, provides anexhibition space allowing artists toshowcase theirworkand share their visions. FromAugust to September2019, theOrientalDreamlandexhibitionbySunChin,anacclaimedChinesejewellerydesigner,washeld in Loupe.Herworkcombined thenaturalbeautyofgold,with the refinedand humblespiritoftheEastandtheresplendenceofWesternjewellerydesign.

Loupe Jewellery Academy

• AspartoftheGroup’srelentlesseffortstoincubateourpotentialtalents,theGroupwashonoured topartnerwith theHauteÉcolede Joaillerie,oneof themostprestigiousjewelleryinstitutionsintheworldtosetuptheLoupeJewelleryAcademy.Theacademyoffers studentswith professional and vocational trainingswhich are taught byexperiencedandprofessionallecturers.

–44–

BUSINESS OUTLOOK AND STRATEGIES

Achallengingbenchmarkfor1HFY2020wassetagainstatoughcomparisonbasetothesameperiodlastyear.ThemarkethasbeensofteningamidsttheescalatingUS-Chinatradeconflictsandmacroheadwinds.TheHongKongandMacaumarketwillremainchallenginginthenearterm.Yet,ourstrategyonmarketpenetrationtolowertierandcountylevelcitiesinMainlandChinawillcontinuetokeepourgrowthmomentum.

Regardlessofthenear-termchallenges,theGroupmaintainsthefocusonitslong-termgoalsandsustainabledevelopment,and invests for thefuturewith foresight.Wehaveexaminedtheoperationsandfinancialpositionandlaidoutthreekeyimmediatemeasurestomitigatetheshort-termimpactandimproveourriskmanagement.Thesearetoenhanceourhealthyfinancialposition, tooptimise theuseofour resourcesandtoempowerourpeople tobe“intrapreneurs”.

“Smart+2020” strategic framework continues to translate identifiable initiatives intoexceptionalcustomerexperiencesandoperatingefficiencyenhancement.Ourmulti-brandstrategyextendedthespectrumofproductofferings tomeettheneedsofourcustomers.Leveragingtechnology,ourinnovativeideasareconvertedintonotableretailexperiencesandcreating joyousmomentsalongthecustomers’shopping journey.Abetterunderstandingofourcustomers,derivedfromouranalytic tools,shapesnewdirectionsandbusinessplans.Theaforementioned initiativeswerestrengthenedoverthepast fewyearswiththesupportof the “Smart+2020” strategic frameworkunderpinnedby technology, innovationandsustainability.Upon completionof the three-year framework,wewill evaluateoveralleffectivenessofourworkplanandformulatenewstrategies.

THE UNAUDITED KEY OPERATIONAL DATA FROM 1 OCTOBER TO 21 NOVEMBER 2019

From1Octoberupto21November2019,theyear-on-yearchangesofRetailSalesValueandSameStoreSalesareasfollows:

(% change compared to the same period last year)Mainland China Hong Kong and Macau

RetailSalesValuegrowth 15% 39%SameStoreSalesgrowth 1% 38%SameStoreSalesvolumegrowth 11% 48%

Same Store Sales growth by product —Gem-setjewellery 2% 50% —Goldproducts 4% 35%

Remark: The above data has not been reviewed nor audited by the auditors of the Company

–45–

INTERIM DIVIDEND

TheBoardhasresolvedtodeclarean interimdividendofHK$0.12pershare,amountingtoapproximatelyHK$1,200million, toshareholderswhosenamesappearon the registerofmembersoftheCompanyonFriday,13December2019.TheinterimdividendisexpectedtobepaidonoraroundMonday,23December2019.

REVIEW OF INTERIM RESULTS

TheAuditCommitteeof theCompanyhasreviewedtheunauditedcondensedconsolidatedfinancialstatementsandtheinterimreportforthesixmonthsended30September2019anddiscussed the financial relatedmatterswith themanagement.TheunauditedcondensedconsolidatedfinancialstatementsoftheGroupforthesixmonthsended30September2019havebeenreviewedbytheCompany’sauditor,PricewaterhouseCoopers,inaccordancewithInternationalStandardonReviewEngagements2410“ReviewofInterimFinancialInformationPerformedbytheIndependentAuditoroftheEntity”.

CLOSURE OF REGISTER OF MEMBERS

Inorder toestablishentitlements to the interimdividend, theregisterofmembersof theCompanywill be closedon Friday, 13December2019andno transferof shareof theCompanywillberegisteredonthatday.AlltransfersofsharesoftheCompanyaccompaniedbytherelevantsharecertificatesandproperlycompletedtransferformsmustbelodgedwiththebranchshareregistrarandtransferofficeof theCompany inHongKong,Tricor InvestorServices Limitedof Level 54,Hopewell Centre, 183Queen’sRoadEast,HongKong forregistrationnolaterthan4:30p.m.onThursday,12December2019.

CORPORATE GOVERNANCE PRACTICES

Duringthesixmonthsended30September2019,theCompanywasinfullcompliancewithallapplicableprinciplesandcodeprovisionsof theCorporateGovernanceCodeassetout inAppendix14totheListingRules.

DIRECTORS’ SECURITIES TRANSACTIONS

TheCompanyhasadoptedacodeofconductregardingdirectors’securities transactionsontermsnolessexactingthantheModelCodeforSecuritiesTransactionsbyDirectorsofListedIssuersas setout inAppendix10 to theListingRules (the“ModelCode”).HavingmadespecificenquiryofallDirectors, theDirectorsconfirmedthat theyhadcompliedwith therequiredstandardassetout intheModelCodeandtheCompany’scodeofconductduringthesixmonthsended30September2019.

–46–

PURCHASE, SALE OR REDEMPTION OF LISTED SECURITIES

NeithertheCompanynoranyofitssubsidiarieshadpurchased,soldorredeemedanyoftheCompany’slistedsecuritiesduringthesixmonthsended30September2019.

ForandonbehalfoftheBoardDr. Cheng Kar-Shun, Henry

Chairman

HongKong,28November2019

As at the date of this announcement, the executive directors are Dr. Cheng Kar-Shun, Henry, Mr. Wong Siu-Kee, Kent, Dr. Cheng Chi-Kong, Adrian, Mr. Cheng Chi-Heng, Conroy, Mr. Cheng Ping-Hei , Hamilton, Mr. Chan Sai-Cheong, Mr. Suen Chi-Keung, Peter, Mr. Chan Hiu-Sang, Albert, Mr. Liu Chun-Wai, Bobby and Mr. Cheng Kam-Biu, Wilson; the non-executive director is Ms. Cheng Chi-Man, Sonia; and the independent non-executive directors are Dr. Fung Kwok-King, Victor, Dr. Or Ching-Fai, Raymond, Mr. Kwong Che-Keung, Gordon, Mr. Cheng Ming-Fun, Paul, Mr. Lam Kin-Fung, Jeffrey and Ms. Cheng Ka-Lai, Lily.

Documents

CHOW TAI FOOK JEWELLERY GROUP LIMITED 大福珠寶集團有限 …ir.ctfjewellerygroup.com/2019112816480132209079563_en.pdf · Jewellery collectibles 1,520.1 1,520.1 Prepayment for