GTI : INTERIM RESULTS ANNOUNCEMENT FOR THE TWELVE MONTHS ENDED 31 DECEMBER 2020

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.

GTI HOLDINGS LIMITED

΍ԮණྠϞࠢʮ̡

(a company incorporated in the Cayman Islands with limited liability)

(in provisional liquidation for the purpose of restructuring)

(Stock Code: 3344)

INTERIM RESULTS ANNOUNCEMENT

FOR THE TWELVE MONTHS ENDED 31 DECEMBER 2020

HIGHLIGHTS

• • Turnover decreased by approximately 55% to approximately HK$319 million.

• • Loss for the period was approximately HK$641 million for the period under review.

• • The Directors did not recommend the payment of an interim dividend for the period under review.

INTERIM RESULTS FOR THE TWELVE MONTHS ENDED 31 DECEMBER 2020

The board (the "Board") of directors (the "Directors") of GTI Holdings Limited (the "Company") hereby announces the unaudited results of the Company and its subsidiaries (hereafter collectively refered to as the "Group") for the twelve months ended 31 December 2020, together with the audited comparative figures for the corresponding period of 2019, as follows:

CONDENSED CONSOLIDATED STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME

For the twelve months ended 31 December 2020

Twelve

months ended	Year ended
31 December	31 December
2020	2019
Notes	HK$'000	HK$'000
(Unaudited)	(Audited)
Revenue	4	319,276	704,356
Cost of sales	(303,523)	(735,299)
Gross profit/(loss)	15,753	(30,943)
Interest revenue	2,575	647
Other income	5	3,586	4,977
Share of result of associates	(624)	(942)
Other gains and losses	6	(275,444)	(358,757)
Selling and distribution costs	(1,110)	(15,298)
Administrative expenses	(138,696)	(98,900)
Finance costs	7	(242,579)	(129,877)
Loss before tax	(636,539)	(629,093)
Income tax expense	8	(4,783)	(3,666)
Loss for the period/year	9	(641,322)	(632,759)
Other comprehensive income/(loss):
Items that will not be reclassified to profit or loss:
Fair value changes of equity investment at fair value
through other comprehensive income	-	(5,412)
Items that may be reclassified to profit or loss:
Exchange differences arising on translation of foreign
operations	12,487	(199)
Share of foreign currency translation reserve of an
associate	-	(393)
Reclassification of translation reserve to profit or loss
upon disposal of a subsidiary/subsidiaries	(1,975)	(9,776)
10,512	(10,368)
Total comprehensive loss for the period/year	(630,810)	(648,539)

Twelve months ended 31 December 2020

Notes

HK$'000 (Unaudited)

Year ended 31 December 2019 HK$'000 (Audited)

Loss for the period/year attributable to:

Owners of the Company Non-controlling interests

Total comprehensive loss for the period/year attributable to:

Owners of the Company Non-controlling interests

Loss per share

Basic and diluted (HK cents)

(640,432) (585,613)

(890) (47,146)

(641,322) (632,759)

(631,991) (601,247)

1,181 (47,292)

(630,810) (648,539)

11

(10.17)

(9.40)

CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL POSITION At 31 December 2020

As at	As at
31 December	31 December
2020	2019
Notes	HK$'000	HK$'000
(Unaudited)	(Audited)
Non-current assets
Property, plant and equipment	12	57,023	108,983
Right-of-use assets	17,751	13,031
Deposit paid for acquisition of land use right and
property, plant and equipment	13,159	12,572
Goodwill	983	6
Intangible assets	15,181	18,353
Investment in associates	-	13,923
Equity investments at fair value through other
comprehensive income	-	-
Derivative financial instruments	22,710	37,520
Trade and other receivables, deposits and prepayments	13	16,876	27,693
143,683	232,081
Current assets
Inventories	7,477	3,408
Trade and other receivables, deposits and prepayments	13	300,137	203,395
Tax recoverable	286	-
Bank balances and cash	10,510	3,242
318,410	210,045
Assets classified as held for sale	9,477	9,054
327,887	219,099

As at	As at
31 December	31 December
2020	2019
Notes	HK$'000	HK$'000
(Unaudited)	(Audited)
Current liabilities
Trade and other payables	14	350,145	280,823
Contract liabilities	1,044	533
Tax liabilities	14,795	9,526
Bank and other borrowings - due within one year	916,356	425,414
Lease liabilities	2,783	2,618
Amount due to a former subsidiary	244,288	-
Amount due to a related party	-	5,095
1,529,411	724,009
Liabilities associated with assets classified as held for sale	24,552	23,456
1,553,963	747,465
Net current liabilities	(1,226,076)	(528,366)
TOTAL ASSETS LESS CURRENT LIABILITIES	(1,082,393)	(296,285)
Non-current liabilities
Bank and other borrowings - due after one year	11,876	186,141
Promissory note payable	11,385	-
Lease liabilities	4,383	1,285
Deferred tax liabilities	7,958	8,751
35,602	196,177
NET LIABILITIES	(1,117,995)	(492,462)
Capital and reserves
Share capital	62,988	62,988
Share premium and reserves	(1,201,519)	(569,528)
Deficits attributable to owners of the Company	(1,138,531)	(506,540)
Non-controlling interests	20,536	14,078
TOTAL DEFICITS	(1,117,995)	(492,462)

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS For the twelve months ended 31 December 2020

1. BASIS OF PREPARATION

The unaudited condensed consolidated financial statements have been prepared in accordance with International Accounting Standard 34 "Interim Financial Reporting" issued by the International Accounting Standards Board and the applicable disclosures required by the Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited.

These unaudited condensed consolidated financial statements should be read in conjunction with the 2019 audited annual financial statements. The accounting policies and methods of computation used in the preparation of these unaudited condensed consolidated financial statements are consistent with those used in the annual financial statements for the year ended 31 December 2019.

Appointment of provisional liquidators

On 26 May 2020, the Company filed a winding up petition together with an application for the appointment of joint provisional liquidators (the "JPLs") of the Company with the Grand Court of the Cayman Islands ("Cayman Court").

On 28 May 2020 (Cayman time), upon the hearing at the Cayman Court regarding the application of JPLs, an order (the "Order") in favour of the Company was granted and Mr. Osman Mohammed Arab and Mr. Lai Wing Lun of RSM Corporate Advisory (Hong Kong) Limited, and Ms. Claire Marie Loebell of R&H Restructuring (Cayman) Ltd. were appointed as the JPLs (for restructuring purposes) on a light touch approach for restructuring purposes.

The Order provides that for so long as JPLs are appointed to the Company, no suit, action or other proceeding, including criminal proceedings, shall be proceeded with or commenced against the Company except with the leave of the Cayman Court and subject to such terms as the Cayman Court may impose.

The Order also provides that, for the avoidance of any doubt, no payment or disposition of the Company's property or any transfer of shares or any alteration in the status of the Company's members shall be made or effected without the direct or indirect approval of the JPLs but no such payment or other disposition or transfer of shares or alteration in the status of the Company's members made or effected by or with the authority or approval of the JPLs in carrying out their duties and functions and in the exercise of their powers under the Order shall be avoided by virtue of the provisions of section 99 of the Companies Law of the Cayman Islands.

Deconsolidation of subsidiaries

The unaudited condensed consolidated financial statements have been prepared based on the books and records maintained by the Group. In July 2020, administrator was appointed for the Group's major subsidiaries in Cambodia which engaged in production, sale and trading of textile products. The Directors considered that the control over four 100% owned subsidiaries, Dignity Knitter Limited, Great Honour Textile Factory Limited, Eco Base Factory Ltd and Chung Yick Textile Factory Limited (the "Cambodia Group") had been lost. Since then, the Directors neither had control over the operating and financial activities, nor any access to the underlying accounting books and records of the Cambodia Group. Due to the lack of control and unavailability of these financial records of the Cambodia Group for the period from 14 July 2020, the Directors considered to deconsolidate the results, assets, liabilities and cash flows of the Cambodia Group.

Going concern basis

The Group incurred a loss attributable to owners of the Company of approximately HK$640,432,000 for the twelve months ended 31 December 2020 and as at 31 December 2020, the Group had net current liabilities and net liabilities of approximately HK$1,226,076,000 and HK$1,117,995,000, respectively. These conditions indicate the existence of a material uncertainty which may cast significant doubt on the Group's ability to continue as a going concern. Therefore, the Group may be unable to realise its assets and discharge its liabilities in the normal course of business.

The Directors are of the opinion that the Group will have sufficient working capital to meet its financial liabilities as and when they fall due given that (i) the Group will be able to successfully complete the debt restructuring with the creditors; (ii) the Group will be able to raise fund to meet a level sufficient to finance the working capital requirements of the Group; (iii) the Group is actively implementing cost-control and cost saving measures to improve operating cash flows and its financial position; and (iv) the Directors believe that the performance of the Group will be significantly improved in the forthcoming year.

Accordingly, the Directors are of the opinion that it is appropriate to prepare the unaudited condensed consolidated financial statements on the going concern basis. Should the Group be unable to continue as a going concern, adjustments would have to be made to the unaudited condensed consolidated financial statements, to write down the value of assets to their recoverable amounts, to provide for further liabilities which might arise and to reclassify non-current assets and non-current liabilities as current assets and current liabilities, respectively. The effect of these adjustments has not been reflected in the unaudited condensed consolidated financial statements.

• 2. ADOPTION OF NEW AND REVISED INTERNATIONAL FINANCIAL REPORTING STANDARDS

  In the current period/year, the Group has adopted all the new and revised International Financial Reporting Standards ("IFRSs") issued by the International Accounting Standards Board that are relevant to its operations and effective for its accounting period/year beginning on 1 January 2020. IFRSs comprise International Financial Reporting Standards ("IFRS"); International Accounting Standards ("IAS"); and Interpretations. The adoption of these new and revised IFRSs did not result in significant changes to the Group's accounting policies, presentation of the Group's financial statements and amounts reported for the current period and prior years.

  The Group has not applied the new IFRSs that have been issued but are not yet effective. The application of these new IFRSs will not have material impact on the financial statements of the Group.

• 3. FAIR VALUE MEASUREMENTS

  Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The following disclosures of fair value measurements use a fair value hierarchy that categorises into three levels the inputs to valuation techniques used to measure fair value:

  Level 1 inputs: quoted prices (unadjusted) in active markets for identical assets or liabilities that the Group can access at the measurement date.

  Level 2 inputs: inputs other than quoted prices included within level 1 that are observable for the asset or liability, either directly or indirectly.

  Level 3 inputs: unobservable inputs for the asset or liability.

  The Group's policy is to recognise transfers into and transfers out of any of the three levels as of the date of the event or change in circumstances that caused the transfer.

(a)Disclosures of level in fair value hierarchy at 31 December 2020:Fair value measurements usingLevel 1:

HK$'000 (Unaudited)Level 2:

HK$'000 (Unaudited)Level 3:

HK$'000 (Unaudited)

Total

HK$'000 (Unaudited)

Recurring fair value measurements: Equity investments at fair value through other comprehensive income Derivative financial instruments

- -

- -

-

-

22,710 22,710

Total recurring fair value measurements

-

Disclosures of level in fair value hierarchy at 31 December 2019:

-

Fair value measurements using

22,710 22,710

Level 1: HK$'000 (Audited)Level 2: HK$'000 (Audited)Level 3: HK$'000 (Audited)Total HK$'000 (Audited)

Recurring fair value measurements: Equity investments at fair value through other comprehensive income Derivative financial instruments

- -

- -

-

-

37,520 37,520

Total recurring fair value measurements

-

-

37,520 37,520

(b)Reconciliation of assets measured at fair value based on level 3:

Equity
investments
at fair value
through other	Derivative
comprehensive	financial
income	instruments	Total
HK$'000	HK$'000	HK$'000
At 1 January 2019 (Audited)	5,414	1,412	6,826
Fair value loss recognised in other comprehensive
income (Audited)	(5,414)	-	(5,414)
Transfer to other receivables, deposits and prepayments
(Audited)	-	(12,131)	(12,131)
Fair value gain recognised in profit or loss (#) (Audited)	-	48,239	48,239
At 31 December 2019 and 1 January 2020 (Audited)	-	37,520	37,520
Transfer to other receivables, deposits and prepayments
(Unaudited)	-	(16,576)	(16,576)
Fair value gain recoginsed in profit or loss (#)
(Unaudited)	-	1,766	1,766
At 31 December 2020 (Unaudited)	-	22,710	22,710
(#) Include gains or losses for assets held at 2019
(Audited)	-	48,239	48,239
(#) Include gains or losses for assets held at 2020
(Unaudited)	-	1,766	1,766

(c) Disclosure of valuation process used by the Group and valuation techniques and inputs used in fair value measurements:

The Group's management is responsible for the fair value measurements of assets and liabilities required for financial reporting purposes, including level 3 fair value measurements. The management reports directly to the Board of Directors for these fair value measurements. Discussions of valuation processes and results are held between the management and the Board of Directors at least twice a year.

Level 3 fair value measurements

DescriptionValuation Unobservable technique inputsRangeEffect on fair value for increase of inputsAt 31 December 2020

HK$'000 (Unaudited)

At 31 December 2019 HK$'000 (Audited)

Unlisted equity securities, classified as Equity investments at fair value through other comprehensive income

Assets approachNet assets

N/AIncrease

-

-

Derivative financial instruments, profit guaranteeIncome approachProbabilities

5%

Increase

22,710

37,520

4. REVENUE AND SEGMENT INFORMATION

Information reported to the executive directors of the Company, being the chief operating decision maker ("CODM"), for the purposes of resource allocation and assessment of segment performance focuses on types of goods or services delivered or provided. This is also the basis upon which the Group is organised.

For the twelve months ended 31 December 2020, the Group has three operating and reportable segments, namely (i) Production, sale and trading of textile products, (ii) Trading of petroleum and chemical products and (iii) RMB banknotes clearing up services and others.

For the year ended 31 December 2019, the Group has four operating and reportable segments, namely (i) Production, sale and trading of textile products, (ii) Trading of petroleum and chemical products, (iii) Provision of financial services and (iv) RMB banknotes clearing up services and others.

Segment profit/(loss) represents the profit/(loss) before taxation of each segment without allocation of share of result of associates, central administration costs, directors' salaries, finance costs, interest revenue, other income and other gains and losses not attributable to segment loss. This is the measure reported to the CODM for the purposes of resource allocation and performance assessment.

For the purposes of monitoring segment performances and allocating resources among segments, all assets and liabilities are allocated to operating segments on the basis of the revenue earned by individual reportable segments. Segment assets exclude investment in associates, tax recoverable, deposits and prepayments, assets classified as held for sale, and unallocated corporate assets while segment liabilities exclude bank and other borrowings, amount due to a related party, amount due to a former subsidiary, current and deferred tax liabilities, promissory note payable, liabilities associated with assets classified as held for sale, and unallocated corporate liabilities. This is the measure reported to the CODM for the purpose of resource allocation and performance assessment.

For the twelve months ended 31 December 2020

RMB banknotes clearing up services and others HK$'000 (Unaudited)Production, sale and trading of textile products HK$'000 (Unaudited)Trading of petroleum and chemical products

HK$'000 (Unaudited)Total

HK$'000 (Unaudited)

Revenue

31,995

7,440

279,841

319,276

Segment profit/(loss)

6,241

(22,512)

(1,074) (17,345)

Unallocated expenses (106,708)

Interest revenue 2,575

Other income 3,586

Other gains and losses (275,444)

Finance costs (242,579)Share of result of associates

(624)

Loss before taxFor the year ended 31 December 2019

(636,539)

RMB banknotes clearing up services and others HK$'000 (Audited)Production, sale and trading of textile products HK$'000 (Audited)Trading of petroleum and chemical products HK$'000 (Audited)Provision of financial services HK$'000 (Audited)

Total HK$'000 (Audited)

Revenue

37,345

147,946

518,627

438

704,356

Segment profit/(loss)

145

(178,446)

(53,281)

(2,890) (234,472)Unallocated expenses (104,330)Interest revenue Other income

647 4,977

Other gains and losses (165,096)

Finance costs (129,877)Share of result of associates

(942)Loss before tax

(629,093)

Disaggregation of revenue from contracts with customers:RMB

banknotes	Production,	Trading of
clearing up	sale and	petroleum
For the twelve months	services and	trading of	and chemical
ended 31 December 2020	others	textile products	products	Total
HK$'000	HK$'000	HK$'000	HK$'000
(Unaudited)	(Unaudited)	(Unaudited)	(Unaudited)
Geographical markets
PRC	31,995	1,940	278,151	312,086
Hong Kong	-	5,500	1,690	7,190
31,995	7,440	279,841	319,276
Timing of revenue recognition
At a point in time	31,995	7,440	279,841	319,276
RMB	Production,
banknotes	sale and	Trading of
clearing up	trading of	petroleum	Provision of
For the year ended	services	textile	and chemical	financial
31 December 2019	and others	products	products	services	Total
HK$'000	HK$'000	HK$'000	HK$'000	HK$'000
(Audited)	(Audited)	(Audited)	(Audited)	(Audited)
Geographical markets
PRC	37,345	4,788	303,076	-	345,209
Hong Kong	-	27,131	215,551	438	243,120
Other Asian countries	-	17,941	-	-	17,941
Europe	-	49,196	-	-	49,196
North America	-	48,890	-	-	48,890
37,345	147,946	518,627	438	704,356
Timing of revenue recognition
At a point in time	37,345	147,946	518,627	41	703,959
Over time	-	-	-	397	397
Total	37,345	147,946	518,627	438	704,356

RMB banknotes clearing up services and others HK$'000 (Unaudited)Production, sale and trading of textile products HK$'000 (Unaudited)Trading of petroleum and chemical products

HK$'000 (Unaudited)Total

HK$'000 (Unaudited)

Segment assets

310,684

101,987

9,980 422,651

Assets classified as held for sale 9,477

Tax recoverable 286

Unallocated corporate assets 39,156

Consolidated total assets 471,570

Segment liabilities

35,320

114,927

12,370 162,617

Bank and other borrowings 928,232

Promissory note payable 11,385

Amount due to a former subsidiary 244,288

Current and deferred tax liabilities 22,753 Liabilities associated with assets classified as

held for sale 24,552

Unallocated corporate liabilities 195,738

Consolidated total liabilities

1,589,565

RMB banknotes clearing up services and others HK$'000 (Audited)Production, sale and trading of textile products HK$'000 (Audited)Trading of petroleum and chemical products HK$'000 (Audited)

Total HK$'000 (Audited)

Segment assets

219,454

158,154

28,188 405,796

Assets classified as held for sale 9,054

Investment in associates 13,923

Unallocated corporate assets 22,407

Consolidated total assets 451,180

Segment liabilities

28,109

124,177

1,548 153,834

Bank and other borrowings 611,555

Amount due to a related party 5,095

Current and deferred tax liabilities 18,277 Liabilities associated with assets classified as

held for sale 23,456

Unallocated corporate liabilities 131,425

Consolidated total liabilities 943,642

• 5. OTHER INCOME

  For the twelve months ended 31 December 2020

  HK$'000 (Unaudited)

  For the year ended 31 December 2019 HK$'000 (Audited)

  Income from sales of scrap materials Sundry income

• 6. OTHER GAINS AND LOSSES

- 425

3,586 4,552

3,586 4,977

For the twelve months ended 31 December 2020

HK$'000 (Unaudited)

For the year ended 31 December 2019 HK$'000 (Audited)

Loss on deconsolidation of subsidiaries

Loss on disposal/deregistration of subsidiaries Loss on disposal of investment in associates

(14,489)

-

(244,294)

(7,982)

(568)

-

Loss on disposal of investments at fair value through profit or loss - (723)

Net exchange gain - 755

(Loss)/gain on disposal/written off of property, plant and equipment Loss on extinguishing financial liabilities with equity instruments Fair value gain on derivative financial instruments

Impairment losses recognised in respect of property, plant and equipment Impairment losses recognised on trade and other receivables, net Impairment losses recognised on goodwill

Impairment losses recognised on right-of-use assets Impairment losses recognised on intangible assets Impairment losses recognised on investment in associates

Impairment loss on deposit paid for acquisition of land use right and property,

(5,072) 9

- 1,766

(1,333) 48,239

(204) (42,406)

(333) (153,315)

- (34,311)

(313) (2,598)

- (4,080)

(11,937) (160,813)plant and equipment - (5,230)Gain on fair value changes on modification of other borrowings

-

5,031

(275,444)

(358,757)

• 7. FINANCE COSTS

  For the twelve

  months ended

  31 December

  2020

  HK$'000

  (Unaudited)

  For the year ended 31 December 2019 HK$'000 (Audited)

  Interest on bank and other borrowings Interest on promissory note payable Interest on lease liabilities

  242,182 244 153

  129,419

  -

  458

  242,579

  129,877

• 8. INCOME TAX EXPENSE

For the twelve

months ended

31 December

2020

HK$'000

(Unaudited)

For the year ended 31 December 2019 HK$'000 (Audited)

Hong Kong Profits Tax: - Current tax

157

-

PRC Enterprise Income Tax: - Current tax

373 2,176

Deferred tax

4,253 1,490

4,783 3,666

For the twelve months ended 31 December 2020 and year ended 31 December 2019, Hong Kong Profits Tax is calculated under two-tier profits tax system where the first HK$2 million of estimated assessable profits is taxed at a reduced rate of 8.25% and the remaining of estimated assessable profits is taxed at 16.5%.

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

Under the Law of the Cambodian Income Tax, the tax rate of the Cambodia subsidiaries is 20%.

• 9. LOSS FOR THE PERIOD/YEAR

  The Group's loss for the period/year is stated after charging the following:

  For the twelve

  months ended

  31 December

  2020

  HK$'000

  (Unaudited)

  For the year ended 31 December 2019 HK$'000 (Audited)

  Cost of inventories sold Amortisation of intangible assets Depreciation of property, plant and equipment Depreciation of right-of-use assets

  303,523 735,299

  3,172 3,877

  6,949 24,696

  967 5,671

  Directors' remuneration

  1,905 5,509

• 10. DIVIDENDS

  The Directors do not recommend the payment of any dividend for the twelve months ended 31 December 2020 and year

• ended 31 December 2019.

• 11. LOSS PER SHARE

  The calculation of the basic loss per share for the period/year is based on the loss for the period/year attributable to the owners of the Company of approximately HK$640,432,000 (2019: HK$585,613,000) and on the weighted average number of shares in issue during the period/year of approximately 6,298,816,000 (2019: 6,232,086,000).

  No diluted loss per share is presented as the Company had no potential ordinary shares outstanding during any time in the period/year.

12. PROPERTY, PLANT AND EQUIPMENT

During the twelve months ended 31 December 2020, the additions of property, plant and equipment are approximately HK$1,529,000 (2019: HK$2,003,000).

13. TRADE AND OTHER RECEIVABLES, DEPOSITS AND PREPAYMENTS

The Group allows an average credit period of 30 to 180 days to its trade customers. The following is an aged analysis of trade receivables, net of allowance for trade receivables, presented based on the invoice date at the end of the reporting period.

31 December	31 December
2020	2019
HK$'000	HK$'000
(Unaudited)	(Audited)
0 - 30 days	7,640	5,295
31 - 60 days	2,023	2,449
61 - 90 days	621	3,317
91 - 120 days	1,037	1,156
Over 120 days	54,807	38,899
66,128	51,116
14. TRADE AND OTHER PAYABLES

An ageing analysis of the trade payable at the end of the reporting period, based on invoice dates, is as follows:

31 December	31 December
2020	2019
HK$'000	HK$'000
(Unaudited)	(Audited)
0-60 days	5,314	9,133
61-90 days	103	560
Over 90 days	48,634	49,623
54,051	59,316

MANAGEMENT DISCUSSION AND ANALYSIS

BUSINESS REVIEW AND PROSPECTS

Business Review

GTI Holdings Limited (the "Company") was incorporated in the Cayman Islands under the Companies Law of the Cayman Islands as an exempted company with limited liabilities on 9 June 2004. The Company's shares were listed on the Main Board of The Stock Exchange of Hong Kong Limited (the "Stock Exchange"). The Company and its subsidiaries (the "Group") are principally engaged in sales and trading of textile products (including surgical masks), trading of petroleum and chemical products, RMB banknotes clearing up services and others.

The Group's consolidated revenue for the twelve months ended 31 December 2020 decreased by 54.7% from approximately HK$704,356,000 for the year ended 31 December 2019 to approximately HK$319,276,000, while the net loss for the period increased to approximately HK$641,322,000 as compared to approximately HK$632,759,000 for the corresponding period last year.

Textile business

During the twelve months ended 31 December 2020, the revenue from the textile business was approximately HK$7,440,000. Compared to the year ended 31 December 2019, the revenue from the textile business dropped significantly by 95.0%. The overall segment loss from textile business improved from the loss of approximately HK$178,446,000 in the same period last year to approximately HK$22,512,000.

During the period under review, the production in our Cambodia site was abandoned because operation of the factory was suspended under court orders of the Kandel Provisional Court in Cambodia (the "Kandel Court"). Based on the latest financial information, the net assets value of the Group's Cambodia group companies as at 31 December 2019 was approximately HK$16,464,000, including total assets and total liabilities of approximately HK$60,834,000 and HK$44,370,000, respectively, while the total claims against the operating subsidiaries (namely Eco Base Factory Limited and Dignity Knitter Limited) in Cambodia were approximately HK$34,008,000 (equivalent to approximately US$4,360,000), including certain outstanding employees' salaries, tax expenses, rental expenses and trade balances etc. With reference to the Court Orders issued from the Kandel Court and the Notices issued by the administrator in June 2020 and July 2020, respectively, insolvency proceedings were opened and the administrator was appointed for the operating subsidiaries in Cambodia. In accordance with the Articles of the General Provisions in Cambodia, the management and power over all debtor's assets shall vest in the administrator, as such, the Board considers that the financial information of the operating subsidiaries was deconsolidated from the consolidation financial statements of the Group during the twelve months ended 31 December 2020 with loss on deconsolidation of approximately HK$14,489,000 recorded under other gains and losses.

Due to the outbreak of COVID-19 ("Outbreak") in the People's Republic of China (the "PRC") during the period under review, the Group's operation for the production and sale of yarn in the PRC was ceased.

Nevertheless, the Group had implemented the restructuring on and extension of the textile business by entering into the surgical mask industry through acquisition of Titok Investment Limited in September 2020, which has enriched the Group's textile business and profile. Particularly, the Board considers that the synergy between the ordinary textile business and surgical mask business through sharing experience and resources can benefit the development and expansion of this business segment. In light of the latest market development and surging demand for personal protective equipment against the Outbreak, the Board considers such investment would have great prospect.

Trading of petroleum and chemical products

Trading of chemical products was the major source of the revenue of the Group during the twelve months ended 31 December 2020. Due to the unfavourable market condition and intensive oil price volatility in 2020, the Group has implemented a risk averse approach in the trading of petroleum for the twelve months ended 31 December 2020, with revenue dropped significantly from approximately HK$518,627,000 for the year ended 31 December 2019 to approximately HK$279,841,000 for the current period. However, the trading of petroleum and chemical products business remains as the Group's major source of revenue, representing over 87.6% of the Group's total revenue for the twelve months ended 31 December 2020.

RMB banknotes clearing up services business

Our Group's equity interest in Zhongcheng Huiyu Technology Services Company Limited, together with its subsidiaries ("Zhongcheng Huiyu"), were principally engaged in the provision of financial outsourcing services of RMB banknotes clearing up services in the PRC. We offer one-stop professional financial outsourcing services for the branches of the People's Bank of China and its local commercial banks in the PRC. During the twelve months ended 31 December 2020, the revenue from RMB banknotes clearing up services business was approximately HK$31,995,000, as compared to approximately HK$37,345,000 for year ended 31 December 2019, representing a drop in revenue of 14.3%. However, this segment managed to significantly improve its contribution to the Group with segment profit of approximately HK$6,241,000 for the twelve monnths ended 31 December 2020, compared to approximately HK$145,000 for the corresponding period last year.

As disclosed in the Company's announcement dated 29 January 2021, Mr. Hao Zhao (the "Vendor") had provided profit guarantee in favour of the Group for the performance of Zhongcheng Huiyu in the year 2019, 2020 and 2021 and personal guarantee had been given by Mr. Hao Xiangbin (the "Guarantor") to guarantee the performance of the obligations by the Vendor.

According to the audited financial statements of Zhongcheng Huiyu for the year ended 31 December 2019, the profit of Zhongcheng Huiyu for the year 2019 falls below the guaranteed profit and the Vendor shall compensate the Group in the amount of approximately RMB10,423,000. The non-fulfilment of the guaranteed profit in the year 2019 was mainly due to the winding up petition filed against the Companyin the High Court in August 2019 which has seriously damaged the Group's image and stopped certain customers (mainly financial institutions in the PRC) to start new businesses with Zhongcheng Huiyu.

Considering that the business performance of Zhongcheng Huiyu was affected by the above unforeseeable event and further affected by the Outbreak, which are beyond the control of the Company, the Vendor and the Guarantor, the Group has entered into a conditional supplemental deed dated 29 January 2021 with the Vendor and the Guarantor to extend the profit guarantee period, pursuant to which the Vendor irrevocably warrants and guarantees to the Group that the audited consolidated net profit after tax of Zhongcheng Huiyu for the financial year ended 31 December 2019 and for the financial years ending 31 December 2021, 31 December 2022 and 31 December 2023 shall not be less than RMB23,000,000, RMB8,000,000, RMB30,000,000 and RMB36,000,000 (the "New Guaranteed Profits") respectively and the Guarantor has agreed to guarantee the performance of the obligations by the Vendor.

Prospects

The global economic outlook beyond 2020 will remain highly uncertain, externally with the continuance of the US-China trade war and the current situation of the Outbreak surrounding all over the world. Internally, as previously announced by the Company, The Company has certain liabilities that have fallen due and is facing legal actions for the repayment of debts. Several bondholders/creditors of the Company have filed winding up petitions against the Company in the High Court in August 2019 and 2020, business activities of the Group are still subject to additional challenge.

Despite the uncertainties and challenges casted by the macroeconomic and political factors, during the period, the Board has reviewed the businesses of the Group with a view to improving the shareholders' returns, streamlining and strengthening the business operations.

On 28 May 2020, an order from the Grand Court of the Cayman Islands in favour of the Company was granted and the Joint Provisional Liquidators (the "JPLs") were appointed for restructuring purposes on a light touch approach. On 19 August 2020, the Company, Mega Yield Enterprise Development Limited and the JPLs entered into a funding agreement in relation to the provision of funding to facilitate the preparation and implementation of the restructuring plan of the Company. As announced by the Company from time to time, the Company and the JPLs are working together to formulate a debt restructuring plan of the Company, in order to relieve the winding up petitions against the Company and ultimately to ensure the Company will continue to be in satisfaction of the listing requirements.

Despite of the hard hit of the Outbreak earlier 2020, the Group managed to take advantage of this opportunity to bring much prospect of the textile industry by introducing the surgical mask business. Based on the current situation with increasing case numbers all over the world recently, surgical masks are popularly worn by the general public to reduce the chance of spreading diseases to others, and to prevent from the breathing in germs, the Board will continue to seek business opportunity in order to increase the customer based and expand the surgical mask business.

During 2020, the Group maintained its cautious and conservative approach on the trading of petroleum and chemical business in view of the uncertain economic conditions with the oil price volatility. However, the Directors consider the possibility on expansion of value-added services into the chemical business by assigning more resources in this segment, with a view to increase this segment's sales volume and gross margin in the long run.

The management expects that the current situation in the RMB banknotes clearing up services business will gradually recover and improve once the Group's restructuring plan is concluded and the proposed scheme of arrangement between the Company and its creditors has been implemented.

Looking forward, the Group will need to continue to implement cautious approach on the development of the existing businesses and seek for better business opportunities to mitigate the impacts of the market's current volatility and to improve the performance of the Group so as to pursue a satisfactory return to our shareholders. The financial restructuring will further proceed subject to the supervision of the JPLs. The management of the Company will minimise all non-core assets and liabilities so that the Group will restore into a healthier financial position.

FINANCIAL REVIEW

Revenue

During the twelve months ended 31 December 2020, the revenue of the Group decreased by approximately 54.7% from approximately HK$704,356,000 for the year ended 31 December 2019 to approximately HK$319,276,000.

For twelve months ended 31 December 2020, the revenue from the textile business (including surgical masks) was approximately HK$7,440,000 which accounted for approximately 2.3% of the revenue of the Group owing to the fact that textile business had ceased its production of cotton and yarns since the closedown of the factory in the Cambodia site, and only the Anhui factory remains in operation. Nevertheless, revenue of approximately HK$5,905,000 was contributed from the newly introduced mask business.

The trading of petroleum and chemical products became the major contributor of revenue of the Group and it represented approximately over 87.6% of the Group's total revenue during the period under review. The trading of petroleum and chemical products was mainly carried out in Hong Kong and the PRC during the current period.

During the period under review, the revenue from RMB banknotes clearing up services business was approximately HK$31,995,000 and represented approximately 10.0% of the Group's total revenue.

Cost of sales and gross profit/loss margin

The cost of sales decreased by approximately 58.7% from approximately HK$735,299,000 in the corresponding period last year to approximately HK$303,523,000 during the period under review. There had been a turnaround in gross profit of approximately HK$15,753,000 as compared to gross loss of approximately HK$30,943,000 in the corresponding period, because of the contribution made by the RMB banknote clearing up services business.

Other gains and losses

During the twelve months period under review, the other net losses of approximately HK$275,444,000 decreased as compared to approximately HK$358,757,000 for the year ended 31 December 2019. During the last year ended 31 December 2019, (i) the impairment losses were recognised on trade and other receivables of approximately HK$153,315,000, in which the impaired other receivables of approximately HK$100,182,000 mainly represented deposits paid for services and potential business opportunities and deposits paid to certain suppliers, given the long outstanding of those balances, the Board considers that the recoverability of those other receivables were remote, nevertheless, the management has implemented certain class of actions during the period at various status, including issuing demand notes, legal letters and further legal actions are/to be taken to recover the other receivables; (ii) the impairment losses of approximately HK$160,813,000 were recognised on investment in associates, Coulman International Limited and its group companies, which is principally engaged in natural gas business. To the best knowledge of the management, the Group's effective interest in the associates' operating companies was passively diluted from 24.3% to 6.1% through capital injection from other investor during the year ended 31 December 2019.

During the twelve months period ended 31 December 2020, the other net losses was mainly derived from the loss on deconsolidation of Cambodia operating subsidiaries approximately HK$14,489,000, the loss on disposal of a subsidiary, Champion Forever Group Limited, of approximately HK$244,294,000 (in which amount due to the former subsidiary was recognised of approximately HK$244,288,000 as at 31 December 2020), and further impairment loss was recognised on the investment in associates of approximately HK$11,937,000, since the financial information would not be able to obtain due to the fact that the Group's effective interest in the associates' operating companies was further dropped from 6.1% to less than 2% due to a passive disposal of registered capital the associates' operating companies during the period. Nevertheless, the Company has appointed a PRC legal adviser to consider the possible claim and demand for compensation from the counterparties on the subjected matter.

Selling and distribution costs

Selling and distribution costs mainly included transportation cost, accessories and packing expenses. During the period under review, with the suspended operation in Cambodia, the Group's overall selling and distribution costs decreased significantly to approximately HK$1,110,000, representing approximately 0.3% of the Group's revenue.

Administrative expenses

Administrative expenses increased by approximately 40.2% to approximately HK$138,696,000 during the period under review. It mainly consisted of staff costs which covered employees' salaries and welfare and directors' remuneration, depreciation and legal and professional fees. The increase in administrative expenses was mainly attributable from commission expenses for bonds renewal.

Finance costs

Finance costs were mainly comprised of interests on bank and other borrowings which increased to approximately HK$242,579,000 for the period under review. The increase in finance costs of approximately HK$112,702,000 from HK$129,877,000 for the corresponding period last year was attributable from additional bonds and bank borrowings and the interest expenses recognised during the period under review.

Borrowings

As at 31 December 2020, the Group had outstanding bank and other borrowings (including promissory note payable) of approximately HK$939,617,000, including bonds payable, bank and other borrowings and promissory notes of approximately HK$554,909,000, HK$373,323,000 and HK$11,385,000, respectively, in which approximately HK$23,261,000 was due more than one year and the remaining balance of approximately HK$916,356,000 was due within one year. The total bank and other borrowings increased by approximately HK$328,062,000 when comparing with the balance as at 31 December 2019 due to the increase of bank borrowings of approximately HK$55,028,000 in order to support the working capital of the Group. Besides, the increase in bonds payable of approximately HK$273,628,000, was mainly attributable from new bonds, transfer of other payables, commission payable for bonds renewal and interest payables of approximately HK$4,350,000, HK$27,997,000, HK$58,515,000 and HK$182,771,000, respectively.

Liquidity and financial resources

As at 31 December 2020, the Group's bank balances and cash increased from approximately HK$3,242,000 as at 31 December 2019 to approximately HK$10,510,000 as at 31 December 2020. The Group's total assets was approximately HK$471,570,000 as at 31 December 2020.

The Group will continue to focus on improving the net cash from operating activities and asset restructuring and to meet its funding requirements in its usual course of operation by improving profitability, procuring the disposal of non-core or idle assets and implementing tighter control over costs, working capital and capital expenditure.

The sales and purchases of the Group were denominated in Hong Kong dollar, US dollar and Renminbi. The Group will remain concerned about the fluctuations in exchange rate of foreign currencies such as US dollar and Renminbi. To mitigate the foreign currency risk, the Group will consider entering into appropriate hedging arrangements from time to time.

Important Events after the Reporting Period

No important event which materially affected the Group has taken place since 31 December 2020 and up to the date of this announcement except the following:

• 1. As mentioned above, the Group has entered into a Supplemental Deed, in which the Vendor irrevocably warrants and guarantees to the Group that the audited consolidated net profit after tax of Zhongcheng Huiyu for the respective financial years shall not be less than the New Guaranteed Profits and the Guarantor has agreed to guarantee the performance of the obligations by the Vendor under the Supplemental Deed.

  Completion of the Supplemental Deed is conditional upon:

  (i) the passing of the relevant resolution(s) by the Independent Shareholders at the extraordinary general meeting to approve the Supplemental Deed and the transactions contemplated thereunder; and

  (ii) all necessary consents and approvals required to be obtained on the part of the Group and the

  Vendor in respect of the Supplemental Deed and the transactions contemplated thereunder having been obtained.

  None of the above conditions can be waived. If any of the conditions mentioned above have not been fulfilled on or before 30 June 2021 or such later date as the parties to the Supplemental Deed may otherwise agree in writing, the Supplemental Deed shall cease and determine. None of the parties to the Supplemental Deed shall have any liability to the other parties under the Supplemental Deed, save for any antecedent breaches.

  Please refer to the announcement of the Company dated 29 January 2021 for further details up to the date of this announcement, none of the above conditions are fulfilled.

• 2. On 11 March 2020, Ms. Wong Wing Sze Tiffany and Ms. Yeung Mei Lee of Alvarez & Marsal Asia Limited (the "Receivers") were appointed as joint and several receivers and managers over the relevant shares, being 2,752,332,765 shares of the Company, held by Gold Train Investments Limited ("Gold Train"), representing approximately 43.70% of the entire issued share capital of the Company. Since the said appointment and up to the date of this announcement, the Company has not been advised by the Receivers of any proposed change of the ownership of the Relevant Shares which may or may not involve a change of the controlling shareholder of the Company, however, they are in the process of identifying purchaser(s) for the Relevant Shares and if materialised, may trigger a mandatory general offer for all the issued securities of the Company (the "Possible Transaction").

In accordance with Rule 3.8 of the Takeovers Code, as of the date of this announcement, the Company has (i) a total of 6,298,816,169 shares in issue; and (ii) an aggregate of 1,000,000,000 shares which may fall to be issued in the event that the lender under the funding agreement dated 19 August 2020 elected to exercise its option to request the Company to allot and issue such new shares to settle the funding provided under the funding agreement, as detailed in the announcement of the Company dated 20 August 2020. Save as disclosed above, the Company has no other relevant securities (as defined in Note 4 to Rule 22 of the Takeovers Code) as of the date of this announcement.

3. References are made to the announcements of the Company dated 7 July 2020, 20 August 2020,

27 August 2020, 28 September 2020, 5 November 2020 and 30 December 2020 (collectively, the "Hearing Announcements") in relation to, among other things, the hearings for application for directions and sanction of Scheme of Arrangement. In the hearing, the High Court has given directions on the preparation of the documents in relation to the Scheme of Arrangement and the Company will make further submissions for the High Court's approval. Also, the hearing for sanction of the proposed Scheme of Arrangement has been tentatively rescheduled on 12 March 2021.

Capital Commitments

The Group did not have any capital commitments as at 31 December 2020.

Dividend Policy

The declaration of dividends is subject to the discretion of the Directors and is expected to take into account various factors such as the Group's financial results, shareholders' interests, general business conditions and strategies, the Group's capital requirements, contractual restrictions on the payment of dividends by the Company to its shareholders or by the Group's subsidiaries to the Company, taxation considerations, possible effects on the Group's creditworthiness, statutory and regulatory restrictions and any other factors as the Directors may deem relevant. Taking into account the accumulated losses of the Company, the Board of Directors of the Company does not recommend the payment of an interim dividend for the twelve months ended 31 December 2020.

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

During the period under review, neither the Company nor any of its subsidiaries has purchased, sold or redeemed any of the Company's shares.

CORPORATE GOVERNANCE

The Company is committed to achieving high standards of corporate governance to safeguard the interest of its shareholders and enhance its corporate value. The Company has complied with the principles as set out in the Corporate Governance Code (the "CG Code") contained in Appendix 14 to the Listing Rules as its own code of corporate governance and confirms that it has complied with all code provisions of the CG Code during the period under review.

The Board reviews the corporate governance structure and practices from time to time and shall make necessary arrangements when the Board considers appropriate.

INTERIM DIVIDEND

The Board resolved not to declare any interim dividend for the twelve months ended 31 December 2020 (six months ended 30 June 2020: Nil) to the shareholders.

MODEL CODE FOR SECURITIES TRANSACTIONS

The Company has adopted the Model Code for Securities Transactions by Directors of the Listed Issuers (the "Model Code") as set out in Appendix 10 to the Listing Rules as its own code of conduct regarding Directors' securities transactions. Specific enquiry has been made to all Directors, and the Directors have confirmed that they have complied with all relevant requirements as set out in the Model Code for the twelve months ended 31 December 2020.

REVIEW OF INTERIM RESULTS BY THE AUDIT COMMITTEE

The audit committee of the Company has reviewed the Group's unaudited interim results for the twelve months ended 31 December 2020. The audit committee of the Company has reviewed with the management of the Group the accounting principles and practices adopted by the Group, its internal controls and financial reporting matters and the interim results for the twelve months ended 31 December 2020.

PUBLICATION OF INTERIM RESULTS ANNOUNCEMENT AND INTERIM REPORT

This announcement will be published on both the websites of the Company (www.gtiholdings.com. hk) and The Stock Exchange of Hong Kong Limited (www.hkexnews.hk). The interim report of the Company for the twelve months ended 31 December 2020 containing all the information required by the Listing Rules will be despatched to shareholders and published on the aforesaid websites in due course.

By Order of the Board

GTI Holdings Limited (Provisional Liquidators Appointed)

(For Restructuring Purposes)

Ng Kwok Hung Perry

Executive Director

Hong Kong, 26 February 2021

As at the date of this announcement, the Board comprises (i) Mr. Ng Kwok Hung Perry, Mr. Hao Xiangbin and Mr. Tan Teng Hong as executive Directors; (ii) Mr. Cheung Kiu Cho Vincent as non-executive Director; and (iii) Mr. Chan Shu Kin, Mr. Chung Lim Tung, Mr. Ng Ka Lun and Mr. Zhou

Weijia (alias Zhou Yi) as independent non-executive Directors.