Financial Performance - The company recorded total revenue of HKD 51,872,000 for the year ended December 31, 2024, a decrease of 43.0% compared to the previous year[8]. - Net loss increased to HKD 173,249,000, primarily due to fair value losses on forestry assets in New Zealand and impairment of forestry concessions in Suriname[8]. - Revenue from the New Zealand segment decreased by 39.8% to HKD 39,220,000, attributed to a significant reduction in sales volume as a major plantation asset entered a regrowth phase[17]. - The average export sales price based on offshore pricing decreased by 14.9%, while sales volume dropped by 39.4% in the New Zealand segment[17]. - The Suriname segment's revenue decreased by 50.9% to HKD 12,652,000, with a 49.0% drop in sales of logs and wood products due to the termination of operations in the western region[18]. - The group's gross loss decreased by 35.2% to HKD 58,612,000, with the New Zealand segment reporting a gross profit of HKD 4,477,000, up from HKD 1,314,000 in 2023, while the Suriname segment's gross loss reduced to HKD 63,089,000 from HKD 91,757,000[19]. - The group's loss before interest, tax, depreciation, and amortization increased from HKD 110,168,000 in 2023 to HKD 147,247,000 in 2024, with significant losses reported in both New Zealand and Suriname segments[31]. - The attributable loss to the company's owners increased from HKD 93,075,000 in 2023 to HKD 139,238,000 in 2024[33]. - Total assets decreased to HKD 609,514,000 in 2024 from HKD 799,301,000 in 2023, a decline of 24%[154]. - Total liabilities slightly increased to HKD (519,296,000) in 2024 from HKD (512,247,000) in 2023[154]. - The annual loss for 2024 was HKD (173,249,000), compared to a loss of HKD (139,674,000) in 2023, representing a 24% increase in losses[154]. Operational Changes - The company plans to explore funding options, including converting non-current assets into working capital to address financial pressures[11]. - The company aims to focus on acquiring short-term logging rights to secure a more stable revenue source in the future[11]. - The company is actively implementing cost-cutting measures and reassessing the feasibility of loss-making businesses to improve financial sustainability[40]. - The company has not engaged in any significant business acquisitions or disposals during the year ended December 31, 2024[43]. - The company has a strategic focus on transforming its Suriname operations to profitability and expanding its business in New Zealand[59]. Governance and Management - The company has appointed Mr. Li Guoheng and Ms. Sun Songxin as non-executive directors, enhancing its board with experienced professionals in strategic investment and marketing[52][53]. - Mr. Huang Wenzong serves as the chairman of both the audit and remuneration committees, bringing over 30 years of experience in auditing, taxation, and corporate governance[54][55]. - The board emphasizes high corporate governance standards, adhering to the applicable corporate governance code provisions throughout the year, with a noted exception regarding the rotation of directors[61]. - The management team includes Mr. Lai Guohong, who oversees overseas operations, and Mr. Chen Junhao, the financial director, both bringing extensive industry experience[59]. - The board regularly reviews and enhances corporate governance practices in response to global trends and business environments[61]. - The company has maintained transparency and disclosure to strengthen stakeholder confidence and protect their interests[61]. - The independent non-executive directors contribute diverse backgrounds and expertise, enhancing the board's effectiveness in governance and oversight[54][56][57]. - The company is committed to high standards of corporate governance, which is crucial for the stability and continuity of its management team[61]. Environmental and Social Responsibility - The company integrates sustainable development principles into its core business strategy, focusing on protecting forests and creating long-term economic value for shareholders[68]. - The management closely monitors greenhouse gas emissions and energy consumption, ensuring compliance with environmental regulations[70]. - The company prohibits child labor and forced labor in its recruitment process, ensuring a safe working environment with personal protective equipment for all workers[70]. - The company actively participates in community engagement, supporting underprivileged communities and promoting green living initiatives[70]. - The company emphasizes environmental responsibility and has implemented measures to reduce operational impact on the environment[146]. Financial Management - The group's capital debt ratio increased to 72.9% as of December 31, 2024, compared to 53.4% in 2023, indicating a rise in leverage[35]. - The group’s capital expenditure for the year ended December 31, 2024, was approximately HKD 1,187,000, compared to HKD 1,150,000 in 2023[42]. - The company has a financing agreement with Silver Mount Group Limited, providing a revolving loan facility of up to HKD 215,000,000[174]. - As of December 31, 2024, a total of HKD 394,077,000 has been drawn from the financing, with related interest accrued amounting to HKD 22,588,000 for the year[177]. - The sixth supplemental financing agreement was signed on July 14, 2023, extending the repayment date to August 4, 2026[177]. Risk Management - The company faces various risks including interest rate risk, foreign currency risk, credit risk, and liquidity risk, which could impact its financial performance[145]. - The board is responsible for maintaining a sound and effective risk management and internal control system, with a clear management structure in place[118]. - The internal control framework is based on the COSO framework, covering five key areas: control environment, risk assessment, control activities, information and communication, and monitoring activities[120]. - The company has integrated risk management functions into its business operations, with department heads identifying potential risks during daily operations[121]. - The company's risk management and internal control systems are deemed effective for the year, with sufficient qualified personnel in the accounting and financial reporting team[123]. Shareholder Communication and Dividends - The company has adopted a shareholder communication policy to maintain ongoing dialogue with shareholders and the investment community[136]. - The company did not recommend any dividend payment for the current year, consistent with the previous year where no dividend was declared[151]. - The company maintains a sustainable dividend policy aimed at balancing shareholder expectations and prudent capital management[140]. - The board considers various factors when deciding on dividends, including financial performance, liquidity, and regulatory restrictions[141]. - The board is committed to reviewing the dividend policy regularly and retains the discretion to update or modify it as necessary[140].

Financial Performance - Total revenue for the year ended December 31, 2024, was HKD 51,872,000, a decrease of 43% compared to HKD 90,982,000 in 2023[2] - The net loss for the year was HKD 173,249,000, compared to a net loss of HKD 139,674,000 in 2023, representing an increase in losses of approximately 24%[2] - Total comprehensive expenses for the year amounted to HKD 196,836,000, up from HKD 133,758,000 in 2023, indicating a 47% increase[3] - Basic loss per share for the year was HKD 0.075, compared to HKD 0.050 in 2023, indicating a worsening in per-share performance[3] - The adjusted EBITDA for the Suriname segment was a loss of HKD 19,315,000, while New Zealand reported a profit of HKD 628,000, leading to a total adjusted EBITDA loss of HKD 18,687,000[24] - The group’s EBITDA loss increased from HKD 110,168,000 for the year ended December 31, 2023, to HKD 147,247,000 for the year ended December 31, 2024[69] Revenue Breakdown - Revenue from the sale of logs and timber products is HKD 44,010,000, down from HKD 80,050,000 in the previous year, representing a decline of 45%[11] - Customer contract revenue totals HKD 49,370,000 for 2024, compared to HKD 85,108,000 in 2023, indicating a 42% decrease[11] - Revenue from subcontracting fees is HKD 2,502,000 for 2024, down from HKD 5,874,000 in 2023, reflecting a 57% decrease[14] - The revenue from New Zealand customers is HKD 39,220,000 for 2024, while the revenue from Suriname customers is HKD 12,652,000[13] - Total revenue from external operations for the year ended December 31, 2024, was HKD 51,872,000, compared to HKD 51,872,000 in 2023, indicating no growth[24] - Total revenue decreased by 43.0% to HKD 51,872,000, with revenue from New Zealand and Suriname divisions at HKD 39,220,000 and HKD 12,652,000 respectively, reflecting a decline of 39.8% and 50.9%[57][58] Asset and Liability Changes - Non-current assets decreased to HKD 564,586,000 from HKD 706,156,000, reflecting a decline of approximately 20%[4] - Current assets decreased significantly to HKD 44,928,000 from HKD 93,145,000, a reduction of about 52%[4] - Total liabilities increased to HKD 481,801,000 from HKD 460,361,000, showing a rise of approximately 5%[5] - The company's equity attributable to owners decreased to HKD 90,218,000 from HKD 287,054,000, a decline of about 69%[5] - As of December 31, 2024, the group's current assets and current liabilities were HKD 44,928,000 and HKD 37,495,000, respectively, compared to HKD 93,145,000 and HKD 51,886,000 as of December 31, 2023[71] - The total liabilities for the group were HKD 519,296,000, with Suriname's liabilities at HKD 232,182,000 and New Zealand's at HKD 266,841,000[24] Operational Challenges - The group incurred a fair value loss of HKD 65,847,000 on plantation assets, impacting overall profitability[24] - The New Zealand division experienced a significant decline in sales volume, leading to a fair value loss of HKD 65,847,000 on its artificial forest assets[50] - The company recognized an impairment of HKD 48,275,000 related to forest concessions and logging rights in Suriname, indicating worsening market conditions and rising operational costs[52] - The group is actively implementing cost-cutting measures and reassessing the feasibility of loss-making operations in Suriname to improve financial sustainability[77] Future Plans and Strategies - The company plans to explore funding options, including converting non-current assets into working capital, focusing on acquiring short-term logging rights to stabilize future revenue[53] - The company aims to enhance financial flexibility and optimize resource allocation to ensure long-term sustainability and shareholder value creation[53] - The company will continue to maintain operational efficiency and financial discipline while exploring strategic opportunities despite challenging market conditions[54] - The group plans to evaluate market conditions and explore additional funding methods, including the potential sale of non-current assets, to address ongoing financial challenges[78] Employee and Governance Information - The total number of employees as of December 31, 2024, is 125, down from 143 in 2023, with employee costs amounting to approximately HKD 30,660,000, compared to HKD 34,547,000 in 2023[87] - The company has complied with all applicable corporate governance code provisions throughout the year ending December 31, 2024, with one exception regarding the rotation of directors[90] - The company has adopted a code of conduct for directors regarding securities trading, which is not less stringent than the standard code[92] Miscellaneous - The company has applied new and revised Hong Kong Financial Reporting Standards, which did not have a significant impact on the financial statements[7] - The company has adopted a stock option plan approved by shareholders on May 24, 2022, which is valid for ten years until May 23, 2032, with no options granted or exercised as of December 31, 2024[85] - The audit committee has reviewed and discussed the audited consolidated financial statements for the year ending December 31, 2024, confirming they are prepared in accordance with applicable accounting standards[88] - The company expresses gratitude to shareholders, customers, and suppliers for their support and acknowledges the efforts of management and employees[95]

Financial Performance - The company's revenue decreased significantly from HKD 164,305,000 in 2022 to HKD 90,982,000 in 2023, primarily due to a decline in New Zealand operations[9]. - Revenue from the New Zealand division dropped by 50.9%, with sales volume decreasing by 52.5%[10]. - The Suriname division's revenue decreased by 18.2%, leading to an adjusted EBITDA loss of HKD 15,192,000 in 2023 compared to a loss of HKD 8,913,000 in 2022[13]. - The company recorded a net loss of HKD 139,674,000 for the year ending December 31, 2023, compared to a net loss of HKD 97,746,000 in 2022[20]. - Total revenue decreased by 44.6% to HKD 90,982,000, with contributions from New Zealand and Suriname segments at HKD 65,200,000 and HKD 25,782,000 respectively[21]. - Gross loss increased by 84.9% to HKD 90,443,000, with Suriname segment gross loss rising significantly to HKD 91,757,000 from HKD 39,512,000[22]. - The attributable loss to the company's owners increased from HKD 68,152,000 to HKD 93,075,000 for the year[39]. - The annual loss for 2023 was HKD (139,674,000), worsening from a loss of HKD (97,746,000) in 2022[196]. - Total assets decreased to HKD 799,301,000 in 2023 from HKD 968,017,000 in 2022, representing a decline of 17.5%[196]. - Total liabilities decreased to HKD (512,247,000) in 2023 from HKD (547,205,000) in 2022, a reduction of 6.4%[196]. - The company reported a loss attributable to equity holders of HKD (93,075,000) in 2023, compared to a loss of HKD (68,152,000) in 2022[196]. Operational Challenges - The Suriname division faced significant challenges, including increased production costs and delays in government licensing, impacting operational risks[17]. - The group is facing operational challenges in Suriname due to external factors such as extreme weather, rising fuel costs, and government uncertainties, which have increased operational risks[49]. - The group has adjusted production levels in Suriname to control costs and manage inventory, focusing on improving operational efficiency[49]. - The company anticipates potential risks in 2024 due to geopolitical instability and a projected 30% to 60% decline in China's real estate investment over the next decade[14]. Cost Management - The company aims to focus on improving operational efficiency and prudent financial management in light of ongoing challenges[17]. - Administrative expenses decreased by 4.9% or HKD 2,370,000 due to reduced depreciation from completed logging activities[32]. - Sales and distribution costs decreased by 44.7% or HKD 11,816,000, mainly due to reduced sales volume and currency depreciation[31]. - Financing costs rose by 39.2% or HKD 6,698,000 due to generally higher interest rates affecting floating-rate bank loans[33]. Sustainability and Corporate Governance - The company has integrated sustainable development principles into its core business strategy, focusing on protecting forests and creating long-term economic value for shareholders[86]. - The management closely monitors greenhouse gas emissions and energy consumption, ensuring compliance with environmental regulations in operational areas[88]. - The company has adopted a sustainable forestry operation model, ensuring that only trees of a certain age are harvested and reforestation occurs within twelve months post-harvest[85]. - The company has a commitment to high corporate governance standards, enhancing transparency and stakeholder confidence[79]. - The company actively participates in community engagement, supporting green living initiatives and providing knowledge to local tribes[88]. - The company has established a whistleblowing policy and anti-corruption measures to maintain high ethical standards in its business culture[88]. - The company emphasizes employee safety and prohibits child labor and forced labor in its operations[88]. - The company aims to create and enhance long-term returns for shareholders while fulfilling corporate social responsibilities[80]. Board and Management Structure - The board consists of eight members, including one executive director and seven non-executive directors, ensuring a strong independent element in decision-making[90]. - The management team includes experienced professionals with extensive backgrounds in finance, accounting, and corporate governance, enhancing the company's strategic direction[63][64][66][67][70][73]. - The chairman and CEO roles are separated, with Mr. Zheng Zhiqian as chairman and Mr. Ding Weiquan as CEO, ensuring clear division of responsibilities[95]. - The board consists of three independent non-executive directors, with independent directors accounting for over one-third of the board, complying with listing rules[91]. - The board held four meetings in 2023, with an overall attendance rate of approximately 97.9%[98]. - The company appointed a new non-executive director, Ms. Sun Songxin, after the annual general meeting on May 31, 2023[96]. - The audit, nomination, and remuneration committees are chaired by non-executive directors and have been granted sufficient resources to fulfill their duties[91]. Risk Management - The board is responsible for maintaining an effective risk management and internal control system, with a clear management structure in place[150]. - The internal control framework is based on the COSO framework, covering monitoring environment, risk assessment, control activities, information and communication, and monitoring activities[153]. - The company has integrated risk management functions into its business operations, with department heads identifying potential risks in daily operations[154]. - The external auditor did not identify any significant internal control weaknesses during the 2023 audit[156]. - The audit committee has received reports on internal control and risk management for the year, which were considered when recommending the board to approve the group's interim and annual performance[157]. Shareholder Communication and Dividends - The company has adopted a shareholder communication policy to maintain ongoing dialogue with shareholders and the investment community[173]. - The company did not recommend any dividend payment for the current year, consistent with the previous year where no dividend was declared[193]. - The board of directors retains the discretion to declare interim and final dividends, subject to shareholder approval at the general meeting[177]. - The company emphasizes a sustainable dividend policy, balancing shareholder expectations with prudent capital management[179]. - The board considers multiple factors when deciding on dividends, including financial performance, retained earnings, and regulatory restrictions[180]. Employee Relations - As of December 31, 2023, the total number of employees in the group was 143, down from 152 in 2022, with employee costs amounting to approximately HKD 34,547,000, an increase from HKD 33,361,000 in 2022[60]. - The company has a compensation policy that includes salaries and discretionary bonuses based on group performance and individual contributions[60]. - The company encourages gender diversity across all departments, with at least one female in management positions in major departments[110].

Financial Performance - The total revenue for the year ended December 31, 2023, was HKD 90,982,000, a decrease of 44.6% compared to HKD 164,305,000 in 2022[2] - The gross loss for the year was HKD 90,443,000, compared to a gross loss of HKD 48,914,000 in the previous year, representing an increase of 84.8%[2] - The net loss for the year was HKD 139,674,000, which is a 42.7% increase from the net loss of HKD 97,746,000 in 2022[2] - The total comprehensive loss for the year attributable to owners of the company was HKD 87,159,000, compared to HKD 66,274,000 in 2022, reflecting a 31.5% increase[3] - The group reported a total loss before tax of HKD 184,058,000 for the year ended December 31, 2023, compared to a loss of HKD 116,808,000 in 2022, representing an increase in losses of 57.5%[29] - The group reported a pre-tax loss of HKD 93,075,000 for the year ended December 31, 2023, compared to a loss of HKD 68,152,000 in 2022[47] - The company recorded an EBITDA loss of HKD 110,168,000 for the year, compared to an EBITDA profit of HKD 7,148,000 in 2022[92] - The loss attributable to the company's owners increased from HKD 68,152,000 in 2022 to HKD 93,075,000 for the year ended December 31, 2023[95] Revenue Breakdown - Revenue from the sale of logs and timber products was HKD 80,050,000, down 48.5% from HKD 155,201,000 in the previous year[14] - Customer contract revenue totaled HKD 85,108,000, a decline of 47.1% compared to HKD 160,639,000 in 2022[14] - Total revenue from leases increased to HKD 5,874,000 in 2023, up from HKD 3,666,000 in 2022, representing a growth of 60.3%[22] - External segment revenue for Suriname was HKD 25,782,000 and for New Zealand was HKD 65,200,000, totaling HKD 90,982,000 for the year ended December 31, 2023[29] - The New Zealand division's revenue dropped by 50.9%, primarily due to reduced demand and a 52.5% decrease in sales volume[66] - The Suriname division experienced an 18.2% decrease in revenue, attributed to lower sales volumes of logs and lumber products[67] - Total revenue decreased by 44.6% to HKD 90,982,000, with contributions from the New Zealand and Suriname divisions of HKD 65,200,000 and HKD 25,782,000 respectively[78] - Revenue from the New Zealand division decreased by 50.9% or HKD 67,577,000, primarily due to a decline in demand from China and reduced supply from owned plantations[78] Assets and Liabilities - The company's total assets decreased to HKD 799,301,000 from HKD 968,017,000 in 2022, a decline of 17.5%[5] - The company's cash and cash equivalents decreased to HKD 47,714,000 from HKD 71,681,000, a reduction of 33.5%[5] - The total liabilities decreased to HKD 512,247,000 from HKD 547,205,000, a decrease of 6.4%[6] - The company's equity attributable to owners decreased to HKD 764,046,000 from HKD 851,205,000, a decline of 10.2%[6] - The group's outstanding borrowings as of December 31, 2023, amounted to HKD 202,512,000 from the direct holding company, HKD 166,948,000 from a subsidiary, HKD 24,644,000 in bank loans, and HKD 14,068,000 in lease liabilities, resulting in a capital debt ratio of 53.4%[97] Operational Challenges - The Suriname operations faced various external challenges, including extreme weather, pandemic lockdowns, rising fuel and transport costs, and social unrest due to economic inflation, increasing operational risks[101] - The company is closely monitoring the impact of geopolitical instability and economic recession risks on supply chain costs for 2024[70] - The International Monetary Fund predicts a 30% to 60% decline in investment in China's residential real estate projects over the next decade, which may affect demand for New Zealand radiata pine[70] - The group is currently in a low harvesting period for most of its radiata pine plantations in New Zealand, requiring ongoing cash support until the plantations mature over the next ten years[100] Employee and Operational Costs - The group’s employee benefits expenses increased to HKD 34,547,000 in 2023 from HKD 33,361,000 in 2022[43] - Financing costs rose to HKD 23,806,000 in 2023 from HKD 17,108,000 in 2022, with interest from loans from a related company increasing significantly from HKD 7,467,000 to HKD 12,780,000[42] - The group incurred capital expenditures of approximately HKD 1,150,000 for investments in properties, plants, and equipment for the year ended December 31, 2023, compared to HKD 9,298,000 in 2022[108] Dividends and Share Options - The group did not declare or recommend any dividends for both years under review[45] - No final dividend was recommended for the year ended December 31, 2023, consistent with the previous year[107] - The maximum number of share options available under the share option scheme adopted on May 24, 2022, is 185,499,105 shares, representing approximately 10.0% of the company's issued share capital[112] Compliance and Governance - The company has complied with all applicable corporate governance code provisions throughout the year ended December 31, 2023, with minor deviations noted[117] - The group has not purchased, sold, or redeemed any of its listed securities during the year ended December 31, 2023[120] - The company acknowledges the inherent risks and uncertainties in forward-looking statements regarding its financial condition and operational performance[121]

Financial Performance - Total revenue for the first half of 2023 decreased by 46.7% to HKD 50,733,000 compared to the same period last year[7]. - Net loss for the period slightly decreased to HKD 50,418,000 from HKD 63,511,000 in the previous year[7]. - Revenue from the New Zealand division fell by 45.4% to HKD 40,956,000, primarily due to a 45.0% drop in sales volume[16]. - Revenue from the Suriname division decreased by 51.2% to HKD 9,777,000, attributed to a gradual recovery in logging activities post-national flooding[16]. - The group recorded a gross loss of HKD 6,664,000 for the period, compared to HKD 5,148,000 in 2022, with a gross loss margin of 13.1% (2022: 5.4%)[18]. - The total comprehensive loss for the period was HKD 56,710,000, down from HKD 78,217,000 in the prior year[45]. - The company reported a net loss of HKD 50,418,000 for the six months ended June 30, 2023, compared to a net loss of HKD 63,511,000 for the same period in 2022[44]. - The group reported a total loss before tax of HKD 54,068,000 for the six months ended June 30, 2023, compared to a loss of HKD 72,632,000 in the same period of 2022[96]. - The group reported a pre-tax loss of HKD 41,254,000 for the six months ended June 30, 2023, compared to a loss of HKD 51,411,000 for the same period in 2022, representing a 19.8% improvement[107]. Revenue Sources - Revenue from forest management services decreased by HKD 737,000 to HKD 2,531,000 due to reduced logging activities[16]. - Revenue from the sale of logs and timber products was HKD 45,151,000, down 50.0% from HKD 90,251,000 in the previous year[72]. - Customer contract revenue totaled HKD 47,682,000, a decline of 49.1% from HKD 93,519,000 in the same period last year[72]. - Revenue from external customers was primarily derived from New Zealand and Suriname, with total revenue from these regions amounting to HKD 50,733,000[80]. - Revenue from New Zealand customers accounted for HKD 40,956,000, while revenue from Suriname customers was HKD 6,726,000 for the six months ended June 30, 2023[73]. Operational Efficiency - The company aims to improve operational efficiency and maintain prudent financial management in the current uncertain market environment[11]. - The company plans to diversify sales to markets like South Korea and India due to ongoing economic challenges in China[11]. - A new logging operation in western Suriname is expected to generate additional revenue starting June 2023[11]. - The company plans to continue monitoring market conditions and adjust its strategies accordingly to enhance performance in the upcoming periods[76]. Expenses and Costs - Selling and distribution costs decreased by 48.6% or HKD 7,181,000, mainly due to reduced sales volume and the depreciation of the New Zealand dollar[24]. - Administrative expenses decreased by 19.2% or HKD 5,130,000, primarily due to reduced depreciation from completed logging activities[25]. - Financing costs increased by 54.7% or HKD 3,998,000, mainly due to rising interest rates affecting bank loans[26]. - The group’s financing costs amounted to HKD 11,310,000 for the six months ended June 30, 2023, compared to HKD 7,312,000 in the same period of 2022[96]. Assets and Liabilities - As of June 30, 2023, the group’s current assets and liabilities were HKD 122,948,000 and HKD 66,411,000 respectively, with a debt-to-equity ratio of 50.6%[32]. - The total assets as of June 30, 2023, were approximately HKD 790,428,000, down from HKD 828,844,000 as of December 31, 2022[47]. - The company's net asset value decreased to HKD 364,102,000 as of June 30, 2023, from HKD 420,812,000 as of December 31, 2022[51]. - The group’s financial liabilities increased to HKD 422,001,000 as of June 30, 2023, up by 2.1% from HKD 411,142,000 as of December 31, 2022[142]. Employee and Management Information - Employee costs for the six-month period were approximately HKD 18,157,000, an increase from HKD 17,051,000 in the previous year[42]. - The total number of employees as of June 30, 2023, was 145, down from 152 as of December 31, 2022[42]. - The total remuneration for key management personnel was HKD 7,910,000 for the six months ended June 30, 2023, an increase of 50.5% from HKD 5,271,000 in the prior year[152]. Shareholder Information - Newforest Limited holds a significant stake of 1,122,005,927 shares, representing approximately 60.49% of the company's issued share capital[161]. - Cheng Yu Tung Family entities collectively own 1,122,005,927 shares, also accounting for about 60.49% of the issued share capital[161]. - China Forestry Group Company holds 110,000,000 shares, which is approximately 5.93% of the company's issued share capital[163]. Corporate Governance - The board approved the interim financial statements on August 30, 2023, ensuring timely reporting and compliance[155]. - The audit committee reviewed and confirmed that the interim financial statements were prepared in accordance with applicable accounting standards and fairly reflect the group's financial position and performance[170]. - The company has maintained compliance with all applicable corporate governance code provisions, with one noted deviation regarding the rotation of directors[171]. Market Outlook - The outlook for the New Zealand division indicates potential price support due to reduced supply of logs to China, while the Suriname division aims for gradual improvement despite ongoing supply chain challenges[35].

香港交易及結算所有限公司及香港聯合交易所有限公司對本公告的內容概不負責， 對其準確性或完整性亦不發表任何聲明，並明確表示，概不對因本公告全部或任 何部份內容而產生或因依賴該等內容而引致的任何損失承擔任何責任。 GREENHEART GROUP LIMITED 綠 心 集 團 有 限 公 司 （於百慕達註冊成立之有限公司） （股份代號：94） 截至二零二三年六月三十日止六個月之 中期業績公告 綠心集團有限公司（「綠心」或「本公司」）之董事（「董事」）會（「董事會」）謹此公佈 本公司及其附屬公司（「本集團」）截至二零二三年六月三十日止六個月（「本期間」） 之未經審核綜合業績，連同二零二二年同期比較數字如下： 簡明綜合損益及其他全面收益表 截至六月三十日止六個月 二零二三年 二零二二年 （未經審核） （未經審核） 附註 千港元 千港元 收益 4 50,733 95,107 銷售及服務成本 (57,397) (100,255) 毛損 (6,664) (5,148) ...

Financial Performance - The company reported a significant net loss of HKD 97,746,000 for the year 2022, compared to a loss of HKD 59,231,000 in 2021, marking an increase in losses [10]. - The group's revenue decreased by 48.7% or HKD 156,216,000 to HKD 164,305,000, with contributions from New Zealand and Suriname divisions at HKD 132,777,000 and HKD 31,528,000 respectively [21]. - The company's revenue for the fiscal year 2022 was HKD 164,305,000, a decrease of 48.7% compared to HKD 320,521,000 in 2021 [183]. - The annual loss for 2022 was HKD 97,746,000, compared to a loss of HKD 59,231,000 in 2021, indicating a worsening financial performance [183]. - The equity attributable to the company's owners showed a loss of HKD 68,152,000 in 2022, worsening from a loss of HKD 36,938,000 in 2021 [183]. - The group's gross loss for the year was HKD 47,972,000, compared to a gross profit of HKD 27,677,000 in the previous year, with the New Zealand division recording a gross loss of HKD 9,402,000 [23]. - The gross loss margin for the year was 29.2%, significantly down from a gross profit margin of 8.6% in the previous year [26]. - The group's EBITDA before interest, tax, depreciation, and amortization dropped by 90.8% to HKD 7,148,000, down from HKD 77,473,000 in the previous year [42]. Revenue and Sales - Revenue from the New Zealand division decreased by 53.2%, primarily due to a 19.4% drop in average export sales prices calculated at offshore prices [10]. - Sales volume in New Zealand fell to 192,000 cubic meters, which is 56.6% lower than the previous year's sales [10]. - In Suriname, revenue decreased by 14.2%, reflecting a slight decline in sales volume despite strong demand for tropical hardwood products [11]. - The New Zealand division's revenue fell by 53.2% or HKD 150,981,000 due to a weak Chinese real estate market, leading to a 19.4% drop in average selling prices and a 43.4% decrease in sales volume [21]. - Sales from the top five customers accounted for 76.0% of total revenue, with the largest customer contributing 64.4% [196]. Operational Efficiency and Cost Management - The company is focused on improving operational efficiency and reducing costs in Suriname through outsourcing, while maintaining stable revenue [14]. - The adjusted EBITDA loss for the Suriname division decreased by 28.9% to HKD 8,913,000 [12]. - Other income decreased by 13.0% or HKD 198,000, primarily due to the repayment of financing lease receivables, partially offset by a one-off COVID-19 related subsidy from the Hong Kong government [28]. - The company has reported a decrease in operational costs by J%, enhancing overall profitability [64]. Investments and Future Plans - The company plans to explore and invest in carbon farming opportunities in New Zealand, aiming to create sustainable revenue sources and contribute to climate change mitigation [14]. - The group has expanded its deep processing facilities in Paramaribo, Suriname, to convert rough-cut timber into higher-value planed timber, with stable production expected in 2023 [51]. - Capital expenditures for investments in properties, plants, and equipment amounted to approximately HKD 9,298,000 for the year [54]. Governance and Board Structure - The board consists of eight members, including one executive director and seven non-executive directors, ensuring a strong independent element in decision-making [90]. - The company’s independent non-executive directors have confirmed their independence in accordance with listing rules [91]. - The board comprises one executive director, four non-executive directors, and three independent non-executive directors, with independent directors making up 37.5% of the board, exceeding the requirement of one-third [109]. - The company has established appropriate liability insurance for directors and senior officers in response to legal proceedings [92]. - The board will consider various factors, including actual and expected business operations, financial performance, and liquidity when deciding on dividend payments [192]. Environmental and Social Responsibility - The company has integrated sustainable development principles into its core business strategy, focusing on protecting forests and creating long-term economic value for shareholders [87]. - The management closely monitors greenhouse gas emissions and energy consumption, ensuring compliance with environmental regulations in operational areas [89]. - The company has implemented a reforestation policy, ensuring that land is replanted within twelve months after logging [89]. - The company actively participates in promoting green living and supports disadvantaged communities through donations and knowledge sharing [89]. Risk Management and Internal Control - The company has adopted an anti-corruption policy and encourages reporting of misconduct without fear of retaliation, reinforcing the effectiveness of its internal control and risk management systems [152]. - The audit committee reviewed the internal control and risk management reports annually and considers them when recommending the approval of the company's interim and annual results [152]. - The company's risk management and internal control systems are deemed effective, with sufficient qualified personnel in the accounting and financial reporting team [152]. Shareholder Communication - The company has adopted a shareholder communication policy to ensure ongoing dialogue with shareholders and the investment community [168]. - Shareholders holding at least 10% of the voting shares can request the company to convene a special general meeting [158]. - The company allows shareholders to submit written inquiries to the board via mail, fax, or email [164].

Financial Performance - In the first half of 2022, Greenheart Group reported a significant revenue decrease of HKD 53,631,000, leading to a net loss increase of HKD 62,246,000[18]. - The group recorded an unaudited net loss of HKD 63,511,000 for the period, attributed to decreased revenue from the New Zealand division and impairment provisions related to a deposit of RMB 20,000,000[28]. - Total revenue for the period decreased by 36.1% to HKD 95,107,000, with New Zealand and Suriname divisions generating revenues of HKD 75,076,000 and HKD 20,031,000 respectively[29]. - The group reported a loss attributable to owners of the company of HKD 51,411,000, compared to a profit of HKD 8,923,000 in the same period last year[44]. - Total comprehensive loss attributable to owners was HKD 66,117 thousand for the first half of 2022, compared to a total comprehensive income of HKD 4,256 thousand in the first half of 2021[70]. - The group recorded a gross loss of HKD 5,148,000, compared to a gross profit of HKD 27,155,000 in the previous year, with a gross loss margin of 5.4%[32]. Revenue Breakdown - Revenue from the New Zealand division decreased by 42.0% or HKD 54,304,000 due to weak demand from China, with average export prices down by 27.9% and sales volume down by 24.3%[29]. - The Suriname division recorded total revenue of HKD 20,031,000, a slight increase from HKD 19,358,000 in the previous year, but faced an adjusted EBITDA loss of HKD 4,252,000[21]. - Revenue from the sale of logs and timber products was HKD 90,251,000, down 37.1% from HKD 143,493,000 in the previous year[107]. - Revenue from New Zealand customers accounted for HKD 75,076,000, representing 78.8% of total customer contract revenue[117]. - Revenue from the United States was HKD 3,972,000, contributing 4.2% to total revenue[117]. - The total revenue from the Suriname region was HKD 2,231,000, which is 2.3% of total revenue[117]. Market Conditions - The New Zealand division experienced a 42.0% decline in total revenue and an 80.0% drop in adjusted EBITDA compared to the same period last year, primarily due to reduced demand for logs from China[19]. - The company anticipates ongoing challenges in the second half of 2022 due to geopolitical tensions, inflation concerns, and supply chain issues, particularly affecting demand for New Zealand radiata pine in China[22]. - Fair value losses for plantation assets in New Zealand amounted to HKD 44,323,000, compared to a gain of HKD 24,995,000 in the previous year[19]. - The ongoing extreme rainfall in Suriname has severely impacted logging activities and logistics, hindering the ability to meet market demand despite strong recovery in the market[21]. - Demand for New Zealand radiata pine logs from China decreased by 40%, impacting the group's performance significantly[49]. Asset and Liability Management - As of June 30, 2022, the group's current assets and current liabilities were HKD 176,116,000 and HKD 78,013,000, respectively, with cash and bank balances at HKD 98,556,000[45]. - The group's capital debt ratio was 46.2% as of June 30, 2022, compared to 42.6% on December 31, 2021[45]. - The company's non-current assets decreased from HKD 907,582 thousand as of December 31, 2021, to HKD 823,689 thousand as of June 30, 2022, reflecting a decline of approximately 9.2%[74]. - The company’s total liabilities decreased from HKD 1,008,602 thousand as of December 31, 2021, to HKD 921,792 thousand as of June 30, 2022, indicating a reduction of approximately 8.6%[76]. - The company’s equity attributable to owners decreased from HKD 917,479 thousand at the end of 2021 to HKD 851,362 thousand at the end of June 2022, a decline of about 7.2%[78]. Operational Efficiency - The company has slowed down logging activities to retain more timber for future market recovery[19]. - The group experienced a 67% decline in forestry production in Suriname due to persistent heavy rainfall in the first half of 2022[50]. - The average sales price for tropical wood products in the EU reached a 10-year high, driven by supply chain disruptions and the Ukraine war[21]. - The average selling price of planed timber increased by 64% in the first half of 2022, contributing positively to revenue despite adverse conditions[50]. - The cost of forest depletion due to logging for the six months ended June 30, 2022, was HKD 19,839,000, down from HKD 23,913,000 in 2021, representing a decrease of approximately 17.4%[148]. Cash Flow and Financing - The company reported a net cash outflow from operating activities of HKD 2,089 thousand for the six months ended June 30, 2022, compared to a net cash inflow of HKD 6,639 thousand in the same period of 2021[84]. - Cash and cash equivalents at the end of June 2022 were HKD 98,556 thousand, a decrease from HKD 154,384 thousand at the end of June 2021[84]. - The group’s financing costs amounted to HKD 7,312,000 for the six months ended June 30, 2022, slightly down from HKD 7,809,000 in the previous year, showing a reduction of about 6.4%[147]. - The company extended the maturity date of its bank loan from May 1, 2022, to May 1, 2024, with an interest rate reduced to the benchmark rate plus 1.15%[200]. - Over 99% of trade receivables as of June 30, 2022, were settled subsequently, indicating effective collection efforts[192]. Accounting and Compliance - The unaudited condensed consolidated financial statements are prepared in accordance with Hong Kong Accounting Standards and the Listing Rules[87]. - The accounting policies used in the unaudited condensed consolidated financial statements for the six months ended June 30, 2022, are consistent with those applied in the previous financial year[88]. - The company has adopted new accounting standards effective from January 1, 2022, which did not have a significant impact on the financial statements[92]. - The company has not identified any significant impacts on its financial position and performance from the adoption of the revised accounting standards[100]. - The company maintains strict control over outstanding receivables to minimize credit risk, with senior management regularly reviewing overdue accounts[189].

Financial Performance - Greenheart Group reported a significant net loss of HKD 59,231,000 for the fiscal year 2021, an increase from HKD 36,127,000 in 2020, primarily due to changes in non-cash items [25]. - The group's revenue decreased by 1.8% or HKD 5,732,000 to HKD 320,521,000, with contributions from New Zealand and Suriname divisions being HKD 283,758,000 and HKD 36,763,000 respectively [38]. - The group reported a loss of HKD 59,231,000 for the fiscal year 2021, compared to a loss of HKD 36,127,000 in 2020 [157]. - The group's earnings before interest, tax, depreciation, and amortization (EBITDA) fell by 25.7% to HKD 77,473,000, impacted by reduced fair value gains from New Zealand forestry assets [53]. - The gross profit for the year was HKD 27,677,000, an increase of HKD 18,656,000 compared to the previous year, with a gross margin of 8.6% [40]. - The group did not recommend any dividend for the fiscal year 2021, consistent with the previous year [154]. Revenue and Sales - Total revenue for the New Zealand division was HKD 283,758,000, a slight decrease of HKD 9,533,000 or 3.3% year-on-year [26]. - The Suriname division experienced a revenue growth of 11.5% year-on-year, despite a 26.2% decrease in adjusted EBITDA to HKD 12,544,000 [28]. - The average export sales price for New Zealand radiata pine increased by 16.1% due to high prices in the first half of the year, despite a sharp decline in the second half [26]. - The average export sales price increased by 16.1%, while sales volume decreased by 17.6% [38]. - Sales from the top five customers accounted for 86.9% of total revenue, with the largest customer contributing 60.2% [169]. Assets and Liabilities - Total assets as of December 31, 2021, were HKD 1,110,112,000, down from HKD 1,209,343,000 in 2020, representing a decrease of 8.2% [157]. - Total liabilities decreased to HKD 593,432,000 in 2021 from HKD 633,579,000 in 2020, a reduction of 6.3% [157]. - Current assets and current liabilities as of December 31, 2021, were HKD 202,530,000 and HKD 101,510,000, respectively, with cash and bank balances at HKD 92,916,000 [58]. Operational Challenges - The New Zealand division sold approximately 340,000 cubic meters of radiata pine, a decrease of 17.6% compared to 2020, attributed to the real estate crisis and power shortages in China [26]. - The company faced challenges in the Suriname division due to supply chain disruptions and increased shipping costs, impacting timely deliveries [28]. - The company’s Suriname operations faced challenges due to continuous heavy rainfall for eight months, impacting business performance, although there have been improvements in timber prices and production efficiency [62]. - The future performance of the Suriname business will depend on market demand sustainability, weather conditions, and alleviation of logistics bottlenecks [62]. Strategic Initiatives - The company is actively exploring new development areas in carbon-related forestry business in response to global trends towards carbon neutrality [32]. - The acquisition of greenfield sites with carbon credit revenue potential is a priority for the company, with land prices increasing by 175% in a competitive market, and carbon prices expected to rise by $48 to $78 per unit within the next twelve months [62]. - The company plans to redesign processing facilities in the capital to focus on more downstream products, which is expected to be a key driver for performance improvement [62]. - The company is considering strategic acquisitions to enhance its product offerings and market presence, with potential targets identified [86]. Governance and Compliance - The management team emphasized the importance of maintaining high corporate governance standards, adhering to all relevant regulations [88]. - The board of directors has reviewed and approved the strategic plan for the upcoming year, focusing on operational efficiency and shareholder value [89]. - The company has adopted a diversity policy for the board, aiming for gender balance by December 31, 2024 [108]. - The company has a policy in place to review and monitor the effectiveness of its nomination and diversity policies regularly [108]. - The company believes its risk management and internal control systems are effective for the year [128]. Financial Instruments and Risk Management - The group has not used any financial instruments for hedging and will continue to monitor foreign exchange risks closely [59]. - The group faces various major risks including interest rate risk, foreign currency risk, credit risk, and liquidity risk, which are detailed in the financial statements [149]. - The company maintains transparency and communication with shareholders through interim and annual reports [132]. Employee and Administrative Matters - The total number of employees as of December 31, 2021, was 168, down from 183 in the previous year, with employee costs amounting to approximately HKD 32,705,000, a decrease from HKD 42,148,000 in the prior year [69]. - Administrative expenses decreased by 4.3% or HKD 2,166,000 to HKD 47,767,000, primarily due to a reduction in employee costs and legal fees [49]. - The company encourages continuous professional development for directors, ensuring they remain informed and relevant in their contributions [97]. Audit and Financial Reporting - The audit committee held four meetings during the year, with external auditors attending three of them [118]. - The company paid HKD 2,480,000 for audit fees and HKD 209,000 for non-audit services, primarily for tax compliance [123]. - The board confirmed that the financial statements fairly reflect the group's affairs and adopted Hong Kong Financial Reporting Standards [123].

Company Information [Company Information Overview](index=2&type=section&id=Company%20Information%20Overview) This section outlines Greenheart Group Limited's core corporate information, including board composition, registered details, and key professional contacts - Board members include **CHENG Chi Him** (Non-executive Chairman) and **DING Wai Chuen** (Chief Executive Officer)[16](index=16&type=chunk) - Audit Committee, Remuneration Committee, and Nomination Committee chairmen are all **WONG Man Chung** or **CHENG Chi Him**[16](index=16&type=chunk) - Stock code: **94**[16](index=16&type=chunk) - Independent Auditor: **Deloitte Touche Tohmatsu**[16](index=16&type=chunk) Chairman's Statement [Performance Review and Highlights](index=5&type=section&id=Performance%20Review%20and%20Highlights) The Group achieved significant revenue growth and a substantial reduction in net loss despite global supply chain challenges, driven by strong performance in New Zealand and revenue growth in Suriname - Global container and vessel shortages led to a global supply chain crisis, impacting the Group's business[18](index=18&type=chunk) 2021 H1 Key Financial Performance | Indicator | 2021 H1 (HK$ million) | Y-o-Y Change | | :--- | :--- | :--- | | Total Revenue | 147.85 | 33.9% | | Adjusted EBITDA | 31.746 | 132.5% | | Net Loss | 1.265 | -96.5% (narrowed) | - New Zealand segment sales grew **31.0%** to **HK$129.38 million**, primarily driven by strong Chinese demand for New Zealand Radiata Pine and rising average log prices[19](index=19&type=chunk) - New Zealand A-grade log prices surged **48.9%** to **US$195 per cubic meter**, but most gains were eroded by soaring shipping costs (from **US$30.6** to **US$60 per cubic meter**)[19](index=19&type=chunk) - New Zealand segment recorded a fair value gain on plantation assets of **HK$24.995 million**, reflecting favorable adjustments in future market prices and demand[21](index=21&type=chunk) - Suriname segment revenue significantly increased by **58.3%** to **HK$18.47 million**, but was adversely affected by local pandemic outbreaks, continuous heavy rainfall, and container shortages[22](index=22&type=chunk) [Outlook and Strategy](index=7&type=section&id=Outlook%20and%20Strategy) Future outlook anticipates short-term pressure on New Zealand log prices from China's economic slowdown, while the Suriname segment faces ongoing uncertainties, necessitating continued focus on cost control and efficiency - Slowing economic growth in China (Q2 GDP growth rate plummeted from **18.3%** to **7.9%**) is expected to exert short-term pressure on New Zealand Radiata Pine prices[24](index=24&type=chunk) - New Zealand carbon credit prices soared to nearly **NZ$50 per tonne**, raising forest owners' price expectations[25](index=25&type=chunk) - The outlook for the Suriname segment is full of uncertainties, facing risks such as a resurgence of the pandemic, adverse weather, supply chain disruptions, and changes in government policies[25](index=25&type=chunk) - Management will continue to strive to improve the Group's productivity and logistics efficiency, cut costs, streamline headcount, and implement stringent and prudent financial and cash flow management policies[27](index=27&type=chunk) Management Discussion and Analysis [Business Review](index=9&type=section&id=Business%20Review) The Group's first-half financial performance significantly improved, marked by reduced net loss, revenue growth, a shift to gross profit, and increased fair value gains on plantation assets - Unaudited net loss significantly narrowed by **96.5%** to **HK$1.265 million**, primarily due to fair value gain on plantation assets and improved operating results[29](index=29&type=chunk) 2021 H1 Revenue Composition | Segment | 2021 H1 Revenue (HK$ thousand) | 2020 H1 Revenue (HK$ thousand) | Y-o-Y Change | | :--- | :--- | :--- | :--- | | New Zealand Segment | 129,380 | 98,754 | 31.0% | | Suriname Segment | 18,470 | 11,671 | 58.3% | | **Total Revenue** | **147,850** | **110,425** | **33.9%** | - The Group recorded a gross profit of **HK$26.267 million** (2020 H1: gross loss of HK$4.177 million), with a gross profit margin of **17.8%**[32](index=32&type=chunk) - New Zealand segment gross profit margin rose to **24.2%**, while Suriname segment gross loss margin decreased to **27.6%**, mainly attributed to higher average timber selling prices and reduced cost structure[32](index=32&type=chunk) - Fair value gain on plantation assets increased to **HK$24.995 million**, mainly reflecting the overall improvement in the New Zealand Radiata Pine market and rising short-term forecast log prices[37](index=37&type=chunk) - Administrative expenses remained stable at **HK$22.67 million**, but as a percentage of revenue, it decreased from **20.5%** to **15.3%**, primarily due to cost control measures[39](index=39&type=chunk) - Finance costs decreased by **14.0%** to **HK$7.809 million**, mainly due to a general decline in bank borrowing interest rates following LIBOR[40](index=40&type=chunk) - EBITDA increased to **HK$57.172 million**, primarily due to increased fair value gain on plantation assets and improved operating results[43](index=43&type=chunk) - Profit attributable to owners of the Company turned from a loss of **HK$24.322 million** in the same period last year to a profit of **HK$8.923 million**[45](index=45&type=chunk) [Liquidity and Financial Review](index=13&type=section&id=Liquidity%20and%20Financial%20Review) The Group maintains robust liquidity, increased net current assets, and a stable gearing ratio, while prudently managing treasury and exchange rate risks and complying with loan covenants Liquidity Position | Indicator | June 30, 2021 (HK$ thousand) | Dec 31, 2020 (HK$ thousand) | | :--- | :--- | :--- | | Current Assets | 250,101 | 241,630 | | Current Liabilities | 105,041 | 114,387 | | Cash and Bank Balances | 154,384 | 167,684 | | Outstanding Borrowings | 428,259 | 426,252 | | Gearing Ratio | 44.7% | 44.7% | - Most of the Group's sales are denominated in USD, and major costs and expenses are also in USD, while New Zealand domestic sales and forest management fee income are in NZD, helping to offset some operating expenses[47](index=47&type=chunk) - No hedging of financial instruments was undertaken during the period, but exchange rate risks will continue to be closely monitored, and necessary hedging arrangements will be implemented[47](index=47&type=chunk) - All financial covenants related to bank loan facilities were complied with[49](index=49&type=chunk) [Outlook](index=14&type=section&id=Outlook) Global forestry markets remain challenging, with New Zealand facing log price pressure and rising shipping costs, while Suriname focuses on turnaround amidst external uncertainties, necessitating strict cost and capital expenditure control - Global forestry market conditions remain challenging, and economic recovery may take more time[50](index=50&type=chunk) - New Zealand became China's largest log supplier in H1 2021, accounting for **32%** of total imports, with import volume increasing by **58%** year-on-year[51](index=51&type=chunk) - New Zealand A-grade Radiata Pine cost-and-freight prices fell from July and further in August, while freight costs to China and South Korea surged to over **US$61 per cubic meter**[51](index=51&type=chunk) - The Suriname segment continues to focus on turning around losses, with management concentrating on improving operational efficiency and market sales effectiveness[54](index=54&type=chunk) - The Group will continue to actively monitor the situation, implement strict cost control, and prudently manage capital expenditures and investment projects[54](index=54&type=chunk) [Other Financial Information](index=15&type=section&id=Other%20Financial%20Information) This section details asset pledges, the Board's decision not to declare an interim dividend, and information on capital expenditures, business activities, contingent liabilities, and employee remuneration - The Group's bank loan facilities are secured by New Zealand forest land (carrying value approximately **HK$134.61 million**) and plantation assets (carrying value approximately **HK$450.919 million**)[55](index=55&type=chunk)[56](index=56&type=chunk) - The Board has resolved not to recommend the declaration of any dividend for the six months ended June 30, 2021[57](index=57&type=chunk) - Capital expenditure for the six months ended June 30, 2021, was approximately **HK$7.039 million** for investment in property, plant, and equipment[58](index=58&type=chunk) - No significant business acquisitions or disposals were undertaken during the period, nor were there any significant contingent liabilities[59](index=59&type=chunk)[60](index=60&type=chunk) - As of June 30, 2021, share options to subscribe for **15,923,600 ordinary shares** of the Company remained valid and unexercised[62](index=62&type=chunk) - As of June 30, 2021, the Group had a total of **179 employees**, with employee costs of approximately **HK$18.55 million**[63](index=63&type=chunk) Condensed Consolidated Statement of Profit or Loss and Other Comprehensive Income [Profit or Loss and Comprehensive Income Overview](index=17&type=section&id=Profit%20or%20Loss%20and%20Comprehensive%20Income%20Overview) This statement outlines the Group's unaudited consolidated profit or loss and other comprehensive income, reflecting a successful turnaround to net profit driven by revenue growth and fair value gains 2021 H1 Condensed Consolidated Statement of Profit or Loss and Other Comprehensive Income Key Data | Indicator | 2021 H1 (HK$ thousand) | 2020 H1 (HK$ thousand) | Change | | :--- | :--- | :--- | :--- | | Revenue | 147,850 | 110,425 | Growth 33.9% | | Cost of sales and services | (121,583) | (114,602) | Growth 6.1% | | Gross profit (loss) | 26,267 | (4,177) | Turned from loss to profit | | Fair value gain on plantation assets | 24,995 | 5,407 | Growth 362.3% | | Selling and distribution costs | (18,207) | (15,072) | Growth 20.8% | | Administrative expenses | (22,670) | (22,632) | Growth 0.2% | | Finance costs | (7,809) | (9,075) | Decrease 14.0% | | Profit (loss) before tax | 3,582 | (41,196) | Turned from loss to profit | | Income tax (expense) credit | (4,847) | 5,090 | Turned to expense | | Loss for the period | (1,265) | (36,106) | Loss narrowed 96.5% | | Profit (loss) for the period attributable to owners of the Company | 8,923 | (24,322) | Turned from loss to profit | | Basic earnings (loss) per share | 0.005 HK$ | (0.013) HK$ | Turned from loss to profit | Condensed Consolidated Statement of Financial Position [Assets, Liabilities, and Equity Overview](index=19&type=section&id=Assets%2C%20Liabilities%2C%20and%20Equity%20Overview) This statement presents the Group's unaudited consolidated financial position, highlighting the composition of assets, liabilities, and equity, with plantation assets as a key non-current component 2021 H1 Condensed Consolidated Statement of Financial Position Key Data | Indicator | June 30, 2021 (HK$ thousand) | Dec 31, 2020 (HK$ thousand) | Change | | :--- | :--- | :--- | :--- | | **Non-current assets** | | | | | Property, plant and equipment | 310,673 | 316,184 | -1.7% | | Forest concessions and harvesting rights | 135,111 | 140,123 | -3.6% | | Plantation assets | 450,919 | 455,131 | -0.9% | | **Current assets** | | | | | Inventories | 42,448 | 25,102 | 69.1% | | Trade receivables | 18,113 | 16,359 | 10.7% | | Bank balances and cash | 154,384 | 167,684 | -7.9% | | **Current liabilities** | | | | | Trade payables | 31,790 | 39,075 | -18.7% | | Bank borrowings (current) | – | 243 | -100.0% | | **Non-current liabilities** | | | | | Loan from direct holding company | 183,658 | 181,900 | 1.0% | | Bank borrowings (non-current) | 219,960 | 219,960 | 0.0% | | Deferred tax liabilities | 100,973 | 97,589 | 3.5% | | **Total Equity** | **569,832** | **575,764** | **-1.0%** | Condensed Consolidated Statement of Changes in Equity [Equity Changes Overview](index=22&type=section&id=Equity%20Changes%20Overview) This statement details the Group's equity changes, primarily influenced by profit attributable to owners and exchange differences from overseas operations - Profit attributable to owners of the Company was **HK$8.923 million** (2020 H1: loss of HK$24.322 million)[77](index=77&type=chunk) - Exchange differences from translating overseas operations resulted in other comprehensive expense of **HK$4.667 million** (2020 H1: HK$6.356 million)[77](index=77&type=chunk) - Total comprehensive income attributable to owners of the Company was **HK$4.256 million** (2020 H1: expense of HK$30.678 million)[77](index=77&type=chunk) - As of June 30, 2021, total equity was **HK$569.832 million**, a slight decrease from **HK$575.764 million** at the beginning of the year[77](index=77&type=chunk) Condensed Consolidated Statement of Cash Flows [Cash Flow Overview](index=23&type=section&id=Cash%20Flow%20Overview) This statement presents the Group's cash flows, indicating net cash generation from operations but an overall decrease in cash and cash equivalents due to investing and financing activities 2021 H1 Condensed Consolidated Statement of Cash Flows Key Data | Activity Type | 2021 H1 (HK$ thousand) | 2020 H1 (HK$ thousand) | Change | | :--- | :--- | :--- | :--- | | Net cash generated from operating activities | 6,639 | 9,228 | -28.1% | | Net cash used in investing activities | (9,301) | (17,595) | -47.1% | | Net cash used in financing activities | (8,786) | (7,789) | 12.8% | | Net decrease in cash and cash equivalents | (11,448) | (16,156) | -29.1% | | Cash and cash equivalents at end of period | 154,384 | 149,897 | 3.0% | Notes to the Condensed Consolidated Interim Financial Statements [1. General Information](index=25&type=section&id=1.%20General%20Information) Greenheart Group Limited, a Bermuda-incorporated and Hong Kong-listed entity, is ultimately held by Chow Tai Fook Enterprises Limited, with financial statements in HKD and functional currency in USD - Company incorporated in Bermuda; listed on The Stock Exchange of Hong Kong Limited[82](index=82&type=chunk) - Ultimate holding company: **Chow Tai Fook Enterprises Limited**[82](index=82&type=chunk) - Financial statements presented in **HKD**; company's functional currency is **USD**[82](index=82&type=chunk) [2. Basis of Preparation](index=25&type=section&id=2.%20Basis%20of%20Preparation) The interim financial statements adhere to Hong Kong Accounting Standard 34 and Appendix 16 of the Listing Rules for disclosure requirements - Prepared in accordance with Hong Kong Accounting Standard 34 "Interim Financial Reporting" and Appendix 16 of the Listing Rules of The Stock Exchange of Hong Kong Limited[83](index=83&type=chunk) [3. Principal Accounting Policies](index=25&type=section&id=3.%20Principal%20Accounting%20Policies) Financial statements are prepared using historical cost, with plantation assets and forest land at fair value, and recent HKFRS amendments had no significant financial impact - Principal measurement basis: historical cost convention, except for plantation assets and forest land measured at fair value less costs to sell or revalued amounts[84](index=84&type=chunk) - First-time application of HKFRS 16 (COVID-19-Related Rent Concessions) and HKFRS 9 (Interest Rate Benchmark Reform – Phase 2) amendments during the period[86](index=86&type=chunk) - Interest rate benchmark reform amendments had no significant impact on the condensed consolidated financial statements for the period, future impacts will be reflected in the annual consolidated financial statements[106](index=106&type=chunk) [4. Revenue](index=29&type=section&id=4.%20Revenue) Group revenue, primarily from log and timber sales and forest management fees, increased by 33.9%, with New Zealand contributing most, largely from China sales, and Suriname also showing significant growth 2021 H1 Revenue Composition | Type of goods or services | 2021 H1 (HK$ thousand) | 2020 H1 (HK$ thousand) | | :--- | :--- | :--- | | Sales of logs and timber products | 142,605 | 107,050 | | Forest management fees | 2,668 | 1,171 | | **Total revenue from contracts with customers** | **145,273** | **108,221** | | Subcontracting fee income | 2,577 | 2,204 | | **Total Revenue** | **147,850** | **110,425** | - New Zealand segment contributed **HK$129.38 million** in revenue, Suriname segment contributed **HK$18.47 million**[109](index=109&type=chunk) - Revenue from New Zealand customers primarily relates to sales made on FOB terms and destined for mainland China[120](index=120&type=chunk) - Revenue from sales of logs and timber products is recognized when control of the goods is transferred to the customer[123](index=123&type=chunk) - Revenue from forest management services is recognized over time as performance obligations are satisfied[124](index=124&type=chunk) - Subcontracting fee income arises from operating lease arrangements with subcontractors, based on variable per-log production and fixed payments[126](index=126&type=chunk) [5. Operating Segments](index=36&type=section&id=5.%20Operating%20Segments) The Group operates in Suriname and New Zealand, with the latter showing strong revenue and adjusted EBITDA, while Suriname's loss narrowed, and major customers are concentrated in New Zealand 2021 H1 Segment Results (Adjusted EBITDA) | Segment | 2021 H1 (HK$ thousand) | 2020 H1 (HK$ thousand) | | :--- | :--- | :--- | | Suriname | (2,789) | (7,612) | | New Zealand | 40,813 | 30,639 | | **Total Segments** | **38,024** | **23,027** | - New Zealand segment contributed **HK$65.664 million** in EBITDA, while Suriname segment recorded a loss of **HK$2.244 million**[135](index=135&type=chunk) - The New Zealand segment has one major customer whose revenue contribution accounted for over **10%** of total revenue for the period (2021 H1: **HK$109.984 million**; 2020 H1: **HK$87.39 million**)[144](index=144&type=chunk) [6. Other Income, Other Gains and Losses](index=41&type=section&id=6.%20Other%20Income%2C%20Other%20Gains%20and%20Losses) Other income decreased due to the absence of prior-period government grants, with other gains and losses primarily reflecting a loss from early lease termination 2021 H1 Other Income Composition | Item | 2021 H1 (HK$ thousand) | 2020 H1 (HK$ thousand) | | :--- | :--- | :--- | | Bank and other interest income | 35 | 247 | | Finance lease income | 356 | 554 | | Government grants | – | 492 | | Service fee income | 914 | 323 | | Others | 194 | 47 | | **Total** | **1,499** | **1,663** | - Other gains and losses primarily represent a loss from early termination of leases of **HK$0.302 million**[147](index=147&type=chunk) [7. Finance Costs](index=42&type=section&id=7.%20Finance%20Costs) Finance costs decreased by 14.0% to HK$7.809 million, primarily due to lower bank borrowing interest rates influenced by LIBOR 2021 H1 Finance Costs Composition | Item | 2021 H1 (HK$ thousand) | 2020 H1 (HK$ thousand) | | :--- | :--- | :--- | | Interest expense on loan from direct holding company | 3,497 | 3,516 | | Interest on lease liabilities | 749 | 720 | | Interest on bank borrowings | 3,563 | 4,839 | | **Total** | **7,809** | **9,075** | [8. Profit (Loss) Before Tax](index=42&type=section&id=8.%20Profit%20(Loss)%20Before%20Tax) Profit before tax significantly improved to HK$3.582 million from a prior-period loss, driven by fair value gains on plantation assets and enhanced operating results 2021 H1 Profit (Loss) Before Tax Key Deductions | Item | 2021 H1 (HK$ thousand) | 2020 H1 (HK$ thousand) | | :--- | :--- | :--- | | Forest harvested as agricultural produce | 31,469 | 29,594 | | Amount reversed from opening inventories | 1,312 | 4,598 | | Cost of forest depletion due to harvesting | 23,913 | 28,376 | | Amortisation of forest concessions and harvesting rights | 5,574 | 5,224 | [9. Income Tax Expense (Credit)](index=43&type=section&id=9.%20Income%20Tax%20Expense%20(Credit)) Income tax expense of HK$4.847 million was recorded, shifting from a prior-period credit, primarily due to New Zealand tax provisions, deferred tax, and withholding tax 2021 H1 Income Tax Expense (Credit) Composition | Item | 2021 H1 (HK$ thousand) | 2020 H1 (HK$ thousand) | | :--- | :--- | :--- | | Current tax – Hong Kong | 356 | 2,410 | | Current tax – Other jurisdictions | 523 | 464 | | Withholding tax | 584 | 805 | | Deferred tax | 3,384 | (9,811) | | **Total** | **4,847** | **(5,090)** | - Hong Kong profits tax adopts a two-tiered tax rate system, with the first **HK$2 million** of assessable profits taxed at **8.25%** and the remainder at **16.5%**[152](index=152&type=chunk) - Statutory tax rates for Suriname and New Zealand are **36%** and **28%**, respectively[153](index=153&type=chunk) [10. Dividends](index=43&type=section&id=10.%20Dividends) The Board resolved not to declare any interim dividend for the six months ended June 30, 2021 - No interim dividend declared for the period[154](index=154&type=chunk) [11. Earnings (Loss) Per Share](index=44&type=section&id=11.%20Earnings%20(Loss)%20Per%20Share) Basic and diluted earnings per share improved significantly to HK$0.005, reversing a prior-period loss of HK$0.013 per share Earnings (Loss) Per Share | Indicator | 2021 H1 | 2020 H1 | | :--- | :--- | :--- | | Basic earnings (loss) per share | 0.005 HK$ | (0.013) HK$ | | Diluted earnings (loss) per share | 0.005 HK$ | (0.013) HK$ | - The weighted average number of ordinary shares used to calculate basic earnings (loss) per share was **1,854,991,056 shares**[156](index=156&type=chunk) [12. Forest Concessions and Harvesting Rights](index=45&type=section&id=12.%20Forest%20Concessions%20and%20Harvesting%20Rights) The Group holds approximately 340,000 hectares of forest concessions and harvesting rights in Suriname, with one renewed and another pending approval, and their amortization included in cost of sales - As of June 30, 2021, the carrying value of forest concessions and harvesting rights was **HK$135.111 million**[158](index=158&type=chunk) - Amortisation of **HK$5.012 million** was recognized during the period[158](index=158&type=chunk) - The Group holds approximately **340,000 hectares** of forest concessions and harvesting rights in Suriname[161](index=161&type=chunk) - One concession located in western Suriname, approximately **25,000 hectares**, was renewed in 2020, valid until **November 7, 2030**[160](index=160&type=chunk) - Another concession renewal application for approximately **25,000 hectares** in central Suriname is still pending approval[160](index=160&type=chunk) [13. Plantation Assets](index=47&type=section&id=13.%20Plantation%20Assets) The Group's 15,819 hectares of New Zealand Radiata Pine plantation assets, measured at fair value, generated a HK$24.995 million gain, influenced by rising log prices and subject to valuation sensitivity analysis - As of June 30, 2021, the net carrying value of plantation assets was **HK$450.919 million**[171](index=171&type=chunk) - Fair value gain on plantation assets for the period was **HK$24.995 million**[170](index=170&type=chunk) - The Group owns approximately **15,819 hectares** of Radiata Pine plantation in New Zealand[172](index=172&type=chunk) - A total of **152,000 cubic meters** of logs were harvested during the period[173](index=173&type=chunk) - Valuation uses the income approach, with key inputs including forecast unit log price (**US$90 per cubic meter**), growth rate, production costs, transport costs, and a **7.25%** discount rate[178](index=178&type=chunk)[180](index=180&type=chunk) Plantation Assets Fair Value Sensitivity Analysis (Impact on Profit Before Tax) | Variable | Change | Impact (HK$ thousand) | | :--- | :--- | :--- | | Production costs | Increase 5% | (33,215) | | Production costs | Decrease 5% | 33,215 | | Transport costs | Increase 5% | (17,439) | | Transport costs | Decrease 5% | 17,439 | | Log prices | Increase 5% | 86,914 | | Log prices | Decrease 5% | (86,914) | | Discount rate | Increase 1% | (67,665) | | Discount rate | Decrease 1% | 87,446 | - Plantation assets are pledged as security for the Group's bank credit facilities[196](index=196&type=chunk) [14. Trade Receivables](index=53&type=section&id=14.%20Trade%20Receivables) Net trade receivables totaled HK$18.113 million, primarily from customer contracts, managed under strict credit policies with most settlements occurring within 90 days - As of June 30, 2021, net trade receivables amounted to **HK$18.113 million**[199](index=199&type=chunk) - Provision for credit losses was **HK$6.862 million**[199](index=199&type=chunk) - The Group grants customers trade terms primarily ranging from immediate to **90 days** for letters of credit or **5 to 30 days** for open account transactions[200](index=200&type=chunk) - As of June 30, 2021, over **85%** of trade receivables balances were settled subsequent to the period-end[203](index=203&type=chunk) [15. Impairment Assessment of Financial Assets and Other Items Subject to Expected Credit Loss Model](index=54&type=section&id=15.%20Impairment%20Assessment%20of%20Financial%20Assets%20and%20Other%20Items%20Subject%20to%20Expected%20Credit%20Loss%20Model) A net impairment loss of HK$0.123 million was recognized for trade receivables, contrasting with a prior-period reversal of other receivables impairment due to settlement - A net impairment loss of **HK$0.123 million** was recognized for trade receivables during the period[204](index=204&type=chunk) - For the six months ended June 30, 2020, an impairment provision of **HK$2.741 million** for other receivables related to refundable earnest money was reversed[206](index=206&type=chunk) [16. Trade Payables](index=55&type=section&id=16.%20Trade%20Payables) Total trade payables of HK$31.79 million are primarily trade-related, interest-free, and typically settled within 30 days Trade Payables Ageing Analysis | Ageing | June 30, 2021 (HK$ thousand) | Dec 31, 2020 (HK$ thousand) | | :--- | :--- | :--- | | Within one month | 26,301 | 29,348 | | One to three months | 449 | 1,745 | | Over three months | 5,040 | 7,982 | | **Total** | **31,790** | **39,075** | - Trade payables are trade in nature, interest-free, and typically settled within a **30-day** period[209](index=209&type=chunk) [17. Bank Borrowings](index=56&type=section&id=17.%20Bank%20Borrowings) Total bank borrowings of HK$219.96 million, primarily secured New Zealand facilities, were renegotiated and extended, with all financial covenants duly complied - As of June 30, 2021, total bank borrowings amounted to **HK$219.96 million**, all of which are secured loans[211](index=211&type=chunk) - New Zealand bank loan facilities were renegotiated, and the final maturity date was extended from March 31, 2022, to **November 1, 2022**[212](index=212&type=chunk)[214](index=214&type=chunk) - Loans are denominated in USD and bear interest at a base rate plus **1.70%** per annum[214](index=214&type=chunk) - All financial covenants related to bank loan facilities were complied with[214](index=214&type=chunk) - Loan collateral includes all personal property of selected Group companies, New Zealand forest land, and plantation assets[216](index=216&type=chunk) - Suriname Hakrinbank loan facilities were fully repaid[214](index=214&type=chunk) [18. Financial Instruments by Category](index=59&type=section&id=18.%20Financial%20Instruments%20by%20Category) This section categorizes the Group's financial assets and liabilities measured at amortized cost Financial Instruments Classification | Type | June 30, 2021 (HK$ thousand) | Dec 31, 2020 (HK$ thousand) | | :--- | :--- | :--- | | Financial assets (amortized cost) | 177,517 | 187,940 | | Financial liabilities (amortized cost) | 470,912 | 476,069 | [19. Related Party Disclosures](index=59&type=section&id=19.%20Related%20Party%20Disclosures) The Group engages in various related party transactions, including loan interest and administrative expenses, with the direct holding company loan maturity extended to March 31, 2023 2021 H1 Related Party Transactions | Relationship | Transaction Nature | 2021 H1 (HK$ thousand) | 2020 H1 (HK$ thousand) | | :--- | :--- | :--- | :--- | | Direct holding company | Interest expense paid and payable on loan | 3,497 | 3,516 | | Fellow subsidiaries | License fees received and administrative expenses received and receivable | 1,119 | 1,133 | | Fellow subsidiaries | Administrative expenses paid and payable | – | 400 | - The maturity date of the loan from the direct holding company has been extended from March 31, 2022, to **March 31, 2023**[225](index=225&type=chunk) - Total remuneration for the Group's key management personnel was **HK$5.224 million** (2020 H1: HK$5.952 million)[229](index=229&type=chunk) [20. Contingent Liabilities](index=62&type=section&id=20.%20Contingent%20Liabilities) The Group reported no significant contingent liabilities as of June 30, 2021, and December 31, 2020 - No significant contingent liabilities[231](index=231&type=chunk) [21. Events After Reporting Period](index=62&type=section&id=21.%20Events%20After%20Reporting%20Period) No significant events occurred subsequent to the reporting period - No significant events after the reporting period[232](index=232&type=chunk) [22. Approval of Condensed Consolidated Interim Financial Statements](index=62&type=section&id=22.%20Approval%20of%20Condensed%20Consolidated%20Interim%20Financial%20Statements) The condensed consolidated interim financial statements received Board approval on August 27, 2021 - Condensed consolidated interim financial statements approved by the Board of Directors on **August 27, 2021**[233](index=233&type=chunk) Other Information [Directors' and Major Shareholders' Interests](index=62&type=section&id=Directors'%20and%20Major%20Shareholders'%20Interests) This section details directors' and major shareholders' interests in company shares and associated corporations, including share options, with Newforest Limited holding 60.49% of shares - As of June 30, 2021, CHENG Chi Him, MA Si Min, TSANG On Yip, WONG Man Chung, and other directors held long positions in the Company's shares and related shares, including share options[235](index=235&type=chunk) - The Company's share option scheme was adopted on June 28, 2012, and is valid until **June 28, 2022**[279](index=279&type=chunk) - Major shareholder Newforest Limited held **1,122,005,927 shares**, representing **60.49%** of the total issued share capital[283](index=283&type=chunk) - Newforest Limited is directly beneficially owned **40%** by Kingway Asia Resources Limited (wholly-owned by Mr. HU Weiliang) and **60%** by Honour Shine Holdings Limited (a wholly-owned subsidiary of Chow Tai Fook Enterprises Limited)[287](index=287&type=chunk) - China Forestry Group Corporation, through its wholly-owned subsidiary, held **110,000,000 shares**, representing **5.93%**[289](index=289&type=chunk) - Mr. CHENG Yang retired as a Non-executive Director on **May 25, 2021**[293](index=293&type=chunk) [Corporate Governance and Compliance](index=72&type=section&id=Corporate%20Governance%20and%20Compliance) The Audit Committee reviewed financial reporting and governance, confirming the company's compliance with the Corporate Governance Code and directors' adherence to securities transaction standards, with no listed securities transactions during the period - The Audit Committee has reviewed and discussed with management the accounting principles and practices adopted by the Group, audit, internal control, and financial reporting matters, as well as the Company's corporate governance policies and practices[295](index=295&type=chunk) - The Company has complied with the applicable code provisions of the Corporate Governance Code set out in Appendix 14 to the Listing Rules throughout the six months ended June 30, 2021[296](index=296&type=chunk) - All Directors have confirmed that they have complied with the Model Code for Securities Transactions by Directors of Listed Issuers and the Code of Conduct during the six months ended June 30, 2021[297](index=297&type=chunk) - During the period, neither the Company nor any of its subsidiaries purchased, redeemed, or sold any of the Company's listed securities[299](index=299&type=chunk) - This report contains forward-looking statements regarding the Group's financial position, operating results, and business, which involve known and unknown risks and uncertainties[300](index=300&type=chunk)