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)

Financial Performance - The company recorded a loss of HKD 36,127,000 for the year, a significant improvement from a loss of HKD 228,121,000 in the previous year[18]. - Excluding significant non-cash items, the company achieved an adjusted EBITDA of HKD 35,887,000, compared to HKD 39,381,000 in the previous year[18]. - The adjusted EBITDA from the New Zealand division was HKD 69,340,000, down HKD 21,104,000 from the previous year due to lower average selling prices and increased operating expenses[21]. - The Suriname division's adjusted EBITDA decreased by 44.9% to HKD 16,998,000 amid challenges from the pandemic[22]. - Total revenue decreased by 12.9% to HKD 326,253,000, with contributions from New Zealand and Suriname divisions at HKD 293,291,000 and HKD 32,962,000 respectively[30]. - The gross profit for the year was HKD 9,021,000, down from HKD 44,145,000, resulting in a gross margin of 2.8% compared to 11.8% last year[33]. - The group reported a loss of HKD 36,127,000 for the year, an improvement from a loss of HKD 228,121,000 in 2019[169]. - The group’s revenue for the year 2020 was HKD 326,253,000, a decrease of 13% compared to HKD 374,435,000 in 2019[169]. Revenue and Market Trends - The New Zealand division's total revenue decreased from HKD 307,042,000 in 2019 to HKD 293,291,000 in 2020, reflecting a nearly 10.3% drop in average export prices[19]. - Revenue from the New Zealand division fell by 15.5% or HKD 53,646,000 due to weak demand in the Chinese market and geopolitical tensions[30]. - The Suriname division's revenue increased by 19.9% to HKD 32,962,000, driven by higher sales volumes in the second half of the year[31]. - The company noted a rebound in demand and prices for tropical hardwoods towards the end of the year, driven by global infrastructure and reconstruction plans[22]. - The average offshore price of A-grade logs in New Zealand rose from USD 88.7 per cubic meter in May to approximately USD 114.0 per cubic meter by year-end[19]. - The hardwood market is projected to maintain an upward trend, with strong demand recorded in Q4 2020, exceeding the original production capacity for 2021[61]. Cost Management and Operational Efficiency - The company continues to implement strict measures to reduce operating costs and adjust workforce levels in response to the pandemic[22]. - Sales and distribution costs decreased by HKD 37,966,000 or 45.8%, primarily due to a reduction in shipping costs from decreased sales volume of New Zealand radiata pine[40]. - Administrative expenses decreased by 18.9% from HKD 61,567,000 in 2019 to HKD 49,933,000 in the current year[42]. - Financing costs reduced by HKD 6,850,000 due to a general decline in bank borrowing interest rates and repayment of loans from the ultimate holding company[43]. - The company reported a significant reduction in business losses for 2020 due to cost-cutting measures and marketing strategies, with average product prices increasing[61]. Corporate Governance - The company has a strong board with members holding various degrees and extensive experience in finance, management, and administration[80][81][83][84]. - The company is focused on enhancing its governance structure through the expertise of its independent directors[79][81]. - The board includes members with backgrounds in both public service and private sector management, contributing to diverse perspectives in decision-making[83][84]. - The company has established a robust audit committee to ensure financial integrity and compliance with regulations[79]. - The independent directors are actively involved in strategic oversight and risk management processes[81]. - The company has maintained high corporate governance standards, complying with all relevant rules and codes, except for certain deviations noted in the annual report[89]. Risk Management - The company faces various major risks including interest rate risk, foreign currency risk, credit risk, and liquidity risk, which are detailed in the financial statements[158]. - The company believes its risk management and internal control systems are effective for the year[135]. Employee and Operational Insights - As of December 31, 2020, the total number of employees was 183, down from 218 in 2019, with employee costs around HKD 42,148,000[69]. - The company has successfully turned around its operations in Suriname and is focusing on business development in New Zealand[86]. Shareholder and Stakeholder Communication - The company maintains transparency and communication with shareholders through interim and annual reports, as well as timely announcements[139]. - The group recognizes the importance of maintaining good communication with stakeholders to adapt to market trends[162]. Financing and Related Party Transactions - The company’s external auditor, Deloitte, issued an unqualified opinion regarding the continuous related party transactions disclosed in the financial statements[199]. - The financing agreements have been reviewed by independent non-executive directors and confirmed to be conducted in the normal course of business and on fair and reasonable terms[197].

Financial Performance - The loss for the six months ended June 30, 2020, was reduced to HKD 36,106,000 compared to HKD 40,110,000 in 2019, reflecting a decrease in losses [20]. - The total revenue for the first half of 2020 decreased by HKD 62,163,000 to HKD 110,425,000 compared to the same period last year [32]. - The group reported a net loss of approximately HKD 36,106,000 for the six months ended June 30, 2020, compared to a net loss of HKD 40,110,000 for the same period in 2019 [74]. - The company's profit before tax decreased from HKD 36,046,000 in the same period last year to HKD 20,751,000, a decline of 42.4% [48]. - The loss attributable to the company's owners increased from HKD 22,426,000 in the same period last year to HKD 24,322,000 [50]. - The group reported a pre-tax loss of HKD 24,322,000 for the six months ended June 30, 2020, compared to a loss of HKD 22,426,000 in the same period of 2019 [147]. - The group incurred capital expenditures of approximately HKD 4,656,000 for the six months ended June 30, 2020, compared to HKD 12,686,000 for the year ended December 31, 2019 [62]. - The group reported a basic and diluted loss per share of HKD 0.013 for the six months ended June 30, 2020, compared to HKD 0.012 for the same period in 2019 [74]. Revenue Breakdown - Total revenue for the six months ended June 30, 2020, was HKD 110,425,000, a decrease of 36% from HKD 172,588,000 in the same period of 2019 [74]. - Revenue from the New Zealand division decreased by HKD 58,924,000 to HKD 98,754,000, reflecting a 23.3% decline in average export prices and a 17.7% decline in sales volume [32]. - Revenue from the sale of logs and timber products was HKD 107,050,000 for the six months ended June 30, 2020, compared to HKD 168,602,000 in 2019, indicating a decrease of about 37% [98]. - Customer contract revenue amounted to HKD 108,221,000 for the six months ended June 30, 2020, down from HKD 170,186,000 in the same period of 2019, representing a decline of approximately 36% [99]. - Revenue from subcontracting fees was HKD 2,204,000 for the six months ended June 30, 2020, slightly down from HKD 2,402,000 in the same period of 2019 [105]. - Revenue from New Zealand customers was HKD 98,754,000 for the six months ended June 30, 2020, while revenue from Suriname customers was HKD 3,040,000 [104]. Cost Management - Selling and distribution costs decreased by HKD 6,214,000 or 29.2%, primarily due to reduced shipping costs from lower sales volumes [43]. - Administrative expenses decreased by 29.1% or HKD 9,276,000, attributed to reduced amortization and a decrease in employee costs [44]. - Financing costs decreased by HKD 3,152,000 or 25.8%, mainly due to a decline in interest rates and repayment of loans [45]. - The gross loss for the period was HKD 4,177,000, compared to a gross profit of HKD 10,928,000 in the same period last year [35]. - The gross loss margin for the group was 3.8%, down from a gross profit margin of 6.3% in the previous year [35]. Market Conditions - The New Zealand division's revenue decreased significantly by HKD 58,924,000 or 37.4% due to weak demand from China and a drop in A-grade log prices, which fell over 25% in February [21]. - The company anticipates that the volume of shipments to China will remain low at approximately 65% of last year's levels in the second half of 2020 [24]. - The company is cautiously optimistic about a gradual recovery in the price of New Zealand radiata pine in the second half of 2020 [24]. - The price of New Zealand A-grade radiata pine fluctuated, reaching USD 136 per cubic meter during lockdown, dropping to USD 120, and hitting a low of USD 117, with expectations to rise to USD 128 by September 2020 [55]. - The company experienced a significant decline in revenue due to the impact of the COVID-19 pandemic, with production in New Zealand halted until late May 2020 [89]. Strategic Initiatives - To mitigate market risks from US-China tensions, the company is seeking to expand its customer base by selling New Zealand radiata pine to India and South Korea [24]. - The company plans to continue exploring opportunities for acquiring short to medium-term logging rights to supplement its timber supply [24]. - The company plans to focus on debt recovery, strict cost control, and capital expenditure management to improve financial performance in the uncertain environment of the second half of 2020 [58]. - The company has obtained NEPCon Legal Source certification for its Suriname division, which is expected to enhance its market position in Europe and the US [58]. Asset Management - As of June 30, 2020, the group's current assets and current liabilities were HKD 235,635,000 and HKD 111,035,000, respectively, with cash and bank balances at HKD 149,897,000 [51]. - Non-current assets decreased to HKD 930,999,000 as of June 30, 2020, from HKD 960,572,000 as of December 31, 2019 [76]. - The fair value of artificial forest assets was approximately HKD 426,780,000 as of June 30, 2020, down from HKD 436,802,000 as of December 31, 2019 [76]. - The company harvested a total of 128,000 cubic meters of timber from its artificial forest assets during the period, compared to 173,000 cubic meters in the previous year [157]. - The total area of forest concessions and logging rights in Suriname as of June 30, 2020, is approximately 293,000 hectares, a decrease from 318,000 hectares as of December 31, 2019 [152]. Compliance and Governance - The financial statements are prepared in accordance with Hong Kong Financial Reporting Standards, ensuring compliance with local regulations [88]. - The group has corrected a non-compliance issue with a financial covenant due to the impact of the COVID-19 pandemic, and all financial covenants related to bank loans are now being complied with [54]. - The company has no financial risk management strategies related to artificial forest assets as of June 30, 2020 [170]. - The group did not declare any interim dividend for the six months ended June 30, 2020, consistent with the previous year [61]. Employee and Operational Metrics - The total number of employees decreased to 198 as of June 30, 2020, down from 218 as of December 31, 2019 [72]. - The company recorded a pre-tax loss sensitivity of HKD 29,018,000 if production costs increase by 5% [165]. - A 5% increase in transportation costs would lead to a pre-tax loss increase of HKD 14,347,000 [165]. - If log prices rise by 5%, the pre-tax loss would increase by HKD 74,384,000 [167]. - A 1% increase in the discount rate would result in a pre-tax loss increase of HKD 61,929,000 [167].

Financial Performance - The overall revenue for Greenheart Group decreased by 12.3% to HKD 374,435,000 for the fiscal year ending December 31, 2019[27]. - The pre-tax loss expanded to HKD 271,287,000, compared to a loss of HKD 112,551,000 in 2018, primarily due to impairment of Suriname forest concessions and a 70.6% decrease in fair value gains from New Zealand plantation assets[27]. - The fair value gain from New Zealand plantation assets decreased by 70.6% to HKD 26,729,000 due to anticipated lower short-term log prices[28]. - The adjusted EBITDA for the New Zealand segment was HKD 90,444,000, a decrease of HKD 64,311,000 compared to 2018[28]. - The total revenue for the Suriname segment was HKD 27,498,000, with an adjusted EBITDA of HKD 30,871,000, an increase of HKD 10,176,000 compared to the same period last year[30]. - The company recorded a net loss of HKD 228,121,000, an increase of HKD 123,071,000 compared to the previous year, primarily due to a sharp decline in market demand for softwood and hardwood[37]. - Total revenue for the company was HKD 374,435,000, a decrease of HKD 52,646,000 from the previous year, mainly attributed to a 20.8% drop in sales volume in the New Zealand division[38]. - The gross profit for the year was HKD 44,145,000, an increase of HKD 31,592,000 compared to last year, with a gross profit margin of 11.8%[41]. - The New Zealand division contributed a gross profit of HKD 85,653,000, while the Suriname division recorded a gross loss of HKD 41,508,000[41]. - The impairment provision for forest concessions and logging rights was HKD 158,740,000, significantly higher than HKD 43,372,000 in the previous year, due to a decline in fair value[45]. - The fair value gain from New Zealand plantation assets was HKD 26,729,000, down from HKD 90,943,000 in the previous year, primarily due to adverse market conditions[49]. - Sales and distribution costs increased by HKD 39,208,000 to HKD 82,806,000, mainly due to increased freight costs associated with sales under cost-plus freight terms[50]. - The company recorded a profit before tax of HKD 112,963,000, up from HKD 101,282,000 in 2018[55]. - The profit before tax for the New Zealand segment decreased to HKD 120,780,000 from HKD 248,948,000 due to a significant drop in fair value gains of plantation assets[55]. - The loss attributable to the company's owners increased from HKD 56,880,000 in 2018 to HKD 143,814,000 in the current year[56]. - The company incurred a loss of HKD 228,121,000 for the fiscal year, compared to a loss of HKD 105,050,000 in the previous year[175]. - Total assets as of December 31, 2019, were HKD 1,222,134,000, down from HKD 1,568,277,000 in 2018, representing a decline of 22.1%[176]. - Total liabilities decreased to HKD 628,964,000 in 2019 from HKD 756,771,000 in 2018, a reduction of 16.8%[176]. - The company did not recommend any dividend for the year, consistent with the previous year[171]. Market Conditions and Outlook - The company expects continued downward pressure on tropical hardwood market prices due to trade protectionism and geopolitical tensions[30]. - The company remains cautious about the economic outlook despite the positive signal from the US-China "Phase One" trade agreement[31]. - The company anticipates that the suspension of logging activities and subsequent government orders may negatively impact short-term financial performance[31]. - A-grade log prices decreased from $129-$136 per cubic meter to $111 due to COVID-19 restrictions, with a potential recovery to $122-$125 in the short term[67]. - Overall production levels in New Zealand have declined by 30% and may reach 40% by the end of February 2020[67]. - Analysts predict China's GDP growth will rebound to between 4.5% and 5.6% in the second and third quarters of 2020[68]. Strategic Initiatives - The company plans to adopt an aggressive pricing strategy in Suriname to maintain competitiveness until the economy stabilizes[36]. - The company will continue to explore business opportunities in core areas to enhance shareholder returns amid ongoing economic uncertainties[37]. - The company plans to strategically acquire softwood plantations in northern and eastern New Zealand to enhance long-term value for investors[68]. - The company is focused on improving shareholder returns amidst economic uncertainties caused by COVID-19 and the US-China trade war[71]. Corporate Governance - The company has maintained high corporate governance standards, complying with all provisions of the corporate governance code as per the Hong Kong Stock Exchange, with minor deviations noted in the annual report[102]. - The board consists of nine members, including two executive directors and three independent non-executive directors, ensuring a diverse and experienced leadership team[103]. - The company appointed Mr. Zhang Bo Tao and Mr. Huang Wen Zong as independent non-executive directors in June 2019, restoring compliance with the minimum requirements of the listing rules[104]. - The Chief Financial Officer, Ms. Xie Ya Ning, has over 20 years of experience in auditing, accounting, and finance, contributing to the company's financial management[99]. - The company has a strong commitment to enhancing its corporate governance framework, regularly reviewing and improving its practices[102]. - The independent non-executive directors have confirmed their independence according to the listing rules, ensuring unbiased oversight of the company's operations[103]. - The company has a diverse board with members possessing extensive experience in various sectors, enhancing its strategic decision-making capabilities[103]. - The company has established a remuneration committee to determine director compensation based on performance and group results[194]. - The board of directors includes both executive and independent non-executive members, ensuring a diverse governance structure[191]. Risk Management and Compliance - The company has established a clear management structure for risk management and internal control systems, ensuring assets are safeguarded and financial records are reliable[139]. - The board has implemented risk management and internal control policies to assess and determine the nature and extent of risks in line with the group's business environment and risk tolerance[142]. - The internal audit function is currently performed by selected personnel from the finance department, with the audit committee preparing and reviewing the annual audit plan based on risk assessment[142]. - The management believes that the risk management and internal control systems are effective for the year, with sufficient qualified personnel in the accounting and financial reporting team[142]. - The company has adopted procedures for handling and disclosing inside information to ensure compliance with regulatory requirements[144]. - The company maintains transparency and communication with shareholders through interim and annual reports, timely announcements, and other publications[147]. Employee and Community Engagement - The company emphasizes the importance of maintaining good relationships with employees, customers, and suppliers for sustainable development[169]. - The company has been actively involved in community service, with board members contributing to social responsibilities over the years[98]. - The total number of employees decreased to 218 from 255, with employee costs around HKD 45,956,000, down from HKD 54,628,000[80]. Financial Management - The group generated 87.6% of its total revenue from its top five customers, with the largest customer accounting for 41.5% of the revenue[190]. - The group sourced 51.0% of its total purchases from its top five suppliers, with the largest supplier representing 16.9% of the total purchases[190]. - The financing agreement with Silver Mount allows for a maximum revolving loan of HKD 50 million, which was later increased to HKD 215 million[198][199]. - The group has a legal indemnity clause in place for directors and senior management, ensuring protection against legal actions arising from company actions[189]. - The board will continuously review the dividend policy and reserves the right to update or modify it as necessary[186].

Financial Performance - The company reported a net loss of HKD 40,110,000 for the six months ended June 30, 2019, an increase of HKD 22,577,000 compared to a net loss of HKD 17,533,000 in the same period last year[14]. - Total revenue decreased by HKD 30,624,000 to HKD 170,186,000 compared to the same period last year, with New Zealand and Suriname divisions contributing HKD 157,678,000 and HKD 12,508,000 respectively[24]. - Gross profit decreased by HKD 6,634,000 to HKD 8,526,000, with a gross profit margin of 5.0%, down from 7.5% in the previous year[27]. - The loss attributable to the company's owners increased to HKD 22,426,000 from HKD 1,233,000 in the previous year[41]. - The company reported a total comprehensive income for the six months ended June 30, 2019, of HKD 771,400,000, compared to HKD 921,307,000 for the same period in 2018, showing a decrease of about 16.3%[81]. - The company’s total equity decreased to HKD 771,400,000 from HKD 811,506,000 in 2018, reflecting a decline of 4.9%[69]. - The basic and diluted loss per share for the period was HKD (0.012), compared to HKD (0.001) in the previous year[63]. Revenue and Sales - Sales volume of New Zealand radiata pine decreased by 23.1% to 176,000 cubic meters, down from 228,000 cubic meters in 2018, with revenue dropping by 20.8% to HKD 151,884,000[15]. - New Zealand division's revenue dropped by HKD 36,777,000, reflecting a 23.1% decline in sales due to weakened demand in the Chinese market amid the US-China trade war[24]. - Revenue for the six months ended June 30, 2019, was HKD 170,186 thousand, a decrease of 15.3% compared to HKD 200,810 thousand in 2018[63]. - Revenue from external customers by region included HKD 100,111,000 from New Zealand, HKD 54,426,000 from Mainland China, and HKD 8,951,000 from Hong Kong[137]. - The company operates in two segments: Suriname, focusing on selective hardwood logging and timber processing, and New Zealand, focusing on softwood plantation management and timber sales[148]. Operational Changes - The company plans to slow down logging activities and retain timber for future use if market conditions continue to deteriorate[18]. - The company received a revised concession permit from the Suriname government and resumed logging activities in August 2019, which is expected to positively impact sales and production[18]. - The company is working on upgrading its sawmill and redesigning its bioenergy plant to increase production following the resumption of logging activities in Suriname[20]. - The company will closely monitor the changing market environment and take appropriate measures if conditions do not improve as expected[20]. Economic Outlook - The company anticipates continued pressure on global economic growth and further downside risks for the remainder of 2019 due to ongoing US-China trade tensions[18]. - The group anticipates stable demand in the global timber industry for the second half of 2019, despite price pressures due to escalating tensions between the US and China[46]. - The annualized GDP growth in China is reported at 6.3%, with the government’s revised target set between 6.0% and 6.5%[48]. Cash Flow and Financing - The net cash generated from operating activities for the six months ended June 30, 2019, was HKD 86,305,000, compared to HKD 63,391,000 for the same period in 2018, representing an increase of approximately 36.4%[80]. - The net cash used in financing activities for the six months ended June 30, 2019, was HKD 88,803,000, compared to HKD 9,318,000 in the prior year, indicating a substantial increase in financing outflows[80]. - The company continues to focus on strategic investments and financing activities to support its growth initiatives despite the increased cash outflows in financing[80]. Asset Management - As of June 30, 2019, the company's current assets and liabilities were HKD 282,609,000 and HKD 120,204,000 respectively, with a capital debt ratio of 40.5%[42]. - The company’s total assets as of June 30, 2019, were HKD 1,086,815,000, compared to HKD 1,148,446,000 as of December 31, 2018, indicating a decline of approximately 5.4%[81]. - The carrying amount of artificial forest assets decreased to HKD 450,337,000 as of June 30, 2019, down from HKD 477,440,000 at the end of 2018[194]. Employee and Administrative Changes - The company reduced administrative expenses by HKD 2,943,000, resulting in a decrease in total employees from 300 to 242[35]. - The total number of employees as of June 30, 2019, was 242, down from 255 as of December 31, 2018[61]. Accounting and Reporting Standards - The company has adopted new accounting standards effective January 1, 2019, which may impact the financial reporting and disclosures in future periods[87]. - The company applies the Hong Kong Financial Reporting Standard 16 to assess whether contracts contain leases, without re-evaluating existing contracts unless terms change[92]. - The company recognized lease liabilities of HKD 24,803,000 and right-of-use assets of HKD 48,095,000 upon the initial application of HKFRS 16 on January 1, 2019[112]. Segment Performance - The Suriname segment recorded an adjusted EBITDA of HKD 18,825,000, an increase of HKD 7,944,000 compared to the same period last year[17]. - The performance of the Suriname segment showed a loss of HKD 18,825,000, while the New Zealand segment reported a profit of HKD 55,558,000[151]. - The adjusted EBITDA from the New Zealand segment was HKD 55,558,000, a decrease of HKD 11,215,000 compared to the previous year[15].

Financial Performance - The company reported a net loss of HKD 105,050,000 for 2018, compared to a net profit of HKD 40,338,000 in 2017, indicating a significant decline in performance [36]. - The company recorded a total revenue of HKD 427,081,000, a decrease of HKD 179,815,000 compared to the previous year, primarily due to declining sales in New Zealand and Suriname divisions [50]. - The net loss for the year was HKD 105,050,000, compared to a net profit of HKD 40,338,000 in the previous year, indicating significant financial challenges faced by the company [49]. - Gross profit for the year was HKD 12,553,000, a decrease of approximately HKD 108,086,000 year-on-year, with a gross margin of 2.9% compared to 19.9% in the previous year [53]. - The New Zealand division contributed a gross profit of HKD 56,374,000, down from HKD 184,682,000 in the previous year, reflecting a gross margin drop from 31.6% to 13.7% [53]. - The group’s earnings before interest, tax, depreciation, and amortization (EBITDA) decreased to HKD 101,282,000 from HKD 258,469,000 in 2017, primarily due to reduced contributions from the New Zealand division [71]. - The loss attributable to the company's owners for the year was HKD 56,880,000, compared to a profit of HKD 86,451,000 in 2017 [72]. Revenue and Sales - The company's own plantation harvesting volume decreased by 23.7% to 450,000 cubic meters, while sales of New Zealand radiata pine dropped by 19.5% to 505,000 cubic meters, resulting in a revenue decrease of 25.1% to HKD 406,753,000 [37]. - Revenue from the Suriname division decreased by 28.5% to HKD 15,400,000, with an adjusted EBITDA loss of HKD 20,695,000, primarily due to production activity suspension and a higher proportion of lower-margin timber species [39]. - Revenue from the Suriname division fell to HKD 15,400,000, primarily due to the suspension of logging activities in a major forest concession [50]. - Other income significantly increased to HKD 7,504,000, mainly due to interest income from overdue trade receivables and fees from granting logging rights [55]. Operational Challenges - The company is facing ongoing challenges in Suriname due to prolonged approval times for logging activities, impacting operational stability and excess capacity [49]. - The company has reduced its workforce in Suriname from 286 to 225 employees to lower direct operating costs amid operational uncertainties [54]. - The company expressed optimism about the future prospects of its Suriname operations, despite current operational challenges [39]. Strategic Plans and Investments - The company plans to focus on acquiring forest assets or sourcing third-party logs to maintain timber supply for its New Zealand operations in the upcoming year [43]. - The company successfully acquired multiple plantations, which have provided positive financial returns, and will continue selective acquisitions to mitigate risks associated with overvalued assets [37]. - The company plans to streamline its cost structure and prioritize financial resources to improve business performance, slowing expansion into new regions [49]. - The company plans to implement process improvement plans in sawmills located in western and central Suriname within the next 12 to 36 months [92]. - The company will adopt a more prudent financial management approach in 2019, focusing resources on existing businesses and slowing down investments in new regions [93]. Market Conditions - The overall economic outlook for 2019 is overshadowed by trade tensions between China and the US, with China's growth rate expected to slow to just above 6.0% [43]. - The actual GDP growth in China for 2018 was 6.6%, the slowest in 28 years, with a target growth rate set between 6.0% and 6.5% for 2019 [88]. - New Zealand's log export volume increased by 12.8% in 2018 compared to 2017, with a forecasted growth of 3.6% for 2019 [89]. Corporate Governance - The management team emphasized a commitment to maintaining high corporate governance standards throughout the year [129]. - The board of directors held five meetings during the year to review business strategies and performance metrics [136]. - The company has appointed at least three independent non-executive directors, constituting over one-third of the board members, ensuring compliance with listing rules [149]. - The audit committee held three meetings during the year, with all members present at each meeting, demonstrating strong oversight of financial reporting [167]. - The company has adopted a code of conduct for directors' securities transactions, ensuring compliance with the standards set out in the listing rules [170]. - The board has confirmed that the financial statements provide a true and fair view of the group's affairs, adhering to Hong Kong Financial Reporting Standards [171]. Financial Management - The capital-to-debt ratio was 44.0% as of December 31, 2018, compared to 38.5% in 2017 [80]. - The group incurred capital expenditures of approximately HKD 25,108,000 for investments in properties, plants, and equipment during the year, a significant increase from approximately HKD 9,249,000 in 2017 [104]. - The group did not engage in any significant business acquisitions or disposals during the year [105]. - The group reported no major events occurring after the reporting period that would significantly impact its financial position [107]. Employee and Compensation - The total employee count as of December 31, 2018, was 255, down from 317 in 2017, with total employee costs amounting to approximately HKD 54,628,000, compared to HKD 59,705,000 in the previous year [108]. - The group’s employee compensation includes salaries and discretionary bonuses based on performance, alongside medical and retirement benefits [108].