[Interim Results Announcement Summary](index=1&type=section&id=%E4%B8%AD%E6%9C%9F%E4%B8%9A%E7%BB%A9%E5%85%AC%E5%91%8A%E6%91%98%E8%A6%81) The Group achieved significant growth in profit attributable to shareholders and maintained a healthy gearing ratio, despite economic downturn and intensified competition [Key Financial Highlights](index=1&type=section&id=%E4%B8%BB%E8%A6%81%E8%B4%A2%E5%8A%A1%E4%BA%AE%E7%82%B9) Despite economic downturn and intensified industry competition, the Group achieved significant growth in profit attributable to shareholders and maintained a healthy gearing ratio through product portfolio optimization and cost control, while also increasing its interim dividend - Group revenue and sales volume decreased by **8%** and **14%** year-on-year respectively, impacted by the domestic economic downturn, weak consumer sentiment, and intensified industry competition[2](index=2&type=chunk) - The Group's overall gross profit margin increased to **24.8%**, a **1.7 percentage point** rise from the previous year, driven by optimized product portfolio and effective raw material cost control[2](index=2&type=chunk) - The solvents associate actively expanded export business, achieving a **2%** sales volume increase, but intensified market competition led to a decline in product unit prices, resulting in a **22%** decrease in the Group's share of profit to **HKD 38.6 million**[2](index=2&type=chunk) - Profit from the sale of idle land in Shanghai Jinshan resulted in property segment operating profit of **HKD 47.2 million** (HKD 21.2 million after tax), offsetting some property devaluation impacts[2](index=2&type=chunk) - Profit attributable to shareholders increased by **94%** year-on-year, reaching **HKD 66.1 million**[2](index=2&type=chunk) - The Group's gearing ratio remained at a healthy **18.0%**, providing flexibility for future investments[2](index=2&type=chunk) - The Board resolved to declare an interim dividend of **HKD 4 cents** per share, a **33%** increase from the previous year[2](index=2&type=chunk) Key Financial Data for the Six Months Ended June 30, 2025 | Metric | June 30, 2025 (HKD Thousand) | June 30, 2024 (HKD Thousand) | % Change | | :--- | :--- | :--- | :--- | | Revenue | 1,430,396 | 1,557,365 | -8% | | Sales Volume (Tons) | 117,000 | 136,000 | -14% | | Profit Attributable to Company Shareholders | 66,112 | 34,057 | +94% | | Earnings Per Share (HK Cents) | 11.8 | 6.0 | +97% | | Interim Dividend Per Share (HK Cents) | 4 | 3 | +33% | | Gearing Ratio* | 18.0% | 18.3% | -0.3 percentage points | *Calculated based on net bank borrowings as a percentage of equity attributable to company shareholders [Chairman's Statement](index=3&type=section&id=%E4%B8%BB%E5%B8%AD%E6%8A%A5%E5%91%8A) The Chairman's statement reviews the challenges of geopolitical tensions and weak domestic consumption in the first half, highlighting profit growth and strategic investments, while outlining a cautious yet proactive outlook for the second half [Review](index=3&type=section&id=%E4%B8%BB%E5%B8%AD%E6%8A%A5%E5%91%8A-%E5%9B%9E%E9%A1%BE) In the first half, the Group faced multiple challenges including geopolitical tensions, tariff wars, and weak domestic consumption, leading to a decline in revenue; however, through management efforts and cost control, gross profit was maintained, and profit attributable to shareholders significantly increased. Associate Qianxin Chemical actively expanded exports amidst market competition and successfully commissioned new acetic acid and acetate production lines, expected to enhance competitiveness - The operating environment in the first half was uncertain, with geopolitical tensions and US tariff wars negatively impacting the global economy and indirectly affecting the Group's downstream customers' export businesses[5](index=5&type=chunk) - Weak private consumption, dragged by falling asset prices and economic uncertainties in the domestic market, led to an **8%** year-on-year decrease in the Group's overall revenue to **HKD 1.43 billion**[5](index=5&type=chunk) - Despite a decline in product unit prices due to intense competition, the Group maintained gross profit at the same level as last year, with profit attributable to shareholders increasing by **94%** to **HKD 66.1 million**[5](index=5&type=chunk) - The Group's financial position remained robust, with a healthy gearing ratio of **18.0%** and an interim dividend of **HKD 4 cents** per share declared[6](index=6&type=chunk) - Associate Qianxin Chemical's solvent business was affected by intense competition and unit price reductions, but sales volume remained largely flat due to expanded exports to ASEAN and other regions, with profit decreasing by approximately **22%** year-on-year to **HKD 38.6 million**[6](index=6&type=chunk) - Qianxin Chemical's new **600,000-ton** acetic acid plant in Jingmen, Hubei, successfully commenced operations in May, and a new **600,000-ton** acetate production line started in July, marking a new milestone in its development, expected to reduce costs and enhance competitiveness[7](index=7&type=chunk) [Outlook](index=4&type=section&id=%E4%B8%BB%E5%B8%AD%E6%8A%A5%E5%91%8A-%E5%B1%95%E6%9C%9B) For the second half, the global economy is expected to recover with easing geopolitical tensions and interest rate cuts, and China's economic growth target is achievable. However, domestic consumer sentiment and intense competition issues require time to resolve. The Group will prioritize stability, continue cost reduction, strengthen competitiveness, and actively seek M&A opportunities to expand synergies and business - The global economy is expected to recover in the second half, driven by clearer "reciprocal tariff" policies, easing geopolitical tensions, and an interest rate cut cycle[8](index=8&type=chunk) - The Chinese government has strategies to navigate the China-US rivalry, with sustained domestic economic growth and achievable annual growth targets[8](index=8&type=chunk) - Improved domestic consumer sentiment and alleviation of intense competition are two key factors affecting the Group's business, expected to be challenging to resolve in the short term, though the government has introduced targeted solutions[8](index=8&type=chunk) - The Group will prioritize stability, intensify cost reduction efforts, strengthen its competitiveness, and actively seek M&A targets to expand synergies and business, laying the foundation for "Yip's Centennial"[8](index=8&type=chunk) [CEO's Report](index=5&type=section&id=%E8%A1%8C%E6%94%BF%E6%80%BB%E8%A3%81%E6%8A%A5%E5%91%8A) The CEO's report details the Group's resilience amidst economic slowdown and market competition, emphasizing effective cost control, profit growth, and a strategic vision for platform development through new products and M&A [Review](index=5&type=section&id=%E8%A1%8C%E6%94%BF%E6%80%BB%E8%A3%81%E6%8A%A5%E5%91%8A-%E5%9B%9E%E9%A1%BE) In the first half, the Group faced challenges from China's economic slowdown, reduced consumer sentiment, intense industry competition, and US tariff policies. Despite revenue decline, effective gross margin improvement and expense control led to profit growth, maintaining healthy cash flow and gearing ratios - In the first half, the Group faced a volatile economic environment, including slow economic development in China, reduced consumer sentiment, intense competition, and uncertainties in US tariff policies[10](index=10&type=chunk) - The Group's revenue declined, but significant improvements in gross margin and expense control led to profit growth compared to the previous year[10](index=10&type=chunk) - The Group's cash flow and gearing ratio both remained at healthy levels[10](index=10&type=chunk) Key Business Summary | Metric | H1 2025 | H1 2024 | Change | | :--- | :--- | :--- | :--- | | Revenue | HKD 1.43 billion | HKD 1.557 billion | Down 8% | | Sales Volume (Tons) | 117,000 | 136,000 | Down 14% | | Overall Gross Profit Margin | 24.8% | 23.1% | Up 1.7 percentage points | | Share of Profit from Solvents Associate | HKD 38.6 million | HKD 49.45 million | Down approx. 22% | | Property Segment Operating Profit | HKD 47.2 million | HKD 0.101 million | Significant Growth | | Profit Attributable to Shareholders | HKD 66.1 million | HKD 34.06 million | Up 94% | | Gearing Ratio (June 30, 2025) | 18.0% | 18.3% | Down 0.3 percentage points | [Outlook](index=7&type=section&id=%E8%A1%8C%E6%94%BF%E6%80%BB%E8%A3%81%E6%8A%A5%E5%91%8A-%E5%B1%95%E6%9C%9B) The Group will uphold its vision of being a "Fine Chemical Enterprise Development Platform" by developing new product lines and strictly controlling operating costs to consolidate its market position in existing businesses. Concurrently, it will actively seek strategic investment and acquisition opportunities with synergies to accelerate platform development and create long-term value for shareholders in a volatile environment - The Group will build upon its legacy, leveraging its controlling shareholder structure, Hong Kong listed company status, strong reputation, and operational experience in China to create a "Fine Chemical Enterprise Development Platform"[18](index=18&type=chunk) - Management will continue to improve and consolidate the market leading positions of the coatings, inks, and lubricants businesses by developing new product lines and strictly controlling operating costs[19](index=19&type=chunk) - The Group actively seeks strategic investment and acquisition opportunities with synergies to accelerate platform development and deliver long-term benefits to shareholders[19](index=19&type=chunk) [Business Review and Outlook](index=6&type=section&id=%E4%B8%9A%E5%8A%A1%E5%9B%9E%E9%A1%BE%E4%B8%8E%E5%B1%95%E6%9C%9B) This section reviews the performance of coatings, inks, and lubricants businesses, noting varied impacts from market conditions, and outlines strategic initiatives for product development, market expansion, and associate investments [Coatings Business](index=6&type=section&id=%E6%B6%82%E6%96%99%E4%B8%9A%E5%8A%A1) Coatings business sales volume decreased by 20% and revenue fell by 7%. Architectural coatings were impacted by the sluggish real estate market, but industrial coatings performed well, especially plastic coatings, benefiting from the rise of Chinese toy brands, achieving revenue and profit growth. The coatings business gross profit margin improved to 28.8%, turning losses into profits. The Group plans to establish a production base in Vietnam to accelerate its Southeast Asian expansion Key Data for Coatings Business | Metric | H1 2025 | H1 2024 | Change | | :--- | :--- | :--- | :--- | | Sales Volume (Tons) | 79,000 | 98,750 | Down 20% | | Revenue | HKD 676 million | HKD 731 million | Down 7% | | Gross Profit Margin | 28.8% | 25.5% | Up 3.3 percentage points | | Segment Result | HKD 19.1 million | (HKD 10.08 million) | Turned Loss to Profit | - Architectural coatings business revenue declined due to the prolonged sluggishness in China's real estate market[12](index=12&type=chunk) - Industrial coatings developed well, particularly the "Hengchang" brand plastic coatings business, which achieved good growth benefiting from the rise of Chinese toy brands and new product development[12](index=12&type=chunk) - The Group plans to establish a production base in Vietnam to accelerate its Southeast Asian expansion, serve local industrial coatings customers, and mitigate future trade war impacts[13](index=13&type=chunk) [Inks Business](index=6&type=section&id=%E6%B2%B9%E5%A2%A8%E4%B8%9A%E5%8A%A1) Inks business sales volume remained flat, but revenue decreased by 8% due to lower selling prices. Despite gross profit margin improving to 20.9% through efficient management, segment profit fell by 64% year-on-year due to increased bad debt provisions from expanded credit risk for individual customers. The Group will continue to manage bad debt risks and leverage "Bauhinia" inks' leading position in the food packaging industry to develop new product lines such as electronic inks and inkjet Key Data for Inks Business | Metric | H1 2025 | H1 2024 | Change | | :--- | :--- | :--- | :--- | | Sales Volume (Tons) | 28,000 | 28,000 | Flat | | Revenue | HKD 591 million | HKD 644 million | Down 8% | | Gross Profit Margin | 20.9% | 20.0% | Up 0.9 percentage points | | Segment Profit | HKD 11.3 million | HKD 31.17 million | Down 64% | - The inks business faced challenges from intense industry competition, with flat sales volume but declining revenue due to lower selling prices[14](index=14&type=chunk) - The management team efficiently managed raw material and operating costs, achieving a gross profit margin of **20.9%**[14](index=14&type=chunk) - Increased bad debt provisions due to expanded credit risk for individual customers led to a significant decline in segment profit[14](index=14&type=chunk) - The Group will continue to manage customer bad debt risks and leverage "Bauhinia" inks' market leadership in the food packaging industry to develop new product lines such as electronic inks and inkjet[15](index=15&type=chunk) [Lubricants Business](index=7&type=section&id=%E6%B6%A6%E6%BB%91%E6%B2%B9%E4%B8%9A%E5%8A%A1) Lubricants business revenue decreased by 7%, gross profit margin fell by 1.7 percentage points, and profit decreased by 12% year-on-year. Automotive lubricant demand remained flat due to economic impacts. The Group will continue to steadily grow automotive lubricant sales and increase resources for R&D of industrial oils in niche markets, aiming for future growth Key Data for Lubricants Business | Metric | H1 2025 | H1 2024 | Change | | :--- | :--- | :--- | :--- | | Revenue | HKD 160 million | HKD 172 million | Down 7% | | Gross Profit Margin | 21.9% | 23.6% | Down 1.7 percentage points | | Profit | HKD 6.1 million | HKD 6.95 million | Down 12% | - Demand for automotive lubricants remained largely flat due to overall negative economic conditions[16](index=16&type=chunk) - Management's investment in the expansion of specialty industrial oils is expected to make them a future growth highlight[16](index=16&type=chunk) - The Group will continue to steadily grow automotive lubricant sales, expand into third and fourth-tier cities, and increase resources for R&D of industrial oils in niche markets[16](index=16&type=chunk) [Investment in Solvents Associate](index=7&type=section&id=%E6%8A%95%E8%B5%84%E4%BA%8E%E6%BA%B6%E5%89%82%E8%81%94%E8%90%A5%E5%85%AC%E5%8F%B8) The Group holds a 24% interest in Qianxin Chemical, whose sales volume slightly increased by 2%, but due to declining selling prices, it contributed HKD 38.6 million to the Group. In the first half, Qianxin Chemical completed its acetic acid plant in Hubei, with new capacities of 600,000 tons of acetic acid and 600,000 tons of acetate expected to be gradually released, potentially leading to greater economies of scale and sustained enhancement of its profit contribution to the Group - The Group holds a **24%** effective interest in Qianxin Chemical, the world's largest acetate solvent company[17](index=17&type=chunk) - The solvents associate's sales volume slightly increased by **2%**, but due to declining selling prices, it contributed **HKD 38.6 million** to the Group[17](index=17&type=chunk) - The associate completed the construction of its acetic acid plant in Hubei, with new capacities of **600,000 tons** of acetic acid and **600,000 tons** of acetate expected to be gradually released in the second half, potentially leading to greater economies of scale[17](index=17&type=chunk) [Financial Review](index=9&type=section&id=%E8%B4%A2%E5%8A%A1%E5%9B%9E%E9%A1%BE) The financial review highlights the Group's stable liquidity, healthy gearing ratio, and prudent financial management, including foreign exchange risk mitigation and a focus on sustainable growth through potential investments [Liquidity and Financial Resources](index=9&type=section&id=%E6%B5%81%E5%8A%A8%E8%B5%84%E9%87%91%E5%8F%8A%E8%B4%A2%E5%8A%A1%E8%B5%84%E6%BA%90) The Group maintained a healthy and low gearing ratio of 18.0% and actively managed foreign exchange risks. Net cash outflow from operating activities decreased in the first half, primarily due to a lower increase in trade receivables. Total bank borrowings decreased, but net bank borrowings slightly increased. The Group had no significant expenditures or investments but is actively seeking potential investment and acquisition opportunities for sustainable growth Key Data for Liquidity and Financial Resources | Metric | June 30, 2025 (HKD Thousand) | June 30, 2024 (HKD Thousand) | Change | | :--- | :--- | :--- | :--- | | Gearing Ratio | 18.0% | 18.3% | Down 0.3 percentage points | | Net Cash Used in Operating Activities | (48,116) | (91,075) | Outflow Decreased | | Total Bank Borrowings | 1,103,146 | 1,226,713 (Dec 31, 2024) | Decreased | | Net Bank Borrowings | 705,000 | 632,336 (Dec 31, 2024) | Increased | | Total Bank Facilities | 2,819,931 | - | - | - The RMB exchange rate increased by **3.4%**, and the Group prudently managed foreign exchange risks by increasing RMB loans and other measures[22](index=22&type=chunk) - There were no significant expenditures or investments in the first half, with medium-to-long-term loans accounting for **41%** of all bank loans[24](index=24&type=chunk) - The Group entered into interest rate swap and cross-currency swap agreements with banks to hedge against interest rate and exchange rate fluctuation risks and reduce financing costs[24](index=24&type=chunk) - The Group has bank facilities totaling **HKD 2,819,931,000**, with **51%** denominated in HKD and **49%** in RMB[25](index=25&type=chunk) - The Group holds no pledged assets or significant contingent liabilities and is actively seeking potential investment and acquisition opportunities for sustainable growth[25](index=25&type=chunk) [Human Resources](index=10&type=section&id=%E4%BA%BA%E5%8A%9B%E8%B5%84%E6%BA%90) This section details the Group's employee numbers and commitment to human resource development, emphasizing training, talent retention, and competitive compensation to foster a skilled workforce [Staff Numbers and Management](index=10&type=section&id=%E5%91%98%E5%B7%A5%E4%BA%BA%E6%95%B0%E5%8F%8A%E7%AE%A1%E7%90%86) As of June 30, 2025, the Group had 2,151 employees, predominantly from mainland China. The Group highly values human resource management and development, enhancing employee skills through internal and external training, education sponsorship programs, and job rotations. The Group offers a challenging work environment and diverse incentive mechanisms, reviewing remuneration and reward policies based on market trends to attract and retain talent Employee Distribution | Region | Number of Employees | | :--- | :--- | | Mainland China | 2,080 | | Hong Kong | 60 | | Other Countries | 11 | | **Total** | **2,151** | - The Group encourages employee self-improvement and enhances work skills and performance through internal and external training courses, job rotations, and education sponsorship programs[27](index=27&type=chunk) - The Group regularly identifies employees with development potential, formulates development plans, and actively recruits outstanding management talent externally[27](index=27&type=chunk) - The Group offers competitive remuneration and benefits, including basic salary and performance-based bonuses, to attract and retain talent[28](index=28&type=chunk) [Corporate Governance and Other Information](index=11&type=section&id=%E4%BC%81%E4%B8%9A%E7%AE%A1%E6%B2%BB%E5%8F%8A%E5%85%B6%E4%BB%96%E4%BF%A1%E6%81%AF) This section confirms the Company's compliance with corporate governance codes, details the Audit Committee's role, and provides information on securities transactions by directors and announcement publications [Purchase, Sale or Redemption of Listed Securities](index=11&type=section&id=%E8%B4%AD%E4%B9%B0%E3%80%81%E5%87%BA%E5%94%AE%E6%88%96%E8%B5%8E%E5%9B%9E%E4%B8%8A%E5%B8%82%E8%AF%81%E5%88%B8) For the six months ended June 30, 2025, neither the Company nor any of its subsidiaries purchased, sold, or redeemed any of the Company's listed securities. At period-end, the Company held 10,024,000 treasury shares - For the six months ended June 30, 2025, neither the Company nor its subsidiaries purchased, sold, or redeemed any listed securities[29](index=29&type=chunk) - As of June 30, 2025, the Company held **10,024,000** treasury shares[30](index=30&type=chunk) [Corporate Governance](index=11&type=section&id=%E4%BC%81%E4%B8%9A%E7%AE%A1%E6%B2%BB) For the six months ended June 30, 2025, the Company complied with the code provisions in Part 2 of the Corporate Governance Code as set out in Appendix C1 to the Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited - The Company complied with the code provisions in Part 2 of the Corporate Governance Code as set out in Appendix C1 to the HKEX Listing Rules[31](index=31&type=chunk) [Audit Committee](index=11&type=section&id=%E5%AE%A1%E6%A0%B8%E5%A7%94%E5%91%98%E4%BC%9A) The Audit Committee comprises three independent non-executive directors, chaired by Mr. Koo Yee Tao. Its primary responsibilities include reviewing financial information, overseeing financial reporting systems, risk management, and internal control procedures, and monitoring the relationship with external auditors. The Committee has reviewed the Group's unaudited interim financial report for the six months ended June 30, 2025 - The Audit Committee comprises three independent non-executive directors: Mr. Koo Yee Tao (Chairman), Mr. Ho Pak Chuen, and Ms. Yau Ching Man[32](index=32&type=chunk) - Key responsibilities include reviewing the Group's financial information, overseeing financial reporting systems, risk management and internal control procedures, and monitoring the relationship with external auditors[32](index=32&type=chunk) - The Audit Committee reviewed the Group's unaudited interim financial report for the six months ended June 30, 2025, on August 19, 2025[32](index=32&type=chunk) [Standard Securities Dealing Code for Directors of Listed Issuers](index=11&type=section&id=%E4%B8%8A%E5%B8%82%E5%85%AC%E5%8F%B8%E8%91%A3%E4%BA%8B%E8%BF%9B%E8%A1%8C%E8%AF%81%E5%88%B8%E4%BA%A4%E6%98%93%E7%9A%84%E6%A8%99%E6%BA%96%E5%AE%88%E5%88%99) The Company has adopted the Model Code for Securities Transactions by Directors of Listed Issuers as set out in Appendix C3 of the Listing Rules and confirmed that all directors complied with the code for the six months ended June 30, 2025 - The Company adopted the Model Code for Securities Transactions by Directors of Listed Issuers as set out in Appendix C3 of the Listing Rules[33](index=33&type=chunk) - All directors confirmed compliance with the required standards of the Model Code for the six months ended June 30, 2025[33](index=33&type=chunk) [Unaudited Interim Results](index=12&type=section&id=%E6%9C%AA%E7%BB%8F%E5%AE%A1%E6%A0%B8%E4%B8%AD%E6%9C%9F%E4%B8%9A%E7%BB%A9) This section presents the condensed consolidated financial statements, including the statement of profit or loss, financial position, and cash flows, along with detailed notes on accounting policies and segment information [Condensed Consolidated Statement of Profit or Loss and Other Comprehensive Income](index=12&type=section&id=%E7%AE%80%E6%98%8E%E7%BB%BC%E5%90%88%E6%8D%9F%E7%9B%8A%E5%8F%8A%E5%85%B6%E4%BB%96%E5%85%A8%E9%9D%A2%E6%94%B6%E7%9B%8A%E8%A1%A8) For the six months ended June 30, 2025, the Group's revenue was HKD 1,430,396 thousand, and profit for the period was HKD 64,910 thousand, a significant increase from the prior year. Profit attributable to company shareholders was HKD 66,112 thousand, with basic earnings per share of HKD 11.8 cents Summary of Condensed Consolidated Statement of Profit or Loss and Other Comprehensive Income | Metric | June 30, 2025 (HKD Thousand) | June 30, 2024 (HKD Thousand) | | :--- | :--- | :--- | | Revenue | 1,430,396 | 1,557,365 | | Gross Profit | 354,294 | 359,244 | | Profit Before Tax | 100,953 | 39,337 | | Profit for the Period | 64,910 | 33,551 | | Profit for the Period Attributable to Company Shareholders | 66,112 | 34,057 | | Earnings Per Share (Basic) | 11.8 HK Cents | 6.0 HK Cents | [Condensed Consolidated Statement of Financial Position](index=14&type=section&id=%E7%AE%80%E6%98%8E%E7%BB%BC%E5%90%88%E8%B4%A2%E5%8A%A1%E7%8A%B6%E5%86%B5%E8%A1%A8) As of June 30, 2025, the Group's total assets less current liabilities were HKD 4,197,676 thousand, and net assets were HKD 3,940,304 thousand. Non-current assets primarily included property, plant and equipment, investment properties, and interests in associates. Trade receivables constituted a significant portion of current assets. Current liabilities mainly comprised trade and other payables and borrowings due within one year Summary of Condensed Consolidated Statement of Financial Position | Metric | June 30, 2025 (HKD Thousand) | Dec 31, 2024 (HKD Thousand) | | :--- | :--- | :--- | | Non-current Assets | 3,721,634 | 3,716,713 | | Current Assets | 2,406,606 | 2,359,065 | | Current Liabilities | 1,930,564 | 1,927,090 | | Net Current Assets | 476,042 | 431,975 | | Net Assets | 3,940,304 | 3,811,482 | | Equity Attributable to Company Shareholders | 3,917,787 | 3,789,127 | | Trade Receivables (Net of Provision) | 1,400,192 | 1,308,119 | | Borrowings - Due within One Year | 891,546 | 932,313 | | Borrowings - Due after One Year | 211,600 | 294,400 | [Condensed Consolidated Statement of Cash Flows](index=16&type=section&id=%E7%AE%80%E6%98%8E%E7%BB%BC%E5%90%88%E7%8E%B0%E9%87%91%E6%B5%81%E9%87%8F%E8%A1%A8) For the six months ended June 30, 2025, the Group's net cash used in operating activities was HKD 48,116 thousand, net cash used in investing activities was HKD 2,971 thousand, and net cash used in financing activities was HKD 159,385 thousand. Cash and cash equivalents at period-end were HKD 394,457 thousand, a decrease from the beginning of the period Summary of Condensed Consolidated Statement of Cash Flows | Metric | June 30, 2025 (HKD Thousand) | June 30, 2024 (HKD Thousand) | | :--- | :--- | :--- | | Net Cash Used in Operating Activities | (48,116) | (91,075) | | Net Cash (Used in) Generated from Investing Activities | (2,971) | 172,089 | | Net Cash Used in Financing Activities | (159,385) | (253,242) | | Net Decrease in Cash and Cash Equivalents | (210,472) | (172,228) | | Cash and Cash Equivalents at End of Period | 394,457 | 431,177 | [Notes](index=18&type=section&id=%E9%99%84%E6%B3%A8) This section provides detailed notes on the basis of preparation, principal accounting policies, revenue and segment information, other income and gains/losses, profit before tax, taxation, dividends, earnings per share, movements in property, plant and equipment and investment properties, trade receivables, and trade and other payables [Basis of Preparation](index=18&type=section&id=%E7%BC%96%E8%A3%BD%E5%9F%BA%E5%87%86) The condensed consolidated financial information is prepared in accordance with Hong Kong Accounting Standard 34 "Interim Financial Reporting" issued by the Hong Kong Institute of Certified Public Accountants and the applicable disclosure requirements of the Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited - The condensed consolidated financial information is prepared in accordance with Hong Kong Accounting Standard 34 "Interim Financial Reporting" and the HKEX Listing Rules[41](index=41&type=chunk) [Principal Accounting Policies](index=18&type=section&id=%E4%B8%BB%E8%A6%81%E4%BC%9A%E8%AE%A1%E6%94%BF%E7%AD%96) The condensed consolidated financial information is prepared on a historical cost basis, except for investment properties and certain financial instruments measured at fair value. The accounting policies and methods of computation adopted for this period are consistent with those in the annual consolidated financial report for the year ended December 31, 2024 - The condensed consolidated financial information is prepared on a historical cost basis, with investment properties and certain financial instruments measured at fair value[42](index=42&type=chunk) - The accounting policies and methods of computation adopted for this period are consistent with those in the annual consolidated financial report for the year ended December 31, 2024[42](index=42&type=chunk) [Revenue and Segment Information](index=18&type=section&id=%E8%90%A5%E4%B8%9A%E9%A2%9D%E5%8F%8A%E5%88%86%E7%B1%BB%E8%B5%84%E6%96%99) Group revenue represents amounts received and receivable from the sale of goods and rendering of services (net of discounts and value-added tax) and rental income during the period. By customer location, mainland China remains the primary market, but overseas (mainly Southeast Asian) market revenue increased. The Group reports operating segment information by four business segments: coatings, inks, lubricants, and property Geographical Market Revenue by Customer Location | Region | 2025 (HKD Thousand) | 2024 (HKD Thousand) | | :--- | :--- | :--- | | Mainland China | 1,378,350 | 1,513,038 | | Hong Kong | 29,256 | 30,123 | | Overseas (mainly Southeast Asian countries) | 22,790 | 14,204 | | **Total** | **1,430,396** | **1,557,365** | - The Group's reportable segments include four business divisions: coatings, inks, lubricants, and property[46](index=46&type=chunk) - Segment results represent profit earned by each segment before unallocated share of results of associates, unallocated income, and unallocated expenses (mainly central administrative expenses, directors' emoluments, and finance costs)[47](index=47&type=chunk) H1 2025 Segment Revenue and Results | Segment | Revenue (HKD Thousand) | Segment Result (HKD Thousand) | | :--- | :--- | :--- | | Coatings | 676,413 | 19,120 | | Inks | 590,661 | 11,315 | | Lubricants | 160,274 | 6,093 | | Property | 3,048 | 47,226 | | **Total Segments** | **1,427,348** | **83,754** | | Share of Results of Associates | - | 38,599 | | **Profit Before Tax** | - | **100,953** | H1 2024 Segment Revenue and Results | Segment | Revenue (HKD Thousand) | Segment Result (HKD Thousand) | | :--- | :--- | :--- | | Coatings | 730,974 | (10,076) | | Inks | 644,371 | 31,171 | | Lubricants | 172,285 | 6,949 | | Property | 5,305 | 101 | | **Total Segments** | **1,547,630** | **28,145** | | Share of Results of Associates | - | 49,449 | | **Profit Before Tax** | - | **39,337** | [Other Income and Other Gains and Losses](index=22&type=section&id=%E5%85%B6%E4%BB%96%E6%94%B6%E5%85%A5%E4%BB%A5%E5%8F%8A%E5%85%B6%E4%BB%96%E6%94%B6%E7%9B%8A%E5%8F%8A%E4%BA%8F%E6%8D%9F) The Group's other income primarily includes interest income, government grants, dividend income from financial assets, and commissioned product processing income. Regarding other gains and losses, the period recorded a gain of HKD 35,001 thousand, mainly due to a gain of HKD 60,023 thousand from the disposal of land use rights, but offset by a significant increase of HKD 25,487 thousand in expected credit loss provisions for trade and other receivables, and a fair value loss of HKD 9,773 thousand on investment properties Other Income | Item | 2025 (HKD Thousand) | 2024 (HKD Thousand) | | :--- | :--- | :--- | | Interest Income | 7,324 | 14,043 | | Government Grants | 6,926 | 7,979 | | Dividend Income from Financial Assets at FVTPL | 11,075 | 11,591 | | Commissioned Product Processing Income | 10,751 | – | | Others | 5,757 | 8,668 | | **Total** | **41,833** | **42,281** | Other Gains (Losses) | Item | 2025 (HKD Thousand) | 2024 (HKD Thousand) | | :--- | :--- | :--- | | Provision for Expected Credit Losses on Trade and Other Receivables | (25,487) | (6,048) | | Fair Value Loss on Investment Properties | (9,773) | (2,737) | | Net Exchange Gains (Losses) from Foreign Currency Balances and Transactions | 12,344 | (7,754) | | Gain on Disposal of Land Use Rights | 60,023 | – | | **Total** | **35,001** | **(21,113)** | - During the period, a provision for expected credit losses of **HKD 25,487 thousand** was made for trade and other receivables, of which **HKD 20,454 thousand** was a specific loss provision for an individual customer[52](index=52&type=chunk) - The Group completed the disposal of idle land use rights in Shanghai Jinshan in June 2025, recognizing a pre-tax gain of **HKD 60,023 thousand** and receiving proceeds of **HKD 20,817 thousand**[53](index=53&type=chunk) [Profit Before Tax](index=23&type=section&id=%E9%99%A4%E7%A8%8E%E5%89%8D%E7%BA%AF%E5%88%A9) For the six months ended June 30, 2025, the Group's profit before tax was HKD 100,953 thousand, primarily after deducting recognized cost of inventories, amortization of intangible assets, and depreciation of property, plant and equipment (net of capitalized portion) Components of Profit Before Tax | Item | 2025 (HKD Thousand) | 2024 (HKD Thousand) | | :--- | :--- | :--- | | Cost of Inventories Recognized as Cost of Sales | 1,076,102 | 1,198,121 | | Amortization of Intangible Assets | 1,015 | 1,016 | | Depreciation of Property, Plant and Equipment (Net of Capitalized Portion) | 19,510 | 22,800 | | **Profit Before Tax** | **100,953** | **39,337** | [Taxation](index=23&type=section&id=%E7%A8%8E%E9%A1%B9) Total taxation for the period was HKD 36,043 thousand, primarily comprising PRC enterprise income tax and land appreciation tax. PRC subsidiaries are subject to a 25% enterprise income tax rate, with some high-tech or western encouraged industry enterprises enjoying a preferential rate of 15%. Hong Kong profits tax is calculated at 16.5% with a two-tiered profits tax regime. Withholding tax mainly applies to PRC interest income and dividend distributions Components of Taxation | Item | 2025 (HKD Thousand) | 2024 (HKD Thousand) | | :--- | :--- | :--- | | Current Tax - PRC Enterprise Income Tax | 10,235 | 4,270 | | Current Tax - Land Appreciation Tax | 26,674 | – | | Current Tax - Withholding Tax | 52 | 59 | | Current Tax - Overseas | 270 | 200 | | Over-provision in Prior Years - PRC | (940) | (1,272) | | Deferred Tax Expense (Credit) | (248) | 2,529 | | **Total** | **36,043** | **5,786** | - Hong Kong profits tax is calculated at **16.5%** of estimated assessable profits and operates under a two-tiered system[56](index=56&type=chunk) - PRC subsidiaries are subject to an enterprise income tax rate of **25%**, with some high-tech enterprises or western encouraged industry enterprises enjoying a preferential rate of **15%**[57](index=57&type=chunk) - Withholding tax primarily refers to interest income (**7%**) and dividend distributions (**10%**) sourced from mainland China; a **5%** dividend withholding tax rate may apply to Hong Kong resident companies directly owning **25%** of the equity[58](index=58&type=chunk) [Dividends](index=25&type=section&id=%E8%82%A1%E6%81%AF) For the six months ended June 30, 2025, the Group declared and paid a final dividend of HKD 11 cents per share for the year 2024, totaling approximately HKD 61,431 thousand. The Board resolved to declare an interim dividend of HKD 4 cents per share for the six months ended June 30, 2025, totaling approximately HKD 22,338 thousand (excluding treasury shares), payable on or about October 31, 2025 Dividend Distribution Details | Dividend Type | Payment Date | Amount Per Share (HK Cents) | Total Amount (HKD Thousand) | | :--- | :--- | :--- | :--- | | 2024 Final Dividend | July 2025 | 11 | 61,431 | | 2023 Final Dividend | July 2024 | 10 | 56,848 | | H1 2025 Interim Dividend | On or about Oct 31, 2025 | 4 | 22,338 | | H1 2024 Interim Dividend | - | 3 | - | [Earnings Per Share](index=25&type=section&id=%E6%AF%8F%E8%82%A1%E7%9B%88%E5%88%A9) Basic earnings per share attributable to company shareholders are calculated based on the profit for the period and the weighted average number of shares. For the six months ended June 30, 2025, basic earnings per share were HKD 11.8 cents, with a weighted average of 558,460 thousand shares (adjusted for treasury shares). Diluted earnings per share are not presented as there are no issued potential ordinary shares Basic Earnings Per Share Calculation | Item | 2025 (HKD Thousand/Thousand Shares) | 2024 (HKD Thousand/Thousand Shares) | | :--- | :--- | :--- | | Profit for the Period Attributable to Company Shareholders | 66,112 | 34,057 | | Weighted Average Number of Shares for Basic EPS Calculation | 558,460 | 568,484 | | **Basic Earnings Per Share** | **11.8 HK Cents** | **6.0 HK Cents** | - The weighted average number of shares used for calculating basic earnings per share has been adjusted for **10,024,000** treasury shares[63](index=63&type=chunk) - Diluted earnings per share are not presented as there are no issued potential ordinary shares[63](index=63&type=chunk) [Movements in Property, Plant and Equipment and Investment Properties](index=26&type=section&id=%E7%89%A9%E4%B8%9A%E3%80%81%E5%8E%82%E6%88%BF%E5%8F%8A%E8%AE%BE%E5%A4%87%E4%BB%A5%E5%8F%8A%E6%8A%95%E8%B5%84%E7%89%A9%E4%B8%9A%E4%B9%8B%E5%8F%98%E5%8A%A8) In the first half, the Group spent approximately HKD 25,157 thousand on acquiring property, plant and equipment, and recognized right-of-use assets of HKD 1,428 thousand from new lease agreements. The Group disposed of investment properties with a carrying amount of HKD 1,278 thousand and recognized a net fair value decrease of HKD 9,773 thousand on investment properties Movements in Property, Plant and Equipment and Investment Properties | Item | H1 2025 (HKD Thousand) | H1 2024 (HKD Thousand) | | :--- | :--- | :--- | | Acquisition of Property, Plant and Equipment | 25,157 | 26,462 | | Recognition of Right-of-Use Assets (Lease Agreements) | 1,428 | 4,859 | | Cash Consideration from Disposal of Investment Properties | 1,278 | Nil | | Net Fair Value Decrease on Investment Properties | 9,773 | 2,737 | [Trade Receivables](index=26&type=section&id=%E8%B4%B8%E6%98%93%E5%BA%94%E6%94%B6%E6%AC%BE%E9%A1%B9) As of June 30, 2025, the Group's trade receivables (net of credit loss provisions) amounted to HKD 1,400,192 thousand. Ageing analysis shows that zero to three-month receivables constitute the largest portion, with the Group offering credit terms of 30 to 90 days, and longer terms for large or long-term customers with good payment records Trade Receivables and Ageing Analysis | Item | June 30, 2025 (HKD Thousand) | Dec 31, 2024 (HKD Thousand) | | :--- | :--- | :--- | | Trade Receivables (from Customer Contracts) | 1,490,864 | 1,372,606 | | Less: Provision for Credit Losses | (90,672) | (64,487) | | **Net Trade Receivables** | **1,400,192** | **1,308,119** | | **Ageing Analysis (Net):** | | | | 0-3 Months | 710,714 | 609,804 | | 4-6 Months | 193,820 | 252,477 | | Over 6 Months | 167,768 | 130,857 | | **Total** | **1,072,302** | **993,138** | - The Group offers credit terms ranging from **30 to 90 days** to trade customers, with longer terms potentially granted to large or long-term customers with good payment records[66](index=66&type=chunk) [Trade and Other Payables](index=27&type=section&id=%E5%BA%94%E4%BB%98%E8%B4%A6%E6%AC%BE%E5%8F%8A%E5%BA%94%E8%AE%A1%E8%B4%B9%E7%94%A8) As of June 30, 2025, the Group's total trade and other payables amounted to HKD 880,764 thousand, primarily comprising trade payables, bills payable, and other payables. Ageing analysis of trade payables indicates that most are due within zero to three months Components of Trade and Other Payables | Item | June 30, 2025 (HKD Thousand) | Dec 31, 2024 (HKD Thousand) | | :--- | :--- | :--- | | Trade Payables | 419,115 | 418,549 | | Bills Payable | 257,457 | 284,187 | | Other Payables and Accrued Expenses | 204,192 | 222,436 | | **Total** | **880,764** | **925,172** | | **Ageing Analysis of Trade Payables:** | | | | 0-3 Months | 368,629 | 358,797 | | 4-6 Months | 45,304 | 55,646 | | Over 6 Months | 5,182 | 4,106 | | **Total** | **419,115** | **418,549** | [Dividend Distribution and Share Registration](index=28&type=section&id=%E8%82%A1%E6%81%AF%E6%B4%BE%E5%8F%91%E5%8F%8A%E8%BF%87%E6%88%B7%E7%99%BB%E8%AE%B0) This section announces the interim dividend declaration and payment details, along with the dates for the closure of the register of members to determine dividend entitlement [Interim Dividend Distribution](index=28&type=section&id=%E4%B8%AD%E6%9C%9F%E8%82%A1%E6%81%AF%E6%B4%BE%E5%8F%91) The Board resolved to declare an interim dividend of HKD 4 cents per share (H1 2024: HKD 3 cents per share) for the six months ended June 30, 2025, payable on or about October 31, 2025, to shareholders registered on the Company's register of members on September 24, 2025 - The Board resolved to declare an interim dividend of **HKD 4 cents** per share (H1 2024: **HKD 3 cents** per share) for the six months ended June 30, 2025[68](index=68&type=chunk) - The interim dividend will be paid on or about October 31, 2025, to shareholders registered on the Company's register of members on September 24, 2025[68](index=68&type=chunk) [Closure of Register of Members](index=28&type=section&id=%E6%9A%82%E5%81%9C%E5%8A%9E%E7%90%86%E8%BF%87%E6%88%B7%E7%99%BB%E8%AE%B0%E6%89%8B%E7%BA%8C) To determine eligibility for the interim dividend, the Company's register of members will be closed from September 19, 2025, to September 24, 2025 (both dates inclusive). All transfer forms, accompanied by the relevant share certificates, must be lodged with the Company's Hong Kong Share Registrar, Tricor Investor Services Limited, by 4:30 p.m. on September 18, 2025 - The Company's register of members will be closed from **September 19, 2025, to September 24, 2025**, to determine eligibility for the interim dividend[69](index=69&type=chunk) - To qualify for the interim dividend, all transfer forms, accompanied by relevant share certificates, must be lodged with the Company's Hong Kong Share Registrar, Tricor Investor Services Limited, by **4:30 p.m. on September 18, 2025**[69](index=69&type=chunk) [Company Information](index=28&type=section&id=%E5%85%AC%E5%8F%B8%E4%BF%A1%E6%81%AF) This section provides details on the publication of the announcement and interim report, along with the current composition of the Board of Directors [Announcement Publication](index=28&type=section&id=%E5%85%AC%E5%91%8A%E5%8F%91%E5%B8%83) This announcement has been published on the HKEX website (http://www.hkex.com.hk) and the Company's website (http://www.yipschemical.com). The Company's 2025 interim report will be published on the HKEX and Company websites in due course - This announcement has been published on the HKEX website and the Company's website[70](index=70&type=chunk) - The Company's 2025 interim report will be published on the HKEX and Company websites in due course[70](index=70&type=chunk) [Board of Directors](index=28&type=section&id=%E8%91%A3%E4%BA%8B%E4%BC%9A%E6%88%90%E5%91%98) As of the date of this announcement, the Board of Directors includes Non-executive Directors Mr. Yip Chi Shing (Chairman), Mr. Ho Pak Chuen*, Mr. Koo Yee Tao*, Ms. Yau Ching Man*, and Executive Directors Mr. Yip Tsz Hin (Vice Chairman), Mr. Yip Kwan (Chief Executive Officer), and Mr. Ho Sai Ho (Chief Financial Officer). (* denotes Independent Non-executive Directors) - The Board of Directors includes Non-executive Directors Mr. Yip Chi Shing (Chairman), Mr. Ho Pak Chuen*, Mr. Koo Yee Tao*, and Ms. Yau Ching Man*[71](index=71&type=chunk) - Executive Directors include Mr. Yip Tsz Hin (Vice Chairman), Mr. Yip Kwan (Chief Executive Officer), and Mr. Ho Sai Ho (Chief Financial Officer)[71](index=71&type=chunk) - Mr. Ho Pak Chuen, Mr. Koo Yee Tao, and Ms. Yau Ching Man are Independent Non-executive Directors[71](index=71&type=chunk)

Core Insights - The company, ZhiJingHua Paint, has demonstrated strong brand strength and market competitiveness in the global paint industry, ranking 62nd globally and 7th among Chinese paint companies with a sales revenue of $188 million for 2024 according to Coatings World [1][2] Group 1: Company Performance - ZhiJingHua Paint has been recognized as one of the top ten paint brands in China, reflecting its comprehensive strength in product quality, environmental standards, and technological innovation [4] - The company has established a solid brand foundation in the domestic market while gradually expanding its international business, exporting products to multiple countries and regions [2] Group 2: Product Innovation - Significant resources have been invested in product research and development, leading to a robust R&D system and professional technical team [3] - The company offers a diverse range of products, including eco-friendly building paints and artistic coatings, which have gained popularity among consumers [3] - ZhiJingHua Paint's furniture paint has consistently ranked among the top ten in China's furniture paint industry, and its toy coatings hold the largest market share in both China and globally [3] Group 3: Future Outlook - The recognition from Coatings World is seen as a new starting point for ZhiJingHua Paint, which aims to continue its innovation and increase R&D investment to enhance product performance and service quality [4] - The company plans to actively expand both domestic and international markets while strengthening brand building and promotion to further enhance its global recognition and reputation [4]

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之內容概不負 責，對其準確性或完整性亦不發表任何聲明，並明確表示概不就因本公告全部或 任何部分內容而產生或因倚賴該等內容而引致之任何損失承擔任何責任。 董事會會議通告 葉氏化工集團有限公司(「本公司」)董事會(「董事會」)謹此公佈，本公司將 於二零二五年八月二十一日(星期四)舉行董事會會議，藉以(其中包括)考慮及 酌情批准本公司及其附屬公司截至二零二五年六月三十日止六個月之中期業 績、其刊發及宣派股息(如有)。 承董事會命 葉氏化工集團有限公司 主席 葉志成 香港，二零二五年八月六日 於本公告日期，董事會成員包括 : 非執行董事: 執行董事: 葉志成先生 (主席) 何百川先生* 葉鈞先生 古以道先生* 何世豪先生 邱靜雯女士* 葉子軒先生 (副主席) (行政總裁) (財務總裁) *獨立非執行董事 ...

致：香港交易及結算所有限公司 公司名稱: 葉氏化工集團有限公司 呈交日期: 2025年8月1日 I. 法定/註冊股本變動 | 1. 股份分類 | 普通股 | 股份類別 | 不適用 | | | 於香港聯交所上市 (註1) | | 是 | | | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | | 證券代號 (如上市) | 00408 | 說明 | | | | | | | | | | | 法定/註冊股份數目 | | | 面值 | | | 法定/註冊股本 | | | 上月底結存 | | | 800,000,000 | HKD | | 0.1 | HKD | | 80,000,000 | | 增加 / 減少 (-) | | | 0 | | | | HKD | | | | 本月底結存 | | | 800,000,000 | HKD | | 0.1 | HKD | | 80,000,000 | 本月底法定/註冊股本總額： HKD 80,000,000 股份發行人及根據《上市規則》第十九B章上市的香港預託證券發行人的證券變動月報表 截至月份: 2025 ...

[Supplemental Announcement: Regarding the 2024 Annual Report](index=1&type=section&id=Supplemental%20Announcement%20As%20of%20December%2031%2C%202024%20Annual%20Report) [Share Repurchase and Treasury Share Handling Explanation](index=1&type=section&id=Share%20Repurchase%20and%20Treasury%20Share%20Handling%20Explanation) This announcement clarifies the company's handling of shares repurchased in 2024, held as treasury stock for future disposition Details of 2024 Share Repurchases | Item | Details | | :--- | :--- | | Number of Shares Repurchased | 10,024,000 shares | | Total Consideration (excluding expenses) | HKD 14,833,500 | | Handling Method | Held as treasury shares | - The company will determine the future disposition of treasury shares, including **cancellation, sale at market price, or other compliant uses**, based on market conditions and capital management needs[2](index=2&type=chunk)

Financial Performance - The company's revenue for the year ended December 31, 2024, was HK$3,162,391,000, representing a growth of 1.7%[8] - The profit attributable to owners of the company was HK$96,882,000, reflecting an increase of 11.8%[9] - Earnings per share for the year were HK$17.2 cents, up by 13.2% compared to the previous year[9] - The gross profit margin improved to 23.5%, an increase of 0.8 percentage points[8] - Sales volume reached 264,000 metric tons, marking a growth of 9.6%[11] - The company declared a dividend of 14 HK cents for the year, which is a 16.7% increase[9] - The gearing ratio stood at 16.7%, an increase of 2.7 percentage points[9] - The Group recorded a revenue of HK$3.16 billion for the year, representing a slight decrease of 1.7% compared to the previous year[24] - Profit attributable to owners increased by 11.8% year-on-year to HK$96.9 million[24] - The Group's gearing ratio was at a low level of 16.7% as of December 31, 2024, indicating a healthy financial position[26] - A final dividend of HK11 cents per share was recommended, an increase of HK1 cent compared to the previous year's final dividend[26] - The Group recorded a revenue of HK$3.16 billion and a sales volume of 264,000 metric tonnes, representing a slight decrease of 1.7% and 9.6% respectively compared to the preceding year[42] - Overall gross profit margin decreased to 23.5%, a year-on-year decrease of 0.8 percentage points, with the coatings business suffering from adverse market conditions[42] - Profit attributable to owners increased by 11.8% to HK$96.9 million compared to the corresponding period of the preceding year[42] - The Group's revenue for the year ended December 31, 2024, was HK$87,695,000, a decrease from HK$92,070,000 in 2023[127] - The inks segment reported revenue of HK$77,199,000 in 2024, up from HK$37,861,000 in 2023, indicating significant growth[127] - The coatings segment generated revenue of HK$7,219,000 in 2024, a decline from HK$57,250,000 in 2023[127] Market Challenges and Strategic Initiatives - The operating environment was described as challenging, with external pressures from geopolitical tensions and sluggish consumer sentiment impacting performance[22] - The company anticipates continued challenges in the market, particularly in the real estate and stock markets, which are crucial for economic support[22] - The management is focused on strategic initiatives to navigate the current economic landscape and enhance operational resilience[22] - The Group plans to explore acquisition opportunities to enhance its core businesses and support SMEs in need of resources[30] - The Group expects to initiate one or two pilot projects during the year to refine its development model for ongoing growth[30] - The Group plans to focus additional resources on the growth of industrial coatings and resin products while reassessing the architectural coatings market[46] - The Group aims to establish a "leading development platform for chemical businesses" by leveraging its stable shareholder base, strong reputation, and extensive experience in China[61] - Strategic investment and acquisition opportunities will be actively sought to accelerate the growth of the chemical business platform[62] Product and Business Development - The inks segment recorded a revenue of HK$1.36 billion, an increase of 13%, and a segment profit of HK$77.2 million, marking a significant increase of 104%[49] - The coatings segment's sales volume declined by 16% to 184,000 metric tonnes, with revenue down 8% to HK$1.46 billion[45] - Revenue from the lubricants business decreased by 6% to HK$320 million, while the gross profit margin rose by 1.5 percentage points to 23.3%[54] - The solvents associate recorded a strong growth of 13% in sales volume, reaching a historical high of 1,540,000 metric tonnes, with export sales of approximately 530,000 metric tonnes[56] - The new acetic acid and acetates solvents manufacturing plant in Hubei is expected to commence operation in the second half of 2025, enhancing vertical integration and economies of scale[57] - The Group's resin production is vertically integrated into coatings products, enhancing product quality and competitiveness[88] - The industrial coatings business has actively explored overseas markets, exporting to Southeast Asia, including Vietnam and Malaysia[85] - The lubricants business has diversified its product range under the "Hercules" brand, including engine oils, antifreeze fluids, and hydraulic oils, aiming to secure a solid footing in the Chinese automotive aftermarket[99] - The Group has increased investment in R&D for industrial specialty lubricants, targeting breakthroughs in specialty greases and metal processing oils for the medium to high-end markets[100] Sustainability and ESG Initiatives - The Group's commitment to sustainable development is reflected in its ongoing monitoring of environmental, social, and governance (ESG) performance[158] - The Group continues to develop environmentally friendly products to assist clients in their green transformation efforts[157] - The Group's sustainability initiatives include improving energy efficiency and supporting R&D plans to promote long-term sustainable development[161] - The Group actively collaborates with social enterprises to create shared value and empower disadvantaged communities[160] - The Group has developed a series of eco-friendly products to assist customers in transitioning to greener operations, enhancing its sustainability performance[160] Management and Human Capital - The Group emphasizes the management and development of human capital, offering educational subsidy programs and career development plans for employees[166] - The management team has been developed internally, with a focus on identifying and nurturing talented employees[166] - The Group regularly reviews its remuneration and reward policies to ensure competitive compensation and benefits for its employees[167] - Mr. Ho Sai Hou has over 30 years of experience in accounting, finance, taxation, and company secretarial fields, serving as the Chief Financial Officer since 2010[177] - Mr. Ho Pak Chuen has extensive experience in the chemical industry, having worked for The Dow Chemical Company for 40 years before joining the Group as an Independent Non-executive Director in 2018[180] - Mr. Ku Yee Dao has been appointed as the Finance Director of Johnson Controls Inc. since May 2023 and will become the General Manager for Hong Kong and Macau in April 2024[181] - Ms. Yau Ching Man joined the Group as an Independent Non-executive Director on March 22, 2024, and has over 10 years of corporate management experience in both PRC and Hong Kong[185] - Mr. Yip Long has held various leadership roles within the Group, including Deputy General Manager of the Solvents Group and Chief Operating Officer, and was appointed Vice Chairman of the Inks Group in 2023[186] - The Group's management team includes experienced professionals with extensive backgrounds in the chemical and petrochemical industries[193][195] Corporate Vision and Future Outlook - The Group aims to achieve its corporate vision of "Towards a Century of Revered Leadership" through business development and profitability[200] - The Group's vision includes generating stable returns and long-term value appreciation for shareholders and stakeholders[61] - The Group's initiatives are expected to further fortify profit growth and add new dimensions to its businesses[63] - Important events affecting the Group since the end of the financial year are noted in the consolidated financial statements[200]

Financial Performance - The company's revenue for the year ended December 31, 2024, was HKD 3.16 billion, a slight decrease of 1.7% compared to HKD 3.22 billion in the previous year[3]. - The sales volume decreased by 9.6% to 264,000 tons from 292,000 tons year-on-year[3]. - Shareholders' profit attributable to the company increased by 11.8% to HKD 96.9 million, up from HKD 86.6 million in the previous year[3]. - The overall gross profit margin decreased to 23.5%, down 0.8 percentage points from the previous year due to challenges in the construction paint market[2]. - The group achieved a net profit attributable to shareholders of HKD 96.9 million, an increase of 11.8% compared to the same period last year[16]. - Gross profit for 2024 was HKD 743,646,000, down 4.9% from HKD 782,270,000 in the previous year[45]. - The net profit for the year was HKD 95,694,000, representing a significant increase of 57.9% compared to HKD 60,596,000 in 2023[45]. - The company reported a total of HKD 88,216,000 in segment profit for the year, compared to HKD 96,024,000 from joint ventures[72]. Dividends and Shareholder Returns - The board proposed a final dividend of HKD 0.11 per share, an increase from HKD 0.10 per share in the previous year[3][8]. - The interim dividend for 2024 was declared at HKD 0.03 per share, compared to HKD 0.02 per share in 2023, marking a 50% increase[83]. - The company plans to propose a final dividend of HKD 0.11 per share for the year ending December 31, 2024, up from HKD 0.10 per share in 2023, totaling approximately HKD 61,431,000[84]. - The company has repurchased a total of 10,024,000 shares during the year, with a total cost of HKD 14,834,000[90]. Debt and Financial Position - The company maintained a low debt ratio of 16.7%, compared to 14.0% in 2023, providing flexibility for future investment projects[2][3]. - The group's net bank borrowings increased to HKD 632,336,000 from HKD 547,546,000 in the previous year[27]. - The group's debt ratio increased to 16.7%, up 2.7 percentage points from 14.0% in 2023[25]. - As of December 31, 2024, the group's bank borrowings totaled HKD 1,226,713,000, down from HKD 1,401,793,000 in 2023[27]. - The group plans to continue increasing its RMB bank loans in mainland China to benefit from lower interest costs and mitigate RMB exchange rate fluctuation risks[30]. Business Segments and Performance - The paint business saw a 16% decrease in sales volume to 184,000 tons and an 8% drop in revenue to HKD 1.46 billion, with the construction paint segment facing a sluggish real estate market[16]. - The ink business recorded a revenue of HKD 1.36 billion, an increase of 13% year-on-year, with a significant profit growth of 104% to HKD 77.2 million[18]. - The lubricant business revenue decreased by 6% to HKD 320 million, with a gross margin increase of 1.5 percentage points to 23.3%[19]. - Revenue from paint sales was HKD 1,461,221,000, down 7.8% from HKD 1,584,770,000 in the previous year[67]. - Revenue from ink sales increased to HKD 1,364,529,000, up 13.2% from HKD 1,205,915,000 in 2023[67]. - Revenue from lubricants was HKD 323,580,000, a decrease of 6.0% from HKD 344,282,000[67]. Cash Flow and Investments - The group's net cash inflow was HKD 86,546,000, a decrease from HKD 236,544,000 in the previous year[26]. - The company reported a net cash outflow from investment activities of HKD 226,064 thousand in 2024, compared to a net cash inflow of HKD 655,382 thousand in 2023[53]. - The company reported a foreign exchange loss of HKD 162,612,000 for the year, compared to a loss of HKD 91,885,000 in 2023[45]. - The company recognized an impairment loss of HKD 57,504,000 on goodwill and intangible assets in the previous year, which was not repeated in 2024[45]. Strategic Initiatives and Future Outlook - The group plans to focus resources on industrial paints and resins to drive business growth in these segments while reassessing the construction paint market[17]. - The group is optimistic about the Chinese economy's continued growth and is preparing to seek more business opportunities amid changing market conditions[11]. - The group aims to explore one or two pilot projects this year to enhance its growth model through strategic acquisitions in the chemical sector[11]. - The company is currently assessing the impact of the new Hong Kong Financial Reporting Standard 18 on its consolidated financial statements[65]. - The company operates in four main business segments: paint, ink, lubricants, and property[69]. Human Resources and Employee Management - As of December 31, 2024, the group employs a total of 2,189 staff, a decrease from 2,561 in 2023[31]. - The group emphasizes the management and development of human resources, providing training and educational assistance programs to enhance employee skills and performance[32].

[Management Discussion and Analysis](index=4&type=section&id=Management%20Discussion%20and%20Analysis) [Highlights](index=4&type=section&id=Highlights) The Group achieved significant profit growth in the first half of 2024, with profit attributable to equity holders surging by 109% to HKD 34.06 million year-on-year, and earnings per share increasing by 107% | Indicator | H1 2024 | YoY Change | | :--- | :--- | :--- | | Revenue | HKD 1.557 billion | ▼ 0.6% | | Profit attributable to equity holders | HKD 34.06 million | ▲ 109% | | Earnings per share | HKD 0.06 | ▲ 107% | | Sales volume | 136 thousand tonnes | ▼ 5% | | Interim dividend | HKD 0.03 | ▲ 50% | | Gearing ratio | 18.3% | ▲ 18.2 percentage points | [Chairman's Statement – Review and Outlook](index=5&type=section&id=Chairman's%20Statement%20%E2%80%93%20Review%20and%20Outlook) The Chairman's report highlights a challenging operating environment in H1 2024 due to China's economic transformation, geopolitical factors, and a weak property market, particularly impacting the architectural coatings business - The operating environment during the review period was more challenging than anticipated, influenced by Western suppression of China, a slower pace of China's growth model transformation, geopolitical tensions, and the absence of an interest rate cut cycle[5](index=5&type=chunk)[7](index=7&type=chunk) - The architectural coatings segment faced severe adverse effects on sales and gross profit margin due to an unprecedented and intense price war among peers[5](index=5&type=chunk)[7](index=7&type=chunk) | Financial Indicator | Amount | YoY Change | | :--- | :--- | :--- | | Sales revenue | HKD 1.56 billion | ▼ 0.6% | | Profit attributable to equity holders | HKD 34 million | ▲ 109% | - The Group's financial position remains sound with a low gearing ratio of **18.3%**, and an interim dividend of **HKD 0.03** per share was declared, alongside the first attempt at share repurchases in the market[9](index=9&type=chunk)[10](index=10&type=chunk) - Looking ahead, the Group will focus more on improving and developing its core businesses, actively pursuing mergers and acquisitions and investments in related fine chemical sectors, leveraging its accumulated experience and capital strength[11](index=11&type=chunk)[12](index=12&type=chunk) [Report of the Chief Executive Officer](index=9&type=section&id=Report%20of%20the%20Chief%20Executive%20Officer) Despite a sluggish macroeconomic environment, the Group achieved profit growth in H1 2024 through effective cost and expense control, with profit attributable to equity holders reaching HKD 34 million, a 109% year-on-year increase | Key Performance Indicator | H1 2024 | YoY Change | | :--- | :--- | :--- | | Revenue | HKD 1.56 billion | ▼ 0.6% | | Total sales volume | 136 thousand tonnes | ▼ 5% | | Gross profit margin | 23.1% | ▼ 0.8 percentage points | | Profit attributable to equity holders | HKD 34 million | ▲ 109% | | Gearing ratio | 18.3% | - | - The solvents associate (Qianxin Chemical) achieved stable growth, contributing **HKD 49.4 million** in profit to the Group[17](index=17&type=chunk)[23](index=23&type=chunk) - Management is confident in the company's long-term development, repurchasing **2.3 million** shares in July 2024 to enhance long-term shareholder value[15](index=15&type=chunk) [Coatings Business](index=11&type=section&id=Coatings) The coatings business faced significant challenges, with sales volume declining by 10%, revenue falling by 6% to HKD 731 million, and gross profit margin decreasing by 2.6 percentage points to 25.5%, resulting in a segment loss of HKD 10.1 million | Indicator | H1 2024 | YoY Change | | :--- | :--- | :--- | | Sales volume (tonnes) | 98 thousand tonnes | ▼ 10% | | Revenue | HKD 731 million | ▼ 6% | | Gross profit margin | 25.5% | ▼ 2.6 percentage points | | Segment results | Loss HKD 10.1 million | - | - The architectural coatings business was severely impacted by the sluggish Chinese property market, reduced new projects, and decreased consumer renovation willingness, while industrial coatings and resins achieved stable growth due to technological advancements[18](index=18&type=chunk) [Inks Business](index=12&type=section&id=Inks) The inks business performed strongly, turning a loss into profit through effective sales strategies and strict cost control, with revenue increasing by 16% to HKD 645 million and gross profit margin rising by 2.6 percentage points to 20%, achieving a segment profit of HKD 31.2 million | Indicator | H1 2024 | YoY Change | | :--- | :--- | :--- | | Revenue | HKD 645 million | ▲ 16% | | Gross profit margin | 20% | ▲ 2.6 percentage points | | Segment results | Profit HKD 31.2 million | Turned loss into profit | - The business successfully captured major clients and expanded market share in the food packaging sector, while also developing specialty ink products for electronic products, flooring, and home appliances[22](index=22&type=chunk) [Lubricants Business](index=13&type=section&id=Lubricants) The lubricants business saw revenue decline by 11% to HKD 173 million, but improved its product portfolio by focusing on mid-to-high-end products, increasing gross profit margin by 2.8 percentage points to 23.6%, and leveraging OEM business to absorb fixed costs, ultimately achieving a profit of HKD 6.9 million and maintaining profitability | Indicator | H1 2024 | YoY Change | | :--- | :--- | :--- | | Revenue | HKD 173 million | ▼ 11% | | Gross profit margin | 23.6% | ▲ 2.8 percentage points | | Segment results | Profit HKD 6.9 million | Maintained profitability | [Solvents Associate](index=13&type=section&id=Solvents%20Associate) The Group's 24% owned solvents associate, Qianxin Chemical, performed exceptionally, with sales volume growing by 24% to 776 thousand tonnes, contributing HKD 49.4 million to the Group - The solvents associate (Qianxin Chemical) sales volume increased by **24%** to **776 thousand tonnes**, contributing **HKD 49.4 million** to the Group[23](index=23&type=chunk) - The new 600 thousand tonnes acetic acid and 600 thousand tonnes acetate solvent plant project in Hubei is progressing well, targeting production in H2 2025 to enhance vertical integration and gross profit margin[23](index=23&type=chunk) [Liquidity and Financial Resources](index=15&type=section&id=Liquidity%20and%20Financial%20Resources) As of June 30, 2024, the Group's financial position is robust, with a low gearing ratio of 18.3% and net bank borrowings of HKD 693 million - The gearing ratio (net bank borrowings to equity attributable to equity holders) increased to **18.3%** from **0.1%** in the prior year, primarily due to special dividend payments in H2 2023 and business development investments, but remains at a low level[28](index=28&type=chunk) | Financial Position (June 30, 2024) | Amount (HKD) | | :--- | :--- | | Total bank borrowings | 1.186 billion | | Cash and bank balances | 494 million | | Net bank borrowings | 693 million | - The Group has total bank facilities of **HKD 2.616 billion** from 18 banks, with **53%** denominated in HKD and **47%** in RMB, ensuring ample liquidity[34](index=34&type=chunk) - The Group will continue to increase RMB loans to benefit from lower interest costs in mainland China and mitigate exchange rate fluctuation risks, with **47%** of total loans being medium-to-long-term and **35%** fixed-rate to hedge interest rate risk[31](index=31&type=chunk)[33](index=33&type=chunk)[34](index=34&type=chunk) [Human Resources](index=18&type=section&id=Human%20Resources) As of June 30, 2024, the Group had 2,308 employees, with the vast majority (2,240) located in mainland China | Region | Number of Employees | | :--- | :--- | | Mainland China | 2,240 | | Hong Kong | 58 | | Other Countries | 10 | | **Total** | **2,308** | [Other Information and Corporate Governance](index=19&type=section&id=Other%20Information%20and%20Corporate%20Governance) [Significant Investments](index=25&type=section&id=Significant%20Investments) As of June 30, 2024, the Group held two significant investments: preferred shares in PAGAC Heisenberg Holding I Limited (fair value HKD 653 million) and an interest in associate Qianxin Chemical (carrying amount HKD 1.222 billion) - Holds preferred shares in PAGAC Heisenberg Holding I Limited with a fair value of approximately **HKD 653 million**, representing **10.8%** of the Group's total assets, and recognized approximately **HKD 11.5 million** in dividend income during the period[57](index=57&type=chunk)[58](index=58&type=chunk) - Holds an interest in the solvents business associate (Qianxin Chemical) with a carrying amount of approximately **HKD 1.222 billion**, representing **20.2%** of the Group's total assets, with a share of associate's results of approximately **HKD 49.4 million** and dividend income of approximately **HKD 33.4 million** received during the period[60](index=60&type=chunk) [Corporate Governance](index=24&type=section&id=Corporate%20Governance) During the reporting period, the company complied with all code provisions of the HKEX Corporate Governance Code - The company complied with the code provisions of the Corporate Governance Code for the six months ended June 30, 2024[60](index=60&type=chunk) - The Audit Committee, comprising three independent non-executive directors, reviewed the unaudited interim financial report, which was also reviewed by external auditor Deloitte[61](index=61&type=chunk) [Shareholder and Director Information](index=19&type=section&id=Shareholder%20and%20Director%20Information) This section discloses the interests of directors, chief executives, and substantial shareholders in the company's shares [Directors' and Chief Executives' Interests in Shares, Underlying Shares and Debentures](index=19&type=section&id=Directors'%20and%20Chief%20Executives'%20Interests) As of June 30, 2024, Chairman Mr. Yip Chi Shing held or was deemed to hold approximately 34.65% of the company's shares | Director Name | Capacity | Total Shares Held | Percentage of Issued Share Capital | | :--- | :--- | :--- | :--- | | Mr. Yip Chi Shing | Chairman | 197,000,532 | 34.65% | | Mr. Yip Tsz Hin | Director | 40,200,000 | 7.07% | | Mr. Yip Kwan | Director | 26,869,000 | 4.73% | [Share Options](index=21&type=section&id=Share%20Options) The company adopted a new share option scheme on June 6, 2022, with no options granted, exercised, or cancelled during the review period - No share options were granted, exercised, or cancelled under the 2022 Share Option Scheme during the review period[46](index=46&type=chunk) [Substantial Shareholder](index=23&type=section&id=Substantial%20Shareholder) The report did not disclose other substantial shareholder interests or short positions requiring registration under Section 336 of the Securities and Futures Ordinance, apart from those of directors and chief executives - Apart from the interests of directors and chief executives already disclosed, no other person has notified the Company of their interests or short positions in the Company's shares requiring registration under Section 336 of the Securities and Futures Ordinance[48](index=48&type=chunk)[49](index=49&type=chunk) [Other Disclosures](index=24&type=section&id=Other%20Disclosures) The Board resolved to declare an interim dividend of HKD 0.03 per share, payable on October 9, 2024 - The Board resolved to declare an interim dividend of **HKD 0.03** per share (H1 2023: HKD 0.02 per share), payable on October 9, 2024[52](index=52&type=chunk)[53](index=53&type=chunk) - During the review period, neither the company nor any of its subsidiaries purchased, sold, or redeemed any of the company's listed securities[54](index=54&type=chunk) [Condensed Consolidated Financial Statements](index=29&type=section&id=Condensed%20Consolidated%20Financial%20Statements) [Report on Review of Condensed Consolidated Financial Statements](index=29&type=section&id=Report%20on%20Review%20of%20Condensed%20Consolidated%20Financial%20Statements) Deloitte Touche Tohmatsu, the auditor, reviewed the Group's condensed consolidated financial statements for the six months ended June 30, 2024, concluding no material non-compliance with HKAS 34 - Auditor Deloitte reviewed this condensed consolidated financial report and concluded that it was prepared in all material respects in accordance with Hong Kong Accounting Standard 34[65](index=65&type=chunk)[69](index=69&type=chunk)[71](index=71&type=chunk) [Condensed Consolidated Statement of Profit or Loss and Other Comprehensive Income](index=31&type=section&id=Condensed%20Consolidated%20Statement%20of%20Profit%20or%20Loss%20and%20Other%20Comprehensive%20Income) For the six months ended June 30, 2024, the Group reported revenue of HKD 1.557 billion, a slight year-on-year decrease, but profit attributable to equity holders surged by 109% to HKD 34.06 million | Item (HKD thousand) | H1 2024 | H1 2023 | | :--- | :--- | :--- | | Revenue | 1,557,365 | 1,566,874 | | Gross profit | 359,244 | 375,022 | | Share of results of an associate | 49,449 | 32,145 | | Profit before tax | 39,337 | 10,072 | | Profit for the period | 33,551 | 8,895 | | **Profit attributable to equity holders of the Company** | **34,057** | **16,260** | [Condensed Consolidated Statement of Financial Position](index=33&type=section&id=Condensed%20Consolidated%20Statement%20of%20Financial%20Position) As of June 30, 2024, the Group's total assets were HKD 6.049 billion, total liabilities HKD 2.233 billion, and equity attributable to equity holders was HKD 3.793 billion | Item (HKD thousand) | June 30, 2024 | December 31, 2023 | | :--- | :--- | :--- | | **Non-current assets** | **3,727,335** | **3,765,519** | | Of which: Interests in an associate | 1,222,419 | 1,241,342 | | **Current assets** | **2,321,384** | **2,653,508** | | **Total assets** | **6,048,719** | **6,419,027** | | **Current liabilities** | **1,798,331** | **1,967,212** | | **Non-current liabilities** | **434,297** | **536,713** | | **Total liabilities** | **2,232,628** | **2,503,925** | | **Equity attributable to equity holders of the Company** | **3,792,695** | **3,926,349** | [Condensed Consolidated Statement of Changes in Equity](index=35&type=section&id=Condensed%20Consolidated%20Statement%20of%20Changes%20in%20Equity) As of June 30, 2024, total equity attributable to company shareholders decreased from HKD 3.926 billion at the beginning of the year to HKD 3.793 billion - Equity attributable to equity holders decreased from **HKD 3.926 billion** at the beginning of the year to **HKD 3.793 billion** at the end of the period[76](index=76&type=chunk) - Key factors contributing to the decrease in equity include total comprehensive expense for the period of **HKD 76.85 million** (comprising profit for the period of **HKD 34.06 million** and other comprehensive expense of **HKD 111 million**) and dividends paid of **HKD 56.85 million**[76](index=76&type=chunk) [Condensed Consolidated Statement of Cash Flows](index=38&type=section&id=Condensed%20Consolidated%20Statement%20of%20Cash%20Flows) In H1 2024, the Group recorded a net cash outflow of HKD 91.08 million from operating activities, a net cash inflow of HKD 172.09 million from investing activities, and a net cash outflow of HKD 253.24 million from financing activities | Item (HKD thousand) | H1 2024 | H1 2023 | | :--- | :--- | :--- | | Net cash used in operating activities | (91,075) | 51,761 | | Net cash generated from investing activities | 172,089 | 969,321 | | Net cash used in financing activities | (253,242) | (977,723) | | **Net (decrease) increase in cash and cash equivalents** | **(172,228)** | **43,359** | | Cash and cash equivalents at beginning of period | 616,093 | 1,088,116 | | **Cash and cash equivalents at end of period** | **431,177** | **1,111,688** | [Notes to the Condensed Consolidated Financial Statements](index=40&type=section&id=Notes%20to%20the%20Condensed%20Consolidated%20Financial%20Statements) The notes detail the basis of preparation, significant accounting policies, and disclosures for revenue, segment information, other income, taxation, dividends, acquisitions and disposals, related party transactions, and fair value of financial instruments - Segment results show a loss of **HKD 10.08 million** for the coatings business, a profit of **HKD 31.17 million** for the inks business, and a profit of **HKD 6.95 million** for the lubricants business[95](index=95&type=chunk) - In January 2024, the Group converted a RMB **31.37 million** loan to Hubei Huima into a **59.91%** equity stake, completing the acquisition and recognizing **HKD 3.98 million** in goodwill[141](index=141&type=chunk)[142](index=142&type=chunk)[143](index=143&type=chunk) - In January 2024, the Group disposed of a **61%** equity stake in Hebei Damai and its subsidiaries to non-controlling shareholders for a cash consideration of RMB **1**, resulting in a loss of **HKD 1.04 million** on the transaction[147](index=147&type=chunk)[148](index=148&type=chunk)[149](index=149&type=chunk) - The Group engages in transactions with related parties, including rental payments to a company controlled by Director Mr. Yip Chi Shing, and goods procurement and consulting service transactions with an associate[161](index=161&type=chunk)[162](index=162&type=chunk)

[Performance Overview](index=1&type=section&id=%E4%B8%9A%E7%BB%A9%E6%A6%82%E8%A7%88) Despite a challenging macroeconomic environment, the Group's turnover slightly decreased by 0.6% to HKD 1.56 billion, while profit attributable to shareholders significantly increased by 109% to HKD 34 million, maintaining a robust financial position [Performance Highlights](index=1&type=section&id=%E4%B8%9A%E7%BB%A9%E6%91%98%E8%A6%81) Despite a challenging macroeconomic environment, the Group's turnover slightly decreased by 0.6% to HKD 1.56 billion, while profit attributable to shareholders significantly increased by 109% to HKD 34 million, maintaining a robust financial position Performance Summary | Metric | H1 2024 (Unaudited) | H1 2023 (Unaudited) | Change | | :--- | :--- | :--- | :--- | | Turnover (HKD billion) | 1.557 | 1.567 | -0.6% | | Sales Volume (tons) | 136,000 | 143,000 | -5% | | Profit Attributable to Shareholders (HKD million) | 34.06 | 16.26 | +109% | | Earnings Per Share (HKD) | 0.06 | 0.029 | +107% | | Interim Dividend Per Share (HKD) | 0.03 | 0.02 | +50% | | Gearing Ratio | 18.3% | 0.1% | +18.2 percentage points | - Affected by the sluggish Chinese economy, the Group's sales growth was limited, with turnover slightly decreasing by **0.6%** year-on-year and sales volume falling by **5%** year-on-year[1](index=1&type=chunk) - Business gross profit margins showed divergence: ink and lubricants businesses saw year-on-year increases of **2.6** and **2.8 percentage points** respectively, but the coatings business was pressured by the depressed real estate market, leading to a slight **0.8 percentage point** decrease in the Group's overall gross profit margin to **23.1%**[1](index=1&type=chunk) [Management Discussion and Analysis](index=3&type=section&id=%E7%AE%A1%E7%90%86%E5%B1%82%E8%AE%A8%E8%AE%BA%E4%B8%8E%E5%88%86%E6%9E%90) This section provides a comprehensive review of the Group's operational performance, financial position, and future outlook, as discussed by management [Chairman's Report](index=3&type=section&id=%E4%B8%BB%E5%B8%AD%E6%8A%A5%E5%91%8A) The Chairman's report highlights the Group's resilient performance amidst a challenging operating environment, stable financial health, and strategic focus on core business development and M&A opportunities - The operating environment faced multiple challenges, including Western countries' suppression of China, a slower transformation of China's economic growth model, geopolitical tensions, and an unclear recovery in the real estate market, leading to intense market competition, especially in the architectural coatings sector[3](index=3&type=chunk) - Despite challenges, the Group's overall business performance in the first half was close to expectations, with turnover slightly decreasing by **0.6%** to **HKD 1.56 billion**, while profit attributable to shareholders increased to **HKD 34 million**[3](index=3&type=chunk) - The Group's financial position is sound, with the gearing ratio maintained at a low level of **18.3%**. The Board resolved to declare an interim dividend of **HKD 0.03 per share** and initiated a share repurchase program for the first time[4](index=4&type=chunk) - Looking ahead to the second half, the Group will focus more on improving and developing core businesses, and leverage its experience and capital strength in fine chemicals to actively seek M&A and investment opportunities for rapid business development[5](index=5&type=chunk) [CEO's Report](index=5&type=section&id=%E8%A1%8C%E6%94%BF%E6%80%BB%E8%A3%81%E6%8A%A5%E5%91%8A) The CEO's report details the Group's profit growth through cost control and strategic adjustments, analyzing divergent segment performance and outlining future growth strategies [Key Business Highlights](index=5&type=section&id=%E4%B8%BB%E8%A6%81%E4%B8%9A%E5%8A%A1%E6%91%98%E8%A6%81) The Group's turnover and sales volume saw slight declines, but improved gross margins in some segments and stable associate contributions led to a 109% increase in profit attributable to shareholders, maintaining a solid financial position Key Business Highlights | Metric | H1 2024 | Y-o-Y Change | | :--- | :--- | :--- | | Turnover (HKD billion) | 1.56 | -0.6% | | Total Sales Volume (tons) | 136,000 | -5% | | Group Gross Profit Margin | 23.1% | -0.8 percentage points | | Profit Attributable to Shareholders (HKD million) | 34.00 | +109% | - The solvent associate business recorded stable performance growth, contributing **HKD 49.4 million** in profit to the Group[8](index=8&type=chunk) - The Group's gearing ratio remained at a relatively low level of **18.3%**, indicating a solid financial position and providing flexibility for future investments in new projects[9](index=9&type=chunk) [Segment Business Review](index=6&type=section&id=%E5%88%86%E9%83%A8%E4%B8%9A%E5%8A%A1%E5%9B%9E%E9%A1%BE) Segment performance varied, with coatings facing losses due to real estate downturns, while inks turned profitable, lubricants maintained profit, and solvent associates provided significant returns with new capacity plans Segment Performance | Business Segment | Turnover (HKD billion) | Y-o-Y Change | Gross Profit Margin | Y-o-Y Change (percentage points) | Segment Results (HKD million) | | :--- | :--- | :--- | :--- | :--- | :--- | | Coatings | 0.731 | -6% | 25.5% | -2.6 | -10.10 (Loss) | | Inks | 0.645 | +16% | 20.0% | +2.6 | 31.20 (Profit) | | Lubricants | 0.173 | -11% | 23.6% | +2.8 | 6.90 (Profit) | - The coatings business faced significant challenges, primarily due to the depressed real estate market, and despite the Group's continuous brand promotion and channel expansion efforts, its performance was significantly impacted[10](index=10&type=chunk) - The ink business successfully gained market share in food packaging and expanded special ink applications in niche areas such as electronic products and flooring, achieving a turnaround to profitability[11](index=11&type=chunk) - Qianxin Chemical, the solvent associate company in which the Group holds a **24%** stake, saw a **24%** increase in sales volume in the first half, contributing **HKD 49.4 million** in returns to the Group. Its new plant construction in Hubei is progressing well and is expected to commence operations in the second half of **2025**[13](index=13&type=chunk)[14](index=14&type=chunk) [Outlook](index=8&type=section&id=%E5%B1%95%E6%9C%9B) The Group plans to focus on new product development and brand enhancement in core businesses, while actively seeking strategic investment opportunities for accelerated long-term growth - Key strategies for the second half include promoting new product development in inks, industrial coatings, resins, and lubricants, enhancing the 'Bauhinia' brand's recognition, and leveraging a healthy financial position to seek strategic investment opportunities[15](index=15&type=chunk) [Liquidity and Financial Resources](index=9&type=section&id=%E6%B5%81%E5%8A%A8%E8%B5%84%E9%87%91%E5%8F%8A%E8%B4%A2%E5%8A%A1%E8%B5%84%E6%BA%90) The Group maintains a robust financial position with a low gearing ratio and ample bank facilities, prudently managing foreign exchange risks and optimizing financing costs Financial Position | Financial Metric | June 30, 2024 | December 31, 2023 | | :--- | :--- | :--- | | Gearing Ratio | 18.3% | 14.0% (Year-end data) | | Total Bank Borrowings (HKD billion) | 1.186 | 1.402 | | Net Bank Borrowings (HKD billion) | 0.693 | 0.548 | | Net Cash Flow from Operating Activities (HKD million) | -91.08 | 51.76 (Prior period) | - The Group prudently managed foreign exchange risks by increasing RMB bank loans to benefit from lower interest costs in mainland China and mitigate RMB exchange rate fluctuation risks[16](index=16&type=chunk)[19](index=19&type=chunk) - As of the period end, the Group secured **HKD 2.616 billion** in bank facilities from **18** banks, indicating ample liquidity[19](index=19&type=chunk) [Human Resources](index=10&type=section&id=%E4%BA%BA%E5%8A%9B%E8%B5%84%E6%BA%90) The Group employs 2,308 staff, primarily in mainland China, and prioritizes human resource development through comprehensive training, competitive compensation, and talent retention strategies - As of June 30, **2024**, the Group had **2,308** employees, with **2,240** from mainland China[20](index=20&type=chunk) - The Group implements a comprehensive talent management strategy, including providing training, development programs, and competitive compensation and benefits, to motivate employees and drive business development[20](index=20&type=chunk) [Other Disclosures](index=11&type=section&id=%E5%85%B6%E4%BB%96%E6%8A%AB%E9%9C%B2%E4%BF%A1%E6%81%AF) This section provides information on securities repurchases, corporate governance practices, and the audit committee's review of the interim financial report [Securities Repurchase, Corporate Governance and Audit Committee](index=11&type=section&id=%E8%AF%81%E5%88%B8%E5%9B%9E%E8%B4%AD%E3%80%81%E4%BC%81%E4%B8%9A%E7%AE%A1%E6%B2%BB%E5%8F%8A%E5%AE%A1%E6%A0%B8%E5%A7%94%E5%91%98%E4%BC%9A) The company confirmed no securities repurchases, compliance with corporate governance codes, and the Audit Committee's review of the unaudited interim financial report - During the review period, neither the Company nor any of its subsidiaries purchased, sold, or redeemed any of the Company's listed securities[21](index=21&type=chunk) - The Company complied with the code provisions of the HKEX Corporate Governance Code during the reporting period[22](index=22&type=chunk) - The Audit Committee reviewed the unaudited interim financial report for this period, which was also reviewed by the Company's auditor, Deloitte Touche Tohmatsu[23](index=23&type=chunk) [Condensed Consolidated Financial Statements](index=12&type=section&id=%E7%AE%80%E6%98%8E%E7%BB%BC%E5%90%88%E8%B4%A2%E5%8A%A1%E6%8A%A5%E8%A1%A8) This section presents the Group's condensed consolidated financial statements, including the income statement, balance sheet, and cash flow statement, along with their accompanying notes [Condensed Consolidated Statement of Profit or Loss and Other Comprehensive Income](index=12&type=section&id=%E7%AE%80%E6%98%8E%E7%BB%BC%E5%90%88%E6%8D%9F%E7%9B%8A%E5%8F%8A%E5%85%B6%E4%BB%96%E5%85%A8%E9%9D%A2%E6%94%B6%E7%9B%8A%E8%A1%A8) The Group reported a slight 0.6% turnover decrease to HKD 1.557 billion, but a 109% increase in profit attributable to owners to HKD 34.06 million, driven by associate contributions and cost control Statement of Profit or Loss and Other Comprehensive Income | Item (HKD thousand) | H1 2024 (Unaudited) | H1 2023 (Unaudited) | | :--- | :--- | :--- | | Turnover | 1,557,365 | 1,566,874 | | Gross Profit | 359,244 | 375,022 | | Operating Expenses (Selling and Administrative) | (358,527) | (399,237) | | Share of Results of Associates | 49,449 | 32,145 | | Profit Before Tax | 39,337 | 10,072 | | Profit for the Period | 33,551 | 8,895 | | **Profit Attributable to Owners of the Company** | **34,057** | **16,260** | [Condensed Consolidated Statement of Financial Position](index=14&type=section&id=%E7%AE%80%E6%98%8E%E7%BB%BC%E5%90%88%E8%B4%A2%E5%8A%A1%E7%8A%B6%E5%86%B5%E8%A1%A8) As of June 30, 2024, total assets decreased to HKD 6.049 billion, with total liabilities at HKD 2.233 billion, while equity attributable to owners remained robust at HKD 3.793 billion Statement of Financial Position | Item (HKD thousand) | June 30, 2024 (Unaudited) | December 31, 2023 (Audited) | | :--- | :--- | :--- | | **Non-current Assets** | **3,727,335** | **3,765,519** | | **Current Assets** | **2,321,384** | **2,653,508** | | **Total Assets** | **6,048,719** | **6,419,027** | | **Current Liabilities** | **1,798,331** | **1,967,212** | | **Non-current Liabilities** | **434,297** | **536,713** | | **Total Liabilities** | **2,232,628** | **2,503,925** | | **Equity Attributable to Owners of the Company** | **3,792,695** | **3,926,349** | [Condensed Consolidated Statement of Cash Flows](index=16&type=section&id=%E7%AE%80%E6%98%8E%E7%BB%BC%E5%90%88%E7%8E%B0%E9%87%91%E6%B5%81%E8%A1%A8) Operating activities resulted in a net cash outflow of HKD 91.08 million, while investing activities generated HKD 172.09 million, leading to a period-end cash balance of HKD 431.18 million Statement of Cash Flows | Item (HKD thousand) | H1 2024 (Unaudited) | H1 2023 (Unaudited) | | :--- | :--- | :--- | | Net Cash Used in Operating Activities | (91,075) | 51,761 | | Net Cash Generated from Investing Activities | 172,089 | 969,321 | | Net Cash Used in Financing Activities | (253,242) | (977,723) | | **Net Decrease in Cash and Cash Equivalents** | **(172,228)** | **43,359** | | Cash and Cash Equivalents at Beginning of Period | 616,093 | 1,088,116 | | **Cash and Cash Equivalents at End of Period** | **431,177** | **1,111,688** | [Notes to the Financial Statements](index=18&type=section&id=%E8%B4%A2%E5%8A%A1%E6%8A%A5%E8%A1%A8%E9%99%84%E6%B3%A8) This section details segment performance, with inks profitable and coatings at a loss, outlines the interim dividend, and describes the period's acquisition and disposal activities [Segment Information](index=19&type=section&id=%E5%88%86%E9%83%A8%E4%BF%A1%E6%81%AF) Segment performance varied, with the ink segment turning profitable at HKD 31.17 million, while the coatings segment incurred a loss of HKD 10.08 million, and lubricants remained profitable Segment Results | Segment Results (HKD thousand) | H1 2024 (Unaudited) | H1 2023 (Unaudited) | | :--- | :--- | :--- | | Coatings | (10,076) | 15,596 | | Inks | 31,171 | (4,012) | | Lubricants | 6,949 | 5,726 | | Property | 101 | (1,391) | [Dividends](index=24&type=section&id=%E8%82%A1%E6%81%AF) The Board declared an interim dividend of HKD 0.03 per share for H1 2024, totaling approximately HKD 16.99 million, an increase from the prior year - The Board resolved to declare an interim dividend of **HKD 0.03 per share** (prior period: **HKD 0.02 per share**), payable on or around October 9, **2024**[47](index=47&type=chunk) [Acquisition and Disposal](index=27&type=section&id=%E6%94%B6%E8%B4%AD%E4%B8%8E%E5%87%BA%E5%94%AE) The Group acquired a 59.91% stake in Hubei Huima via debt-to-equity conversion, generating goodwill, and disposed of a 61% stake in Hebei Damai, incurring a loss - In January **2024**, the Group acquired a **59.91%** equity stake in Hubei Huima through a debt-to-equity swap, resulting in goodwill of **HKD 3.98 million**[56](index=56&type=chunk)[57](index=57&type=chunk) - In January **2024**, the Group disposed of a **61%** equity stake in Hebei Damai, recording a loss on disposal of **HKD 1.036 million**[59](index=59&type=chunk)[60](index=60&type=chunk) [Dividends and Other Announcements](index=29&type=section&id=%E8%82%A1%E6%81%AF%E5%8F%8A%E5%85%B6%E4%BB%96%E5%85%AC%E5%91%8A) This section provides details on the interim dividend declaration and related arrangements, along with other significant announcements [Interim Dividend and Arrangements](index=29&type=section&id=%E4%B8%AD%E6%9C%9F%E8%82%A1%E6%81%AF%E5%8F%8A%E5%AE%89%E6%8E%92) The company announced an interim dividend of HKD 0.03 per share, payable around October 9, 2024, with share transfer registration suspended from September 6-11 for eligibility determination - The Board resolved to declare an interim dividend of **HKD 0.03 per share** (prior period: **HKD 0.02 per share**), payable on or around October 9, **2024**[62](index=62&type=chunk) - To determine eligibility for the interim dividend, the company will suspend registration of the register of members from September 6 to September 11, **2024** (both dates inclusive)[63](index=63&type=chunk)

Financial Performance - The company's revenue for the year ended December 31, 2023, was HK$3,217,138,000, representing a 4% increase compared to the previous year[6]. - Sales volume reached 292,000 metric tons, marking a 9% increase year-over-year[7]. - The gross profit margin improved to 24.3%, an increase of 2.9 percentage points from the previous year[8]. - Profit attributable to owners of the company was HK$86,623,000, reflecting a significant increase of 93%[9]. - Earnings per share rose to 15.2 HK cents, also up by 93% compared to the prior year[9]. - The annual dividend declared was 12 HK cents per share, an increase of 87% from the previous year[9]. - The gearing ratio decreased to 14.0%, down by 10.8 percentage points, indicating improved financial stability[9]. - The Group recorded a revenue of HK$3.22 billion and a sales volume of 292,000 metric tonnes, representing a decrease of 4% and an increase of 9% year-on-year respectively[30]. - Profit attributable to owners was HK$86.6 million, a decrease of 93% year-on-year; however, excluding one-off gains and write-downs, profit increased by 328% year-on-year[30]. - The Group's gearing ratio improved significantly to 14.0%, down from 24.8% at the end of the previous year, due to cash inflow from the disposal of 51% interest in the solvents business[31]. - The profit before taxation for 2023 was HK$83,865, significantly down from HK$1,534,704 in 2022, reflecting a decline of approximately 94.5%[131]. - The profit attributable to owners of the Company for 2023 was HK$86,623, a decrease of 92.9% compared to HK$1,217,774 in 2022[131]. - The total assets as of December 31, 2023, were HK$6,419,027, down from HK$8,011,501 in 2022, indicating a decrease of 19.9%[131]. - The net bank borrowings to shareholders' funds ratio improved to 14% in 2023, down from 25% in 2022[131]. - The Group recorded a net cash inflow of HK$236,544,000 for the year, down from HK$413,892,000 in 2022, primarily due to the impact of the disposal of 51% effective interest in the solvents business[161]. Strategic Initiatives - The company is focused on enhancing its product offerings and expanding its market presence as part of its strategic initiatives[19]. - Future outlook includes continued investment in new technologies and market expansion efforts to drive growth[19]. - The Group plans to continue investing in expanding the store network and brand reach of "Bauhinia" and "Camel" in the coming year[59]. - The Group plans to leverage its reputation to seek strategic investments or acquisitions in niche areas to enhance core businesses[78]. - A new manufacturing plant with a capacity of 600,000 tonnes of acetic acid and 600,000 tonnes of acetate solvents is planned in Hubei, targeting operation in 2025[72]. - The Group will continue to increase its RMB bank borrowings in Mainland China to benefit from lower interest costs and mitigate currency fluctuation risks[173]. Business Segments Performance - The coatings segment recorded a sales volume growth of 11% to 219,000 metric tonnes, while sales revenue slightly declined by 3% to HK$1.58 billion[57]. - The coatings segment's gross profit margin improved to 27.8%, representing a year-on-year increase of 3.9 percentage points, leading to a segment profit increase of 571% to HK$57.3 million[58]. - The inks segment recorded a revenue of HK$1.21 billion in 2023, a slight decrease of 10% compared to the previous year, but the gross profit margin increased by 1.9 percentage points to 18.8%[63][64]. - The inks business achieved a segment profit of HK$37.9 million, marking a significant increase of 302% year-on-year[63]. - The lubricants business revenue grew by 15% to HK$0.34 billion, with a gross profit margin improvement of 1.7 percentage points to 21.8%[66]. - The lubricants segment recorded a profit of HK$10.8 million, returning to profitability in 2023[66]. - The properties segment revenue increased by 3% to HK$11 million, with operating results improving by 394% to HK$30.9 million due to net increases in fair values of investment properties[70]. - The solvents associate achieved a sales volume growth of 15% in 2023, reaching a historical high of 1,368,000 metric tonnes, contributing HK$94.7 million in returns to the Group[71]. Corporate Governance and Management - A new Senior Leadership Team was established in the first half of 2023 to enhance corporate governance and execute the Group's development plans[50]. - The Group emphasizes the management and development of human capital, providing educational subsidy programs and career development plans for employees[188]. - The Group's management team has been developed internally, with a focus on promoting talented employees to management positions[188]. - The Group regularly reviews its remuneration and reward policies to ensure competitive compensation and benefits for employees[189]. - The Group's commitment to corporate governance is reflected in its structured management and oversight by experienced directors[199]. Sustainability and Innovation - The Group integrates sustainability concepts into its development strategies and daily operations to manage risks and opportunities[181]. - The Group's ESG report outlines management policies, progress, and achievements in environmental, social, and governance aspects for the year[183]. - The company has reduced volatile organic compounds (VOC) emissions during production and developed eco-friendly products, earning the "Corporate Environmental Leadership Awards"[112]. - The Group's commitment to innovation aims to lead the household paints market in China, focusing on health and environmental sustainability[93]. Market Position and Recognition - The Group's coatings subsidiary was ranked 57th globally and 7th in Mainland China in terms of sales revenue among international coatings companies in 2023[184]. - The Group's inks subsidiary was ranked 17th globally and 1st in Mainland China in terms of sales revenue among international ink companies in 2023[184]. - The Group has become the official supporting brand of the China Women's National Football Team, promoting health-conscious products[99].