Revenue and Profitability - Revenue for the year ended December 31, 2023, was HKD 3,217,138,000, a decrease of 4% compared to HKD 3,358,509,000 in 2022[2] - Net profit attributable to shareholders was HKD 86,623,000, a significant decline of 93% from HKD 1,217,774,000 in 2022[2] - Earnings per share dropped to HKD 15.2, down 93% from HKD 214.2 in the prior year[2] - The group recorded a revenue of HKD 3.22 billion and a sales volume of 292,000 tons, representing a 4% decrease in revenue but a 9% increase in sales volume compared to the previous year[51] - Shareholders' net profit was HKD 86.6 million, a 93% decrease year-on-year; however, excluding one-time gains from the solvent business sale and one-time write-offs related to the car maintenance business, profit increased by 328%[51] - The group’s attributable net profit was HKD 86.6 million, a significant decline of 93% compared to the same period last year, mainly due to a one-time sale related to the disposal of a 51% stake in a subsidiary[62] - Total comprehensive income attributable to shareholders for the year was HKD 25,566,000, a significant decrease from HKD 763,318,000 in the previous year[116]. Dividends and Shareholder Returns - The company proposed a final dividend of HKD 0.10 per share, representing a 100% increase from HKD 0.05 in 2022[2] - The board proposed a final dividend of HKD 0.10 per share, up from HKD 0.05 per share last year[57] Debt and Financial Management - The company's debt ratio decreased to 14.0%, down from 24.8% in the previous year, reflecting effective capital management[2] - The group maintained a low debt ratio of 14.0% at the end of 2023, down 10.8 percentage points from 24.8% at the end of 2022, providing financial flexibility for future investments[64][80] - As of December 31, 2023, the total bank borrowings of the group amounted to HKD 2,180,475,000, a decrease from HKD 1,401,793,000 at the end of 2022[81] - The net bank borrowings after deducting short-term bank deposits and cash were HKD 547,546,000, down from HKD 1,092,359,000 at the end of 2022[81] - The company’s current liabilities decreased to HKD 930,787,000 in 2023 from HKD 1,820,317,000 in 2022, reflecting improved liquidity management[119]. Operational Performance - Sales volume increased by 9% to 292,000 tons, up from 269,000 tons in the previous year[7] - The gross profit margin improved by 2.9 percentage points to 24.3% due to effective product mix optimization and cost control measures[7] - The paint business achieved a sales volume growth of 11% to 219,000 tons, while revenue slightly decreased by 3% to HKD 1.58 billion, with a gross profit margin rising to 27.8%, an increase of 3.9 percentage points[65] - The ink business recorded a revenue of HKD 1.21 billion, a slight decline of 10%, but the gross profit margin increased by 1.9 percentage points to 18.8%, resulting in a significant profit increase of 302%[74] - The lubricants business saw a revenue growth of 15% to HKD 340 million, with a gross profit margin improvement of 1.7 percentage points to 21.8%, returning to profitability with a profit of HKD 10.8 million[76] Acquisitions and Investments - The company acquired a 70% stake in Shanxi Yanyu E-commerce Co., Ltd. for RMB 3,750,000 (approximately HKD 4,590,000) to expand its market share in the automotive maintenance business[24] - The acquisition resulted in a net cash outflow of HKD 8,568,000[39] - The company expects future benefits from the acquisition related to synergies, revenue growth, and market development, which contributed to the goodwill recognized[41] - The group completed the acquisition of a controlling stake in a printed circuit board ink manufacturer in January 2024, aiming for growth in a new market segment[66] Market and Economic Conditions - The group anticipates ongoing challenges from geopolitical tensions and economic uncertainties, but remains cautiously optimistic about future growth opportunities[58] - The group has made strategic adjustments to focus on core business development after the significant structural changes following the sale of the solvent business[51][56] Cash Flow and Liquidity - Cash and cash equivalents at the end of the year were HKD 616,093, down from HKD 1,076,006 in the previous year[103] - The company reported a net cash outflow of HKD 1,343,158 from financing activities, compared to an outflow of HKD 147,381 in 2022[103] - Net cash generated from operating activities was HKD 236,544,000 in 2023, down from HKD 413,892,000 in 2022, indicating a decline in operational efficiency[120]. Employee and Workforce Management - The group employed a total of 2,561 employees as of December 31, 2023, a decrease from 2,642 employees in 2022[92] Taxation and Regulatory Compliance - The effective tax rate for subsidiaries in China is 25%, with certain high-tech enterprises eligible for a reduced rate of 15% from 2021 to 2030[46][49] - The withholding tax rate on interest income from loans to Chinese subsidiaries is 7%, while the rate on dividends from certain profits is 5%[46]

Financial Performance - For the six months ended June 30, 2023, the Group reported a profit of HK$576,022,000, reflecting a significant increase compared to the previous period[41] - The total comprehensive income for the period was HK$5,752,000, indicating a positive performance despite fluctuations in foreign exchange[41] - The Group's total equity as of June 30, 2023, was HK$4,727,499,000, showing a robust financial position[41] - For the six months ended June 30, 2023, the net decrease in profit for the period was HK$147,000, compared to HK$19,000 in 2022[62] - The increase in income tax expense for the same period was HK$147,000, up from HK$19,000 in the previous year[62] - Total comprehensive expense for the period attributable to owners of the company increased by HK$88,000, while non-controlling interests increased by HK$59,000[62] - For the six months ended June 30, 2023, the reported basic and diluted earnings per share were HK$2.9, a decrease of 84.8% compared to HK$19.1 in 2022[65] - Revenue for the same period was HK$1,566,874,000, representing a 12% increase year-over-year[75] - The Group recorded a substantial exchange loss of HK$23,000,000 due to fluctuations in the Renminbi, which depreciated by up to 3.75% during the review period[77] - The Group's revenue decreased by 12% to HK$1.567 billion, while sales volume increased by 7% to 143,000 tonnes compared to the same period last year[80] - Profit attributable to owners of the Company amounted to HK$16.3 million, representing a decrease of 85% compared to the same period last year[80] Cash Flow and Liquidity - The Group's cash flow statement showed a net cash inflow from operating activities of HK$3,546,000 for the six months ended June 30, 2023[42] - Net cash from operating activities for the six months ended June 30, 2023, was HK$51,761,000, compared to a cash outflow of HK$31,337,000 in the same period of 2022[43] - The company reported a net increase in cash and cash equivalents of HK$43,359,000 for the six months ended June 30, 2023, reversing a decrease of HK$48,869,000 in the prior year[45] - Cash and cash equivalents at the end of the period stood at HK$1,111,688,000, up from HK$686,864,000 at the end of June 2022[45] - The Group's liquidity position improved with cash and cash equivalents totaling HK$1,239,673,000, up from HK$1,088,116,000 at the end of 2022[145] - The group recorded a 3.75% depreciation in the RMB exchange rate during the review period, prompting a cautious approach to foreign exchange risk management[144] Investments and Acquisitions - The Group acquired the remaining 8.24% interest in Bauhinia Variegata Ink & Chemical (Zhejiang) Limited during the period, enhancing its stake in the subsidiary[39] - The company acquired an additional 8.24% equity interest in Bauhinia Variegata for approximately RMB 69,320,000 (equivalent to approximately HK$ 78,137,000) on March 10, 2023, making it an indirect wholly-owned subsidiary[159] - The company also entered into an agreement to acquire approximately 0.53% equity interest in Bauhinia Variegata from Zhongshan Yumao for approximately RMB 4,468,000 (equivalent to approximately HK$ 5,036,000) on the same date[162] - The acquisition of the additional equity interests was completed on March 22, 2023[162] - On March 27, 2023, the company subscribed for two redeemable non-voting preferred shares for a total subscription price of US$ 85 million (approximately HK$ 667.3 million or RMB 583.5 million)[162] - The Group received substantial cash from the disposal of a 51% effective interest in the solvents business, impacting its business structure and development strategy[100] Business Strategy and Outlook - Future outlook includes plans for market expansion and potential new product launches to drive growth[41] - The Group's strategic focus remains on enhancing operational efficiency and exploring acquisition opportunities to strengthen its market position[41] - The management anticipates continued challenges in the market environment, necessitating strategic adjustments moving forward[77] - The Group plans to invest in the construction of a new acetic acid plant, aiming for production before mid-2025, which is expected to enhance the solvent business's profitability[82] - The Group will focus on restructuring and optimizing its core businesses, leveraging the latest national and market conditions[82] - The Group maintains a cautious outlook for the second half of 2023, anticipating continued global economic weakness and low consumer confidence in China[82] Segment Performance - The coatings business generated revenue of HK$780 million, also a 12% decline year-on-year, but the gross profit margin improved significantly by 5.2 percentage points to 28.1%[109] - The inks business revenue declined by 18% year-on-year to HK$550 million, resulting in an operating loss of HK$4 million compared to an operating profit of HK$17.8 million in the same period last year[112] - The lubricants business revenue increased by 12% to HK$190 million, with a gross profit margin of 20.8%, turning an operating loss of HK$2.9 million into a profit of HK$5.7 million[114] - The property segment recorded a 4% increase in revenue to HK$5.6 million, but faced an operating loss of HK$1.4 million due to a decrease in the fair value of the leased portion of the Wanchai office[114] Human Capital Management - The total number of employees as of June 30, 2023, was 2,837, with 2,764 from Mainland China, 63 from Hong Kong, and 10 from other countries[187] - The Group emphasizes the management and development of human capital, offering training programs and educational subsidies to enhance employee skills and performance[188] - The Group regularly reviews its remuneration and reward policy to ensure competitive compensation and benefits, including performance-based bonuses[189]

[Financial Highlights](index=1&type=section&id=Financial%20Highlights) The Group's H1 2023 performance saw a 12% turnover decrease to HKD 1.567 billion, an 85% drop in profit attributable to shareholders, but improved gross margin and a significantly reduced gearing ratio [Financial and Business Summary](index=1&type=section&id=Financial%20and%20Business%20Summary) For the six months ended June 30, 2023, the Group's turnover decreased by 12% to HKD 1.567 billion, while sales volume increased by 7%, gross profit margin improved by 2.8 percentage points, and profit attributable to shareholders significantly decreased by 85% to HKD 16.3 million Key Financial Indicators for H1 2023 | Indicator | For the six months ended June 30, 2023 | For the six months ended June 30, 2022 | Change | | :--- | :--- | :--- | :--- | | Turnover | HKD 1,566,874,000 | HKD 1,770,874,000 | -12% | | Sales Volume | 143,000 tonnes | 134,000 tonnes | +7% | | Profit Attributable to Company Shareholders^ | HKD 16,260,000 | HKD 108,313,000 | -85% | | Earnings Per Share^ | 2.9 HK cents | 19.1 HK cents | -85% | | Interim Dividend Per Share | 2.0 HK cents | 10.0 HK cents | -80% | | Gearing Ratio* | 0.1% | 46.6% | -46.5 percentage points | - Despite the decline in sales, the Group's core business improved cost efficiency, leading to a **2.8 percentage point year-on-year increase in gross profit margin to 23.9%**[110](index=110&type=chunk)[31](index=31&type=chunk) - The Group's overall financial position remains strong, with the gearing ratio significantly reduced to **0.1%** at period-end, benefiting from proceeds from the disposal of a 51% effective interest in the solvent business[110](index=110&type=chunk)[71](index=71&type=chunk)[46](index=46&type=chunk) [Management Discussion and Analysis](index=3&type=section&id=Management%20Discussion%20and%20Analysis) The Group navigated a challenging H1 2023 with strategic shifts, including a new acetic acid plant, core business optimization, and M&A exploration, while improving core continuing operations profitability [Chairman's Report: Review and Outlook](index=3&type=section&id=%E4%B8%BB%E5%B8%AD%E5%A0%B1%E5%91%8A%EF%BC%8D%E5%9B%9E%E9%A1%A7%E5%8F%8A%E5%B1%95%E6%9C%9B) The Chairman highlighted a challenging H1 2023 due to global interest rate hikes, weak domestic recovery, and RMB depreciation, while outlining future strategies focused on new acetic acid plant construction, core business optimization, and strategic investments - During the reporting period, the operating environment was challenging due to multiple adverse factors including weak global economy, insufficient domestic consumer confidence, and RMB depreciation of **3.75%** (resulting in **HKD 23 million exchange loss**)[112](index=112&type=chunk) - Due to the disposal of a **51% effective interest** in the solvent business, the Group's business structure underwent significant changes, with related performance reported as an associate of continuing operations[119](index=119&type=chunk)[15](index=15&type=chunk) - Future development strategies include: - **New Product Construction**: Accelerating the construction of a new acetic acid plant, expected to commence production by mid-2025[120](index=120&type=chunk) - **Core Business Optimization**: Allocating more resources to restructure and optimize core businesses[15](index=15&type=chunk) - **Strategic Investment**: Seeking M&A targets and direct investments in high-quality SMEs [CEO's Report](index=5&type=section&id=%E8%A1%8C%E6%94%BF%E7%B8%BD%E8%A3%81%E5%A0%B1%E5%91%8A) The CEO's report details the Group's turnaround in core continuing operations despite external challenges and reduced profit from the solvent business, driven by product mix improvements, cost reductions, and new business initiatives Overall Performance Overview for H1 | Indicator | Amount | Year-on-year Change | | :--- | :--- | :--- | | Turnover | HKD 1.567 billion | -12% | | Gross Profit Margin | 23.9% | +2.8 percentage points | | Operating Profit from Core Continuing Operations | HKD 1.9 million | Turnaround to profit | | Profit Attributable to Shareholders | HKD 16.3 million | -85% | - The Group formed a new senior leadership team in H1 2023, integrating members with business operations and investment development backgrounds to strategize for future growth[17](index=17&type=chunk) [Coatings Business](index=6&type=section&id=%E5%A1%97%E6%96%99) The coatings business achieved a turnaround to profitability despite a 12% sales decline, driven by a 5.2 percentage point gross margin improvement through cost control and a higher-margin product mix Coatings Business Performance | Indicator | H1 2023 | H1 2022 | | :--- | :--- | :--- | | Sales Revenue | HKD 780 million | HKD 880 million (-12%) | | Gross Profit Margin | 28.1% | 22.9% (+5.2pp) | | Operating Profit/(Loss) | HKD 15.6 million | (HKD 26.5 million) | - In terms of business expansion, domestic architectural coatings retail stores exceeded **2,600**, and the brand became an official supporter of China Women's National Football Team to enhance brand image[115](index=115&type=chunk) [Ink Business](index=7&type=section&id=%E6%B2%B9%E5%A2%A8) The ink business experienced an 18% sales decline and turned to a loss due to slower-than-expected food packaging industry recovery and intensified market competition, prompting a strategic shift to new product lines like electronic circuit board ink Ink Business Performance | Indicator | H1 2023 | H1 2022 | | :--- | :--- | :--- | | Sales Revenue | HKD 550 million | HKD 676 million (-18%) | | Operating Profit/(Loss) | (HKD 4 million) | HKD 17.8 million | - Future plans include developing new product lines, with a strategic partnership formed in July 2023 with a Hubei enterprise to invest in electronic circuit board ink business[27](index=27&type=chunk) [Lubricants Business](index=8&type=section&id=%E6%BD%A4%E6%BB%91%E6%B2%B9) The lubricants business showed strong performance with a 12% sales increase and a return to profitability, driven by sales network expansion, new dealer development, and OEM collaborations, capitalizing on the large traditional automotive market Lubricants Business Performance | Indicator | H1 2023 | H1 2022 | | :--- | :--- | :--- | | Sales Revenue | HKD 190 million | HKD 172 million (+12%) | | Gross Profit Margin | 20.8% | 20.2% (+0.6pp) | | Operating Profit/(Loss) | HKD 5.7 million | (HKD 2.9 million) | - Business strategies include deepening focus on automotive and diesel engine lubricants, developing new dealers nationwide, and engaging in OEM collaborations with other brands[82](index=82&type=chunk) [Property Business](index=8&type=section&id=%E7%89%A9%E6%A5%AD) The property segment's turnover increased by 4% from Shanghai R&D building rentals, but a fair value decrease of HKD 5.2 million for the Hong Kong Wan Chai office resulted in an operating loss of HKD 1.4 million Property Business Performance | Indicator | H1 2023 | H1 2022 | | :--- | :--- | :--- | | Turnover | HKD 5.6 million | HKD 5.4 million (+4%) | | Operating Profit/(Loss) | (HKD 1.4 million) | HKD 2.2 million | [Other Businesses and Outlook](index=9&type=section&id=%E5%85%B6%E4%BB%96%E6%A5%AD%E5%8B%99%E5%8F%8A%E5%B1%95%E6%9C%9B) The Group is transforming towards "environmentalization," "terminalization," and "service-oriented" models, investing USD 85 million in upstream acetic acid and expanding the "Da Mai Car Care" brand, while cautiously optimistic for H2 market recovery - The Group invested in upstream acetic acid business by subscribing to **USD 85 million** in preferred shares, partnering with PAG[29](index=29&type=chunk) - The automotive aftermarket brand "Da Mai Car Care" has expanded its store network to **122 stores**, covering six provinces and serving over **467,000 vehicles**[29](index=29&type=chunk) [Liquidity and Financial Resources](index=9&type=section&id=%E6%B5%81%E5%8B%95%E8%B3%87%E9%87%91%E5%8F%8A%E8%B2%A1%E5%8B%99%E8%B3%87%E6%BA%90) The Group's financial position significantly improved, with the gearing ratio dramatically reduced to 0.1% and operating cash flow turning positive, primarily due to proceeds from the solvent business disposal - The gearing ratio (net bank borrowings as a percentage of shareholders' equity) significantly decreased from **46.6%** in the prior period to **0.1%**[46](index=46&type=chunk)[14](index=14&type=chunk) Financial Position Summary (as of June 30, 2023) | Indicator | June 30, 2023 | December 31, 2022 | | :--- | :--- | :--- | | Total Bank Borrowings | HKD 1.244 billion | HKD 2.180 billion | | Cash and Bank Balances | HKD 1.240 billion | HKD 1.088 billion | | Net Bank Borrowings | HKD 4.012 million | HKD 1.092 billion | - Net cash inflow from operating activities was **HKD 51.76 million**, compared to a net outflow of **HKD 31.34 million** in the prior period[39](index=39&type=chunk)[7](index=7&type=chunk) - Proceeds from the solvent business disposal were partly used to repay loans, subscribe to **USD 85 million** in preferred shares, and acquire a minority interest in the ink business, with the remainder for dividends and future investments[41](index=41&type=chunk) [Human Resources](index=11&type=section&id=%E4%BA%BA%E5%8A%9B%E8%B3%87%E6%BA%90) As of June 30, 2023, the Group had 2,837 employees, predominantly in mainland China, with a focus on human resource development through training, job rotation, education subsidies, and competitive compensation to attract and retain talent - As of June 30, 2023, the Group had a total of **2,837 employees**, with **2,764** from mainland China[44](index=44&type=chunk) - The Group offers competitive compensation and benefits, including base salary and performance-linked bonuses, with regular reviews of remuneration policies[53](index=53&type=chunk) [Condensed Consolidated Financial Statements](index=13&type=section&id=Condensed%20Consolidated%20Financial%20Statements) The Group's H1 2023 financial statements show a 12% turnover decrease, stable gross profit, and a significant drop in net profit due to the prior period's discontinued operations, but a turnaround to profitability for continuing operations [Condensed Consolidated Statement of Profit or Loss and Other Comprehensive Income](index=13&type=section&id=%E7%B0%A1%E6%98%8E%E7%B6%9C%E5%90%88%E6%90%8D%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's H1 2023 turnover was HKD 1.567 billion, with gross profit stable at HKD 375 million, and net profit significantly decreased to HKD 8.9 million due to prior period discontinued operations, while continuing operations achieved HKD 16.26 million in profit attributable to shareholders Condensed Consolidated Statement of Profit or Loss (HKD thousands) | Indicator | H1 2023 (Unaudited) | H1 2022 (Unaudited and Restated) | | :--- | :--- | :--- | | Turnover | 1,566,874 | 1,770,874 | | Gross Profit | 375,022 | 373,445 | | Profit (Loss) Before Tax | 10,072 | (57,134) | | Profit for the Period | 8,895 | 164,355 | | **Attributable to** | | | | Profit Attributable to Company Shareholders | 16,260 | 108,313 | | - From continuing operations | 16,260 | (62,047) | | - From discontinued operations | – | 170,360 | | **Earnings Per Share** | | | | Basic and Diluted (from continuing and discontinued operations) | 2.9 HK cents | 19.1 HK cents | [Condensed Consolidated Statement of Financial Position](index=16&type=section&id=%E7%B0%A1%E6%98%8E%E7%B6%9C%E5%90%88%E8%B2%A1%E5%8B%99%E7%8B%80%E6%B3%81%E8%A1%A8) As of June 30, 2023, the Group's total assets decreased to HKD 6.545 billion, total liabilities significantly reduced to HKD 2.748 billion due to loan repayments, and equity attributable to shareholders decreased to HKD 3.825 billion Condensed Consolidated Statement of Financial Position Summary (HKD thousands) | Indicator | June 30, 2023 (Unaudited) | December 31, 2022 (Restated) | | :--- | :--- | :--- | | Non-current assets | 3,547,166 | 3,038,893 | | Current assets | 2,998,152 | 4,972,608 | | **Total assets** | **6,545,318** | **8,011,501** | | Current liabilities | 2,682,059 | 3,144,534 | | Non-current liabilities | 66,152 | 408,054 | | **Total liabilities** | **2,748,211** | **3,552,588** | | **Equity attributable to company shareholders** | **3,824,927** | **4,406,955** | | **Total equity** | **3,797,107** | **4,458,913** | [Condensed Consolidated Statement of Cash Flows](index=18&type=section&id=%E7%B0%A1%E6%98%8E%E7%B6%9C%E5%90%88%E7%8F%BE%E9%87%91%E6%B5%81%E9%87%8F%E8%A1%A8) The Group generated net cash inflow of HKD 51.76 million from operating activities and HKD 969 million from investing activities, while financing activities resulted in a net outflow of HKD 978 million, with period-end cash and cash equivalents at HKD 1.112 billion Condensed Consolidated Statement of Cash Flows Summary (HKD thousands) | Indicator | H1 2023 (Unaudited) | H1 2022 (Unaudited) | | :--- | :--- | :--- | | Net cash generated from operating activities | 51,761 | (31,337) | | Net cash generated from investing activities | 969,321 | (122,336) | | Net cash used in financing activities | (977,723) | 104,804 | | Net increase (decrease) in cash and cash equivalents | 43,359 | (48,869) | | Cash and cash equivalents at beginning of period | 1,088,116 | 758,317 | | **Cash and cash equivalents at end of period** | **1,111,688** | **686,864** | [Notes to the Condensed Consolidated Financial Statements](index=20&type=section&id=Notes%20to%20the%20Condensed%20Consolidated%20Financial%20Statements) These notes detail the basis of preparation, significant accounting policies, and specific financial information for various segments, income, taxation, dividends, discontinued operations, earnings per share, and receivables/payables [Basis of Preparation and Significant Accounting Policies](index=20&type=section&id=%E7%B7%A8%E8%A3%BD%E5%9F%BA%E6%BA%96%E5%8F%8A%E4%B8%BB%E8%A6%81%E6%9C%83%E8%A8%88%E6%94%BF%E7%AD%96) This condensed consolidated financial report is prepared under HKAS 34, with accounting policies consistent with the prior year's annual report, and includes the first application of HKAS 12 amendments on deferred tax, which had no impact on EPS - The financial report is prepared in accordance with **HKAS 34 "Interim Financial Reporting"**[11](index=11&type=chunk) - The Group first applied amendments to **HKAS 12 "Deferred Tax related to Assets and Liabilities arising from a Single Transaction"** and retrospectively restated comparative figures[83](index=83&type=chunk)[84](index=84&type=chunk)[90](index=90&type=chunk) Impact of Accounting Policy Changes on Statement of Financial Position as of December 31, 2022 (HKD thousands) | Item | Before adjustment | Adjustment | After adjustment (restated) | | :--- | :--- | :--- | :--- | | Deferred tax assets | 6,812 | 515 | 7,327 | | Deferred tax liabilities | (23,615) | – | (23,615) | | Equity attributable to company shareholders | 4,406,572 | 383 | 4,406,955 | [Turnover and Segment Information](index=25&type=section&id=%E7%87%9F%E6%A5%AD%E9%A1%8D%E5%8F%8A%E5%88%86%E9%A1%9E%E8%B3%87%E6%96%99) The Group's turnover primarily originates from mainland China (96.8%), with coatings and inks as major revenue sources, and coatings and lubricants businesses achieving operating profits while ink business recorded a loss Turnover by Geographical Region (HKD thousands) | Region | H1 2023 | H1 2022 | | :--- | :--- | :--- | | China | 1,516,604 | 1,711,603 | | Hong Kong | 33,894 | 30,899 | | Overseas | 16,376 | 28,372 | | **Total** | **1,566,874** | **1,770,874** | Segment Results by Business Segment (H1 2023, HKD thousands) | Business Segment | External Sales | Segment Results (Operating Profit/Loss) | | :--- | :--- | :--- | | Coatings | 775,063 | 15,596 | | Ink | 553,880 | (4,012) | | Lubricants | 193,761 | 5,726 | | Property | 5,419 | (1,391) | | Others | 38,751 | (14,012) | | **Total Reportable Segments** | **1,566,874** | **1,895** | [Other Income and Other Gains and Losses](index=29&type=section&id=%E5%85%B6%E4%BB%96%E6%94%B6%E5%85%A5%E5%8F%8A%E5%85%B6%E4%BB%96%E6%94%B6%E7%9B%8A%E5%8F%8A%E虧%E6%90%8D) The Group recorded HKD 48.2 million in other income, mainly from interest, but also HKD 17.65 million in other losses, primarily due to a HKD 22.94 million net exchange loss from foreign currency balances and transactions - Other income primarily included interest income of **HKD 29.91 million**, a significant increase from **HKD 3.08 million** in the prior period[146](index=146&type=chunk) - Other losses primarily stemmed from a net exchange loss of **HKD 22.94 million**, compared to a net exchange gain of **HKD 4.39 million** in the prior period[152](index=152&type=chunk) [Taxation](index=30&type=section&id=%E7%A8%85%E9%A0%85) The Group's H1 2023 tax expense was HKD 1.18 million, significantly lower than the prior period, with Chinese subsidiaries benefiting from preferential tax rates and no profits tax provision in Hong Kong Composition of Tax Expense (HKD thousands) | Item | H1 2023 | H1 2022 | | :--- | :--- | :--- | | Current tax | 4,565 | 9,371 | | Over-provision in prior years | (4,999) | – | | Deferred tax expense | 1,611 | 1,981 | | **Total tax expense** | **1,177** | **11,352** | - Certain of the Group's subsidiaries operating in China enjoy a **preferential income tax rate of 15%**[156](index=156&type=chunk) [Dividends](index=32&type=section&id=%E8%82%A1%E6%81%AF) The Board declared an interim dividend of HKD 0.02 per share for H1 2023, totaling HKD 11.37 million, a significant decrease from the prior period, in addition to HKD 455 million in final and special dividends paid for year-end 2022 Dividend Distribution | Dividend Type | Amount Per Share | Total Amount (Approx.) | | :--- | :--- | :--- | | 2023 Interim Dividend | 2 HK cents | HKD 11.37 million | | 2022 Interim Dividend | 10 HK cents | HKD 56.85 million | | 2022 Final and Special Dividends (Paid during the period) | 80 HK cents | HKD 455 million | [Discontinued Operations](index=32&type=section&id=%E5%B7%B2%E7%B5%82%E6%AD%A2%E7%B6%93%E7%87%9F%E6%A5%AD%E5%8B%99) The Group completed the disposal of a 51% effective interest in the solvent business at year-end 2022, leading to its presentation as discontinued operations, which significantly impacted the current period's overall net profit compared to H1 2022's HKD 233 million contribution - Completed the disposal of a **51% effective interest** in Qianxin Chemical Development Group, engaged in manufacturing and trading monomer solvents and related products, in 2022[159](index=159&type=chunk) - In H1 2022, the discontinued solvent business recorded turnover of **HKD 5.946 billion** and net profit of **HKD 233 million**[161](index=161&type=chunk) [Earnings Per Share](index=34&type=section&id=%E6%AF%8F%E8%82%A1%E7%9B%88%E5%88%A9) Basic and diluted earnings per share from continuing operations were HKD 0.029, calculated based on HKD 16.26 million net profit and 568 million weighted average shares, a turnaround from a HKD 0.109 loss per share in the prior period Earnings Per Share Calculation | Item | H1 2023 | H1 2022 | | :--- | :--- | :--- | | Profit (Loss) used for calculation (HKD thousands) | 16,260 | (62,047) | | Weighted average number of shares (thousands) | 568,484 | 568,484 | | Basic and diluted earnings (loss) per share | 2.9 HK cents | (10.9) HK cents | [Trade and Other Receivables and Prepayments](index=35&type=section&id=%E8%B2%BF%E6%98%93%E6%87%89%E6%94%B6%E6%AC%BE%E9%A0%85%E3%80%81%E5%85%B6%E4%BB%96%E6%87%89%E6%94%B6%E8%B3%87%E6%AC%BE%E5%8F%8A%E9%A0%90%E4%BB%98%E6%AC%BE%E9%A0%85) At period-end, net trade receivables were HKD 1.257 billion, largely stable, with approximately 75% within three months, while other receivables and prepayments significantly decreased due to the recovery of HKD 2.04 billion from the Qianxin Chemical disposal Trade Receivables Ageing Analysis (HKD thousands) | Ageing | June 30, 2023 | December 31, 2022 | | :--- | :--- | :--- | | 0 to 3 months | 706,879 | 580,917 | | 4 to 6 months | 175,068 | 216,299 | | Over 6 months | 59,798 | 76,414 | | **Total** | **941,745** | **873,630** | - Other receivables and prepayments significantly decreased from **HKD 2.214 billion** to **HKD 134 million**, primarily due to the recovery of **HKD 2.04 billion** in receivables from the disposal of Qianxin Chemical Development Group during the period[3](index=3&type=chunk)[169](index=169&type=chunk) [Trade and Other Payables and Accruals](index=37&type=section&id=%E6%87%89%E4%BB%98%E8%B3%87%E6%AC%BE%E5%8F%8A%E6%87%89%E8%A8%88%E8%B2%BB%E7%94%A8) At period-end, total trade and other payables and accruals were HKD 935 million, a decrease from year-end 2022, with trade payables at HKD 676 million and approximately 77% due within three months Trade Payables Ageing Analysis (HKD thousands) | Ageing | June 30, 2023 | December 31, 2022 | | :--- | :--- | :--- | | 0 to 3 months | 522,257 | 538,853 | | 4 to 6 months | 148,981 | 147,991 | | Over 6 months | 5,186 | 2,285 | | **Total** | **676,424** | **689,129** |

Financial Performance - Total revenue for the year was HK$14,025,180, a decrease from HK$17,805,397 in the previous year[14]. - Profit for the year was HK$1,295,910, compared to HK$574,551 in the previous year[14]. - Earnings per share (diluted) increased to HK$214.2 from HK$72.8 in the previous year[14]. - The profit attributable to owners of the Company for 2022 was HK$1,217,830, compared to HK$184,805 in 2021[19]. - Revenue for the same period was HK$3,358,509,000, reflecting a 16% growth[172]. - The Group's net profit attributable to shareholders was HK$1.22 billion, showing a significant increase compared to the previous year[188]. - The Group's revenue for the year under review was HK$3.36 billion, a decrease of 16% compared to the previous year[188]. Dividends and Shareholder Returns - The company declared a dividend per share of HK$90.0, up from HK$40.0 in the previous year[14]. - The Company declared a final dividend of HK$90.0 cents per share, including a special dividend of HK$75.0 cents[21]. - The company declared an interim dividend of HKD 0.10 per share and proposed a final dividend of HKD 0.05 per share along with a special dividend of HKD 0.75 per share, totaling approximately HKD 28,424,000 and HKD 426,363,000 respectively[115]. - The company declared a full-year dividend of HK$0.90, which is a 125% increase compared to the previous year[162]. Business Operations and Strategy - The lubricants business is focused on re-building and repositioning the Hercules brand to strengthen its presence in the automotive aftermarket[1]. - The company has increased investment in R&D for industrial specialty lubricant technologies to achieve breakthroughs in specialty greases and metal processing oils for medium to high-end markets[1]. - The company sold a controlling interest in its solvents business to Taima, retaining a 24% stake for further investment[5]. - The Group aims to extend its service offerings to consumers through strategic investments and market expansion initiatives[38]. - The company aims to enhance its market presence and operational efficiency through strategic adjustments in its business segments[60]. - Future strategies include enhancing shareholder returns and developing next-generation products[168]. Employee and Management - The Group emphasizes the management and development of human capital, providing training programs and educational subsidies to enhance employee skills and performance[40]. - The Group's management team has been developed internally, with a focus on promoting talented employees and attracting external talents[40]. - Management emphasized the importance of employee health and recovery from COVID-19 during the challenging operational environment[187]. Market and Economic Conditions - The Group's operations are primarily concentrated in mainland China, making it susceptible to economic and political developments in the region[80]. - The company faced significant challenges during the year, including geopolitical tensions and supply chain disruptions due to the Russia-Ukraine conflict[187]. - The overall economic environment is expected to improve in the new year, with anticipated easing of interest rate hikes in Western countries[189]. - The Chinese government's measures to stabilize the economy and promote growth are expected to create favorable conditions for the Group's operations[189]. Revenue by Segment - Coatings revenue for 2022 was HK$1,639,448,000, down from HK$2,036,898,000 in 2021, representing a decline of approximately 19.5%[59]. - Inks revenue for 2022 was HK$1,340,198,000, compared to HK$1,498,448,000 in 2021, reflecting a decrease of about 10.6%[59]. - Lubricants revenue decreased to HK$299,026,000 in 2022 from HK$333,214,000 in 2021, a decline of approximately 10.3%[59]. - Properties segment revenue for 2022 was HK$10,685,000, slightly up from HK$10,163,000 in 2021[59]. - Other segments generated revenue of HK$74,015,000 in 2022, down from HK$139,329,000 in 2021, indicating a significant decline of about 46.8%[59]. Risk Management and Compliance - The Group's financial instruments are exposed to market risks, including foreign exchange risk, interest rate risk, and liquidity risk, with policies in place to mitigate these risks[80]. - The Group has implemented effective internal controls and risk management procedures to ensure compliance with relevant laws and regulations[83]. Awards and Recognition - The Company received multiple awards in 2022, including recognition as the top brand in Hong Kong and Mainland China in various categories[36].

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。 截至二零二二年十二月三十一日止年度 全年業績公告 概要 股東應佔純利創新高達12.2億港元 派發期末股息及特別股息共每股80港仙 • 股東應佔純利達12.2億港元，創歷史新高，主要來自向太盟投資集團出售 集團溶劑業務51%實際權益； • 受疫情及經濟大環境影響，集團銷售額（不計溶劑業務）同比下降16%至港 幣33.6億元； ...

Financial Performance - Profit attributable to owners of the Company for the six months ended 30 June 2022 was HK$108,322,000, representing a 64% decrease year-on-year [6]. - Revenue for the same period was HK$7,716,739,000, reflecting a 9% decline compared to the previous year [6]. - Earnings per share decreased to HK 19.1 cents, down 65% from the prior year [6]. - The Group's sales volume for the first half of 2022 was 718,000 metric tons, a decrease of 6% year-on-year [9]. - The Group recorded a notable non-recurring fair value increase of over HK$88 million in the previous year, which was not repeated in the current period [9]. - Profit attributable to owners of the Company amounted to HK$108 million, a decrease of 64% compared to the same period last year, primarily due to non-recurring fair value increases recorded in the previous year [22]. - The overall sales volume and revenue of the Group decreased by 6% and 9% respectively compared to the same period last year [22]. - The coatings business reported sales revenue of HK$880 million, a year-on-year decline of 10% due to pandemic impacts and unstable supply from the Shanghai plant [24]. - The inks business achieved sales revenue of approximately HK$680 million, representing a slight decrease of 1% year-on-year, with operating profit improving to approximately HK$17.8 million [25]. - The lubricants business reported sales of HK$170 million, with an operating loss of HK$2.9 million due to decreased demand and rising raw material costs [28]. Dividends and Share Capital - The interim dividend declared was HK 10 cents per share [6]. - The Group declared an interim dividend of HK10 cents per share, a slight decline of HK2 cents compared to the previous year's interim dividend [1]. - An interim dividend of HK10 cents per share was declared for the six months ended June 30, 2022, compared to HK12 cents per share for the same period in 2021 [96]. - The interim dividend declared for the six months ended June 30, 2022, was lower than the interim dividend of HK12 cents per share and a special dividend of HK10 cents per share declared for the same period in 2021 [186]. - As of June 30, 2022, Mr. Ip Chi Shing holds 161,304,532 shares personally, representing approximately 34.65% of the issued share capital of the Company [57]. - The total number of shares held by directors and chief executives amounts to 197,000,532, which is approximately 34.65% of the issued share capital [57]. - The issued share capital of the Company as of June 30, 2022, is 568,484,096 shares [64]. Financial Position and Gearing - The gearing ratio as of 30 June 2022 was 46.6%, an improvement from 51.7% as of the end of the previous year [9]. - The gearing ratio slightly decreased to 46.6%, down from 51.7% in June 2021, indicating improved financial stability [19]. - The Group's gearing ratio decreased to 46.6%, down 5.1 percentage points from the previous year, indicating improved financial stability [45]. - The Group recorded a net cash outflow of HK$31.3 million during the period, a significant improvement compared to a net cash outflow of HK$394.2 million in the same period last year [45]. - As of June 30, 2022, the Group's gross bank borrowings amounted to HK$2,351,734,000, an increase from HK$2,149,875,000 as of December 31, 2021 [47]. - The net bank borrowings after deducting short-term deposits and cash were HK$1,664,870,000, compared to HK$1,391,558,000 at the end of 2021 [47]. - The Group's short-term loans repayable within one year totaled HK$1,725,734,000, up from HK$1,247,042,000 in the previous year [47]. Challenges and Market Conditions - The Group faced significant challenges due to geopolitical conflicts and COVID-19 outbreaks, impacting overall performance [9]. - Cost reduction efforts were made by management, but could not fully offset the decline in sales revenue [9]. - The Group is cautiously optimistic about the domestic economic recovery as pandemic controls ease, but remains wary of international uncertainties, including inflation and geopolitical tensions [15]. - The management team remains cautiously optimistic about the business outlook for the second half of 2022, despite challenges in demand and raw material prices [24]. Strategic Initiatives and Future Plans - The Group continues to focus on "reducing costs and expenses" to enhance competitiveness and maximize shareholder value [15]. - The Group plans to sell a 51% effective interest in its solvents business to PAG to enhance value creation and financial resources for future development [1]. - The new solvents plant in Zhuhai has completed payment, and the Group expects its financial position to improve in the second half of 2022 [22]. - The Group plans to build a new acetic acid plant in Jingmen, Hubei Province, with an annual production capacity of 600,000 metric tons [24]. - The logistics costs are anticipated to drop in the second half of the year, which is expected to help increase profits [24]. Governance and Compliance - The Company has complied with the Corporate Governance Code as set out in Appendix 14 to the Listing Rules for the six months ended 30 June 2022 [100]. - The Audit Committee reviewed the unaudited interim financial statements for the six months ended 30 June 2022, prepared in accordance with Hong Kong Accounting Standard 34 [101]. - The Company has adopted the Model Code for Securities Transactions by Directors, confirming all Directors complied with the required standards during the reporting period [103]. - The Group is committed to sustainable development, aiming to become a respected century-old corporation, focusing on five key aspects: environment, communities, employees, supply chains, and customers [106]. - The Company has issued its Environmental, Social and Governance (ESG) Report annually since 2016, with the 2021 report available on its official website [107]. Segment Performance - Segment revenue breakdown includes: Solvents at HK$6,014,496,000, Coatings at HK$880,960,000, Inks at HK$675,687,000, Lubricants at HK$172,665,000, and Properties at HK$5,374,000 [150]. - Segment results showed a profit of HK$295,808,000 for Solvents, a loss of HK$26,549,000 for Coatings, a profit of HK$17,771,000 for Inks, a loss of HK$2,897,000 for Lubricants, and a profit of HK$2,186,000 for Properties, totaling HK$286,319,000 [150]. - The Group's segment results showed a total of HK$512,758, reflecting a decrease from the previous year's results [159]. Cash Flow and Investments - For the six months ended June 30, 2022, the net cash used in operating activities was HK$31,337, compared to HK$394,198 for the same period in 2021, indicating a significant improvement [137]. - The net cash used in investing activities was HK$122,336, a decrease from HK$327,295 in the prior year, showing a reduction in cash outflow for investments [137]. - The company raised borrowings of HK$1,130,245 during the period, compared to HK$1,346,522 in the same period last year, indicating a decrease in new debt issuance [137]. - The cash received from the disposal of property, plant, and equipment was HK$15,412, significantly higher than HK$1,035 in the previous year, showing effective asset management [137]. Taxation and Regulatory Matters - Current tax for the PRC amounted to HK$75,002,000, with a total current tax expense of HK$84,291,000 for the period [182]. - The Group's subsidiaries in the PRC are entitled to a reduced income tax rate of 15% due to their qualification as High and New Technology Enterprises [184]. - The withholding tax on interest income from loans to PRC subsidiaries is recognized at a rate of 7% [184].

Financial Performance - Profit attributable to owners of the Company reached HK$406,280,000, representing a 34% increase[7] - Revenue for the year was HK$17,805,397,000, reflecting a 65% growth[7] - Earnings per share increased by 35% to HK$0.728[8] - The total dividend for the year was HK$0.40, an 82% increase compared to the previous year[8] - Sales volume was 1,559,000 metric tons, marking a 5% increase[8] - The Group's sales revenue reached HK$17.8 billion, representing a substantial growth of 65% year-on-year[40] - Profit attributable to owners was HK$406 million, reflecting a growth of 34% year-on-year[40] - The Group's total sales revenue reached HK$17.8 billion, an increase of 65% year-on-year, with a sales volume of 1.56 million metric tons, up by 5%[51] - The solvents business achieved a record operating profit of HK$830 million, representing a growth of 76% year-on-year, benefiting from rising raw material prices and strong export growth[51] - Overall sales in the inks segment grew by 20% year-on-year to almost HK$1.5 billion, while operating profits fell by 22% to HK$47 million due to mismatched product price adjustments and raw material cost increases[59] - The lubricants business achieved a 51% increase in sales revenue to HK$330 million, with a gross profit margin of 24.4% and operating profit of HK$20 million, up 160% from the previous year[61] - The total segment results for the year were HK$809.3 million, an increase from HK$579.5 million in 2020, indicating overall improved profitability[169] Dividends and Shareholder Returns - The company celebrated its 50th anniversary with a special dividend of HK$0.10 per share[8] - The Board recommended a final dividend of HK$0.18 per share, totaling HK$0.40 per share for the year, an increase of 82% from HK$0.22 per share in 2020 (36% increase excluding special dividend)[42] - The company offered a special dividend of HK10.0 cents per share in 2021, with a scrip dividend alternative provided for the interim and special dividends[131] Gearing and Financial Ratios - The gearing ratio improved to 36.6%, a decrease of 5.5 percentage points[8] - The Group maintained a satisfactory gearing ratio of 36.6%, which increased by 5.5 percentage points from the previous year[40] - As of December 31, 2021, the Group's gearing ratio was 36.6%, an increase of 5.5 percentage points from 31.1% in 2020, but a decrease of 15.1 percentage points from 51.7% at interim 2021[192] - The net bank borrowings to shareholders' funds ratio was 37% in 2021, an increase from 31% in 2020[132] Market Conditions and Challenges - The global supply chain was disrupted due to the pandemic, affecting raw material prices which surged at the beginning of the year and remained high throughout[40] - The Group's core businesses faced varying performance due to different market conditions and competition, leading to unprecedented disparities[40] - The Group's coatings-related business was impacted by the debt defaults of medium and large property developers in Mainland China[40] - The outlook for the global economy is uncertain due to geopolitical tensions, with raw material prices expected to remain high throughout 2022[42] - The coatings business has been negatively impacted by the Mainland's real estate crisis and is focusing on strong brands and products to enhance long-term profitability[64] Strategic Initiatives and Future Plans - The company is focused on enhancing shareholder returns and developing next-generation products[4] - Future strategies include market expansion and continued investment in research and development[4] - The Group plans to spin off a mature subsidiary for separate listing to maximize shareholder value and explore business diversification[46] - The management team plans to double the sales of water-based products in 2022, focusing on R&D and recruitment of experts in the inks business[61] - The coatings business will focus on expanding the retail network for water-based products and enhancing industrial coatings and resin business[59] - The Group is expanding its acetate solvents capacity to maintain a competitive edge and is developing new related products to enhance its product portfolio[99] Operational Efficiency and Management - The marketing committee has improved operational efficiency, particularly in export coordination, leading to significant benefits for the business[56] - The management team is optimizing operations to reduce supply chain and sales expenses, aiming to improve operating profit[59] - The Tongxiang plant completed the automation and digitization of new production lines, which will support sales growth and serve as a model for other plants[61] Environmental and Sustainability Efforts - The inks division promotes green technology and has achieved industry-leading levels in environmental protection and product quality assurance[113] - The company reduced volatile organic compounds (VOC) emissions during production and developed water-based inks, earning the "Corporate Environmental Leadership Awards"[116] - The Group signed a four-year sustainability-linked syndicated loan facility agreement of HK$600,000,000 with six banks in 2021, achieving certain pre-determined environmental, social, and governance performance targets[197]

Financial Performance - Revenue for the six-month period ended June 30, 2021, reached HK$8,453,208,000, representing a year-on-year increase of approximately 89%[6] - Profit attributable to owners of the Company was HK$299,824,000, a significant increase of 410% compared to the same period last year[6] - Sales volume increased to 767,000 metric tons, reflecting a growth of 16% year-on-year[6] - Earnings per share rose to HK$0.539, marking an increase of 418% compared to the previous year[7] - The Group recorded a sales revenue of HK$8.45 billion, increasing by nearly 90% year-on-year, with a sales volume of 767,000 metric tons, up 16% from the previous year[16] - Profit attributable to owners surged by 410% to approximately HK$300 million, driven by a record operating profit of HK$436 million in the solvents business, which increased by 190% year-on-year[24] - Gross profit for the same period was HK$1,099,345,000, up 68.8% from HK$650,854,000 year-on-year[117] - Profit before taxation increased significantly to HK$477,036,000, compared to HK$132,888,000 in the previous year, marking a 258.5% rise[117] - Total comprehensive income for the period was HK$438,439,000, a notable increase from HK$1,104,000 in the previous year[118] Dividends - The Company declared an interim dividend of HK$0.12 per share, doubling the previous year's dividend of HK$0.06[14] - A special dividend of HK$0.10 per share was also announced to celebrate the Company's 50th anniversary[14] - The total dividend declared is HK$22 cents per share, including an interim dividend of HK$0.12 and a special dividend of HK$0.10, doubling last year's interim dividend[16] - The company will provide a scrip dividend alternative for shareholders to receive dividends in the form of shares instead of cash[84] - A circular with details of the scrip dividend scheme will be sent to eligible shareholders on or around September 14, 2021[84] Business Segments - The solvents business demonstrated strong performance, fully offsetting negative impacts from other segments such as coatings[13] - The solvents business achieved a sales revenue of HK$6.63 billion, up 106% year-on-year, with sales volume increasing by approximately 70,000 metric tons to 610,000 metric tons[27] - Coatings business sales revenue reached HK$980 million, a growth of 56% compared to the same period last year, with a gross profit margin of 23.5%[32] - Lubricants sales revenue grew 132% year-on-year to HK$190 million, with operating profit turning around to HK$11.3 million from a loss of HK$9.3 million in the previous year[34][36] - The segment revenue breakdown includes solvents at HK$6,630,281,000, coatings at HK$978,604,000, inks at HK$682,829,000, lubricants at HK$188,502,000, and properties at HK$4,914,000[170] Gearing and Borrowings - The gearing ratio stood at 51.7%, an increase of 22.5 percentage points from the previous year[6] - The gearing ratio rose to 51.7%, an increase of 22.5 percentage points year-on-year, primarily due to an investment of approximately HK$140 million in a new plant in Zhuhai[16] - Gross bank borrowings amounted to HK$2,251,721,000, an increase from HK$1,624,487,000 as of December 31, 2020[48] - Net bank borrowings reached HK$1,887,102,000, compared to HK$1,059,185,000 at the end of 2020[48] - The Group entered into a four-year sustainability-linked loan agreement for HK$600,000,000 with six banks, allowing for interest rate discounts upon meeting ESG performance targets[48] Cash Flow and Assets - The Group recorded a net cash outflow of HK$394,198,000 for the period, contrasting with a net cash inflow of HK$251,760,000 in the same period last year[46] - Cash and bank balances decreased to HK$357,175 from HK$530,408 as of December 31, 2020[121] - The company reported a net cash used in operating activities of HK$394,198,000 for the six months ended June 30, 2021, compared to a net cash generated of HK$251,760,000 in the same period of 2020[136] - The company experienced a net cash outflow of HK$327,295,000 from financing activities during the six months ended June 30, 2021[136] Management and Governance - The Company has complied with the Corporate Governance Code except for the absence of a nomination committee during the six months ended 30 June 2021[97] - The Audit Committee reviewed the Group's unaudited interim financial statements for the six months ended 30 June 2021 on 16 August 2021[100] - The Group aims for sustainable development with a vision of becoming a respected century-old corporation[105] - The Group emphasizes the management and development of human capital, providing training programs and educational subsidies to enhance employee skills[52] Market Performance - Revenue from the PRC market was HK$6,178,810,000, up from HK$3,611,626,000 in 2020, indicating a growth of about 71.5%[158] - Revenue from Hong Kong and overseas markets totaled HK$2,238,080,000, compared to HK$822,213,000 in 2020, reflecting an increase of approximately 172.0%[158] - The Group's performance in the first half of 2021 demonstrates strong recovery and growth compared to the previous year, driven by increased demand in key markets[158] Employee Information - The Group employs a total of 3,393 employees, with 83 from Hong Kong, 3,303 from Mainland China, and 7 from Vietnam as of June 30, 2021[51] - The Group regularly reviews its remuneration and reward policy to ensure competitive compensation and benefits for employees[52] Shareholder Information - Mr. Ip Chi Shing holds a total of 188,624,532 shares, representing 34.06% of the company's share capital as of June 30, 2021[59] - The company has no other interests or short positions in the securities of any associated corporations as of June 30, 2021[69] - The company repurchased a total of 2,780,000 shares at an aggregate consideration of HK$10,309,040, which were subsequently cancelled[88] Future Outlook - The management is cautiously optimistic about the second half of 2021, expecting a slight drop in raw material prices and a more balanced performance across business segments[17] - The management anticipates that the profitability of the solvents business will be affected in the second half of 2021 due to a drop in selling prices, while coatings and inks businesses are expected to benefit[40][41]

Financial Performance - The company's revenue for the year was HK$10,776,026,000, representing a 3% increase compared to the previous year[9]. - Profit attributable to owners of the company was HK$302,575,000, reflecting an 11% increase year-on-year[8]. - Earnings per share for the year stood at HK$0.538, which is an 11% increase from the prior year[9]. - The sales volume reached 1,490,000 metric tons, marking an 8% increase compared to the previous year[9]. - The gearing ratio was reported at 31.1%, an increase of 1.9 percentage points from the previous year[9]. - The company declared a dividend of HK$0.22 per share, which is a 10% increase from the previous year[9]. - Operating profit was HK$580 million, showing a marginal increase of 0.8% compared to the previous year[44]. - Profit attributable to owners of the Company increased by 11% to HK$303 million, marking the second-highest audited profit in the Group's history[44]. - The Group's net profit, excluding one-off items, surged by more than 50%[44]. - The Group's gearing ratio improved to 31.1%, a decrease of 1.9 percentage points year-on-year[46]. - Revenue for 2020 was HK$10,776,026, an increase of 2.9% from HK$10,464,834 in 2019[136]. - Profit for the year attributable to owners of the Company was HK$302,575, representing a 10.9% increase from HK$272,907 in 2019[132]. - Basic and diluted earnings per share increased to 53.8 HK cents, up from 48.4 HK cents in 2019[134]. - The total assets increased to HK$8,439,363, a rise of 8.8% from HK$7,752,659 in 2019[136]. - The equity attributable to owners of the Company rose to HK$3,405,924, an increase of 15.7% from HK$2,941,479 in 2019[135]. Business Strategy and Development - The company aims to develop next-generation products and enhance shareholder returns as part of its corporate vision[3]. - The company is focused on building value-added brands and expanding its market presence[3]. - The management is committed to continuous improvement and innovation in its core businesses[3]. - A new Strategic Investment Department was established to focus on opportunities in environmental protection, new energy, and new materials[28]. - The Group's strategy includes "global sourcing" of raw materials and "global selling" of products to enhance operational efficiency[52]. - The Group aims to inject new projects into the solvents business to drive profit growth in the upcoming year[52]. - The Group aims to advance the separate listing of the inks business as part of its key objectives for the year[63]. Market Performance and Segments - The solvents segment achieved significant performance, reaching new heights during the year[29]. - The solvents business achieved sales volume of 1.22 million metric tons and sales revenue of HK$7.87 billion, representing year-on-year growth of 8.5% and 6.3% respectively[49]. - The coatings business recorded sales revenue of HK$1.44 billion in 2020, a decline of 10.4% compared to the previous year due to pandemic-related impacts[52]. - The lubricants business achieved an 8.0% increase in sales revenue to HK$220 million, with operating profit growing by 17.9% to HK$7.59 million[58]. - The inks segment reported revenue of HK$60,767,000, down from HK$78,616,000 in 2019, representing a decrease of 22.7%[152]. - The lubricants segment saw revenue increase to HK$7,593,000 from HK$6,441,000, marking a growth of 17.8%[152]. - The properties segment revenue dropped significantly to HK$981,000 from HK$140,272,000 in 2019, a decline of 99.3%[152]. Corporate Social Responsibility - The company emphasizes corporate social responsibility and cooperation with all stakeholders[3]. - The Group donated over 230 tonnes of antiseptic alcohol to various local governments and organizations in Mainland China during the COVID-19 pandemic[178]. - In Hong Kong, the Group's sanitizing brand EUCA has donated over 15,000 bottles of sanitizers to safeguard public health since its launch in 2020[178]. - The Group's community initiatives include renovating homes for families in need, showcasing its commitment to social responsibility[181]. Management and Governance - Mr. Ip Chi Shing, aged 73, is the Chairman and Co-founder of the Group, focusing on long-term development strategy and human resources planning[190]. - Mr. Yip Tsz Hin, aged 62, has over 40 years of experience in manufacturing and trading petrochemical products, serving as the Chief Executive Officer of the Group[190]. - Mr. Ho Sai Hou, aged 54, is the Chief Financial Officer with over 20 years of experience in accounting, finance, and taxation, holding a Bachelor's degree in Accounting from The University of Hong Kong[195]. - Mr. Wong Yuk, aged 57, has over 30 years of experience in the petrochemical industry, previously serving as Managing Director of Methanex's China Strategy and Investment[196]. - Mr. Ho Sai Hou completed his EMBA in 2007 from The China Europe International Business School, enhancing his financial expertise[195]. - Mr. Ip Kwan, aged 38, joined the Group in 2007 and has held various leadership roles, contributing to corporate development[190]. - Mr. Wong Yuk transitioned to an Independent Non-executive Director in early 2021, reflecting a shift in governance structure[196]. Employee Development and Culture - The Group emphasizes the management and development of human capital, providing educational subsidy programs for employees to enhance their skills and performance[186]. - The Group offers a challenging work environment with various incentive programs to enhance employee competitiveness and drive business development[186]. - The Group regularly reviews its remuneration and reward policies to ensure competitive compensation and benefits for its employees[186]. - The Group's management team has risen through the ranks, ensuring leadership in the development of the Group[186].

Financial Performance - For the six-month period ended June 30, 2020, the Group recorded sales revenue of HK$4.47 billion, a decrease of 9.6% compared to the same period last year[9]. - Profit attributable to owners of the Company for the period was HK$58.8 million, representing a decline of 33.5% year-on-year[9]. - Overall sales volume reached 662,000 metric tons, a growth of 5.4% compared to the same period last year, while sales revenue fell 9.6% year-on-year to approximately HK$4.47 billion due to a drop in raw material prices and product selling prices of solvents[20]. - The overall gross profit margin increased by 0.8 percentage points to 14.6% year-on-year[20]. - Coatings business sales revenue dropped to approximately HK$629 million, a decline of 22.7% year-on-year due to pandemic impacts on construction projects and retail operations[27]. - Inks business sales revenue was approximately HK$525 million, representing a year-on-year decline of 12.0%, with operating profit decreasing by 61.3% to approximately HK$17 million[28]. - Lubricants business sales revenue was approximately HK$81.4 million, down 25.0% year-on-year, with an operating loss of approximately HK$9.3 million compared to an operating profit of HK$6.8 million in the previous year[30]. - The profit for the period attributable to owners of the Company was HK$58,803, down from HK$88,388, representing a decrease of 33.5%[95]. - Total comprehensive income for the period was HK$1,104, significantly lower than HK$108,397 in the prior year[95]. Dividends and Shareholder Returns - An interim dividend of HK$0.06 per share was declared, down from HK$0.07 per share in the same period last year[10]. - The interim dividend declared for the six months ended June 30, 2020, is HK6 cents per share, down from HK7 cents per share for the same period in 2019[78]. - The interim dividend will be payable on or about October 8, 2020, to shareholders on the register as of September 18, 2020[79]. Operational Developments - The Group donated over 230 metric tons of antiseptic alcohol valued at approximately RMB1.8 million during the COVID-19 pandemic[9]. - The corporate restructuring for the spin-off and separate listing of the Group's inks business incurred one-off expenditures totaling HK$21 million[9]. - The new plant in Southern China is progressing well, with land purchase completed and expected to be operational by the end of next year[25]. - The Group is focusing on expanding its distribution channels for lubricants and leveraging price advantages to capture market share[30]. - The Group has increased its stake in Damai to 61%, becoming the largest controlling shareholder, to support the expansion of car maintenance services across China[30]. Financial Position and Liquidity - The Group's gearing ratio improved to 29.2%, down from 47.6% in the same period last year[10]. - The Group recorded a net cash inflow of HK$251,760,000 for the first half of 2020, compared to HK$94,385,000 in the same period of 2019, indicating a substantial increase in operating cash flow[42]. - The Group's total bank borrowings amounted to HK$1,695,525,000 as of June 30, 2020, down from HK$1,979,400,000 at the end of 2019[42]. - The Group's total assets less current liabilities amounted to HK$2,121,111, a decrease from HK$2,245,672 as of December 31, 2019, representing a decline of approximately 5.5%[99]. - The equity attributable to owners of the Company was HK$2,854,008, down from HK$2,941,479, indicating a decrease of about 3%[99]. Risk Management and Challenges - The company acknowledges the ongoing challenges posed by the COVID-19 pandemic and geopolitical tensions, impacting business prospects[13]. - The Group's overall credit status remained good, with bad debts under control[10]. - The management is committed to pursuing quality growth and adopting ambitious yet prudent strategies to enhance value for the Group and its shareholders[37]. - The Group implemented various remedial measures to mitigate the impact of COVID-19 on its operations[9]. Corporate Governance and Compliance - The audit committee comprises three independent non-executive directors and one non-executive director as of 30 June 2020[82]. - The company has complied with the Corporate Governance Code during the six months ended 30 June 2020[82]. - The Group aims for sustainable development with a vision of becoming a respected century-old corporation[82]. - The company has adopted the Model Code for Securities Transactions by Directors and all directors confirmed compliance during the six months ended 30 June 2020[82]. Segment Performance - The solvents segment saw a sales volume growth of 7.5% to approximately 540,000 metric tons, with operating profit increasing by 47.3% year-on-year to approximately HK$151 million[20]. - The solvents segment generated revenue of HK$3,187,851,000, while the coatings segment contributed HK$628,603,000[150]. - The inks segment reported revenue of HK$524,949,000, and lubricants generated HK$81,152,000[150]. Share Options and Ownership - The total number of share options outstanding as of January 1, 2020, is not specified in the provided documents[60]. - The New Share Option Scheme was approved on May 25, 2012, and will expire on May 24, 2022, replacing the Old Share Option Scheme[62]. - As of June 30, 2020, the total outstanding share options for eligible persons was 3,340,000 after accounting for 220,000 options that lapsed[64].