Financial Performance - Revenue increased by approximately 26.5% to approximately RMB957,058,000 for the six months ended 30 June 2022 from approximately RMB756,724,000 for the six months ended 30 June 2021[14] - Profit for the Review Period surged by 5.9 times to approximately RMB84,439,000 for the six months ended 30 June 2022 from approximately RMB12,289,000 for the six months ended 30 June 2021[17] - Profit attributable to the owners of the parent surged by approximately 4.8 times to approximately RMB82,494,000 for the six months ended 30 June 2022 from approximately RMB14,280,000 for the six months ended 30 June 2021[17] - Basic earnings per share increased by 5.5 times to approximately RMB0.13 for the six months ended 30 June 2022 from RMB0.02 for the six months ended 30 June 2021[17] - Gross profit margin improved by approximately 8.7 percentage points to approximately 22.4% for the six months ended 30 June 2022 from approximately 13.7% for the six months ended 30 June 2021[15] - Gross profit increased by approximately 106.1% to approximately RMB214,129,000, with a gross profit margin improvement of 8.7 percentage points to approximately 22.4%[50] - Other income and gains rose significantly to approximately RMB36,884,000, compared to RMB1,471,000 in the same period last year, primarily due to government grants and a net exchange gain[51] Sales and Market Performance - The increase in revenue was mainly attributable to the higher average selling price of linen yarn, particularly organic and REEL linen yarn, benefiting from market recovery and additional production capacity from the Group's factory in Ethiopia[22] - Domestic sales amounted to RMB312,827,000, contributing approximately 32.7% to total revenue, with a year-on-year increase of approximately 2.9%[25] - Overseas sales reached RMB644,231,000, accounting for approximately 67.3% of total revenue, with a significant year-on-year increase of approximately 42.3%[25] - Sales to European Union countries increased by 51.1%, while sales to non-European Union countries rose by 33.6% during the Review Period[25] Production and Capacity - A total of 11,189 tonnes of linen and hemp yarn were produced during the Review Period, with 371 tonnes specifically being hemp yarn[38] - The Group's production capacity is nearly fully utilized across its five production bases in China[30] - The Group's Ethiopian factory commenced production in 2021, with capacity ramping up during the Review Period, aimed at reducing costs and benefiting from the EU's Everything but Arms initiative[40] Financial Position - Total assets of the Group as at 30 June 2022 were approximately RMB3,045,925,000, up from RMB2,789,467,000 as at 31 December 2021[17] - As of 30 June 2022, the Group had net current assets of approximately RMB274,407,000, an increase from approximately RMB178,810,000 as of 31 December 2021[71] - The liquidity ratio of the Group as of 30 June 2022 was approximately 117.7%, up from approximately 113.3% as of 31 December 2021[71] - The Group's cash and cash equivalents as of 30 June 2022 were approximately RMB345,072,000, an increase from approximately RMB249,213,000 as of 31 December 2021[71] Expenses and Costs - Administrative expenses increased by approximately 60.9% to RMB60,087,000, driven by higher staff costs and additional research and development expenses[56] - Selling and distribution expenses amounted to approximately RMB51,257,000, accounting for 5.4% of total revenue, up from 4.3% in the previous year[51] - The Group's total staff costs for the Review Period amounted to approximately RMB97,418,000, compared to RMB66,445,000 for the six months ended 30 June 2021[92] Corporate Governance and Shareholder Information - The Board will continuously review the share award plan to incentivize employees contributing to the Group's success[98] - The Company has established an Audit Committee to review financial reporting processes and internal controls, comprising three independent non-executive Directors[171][172] - The Company has complied with the Corporate Governance Code, except for the separation of the roles of chairman and chief executive officer, which are held by the same individual[166][168] - The Company has not granted any share options under its share option scheme since its adoption on May 30, 2016[147] Future Outlook and Strategic Initiatives - The Company aims to become one of the largest linen yarn manufacturers globally by implementing a strategic global production layout and focusing on sustainable development and technical innovation[144] - The Group confirmed ongoing investment in the Ethiopia factory project and plans for a new warehouse in Heilongjiang, with no other material investment plans as of the report date[82] - The Group has partnered with COTTONCONNECT to develop the REEL Linen Code of Conduct, promoting sustainability in the linen industry[114] Risks and Challenges - The principal risks include demand for linen yarn, trade protectionism, and potential tariffs on products made in China[104] - The Group's operations are gradually returning to normal after two years of the COVID-19 pandemic, although trade tensions between the U.S. and China are expected to persist[112]

Production and Capacity - Kingdom produced 20,756 tonnes of linen yarn in 2021, up from 16,704 tonnes in 2020, maintaining over 40% of China's total pure linen yarn export for 19 consecutive years[15]. - The Kingdom Ethiopia factory commenced production in the second half of 2021, targeting an annual capacity of 5,000 tonnes of linen yarn[17]. - The Group's production capacity for linen and industrial hemp yarn is currently 22,000 tonnes, with high utilization rates across its four production bases in China[61]. - The new production facility in Ethiopia has boosted the Group's annual production capacity by 5,000 tonnes, with production commencing in the second half of 2021[65]. - The Group's annual production capacity in China is now 22,000 tonnes, with utilization rates close to 100% across all four production bases[72]. Financial Performance - The Group's revenue surged by approximately 70.2% year-on-year to RMB 1,799,690,000 in 2021, compared to RMB 1,057,426,000 in 2020[40]. - Gross profit increased by approximately 216.4% year-on-year to RMB 339,528,000, with an overall gross margin rising to 18.9% in 2021 from 10.1% in 2020[40]. - Profit for the year was RMB 90,500,000, a significant recovery from a net loss of RMB 12,678,000 in 2020[40]. - The Group's total revenue for the year reached RMB1,799,690,000, representing a year-on-year increase of 70.2%[51]. - Domestic sales in China increased by approximately 41.3% to RMB673,137,000, accounting for approximately 37.4% of the Group's total revenue[48]. - Revenue from overseas sales amounted to RMB1,126,553,000, representing approximately 62.6% of the Group's total revenue[43]. - The Group recorded a net profit of approximately RMB90,500,000 for the Year, compared to a net loss of approximately RMB12,678,000 for the year ended 31 December 2020[87]. Export and Market Position - The Group exported 14,138 tonnes of pure linen yarn in 2021, a 85.5% increase from 7,640 tonnes in 2020, maintaining over 40% of China's total pure linen yarn exports[39]. - The Group has been the largest pure linen yarn exporter in China for 19 consecutive years[39]. - The top five exporting countries accounted for 80.5% of the Group's total export revenue during the year, up from 76.2% in 2020[45]. - Sales to the EU and non-EU markets grew by 86.1% and 102.4%, respectively, indicating strong international demand[75]. Sustainability and Innovation - Kingdom is committed to achieving carbon neutrality and is collaborating with CottonConnect to develop the REEL Linen Code of Conduct for sustainable practices[19]. - The company aims to promote industrial hemp yarn as an environmentally friendly product alongside its linen offerings[19]. - The trend towards environment-friendliness and the use of natural fibers is growing, with many fashion brands committing to sustainable materials, which will benefit linen yarn[127]. - The Group aims to explore the production of linen fabric and expand the use of hemp yarn to extend its product offerings[129]. - Kingdom is collaborating with CottonConnect to develop the REEL Linen Code of Conduct, promoting sustainability in the linen supply chain[127]. Corporate Governance and Management - The company has a diverse board with members having significant experience in finance, textiles, and corporate governance[146][150][151]. - The management team has been in place since 2003, indicating stability and continuity in leadership[140][141][144][145]. - The board composition reflects a mix of executive, non-executive, and independent directors, ensuring a balanced governance structure[146][150][151]. - The Group's independent non-executive director, Mr. Yan Jianmiao, has extensive experience in international economics and has held various academic and directorial positions[154]. - The Group's chief financial officer, Mr. Chan Yan Kwan Andy, has over 20 years of experience in accounting and finance, previously serving in senior financial roles[157]. Employee Relations and Compensation - The Group is committed to establishing a close relationship with employees, providing a fair workplace, competitive remuneration, and ongoing training and development resources[175]. - The remuneration policy for employees is based on qualifications, experience, responsibilities, and market rates, ensuring competitive compensation[122]. - The Group provides both internal and external training programs for its employees to enhance their skills[122]. - The Directors' remuneration is determined based on the Group's operating results and individual performance, reflecting a performance-driven approach[122]. Risks and Challenges - The principal risks include demand for linen yarn, protectionism, possible punitive tariffs on products made in China, and execution risk of the new expansion project in Ethiopia[174]. - The Group faces risks including demand fluctuations for linen yarn, trade protectionism in various countries, and potential punitive tariffs on Chinese products[177]. Financial Position and Liquidity - The liquidity ratio improved to approximately 113.3%, up from 109.3% in 2020[99]. - Total equity increased to approximately RMB1,350,616,000, compared to RMB1,239,635,000 in 2020[99]. - The gross debt gearing ratio decreased to approximately 65.6%, down from 81.9% in 2020[100]. - The Group's net current assets as of December 31, 2021, were approximately RMB 178,810,000, an increase from RMB 124,115,000 in 2020[103]. - Total cash and deposits amounted to approximately RMB 293,943,000 as of December 31, 2021, compared to RMB 199,771,000 in 2020, with cash and cash equivalents at RMB 249,213,000[103].

Financial Performance - Revenue increased by approximately 78.3% to approximately RMB756,724,000 for the six months ended 30 June 2021 from approximately RMB424,317,000 for the six months ended 30 June 2020[34] - Gross profit margin improved by approximately 0.5 percentage points to approximately 13.7% for the six months ended 30 June 2021 from approximately 13.2% for the six months ended 30 June 2020[35] - Profit for the Review Period increased by 8.4% to approximately RMB12,289,000 for the six months ended 30 June 2021 from approximately RMB11,340,000 for the six months ended 30 June 2020[35] - Profit attributable to the owners of the parent surged by approximately 41.5% to approximately RMB14,280,000 for the six months ended 30 June 2021 from approximately RMB10,093,000 for the six months ended 30 June 2020[35] - Basic earnings per share remained at approximately RMB0.02 for the six months ended 30 June 2021[35] Revenue Breakdown - Domestic sales reached RMB 303,921,000, contributing approximately 40.2% of total revenue, with a year-on-year increase of approximately 127.2%[63] - Overseas sales amounted to RMB 452,803,000, accounting for approximately 59.8% of total revenue, with a year-on-year increase of approximately 55.8%[63] - Sales to European Union countries increased by 44.5%, while sales to non-European Union countries rose by 68.8% during the Review Period[63] - The Group sold a total of 11,370 tonnes of linen yarn, representing an increase of approximately 104% in sales quantity compared to 5,567 tonnes in the same period last year[63] Operational Efficiency - The increase in revenue was mainly attributable to the recovery in demand for linen yarn in all markets during the Review Period[40] - The overall market demand recovery contributed to the significant revenue growth during the Review Period[40] - The Group's operational efficiency improved during the Review Period compared to the partial shutdown of factories in early 2020 due to the pandemic[35] - The Group's production facilities are operating at close to 100% capacity across all five production bases[48] Cost and Expenses - The average procurement unit price for raw materials decreased by approximately 22.3% to RMB 21,291 per tonne, down from RMB 27,430 in the corresponding period last year[49] - Selling and distribution expenses rose to approximately RMB32,281,000, accounting for approximately 4.3% of total revenue, up from approximately 3.8% in the previous period[70] - Administrative expenses increased by approximately 18.2% to approximately RMB37,354,000, mainly due to higher staff costs and bonuses[75] - Other income and gains decreased to approximately RMB1,001,000 from approximately RMB9,463,000 in the corresponding period, primarily due to fewer government grants and subsidies[69] Financial Position - As of 30 June 2021, the Group had net current assets of approximately RMB120,451,000, slightly down from approximately RMB121,545,000 as of 31 December 2020[85] - The liquidity ratio as of 30 June 2021 was approximately 109.5%, compared to approximately 109.1% as of 31 December 2020[86] - As of June 30, 2021, total equity of the Group was approximately RMB1,232,031,000, a slight increase from RMB1,227,235,000 as of December 31, 2020[87] - The Group's interest-bearing bank and other borrowings repayable within 12 months amounted to approximately RMB880,841,000, down from RMB962,399,000 as of December 31, 2020, resulting in a gross debt gearing ratio of approximately 75.7% compared to 82.8% previously[90] Investment and Expansion - The investment in Ethiopia is expected to help the Group save on land, labor, energy, and tax costs, while benefiting from favorable trade agreements[57] - The Group confirmed ongoing investment in the Ethiopia factory project and plans for a new warehouse in Heilongjiang, with no current plans for other material investments[94] - The Group's factory in Ethiopia has gradually commenced production, with the first batch of finished products shipped in August 2021, aiming for increased production in the near future[116] Corporate Governance - The Company has complied with all code provisions of the Corporate Governance Code throughout the Review Period, except for a deviation regarding the separation of roles of chairman and CEO[155][159] - The Audit Committee, comprising three independent non-executive Directors, reviewed the interim results with no disagreements noted[161] Shareholder Information - As of June 30, 2021, Mr. Ren Weiming holds 314,872,000 shares, representing approximately 50.01% of the issued share capital[122] - Mr. Ngan Kam Wai Albert holds 67,418,000 shares, accounting for approximately 10.71% of the issued share capital[122] - Kingdom Investment Holdings Limited holds approximately 302,800,000 shares, representing 48.09% of the issued share capital[128] - Mr. Ren Weiming owns 76.38% of Kingdom Investment (BVI), which holds a controlling interest in the company[128] Risk Factors - The principal risks include demand for linen yarn, trade protectionism, potential punitive tariffs on Chinese products, and stable raw material supply[112] - The Group's raw materials, specifically fiber flax, are imported from Europe, which may impact production costs and supply stability[112] - Trade tensions between the United States and China are anticipated to persist, with unilateral sanctions and retaliation possible[114] Compliance and Reporting - The company has adopted revised International Financial Reporting Standards (IFRSs) for the first time in the current period, which may impact future financial reporting[197] - The interim financial statements have been prepared in accordance with International Accounting Standard (IAS) 34, indicating compliance with international financial reporting standards[192]

KINGDOM KINGDOM HOLDINGS LIMITED 金 達 控 股 有 限 公 司 (Incorporated in the Cayman Islands with limited liability and carrying on business in Hong Kong as "Kingdom (Cayman) Limited") (於開量群島註冊成立的有限公司，以「金建(開疊)有限公司」的名稱於香港經營業務) (Stock Code 股份代號：528) ANNUAL REPORT 2020 年報 100 for g is p 365 8 7 n r gli 400 STA 4 7 a 25 p 8 22 ** 14 x o the first the state 8 70 元 as Contents 目錄 Contents 目錄 | --- | --- | |----------------------------------------------------------------|-------| | | | | Corporate Information 公司資料 | 2 | | ...

Financial Performance - Revenue decreased by approximately 42.0% to approximately RMB424,317,000 for the six months ended 30 June 2020 from approximately RMB731,167,000 for the same period in 2019[19] - Gross profit margin dropped by approximately 13.4 percentage points to approximately 13.2% for the six months ended 30 June 2020 from approximately 26.6% for the same period in 2019[20] - Profit for the Review Period decreased by approximately 87.5% to approximately RMB11,340,000 for the six months ended 30 June 2020 from approximately RMB90,729,000 for the same period in 2019[20] - Profit attributable to the owners of the parent decreased by approximately 88.5% to approximately RMB10,093,000 for the six months ended 30 June 2020 from approximately RMB87,814,000 for the same period in 2019[21] - Basic earnings per share dropped by approximately 85.7% to approximately RMB0.02 for the six months ended 30 June 2020 compared to approximately RMB0.14 for the same period in 2019[21] - The Group's gross profit decreased by approximately 71.2% to approximately RMB56,198,000, with a gross profit margin dropping by approximately 13.4 percentage points to approximately 13.2%[58] - Profit before tax decreased significantly to RMB 11,004,000, compared to RMB 126,279,000 in the previous year, representing a decline of approximately 91%[195] - Total comprehensive income for the period was RMB 11,576,000, down from RMB 90,670,000 in 2019, indicating a decrease of about 87.2%[197] Sales Performance - Domestic sales recorded a decrease of approximately 56.7% to RMB133,763,000, contributing approximately 31.5% of total revenue[28] - Overseas sales decreased by approximately 31.2% to RMB290,554,000, contributing approximately 68.5% of total revenue[28] - Sales to European Union countries reported a drop of 16.3% year-on-year, while sales to non-European Union countries dropped by 42.9%[28] - Sales quantity of linen yarn dropped by approximately 40.4%, resulting in total sales of only 5,567 tonnes during the Review Period, down from 9,340 tonnes in 2019[52] - Revenue from domestic sales decreased by approximately 56.7%, while sales to the European Union and non-European Union regions dropped by approximately 16.3% and 42.9%, respectively[55] Production and Capacity - A total of 7,754 tonnes of linen and hemp yarn were produced during the Review Period, including 611 tonnes of hemp yarn, marking the Group's first venture into the hemp yarn market[44] - The Group's total annual production capacity is 27,000 tonnes across five production bases, with the Adama factory in Ethiopia having a designed capacity of 5,000 tonnes, which is currently delayed due to COVID-19[40][47] - Preparatory works for the factory in Ethiopia were completed, with a designed annual production capacity of 5,000 tonnes, but the project will be delayed until the pandemic is under control[124] Costs and Expenses - Selling and distribution expenses amounted to approximately RMB15,947,000, accounting for approximately 3.8% of total revenue, compared to 3.2% in the previous year[63] - Administrative expenses decreased by approximately 13.4% to RMB31,592,000, attributed to cost control measures during the COVID-19 pandemic[66] - Total finance costs for the Review Period amounted to approximately RMB11,481,000, an increase from RMB9,275,000 in the same period last year[73] - Other income and gains increased to approximately RMB9,463,000, up from RMB6,177,000 in the previous year, primarily due to government grants and subsidies[60] Assets and Liabilities - As of 30 June 2020, the Group had net current assets of approximately RMB133,984,000, down from approximately RMB178,938,000 as of 31 December 2019[80] - The Group's cash and cash equivalents as of 30 June 2020 were approximately RMB153,654,000, an increase from approximately RMB144,798,000 as of 31 December 2019[87] - The liquidity ratio as of 30 June 2020 was approximately 109.6%, compared to 113.3% as of 31 December 2019[87] - Total equity of the Group as of 30 June 2020 was approximately RMB1,248,692,000, down from approximately RMB1,280,895,000 as of 31 December 2019[88] - Current liabilities increased to RMB 1,390,462,000 as of June 30, 2020, compared to RMB 1,345,869,000 at the end of 2019, marking an increase of approximately 3.3%[199] - Inventories rose to RMB 943,066,000 as of June 30, 2020, up from RMB 795,592,000 at the end of 2019, reflecting an increase of approximately 18.6%[199] Shareholder Information - As of June 30, 2020, Mr. Ren Weiming holds a total of 314,872,000 shares, representing approximately 50.01% of the issued share capital[132] - Mr. Ngan Kam Wai Albert holds 67,418,000 shares, which is about 10.71% of the issued share capital[132] - Kingdom Investment Holdings Limited is the beneficial owner of 302,800,000 shares, accounting for approximately 48.09% of the issued share capital[149] - Millionfull International Co., Ltd. holds 64,800,000 shares, representing approximately 10.29% of the issued share capital[149] - The Board has resolved not to recommend any interim dividend for the six months ended 30 June 2020, consistent with the previous year[158] Risks and Challenges - The Group's principal risks include demand for linen yarn, trade protectionism, and potential punitive tariffs on products made in China[117] - The COVID-19 pandemic has led to weak demand for linen yarn, with recovery expected only by the end of the year, depending on the development of effective treatments[120] Corporate Governance - The company has established an Audit Committee to review and supervise the financial reporting process and internal control systems[190]

Production and Export - Kingdom produced 20,618 tonnes of linen yarn during the year, maintaining its position as the world's largest manufacturer of linen yarn[12]. - The Group's pure linen yarn exports amounted to 10,900 tonnes, a decrease of approximately 5% compared to 11,472 tonnes in 2018, while Kingdom accounted for over 40% of China's total pure linen yarn exports[13]. - Approximately 400 tonnes of organic linen fiber were produced in 2019, supporting Kingdom's leadership in organic linen manufacturing[15]. - The Group's pure linen yarn exports amounted to 10,900 tonnes, accounting for more than 40% of the total pure linen yarn export from China, maintaining its position as the largest exporter for 17 consecutive years[54]. - The total volume of pure linen yarn exports from China dropped by approximately 21.7% year-on-year, with a significant 58.0% decline in exports to the Indian market[50]. - The Group's production capacity across four bases in China totals 22,000 tonnes, with utilization rates close to 100% during the Year[67]. - The Group holds a 72.72% equity interest in a flax and industrial hemp yarn manufacturing facility in Heilongjiang, targeting growth in the industrial hemp yarn market[73]. Financial Performance - The Group's revenue for the year increased by approximately 20.4% year-on-year to RMB1,499,560,000, compared to RMB1,245,643,000 in 2018[55]. - Gross profit surged by approximately 40.9% year-on-year to RMB363,267,000, with an overall gross margin increase to 24.2% in 2019 from 20.7% in 2018[55]. - Profit for the year was RMB155,765,000, representing a surge of 51.0% compared to RMB103,187,000 in 2018[55]. - Basic earnings per share amounted to RMB0.25, up from RMB0.17 in 2018[55]. - Total assets increased to RMB2,725,785,000 in 2019 from RMB2,127,748,000 in 2018[44]. - Total liabilities rose to RMB1,444,890,000 in 2019 from RMB974,239,000 in 2018[44]. - Other income and gains for the year amounted to RMB17,364,000, down from RMB24,308,000 in 2018, primarily due to a decrease in net exchange gains[83]. - The net profit for the year was approximately RMB155,765,000, an increase of approximately 51.0% compared to RMB103,187,000 in 2018[91]. - Profit attributable to owners of the parent was approximately RMB151,468,000, representing an increase of approximately 48.5% compared to RMB102,006,000 in 2018[93]. Investments and Expansion - Kingdom is investing in a new production facility in Ethiopia, having acquired 300,000 square meters of land, which is expected to generate savings on land lease, labor, energy, and tax[28][29]. - The new production facility in Ethiopia is expected to boost annual production capacity by 5,000 tonnes, with trial production commencing in the second quarter of 2020[76]. - The construction of the Ethiopian factory is completed, and machinery has been installed despite delays due to COVID-19[76]. - The first phase of the Ethiopia factory, with an annual production capacity of 5,000 tonnes, is completed and expected to commence trial production in the second quarter of 2020[129]. Challenges and Risks - The geopolitical environment poses challenges, with India's anti-dumping duties on flax yarn impacting pricing, while the China-US trade tension is expected to have limited indirect effects on the Group[22]. - The market price of cotton dropped by 13.0% in 2019, which may negatively influence the demand for linen yarn[49]. - The uncertainties from 2019, including the trade war and COVID-19 outbreak, are expected to impact operations and supply chains into 2020[125]. - The Group imports raw materials (fiber flax) from Europe, which exposes it to risks related to supply chain stability[174]. - The execution risk of the new expansion project in Ethiopia is a significant concern for the Group[174]. Corporate Governance and Management - Mr. Ren Weiming is the chairman and executive director, responsible for overall management and business development strategy since 2000[135]. - Mr. Shen Yueming oversees day-to-day operations and management, participating in decision-making since joining the Group in March 2003[136]. - Mr. Zhang Hongwen has been an executive director since 2003, involved in various subsidiaries including Zhejiang Jinyuan and Jiangsu Jinyuan[140]. - Ms. Shen Hong, with over 20 years of finance experience, serves as the management controller and joined the Group in March 2003[141]. - Mr. Ngan Kam Wai Albert, a non-executive director since September 2004, is the chairman of Millionfull Company Limited, engaged in linen trading[142]. - Mr. Lau Ying Kit, an independent non-executive director since November 2006, has extensive financial and accounting experience in China and Hong Kong[148]. - Mr. Lo Kwong Shun Wilson, an independent non-executive director since May 2010, has over 10 years of experience in investment banking and corporate finance[149]. Sustainability and Environmental Initiatives - The Group's factories adopted various environmental protection and energy conservation equipment, with photovoltaic solar energy accounting for 3.6% of total electricity consumed[166]. - The consumption of steam per tonne of yarn manufactured reduced by 4.5% during the Year[166]. - The Group is committed to supporting environmental sustainability while pursuing excellent operating results[166]. - The Group's commitment to sustainable development is highlighted alongside its operational performance[166]. - The Company has published a separate ESG report detailing its performance on environmental, social, and governance aspects[167]. Dividends and Shareholder Returns - The Board has recommended a final dividend of HK7.0 cents per ordinary share for the year, an increase from HK6.0 cents per share in 2018, reflecting confidence in future operations and profitability[34][35]. - The Board recommended a final dividend of HK7.0 cents per ordinary share for the year, pending approval at the upcoming annual general meeting[187]. Employee and Operational Insights - The Group's workforce increased to 3,099 employees as of December 31, 2019, compared to 3,048 employees in 2018[119]. - The Group's total staff costs increased by approximately 11.0% to RMB204,072,000, up from RMB183,823,000 in 2018, primarily due to additional headcount for the new Ethiopia factory[119]. - Traffic and crowd controls implemented during the epidemic resulted in only partial operation of the Group's factories initially[183]. - Full capacity operation of the Group's factories resumed in March 2020 after disruptions caused by the epidemic[183].

Financial Performance - Revenue increased by approximately 42.4% to approximately RMB731,167,000 for the six months ended 30 June 2019 from approximately RMB513,401,000 for the six months ended 30 June 2018[12] - Profit for the Review Period increased by 303.6% to approximately RMB90,729,000 for the six months ended 30 June 2019 from approximately RMB22,481,000 for the six months ended 30 June 2018[12] - Profit attributable to the owners of the parent surged by approximately 280.2% to approximately RMB87,814,000 for the six months ended 30 June 2019 from approximately RMB23,099,000 for the six months ended 30 June 2018[12] - Basic earnings per share grew approximately 2.5 times to approximately RMB0.14 for the six months ended 30 June 2019 compared to approximately RMB0.04 for the six months ended 30 June 2018[12] - The Group's gross profit rose by approximately 136.9% to approximately RMB194,835,000, with a gross profit margin improvement of approximately 10.6 percentage points to approximately 26.6%[44] - Profit before tax increased to RMB 126,279,000, compared to RMB 24,580,000 in the prior year, reflecting a growth of 414.5%[162] - Total comprehensive income for the period was RMB 90,670,000, up from RMB 22,226,000, reflecting a growth of 308% year-over-year[166] Sales and Market Performance - The Group accounted for over 40% of the total pure linen yarn exports from China by volume during the Review Period[12] - Domestic sales contributed approximately 42.2% of total revenue, with a remarkable increase of about 90.0% compared to the previous year, while overseas sales accounted for approximately 57.8% and grew by approximately 20.4% year-on-year[25] - Total sales to European Union countries reported a strong growth of 35.0% year-on-year during the Review Period, with key markets including Italy, Portugal, and Lithuania[25] - The quantity of linen yarn sold increased by approximately 13.3%, totaling 9,340 tonnes during the Review Period, up from 8,243 tonnes in the previous year[39] - Sales in the domestic market grew approximately 90.0%, while sales to the European Union and non-European Union regions increased by approximately 35.0% and 10.9%, respectively[39] Production and Capacity - The Group produced a total of 10,030 tonnes of linen and hemp yarn during the Review Period, with 415 tonnes of hemp yarn produced as part of its entry into the hemp yarn market[34] - The Group's production capacity reached 22,000 tonnes across four production bases, with advanced equipment for unique spinning techniques[33] - The first phase of the Ethiopia project, with a designed annual production capacity of 5,000 tonnes, is expected to commence trial production in early 2020, aiming to reduce costs and benefit from favorable trade agreements[35] Costs and Expenses - The average procurement unit price for raw materials increased by approximately 28.0% to RMB 25,928 per tonne, with total procurement of approximately 14,734 tonnes, reflecting a year-on-year increase of about 4.0%[27] - Selling and distribution costs amounted to approximately RMB23,070,000, accounting for approximately 3.2% of total revenue, down from 4.1% in the previous year[44] - Administrative expenses increased by approximately 21.6% to RMB36,461,000, driven by additional R&D costs and staff expenses[44] - Net finance costs for the Review Period were approximately RMB9,275,000, slightly up from RMB9,253,000 in the previous year[47] - Income tax expense surged to approximately RMB35,550,000, with an effective tax rate of approximately 28.2%, compared to 8.5% in the previous year[48] Assets and Equity - As of June 30, 2019, the Group had net current assets of approximately RMB267,909,000, down from approximately RMB314,058,000 as of December 31, 2018[55] - The Group's cash and cash equivalents as of June 30, 2019, were approximately RMB219,724,000, compared to RMB241,826,000 as of December 31, 2018, with a liquidity ratio of approximately 124.5%[55] - Total equity of the Group as of June 30, 2019, was approximately RMB1,212,115,000, an increase from approximately RMB1,153,509,000 as of December 31, 2018[55] - The Group's gross debt gearing ratio as of June 30, 2019, was approximately 55.4%, up from approximately 48.5% as of December 31, 2018[55] Corporate Governance - The company has committed to good corporate governance practices, with a focus on transparency and accountability to shareholders[150] - The roles of chairman and chief executive officer are not separated, as the chairman oversees general operations, which the board believes does not impair the balance of power[155] - The company has complied with the corporate governance code throughout the review period, except for a deviation in the separation of roles as noted[150] Future Outlook and Risks - The Group is cautiously optimistic about the future of the linen textile industry and aims to maintain production scale and secure steady production volumes going forward[27] - The Group faces risks including demand for linen yarn, protectionism, and potential punitive tariffs on products made in China[84] - The Group is confident in the sustainable demand for linen yarn due to the trend towards environmental-friendliness and the Chinese government's encouragement of domestic consumption[86] Share Options and Awards - The Group has adopted share option schemes and a share award plan to incentivize directors and employees contributing to the Group's success[80] - The company awarded 19,400,000 shares under the Share Award Plan, with 19,370,000 shares accepted by selected persons[147] - No Share Option under the Old Scheme was exercised during the Review Period, and no option was granted under the New Scheme during the Review Period[143] IFRS Adoption - The Group adopted IFRS 16 using the modified retrospective method with an initial application date of January 1, 2019[195] - The cumulative effect of initial adoption of IFRS 16 was recognized as an adjustment to the opening balance of retained earnings at January 1, 2019[198] - Comparative information for 2018 was not restated and continues to be reported under IAS 17[195]

Production and Market Performance - Kingdom produced 18,523 tonnes of linen yarn in 2018, accounting for over 10% of the global supply[14]. - The Group's pure linen yarn exports amounted to 11,472 tonnes in 2018, slightly down from 11,734 tonnes in 2017, maintaining a market share of approximately 44.4% of China's total pure linen yarn exports[15]. - Total turnover of the Group increased by 21.6% despite similar quantities of linen yarn sold compared to 2017, driven by a rebound in global demand and historical selling prices[17]. - Kingdom produced 620 tonnes of organic linen yarn in 2018, reinforcing its position as a leader in organic and sustainable linen production[16]. - The average selling price of linen yarn reached a historical high during the year due to constrained capacity expansion in 2017 and growing demand in the Chinese market[17]. - The total volume of pure linen yarn exports from China in 2018 dropped by approximately 1.0% year-on-year[40]. - The demand for linen yarn has rebounded since the end of 2017, with no significant production capacity added to the market since 2016, leading to a robust market environment[113]. Financial Performance - The Group's revenue for 2018 was RMB 1,245,643, an increase of 21.6% from RMB 1,023,962 in 2017[35]. - Gross profit for 2018 was RMB 257,881, representing a significant increase from RMB 116,268 in 2017[35]. - The profit for the year 2018 was RMB 103,187, a substantial increase from RMB 622 in 2017[35]. - Gross profit surged by approximately 121.8% year-on-year to RMB257,881,000, with an overall gross margin rebounding to 20.7% in 2018, compared to 11.4% in 2017[44]. - The Group's basic earnings per share amounted to RMB0.17, compared to a loss per share of RMB0.01 in 2017[44]. - The Group recorded a net profit of approximately RMB103,187,000, representing a surge of approximately 165 times compared to the previous year[82]. - Profit attributable to owners of the parent was approximately RMB102,006,000, a significant recovery from a loss of RMB3,132,000 in the previous year[84]. Investments and Expansion - Kingdom Holdings has invested in a new production facility in Ethiopia, covering 300,000 square meters, expected to commence trial production in late 2019/early 2020[24]. - The Group has established a new production facility in Heilongjiang Province, China, with an annual capacity of 4,000 tonnes, focusing on flax and industrial hemp yarn[63][64]. - The Group is investing in a new production facility in Ethiopia, which will increase annual production capacity by 5,000 tonnes, with trial production expected to commence in late 2019 or early 2020[66][67]. - The Group owns 72.72% equity interest in the Heilongjiang facility, marking its entry into the industrial hemp yarn market, which is anticipated to grow rapidly due to supportive national policies in China[63][64]. Raw Material Procurement and Supply Chain - The Group has a systematic procurement strategy for raw materials, primarily sourcing flax fiber from France, Belgium, and the Netherlands, which helps stabilize costs and mitigate price fluctuations[57]. - The Group's procurement strategy is influenced by factors such as flax harvest conditions and market prices, ensuring a stable supply of raw materials[57]. Dividends and Shareholder Returns - The Board has recommended a final dividend of HK6.0 cents per share for the year, compared to HK2.0 cents per share in 2017[25]. - The Board recommended a final dividend of HK 6.0 cents per ordinary share for the Year, pending approval at the upcoming annual general meeting[163]. Risks and Challenges - The Indian government initiated an anti-dumping investigation on linen yarn from China, proposing duties ranging from USD0.5 to USD4.83 per kilogram, which may affect pricing in that market[18]. - The geopolitical environment remains a concern, with potential impacts from the ongoing China-US trade tensions, although most of the Group's customers are not US-based[18]. - The Group faces risks including demand fluctuations for linen yarn, trade protectionism, and execution risks related to the new expansion project in Ethiopia[111]. Sustainability and Environmental Commitment - The Group is committed to environmental sustainability while pursuing excellent operating results, as highlighted in the separate ESG report[157]. - The Group's factories reduced steam, water, and electricity consumption per tonne of yarn manufactured by 13%, 8%, and 2% respectively during the Year[156]. Patents and Innovation - In 2018, Kingdom Holdings applied for 14 patents, including 8 invention patents, with 7 patents granted, enhancing its core competitiveness[28]. - As of December 31, 2018, the Group holds 64 registered patents and has 28 pending patent applications, reflecting its commitment to technology and innovation[72]. Employee and Management Information - The total staff costs for the year increased by approximately 9.4% to RMB183,823,000, with the headcount rising to 3,048 employees due to recruitment for the new Heilongjiang factory[105]. - The remuneration of senior management during the year ranges from RMB 1,000,001 to RMB 1,500,000, with one individual in this range[196]. - The Remuneration Committee regularly monitors the remuneration levels of all Directors and senior management to ensure appropriateness[194]. Financial Position and Assets - The total assets of the Group as of December 31, 2018, were RMB 2,127,748, up from RMB 1,962,416 in 2017[35]. - The Group's net current assets as of December 31, 2018, were approximately RMB314,058,000, with cash and cash equivalents increasing to approximately RMB241,826,000 from RMB173,824,000 in 2017[95]. - Total equity as of December 31, 2018, was approximately RMB1,153,509,000, compared to RMB1,050,196,000 in 2017[95].