Market Overview - The cyclical and consumer stocks rebounded, with oil and gas extraction, steel, and coal sectors rising, alongside duty-free shops, liquor, and tourism hotels [1] - The Shanghai Composite Index reached a new high, closing at 3628.53 points, with an intraday peak of 3636.17 points, marking the highest level since October 9, 2024 [3] Financing and Investment Trends - A-share financing balance increased to 19684.21 billion, the highest since July 2015, with the Shanghai market's financing balance surpassing 10000 billion [3] - The structure of incremental funds in A-shares has varied across three market phases this year, with different contributors such as retail investors, private equity, and foreign capital [3] Banking Sector Performance - The banking sector rebounded, with all stocks in the sector rising, particularly Qingnong Commercial Bank and Postal Savings Bank [5] - A-share listed banks' total dividend for 2024 reached 6325.94 billion, a 3.14% increase year-on-year, with state-owned banks accounting for 66.5% of total dividends [8] Insurance Sector Performance - The insurance sector saw significant gains, with China Ping An and New China Life both rising over 2%, and Ping An reaching a new high in this rebound [9] - The dynamic adjustment mechanism for preset interest rates is expected to improve the liability costs and net investment returns for life insurance companies, alleviating asset allocation pressures [9]

Group 1 - The film "Nanjing Photo Studio" has achieved a box office of over 5.7 billion RMB within five days of its release, with predictions estimating total earnings to reach 34.6 billion RMB [1][2] - The film has received a high rating of 8.6 on Douban, making it the top-rated domestic film of the summer season, alongside "The King's Avatar: The Movie" [1] - The film's success has led to significant stock price increases for several A-share companies involved in its production, including China Film, Happiness Blue Sea, and Shanghai Film, with Happiness Blue Sea's stock rising nearly 80% since July 23 [2] Group 2 - The summer box office has seen a notable increase, reaching 55 billion RMB so far in 2025, driven by the popularity of films like "Nanjing Photo Studio" [4] - China Film has indicated plans to release a series of diverse films this summer, with "Nanjing Photo Studio" being a key project commemorating the 80th anniversary of the victory in the Chinese People's War of Resistance against Japanese Aggression [2] - As of July 27, 2025, the film has not yet impacted the company's operating income, as revenue recognition will only occur after recovering the investment costs [3]

Financial Performance - The Group recorded a sales growth of 5.2% for the year, reaching RMB 2.57 billion[16] - The Group experienced a loss of RMB 43.0 million for the year, attributed to the inventory impairment[16] - The Group's revenue for the year increased by approximately 5.2% year-on-year to RMB 2,571,606,000, compared to RMB 2,445,428,000 in 2023[39] - Gross profit decreased by approximately 62.8% year-on-year to RMB 153,274,000, with a gross profit margin dropping by 10.8 percentage points to 6.0%[39] - The Group's loss for the year amounted to RMB 43,338,000, compared to a profit of RMB 162,790,000 in 2023[39] - Revenue from overseas sales amounted to RMB 1,492,134,000, representing approximately 58.0% of the Group's total revenue[44] - Revenue from the European Union countries was approximately RMB 516,543,000, accounting for about 20.1% of total revenue, while non-EU countries contributed approximately RMB 975,591,000, or 37.9%[44] - Domestic sales in China dropped by approximately 9.6% to RMB 1,079,472,000, representing about 42.0% of total revenue[46] - Other income and gains decreased to approximately RMB 11,384,000 from RMB 18,927,000 in 2023, primarily due to lower interest income and government grants[76] - Selling and distribution expenses amounted to approximately RMB 34,476,000, accounting for 1.3% of revenue, down from 1.7% in 2023, attributed to reduced sales commissions[77] - The Group recorded a net loss of approximately RMB 43,338,000 for the year, compared to a profit of approximately RMB 162,790,000 in 2023[89] Inventory and Impairment - An impairment provision of approximately RMB 199 million for inventories was recognized due to significant drops in raw material and flax yarn prices in Q4 2024[16] - A provision for inventory impairment of approximately RMB 199,431,000 was made as of December 31, 2024, due to significant drops in raw material and flax yarn prices[39] - The impairment provision for inventories as of December 31, 2024, was approximately RMB199,431,000, reflecting the difference between inventory costs and net realizable values[71] Production and Capacity - The Group's production capacity in China totals 23,000 tonnes, with all four production bases operating at near full capacity[59] - The new production facility in Ethiopia has boosted the Group's annual production capacity by 5,000 tonnes, with production ramping up to about 70%[66] - The Group owns 78.67% equity interest in the Heilongjiang facility, marking its entry into the industrial hemp yarn market, which is expected to grow due to national policies[60] Supply Chain and Operations - The company aims to improve operational efficiency and optimize the global supply chain through globalization, process orientation, standardization, and digitalization strategies[22] - The Group is collaborating with CottonConnect to develop the REEL Linen Code of Conduct, focusing on sustainability and traceability in the linen supply chain[54] - The Group plans to build a warehouse in Heilongjiang to manage the supply chain of hemp materials, aiming to establish it as a national trading hub for hemp in China[53] - The Group's production bases are continuously being improved with the latest management systems and technologies, enhancing overall production efficiency and reducing costs[58] Financial Position - The total assets of the Group as of December 31, 2024, were RMB 3,115,009,000, a decrease from RMB 3,283,176,000 in 2023[31] - The total liabilities of the Group as of December 31, 2024, were RMB 1,640,180,000, compared to RMB 1,695,964,000 in 2023[31] - The Group's net current assets as of December 31, 2024, were approximately RMB 477,487,000 (2023: RMB 562,864,000), with total cash and deposits decreasing to approximately RMB 277,650,000 (2023: RMB 521,256,000)[107] - The liquidity ratio as of December 31, 2024, was approximately 129.9% (2023: 134.6%), and total equity was approximately RMB 1,474,829,000 (2023: RMB 1,587,212,000)[108] - The gross debt gearing ratio increased to approximately 69.4% as of December 31, 2024 (2023: 54.8%) due to higher borrowings[109] Dividends - The Board has recommended a final dividend of HK$0.05 per share for the year, down from HK$0.09 in 2023[40] - The Board proposed a final dividend of HKD 0.05 per share for the year, down from HKD 0.09 per share in 2023[43] - A final dividend of HK$0.05 per ordinary share has been recommended for the Year, pending approval at the upcoming annual general meeting[182] - The board proposed a final dividend of HKD 0.05 per ordinary share, subject to shareholder approval at the upcoming annual general meeting[189] Employee and Governance - The Group has 3,703 employees as of December 31, 2024, a slight increase from 3,700 employees in 2023[131] - The Group has adopted a share option scheme and a share award plan to incentivize Directors and employees contributing to the Group's success[135] - The company has a strong governance structure with a mix of executive and independent non-executive directors to ensure effective oversight[153][154] - The management team has a significant ownership stake in the company, aligning their interests with those of shareholders[145][147][148] Market and Economic Conditions - The Group faces risks including unstable demand for linen yarn, protectionism, and potential punitive tariffs on products made in China[176] - The Group's diversification of the supply chain is deemed urgent due to the aging population in China and rising operating costs in Asia[137] - The management team anticipates challenges in 2025 and beyond due to ongoing tariffs and political divergences among superpowers[137] Charitable Contributions - Charitable donations made by the Group during the Year totaled approximately RMB200,000, compared to RMB139,000 in 2023[185] - Charitable donations made by the group during the year totaled approximately RMB 200,000, compared to RMB 139,000 in 2023[192]

Financial Performance - The group's revenue increased by approximately 5.2% from RMB 2,445,428,000 in the year ended December 31, 2023, to RMB 2,571,606,000 in the year ended December 31, 2024, due to higher average selling prices[2] - The gross profit margin decreased by 10.8 percentage points to approximately 6.0% for the year ended December 31, 2024, attributed to higher average material costs[2] - The net loss for the year was approximately RMB 43,338,000, compared to a profit of approximately RMB 162,790,000 for the year ended December 31, 2023[3] - The loss attributable to equity holders of the parent company was approximately RMB 45,380,000, compared to a profit of approximately RMB 163,611,000 for the previous year[3] - The basic and diluted loss per share for the year was approximately RMB 0.07, down from earnings of approximately RMB 0.27 per share in the previous year[3] - The group reported a pre-tax loss of RMB 43,854,000 in 2024, compared to a profit of RMB 221,191,000 in 2023[33] - The total income tax expense for the year was a credit of RMB 516,000, a significant decrease from an expense of RMB 58,401,000 in 2023[34] - The company’s gross profit decreased by approximately 62.8% to RMB 153,274,000, resulting in a gross margin decline of 10.8 percentage points to 6.0%[62] Dividends - The board proposed a final dividend of HKD 0.05 per ordinary share for the year ended December 31, 2024, down from HKD 0.09 in the previous year[2] - Proposed final dividend for 2024 is HKD 0.05 per share, totaling approximately RMB 29,155,000, pending shareholder approval[36] - The company plans to pay a final dividend of HKD 0.05 per share for the year, down from HKD 0.09 in 2023, reflecting a commitment to shareholder returns while reserving resources for further expansion[62] Inventory and Assets - The total inventory as of December 31, 2024, was RMB 1,195,126,000, an increase from RMB 1,019,545,000 in the previous year[5] - Non-current assets decreased from RMB 1,093,960,000 in the previous year to RMB 1,041,403,000 as of December 31, 2024[5] - The carrying amount of non-current assets subject to impairment testing was RMB 980,000,000 as of December 31, 2024, compared to RMB 1,043,000,000 in 2023[22] - Inventory carrying amount increased to RMB 1,195,126,000 as of December 31, 2024, from RMB 1,019,545,000 in 2023, representing an increase of approximately 17.3%[23] - The total value of right-of-use assets decreased from RMB 68,815,000 at the beginning of 2023 to RMB 61,818,000 by the end of 2024, reflecting a depreciation expense of RMB 3,746,000 for the year[41] Liabilities and Borrowings - Current liabilities totaled RMB 1,596,119,000 as of December 31, 2024, compared to RMB 1,626,352,000 in the previous year[5] - The total accounts payable and notes payable as of December 31, 2024, was RMB 454,696,000, a decrease of 22.6% from RMB 587,651,000 in 2023[51] - The total amount of current interest-bearing bank and other borrowings increased to RMB 989,556,000 in 2024 from RMB 833,806,000 in 2023, representing an increase of 18.7%[53] - The current portion of bank loans due within one year rose to RMB 938,693,000 in 2024 from RMB 782,480,000 in 2023, an increase of 20.0%[54] - Interest-bearing bank and other borrowings increased by 17.8% to approximately RMB 1,023,992,000[92] Revenue Breakdown - Revenue from mainland China decreased to RMB 1,079,472,000 in 2024 from RMB 1,194,237,000 in 2023, a decline of about 9.6%[26] - Revenue from the European Union increased to RMB 516,543,000 in 2024 from RMB 468,957,000 in 2023, reflecting a growth of approximately 10.2%[26] - Revenue from continuing operations amounted to RMB 324,706,000, with no revenue reported in 2023 from a single customer[27] - Total customer contract revenue for 2024 was RMB 2,571,606,000, representing an increase of 5.2% from RMB 2,445,428,000 in 2023[29] - Sales of hemp yarn, hemp fiber, and waste accounted for RMB 2,344,251,000 in 2024, slightly up from RMB 2,339,400,000 in 2023[29] Operational Developments - The company has established four production bases in China with a total annual capacity of 23,000 tons, all operating near full capacity[70][73] - The company is investing in a new production facility in Ethiopia, which will increase annual capacity by 5,000 tons, with the project expected to benefit from reduced costs and tariffs[72] - The company is establishing a warehouse in Heilongjiang Province to manage the storage and supply chain of industrial hemp fiber, aiming to make it a national trade center for hemp materials in China[67] - The company has entered into foreign exchange forward contracts to manage currency risks, with no significant derivative financial assets or liabilities recorded as of December 31, 2024[101] Employee and Governance - The total employee cost for the year decreased by approximately 4.7% to RMB 250,102,000, compared to RMB 262,496,000 in the previous year[102] - The total number of employees as of December 31, 2024, was 3,703, a slight increase from 3,700 in 2023[102] - The company has adopted stock option and share incentive plans to motivate and reward employees contributing to its business success[102] - The company has established an audit committee to review and monitor financial reporting processes and risk management systems[115] - The audit committee consists of three independent non-executive directors, with Mr. Liu Yingjie as the chairman, ensuring compliance with corporate governance codes[117] Market Position and Future Outlook - The company continues to maintain its position as China's largest pure linen yarn exporter for 22 consecutive years, demonstrating its market leadership[60] - The company anticipates a positive long-term outlook for the linen industry, driven by changing consumer preferences towards sustainable and high-quality products[65] - The company is collaborating with CottonConnect to promote sustainability in the flax industry through the REEL flax behavior code[68] - The group plans to establish a new factory in Egypt, with feasibility studies already conducted and registration planned for 2024[100] - The company is conducting feasibility studies for establishing a new factory in Egypt, which could benefit from reduced or zero import tariffs from EU member states[103]

Revenue Growth - Revenue increased by approximately 37.5% to approximately RMB1,129,916,000 for the Review Period from approximately RMB821,476,000 for the Previous Period[8] - Domestic sales amounted to RMB538,944,000, contributing approximately 47.7% of total revenue, with a year-on-year increase of approximately 56.4%[11] - Overseas sales reached RMB590,972,000, contributing approximately 52.3% of total revenue, with a year-on-year increase of approximately 23.9%[11] - Revenue for the six months ended June 30, 2024, reached RMB 1,129,916,000, a 37.5% increase from RMB 821,476,000 in the same period of 2023[127] - Revenue from Mainland China was RMB 538,944,000, up 56.6% from RMB 344,603,000 in the previous year[127] - Revenue from the European Union increased to RMB 253,008,000, a rise of 5.8% compared to RMB 240,230,000 in 2023[127] Profitability - Profit for the Review Period increased by approximately 16.3% to RMB78,508,000 from approximately RMB67,500,000 for the Previous Period[8] - Profit attributable to the owners of the parent increased by approximately 9.5% to RMB73,961,000 for the Review Period from approximately RMB67,549,000 for the Previous Period[8] - Basic earnings per share increased by 9.1% to approximately RMB0.12 for the Review Period from RMB0.11 for the Previous Period[8] - Profit before tax increased to RMB 108,260, a rise of 22.4% from RMB 88,484 in the previous year[103] - Profit for the period was RMB 78,508, compared to RMB 67,500 in 2023, marking a growth of 16.4%[104] - The company reported a profit for the period of RMB 73,961, contributing to the overall increase in equity[108] Cost and Expenses - Gross profit margin slightly decreased by approximately 1.2 percentage points to approximately 17.6% for the Review Period from approximately 18.8% for the Previous Period[8] - The average procurement unit price for raw materials rose to approximately RMB73,999 per tonne, a 65.7% increase from RMB44,658 in the previous year, due to supply shortages[13] - Selling and distribution expenses amounted to approximately RMB16,164,000, accounting for approximately 1.4% of total revenue, a decrease from 1.7% in the previous period[21] - Administrative expenses increased by approximately 7.9% to RMB 53,271,000 from RMB 49,361,000 in the previous period, primarily due to higher staff costs and consulting fees[26] - Other expenses rose significantly to approximately RMB 7,293,000 from RMB 673,000, mainly due to a net exchange loss of RMB 4,268,000[28] - Finance costs totaled approximately RMB 18,660,000, an increase from RMB 15,326,000 in the previous period, with net borrowing interest expenses rising to RMB 18,512,000[29] Assets and Liabilities - As of June 30, 2024, the Group's total assets were approximately RMB 3,443,266,000, an increase from RMB 3,283,176,000 as of December 31, 2023[41] - The Group's net current assets as of June 30, 2024, were approximately RMB 614,907,000, compared to RMB 562,864,000 as of December 31, 2023[40] - Current interest-bearing bank loans amounted to RMB 391,380,000, an increase of 15.1% from RMB 339,817,000 as of December 31, 2023[48] - The gross debt gearing ratio increased to approximately 66.3% as of June 30, 2024, from 54.8% as of December 31, 2023[41] - Total financial liabilities at amortised cost reached RMB 1,694,035,000 as of June 30, 2024, including interest-bearing bank borrowings of RMB 1,064,796,000 and trade payables of RMB 488,255,000[164] Production and Capacity - The Group produced a total of 220 tonnes of hemp yarn during the review period, marking its first venture into the hemp yarn market[16] - The Group has five production bases with a total annual capacity of 34,000 tonnes, with utilization rates around 85% for most factories[15] - The Group's factory in Ethiopia is expected to contribute additional production capacity, enhancing overall operational efficiency[64] - 2024 is anticipated to be a bumper year for raw materials, with an expected abundant supply enabling strategic release of production capacity[64] Corporate Governance and Shareholder Information - The Company has adopted a Share Option Scheme since 30 May 2016, but no options have been granted under this scheme since its adoption[85] - The Share Award Plan, adopted on 26 August 2016, aims to incentivize and reward eligible persons for their contributions, with no shares awarded during the review period[89] - The Company has complied with all corporate governance code provisions throughout the review period, except for a deviation regarding the separation of roles of chairman and chief executive officer[96] - The Company does not have a chief executive officer; the chairman oversees general operations, which the Board believes does not impair the balance of power[97] - As of June 30, 2024, Mr. Ren Weiming holds a total of 327,062,000 shares, representing approximately 51.94% of the issued share capital[69] Future Outlook - The Group is optimistic about the future of the linen textile industry and plans to maintain production scale while monitoring international market developments[13] - Future plans include maintenance of existing factory projects and a potential factory setup in Egypt or Northern Africa[54] - The investment in Ethiopia is expected to reduce costs and provide duty-free access to European markets under the Everything but Arms initiative[17] - Overall, the company remains optimistic about future growth, citing a strong pipeline of products and services[180]

Financial Performance - Revenue increased by approximately 37.5% from RMB 821,476,000 in the previous period to RMB 1,129,916,000 in the review period[1] - Profit for the period rose by approximately 16.3% to RMB 78,508,000 from RMB 67,500,000 in the previous period[2] - Profit attributable to equity holders of the parent increased by approximately 9.5% to RMB 73,961,000 from RMB 67,549,000[2] - Basic earnings per share increased by 9.1% to approximately RMB 0.12 from RMB 0.11 in the previous period[2] - Total comprehensive income for the period amounted to RMB 70,786,000, compared to RMB 66,880,000 in the previous period[3] - The company reported a gross profit of RMB 221,016 thousand for the six months ended June 30, 2024, compared to RMB 173,921 thousand in 2023, indicating improved profitability[19] - Gross profit increased by about 28.5% to approximately RMB 198,845,000, with a gross margin decline of about 1.2 percentage points to approximately 17.6%[32] Assets and Liabilities - Non-current assets decreased from RMB 1,093,960,000 to RMB 1,060,790,000[4] - Current assets increased from RMB 2,189,216,000 to RMB 2,382,476,000[4] - Total liabilities increased from RMB 1,626,352,000 to RMB 1,767,569,000[4] - Net assets attributable to equity holders of the parent increased from RMB 1,522,981,000 to RMB 1,537,864,000[5] - Non-current assets as of June 30, 2024, totaled RMB 1,045,993 thousand, a decrease from RMB 1,078,857 thousand as of December 31, 2023[12] - The total amount of trade receivables increased to RMB 508,406,000 from RMB 558,356,000, with trade receivables of RMB 439,664,000[24] - The total accounts payable decreased to RMB 488,255,000 from RMB 587,651,000[25] - The net current assets as of June 30, 2024, were approximately RMB 614,907,000, an increase from RMB 562,864,000 as of December 31, 2023[42] - The total assets as of June 30, 2024, were approximately RMB 3,443,266,000, compared to RMB 3,283,176,000 as of December 31, 2023[42] Sales and Market Performance - Domestic sales contributed approximately 47.7% of total revenue, amounting to RMB 538,944,000, a year-on-year increase of about 56.4%[27] - Overseas sales accounted for approximately 52.3% of total revenue, totaling RMB 590,972,000, with a year-on-year increase of about 23.9%[27] - Sales of linen yarn, hemp yarn, and waste accounted for RMB 1,106,745 thousand, up from RMB 802,256 thousand, reflecting a significant growth in product sales[16] - The average selling price of linen yarn increased, despite a slight decrease in sales volume from 7,275 tons to 7,179 tons, a reduction of 1.3%[26] - Domestic sales in China grew by 56.4%, while export sales to the EU and non-EU regions rose by approximately 5.3% and 42.8%, respectively[31] Costs and Expenses - The company incurred research and development expenses of RMB 8,746 thousand for the six months ended June 30, 2024, down from RMB 12,656 thousand in the previous year, indicating a focus on cost management[19] - Interest expenses on bank loans increased to RMB 18,512 thousand in the first half of 2024, compared to RMB 16,235 thousand in the same period of 2023[18] - The group reported a total tax expense of RMB 29,752,000 for the period, compared to RMB 20,984,000 in the previous year[7] - The financial costs totaled approximately RMB 18,660,000, up from RMB 15,326,000 in the previous period[37] - The total employee cost for the review period was approximately RMB 79,101,000, a decrease from RMB 80,261,000 in the previous period, with a total of 3,736 employees as of June 30, 2024[50] Corporate Governance and Strategy - The company aims to enhance long-term shareholder returns by implementing a strategy focused on sustainable development and technological innovation[56] - The company is committed to good corporate governance practices to enhance investor confidence, and it has adhered to the corporate governance code throughout the review period, except for a specific deviation noted[63] - The chairman and CEO roles are separated, with Mr. Ren Wei Ming serving as chairman, ensuring a balance of power and effective operations within the company[64] - An audit committee has been established in accordance with the listing rules, consisting of three independent non-executive directors, and the interim results have been reviewed without dissent[65] Future Outlook and Risks - The company anticipates a bountiful year for raw materials in 2024, expecting sufficient supply to strategically release production capacity[54] - The company faces risks related to demand for linen yarn, trade protectionism, and potential punitive tariffs on Chinese products[53] - The company has no plans for significant acquisitions or capital assets, except for maintenance of existing factory projects and potential establishment of a factory in Egypt or North Africa[48] - The company has not recorded any significant derivative financial assets or liabilities as of June 30, 2024[49] - There have been no significant events disclosed since December 31, 2023[52] Dividends - The group did not declare any interim dividends for the six months ended June 30, 2024, consistent with the previous year[22] - No interim dividend has been recommended for the six months ending June 30, 2024, consistent with the previous year[57] - As of June 30, 2024, a total of 13,230,750 shares are held by the trustee for future grants, representing approximately 2.1% of the company's issued shares[60]

Financial Performance - Kingdom Holdings recorded a sales growth of 21.0% for the year, reaching RMB 2.4 billion, with a profit of RMB 162.8 million[16]. - The Group's revenue for the year increased by approximately 21.0% to RMB2,445,428,000 compared to RMB2,021,055,000 in 2022[43]. - Gross profit rose by approximately 6.4% year-on-year to RMB411,488,000, while the overall gross profit margin decreased by 2.3 percentage points to 16.8%[43]. - Profit for the year was RMB162,790,000, a decrease from RMB171,808,000 in 2022[43]. - Revenue from overseas sales amounted to RMB1,251,191,000, representing approximately 51.2% of the Group's total revenue[45]. - Domestic sales in China increased by approximately 54.2% to RMB 1,194,237,000, accounting for approximately 48.8% of the Group's total revenue[52][53]. - Other income and gains for the year recorded a net gain of RMB18,927,000, down from RMB54,431,000 in the previous year[79]. - The Group recorded a net profit of approximately RMB162,790,000 for the Year, compared to RMB171,808,000 for the year ended 31 December 2022, representing a decrease of about 5.9%[92][98]. Operational Efficiency - The Group's total consumption of electricity, water, steam, and natural gas decreased by 7.0%, 6.1%, 12.5%, and 6.8% respectively[17]. - The Group's production capacity for linen and industrial hemp yarn is currently 23,000 tonnes, with high utilization rates across its four production bases in China[65][67]. - The Group's production bases are continuously improved with the latest technologies, enhancing operational efficiency and reducing production costs[64][67]. - The Group aims to improve production processes to enhance operational efficiencies in pursuit of sustainable development[181]. Sustainability Initiatives - Kingdom achieved carbon neutrality in November 2023, verified by SGS, through various carbon emission reduction initiatives[18]. - The company has integrated Environmental, Social, and Governance (ESG) principles into its business strategy to ensure sustainable operations[17]. - The Group is collaborating with CottonConnect to develop the REEL Linen Code of Conduct, focusing on sustainability and traceability in the linen supply chain[59][61]. - The Group aims to promote the REEL Linen Code of Conduct, a sustainability initiative to improve environmental and product quality standards in the linen industry[145]. - The company has launched the REEL initiative aimed at promoting sustainable practices in the linen industry, focusing on improving environmental conditions and product traceability in its global supply chain[148]. Challenges and Risks - The geopolitical tensions and disruptions in shipment routes have posed challenges to the Group's operations during the year[15]. - The Group's principal risks include unstable demand for linen yarn, protectionism, and potential punitive tariffs on products made in China[188]. - The year 2024 and beyond are expected to be challenging due to geopolitical tensions and rising operational costs in Asia[143]. Dividends and Shareholder Relations - The Board has recommended a final dividend of HK$0.09 per ordinary share for the year, consistent with the previous year[24]. - The Board recommended a final dividend of HK$0.09 per share for the year, unchanged from 2022[44]. - The Chairman expressed gratitude to shareholders and business partners for their continuous support during the challenging year[25]. Future Outlook - Looking ahead to 2024, the company will focus on globalization, process orientation, standardization, and digitalization to enhance operational efficiency and customer service quality[23]. - The Group plans to establish a new factory in Egypt in 2024 to diversify its supply chain, following a feasibility study conducted in 2023[133]. - The company is conducting feasibility studies for new factories in Egypt and North Africa to diversify its supply chain, benefiting from potential EU tariff exemptions[148]. - The company plans to cautiously advance the new factory project in 2024, responding to the increasing operational costs in Asia and the aging population in China[148]. Employee and Management Information - As of December 31, 2023, the Group had a total of 3,700 employees, a decrease from 4,087 employees in 2022[135]. - Total staff costs for the year increased by approximately 0.3% to RMB 262,496,000, compared to RMB 261,764,000 in 2022[135]. - Ms. Shen Hong, aged 57, has over 20 years of financial experience and is the Group's managing director[161]. - Mr. Yan Jianmiao, aged 58, is an independent non-executive director with a strong academic background in economics and international trade[170]. - Mr. Chan Yan Kwan Andy, aged 55, serves as the chief financial officer and has over 20 years of experience in accounting and finance[174].

Revenue and Profitability - The group's revenue increased by approximately 21.0% from RMB 2,021,055,000 in 2022 to RMB 2,445,428,000 in 2023, driven by rising prices of pure linen yarn[6]. - Profit for the year declined by 5.2% to approximately RMB 162,790,000 in 2023, down from RMB 171,808,000 in 2022[6]. - Basic earnings per share fell by 6.9% to approximately RMB 0.27 in 2023, compared to RMB 0.29 in 2022[6]. - Total comprehensive income for the year was RMB 163,040,000 in 2023, compared to RMB 168,727,000 in 2022[8]. - The gross profit margin decreased by 2.3 percentage points to approximately 16.8% in 2023, compared to 19.1% in 2022, due to raw material cost increases outpacing the rise in pure linen yarn prices[6]. - Gross profit rose by about 6.4% to RMB 411,488,000, while the overall gross margin decreased by 2.3 percentage points to 16.8%[104]. Assets and Liabilities - Non-current assets decreased from RMB 1,167,881,000 in 2022 to RMB 1,093,960,000 in 2023[9]. - Current assets increased significantly from RMB 1,737,041,000 in 2022 to RMB 2,189,216,000 in 2023[9]. - Total liabilities increased from RMB 1,319,707,000 in 2022 to RMB 1,626,352,000 in 2023[9]. - The net asset value increased from RMB 1,487,990,000 in 2022 to RMB 1,587,212,000 in 2023[11]. - The carrying amount of non-current assets was RMB 1,043,000,000 as of December 31, 2023, down from RMB 1,150,000,000 in 2022[38]. - The company's total non-current assets were RMB 1,078,857,000 as of December 31, 2023, compared to RMB 1,159,408,000 in 2022[45]. - The total liabilities, including current and non-current borrowings, reached RMB 869,526,000 in 2023, compared to RMB 752,903,000 in 2022, reflecting an increase of 15.5%[95]. Sales and Market Performance - Revenue from mainland China reached RMB 1,194,237,000, up 54% from RMB 774,455,000 in 2022[44]. - The company's pure linen yarn export volume was 7,955 tons, representing a decrease of about 30.5% from 11,477 tons in the previous year[102]. - Overseas sales contributed RMB 1,251,191,000, accounting for approximately 51.2% of total revenue, with the EU contributing RMB 468,957,000 (19.2%) and non-EU countries RMB 782,234,000 (32.0%)[105]. - The company maintained its position as the largest pure linen yarn exporter in China for 21 consecutive years, holding over 40% of the total export volume[102]. - The group's revenue increased by approximately 21.0% to RMB 2,445,428,000, driven by a rise in the selling price of pure linen yarn, with sales to China and non-EU markets growing by 54.2% and 12.7% respectively[119]. Dividends and Shareholder Returns - The board proposed a final dividend of HKD 0.09 per ordinary share for the year ended December 31, 2023, unchanged from 2022[6]. - The board proposed a final dividend of HKD 0.09 per share, totaling approximately RMB 51,356,000, subject to shareholder approval[124]. Operational Efficiency and Costs - The group's sales and distribution expenses were approximately RMB 42,229,000, accounting for about 1.7% of total revenue, a decrease from 2.1% in the previous year due to reduced promotional costs[121]. - Administrative expenses for the year were approximately RMB 116,078,000, a slight decrease of about 2.5% compared to RMB 119,013,000 in 2022, mainly due to savings in general office expenses[140]. - Total financial costs for the year were approximately RMB 36,800,000, an increase from RMB 33,852,000 in 2022, with bank loan interest expenses totaling RMB 37,708,000[170]. Inventory and Receivables - The group's inventory increased by approximately 48.8% to RMB 1,019,545,000, up from RMB 685,180,000 in the previous year, with average turnover days rising from 147 to 153 days[177]. - Trade receivables and notes receivable increased by approximately 31.0% to RMB 558,356,000, compared to RMB 426,267,000 in the previous year, while average turnover days decreased from 85 to 73 days[178]. - The aging analysis of accounts receivable showed that the total amount overdue for more than three months was RMB 10,150, a decrease of 73.0% from RMB 37,670 in 2022[82]. Investments and Subsidiaries - The company has 100% ownership in Overseas Kingdom Limited and Jiangsu Jinyuan Linen Co., Ltd., both engaged in investment holding and linen production respectively[15]. - The company holds 78.67% of Heilongjiang Jinda Hemp Industry Co., Ltd., which focuses on the production and sales of industrial hemp[17]. - The group is investing in a new production facility in Ethiopia, which will increase annual capacity by 5,000 tons, and is expected to be a demonstration project for the Belt and Road Initiative[115]. Future Outlook and Strategic Initiatives - The geopolitical situation, including the ongoing Russia-Ukraine conflict and military actions in Israel, continues to pose challenges for 2024 and beyond[199]. - Supply chain diversification is urgent due to China's aging population and rising operational costs in Asia[199]. - A feasibility study is underway for establishing new factories in Egypt and North Africa, which could benefit from reduced or zero import tariffs from EU member states, with cautious progress planned for 2024[199]. - The company has partnered with UK non-profit organizations to transform the flax industry and implement the REEL (Responsible Flax) code of conduct, focusing on sustainability[199]. - The REEL initiative aims to improve environmental conditions, product quality, and traceability in global supply chains for sustainable flax sourcing[199]. Financial Reporting and Compliance - The financial statements are prepared in accordance with International Financial Reporting Standards and are presented in RMB, rounded to the nearest thousand[19]. - The consolidated financial statements include the company and its subsidiaries as of December 31, 2023, with all intercompany transactions fully eliminated[20]. - The company reassesses control over subsidiaries if there are changes in the elements of control, ensuring accurate financial reporting[22]. - The company has adopted new and revised International Financial Reporting Standards in the current financial statements, with no significant impact on measurement or presentation[25].

Financial Performance - The Group's gross profit decreased by approximately 16.9% to approximately RMB154,701,000, with a gross profit margin dropping by approximately 0.6 percentage points to approximately 18.8% due to rising raw material costs and currency fluctuations [1][2] - Total revenue for the Review Period dropped by approximately 14.2% to approximately RMB821,476,000, primarily due to weaker demand in export markets, particularly in the European Union, countered by higher average selling prices and new product launches [13][14] - Profit for the Review Period was approximately RMB67,500,000, representing a decline of approximately 20.1% compared to RMB84,439,000 for the same period last year [40] - Profit attributable to owners of the parent was approximately RMB67,549,000, down approximately 18.1% from RMB82,494,000 in the previous year [42] - Income tax expense for the Review Period was approximately RMB20,984,000, with an effective tax rate of approximately 23.7%, down from 27.8% in the previous year [39] - Revenue decreased by approximately 14.2% to approximately RMB821,476,000 for the six months ended 30 June 2023 from approximately RMB957,058,000 for the same period in 2022, mainly due to lower demand from export markets, particularly in the European Union [59] - Profit for the Review Period dropped by approximately 20.1% to RMB67,500,000 for the six months ended 30 June 2023 from approximately RMB84,439,000 for the same period in 2022 [62] - Profit attributable to the owners of the parent decreased by approximately 18.1% to RMB67,549,000 for the six months ended 30 June 2023 from approximately RMB82,494,000 for the same period in 2022 [62] Sales and Market Performance - Domestic sales in China grew by 10.2%, while export sales to the European Union and non-European Union regions decreased by approximately 29.2% and 22.4%, respectively [13][14] - The quantity of linen yarn sold during the Review Period was 7,275 tonnes, which is 31.2% fewer than the 10,572 tonnes sold during the same period in 2022 [66] - Domestic sales reached RMB344,603,000, contributing approximately 41.9% to total revenue, an increase of approximately 10.2% year-on-year [73] - Overseas sales amounted to RMB476,873,000, contributing approximately 58.1% to total revenue, a decrease of approximately 26.0% year-on-year [73] - Sales to European Union countries decreased by 29.2% year-on-year, while sales to non-European Union countries decreased by 22.4% year-on-year due to weak demand [73] Cost Management and Expenses - Administrative expenses decreased by approximately 17.9% to approximately RMB49,361,000, attributed to lower staff costs, research and development expenses, and reduced provisions for bad debts [6][7] - Selling and distribution expenses amounted to approximately RMB13,957,000, accounting for approximately 1.7% of total revenue, down from approximately 2.4% in the previous period [4] - Total finance costs for the Review Period were approximately RMB15,326,000, lower than the previous year's RMB17,624,000, due to a reduced average loan balance [9] - The total employee cost during the Review Period was approximately RMB80,261,000, a decrease from RMB97,418,000 in the same period last year [120] - Total staff costs for the review period amounted to approximately RMB80,261,000, down from RMB97,418,000 for the six months ended June 30, 2022 [139] Assets and Liabilities - The Group's total assets as of 30 June 2023 were approximately RMB3,088,772,000, an increase from RMB2,904,922,000 as of 31 December 2022 [12] - As of June 30, 2023, total equity was approximately RMB1,504,247,000, an increase from approximately RMB1,487,990,000 as of December 31, 2022 [18] - The Group's total borrowings repayable within 12 months increased to approximately RMB786,642,000 from approximately RMB696,344,000 as of December 31, 2022, resulting in a gross debt gearing ratio of approximately 56.0% compared to 50.6% previously [18] - Net current assets as of June 30, 2023, were approximately RMB433,541,000, up from approximately RMB417,334,000 as of December 31, 2022 [49] - Cash and cash equivalents decreased to approximately RMB168,180,000 as of June 30, 2023, from approximately RMB467,469,000 as of December 31, 2022 [50] - The liquidity ratio as of June 30, 2023, was approximately 129.1%, slightly down from 131.6% as of December 31, 2022 [50] Production and Operations - The Ethiopia factory has resumed normal production and is ramping up its production capacity during the Review Period [75] - The Group procured approximately 19,419 tonnes of raw materials during the Review Period, a year-on-year decrease of approximately 13.4% from 22,426 tonnes [81] - The average procurement unit price surged approximately 64.3% to RMB 44,658 per tonne, up from RMB 27,177 in the corresponding period last year due to supply shortages [81] - As of June 30, 2023, the Group had five production bases with an annual capacity of 7,000 tonnes (90% utilization), 6,000 tonnes (90% utilization), and 5,000 tonnes (80% utilization) among others [84] - A total of 194 tonnes of hemp yarn were produced during the Review Period, marking the Group's first venture into the hemp yarn market with a 75.34% equity interest in Heilongjiang Kingdom Enterprise Co., Ltd. [87] - The weaving and fabric factory in China is under construction and is expected to start trial production in the fourth quarter of 2023 [103] Strategic Initiatives - The Group is committed to investing in Ethiopia to reduce costs and benefit from the European Union's Everything but Arms initiative, which provides duty-free access to products made in least developed countries [102] - The Group aims to establish a scaled hemp yarn production within three years to meet market demand [148] - The Group has partnered with COTTONCONNECT to develop the REEL Linen Code of Conduct, promoting sustainability in the flax industry [149] - The Group's strategy includes developing proprietary intellectual property rights and pursuing advanced management practices to enhance long-term shareholder value [175] - The Group aims to become one of the largest linen yarn manufacturers globally, focusing on sustainable development and technical innovation [175] Corporate Governance and Shareholder Matters - The Company has not declared any interim dividend for the six months ended June 30, 2023, consistent with the previous year [190] - The Group's primary objective is to enhance long-term total return for shareholders through solid financial fundamentals [175] - The Company has adopted a share award plan to incentivize and retain personnel, aligning their interests with those of shareholders [193] - No Shares have been awarded pursuant to the Share Award Plan during the Review Period [198] - As of June 30, 2023, there were 13,230,750 Shares held by the Trustee, representing approximately 2.1% of the issued Shares of the Company [198] - All Directors have confirmed compliance with the required standards regarding securities transactions during the Review Period [199] - The Company has established its own code of conduct for Directors' securities transactions, which meets or exceeds the Model Code standards [199]

[Interim Results Highlights](index=1&type=section&id=Interim%20Results%20Highlights) [Key Financial Performance](index=1&type=section&id=Key%20Financial%20Performance) The company's revenue, profit, and basic EPS declined for the six months ended June 30, 2023, impacted by weak export demand, soaring raw material costs, and exchange rate fluctuations | Metric | Six Months Ended June 30, 2023 (RMB '000) | Six Months Ended June 30, 2022 (RMB '000) | Change (%) | | :--- | :--- | :--- | :--- | | Revenue | 821,476 | 957,058 | -14.2% | | Gross Margin | 18.8% | 19.4% | -0.6 percentage points | | Profit for the Period | 67,500 | 84,439 | -20.1% | | Profit Attributable to Owners of the Parent | 67,549 | 82,494 | -18.1% | | Basic Earnings Per Share | RMB 0.11 | RMB 0.13 | -15.4% | - The decrease in revenue was primarily due to **weak demand** in export markets, especially the EU region, leading to a **reduction in flax yarn sales**, but partially offset by an **increase in the average selling price** of flax yarn, new product launches, and the **appreciation of the USD against RMB**[2](index=2&type=chunk) - Gross margin slightly decreased by **0.6 percentage points to 18.8%**, mainly due to **soaring raw material costs**, despite increased flax yarn selling prices, capacity release from the Ethiopia plant, and the appreciation of the USD against RMB[2](index=2&type=chunk) [Interim Condensed Consolidated Financial Statements](index=2&type=section&id=Interim%20Condensed%20Consolidated%20Financial%20Statements) [Interim Condensed Consolidated Statement of Profit or Loss](index=2&type=section&id=Interim%20Condensed%20Consolidated%20Statement%20of%20Profit%20or%20Loss) For the six months ended June 30, 2023, the Group's revenue and various profit metrics decreased year-on-year, mainly due to increased cost of sales, reduced other income and gains, and changes in selling and administrative expenses | Metric | Six Months Ended June 30, 2023 (RMB '000) | Six Months Ended June 30, 2022 (RMB '000) | | :--- | :--- | :--- | | Revenue | 821,476 | 957,058 | | Cost of Sales | (666,775) | (770,976) | | Gross Profit | 154,701 | 186,082 | | Other Income and Gains | 13,100 | 37,842 | | Selling and Distribution Expenses | (13,957) | (23,210) | | Administrative Expenses | (49,361) | (60,087) | | Finance Costs | (15,326) | (17,624) | | Profit Before Tax | 88,484 | 117,005 | | Profit for the Period | 67,500 | 84,439 | | Profit Attributable to Owners of the Parent | 67,549 | 82,494 | | Basic Earnings Per Share | RMB 0.11 | RMB 0.13 | [Interim Condensed Consolidated Statement of Comprehensive Income](index=3&type=section&id=Interim%20Condensed%20Consolidated%20Statement%20of%20Comprehensive%20Income) For the six months ended June 30, 2023, the Group's total comprehensive income for the period was RMB 66,880 thousand, a decrease from RMB 82,912 thousand in the prior year, mainly due to reduced profit and exchange differences on translating foreign operations | Metric | Six Months Ended June 30, 2023 (RMB '000) | Six Months Ended June 30, 2022 (RMB '000) | | :--- | :--- | :--- | | Profit for the Period | 67,500 | 84,439 | | Exchange Differences on Translating Foreign Operations | (620) | (1,527) | | Total Comprehensive Income for the Period | 66,880 | 82,912 | | Attributable to Owners of the Parent | 66,929 | 80,967 | | Attributable to Non-controlling Interests | (49) | 1,945 | [Interim Condensed Consolidated Statement of Financial Position](index=4&type=section&id=Interim%20Condensed%20Consolidated%20Statement%20of%20Financial%20Position) As of June 30, 2023, the Group's total assets, net current assets, and total equity increased compared to December 31, 2022, but cash and cash equivalents significantly decreased, while inventories and trade and bills payables increased | Metric | June 30, 2023 (RMB '000) | December 31, 2022 (RMB '000) | | :--- | :--- | :--- | | Total Non-current Assets | 1,166,797 | 1,167,881 | | Total Current Assets | 1,921,975 | 1,737,041 | | Inventories | 1,042,867 | 685,180 | | Cash and Cash Equivalents | 168,180 | 467,469 | | Total Current Liabilities | 1,488,434 | 1,319,707 | | Trade and Bills Payables | 433,421 | 367,096 | | Net Current Assets | 433,541 | 417,334 | | Total Assets Less Current Liabilities | 1,600,338 | 1,585,215 | | Total Equity | 1,504,247 | 1,487,990 | - Total current assets increased, primarily due to a **significant increase in inventories** from **RMB 685,180 thousand to RMB 1,042,867 thousand**[5](index=5&type=chunk) - Cash and cash equivalents **decreased significantly** from **RMB 467,469 thousand to RMB 168,180 thousand**[5](index=5&type=chunk) [Notes to the Interim Condensed Consolidated Financial Statements](index=6&type=section&id=Notes%20to%20the%20Interim%20Condensed%20Consolidated%20Financial%20Statements) [Company and Group Information](index=6&type=section&id=Company%20and%20Group%20Information) Jinda Holdings Limited was incorporated in the Cayman Islands in 2006 and listed on the Hong Kong Stock Exchange, with the Group primarily engaged in the production and sale of flax yarn - The Company was incorporated in the Cayman Islands on **July 21, 2006**, and listed on the Hong Kong Stock Exchange on **December 12, 2006**[8](index=8&type=chunk) - The Group is principally engaged in the **production and sale of flax yarn**[40](index=40&type=chunk) [Basis of Preparation and Accounting Policies](index=6&type=section&id=Basis%20of%20Preparation%20and%20Accounting%20Policies) The interim condensed consolidated financial statements are prepared in accordance with IAS 34 and incorporate new and revised IFRSs for the first time, with minimal impact on the Group's financial position or performance - The interim condensed consolidated financial statements are prepared in accordance with **International Accounting Standard 34 "Interim Financial Reporting"**[41](index=41&type=chunk) - New and revised International Financial Reporting Standards, including amendments to **IAS 1, IAS 8, and IAS 12**, were adopted for the first time during this period[10](index=10&type=chunk)[21](index=21&type=chunk)[42](index=42&type=chunk) - The amendments to **IAS 12 (International Tax Reform – Pillar Two Model Rules)** have no impact on the Group as it does not fall within their scope[47](index=47&type=chunk) [Basis of Preparation](index=6&type=section&id=Basis%20of%20Preparation) The interim condensed consolidated financial statements are prepared in accordance with IAS 34 "Interim Financial Reporting" and should be read in conjunction with the Group's annual financial statements for the year ended December 31, 2022 - The interim condensed consolidated financial statements are prepared in accordance with **International Accounting Standard 34 "Interim Financial Reporting"**[41](index=41&type=chunk) - These interim condensed consolidated financial statements should be read in conjunction with the Group's annual financial statements for the year ended **December 31, 2022**[20](index=20&type=chunk) [Changes in Accounting Policies and Disclosures](index=6&type=section&id=Changes%20in%20Accounting%20Policies%20and%20Disclosures) The Group adopted amendments to IAS 1, IAS 8, and IAS 12 effective January 1, 2023, which have minimal quantitative impact on the interim condensed consolidated financial information, primarily affecting accounting policy disclosures or being inapplicable to the Group - Amendments to **IAS 1** require disclosure of material accounting policy information, expected to impact accounting policy disclosures in the annual consolidated financial statements but with **no impact on interim condensed consolidated financial information**[23](index=23&type=chunk) - Amendments to **IAS 8** clarify the distinction between changes in accounting estimates and changes in accounting policies, with **no impact on the Group's financial position or performance**[45](index=45&type=chunk) - Amendments to **IAS 12** narrow the scope of the initial recognition exemption, requiring recognition of deferred tax assets and liabilities related to leases, but with **no significant impact on the retained earnings balance as of January 1, 2022**[24](index=24&type=chunk)[46](index=46&type=chunk) [Operating Segments](index=8&type=section&id=Operating%20Segments) The Group primarily engages in the production and sale of flax yarn, organized as a single business unit, with geographical data showing mainland China as the main location for non-current assets, and revenue distributed across mainland China, EU, and non-EU regions - The Group is organized into a **single business unit**, primarily comprising the production and sale of flax yarn, hence no segment analysis is presented[48](index=48&type=chunk) [Geographical Information](index=8&type=section&id=Geographical%20Information) The Group's revenue is sourced from mainland China, the EU, and non-EU regions, with increased revenue from mainland China and decreased revenue from EU and non-EU regions, while non-current assets are primarily located in mainland China and Ethiopia Revenue by Customer Location | Region | 2023 (RMB '000) | 2022 (RMB '000) | | :--- | :--- | :--- | | Mainland China | 344,603 | 312,827 | | European Union | 240,230 | 339,165 | | Non-European Union | 236,643 | 305,066 | | Total | 821,476 | 957,058 | Non-current Assets by Asset Location | Region | June 30, 2023 (RMB '000) | December 31, 2022 (RMB '000) | | :--- | :--- | :--- | | Mainland China | 799,890 | 790,849 | | Ethiopia | 356,869 | 368,559 | | Total | 1,156,759 | 1,159,408 | [Information about Major Customers](index=9&type=section&id=Information%20about%20Major%20Customers) For the six months ended June 30, 2023, the Group had no sales to a single customer accounting for 10% or more of total revenue - For the six months ended June 30, 2023, there were **no sales to a single customer** accounting for **10% or more of the Group's total revenue**[52](index=52&type=chunk) [Revenue, Other Income and Gains](index=9&type=section&id=Revenue,%20Other%20Income%20and%20Gains) The Group's revenue primarily derives from the sale of flax yarn, hemp yarn, and waste, recognized at a point in time, while other income and gains, mainly net exchange gains, government grants, and bank interest income, significantly decreased year-on-year - Revenue refers to the sales value of **flax yarn, hemp yarn, and waste**, net of sales tax and any sales discounts and returns[53](index=53&type=chunk) Revenue Analysis | Type of Goods or Services | 2023 (RMB '000) | 2022 (RMB '000) | | :--- | :--- | :--- | | Sales of Flax Yarn, Hemp Yarn and Waste | 802,256 | 929,011 | | Other Services | 19,220 | 28,047 | | Total Revenue | 821,476 | 957,058 | | Timing of Revenue Recognition: | | | | Goods Transferred at a Point in Time | 802,256 | 929,011 | | Services Provided Over Time | 19,220 | 28,047 | Other Income and Gains | Item | 2023 (RMB '000) | 2022 (RMB '000) | | :--- | :--- | :--- | | Net Exchange Gains | 4,223 | 28,238 | | Gain on Disposal of Items of Property, Plant and Equipment | 1,982 | – | | Government Grants | 2,889 | 8,117 | | Bank Interest Income | 1,958 | 529 | | Others | 2,048 | 958 | | Total | 13,100 | 37,842 | [Finance Costs](index=10&type=section&id=Finance%20Costs) For the six months ended June 30, 2023, the Group's total finance costs were RMB 15,326 thousand, a decrease from RMB 17,624 thousand in the prior year, primarily due to lower average loan balances | Item | 2023 (RMB '000) | 2022 (RMB '000) | | :--- | :--- | :--- | | Interest on Bank Loans | 16,235 | 20,751 | | Interest on Lease Liabilities | 196 | 363 | | Total Interest Expense on Financial Liabilities Not at Fair Value Through Profit or Loss | 16,431 | 21,114 | | Less: Interest Capitalized | (1,105) | (3,490) | | Total Finance Costs | 15,326 | 17,624 | - The lower total finance costs were mainly due to a **lower average loan balance** during the review period compared to the same period last year[84](index=84&type=chunk) [Profit Before Tax](index=11&type=section&id=Profit%20Before%20Tax) For the six months ended June 30, 2023, the Group's profit before tax was RMB 88,484 thousand, a decrease from RMB 117,005 thousand in the prior year, primarily due to reduced cost of inventories sold, service costs, R&D expenses, and employee benefit expenses, as well as a significant decline in net exchange gains | Item | 2023 (RMB '000) | 2022 (RMB '000) | | :--- | :--- | :--- | | Cost of Inventories Sold | 647,555 | 742,929 | | Cost of Services | 19,220 | 28,047 | | Depreciation | 50,869 | 51,420 | | Research and Development Expenses | 12,656 | 15,699 | | Employee Benefit Expenses | 80,261 | 97,418 | | Net Exchange Gains | (4,223) | (28,238) | | Fair Value Loss on Derivative Financial Instruments | – | 4,875 | | Impairment (Reversal) / Provision for Inventories | (3,296) | 2,884 | | Impairment Provision for Trade and Bills Receivables | 74 | 3,841 | | Finance Costs | 15,326 | 17,624 | | Bank Interest Income | (1,958) | (529) | [Income Tax Expense](index=12&type=section&id=Income%20Tax%20Expense) For the six months ended June 30, 2023, the Group's income tax expense was RMB 20,984 thousand, a decrease from RMB 32,566 thousand in the prior year, with the effective tax rate falling from 27.8% to 23.7%, reflecting varying tax policies across regions, such as a 15% preferential rate for high-tech enterprises in mainland China and a 5-year profit tax exemption in Ethiopia | Item | 2023 (RMB '000) | 2022 (RMB '000) | | :--- | :--- | :--- | | Current Period Expense | 23,511 | 22,533 | | Deferred | (2,527) | 10,033 | | Total Tax Expense for the Period | 20,984 | 32,566 | - The effective tax rates for the review period and the prior year were approximately **23.7% and 27.8%**, respectively[112](index=112&type=chunk) - Zhejiang Jinda in mainland China enjoys a **15% preferential tax rate** as a high-tech enterprise, while the Ethiopia plant benefits from a **5-year profit tax exemption**[58](index=58&type=chunk)[59](index=59&type=chunk) [Dividends](index=12&type=section&id=Dividends) The Board of Directors resolved not to declare any interim dividend for the six months ended June 30, 2023 - The Board of Directors resolved **not to declare any interim dividend** for the six months ended June 30, 2023 (six months ended June 30, 2022: nil)[89](index=89&type=chunk) [Earnings Per Share](index=13&type=section&id=Earnings%20Per%20Share) For the six months ended June 30, 2023, the Group's basic and diluted earnings per share were both RMB 0.11, a decrease from RMB 0.13 in the prior year, primarily due to reduced profit attributable to owners of the parent | Metric | 2023 (RMB '000) | 2022 (RMB '000) | | :--- | :--- | :--- | | Profit Attributable to Ordinary Equity Holders of the Parent Used for Basic EPS Calculation | 67,549 | 82,494 | | Weighted Average Number of Ordinary Shares in Issue for Basic EPS Calculation (thousand shares) | 616,447 | 616,447 | | Basic Earnings Per Share | RMB 0.11 | RMB 0.13 | | Diluted Earnings Per Share | RMB 0.11 | RMB 0.13 | - Diluted earnings per share are calculated based on the profit attributable to ordinary equity holders of the parent for the reporting period, considering the dilutive effect of potential ordinary shares, but **no share awards met vesting conditions** during this period[61](index=61&type=chunk)[62](index=62&type=chunk) [Trade and Other Receivables](index=14&type=section&id=Trade%20and%20Other%20Receivables) As of June 30, 2023, the Group's total trade and bills receivables increased to RMB 440,733 thousand from December 31, 2022, with customers generally granted credit terms of 30 to 150 days, and the Group maintaining a credit control department to manage risks | Item | June 30, 2023 (RMB '000) | December 31, 2022 (RMB '000) | | :--- | :--- | :--- | | Trade Receivables | 335,142 | 273,073 | | Bills Receivables | 105,991 | 153,520 | | Impairment | (400) | (326) | | Total | 440,733 | 426,267 | Ageing Analysis of Trade Receivables | Ageing | June 30, 2023 (RMB '000) | December 31, 2022 (RMB '000) | | :--- | :--- | :--- | | Within 1 Month | 186,069 | 148,389 | | 1 to 2 Months | 62,215 | 49,438 | | 2 to 3 Months | 63,823 | 37,250 | | Over 3 Months | 22,635 | 37,670 | | Total | 334,742 | 272,747 | - Customers are generally granted credit terms of **30 to 150 days**, and the Group maintains a credit control department to minimize credit risk[36](index=36&type=chunk) [Trade and Other Payables](index=15&type=section&id=Trade%20and%20Other%20Payables) As of June 30, 2023, the Group's total trade and bills payables increased to RMB 433,421 thousand from December 31, 2022, with these balances being unsecured, non-interest-bearing, and having a credit period of 90 days | Ageing | June 30, 2023 (RMB '000) | December 31, 2022 (RMB '000) | | :--- | :--- | :--- | | Due within 1 Month or on Demand | 55,170 | 65,609 | | Due after 1 Month but within 3 Months | 343,251 | 252,383 | | Over 3 Months | 35,000 | 49,104 | | Total | 433,421 | 367,096 | - The above balances are **unsecured and non-interest-bearing**, with a credit period of **90 days**[95](index=95&type=chunk) [Events After the Reporting Period](index=15&type=section&id=Events%20After%20the%20Reporting%20Period) The Group did not undertake any significant post-reporting period events after June 30, 2023 - The Group did not undertake any **significant post-reporting period events** after June 30, 2023[96](index=96&type=chunk) [Management Discussion and Analysis](index=16&type=section&id=Management%20Discussion%20and%20Analysis) [Business Review](index=16&type=section&id=Business%20Review) The Group faced global economic challenges during the review period, leading to a decline in revenue, but partially offset negative impacts through product innovation and market expansion efforts; raw material costs soared, yet the Group remains optimistic about the flax textile industry's future, continuing investments in Ethiopia and the hemp yarn market while advancing weaving and fabric projects - Revenue decreased by **14.2% to RMB 821,476 thousand** during the review period, primarily due to a **31.2% reduction in flax yarn sales** from weak export market demand, but partially offset by increased average selling prices and the appreciation of the USD against RMB[98](index=98&type=chunk) - The average procurement unit price for flax fiber, a key raw material, **soared by approximately 64.3% to RMB 44,658 per ton**, mainly due to supply shortages caused by low harvests[71](index=71&type=chunk) - The Group continues to invest in its Ethiopia plant, expecting cost savings and benefits from the EU's "Everything But Arms (EBA)" initiative, while actively entering the hemp yarn market and advancing weaving and fabric factory construction[74](index=74&type=chunk)[101](index=101&type=chunk)[103](index=103&type=chunk) [Economic Outlook](index=16&type=section&id=Economic%20Outlook) Despite the end of the COVID-19 pandemic, geopolitical tensions persist, with many countries anticipating low single-digit economic growth or contraction in 2023 - The COVID-19 pandemic has ended, but geopolitical tensions between different countries persist, with many developed and developing countries forecasting **low single-digit economic growth or even contraction in 2023**[68](index=68&type=chunk) [Revenue and Sales Strategy](index=16&type=section&id=Revenue%20and%20Sales%20Strategy) The Group's revenue decreased by 14.2% during the review period, mainly due to weak export market demand, though domestic sales grew by 10.2%, as the Group implements an international sales strategy and continues to expand its domestic market presence Revenue by Sales Region | Region | 2023 (RMB '000) | 2022 (RMB '000) | Year-on-Year Change (%) | | :--- | :--- | :--- | :--- | | China | 344,603 | 312,827 | +10.2% | | European Union | 240,230 | 339,165 | -29.2% | | Non-European Union | 236,643 | 305,066 | -22.4% | | Total Revenue | 821,476 | 957,058 | -14.2% | - During the review period, **7,275 tons of flax yarn were sold**, a **31.2% decrease** compared to 10,572 tons in the prior year[98](index=98&type=chunk) - The Group implements an **international sales strategy**, with a sales network spanning approximately **20 countries and regions globally**, and continues to expand its domestic market[98](index=98&type=chunk) [Raw Material Procurement](index=17&type=section&id=Raw%20Material%20Procurement) The Group primarily imports flax fiber from Europe, with procurement volume decreasing by 13.4% during the review period, but the average procurement unit price soaring by 64.3% due to supply shortages; the Group will closely monitor international markets and prudently formulate procurement plans - The Group's main raw material for flax yarn, **flax fiber**, is primarily imported from quality suppliers in France, Belgium, and the Netherlands[71](index=71&type=chunk) - Approximately **19,419 tons of raw materials were procured** during the review period, a **decrease of about 13.4%** year-on-year, with the average procurement unit price soaring by approximately **64.3% to RMB 44,658 per ton** due to supply shortages from low harvests[71](index=71&type=chunk) [Production Capacity](index=17&type=section&id=Production%20Capacity) The Group operates five production bases with a total annual capacity of 27,000 tons, where Chinese plants utilize approximately 80%-90% of capacity, and the Ethiopia plant operates at around 60% utilization, which is continuously improving Production Bases and Capacity | No. | Plant | Location | Country | Annual Capacity (tons) | Utilization/Status | | :--- | :--- | :--- | :--- | :--- | :--- | | 1 | Haiyan Phase I Plant | Zhejiang | China | 7,000 | Approx. 90% | | 2 | Rugao Plant | Jiangsu | China | 6,000 | Approx. 90% | | 3 | Haiyan Phase II Plant | Zhejiang | China | 5,000 | Approx. 80% | | 4 | Qinggang Plant | Heilongjiang | China | 4,000 | Approx. 90% | | 5 | Ethiopia | Adama | Ethiopia | 5,000 | Approx. 60% | - The Ethiopia factory operated normally during the review period, with **continuously improving production capacity**[102](index=102&type=chunk) [Ethiopia Investment](index=18&type=section&id=Ethiopia%20Investment) The Group's investment in Ethiopia aims to save land, labor, energy costs, and tax expenses, while benefiting from the EU's "Everything But Arms (EBA)" initiative for Least Developed Countries - The Ethiopia investment helps the Group save on **land costs, labor costs, energy costs, and tax expenses**[74](index=74&type=chunk) - This investment allows the Group to benefit from the EU's "Everything But Arms (EBA)" initiative for Least Developed Countries, granting **duty-free and quota-free access** to all products manufactured in LDCs entering EU countries[74](index=74&type=chunk) [Weaving and Fabric Project & Hemp Yarn](index=18&type=section&id=Weaving%20and%20Fabric%20Project%20%26%20Hemp%20Yarn) The Group is expanding into flax weaving and fabric business, with trial production expected at its China factory in Q4 2023, while also producing 194 tons of multi-specification hemp yarn and anticipating strong growth in the hemp yarn market - The weaving and fabric factory in China is still under construction, with trial production expected to begin in **Q4 2023**, aiming to broaden flax application areas[103](index=103&type=chunk) - A total of **194 tons of multi-specification hemp yarn** were produced during the review period, and the Group believes the hemp yarn market will grow rapidly in the coming years, benefiting from China's national policy promoting hemp cultivation and textile use in Heilongjiang province[101](index=101&type=chunk) [Financial Review](index=18&type=section&id=Financial%20Review) The Group experienced declines in revenue, gross profit, and profit for the period during the review period; revenue decreased due to weak export market demand, gross margin slightly fell due to soaring raw material costs, while other income and gains, selling and distribution expenses, administrative expenses, and finance costs all decreased, with a corresponding reduction in income tax expense | Metric | Six Months Ended June 30, 2023 (RMB '000) | Six Months Ended June 30, 2022 (RMB '000) | Change (%) | | :--- | :--- | :--- | :--- | | Revenue | 821,476 | 957,058 | -14.2% | | Gross Profit | 154,701 | 186,082 | -16.9% | | Gross Margin | 18.8% | 19.4% | -0.6 percentage points | | Other Income and Gains | 13,100 | 37,842 | -65.3% | | Selling and Distribution Expenses | 13,957 | 23,210 | -39.9% | | Administrative Expenses | 49,361 | 60,087 | -17.9% | | Total Finance Costs | 15,326 | 17,624 | -13.0% | | Profit for the Period | 67,500 | 84,439 | -20.1% | | Profit Attributable to Owners of the Parent | 67,549 | 82,494 | -18.1% | | Income Tax Expense | 20,984 | 32,566 | -35.5% | [Revenue](index=18&type=section&id=Revenue_FinancialReview) Revenue decreased by 14.2% to RMB 821,476 thousand during the review period, primarily due to weak export market demand leading to reduced flax yarn sales, but partially offset by increased average selling prices and the appreciation of the USD against RMB; domestic sales grew by 10.2%, while export sales to EU and non-EU regions fell by 29.2% and 22.4% respectively Revenue Breakdown by Sales Region | Region | 2023 (RMB '000) | % of Total Revenue | 2022 (RMB '000) | % of Total Revenue | Year-on-Year Revenue Change (RMB '000) | Change (%) | | :--- | :--- | :--- | :--- | :--- | :--- | :--- | | China | 344,603 | 41.9% | 312,827 | 32.7% | 31,776 | +10.2% | | European Union | 240,230 | 29.3% | 339,165 | 35.4% | (98,935) | -29.2% | | Non-European Union | 236,643 | 28.8% | 305,066 | 31.9% | (68,423) | -22.4% | | Total Revenue | 821,476 | 100.0% | 957,058 | 100.0% | (135,582) | -14.2% | - The decrease in revenue was mainly due to **weak demand in export markets**, especially the EU region, caused by the COVID-19 pandemic and geopolitical tensions during the review period, leading to a reduction in flax yarn sales[76](index=76&type=chunk) [Gross Profit and Gross Margin](index=19&type=section&id=Gross%20Profit%20and%20Gross%20Margin) Gross profit decreased by 16.9% to RMB 154,701 thousand during the review period, and gross margin declined by 0.6 percentage points to 18.8%, primarily due to soaring raw material costs, despite increased flax yarn selling prices, capacity release from the Ethiopia plant, and the appreciation of the USD against RMB - The Group's gross profit decreased by approximately **16.9% to approximately RMB 154,701 thousand** during the review period[106](index=106&type=chunk) - Gross margin decreased by approximately **0.6 percentage points to approximately 18.8%**, mainly due to **soaring raw material costs** during the review period[106](index=106&type=chunk) [Other Income and Gains](index=19&type=section&id=Other%20Income%20and%20Gains_FinancialReview) Other income and gains during the review period, primarily comprising government grants, interest income, and net exchange gains, significantly decreased year-on-year, mainly due to reduced government grants and lower net exchange gains Other Income and Gains | Item | 2023 (RMB '000) | 2022 (RMB '000) | | :--- | :--- | :--- | | Government Grants and Subsidies | 2,889 | 8,117 | | Bank Interest Income | 1,958 | 529 | | Net Exchange Gains | 4,223 | 28,238 | | Total | 13,100 | 37,842 | - Net exchange gains were mainly attributable to the **appreciation of the USD against RMB** during the review period, as all overseas invoices are denominated in USD[139](index=139&type=chunk) - Government grants and subsidies decreased because the Chinese government provided **more subsidies in the prior year** to curb the COVID-19 pandemic[139](index=139&type=chunk) [Selling and Distribution Expenses](index=20&type=section&id=Selling%20and%20Distribution%20Expenses) Selling and distribution expenses were approximately RMB 13,957 thousand during the review period, a 39.9% decrease from the prior year, with the percentage of total revenue declining, mainly due to reduced sales commissions payable - The Group's selling and distribution expenses were approximately **RMB 13,957 thousand** during the review period, a decrease of approximately **39.9%** compared to the prior year[140](index=140&type=chunk) - The decrease in selling expenses as a percentage of revenue was mainly due to **reduced sales commissions payable**, as commissions are only paid for certain export sales and not for domestic sales in China[140](index=140&type=chunk) [Administrative Expenses](index=20&type=section&id=Administrative%20Expenses) Administrative expenses were approximately RMB 49,361 thousand during the review period, a 17.9% decrease from the prior year, primarily due to reduced staff costs, R&D expenses, and bad debt provisions - The Group's administrative expenses were approximately **RMB 49,361 thousand** during the review period, a decrease of approximately **17.9%** compared to the prior year[81](index=81&type=chunk) - The decrease in administrative expenses was mainly due to a **RMB 3.0 million reduction in staff costs**, a **RMB 3.0 million reduction in R&D expenses**, and a **RMB 3.8 million reduction in bad debt provisions**[81](index=81&type=chunk) [Other Expenses](index=20&type=section&id=Other%20Expenses) Other expenses were approximately RMB 673 thousand during the review period, a significant decrease from the prior year, primarily due to the absence of fair value losses on derivative instruments and losses on asset disposals in the current period - The Group's other expenses were approximately **RMB 673 thousand** during the review period, a significant decrease from approximately RMB 5,998 thousand in the prior year[109](index=109&type=chunk) - During the review period, there were **no fair value losses on derivative instruments** (prior year: RMB 4,875 thousand) and **no losses on asset disposals** (prior year: approximately RMB 621 thousand)[109](index=109&type=chunk) [Finance Costs](index=20&type=section&id=Finance%20Costs_FinancialReview) Total finance costs were approximately RMB 15,326 thousand during the review period, a 13.0% decrease from the prior year, primarily due to lower average loan balances, with both net interest on borrowings and interest on lease liabilities declining - Total finance costs for the review period were approximately **RMB 15,326 thousand**, a decrease of approximately **13.0%** compared to the prior year[84](index=84&type=chunk) - The lower total finance costs were mainly due to a **lower average loan balance** during the review period compared to the same period last year[84](index=84&type=chunk) - Net interest on borrowings was approximately **RMB 15,130 thousand**, and interest on lease liabilities was approximately **RMB 196 thousand**, both decreasing from the prior year[110](index=110&type=chunk)[111](index=111&type=chunk) [Profit for the Period](index=21&type=section&id=Profit%20for%20the%20Period) The Group recorded a profit of approximately RMB 67,500 thousand during the review period, a 20.1% decrease from the prior year - The Group recorded a profit of approximately **RMB 67,500 thousand** during the review period, a decrease of approximately **20.1%** compared to the prior year[145](index=145&type=chunk) [Profit Attributable to Owners of the Parent](index=21&type=section&id=Profit%20Attributable%20to%20Owners%20of%20the%20Parent) Profit attributable to owners of the parent was approximately RMB 67,549 thousand during the review period, an 18.1% decrease from the prior year - During the review period, the Group recorded a profit attributable to owners of the parent of approximately **RMB 67,549 thousand**, a decrease of approximately **18.1%** compared to the prior year[114](index=114&type=chunk) [Non-controlling Interests](index=21&type=section&id=Non-controlling%20Interests) Non-controlling interests of approximately RMB 49 thousand represent the share of losses attributable to non-controlling interests in certain subsidiaries of the Group during the review period - Non-controlling interests of approximately **RMB 49 thousand** represent the share of losses attributable to non-controlling interests in certain subsidiaries of the Group during the review period (six months ended June 30, 2022: share of profit of RMB 1,945 thousand)[146](index=146&type=chunk) [Liquidity and Financial Resources](index=22&type=section&id=Liquidity%20and%20Financial%20Resources) As of June 30, 2023, the Group's cash and cash equivalents significantly decreased, and the current ratio slightly declined, but net current assets increased; the total capital-to-debt ratio rose to 56.0%, and the Board believes existing financial resources are adequate, considering various financing options | Metric | June 30, 2023 (RMB '000) | December 31, 2022 (RMB '000) | | :--- | :--- | :--- | | Cash and Cash Equivalents | 168,180 | 467,469 | | Net Current Assets | 433,541 | 417,334 | | Current Ratio | 129.1% | 131.6% | | Total Equity | 1,504,247 | 1,487,990 | | Total Borrowings | 843,029 | 752,903 | | Total Capital-to-Debt Ratio | 56.0% | 50.6% | - The Group's cash and cash equivalents are primarily denominated in **RMB, USD, EUR, HKD, and Ethiopian Birr**, while borrowings are mainly denominated in **RMB and EUR**[150](index=150&type=chunk) - The Board believes the Group's existing financial resources are relatively adequate, and should additional funds be required, the Group may consider **all possible financing options**[117](index=117&type=chunk) [Capital Commitments](index=22&type=section&id=Capital%20Commitments) As of June 30, 2023, the Group's outstanding contractual capital commitments for the purchase of property, plant, and equipment not provided for in the interim condensed consolidated financial statements were approximately RMB 172,371 thousand, a decrease from the end of last year - As of June 30, 2023, the Group's outstanding contractual capital commitments for the purchase of property, plant, and equipment not provided for in the interim condensed consolidated financial statements were approximately **RMB 172,371 thousand** (December 31, 2022: approximately RMB 208,855 thousand)[150](index=150&type=chunk) - As of June 30, 2023, the Group had **no authorized but not contracted capital commitments**[150](index=150&type=chunk) [Contingent Liabilities](index=23&type=section&id=Contingent%20Liabilities) As of June 30, 2023, the Group had no significant contingent liabilities - As of June 30, 2023, the Group had **no significant contingent liabilities**[120](index=120&type=chunk) [Pledge of Assets](index=23&type=section&id=Pledge%20of%20Assets) As of June 30, 2023, the Group pledged property, plant, and equipment with a carrying amount of approximately RMB 286,967 thousand and inventories of approximately RMB 40,000 thousand to secure current interest-bearing bank loans of RMB 220,000 thousand - Current interest-bearing bank loans of **RMB 220,000 thousand** are secured by certain property, plant, and equipment with a carrying amount of approximately **RMB 286,967 thousand** and inventories of approximately **RMB 40,000 thousand**[120](index=120&type=chunk) [Major Acquisitions and Disposals](index=23&type=section&id=Major%20Acquisitions%20and%20Disposals) During the review period, the Group did not undertake any major acquisitions or disposals of subsidiaries, associates, or joint ventures - During the review period, the Group did not undertake any **major acquisitions or disposals** of subsidiaries, associates, or joint ventures[121](index=121&type=chunk) [Material Investments Held](index=23&type=section&id=Material%20Investments%20Held) During the review period, the Group did not hold any material investments - The Group did not hold any **material investments** during the review period[122](index=122&type=chunk) [Future Plans for Material Investments or Capital Assets](index=23&type=section&id=Future%20Plans%20for%20Material%20Investments%20or%20Capital%20Assets) Aside from maintenance of existing factory projects and vertical expansion into weaving and fabric business, the directors confirm there are currently no plans to acquire any material investments or capital assets - Aside from various maintenance and upkeep of existing factory projects and vertical expansion into the weaving and fabric business, the directors confirm that as of the date of this announcement, there are **currently no plans to acquire any material investments or capital assets**[123](index=123&type=chunk) [Foreign Currency Risk](index=23&type=section&id=Foreign%20Currency%20Risk) The Group's transactions are primarily denominated in RMB, USD, EUR, HKD, and Ethiopian Birr; the Group regularly monitors and manages exchange rate fluctuations and may use credit facilities to enter into foreign currency forward contracts and derivative financial instruments - The Group's transactions are primarily denominated in **RMB, USD, EUR, HKD, and Ethiopian Birr**[124](index=124&type=chunk) - The Group regularly monitors and properly manages exchange rate fluctuations between these currencies and may use credit facilities to enter into certain **foreign currency forward contracts and derivative financial instruments** when necessary[124](index=124&type=chunk) [Remuneration Policy and Employees](index=24&type=section&id=Remuneration%20Policy%20and%20Employees) The Group's remuneration policy is set by the Board with reference to qualifications, experience, responsibilities, contributions, and market levels; as of June 30, 2023, the Group employed 3,842 employees, with total staff costs of approximately RMB 80,261 thousand, and has adopted share option and share award schemes to incentivize staff - The Group's employee remuneration policy is formulated by the Board with reference to each employee's **qualifications, experience, responsibilities, contributions to the Group, and prevailing market remuneration levels** for similar positions[126](index=126&type=chunk) - As of June 30, 2023, the Group employed a total of **3,842 employees** (June 30, 2022: 4,342 employees), with total staff costs incurred during the review period amounting to approximately **RMB 80,261 thousand**[154](index=154&type=chunk) - The Group has also adopted a **share option scheme and a share award scheme** to provide incentives and rewards to directors and other employees who have contributed to the Group's business success[155](index=155&type=chunk) [Principal Risks and Uncertainties](index=25&type=section&id=Principal%20Risks%20and%20Uncertainties) The Group faces principal risks including demand for flax yarn, trade protectionism, raw material supply stability, exchange rate fluctuations, execution risks of the Ethiopia expansion project, and production disruptions caused by pandemics - The Group faces principal risks and uncertainties including **demand for flax yarn, trade protectionism** in certain countries and potential punitive tariffs on Chinese-made products, **stability of raw material supply, depreciation of the USD against RMB, execution risks** of the new expansion project in Ethiopia, and **pandemic outbreaks** leading to production disruptions[129](index=129&type=chunk) - The **Sino-US trade conflict** is expected to continue for the foreseeable future[130](index=130&type=chunk) [Prospects and Plans](index=25&type=section&id=Prospects%20and%20Plans) The Group's Ethiopia factory has commenced operations, contributing additional capacity; the Group will continue to promote the CELC Masters of Linen Code of Conduct to foster sustainable development in the flax industry and actively advance the cultivation of fiber hemp planting bases in China, aiming for large-scale production within three years - The Group's factory in Ethiopia has commenced operations and will contribute **additional production capacity** to the Group[158](index=158&type=chunk) - The Group will continue to promote the **CELC Masters of Linen Code of Conduct** to foster sustainable development in the flax industry[159](index=159&type=chunk)[171](index=171&type=chunk) - The Group is actively promoting the cultivation of **fiber hemp planting bases in China**, striving to achieve large-scale production of fiber hemp spinning within three years to meet market demand[131](index=131&type=chunk) [Other Information](index=26&type=section&id=Other%20Information) [Corporate Strategy and Long-Term Business Model](index=26&type=section&id=Corporate%20Strategy%20and%20Long-Term%20Business%20Model) The Group's primary objective is to enhance long-term shareholder returns through a global production layout, sustainable development, technological innovation, independent intellectual property, product brand marketing, and excellent management, aspiring to become one of the world's largest flax yarn manufacturers - The Group's primary objective is to **enhance long-term total shareholder returns**, with a strategy to build a solid financial foundation and deliver sustained returns[173](index=173&type=chunk) - To achieve this goal, the Company implements a strategy of **globalized production layout**, commits to **sustainable development and technological innovation**, develops **independent intellectual property**, engages in **product brand marketing**, and pursues **management excellence**[173](index=173&type=chunk) [Purchase, Sale or Redemption of the Company’s Listed Securities](index=26&type=section&id=Purchase,%20Sale%20or%20Redemption%20of%20the%20Company%E2%80%99s%20Listed%20Securities) Neither the Company nor its subsidiaries purchased, sold, or redeemed any of the Company's listed securities during the review period - Neither the Company nor its subsidiaries purchased, sold, or redeemed any of the Company's listed securities during the review period[160](index=160&type=chunk) [Interim Dividends](index=26&type=section&id=Interim%20Dividends_OtherInformation) The Board of Directors resolved not to recommend the declaration of any interim dividend for the six months ended June 30, 2023 - The Board of Directors resolved **not to recommend the declaration of any interim dividend** for the six months ended June 30, 2023 (June 30, 2022: nil)[134](index=134&type=chunk) [Share Option Scheme](index=26&type=section&id=Share%20Option%20Scheme) The Company adopted a share option scheme on May 30, 2016, to provide incentives and rewards to directors, employees, consultants, and others who have contributed to the Group's business success; no share options have been granted under the scheme since its adoption - The Company adopted a share option scheme on **May 30, 2016**, to provide incentives and rewards to any director, employee, consultant, client, supplier, agent, business partner, or advisor/contractor of the Group who has contributed to its business success[162](index=162&type=chunk) - Since the adoption of the scheme on May 30, 2016, **no share options have been granted** under the scheme[162](index=162&type=chunk) [Share Award Scheme](index=27&type=section&id=Share%20Award%20Scheme) The Company adopted a share award scheme on August 26, 2016, to incentivize, recognize, and reward eligible persons and align award holders' interests with shareholders'; award shares will be funded by market purchases, held in trust by a trustee, and no shares were granted during the review period, with approximately 2.1% of issued shares held by the trustee for future grants as of June 30, 2023 - The Company adopted a share award scheme on **August 26, 2016**, with the purpose of incentivizing, recognizing, and rewarding eligible persons for their contributions to the Group, attracting and retaining personnel, and aligning the interests of award holders with those of shareholders[163](index=163&type=chunk) - Awards will be funded by **shares purchased in the market at prevailing market prices**, and no new shares will be allotted and issued under the share award scheme[136](index=136&type=chunk) - During the review period, **no shares were granted** under the share award scheme; as of June 30, 2023, a total of **13,230,750 shares** were held by the trustee for future grants, representing approximately **2.1% of the Company's issued shares** as of June 30, 2023[137](index=137&type=chunk) [Events After the Reporting Period](index=28&type=section&id=Events%20After%20the%20Reporting%20Period_OtherInformation) There were no significant post-reporting period events requiring disclosure by the Group after June 30, 2023, and up to the date of this announcement - There were **no significant post-reporting period events** requiring disclosure by the Group after June 30, 2023, and up to the date of this announcement[178](index=178&type=chunk) [Standard of Securities Dealings by Directors](index=28&type=section&id=Standard%20of%20Securities%20Dealings%20by%20Directors) The Company has established a code of conduct for directors' securities dealings, with terms no less exacting than the Model Code in Appendix 10 of the Listing Rules; all directors confirmed compliance with the relevant code during the review period and up to the date of this announcement - The Company has established its own code of conduct for directors' securities dealings, with terms **no less exacting than the Model Code** for Securities Transactions by Directors of Listed Issuers set out in Appendix 10 of the Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited[183](index=183&type=chunk) - Following specific inquiries with all directors, all directors confirmed that they have **complied with the required standards** set out in the Model Code and the Company's code of conduct regarding directors' securities dealings during the review period and up to the date of this announcement[183](index=183&type=chunk) [Compliance with Corporate Governance Code](index=28&type=section&id=Compliance%20with%20Corporate%20Governance%20Code) The Company is committed to establishing good corporate governance practices and believes it has complied with the Code Provisions in Part 2 throughout the review period, except for the non-segregation of duties between the Chairman and Chief Executive Officer; the Board believes the existing structure fosters strong and stable leadership - The Company is committed to establishing **good corporate governance practices and procedures** to be a transparent and accountable organization, open and responsible to shareholders[179](index=179&type=chunk) - The Company has complied with the Code Provisions set out in Part 2 of the Code throughout the review period, **except for Code Provision C.2.1** (segregation of duties between the Chairman and Chief Executive Officer)[179](index=179&type=chunk) - The Board believes that, based on the nature and scale of the Group's business and Mr. Ren Weiming's extensive industry experience, the existing structure contributes to **strong and stable leadership**, enabling the Company to operate effectively[179](index=179&type=chunk) [Audit Committee and Review of Interim Results](index=29&type=section&id=Audit%20Committee%20and%20Review%20of%20Interim%20Results) The Company has established an Audit Committee, comprising three independent non-executive directors, chaired by Mr. Liu Yingjie; the Audit Committee has reviewed the Group's interim results for the review period with no disagreements - The Company has established an Audit Committee, comprising **three independent non-executive directors**: Mr. Liu Yingjie, Mr. Yan Jianmiao, and Mr. Luo Guangxin[180](index=180&type=chunk) - **Mr. Liu Yingjie serves as the Chairman** of the Audit Committee and possesses appropriate professional qualifications and experience in accounting matters[180](index=180&type=chunk) - The Group's interim results for the review period have been **reviewed by the Audit Committee, with no disagreements**[180](index=180&type=chunk) [Acknowledgements](index=29&type=section&id=Acknowledgements) The Company's Chairman extends gratitude to the directors for their valuable advice and guidance, and to all Group employees for their diligent work and loyal service - The Company's Chairman extends gratitude to the directors for their **valuable advice and guidance**, and to all Group employees for their **diligent work and loyal service**[181](index=181&type=chunk)