香港交易及結算所有限公司及香港聯合交易所有限公司對本公告的內容概 不負責，對其準確性或完整性亦不發表任何聲明，並明確表示，概不對因 本公告全部或任何部份內容而產生或因倚賴該等內容而引致的任何損失承 擔任何責任。 盈利警告 本公告乃北海集團有限公司 (「本公司」，連同其附屬公司，「本集團」) 董事 (「董事」) 會 (「董事會」) 根據香港聯合交易所有限公司證券上市 規則 (「上市規則」) 第 13.09(2)(a) 條及《證券及期貨條例》(香港法例 第 571 章) 第 XIVA 部項下之內幕消息條文而發出。 儘管有上述信息，由於上述之公平值虧損乃屬非現金性質，對本集團的營運 現金流並無影響。本集團的整體財政狀況維持穩健。 本公司仍在就本集團於二零二五年六個月期間之未經審核綜合業績定稿。 上述之估計虧損金額並未經本公司之獨立外聘核數師審閱或確認，亦未經 董事會之審核委員會審閱，並可能與本集團於二零二五年六個月期間之未經 審核綜合業績不同。本公司將於二零二五年八月底前完全遵照上市規則之 要求，刊發本公司於二零二五年六個月期間之業績公告。 股東及本公司之有意投資者於買賣本公司之股份時務請審慎行事。 代表董事會 北 ...

股份發行人及根據《上市規則》第十九B章上市的香港預託證券發行人的證券變動月報表 截至月份: 2025年7月31日 狀態: 新提交 致：香港交易及結算所有限公司 公司名稱: CNT Group Limited 北海集團有限公司 呈交日期: 2025年8月1日 I. 法定/註冊股本變動 | 1. 股份分類 | 普通股 | 股份類別 不適用 | | | 於香港聯交所上市 (註1) | | 是 | | | --- | --- | --- | --- | --- | --- | --- | --- | --- | | 證券代號 (如上市) | 00701 | 說明 | | | | | | | | | | 法定/註冊股份數目 | | | 面值 | | 法定/註冊股本 | | | 上月底結存 | | | 2,880,000,000 | HKD | | 0.1 HKD | | 288,000,000 | | 增加 / 減少 (-) | | | 0 | | | HKD | | 0 | | 本月底結存 | | | 2,880,000,000 | HKD | | 0.1 HKD | | 288,000,000 | 本月底法定/註冊 ...

Revenue Performance - The total revenue for the year ended December 31, 2024, was approximately HKD 345.9 million, a decrease of 30.2% from HKD 495.65 million in 2023[7]. - The revenue from the paint and coating business decreased by 33.5% to approximately HKD 298.34 million in 2024, compared to HKD 448.48 million in 2023[6]. - The investment property business generated revenue of approximately HKD 37.71 million in 2024, an increase of 4.2% from HKD 36.18 million in 2023[7]. - The hotel business revenue decreased by 10.5% to approximately HKD 9.85 million in 2024, down from HKD 11 million in 2023[7]. - The paint and coatings business of the subsidiary accounted for 86.3% of the group's revenue for the year ended December 31, 2024, down from 90.5% for the year ended December 31, 2023[14]. Profit and Loss - The gross profit decreased by 17.2% to approximately HKD 144.57 million in 2024, compared to HKD 174.59 million in 2023[7]. - The loss attributable to shareholders increased to approximately HKD 77.38 million in 2024, compared to HKD 68.58 million in 2023[7]. - The group recorded a loss attributable to shareholders of approximately HKD 77,380,000 for the year ended December 31, 2024, compared to a loss of approximately HKD 68,580,000 for the year ended December 31, 2023, primarily due to significant fair value losses on investment properties[12]. - The group's adjusted profit was approximately HKD 30,190,000 for the year ended December 31, 2024, compared to HKD 33,350,000 for the previous year[13]. Market Conditions and Outlook - The company anticipates that the property market will remain sluggish in 2025, with rental levels under pressure due to oversupply[8]. - The Chinese government's new economic stimulus measures are expected to gradually revive the market, despite ongoing geopolitical and economic uncertainties[8]. - The company is focusing on innovation and efficiency to adapt to the changing market environment and mitigate the impact of declining sales[9]. - The company plans to explore expansion opportunities in other regions to maintain growth and maximize potential revenue[34]. Sales and Distribution - Sales to real estate developers and contractors in mainland China for private residential projects dropped by 78.3% to HKD 17,960,000 for the year ending December 31, 2024, from HKD 82,690,000 in the previous year[27]. - Sales to wholesale and retail distributors in mainland China decreased by 29.4% to approximately HKD 109,280,000 for the year ending December 31, 2024, down from HKD 154,740,000 for the year ending December 31, 2023[29]. - Sales to industrial manufacturers in mainland China fell by 18.4% to approximately HKD 87,130,000 for the year ending December 31, 2024, compared to HKD 106,710,000 for the year ending December 31, 2023[30]. - The mainland China market accounted for approximately 80.8% of total revenue from paint and coatings sales in 2024, down from 86.8% in 2023[25]. Cost Management - The cost of raw materials as a percentage of total production costs decreased from 86.3% in 2023 to 82.5% in 2024, reflecting strategic measures to optimize costs[39]. - The overall raw material costs significantly decreased by 41.1%, exceeding the sales decline of 33.5%, indicating substantial progress in cost management[39]. - Selling and distribution expenses decreased by 18.3% to HKD 50,890,000, compared to HKD 62,290,000 in 2023[43]. - Administrative expenses decreased by 12.0% to approximately HKD 73,880,000, down from about HKD 83,910,000 in the previous year[44]. Employee and Operational Metrics - As of December 31, 2024, the group employed 459 staff, down from 517 staff as of December 31, 2023[77]. - Employee costs for the year ended December 31, 2024, were approximately HKD 88,390,000, a decrease from HKD 105,060,000 for the year ended December 31, 2023[77]. - The average monthly employee turnover rate for 2024 is 5.98% in Hong Kong, consistent with the previous year[163]. - The company has established internal management systems outlining regulations for recruitment, promotion, and employee benefits[158]. Corporate Governance - The board emphasizes the importance of good corporate governance practices and has implemented mechanisms to ensure independent viewpoints are considered[90]. - The board of directors has been actively involved in overseeing the overall strategy, operational and financial performance, and other responsibilities, with each director attending 100% of regular board meetings[92]. - The company has adopted a board diversity policy, with female directors currently representing 14.3% of the board, aiming to maintain and gradually increase this ratio[96]. - The board will review the succession plan for directors at least annually to ensure effective governance and continuity[96]. Environmental, Social, and Governance (ESG) Initiatives - The company has established a sustainable development framework focusing on environmental protection, resource management, employee welfare, and community benefits[135]. - The board believes that a robust ESG strategy can create investment value and long-term returns for stakeholders[138]. - The company engages with stakeholders through various channels to ensure smooth communication and address their needs and expectations[140]. - The company has implemented various energy-saving measures, including optimizing the use of electrical appliances and encouraging employees to adopt energy-efficient practices[150]. Financial Position - The total outstanding bank and other borrowings decreased by 9.6% to HKD 195,970,000 as of December 31, 2024, compared to HKD 216,750,000 as of December 31, 2023[50]. - The current ratio increased by 3.8% from 1.30 on December 31, 2023, to 1.35 on December 31, 2024, reflecting improved financial efficiency[50]. - The company's total shareholder equity was approximately HKD 1,219,560,000 as of December 31, 2024, down from HKD 1,323,300,000 in 2023, with a net asset value per share of HKD 0.70[70]. - The debt-to-equity ratio as of December 31, 2024, was 11.3%, down from 13.0% in 2023, while the current ratio improved to 1.46 from 1.38[69].

Financial Performance - Revenue for the year ended December 31, 2024, was HKD 345,901,000, a decrease of 30.2% compared to HKD 495,654,000 in 2023[3] - Gross profit for the same period was HKD 144,565,000, down 17.2% from HKD 174,584,000, with a gross margin of 41.8%[3] - The company reported a loss for the year of HKD 89,423,000, compared to a loss of HKD 85,220,000 in 2023, representing an increase in loss of 4.9%[4] - Basic and diluted loss per share increased to HKD 4.06 from HKD 3.60, reflecting a 12.8% increase in loss per share[4] - The company’s total comprehensive loss for the year was HKD 120,890,000, compared to HKD 106,721,000 in 2023, an increase of 13.3%[5] - The company reported a pre-tax loss of HKD 86,328,000 for the year, compared to a loss of HKD 56,698,000 in the previous year, indicating a worsening financial position[18] - The net loss attributable to shareholders increased to approximately HKD 77.38 million, compared to HKD 68.58 million in 2023[52] - The company recorded a loss attributable to shareholders of approximately HKD 77.38 million for the year ended December 31, 2024, compared to a loss of HKD 68.58 million for the previous year, primarily due to significant fair value losses on investment properties[57] Assets and Liabilities - Total assets decreased to HKD 1,384,913,000 from HKD 1,509,806,000, indicating a decline in total assets[6] - Non-current assets decreased to HKD 1,230,652,000 from HKD 1,339,511,000, a reduction of 8.1%[6] - Total assets as of December 31, 2024, were valued at HKD 1,717,384,000, with total liabilities at HKD 393,789,000[16] - The total liabilities of the company were HKD 511,373,000, reflecting a decrease from HKD 603,991,000 in the previous year[18] - The debt-to-equity ratio improved to 11.3% from 13.0%, a decrease of 13.1%[3] - The company has reduced its interest-bearing bank and other borrowings by 9.6% to HKD 195,970,000 as of December 31, 2024, from HKD 216,750,000 as of December 31, 2023[94] Revenue Breakdown - Total revenue for the year ending December 31, 2024, was HKD 366,605,000, with sales to external customers amounting to HKD 345,901,000[16] - Sales of paint products amounted to HKD 448,475,000, down from HKD 298,341,000 in 2024, indicating a significant decrease of approximately 33.5%[23][24] - Hotel operations generated revenue of HKD 10,999,000, which decreased to HKD 9,849,000 in 2024, reflecting a decline of about 10.5%[23][24] - The investment property business generated revenue of approximately HKD 37.71 million, an increase of 4.2% from HKD 36.18 million in 2023[51] - The paint and coatings segment remained the largest revenue source, generating approximately HKD 298.34 million, but saw a 33.5% decrease in revenue compared to 2023 due to intense competition and reduced domestic demand[111] Cost and Expenses - The cost of sold inventory decreased from HKD 321,070 thousand in 2023 to HKD 201,336 thousand in 2024[30] - Selling and distribution expenses decreased by 18.3% to HKD 50,890,000 in 2024, compared to HKD 62,290,000 in 2023, despite legal and professional fees increasing significantly[87] - Administrative expenses decreased by 12.0% to approximately HKD 73,880,000 in 2024, down from about HKD 83,910,000 in 2023, due to cost-saving measures[88] - Other expenses decreased by 38.6% to approximately HKD 34,730,000 in 2024, down from about HKD 56,570,000 in 2023, mainly due to reduced provisions for overdue receivables[89] Investment and Capital Expenditures - Capital expenditures for the year totaled HKD 2,141,000, including investments in property, plant, and equipment[17] - The company acquired property, plant, and equipment at a cost of HKD 2,171,000 thousand in 2024, down from HKD 3,997,000 thousand in 2023[36] - The group invested approximately HKD 2,170,000 in property, plant, and equipment for the year ended December 31, 2024, down from HKD 4,000,000 in 2023[121] Market and Economic Conditions - The company anticipates that the real estate market in Hong Kong will stabilize due to interest rate cuts and government economic stimulus measures, despite ongoing geopolitical tensions[53] - The hotel industry is expected to benefit from an increase in tourists, although structural changes in consumer behavior may hinder significant revenue growth[54] - The overall decline in sales reflects a broader trend of reduced construction activity and demand in the real estate sector, with new construction area in the southern, central, and eastern regions dropping by 2.0%, 2.4%, and 11.4% respectively[76] Strategic Initiatives - The company plans to continue reviewing its investment property portfolio and will act prudently in acquiring new properties in Hong Kong and mainland China that can generate stable income and have capital appreciation potential[62] - The company is actively exploring different development options for the redevelopment project, with a focus on selling the project to independent third parties as a viable strategy[64] - The company plans to explore new opportunities in other regions to maintain growth and maximize potential revenue[79] Employee and Governance - The total employee cost for the year ended December 31, 2024, was approximately HKD 88,390,000, compared to HKD 105,060,000 for the year ended December 31, 2023[122] - The group employed 459 staff as of December 31, 2024, a reduction from 517 employees as of December 31, 2023[122] - The company has adopted a code of conduct for directors regarding securities trading, ensuring compliance with the standards set forth in the listing rules[136] - All directors confirmed adherence to the code of conduct for the fiscal year ending December 31, 2024[136]

Financial Performance - Revenue for the six months ended June 30, 2024, was HKD 161,111,000, a decrease of 37.2% compared to HKD 256,288,000 in the same period of 2023[3] - Gross profit for the same period was HKD 66,334,000, down 18.3% from HKD 81,222,000 year-on-year[3] - The net loss for the six months ended June 30, 2024, was HKD 16,868,000, compared to a net loss of HKD 6,033,000 in the prior year, representing an increase in loss of 179.5%[3] - Other income and gains increased to HKD 11,800,000, up 54.1% from HKD 7,627,000 in the previous year[3] - Total comprehensive loss for the period was HKD 34,950,000, compared to HKD 42,756,000 in the same period of 2023, showing a decrease in comprehensive loss of 18.5%[4] - The company reported a basic and diluted loss per share of HKD 0.71 for the period, compared to HKD 0.17 in the previous year[3] - The company reported a total comprehensive loss of HKD 34,950,000 for the six months ended June 30, 2024, compared to a total comprehensive loss of HKD 42,756,000 for the same period in 2023, indicating an improvement of approximately 18.5%[7] - The company recorded a loss attributable to shareholders of approximately HKD 13,460,000 for the six months ended June 30, 2024, compared to a loss of HKD 3,320,000 for the same period in 2023, primarily due to a significant fair value loss of HKD 11,630,000 on investment properties[55] Assets and Liabilities - Non-current assets as of June 30, 2024, totaled HKD 1,299,909,000, down from HKD 1,339,511,000 as of December 31, 2023[5] - Current assets decreased to HKD 543,779,000 from HKD 615,922,000, reflecting a decline of 11.7%[5] - Current liabilities decreased to HKD 371,948,000 from HKD 445,627,000, a reduction of 16.5%[5] - The net asset value as of June 30, 2024, was HKD 1,409,319,000, down from HKD 1,444,060,000 at the end of 2023[6] - Total assets as of June 30, 2024, amounted to HKD 1,716,834,000, while total liabilities were HKD 511,956,000[16] - The company’s total liabilities decreased from HKD 603,991,000 as of December 31, 2023, to HKD 511,956,000 as of June 30, 2024[16] Cash Flow and Financing - Operating cash flow before changes in working capital was HKD 7,542,000 for the six months ended June 30, 2024, a decrease from HKD 12,523,000 in the same period of 2023[8] - The net cash used in operating activities was HKD 26,664,000 for the first half of 2024, compared to a net cash generated of HKD 11,068,000 in the first half of 2023, reflecting a significant decline[8] - The company reported a decrease in cash flow from financing activities, with a net cash outflow of HKD 9,122,000 for the six months ended June 30, 2024, compared to a net cash outflow of HKD 65,498,000 in the same period of 2023[8] - The company’s cash and cash equivalents decreased by HKD 17,974,000 during the reporting period[8] - Cash and cash equivalents increased to approximately HKD 287,850,000 as of June 30, 2024, compared to HKD 260,390,000 as of December 31, 2023[73] - The debt-to-equity ratio was 12.6% as of June 30, 2024, slightly down from 13.0% as of December 31, 2023[74] - Current ratio improved to 1.46 times as of June 30, 2024, compared to 1.38 times as of December 31, 2023[74] Segment Performance - The company operates in four reportable segments: paint products, property investment, hotel operations, and other investments, with performance evaluated based on adjusted profit or loss before tax[13] - Revenue from paint products was HKD 137,044,000, down 41% from HKD 233,886,000 year-on-year[19] - Investment property rental income increased to HKD 18,863,000, up 7% from HKD 17,599,000 in the previous year[19] - The company’s hotel operations generated revenue of HKD 5,204,000 for the six months ended June 30, 2024, compared to HKD 4,803,000 in the previous year[19] - The investment property business generated revenue of approximately HKD 18,860,000 for the six months ended June 30, 2024, compared to HKD 17,600,000 for the same period in 2023[56] Cost Management - The cost of goods sold for the group was HKD 94,777,000, a reduction of 45.9% compared to HKD 175,066,000 in the previous year[25] - Selling and distribution expenses decreased by 16.9% to HKD 28,990,000 for the six months ending June 30, 2024, primarily due to reduced transportation costs and employee cost adjustments[70] - Administrative expenses fell by 17.2% to HKD 34,830,000 for the six months ending June 30, 2024, driven by cost-saving measures from the integration of production facilities[70] - Gross profit margin improved to 34.2% for the six months ending June 30, 2024, up from 27.1% in the same period of 2023, reflecting effective cost management[69] Stock Options and Corporate Governance - The 2022 stock option plan was adopted on June 2, 2022, and will remain effective for ten years until June 1, 2032, unless terminated by a shareholder resolution or the board[39] - A total of 80,000,000 stock options were granted on June 15, 2022, under the stock option plan, with an exercise price of HKD 0.335 per share[40] - The total stock option expense recognized for the six months ended June 30, 2024, was approximately HKD 209,000, compared to HKD 1,224,000 for the same period in 2023[43] - The company has adopted a set of corporate governance practices that comply with the standards set out in the listing rules[93] - Changes in the board include the resignation of independent non-executive directors and the appointment of new committee members[94] Market Conditions and Future Outlook - The company continues to focus on the mainland China market despite the significant decline in sales due to increased competition and regulatory pressures in the real estate sector[66] - The company expects continued pressure on rental income due to market conditions in both mainland China and Hong Kong[80] - The company anticipates a 6.0% increase in production for 2024, despite facing challenges such as low completion rates in the real estate sector[79] - The company is actively exploring different options for the redevelopment project on the land in Yuen Long, which includes the preservation of historical buildings and the construction of a care home with approximately 530 beds[59]

Financial Performance - Revenue for the six months ended June 30, 2024, was HKD 161,111, a decrease of 37.1% compared to HKD 256,288 in 2023[1] - Gross profit for the same period was HKD 66,334, down 18.3% from HKD 81,222, with a gross margin of 41.2% compared to 31.7% in 2023[1] - The company reported a loss of HKD 16,868 for the period, representing a 179.6% increase in losses compared to HKD 6,033 in the previous year[1] - Loss attributable to shareholders was HKD 13,462, a significant increase of 306.1% from HKD 3,315 in 2023[1] - Basic and diluted loss per share was HKD 0.71, compared to HKD 0.17 in the prior year, reflecting a decrease of 317.6%[1] - For the six months ended June 30, 2024, total revenue was HKD 169,663,000, a decrease from HKD 273,169,000 for the same period in 2023, representing a decline of approximately 37.9%[13] - The total adjusted profit/loss before tax for the group was a loss of HKD 17,116,000, compared to a loss of HKD 3,485,000 in the previous year, reflecting a significant increase in losses[13] - The company reported a total of HKD 8,552,000 in other income and gains for the six months ended June 30, 2024, compared to HKD 16,881,000 in the previous year, indicating a decrease of approximately 49.3%[13] Segment Performance - The sales to external customers for the paint products segment were HKD 137,044,000, down from HKD 233,886,000 in the previous year, indicating a decrease of about 41.3%[13] - The property investment segment reported revenue of HKD 18,863,000, compared to HKD 17,599,000 in the prior year, reflecting an increase of approximately 7.2%[13] - The hotel business segment generated revenue of HKD 5,204,000, a slight decrease from HKD 4,803,000 in the previous year, showing a decline of about 8.3%[13] - The adjusted profit/loss before tax for the paint products segment was a loss of HKD 19,296,000, compared to a loss of HKD 15,251,000 in the previous year, indicating a worsening performance[13] Assets and Liabilities - Cash and cash equivalents, along with pledged deposits, totaled HKD 325,009, down 9.6% from HKD 359,386 at the end of 2023[1] - Non-current assets amounted to HKD 1,299,909, a decrease from HKD 1,339,511 at the end of 2023[5] - Total liabilities decreased to HKD 371,948 from HKD 445,627, indicating a reduction in current liabilities[5] - Total assets as of June 30, 2024, were HKD 1,843,688,000, compared to HKD 1,955,433,000 as of December 31, 2023[16] - Total liabilities as of June 30, 2024, were HKD 434,369,000, a slight decrease from HKD 511,373,000 as of December 31, 2023[16] Cash Flow and Expenditures - Capital expenditures for the six months ended June 30, 2024, totaled HKD 73,000, compared to HKD 2,738,000 in the same period of 2023[16] - Interest expenses for bank loans were HKD 3,499,000 for the six months ended June 30, 2024, down from HKD 6,284,000 in the same period of 2023[23] - The company received government subsidies totaling HKD 408,000 for the six months ended June 30, 2024, compared to HKD 2,415,000 in the previous year[21] Market and Economic Conditions - The company anticipates a 6.0% increase in production for 2024, despite facing challenges such as low real estate completion rates and reduced demand in the paint and coatings industry[65] - The rental market in mainland China and Hong Kong is expected to remain challenging, with potential downward pressure on rental rates during lease renewals[67] - The overall economic growth in the U.S. is expected to slow down, with market expectations for interest rate cuts to begin in September 2024, while Hong Kong's interest rates are likely to remain high in the second half of the year[64] Corporate Governance - The board of directors includes Mr. Xu Yintang and Mr. Zhuang Zhikun as executive directors, Mr. Xu Haoquan as a non-executive director, and independent non-executive directors Mr. Gao Guohui, Mr. Huang Derui, and Ms. Lin Yingru[71] Employee and Operational Efficiency - The employee count decreased to 514 as of June 30, 2024, from 551 a year earlier, with employee costs for the six months ending June 30, 2024, at approximately HKD 43,390,000, down from HKD 55,500,000 in the same period last year[63] - Selling and distribution expenses decreased by 16.9% from HKD 34,880,000 to HKD 28,990,000 for the six months ending June 30, 2024[55] - Administrative expenses decreased by 17.2% from HKD 42,070,000 to HKD 34,830,000 for the six months ending June 30, 2024[56] Investment and Redevelopment Plans - The company plans to explore various options for the redevelopment project on the Au Tau land, considering the financial situation and business focus, with a preliminary view to sell the project to independent third parties[43] - The company is actively reviewing its investment property portfolio and will proceed cautiously in acquiring new properties in Hong Kong and/or mainland China that can generate stable income and have capital appreciation potential[41] - The company has received approval for the redevelopment project, which includes the preservation of a historical building and the construction of a care home with approximately 530 beds[43]

Sustainability and Corporate Social Responsibility - The company has established a sustainable development framework focusing on environmental protection, resource management, employee welfare, and community benefits[14]. - The management team and all employees actively supported the company's sustainability strategies and goals, achieving significant progress during the reporting period[15]. - The company emphasizes the importance of a robust ESG strategy to create investment value and long-term returns for stakeholders[16]. - The company is committed to fulfilling corporate social responsibility and balancing environmental, social, and economic benefits[14]. - The board reviews the execution and progress of ESG-related work annually and reports on its performance[16]. - The company encourages employees to participate in charitable activities and volunteer services, enhancing energy-saving and emission reduction management[20]. - The group has set waste reduction targets and is taking steps to achieve these goals[53]. - The company made charitable donations totaling HKD 114,000 during the year[129]. Environmental Impact and Resource Management - The group consumed approximately 0.71 tons of paper during the reporting period, a decrease from 0.77 tons in 2022, reflecting efforts to promote a green office policy[34]. - The group estimates that electricity consumption, gas consumption, and related scope 2 greenhouse gas emissions will increase by 15%, 5%, and 10% respectively compared to 2022, as the economy gradually recovers after the lifting of COVID-19 restrictions[54]. - The group maintains long-term strategic partnerships with suppliers who have good credit history and compliance records, aiming to build an effective green supply chain[47]. - The company maintains a focus on climate change issues and promotes green transportation concepts among employees[20]. - The total energy consumption, categorized by type, is reported in megawatt-hours, with density calculated per unit of production or facility[53]. - The total water consumption and its density are also reported, with measures in place to address any issues related to water sources[53]. - Total greenhouse gas emissions for Scope 1 amounted to 15.30 tons, while Scope 2 emissions totaled 444.18 tons, reflecting an increase from 404.84 tons in the previous year[85]. - The company reported a total water consumption of 3,248 cubic meters, which is an increase from 1,927 cubic meters in the previous year[85]. - The company’s total nitrogen oxide emissions were recorded at 2.95 kg, an increase from 2.63 kg in the previous year[85]. - The company’s total coal gas consumption was 620,448.00 MJ, compared to 543,648.00 MJ in the previous year, indicating a rise in gas usage[85]. - The company’s total sulfur oxides and particulate matter emissions were recorded at 0.08 kg and 0.22 kg respectively, showing an increase from the previous year's figures[85]. Employee Management and Development - The average monthly employee turnover rate during the reporting period was not specified, indicating a focus on employee retention strategies[39]. - The group emphasizes competitive compensation to attract and retain talent, regularly reviewing employee salary levels to ensure they meet market standards[41]. - The average training time for employees during the reporting period was not specified, highlighting the group's commitment to employee development[45]. - The percentage of trained employees during the reporting period is calculated based on the number of trained employees divided by the total number of employees at the end of the reporting period[76]. - The company has implemented training policies aimed at enhancing employee skills, with specific metrics on training hours and participation rates[90]. - The group has no reported incidents of work-related fatalities or lost workdays due to injuries during the reporting period, indicating a strong focus on workplace safety[43]. Governance and Compliance - There were no lawsuits related to corruption allegations against the group or its employees during the reporting period, reflecting a commitment to ethical practices[52]. - The company’s board of directors has arranged appropriate insurance for directors and senior personnel during the year[136]. - The company has not disclosed any interests or short positions in shares or related securities held by individuals other than directors as of December 31, 2023[125]. - The company’s board members have extensive experience, with the chairman having over 51 years and the managing director over 32 years in management and finance[131]. - The company’s financial statements are subject to audit, and the auditor has communicated significant audit findings to the audit committee[166]. - The auditor's report indicates no significant uncertainties regarding the company's ability to continue as a going concern[186]. - The company has not reported any significant misstatements in the other information reviewed by the auditor[183]. Financial Performance and Investments - The company’s available distributable reserves as of December 31, 2023, were HKD 433,116,000[99]. - As of December 31, 2023, the total accounts receivable amounted to HKD 249,500,000, with a loss provision of HKD 92,600,000[182]. - The fair value of investment properties as of December 31, 2023, was approximately HKD 772,900,000, with a corresponding fair value loss of HKD 30,600,000 recognized in the income statement[182]. - The company maintains sufficient public float as required by the listing rules[177]. - The company has engaged an independent professional valuer for the assessment of investment properties[182]. - Development properties are recorded at the lower of cost and net realizable value, including all development costs and capitalized interest[195]. Stock Options and Shareholder Information - The total number of shares that can be issued under the stock option plan is 190,368,569 shares, representing 10% of the total shares issued by the company as of the report date[111]. - The stock options granted under the plan require a payment of HKD 1.00 per option upon acceptance of the offer[112]. - The remaining 10% of stock options will vest one day before four years from the grant date, becoming exercisable from June 15, 2026[121]. - The stock option plan for the company will expire on June 1, 2032[143]. - The company has not granted, exercised, canceled, or lapsed any other stock options during the year ending December 31, 2023[122]. - The company’s remuneration committee believes that the stock options will directly contribute to the overall business performance and sustainable development[150]. - As of September 30, 2023, 19.35% of the company's shares are held by Chinaculture.com Limited, according to the interim report[153]. - Prime Surplus Limited holds 29.17% of the issued shares, representing 555,409,226 shares[173]. - The company has a total of 98,000,000 shares held by Rapid Growth Ltd., representing 5.15% of the issued shares[173].

Revenue Performance - Total revenue for 2023 was HKD 495,654,000, a decrease of 25.6% from HKD 665,591,000 in 2022[5] - Revenue from Hong Kong was HKD 77,988,000, down 6.7% from HKD 83,383,000 in the previous year[5] - Revenue from Mainland China was HKD 417,666,000, a decline of 28.3% compared to HKD 582,208,000 in 2022[5] - The group's revenue for the year ended December 31, 2023, was approximately HKD 495,650,000, a decrease of 25.5% from HKD 665,590,000 for the year ended December 31, 2022[80] - The group's revenue from the paint and coating business decreased by 29.8% to approximately HKD 448,480,000 in 2023, compared to HKD 639,130,000 in 2022[70] - Revenue from the hotel business was approximately HKD 11,000,000 for the year ended December 31, 2023, compared to approximately HKD 4,830,000 for the year ended December 31, 2022[139] - Revenue from investment properties was approximately HKD 36,180,000 in 2023, significantly up from HKD 19,980,000 in 2022, attributed to increased investment properties after consolidating production activities[108] Profit and Loss - The adjusted loss before tax for 2023 was HKD 86,328,000, compared to a loss of HKD 120,455,000 in 2022[11] - The net loss for the year was HKD (85,220), a reduction of 28.4% from HKD (118,989) in 2022[32] - Loss attributable to shareholders decreased to HKD (68,579), down 27.1% from HKD (94,081) in the prior year[32] - The company reported a net loss before tax of HKD 86.33 million, an improvement from a loss of HKD 120.46 million in the previous year[1] - For the year ended December 31, 2023, the group recorded a loss attributable to shareholders of approximately HKD 68,580,000, compared to a loss of HKD 94,080,000 for the year ended December 31, 2022[79] Assets and Liabilities - The total assets as of December 31, 2023, amounted to HKD 1,955,433,000, down from HKD 2,301,507,000 in 2022[11] - The total liabilities decreased to HKD 511,373,000 from HKD 714,334,000 in the previous year[11] - Non-current assets in Hong Kong decreased to HKD 641,158,000 from HKD 664,538,000, while Mainland China's non-current assets fell to HKD 644,627,000 from HKD 668,535,000[5] - The total equity attributable to shareholders decreased from HKD 1,450.57 million in 2022 to HKD 1,323.30 million in 2023[46] - The company's cash and cash equivalents decreased to HKD 260.39 million in 2023 from HKD 386.87 million in 2022[44] Investment and Capital Expenditure - Capital expenditure for 2023 was HKD 3,997,000, a slight decrease from the previous year's expenditure[13] - The company plans to focus on expanding its investment in properties with rental income potential[6] - The group is actively expanding its investment property portfolio to enhance rental income and capital appreciation[68] - The investment property portfolio increased from 17 properties as of December 31, 2022, to 20 properties as of December 31, 2023, with a total floor area of 1,014,246 square feet[134] Market Conditions and Economic Outlook - The overall economic outlook for 2024 remains uncertain due to geopolitical tensions and slow recovery in the Chinese economy[59] - The office leasing market in Hong Kong is expected to show no significant growth as businesses adopt a cautious approach to expansion[59] - The global economic environment for 2024 is expected to remain uncertain, with challenges including slow growth, high interest rates, and geopolitical tensions[199] - Hong Kong's economy is recovering in 2023, with local hotel operations showing steady improvement due to the return of business and leisure travelers[200] Cost Management and Expenses - Selling and distribution expenses decreased by 31.1% to approximately HKD 62.29 million, down from approximately HKD 90.46 million in 2022[185] - Administrative expenses significantly reduced by 25.1% to approximately HKD 83.91 million, down from approximately HKD 112.07 million in 2022[186] - The cost of raw materials as a percentage of sales decreased from 87.2% in 2022 to 86.3% in 2023, reflecting improved cost management strategies[182] Strategic Initiatives - The company is focusing on strategic partnerships to drive product expansion and market coverage[159] - The company aims to enhance sales value and volume of paint and coating products in 2024, focusing on strategic partnerships and product diversification[189] - The company has adjusted credit terms to mitigate risks associated with delayed repayments, reflecting a proactive approach to credit risk management[192] Industry Trends - The industry anticipates a shift towards more sustainable and environmentally friendly products, driven by increased public awareness and demand[200] - The Chinese government is focusing on urbanization, particularly in affordable housing and slum redevelopment, which is expected to benefit the industry[200] - The Hong Kong government emphasizes sustainable development and green initiatives, creating opportunities for paint and coating manufacturers to provide eco-friendly products[200]

Financial Performance - Revenue for the six months ended June 30, 2023, was HKD 256,288,000, a decrease of 20.3% from HKD 321,696,000 in the same period of 2022[5] - Gross profit increased to HKD 81,222,000, up 16.2% from HKD 69,882,000 year-on-year[5] - The net loss for the period was HKD 6,033,000, significantly improved from a loss of HKD 58,812,000 in the previous year[5] - The basic and diluted loss per share for the period was HKD 0.17, compared to HKD 2.42 in the same period last year[5] - The total comprehensive income for the period ended June 30, 2023, was HKD (33,205) million, compared to HKD (9,551) million for the same period in 2022[94] - The company reported a basic loss per share for the six months ended June 30, 2023, without adjustments for dilution due to unexercised stock options[88] - The group recorded a shareholder loss of HKD 3,320,000 for the first six months of 2023, compared to a loss of HKD 46,080,000 for the same period in 2022[129] Investment Properties - The company reported a fair value gain on investment properties of HKD 12,834,000, compared to a loss of HKD 5,198,000 in the prior period[5] - Rental income from investment properties increased to HKD 17,599,000, up 78.5% from HKD 9,881,000 year-on-year[29] - The fair value of the group's investment properties was assessed using various methods, including income capitalization and market comparison, with independent valuation firms conducting the evaluations[38] - The fair value of investment properties increased to HKD 780,900,000 as of June 30, 2023, from HKD 729,079,000 at the end of 2022[74] - Fair value gains for investment properties amounted to approximately HKD 12,830,000 as of June 30, 2023, compared to a fair value loss of approximately HKD 5,200,000 for the same period in 2022[129] - The average occupancy rate for investment properties increased to 93.2% in the first six months of 2023, up from 87.7% in the same period of 2022[134] Revenue Breakdown - Sales of paint products amounted to HKD 233,886,000, down 24.5% from HKD 310,152,000 in the previous year[29] - The paint and coating business accounted for 91.3% of the group's revenue in the first six months of 2023, down from 96.4% in the same period of 2022[130] - The group’s revenue from paint sales to construction contractors in mainland China decreased by 29.5% to HKD 73,480,000 in the first half of 2023, compared to HKD 104,190,000 in the same period of 2022[142] - Revenue from the property investment business for the first six months of 2023 was approximately HKD 17,600,000, compared to HKD 9,880,000 in the same period of 2022[149] - Total revenue from the hotel business for the first six months of 2023 was approximately HKD 4,800,000, up from approximately HKD 1,030,000 in the same period of 2022[155] Cash Flow and Liquidity - The net cash and cash equivalents at the end of June 30, 2023, were HKD 320,984 million, a decrease from HKD 338,443 million at the end of 2022, reflecting a reduction of about 5.4%[48] - The group’s total equity as of June 30, 2023, was approximately HKD 1,379,290,000, compared to approximately HKD 1,450,570,000 as of December 31, 2022[169] - Cash and cash equivalents as of June 30, 2023, were approximately HKD 320,980,000, down from approximately HKD 386,870,000 as of December 31, 2022[167] - The total bank borrowings as of June 30, 2023, were approximately HKD 263,300,000, down from HKD 289,120,000 at the end of 2022[188] - The company has reduced short-term bank borrowings by 10.6% to HKD 212,040,000 as of June 30, 2023, from HKD 237,260,000 at the end of 2022[195] Operational Efficiency and Future Plans - The company is focusing on enhancing its operational efficiency and exploring new market opportunities to drive future growth[26] - The group plans to continue optimizing its business measures and actions to enhance product offerings and operational efficiency[175] - The company plans to monitor the pace of economic recovery and assess the impact of potential government stimulus measures on the paint and coatings industry[195] - The company will continue to explore various alternatives to strengthen its financial position and improve cash flow[195] - The company plans to continue expanding its property investment business, reallocating additional resources to this segment[26] Shareholder Information - The company declared a final dividend of HKD 0.02 per share for the year ended December 31, 2022, totaling approximately HKD 38,074,000, consistent with the previous year[36] - The company did not declare an interim dividend for the six months ended June 30, 2023, consistent with the previous year[64] - As of June 30, 2023, the company had 80,000,000 unexercised stock options, which would result in the issuance of an additional 80,000,000 shares and generate HKD 26,800,000 in additional capital if fully exercised[85] - The company’s issued share capital as of June 30, 2023, was HKD 190,369 million, with a share premium of HKD 88,970 million[94] - The total number of share options granted under the company's plan remains at 80,000,000 as of June 30, 2023, with no options exercised, cancelled, or lapsed during the period[110] Debt and Liabilities - Non-current liabilities related to lease liabilities decreased to HKD 4,218 million as of June 30, 2023, down from HKD 5,213 million at the end of 2022, indicating a reduction of approximately 19.1%[46] - The debt-to-equity ratio as of June 30, 2023, was 19.1%, a slight improvement from 19.9% at the end of 2022[189] - The current ratio as of June 30, 2023, was 1.36, compared to 1.39 at the end of 2022[189] Market Conditions - The demand for office space in Hong Kong continues to decline due to multiple factors, including the pandemic and the trend of remote work, which has reduced the need for centralized office spaces[197] - It is anticipated that the demand for commercial office space will gradually improve in the near future, particularly for small and medium-sized enterprises that may continue to utilize physical offices[197] - The rental and returns from office leasing and investment properties are expected to improve for the remainder of 2023[197]

[Company Information](index=1&type=section&id=Company%20Information) Provides essential identification details for CNT GROUP LIMITED, including its stock code and report type - Company Name: **CNT GROUP LIMITED 北海集團有限公司**[1](index=1&type=chunk) - Stock Code: **701**[1](index=1&type=chunk) - Announcement Type: **2023 Interim Results Announcement**[1](index=1&type=chunk) [Financial Highlights](index=1&type=section&id=Financial%20Highlights) Presents a concise overview of the Group's financial performance and position for the six months ended June 30, 2023 Financial Highlights for the Six Months Ended June 30, 2023 | Metric | 2023 (HK$ Thousand) | 2022 (HK$ Thousand) (Restated) | Change % | | :--- | :--- | :--- | :--- | | **Results** | | | | | Revenue | 256,288 | 321,696 | -20.3 | | Gross Profit | 81,222 | 69,882 | 16.2 | | Gross Profit Margin | 31.7% | 21.7% | 46.1 | | Loss for the Period | (6,033) | (58,812) | -89.7 | | Loss attributable to: | | | | | Equity holders of the Company | (3,315) | (46,080) | -92.8 | | Non-controlling interests | (2,718) | (12,732) | -78.7 | | Loss per share (HK Cents) Basic and diluted | (0.17) | (2.42) | -93.0 | | **Financial Position** | June 30, 2023 (HK$ Thousand) | December 31, 2022 (HK$ Thousand) | Change % | | Cash and cash equivalents and pledged deposits | 361,951 | 429,076 | -15.6 | | Bank borrowings | 263,300 | 289,116 | -8.9 | | Net asset value per share (HK$) | 0.79 | 0.83 | -4.8 | | Debt to capital ratio | 19.1% | 19.9% | -4.0 | | Shareholders' funds per share (HK$) | 0.72 | 0.76 | -5.3 | [Condensed Consolidated Financial Statements](index=2&type=section&id=Condensed%20Consolidated%20Financial%20Statements) Presents the Group's unaudited condensed consolidated financial statements for the six months ended June 30, 2023, including statements of profit or loss, comprehensive income, and financial position - The condensed consolidated interim financial statements are unaudited but have been reviewed by the Board's Audit Committee[4](index=4&type=chunk) - The financial statements cover the six months ended June 30, 2023[5](index=5&type=chunk) - Comparative figures are presented alongside those for the corresponding period in 2022[4](index=4&type=chunk) [Condensed Consolidated Statement of Profit or Loss](index=2&type=section&id=Condensed%20Consolidated%20Statement%20of%20Profit%20or%20Loss) Details the Group's revenue, costs, and expenses, showing a significant reduction in loss for the period, primarily due to a fair value gain on investment properties Key Data from Condensed Consolidated Statement of Profit or Loss | Metric | 2023 (HK$ Thousand) | 2022 (HK$ Thousand) (Restated) | | :--- | :--- | :--- | | Revenue | 256,288 | 321,696 | | Cost of sales | (175,066) | (251,814) | | Gross Profit | 81,222 | 69,882 | | Other income and gains, net | 7,627 | 7,376 | | Selling and distribution expenses | (34,455) | (46,470) | | Administrative expenses | (56,171) | (70,110) | | Fair value gains/(losses) on investment properties, net | 12,834 | (5,198) | | Finance costs | (6,509) | (3,005) | | Loss before tax | (3,485) | (58,258) | | Loss for the period | (6,033) | (58,812) | | Loss attributable to owners of the parent | (3,315) | (46,080) | | Loss per share (HK Cents) Basic and diluted | (0.17) | (2.42) | - Loss for the period significantly narrowed by **89.7%**, primarily due to a fair value gain on investment properties, reversing a prior loss[2](index=2&type=chunk)[8](index=8&type=chunk) [Condensed Consolidated Statement of Comprehensive Income](index=3&type=section&id=Condensed%20Consolidated%20Statement%20of%20Comprehensive%20Income) Presents the total comprehensive loss for the period, influenced by exchange differences on overseas operations, with a significant year-on-year reduction in total comprehensive loss Key Data from Condensed Consolidated Statement of Comprehensive Income | Metric | 2023 (HK$ Thousand) | 2022 (HK$ Thousand) | | :--- | :--- | :--- | | Loss for the period | (6,033) | (58,812) | | Exchange differences on translation of overseas operations | (42,278) | (41,020) | | Other comprehensive loss for the period | (36,723) | (41,020) | | Total comprehensive loss for the period | (42,756) | (99,832) | | Total comprehensive loss attributable to owners of the parent | (33,205) | (79,269) | - Exchange differences on overseas operations led to an increase in other comprehensive loss, but the total comprehensive loss for the period significantly narrowed year-on-year[9](index=9&type=chunk)[10](index=10&type=chunk) [Condensed Consolidated Statement of Financial Position](index=4&type=section&id=Condensed%20Consolidated%20Statement%20of%20Financial%20Position) Provides an overview of the Group's assets, liabilities, and equity as of June 30, 2023, indicating a decrease in total assets and equity while maintaining healthy net current assets Key Data from Condensed Consolidated Statement of Financial Position | Metric | June 30, 2023 (HK$ Thousand) | December 31, 2022 (HK$ Thousand) | | :--- | :--- | :--- | | Total non-current assets | 1,369,961 | 1,391,219 | | Total current assets | 757,978 | 910,288 | | Total current liabilities | 555,613 | 653,245 | | Net current assets | 202,365 | 257,043 | | Total equity | 1,507,567 | 1,587,173 | | Equity attributable to owners of the parent | 1,379,290 | 1,450,569 | - Investment property value increased, but overall total non-current assets and current assets decreased[11](index=11&type=chunk) - Both total equity and equity attributable to owners of the parent decreased[12](index=12&type=chunk) [Notes to the Condensed Consolidated Financial Statements](index=6&type=section&id=Notes%20to%20the%20Condensed%20Consolidated%20Financial%20Statements) Provides detailed explanations and disclosures supporting the condensed consolidated financial statements, including accounting policies, changes in standards, and segment information - The condensed consolidated interim financial statements are prepared in accordance with Hong Kong Accounting Standard ("HKAS") 34 Interim Financial Reporting issued by the Hong Kong Institute of Certified Public Accountants and the applicable disclosure requirements of the Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited ("Listing Rules")[14](index=14&type=chunk) - The unaudited condensed consolidated interim financial statements do not include all the information and disclosures required in the annual financial statements and should be read in conjunction with the Group's annual consolidated financial statements for the year ended December 31, 2022[14](index=14&type=chunk) [Basis of Preparation and Accounting Policies](index=6&type=section&id=1.1%20Basis%20of%20Preparation%20and%20Accounting%20Policies) Outlines the basis for preparing the interim financial statements, confirming consistency with prior annual financial statements except for newly adopted HKFRS - The accounting policies adopted in the preparation of the unaudited condensed consolidated interim financial statements are consistent with those applied in the Group's annual consolidated financial statements for the year ended December 31, 2022, except for the adoption of new and revised Hong Kong Financial Reporting Standards[15](index=15&type=chunk) [Changes in Accounting Policies and Disclosures](index=6&type=section&id=1.2%20Changes%20in%20Accounting%20Policies%20and%20Disclosures) Details the adoption of new HKFRS standards and amendments, noting that most changes have no material impact on the Group's financial position or performance - HKFRS 17 and its amendments, along with amendments to HKAS 1, HKAS 8, and HKAS 12, have been adopted[16](index=16&type=chunk) - Amendments to HKAS 8 clarify the distinction between accounting estimates and changes in accounting policies, with no impact on the Group's financial position or performance[18](index=18&type=chunk) - Amendments to HKAS 12 regarding deferred tax have no impact on the Group, as relevant deferred tax assets and liabilities are already recognized[18](index=18&type=chunk) - Amendments to HKAS 12 concerning international tax reform have no impact on the Group, as it is not within the scope of the Pillar Two Model Rules[19](index=19&type=chunk) [Segment Information](index=8&type=section&id=2.%20Segment%20Information) Divides the Group's operations into four reportable segments: paints and coatings, property investment, hotel business, and others, providing detailed financial performance and position data for each - The Group's operations are classified into four reportable operating segments: paints and coatings, property investment, hotel business, and others[21](index=21&type=chunk) - Steel product trading, previously reported under the "Steel Product Trading" segment, has been reclassified to the "Others" segment[41](index=41&type=chunk) - The board of directors of China Paint decided to re-designate property investment as one of the China Paint Group's principal businesses[41](index=41&type=chunk) Operating Segment Revenue and Results (For the six months ended June 30, 2023) | Segment | Sales to external customers (HK$ Thousand) | Other income and gains (HK$ Thousand) | Segment results (HK$ Thousand) | | :--- | :--- | :--- | :--- | | Paints and coatings | 233,886 | 3,595 | (15,251) | | Property investment | 17,599 | 12,834 | 28,167 | | Hotel business | 4,803 | – | (527) | | Others | – | 452 | (2,074) | | **Total** | **256,288** | **16,881** | **10,315** | Operating Segment Assets and Liabilities (As of June 30, 2023) | Segment | Segment assets (HK$ Thousand) | Segment liabilities (HK$ Thousand) | | :--- | :--- | :--- | | Paints and coatings | 718,173 | 498,564 | | Property investment | 905,591 | 111,334 | | Hotel business | 282,175 | 7,311 | | Others | 68,951 | 2,777 | | **Total** | **1,974,890** | **619,986** | [Disaggregated Revenue Information from Contracts with Customers](index=11&type=section&id=Disaggregated%20Revenue%20Information%20from%20Contracts%20with%20Customers) Presents a detailed breakdown of the Group's revenue from customer contracts by product/service category, geographical market, and timing of revenue recognition Disaggregation of Revenue from Contracts with Customers for H1 2023 | Product or service category | Revenue (HK$ Thousand) | | :--- | :--- | | Sales of industrial products | 233,886 | | Hotel operations | 4,803 | | **Total revenue from contracts with customers** | **238,689** | | **Geographical markets** | | | Hong Kong | 36,834 | | Mainland China | 201,855 | | **Total revenue from contracts with customers** | **238,689** | | **Timing of revenue recognition** | | | Goods transferred at a point in time | 233,886 | | Services rendered over time | 4,803 | | **Total revenue from contracts with customers** | **238,689** | - Mainland China contributed the vast majority of revenue from customer contracts, primarily from industrial product sales[31](index=31&type=chunk) [Other Income and Gains, Net](index=14&type=section&id=Other%20Income%20and%20Gains%2C%20Net) Analyzes the Group's other income and net gains, including bank interest, government grants, and fair value adjustments, showing an overall increase in total other income Analysis of Other Income and Gains, Net | Item | 2023 (HK$ Thousand) | 2022 (HK$ Thousand) (Restated) | | :--- | :--- | :--- | | Bank interest income | 3,580 | 1,988 | | Dividend income from financial assets at fair value through profit or loss held for trading | 8 | 132 | | Government grants | 520 | 1,313 | | Government subsidies | 2,415 | 1,364 | | Deferred income recognised | 145 | 155 | | Net gain on disposal of items of property, plant and equipment | 60 | 221 | | Net exchange differences | – | 206 | | Income refunded from early termination of lease agreements | – | 2,297 | | Net fair value losses on financial assets at fair value through profit or loss held for trading | (10) | (423) | | Net losses on trading of financial assets at fair value through profit or loss held for trading | (139) | (351) | | Others | 1,048 | 474 | | **Total** | **7,627** | **7,376** | - In the first half of 2023, the Group received government subsidies of **HK$2,415,000** from the PRC government for factory relocation and entrance modification[35](index=35&type=chunk)[44](index=44&type=chunk) - Government subsidies in the first half of 2022 primarily originated from the Hong Kong Government's "Employment Support Scheme" and "Hotel Industry Support Scheme" under the Anti-epidemic Fund[45](index=45&type=chunk) [Finance Costs](index=15&type=section&id=4.%20Finance%20Costs) Details the Group's finance costs, primarily comprising interest on bank borrowings and lease liabilities, showing a significant increase in 2023 Analysis of Finance Costs | Item | 2023 (HK$ Thousand) | 2022 (HK$ Thousand) | | :--- | :--- | :--- | | Interest on bank borrowings | 6,284 | 2,920 | | Interest on lease liabilities | 225 | 85 | | **Total** | **6,509** | **3,005** | - Finance costs significantly increased by **116.6%** year-on-year, primarily due to higher interest on bank borrowings[47](index=47&type=chunk) [Loss Before Tax](index=15&type=section&id=5.%20Loss%20Before%20Tax) Refers to the calculation of loss before tax, with specific figures presented in the condensed consolidated statement of profit or loss - The calculation of loss before tax is presented in the condensed consolidated statement of profit or loss[48](index=48&type=chunk) [Income Tax Expense](index=16&type=section&id=6.%20Income%20Tax) Explains the Group's income tax provisions, noting no Hong Kong profits tax provision due to no taxable profits, while PRC subsidiaries pay corporate income tax at standard or preferential rates - No Hong Kong profits tax provision was made for the current period[80](index=80&type=chunk) - PRC subsidiaries are subject to a standard corporate income tax rate of **25%**, with high-tech enterprise-qualified subsidiaries enjoying a preferential rate of **15%**[80](index=80&type=chunk) [Loss Per Share Attributable to Ordinary Equity Holders of the Parent](index=16&type=section&id=7.%20Loss%20Per%20Share%20Attributable%20to%20Ordinary%20Equity%20Holders%20of%20the%20Parent) Details the calculation of basic and diluted loss per share, showing a significant decrease due to reduced loss attributable to ordinary equity holders of the parent Loss Per Share Calculation | Metric | 2023 (HK$ Thousand) | 2022 (HK$ Thousand) | | :--- | :--- | :--- | | Loss attributable to ordinary equity holders of the parent | 3,315 | 46,080 | | Weighted average number of ordinary shares in issue | 1,903,685,690 | 1,903,685,690 | | Basic and diluted loss per share (HK Cents) | (0.17) | (2.42) | - No diluted adjustment was made to the basic loss per share amount as unexercised share options had an anti-dilutive effect[81](index=81&type=chunk) [Dividends](index=16&type=section&id=8.%20Dividends) Reports the approval of the previous year's final dividend and the Board's decision not to declare an interim dividend for the current period - Shareholders approved a final dividend of **HK 2.0 cents** per share for the year ended December 31, 2022, totaling approximately **HK$38,074,000**[82](index=82&type=chunk) - The Board resolved not to declare an interim dividend for the six months ended June 30, 2023[82](index=82&type=chunk) [Property, Plant and Equipment](index=16&type=section&id=9.%20Property%2C%20Plant%20and%20Equipment) Provides details on the Group's capital expenditures and disposals of property, plant, and equipment, showing a significant reduction in acquisition costs for the period - For the six months ended June 30, 2023, the Group acquired items of property, plant and equipment at a cost of **HK$2,738,000**, a significant decrease from the prior period[83](index=83&type=chunk) - For the six months ended June 30, 2023, the Group disposed of items of property, plant and equipment with an aggregate net book value of **HK$847,000**[83](index=83&type=chunk) [Investment Properties](index=17&type=section&id=10.%20Investment%20Properties) Details changes in the carrying amount of investment properties, including fair value gains, transfers from owner-occupied properties, and exchange adjustments, leading to an increase in total carrying amount Changes in Carrying Amount of Investment Properties | Item | June 30, 2023 (HK$ Thousand) | December 31, 2022 (HK$ Thousand) | | :--- | :--- | :--- | | Carrying amount at beginning of period/year | 729,079 | 601,378 | | Net fair value gains/(losses) | 12,834 | (15,391) | | Transfers from owner-occupied properties | 61,243 | 160,710 | | Exchange adjustments | (22,256) | (17,618) | | **Carrying amount at end of period/year** | **780,900** | **729,079** | - Investment property fair value shifted from loss to gain, with significant transfers from owner-occupied properties, leading to an increase in carrying amount[86](index=86&type=chunk) - Investment properties were revalued by independent professional qualified valuers using the income capitalization approach, market approach, and depreciated replacement cost approach[86](index=86&type=chunk) [Trade and Bills Receivables](index=17&type=section&id=11.%20Trade%20and%20Bills%20Receivables) Outlines the Group's credit policy and provides an aging analysis of trade and bills receivables, indicating a decrease in total receivables - The Group generally grants credit terms of one to three months to customers and closely monitors receivables to mitigate credit risk[125](index=125&type=chunk) Aging Analysis of Trade and Bills Receivables | Aging | June 30, 2023 (HK$ Thousand) | December 31, 2022 (HK$ Thousand) | | :--- | :--- | :--- | | Within 3 months | 101,223 | 148,921 | | Over 3 months but within 6 months | 40,172 | 72,445 | | Over 6 months | 157,135 | 149,235 | | **Total** | **298,530** | **370,601** | - Total trade and bills receivables decreased, but receivables over six months increased[126](index=126&type=chunk) [Trade and Bills Payables](index=18&type=section&id=12.%20Trade%20and%20Bills%20Payables) Provides an aging analysis of trade and bills payables, showing a decrease in total payables and a reduction in bills payable pledged by time deposits Aging Analysis of Trade and Bills Payables | Aging | June 30, 2023 (HK$ Thousand) | December 31, 2022 (HK$ Thousand) | | :--- | :--- | :--- | | Within 3 months | 88,656 | 122,567 | | Over 3 months but within 6 months | 50,934 | 76,699 | | Over 6 months | 77,465 | 61,512 | | **Total** | **217,055** | **260,778** | - Total trade and bills payables decreased, and the amount of bills payable pledged by time deposits also declined[128](index=128&type=chunk) [Share Option Scheme](index=18&type=section&id=13.%20Share%20Option%20Scheme) Details the Company's and China Paint's share option schemes, including the termination of the 2012 plan, adoption of a new 2022 plan, and vesting schedule for China Paint options - The Company's 2012 share option scheme was terminated, and a new scheme with a ten-year validity was adopted in 2022[129](index=129&type=chunk)[130](index=130&type=chunk) - On June 15, 2022, China Paint Group granted **80,000,000** share options to directors and employees under its share option scheme, with an exercise price of **HK$0.335** per share[132](index=132&type=chunk)[133](index=133&type=chunk) Vesting Schedule of China Paint Share Options (As of June 30, 2023) | Vesting Date | Vesting Percentage | | :--- | :--- | | Immediately vested on grant date | 50% | | June 14, 2023 | 20% | | June 14, 2024 | 10% | | June 14, 2025 | 10% | | June 14, 2026 | 10% | - Share option expenses for the six months ended June 30, 2023, were approximately **HK$1,224,000**, a significant decrease from the prior period[137](index=137&type=chunk) [Comparative Figures](index=20&type=section&id=14.%20Comparative%20Figures) States that certain comparative figures have been reclassified due to changes in the designation of principal businesses to align with current period presentation and disclosure requirements - Certain comparative figures have been reclassified due to changes in the designation of principal businesses to conform with the current period's presentation and disclosure requirements[138](index=138&type=chunk) [Management Discussion and Analysis](index=21&type=section&id=Management%20Discussion%20and%20Analysis) Provides a comprehensive review of the Group's business operations, financial performance, and future outlook, covering key business segments and strategic initiatives - The Group recorded a loss attributable to shareholders of **HK$3,320,000** for the first six months of 2023, a significant reduction from the prior period[73](index=73&type=chunk) - Revenue was **HK$256,290,000**, a **20.3%** year-on-year decrease; gross profit was **HK$81,220,000**, a **16.2%** year-on-year increase[74](index=74&type=chunk) - Adjusted profit was approximately **HK$9,610,000**, compared to an adjusted loss of approximately **HK$27,430,000** for the first six months of 2022[74](index=74&type=chunk) [Interim Dividend](index=21&type=section&id=Interim%20Dividend) The Board of Directors resolved not to declare an interim dividend for the six months ended June 30, 2023 - The Board resolved not to declare an interim dividend for the six months ended June 30, 2023[72](index=72&type=chunk) [Business Review](index=21&type=section&id=Business%20Review) Reviews the performance of the Group's principal business segments, including property investment, hotel operations, paints and coatings, and other investments, highlighting key drivers and strategic adjustments - The Group primarily engages in property investment, hotel operations, and paints and coatings businesses[72](index=72&type=chunk) - Loss attributable to shareholders significantly narrowed, primarily influenced by net fair value gains on investment properties and losses from China Paint Group[73](index=73&type=chunk) - Revenue from the paints and coatings business accounted for **91.3%** of the Group's total revenue, but decreased year-on-year[74](index=74&type=chunk) [Investment Property Business](index=22&type=section&id=Investment%20Property%20Business) The investment property portfolio expanded to 18 properties, with increased total floor area and market value, driven by property reclassification and fair value gains - The investment property portfolio increased from 17 to **18** properties, with total floor area rising to **816,452 square feet**[123](index=123&type=chunk) - The total market value of investment properties was approximately **HK$780,900,000**, an increase of **7.1%** from the end of last year[123](index=123&type=chunk) - Average occupancy rate increased from **87.7%** to **93.2%**, with total rental income rising to approximately **HK$19,220,000**[75](index=75&type=chunk) - Segment profit significantly increased to approximately **HK$28,170,000**, primarily due to net fair value gains on investment properties of approximately **HK$12,830,000**[77](index=77&type=chunk) [Properties Under Development](index=23&type=section&id=Properties%20Under%20Development) The Group's redevelopment project on Au Tau land, including heritage conservation and new facilities, has received planning approval, with the Board exploring various development options - The Au Tau land redevelopment project, including the conservation of Poon Uk, construction of recreational facilities, and an elderly home, has been approved by the Town Planning Board[60](index=60&type=chunk) - The permit is valid for **four years**, until August 2026[60](index=60&type=chunk) - The Board initially believes that selling the redevelopment project to an independent third party would be in the best interests of the Company and its shareholders[60](index=60&type=chunk) [Hotel Business](index=24&type=section&id=Hotel%20Business) The hotel business, managed by an external operator, achieved a high occupancy rate of 98%, generating approximately HK$4.8 million in revenue, with a significantly narrowed segment loss - The hotel business is managed by an operator, with an average occupancy rate of approximately **98%**[61](index=61&type=chunk) - Total revenue was approximately **HK$4,800,000**, with a segment loss of approximately **HK$530,000**, significantly narrowed from the prior period[61](index=61&type=chunk) - The recovery of international tourism and easing of travel restrictions to Hong Kong are expected to benefit room occupancy and average room rates[61](index=61&type=chunk) [Paints and Coatings Business](index=25&type=section&id=Paints%20and%20Coatings%20Business) Revenue from paints and coatings significantly decreased due to the sluggish PRC property market and reduced industrial demand, yet gross profit improved due to lower raw material costs and business revitalization efforts - Total revenue from the paints and coatings business was approximately **HK$233,890,000**, a significant year-on-year decrease of **24.6%**[65](index=65&type=chunk) - The revenue decrease was primarily due to the sluggish Mainland China property market, tightened credit control policies, and reduced demand from industrial manufacturers[67](index=67&type=chunk)[68](index=68&type=chunk) - Raw material costs as a percentage of paint sales decreased by **8.0%** to **63.2%**, although raw material prices were not proportionally affected by falling crude oil prices[89](index=89&type=chunk) - Gross profit margin for paint sales significantly increased by **34.2%** to **27.1%**, with gross profit modestly growing by **1.4%** to **HK$870,000**, benefiting from business revitalization measures and cost savings[90](index=90&type=chunk) - Selling and distribution expenses decreased by **25.7%**, and administrative expenses decreased by **17.8%**, mainly due to reductions in transportation costs, advertising, entertainment expenses, and staff costs[91](index=91&type=chunk) [Other Businesses](index=28&type=section&id=Other%20Businesses) The Group's other businesses include equity investments in a cemetery project, financial asset investments in listed securities, and the discontinued steel product trading business due to its small scale and market volatility - The Group holds a **12.5%** equity interest in Profitable Industries Limited, which is engaged in a cemetery project in Sihui, Guangdong Province, Mainland China[93](index=93&type=chunk) - Financial assets at fair value through profit or loss (listed securities) recorded net realized losses of **HK$140,000** and net unrealized losses of **HK$10,000**, a significant reduction in losses compared to the prior period[95](index=95&type=chunk) - The steel product trading business ceased operations from the end of December 2022 due to its small scale and market volatility[96](index=96&type=chunk) [Financial Review](index=29&type=section&id=Financial%20Review) Reviews the Group's liquidity, financial position, and capital structure, encompassing cash flows, borrowings, key financial ratios, and employee information - Working capital is primarily sourced from internal financial resources and external bank borrowings[98](index=98&type=chunk) [Liquidity and Financial Resources](index=29&type=section&id=Liquidity%20and%20Financial%20Resources) The Group's cash and cash equivalents and bank borrowings both decreased, with debt-to-capital and current ratios declining but remaining healthy Liquidity and Financial Indicators | Metric | June 30, 2023 | December 31, 2022 | Change | | :--- | :--- | :--- | :--- | | Cash and cash equivalents | HK$320,980,000 | HK$386,870,000 | Decrease | | Bank borrowings | HK$263,300,000 | HK$289,120,000 | Decrease | | Debt to capital ratio | 19.1% | 19.9% | Decrease | | Current ratio | 1.36 times | 1.39 times | Decrease | | Inventory turnover days | 30 days | 48 days | Decrease | | Trade and bills receivables turnover days | 211 days | 225 days | Decrease | - Bank borrowings are primarily interest-bearing at floating rates, with **100%** repayable within one year[98](index=98&type=chunk) - The Group has not used hedging instruments for foreign currency risk but will closely monitor and arrange hedging measures as needed[98](index=98&type=chunk) [Equity, Net Asset Value and Shareholders' Funds](index=30&type=section&id=Equity%2C%20Net%20Asset%20Value%20and%20Shareholders%27%20Funds) The Group's shareholders' funds, net asset value per share, and shareholders' funds per share all decreased, with exchange rate fluctuations between HKD and RMB potentially impacting operating results Equity and Net Asset Value Indicators | Metric | June 30, 2023 | December 31, 2022 | Change | | :--- | :--- | :--- | :--- | | Shareholders' funds | HK$1,379,290,000 | HK$1,450,570,000 | Decrease | | Shareholders' funds per share | HK$0.72 | HK$0.76 | Decrease | | Net asset value per share | HK$0.79 | HK$0.83 | Decrease | - Fluctuations in the foreign currency exchange rate between HKD and RMB may significantly impact the Group's operating results[102](index=102&type=chunk) [Contingent Liabilities and Pledge of Assets](index=30&type=section&id=Contingent%20Liabilities%20and%20Pledge%20of%20Assets) Portions of the Group's property, plant and equipment, investment properties, right-of-use assets, and cash deposits are pledged as collateral for bank borrowings, lease liabilities, and bills payable - Property, plant and equipment, investment properties, right-of-use assets, and cash deposits with an aggregate net book value of approximately **HK$741,220,000** are pledged as collateral for bank borrowings, lease liabilities, bills payable, and performance guarantees[103](index=103&type=chunk) - The total outstanding secured bank borrowings amounted to approximately **HK$206,300,000**[103](index=103&type=chunk) [Employees](index=30&type=section&id=Employees) The Group's total number of employees decreased, leading to lower staff costs, while maintaining a comprehensive and competitive remuneration and benefits system - The Group had **551** employees, a decrease from the prior period[104](index=104&type=chunk) - Staff costs were approximately **HK$55,500,000**, a year-on-year decrease[104](index=104&type=chunk) - The Group maintains a comprehensive and competitive employee remuneration and benefits system, including a staff share option scheme[104](index=104&type=chunk) [Business Outlook](index=31&type=section&id=Business%20Outlook) Discusses the Group's business prospects within a gradually improving yet uncertain global economic environment, addressing challenges in the Chinese market and strategies for each business segment - Hong Kong's economy significantly improved in the first half of 2023, but the global business environment remains affected by geopolitical tensions, the Russia-Ukraine conflict, and global inflation[106](index=106&type=chunk)[112](index=112&type=chunk) - China Paint Group will continue to optimize business revitalization measures, focusing on enriching its product portfolio, enhancing operational efficiency, reducing costs, and implementing prudent risk management[107](index=107&type=chunk) [Paints and Coatings Business Outlook](index=31&type=section&id=Paints%20and%20Coatings%20Business%20Outlook) The paints and coatings business faces an uncertain outlook due to the sluggish PRC property market and declining investment, with China Paint Group strengthening its financial position by reducing short-term bank borrowings - China Paint Group's operating environment remains uncertain, affected by the sluggish Mainland China property sector and declining investment[113](index=113&type=chunk) - China Paint Group has reduced short-term bank borrowings by **10.6%** to **HK$212,040,000** to strengthen its financial position[113](index=113&type=chunk) [Investment Property Business Outlook](index=32&type=section&id=Investment%20Property%20Business%20Outlook) The property leasing market, particularly for office and residential properties, remains pessimistic in Mainland China, while Hong Kong office demand is expected to gradually improve - The office and residential property leasing market is pessimistic, affected by Mainland China's import contraction, slow export growth, and real estate debt crisis[115](index=115&type=chunk) - Demand for office space in Hong Kong continues to decline but is expected to gradually improve[115](index=115&type=chunk) - The Group will continuously review its investment property portfolio and prudently acquire new properties to generate recurring income and cash flow[115](index=115&type=chunk) [Hotel Business Outlook](index=32&type=section&id=Hotel%20Business%20Outlook) The Group's hotel business is anticipated to achieve a year-on-year recovery in 2023 due to an increase in visitor arrivals to Hong Kong - The Group's hotel business is expected to recover year-on-year in 2023 due to an increase in visitor arrivals to Hong Kong[116](index=116&type=chunk) [Material Investments and Share Dealings](index=32&type=section&id=Material%20Investments%20and%20Share%20Dealings) During the review period, the Group made no material investments, acquisitions, or disposals of subsidiaries, nor did it have plans for future capital asset additions or share dealings - No material investments were acquired, nor were there any other material acquisitions or disposals of subsidiaries during the review period[116](index=116&type=chunk) - The Board has not approved any other plans for material investments or additions of capital assets[116](index=116&type=chunk) - Neither the Company nor any of its subsidiaries bought or redeemed any shares of the Company[117](index=117&type=chunk) [Corporate Governance](index=33&type=section&id=Corporate%20Governance) Reaffirms the Company's commitment to sound corporate governance practices, adherence to the Corporate Governance Code, and directors' compliance with the Model Code for securities transactions - The Company is committed to establishing best corporate governance practices suitable for the Group's business, applying the principles and complying with the code provisions of the Corporate Governance Code set out in Appendix 14 Part 2 of the Listing Rules[119](index=119&type=chunk) - The Company has adopted a code of conduct for directors' securities transactions, with terms no less exacting than those set out in the Model Code in Appendix 10 of the Listing Rules[120](index=120&type=chunk) - All directors confirmed compliance with the standards set out in the Model Code and the Company's own code for the six months ended June 30, 2023[120](index=120&type=chunk) - The Board of Directors comprises executive directors, non-executive directors, and independent non-executive directors[121](index=121&type=chunk)