[Company Information](index=3&type=section&id=%E5%85%AC%E5%8F%B8%E8%B3%87%E6%96%99) The company is led by Chairman and CEO Mr. Hong Yiyuan, with key offices located in Jinjiang and Hong Kong - The Board of Directors is chaired by Mr. Hong Yiyuan, who also serves as CEO, and the company secretary is Mr. Liu Weibiao; the auditor is Forvis Mazars CPA Limited[5](index=5&type=chunk) - The company's head office and principal place of business in China is in the Jinjiang Economic Development Zone, while its Hong Kong office is at the CRE Centre in North Point[5](index=5&type=chunk) [Management Discussion and Analysis](index=5&type=section&id=%E7%AE%A1%E7%90%86%E5%B1%A4%E8%A8%8E%E8%AB%96%E8%88%87%E5%88%86%E6%9E%90) The Group's revenue grew significantly while net loss narrowed, driven by strategic capacity expansion and global market development [Business Review](index=5&type=section&id=%E6%A5%AD%E5%8B%99%E5%9B%9E%E9%A1%A7) The Group, a manufacturer of disposable hygiene product machinery, saw a 65% revenue increase and a 14% net loss reduction in H1 2024 Key Performance Indicators | Metric | H1 2024 | H1 2023 | YoY Change | | :--- | :--- | :--- | :--- | | Total Revenue | Approx. RMB 182.4 million | Approx. RMB 110.5 million | +65% | | Total Machines Sold | 29 units | - | - | | Net Loss | Approx. RMB 13.6 million | Approx. RMB 15.8 million | -14% | - The Group primarily designs and manufactures automated machinery for disposable hygiene products, including baby/adult diapers and feminine hygiene napkins[8](index=8&type=chunk) - To expand capacity, the Group is building two new projects: a digital factory in Hangzhou expected to be completed by the end of 2024, and a new R&D and production center in Jinjiang expected to be completed in H2 2025[8](index=8&type=chunk)[9](index=9&type=chunk) [Future Outlook](index=6&type=section&id=%E5%B1%95%E6%9C%9B%E6%9C%AA%E4%BE%86) The Group's future strategy focuses on enhancing R&D, expanding production capacity, and deepening its global market presence - **Enhance R&D capabilities**: The Jinjiang R&D center, expected to be completed in H2 2025, will boost new product development efficiency; R&D expenses (including capitalization) were **approximately RMB 13.9 million** during the period[12](index=12&type=chunk) - **Increase production capacity**: The Hangzhou factory is expected to be completed by the end of 2024, and the Jinjiang R&D center in H2 2025; a new subsidiary will also increase the self-production rate of core components to enhance production flexibility and competitive advantage[13](index=13&type=chunk)[14](index=14&type=chunk) - **Globalization strategy**: The Group is actively using platforms like Douyin and Alibaba for domestic and overseas marketing and participating in major exhibitions to enhance brand awareness and achieve dual growth in domestic and overseas business[15](index=15&type=chunk) [Financial Review](index=8&type=section&id=%E8%B2%A1%E5%8B%99%E5%9B%9E%E9%A1%A7) In H1 2024, the Group's financial performance improved significantly, with revenue up 65% and gross profit margin rising to 16.7% [Revenue](index=8&type=section&id=%E6%94%B6%E7%9B%8A) Revenue grew 65% year-on-year to approximately RMB 182.4 million, driven by strong sales of baby and adult diaper machines Revenue by Product Type | Product Category | H1 2024 Revenue (RMB in thousands) | H1 2023 Revenue (RMB in thousands) | Change | | :--- | :--- | :--- | :--- | | Baby Diaper Machines | 78,121 | 45,390 | +72.1% | | Adult Diaper Machines | 61,031 | 25,744 | +137.1% | | Feminine Hygiene Napkin Machines | 20,605 | 13,592 | +51.6% | | Components and Parts | 19,166 | 14,690 | +30.5% | | **Total** | **182,391** | **110,535** | **+65.0%** | - As of June 30, 2024, the Group had signed sales contracts valued at **approximately RMB 267 million** for 40 machines, scheduled for delivery in 2024 and 2025[17](index=17&type=chunk) [Gross Profit and Gross Profit Margin](index=8&type=section&id=%E6%AF%9B%E5%88%A9%E5%8F%8A%E6%AF%9B%E5%88%A9%E7%8E%87) Gross profit increased by 138% to RMB 30.5 million, with the gross profit margin rising from 11.6% to 16.7% due to higher sales and lower material costs - **Gross profit increased** from approximately RMB 12.8 million in the prior-year period to approximately RMB 30.5 million in the current period[18](index=18&type=chunk) - **Gross profit margin increased by 5.1 percentage points** to 16.7% from 11.6% in the prior-year period[18](index=18&type=chunk) [Other Income](index=9&type=section&id=%E5%85%B6%E4%BB%96%E6%94%B6%E5%85%A5) Other income decreased by 36.3% year-on-year to approximately RMB 5.1 million, primarily due to a reduction in foreign exchange gains - Other income decreased from RMB 8.0 million in the prior-year period to **RMB 5.1 million**, mainly due to lower foreign exchange gains[20](index=20&type=chunk) [Selling and Distribution Costs](index=9&type=section&id=%E9%8A%B7%E5%94%AE%E5%8F%8A%E5%88%86%E9%8A%B7%E6%88%90%E6%9C%AC) Selling and distribution costs rose by 45.3% year-on-year to approximately RMB 7.7 million, driven by higher transportation, advertising, and salary expenses - Selling and distribution costs **increased by 45.3%** from RMB 5.3 million in the prior-year period to RMB 7.7 million[21](index=21&type=chunk) [Administrative and Other Operating Expenses](index=9&type=section&id=%E8%A1%8C%E6%94%BF%E5%8F%8A%E5%85%B6%E4%BB%96%E7%87%9F%E9%81%8B%E9%96%8B%E6%94%AF) Administrative and other operating expenses increased by 23.4% year-on-year to approximately RMB 33.2 million, mainly due to higher salary and training costs - Administrative and other operating expenses **increased by 23.4%** from RMB 26.9 million in the prior-year period to RMB 33.2 million[22](index=22&type=chunk) [Finance Costs](index=9&type=section&id=%E8%B2%A1%E5%8B%99%E6%88%90%E6%9C%AC) Finance costs decreased by 12.5% year-on-year to approximately RMB 0.7 million, primarily due to lower capitalized interest on bank borrowings - Finance costs decreased from RMB 0.8 million in the prior-year period to **RMB 0.7 million**[23](index=23&type=chunk) [Income Tax Expense](index=9&type=section&id=%E6%89%80%E5%BE%97%E7%A8%85%E9%96%8B%E6%94%AF) Income tax expense fell sharply by 90.9% year-on-year to approximately RMB 0.1 million due to lower taxable profits from Chinese subsidiaries - Income tax expense decreased from RMB 1.1 million in the prior-year period to **RMB 0.1 million**[24](index=24&type=chunk) [Loss Attributable to Owners of the Company](index=9&type=section&id=%E6%9C%AC%E5%85%AC%E5%8F%B8%E6%93%81%E6%9C%89%E4%BA%BA%E6%87%89%E4%BD%94%E8%99%A7%E6%90%8D) The loss attributable to owners of the Company narrowed from RMB 15.4 million to RMB 11.6 million, mainly due to a significant increase in gross profit - The loss attributable to owners of the Company was **approximately RMB 11.6 million**, a reduction from RMB 15.4 million in the prior-year period[25](index=25&type=chunk) [Liquidity, Financial Resources, and Capital Structure](index=10&type=section&id=%E6%B5%81%E5%8B%95%E8%B3%87%E9%87%91%E3%80%81%E8%B2%A1%E5%8B%99%E8%B3%87%E6%BA%90%E5%8F%8A%E8%B3%87%E6%9C%AC%E6%9E%B6%E6%A7%8B) The Group's financial position shows higher leverage, with the gearing ratio rising to 78.1% and the current ratio declining to 0.9 [Use of Proceeds from Listing](index=10&type=section&id=%E4%B8%8A%E5%B8%82%E6%89%80%E5%BE%97%E6%AC%BE%E9%A0%85%E7%94%A8%E9%80%94) Net proceeds from the listing were reallocated to fund the new R&D center and manufacturing workshop in Jinjiang, which are now fully utilized - On April 28, 2023, the Group announced the reallocation of unutilized net proceeds to establish a new R&D center, manufacturing workshop, and other office buildings in Jinjiang[30](index=30&type=chunk) - As of June 30, 2024, the funds allocated for the new R&D center (RMB 24.1 million) and the new manufacturing workshop (RMB 22.2 million) were **fully utilized**[29](index=29&type=chunk) [Liquidity and Financial Resources](index=11&type=section&id=%E6%B5%81%E5%8B%95%E8%B3%87%E9%87%91%E5%8F%8A%E8%B2%A1%E5%8B%99%E8%B3%87%E6%BA%90) The Group's current ratio decreased from 1.3 to 0.9, indicating tighter short-term liquidity, with operations funded by internal resources and borrowings - The **current ratio decreased** from approximately 1.3 times as of December 31, 2023, to approximately 0.9 times as of June 30, 2024[31](index=31&type=chunk) [Capital Structure and Borrowings](index=12&type=section&id=%E8%B3%87%E6%9C%AC%E6%9E%B6%E6%A7%8B%E8%88%87%E5%80%9F%E6%AC%BE) The Group's bank borrowings increased significantly by 176% to RMB 212.7 million, altering its capital structure Capital Structure Summary | Item | June 30, 2024 (RMB in millions) | December 31, 2023 (RMB in millions) | | :--- | :--- | :--- | | Equity | 291.5 | 305.0 | | Bank Borrowings | 212.7 | 77.0 | [Gearing Ratio](index=12&type=section&id=%E8%B3%87%E7%94%A2%E8%B2%A0%E5%82%B5%E6%AF%94%E7%8E%87) The Group's gearing ratio surged from 30.9% to 78.1%, reflecting a significant increase in financial leverage - The **gearing ratio increased sharply** from 30.9% as of December 31, 2023, to 78.1% as of June 30, 2024[36](index=36&type=chunk) [Capital Commitments](index=12&type=section&id=%E8%B3%87%E6%9C%AC%E6%89%BF%E6%93%94) As of June 30, 2024, the Group's capital commitments totaled RMB 217 million, a decrease from RMB 355 million at year-end 2023 Capital Commitments Breakdown | Capital Commitment | June 30, 2024 (RMB in thousands) | December 31, 2023 (RMB in thousands) | | :--- | :--- | :--- | | Construction in progress | 189,329 | 327,083 | | Development of intangible assets* | 27,679 | 27,679 | | **Total** | **217,008** | **354,762** | [Risk Management and Human Resources](index=13&type=section&id=%E9%A2%A8%E9%9A%AA%E7%AE%A1%E7%90%86%E5%8F%8A%E4%BA%BA%E5%8A%9B%E8%B3%87%E6%BA%90) The Group monitors foreign exchange risk without using derivatives and increased its headcount and corresponding staff costs during the period [Contingent Liabilities](index=13&type=section&id=%E6%88%96%E7%84%B6%E8%B2%A0%E5%82%B5) As of June 30, 2024, the Group had no significant contingent liabilities - The Group had **no significant contingent liabilities** as at 30 June 2024[39](index=39&type=chunk) [Foreign Exchange Risk Management](index=13&type=section&id=%E5%A4%96%E5%8C%AF%E9%A2%A8%E9%9A%AA%E7%AE%A1%E7%90%86) The Group's transactions are mainly in RMB, HKD, and USD, with foreign exchange risk reviewed periodically but unhedged during the period - The Group did not enter into any foreign exchange derivative contracts during the period and will continue to review its foreign exchange risk regularly[40](index=40&type=chunk) [Human Resources](index=13&type=section&id=%E4%BA%BA%E5%8A%9B%E8%B3%87%E6%BA%90) The Group's total number of employees increased to 529, with staff costs rising by 25% to approximately RMB 31 million - The total number of employees **increased to 529** from 467 in the prior-year period[41](index=41&type=chunk) - Staff costs, including directors' remuneration, **increased to RMB 31.0 million** from RMB 24.8 million in the prior-year period[41](index=41&type=chunk) [Significant Events and Future Plans](index=13&type=section&id=%E9%87%8D%E5%A4%A7%E4%BA%8B%E9%A0%85%E5%8F%8A%E6%9C%AA%E4%BE%86%E8%A8%88%E5%8A%83) The Group had no major investments or disposals, with future plans centered on the construction of its Jinjiang and Hangzhou facilities [Pledge of Group's Assets](index=13&type=section&id=%E6%9C%AC%E9%9B%86%E5%9C%98%E8%B3%87%E7%94%A2%E6%8A%B5%E6%8A%BC) As of June 30, 2024, the Group had no pledged assets other than those disclosed in note 15 to secure bank loans - Save as disclosed in note 15, the Group did not pledge or charge any of its assets as at 30 June 2024[42](index=42&type=chunk) [Material Investments, Acquisitions, and Disposals](index=13&type=section&id=%E9%87%8D%E5%A4%A7%E6%8A%95%E8%B3%87%E3%80%81%E9%87%8D%E5%A4%A7%E6%94%B6%E8%B3%BC%E5%8F%8A%E5%87%BA%E5%94%AE%E4%BA%8B%E9%A0%85) During the reporting period, the Group did not undertake any material investments, acquisitions, or disposals - The Group had **no material investments, acquisitions, or disposals** during the period[42](index=42&type=chunk) [Future Plans for Material Investments and Capital Assets](index=13&type=section&id=%E9%87%8D%E5%A4%A7%E6%8A%95%E8%B3%87%E5%8F%8A%E8%B3%87%E6%9C%AC%E8%B3%87%E7%94%A2%E7%9A%84%E6%9C%AA%E4%BE%86%E8%A8%88%E5%8A%83) Future investment plans are focused on the construction of the previously announced R&D and production center in Jinjiang and the Hangzhou production base - The Group's future plans primarily involve the construction of the Jinjiang R&D and production center and the development of the Hangzhou production base[43](index=43&type=chunk) [Post Reporting Period Events](index=14&type=section&id=%E5%A0%B1%E5%91%8A%E6%9C%9F%E5%BE%8C%E4%BA%8B%E9%A0%85) No significant events affecting the Group occurred between the end of the reporting period and the date of this report - **No significant events** affecting the Group occurred after the reporting period and up to the date of this report[45](index=45&type=chunk) [Corporate Governance and Other Information](index=15&type=section&id=%E4%BC%81%E6%A5%AD%E7%AE%A1%E6%B2%BB%E5%8F%8A%E5%85%B6%E4%BB%96%E8%B3%87%E6%96%99) The Group maintained high corporate governance standards, with the Audit Committee having reviewed the interim financial information [Corporate Governance Practices](index=15&type=section&id=%E4%BC%81%E6%A5%AD%E7%AE%A1%E6%B2%BB%E5%B8%B8%E8%A6%8F) The Group complied with the Corporate Governance Code, except for the deviation where the roles of Chairman and CEO are held by the same individual - The company deviated from the Corporate Governance Code as the roles of Chairman and CEO are not separate and are both held by Mr. Hong Yiyuan, which the Board believes ensures consistent leadership and efficiency[47](index=47&type=chunk) - The Audit Committee has reviewed the Group's unaudited condensed consolidated financial information for the period and considers that adequate disclosures have been made[49](index=49&type=chunk) [Directors' and Shareholders' Interests](index=16&type=section&id=%E8%91%A3%E4%BA%8B%E5%8F%8A%E8%82%A1%E6%9D%B1%E6%AC%8A%E7%9B%8A) As of June 30, 2024, the controlling shareholders collectively held 61.92% of the company's shares through Well Fame International Limited - The controlling shareholders hold 349,188,000 shares, representing **61.92% of the issued shares**, through Well Fame International Limited[51](index=51&type=chunk)[52](index=52&type=chunk) - The five controlling shareholders and Well Fame International are parties acting in concert under a Concert Party Confirmation Deed[52](index=52&type=chunk)[54](index=54&type=chunk) [Share Option Scheme](index=18&type=section&id=%E8%B3%BC%E8%82%A1%E6%AC%8A%E8%A8%88%E5%8A%83) No share options were granted or exercised during the period, with 32,400,000 options remaining available for grant under the 2020 scheme - During the period, **no share options were granted or exercised**[57](index=57&type=chunk) - As of June 30, 2024, the number of share options available for grant under the scheme was **32,400,000**[57](index=57&type=chunk) [Unaudited Condensed Consolidated Financial Statements](index=19&type=section&id=%E6%9C%AA%E7%B6%93%E5%AF%A9%E6%A0%B8%E7%B0%A1%E6%98%8E%E7%B6%9C%E5%90%88%E8%B2%A1%E5%8B%99%E5%A0%B1%E8%A1%A8) The financial statements show increased revenue and narrowed losses, alongside a significant rise in liabilities and a shift in asset composition [Unaudited Condensed Consolidated Statement of Profit or Loss and Other Comprehensive Income](index=19&type=section&id=%E6%9C%AA%E7%B6%93%E5%AF%A9%E6%A0%B8%E7%B0%A1%E6%98%8E%E7%B6%9C%E5%90%88%E6%90%8D%E7%9B%8A%E5%8F%8A%E5%85%B6%E4%BB%96%E5%85%A8%E9%9D%A2%E6%94%B6%E7%9B%8A%E8%A1%A8) For the six months ended June 30, 2024, the Group's revenue was RMB 182.4 million, with a net loss of RMB 13.6 million Statement of Profit or Loss Summary | Item (RMB in thousands) | H1 2024 (Unaudited) | H1 2023 (Unaudited) | | :--- | :--- | :--- | | Revenue | 182,391 | 110,535 | | Gross Profit | 30,533 | 12,784 | | Loss before tax | (13,438) | (14,689) | | Loss for the period | (13,555) | (15,819) | | Loss attributable to owners of the Company | (11,627) | (15,363) | | Basic and diluted loss per share (RMB cents) | (2.06) | (2.72) | [Unaudited Condensed Consolidated Statement of Financial Position](index=20&type=section&id=%E6%9C%AA%E7%B6%93%E5%AF%A9%E6%A0%B8%E7%B0%A1%E6%98%8E%E7%B6%9C%E5%90%88%E8%B2%A1%E5%8B%99%E7%8B%80%E6%B3%81%E8%A1%A8) As of June 30, 2024, the Group had total assets of RMB 793.6 million and net assets of RMB 291.5 million, with a net current liability position Statement of Financial Position Summary | Item (RMB in thousands) | June 30, 2024 (Unaudited) | December 31, 2023 (Audited) | | :--- | :--- | :--- | | Non-current assets | 354,314 | 213,032 | | Current assets | 439,240 | 464,525 | | **Total assets** | **793,554** | **677,557** | | Current liabilities | 490,884 | 360,692 | | Non-current liabilities | 11,209 | 11,828 | | **Total liabilities** | **502,093** | **372,520** | | **Net assets** | **291,461** | **305,037** | | Net current (liabilities) assets | (51,644) | 103,833 | [Unaudited Condensed Consolidated Statement of Changes in Equity](index=21&type=section&id=%E6%9C%AA%E7%B6%93%E5%AF%A9%E6%A0%B8%E7%B0%A1%E6%98%8E%E7%B6%9C%E5%90%88%E6%AC%8A%E7%9B%8A%E8%AE%8A%E5%8B%95%E8%A1%A8) Total equity decreased from RMB 305.0 million to RMB 291.5 million, primarily due to a total comprehensive loss of RMB 13.9 million for the period - **Total equity at the beginning of the period was RMB 305,037 thousand**, and total equity at the end of the period was RMB 291,461 thousand[62](index=62&type=chunk) - The change in equity was mainly affected by the **total comprehensive loss for the period of RMB 13,856 thousand**, of which the comprehensive loss attributable to the owners of the Company was RMB 11,928 thousand[62](index=62&type=chunk) [Unaudited Condensed Consolidated Statement of Cash Flows](index=23&type=section&id=%E6%9C%AA%E7%B6%93%E5%AF%A9%E6%A0%B8%E7%B0%A1%E6%98%8E%E7%B6%9C%E5%90%88%E7%8F%BE%E9%87%91%E6%B5%81%E9%87%8F%E8%A1%A8) In H1 2024, the Group had a net cash outflow from operating and investing activities, offset by a net inflow from financing activities Statement of Cash Flows Summary | Item (RMB in thousands) | H1 2024 (Unaudited) | H1 2023 (Unaudited) | | :--- | :--- | :--- | | Net cash from operating activities | (14,552) | 386 | | Net cash used in investing activities | (100,302) | (22,927) | | Net cash from financing activities | 127,969 | 19,498 | | Net increase (decrease) in cash and cash equivalents | 13,115 | (3,043) | | Cash and cash equivalents at end of period | 69,018 | 80,386 | [Notes to the Unaudited Condensed Consolidated Financial Statements](index=25&type=section&id=%E6%9C%AA%E7%B6%93%E5%AF%A9%E6%A0%B8%E7%B0%A1%E6%98%8E%E7%B6%9C%E5%90%88%E8%B2%A1%E5%8B%99%E5%A0%B1%E8%A1%A8%E9%99%84%E8%A8%BB) The financial statements are prepared under HKAS 34, with mainland China being the primary source of revenue and location of assets [Basis of Preparation and Presentation](index=25&type=section&id=%E5%9F%BA%E6%9C%AC%E8%B3%87%E6%96%99%E8%88%87%E7%B7%A8%E8%A3%BD%E5%9F%BA%E6%BA%96) The interim financial statements are prepared in accordance with HKAS 34 and presented in RMB, with accounting policies consistent with the prior year - The Company is incorporated in the Cayman Islands, its shares are listed on the Main Board of the Stock Exchange, and its principal activity is investment holding, while its subsidiaries are primarily engaged in the design and production of automated machinery for disposable hygiene products in China[65](index=65&type=chunk) - The interim financial statements have been prepared in accordance with Hong Kong Accounting Standard 34 "Interim Financial Reporting"[66](index=66&type=chunk) [Segment Information](index=26&type=section&id=%E5%88%86%E9%83%A8%E8%B3%87%E6%96%99) The Group operates as a single reportable segment, with mainland China accounting for 60.2% of total revenue - The directors have determined that the Group has only a single operating segment, which is the design and production of automated machinery for disposable hygiene products[69](index=69&type=chunk) Revenue from External Customers by Location | Region | Revenue from External Customers (RMB in thousands) | | :--- | :--- | | China | 109,823 | | The Philippines | 34,240 | | Republic of Indonesia | 12,938 | | Uzbekistan | 10,649 | | Others | 14,731 | | **Total** | **182,391** | [Revenue and Other Income](index=28&type=section&id=%E6%94%B6%E7%9B%8A%E8%88%87%E5%85%B6%E4%BB%96%E6%94%B6%E5%85%A5) All revenue was recognized at a point in time from the sale of machinery and components, with other income mainly comprising interest, forex gains, and subsidies - For the six months ended June 30, 2024, the amount of revenue recognized that was included in contract liabilities at the beginning of the reporting period was **approximately RMB 50.5 million**[73](index=73&type=chunk) Other Income Breakdown | Other Income Item (RMB in thousands) | H1 2024 | H1 2023 | | :--- | :--- | :--- | | Bank interest income | 340 | 651 | | Interest income from debt instruments | 1,341 | 1,327 | | Net foreign exchange gain | 1,350 | 3,815 | | Government grants | 380 | 633 | | **Total** | **5,145** | **8,006** | [Costs and Expenses](index=29&type=section&id=%E6%88%90%E6%9C%AC%E8%88%87%E9%96%8B%E6%94%AF) During the period, staff costs totaled RMB 31.0 million and R&D expenses were RMB 13.9 million, with RMB 2.0 million of interest capitalized - Interest on bank borrowings during the period was RMB 2,334 thousand, of which **RMB 1,982 thousand was capitalized** to construction in progress[76](index=76&type=chunk) - Total staff costs were **RMB 30,993 thousand**, an increase from RMB 24,834 thousand in the prior-year period[77](index=77&type=chunk) - R&D expenses were **RMB 13,920 thousand**, an increase from RMB 12,781 thousand in the prior-year period[77](index=77&type=chunk) [Taxation and Dividends](index=30&type=section&id=%E7%A8%85%E9%A0%85%E8%88%87%E8%82%A1%E6%81%AF) The income tax expense for the period was RMB 117 thousand, and the Board resolved not to declare an interim dividend - Jinjiang Haina and Hangzhou Haina were recognized as High and New Technology Enterprises, qualifying for a preferential tax rate of 15%[78](index=78&type=chunk) - The Board of Directors has resolved **not to declare an interim dividend** for the six months ended 30 June 2024[80](index=80&type=chunk) [Loss Per Share](index=31&type=section&id=%E6%AF%8F%E8%82%A1%E8%99%A7%E6%90%8D) Basic loss per share for H1 2024 was RMB 2.06 cents, narrowed from RMB 2.72 cents in the prior year, with diluted loss per share being the same Loss Per Share Calculation | Item | H1 2024 | H1 2023 | | :--- | :--- | :--- | | Loss attributable to owners of the Company (RMB in thousands) | (11,627) | (15,363) | | Weighted average number of ordinary shares (in thousands) | 563,976 | 563,976 | | Basic loss per share (RMB cents) | (2.06) | (2.72) | [Asset Analysis](index=31&type=section&id=%E8%B3%87%E7%94%A2%E5%88%86%E6%9E%90) The Group's asset structure changed significantly with property purchases of RMB 149 million and an impairment provision of RMB 1.72 million - During the period, the Group purchased property, plant and equipment of approximately **RMB 149 million** and recognized an impairment loss of approximately **RMB 1.71 million** on property, plant and equipment and RMB 16 thousand on intangible assets for its Hangzhou production facilities[83](index=83&type=chunk) - Within trade receivables, amounts overdue for more than 365 days **increased from RMB 11.94 million to RMB 12.70 million**[86](index=86&type=chunk) - The Group holds a bond with an original principal of HKD 40 million, of which **HKD 35 million (approx. RMB 32.71 million) remains outstanding**, with an expected credit loss provision of RMB 27.62 million recognized[89](index=89&type=chunk)[90](index=90&type=chunk) [Liability and Equity Analysis](index=35&type=section&id=%E8%B2%A0%E5%82%B5%E8%88%87%E8%82%A1%E6%9C%AC%E5%88%86%E6%9E%90) The Group's liabilities increased significantly, with interest-bearing bank borrowings surging to RMB 212.7 million while share capital remained stable - Total interest-bearing borrowings **surged from RMB 77.03 million** at the end of 2023 to **RMB 212.7 million**, of which RMB 176.7 million was secured bank loans[93](index=93&type=chunk)[97](index=97&type=chunk) - The total number of shares in issue was **563,976,000**, with no change during the period[98](index=98&type=chunk) - As of the period end, there were **14,000,000 outstanding share options** with an exercise price of HKD 1.14; related expenses of approximately RMB 280 thousand were recognized during the period[102](index=102&type=chunk)[104](index=104&type=chunk) [Related Party Transactions](index=42&type=section&id=%E9%97%9C%E8%81%AF%E6%96%B9%E4%BA%A4%E6%98%93) Key management personnel compensation totaled RMB 1.44 million, and the Group purchased materials worth RMB 4.53 million from three related parties Related Party Purchases | Related Party | Nature of Transaction | Amount (RMB in thousands) | | :--- | :--- | :--- | | Hengqin Machinery | Purchase of materials | 2,817 | | Shengrong Machinery | Purchase of materials | 653 | | Guangdong Aimeigao | Purchase of materials | 1,062 | - The total remuneration for the Group's key management personnel (including directors) was **approximately RMB 1.44 million**, a decrease from RMB 1.70 million in the prior-year period[106](index=106&type=chunk) [Post Reporting Period Events](index=43&type=section&id=%E5%A0%B1%E5%91%8A%E6%9C%9F%E5%BE%8C%E4%BA%8B%E9%A0%85) No significant events with a material impact on the Group have occurred since June 30, 2024 - **No significant events** affecting the Group have occurred from 30 June 2024 up to the date of this report[109](index=109&type=chunk)

Financial Performance - For the six months ended June 30, 2024, the group recorded revenue of approximately RMB 182.4 million, an increase of 65% compared to RMB 110.5 million for the same period in 2023[1] - Gross profit for the same period was approximately RMB 30.5 million, with a gross margin of 16.7%, up from RMB 12.8 million and a gross margin of 11.6% in the prior year[1] - The loss attributable to the owners of the company was approximately RMB 11.6 million, an improvement from a loss of RMB 15.4 million in the same period last year[1] - The company reported a net loss of RMB 13.6 million for the period, compared to a net loss of RMB 15.8 million in the prior year[3] - Total comprehensive loss for the period was RMB 13.9 million, down from RMB 16.5 million in the same period last year[3] - Revenue increased by approximately RMB 71.9 million (or 65%) to about RMB 182.4 million, driven by sales of baby diaper machines, adult diaper machines, and feminine hygiene machines[47] - Gross profit rose from approximately RMB 12.8 million to about RMB 30.5 million, with a gross margin increase from approximately 11.6% to 16.7%[49] - The net loss attributable to shareholders for the six months ended June 30, 2024, was RMB 11,627,000, an improvement from a loss of RMB 15,363,000 in the same period of 2023, reflecting a 24.0% reduction in losses[21] Revenue Sources - The group's revenue from external customers for the six months ended June 30, 2024, was RMB 182,391 thousand, an increase of 65% compared to RMB 110,535 thousand for the same period in 2023[11] - Revenue from the Chinese market reached RMB 109,823 thousand, up 12.5% from RMB 97,565 thousand in the previous year[11] - The group reported a significant increase in sales of baby diapers, generating RMB 78,121 thousand compared to RMB 45,390 thousand in the prior period, representing a growth of 72%[14] Expenses and Costs - Other income decreased to RMB 5.1 million from RMB 8.0 million year-on-year[2] - Administrative and other operating expenses increased to RMB 33.2 million from RMB 26.9 million in the previous year[2] - Employee costs, including director remuneration, rose to RMB 30,993 thousand, up from RMB 24,834 thousand in the previous year, reflecting a growth of 24.5%[16] - Selling and distribution costs increased by approximately RMB 2.4 million (or 45.3%) to about RMB 7.7 million, mainly due to higher transportation and advertising expenses[51] - Financial costs for the six months ended June 30, 2024, included bank loan interest of RMB 2,334 thousand, a substantial increase from RMB 475 thousand in the same period last year[16] - Research and development expenses rose to RMB 13,920,000, compared to RMB 12,781,000 in the prior year, indicating an increase of 8.9%[17] Assets and Liabilities - The company's total assets less current liabilities stood at RMB 302.7 million as of June 30, 2024, compared to RMB 316.9 million at the end of 2023[5] - The company had cash and cash equivalents of RMB 69.0 million as of June 30, 2024, compared to RMB 56.3 million at the end of 2023[5] - Non-current assets as of June 30, 2024, totaled RMB 352,140 thousand, compared to RMB 210,858 thousand as of December 31, 2023, indicating a growth of 67%[11] - The total interest-bearing borrowings increased significantly to RMB 212,735,000 as of June 30, 2024, compared to RMB 77,026,000 as of December 31, 2023, marking an increase of approximately 176.5%[33] - The company's trade payables amounted to RMB 70,099,000, a decrease from RMB 78,913,000 as of December 31, 2023, representing a reduction of approximately 10.3%[31] Corporate Governance and Compliance - The company maintains high corporate governance standards, with the chairman and CEO roles currently held by the same individual to ensure consistent leadership[74] - The audit committee, composed of independent non-executive directors, has reviewed the unaudited financial information and confirmed compliance with applicable accounting standards[76] - There were no purchases, sales, or redemptions of the company's listed securities during the reporting period, reflecting a stable capital management approach[77] Future Plans and Investments - The group plans to increase R&D capabilities and strengthen innovation to drive technological transformation[42] - The company successfully acquired land for a new factory with an investment of no less than RMB 600 million, expected to be completed by the end of 2024[45] - A research and development center is under construction with an investment of no less than RMB 350 million, expected to be completed in the second half of 2025[45] - The group acquired land for a new R&D and production center at a cost of approximately RMB 19.9 million, aimed at enhancing production efficiency and capacity[41] Market Presence and Sales - The company is actively expanding its global market presence through advertising on major platforms and participation in international trade shows[46] - The company has signed sales contracts for 17 baby diaper machines and 16 adult diaper machines, with total contract values of approximately RMB 113.2 million and RMB 134.9 million respectively[48] Miscellaneous - The company did not declare an interim dividend for the six months ended June 30, 2024, consistent with the previous year[20] - The company expresses gratitude to management, employees, shareholders, and business partners for their contributions and support during the reporting period[78]

Financial Performance - The group recorded total revenue of approximately RMB 350.7 million, with a total of 62 machines sold, representing a decrease of about 12% compared to the previous year[5]. - The group incurred a net loss of approximately RMB 37.5 million for the year, and the board does not recommend a final dividend for this period[5]. - The company recorded total revenue of approximately RMB 350.7 million, a decrease of about 12% from the previous year's revenue of approximately RMB 397.8 million[49]. - Gross profit decreased to approximately RMB 46.4 million, down RMB 17.8 million from the previous year's gross profit of approximately RMB 64.2 million, resulting in a gross margin of about 13.2%[58]. - The number of machines sold was 62, which contributed to the revenue decline, particularly in the sales of baby diaper machines (RMB 12.5 million), adult diaper machines (RMB 66.5 million), and pet diaper machines (RMB 5.8 million)[51]. - Other income decreased by approximately 9.6% to about RMB 12.2 million, mainly due to a reduction in government subsidies[54]. - The company recorded a loss attributable to owners of approximately RMB 35.8 million for the year, an increase from RMB 3.1 million in the previous year, primarily due to reduced gross profit and impairment losses on non-listed debt instruments and other receivables[63]. - Administrative and other operating expenses decreased by approximately 7.9% to about RMB 49.0 million, primarily due to reduced consulting fees and amortization expenses[61]. - Financial costs were approximately RMB 1.5 million, a decrease of about 31.8% from the previous year's RMB 2.2 million[62]. - The company did not declare a final dividend for the year[60]. Investment and Expansion - The group plans to establish a new R&D and production center on a land area of approximately 28,353 square meters in Jinjiang, Fujian Province, with a total investment expected to be no less than RMB 350 million[21]. - A construction contract for the R&D center was signed on July 4, 2023, with a total contract value of approximately RMB 176 million, and the project is expected to be completed in the second half of 2025[8]. - R&D expenditures (including capitalized expenditures) for the year amounted to approximately RMB 27.34 million, fully funded by the group's internal resources[8]. - The group is planning to acquire a company that produces automated packaging equipment to provide comprehensive solutions for customers, with the acquisition expected to be completed by 2025[9]. - The company has invested approximately RMB 19.9 million in land for a new R&D center, which is expected to enhance production capacity and efficiency[42]. - A wholly-owned subsidiary successfully acquired land for approximately RMB 21.83 million to build a factory for designing and producing automated machines for disposable hygiene products, with a total construction contract value of approximately RMB 265.6 million[41]. - The company successfully acquired land use rights in Jinjiang, Fujian Province, for the construction of a dedicated R&D and production center, supporting future capacity expansion[88]. - The company successfully acquired land use rights in Hangzhou, Zhejiang Province, China, to develop its production base[97]. Market and Sales Strategy - The group has extended its sales to 11 overseas countries during the year, indicating a strategic market expansion[5]. - The company has signed a cooperation agreement with an agency for equipment sales in South America, aiming to expand into new overseas markets[23]. - The group anticipates that the sales volume of disposable hygiene product machines in China will increase year by year due to government policies aimed at boosting domestic demand[11]. - The company is focused on deepening cooperation with agents to continuously explore new overseas markets[23]. - The company has signed sales contracts for 22 baby diaper machines valued at approximately RMB 148.9 million, with expected delivery in 2024[57]. Digital Transformation and Technology - The company is advancing its digital transformation through the "5G + Smart Equipment Operation and Maintenance Service Platform," which is part of a project integrating new information technology with manufacturing in Fujian Province[24]. - The company is developing a "5G + Smart Equipment Operation and Maintenance Service Platform," with the first phase of software system deployment completed[71]. - The group aims to invest in a digital factory to enhance production efficiency, accuracy, and quality in response to increasing sales orders[10]. Risk Management and Governance - The company is committed to enhancing its risk management and internal control systems, with external consultants reviewing their effectiveness annually[30]. - The board of directors has confirmed the effectiveness and adequacy of the company's risk management and internal control systems for the year[30]. - The current ratio as of December 31, 2023, was approximately 1.3 times, down from 2.2 times as of December 31, 2022, indicating a decrease in liquidity[65]. - The debt-to-equity ratio as of December 31, 2023, was approximately 30.9%, significantly higher than 12.1% as of December 31, 2022, reflecting increased leverage[69]. - The company has capital expenditure commitments of RMB 354.8 million as of December 31, 2023, compared to RMB 273.4 million in the previous year, indicating ongoing investment in growth[70]. - The company has not entered into any financial instruments to hedge foreign exchange risks as of December 31, 2023[73]. - The group has not encountered any operational or liquidity difficulties due to currency fluctuations during the year[94]. - The company has complied with relevant laws and regulations without any significant violations during the reporting period[154]. Board and Corporate Governance - The board of directors has held a total of 7 meetings during the year, with all members in attendance[106]. - The company has adopted the standard code for securities trading by directors as per the listing rules, ensuring compliance throughout the year[102]. - The board has established three committees: the Audit Committee, the Remuneration Committee, and the Nomination Committee, in accordance with relevant laws and regulations[124]. - The company emphasizes the importance of board diversity, considering factors such as gender, age, cultural background, and professional experience[138]. - The Audit Committee assessed the effectiveness of internal controls and risk management systems[127]. - The company is committed to continuous professional development for all directors, encouraging participation in relevant training[131]. - The board's responsibilities include determining the group's operational and investment plans, as well as the annual financial budget[129]. - The company has a clear policy for the appointment and succession planning of directors[134]. - The company has appointed one female director to achieve gender diversity on the board by December 31, 2023[148]. - The employee gender ratio within the group has reached approximately 8:2, with senior management considering this ratio appropriate for the current year[149]. - The board has established a shareholder communication policy to ensure timely access to information for shareholders and potential investors[161]. - The board has adopted a diversity policy that considers various factors, including gender, age, and professional experience, when selecting candidates[170]. - The board encourages participation from all members in meetings to express independent opinions and viewpoints[1]. Future Outlook - The company anticipates challenges in 2024 but is optimistic about technological breakthroughs and strategic changes providing new opportunities[34]. - The company expects the domestic consumption market to gradually recover, driven by economic support policies and the easing impact of the COVID-19 pandemic on global economic growth and supply chains[40].

Financial Performance - For the year ended December 31, 2023, the total revenue of the group was approximately RMB 350.7 million, a decrease of about 12% compared to RMB 397.8 million for the year ended December 31, 2022[18]. - The gross profit for the year ended December 31, 2023, was approximately RMB 46.4 million, representing a decrease of about 28% from RMB 64.2 million in the previous year[18]. - The loss attributable to the owners of the company for the year was approximately RMB 35.8 million, significantly higher than the loss of RMB 3.1 million in the previous year[18]. - The basic loss per share for the year ended December 31, 2023, was approximately RMB 6.35, compared to RMB 0.56 in the previous year[18]. - The company reported a loss before tax of RMB 36,728,000, compared to a loss of RMB 5,395,000 in 2022[28]. - The net loss for the year was RMB 37,532,000, significantly higher than the loss of RMB 3,221,000 in the prior year[28]. - The company incurred impairment losses on debt instruments measured at amortized cost amounting to RMB 17,591,000, compared to RMB 4,810,000 in 2022[28]. - The company experienced a decrease in other income, which fell by approximately RMB 1.3 million or 9.6% to about RMB 12.2 million, primarily due to reduced government subsidies[137]. Revenue and Sales - Revenue from the Chinese market was RMB 286,625,000, down from RMB 310,214,000 in 2022, representing a decline of 7.6%[59]. - Sales of adult diapers decreased to RMB 117,457,000 from RMB 183,976,000, a drop of 36%[60]. - The company recorded a total of 62 machines sold, generating revenue of approximately RMB 350.7 million, a decrease of about 11.8% from RMB 397.8 million in 2022[135]. - The company sold 25 baby diaper machines in 2023, generating revenue of RMB 146.978 million, which is a 42% share of total machine sales[135]. - The company sold 18 adult diaper machines in 2023, generating revenue of RMB 117.457 million, accounting for 33% of total machine sales[135]. Costs and Expenses - Sales and distribution costs increased by approximately RMB 3.1 million or 22.5% to RMB 16.9 million, primarily due to increased marketing personnel salaries and promotional expenses[5]. - Employee costs, including director remuneration, rose to RMB 59,278,000 from RMB 46,213,000 in the previous year[39]. - Administrative and other operating expenses decreased by approximately RMB 4.2 million or 7.9% to about RMB 49.0 million, primarily due to reductions in consulting fees and amortization of intangible assets[191]. - Financial costs for the year were approximately RMB 1.5 million, a decrease of about 31.8% from the previous year's RMB 2.2 million, mainly due to reduced interest on capitalized bank loans and lease liabilities[192]. Investments and Development - The company has invested no less than RMB 350 million in the construction of a new R&D center, with a contract value of approximately RMB 176.0 million signed for the construction work[7]. - The company plans to invest in a research and development center on a land area of approximately 28,353 square meters in Jinjiang, Fujian Province, with a construction contract valued at approximately RMB 176.0 million[126][127]. - The company is investing in a digital factory to meet increasing market demands for production efficiency, precision, and quality[130]. - The company aims to acquire a company that produces automated packaging equipment to provide comprehensive solutions for customers, with the acquisition expected to be completed by 2025[128]. - The total investment for the new factory is not less than RMB 600 million, with the project already having reached the topping-out stage[160]. Assets and Liabilities - The company’s non-current assets increased to approximately RMB 198,822,000, up from RMB 88,037,000 in 2022, primarily due to new construction projects[46]. - The total current liabilities increased significantly to RMB 360,692,000 in 2023 from RMB 205,507,000 in 2022, an increase of 75.5%[60]. - The company’s total liabilities increased to RMB 276,089,000 in 2023 from RMB 168,894,000 in 2022, reflecting a 63.6% increase[106]. - Trade payables increased to RMB 78,913,000 in 2023 from RMB 50,600,000 in 2022, representing a 55.8% increase[106]. - The total bank loans increased to RMB 77,026,000 in 2023 from RMB 25,000,000 in 2022, a significant increase of 208.1%[109]. Strategic Initiatives - The group recorded a significant increase in operational flexibility and comprehensive service solutions through the establishment of a "5G + Smart Equipment Operation and Maintenance Service Platform"[4]. - The company is advancing its digital transformation through the "5G + Smart Equipment Operation and Maintenance Service Platform" project, which integrates new generation information technology with manufacturing[133]. - The group actively advertised on major media platforms and participated in large exhibitions to enhance brand exposure and market penetration[185]. - A cooperation agreement was signed with an agency for equipment sales in South America, aiming to expand into new overseas markets[185]. - The company is committed to strategic transformation and technological breakthroughs to navigate challenges and seize opportunities in 2024[134]. Future Outlook - The company anticipates that its future financial performance will be impacted by rising raw material and labor costs, as well as fluctuations in the foreign exchange market[131]. - The company expects the sales volume of disposable hygiene product machines in China to increase year by year, driven by national policies aimed at restoring and expanding domestic demand[132]. - The company anticipates that the domestic consumption market will gradually recover, driven by a series of economic support policies and the easing impact of the COVID-19 pandemic on global economic growth and supply chain stability[152].

智通财经APP讯，海纳智能(01645)发布公告，集团预期于截至2023年12月31日止年度取得亏损净额不多于人民币4000万元，相较于截至2022年12月31日止年度取得亏损净额约人民币320万元。 公告称，预期亏损主要归因于集团于中国一次性卫生用品机器行业面临激烈竞争，导致售价下降，致使成人纸尿裤机器及婴儿纸尿裤机器的销售收益减少; 主要由于劳工成本整体上升及海外进口的配件价格有所上升(受早前海关政策所限)，导致集团截至2023年12月31日止年度的毛利率较去年同期有所下降;及对非上市债务工具及其他应收款项作出的减值亏损拨备。 ...

Financial Performance - Revenue for the six months ended June 30, 2023, was RMB 110,535 thousand, a decrease from RMB 199,809 thousand in the same period of 2022, representing a decline of approximately 44.7%[161]. - Gross profit for the period was RMB 12,784 thousand, down from RMB 32,142 thousand in the previous year, indicating a decrease of about 60.2%[161]. - The net loss for the period was RMB 15,819 thousand, compared to a net loss of RMB 4,401 thousand in the same period last year, reflecting an increase in losses of approximately 259.4%[161]. - The group recorded a loss attributable to owners of approximately RMB 15.4 million, an increase from approximately RMB 4.3 million in the previous period, mainly due to the decrease in gross profit[110]. - The company's total equity decreased to RMB 324,046 thousand from RMB 338,772 thousand, a decline of approximately 4.4%[163]. - The company reported a net loss of RMB 15,363,000 for the six months ended June 30, 2023, compared to a loss of RMB 4,075,000 in the same period of 2022[176]. - The company's basic and diluted loss per share for the period was RMB (2.72), compared to RMB (0.77) in the same period last year, indicating a worsening in per-share losses[161]. Trade Receivables and Liabilities - Trade receivables as of June 30, 2023, amounted to RMB 67,110,000, down from RMB 75,768,000 as of December 31, 2022, reflecting a decrease of approximately 11.0%[16]. - The aging analysis of trade receivables shows that as of June 30, 2023, RMB 36,121,000 was overdue for more than 365 days, compared to RMB 18,581,000 as of December 31, 2022, indicating an increase of approximately 94.5%[19]. - The group reported a provision for expected credit losses of RMB 48,123,000 as of June 30, 2023, compared to RMB 38,655,000 as of December 31, 2022, reflecting an increase of approximately 24.3%[16]. - As of June 30, 2023, the company’s contract liabilities from advance payments amounted to RMB 115,084,000, an increase of 81.5% from RMB 63,534,000 as of December 31, 2022[28]. - The company has outstanding receivables from the sale of unlisted equity instruments totaling HKD 9,000,000 (approximately RMB 8,346,000) as of June 30, 2023[24]. Assets and Liabilities - The company's total liabilities increased to RMB 228,858,000 as of June 30, 2023, up from RMB 168,894,000 as of December 31, 2022[28]. - The company reported total interest-bearing borrowings of RMB 49,934,000 as of June 30, 2023, compared to RMB 25,000,000 as of December 31, 2022[33]. - The company's bank borrowings increased to approximately RMB 49.9 million as of June 30, 2023, from RMB 25.0 million as of December 31, 2022[126]. - Current liabilities increased to RMB 289,372 thousand from RMB 205,507 thousand, marking an increase of approximately 40.6%[163]. - The company has capital commitments of approximately RMB 253.8 million as of June 30, 2023, for construction projects and intangible asset development[138]. Share Options and Equity - The company has issued a total of 563,976,000 shares as of June 30, 2023[44]. - The company has a share option plan that allows for a maximum of 10% of the total issued shares to be granted under the plan[47]. - A total of 14,000,000 share options were granted at an exercise price of HKD 1.14 per share, with 10,000,000 options granted to executive directors and employees[49]. - The share option plan is valid for ten years from the adoption date, which was May 8, 2020[46]. - The fair value of the share options granted to directors and employees on May 21, 2021, was approximately HKD 0.355 and HKD 0.360 per option[55]. - The group recognized an expense of approximately RMB 692,000 for equity-settled share-based payments for the six months ended June 30, 2023, compared to RMB 649,000 for the same period in 2022[58]. Research and Development - The group plans to construct a dedicated R&D and production center in Jinjiang City, as disclosed in its prospectus dated May 20, 2020[7]. - A new research and development center is being established on a land area of approximately 28,353 square meters, with a construction contract valued at approximately RMB 176.0 million[85]. - The group plans to enhance research and development efficiency and accelerate the iteration of key components through the new R&D center[88]. - Research and development expenses for the period amounted to approximately RMB 12.8 million, fully funded by the group's internal resources[88]. - The company is currently developing a 5G+ smart equipment operation and maintenance service platform, with the first phase of software system deployment completed[139]. Market and Sales Performance - The group recorded total revenue of approximately RMB 110.5 million for the six months ended June 30, 2023, with a total of 23 machines sold, representing a 45% decrease compared to the previous period[85]. - The company sold 8 baby diaper machines generating RMB 45.39 million, a 41% increase from the previous year[98]. - The company sold 4 adult diaper machines generating RMB 25.74 million, a 23% increase, despite a decrease in the number of units sold compared to the previous year[98]. - The company sold 4 women's sanitary napkin machines generating RMB 13.59 million, a 12% increase from the previous year[98]. - The group's revenue decreased from approximately RMB 199.8 million in the previous period to about RMB 110.5 million, a reduction of approximately RMB 89.3 million or 45%[99]. Governance and Compliance - The company has adopted the corporate governance code as per the Hong Kong Stock Exchange's listing rules, ensuring high standards of corporate governance[11]. - The board of directors remains unchanged, with Mr. Wu resigning on May 25, 2023, and Ms. Chen appointed on the same date[150]. - The company has maintained a consistent governance structure, with no significant changes reported in the last six months[158]. - The company has not disclosed any additional information that needs to be reported under the Listing Rules as of June 30, 2023[158]. Future Outlook and Strategy - The company plans to acquire a manufacturer of automated packaging equipment to enhance production flexibility and provide comprehensive solutions for customers, with the acquisition expected to be completed by 2025[89]. - The company anticipates a certain impact on future financial performance due to rising raw material and labor costs, but will implement cost control measures[92]. - The company is actively expanding its global platform strategy, with advertising campaigns on major media platforms and participation in international trade shows to enhance brand exposure[94].

[Company Overview and Performance Summary](index=1&type=section&id=%E4%B8%AD%E6%9C%9F%E6%A5%AD%E7%B8%BE%E5%85%AC%E5%91%8A) This section presents an overview of the company's interim financial performance, highlighting significant declines in revenue and gross profit, and an expanded loss attributable to owners [Performance Highlights](index=1&type=section&id=%E6%91%98%E8%A6%81) For the six months ended June 30, 2023, the Group experienced significant declines in revenue and gross profit, with an expanded loss attributable to owners compared to the prior period Key Financial Indicators for H1 2023 | Indicator | For the Six Months Ended June 30, 2023 (RMB Million) | For the Six Months Ended June 30, 2022 (RMB Million) | | :--- | :--- | :--- | | Revenue | 110.5 Million | 199.8 Million | | Gross Profit | 12.8 Million | 32.1 Million | | Gross Margin | 11.6% | 16.1% | | Loss Attributable to Owners of the Company | 15.4 Million | 4.3 Million | [Consolidated Financial Statements](index=2&type=section&id=%E6%9C%AA%E7%B6%93%E5%AF%A9%E6%A0%B8%E7%B0%A1%E6%98%8E%E7%B6%9C%E5%90%88%E8%B2%A1%E5%8B%99%E5%A0%B1%E8%A1%A8) This section provides the unaudited condensed consolidated financial statements, including the statement of profit or loss, financial position, and key notes [Consolidated Statement of Profit or Loss and Other Comprehensive Income](index=2&type=section&id=%E6%9C%AA%E7%B6%93%E5%AF%A9%E6%A0%B8%E7%B0%A1%E6%98%8E%E7%B6%9C%E5%90%88%E6%90%8D%E7%9B%8A%E5%8F%8A%E5%85%B6%E4%BB%96%E5%85%A8%E9%9D%A2%E6%94%B6%E7%9B%8A%E8%A1%A8) During the reporting period, the company's revenue decreased by **44.7%** year-on-year and gross profit by **60.2%**, with the loss for the period expanding from **RMB 4.4 Million** to **RMB 15.8 Million** due to reduced revenue and gross profit Consolidated Statement Core Data | Item | H1 2023 (RMB Thousand) | H1 2022 (RMB Thousand) | | :--- | :--- | :--- | | Revenue | 110,535 | 199,809 | | Cost of Sales | (97,751) | (167,667) | | **Gross Profit** | **12,784** | **32,142** | | Administrative and Other Operating Expenses | (26,904) | (29,949) | | Loss Before Tax | (14,689) | (4,075) | | **Loss for the Period** | **(15,819)** | **(4,401)** | - Basic and diluted loss per share was **RMB 2.72 cents**, compared to a loss of **RMB 0.77 cents** in the prior period[8](index=8&type=chunk) [Consolidated Statement of Financial Position](index=4&type=section&id=%E6%9C%AA%E7%B6%93%E5%AF%A9%E6%A0%B8%E7%B0%A1%E6%98%8E%E7%B6%9C%E5%90%88%E8%B2%A1%E5%8B%99%E7%8B%80%E6%B3%81%E8%A1%A8) As of June 30, 2023, the company's total assets increased, primarily driven by an increase in property, plant, and equipment within non-current assets, though a larger increase in current liabilities led to a decrease in net current assets and total equity Financial Position Core Data | Item | June 30, 2023 (RMB Thousand) | December 31, 2022 (RMB Thousand) | | :--- | :--- | :--- | | **Non-current Assets** | 117,269 | 96,805 | | **Current Assets** | 499,710 | 454,858 | | **Current Liabilities** | 289,372 | 205,507 | | Net Current Assets | 210,338 | 249,351 | | **Net Assets** | 324,046 | 338,772 | | Interest-bearing Borrowings | 49,934 | 25,000 | | Bank Balances and Cash | 80,386 | 85,596 | [Summary of Notes to Financial Statements](index=5&type=section&id=%E6%9C%AA%E7%B6%93%E5%AF%A9%E6%A0%B8%E7%B0%A1%E6%98%8E%E7%B6%9C%E5%90%88%E8%B2%A1%E5%8B%99%E5%A0%B1%E8%A1%A8%E9%99%84%E8%A8%BB) The notes detail the company's principal business, accounting policies, segment information, and financial item specifics, including its primary engagement in designing and manufacturing automated machinery for disposable hygiene products in China, no interim dividend declaration, and key disclosures on trade receivables, debt instruments, bank borrowings, and significant post-period construction contracts - The Group primarily engages in the design and production of automated machinery for disposable hygiene products in China[11](index=11&type=chunk) - The Board has resolved not to declare an interim dividend for the six months ended June 30, 2023[147](index=147&type=chunk) - Post-reporting period, on July 4, 2023, the company signed a construction contract valued at approximately **RMB 176 Million** for the construction of an R&D center and supporting facilities in Jinjiang, Fujian[62](index=62&type=chunk)[223](index=223&type=chunk) - Some of the Group's Chinese subsidiaries are recognized as high-tech enterprises, enjoying a preferential income tax rate of **15%**[146](index=146&type=chunk) - As of June 30, 2023, trade receivables included approximately **RMB 25.52 Million** in product quality assurance deposits, collectible after the 12-month warranty period[19](index=19&type=chunk) [Management Discussion and Analysis](index=19&type=section&id=%E7%AE%A1%E7%90%86%E5%B1%A4%E8%A8%8E%E8%AB%96%E8%88%87%E5%88%86%E6%9E%90) This section offers a comprehensive review of the company's business operations, financial performance, liquidity, and strategic outlook for the reporting period [Business Review and Outlook](index=19&type=section&id=%E6%A5%AD%E5%8B%99%E5%9B%9E%E9%A1%A7%E8%88%87%E5%B1%95%E6%9C%9B) Impacted by macroeconomic conditions, the company's total machines sold decreased by **45%** year-on-year, prompting strategic initiatives including new R&D centers and digital factories in Jinjiang and Hangzhou to boost capacity and efficiency, establishing subsidiaries for in-house core component production, expanding into overseas markets, and developing a '5G+ Smart Equipment Operation and Maintenance Service Platform' for digital transformation - During the period, the Group recorded total revenue of approximately **RMB 110.5 Million**, with **23 machines** sold, a **45% decrease** from the prior period[34](index=34&type=chunk) - The company is actively advancing major infrastructure projects: - **Jinjiang R&D Center**: Total investment no less than **RMB 350 Million**, with a construction contract of approximately **RMB 176 Million** signed, aiming to enhance R&D efficiency and intelligent manufacturing capabilities - **Hangzhou Digital Factory**: Total investment no less than **RMB 600 Million**, aiming to expand production capacity to meet market demand[35](index=35&type=chunk)[37](index=37&type=chunk)[64](index=64&type=chunk) - To enhance supply chain control and production flexibility, the Group has invested in establishing two subsidiaries for in-house production and processing of core components, replacing external procurement[36](index=36&type=chunk) - The company is deeply advancing its globalization strategy, actively exploring overseas markets beyond China, and has signed sales cooperation agreements with agents for the South American region[69](index=69&type=chunk)[201](index=201&type=chunk) - The company is developing a '5G+ Smart Equipment Operation and Maintenance Service Platform,' leveraging 5G and AR technologies for equipment visualization and simulation, driving its transformation towards 'manufacturing + service' and accelerating digitalization[39](index=39&type=chunk)[70](index=70&type=chunk)[202](index=202&type=chunk) [Financial Review](index=25&type=section&id=%E8%B2%A1%E5%8B%99%E5%9B%9E%E9%A1%A7) Financial performance declined this period, with revenue decreasing **45%** to **RMB 110.5 Million**, primarily due to lower sales of adult and baby diaper machines, and gross margin falling from **16.1%** to **11.6%** due to reduced high-margin product sales and rising costs, leading to an expanded loss attributable to owners of **RMB 15.4 Million** despite lower administrative and finance expenses Revenue Breakdown by Product Type (For the Six Months Ended June 30) | Product Type | 2023 (RMB Thousand) | 2022 (RMB Thousand) | | :--- | :--- | :--- | | Baby Diaper Machines | 45,390 | 51,232 | | Adult Diaper Machines | 25,744 | 118,985 | | Feminine Hygiene Napkin Machines | 13,592 | 8,912 | | Other Machines and Components | 25,859 | 20,680 | | **Total** | **110,535** | **199,809** | - Revenue decreased by **45%** from approximately **RMB 199.8 Million** in the prior period to approximately **RMB 110.5 Million**, primarily due to lower sales of adult diaper machines (a decrease of approximately **RMB 93.2 Million**) and baby diaper machines (a decrease of approximately **RMB 5.8 Million**)[204](index=204&type=chunk) - Gross profit decreased from **RMB 32.1 Million** to **RMB 12.8 Million**, with gross margin falling from **16.1%** to **11.6%**, primarily due to reduced sales revenue from high-margin adult and baby diaper machines, and increased labor and imported component costs[205](index=205&type=chunk) - Loss attributable to owners of the company increased from **RMB 4.3 Million** in the prior period to **RMB 15.4 Million**, mainly due to a significant reduction in gross profit[75](index=75&type=chunk) [Liquidity and Financial Resources](index=30&type=section&id=%E6%B5%81%E5%8B%95%E8%B3%87%E9%87%91%E8%88%87%E8%B2%A1%E5%8B%99%E8%B3%87%E6%BA%90) The Group's liquidity tightened, with the current ratio decreasing from **2.2x** to **1.7x**, and its capital structure saw bank borrowings increase to **RMB 49.9 Million**, raising the gearing ratio from **12.1%** to **19.0%**, with operations primarily funded by internal cash flow and bank borrowings - The Group's current ratio (current assets/current liabilities) was approximately **1.7x** as of June 30, 2023, lower than approximately **2.2x** as of December 31, 2022[243](index=243&type=chunk) - The gearing ratio (total interest-bearing liabilities/total equity) increased from **12.1%** at the end of last year to **19.0%** at the end of the reporting period[103](index=103&type=chunk) - As of June 30, 2023, bank borrowings were approximately **RMB 49.9 Million**, a significant increase from **RMB 25.0 Million** at the end of last year[55](index=55&type=chunk)[84](index=84&type=chunk) - The Group has significant capital commitments, primarily for construction in progress (approximately **RMB 226 Million**) and intangible asset development (approximately **RMB 28 Million**)[246](index=246&type=chunk) [Use of Proceeds from Listing and Placing](index=27&type=section&id=%E4%B8%8A%E5%B8%82%E6%89%80%E5%BE%97%E6%AC%BE%E9%A0%85%E7%94%A8%E9%80%94) The report details the use of IPO and placing proceeds, with **RMB 68.0 Million** from the 2021 placing fully utilized for the Hangzhou production base, while approximately **RMB 45.8 Million** of IPO proceeds remain unutilized, reallocated for the new Jinjiang R&D center and manufacturing workshop by the end of 2025 IPO Net Proceeds Utilization (As of June 30, 2023) | Purpose | Allocated Amount (RMB Million) | Unutilized Amount (RMB Million) | Expected Utilization Timeline | | :--- | :--- | :--- | :--- | | Establishment of New R&D Center in Jinjiang | 24.1 | 23.6 | By December 31, 2025 | | Establishment of New Manufacturing Workshop and Other Office Buildings in Jinjiang | 22.2 | 22.2 | By December 31, 2025 | | **Total** | **46.3** | **45.8** | | - The net proceeds of approximately **RMB 68.0 Million** from the placing completed in June 2021 have been fully utilized for the development of the Group's Hangzhou production base[50](index=50&type=chunk)[79](index=79&type=chunk)[215](index=215&type=chunk) [Other Information](index=32&type=section&id=%E5%85%B6%E4%BB%96%E8%B3%87%E6%96%99) This section covers additional corporate details, including human resources, corporate governance practices, and compliance with listing rules [Human Resources](index=32&type=section&id=%E4%BA%BA%E5%8A%9B%E8%B3%87%E6%BA%90) As of the reporting period, the Group's total number of employees increased to **467**, with corresponding staff costs rising from **RMB 21.2 Million** in the prior period to **RMB 24.8 Million** - As of June 30, 2023, the Group employed approximately **467 employees**, an increase from approximately **401 employees** in the prior period[87](index=87&type=chunk) - During the period, staff costs (including directors' emoluments) were approximately **RMB 24.8 Million**, compared to approximately **RMB 21.2 Million** in the prior period[87](index=87&type=chunk) [Corporate Governance](index=34&type=section&id=%E9%81%B5%E5%AE%88%E4%BC%81%E6%A5%AD%E7%AE%A1%E6%B2%BB%E5%B8%B8%E8%A6%8F%E5%AE%88%E5%89%87) The company is committed to maintaining high corporate governance standards, complying with most Listing Rules code provisions, with a key deviation being the combined roles of Chairman and Chief Executive Officer held by Mr. Hong Yiyuan, an arrangement the Board believes ensures leadership consistency and decision-making efficiency, and the Audit Committee has reviewed the unaudited financial information for the period - The company has one deviation from the Corporate Governance Code: the roles of Chairman and Chief Executive Officer are not separated, both held by Mr. Hong Yiyuan, an arrangement the Board believes contributes to leadership consistency and decision-making efficiency[94](index=94&type=chunk)[112](index=112&type=chunk) - The Audit Committee has reviewed the Group's unaudited condensed consolidated financial information for the period and considers its preparation to be in compliance with applicable accounting standards and Listing Rules requirements[96](index=96&type=chunk) - During the period, neither the company nor any of its subsidiaries purchased, sold, or redeemed any of the company's listed securities[97](index=97&type=chunk)

Financial Performance - The company recorded total revenue of approximately RMB 397.8 million, with a net loss of approximately RMB 3.2 million for the year[19]. - Gross profit decreased by approximately RMB 20.6 million to about RMB 64.2 million, with a gross margin reduction of about 5.5 percentage points to approximately 16.1%[21]. - Other income decreased by approximately RMB 1.9 million or about 12% to approximately RMB 13.5 million, primarily due to a reduction in government subsidies[23]. - Revenue increased slightly by approximately RMB 4.8 million or about 1% to approximately RMB 397.8 million, driven by sales increases in adult diaper machines and new products[26]. - The group recorded total revenue of approximately RMB 397.8 million, with a total of 57 machines sold, representing an increase of about 1% compared to the previous year[77]. - The group incurred a net loss of approximately RMB 3.2 million for the year, and the board does not recommend a final dividend for the year[77]. - The company reported a loss attributable to owners of approximately RMB 3.1 million, compared to a profit of approximately RMB 27.0 million in the previous year[30]. - The total income tax expense for the year ended December 31, 2022, was RMB (2,174) thousand, a significant decrease from RMB 870 thousand in 2021[194]. - The group did not pay any remuneration to directors as an incentive for joining or as a reward for leaving during the years ended December 31, 2022, and 2021[189]. - The group has no plans for dividends for the year ended December 31, 2022[196]. Sales and Market Expansion - A total of 57 machines were sold during the year, representing a 1% increase compared to the previous year[19]. - The company has signed sales contracts for 21 baby diaper machines valued at approximately RMB 131.2 million and 7 adult diaper machines valued at approximately RMB 56.5 million, among others[20]. - The company has expanded its sales reach to 10 overseas countries, in addition to its primary customer base in China[19]. - The company aims to enhance market penetration through customized product design and production services[6]. - The company is committed to a platform-based strategy for global market expansion[11]. - The group has increased advertising efforts on major media platforms to enhance brand exposure and market penetration, and has signed a cooperation agreement for equipment sales in South America[84]. - The group plans to continue deepening cooperation with agents to explore new overseas markets[84]. Production and Operations - The company is constructing a digital factory on a land area of approximately 27,594 square meters, with a total construction area of approximately 78,579 square meters, to meet the increasing demand for its products[18]. - The company has two production bases in China, with a total floor area of approximately 53,000 square meters and operates 18 production lines in Jinjiang and 9 in Hangzhou[17]. - The company is advancing its "5G + smart equipment operation and maintenance service platform" to accelerate digital transformation and enhance operational efficiency[7]. - The company plans to strengthen cost control and adjust its cost structure in response to rising raw material and labor costs[15]. - The construction of digital factories in Jinjiang and Hangzhou is progressing, which is expected to elevate the group's digital and intelligent construction to a new level[86]. - The company plans to expand its production capacity by acquiring land in Hangzhou, expected to enhance production efficiency and meet customer sales orders[165]. Research and Development - The group has approximately RMB 26.6 million allocated for R&D expenditures this year, fully funded by internal resources[94]. - The group plans to invest no less than RMB 350 million in a new R&D and production center currently under construction[97]. - The group currently holds 160 patents in China, reflecting its strong R&D capabilities[92]. - The group aims to enhance its R&D efficiency and continuously delve into technological innovation[93]. - The group is committed to expanding its market presence both domestically and internationally to maintain its industry-leading position[98]. - The group is enhancing its R&D capabilities through the adoption of precision manufacturing and increased automation[94]. - The group aims to improve the self-manufacturing rate of core components year by year, optimizing its industrial chain layout[95]. Environmental, Social, and Governance (ESG) - The group has established an Environmental, Social, and Governance (ESG) working group to assess and manage ESG-related risks and opportunities[175]. - The board of directors is responsible for overseeing the group's ESG governance and regularly evaluates ESG-related risks and performance[174]. - The group has achieved ISO 14001:2015 environmental management system certification, demonstrating its commitment to environmental protection[183]. - No significant violations of local environmental laws and regulations were reported during the year concerning air and greenhouse gas emissions, pollutants, and waste generation[184]. - The group believes that sustainable development is a core part of its business strategy for future success[174]. Financial Position and Commitments - The current ratio improved to approximately 2.2 times as of December 31, 2022, compared to approximately 2.0 times in the previous year[33]. - The debt-to-equity ratio was approximately 12.1% as of December 31, 2022, down from approximately 19.1% in the previous year[40]. - Capital commitments amounted to approximately RMB 273.4 million, significantly higher than RMB 49.1 million in the previous year[44]. - The company successfully acquired land for industrial use in Hangzhou for RMB 21,830,000, with a 50-year usage term[48]. - The company won a bid for state-owned land use rights in Jinjiang for approximately RMB 199 million[49]. - A construction contract was signed for a total value of approximately RMB 265.60 million for facilities on the newly acquired land[49]. - The company has no significant contingent liabilities as of December 31, 2022, consistent with the previous year[57]. - The company has no financial instruments in place to hedge foreign exchange risks as of December 31, 2022[58].

Financial Summary [Key Financial Indicators](index=1&type=section&id=Key%20Financial%20Indicators) The company's total revenue slightly increased by 1% to RMB 397.8 million, but gross profit significantly dropped by 24% to RMB 64.2 million, resulting in a net loss attributable to owners of RMB 3.1 million Key Financial Indicators | Indicator | 2022 (RMB in millions) | 2021 (RMB in millions) | YoY Change | | :--- | :--- | :--- | :--- | | Total Revenue | 397.8 | 393.0 | Increase of approx 1% | | Gross Profit | 64.2 | 84.8 | Decrease of approx 24% | | (Loss) Profit Attributable to Company Owners | (3.1) | 27.0 | Turned from profit to loss | | Basic (Loss) Earnings Per Share | (0.56) cents | 5.21 cents | Turned from profit to loss | - The Board of Directors resolved not to declare a final dividend for the year ended December 31, 2022[1](index=1&type=chunk) Consolidated Financial Statements [Consolidated Statement of Profit or Loss and Other Comprehensive Income](index=2&type=section&id=Consolidated%20Statement%20of%20Profit%20or%20Loss%20and%20Other%20Comprehensive%20Income) Revenue slightly increased to RMB 397.8 million in 2022, but a sharp rise in cost of sales led to a significant drop in gross profit, turning a pre-tax profit in 2021 into a pre-tax loss in 2022 Consolidated Statement of Profit or Loss and Other Comprehensive Income | Indicator | 2022 (RMB in thousands) | 2021 (RMB in thousands) | | :--- | :--- | :--- | | Revenue | 397,817 | 392,982 | | Cost of sales | (333,600) | (308,211) | | Gross profit | 64,217 | 84,771 | | Other income | 13,511 | 15,415 | | Selling and distribution costs | (13,795) | (14,389) | | Administrative and other operating expenses | (53,176) | (54,857) | | Net impairment loss on trade receivables | (3,331) | (1,338) | | Fair value change of equity instruments at FVTPL | (4,124) | 812 | | Finance costs | (2,186) | (1,614) | | (Loss) profit before tax | (5,395) | 27,166 | | Income tax credit (expense) | 2,174 | (870) | | (Loss) profit for the year | (3,221) | 26,296 | | (Loss) profit for the year attributable to owners of the Company | (3,147) | 26,980 | | Basic (loss) earnings per share (RMB cents) | (0.56) | 5.21 | [Consolidated Statement of Financial Position](index=4&type=section&id=Consolidated%20Statement%20of%20Financial%20Position) As of year-end 2022, non-current assets increased significantly, driven by property, plant and equipment, while total current assets decreased, leading to a slight decline in net current assets Consolidated Statement of Financial Position | Indicator | 2022 (RMB in thousands) | 2021 (RMB in thousands) | | :--- | :--- | :--- | | **Non-current assets** | | | | Property, plant and equipment | 88,037 | 35,051 | | Intangible assets | 5,225 | 5,331 | | Equity instruments at FVTOCI | – | 14,267 | | Goodwill | 1,369 | 1,369 | | Deferred tax assets | 2,174 | 2,174 | | Deposit paid for acquisition of land use rights | – | 21,530 | | **Total non-current assets** | **96,805** | **79,722** | | **Current assets** | | | | Inventories | 197,607 | 276,096 | | Equity instruments at FVTPL | 4,257 | 8,885 | | Debt instruments at amortised cost | 29,653 | 31,893 | | Trade and other receivables | 115,417 | 107,177 | | Restricted bank deposits | 22,328 | 21,700 | | Bank balances and cash | 85,596 | 102,443 | | **Total current assets** | **454,858** | **548,194** | | **Current liabilities** | | | | Trade and other payables | 168,894 | 217,632 | | Lease liabilities | 10,592 | 9,494 | | Interest-bearing borrowings | 25,000 | 39,193 | | Income tax payable | 1,021 | 3,264 | | **Total current liabilities** | **205,507** | **269,583** | | **Net current assets** | **249,351** | **278,611** | | **Total assets less current liabilities** | **346,156** | **358,333** | | **Non-current liabilities** | | | | Lease liabilities | 5,528 | 16,210 | | Deferred tax liabilities | 1,856 | 1,873 | | **Total non-current liabilities** | **7,384** | **18,083** | | **Net assets** | **338,772** | **340,250** | | **Total equity** | **338,772** | **340,250** | Notes to the Consolidated Financial Statements [General Information and Basis of Preparation](index=5&type=section&id=General%20Information%20and%20Basis%20of%20Preparation) The company, incorporated in the Cayman Islands and listed in Hong Kong, primarily engages in designing and producing automated machines for disposable hygiene products in China - The company was incorporated in the Cayman Islands on December 20, 2017, and its shares were listed on the Main Board of the Hong Kong Stock Exchange on June 3, 2020[36](index=36&type=chunk) - The Group is principally engaged in the design and production of automated machines for disposable hygiene products in the People's Republic of China ("China")[13](index=13&type=chunk) - The consolidated financial statements have been prepared in accordance with Hong Kong Financial Reporting Standards (HKFRSs) issued by the Hong Kong Institute of Certified Public Accountants and comply with the applicable disclosure requirements of the Hong Kong Companies Ordinance and the Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited[7](index=7&type=chunk) [Statement of Compliance](index=5&type=section&id=Statement%20of%20Compliance) The adoption of new/revised Hong Kong Financial Reporting Standards in the current and prior years had no material impact on the Group's financial performance and position - The application of new/revised HKFRSs that are relevant to the Group and effective in the current year has had no material effect on the Group's financial performance and financial position for the current and prior years[15](index=15&type=chunk) [Segment Information](index=6&type=section&id=Segment%20Information) The Group operates as a single reportable segment, designing and producing automated machines for disposable hygiene products, with revenue primarily from China and expanding overseas [Geographical Information](index=6&type=section&id=Geographical%20Information) The Group's revenue is predominantly from China, which amounted to RMB 310.214 million in 2022, with active expansion into overseas markets like the Philippines, India, and Indonesia Revenue by Geographical Location | Region | 2022 (RMB in thousands) | 2021 (RMB in thousands) | | :--- | :--- | :--- | | China | 310,214 | 285,485 | | Philippines | 35,121 | 15,408 | | India | 17,854 | – | | Indonesia | 16,219 | 29,158 | | Bangladesh | 9,101 | – | | Pakistan | 5,846 | 1,157 | | South Korea | 1,355 | 27,838 | | Nigeria | 1,354 | 9,564 | | Dubai | 430 | 2,367 | | Uzbekistan | 317 | 6,034 | | Angola | 6 | 158 | | Thailand | – | 8,595 | | Yemen | – | 5,390 | | Vietnam | – | 1,413 | | Malaysia | – | 362 | | Cambodia | – | 53 | | **Total** | **397,817** | **392,982** | - Non-current assets, allocated based on the physical location of assets and the operations to which they are assigned, are primarily located in China[40](index=40&type=chunk)[42](index=42&type=chunk) [Information about Major Customers](index=7&type=section&id=Information%20about%20Major%20Customers) For the years ended December 31, 2022 and 2021, no single external customer contributed 10% or more to the Group's total revenue - For the years ended December 31, 2022 and 2021, no revenue from transactions with a single external customer amounted to 10% or more of the Group's total revenue[42](index=42&type=chunk) [Other Income](index=7&type=section&id=Other%20Income) Other income decreased to RMB 13.511 million in 2022 from RMB 15.415 million in 2021, mainly due to reduced government grants and no reversal of provision for litigation and claims Breakdown of Other Income | Income Source | 2022 (RMB in thousands) | 2021 (RMB in thousands) | | :--- | :--- | :--- | | Bank interest income | 1,185 | 1,896 | | Interest income from debt instruments at amortised cost | 2,061 | 1,880 | | Net foreign exchange gain | 2,617 | 382 | | Government grants | 5,745 | 8,499 | | Sales of scrap materials | 442 | 423 | | Reversal of provision for litigation and claims | – | 2,000 | | Others | 1,461 | 335 | | **Total** | **13,511** | **15,415** | - The decrease in other income was mainly attributable to the decrease in government grants and the absence of a reversal of provision for litigation and claims during the year[153](index=153&type=chunk) [(Loss) Profit Before Tax](index=8&type=section&id=(Loss)%20Profit%20Before%20Tax) The company reported a pre-tax loss of RMB 5.395 million in 2022, a reversal from a pre-tax profit of RMB 27.166 million in 2021, driven by lower gross profit and finance costs - **(Loss) profit before tax** shifted from RMB 27,166 thousand in 2021 to RMB (5,395) thousand in 2022[33](index=33&type=chunk) Expenses by Nature | Item | 2022 (RMB in thousands) | 2021 (RMB in thousands) | | :--- | :--- | :--- | | Finance costs | 2,186 | 1,614 | | Staff costs (including directors' remuneration) | 46,213 | 46,861 | | Depreciation of property, plant and equipment | 46,975 | 47,878 | | Amortisation of intangible assets | 3,083 | 3,276 | | Research and development expenses (net of capitalisation) | 23,584 | 28,336 | [Income Tax (Credit) Expense](index=10&type=section&id=Income%20Tax%20(Credit)%20Expense) An income tax credit of RMB 2.174 million was recorded in 2022, compared to an expense of RMB 0.870 million in 2021, mainly due to an overprovision credit from prior years Breakdown of Income Tax | Item | 2022 (RMB in thousands) | 2021 (RMB in thousands) | | :--- | :--- | :--- | | PRC Enterprise Income Tax - Current year | 958 | 2,983 | | Hong Kong Profits Tax - Current year | 15 | 5 | | Overprovision in prior years | (3,130) | – | | Deferred tax | (17) | (2,118) | | **Income tax (credit) expense for the year** | **(2,174)** | **870** | - Jinjiang Haina and Hangzhou Haina were recognised as High and New Technology Enterprises and are entitled to a preferential tax rate of 15%[29](index=29&type=chunk) [(Loss) Earnings Per Share](index=10&type=section&id=(Loss)%20Earnings%20Per%20Share) Basic loss per share was RMB 0.56 cents in 2022, compared to basic earnings per share of RMB 5.21 cents in 2021, with diluted loss per share being the same due to anti-dilutive potential ordinary shares Calculation of (Loss) Earnings Per Share | Indicator | 2022 | 2021 | | :--- | :--- | :--- | | Basic (loss) earnings per share (RMB cents) | (0.56) | 5.21 | | (Loss) profit attributable to owners of the Company for basic EPS calculation (RMB in thousands) | (3,147) | 26,980 | | Weighted average number of ordinary shares for basic EPS calculation (in thousands) | 563,976 | 517,506 | - Diluted (loss) earnings per share was the same as the basic (loss) earnings per share as the potential ordinary shares had an anti-dilutive effect for the years ended December 31, 2022 and 2021[51](index=51&type=chunk) [Dividends](index=10&type=section&id=Dividends) No dividends were declared or proposed by the Group for the years 2022 and 2021 - No dividend was declared by the Group for each of the years ended December 31, 2022 and 2021, nor has any dividend been proposed since the end of the reporting period[32](index=32&type=chunk) [Debt Instruments at Amortised Cost](index=11&type=section&id=Debt%20Instruments%20at%20Amortised%20Cost) As of year-end 2022, the net amount of unlisted debt instruments at amortised cost was RMB 29.653 million, a decrease from RMB 31.893 million in 2021 Debt Instruments at Amortised Cost | Indicator | 2022 (RMB in thousands) | 2021 (RMB in thousands) | | :--- | :--- | :--- | | Unlisted debt instruments, unsecured | 35,458 | 32,679 | | Less: Provision for expected credit losses | (5,805) | (786) | | **Net amount** | **29,653** | **31,893** | - The maturity date of the bond with Zhuohang Holdings Group Co, Ltd was extended from January 26, 2022, to July 25, 2023, with the annual interest rate revised from 6% to 8%[53](index=53&type=chunk)[54](index=54&type=chunk) - The bond is guaranteed by a corporate guarantee deed executed by an independent third party in favour of the Group on March 4, 2023[75](index=75&type=chunk) [Trade and Other Receivables](index=12&type=section&id=Trade%20and%20Other%20Receivables) Total trade and other receivables increased to RMB 115.417 million by the end of 2022, including retention money of approximately RMB 30.650 million due after the warranty period Breakdown of Trade and Other Receivables | Item | 2022 (RMB in thousands) | 2021 (RMB in thousands) | | :--- | :--- | :--- | | Trade receivables (net of provision) | 75,768 | 73,340 | | Bills receivable | 1,394 | – | | Prepayments to suppliers | 3,912 | 9,264 | | Other prepaid expenses | 4,702 | 1,804 | | Consideration receivable | 7,978 | – | | Interest receivable from debt instruments at amortised cost | 2,009 | 1,880 | | Deposits and other receivables | 2,939 | 2,230 | | VAT and other tax recoverable (net of provision) | 38,255 | 33,837 | | **Total** | **115,417** | **107,177** | - Trade receivables included retention money of approximately RMB 30,650,000, which is due upon the expiry of the product warranty period (generally 12 months from customer acceptance)[78](index=78&type=chunk) - The Group may grant a credit period of up to 30 days from the invoice date, with specific settlement arrangements allowing for monthly instalments up to 12 months[57](index=57&type=chunk) [Trade and Other Payables](index=14&type=section&id=Trade%20and%20Other%20Payables) Total trade and other payables significantly decreased to RMB 168.894 million by year-end 2022, mainly due to a reduction in trade payables and contract liabilities Breakdown of Trade and Other Payables | Item | 2022 (RMB in thousands) | 2021 (RMB in thousands) | | :--- | :--- | :--- | | Trade payables | 50,600 | 76,367 | | Bills payable | 29,810 | 23,400 | | Salaries payable | 5,674 | 6,390 | | Contract liabilities - receipts in advance | 63,534 | 98,559 | | Accrued expenses and other payables | 19,276 | 12,916 | | **Total** | **168,894** | **217,632** | - Trade payables are interest-free and the Group is generally granted a credit period of up to 180 days[62](index=62&type=chunk) - The overall contract activities decreased during the year ended December 31, 2022, resulting in a decrease in the amount of receipts in advance[84](index=84&type=chunk) [Interest-bearing Borrowings](index=15&type=section&id=Interest-bearing%20Borrowings) As of year-end 2022, total interest-bearing borrowings, consisting of bank loans, decreased to RMB 25.0 million, all classified as current liabilities with fixed interest rates Breakdown of Interest-bearing Borrowings | Item | 2022 (RMB in thousands) | 2021 (RMB in thousands) | | :--- | :--- | :--- | | Bank loans - unsecured | 25,000 | 20,000 | | Bank revolving loans - unsecured | – | 19,193 | | **Total** | **25,000** | **39,193** | - The bank loans are repayable within one year and were therefore classified as current liabilities as at December 31, 2022[185](index=185&type=chunk) - The bank loans carry fixed interest rates ranging from 3.50% to 4.5% per annum (December 31, 2021: 3.35% to 4.35%)[185](index=185&type=chunk) [Share Capital](index=16&type=section&id=Share%20Capital) Issued and fully paid share capital remained at RMB 5.088 million as of year-end 2022, following the issuance of 93,972,000 new shares via a placing in 2021 Movement in Share Capital | Item | Number of Shares (in thousands) | Equivalent in RMB thousands | | :--- | :--- | :--- | | Issued and fully paid at 1 January 2021 | 470,004 | 4,315 | | Issue of shares upon placing | 93,972 | 773 | | **Issued and fully paid at 31 December 2021, 1 January 2022 and 31 December 2022** | **563,976** | **5,088** | - On June 30, 2021, the placing of 93,972,000 shares was completed, with net proceeds of approximately RMB 67,971,000, of which approximately RMB 773,000 was credited to share capital and the remainder to the share premium account[68](index=68&type=chunk) [Share-based Payments](index=17&type=section&id=Share-based%20Payments) The company granted 14,000,000 share options in 2021 under its 2020 share option scheme and recognised an expense of RMB 1.356 million for equity-settled share-based payments in 2022 - The company adopted a new share option scheme on May 8, 2020, to provide incentives or rewards to participants for their contribution to the Group and/or to enable the Group to recruit and retain high-calibre employees[69](index=69&type=chunk)[110](index=110&type=chunk) - On May 21, 2021, the company granted a total of **14,000,000 share options** to certain eligible participants at an exercise price of HK$1.14 per share[90](index=90&type=chunk) Movement of Share Options | Category of Grantee | Number of options at 1 Jan 2022 | Granted during the year | Exercised | Cancelled/Lapsed | Number of options at 31 Dec 2022 | | :--- | :--- | :--- | :--- | :--- | :--- | | Directors | 10,000,000 | – | – | – | 10,000,000 | | Eligible employees | 4,000,000 | – | – | – | 4,000,000 | | **Total** | **14,000,000** | **–** | **–** | **–** | **14,000,000** | - For the year ended December 31, 2022, the Group recognised an expense of **RMB 1,356,000** (2021: RMB 804,000) for equity-settled share-based payments[95](index=95&type=chunk) [Litigation and Claims](index=22&type=section&id=Litigation%20and%20Claims) The Group resolved two customer claims, with Claim 1 dismissed in March 2022 and Claim 2 resulting in a payment of RMB 1.714 million which has been fully settled - Claim 1 (regarding quality issues of disposable medical mask machines) was dismissed by the Intermediate Court on March 24, 2022, with no liability for the Group, and a provision of approximately RMB 2,000,000 was reversed in 2021[97](index=97&type=chunk)[98](index=98&type=chunk)[119](index=119&type=chunk) - For Claim 2 (regarding quality issues of disposable medical mask machines), a judgment on August 1, 2022, required Hangzhou Haina to pay Plaintiff 2 RMB 1,600,000 plus interest of approximately RMB 114,000, which the Group fully settled in 2022[99](index=99&type=chunk)[119](index=119&type=chunk) [Events After the Reporting Period](index=22&type=section&id=Events%20After%20the%20Reporting%20Period) No other significant events occurred for the Group after December 31, 2022, other than those disclosed elsewhere in the consolidated financial statements - Save as disclosed elsewhere in the consolidated financial statements, the Group does not have other significant events after December 31, 2022[100](index=100&type=chunk) Management Discussion and Analysis [Business Review](index=23&type=section&id=Business%20Review) The Group, a manufacturer of automated machines for disposable hygiene products, achieved total revenue of approximately RMB 397.8 million in 2022 but recorded a net loss of RMB 3.2 million - In 2022, the Group recorded total revenue of approximately **RMB 397.8 million** from the sale of 57 machines, an increase of 1% from the previous year[103](index=103&type=chunk) - The Group's main customer base is in China, and during the year, it also extended its sales to 10 overseas countries[103](index=103&type=chunk) - The Group recorded a **net loss of approximately RMB 3.2 million** for the year[103](index=103&type=chunk) - The Group has two production bases in Jinjiang and Hangzhou, China, with a total gross floor area of approximately 53,000 square meters, operating 18 and 9 production lines, respectively[138](index=138&type=chunk) [Outlook](index=24&type=section&id=Outlook) The Group plans to enhance its business prospects and financial performance through five key strategies, including improving R&D efficiency and expanding production capacity - The Group plans to strengthen R&D innovation by adopting new technologies such as precision manufacturing and enhanced automation, with R&D expenses of approximately **RMB 26.6 million** in 2022[104](index=104&type=chunk)[141](index=141&type=chunk) - The Group intends to acquire companies engaged in automated packaging equipment to provide integrated solutions, accelerate technological iteration, and increase the self-manufacturing rate of core components[125](index=125&type=chunk)[143](index=143&type=chunk) - The Group has commenced construction of a digital factory (Zhejiang Tongchuang project) expected to be completed in 2024 with a total investment of no less than **RMB 600 million**, while a new R&D and production center in Jinjiang is also under planning with an investment of no less than **RMB 350 million**[122](index=122&type=chunk)[126](index=126&type=chunk)[139](index=139&type=chunk)[145](index=145&type=chunk) - The Group will continue to cultivate the Chinese market, protect its overseas market share, and explore new markets like South America through advertising on various platforms and collaborating with agents[129](index=129&type=chunk)[146](index=146&type=chunk)[147](index=147&type=chunk) - The Group is building a "5G + Smart Equipment Operation and Maintenance Service Platform" to transition towards a "manufacturing + service" model, leveraging 5G and AR technology for equipment visualization and lean production management[130](index=130&type=chunk)[131](index=131&type=chunk)[148](index=148&type=chunk) Financial Review [Revenue](index=27&type=section&id=Revenue) Total revenue in 2022 slightly increased by 1% to RMB 397.8 million, driven by sales growth in adult diaper, mattress, pet diaper, and wet wipe machines Revenue by Product Type | Product Category | 2022 Units | 2022 (RMB in thousands) | 2022 % | 2021 Units | 2021 (RMB in thousands) | 2021 % | | :--- | :--- | :--- | :--- | :--- | :--- | :--- | | Baby diaper machines | 22 | 159,520 | 40% | 33 | 215,073 | 55% | | Adult diaper machines | 21 | 183,976 | 46% | 13 | 109,986 | 28% | | Feminine sanitary napkin machines | 6 | 18,779 | 4% | 14 | 44,117 | 11% | | Mattress machines | 3 | 7,035 | 2% | 2 | 3,516 | 1% | | Pet diaper machines | 2 | 5,841 | 2% | – | – | – | | Wet wipe machines | 3 | 1,735 | 1% | – | – | – | | Components and parts | N/A | 20,931 | 5% | N/A | 20,290 | 5% | | **Total** | **57** | **397,817** | **100%** | **62** | **392,982** | **100%** | - The increase in revenue was mainly due to increased sales of adult diaper machines (approx **RMB 74.0 million**), mattress machines (approx RMB 3.5 million), pet diaper machines (approx RMB 5.8 million), wet wipe machines (approx RMB 1.7 million), and components and parts (approx RMB 0.6 million)[132](index=132&type=chunk) - After December 31, 2022, the Group entered into further sales contracts with customers for delivery in 2023 with a total value of approximately **RMB 124.3 million**[152](index=152&type=chunk) [Gross Profit and Gross Profit Margin](index=28&type=section&id=Gross%20Profit%20and%20Gross%20Profit%20Margin) Gross profit decreased by 24% to RMB 64.2 million in 2022, with the gross profit margin falling by 5.5 percentage points to 16.1% due to rising costs and supply chain issues Gross Profit and Margin | Indicator | 2022 (RMB in millions) | 2021 (RMB in millions) | YoY Change | | :--- | :--- | :--- | :--- | | Gross Profit | 64.2 | 84.8 | Decrease of approx RMB 20.6 million (24%) | | Gross Profit Margin | 16.1% | 21.6% | Decrease of approx 5.5 p.p. | - The decrease in gross profit and gross profit margin was mainly due to (i) a significant increase in raw material costs; (ii) inability to pass on costs due to market competition; (iii) freight disruptions and increased transportation costs due to the COVID-19 pandemic; and (iv) decreased production efficiency from untimely supply of parts[153](index=153&type=chunk) [Other Income](index=28&type=section&id=Other%20Income) Other income for 2022 was RMB 13.5 million, a 12% year-on-year decrease, primarily due to reduced government grants and no reversal of provision for litigation and claims Other Income | Indicator | 2022 (RMB in millions) | 2021 (RMB in millions) | YoY Change | | :--- | :--- | :--- | :--- | | Other Income | 13.5 | 15.4 | Decrease of approx RMB 1.9 million (12%) | - The decrease in other income was mainly attributable to the decrease in government grants and the absence of a reversal of provision for litigation and claims during the year[153](index=153&type=chunk) [Selling and Distribution Costs](index=29&type=section&id=Selling%20and%20Distribution%20Costs) Selling and distribution costs for 2022 were RMB 13.8 million, a slight year-on-year decrease of 4.2%, mainly due to lower commissions Selling and Distribution Costs | Indicator | 2022 (RMB in millions) | 2021 (RMB in millions) | YoY Change | | :--- | :--- | :--- | :--- | | Selling and Distribution Costs | 13.8 | 14.4 | Decrease of approx RMB 0.6 million (4.2%) | - The decrease in selling and distribution costs was mainly due to a decrease in commissions[155](index=155&type=chunk) [Administrative and Other Operating Expenses](index=29&type=section&id=Administrative%20and%20Other%20Operating%20Expenses) Administrative and other operating expenses for 2022 were RMB 53.2 million, a 3% year-on-year decrease, primarily due to reduced research and development expenses Administrative and Other Operating Expenses | Indicator | 2022 (RMB in millions) | 2021 (RMB in millions) | YoY Change | | :--- | :--- | :--- | :--- | | Administrative and Other Operating Expenses | 53.2 | 54.9 | Decrease of approx RMB 1.7 million (3%) | - The decrease in administrative and other operating expenses was mainly due to the decrease in research and development expenses during the year[156](index=156&type=chunk) [Finance Costs](index=29&type=section&id=Finance%20Costs) Finance costs for 2022 were RMB 2.2 million, a 38% year-on-year increase, mainly due to higher interest on bank borrowings Finance Costs | Indicator | 2022 (RMB in millions) | 2021 (RMB in millions) | YoY Change | | :--- | :--- | :--- | :--- | | Finance Costs | 2.2 | 1.6 | Increase of approx RMB 0.6 million (38%) | - The increase in finance costs was mainly due to the increase in interest on bank borrowings[171](index=171&type=chunk) [Income Tax Credit/(Expense)](index=29&type=section&id=Income%20Tax%20Credit%2F(Expense)) An income tax credit of RMB 2.2 million was recorded in 2022, compared to an expense of RMB 0.9 million in 2021, mainly reflecting an overprovision of income tax expense Income Tax Credit/(Expense) | Indicator | 2022 (RMB in millions) | 2021 (RMB in millions) | | :--- | :--- | :--- | | Income Tax Credit/(Expense) | 2.2 (Credit) | 0.9 (Expense) | - The income tax credit represents an overprovision of income tax expense[172](index=172&type=chunk) [Loss Attributable to Owners of the Company](index=29&type=section&id=Loss%20Attributable%20to%20Owners%20of%20the%20Company) The loss attributable to company owners was RMB 3.1 million in 2022, a reversal from a profit of RMB 27.0 million in 2021, primarily due to the decrease in gross profit (Loss) Profit Attributable to Owners of the Company | Indicator | 2022 (RMB in millions) | 2021 (RMB in millions) | | :--- | :--- | :--- | | (Loss) Profit Attributable to Owners of the Company | (3.1) | 27.0 | - The Group's loss position for the year was mainly due to the decrease in gross profit as described above[173](index=173&type=chunk) [Dividends](index=29&type=section&id=Dividends) The Board of Directors has resolved not to declare a final dividend for the current year - The Board has resolved not to declare a final dividend for the current year[158](index=158&type=chunk)[174](index=174&type=chunk) Use of Proceeds [Use of Proceeds from Listing](index=30&type=section&id=Use%20of%20Proceeds%20from%20Listing) Of the RMB 119.5 million net proceeds from the listing, RMB 72.2 million has been utilized for R&D, capacity expansion, and other purposes, with RMB 47.3 million remaining unutilized as of year-end 2022 Use of Net Proceeds from Listing | Allocation of Net Proceeds | Planned Allocation (RMB in millions) | Unutilized at 1 Jan 2022 (RMB in millions) | Utilized up to 31 Dec 2022 (RMB in millions) | Unutilized at 31 Dec 2022 (RMB in millions) | Timeline for Utilization | | :--- | :--- | :--- | :--- | :--- | :--- | | Establishing an R&D centre | 24.1 | 24.1 | 23.0 | 1.1 | By 31 Dec 2023 | | Enhancing R&D capabilities | 22.9 | 2.9 | 20.0 | 2.9 | By 31 Dec 2023 | | Increasing production capacity | 16.8 | 13.3 | 7.2 | 9.6 | By 31 Dec 2024 | | Increasing competitiveness through acquisitions | 43.5 | 27.0 | 16.5 | 27.0 | By 31 Dec 2024 | | Working capital and general corporate purposes | 12.2 | 10.3 | 5.5 | 6.7 | By 31 Dec 2024 | | **Total** | **119.5** | **77.6** | **72.2** | **47.3** | | - As at December 31, 2022, the unutilized net proceeds of approximately **RMB 47.3 million** were deposited with licensed banks in Hong Kong and China[160](index=160&type=chunk) - The utilization progress of proceeds for increasing competitiveness through acquisitions has slowed as the Company continues to search for suitable acquisition targets[163](index=163&type=chunk) [Use of Proceeds from Share Placement](index=31&type=section&id=Use%20of%20Proceeds%20from%20Share%20Placement) Of the RMB 68.0 million net proceeds from the 2021 share placement, RMB 44.1 million has been used for developing the Hangzhou production base, with RMB 23.9 million remaining Use of Net Proceeds from Share Placement | Item | Unutilized at 1 Jan 2022 (RMB in millions) | Utilized up to 31 Dec 2022 (RMB in millions) | Unutilized at 31 Dec 2022 (RMB in millions) | Timeline for Utilization | | :--- | :--- | :--- | :--- | :--- | | Development of Hangzhou production base | 68.0 | 44.1 | 23.9 | By 31 Dec 2024 | - The Group plans to use all net proceeds from the placing to develop its Hangzhou production base[165](index=165&type=chunk) - As of the date of this announcement, land foundation works have commenced on Land I[165](index=165&type=chunk) Financial Policies [Liquidity and Financial Resources](index=32&type=section&id=Liquidity%20and%20Financial%20Resources) The Group funds its operations through internal resources and borrowings, maintaining adequate liquidity with a current ratio of 2.2 times at year-end 2022 - The Group's working capital is mainly derived from internal resources and interest-bearing borrowings[166](index=166&type=chunk) Liquidity Ratio | Indicator | 31 Dec 2022 | 31 Dec 2021 | | :--- | :--- | :--- | | Current Ratio | 2.2 times | 2.0 times | - It is the Group's policy to regularly monitor its current and expected liquidity requirements to ensure that it maintains sufficient cash reserves to meet its short-term and long-term liquidity needs[205](index=205&type=chunk) [Capital Structure](index=32&type=section&id=Capital%20Structure) As of year-end 2022, the Group's capital structure comprised approximately RMB 338.8 million in equity and RMB 25.0 million in bank borrowings Capital Structure | Indicator | 31 Dec 2022 (RMB in millions) | 31 Dec 2021 (RMB in millions) | | :--- | :--- | :--- | | Equity | 338.8 | 340.3 | | Bank borrowings | 25.0 | 39.2 | [Borrowings](index=33&type=section&id=Borrowings) As of year-end 2022, the Group's bank loans totaled RMB 25.0 million, repayable within one year, with a gearing ratio of approximately 12.1% Borrowings and Gearing Ratio | Indicator | 31 Dec 2022 (RMB in millions) | 31 Dec 2021 (RMB in millions) | | :--- | :--- | :--- | | Bank loans | 25.0 | 39.2 | | Gearing ratio | 12.1% | 19.1% | - The bank loans are repayable within one year and carry fixed interest rates ranging from 3.50% to 4.5% per annum[185](index=185&type=chunk) [Capital Commitments](index=33&type=section&id=Capital%20Commitments) As of year-end 2022, the Group's capital expenditure commitments, primarily for construction in progress and intangible asset development, totaled RMB 273.384 million Capital Commitments | Item | 2022 (RMB in thousands) | 2021 (RMB in thousands) | | :--- | :--- | :--- | | Contracted but not provided for, net of deposits paid: | | | | - Construction in progress | 245,705 | – | | - Development of intangible assets | 27,679 | 29,197 | | - Acquisition of land use rights | – | 19,912 | | **Total** | **273,384** | **49,109** | [Contingent Liabilities](index=33&type=section&id=Contingent%20Liabilities) As of year-end 2022, the Group had no significant contingent liabilities - As at December 31, 2022, the Group did not have any significant contingent liabilities (December 31, 2021: Nil)[209](index=209&type=chunk) [Foreign Exchange Risk Management](index=33&type=section&id=Foreign%20Exchange%20Risk%20Management) The Group's monetary assets, liabilities, and transactions are mainly denominated in RMB, HKD, and USD, with no foreign exchange derivatives used during the year - The Group's monetary assets, liabilities and transactions are principally denominated in Renminbi, Hong Kong dollars and United States dollars[209](index=209&type=chunk) - The Group did not experience any difficulties or effects on its operations or liquidity due to fluctuations in currency exchange rates during the year[209](index=209&type=chunk) - The Group did not enter into any foreign exchange derivative contracts to manage currency conversion risk during the year but will continue to review its foreign exchange exposure regularly and may consider using financial instruments for hedging when appropriate[209](index=209&type=chunk)[210](index=210&type=chunk) Other Information [Human Resources](index=34&type=section&id=Human%20Resources) As of year-end 2022, the Group employed approximately 376 staff in Hong Kong and China, with total staff costs for the year amounting to RMB 46.2 million Employee Data | Indicator | 31 Dec 2022 | 31 Dec 2021 | | :--- | :--- | :--- | | Number of employees | 376 | 394 | | Staff costs (RMB in millions) | 46.2 | 46.9 | - Remuneration is determined based on employees' performance, professional experience, and prevailing market conditions, with the Group's remuneration policies and arrangements reviewed regularly by management[189](index=189&type=chunk) [Pledge of Group's Assets](index=34&type=section&id=Pledge%20of%20Group's%20Assets) As of year-end 2022, the Group had not pledged or charged any assets, except for those disclosed in relation to bills payable - Save as disclosed in note 12(b) to the consolidated financial statements, the Group had not pledged or charged any of its assets as at December 31, 2022[190](index=190&type=chunk) [Significant Investments, Acquisitions and Disposals](index=34&type=section&id=Significant%20Investments%2C%20Acquisitions%20and%20Disposals) In 2022, the Group acquired land for a digital factory in Hangzhou and an R&D center in Jinjiang, extended a bond's maturity, and disposed of an unlisted equity investment - On January 5, 2022, Haina Tongchuang successfully acquired Land I in Hangzhou (approx 27,594 sq.m.) for RMB 21,830,000 to build a digital factory[191](index=191&type=chunk) - On January 24, 2022, the issuer paid the bond interest of HK$2,400,000 and agreed on January 25, 2022, to extend the bond's maturity date to January 25, 2023[192](index=192&type=chunk) - On June 30, 2022, Jinjiang Haina successfully acquired Land II in Jinjiang (approx 28,353 sq.m.) for approximately RMB 19.9 million to build a new R&D and production center[193](index=193&type=chunk) - On August 15, 2022, Haina Tongchuang entered into a construction contract with a contractor for a total price of approximately RMB 265.60 million for the construction of factory buildings and ancillary facilities on Land II[215](index=215&type=chunk) - On December 13, 2022, Haina Technology disposed of its unlisted equity investment at FVTOCI for a consideration of HK$14,200,000 as it no longer aligned with the Group's investment objectives[194](index=194&type=chunk) [Future Plans for Material Investments and Capital Assets](index=36&type=section&id=Future%20Plans%20for%20Material%20Investments%20and%20Capital%20Assets) The Group plans to build a dedicated R&D and production center in Jinjiang and develop a production base in Hangzhou, with no other material investment plans at present - The Group plans to build a dedicated research and development and production centre in Jinjiang City[196](index=196&type=chunk) - The Company announced its successful bid for the land use rights of a parcel of land located in Hangzhou Qianjiang Economic Development Zone, Hangzhou City, Zhejiang Province, the PRC, for the development of the Group's Hangzhou production base[217](index=217&type=chunk) - Save as mentioned above and disclosed in this announcement, the Group does not have any plan for material investments or capital assets at present[197](index=197&type=chunk) [Events After the Reporting Period](index=36&type=section&id=Events%20After%20the%20Reporting%20Period) No significant events affecting the Group have occurred after the reporting period up to the date of this announcement, other than those disclosed in note 17 to the financial statements - Save as disclosed in note 17 to the consolidated financial statements, no significant events affecting the Group have occurred after the end of the Period and up to the date of this announcement[198](index=198&type=chunk) [Closure of Register of Members](index=36&type=section&id=Closure%20of%20Register%20of%20Members) The register of members will be closed from May 22 to May 25, 2023, to determine shareholder eligibility for the 2023 Annual General Meeting - The register of members of the Company will be closed from Monday, May 22, 2023 to Thursday, May 25, 2023 (both days inclusive) to determine the eligibility of the Shareholders to attend the 2023 AGM[218](index=218&type=chunk) [Compliance with the Corporate Governance Code](index=36&type=section&id=Compliance%20with%20the%20Corporate%20Governance%20Code) The company has adopted the Corporate Governance Code, and while the roles of Chairman and CEO are combined, the Board believes this ensures consistent leadership and efficiency - The Company has adopted the applicable code provisions of the Corporate Governance Code as set out in Part 2 of Appendix 14 to the Listing Rules during the Period[200](index=200&type=chunk) - The roles of the Chairman and the chief executive officer are performed by the same individual, Mr Hong Yiyuan, which the Board believes ensures consistent leadership and enhances the efficiency of overall strategic planning[219](index=219&type=chunk) - The Company has adopted the Model Code for Securities Transactions by Directors of Listed Issuers as set out in Appendix 10 to the Listing Rules, and all Directors have confirmed compliance[226](index=226&type=chunk) [Audit Committee Review](index=37&type=section&id=Audit%20Committee%20Review) The Audit Committee has reviewed the Group's financial results for the year, and there were no disagreements between the Board and the committee - The audit committee of the Company has reviewed the Group's financial results for the year (including the accounting principles and practices adopted by the Group)[202](index=202&type=chunk) - During the year, there was no disagreement between the Board and the audit committee regarding the financial results of the Group[202](index=202&type=chunk) [Scope of Work of the Company's Auditor on the Results Announcement](index=37&type=section&id=Scope%20of%20Work%20of%20the%20Company's%20Auditor%20on%20the%20Results%20Announcement) The auditor has agreed that the financial figures in the preliminary announcement are consistent with the audited consolidated financial statements, but their work does not constitute an audit or assurance engagement - The Company's auditor, ZHONGHUI ANDA CPA Limited, has agreed the figures in this preliminary announcement with the amounts set out in the Group's audited consolidated financial statements for the year ended December 31, 2022[221](index=221&type=chunk) - The work performed by the auditor does not constitute an audit, review or other assurance engagement in accordance with Hong Kong Standards on Auditing, Hong Kong Standards on Review Engagements or Hong Kong Standards on Assurance Engagements and consequently no assurance is expressed by the Company's auditor on this announcement[221](index=221&type=chunk) [Publication of Annual Results and Annual Report](index=38&type=section&id=Publication%20of%20Annual%20Results%20and%20Annual%20Report) This results announcement is available on the websites of the Stock Exchange and the company, with the annual report to be dispatched to shareholders in due course - This results announcement is published on the website of the Stock Exchange (www.hkexnews.hk) and the website of the Company (www.haina-intelligent.com)[230](index=230&type=chunk) - The annual report of the Company for the year containing all the information required by the Listing Rules will be despatched to the Shareholders of the Company and published on the websites of the Stock Exchange and the Company in due course[230](index=230&type=chunk) [Appreciation](index=38&type=section&id=Appreciation) The Board extends its sincere gratitude to the Group's business partners, shareholders, management team, and all employees - The Board would like to express its sincere gratitude to the business partners and Shareholders of the Group for their continuous support, and to the management team and all employees for their unremitting efforts and valuable contributions to the Group[231](index=231&type=chunk) [Composition of the Board of Directors](index=38&type=section&id=Composition%20of%20the%20Board%20of%20Directors) As of the announcement date, the Board consists of four executive directors, one non-executive director, and three independent non-executive directors - As at the date of this announcement, the Company has four executive Directors, namely Mr Hong Yiyuan (Chairman), Mr Zhang Zhixiong, Mr Su Chengya and Mr He Ziping; one non-executive Director, namely Mr Zheng Zhixiong; and three independent non-executive Directors, namely Mr Chan Ming Kit, Dr Wang Fengxiang and Mr Ng Tat Fung[232](index=232&type=chunk)

Financial Performance - Total revenue for the first half of 2022 was approximately RMB 199.8 million, with a total of 29 machines sold[10]. - The company recorded a net loss of approximately RMB 4.4 million during the same period[10]. - Revenue for the six months ended June 30 decreased by approximately RMB 1.4 million (or 1%) to about RMB 199.8 million, primarily due to declines in sales of baby diaper machines and female hygiene machines[22]. - Gross profit decreased by approximately RMB 13.7 million to about RMB 32.1 million, with a gross margin drop of about 6.7 percentage points to approximately 16.1%[23]. - The company reported a loss before tax of RMB 4,075 thousand, compared to a profit of RMB 19,921 thousand in 2021[83]. - Net loss for the period was RMB 4,401 thousand, a significant decline from a profit of RMB 17,732 thousand in the prior year[83]. - The company reported a comprehensive loss of RMB 4,885 thousand for the period, compared to a comprehensive income of RMB 18,163 thousand in the previous year[83]. - The basic loss per share attributable to the company's owners for the six months ended June 30, 2022, was RMB (4,335,000), compared to a profit of RMB 18,336,000 for the same period in 2021[131]. Research and Development - Research and development expenses for the period amounted to approximately RMB 14.07 million, fully funded by internal resources[13]. - A new research and development center will be established on a land area of approximately 28,353 square meters, costing RMB 19.90 million, to enhance production efficiency[9]. - The company is focused on enhancing its research and development capabilities through precision manufacturing and increased automation[13]. - Future strategies include improving research and development efficiency and production flexibility through acquisitions and new technologies[11][14]. - Research and development expenses for the six months ended June 30, 2022, were RMB 14,072 thousand, slightly down from RMB 14,746 thousand in the same period of 2021[123]. Market Expansion and Sales - The company plans to expand its market presence by selling products to 9 overseas countries during the reporting period[10]. - The company is enhancing its market penetration by increasing advertising efforts on major media platforms and collaborating with an agency for sales in South America[17]. - Sales of adult diapers increased significantly to RMB 118,985 thousand, up 92.5% from RMB 61,814 thousand in the previous year[118]. - The sales of baby diapers decreased to RMB 51,232 thousand, down 50.9% from RMB 104,232 thousand in the previous year[118]. - Major customer A contributed RMB 20,141 thousand, representing over 10% of total revenue for the period, while in the previous year, this customer contributed less than 10%[117]. Operational Efficiency - The company plans to invest at least RMB 600 million in a digital factory to enhance production efficiency and meet increasing market demand for disposable hygiene product automation machines[15]. - The company operates two production bases in China, with a total floor area of approximately 53,000 square meters[8]. - The company has successfully acquired land for a new R&D and production center with an investment of no less than RMB 350 million[15]. - The company is developing a "5G + Smart Equipment Operation and Maintenance Service Platform" in collaboration with China Telecom, aimed at transforming its business model and improving operational efficiency[18]. Financial Position and Liquidity - As of June 30, 2022, unutilized net proceeds from the share issuance amounted to approximately RMB 52.1 million, deposited in licensed banks in Hong Kong and China[35]. - The liquidity ratio as of June 30, 2022, was approximately 2.1 times, compared to 2.0 times on December 31, 2021, indicating stable operational funding from internal resources and interest-bearing borrowings[44]. - The group had bank loans of approximately RMB 30.0 million as of June 30, 2022, down from RMB 39.2 million as of December 31, 2021[47]. - The debt-to-equity ratio was approximately 15.2% as of June 30, 2022, compared to 19.1% as of December 31, 2021[50]. - The total cash and cash equivalents at the end of the reporting period were RMB 75,284,000, down from RMB 194,308,000 at the end of the previous year, reflecting a decrease in liquidity[98]. Employee and Management Costs - Employee costs for the period were approximately RMB 21.2 million, slightly up from RMB 21.0 million in the previous period[54]. - Total remuneration for key management personnel, including directors, was RMB 1,625,000 for the six months ended June 30, 2022, up from RMB 1,097,000 in 2021, representing a year-on-year increase of 48%[170]. - The group employed approximately 401 employees as of June 30, 2022, down from 413 employees a year earlier[54]. Share Capital and Dividends - The company has not declared an interim dividend for the period[31]. - The company issued shares during the period, raising RMB 68,666,000, with transaction costs of RMB (695,000)[89]. - The total issued and paid-up shares increased to 563,976,000, up from 470,004,000 on January 1, 2021, representing a growth of approximately 19.9%[156]. - The net proceeds from the share placement were allocated to enhance the company's equity base, with approximately HKD 81,851,000 recorded under share premium[156]. Legal and Compliance - The company recorded a provision for litigation claims of RMB 1,600,000 as of June 30, 2022, related to a civil lawsuit concerning product quality issues[149]. - The audit committee, consisting of three independent non-executive directors and one non-executive director, has reviewed the unaudited financial statements and believes they comply with applicable accounting standards[66].