[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].

Financial Performance - Haina Intelligent Equipment recorded total revenue of approximately RMB 393.0 million for the year, a decrease of about 17.1% compared to the previous year[7] - The company sold a total of 62 machines during the year, reflecting a decline in sales volume[7] - Net profit after tax was approximately RMB 26.3 million, down about 47.5% from the previous year, with earnings per share at RMB 0.0521[7] - The group recorded total revenue of approximately RMB 393.0 million for the year, with a total of 62 machines sold, representing a decrease of about 17.1% compared to the previous year[20] - The net profit after tax for the group was approximately RMB 26.3 million, a decrease of about 47.5% from the previous year[20] - The company's revenue decreased by approximately RMB 81.3 million (or 17.1%) to about RMB 393.0 million, primarily due to a reduction in sales of disposable medical mask machines by approximately RMB 164.8 million[33] - The gross profit for the year was approximately RMB 84.8 million, a decrease of about RMB 54.5 million from the previous year, resulting in a gross margin of approximately 21.6%, down from 29.4%[35] - The profit attributable to the owners of the company for the year was approximately RMB 27.0 million, a decrease from RMB 40.0 million in the previous year[42] Investments and Acquisitions - Haina Intelligent plans to establish a dedicated R&D center in Jinjiang, Fujian Province, to enhance product development efficiency[10] - The company completed the acquisition of the remaining 49% stake in Hangzhou Haina Machinery, making it a wholly-owned subsidiary[11] - The group has successfully acquired land use rights for approximately 27,594 square meters at a cost of about RMB 21.83 million for the construction of a digital factory[19] - The company signed a land reservation agreement on December 17, 2021, for approximately 40 acres of land at a total price of RMB 199 million to build a dedicated R&D center in Jinjiang[65] - The company entered into a share subscription agreement on July 28, 2021, to acquire 19.8% equity in an automation production and logistics technology solutions provider for HKD 19.8 million[63] - The group completed the acquisition of the remaining 49% stake in Hangzhou Haina Machinery, making it a wholly-owned subsidiary[24] Research and Development - Haina Intelligent holds 147 patents in China, emphasizing its strong R&D capabilities[8] - The group intends to continue increasing R&D investment, with R&D expenditures for the year amounting to approximately RMB 32.0 million[23] - The group aims to establish a dedicated R&D center in Jinjiang, Fujian Province, to improve R&D efficiency and reduce product development time[23] - The company is developing a "5G + Hygiene Industry Industrial Internet Digital Empowerment Platform" in collaboration with China Telecom, with the first phase of the big data dashboard completed and full completion expected within two years[30] Market Expansion - Haina Intelligent intends to invest in a digital factory to increase production capacity and meet higher market demands[12] - The company aims to expand its sales reach to 13 overseas countries while maintaining a strong presence in the domestic market[7] - The group has deepened its penetration in both domestic and overseas markets, gaining 12 new customers in China and 2 overseas[15] - The company is expanding its market presence in Southeast Asia, targeting a 10% market share by the end of the next fiscal year[136] Corporate Governance - The company is committed to maintaining high standards of corporate governance and has complied with the applicable corporate governance code[69] - The roles of the chairman and CEO are currently held by the same individual, which the board believes ensures effective leadership and decision-making[69] - The company has established three committees: the audit committee, the remuneration committee, and the nomination committee to assist the board in governance[85] - The audit committee is composed of three independent non-executive directors and one non-executive director, ensuring appropriate professional accounting qualifications[87] - The board consists of eight members with a balanced mix of experience in management, strategic development, quality assurance, risk management, and finance[99] Shareholder Information - The company has established a website for shareholders and investors to access the latest financial information, business developments, announcements, and contact details[119] - The total reserves available for distribution to shareholders as of December 31, 2021, amounted to approximately RMB 161.3 million, an increase from RMB 120.2 million in 2020[160] - The group did not recommend the payment of a final dividend for the reporting period[151] - The board retains discretion over any proposed dividend distribution, amount, and payment method, which will depend on various factors including actual and expected financial performance[121] Risk Management - The company has a clear internal control and risk management system in place, which was reviewed by the audit committee[88] - The company has established a three-tier risk management approach to identify, assess, and manage various types of risks[105] - The audit committee reviews the effectiveness of the risk management and internal control systems and provides recommendations to the board[104] Employee Information - Employee costs for the year were approximately RMB 46.9 million, an increase from RMB 38.9 million in the previous year[60] - All directors are encouraged to participate in ongoing professional development activities to ensure they remain informed and relevant[84] Financial Position - As of December 31, 2021, cash and bank balances were approximately RMB 102.4 million, down from RMB 230.4 million as of December 31, 2020[46] - The group's debt-to-equity ratio as of December 31, 2021, was approximately 19.1%, compared to 8.9% as of December 31, 2020[50] - The group had unutilized capital commitments of approximately RMB 29.2 million for the development of intangible assets and RMB 19.9 million for land use rights as of December 31, 2021[51]

Financial Performance - The company recorded revenue of approximately RMB 474.3 million for the year, representing a year-on-year increase of about 25.5%[7] - Profit attributable to owners of the company was approximately RMB 40 million, reflecting a year-on-year increase of about 51.2%[7] - The net profit after tax for the year was approximately RMB 50.1 million, which is an increase of about 61.2% compared to the previous year[7] - Total revenue for the year ended December 31, 2020, was approximately RMB 474.3 million, an increase of 25.4% compared to RMB 377.9 million in 2019[36] - Gross profit for the same period was RMB 139.3 million, resulting in a gross margin of 29.4%, up from 24.0% in 2019[26][36] - Net profit after tax was approximately RMB 50.1 million, representing a growth of 61.2% from RMB 31.1 million in the previous year[36] - Other income rose by approximately RMB 2.1 million or 25% to about RMB 10.5 million, primarily due to increased bank interest income from government subsidies and bank balances[55] - Selling and distribution costs increased by approximately RMB 1.3 million or 9% to about RMB 15.9 million, mainly due to commission and consulting fees[56] - Administrative and other operating expenses rose by approximately RMB 14.9 million or 40% to about RMB 51.8 million, driven by charitable donations and increased legal and professional fees[58] - Financial costs increased by approximately 30% to about RMB 1.3 million due to increased financial expenses related to lease liabilities and bank borrowings[61] - Income tax expenses rose by approximately 159% to about RMB 13.2 million, primarily due to increased profits from the company's Chinese operations[63] Production and Sales - The company sold a total of 282 machines during the year, with disposable medical mask machines accounting for approximately 34.7%, an increase of about 25.5% compared to the previous year[7] - The sales value of disposable hygiene product machines in China is projected to increase at an annual rate of approximately 6.5% from 2020 to 2024, reaching about RMB 12 billion by 2024[14] - The sales contribution from baby diaper machines, adult diaper machines, and women's sanitary napkin machines decreased from about 96% to approximately 61% of total revenue due to the shift in production capacity towards disposable medical mask machines[49] - The company has deepened its penetration in the Chinese market, acquiring 20 new customers for disposable hygiene product machines during the year[45] - The company has signed sales contracts for 43 baby diaper machines, 15 adult diaper machines, 18 feminine hygiene machines, and 3 pad machines, with a total contract value of approximately RMB 295.6 million, RMB 131.2 million, RMB 111.5 million, and RMB 7.5 million respectively as of December 31, 2020[53] Research and Development - The company holds 146 patents and continues to invest significant resources in R&D to enhance product development capabilities and quality[8] - Research and development expenses for the year amounted to approximately RMB 25.9 million, with RMB 19.1 million funded from internal resources[41] - The company plans to establish a dedicated research and development center in Jinjiang, Fujian Province, to enhance its R&D capabilities[40] - The company is committed to continuous innovation and development of high-tech intelligent products to maintain industry leadership[17] - The management team has emphasized the importance of R&D, allocating 15% of total revenue towards new technology development[148] Market Expansion and Strategy - The company aims to maintain its position as one of China's top suppliers of disposable hygiene product machinery through continuous R&D enhancement and market penetration[8] - The company plans to increase production capacity and competitiveness through acquisitions and expansion in both domestic and international markets[8] - The company plans to increase sales and marketing resources to penetrate overseas markets, particularly in Southeast Asia and India, following the easing of travel restrictions[14] - The company intends to explore opportunities in supplying disposable medical and hygiene products in both domestic and overseas markets[46] - The company is exploring market expansion opportunities in Southeast Asia, targeting a 10% market share within the next two years[148] Corporate Governance - The company has adopted corporate governance principles that align with the interests of the company and its shareholders[86] - The board of directors consists of 4 executive directors, 1 non-executive director, and 3 independent non-executive directors as of December 31, 2020[88] - The board has established three committees: Audit Committee, Remuneration Committee, and Nomination Committee to enhance corporate governance[104] - The Audit Committee, consisting of three independent non-executive directors, reviewed the annual financial statements and provided recommendations to the board[106] - The company has implemented internal controls and checks to define the responsibilities and authority of the board and management[98] Financial Position - Non-current assets decreased from RMB 46,269 thousand in 2019 to RMB 41,989 thousand in 2020, while current assets increased significantly from RMB 290,270 thousand to RMB 515,308 thousand[20] - The company's net asset value rose from RMB 113,271 thousand in 2019 to RMB 279,998 thousand in 2020, indicating strong financial growth[20] - The current ratio improved to 2.0 in 2020, compared to 1.4 in 2019, indicating better short-term financial health[31] - The interest coverage ratio was 50.2 times in 2020, reflecting strong earnings relative to interest expenses[35] - The bank and cash balance as of December 31, 2020, was approximately RMB 230.4 million, an increase of about RMB 194.7 million from RMB 35.7 million as of December 31, 2019[66] Dividend and Shareholder Returns - The board proposed a final dividend of HKD 0.05 per share for the year ended December 31, 2020[7] - The proposed final dividend is HKD 0.05 per share, amounting to approximately HKD 23.5 million (around RMB 20.9 million), with no dividends declared in 2019[177] - The company does not have a fixed dividend policy, but the board expects the dividend payout ratio to be no less than 25% of the annual distributable profit[138] - The board retains discretion over any proposed dividend distribution, amount, and payment method, which will depend on various factors including actual and expected financial performance[138] Social Responsibility - The group made charitable donations of approximately RMB 2.4 million during the reporting period, compared to none in 2019[178] - The company has committed to sustainable development and compliance with environmental protection laws and regulations[176]

Financial Performance - The total revenue for the period was approximately RMB 207.9 million, with a total of 210 machines sold, of which around 96% were disposable medical mask machines[9]. - The net profit after tax for the period was approximately RMB 32.4 million, representing a growth of about 17.9%[9]. - The company's revenue increased by approximately RMB 31.4 million (or 18%) to about RMB 207.9 million for the six months ended June 30, 2020, compared to approximately RMB 176.4 million for the same period in 2019[22]. - The gross profit increased by approximately RMB 35.1 million, with a gross profit margin rising to about 38% from approximately 25% in the previous period[27]. - The company reported a profit of RMB 24,603,000, compared to RMB 11,600,000 for the same period in 2019, representing an increase of 112.9%[84]. - The net profit for the six months ended June 30, 2020, was RMB 32,412,000, up from RMB 13,998,000 in 2019, reflecting a year-on-year growth of 131.5%[78]. - Basic and diluted earnings per share increased to RMB 6.73 from RMB 2.46, indicating strong profitability growth[78]. - The company reported a comprehensive income of RMB 22,951,000 for the six months ended June 30, 2020, compared to RMB 30,760,000 for the same period in 2019, indicating a decrease of 25.7%[88]. Revenue Breakdown - The sales value of disposable hygiene product machines in China is expected to increase at an annual rate of approximately 6.5% from 2020 to 2024, reaching about RMB 12 billion by 2024[18]. - The sales of disposable medical mask machines contributed approximately RMB 144.7 million to the revenue, with 201 units sold during the period[23]. - Revenue from the sale of disposable medical masks was RMB 144,734 thousand, which was not reported in the previous year[116]. - Revenue from the sale of adult diapers decreased to RMB 11,212 thousand from RMB 63,710 thousand in the prior year, representing a decline of 82.4%[116]. - Revenue from the sale of baby diapers decreased to RMB 44,832 thousand from RMB 104,136 thousand in the prior year, a decline of 56.9%[116]. Research and Development - The company plans to establish a dedicated R&D center in Jinjiang, Fujian Province, to enhance its R&D capabilities and improve product development efficiency[11]. - R&D expenses for the period were approximately RMB 9.4 million, funded by the company's internal resources[13]. - The company currently holds 127 patents in China, reflecting its strong commitment to R&D and technological advancement[9]. - The company aims to acquire a company engaged in the development, design, and manufacturing of automated packaging equipment to enhance its competitive edge[14]. Market Strategy - The company is focused on increasing its market penetration in both domestic and overseas markets to maintain its position as a leading supplier of disposable hygiene product machinery in China[10]. - The company plans to deepen its penetration in the disposable hygiene product machine industry in China and expand into overseas markets such as Southeast Asia and India[21]. - The company aims to increase sales and marketing resources to promote its products and enhance R&D efforts to cater to different overseas market preferences[21]. Operational Capacity - The company intends to increase production capacity by renting an additional 10,000 square meters of production property in Jinjiang, which will accommodate five new production lines[16]. - The company has two production bases in China, with a total floor area of approximately 35,400 square meters, operating 16 production lines in Jinjiang and 6 in Hangzhou[8]. - The company has established sales contracts for 34 baby diaper machines, 15 adult diaper machines, and 6 disposable medical mask machines, with total contract values of approximately RMB 213.6 million, RMB 144.3 million, and RMB 4.7 million, respectively[26]. Financial Position - As of June 30, 2020, the current ratio was approximately 2.35, up from 1.44 as of December 31, 2019, indicating improved liquidity[43]. - The company's capital structure included equity of approximately RMB 282.0 million as of June 30, 2020, compared to RMB 113.3 million as of December 31, 2019[45]. - The company had no outstanding bank borrowings as of June 30, 2020, confirming no liquidity issues[46]. - The unutilized proceeds from the share offering amounted to approximately RMB 119.4 million, held in licensed banks in Hong Kong and China[42]. - The company’s total equity reached RMB 282,001,000 as of June 30, 2020, compared to RMB 113,271,000 at the end of 2019, reflecting a substantial increase in shareholder value[82]. Employee and Administrative Costs - As of June 30, 2020, the group employed approximately 389 employees, an increase from 362 employees as of June 30, 2019[52]. - Employee costs, including director remuneration, amounted to approximately RMB 18.2 million, compared to RMB 15.8 million in the previous period, reflecting an increase of about 15.2%[52]. - Administrative and other operating expenses increased by approximately RMB 1.9 million or 10.2% to about RMB 20.6 million, mainly due to charitable donations of RMB 2.4 million[31]. Share Capital and Financing - The total issued share capital increased to 2,000,000,000 shares with a par value of HKD 0.01 per share as of June 30, 2020[159]. - The company completed a capitalized issuance of 347,999,990 shares, raising approximately RMB 3,195,000[164]. - The company issued 116,000,000 shares at an exercise price of HKD 1.38 per share on June 3, 2020, as part of a share sale[164]. - The total expenses related to the share sale and over-allotment amounted to approximately RMB 29,153,000[165]. Tax and Financial Costs - Income tax expenses increased by approximately 299% to about RMB 9.2 million, attributed to increased taxable profits from operating subsidiaries[34]. - Financial costs increased by approximately 71% to about RMB 0.7 million, primarily due to increased financial expenses related to lease liabilities[33]. - The company reported a significant increase in current tax expenses to RMB 9,240,000 from RMB 2,639,000, an increase of 250%[129]. Compliance and Governance - The company has not engaged in any share buybacks or sales during the reporting period, except for the issuance of shares related to the over-allotment option[65]. - The chairman and CEO roles are held by the same individual, which the board believes ensures effective leadership and decision-making[59]. - The company has no other disclosures required under the listing rules apart from those mentioned, indicating compliance with regulatory requirements[76].