Core Viewpoint - The company anticipates a significant increase in shareholder losses for the first half of 2025, estimated between 28 million to 32 million HKD, compared to a loss of 15 million HKD in the same period of 2024 [1] Group 1: Financial Performance - The estimated shareholder loss for the first half of 2025 is significantly higher than the previous year, indicating a worsening financial situation [1] - The decline in sales revenue from paint and coating products is a major contributor to the increased losses [1] - The company reported a fair value loss on investment properties in mainland China during the first half of 2025, contrasting with a fair value gain of 3.2 million HKD in the same period of 2024 [1] Group 2: Market Conditions - The decrease in sales revenue is attributed to the economic slowdown in mainland China and Hong Kong, a weak real estate market, and intense competition within the paint and coating industry [1] - The overall market environment is challenging, impacting the company's revenue and profitability [1]

Core Viewpoint - The company anticipates a significant increase in shareholder losses for the first half of 2025, projecting losses between 28 million to 32 million HKD, compared to a loss of 15 million HKD in the same period of 2024 [1] Group 1: Financial Performance - The estimated shareholder losses have increased substantially due to a significant decline in sales revenue from paint and coating products [1] - The decrease in sales revenue is attributed to the economic slowdown in mainland China and Hong Kong, a weak real estate market, and intense competition in the paint and coating industry [1] - The reduction in sales revenue has led to a significant decline in gross profit for the company [1] Group 2: Investment Property Impact - The company experienced a fair value loss on its investment properties during the first half of 2025, contrasting with a fair value gain of 3.2 million HKD in the same period of 2024 [1]

香港交易及結算所有限公司及香港聯合交易所有限公司對本公告的內容概 不負責，對其準確性或完整性亦不發表任何聲明，並明確表示，概不對因 本公告全部或任何部份內容而產生或因倚賴該等內容而引致的任何損失承 擔任何責任。 1 (i) 本集團於二零二五年六個月期間之油漆及塗料產品銷售收入顯著 下降。銷售收入下降主要由於中國內地及香港經濟放緩、房地產 市場疲弱，以及油漆及塗料行業競爭激烈； (ii) 由於本集團之油漆及塗料產品銷售收入減少，導致毛利顯著下降； 及 (iii) 本集團於中國內地之投資物業於二零二五年六個月期間出現公平值 虧損，對比於二零二四年六月三十日止六個月之投資物業之公平值 收益為 3,200,000 港元。 本集團於二零二五年六個月期間之經營業績亦受到其他因素影響，有關 詳情將載於本公司二零二五年六個月期間之業績公告。 本公司仍在就本集團於二零二五年六個月期間之業績定稿。上述估計虧損 金額並未經本公司之獨立外聘核數師審閱或確認，亦未經董事會之審核 委員會審閱，並可能與本集團於二零二五年六個月期間之未經審核綜合業 績不同。本公司將於二零二五年八月底前完全遵照上市規則之要求，刊發 本公司於二零二五年六個月期 ...

股份發行人及根據《上市規則》第十九B章上市的香港預託證券發行人的證券變動月報表 截至月份: 2025年7月31日 狀態: 新提交 致：香港交易及結算所有限公司 公司名稱: CPM Group Limited 中漆集團有限公司 I. 法定/註冊股本變動 | 1. 股份分類 | 普通股 | 股份類別 | 不適用 | | 於香港聯交所上市 (註1) | | 是 | | | --- | --- | --- | --- | --- | --- | --- | --- | --- | | 證券代號 (如上市) | 01932 | 說明 | | | | | | | | | | 法定/註冊股份數目 | | | 面值 | | 法定/註冊股本 | | | 上月底結存 | | 8,000,000,000 | | HKD | 0.1 | HKD | | 800,000,000 | | 增加 / 減少 (-) | | | 0 | | | HKD | | 0 | | 本月底結存 | | | 8,000,000,000 | HKD | | 0.1 HKD | | 800,000,000 | 本月底法定/註冊股本總額： HKD 800,00 ...

Sales Performance - The company's sales of paint and coating products in mainland China decreased significantly by 38.1% to HKD 154,010,000 for the year ended December 31, 2024, compared to HKD 282,690,000 for the previous year[7]. - The company’s sales revenue from southern, central, and eastern China represented 76.1% of total revenue in 2024, compared to 81.4% in 2023[26]. - Sales to real estate developers and contractors in mainland China fell by 78.3% to HKD 17,960,000 in 2024 from HKD 82,690,000 in 2023[21]. - Sales to wholesale and retail distributors in mainland China decreased by 29.4% to approximately HKD 109,280,000 in 2024 from HKD 154,740,000 in 2023[23]. - Revenue from mainland China accounted for 80.8% of total sales in 2024, down from 86.8% in 2023[20]. - Sales revenue from private residential property projects in South China, Central China, and East China decreased significantly, with declines of 58.2% to HKD 29,170,000, 63.5% to HKD 9,230,000, and 83.5% to HKD 3,730,000 respectively, compared to the previous year's revenues of HKD 69,880,000, HKD 25,270,000, and HKD 22,570,000[27]. - Sales of paint and coating products to distributors in South China dropped by 40.3% or HKD 44,800,000, following a previous decline of 16.6% or HKD 22,130,000 in the prior year, indicating a continuing negative trend[28]. Financial Performance - The company recorded a significant revenue decrease of 31.5% for the year ending December 31, 2024, but the loss was reduced by 28.4% to HKD 47,980,000 compared to HKD 66,980,000 in 2023[11]. - Total revenue for the year 2024 was approximately HKD 321,350,000, a decrease of 31.5% from HKD 469,090,000 in 2023[18]. - The company reported a loss attributable to equity holders of approximately HKD 47,920,000 for the year ended December 31, 2024, a decrease of 28.6% compared to a loss of HKD 67,120,000 for the year ended December 31, 2023[63]. - The gross profit margin improved by 6.6 percentage points, rising from 33.6% in 2023 to 40.2% in 2024, attributed to successful strategic business revitalization measures[11]. - The gross profit margin significantly improved from 33.6% in 2023 to 40.2% in 2024, despite a 33.5% decrease in sales of paint and coating products[63]. - The company anticipates significant opportunities for growth in the paint and coatings industry due to government measures aimed at stimulating domestic demand and stabilizing the real estate market[14]. Cost Management - The cost of raw materials as a percentage of total production costs decreased from 86.3% in 2023 to 82.5% in 2024, reflecting strategic measures to optimize costs and diversify procurement options[33]. - Overall raw material costs in sales decreased significantly by 41.1%, exceeding the sales decline of 33.5%, indicating substantial progress in cost management[33]. - The company successfully reduced direct and indirect labor costs by 18.6% for the year ending December 31, 2024, despite a 33.5% decline in sales of paint and coating products, demonstrating effective cost management strategies[34]. - Depreciation and manufacturing costs decreased by 24.5%, with depreciation reduced by 35.8% due to converting underutilized production facilities into investment properties, and manufacturing costs reduced by 7.9% through streamlined processes[35]. Economic Environment - The overall economic environment for the manufacturing sector in mainland China remains challenging, with ongoing fluctuations in order volumes and cautious market sentiment[8]. - The Purchasing Managers' Index (PMI) for the construction sector in mainland China showed a declining trend, indicating economic contraction, with over 2,400 construction companies undergoing bankruptcy restructuring in 2024[7]. - The cumulative construction area of ongoing projects in the real estate sector in mainland China decreased by 12.5% in 2024, compared to a 7.4% decrease in 2023[7]. - The overall GDP growth for mainland China in 2024 is projected at 5.0%, surpassing the global average GDP growth of approximately 3.2%[5]. Investment and Assets - The value of investment properties decreased by 4.5% from HKD 309,090,000 in 2023 to HKD 295,280,000 in 2024, primarily due to a significant depreciation of the Renminbi[10]. - Cash and cash equivalents increased by HKD 24,310,000 to HKD 169,250,000 as of December 31, 2024, from HKD 144,940,000 in 2023[12]. - The company's net asset value decreased by 15.1% as of December 31, 2024, compared to a 13.9% decrease in 2023[12]. - The company aims to balance short-term funding needs with long-term financial strength by repositioning production facilities as investment properties[47]. Corporate Governance - The company has implemented corporate governance principles and complied with the guidelines, with the exception of the separation of the roles of Chairman and CEO, which are currently held by the same individual since April 1, 2023[89]. - The board consists of three executive directors, one non-executive director, and three independent non-executive directors, ensuring a balanced representation of shareholder interests[92]. - The company has established a sustainable development framework focusing on environmental protection, resource management, and employee welfare, aligning corporate culture with strategic goals[91]. - The board will regularly review the effectiveness of the current arrangement regarding the dual role of Chairman and CEO, considering the appointment of a suitable candidate to separate these roles in the future[90]. Environmental, Social, and Governance (ESG) - The company has established a set of environmental and social key performance indicators (KPIs) to guide its sustainable development strategy[136]. - The board of directors emphasizes the importance of a robust ESG strategy to enhance the company's investment value and provide long-term returns to stakeholders[137]. - The company is committed to corporate social responsibility, balancing environmental, social, and economic benefits while ensuring sustainable business operations[134]. - The company has implemented measures to optimize emissions handling facilities and adjust product structures to produce more environmentally friendly products[135]. - The company has launched green products such as low VOC latex paint and water-based wood paint, which have received multiple environmental certifications in mainland China and Hong Kong[149]. Employee Management - The total number of full-time employees decreased from 496 in 2023 to 441 in 2024, while part-time employees remained stable at 2[187]. - The company provides competitive compensation packages, including salaries, overtime pay, and bonuses, while also offering additional benefits such as employee dormitories and free annual health check-ups[189]. - The company has implemented a safety management system and emergency response plans to enhance occupational health and safety for employees[191]. - The company emphasizes continuous training and development, with a focus on enhancing employees' skills and knowledge[197]. - The company conducts regular employee satisfaction surveys and encourages continuous education and professional training for staff[140].

Financial Performance - Revenue for the year ended December 31, 2024, was HKD 321,352,000, a decrease of 31.5% compared to HKD 469,091,000 in 2023[2] - Gross profit for the same period was HKD 129,318,000, down 17.9% from HKD 157,543,000, with a gross margin of 40.2%[2] - Loss attributable to shareholders was HKD 47,915,000, a reduction of 28.6% from HKD 67,115,000 in the previous year[2] - The company reported a total comprehensive loss of HKD 68,002,000 for the year, compared to HKD 73,987,000 in 2023[4] - The adjusted loss before tax for the year ended December 31, 2024, was HKD 49,585,000, compared to a loss of HKD 69,459,000 in 2023, indicating an improvement of about 28.6%[18][21] - The company reported a significant revenue decrease of 31.5% for the year ending December 31, 2024, with a loss reduced by 28.4% to HKD 47,980,000 compared to HKD 66,980,000 in 2023[52] Assets and Liabilities - Cash and cash equivalents decreased by 21.5% to HKD 191,459,000 from HKD 243,937,000[2] - Total liabilities to equity ratio increased to 52.0% from 48.8%[2] - Non-current assets decreased to HKD 438,683,000 from HKD 476,431,000, reflecting a decline of 7.9%[5] - Current assets dropped significantly to HKD 365,313,000 from HKD 496,428,000, a decrease of 26.4%[5] - The total assets as of December 31, 2024, amounted to HKD 803,996,000, down from HKD 972,859,000 in 2023, reflecting a decrease of about 17.4%[20][21] - The total liabilities as of December 31, 2024, were HKD 422,933,000, compared to HKD 524,219,000 in 2023, showing a reduction of approximately 19.3%[20][21] Revenue Breakdown - Revenue from paint products decreased to HKD 298,341,000 in 2024 from HKD 448,475,000 in 2023, representing a decline of approximately 33.5%[25] - Sales to external customers in mainland China decreased from HKD 410,018,000 in 2023 to HKD 264,151,000 in 2024, a decline of approximately 35.5%[23] - Sales to real estate developers and contractors for private residential projects in mainland China dropped by 78.3% to HKD 17,960,000 in 2024 from HKD 82,690,000 in 2023[62] - Sales to wholesale and retail distributors in mainland China decreased significantly by 29.4% to approximately HKD 109,280,000 from HKD 154,740,000 in the previous year[64] - The industrial paint and coating products accounted for 50.7% of total sales in 2024, up from 38.6% in 2023[61] Cost Management - The cost of raw materials as a percentage of total sales cost decreased significantly from 86.3% in 2023 to 82.5% in 2024, reflecting effective cost management strategies[75] - Direct and indirect labor costs were reduced by 18.6%, demonstrating proactive cost management in challenging market conditions[76] - Selling and distribution expenses decreased by 18.3% to HKD 50,890,000, although legal and professional fees increased significantly[81] - The company achieved a reduction in depreciation and manufacturing costs by 24.5%, aligning with its focus on efficiency and budget control[77] Operational Efficiency - The company achieved a 12.7% reduction in administrative expenses, decreasing from HKD 91,140,000 in 2023 to HKD 79,490,000 in 2024[50] - Trade receivables aged analysis shows a decrease from HKD 171,852,000 in 2023 to HKD 103,628,000 in 2024, with over six months receivables dropping by 53.5%[38] - Trade payables aged analysis indicates a reduction from HKD 195,523,000 in 2023 to HKD 125,437,000 in 2024, with payables over three months decreasing by 44.5%[39] - The company’s operational efficiency improved, leading to a gross margin increase of 5.1 percentage points from 30.5% in 2023 to 35.6% in 2024[105] Market Conditions - The company faced a significant challenge in 2024, with a 38.1% decrease in sales of paint and coating products in mainland China compared to 2023[47] - The overall decline in sales reflects a significant downturn in the real estate market, with new construction areas in southern, central, and eastern China dropping by 2.0%, 2.4%, and 11.4% respectively[68] - The GDP growth rate slowed from 3.2% in 2023 to a forecasted 2.5% in 2024, leading to more cautious household spending, particularly in property renovation[73] Strategic Initiatives - The company has implemented strategic pricing adjustments and enhanced purchasing incentives to stimulate sales amid challenging market conditions[47] - The company plans to explore new opportunities in other regions to maintain growth and maximize potential revenue[71] - The company is implementing strategic partnerships to enhance product expansion and market coverage, although these efforts faced challenges in 2024[97] Governance and Compliance - The board is committed to good corporate governance practices and has applied the principles of the corporate governance code, with some deviations noted regarding the roles of the chairman and CEO[131] - The audit committee reviewed the annual performance for the year ending December 31, 2024, in conjunction with external auditors[129] - There were no significant violations of applicable laws and regulations that materially affected the group's business and operations during the reporting period[125]

Financial Performance - Revenue for the six months ended June 30, 2024, was HKD 148,322,000, a decrease of 39.2% compared to HKD 243,887,000 for the same period in 2023[5] - Gross profit for the same period was HKD 58,134,000, down 20.7% from HKD 73,372,000 year-over-year[5] - The company reported a loss before tax of HKD 13,434,000, compared to a loss of HKD 11,009,000 in the previous year, indicating a worsening financial performance[5] - Total comprehensive loss for the period was HKD 27,801,000, an improvement from HKD 38,266,000 in the prior year[6] - The company reported a net loss of HKD 31,763,000 for the six months ended June 30, 2024, compared to a net profit of HKD 11,634,000 in the same period last year[14] - The basic and diluted loss per share for the period was HKD 1.50, compared to HKD 1.15 in the previous year[5] - The company’s total comprehensive income for the period was negative HKD 38,288,000, compared to negative HKD 38,266,000 in the same period last year[11] - The company reported a significant increase in cash flow from investing activities, totaling HKD 61,854,000, compared to a cash outflow of HKD 1,618,000 in the previous year[14] - The company reported a decrease in inventory by HKD 1,961,000, compared to a decrease of HKD 12,948,000 in the prior year[14] - The company’s retained earnings stood at HKD 171,102,000 as of June 30, 2024, reflecting ongoing financial challenges[11] Assets and Liabilities - Non-current assets as of June 30, 2024, totaled HKD 458,699,000, a decrease from HKD 476,431,000 at the end of 2023[7] - Current assets decreased to HKD 399,424,000 from HKD 496,428,000, reflecting a decline in liquidity[7] - Current liabilities were reduced to HKD 311,010,000 from HKD 381,470,000, indicating improved short-term financial health[7] - The company’s net asset value was HKD 421,048,000 as of June 30, 2024, down from HKD 448,640,000 at the end of 2023[9] - The company’s total assets decreased to HKD 316,637,000 as of June 30, 2024, down from HKD 381,002,000 as of June 30, 2023[12] - The company’s financing cash flow was negative HKD 24,230,000, slightly improved from negative HKD 26,819,000 in the previous year[14] - The group’s total assets were valued at HKD 858.12 million, with total liabilities amounting to HKD 437.08 million[22] - Total liabilities increased to HKD 524,219 as of June 30, 2024, compared to HKD 522,346 at the end of 2023[25] Cash Flow and Capital Expenditures - Cash flow from operating activities before changes in working capital was negative HKD 872,000, a significant decline from HKD 5,764,000 in the previous year[14] - Cash and cash equivalents at the end of the period were HKD 146.88 million, an increase from HKD 123.79 million at the end of June 2023[15] - The group’s cash flow position improved significantly compared to a net decrease of HKD 16.80 million in the same period last year[15] - The group incurred capital expenditures of HKD 42,000 during the reporting period, primarily for the acquisition of property, plant, and equipment[24] - The company has capital commitments of HKD 2,542,000 for construction and acquisition of properties, plant, and equipment as of June 30, 2024, compared to HKD 2,737,000 as of December 31, 2023[52] Sales and Revenue Breakdown - For the six months ended June 30, 2024, total revenue reached HKD 153.69 million, with paint products contributing HKD 137.04 million and property investment contributing HKD 11.28 million[22] - Revenue from paint and coating products was HKD 137,044, down 41.3% from HKD 233,886 in the previous year[29] - The group reported a loss before tax of HKD 13.43 million for the same period, with the paint products segment showing a loss of HKD 19.30 million and the property investment segment showing a profit of HKD 12.87 million[22] - Sales to construction and renovation contractors decreased by 67.9% compared to the same period in 2023[67] - Sales to industrial manufacturers fell by 31.1% compared to the same period in 2023, amounting to HKD 17,630,000[66] - Sales to wholesale and retail distributors decreased by 26.2% compared to the same period in 2023[67] - Sales to real estate developers and contractors in mainland China dropped significantly by 87.9%, from HKD 54.01 million in 2023 to HKD 6.54 million in 2024[70] Cost Management and Profitability - The cost of sales decreased by 47.1% to HKD 16,520,000, which is a greater decline than the 41.4% drop in sales revenue[78] - Direct and indirect labor costs reduced by 27.5% to HKD 9,210,000, primarily due to successful cost-saving strategies implemented by the company[79] - Depreciation and manufacturing expenses decreased by 20.3% to HKD 7,990,000, with depreciation alone dropping by 31.0%[80] - Gross profit margin improved significantly to 34.2%, up 26.2% from 27.1% in the previous year, despite a 41.4% decline in sales revenue[81] - Selling and distribution expenses decreased by 16.9% to HKD 28,990,000, driven by lower transportation costs and adjustments in employee costs[83] - Administrative expenses fell by 17.2% to HKD 34,830,000, mainly due to cost-saving measures from the integration of production facilities[83] Corporate Governance and Management - The company has a share option plan that allows for the issuance of up to 80,000,000 new shares, aimed at attracting and retaining employees and contributors[47] - The company has established a credit control department to monitor accounts receivable and minimize credit risk, with senior management regularly reviewing overdue balances[45] - The company has adhered to the corporate governance code principles, with a noted deviation regarding the dual role of the Chairman and CEO held by Mr. Xu Haoquan since April 1, 2023[102] - The board believes that the current arrangement of Mr. Xu holding both roles is suitable for maintaining policy continuity and operational stability[102] - The company emphasizes the importance of good corporate governance practices and is committed to establishing the best governance standards suitable for its business[102] Market Conditions and Future Outlook - The overall GDP growth rate in mainland China decreased from 5.5% in the first half of 2023 to 5.0% in the first half of 2024, primarily due to the ongoing difficulties in the real estate sector[64] - The company anticipates a production growth of 6.0% in 2024, despite facing reduced demand due to low real estate completion rates[92] - The company aims to enhance its product portfolio and ensure competitiveness while improving operational efficiency and reducing costs[92] - The company is prioritizing the repayment of high-interest loans to lower financial costs and improve liquidity[92]

Financial Performance - Revenue for the six months ended June 30, 2024, was HKD 148,322 thousand, a decrease of 39.2% compared to HKD 243,887 thousand in 2023[1] - Gross profit for the same period was HKD 58,134 thousand, down 20.8% from HKD 73,372 thousand in 2023, with a gross margin of 39.2%[1] - Loss attributable to shareholders for the six months was HKD (14,972) thousand, compared to HKD (11,508) thousand in 2023, representing an increase of 30.1%[1] - Basic and diluted loss per share was HKD (1.50), compared to HKD (1.15) in 2023, reflecting a 30.1% increase[1] - The company reported a total comprehensive loss of HKD (27,801) thousand for the period, compared to HKD (38,266) thousand in 2023[4] - The adjusted profit for the six months ended June 30, 2024, was approximately HKD 850,000, down from HKD 8,380,000 in the same period of 2023, primarily due to the decline in sales and increased legal and professional fees[41] Revenue Breakdown - For the six months ended June 30, 2024, the total revenue from the paint products segment was HKD 137,044,000, while the property investment segment generated HKD 11,278,000, resulting in a total revenue of HKD 148,322,000[12] - Revenue from paint products for the six months ended June 30, 2024, was HKD 137,044,000, down 41.4% from HKD 233,886,000 in 2023[21] - For the six months ended June 30, 2023, the total revenue from the paint products segment was HKD 233,886,000, while the property investment segment generated HKD 10,001,000, resulting in a total revenue of HKD 243,887,000[15] - Sales revenue from paint and coating products decreased by 41.4% compared to the same period in 2023, significantly impacting gross profit, which fell by 26.1%[40] Assets and Liabilities - Cash and cash equivalents, along with pledged deposits, totaled HKD 184,046 thousand, a decrease of 24.6% from HKD 243,937 thousand in 2023[1] - Non-current assets amounted to HKD 458,699 thousand, down from HKD 476,431 thousand in 2023[5] - Total liabilities decreased to HKD 126,065 thousand from HKD 142,749 thousand in 2023[6] - The total equity attributable to shareholders was HKD 416,637 thousand, down from HKD 444,465 thousand in 2023[6] - As of June 30, 2024, total assets amounted to HKD 858,123,000, with segment assets for paint products at HKD 527,988,000 and property investment at HKD 325,372,000[12] - The total liabilities as of June 30, 2024, were HKD 437,075,000, with segment liabilities for paint products at HKD 393,355,000 and property investment at HKD 41,374,000[12] Cash Flow and Expenditures - Capital expenditures for the six months ended June 30, 2024, were HKD 42,000, primarily for the acquisition of property, plant, and equipment[13] - The group acquired property, plant, and equipment at a cost of HKD 42,000 for the six months ended June 30, 2024, a significant decrease from HKD 2,737,000 for the same period in 2023[30] - The group received government subsidies totaling HKD 408,000 for advanced manufacturing tax reductions during the six months ended June 30, 2024[23] Market Conditions - The overall GDP growth rate in mainland China decreased from 5.5% in the first half of 2023 to 5.0% in the first half of 2024, largely due to the ongoing difficulties in the real estate sector[42] - Sales to construction and renovation contractors decreased by HKD 52,430,000, representing a 71.4% decline compared to the same period in 2023, attributed to the downturn in the real estate market[43] - The company experienced a 31.3% decline in sales to wholesale and retail distributors, reflecting the challenging market environment[44] - Sales to contractors for private residential property developers in mainland China dropped by 87.9% to HKD 6,540,000, reflecting a significant downturn in the real estate market[48] Cost Management - The cost of sold inventory for the six months ended June 30, 2024, was HKD 90,188,000, a decrease of 47.1% from HKD 170,515,000 in 2023[25] - Selling and distribution expenses decreased by 16.9% to HKD 28,990,000, while administrative expenses fell by 17.2% to HKD 34,830,000, reflecting cost-saving measures implemented during the year[61] - Direct and indirect labor costs reduced by 27.5% to HKD 9,210,000, attributed to successful cost-saving strategies[57] Shareholder Information - The loss attributable to equity holders of the parent company for the period was HKD 14,972,000, compared to a loss of HKD 11,508,000 for the six months ended June 30, 2023, with a weighted average of 1,000,000,000 shares outstanding[28] - No interim dividend was declared for the six months ended June 30, 2024, consistent with the previous period[29][38] Corporate Governance - The board is committed to maintaining good corporate governance practices and has adhered to the corporate governance code[74] - The company has adopted a code of conduct for directors' securities transactions, ensuring compliance with the required standards[76]

Economic Performance - In 2023, the global GDP growth was approximately 3%, while China's GDP growth exceeded the global average, driven by domestic consumption and capital investment[6]. - The nominal GDP growth for the secondary industry in China was 4.7% in 2023, with the paint and coating product output expected to grow by 3.5%[8]. - The overall demand for paint and coating products in mainland China significantly declined, particularly in the real estate sector, while domestic manufacturers increased supply[11]. Financial Performance - The total revenue for the company in 2023 was approximately HKD 469,090,000, a decrease of 27.1% compared to HKD 643,050,000 in 2022[24]. - Revenue from paint and coating products in 2023 was about HKD 448,480,000, down 29.8% from HKD 639,130,000 in 2022[25]. - The group recorded a loss of approximately HKD 66,980,000 for the year ended December 31, 2023, an improvement from a loss of HKD 98,470,000 in 2022[14]. - The net asset value of the group decreased by 13.9% as of December 31, 2023, compared to a decrease of 2.3% in 2022[15]. - The company recorded a loss attributable to equity holders of approximately HKD 67,120,000 for the year ended December 31, 2023, a decrease of 31.6% compared to a loss of approximately HKD 98,080,000 for the year ended December 31, 2022[71]. Sales and Revenue Trends - Sales revenue from construction industry clients in mainland China dropped by 42.0% in 2023, following a 39.7% decrease in 2022[10]. - The construction area of new projects in mainland China decreased by 20.9% in 2023, following a 39.4% decrease in 2022[10]. - Sales revenue from wholesale distributors and retail distributors in mainland China decreased by 19.4%, compared to a decrease of 18.4% in 2022[11]. - Sales of construction paint and coating products from the mainland real estate market decreased by 42.0% in 2023 compared to 2022[28]. - Sales of industrial paint and coating products from the mainland manufacturing market fell by 32.5% in 2023 compared to 2022[29]. Cost Management and Efficiency - The cost of raw materials as a percentage of total production costs decreased from 87.2% in 2022 to 86.3% in 2023, reflecting improved cost management strategies[38]. - Direct and indirect labor costs decreased by 33.8% due to enhanced production operations and improved production lines[40]. - Depreciation and manufacturing costs decreased by 32.7%, with depreciation reduced by 25.8% and manufacturing costs down by 40.8%[41]. - The gross profit margin for paint and coating products increased from 21.7% in 2022 to 30.5% in 2023, an increase of 8.8 percentage points[42]. Investment Properties and Asset Management - The value of the group's investment properties increased significantly from HKD 240,940,000 in 2022 to HKD 309,090,000 in 2023, representing 31.8% of total assets[7]. - The group has shifted underutilized production facilities in mainland China to investment properties to improve cash flow and asset allocation[7]. - The company’s investment property portfolio increased from 3 properties in 2022 to 6 properties in 2023, with a total area of 175,669.5 square meters[52]. Strategic Initiatives and Future Outlook - The company maintains a cautiously optimistic outlook for the paint and coating industry in 2024, despite ongoing challenges in the market[20]. - The company aims to improve the sales value and volume of paint and coating products in 2024, focusing on financial stability and reducing borrowing costs[61]. - The group is committed to developing innovative and sustainable products to meet the growing market demand in the paint and coating industry[60]. Environmental, Social, and Governance (ESG) Practices - The company has established a sustainable development framework focusing on environmental protection and employee welfare[103]. - The board is fully responsible for ESG matters, integrating them into the company's management policies and strategies[159]. - The company emphasizes the importance of quantifying key performance indicators in its ESG report to provide stakeholders with a comprehensive understanding of its ESG performance[155]. - The group has implemented a comprehensive internal control and environmental management system to ensure compliance and sustainable development goals[167]. Employee Management and Welfare - Employee termination payments significantly decreased by 94.3% to approximately HKD 1,220,000 in 2023, down from approximately HKD 21,580,000 in 2022[47]. - Employee costs decreased by approximately HKD 30,520,000 or 24.2% compared to 2022, with the number of employees reducing from 583 to 495, a decrease of 15.1%[59]. - The total number of employees as of December 31, 2023, is 41.77% female and 58.23% male[114]. Risk Management and Compliance - The board is responsible for maintaining a robust risk management and internal control system to safeguard assets and ensure the accuracy of financial records[128]. - The company has engaged an external internal auditor to continuously review its major operational, financial, and compliance controls[132]. - The group faces market risks, including the potential loss of market share in its core markets of Hong Kong and mainland China due to increasing competition[94].

Financial Performance - Revenue for the year ended December 31, 2023, was HKD 469,091,000, a decrease of 27.1% compared to HKD 643,049,000 in 2022[2] - Gross profit increased by 10.5% to HKD 157,543,000, with a gross margin of 33.6%, up from 22.2% in the previous year[2] - Loss attributable to shareholders decreased by 31.6% to HKD 67,115,000, compared to HKD 98,084,000 in 2022[2] - Total comprehensive loss for the year was HKD 73,987,000, compared to a loss of HKD 17,779,000 in 2022[4] - The adjusted loss before tax for the year was HKD 69.459 million, with the paint products segment reporting a loss of HKD 58.152 million and the property investment segment showing a profit of HKD 6.355 million[22] - The company reported a pre-tax loss of HKD 67,115,000 for the year, an improvement from a loss of HKD 98,084,000 in 2022[42] - The company recorded a loss of approximately HKD 66,980,000 for the year ending December 31, 2023, an improvement from a loss of HKD 98,470,000 in 2022, primarily due to provisions for trade receivables and fair value losses on investment properties[69] Cash Flow and Liquidity - Cash and cash equivalents increased by 28.6% to HKD 243,937,000 from HKD 189,723,000 in 2022[2] - The company's net working capital increased by 59.1% due to refinancing short-term bank loans with long-term borrowings, positively impacting liquidity and financial stability[70] - The total cash and cash equivalents amounted to HKD 144,940,000, a decrease from HKD 147,520,000 as of December 31, 2022, primarily due to RMB depreciation and changes in working capital[138] - The group's net current asset value increased by 59.1% from approximately HKD 72,250,000 to approximately HKD 114,960,000, attributed to the restructuring of short-term bank loans into long-term loans from its holding company and subsidiaries[141] Assets and Liabilities - Total assets as of December 31, 2023, were HKD 972.859 million, with classified assets in the paint products segment at HKD 639.424 million and property investment segment at HKD 320.731 million[24] - Total liabilities as of December 31, 2023, were HKD 524.219 million, with classified liabilities in the paint products segment at HKD 482.024 million and property investment segment at HKD 40.322 million[24] - Total liabilities to equity ratio rose to 48.8%, up from 45.8% in the previous year, indicating increased leverage[2] - The debt-to-equity ratio as of December 31, 2023, was 48.8%, up from 45.8% as of December 31, 2022[139] Revenue Segmentation - Total revenue for the year ended December 31, 2023, was HKD 476.78 million, with sales to external customers in the paint products segment amounting to HKD 448.475 million and property investment segment contributing HKD 20.616 million[22] - Revenue from paint and coating products was approximately HKD 448,480,000, accounting for 95.6% of total revenue, but saw a decline of 29.8% compared to 2022 due to decreased industrial demand and increased competition[134] - Revenue from property investments for the year ended December 31, 2023, was approximately HKD 20,610,000, a substantial increase from approximately HKD 3,920,000 in 2022[112] Operational Efficiency - The company continues to focus on improving operational efficiency and cost reduction to enhance profitability and capacity[72] - Direct and indirect labor costs decreased by 33.8% compared to the previous year, attributed to improved production processes[97] - Sales and distribution expenses decreased by 31.1% to approximately HKD 62,290,000, with significant reductions in personnel costs and transportation expenses[103] - Administrative expenses decreased by 25.1% to approximately HKD 83,910,000, mainly due to the integration of production facilities in mainland China[104] Market Conditions and Strategy - The company plans to focus on expanding its market presence and enhancing product offerings in the upcoming year[10] - The company anticipates increased competition in the paint and coatings industry in 2024, driven by mergers and acquisitions among manufacturers shifting focus to industrial products[73] - Government measures, including a project whitelist mechanism and reduced loan rates, are expected to positively impact cash flow for real estate developers and overall demand for paint and coatings products[74] - The company remains cautiously optimistic about the profitability outlook for the paint and coatings industry in 2024, despite ongoing market challenges[76] Investment Properties - The total value of the company's investment properties increased significantly from approximately HKD 240,940,000 as of December 31, 2022, to approximately HKD 309,090,000 as of December 31, 2023, representing 31.8% of total assets[78] - The fair value of investment properties was revalued at HKD 309,087,000 as of December 31, 2023, up from HKD 240,941,000 a year earlier, reflecting a significant increase[46] - Rental income from investment properties surged by 426.6% in 2023, primarily due to a full year of leasing at the Sha Jing factory[118] Employee and Operational Changes - The group employed 495 staff as of December 31, 2023, a significant decrease from 583 staff as of December 31, 2022[149] - The group recorded employee termination payments of approximately HKD 1,220,000, a significant decrease of 94.3% compared to approximately HKD 21,580,000 in 2022[107] - Employee costs decreased by approximately HKD 30,520,000 or 24.2% in 2023, with the workforce reduced by 15.1% to 495 employees[119] Compliance and Governance - The group has maintained compliance with applicable laws and regulations without any significant violations affecting its business operations[157] - The board has adopted a code of conduct for directors' securities trading, ensuring compliance with the standards set by the listing rules[167] - The audit committee has reviewed the annual performance for the year ending December 31, 2023, in conjunction with external auditors[161]