力图控股(01008) - 2024 - 中期财报

Corporate Information This section provides an overview of the company's governance structure, including changes in its board and key personnel, committee compositions, and other essential corporate details. Directors and Company Secretary During the reporting period, the company experienced multiple changes in its board of directors and company secretary team, including resignations and new appointments - Executive Director Mr. Jiang Xiangyu resigned effective January 29, 2024[3] - Executive Director Mr. Deng Weichao was appointed effective January 29, 2024, and resigned effective April 16, 2024[3] - Executive Director Ms. Chen Lingling was appointed effective April 16, 2024[3] - Company Secretary Mr. Wu Yongzhen resigned effective June 7, 2024, and Mr. Chen Yongzhong was appointed on the same date[3] Committee Composition The company has established Audit, Remuneration, and Nomination Committees, each comprising multiple directors to ensure effective corporate governance - The Audit Committee is chaired by Mr. Lu Tianneng, with members including Mr. Lin Yinghong, Ms. Li Li, and Mr. Hao Wenhao[3] - The Remuneration Committee is chaired by Mr. Lin Yinghong, with members including Mr. Huang Wanru, Ms. Li Li, Mr. Lu Tianneng, and Mr. Hao Wenhao[3] - The Nomination Committee is chaired by Mr. Hao Wenhao, with members including Mr. Lin Yinghong, Ms. Li Li, Mr. Lu Tianneng, and Mr. Huang Wanru[3] Other Key Information Key information such as authorized representatives, auditor, principal bankers, share registrars, registered office, and listing details are disclosed - Authorized representatives are Mr. Huang Wanru and Mr. Chen Yongzhong (Mr. Wu Yongzhen has resigned)[5] - The auditor is RSM Hong Kong Certified Public Accountants[5] - Principal bankers include Hang Seng Bank, Agricultural Bank of China, Bank of China, and China Merchants Bank[5] - The company's stock code is 1008, and its listing date was March 30, 2009[6] Management Discussion and Analysis This section provides a detailed review of the company's financial performance, business operations, future outlook, and financial position for the reporting period Financial Highlights For the six months ended June 30, 2024, the company's revenue from continuing operations slightly decreased, but it successfully turned losses into profits and declared an interim dividend Financial Highlights for H1 2024 | Metric | H1 2024 (HK$ thousand) | H1 2023 (HK$ thousand) | Change | | :--- | :--- | :--- | :--- | | Revenue | 318,598 | 335,460 | -5.0% | | Profit/(Loss) Attributable to Owners of the Company | 28,811 | (51,290) | Turned to profit | | Basic and Diluted Earnings/(Loss) Per Share (HK$) | 0.018 | (0.033) | Turned to profit | | Interim Dividend Per Share | 2 HK cents | Nil | First dividend payment | Business Review In H1 2024, revenue from continuing operations decreased by 5.0% to HK$318.6 million, but the company achieved a profit of HK$28.8 million by implementing cost control measures - Revenue from continuing operations was approximately HK$318.6 million, a year-on-year decrease of 5.0%[9][12] - Profit attributable to owners of the company was approximately HK$28.8 million, compared to a loss of HK$51.3 million in the same period last year, representing a turnaround to profit[9][12] - Basic earnings per share was approximately HK$0.018, compared to a loss of HK$0.033 in the same period last year[9][12] - The Board declared an interim dividend of HK 2 cents per share (same period last year: nil)[9][12] - China's GDP grew by 5.0% in the first half, but global inflation, US-China competition, and the Russia-Ukraine war continue to cloud the economic outlook[10][12] - The tobacco industry faces operating pressure due to falling bidding prices under mandatory bidding policies and intensified competition[10][12] - To address challenges, the Group implemented measures such as simplifying management structure, improving inventory management efficiency, and raw material procurement bidding systems to control costs and enhance bargaining power[11][12] - Revenue from the printing and manufacturing of paper packaging and related materials segment decreased by 6.0% to HK$301.6 million, primarily due to reduced sales orders from major customers[14][17] - This segment was impacted by failure to secure some major customer orders, falling bidding prices, and inflation; the Group is responding by increasing bidding participation, seeking new market opportunities, R&D of new products, and cost control measures[15][17] - The Group is consolidating resources and production at Bengbu Jin Huangshan Gravure Printing Co., Ltd. to improve cost control, production efficiency, and reduce environmental compliance administrative burden[16][17] - Revenue from the investment property leasing segment increased by 14.9% to HK$17.0 million, mainly due to increased leased area of investment properties[16][17] Prospects The Group will continue to focus on paper packaging and maximize investment property rental income, while exploring new investments and diversification for sustainable growth - The Group will continue to base its development on paper packaging and maximize investment property rental income[18][21] - It will increase bidding participation, actively expand into other packaging markets, and mitigate pressure from falling bidding prices through cost control, efficiency improvements, and resource integration[18][21] - The corporate mission is to improve financial performance, provide growth momentum, and broaden revenue streams within acceptable risk levels[19][21] - It will continue to explore possibilities for acquiring new investments, disposing of subsidiaries or associates, or diversifying into other profitable businesses to achieve sustainable growth, enhance profitability, and maximize shareholder returns[19][21] Revenue Analysis Total revenue from continuing operations decreased by 5.0% year-on-year, primarily due to reduced paper packaging volume, delayed customer orders, and RMB depreciation against HKD Revenue Composition from Continuing Operations | Business Segment | H1 2024 (HK$ thousand) | H1 2023 (HK$ thousand) | Y-o-Y Change | | :--- | :--- | :--- | :--- | | Printing and Manufacturing of Paper Packaging and Related Materials | 301,600 | 320,700 | -5.95% | | Investment Property Leasing | 17,000 | 14,800 | +14.86% | | Total | 318,600 | 335,500 | -5.04% | - The decrease in total revenue was mainly due to a subsidiary failing to secure some major customer orders, leading to reduced business volume in printing and manufacturing of paper packaging and related materials[21][22] - Some customers delayed sales orders due to product design changes[21][22] - The average depreciation of the RMB against the HKD by approximately 4.0% exacerbated the impact on revenue decline[21][22] Gross Profit and Other Income Gross profit significantly increased, with the gross profit margin rising to 24.8%, primarily due to new cost control measures, while other income remained stable Changes in Gross Profit and Gross Profit Margin | Metric | H1 2024 (HK$ thousand) | H1 2023 (HK$ thousand) | Y-o-Y Change | | :--- | :--- | :--- | :--- | | Gross Profit | 79,000 | 55,700 | +41.83% | | Gross Profit Margin | 24.8% | 16.6% | +8.2 percentage points | - The increase in gross profit margin was mainly due to the implementation of new cost control measures, improving cost control efficiency[23][26] Other Income | Metric | H1 2024 (HK$ thousand) | H1 2023 (HK$ thousand) | Y-o-Y Change | | :--- | :--- | :--- | :--- | | Other Income | 9,500 | 7,700 | +23.38% | Other Net Gains and Losses Net other gains from continuing operations turned from a loss to a gain, mainly due to a significant reduction in impairment losses on interests in associates and goodwill Other Net Gains and Losses from Continuing Operations | Metric | H1 2024 (HK$ thousand) | H1 2023 (HK$ thousand) | Y-o-Y Change | | :--- | :--- | :--- | :--- | | Other Net Gains and Losses | 1,500 | (62,500) | Turned to gain | | Decrease in impairment loss on interests in associates | 20,000 | - | - | | Decrease in goodwill impairment loss | 40,000 | - | - | Expenses Analysis Selling and distribution expenses remained stable, administrative expenses increased due to higher staff costs and professional fees, finance costs decreased, and tax expenses rose significantly Changes in Various Expenses | Metric | H1 2024 (HK$ thousand) | H1 2023 (HK$ thousand) | Y-o-Y Change | | :--- | :--- | :--- | :--- | | Selling and Distribution Expenses | 5,800 | 6,600 | -12.12% | | Administrative Expenses | 39,400 | 32,400 | +21.60% | | Finance Costs | 2,000 | 2,200 | -9.09% | | Taxation | 11,300 | 7,200 | +56.94% | - The increase in administrative expenses was mainly due to higher salaries and other benefits, termination benefits, and legal and professional service fees[25][27] - The decrease in finance costs was mainly due to a reduction in the average amount of bank borrowings, partially offset by an increase in average interest rates[28] - The increase in taxation was mainly due to higher profit before tax[28] Profit Attributable to Owners of the Company Profit attributable to owners of the company turned from a loss to a gain, primarily due to significant reductions in impairment losses on interests in associates and goodwill, and improved cost control efficiency Profit/(Loss) Attributable to Owners of the Company | Metric | H1 2024 (HK$ thousand) | H1 2023 (HK$ thousand) | Y-o-Y Change | | :--- | :--- | :--- | :--- | | Profit/(Loss) Attributable to Owners of the Company | 28,800 | (51,300) | Turned to profit | - The turnaround to profit was mainly attributable to: (i) a decrease in impairment loss on interests in associates of approximately HK$20 million; (ii) a decrease in goodwill impairment loss of approximately HK$48.2 million; and (iii) improved cost control efficiency of the Group, primarily due to the implementation of new cost control measures[28] Segment Information Both the printing and manufacturing of paper packaging and related materials segment and the investment property leasing segment achieved significant profit growth from continuing operations, with the latter showing particularly strong growth Segment Profit from Continuing Operations (Before Unallocated Items) | Business Segment | H1 2024 (HK$ thousand) | H1 2023 (HK$ thousand) | Y-o-Y Change | | :--- | :--- | :--- | :--- | | Printing and Manufacturing of Paper Packaging and Related Materials | 68,800 | 47,900 | +43.63% | | Investment Property Leasing | 4,500 | 1,600 | +181.25% | - Profit from the printing and manufacturing of paper packaging and related materials segment accounted for approximately 93.9% of the total segment profit before unallocated items (H1 2023: 96.9%)[28] Financial Position and Liquidity As of June 30, 2024, the Group's net current assets and bank balances and cash increased, significantly improving net cash, while bank borrowings rose, but the gearing ratio remained reasonable Key Financial Position and Liquidity Indicators | Metric | June 30, 2024 (HK$ thousand) | December 31, 2023 (HK$ thousand) | Change | | :--- | :--- | :--- | :--- | | Net Current Assets | 616,500 | 577,700 | +6.72% | | Bank Balances and Cash | 501,600 | 345,800 | +45.06% | | Bank Borrowings (Repayable within one year) | 208,300 | 131,600 | +58.28% | | Net Cash | 301,900 | 236,000 | +27.92% | | Gearing Ratio | 14.1% | 10.9% | +3.2 percentage points | - The increase in net current assets was mainly due to an increase in net cash[30][33] - The carrying amount of bank deposits pledged for bank financing of bills payable was approximately HK$8.6 million (December 31, 2023: HK$21.8 million)[31][33] Capital Commitments As of June 30, 2024, the Group's capital commitments significantly decreased, primarily because most committed payments for new plant construction had been settled Capital Commitments | Metric | June 30, 2024 (HK$ thousand) | December 31, 2023 (HK$ thousand) | Change | | :--- | :--- | :--- | :--- | | Capital commitments for acquisition of property, plant and equipment | 7,000 | 39,600 | -82.32% | - The decrease in capital commitments was mainly due to most committed payments for the construction of new plant being settled before June 30, 2024[32][33] Treasury Policies and Capital Structure The Group adopts prudent financial management, maintains a sound liquidity position, manages credit risk through continuous assessment, and monitors foreign exchange risk - The Group adopts prudent financial management policies to maintain a sound liquidity position[35][37] - It strives to mitigate credit risk through continuous credit assessment and periodic evaluation of existing customers' financial standing[35][37] - The Board closely monitors the Group's liquidity position to ensure that the liquidity structure of assets, liabilities, and other commitments can meet funding requirements[35][37] - The Group's working capital primarily comes from funds generated from operations and bank borrowings[36][37] - Bank borrowings, cash and cash equivalents are mainly denominated in HKD and RMB, while revenue, costs, and expenses are primarily denominated in RMB and HKD respectively[36][37] - No financial instruments were used for hedging during the period; management closely monitors foreign exchange risk and will consider hedging when necessary[36][37] Contingent Liabilities and Charges on Assets As of June 30, 2024, the Group had no significant contingent liabilities, but bank borrowings were secured by property, plant and equipment, investment properties, and corporate guarantees - As of June 30, 2024, the Group had no significant contingent liabilities[35] - As of December 31, 2023, a corporate guarantee of HK$11 million was provided to a bank for bank financing granted to a third party[35] - As of June 30, 2024, bank loan facilities totaling HK$270 million were secured by the Group's property, plant and equipment with a carrying amount of approximately HK$169.7 million, investment properties of approximately HK$37 million, and corporate guarantees[39][62] - As of June 30, 2024, bank deposits with a total carrying amount of approximately HK$8.6 million were pledged to banks to secure bank financing for bills payable[39] Equity Fund Raising and Significant Investments During the review period, the company did not undertake any equity fundraising activities or hold significant investments exceeding 5% of total assets, nor are there plans for other major investments - During the review period, the Company did not undertake any equity fund-raising activities, nor were there any unutilized proceeds from the issuance of any equity securities in previous financial years[39] - Except for Changde Jinpeng Printing Co., Ltd., as of June 30, 2024, and June 30, 2023, the Group did not hold any significant investments with a value of 5% or more of the Company's total assets[40] - Save as disclosed in this report, as of the date of this report, the Board had not authorized any other significant investments or plans to increase capital assets[40] Material Acquisition and Disposal of Subsidiaries, Associates and Joint Ventures The Group is undertaking two significant disposals: 70% equity in Jiangsu Lianheng Wuyu and 31% equity in Changde Jinpeng, both expected to complete in H2 2024 - On May 29, 2023, Wealthy Dragon (China) Limited, a wholly-owned subsidiary of the Company, entered into an agreement with a third party to dispose of 70% equity interest in Jiangsu Lianheng Wuyu Technology Co., Ltd. for RMB51.1 million[43][46] - As of June 30, 2024, a deposit of approximately RMB41.551 million has been received, but due to the buyer's delay in settling the final consideration, the disposal has not yet been completed and is expected to be completed in H2 2024[43][46] - On December 28, 2023, Guilian Development Co., Ltd., a wholly-owned subsidiary of the Company, entered into a framework agreement with the major shareholders of Changde Jinpeng Printing Co., Ltd. to dispose of its 31% equity interest in Changde Jinpeng[44][46] - The consideration for the disposal of Changde Jinpeng will be determined with reference to the valuation by an independent valuer, and terms are currently under negotiation, with the final sale and purchase agreement expected to be signed and completed in H2 2024[44][46] Post-Reporting Period Events, Human Resources and Interim Dividend No significant events occurred post-June 30, 2024; the Group employed 623 full-time staff, with remuneration based on market terms, and declared an interim dividend of HK 2 cents per share - No significant events affecting the Group have occurred since June 30, 2024, up to the date of this report[48] - As of June 30, 2024, the Group employed 8 full-time staff in Hong Kong and 615 in China, respectively[48] - The Group's remuneration packages are determined with reference to market conditions and individual qualifications, operating a Mandatory Provident Fund Scheme for Hong Kong employees and contributing to provident funds, pension insurance, medical insurance, unemployment insurance, and work injury insurance for Chinese employees[48] - The Board declared an interim dividend of HK 2 cents per share for the review period (2023: nil)[49] - The proposed interim dividend will be paid on or about November 8, 2024, to shareholders whose names appear on the Company's register of members on October 17, 2024[49] Other Information This section covers directors' and substantial shareholders' interests, securities transactions, corporate governance, and other compliance-related disclosures Directors' and Chief Executives' Interests As of June 30, 2024, the company's directors and chief executives held interests in the company's shares, with Ms. Li Li holding 15.98% through a controlled corporation Directors' Interests in the Company's Shares | Director's Name | Capacity | Number of Shares/Relevant Shares Held | Position | Approximate Percentage of Issued Share Capital | | :--- | :--- | :--- | :--- | :--- | | Mr. Huang Wanru | Beneficial Owner | 1,735,204 | Long Position | - | | Ms. Li Li | Interest in Controlled Corporation | 250,551,964 | Long Position | 15.98% | Substantial Shareholders' Interests As of June 30, 2024, Mr. Cai Xiaoming, through his controlled corporations, held 57.50% of the company's issued share capital, making him the single largest shareholder Substantial Shareholders' Interests in the Company's Shares | Shareholder's Name/Name | Capacity | Number of Shares/Relevant Shares Held | Position | Approximate Percentage of Issued Share Capital | | :--- | :--- | :--- | :--- | :--- | | Mr. Cai Xiaoming | Interest in Controlled Corporation | 901,456,892 | Long Position | 57.50% | | Chuangyi Co., Ltd. | Beneficial Owner | 274,325,278 | Long Position | 17.50% | | Zhenhua International Co., Ltd. | Beneficial Owner | 627,131,614 | Long Position | 40.00% | | Tianjin Changrong Technology Group Co., Ltd. | Interest in Controlled Corporation | 250,551,964 | Long Position | 15.98% | | Changrong Shares (Hong Kong) Co., Ltd. | Beneficial Owner | 250,551,964 | Long Position | 15.98% | | Tianjin Dehou Investment Management Partnership (Limited Partnership) | Interest in Controlled Corporation | 103,555,231 | Long Position | 6.60% | - Mr. Cai Xiaoming beneficially owns the entire share capital of Chuangyi Co., Ltd. and Zhenhua International Co., Ltd., and is therefore deemed to be interested in the aggregate shares held by both companies[55] - Tianjin Changrong Technology Group Co., Ltd. beneficially owns the entire share capital of Changrong Shares (Hong Kong) Co., Ltd., and is therefore deemed to be interested in the shares held by Changrong Shares (Hong Kong) Co., Ltd.[56] Purchase, Sale or Redemption of Securities During the reporting period, neither the company nor its subsidiaries purchased, sold, or redeemed any of the company's securities, and no treasury shares were held as of June 30, 2024 - Neither the Company nor any of its subsidiaries purchased, sold, or redeemed any of the Company's securities (including sales of treasury shares) during the review period[57] - As of June 30, 2024, the Company did not hold any treasury shares[57] Corporate Governance The company has adopted and largely complied with the Corporate Governance Code, with two deviations concerning independent non-executive directors' tenure and the separation of Chairman and CEO roles - The Company has adopted and largely complied with the Corporate Governance Code set out in Appendix C1 Part 2 of the Listing Rules, save for code provisions B.2.4(b) and C.2.1[57] - Deviation from B.2.4(b): Mr. Lin Yinghong, Mr. Lu Tianneng, and Mr. Xiao Wenhao have each served as independent non-executive directors for over 9 years. The Company believes their diverse backgrounds and professional development continue to bring fresh perspectives to the Board, and suitable candidates are being sought[58][60] - Deviation from C.2.1: Mr. Huang Wanru is the Chairman of the Company, but no Chief Executive Officer has been appointed, with the role and functions collectively performed by all executive directors. The Board will review this from time to time and appoint a Chief Executive Officer when appropriate and necessary[59][60] Compliance with Model Code and Disclosure under Rule 13.21 Directors confirmed compliance with the Model Code for securities transactions, and the company committed to Mr. Cai Xiaoming maintaining at least 50% beneficial shareholding for bank revolving loan facilities - The Company has made specific enquiries to all Directors, and all Directors have confirmed their compliance with the standards set out in the Model Code and the code of conduct regarding securities transactions by Directors throughout the review period[62] - As of June 30, 2024, the Group was granted certain revolving loan facilities totaling HK$270 million by a bank[62] - The Company has undertaken that Mr. Cai Xiaoming shall maintain at least 50% beneficial shareholding or remain the single largest shareholder of the Company, and a breach of this undertaking may result in the loans becoming immediately due and repayable[62] Changes in Director's Information Mr. Lin Yinghong retired as an independent non-executive director after the annual general meeting of Synergis Holdings Limited on August 29, 2024 - Mr. Lin Yinghong retired as an independent non-executive director after the annual general meeting of Synergis Holdings Limited held on August 29, 2024, as he was not re-elected[61][63] Audit Committee and Closure of Register of Members The Audit Committee reviewed accounting principles and financial reporting, with interim financial information reviewed by independent auditors, and the share register will be closed to determine interim dividend eligibility - The Audit Committee, together with management, has reviewed the accounting principles and practices adopted by the Group and discussed internal controls, risk management, and financial reporting matters[64][66] - The independent auditor, RSM Hong Kong Certified Public Accountants, has reviewed the Group's interim financial information for the review period[64][66] - The Audit Committee comprises three independent non-executive directors (Mr. Lu Tianneng, Mr. Lin Yinghong, Mr. Xiao Wenhao) and one non-executive director (Ms. Li Li)[64][66] - To determine eligibility for the proposed interim dividend, the register of members will be closed from Wednesday, October 16, 2024, to Thursday, October 17, 2024[65][66] - Shareholders must lodge all transfer documents for registration by 4:30 p.m. on Tuesday, October 15, 2024[65][66] Report on Review of Condensed Consolidated Financial Statements This section presents the auditor's review report on the condensed consolidated financial statements, outlining the scope and conclusion of their work Introduction The auditor reviewed the condensed consolidated financial statements of Litu Holdings Limited for the six months ended June 30, 2024, prepared in accordance with HKAS 34 and Listing Rules - The auditor has reviewed the condensed consolidated financial statements of the Company and its subsidiaries for the six months ended June 30, 2024[68][69] - The financial statements were prepared in accordance with Hong Kong Accounting Standard 34 "Interim Financial Reporting" and the relevant disclosure requirements of the Listing Rules[68][69] - The Company's directors are responsible for the preparation and presentation of the financial statements[68][69] Scope of Review The auditor conducted the review in accordance with Hong Kong Standard on Review Engagements 2410, primarily through inquiries and analytical procedures, which is less extensive than an audit - The review was conducted in accordance with Hong Kong Standard on Review Engagements 2410 issued by the Hong Kong Institute of Certified Public Accountants[71] - The review included making inquiries of persons responsible for financial and accounting matters and applying analytical and other review procedures[71] - The scope of a review is substantially less than an audit conducted in accordance with Hong Kong Standards on Auditing, and consequently, no audit opinion is expressed[71] Conclusion Based on the review, the auditor found no matters suggesting that the condensed consolidated financial statements were not prepared in all material respects in accordance with HKAS 34 - Nothing has come to the auditor's attention that causes them to believe that the condensed consolidated financial statements are not prepared, in all material respects, in accordance with Hong Kong Accounting Standard 34[72] Condensed Consolidated Statement of Comprehensive Income This section provides a summary of the company's financial performance, including profit or loss and other comprehensive income, for the reporting period Comprehensive Income Analysis For the six months ended June 30, 2024, the company achieved a profit of HK$27.579 million, a significant improvement from last year's loss, but total comprehensive loss was HK$17.62 million due to exchange differences Key Data from Condensed Consolidated Statement of Comprehensive Income | Metric | H1 2024 (HK$ thousand) | H1 2023 (HK$ thousand) | Change | | :--- | :--- | :--- | :--- | | Revenue from continuing operations | 318,598 | 335,460 | -5.0% | | Gross profit | 79,048 | 55,698 | +41.9% | | Other net gains and losses | 1,511 | (62,543) | Turned to profit | | Profit/(Loss) before tax | 42,965 | (34,986) | Turned to profit | | Profit/(Loss) for the period from continuing operations | 31,687 | (42,224) | Turned to profit | | Loss for the period from discontinued operations | (4,108) | (9,433) | Loss narrowed | | Profit/(Loss) for the period | 27,579 | (51,657) | Turned to profit | | Profit/(Loss) attributable to owners of the Company | 28,811 | (51,290) | Turned to profit | | Loss attributable to non-controlling interests | (1,232) | (367) | Loss widened | | Exchange differences arising on translation to presentation currency | (45,199) | (93,967) | Loss narrowed | | Total comprehensive loss for the period | (17,620) | (145,624) | Loss narrowed | | Basic and diluted earnings/(loss) per share (HK$) | 0.018 | (0.033) | Turned to profit | Condensed Consolidated Statement of Financial Position This section provides a snapshot of the company's assets, liabilities, and equity at the end of the reporting period Financial Position Overview As of June 30, 2024, total assets less current liabilities slightly decreased, but net current assets and bank balances and cash significantly increased, indicating improved liquidity Key Data from Condensed Consolidated Statement of Financial Position | Metric | June 30, 2024 (HK$ thousand) | December 31, 2023 (HK$ thousand) | Change | | :--- | :--- | :--- | :--- | | Property, plant and equipment | 700,806 | 735,007 | -4.65% | | Investment properties | 158,127 | 168,599 | -6.21% | | Goodwill | 601,177 | 615,939 | -2.39% | | Inventories | 33,515 | 72,486 | -53.77% | | Trade receivables | 217,371 | 242,576 | -10.39% | | Bank balances and cash | 501,593 | 345,798 | +45.06% | | Assets classified as held for sale | 292,694 | 307,373 | -4.80% | | Trade payables | 118,928 | 189,418 | -37.21% | | Bank borrowings | 208,344 | 131,550 | +58.37% | | Net current assets | 616,463 | 577,716 | +6.70% | | Net assets | 2,139,035 | 2,156,655 | -0.82% | | Equity attributable to owners of the Company | 2,115,710 | 2,131,555 | -0.74% | | Total equity | 2,139,035 | 2,156,655 | -0.82% | Condensed Consolidated Statement of Changes in Equity This section details the changes in the company's equity components over the reporting period, including profit, other comprehensive income, and dividend distributions Equity Changes Analysis For the six months ended June 30, 2024, equity attributable to owners of the company slightly decreased, but profit for the period offset some negative impacts from exchange differences and other comprehensive losses Key Data from Condensed Consolidated Statement of Changes in Equity | Metric | H1 2024 (HK$ thousand) | H1 2023 (HK$ thousand) | Change | | :--- | :--- | :--- | :--- | | Profit/(Loss) for the period | 28,811 | (51,290) | Turned to profit | | Other comprehensive loss | (42,721) | (93,260) | Loss narrowed | | Total comprehensive loss for the period | (13,910) | (144,550) | Loss narrowed | | Proposed interim dividend | 31,358 | - | New | | Equity attributable to owners of the Company at end of period | 2,115,710 | 2,242,622 | -5.66% | | Total equity at end of period | 2,139,035 | 2,266,798 | -5.64% | - Chinese subsidiaries are required to establish statutory reserves, appropriated from after-tax profits, with the amount and basis of appropriation determined annually by the Board[83][85] - Equity related to assets classified as held for sale represents amounts recognized in other comprehensive income/loss and accumulated in equity related to assets held for sale[84][85] Condensed Consolidated Statement of Cash Flows This section outlines the cash inflows and outflows from operating, investing, and financing activities, providing insights into the company's liquidity and solvency Cash Flow Analysis For the six months ended June 30, 2024, net cash from operating activities decreased, but net cash from investing and financing activities turned from outflow to inflow, leading to a significant increase in cash and cash equivalents at period-end Key Data from Condensed Consolidated Statement of Cash Flows | Metric | H1 2024 (HK$ thousand) | H1 2023 (HK$ thousand) | Change | | :--- | :--- | :--- | :--- | | Net cash generated from operating activities | 79,467 | 98,558 | -19.47% | | Net cash generated from/(used in) investing activities | 4,363 | (6,003) | Turned to inflow | | Net cash generated from/(used in) financing activities | 79,879 | (43,973) | Turned to inflow | | Net increase/(decrease) in cash and cash equivalents | 163,709 | 48,582 | +237.00% | | Cash and cash equivalents at end of period | 501,593 | 339,380 | +47.79% | - Cash inflow from investing activities mainly included interest received, deposits received from disposal of a subsidiary, and proceeds from disposal of property, plant and equipment[87] - Cash inflow from financing activities mainly came from new bank borrowings, offsetting outflows from repayment of bank borrowings and lease liabilities[87] - During the period, the Group directly settled bills payable of approximately HK$21.177 million (H1 2023: approximately HK$16.271 million) with pledged bank deposits[90][91] Notes to the Condensed Consolidated Financial Statements This section provides detailed explanations and breakdowns of the figures presented in the condensed consolidated financial statements, including accounting policies, segment information, and other disclosures 1. General Information Litu Holdings Limited, incorporated in the Cayman Islands and listed in Hong Kong, is ultimately controlled by Mr. Cai Xiaoming, primarily engaged in printing, packaging, RFID products, and investment property leasing - Litu Holdings Limited was incorporated in the Cayman Islands on November 11, 2008, and its shares are listed on the Main Board of The Stock Exchange of Hong Kong[94][97] - The ultimate controlling party is Mr. Cai Xiaoming[94][97] - The Group is principally engaged in the printing of cigarette packaging, manufacturing of paper packaging materials, sales of RFID products, printing of packaging and decorative printed products, research and development of printing technology, wholesale and import/export of packaging products and other related services, and investment property leasing[95][97] - The Company's functional currency is RMB, and the condensed consolidated financial statements are presented in HKD[95][97] 2. Basis of Preparation The condensed consolidated financial statements are prepared in compliance with HKAS 34 "Interim Financial Reporting" and applicable disclosure requirements of Appendix 16 to the Listing Rules - The condensed consolidated financial statements have been prepared in accordance with Hong Kong Accounting Standard 34 "Interim Financial Reporting" issued by the Hong Kong Institute of Certified Public Accountants and the applicable disclosure requirements of Appendix 16 to the Listing Rules[96][97] 3. Principal Accounting Policies The condensed consolidated financial statements are prepared on a historical cost basis, with no significant impact from new HKFRS amendments, and the Group has not early adopted any new or revised HKFRS - The condensed consolidated financial statements are prepared on a historical cost basis[98][105] - The Group has applied for the first time certain amendments to Hong Kong Financial Reporting Standards (HKFRS) issued by the Hong Kong Institute of Certified Public Accountants that are mandatorily effective for annual periods beginning on or after January 1, 2024[98][105] - The application of the amendments has no material impact on the Group's financial position and performance and/or disclosures for the current and prior periods[100][105] - The Group has not early adopted any new/revised HKFRS that have been issued but are not yet effective for the financial year beginning on January 1, 2024[109][110] 4. Revenue The Group's continuing operations revenue primarily derives from printing and manufacturing paper packaging and related materials, with cigarette packaging being the main income source, largely recognized over time and from customers in China Revenue Analysis from Continuing Operations | Revenue Source | H1 2024 (HK$ thousand) | H1 2023 (HK$ thousand) | | :--- | :--- | :--- | | Sale of goods | 301,621 | 320,692 | | Rental income from investment properties | 16,977 | 14,768 | | Total revenue from continuing operations | 318,598 | 335,460 | | Sale of goods from discontinued operations | 23,504 | 20,857 | | Total | 342,102 | 356,317 | Revenue Classification by Type of Goods from Continuing Operations | Type of Goods | H1 2024 (HK$ thousand) | H1 2023 (HK$ thousand) | | :--- | :--- | :--- | | Printing of cigarette packaging | 297,233 | 276,037 | | Manufacturing of paper packaging materials | 4,180 | 42,995 | | Other related products | 208 | 1,660 | | Total sale of goods from continuing operations | 301,621 | 320,692 | | Sale of RFID products from discontinued operations | 23,504 | 20,857 | | Total | 325,125 | 341,549 | - For continuing operations, revenue from printing of cigarette packaging is primarily recognized over time (HK$297,233 thousand), while manufacturing of paper packaging materials and other related products are recognized at a point in time (total HK$4,388 thousand)[118] - Revenue from external customers (presented by customer location) for the Group primarily originates from China[120][121] 5. Segment Information The Group's reportable segments include printing and manufacturing paper packaging, sales of RFID products (discontinued), and investment property leasing, with the former remaining the main contributor and the latter showing strong profit growth - The Group's operating and reportable segments are currently: (i) printing and manufacturing of paper packaging and related materials; (ii) sales of RFID products (included in discontinued operations); and (iii) investment property leasing[122] Segment Revenue and Results for H1 2024 | Segment | Revenue (HK$ thousand) | Results (HK$ thousand) | | :--- | :--- | :--- | | Printing and Manufacturing of Paper Packaging and Related Materials | 301,621 | 68,812 | | Investment Property Leasing | 16,977 | 4,461 | | Subtotal from continuing operations | 318,598 | 73,273 | | Sales of RFID products (discontinued operations) | 23,504 | (1,930) | Segment Revenue and Results for H1 2023 | Segment | Revenue (HK$ thousand) | Results (HK$ thousand) | | :--- | :--- | :--- | | Printing and Manufacturing of Paper Packaging and Related Materials | 320,692 | 47,930 | | Investment Property Leasing | 14,768 | 1,555 | | Subtotal from continuing operations | 335,460 | 49,485 | | Sales of RFID products (discontinued operations) | 20,857 | (1,071) | - Segment results refer to the profit or loss earned (generated) by each segment, without allocation of company management expenses, directors' remuneration, share of results of an associate, finance costs, unallocated other income, unallocated other net gains and losses, etc[126][128] - All segment revenue is derived from external customers[127][128] 6. Taxation Income tax expense from continuing operations significantly increased due to current period EIT and under-provision for prior years, with no Hong Kong profits tax provision and varying EIT rates in China Income Tax Expense from Continuing Operations | Metric | H1 2024 (HK$ thousand) | H1 2023 (HK$ thousand) | Change | | :--- | :--- | :--- | :--- | | PRC Enterprise Income Tax (EIT) | 10,257 | 8,176 | +25.45% | | Under/(Over) provision for EIT in prior years | 6,146 | (607) | Increase | | Deferred tax | (5,125) | (331) | Decrease | | Income tax expense from continuing operations | 11,278 | 7,238 | +55.82% | | Income tax credit from discontinued operations | (80) | (33) | Credit increased | | Total tax expense for the period | 11,198 | 7,205 | +55.42% | - No provision for Hong Kong profits tax has been made as the Group did not generate or derive any assessable profits in Hong Kong[133] - PRC Enterprise Income Tax is calculated at the prevailing PRC tax rates ranging from 15% to 25%[133] - Certain PRC subsidiaries (i.e. high-tech enterprises) are entitled to a reduced EIT rate of 15% for three years from the approval date[133] - PRC withholding income tax is applicable to dividends payable to investors classified as "non-PRC resident tax enterprises", with a 5% withholding tax rate for Hong Kong resident companies[136][137] - Deferred tax has been provided for undistributed earnings of all subsidiaries and an associate[136][137] 7. Other Net Gains and Losses Net other gains from continuing operations turned from a loss to a gain, primarily due to significant reductions in goodwill and associate impairment losses, as well as foreign exchange gains and gains from disposal of property, plant and equipment Composition of Other Net Gains and Losses from Continuing Operations | Metric | H1 2024 (HK$ thousand) | H1 2023 (HK$ thousand) | | :--- | :--- | :--- | | Net foreign exchange gains/(losses) | 459 | (372) | | Gains/(losses) on disposal of property, plant and equipment | 199 | (2,203) | | Impairment loss on goodwill | - | (40,000) | | Impairment loss on interests in associates | - | (20,000) | | Net reversal of loss allowance for trade and other receivables and contract assets | 853 | 259 | | Loss on derecognition of a subsidiary | - | (226) | | Total from continuing operations | 1,511 | (62,543) | | Total from discontinued operations | (188) | (7,895) | | Total | 1,323 | (70,438) | 8. Profit (Loss) Before Taxation Profit (loss) before taxation is derived after deducting finance costs, staff costs, amortization, depreciation, inventory costs, government grants, and investment property operating expenses Key Deductions from Continuing Operations | Metric | H1 2024 (HK$ thousand) | H1 2023 (HK$ thousand) | | :--- | :--- | :--- | | Finance costs | 1,980 | 2,160 | | Total staff costs | 41,641 | 41,234 | | Amortisation of intangible assets | 16 | 603 | | Total depreciation | 50,306 | 50,200 | | Cost of inventories | 226,416 | 279,762 | | Government grants (included in other income) | (478) | (1,490) | | Direct operating expenses from investment properties that generated rental income | 946 | 885 | | Direct operating expenses from investment properties that did not generate rental income | 116 | 176 | - Cost of inventories for continuing operations included staff costs of approximately HK$17.93 million (H1 2023: HK$20.17 million) and depreciation and amortisation of approximately HK$17.909 million (H1 2023: HK$22.89 million)[141][142] Key Deductions from Discontinued Operations | Metric | H1 2024 (HK$ thousand) | H1 2023 (HK$ thousand) | | :--- | :--- | :--- | | Finance costs | 302 | - | | Total staff costs | 5,348 | 3,651 | | Depreciation of property, plant and equipment | - | 4,039 | | Cost of inventories | 24,496 | 21,339 | | Research expenses | 1,146 | 2,757 | 9. Dividends The Board determined to pay an interim dividend of HK 2 cents per share for the six months ended June 30, 2024, totaling approximately HK$31.358 million, with no interim dividend paid in the prior period - A final dividend of HK 4 cents per share, totaling HK$62.715 million, for the year ended December 31, 2022, was declared and paid during the six months ended June 30, 2023[148][151] - The Directors of the Company have determined to pay an interim dividend of HK 2 cents per share (H1 2023: nil) for the six months ended June 30, 2024, amounting to approximately HK$31.358 million[149][151] 10. Earnings (Losses) Per Share For the six months ended June 30, 2024, basic earnings per share attributable to owners of the company was HK$0.018, a turnaround from a loss of HK$0.033 in the prior period, with diluted EPS being the same due to no potential ordinary shares Earnings (Losses) Per Share Calculation Data | Metric | H1 2024 | H1 2023 | | :--- | :--- | :--- | | Profit/(Loss) for the period from continuing operations attributable to owners of the Company (HK$ thousand) | 31,687 | (42,224) | | Loss for the period from discontinued operations attributable to owners of the Company (HK$ thousand) | (2,876) | (9,066) | | Profit/(Loss) for the period attributable to owners of the Company for basic earnings/(losses) per share calculation (HK$ thousand) | 28,811 | (51,290) | | Weighted average number of ordinary shares in issue (thousand shares) | 1,567,885 | 1,567,885 | | Basic and diluted earnings/(losses) per share (HK$) | 0.018 | (0.033) | - For the six months ended June 30, 2024, and 2023, diluted earnings (losses) per share were the same as basic earnings (losses) per share as there were no potential ordinary shares in existence[154] 11. Property, Plant and Equipment Movements During the interim period, the Group disposed of certain plant and machinery, realizing a gain of HK$0.199 million, and acquired property, plant and equipment totaling approximately HK$25.085 million for business expansion - During the period, the Group disposed of plant and machinery with a total carrying amount of approximately HK$11.874 million (H1 2023: HK$17.128 million) for proceeds of approximately HK$12.073 million (H1 2023: HK$14.925 million)[156] - A gain of HK$0.199 million (H1 2023: loss of HK$2.203 million) was recorded on disposal[156] - During the period, the Group paid approximately HK$25.085 million (H1 2023: HK$20.373 million) for the acquisition of property, plant and equipment to expand its business[156] 12. Goodwill As of June 30, 2024, the carrying amount of goodwill was approximately HK$601.2 million, a slight decrease from year-end 2023, with no impairment loss recognized during the period Goodwill Movements | Metric | June 30, 2024 (HK$ thousand) | December 31, 2023 (HK$ thousand) | | :--- | :--- | :--- | | At beginning of reporting period | 615,939 | 728,704 | | Impairment loss recognised | - | (92,693) | | Exchange differences | (14,762) | (20,072) | | At end of reporting period | 601,177 | 615,939 | - For the six months ended June 30, 2024, the Directors considered that there were no indications of impairment for any cash-generating units containing goodwill[158] - For the six months ended June 30, 2023, an impairment loss of HK$48.209 million was recognized in aggregate for cash-generating units 1, 5, and 7, mainly due to the cessation of manufacturing operations at the Shenzhen plant and a decline in the market value of the premises[158] 13. Movements in Intangible Assets Intangible assets, primarily licenses and concessions, had a carrying amount of approximately HK$0.44 million, with amortization of approximately HK$0.016 million during the interim period - Intangible assets refer to licenses and concessions with a carrying amount of approximately HK$0.44 million (December 31, 2023: HK$0.467 million)[159][160] - During the interim period, amortization of intangible assets was approximately HK$0.016 million (H1 2023: HK$0.603 million)[159][160] 14. Trade Receivables As of June 30, 2024, total trade receivables were HK$217.4 million, a decrease from year-end 2023, with credit terms of 60 to 90 days and most receivables due within 90 days Trade Receivables | Metric | June 30, 2024 (HK$ thousand) | December 31, 2023 (HK$ thousand) | | :--- | :--- | :--- | | Trade receivables from third parties | 219,060 | 245,037 | | Less: Loss allowance for credit losses | (1,689) | (2,461) | | Net trade receivables | 217,371 | 242,576 | - The Group grants credit terms of 60 to 90 days to its trade customers[163][164] Ageing Analysis of Trade Receivables (by invoice date) | Ageing | June 30, 2024 (HK$ thousand) | December 31, 2023 (HK$ thousand) | | :--- | :--- | :--- | | 0–90 days | 192,379 | 220,795 | | 91–180 days | 16,928 | 10,092 | | 181–365 days | 8,897 | 9,504 | | Over 365 days | 856 | 4,646 | | Total | 219,060 | 245,037 | - As of June 30, 2024, trade receivables included bills receivable of HK$9.047 million (December 31, 2023: HK$11.578 million), all of which are due within one year[166] 15. Contract Assets As of June 30, 2024, contract assets decreased to HK$34.242 million, mainly due to fewer ongoing contracts, primarily related to unbilled cigarette packaging printing work Contract Assets | Metric | June 30, 2024 (HK$ thousand) | December 31, 2023 (HK$ thousand) | | :--- | :--- | :--- | | Contract assets | 34,242 | 50,836 | | Less: Loss allowance for credit losses | (165) | - | - Contract assets primarily represent the Group's right to consideration for work completed but not yet billed, as this right is conditional on the Group's future performance in delivering goods involved in cigarette packaging printing to customers as of the reporting date[168] - Contract assets are typically reclassified to trade receivables upon delivery of products to customers[168] - The decrease in contract assets resulted from a reduction in ongoing contracts as of June 30, 2024[168] - Consideration is payable upon delivery and acceptance of finished goods by the customer or notification of order cancellation by the customer, whichever is earlier[169][170] 16. Trade Payables As of June 30, 2024, total trade payables significantly decreased to HK$118.9 million, with credit terms ranging from 30 to 180 days, and sufficient cash maintained for timely payments Trade Payables | Metric | June 30, 2024 (HK$ thousand) | December 31, 2023 (HK$ thousand) | | :--- | :--- | :--- | | Trade payables to third parties | 118,811 | 189,244 | | Trade payables to related parties | 117 | 174 | | Total trade payables | 118,928 | 189,418 | - Credit terms for purchases of goods range from 30 to 180 days[173] Ageing Analysis of Trade Payables (by date of receipt of goods/invoice date) | Ageing | June 30, 2024 (HK$ thousand) | December 31, 2023 (HK$ thousand) | | :--- | :--- | :--- | | 0–30 days | 59,319 | 95,964 | | 31–90 days | 28,315 | 71,733 | | 91–180 days | 27,347 | 21,633 | | 181–365 days | 3,947 | - | | Over 365 days | - | - | | Total | 118,928 | 189,418 | - As of June 30, 2024, bills amounting to HK$19.158 million (December 31, 2023: HK$46.145 million) were transferred to suppliers to settle trade payables[174] 17. Bank Borrowings As of June 30, 2024, the Group's unsecured bank borrowings significantly increased to HK$208.3 million, all fixed-rate with effective interest rates between 2.80% and 5.05% per annum Bank Borrowings | Metric | June 30, 2024 (HK$ thousand) | December 31, 2023 (HK$ thousand) | | :--- | :--- | :--- | | Unsecured bank borrowings | 208,344 | 131,550 | - Bank borrowings refer to unsecured bank loans covered by various cross-guarantee arrangements entered into by the Group's entities[175] - Bank borrowings with a repayment on demand clause are classified as current liabilities, even if the Directors do not expect the bank to exercise that right[175] - As of June 30, 2024, all bank borrowings were fixed-rate borrowings, with effective interest rates ranging from 2.80% to 5.05% per annum (December 31, 2023: 3.10% to 3.20%)[179][180] 18. Share Capital As of June 30, 2024, the company's authorized share capital was HK$50 million (10 billion ordinary shares of HK$0.005 each), with issued and fully paid share capital of HK$7.839 million (1.5679 billion shares), consistent with year-end 2023 Share Capital Structure | Metric | Number of Shares | Amount (HK$ thousand) | | :--- | :--- | :--- | | Authorised share capital (ordinary shares of HK$0.005 each) | 10,000,000,000 | 50,000 | | Issued and fully paid share capital (ordinary shares of HK$0.005 each) | 1,567,884,634 | 7,839 | 19. Discontinued Operations and Assets Classified as Held for Sale The Group is in the process of disposing of 70% equity in subsidiary Jiangsu Lianheng Wuyu and 31% equity in associate Changde Jinpeng, with their assets and liabilities classified as held for sale (a) Disposal of a Subsidiary The company's wholly-owned subsidiary, Wealthy Dragon (China) Limited, agreed to sell 70% equity in Jiangsu Lianheng Wuyu Technology Co., Ltd. for RMB51.1 million, with completion expected in H2 2024 due to buyer's payment delay - On May 29, 2023, Wealthy Dragon (China) Limited, a wholly-owned subsidiary of the Company, entered into an agreement with a third party to dispose of 70% equity interest in Jiangsu Lianheng Wuyu Technology Co., Ltd. for RMB51.1 million (approximately HK$56.018 million)[182][183] - As of June 30, 2024, a deposit of approximately RMB41.551 million (approximately HK$44.459 million) has been received, but due to the buyer's delay in settling the final consideration, the disposal has not yet been completed and is expected to be completed in H2 2024[182][183] Results of Discontinued Operations of Jiangsu Lianheng Wuyu | Metric | H1 2024 (HK$ thousand) | H1 2023 (HK$ thousand) | | :--- | :--- | :--- | | Revenue | 23,504 | 20,857 | | Cost of sales | (24,496) | (21,339) | | Gross loss | (992) | (482) | | Other income | 205 | 607 | | Other net gains and losses | (188) | (7,895) | | Selling and distribution expenses | (938) | (589) | | Administrative expenses | (1,973) | (1,107) | | Finance costs | (302) | - | | Loss before tax | (4,188) | (9,466) | | Taxation | 80 | 33 | | Loss for the period from discontinued operations | (4,108) | (9,433) | | Net cash inflow/(outflow) from operating activities | (10,610) | 11,094 | | Net cash inflow/(outflow) from investing activities | (495) | (1,712) | | Net cash inflow/(outflow) from financing activities | 14,841 | (12,779) | | Net cash inflow/(outflow) | 3,736 | (3,397) | Assets Classified as Held for Sale and Related Liabilities of Jiangsu Lianheng Wuyu | Metric | June 30, 2024 (HK$ thousand) | December 31, 2023 (HK$ thousand) | | :--- | :--- | :--- | | Property and equipment | 30,666 | 34,291 | | Inventories | 69,773 | 66,472 | | Trade and other receivables | 6,572 | 20,676 | | Bank balances | 4,852 | 868 | | Total assets classified as held for sale | 114,432 | 124,909 | | Trade and other payables | 18,848 | 39,633 | | Bank borrowings | 16,050 | - | | Total liabilities associated with assets classified as held for sale | 38,454 | 43,044 | (b) Disposal of Interest in an Associate Guilian Development Co., Ltd. signed a framework agreement to sell its 31% equity in Changde Jinpeng Printing Co., Ltd., with the consideration to be determined by an independent valuation, and completion expected in H2 2024 - Guilian Development Co., Ltd. entered into a framework agreement on December 28, 2023, to dispose of its 31% equity interest in Changde Jinpeng Printing Co., Ltd.[191][192] - The consideration for the disposal will be determined with reference to a valuation conducted by an independent valuer jointly appointed by the Group and the buyer[191][192] - The final sale and purchase agreement is expected to be signed and the disposal completed in H2 2024[191][192] - The interest in an associate of HK$178.3 million (December 31, 2023: HK$182.5 million) has been classified as an asset held for sale in accordance with Hong Kong Financial Reporting Standard 5[191][194][195] 20. Pledge of or Restrictions on Assets As of June 30, 2024, the Group's bank loan facilities were secured by property, plant and equipment, investment properties, corporate guarantees, and pledged bank deposits for bills payable - As of June 30, 2024, bank loan facilities granted to the Group were secured by property, plant and equipment with a carrying amount of approximately HK$169.7 million (December 31, 2023: HK$177.6 million), investment properties of approximately HK$37 million (December 31, 2023: HK$37.811 million), and corporate guarantees[195] - As of June 30, 2024, the Group pledged bank deposits of approximately HK$8.591 million (December 31, 2023: HK$21.832 million) to secure bank financing granted to the Group for bills payable[195] 21. Related Party Disclosures The Group engaged in transactions and balances with related parties, with no raw material purchases from director-controlled companies or sales to associates during the period, and increased key management personnel remuneration Significant Transactions with Related Companies | Type of Transaction | H1 2024 (HK$ thousand) | H1 2023 (HK$ thousand) | | :--- | :--- | :--- | | Purchases of raw materials and related materials for printing and manufacturing of cigarette packaging (from companies controlled by a director) | - | 762 | | Sales of printing and manufacturing of cigarette packaging and related materials (to an associate) | - | 25,136 | - As of the end of the reporting period, trade payables due to a related party controlled by a director of the Company amounted to HK$0.117 million (December 31, 2023: HK$0.174 million)[200]