合丰集团(02320) - 2025 - 中期业绩

Financial Summary This section provides a concise overview of the company's financial performance and position for the six months ended June 30, 2025 As at June 30, 2025 Financial Summary | Indicator | 2025 (HK$ Million) | 2024 (HK$ Million) | Change | | :--- | :--- | :--- | :--- | | Revenue | 69.1 | 107.8 | -35.9% | | EBITDA* | (14.7) | (16.9) | -13.0% | | Loss for the Period | (38.4) | (43.7) | -12.1% | | As at | June 30, 2025 | December 31, 2024 | Change | | Gearing Ratio | 13.0% | 12.7% | 0.3 percentage points | | Net Gearing Ratio** | 10.0% | 8.0% | 2.0 percentage points | * EBITDA refers to earnings before finance costs, tax, depreciation and amortisation ** Refers to the ratio of net balance of total bank borrowings less bank balances and cash and restricted bank deposits to equity Condensed Consolidated Statement of Profit or Loss and Other Comprehensive Income This statement presents the company's financial performance, including revenue, expenses, and total comprehensive income for the period Condensed Consolidated Statement of Profit or Loss and Other Comprehensive Income (For the six months ended June 30) | Indicator | 2025 (HK$ Thousand) | 2024 (HK$ Thousand) | | :--- | :--- | :--- | | Revenue | 69,134 | 107,821 | | Cost of Sales | (64,094) | (98,586) | | Gross Profit | 5,040 | 9,235 | | Other Income | 1,079 | 1,120 | | Other Gains and Losses | 1,782 | 175 | | Selling and Distribution Costs | (4,449) | (5,867) | | Administrative Expenses | (16,112) | (17,983) | | Other Expenses | (27,489) | (29,546) | | Finance Costs | (1,662) | (1,831) | | Loss Before Tax | (41,811) | (44,697) | | Income Tax Credit | 3,405 | 1,020 | | Loss for the Period Attributable to Owners of the Company | (38,406) | (43,677) | | Exchange Differences on Translation of Overseas Operations | 19,849 | (22,724) | | Total Comprehensive Expense for the Period Attributable to Owners of the Company | (18,557) | (66,401) | | Basic and Diluted Loss Per Share (HK Cents) | (4.70) | (5.34) | Condensed Consolidated Statement of Financial Position This statement details the company's assets, liabilities, and equity as of June 30, 2025, and December 31, 2024 Condensed Consolidated Statement of Financial Position (As at June 30, 2025) | Indicator | As at June 30, 2025 (HK$ Thousand) | As at December 31, 2024 (HK$ Thousand) | | :--- | :--- | :--- | | Non-current Assets | | | | Property, Plant and Equipment | 659,510 | 665,812 | | Right-of-use Assets | 17,449 | 17,493 | | Deposits and Prepayments | 125,252 | 131,821 | | Current Assets | | | | Inventories | 12,058 | 13,098 | | Trade and Other Receivables | 30,787 | 39,549 | | Deposits and Prepayments | 4,453 | 6,465 | | Restricted Bank Deposits | 596 | 586 | | Bank Balances and Cash | 20,125 | 33,558 | | Current Liabilities | | | | Trade and Other Payables | 61,812 | 77,581 | | Tax Payable | 1,689 | 1,361 | | Lease Liabilities | 64 | 141 | | Bank Borrowings | 4,317 | 4,239 | | Non-current Liabilities | | | | Bank Borrowings | 87,595 | 88,128 | | Deferred Tax | 5,347 | 8,969 | | Net Assets | 709,406 | 727,963 | | Total Equity Attributable to Owners of the Company | 709,406 | 727,963 | Notes This section provides detailed explanations and disclosures supporting the condensed consolidated financial statements 1. Basis of Preparation The unaudited condensed consolidated financial statements are prepared in accordance with HKAS 34 Interim Financial Reporting and Appendix D2 of the Listing Rules - The financial statements are prepared in accordance with Hong Kong Accounting Standard (HKAS) 34 and Appendix D2 of the Listing Rules[5] Going Concern Basis The Group faces significant going concern uncertainties due to continuous losses and potential large tax liabilities, despite management's plans - The Group recorded continuous losses for the six months ended June 30, 2025, and 2024, amounting to HK$38,406,000 and HK$43,677,000 respectively[6] - There is a significant contingent liability related to the PRC tax authorities, which if realized, could lead to insufficient cash to meet obligations[6] - The Directors have prepared cash flow forecasts and obtained a letter of intent for a RMB300 million loan facility to support going concern[7] 2. Significant Accounting Policies The unaudited condensed consolidated financial statements are prepared on a historical cost basis, with consistent accounting policies - The financial statements are prepared on a historical cost basis, with accounting policies consistent with the prior year[8] - The adoption of new and revised Hong Kong Financial Reporting Standards has not resulted in significant changes to the Group's accounting policies, financial statement presentation, or reported amounts[9] 3. Revenue and Segment Information The Group's manufacturing operations in China are segmented into containerboard and corrugated packaging, with the latter being the sole source of external revenue Segment Revenue and Results All Group revenue is derived from corrugated packaging, with both segments reporting losses, particularly the containerboard segment Analysis of Revenue and Results by Operating and Reportable Segment | Segment | 2025 (HK$ Thousand) | 2024 (HK$ Thousand) | | :--- | :--- | :--- | | Revenue | | | | Containerboard | – | – | | Corrugated Packaging | 69,134 | 107,821 | | Segment Loss | | | | Containerboard | (30,058) | (31,336) | | Corrugated Packaging | (4,424) | (3,341) | | Central Administrative Expenses | (5,667) | (8,189) | | Finance Costs | (1,662) | (1,831) | | Loss Before Tax | (41,811) | (44,697) | 4. Finance Costs The Group's finance costs primarily consist of interest on bank borrowings, showing a decrease compared to the prior period Details of Finance Costs (For the six months ended June 30) | Item | 2025 (HK$ Thousand) | 2024 (HK$ Thousand) | | :--- | :--- | :--- | | Interest on Bank Borrowings | 1,660 | 1,826 | | Interest on Lease Liabilities | 2 | 5 | | Total | 1,662 | 1,831 | 5. Income Tax Credit The Group recorded an income tax credit, mainly from deferred tax, benefiting from Hong Kong's two-tiered tax rate and China's preferential rates for high-tech enterprises Details of Income Tax Credit (For the six months ended June 30) | Item | 2025 (HK$ Thousand) | 2024 (HK$ Thousand) | | :--- | :--- | :--- | | Current Tax: Hong Kong Profits Tax | 331 | 390 | | Current Tax: PRC Enterprise Income Tax | 3 | – | | Deferred Tax Credit | (3,739) | (1,410) | | Total | (3,405) | (1,020) | - Hong Kong Profits Tax applies a two-tiered tax rate, with the first HK$2,000,000 of assessable profits taxed at 8.25% and the remainder at 16.5%[14] - PRC subsidiaries are subject to a 25% Enterprise Income Tax rate, with one high-tech enterprise enjoying a preferential rate of 15%[15] 6. Loss for the Period This section details key expenses and income items, such as depreciation, staff costs, and inventory costs, included in or deducted from the loss for the period Loss for the Period has been (Credited)/Charged with the following (For the six months ended June 30) | Item | 2025 (HK$ Thousand) | 2024 (HK$ Thousand) | | :--- | :--- | :--- | | Depreciation of Property, Plant and Equipment | 25,105 | 25,652 | | Depreciation of Right-of-use Assets | 340 | 342 | | Gain on Termination of Lease Contracts | – | (7) | | Staff Costs (including Directors' Emoluments) | 17,394 | 19,574 | | Cost of Inventories Recognised as Expense | 64,094 | 98,586 | | Exchange Gain, Net | (29) | (81) | 7. Dividends The Group neither declared nor proposed any dividends during or at the end of the reporting period - For the six months ended June 30, 2025, and 2024, the Group did not declare or propose any dividends[17] 8. Loss Per Share Basic and diluted loss per share attributable to owners was 4.70 HK cents, showing an improvement, with no dilutive effect from share options Loss Per Share Calculation (For the six months ended June 30) | Item | 2025 (HK$ Thousand) | 2024 (HK$ Thousand) | | :--- | :--- | :--- | | Loss for the Purpose of Calculating Basic and Diluted Loss Per Share | (38,406) | (43,677) | | Weighted Average Number of Ordinary Shares for Basic and Diluted Loss Per Share | 817,644,000 | 817,644,000 | | Basic and Diluted Loss Per Share (HK Cents) | (4.70) | (5.34) | - The exercise price of share options was higher than the average market price of shares, thus no dilutive effect was included in the calculation of diluted loss per share[18] 9. Trade and Other Receivables The Group's total trade and other receivables decreased, primarily due to a reduction in trade receivables, with credit terms ranging from 5 to 120 days Total Trade and Other Receivables (As at June 30, 2025) | Item | As at June 30, 2025 (HK$ Thousand) | As at December 31, 2024 (HK$ Thousand) | | :--- | :--- | :--- | | Trade Receivables | 21,796 | 30,665 | | Less: Provision for Credit Losses | (248) | (243) | | Other Receivables | 9,239 | 9,127 | | Total Trade and Other Receivables | 30,787 | 39,549 | Ageing Analysis of Trade Receivables (As at June 30, 2025) | Ageing | As at June 30, 2025 (HK$ Thousand) | As at December 31, 2024 (HK$ Thousand) | | :--- | :--- | :--- | | Within 30 Days | 14,169 | 20,504 | | 31-60 Days | 6,474 | 9,488 | | 61-90 Days | 413 | 341 | | Over 90 Days | 492 | 89 | | Total | 21,548 | 30,422 | - The Group grants trade customers credit terms ranging from 5 to 120 days, with an average ageing of approximately 56 days (December 31, 2024: approximately 53 days)[19] 10. Trade and Other Payables The Group's total trade and other payables decreased, with supplier credit terms between 30 and 90 days, and overdue trade payables remaining stable Total Trade and Other Payables (As at June 30, 2025) | Item | As at June 30, 2025 (HK$ Thousand) | As at December 31, 2024 (HK$ Thousand) | | :--- | :--- | :--- | | Trade Payables | 16,236 | 22,703 | | Payables for Acquisition of Property, Plant and Equipment | 3,200 | 2,492 | | Other PRC Taxes Payable | 13,010 | 11,794 | | Accrued Expenses | 25,692 | 37,811 | | Other Payables | 3,674 | 2,781 | | Total | 61,812 | 77,581 | Ageing Analysis of Trade Payables (As at June 30, 2025) | Ageing | As at June 30, 2025 (HK$ Thousand) | As at December 31, 2024 (HK$ Thousand) | | :--- | :--- | :--- | | Current | 4,629 | 11,311 | | Overdue 1 to 30 Days | 23 | 8 | | Overdue 31 to 60 Days | – | – | | Overdue Over 60 Days | 11,584 | 11,384 | | Trade Payables | 16,236 | 22,703 | 11. Litigation and Contingent Liabilities The Group faces a significant tax issue related to its PRC subsidiary, Senye Paper, involving VAT invoice irregularities, unpaid taxes of approximately RMB 109 million, and administrative penalties of RMB 44.07 million, which the Group is contesting Tax Treatment Decision Senye Paper appealed the Qingyuan Tax Bureau's tax treatment decision, including a rejected tax guarantee application and a review application to the Guangdong High People's Court, which was dismissed, now seeking administrative supervision - Senye Paper was required to pay approximately RMB109 million in outstanding taxes and surcharges due to VAT invoice issues[22] - Senye Paper's application for a tax guarantee was rejected, leading to appeals to various mainland authorities[23] - The application for review to the Guangdong High People's Court was dismissed, and an application for administrative supervision has been filed with the Qingyuan People's Procuratorate of Guangdong Province[24][25] Tax Penalty Decision Senye Paper sought administrative reconsideration and then initiated administrative litigation regarding the tax penalty decision; the second instance judgment overturned the first instance and dismissed Senye Paper's claims, prompting the Group to seek legal advice - Senye Paper was subject to an administrative penalty of approximately RMB44.07 million[22] - Senye Paper applied for administrative reconsideration with the Guangdong Provincial Tax Service regarding the tax penalty decision, followed by administrative litigation[26] - The second instance judgment overturned the first instance administrative judgment and dismissed Senye Paper's claims, and the Group is seeking PRC legal advice on this matter[27][28] Interim Dividend The Board of Directors does not recommend the payment of an interim dividend for the six months ended June 30, 2025 - The Directors do not recommend the payment of an interim dividend for the six months ended June 30, 2025[29] Business Review The Group's revenue declined significantly in the first half of 2025 due to reduced orders and intense market competition, while its upstream business aims to resume production after a boiler conversion project - In the first half of 2025, the Group's revenue decreased by 35.9%, primarily due to reduced customer orders and intense market competition[30] - The upstream containerboard business has been temporarily suspended since October 2021 and is currently coordinating a coal-to-gas boiler conversion project to resume production[30] - The corrugated packaging industry faces a challenging operating environment, and the Group is committed to strengthening cost control management and improving efficiency to reduce losses[30] Financial Review This section provides a comprehensive analysis of the Group's financial performance, liquidity, and capital resources for the reporting period Operating Results The Group's revenue significantly decreased by 35.9% to HK$69.1 million, leading to lower gross profit and margin, though the loss for the period narrowed despite negative EBITDA Key Operating Results Changes (For the six months ended June 30) | Indicator | 2025 (HK$ Million) | 2024 (HK$ Million) | Change | | :--- | :--- | :--- | :--- | | Revenue | 69.1 | 107.8 | -35.9% | | Gross Profit | 5.0 | 9.2 | -45.7% | | Gross Profit Margin | 7.3% | 8.6% | -1.3 percentage points | | Other Income | 1.08 | 1.1 | -1.8% | | Other Gains and Losses (Net Gain) | 1.8 | 0.174 | +934.5% | | Selling and Distribution Costs | 4.4 | 5.9 | -25.5% | | Administrative Expenses | 16.1 | 17.9 | -10.1% | | Other Expenses | 27.5 | 29.5 | -6.8% | | Finance Costs | 1.7 | 1.8 | -5.6% | | EBITDA | (14.7) | (16.9) | +13.0% | | Loss for the Period | (38.4) | (43.7) | +12.1% | - The decrease in revenue was primarily due to reduced customer orders and intense competition[31] - The significant increase in net other gains and losses was mainly due to the write-off of accrued expenses and other payables[31] Liquidity, Financial and Capital Resources The Group experienced reduced cash and cash equivalents, net current assets, and liquidity ratio, indicating increased liquidity pressure, alongside extended turnover days and higher leverage ratios Liquidity and Financial Indicators (As at June 30, 2025) | Indicator | As at June 30, 2025 | As at December 31, 2024 | Change | | :--- | :--- | :--- | :--- | | Total Cash and Cash Equivalents | HK$20.1 Million | HK$33.6 Million | -40.2% | | Net Current Assets | HK$0.1 Million | HK$9.9 Million | -99.0% | | Current Ratio | 1.0 | 1.12 | -0.12 | | Trade Receivables Turnover Days | Approx. 56 Days | Approx. 53 Days | +3 Days | | Trade Payables Turnover Days | Approx. 46 Days | Approx. 43 Days | +3 Days | | Inventory Turnover Days | Approx. 46 Days | Approx. 33 Days | +13 Days | | Total Bank Borrowings | HK$91.9 Million | HK$92.4 Million | -0.5% | | Gearing Ratio | 13.0% | 12.7% | +0.3 percentage points | | Net Borrowings | HK$71.2 Million | HK$58.2 Million | +22.3% | | Net Gearing Ratio | 10.0% | 8.0% | +2.0 percentage points | - The Group's capital expenditure in China was HK$0.2 million, primarily for property, plant, and equipment, a significant decrease from the prior period[34] Outlook The corrugated packaging industry is expected to remain challenging, but the Group anticipates resuming upstream operations and benefiting from increasing demand for eco-friendly paper packaging - The operating environment for the corrugated packaging industry is expected to remain challenging, facing soaring manufacturing costs and weak market demand[36] - The Group anticipates its upstream business will resume operations after completing the coal-to-gas boiler conversion project to achieve vertical integration advantages[36] - Stricter controls on plastic packaging in China and market focus on sustainability will drive demand for environmentally friendly paper packaging, benefiting the Group's business[36] - The Group will focus on strategies such as pricing power, increasing sales volume, improving production efficiency, and reducing energy use and raw material waste[36] Human Resources The Group employed approximately 206 full-time staff as of June 30, 2025, a decrease from the prior period, offering competitive remuneration and performance-based incentives - As of June 30, 2025, the Group employed approximately 206 full-time staff, a decrease from 229 as of December 31, 2024[37] - The Group offers competitive remuneration packages to employees and may grant share options and discretionary bonuses based on performance[37] Audit Committee The Audit Committee, comprising three independent non-executive directors, reviewed the interim results, financial statements, risk management, internal controls, and financial reporting - The Audit Committee, consisting of three independent non-executive directors, has reviewed the Group's interim results announcement and financial statements, and discussed risk management, internal controls, and financial reporting matters[38] Purchase, Sale or Redemption of the Company's Listed Securities Neither the Company nor its subsidiaries purchased, sold, or redeemed any of the Company's listed securities during the six months ended June 30, 2025 - For the six months ended June 30, 2025, neither the Company nor any of its subsidiaries purchased, sold, or redeemed any of the Company's listed securities[39] Model Code for Securities Transactions The Company has adopted a code of conduct for directors' securities transactions, which is no less stringent than the Model Code in Appendix C3 of the Listing Rules - The Company has adopted a code of conduct for directors' securities transactions, with terms no less stringent than the Model Code set out in Appendix C3 of the Listing Rules[40] Corporate Governance The Company's corporate governance practices include deviations from certain code provisions regarding the roles of Chairman and CEO, audit committee meetings, and remuneration committee responsibilities Code Provision C.2.1 The Company deviates from the code provision requiring written delineation of Chairman and CEO responsibilities, as their roles are considered clearly defined - The Company has not formally separated the roles of Chairman and Chief Executive Officer in writing, but the Board believes their respective responsibilities are clearly defined[42][43] Code Provision D.3.3 The Company deviates from the code provision for the Audit Committee to meet with auditors at least twice annually, as no auditors were engaged for the interim review - The Audit Committee meets with the auditors once a year, instead of the minimum two times required by the code, as no auditors were engaged to review the interim report[42][43] Code Provision E.1.2 The Company deviates from the code provision for the Remuneration Committee to review senior management remuneration, which is currently handled by the Chairman and/or CEO - The Remuneration Committee only reviews the remuneration of Directors, while senior management remuneration is handled by the Chairman and/or Chief Executive Officer[44][48] Public Float As of the announcement date, at least 25% of the Company's total issued shares are held by the public - As of the date of this announcement, at least 25% of the Company's total issued shares are held by the public[45] Publication of Results Announcement and Interim Report The results announcement has been published on the Company's and HKEX websites, with the interim report to be dispatched to shareholders and published in September 2025 - This results announcement has been published on the Company's website and the website of Hong Kong Exchanges and Clearing Limited[46] - The interim report for the six months ended June 30, 2025, will be dispatched to shareholders and published on the Company's and HKEX websites in September 2025[46] Acknowledgement The Board of Directors extends its sincere gratitude to shareholders, business partners, and company employees - The Board of Directors extends its sincere gratitude to shareholders, business partners, and company employees[47]