鸿兴印刷集团(00450) - 2025 - 中期业绩

Financial Performance Overview The group experienced a significant shift from profit to loss in H1 2025, with decreased turnover and gross profit, leading to a substantial increase in loss for the period Consolidated Income Statement The group shifted from profit to loss in H1 2025, with decreased turnover and gross profit, resulting in a significantly expanded loss for the period Key Consolidated Income Statement Data for H1 2025 (thousand HKD) | Indicator | 2025 (Unaudited) | 2024 (Unaudited) | | :--- | :--- | :--- | | Turnover | 935,402 | 1,095,702 | | Cost of Sales | (830,352) | (942,638) | | Gross Profit | 105,050 | 153,064 | | Operating Loss | (48,878) | (8,500) | | Loss Before Income Tax | (50,150) | (10,882) | | Loss for the Period | (52,920) | (7,622) | | Loss Attributable to Equity Holders of the Company | (48,779) | (4,472) | Consolidated Statement of Comprehensive Income The group's total comprehensive loss narrowed in H1 2025, primarily due to a favorable shift in currency translation differences, partially offsetting the increased loss for the period Key Consolidated Statement of Comprehensive Income Data for H1 2025 (thousand HKD) | Indicator | 2025 (Unaudited) | 2024 (Unaudited) | | :--- | :--- | :--- | | Loss for the Period | (52,920) | (7,622) | | Currency Translation Differences for Financial Statements of Subsidiaries and an Associate Outside Hong Kong | 10,119 | (47,650) | | Other Comprehensive Income for the Year | 11,728 | (48,695) | | Total Comprehensive Income for the Period | (41,192) | (56,317) | | Total Comprehensive Income Attributable to Equity Holders of the Company | (38,089) | (49,028) | Consolidated Statement of Financial Position As of June 30, 2025, the group's total assets and equity decreased, net current assets declined, but bank and cash balances remained at a relatively high level Key Consolidated Statement of Financial Position Data as of June 30, 2025 (thousand HKD) | Indicator | June 30, 2025 (Unaudited) | December 31, 2024 (Audited) | | :--- | :--- | :--- | | Non-current Assets | 1,515,869 | 1,553,555 | | Current Assets | 1,777,401 | 1,882,022 | | Bank and Cash Balances | 431,466 | 717,286 | | Current Liabilities | 400,099 | 408,048 | | Net Current Assets | 1,377,302 | 1,473,974 | | Net Assets | 2,835,539 | 2,958,612 | | Total Equity Attributable to Equity Holders of the Company | 2,722,277 | 2,842,247 | Condensed Consolidated Statement of Cash Flows In H1 2025, the group saw increased cash outflow from operating activities, a shift from inflow to outflow in investing activities, and reduced cash outflow from financing activities, leading to a larger net decrease in cash and cash equivalents Key Condensed Consolidated Statement of Cash Flows Data for H1 2025 (thousand HKD) | Indicator | 2025 (Unaudited) | 2024 (Unaudited) | | :--- | :--- | :--- | | Net Cash (Outflow)/Inflow from Operating Activities | (109,157) | (142,038) | | Net Cash (Outflow)/Inflow from Investing Activities | (116,455) | 58,416 | | Net Cash (Outflow)/Inflow from Financing Activities | (108,345) | (126,403) | | Net Decrease in Cash and Cash Equivalents | (333,957) | (210,025) | | Cash and Cash Equivalents at June 30 | 387,606 | 587,133 | Notes to the Condensed Interim Financial Information This section details the basis of preparation, accounting policies, segment information, finance costs, income tax, loss per share, dividends, and key balance sheet items Basis of Preparation and Accounting Policies The interim financial report is unaudited, prepared under HKAS 34 and Appendix D2 of the Listing Rules, using historical cost convention, consistent with 2024 policies, with no significant impact from new standards - The interim financial report is unaudited, prepared in accordance with Hong Kong Accounting Standard 34 and Appendix D2 of the Listing Rules[8] - The report adopts the historical cost convention and should be read in conjunction with the financial statements for the year ended December 31, 2024[8] - Revisions to Hong Kong Financial Reporting Standards, such as the amendment to HKAS 21, effective for the current period, have no significant impact on the group's current or prior period results and financial position[9] Revenue and Segment Information The group's business is segmented into book and packaging printing, consumer product packaging, corrugated products, and paper trading, with segment revenue and results presented accordingly - The group's key operating decision-maker (Management Committee) classifies business into four segments based on internal reports to assess operating performance[10] Business Segments The group's four business segments are book and packaging printing, consumer product packaging, corrugated products, and paper trading, with inter-segment sales conducted on an arm's length basis - The group's four business segments are: book and packaging printing, consumer product packaging, corrugated products, and paper trading[11] - Inter-segment sales are conducted on an arm's length basis, and segment results exclude corporate finance costs, other corporate income and expenses, and share of results of associates[12][13] Segment Results In H1 2025, all business segments experienced decreased turnover and recorded losses, with book and packaging printing showing the most significant loss H1 2025 Segment Revenue and Results (thousand HKD) | Business Segment | 2025 Segment Revenue | 2025 Segment Results | 2024 Segment Revenue | 2024 Segment Results | | :--- | :--- | :--- | :--- | :--- | | Book and Packaging Printing | 648,704 | (22,144) | 764,768 | 26,429 | | Consumer Product Packaging | 144,700 | (17,619) | 151,218 | (24,253) | | Corrugated Products | 115,415 | (6,053) | 116,771 | (8,421) | | Paper Trading | 190,802 | (3,949) | 238,383 | 532 | | Total | 935,402 | (50,376) | 1,095,702 | (6,418) | Finance Costs The group's finance costs decreased by 35.8% in H1 2025 year-on-year, primarily due to reduced interest on bank borrowings H1 2025 Finance Costs (thousand HKD) | Item | 2025 (Unaudited) | 2024 (Unaudited) | Change (%) | | :--- | :--- | :--- | :--- | | Interest on Bank Borrowings | 724 | 1,621 | -55.3% | | Interest on Lease Liabilities | 893 | 899 | -0.7% | | Total | 1,617 | 2,520 | -35.8% | Loss Before Income Tax The group's loss before income tax significantly expanded in H1 2025, influenced by increased depreciation, losses on asset disposals, and reduced interest income, despite improved net foreign exchange gains Key Factors Affecting Loss Before Income Tax for H1 2025 (thousand HKD) | Item | 2025 (Unaudited) | 2024 (Unaudited) | | :--- | :--- | :--- | | Depreciation (Property, Plant and Equipment) | 50,800 | 52,675 | | Loss on Disposal of Property, Plant and Equipment | 5,447 | 921 | | Employee Benefit Expenses (including Directors' Emoluments) | 279,431 | 295,739 | | Interest Income | 4,588 | 8,342 | | Net Foreign Exchange Gain | 9,612 | - | | Fair Value Gain on Structured Bank Deposits | 11,783 | 8,753 | Income Tax The group's income tax shifted from a gain to an expense in H1 2025, mainly due to deferred tax moving from a gain to an expense and increased taxes in Hong Kong and Vietnam H1 2025 Income Tax Components (thousand HKD) | Item | 2025 (Unaudited) | 2024 (Unaudited) | | :--- | :--- | :--- | | Current Tax for the Period | 913 | 1,164 | | Deferred Tax | 1,857 | (4,424) | | Income Tax | 2,770 | (3,260) | - Hung Hing Printing (China) Company Limited obtained High-Tech Enterprise certification, qualifying for a 15% reduced corporate income tax rate in China for 2024 and 2025[19] - Vietnamese subsidiaries HH Dream Printing Company Limited and HHD (Thai Ha) Company Limited enjoy a corporate income tax exemption for the first two years, followed by a 50% reduction for the subsequent four years[19] Loss Per Share The group's basic loss per share significantly increased in H1 2025, with diluted loss per share being the same due to the anti-dilutive effect of ordinary shares repurchased under the share award scheme H1 2025 Basic Loss Per Share (HK cents) | Indicator | 2025 (Unaudited) | 2024 (Unaudited) | | :--- | :--- | :--- | | Basic Loss Per Share | (5.4) | (0.5) | - For the periods ended June 30, 2025 and 2024, diluted loss per share was the same as basic loss per share due to the anti-dilutive effect of ordinary shares repurchased under the share award scheme[21] Basic Loss Per Share Basic loss per share for H1 2025 was HK 5.4 cents, a significant increase from HK 0.5 cents in the prior year, primarily due to the expanded loss attributable to equity holders H1 2025 Basic Loss Per Share Calculation | Indicator | 2025 (thousand HKD/thousand shares) | 2024 (thousand HKD/thousand shares) | | :--- | :--- | :--- | | Loss Attributable to Equity Holders of the Company | (48,779) | (4,472) | | Weighted Average Number of Ordinary Shares for Basic Loss Per Share | 907,292 | 904,591 | | Basic Loss Per Share (HK cents per share) | (5.4) | (0.5) | Diluted Loss Per Share Diluted loss per share for H1 2025 was identical to basic loss per share, as the repurchase of ordinary shares under the share award scheme had an anti-dilutive effect - For the periods ended June 30, 2025 and 2024, diluted loss per share was the same as basic loss per share due to the anti-dilutive effect of ordinary shares repurchased under the share award scheme[21] Dividends The Board declared an interim dividend of HK 3 cents per share, a reduction from HK 4 cents per share in the prior year Interim Dividend Distribution | Item | 2025 (Unaudited) | 2024 (Unaudited) | | :--- | :--- | :--- | | Interim Dividend Per Ordinary Share | HK 3 cents | HK 4 cents | | Total Amount Distributed (thousand HKD) | 27,236 | 36,315 | Trade and Other Receivables As of June 30, 2025, the group's total trade and other receivables increased, with both net trade receivables and prepayments showing an upward trend Trade and Other Receivables as of June 30, 2025 (thousand HKD) | Item | June 30, 2025 (Unaudited) | December 31, 2024 (Audited) | | :--- | :--- | :--- | | Trade Receivables (Net) | 513,008 | 449,674 | | Trade Receivables from Related Parties | 313 | 9 | | Bills Receivable | 6,781 | 974 | | Prepayments, Deposits and Other Receivables | 122,353 | 113,451 | | Total | 642,455 | 564,108 | - As of the reporting period end, trade receivables overdue by more than 90 days increased from HKD 47,828 thousand on December 31, 2024, to HKD 78,560 thousand on June 30, 2025[23] Cash and Cash Equivalents As of June 30, 2025, the group's bank and cash balances significantly decreased, leading to a corresponding reduction in cash and cash equivalents within the consolidated cash flow statement Cash and Cash Equivalents as of June 30, 2025 (thousand HKD) | Item | June 30, 2025 (Unaudited) | December 31, 2024 (Audited) | | :--- | :--- | :--- | | Bank and Cash Balances | 431,466 | 717,286 | | Less: Time Deposits with Original Maturity Over Three Months | (43,860) | - | | Cash and Cash Equivalents in Consolidated Cash Flow Statement | 387,606 | 717,286 | Trade and Other Payables As of June 30, 2025, the group's total trade and other payables slightly increased, with both trade payables and bills payable showing an upward trend Trade and Other Payables as of June 30, 2025 (thousand HKD) | Item | June 30, 2025 (Unaudited) | December 31, 2024 (Audited) | | :--- | :--- | :--- | | Trade Payables | 142,616 | 130,262 | | Bills Payable | 10,316 | 6,799 | | Current Portion of Deferred Income | 4,798 | 5,956 | | Other Payables and Accruals | 173,171 | 175,138 | | Amount Due to an Associate | 4,900 | 5,418 | | Total | 335,801 | 323,573 | - As of the reporting period end, trade payables overdue by more than 90 days increased from HKD 5,197 thousand on December 31, 2024, to HKD 10,937 thousand on June 30, 2025[25] Management Discussion and Analysis This section provides an overview of the group's financial results, strategic initiatives for future growth, detailed business performance by segment, liquidity, capital resources, environmental sustainability efforts, and human resources Results and Dividends In H1 2025, the group's loss attributable to equity holders expanded to HKD 49 million due to global economic volatility, protectionism, and tariffs, yet maintained robust cash flow and declared an interim dividend of HK 3 cents per share - In H1 2025, the group recorded a loss attributable to equity holders of approximately HKD 49 million, a significant increase compared to a loss of HKD 4 million in the prior year period[27] - The group's total deposits and cash (including structured deposits) amounted to approximately HKD 760 million, maintaining robust liquidity[27] - The Board declared an interim dividend of HK 3 cents per share, lower than the HK 4 cents per share in 2024[27] - The global printing and packaging industry faces significant pressure, with declining demand for core businesses and US tariff policies imposing substantial financial burdens on export-oriented enterprises[26] Laying the Foundation for Future Growth The group is proactively addressing the challenging operating environment by constructing a second Vietnam factory, integrating Zhongshan plant operations, upgrading AI-driven systems, ensuring EUDR compliance, and diversifying business through STEM PLUS and Yum Me Print - Construction of the second Vietnam factory (Thai Ha plant) is progressing smoothly, which will provide a critical production base for customers and diversify tariff risks[28] - The Zhongshan plant completed two major business integrations, enhancing communication, production efficiency, and logistics operations[28] - The group continues to transform its business through system standardization and AI-driven innovation, with the new ERP 5.0 system improving quotation and inventory management efficiency, and the AI team driving cross-departmental innovation projects[28] - The group has made significant progress in complying with the EU Deforestation Regulation (EUDR), achieving full traceability of paper raw materials starting from July 2025[29] - Diversified business expansion includes STEM PLUS educational activities, Think Leap Limited's children's books and educational toys business (which completed digital transformation of logistics management), and Yum Me Print's self-service printing (with 50 service stations and over 20,000 members)[30] - Yum Me Print has established a strategic partnership with a mainland shared power bank provider to expand its service scope[31] Business Performance All major business segments faced challenges in H1 2025, experiencing revenue declines and losses, but the group actively responded with cost optimization, efficiency improvements, and resource integration strategies - The group's geographical diversification strategy through expanding production in Vietnam aims to counter US-China trade friction and tariff changes, optimizing production scheduling and reducing geopolitical interference[32] Book and Packaging Printing As the largest segment, book and packaging printing revenue decreased by 15% and shifted from profit to loss, primarily due to slowing demand, price competition, and rising logistics costs, prompting a comprehensive transformation strategy Book and Packaging Printing Business Performance | Indicator | H1 2025 | H1 2024 | Change | | :--- | :--- | :--- | :--- | | Revenue | HKD 647.1 million | HKD 761.7 million | -15% | | Results | Loss of HKD 22.1 million | Profit of HKD 26.4 million | Shift from profit to loss | - The business has implemented a comprehensive transformation strategy, combining operational excellence with strategic growth initiatives through cost optimization, business restructuring, AI technology integration, and business diversification[32] Consumer Product Packaging Consumer product packaging revenue declined by 4.1%, but losses narrowed through cost optimization and enhanced operational efficiency Consumer Product Packaging Business Performance | Indicator | H1 2025 | H1 2024 | Change | | :--- | :--- | :--- | :--- | | Revenue | HKD 144.5 million | HKD 150.7 million | -4.1% | | Loss | HKD 17.6 million | HKD 24.2 million | Loss narrowed | - The business continues to streamline processes, share resources, and optimize logistics, with sustainable cost savings and improved profitability expected in the short term[33] Corrugated Products Despite weak demand and price competition, corrugated products revenue grew by 6.3%, losses narrowed, and the segment enhanced collaborative efficiency by integrating Greater Bay Area production resources Corrugated Products Business Performance | Indicator | H1 2025 | H1 2024 | Change | | :--- | :--- | :--- | :--- | | Revenue | HKD 91.8 million | HKD 86.413 million | +6.3% | | Loss | HKD 6 million | HKD 8.4 million | Loss narrowed | - The business is integrating Greater Bay Area production resources to enhance collaborative efficiency, actively expanding its customer base, and improving product and service quality and speed to market[33] Paper Trading Paper trading revenue sharply decreased by 46.4% due to shrinking export demand, presenting unprecedented challenges, for which the group has formulated turnaround initiatives Paper Trading Business Performance | Indicator | H1 2025 | H1 2024 | Change | | :--- | :--- | :--- | :--- | | Revenue | HKD 51.9 million | HKD 96.8 million | -46.4% | - The group has formulated turnaround initiatives including expanding new businesses, improving cost structures, and driving strategic innovation[33] Liquidity and Capital Resources The group maintained a prudent cash management strategy, holding HKD 760 million in total cash and HKD 715 million in net cash as of June 30, 2025, while successfully reducing bank loans and lowering the gearing ratio to 1.6% - As of June 30, 2025, the group's total cash (including structured deposits) was HKD 760 million, with net cash at HKD 715 million[34] - The group's bank loans decreased to HKD 46 million, and the gearing ratio continued to fall to 1.6% (2024: 3.1%)[35] - Total interest costs decreased by 55% to HKD 0.7 million[35] - The group invested over HKD 41 million in capital projects and committed an additional HKD 43 million to expand and enhance existing production capacity[35] - RMB-linked structured bank deposits increased to HKD 329 million, with RMB accounting for 71% of total cash[34] Environmental Sustainability The group continues to strengthen environmental sustainability by expanding solar energy use, improving resource efficiency, adhering to responsible sourcing, and maintaining a high production waste recycling rate - The group has expanded photovoltaic power generation equipment to six locations, increasing total installed capacity to 9,806 kWp (H1 2024: 6,504 kWp), generating 4,472,301 kWh of electricity and offsetting approximately 1,771 tonnes of carbon emissions[36] - Total electricity consumption decreased to 26.81 million kWh, and water consumption reduced to 177,859 cubic meters, reflecting improved resource management efficiency[37] - Production waste recycling rate remained at a high level of 96%, with 14,294 tonnes of waste paper recycled[37] - Over 95% of paper is FSC™ certified or contains a high proportion of recycled content, demonstrating a commitment to responsible sourcing[37][38] Our People As of June 30, 2025, the group's total workforce decreased, but training investment continued, with increased average training hours per trainee covering environmental awareness, business ethics, functional skills, and diversity and inclusion Employee and Training Data | Indicator | June 30, 2025 | H1 2024 | | :--- | :--- | :--- | | Total Employees | 4,918 | 5,600 | | Total Training Hours | 84,873 hours | 94,252 hours | | Number of Training Participants | 34,131 | - | | Average Training Hours Per Participant | 2.49 hours | 2.37 hours | - Training scope covers key areas such as environmental awareness, business ethics, specialized functional skills, and diversity, equity, and inclusion (DE&I)[39] Outlook The group remains optimistic about future development, continuing to drive organizational streamlining, business integration, new Vietnam plant operations, printing technology innovation, and diversified business expansion (STEM PLUS, Think Leap) to navigate market uncertainties and achieve sustainable growth - The group will continue to drive synergistic initiatives to achieve operational savings and resource optimization, with Shenzhen corrugated products business integrating with Shunde/Foshan and Zhongshan plants, and the second Vietnam plant expected to be fully operational by the end of September[41] - The group successfully secured new product packaging orders from several internationally renowned consumer brands, utilizing innovative printing technologies and eco-friendly materials, demonstrating its R&D capabilities[41] - As trade tensions ease, some major clients are gradually returning to the Chinese market, and the group is actively promoting its printing capabilities in the mainland market[42] - The STEM PLUS program will expand its business beyond Hong Kong, exploring new opportunities in Asia and solidifying Hong Kong's position as a regional education hub[42] - Think Leap will focus on developing the online digital market, leveraging technological advancements to drive retail business expansion and innovation[43] - The group believes that its various improvements and innovative measures, combined with advantages in quality, compliance, and sustainability, will effectively address market uncertainties, seize new opportunities, and drive sustainable growth[43] Other Information This section covers the interim dividend declaration, closure of the register of members, transactions involving the company's listed securities, adherence to the Corporate Governance Code, compliance with the Model Code for Securities Transactions, and the Audit Committee's review Interim Dividend The Board resolved to declare an interim dividend of HK 3 cents per share, payable on October 17, 2025, to shareholders registered on September 25, 2025 - The Board resolved to declare an interim dividend of HK 3 cents per ordinary share (2024: HK 4 cents)[45] - The dividend will be paid on October 17, 2025, to shareholders whose names appear on the company's register of members on September 25, 2025[45] Closure of Register of Members To determine eligibility for the interim dividend, the company's register of members will be closed from September 22 to September 25, 2025, with all transfer documents due by 4:30 p.m. on September 19, 2025 - The company's register of members will be closed from September 22, 2025, to September 25, 2025 (both dates inclusive)[46] - To qualify for the interim dividend, all transfer documents, accompanied by the relevant share certificates, must be lodged with the company's share registrar by 4:30 p.m. on September 19, 2025[46] Purchase, Redemption or Sale of the Company's Listed Securities Except for the trustee of the Restricted Share Award Scheme purchasing 288,000 shares, neither the company nor its subsidiaries purchased, redeemed, or sold any of the company's listed securities during the period - The trustee of the Restricted Share Award Scheme purchased a total of 288,000 shares of the company for an aggregate consideration of HKD 298,000[47] - Save for the above, neither the company nor any of its subsidiaries purchased, redeemed, or sold any of the company's shares during the period[47] Corporate Governance Code The group complied with the Corporate Governance Code in Appendix C1 of the Listing Rules during the reporting period, though the roles of Chairman and Chief Executive are combined by Mr. Yam Chak Ming, which the Board deems to be in the company's best interest - The group complied with the Corporate Governance Code set out in Appendix C1 of the Listing Rules throughout the accounting period covered by the interim results[48] - Code Provision C2.1 stipulates that the roles of chairman and chief executive should be separate, but the duties of chief executive are performed by Mr. Yam Chak Ming, the Executive Chairman of the company, which the Board believes is in the company's best interest[48] Model Code for Securities Transactions The company adopted the Model Code for Securities Transactions by Directors of Listed Issuers in Appendix C3 of the Listing Rules, and all directors confirmed compliance during the reporting period after specific inquiry - The company has adopted the Model Code for Securities Transactions by Directors of Listed Issuers set out in Appendix C3 of the Listing Rules for directors' dealings in the company's securities[49] - Following specific enquiry with the company's directors, all directors confirmed compliance with the Model Code for Securities Transactions throughout the accounting period covered by the interim results[49] Audit Committee The company's Audit Committee reviewed the interim financial results for the six months ended June 30, 2025, including accounting policies and practices, and discussed audit, internal control, and financial reporting matters - The company's Audit Committee has reviewed the interim financial results for the six months ended June 30, 2025, and the accounting principles and practices adopted by the group[50] - The Audit Committee comprises three independent non-executive directors and one non-executive director[50]