中宝新材(02439) - 2025 - 中期业绩

Company Information and Performance Overview This section provides an overview of the Group's financial performance and position, highlighting key changes in income, expenses, assets, and liabilities Condensed Consolidated Statement of Profit or Loss and Other Comprehensive Income For the six months ended June 30, 2025, the Group's revenue and profit significantly decreased, primarily due to weak domestic consumer demand. Revenue decreased by 21.8% year-on-year, profit for the period decreased by 25.8%, and basic earnings per share fell to RMB 3.55 cents Condensed Consolidated Statement of Profit or Loss and Other Comprehensive Income (RMB thousands) | Indicator | 2025 (Unaudited) | 2024 (Unaudited) | Year-on-Year Change (%) | | :--- | :--- | :--- | :--- | | Revenue | 153,886 | 196,868 | -21.8% | | Cost of Sales | (93,552) | (118,480) | -21.0% | | Gross Profit | 60,334 | 78,388 | -23.1% | | Other Income | 2,115 | 920 | +130.0% | | Selling and Distribution Expenses | (2,267) | (2,377) | -4.6% | | Administrative and Other Operating Expenses | (14,385) | (18,717) | -23.1% | | Finance Costs | (3,440) | (1,745) | +97.1% | | Profit Before Tax | 42,357 | 56,469 | -25.0% | | Income Tax Expense | (6,599) | (8,261) | -20.2% | | Profit for the Period | 35,758 | 48,208 | -25.8% | | Basic Earnings Per Share Attributable to Owners of the Company (RMB cents) | 3.55 | 4.78 | -25.7% | Condensed Consolidated Statement of Financial Position As of June 30, 2025, the Group's non-current assets significantly increased by 203%, primarily due to construction in progress for a new production base and land acquisition. Concurrently, non-current liabilities surged by nearly 50 times due to increased interest-bearing borrowings, leading to a modest increase in total net assets and total equity Condensed Consolidated Statement of Financial Position (RMB thousands) | Indicator | June 30, 2025 (Unaudited) | December 31, 2024 (Audited) | Change (%) | | :--- | :--- | :--- | :--- | | Non-current Assets | 370,819 | 122,412 | +203.0% | | Current Assets | 520,525 | 568,192 | -8.4% | | Current Liabilities | 134,534 | 127,100 | +5.8% | | Net Current Assets | 385,991 | 441,092 | -12.5% | | Total Assets Less Current Liabilities | 756,810 | 563,504 | +34.3% | | Non-current Liabilities | 158,993 | 3,148 | +4950.0% | | Net Assets | 597,817 | 560,356 | +6.7% | | Total Equity | 597,817 | 560,356 | +6.7% | - Non-current assets significantly increased, primarily due to growth in property, plant and equipment (construction in progress) and right-of-use assets[6] - Non-current liabilities substantially increased, mainly due to a significant rise in interest-bearing borrowings[7] Notes to the Financial Statements This section details the Group's accounting policies, segment information, and specific breakdowns of revenue, expenses, and balance sheet items 1. Company Information and Basis of Preparation Zhongbao New Material Group Co., Ltd. was incorporated in the Cayman Islands in 2022 and listed on the Hong Kong Stock Exchange in 2023, primarily engaged in the development and production of biodegradable plastic products and non-biodegradable automotive plastic components in China. This interim report adopts accounting policies consistent with the 2024 annual report, with no significant impact from new standards - The Company was incorporated in the Cayman Islands on January 21, 2022, and listed on the Main Board of The Stock Exchange of Hong Kong on March 31, 2023[8] - The Group is principally engaged in the development and production of biodegradable plastic products and non-biodegradable automotive plastic components in China[8] - The ultimate controlling parties are Ms. Zhang Yuqiu and Mr. Shan Yuzhu[9] 2. Principal Accounting Policies The accounting policies applied in the Group's interim financial statements are consistent with those used in the 2024 financial statements, and newly adopted IFRS and amendments have no significant impact on the financial position and performance for the period - The accounting policies and methods of computation used in the preparation of the interim financial statements are consistent with those applied in the preparation of the 2024 financial statements[11] - The new/revised International Financial Reporting Standards (IFRS) accounting standards applied for the first time during this interim period had no significant impact on the Group's financial position and performance[12][13] 3. Segment Information The Group's operating segments include biodegradable plastic products and non-biodegradable automotive plastic components. Biodegradable plastic products are the primary revenue source, but both segments experienced a decline in revenue and performance this period. Almost all revenue, assets, and liabilities originate from China Segment Revenue and Results For the six months ended June 30, 2025, the biodegradable plastic products segment generated RMB 143.9 million in revenue, while the non-biodegradable automotive plastic components segment generated RMB 9.98 million, with both segments experiencing a year-on-year decline in revenue Segment Revenue and Results (RMB thousands) | Indicator | June 30, 2025 (Unaudited) | June 30, 2024 (Unaudited) | | :--- | :--- | :--- | | Development and Manufacturing of Biodegradable Plastic Products | | | | Segment Revenue | 143,910 | 183,776 | | Segment Cost of Sales | (87,550) | (110,761) | | Segment Results | 56,360 | 73,015 | | Development and Manufacturing of Non-biodegradable Automotive Plastic Components | | | | Segment Revenue | 9,976 | 13,092 | | Segment Cost of Sales | (6,002) | (7,719) | | Segment Results | 3,974 | 5,373 | | Total | | | | Segment Revenue | 153,886 | 196,868 | | Segment Results (Gross Profit) | 60,334 | 78,388 | Segment Assets and Liabilities As of June 30, 2025, the biodegradable plastic products segment had assets of RMB 374.3 million and liabilities of RMB 40.5 million. The non-biodegradable automotive plastic components segment had assets of RMB 30.3 million and liabilities of RMB 0.34 million. Both total assets and total liabilities increased compared to the end of 2024 Segment Assets and Liabilities (RMB thousands) | Indicator | June 30, 2025 (Unaudited) | December 31, 2024 (Audited) | | :--- | :--- | :--- | | Development and Manufacturing of Biodegradable Plastic Products | | | | Reportable Segment Assets | 374,316 | 142,426 | | Reportable Segment Liabilities | 40,483 | 40,471 | | Capital Expenditure | 146,710 | 3,322 | | Development and Manufacturing of Non-biodegradable Automotive Plastic Components | | | | Reportable Segment Assets | 30,282 | 36,032 | | Reportable Segment Liabilities | 342 | 1,009 | | Capital Expenditure | – | 62 | | Total | | | | Reportable Segment Assets | 891,344 | 690,604 | | Reportable Segment Liabilities | 293,527 | 130,248 | | Capital Expenditure | 146,710 | 34,635 | Geographical Information All the Group's revenue from external customers and almost all assets and liabilities are located in China - For the six months ended June 30, 2025 and 2024, all the Group's revenue from external customers was derived from China[21] - Almost all the Group's assets and liabilities are located in China[21] Major Customer Information Customer A is one of the Group's major customers, with its contribution from biodegradable plastic products declining in the first half of 2025 Major Customer Revenue (RMB thousands) | Customer | 2025 (Unaudited) | 2024 (Unaudited) | | :--- | :--- | :--- | | Customer A (Development and Manufacturing of Biodegradable Plastic Products) | 21,179 | 28,171 | 4. Revenue During the period, the Group's total revenue was RMB 153.9 million, a 21.8% decrease from RMB 196.9 million in the prior period, primarily due to weak domestic consumer demand and a shift in shopping habits towards online purchases, resulting in reduced orders from existing customers like chain supermarkets Revenue Composition (RMB thousands) | Product Category | 2025 (Unaudited) | 2024 (Unaudited) | | :--- | :--- | :--- | | Development and Production of Biodegradable Plastic Products | 143,910 | 183,776 | | Development and Production of Non-biodegradable Automotive Plastic Components | 9,976 | 13,092 | | Total Revenue | 153,886 | 196,868 | 5. Other Income Other income significantly increased by 133.3% to RMB 2.1 million during the period, primarily benefiting from increased government grants and the recovery of previously written-off receivables Other Income (RMB thousands) | Item | 2025 (Unaudited) | 2024 (Unaudited) | | :--- | :--- | :--- | | Interest Income | 645 | 525 | | Government Grants | 925 | 395 | | Recovery of written-off receivables | 545 | – | | Total | 2,115 | 920 | - The increase in other income was mainly due to increased government grants (from RMB 0.4 million to RMB 0.9 million) and the recognition of recovered written-off receivables (RMB 0.5 million)[56] 6. Components of Profit Before Tax During the period, finance costs doubled due to increased interest-bearing borrowings, while staff costs and R&D expenses decreased, and depreciation of property, plant and equipment increased Items Deducted from Profit Before Tax (RMB thousands) | Item | 2025 (Unaudited) | 2024 (Unaudited) | | :--- | :--- | :--- | | Finance Costs | | | | Interest on bank loans | 3,440 | 1,492 | | Interest on lease liabilities | – | 253 | | Staff Costs | | | | Salaries, discretionary bonuses, allowances and other benefits in kind | 4,070 | 5,752 | | Contributions to defined contribution plans | 1,354 | 1,344 | | Other Items | | | | Cost of inventories | 92,476 | 117,331 | | Amortisation of intangible assets | 5 | 5 | | Depreciation of property, plant and equipment | 6,678 | 5,053 | | Depreciation of right-of-use assets | 201 | 2,280 | | Research and development expenses | 6,354 | 12,107 | | Short-term lease expenses recognised | 862 | 90 | | Net allowance for (reversal of) loss allowance for trade receivables | (191) | 42 | - Finance costs increased by approximately 100% year-on-year, primarily due to an increase in the balance of interest-bearing borrowings[24][59] - Research and development expenses decreased by approximately RMB 5.7 million, mainly due to the reduction in R&D projects in collaboration with Changchun Institute of Applied Chemistry as major projects were completed in 2024[58] 7. Taxation The Group's income tax expense decreased by 20.5% year-on-year to RMB 6.6 million, primarily due to a decline in profit before tax. Jilin Kaishun, as a high-tech enterprise, enjoys a preferential tax rate of 15% Income Tax Expense (RMB thousands) | Item | 2025 (Unaudited) | 2024 (Unaudited) | | :--- | :--- | :--- | | Current tax - PRC Enterprise Income Tax | 6,658 | 8,241 | | Deferred tax - Changes in temporary differences | (59) | 20 | | Total income tax expense for the period | 6,599 | 8,261 | - The decrease in income tax expense was mainly due to a reduction in profit before tax[60] - Jilin Kaishun New Material Co., Ltd., as a high-tech enterprise, enjoys a preferential tax rate of 15%, with this qualification approved until December 31, 2026[29] 8. Earnings Per Share For the six months ended June 30, 2025, basic earnings per share attributable to owners of the Company was RMB 3.55 cents, a decrease from RMB 4.78 cents in the prior period. Diluted earnings per share is the same as basic earnings per share due to the absence of dilutive potential ordinary shares Earnings Per Share (RMB thousands/share) | Indicator | 2025 (Unaudited) | 2024 (Unaudited) | | :--- | :--- | :--- | | Profit attributable to owners of the Company for the purpose of calculating basic earnings per share | 35,534 | 47,834 | | Weighted average number of ordinary shares for the purpose of calculating basic earnings per share | 1,000,000,000 | 1,000,000,000 | | Basic Earnings Per Share Attributable to Owners of the Company (RMB cents) | 3.55 | 4.78 | - As there were no dilutive potential ordinary shares for the six months ended June 30, 2025 and 2024, diluted earnings per share was the same as basic earnings per share[30] 9. Dividends The Board does not recommend the payment of an interim dividend for the six months ended June 30, 2025 and 2024 - The directors of the Company do not recommend the payment of an interim dividend for the six months ended June 30, 2025 and 2024[31] 10. Property, Plant and Equipment As of June 30, 2025, the Group's property, plant and equipment significantly increased, primarily due to total construction in progress costs of approximately RMB 136.7 million - For the six months ended June 30, 2025, the Group's total construction in progress costs were approximately RMB 136,734,000 (2024: nil)[32] 11. Trade and Other Receivables As of June 30, 2025, total trade and other receivables decreased by 22.2% to RMB 95.9 million, primarily due to lower trade receivables from reduced revenue, partially offset by increased VAT from significant capital expenditures Trade and Other Receivables (RMB thousands) | Item | June 30, 2025 (Unaudited) | December 31, 2024 (Audited) | | :--- | :--- | :--- | | Trade receivables (from third parties, net of loss allowance) | 77,994 | 114,405 | | Other receivables (prepayments, other deposits and receivables, VAT and other recoverable taxes) | 17,881 | 8,909 | | Total | 95,875 | 123,314 | Ageing Analysis of Trade Receivables (Net of loss allowance, RMB thousands) | Ageing | June 30, 2025 (Unaudited) | December 31, 2024 (Audited) | | :--- | :--- | :--- | | Within 30 days | 27,151 | 43,776 | | 31 to 60 days | 26,514 | 37,771 | | 61 to 90 days | 24,329 | 30,280 | | Over 90 days | – | 2,578 | | Total | 77,994 | 114,405 | - Trade and other receivables decreased primarily due to a reduction of approximately RMB 36.4 million in trade receivables from lower revenue, partially offset by an increase of approximately RMB 11.5 million in input VAT due to significant capital expenditures[66] 12. Trade and Other Payables As of June 30, 2025, total trade and other payables decreased by 3.3% to RMB 52.4 million, mainly due to reductions in trade payables, salaries payable, and accrued expenses, partially offset by an increase in the amount due to a director Trade and Other Payables (RMB thousands) | Item | June 30, 2025 (Unaudited) | December 31, 2024 (Audited) | | :--- | :--- | :--- | | Trade payables (due to third parties) | 40,825 | 41,480 | | Other payables (salaries payable, VAT and other taxes payable, amount due to a director, accrued expenses and other payables) | 11,615 | 12,697 | | Total | 52,440 | 54,177 | Ageing Analysis of Trade Payables (RMB thousands) | Ageing | June 30, 2025 (Unaudited) | December 31, 2024 (Audited) | | :--- | :--- | :--- | | Within 30 days | 21,483 | 26,095 | | 31 to 60 days | 19,342 | 15,227 | | 61 to 90 days | – | 158 | | Total | 40,825 | 41,480 | - Trade and other payables decreased primarily due to reductions in trade payables, salaries payable, and accrued expenses, partially offset by an increase of approximately RMB 2.6 million in the amount due to a director for operating purposes[67] 13. Interest-bearing Borrowings As of June 30, 2025, the Group's total interest-bearing borrowings significantly increased to RMB 238.3 million, with a notable rise in the non-current portion. Borrowings are primarily secured by assets such as patents, leased land, buildings, and construction in progress, and are personally guaranteed by an executive director Details of Interest-bearing Borrowings (RMB thousands) | Item | June 30, 2025 (Unaudited) | December 31, 2024 (Audited) | | :--- | :--- | :--- | | Secured borrowings - bank and other loans | 213,341 | 57,250 | | Unsecured borrowings - bank and other loans | 25,000 | 14,760 | | Total | 238,341 | 72,010 | | Current portion | 80,964 | 70,724 | | Non-current portion | 157,377 | 1,286 | Repayment Schedule of Borrowings (RMB thousands) | Repayment Period | June 30, 2025 (Unaudited) | December 31, 2024 (Audited) | | :--- | :--- | :--- | | Within one year | 80,964 | 70,724 | | Over one year but not exceeding two years | 157,377 | 1,286 | | Total | 238,341 | 72,010 | - Secured borrowings bear interest at a weighted average effective annual interest rate of approximately 4.15% (December 31, 2024: 4.41%)[39] - Unsecured borrowings bear interest at an effective annual interest rate of 3.95% (December 31, 2024: 10.9%)[39] - Secured borrowings are pledged by patents, leased land, buildings, and construction in progress, and are personally guaranteed by Mr. Shan Yuzhu, an executive director[39] 14. Related Party Transactions During the period, the total remuneration for the Group's key management personnel (including directors) was RMB 641 thousand, a decrease from the prior period Key Management Personnel Remuneration (RMB thousands) | Item | 2025 (Unaudited) | 2024 (Unaudited) | | :--- | :--- | :--- | | Salaries, allowances, discretionary bonuses and other benefits in kind | 519 | 770 | | Contributions to defined contribution plans | 122 | 119 | | Total | 641 | 889 | 15. Commitments As of June 30, 2025, the Group's capital expenditure commitments significantly increased to RMB 144.1 million, primarily for the acquisition of property, plant and equipment, while short-term lease commitments also rose Capital Expenditure Commitments (RMB thousands) | Item | June 30, 2025 (Unaudited) | December 31, 2024 (Audited) | | :--- | :--- | :--- | | Contracted but not provided for (net of deposits paid for acquisition of property, plant and equipment) | 144,138 | – | | Leased land | – | 9,976 | | Total | 144,138 | 9,976 | - The Group has short-term lease commitments of approximately RMB 1,293,000 (December 31, 2024: RMB 962,000)[43] Business and Financial Review This section reviews the Group's strategic transformation, market conditions, operational highlights, and a detailed analysis of financial performance and liquidity Business Review Since 2015, the Group has diversified from non-biodegradable automotive plastic components to biodegradable plastic products in response to environmental policies, listing in 2023. During the period, the company consolidated production to Changchun, invested in new facilities, and continued R&D. Despite weak domestic consumer demand, government policy support and market expansion offer long-term growth potential for biodegradable plastics Company Profile and Strategic Transformation Since 2015, the Group has diversified its business from non-biodegradable automotive plastic components to biodegradable plastic products in response to China's environmental policies, and was listed on the Main Board of the Hong Kong Stock Exchange on March 31, 2023 - Since 2015, the Group has gradually diversified its business towards the development and manufacturing of biodegradable plastic products in response to China's environmental policies and regulations[44] - The Company's shares were listed on the Main Board of The Stock Exchange of Hong Kong on March 31, 2023, successfully raising net proceeds of approximately HKD 155.4 million[44] Product Portfolio and Market Distribution The Group primarily develops and produces biodegradable plastic products in Northeast China, with a product portfolio including biodegradable roll-on fruit and vegetable bags, shopping bags, and stretch films, of which approximately 90.4% of revenue comes from customers in Northeast China - The Group is primarily engaged in the development and production of biodegradable plastic products in Northeast China, with a product portfolio including biodegradable roll-on fruit and vegetable bags, shopping bags, and stretch films[45] - During the period, approximately 90.4% of biodegradable products were sold to customers in Northeast China (prior period: approximately 79.9%)[45] Production Base Integration and Expansion To enhance production capacity and optimize production lines, the Group consolidated its production to the main Changchun production base in Jilin Province, China, by the end of 2024, acquired a piece of land in January 2025, and subsequently entered into a contract in June 2025 to construct a new production base, expected to commence trial operation in November 2025 - By the end of 2024, the Group relocated all machinery and equipment and terminated the leases for its Dongguan and Anji factories, consolidating and centralizing production at its main Changchun production base in Jilin Province, China[45] - In January 2025, the acquisition of a 31,615 square meter plot of land in Jiutai Economic Development Zone, Changchun City, was completed, and in June 2025, a construction contract was entered into for a new production base with a total gross floor area of approximately 80,298 square meters[46] - The new production base is expected to commence trial operation and production in November 2025, aiming for strategic integration, cost efficiency, market restructuring, enhanced production control capabilities, and resource optimization[46][47] Research and Development and Industry Standards The Group continuously invests in R&D, collaborating with Changchun Institute of Applied Chemistry to improve product performance and cost-effectiveness, and participated in formulating the national standard "GB/T 38082–2019" for biodegradable plastic shopping bags - The Group collaborates with Changchun Institute of Applied Chemistry on R&D for biodegradable plastic products to improve product performance and cost-effectiveness[47] - The Group participated in the discussion and formulation of the national standard "GB/T 38082–2019" for biodegradable plastic shopping bags, which remains the sole national standard for such products in China[47] - The Group is also a member of relevant plastic production industry associations in China to respond to market trends and promote business development[48] Market Outlook and Challenges The Chinese government continues to advance environmental policies, with an expanded ban on non-biodegradable plastic bags expected by the end of 2025, driving rapid growth in the biodegradable plastics market. Despite an optimistic market outlook, the Group's revenue declined this period due to weak domestic consumer demand and shifting shopping habits - The Chinese government continues to implement environmental policies, with the ban on non-biodegradable plastic bags expected to expand to major commercial venues by the end of 2025, driving increased demand for biodegradable plastic products[49] - According to reports, China's production capacity for biodegradable plastic shopping bags grew by over 20% annually from 2020 to 2024, with total market output reaching nearly 500,000 tonnes in 2024, and market size exceeding RMB 10 billion, projected to surpass RMB 60 billion by 2030[50] - The Group's revenue decreased by approximately 21.8% during the period, primarily due to weak domestic consumer demand and a shift in shopping habits from physical stores to online purchases, resulting in reduced orders from existing customers[50] - Despite challenges, the Group maintains a cautiously optimistic outlook on the long-term prospects of the biodegradable plastic products industry, believing that government support, increased consumer environmental awareness, and market expansion will lay a foundation for positive growth[51] Financial Review During the period, the Group's revenue and gross profit both declined due to weak domestic consumer demand, but other income significantly grew from government grants and receivable recoveries. Administrative and R&D expenses decreased, but finance costs doubled due to increased borrowings, ultimately leading to a decline in profit for the period. On the balance sheet, non-current assets substantially increased due to new production base construction, while trade receivables decreased and trade payables slightly declined Income Statement Analysis Revenue and gross profit both decreased during the period, with a corresponding reduction in cost of sales. Other income significantly grew due to government grants and receivable recoveries. Administrative and R&D expenses decreased, but finance costs doubled due to increased borrowings, and income tax expense declined due to reduced profit before tax, ultimately leading to a 25.7% decrease in profit for the period - Revenue decreased by 21.8% to RMB 153.9 million, primarily due to weak domestic consumer demand and a shift in shopping habits towards online purchases, resulting in a decline in chain supermarket orders[52] - Cost of sales decreased by 21.0% to RMB 93.6 million, mainly due to lower production and raw material costs resulting from reduced revenue[53] - Gross profit decreased by 23.1% to RMB 60.3 million, with the gross profit margin remaining stable at approximately 39.2% (prior period: 39.8%)[54][55] - Other income increased by 133.3% to RMB 2.1 million, primarily due to increased government grants and the recovery of previously written-off receivables[56] - Administrative and other operating expenses decreased by 23.0% to RMB 14.4 million, mainly due to a reduction in R&D expenditure of approximately RMB 5.7 million, partially offset by an increase in legal and professional fees of approximately RMB 1.1 million[58] - Finance costs increased by 100.0% to RMB 3.4 million, primarily due to an increase in the balance of interest-bearing borrowings[59] - Profit for the period decreased by 25.7% to RMB 35.8 million, mainly due to lower gross profit resulting from reduced revenue, partially offset by a decrease in administrative and other operating expenses[61] Statement of Financial Position Analysis Property, plant and equipment significantly increased due to construction in progress for a new production base. Right-of-use assets rose due to land acquisition. Deposits paid for property, plant and equipment acquisitions substantially increased. Inventories grew due to maintaining higher raw material levels. Trade and other receivables decreased due to lower revenue, partially offset by increased VAT. Trade and other payables slightly declined, influenced by a combination of factors - Property, plant and equipment increased to RMB 251.3 million (end of 2024: RMB 121.2 million), primarily due to an increase of approximately RMB 136.7 million in construction in progress for the new production base[62] - Right-of-use assets increased to RMB 10.8 million (end of 2024: RMB 1.0 million), resulting from the completion of land acquisition in January 2025[63] - Deposits paid for the acquisition of property, plant and equipment amounted to approximately RMB 108.5 million (end of 2024: nil), mainly for construction contracts and plant machinery for the new production base[64] - Inventories increased to RMB 25.7 million (end of 2024: RMB 22.2 million), due to maintaining higher raw material levels during the procurement process to control costs[65] - Trade and other receivables decreased by 22.2% to RMB 95.9 million, primarily due to lower trade receivables from reduced revenue, but offset by an increase in input VAT due to significant capital expenditures[66] - Trade and other payables decreased by 3.3% to RMB 52.4 million, mainly due to reductions in trade payables, salaries payable, and accrued expenses, partially offset by an increase in the amount due to a director[67] Liquidity, Financial Resources and Capital Structure The Group maintains adequate liquidity, with cash and cash equivalents of approximately RMB 399.0 million. However, a significant increase in interest-bearing borrowings led to the gearing ratio rising from 12.9% to 39.9%. The Group implements prudent treasury policies, faces no significant exchange rate risk or contingent liabilities, but capital commitments have substantially increased Cash and Borrowings As of June 30, 2025, the Group's cash and cash equivalents were approximately RMB 399.0 million, a slight decrease from the end of 2024. Total interest-bearing borrowings significantly increased to RMB 238.3 million - As of June 30, 2025, the Group maintained cash and cash equivalents totaling approximately RMB 399.0 million (December 31, 2024: RMB 422.7 million)[68] - As of June 30, 2025, the Group's interest-bearing borrowings amounted to approximately RMB 238.3 million (December 31, 2024: RMB 72.0 million)[68] Gearing Ratio and Treasury Policy The Group's gearing ratio increased from 12.9% at the end of 2024 to 39.9% as of June 30, 2025, primarily due to increased interest-bearing borrowings. The company implements prudent treasury policies to maintain flexibility and manage risks - As of June 30, 2025, the Group's gearing ratio was approximately 39.9% (December 31, 2024: approximately 12.9%), with the increase primarily due to an increase in interest-bearing borrowings of approximately RMB 166.3 million[69] - The Group implements a prudent treasury policy to mitigate credit risk and meet financing needs through credit assessments and liquidity monitoring[70] Exchange Rate Risk and Asset Pledges The vast majority of the Group's transactions, assets, and liabilities are denominated in RMB, resulting in no significant exchange rate risk, and no hedging was undertaken during the period. As of June 30, 2025, the Group's interest-bearing borrowings and lease liabilities are secured by assets such as buildings, construction in progress, leased land, and patents - The vast majority of the Group's transactions, assets, and liabilities are denominated in RMB, resulting in no significant exchange rate risk, and no financial instruments were used to hedge exchange rate risk during the period[71] Group Asset Pledges (RMB thousands) | Pledged Assets | June 30, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Buildings | 18,272 | 19,035 | | Construction in progress | 136,734 | – | | Leased land | 10,669 | 768 | | Patents | 66 | 73 | | Total | 165,741 | 19,876 | Contingent Liabilities and Capital Commitments As of June 30, 2025 and 2024, the Group had no contingent liabilities. Capital commitments significantly increased to RMB 144.1 million, primarily for the acquisition of property, plant and equipment - As of June 30, 2025 and 2024, the Group had no contingent liabilities[73] - As of June 30, 2025, the Group's capital commitments amounted to approximately RMB 144.1 million (December 31, 2024: approximately RMB 10.0 million)[74] Material Investments, Acquisitions and Disposals During the period, the Group entered into a construction contract with a contractor to build a new production base in Jiutai Economic Development Zone, Changchun City, for a total consideration of approximately RMB 236.7 million, which constitutes a major transaction. Other than this, the Group had no other material investments, acquisitions, or disposals - Jilin Kaishun, a subsidiary of the Company, entered into a construction contract with Henan Naiwo Construction Engineering Co., Ltd. to build a production base in Jiutai Economic Development Zone, Changchun City, for a total consideration of approximately RMB 236.7 million[75] - The transactions contemplated under this construction contract constitute a major transaction for the Company, subject to the reporting, announcement, circular, and shareholder approval requirements under Chapter 14 of the Listing Rules[75] - Other than the above, the Group did not undertake any other material investments, acquisitions, or disposals of subsidiaries, associates, or joint ventures during the period[75] Interim Dividend The Board does not recommend the declaration of an interim dividend for the current period - The Board does not recommend the declaration of an interim dividend for the current period (prior period: nil)[76] Other Information This section covers human resources, the utilization of IPO proceeds, the share option scheme, compliance, and administrative matters Human Resources As of June 30, 2025, the Group had 157 employees, a decrease from the prior year, with total staff costs of approximately RMB 5.4 million. Remuneration policies are set by the Remuneration Committee, and a share option scheme is in place to incentivize employees and directors - As of June 30, 2025, the Group had 157 employees, compared to 188 as of June 30, 2024, with all employees based in China[77] - During the period, total staff costs (including directors' remuneration and retirement benefit costs) were approximately RMB 5.4 million, compared to approximately RMB 7.1 million in the prior period[77] - The Group has a share option scheme to grant share options to employees and directors as incentives[77] Use of Proceeds The Company's IPO net proceeds were approximately HKD 155.4 million. On March 28, 2025, the Board resolved to change the use of certain unutilized net proceeds from "establishing a Huizhou production base in Southeast China" to "establishing a new production base on Changchun land." As of June 30, 2025, most proceeds have been utilized, with the remaining approximately HKD 4.7 million expected to be used by December 2025 - The Company's net proceeds from its listing were approximately HKD 155.4 million[78] - On March 28, 2025, the Board resolved to change the use of unutilized net proceeds from "establishing a Huizhou production base in Southeast China" to "establishing a new production base on Changchun land"[78][79] Use of Proceeds and Utilization (HKD thousands) | Original Use of Proceeds as Disclosed in Prospectus | Original Allocation | Change in Use | Revised Allocation | Utilized as of June 30, 2025 | Unutilized as of June 30, 2025 | Expected Timeline for Utilizing Unutilized Net Proceeds | | :--- | :--- | :--- | :--- | :--- | :--- | :--- | | Expansion of biodegradable plastic product production line at Changchun production base | 51,743 | Same | 51,743 | 51,743 | – | Not applicable | | Establishment of Huizhou production base in Southeast China | 51,588 | Establishment of new production base on Changchun land | 51,588 | 51,588 | – | Not applicable | | Strengthening the Group's R&D capabilities and upgrading existing R&D equipment | 6,682 | Same | 6,682 | 6,682 | – | Not applicable | | Funding the Group's R&D projects | 33,253 | Same | 33,253 | 33,253 | – | Not applicable | | Strengthening the Group's IT systems | 4,662 | Same | 4,662 | – | 4,662 | Expected to be utilized by December 2025 | | General working capital | 7,458 | Same | 7,458 | 7,458 | – | Not applicable | | Total | 155,386 | | 155,386 | 150,724 | 4,662 | | - As of June 30, 2025, unutilized net proceeds of approximately HKD 4.7 million have been deposited in licensed banks in China and are expected to be utilized by December 2025[79][80] Share Option Scheme The Company adopted a share option scheme on March 9, 2023, to incentivize eligible persons. The scheme is valid for 10 years, with the total number of shares available for issue not exceeding 10% of the issued shares. Options have a minimum 12-month vesting period, and the subscription price must not be lower than the highest of the share's nominal value, closing price on the offer date, and average closing price of the preceding five business days. As of this announcement date, no share options have been granted, exercised, cancelled, or lapsed - The Share Option Scheme was adopted on March 9, 2023, and became effective after the listing date for a period of 10 years, aiming to incentivize eligible persons[81][93] - The maximum number of shares that may be issued upon exercise of all share options shall not exceed 10% of the shares in issue on the listing date, i.e., 100,000,000 shares[82] - Share options have a minimum vesting period of 12 months, and the subscription price shall not be less than the highest of the nominal value of the share, the closing price on the offer date, and the average closing price for the five business days immediately preceding the offer date[86][87] - From the adoption date up to the date of this announcement, no share options have been granted, exercised, cancelled, or lapsed under the Share Option Scheme[94] Securities Transactions and Public Float During the period, neither the Company nor any of its subsidiaries purchased, sold, or redeemed any of the Company's listed securities. The Company has maintained an adequate public float of not less than 25% of its total issued shares since the listing date - During the period and up to the date of this announcement, neither the Company nor any of its subsidiaries purchased, sold, or redeemed any of the Company's listed securities[96] - From the listing date up to the date of this announcement, the Company has maintained an adequate public float, with such holdings being not less than 25% of the Company's total issued shares[99] Compliance with Laws and Regulations and Corporate Governance The Group has complied with relevant laws and regulations materially affecting its business and operations, with no significant breaches during the period. The Company continues to comply with all code provisions of the Corporate Governance Code in Appendix C1 of the Listing Rules and has adjusted Nomination Committee members in response to code revisions - The Group has complied with relevant laws and regulations that have a material impact on its business and operations, with no significant breaches during the period[101] - The Company has consistently complied with all code provisions of the Corporate Governance Code set out in Appendix C1 of the Listing Rules[102] - In response to revisions to the Corporate Governance Code, Mr. Li Xiquan, an independent non-executive director, ceased to be a member of the Nomination Committee, and Ms. Zhang Yuqiu, an executive director, was appointed to replace him, effective from June 30, 2025[103] Events After Reporting Period No significant events affecting the Group have occurred from the end of the period up to the date of this announcement - No significant events affecting the Group have occurred from the end of the period up to the date of this announcement[105] Audit Committee and Review of Financial Statements The Company's Audit Committee has reviewed the unaudited condensed consolidated financial statements for the six months ended June 30, 2025, and confirmed their preparation in accordance with applicable accounting standards - The Audit Committee members include Mr. Leung Tsz Wing (Chairman), Dr. Lai King Yin, and Dr. Song Xiaofeng (all independent non-executive directors)[106] - The Audit Committee has reviewed the Group's unaudited condensed consolidated financial statements for the six months ended June 30, 2025, and is satisfied that they were prepared in accordance with applicable accounting standards[106] Publication of Results Announcement and Interim Report This results announcement has been published on the Stock Exchange's website and the Company's website, and the interim report will be published in due course - This results announcement has been published on the Stock Exchange's website (www.hkexnews.hk) and the Company's website (http://www.jl-ks.cn)[107](index=107&type=chunk) - The Company's interim report for the six months ended June 30, 2025, will be published on the aforementioned websites in due course[107]