环龙控股(02260) - 2025 - 中期财报

Corporate Information This section details the company's board structure, authorized representatives, principal business locations, and professional advisors Board of Directors This section lists the company's executive and independent non-executive directors, along with the composition of the audit, remuneration, and nomination committees - Executive Directors include Ms. Shen Genlian (Chairperson), Mr. Zhou Jun (CEO), Mr. Xie Zongguo, and Ms. Yuan Aomei[6] - Independent Non-executive Directors are Mr. Ye Yunkai, Mr. Zhang Shenjin, and Mr. Wang Yunchen[6] - Mr. Wang Yunchen chairs the Audit Committee, Mr. Ye Yunkai chairs the Remuneration Committee, and Ms. Shen Genlian chairs the Nomination Committee[6] Authorized Representatives and Joint Company Secretaries This section updates changes in the company's authorized representatives and joint company secretaries, with Mr. Yan Luojun resigning and Ms. Ip Chui Mei and Ms. Liu Jinping being appointed - Mr. Yan Luojun resigned as authorized representative and joint company secretary on June 20, 2025[7][8] - Ms. Ip Chui Mei was appointed as authorized representative and joint company secretary on June 20, 2025[7][8] - Ms. Liu Jinping was appointed as joint company secretary on June 20, 2025[8] Registered Office and Principal Places of Business The company maintains its registered office in the Cayman Islands and principal places of business in Chengdu, Sichuan Province, China, and Hong Kong - The registered office is located at Cricket Square, Cayman Islands[10][11] - The principal place of business in China is located in Haixia Liang'an Science and Technology Industrial Development Park, Wenjiang District, Chengdu, Sichuan Province[10][11] - The principal place of business in Hong Kong is located at Dah Sing Financial Centre, Queen's Road East, Wan Chai[10][11] Professional Advisors and Share Registrar This section lists the company's auditor, legal counsel, principal share registrar, Hong Kong share registrar, stock code, and company website - The auditor is Grant Thornton Hong Kong Limited[11] - The legal counsel for Hong Kong law is Loong & Yeung, Solicitors[12] - The Hong Kong share registrar is Computershare Hong Kong Investor Services Limited[14] - The company's stock code is 2260, and its official website is www.vanov.cn[14](index=14&type=chunk) Main Products This section describes the company's various papermaking felt series for packaging, specialty, household, printing, and pulp board applications Packaging Papermaking Felts Series This product series is suitable for various high-speed paper machines, producing 40-300 gram packaging paper with excellent machine adaptability, high compression resistance, and low steam consumption - Applicable to high-speed paper machines with polyurethane blind-drilled grooved press rolls, rubber blind-drilled press rolls, vacuum presses, large-diameter presses, shoe presses, and super-forming[18] - Features include good machine adaptability, fast speed-up, high compression resistance, continuous stable operation, high press dryness, and low steam consumption[18] - Suitable for operating speeds of 550–1,500 meters per minute, producing 40–300 grams of various packaging paper grades[18] Specialty Papermaking Felts Series This series is designed for the press section of specialty paper machines and the dryer section of machines requiring high paper surface quality, meeting customer demands for ultra-fine paper surfaces with high air permeability, flatness, and delicacy - Applicable to the press section of various specialty paper machines and the dryer section of machines requiring high paper surface quality[20] - Capable of meeting high surface performance requirements for different specialty papers according to customer demands[20] - Coarse monofilament seamed/seamless dryer felts and composite seamed/seamless dryer felts feature high air permeability, flatness, and delicacy[20] Household Papermaking Felts Series This series is suitable for vacuum former and crescent former paper machines, characterized by delicate paper sheets, fast speed-up, low steam consumption, and long service life - Applicable to various vacuum former and crescent former paper machines[20] - Product features include delicate paper sheets, fast speed-up, low steam consumption, and long service life[20] Printing Papermaking Felts Series This series is suitable for various compound press and shoe press paper machines, producing 30-180 gram cultural paper with smooth and delicate paper surfaces, quick start-up, and continuous stable operation - Applicable to various compound press and shoe press paper machines[25] - Features include smooth and delicate paper surfaces, quick start-up, and continuous stable operation[25] - Suitable for operating speeds of 450-2,000 meters per minute, producing 30–80 grams of various cultural paper grades[25] Pulp Board Papermaking Felts Series This series is suitable for various large-roll press and compound press machine types, designed to meet the production and operational efficiency for all pulps and full-grammage pulp boards - Applicable to various large-roll press and compound press machine types[25] - Capable of meeting the production and operational efficiency for all pulps and full-grammage pulp boards[25] Management Discussion and Analysis This section provides an overview of the company's business and financial performance, including market trends, strategic initiatives, and key financial metrics Business Review During the reporting period, China's papermaking industry achieved steady growth under the "dual circulation" policy, while Huanlong Holdings steadfastly implemented its "new equipment, new model, new system, new value" strategy, achieving significant international market revenue growth and solidifying its ESG sustainable development foundation through photovoltaic power generation and green high-performance TPU felt R&D - In the first half of 2025, China's machine-made paper and paperboard output was approximately 79.332 million tons, a year-on-year increase of 3.2%[26][28] - The cumulative export value of China's paper and paper products industry was approximately RMB 38.78 billion, a year-on-year increase of 2.6%[26][28] - Group revenue increased by 6.3% year-on-year, with high-speed product revenue growing by 23.5% and international market revenue by 100.1% year-on-year[27][29] - Sichuan Huanlong Technical Textiles Co., Ltd.'s "Photovoltaic Power Generation Project" is fully operational, showing initial benefits in energy saving and consumption reduction[30][32] - The independently developed project "Research and Application of Key Technologies for Green High-Performance TPU Papermaking Felts" has been recognized as "internationally advanced"[30][32] - In the future, the Group will focus on green and intelligent transformation, driving industry upgrades through technological innovation and accelerating international expansion[31][33] Financial Review The Group's revenue increased by 6.3% to RMB 102.6 million in the first half of 2025, but gross profit and gross margin declined due to increased depreciation from the new high-end production line. Profit for the period and EBITDA both decreased, primarily affected by cost pressures, reduced government subsidies, and increased R&D investment. Liquidity remained sufficient, though the net gearing ratio slightly increased Key Financial Indicators for H1 2025 | Indicator | H1 2025 (RMB'000) | H1 2024 (RMB'000) | Year-on-Year Change (%) | | :--- | :--- | :--- | :--- | | Revenue | 102,579 | 96,537 | +6.3% | | Gross Profit | 42,745 | 47,490 | -10.0% | | Gross Margin | 41.7% | 49.2% | -7.5 percentage points | | EBITDA | 32,400 | 38,176 | -15.1% | | Profit for the Period | 6,727 | 18,631 | -63.9% | - Revenue growth was primarily attributable to the increased proportion of high-end market sales and higher average product prices following the commissioning of Shanghai Jin Xiong Papermaking Felt Co., Ltd.'s 14.5-meter high-end production line[34][37] - The decrease in gross margin was mainly due to increased depreciation resulting from the commissioning of the 14.5-meter high-end production line[35][38] Changes in Other Income and Expenses for H1 2025 | Indicator | H1 2025 (RMB'000) | H1 2024 (RMB'000) | Year-on-Year Change (RMB'000) | | :--- | :--- | :--- | :--- | | Other Income | 4,537 | 8,105 | -3,568 | | Sales and Distribution Expenses | 11,231 | 11,482 | -251 | | Administrative and Other Operating Expenses | 21,917 | 17,242 | +4,675 | | Finance Costs | 6,824 | 6,565 | +259 | | Income Tax Expense | 671 | 1,704 | -1,033 | - The decrease in other income was mainly due to reduced government subsidies and VAT super deduction[43][45] - The increase in administrative and other operating expenses was primarily due to increased R&D investment and depreciation[48][53] - The increase in finance costs was mainly due to the cessation of interest capitalization for project loans and increased financing for discounted bills after the completion of the 14.5-meter high-end production line construction[49][54] - The decrease in income tax expense was mainly due to lower profit before tax[50][55] Assets, Liabilities, and Turnover Period for H1 2025 | Indicator | As at June 30, 2025 (RMB'000) | As at December 31, 2024 (RMB'000) | Change (RMB'000) | | :--- | :--- | :--- | :--- | | Trade and Other Receivables | 189,428 | 215,218 | -25,790 | | Inventory Turnover Period (days) | 103.0 | 90.1 | +12.9 | | Trade Payables Turnover Period (days) | 107.4 | 102.6 | +4.8 | | Net Assets | 392,678 | 399,728 | -7,050 | | Current Assets | 322,033 | 336,121 | -14,088 | | Current Liabilities | 250,121 | 265,300 | -15,179 | | Current Ratio | 128.8% | 126.7% | +2.1 percentage points | | Net Gearing Ratio | 82.4% | 81.0% | +1.4 percentage points | | Gearing Ratio | 94.5% | 92.2% | +2.3 percentage points | | Total Pledged Assets | 158,714 | 178,495 | -19,781 | - The Board resolved not to declare an interim dividend for the six months ended June 30, 2025[58][63] - The Group primarily funds its operations with cash generated from operating activities and bank borrowings, possessing ample cash and available bank facilities[60][61][65][66] - The Group's primary currency is RMB, but it holds some bank balances and trade receivables denominated in USD and HKD, exposing it to foreign exchange risk, with no foreign exchange hedging policy in place[62][70][75] - As at June 30, 2025, the Group had no significant contingent liabilities[71][76] Other Operational Information During the reporting period, the company held no significant investments and made no material acquisitions or disposals of subsidiaries. Employee numbers slightly increased, leading to higher staff costs. The company changed the use of a portion of its unutilized net proceeds from the listing, reallocating funds to upgrade production facilities and enhance R&D capabilities - For the six months ended June 30, 2025, there were no major investments held, nor any material acquisitions or disposals of subsidiaries, associates, and joint ventures[77][81] Employee Numbers and Costs | Indicator | As at June 30, 2025 | As at June 30, 2024 | Change | | :--- | :--- | :--- | :--- | | Number of Employees | 407 persons | 396 persons | +11 persons | | Total Staff Costs (RMB'000) | 20,700 | 19,100 | +1,600 | - The company determines remuneration based on employee qualifications, experience, position, and seniority, and provides regular on-the-job training and annual performance reviews[79][82] - On March 10, 2025, the company announced a change in the use of the remaining unutilized net proceeds from the listing of HK$9.7 million, reallocating funds from seeking strategic acquisitions to purchasing machinery for production base upgrades and enhancing R&D capabilities[85][87] Use of Net Proceeds from Listing (As at June 30, 2025) | Allocated Use | Original Allocation Ratio | Original Allocated Amount (HK$ million) | Utilized as at December 31, 2024 (HK$ million) | Revised Allocated Amount per Announcement (HK$ million) | Utilized as at June 30, 2025 (HK$ million) | Unutilized Balance as at June 30, 2025 (HK$ million) | Proposed Timeline | | :--- | :--- | :--- | :--- | :--- | :--- | :--- | :--- | | Purchase machinery to upgrade production base | 40% | 38.8 | 38.8 | 5.0 | 1.8 | 3.2 | On or before December 31, 2025 | | Enhance R&D capabilities | 20% | 19.4 | 19.4 | 4.7 | 4.5 | 0.2 | On or before December 31, 2025 | | Seek strategic acquisitions | 10% | 9.7 | — | — | — | — | — | | Reduce debt | 20% | 19.4 | 19.4 | — | — | — | — | | For working capital and other general corporate purposes | 10% | 9.7 | 9.7 | — | — | — | — | | Total | 100% | 97.0 | 87.3 | 9.7 | 6.3 | 3.4 | | Other Information This section covers directors' and substantial shareholders' interests, securities transactions, share option and award schemes, post-reporting events, corporate governance, and public float Directors' Interests and Short Positions in Shares, Underlying Shares and Debentures As at June 30, 2025, company directors Ms. Shen Genlian and Mr. Zhou Jun (as a couple) are deemed to jointly hold a 74.46% long position in the company's shares, primarily through discretionary trusts holding shares in Perfect Angle Limited and Wonderful Advisor Limited Directors' Long Positions in Shares (As at June 30, 2025) | Name of Director | Capacity/Nature of Interest | Number of Shares Held/Interested | Approximate Percentage of Interest in the Company | | :--- | :--- | :--- | :--- | | Ms. Shen Genlian | Founder of discretionary trust; Spouse's interest | 359,947,200 | 74.46% | | Mr. Zhou Jun | Founder of discretionary trust; Spouse's interest | 359,947,200 | 74.46% | - Ms. Shen Genlian and Mr. Zhou Jun indirectly hold shares in Perfect Angle Limited and Wonderful Advisor Limited through Vistra Trust as trustee for SGL Trust and ZJ Trust, and are thus deemed to jointly own the company's shares[96][97] - Ms. Shen Genlian and Mr. Zhou Jun are also deemed to have interests in the shares of associated corporations Perfect Angle Limited and Chengdu Huanlong Lixin Technology Co., Ltd[99][100][101][102] Interests and Short Positions of Substantial Shareholders in Shares and Underlying Shares of the Company As at June 30, 2025, substantial shareholders Perfect Angle Limited and Wonderful Advisor Limited held 55.84% and 18.61% of the company's shares, respectively, with Vistra Trust, as trustee, deemed to have an interest in all shares held by both Substantial Shareholders' Interests in Shares (As at June 30, 2025) | Name | Capacity/Nature of Interest | Number of Shares Held/Interested | Approximate Percentage of Interest | | :--- | :--- | :--- | :--- | | Perfect Angle | Beneficial owner | 269,960,400 | 55.84% | | Wonderful Advisor | Beneficial owner | 89,986,800 | 18.61% | | Vistra Trust | Trustee | 359,947,200 | 74.46% | - Vistra Trust, as trustee for SGL Trust and ZJ Trust, holds 100% of the issued share capital of Perfect Angle and Wonderful Advisor, and is therefore deemed to have an interest in all shares held by them[105][106] Securities Transactions by Directors The company has adopted the Model Code set out in Appendix C3 of the Listing Rules, and all directors confirmed compliance with the code for the six months ended June 30, 2025 - The company has adopted the Model Code set out in Appendix C3 of the Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited as the code of conduct for directors' securities transactions[107][110] - All directors confirmed compliance with the Model Code for the six months ended June 30, 2025[107][110] Share Option Scheme The company adopted a share option scheme on December 9, 2021, to incentivize Group members, but as at June 30, 2025, no share options were granted, exercised, cancelled, or lapsed, with 48,000,000 share options remaining available for grant - The share option scheme was adopted on December 9, 2021, to incentivize directors, employees, consultants, substantial shareholders, and others[108][111] - As at June 30, 2025, no share options were granted, exercised, cancelled, or lapsed, and there were no outstanding share options[108][111] - As at June 30, 2025, the number of share options available for grant remained at 48,000,000[109][111] Share Award Scheme The company adopted a share award scheme on May 9, 2024, to recognize and reward eligible participants for their contributions to the Group and provide incentives. The scheme has a 10-year validity, with a maximum of 30,000,000 award shares, but as at June 30, 2025, no award shares had been granted - The share award scheme was adopted on May 9, 2024, to recognize and reward eligible participants for their contributions to the Group and provide incentives[112][115] - The scheme has a 10-year validity, with a maximum of 30,000,000 award shares, representing approximately 6.21% of the issued share capital as at the adoption date[112][115] - As at June 30, 2025, no award shares had been granted[112][115] Events After the Reporting Period Except as disclosed in this interim report, as at the date of this report, no significant events after June 30, 2025, have occurred for the Group - As at the date of this report, no significant events after June 30, 2025, have occurred for the Group[113][116] Corporate Governance For the six months ended June 30, 2025, the company adopted and complied with the principles and code provisions of the Corporate Governance Code set out in Appendix C1 of the Listing Rules - The company has adopted and complied with the principles and code provisions of the Corporate Governance Code set out in Appendix C1 of the Listing Rules[114][117] Purchase, Sale or Redemption of the Company's Listed Securities 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, nor held any treasury shares - 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[118][123] - As at June 30, 2025, neither the company nor its subsidiaries held any treasury shares[118][123] Arrangement to Purchase Shares or Debentures Save for the share option scheme and share award scheme, for the six months ended June 30, 2025, neither the company nor any of its associated corporations was a party to any arrangement enabling directors to acquire benefits by means of acquiring shares in or debentures of the company or any other body corporate - Save for the share option scheme and share award scheme, neither the company nor any of its associated corporations was a party to any arrangement enabling directors to acquire benefits by means of acquiring shares in or debentures of the company or any other body corporate[119][124] Audit Committee The Audit Committee has reviewed the Group's unaudited interim results for the six months ended June 30, 2025, and considers their preparation to be in compliance with applicable accounting standards and the Listing Rules, with adequate disclosures made - The Audit Committee has reviewed the Group's unaudited interim results for the six months ended June 30, 2025[120][125] - The Audit Committee considers the results to have been prepared in compliance with applicable accounting standards, requirements, and the Listing Rules, with adequate disclosures made[120][125] Sufficiency of Public Float Based on public information and to the best of the directors' knowledge, the company has maintained sufficient public float in compliance with the Listing Rules throughout the six months ended June 30, 2025 - For the six months ended June 30, 2025, the company has maintained sufficient public float in compliance with the Listing Rules at all times[121][126] Changes in Directors' and Chief Executive's Information There have been no changes in directors' information requiring disclosure under the Listing Rules from the date of the last annual report to the date of this report - There have been no changes in directors' information requiring disclosure under Rules 13.51(2)(a) to (e) and (g) of the Listing Rules from the date of the last annual report to the date of this report[122][127] Condensed Consolidated Statement of Profit or Loss and Other Comprehensive Income For the six months ended June 30, 2025, the Group's revenue increased by 6.3% to RMB 102.6 million, but due to increased cost of sales and a decline in gross margin, profit and total comprehensive income for the period significantly decreased by 63.9% to RMB 6.7 million Summary of Condensed Consolidated Statement of Profit or Loss and Other Comprehensive Income | Indicator | H1 2025 (RMB'000) | H1 2024 (RMB'000) | | :--- | :--- | :--- | | Revenue | 102,579 | 96,537 | | Cost of Sales | (59,834) | (49,047) | | Gross Profit | 42,745 | 47,490 | | Other Income | 4,537 | 8,105 | | Sales and Distribution Expenses | (11,231) | (11,482) | | Administrative and Other Operating Expenses | (21,917) | (17,242) | | Finance Costs | (6,824) | (6,565) | | Profit Before Income Tax | 7,398 | 20,335 | | Income Tax Expense | (671) | (1,704) | | Profit and Total Comprehensive Income for the Period | 6,727 | 18,631 | | Earnings Per Share Attributable to Owners of the Company (RMB cents) | 1.46 | 3.84 | - Profit and total comprehensive income for the period decreased by 63.9% year-on-year, primarily affected by increased cost of sales, decreased other income, and increased administrative and other operating expenses[129] Condensed Consolidated Statement of Financial Position As at June 30, 2025, the Group's total assets slightly increased, but net assets slightly decreased. Net current assets remained stable, with a current ratio of 128.8%, indicating healthy short-term solvency Summary of Condensed Consolidated Statement of Financial Position | Indicator | As at June 30, 2025 (RMB'000) | As at December 31, 2024 (RMB'000) | | :--- | :--- | :--- | | Non-current Assets | 527,826 | 527,228 | | Current Assets | 322,033 | 336,121 | | Current Liabilities | 250,121 | 265,300 | | Net Current Assets | 71,912 | 70,821 | | Non-current Liabilities | 207,060 | 198,321 | | Net Assets | 392,678 | 399,728 | | Total Equity | 392,678 | 399,728 | - The current ratio increased from 126.7% as at December 31, 2024, to 128.8% as at June 30, 2025[59][64] - Trade and other receivables decreased, while inventories increased[130] - Bank borrowings and discounted bill financing decreased, but other borrowings increased[130] Condensed Consolidated Statement of Changes in Equity For the six months ended June 30, 2025, equity attributable to owners of the company decreased from RMB 396.1 million at the beginning of the period to RMB 389.1 million, primarily due to the combined effect of profit for the period, transfer to statutory reserves, and dividend distribution Summary of Condensed Consolidated Statement of Changes in Equity | Indicator | As at January 1, 2025 (RMB'000) | Profit and Total Comprehensive Income for the Period (RMB'000) | Transfer to Statutory Reserves (RMB'000) | Dividends (RMB'000) | As at June 30, 2025 (RMB'000) | | :--- | :--- | :--- | :--- | :--- | :--- | | Equity Attributable to Owners of the Company | 396,065 | 6,645 | — | (13,639) | 389,071 | | Non-controlling Interests | 3,663 | 82 | — | (138) | 3,607 | | Total Equity | 399,728 | 6,727 | — | (13,777) | 392,678 | - Profit for the period was RMB 6,727 thousand, of which RMB 6,645 thousand was attributable to owners of the company[133] - A transfer of RMB 962 thousand was made to statutory reserves, and dividends of RMB 13,639 thousand were distributed[133] Condensed Consolidated Statement of Cash Flows For the six months ended June 30, 2025, the Group generated RMB 54.7 million net cash from operating activities, had a net outflow of RMB 44.6 million from investing activities (including a loan to a shareholder), and a net outflow of RMB 6.2 million from financing activities, resulting in a net increase of RMB 3.9 million in cash and cash equivalents Summary of Condensed Consolidated Statement of Cash Flows | Type of Activity | H1 2025 (RMB'000) | H1 2024 (RMB'000) | | :--- | :--- | :--- | | Net Cash Generated from Operating Activities | 54,712 | 39,507 | | Net Cash Used in Investing Activities | (44,634) | (24,861) | | Net Cash Used in Financing Activities | (6,172) | (49,842) | | Net Increase/(Decrease) in Cash and Cash Equivalents | 3,906 | (35,196) | | Cash and Cash Equivalents at End of Period | 50,846 | 43,413 | - Net cash generated from operating activities increased year-on-year, primarily due to an increase in net working capital changes[136] - Net cash used in investing activities increased, mainly including the acquisition of property, plant and equipment, intangible assets, and a loan of RMB 25.8 million to a shareholder[136][142][201][202] - Net cash used in financing activities significantly decreased, mainly due to increased proceeds from bank borrowings and reduced repayment of bank borrowings, as well as expenditure for purchasing shares for the share award scheme in 2024[136] Notes to the Condensed Consolidated Financial Statements This section provides detailed notes on the preparation basis, critical accounting estimates, adoption of new accounting standards, revenue, expenses, assets, liabilities, and other financial commitments 1. General Information and Basis of Preparation This note outlines Huanlong Holdings Limited's incorporation background, principal business (design, manufacture, and sale of papermaking felts), controlling shareholders, listing status, and the basis of preparation for the condensed consolidated financial statements, which is HKAS 34 - The company was incorporated in the Cayman Islands on November 5, 2018, primarily engaged in the design, manufacture, and sale of papermaking felts[138][139][142][143] - The ultimate controlling parties are Ms. Shen Genlian and her spouse, Mr. Zhou Jun[139][143] - Shares were listed on the Main Board of The Stock Exchange of Hong Kong Limited on January 11, 2022[140][144] - The financial statements are prepared in accordance with HKAS 34 "Interim Financial Reporting" and presented in RMB[140][141][144][145] 2. Critical Accounting Estimates and Judgements This note states that the critical accounting estimates and judgments used in preparing the condensed consolidated interim financial statements are consistent with those used for the annual financial statements for the year ended December 31, 2024 - Significant judgments made by management in applying accounting policies and estimates of uncertainty are the same as those applied in the annual financial statements for the year ended December 31, 2024[149][152] 3. Adoption of Amended HKFRS Accounting Standards The Group has adopted HKAS 21 (Amendment) "Lack of Exchangeability" effective January 1, 2025, which had no material impact on the results and financial position for the current and prior periods - HKAS 21 (Amendment) "Lack of Exchangeability" effective January 1, 2025, has been adopted[153][157] - The adoption of the amended standard had no material impact on the Group's results and financial position for the current and prior periods[154][158] - Other new and amended HKFRS accounting standards issued but not yet effective are not expected to have a significant impact on the condensed consolidated financial statements[155][159] 4. Revenue and Segment Reporting The Group's revenue primarily derives from the design, manufacture, and sale of papermaking felts, with packaging papermaking felts being the largest contributor. The Chinese market remains the main revenue source, but overseas market revenue doubled, and all non-current assets are located in China Revenue by Product Category (For the six months ended June 30, 2025) | Product Category | 2025 (RMB'000) | 2024 (RMB'000) | | :--- | :--- | :--- | | Packaging Papermaking Felts | 65,516 | 59,584 | | Specialty Papermaking Felts | 19,389 | 20,089 | | Printing Papermaking Felts | 5,761 | 7,391 | | Household Papermaking Felts | 4,769 | 3,533 | | Pulp Board Papermaking Felts | 7,144 | 5,940 | | Total Revenue | 102,579 | 96,537 | Revenue by Geographical Location (For the six months ended June 30, 2025) | Geographical Region | 2025 (RMB'000) | 2024 (RMB'000) | | :--- | :--- | :--- | | China | 86,581 | 88,543 | | Overseas | 15,998 | 7,994 | | Total Revenue | 102,579 | 96,537 | - Overseas market revenue increased by 100.1% year-on-year, demonstrating significant effectiveness of the internationalization strategy[27][29][165] - As at June 30, 2025, all of the Group's non-current assets are located in China[165] - Customer A is a major customer, contributing RMB 10,631 thousand in revenue[165] 5. Other Income The Group's other income for the six months ended June 30, 2025, was approximately RMB 4.5 million, a decrease from RMB 8.1 million in the prior period, mainly due to reduced government subsidies and VAT super deduction Details of Other Income (For the six months ended June 30, 2025) | Item | 2025 (RMB'000) | 2024 (RMB'000) | | :--- | :--- | :--- | | Bank Interest Income | 998 | 1,742 | | Sales of Scraps | 1,063 | 1,052 | | Government Subsidies | 506 | 1,048 | | Rental Income | 1,441 | 1,399 | | Net Exchange Gain | 102 | 114 | | VAT Super Deduction | 255 | 2,160 | | Miscellaneous Income | 172 | 590 | | Total | 4,537 | 8,105 | - Government subsidies decreased by RMB 542 thousand, and VAT super deduction decreased by RMB 1,905 thousand[167] 6. Finance Costs The Group's finance costs for the six months ended June 30, 2025, were RMB 6.8 million, a slight increase from the prior period, mainly due to a decrease in the amount of borrowing costs capitalized for qualifying assets Details of Finance Costs (For the six months ended June 30, 2025) | Item | 2025 (RMB'000) | 2024 (RMB'000) | | :--- | :--- | :--- | | Interest Expense on Discounted Bills Financing | 1,081 | 302 | | Interest Expense on Bank Borrowings | 5,088 | 6,482 | | Interest Expense on Other Borrowings | 597 | 2,145 | | Interest Expense on Lease Liabilities | 58 | 159 | | Total Borrowing Costs | 6,824 | 9,088 | | Less: Amount of Borrowing Costs Capitalized for Qualifying Assets | — | (2,523) | | Total Finance Costs | 6,824 | 6,565 | - No borrowing costs were capitalized for qualifying assets in H1 2025, compared to RMB 2,523 thousand capitalized in H1 2024, leading to an increase in total finance costs[170] 7. Profit Before Income Tax This note details the various expenses and income affecting profit before income tax, where depreciation, maintenance provisions, and R&D costs significantly increased, leading to a decrease in profit before tax Expenses/Income Affecting Profit Before Income Tax (For the six months ended June 30, 2025) | Item | 2025 (RMB'000) | 2024 (RMB'000) | | :--- | :--- | :--- | | Amortization of Intangible Assets | 3,786 | 2,826 | | Depreciation of Land Lease Prepayments | 169 | 169 | | Depreciation of Owned Assets | 11,568 | 6,371 | | Depreciation of Right-of-Use Assets | 2,634 | 2,634 | | Depreciation of Investment Property | 1,019 | 1,018 | | Cost of Inventories Recognized as Expense | 23,136 | 22,515 | | Provision for Maintenance | 5,179 | 2,598 | | Research and Development Costs | 4,599 | 3,086 | | Total Staff Costs | 20,686 | 19,105 | - Depreciation of owned assets significantly increased from RMB 6,371 thousand to RMB 11,568 thousand[173] - Maintenance provisions nearly doubled year-on-year, and R&D costs also significantly increased[173] 8. Income Tax Expense The Group's income tax expense for the six months ended June 30, 2025, was RMB 0.7 million, a decrease from RMB 1.7 million in the prior period, mainly due to lower profit before tax Details of Income Tax Expense (For the six months ended June 30, 2025) | Item | 2025 (RMB'000) | 2024 (RMB'000) | | :--- | :--- | :--- | | China Corporate Income Tax | 346 | 1,424 | | Deferred Tax (Current Year) | 325 | 280 | | Total Income Tax Expense | 671 | 1,704 | - The decrease in income tax expense was primarily attributable to lower profit before income tax[50][55] 9. Earnings Per Share For the six months ended June 30, 2025, basic earnings per share attributable to owners of the company significantly decreased to RMB 1.46 cents from RMB 3.84 cents in the prior period, with no potential dilutive ordinary shares Earnings Per Share (For the six months ended June 30, 2025) | Indicator | 2025 | 2024 | | :--- | :--- | :--- | | Profit for the Period Attributable to Owners of the Company (RMB'000) | 6,645 | 18,441 | | Weighted Average Number of Ordinary Shares for Basic EPS Calculation | 456,626,000 | 480,129,454 | | Earnings Per Share (RMB cents) | 1.46 | 3.84 | - As there were no potential dilutive ordinary shares during the period, diluted earnings per share were consistent with basic earnings per share[180][181] 10. Dividend The Board does not recommend an interim dividend for the six months ended June 30, 2025. However, the final dividend for the year ended December 31, 2024, has been approved and included in dividends payable - The Board does not recommend an interim dividend for the six months ended June 30, 2025[183][186] - The final dividend of HK 3 cents per ordinary share (approximately RMB 13,639 thousand) for the year ended December 31, 2024, was approved on June 20, 2025, and included in "dividends payable"[184][186] 11. Property, Plant and Equipment and Investment Property As at June 30, 2025, the Group's property, plant and equipment had a carrying value of RMB 352.6 million, and investment property was RMB 35.3 million. Additions to property, plant and equipment during the period amounted to RMB 11.3 million. A total of RMB 111.9 million in property, plant and machinery has been pledged to secure bank and other borrowings Carrying Value of Property, Plant and Equipment and Investment Property (As at June 30, 2025) | Item | As at June 30, 2025 (RMB'000) | As at December 31, 2024 (RMB'000) | | :--- | :--- | :--- | | Property, Plant and Equipment | 352,630 | 356,089 | | Investment Property | 35,336 | 36,262 | - For the six months ended June 30, 2025, additions to property, plant and equipment amounted to RMB 11,319 thousand, and additions to investment property were RMB 93 thousand[189] - As at June 30, 2025, property, plant and machinery with a total net carrying value of RMB 111,878 thousand has been pledged to secure bank and other borrowings[191][193] 12. Land Lease Prepayment As at June 30, 2025, the Group's land lease prepayments had a carrying value of RMB 4.3 million, primarily located in China and pledged to secure bank borrowings Land Lease Prepayment (As at June 30, 2025) | Item | As at June 30, 2025 (RMB'000) | As at December 31, 2024 (RMB'000) | | :--- | :--- | :--- | | Land Lease Prepayments | 4,336 | 4,505 | | Depreciation for the Period/Year | (169) | (338) | - The leased land is located in China, held under medium-term leases, and pledged to secure bank borrowings[196] 13. Intangible Assets As at June 30, 2025, the Group's intangible assets had a carrying value of RMB 94.2 million, primarily comprising trademarks, computer software, and capitalized development costs, with new intangible assets added during the period Carrying Value of Intangible Assets (As at June 30, 2025) | Item | As at June 30, 2025 (RMB'000) | As at December 31, 2024 (RMB'000) | | :--- | :--- | :--- | | Trademarks | 32,586 | 32,595 | | Computer Software | 3,620 | 4,067 | | Capitalized Development Costs | 46,242 | 49,568 | | Construction in Progress | 11,770 | 1,424 | | Total | 94,218 | 87,654 | - For the six months ended June 30, 2025, intangible assets recognized from acquisitions and internal development were RMB 4 thousand and RMB 10,346 thousand, respectively[199] 14. Trade and Other Receivables As at June 30, 2025, the Group's total trade and other receivables amounted to RMB 189.4 million, a decrease from the end of 2024. Both trade receivables and bills receivable decreased, but a loan of RMB 26.1 million was made to a shareholder Details of Trade and Other Receivables (As at June 30, 2025) | Item | As at June 30, 2025 (RMB'000) | As at December 31, 2024 (RMB'000) | | :--- | :--- | :--- | | Trade Receivables (Net) | 143,718 | 168,374 | | Bills Receivable (Net) | 8,891 | 38,781 | | Prepayments | 3,147 | 2,579 | | Other Tax Receivables | 1,278 | 63 | | Loan to a Shareholder | 26,136 | — | | Other Receivables | 6,258 | 5,421 | | Total | 189,428 | 215,218 | - The loan to a shareholder is unsecured, bears interest at 4% per annum, and is repayable in February and March 2026[201][202] Ageing Analysis of Trade Receivables (As at June 30, 2025) | Ageing | As at June 30, 2025 (RMB'000) | As at December 31, 2024 (RMB'000) | | :--- | :--- | :--- | | 0 – 90 days | 77,415 | 118,791 | | 91 – 180 days | 8,252 | 14,294 | | 181 – 365 days | 42,658 | 16,215 | | Over 365 days | 23,834 | 27,377 | | Total | 152,159 | 176,677 | - The proportion of trade receivables aged 181-365 days significantly increased[205] 15. Trade and Other Payables As at June 30, 2025, the Group's total trade and other payables amounted to RMB 50.5 million, a decrease from RMB 69.9 million at the end of 2024. The credit period for trade payables is 30 to 90 days Details of Trade and Other Payables (As at June 30, 2025) | Item | As at June 30, 2025 (RMB'000) | As at December 31, 2024 (RMB'000) | | :--- | :--- | :--- | | Trade Payables | 31,998 | 39,004 | | Other Payables | 3,171 | 4,204 | | Payables for Construction Work | 3,883 | 6,364 | | Accrued Wages | 3,881 | 7,931 | | Provision for Maintenance | 5,649 | 5,519 | | Other Tax Payables | 498 | 4,254 | | Total | 50,480 | 69,876 | - The credit period for trade payables is 30 to 90 days[208] Ageing Analysis of Trade Payables (As at June 30, 2025) | Ageing | As at June 30, 2025 (RMB'000) | As at December 31, 2024 (RMB'000) | | :--- | :--- | :--- | | 0 – 30 days | 7,212 | 6,904 | | 31 – 60 days | 7,413 | 10,404 | | 61 – 90 days | 6,706 | 8,694 | | 91 – 180 days | 6,533 | 10,253 | | 181 – 365 days | 3,793 | 2,126 | | Over 365 days | 341 | 623 | | Total | 31,998 | 39,004 | 16. Bank Borrowings As at June 30, 2025, the Group's total bank borrowings amounted to RMB 321.7 million, a decrease from the end of 2024. These borrowings are secured by property, plant and equipment, land lease prepayments, and pledged and restricted bank balances Repayment Schedule of Bank Borrowings (As at June 30, 2025) | Repayment Period | As at June 30, 2025 (RMB'000) | As at December 31, 2024 (RMB'000) | | :--- | :--- | :--- | | Within one year | 148,500 | 155,000 | | In the second to fifth years (inclusive) | 163,200 | 158,700 | | After five years | 10,000 | 20,000 | | Total | 321,700 | 333,700 | - Bank borrowings are secured by assets with carrying values of RMB 11,400 thousand (property, plant and equipment), RMB 4,336 thousand (land lease prepayments), and RMB 42,500 thousand (pledged and restricted bank balances), respectively[213] 17. Other Borrowings As at June 30, 2025, the Group's total other borrowings amounted to RMB 49.6 million, a significant increase from the end of 2024. During the period, the Group entered into sale and leaseback arrangements with a leasing company to acquire machinery and equipment Repayment Schedule of Other Borrowings (As at June 30, 2025) | Repayment Period | As at June 30, 2025 (RMB'000) | As at December 31, 2024 (RMB'000) | | :--- | :--- | :--- | | Within one year | 23,755 | 17,564 | | In the second to fifth years (inclusive) | 25,818 | 11,935 | | Total | 49,573 | 29,499 | - For the six months ended June 30, 2025, the Group entered into sale and leaseback arrangements with a leasing company for RMB 30,000 thousand to acquire machinery and equipment[217][218] - Sale and leaseback liabilities are secured by the Group's assets with carrying values of zero (construction in progress) and RMB 94,100 thousand (plant and equipment), respectively[218] 18. Share Capital As at June 30, 2025, the company's authorized share capital was 2,000,000,000 ordinary shares of HK$0.01 each, with 483,442,000 shares issued and fully paid, including 26,816,000 shares issued and held under the share award scheme Share Capital Structure (As at June 30, 2025) | Item | Number of Shares | RMB'000 | | :--- | :--- | :--- | | Authorized Share Capital (Ordinary shares of HK$0.01 each) | 2,000,000,000 | 24,355 | | Issued and Fully Paid Share Capital | 483,442,000 | 3,949 | - The total number of issued shares includes 26,816,000 shares issued and held under the share award scheme[220][221] 19. Lease Commitments As a lessor, the Group's total minimum lease payments under non-cancellable operating leases for the next year amounted to RMB 2.2 million as at June 30, 2025. As a lessee, short-term lease commitments were RMB 0.2 million Lease Commitments as Lessor (As at June 30, 2025) | Period | As at June 30, 2025 (RMB'000) | As at December 31, 2024 (RMB'000) | | :--- | :--- | :--- | | Within one year | 2,225 | 2,924 | | After one year but within two years | — | 742 | | Total | 2,225 | 3,666 | - As a lessee, short-term lease commitments amounted to RMB 191 thousand as at June 30, 2025[225][226] 20. Capital Commitments As at June 30, 2025, the Group's contracted but unprovided capital commitments primarily related to property, plant and equipment, amounting to RMB 9.7 million Capital Commitments (As at June 30, 2025) | Item | As at June 30, 2025 (RMB'000) | As at December 31, 2024 (RMB'000) | | :--- | :--- | :--- | | Property, Plant and Equipment | 9,739 | 12,689 | 21. Related Party Transactions The Group has sales transactions with related parties, primarily including sales to Sichuan Huanlong New Material Co., Ltd. and Sichuan Huanlong Household Products Co., Ltd. Total key management personnel compensation amounted to RMB 1.9 million Significant Transactions with Related Parties (For the six months ended June 30, 2025) | Name of Related Party | Nature | 2025 (RMB'000) | 2024 (RMB'000) | | :--- | :--- | :--- | :--- | | Sichuan Huanlong New Material Co., Ltd. | Sales | 367 | 1,898 | | Sichuan Huanlong Household Products Co., Ltd. | Sales | 918 | 359 | Key Management Personnel Compensation (For the six months ended June 30, 2025) | Item | 2025 (RMB'000) | 2024 (RMB'000) | | :--- | :--- | :--- | | Salaries, Allowances and Benefits | 1,675 | 1,754 | | Contributions to Defined Contribution Retirement Plans | 252 | 225 | | Total | 1,927 | 1,979 | Amounts Due from Related Parties (As at June 30, 2025) | Name of Related Party | As at June 30, 2025 (RMB'000) | As at December 31, 2024 (RMB'000) | | :--- | :--- | :--- | | Sichuan Huanlong New Material Co., Ltd. (Trade) | 3,074 | 3,762 | | Sichuan Huanlong Household Products Co., Ltd. (Trade) | 1,208 | 527 | | Total | 4,282 | 4,289 | 22. Pledge of Assets As at June 30, 2025, the Group's total carrying value of pledged assets was approximately RMB 158.7 million, primarily comprising property, plant and equipment, land lease prepayments, and pledged and restricted bank balances, to secure bank financing and borrowings Total Carrying Value of Pledged Assets (As at June 30, 2025) | Item | As at June 30, 2025 (RMB'000) | As at December 31, 2024 (RMB'000) | | :--- | :--- | :--- | | Property, Plant and Equipment | 111,878 | 131,490 | | Land Lease Prepayments | 4,336 | 4,505 | | Pledged and Restricted Bank Balances | 42,500 | 42,500 | | Total | 158,714 | 178,495 | - The total pledged assets decreased by approximately RMB 19.8 million from the end of 2024[238]