Hilong Holding Limited 2025 Annual Report: Key Highlights and Investor Insights

Executive Summary

Hilong Holding Limited has released its Annual Report for the year ended 31 December 2025, containing a number of significant developments that are highly relevant to shareholders and could impact share value. The report details the company’s financial performance, corporate governance, risk management, and strategic direction, with several events occurring post-year-end that may be price sensitive.

Key Financial and Operational Highlights

• Offshore Debt Restructuring Completed: The Group successfully completed a restructuring of its 9.75% Senior Secured Notes due 2024, with the new maturity date set for 5 February 2030. The restructuring was formalized on 5 February 2026, following a consent solicitation and related legal process. This event resolved a major financial overhang and could significantly improve investor confidence regarding the Group’s liquidity and solvency position.
• Dismissal of Winding-Up Petition: A winding-up petition filed against the company by The Bank of New York Mellon, London Branch, was dismissed by the High Court of Hong Kong on 9 February 2026. The successful resolution of this legal challenge eliminates a serious risk of forced liquidation, thereby reducing uncertainty for shareholders.
• Stable Borrowings and Gearing: As of 31 December 2025, the Group had borrowings of RMB2,349.1 million at a fixed rate, down from RMB2,645.8 million in 2024. The Group emphasized its commitment to maintaining an optimal capital structure, aiming to keep the gearing ratio between 30% and 40% and ensuring ongoing financial stability.
• Expansion and Market Focus: The company continues to pursue international growth, targeting high-end customers and new orders in regions such as the Middle East, Nigeria, Ecuador, Brazil, and Kuwait. The Group is also investing in technology and digital transformation to enhance its service offerings, including drilling turnkey services, oilfield environmental protection, nanofluids production enhancement, and advanced technical services.
• Corporate Governance and Internal Controls Strengthened: In response to previous findings, the company has implemented comprehensive remedial actions to enhance internal controls, compliance, and risk management. This includes improvements in the approval and reporting process for material contracts, management of guarantees, reserve fund management, and compliance with connected transactions regulations.

Corporate Governance and Shareholder Protection

• The Board reaffirmed its commitment to robust corporate governance, transparency, and accountability, ensuring that all actions are in the interests of shareholders and in compliance with the Hong Kong Stock Exchange Listing Rules and the CG Code.
• All directors have completed independence evaluations and relevant professional development. There is ongoing training and regular review of board effectiveness.
• Remuneration for directors and senior management is closely monitored, with transparent disclosures in the annual report.

Risk Factors and Business Outlook

• Market and Industry Risks: The Group faces risks related to volatility in oil and gas prices, the need for ongoing technological innovation, and challenges inherent in overseas operations—including currency risk, regulatory changes, and exposure to sanctioned entities.
• Sanctions Exposure: Some Russian subsidiaries continue to engage with sanctioned entities. While efforts are being made to wind down such business, the risk of further sanctions remains, which could affect business operations and investor sentiment.
• Environmental and Social Governance (ESG): The company reported no material costs associated with environmental compliance and emphasized its commitment to HSE (Health, Safety, and Environmental) management.

Shareholder Communications and Rights

• The company maintains open communication channels with shareholders, including regular updates, annual general meetings, and a dedicated investor relations policy to ensure transparency and timely disclosure of material events.
• No changes were made to the Articles of Association during the year, and the company ensured that at least 25% of its issued share capital remains in public float.

Remedial Actions and Internal Controls

The company has fully implemented all recommendations from its Internal Control Consultant. Key measures include:

• Enhanced policies for conflict of interest disclosure and whistleblowing.
• Periodic training for management and employees on connected transactions and compliance with the Listing Rules.
• Updated approval and reporting processes for material contracts and guarantees.
• Improved management and oversight of prepayments, reserve funds, and procurement contracts.
• Ongoing internal audits and risk assessments to ensure compliance and mitigate operational risks.

Other Noteworthy Developments

• 2023 Award Scheme: The company continued its share-based incentive program to retain and attract talent, aligning management interests with those of shareholders.
• No Share Buybacks or Redemptions: There were no purchases, sales, or redemptions of the company’s listed securities during the reporting period.
• Sufficiency of Public Float: The company has confirmed that it meets the minimum public float requirements of the Hong Kong Stock Exchange.

Potential Share Price Moving Events

• Successful Debt Restructuring and Legal Risk Resolution: The completion of offshore debt restructuring and the dismissal of the winding-up petition remove major uncertainties, potentially improving the company’s credit profile and share valuation.
• Ongoing Exposure to Sanctions: Continuing operations with sanctioned entities in Russia, despite efforts to wind down, remain a material risk factor that could negatively affect share value should circumstances deteriorate.
• Enhanced Internal Controls and Governance: The completion of all recommended internal control improvements and transparent governance may positively impact investor confidence and, consequently, share price.

Disclaimer

The above article is based on the public disclosures and audited information in Hilong Holding Limited’s 2025 Annual Report. This news summary is for informational purposes only and does not constitute investment advice. Investors should conduct their own due diligence and consult professional advisers before making any investment decisions. The company’s share price may be affected by the aforementioned events, but future performance cannot be guaranteed.

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