Magnesium Market Performance - The average monthly price of magnesium in 2023 decreased from 21,811 yuan/ton in January to 20,433 yuan/ton in December, with an annual average price of 21,953 yuan/ton, representing a 27.5% decrease compared to the previous year, marking a three-year low [13]. - The magnesium market has continued to face pressure since the beginning of 2024, with prices exploring lower levels and downstream purchases remaining cautious, leading to significant losses for factories and enterprises [18]. - The overall economic environment in 2023 was unfavorable, contributing to the decline in magnesium prices despite temporary rebounds observed in mid-April, mid-May, and late September [18]. - The magnesium-aluminum price ratio remained low for 9 months in 2023, with a minimum of 1.08 and ending the year at 1.18, indicating a significant cost-effectiveness advantage for magnesium [26]. - The Group aims to promote downstream applications of magnesium-based products, leveraging the cost advantages of magnesium over aluminum [26]. - The sales volume of magnesium products slightly increased from 11,098 tons in 2022 to 12,300 tons in 2023, but the average selling price dropped from HK$34,592 per ton to HK$21,337 per ton [39]. - The Group's magnesium product business incurred losses in 2023 due to a global economic slowdown, leading to potential impairment assessments for assets valued at approximately HK$1,101,300,000 [63][64]. Financial Performance - The Group's revenue for the year was HK$263,491,000, a decrease of 31.4% compared to HK$383,899,000 in 2022 [34]. - The overall gross loss for the year was HK$85,281,000, reversing from a gross profit of HK$46,614,000 in the previous year [34]. - The loss attributable to shareholders was HK$423,600,000, compared to a profit of HK$1,404,000 in 2022 [34]. - The Group's revenue in 2023 decreased by approximately HK$120,408,000, or 31.4%, compared to the previous year [38]. - The Group recorded an overall gross loss of HK$85,281,000 in 2023, compared to a gross profit of HK$46,614,000 in the previous year [40]. - Administrative expenses decreased to approximately HK$83,658,000 in 2023 from HK$126,222,000 in 2022, primarily due to the absence of a similar provision for long outstanding prepayments [47]. - The finance cost for the year totaled approximately HK$48,793,000, representing a year-on-year increase of HK$27,870,000, or 133.2% [56]. - The Group recorded a reversal of allowance for expected credit loss of HK$3,992,000 in 2023, compared to an allowance of HK$104,191,000 in 2022 [55]. - The Group reported a retained cumulative loss of approximately HKD 30,317,000 as of December 31, 2023 [198]. - The Group did not declare an interim dividend during the review period and the Board does not recommend a final dividend for the year ended December 31, 2023 [198]. Impairment and Asset Management - An impairment loss provision of approximately HK$203,902,000 was recognized on non-current assets in 2023, compared to HK$61,530,000 in 2022 [54]. - The estimated recoverable amount of the cash-generating unit (CGU) was approximately HK$1,101,300,000, leading to impairment losses recognized on various assets [60]. - Impairment losses recognized included HK$188,941,000 for property, plant, and equipment, HK$5,876,000 for right-of-use assets, HK$2,443,000 for intangible assets, and HK$6,642,000 for mining rights [65]. - As of December 31, 2023, the Group's current borrowings amounted to approximately HK$111,228,000, while cash and cash equivalents were only about HK$39,954,000, indicating liquidity risk [75]. Corporate Governance and Management - The Company has established relevant committees and adopted internal policies to enhance corporate governance practices and protect stakeholder interests [104]. - The Company has complied with the Code on Corporate Governance Practices as set out in the Listing Rules, with no significant deviations reported [105]. - The Board consists of five directors, including two executive directors and three independent non-executive directors, ensuring adequate expertise in financial management [115]. - The Company encourages continuous professional development for directors, providing training records for the year ended December 31, 2023 [119]. - The Company has implemented measures to improve internal controls and enhance transparency in business operations [104]. - The Company has established three committees: Audit Committee, Remuneration Committee, and Nomination Committee, to assist the Board in its duties [133]. - The Audit Committee is composed of three Independent Non-executive Directors, ensuring independent oversight of financial reporting [133]. - The Company reviewed its corporate governance policies and practices, making appropriate recommendations for improvement [125]. - The Company has adopted a Board Diversity Policy, considering various objective criteria such as gender, age, and professional qualifications for Board appointments [149]. Risk Management - The Group is actively seeking financing options, including venture capital and equity financing, to address the capital needs for environmental upgrades and transformations [27]. - The Group's management does not currently hedge foreign exchange risks, as they do not expect significant net foreign currency risk from operations primarily in Mainland China and Hong Kong [66][67]. - The Group has established procedures for credit risk management, including determining credit limits and monitoring overdue debts to minimize exposure [74]. - The operational risk management framework is guided by functional departments, focusing on internal processes and external events to mitigate potential losses [76]. - The Board is responsible for maintaining the Group's risk management and internal control systems to mitigate risks associated with achieving business objectives [171]. - The effectiveness of the internal control system was reviewed, covering risk management functions, financial, operational, and compliance controls, as well as staff qualifications and training adequacy [172]. Community and Environmental Commitment - The Group is committed to improving and maintaining the long-term sustainability of the communities in which it operates, adhering to environmental laws and regulations [89]. - The Group emphasizes the importance of environmental protection for its long-term development and will continue to review and improve management practices [197]. - The Group's annual report includes a discussion on major risks and uncertainties faced by the business, as well as potential future developments [196].

Financial Performance - Revenue for the six months ended June 30, 2023, was HK$103,004,000, a decrease of 57% compared to HK$238,936,000 for the same period in 2022[8] - Gross loss for the period was HK$35,039,000, compared to a gross profit of HK$57,410,000 in the previous year[8] - Loss before tax increased to HK$113,282,000 from HK$86,321,000 year-on-year, reflecting a worsening financial performance[8] - Total comprehensive loss attributable to owners of the Company for the period was HK$186,527,000, slightly improved from HK$191,848,000 in the prior year[10] - Basic and diluted loss per share was 28 cents, compared to 1.46 cents in the same period last year[10] - For the six months ended June 30, 2023, the loss before income tax was HK$113,282,000, compared to a loss of HK$86,321,000 for the same period in 2022, indicating a worsening of 31.2%[21] - The total comprehensive loss for the period was HK$186,527,000, which includes a loss of HK$113,238,000 and other comprehensive losses of HK$73,289,000[19] - Cash generated from operating activities was HK$4,385,000, a significant decrease from HK$33,658,000 in the previous year, representing a decline of approximately 87%[21] - The after-tax loss increased to HK$113,238,000 for the period, compared to HK$96,188,000 in the same period of 2022[104] Assets and Liabilities - Non-current assets decreased to HK$1,329,413,000 as of June 30, 2023, down from HK$1,445,474,000 at the end of 2022[14] - Current assets totaled HK$386,140,000, a decline from HK$427,700,000 at the end of 2022[14] - Net current assets decreased to HK$203,423,000 from HK$254,946,000 at the end of the previous year[14] - As of June 30, 2023, total non-current liabilities amounted to HK$623,411,000, an increase of 3.1% from HK$604,468,000 as of December 31, 2022[16] - The company's net assets decreased to HK$909,425,000 from HK$1,095,952,000, reflecting a decline of approximately 17%[16] - The company’s reserves decreased from HK$1,092,002,000 to HK$905,475,000, a reduction of approximately 17%[16] - Trade receivables increased to HK$1,676,000 from HK$1,498,000 year-on-year, indicating a slight improvement in collection[14] - Trade receivables as of June 30, 2023, amounted to HK$141,726,000, a decrease from HK$154,881,000 as of December 31, 2022, while the allowance for expected credit loss was HK$140,050,000[54] - The company reported trade payables of HK$19,998,000 as of June 30, 2023, an increase from HK$17,449,000 as of December 31, 2022, indicating a rise in outstanding obligations[60] - Total borrowings as of June 30, 2023, were HK$326,163,000, slightly up from HK$320,104,000 as of December 31, 2022, with bank borrowings at HK$69,184,000 and other borrowings at HK$256,979,000[62] Operational Highlights - The Group's cash and cash equivalents at the end of the period increased to HK$32,666,000, up from HK$26,289,000 in 2022, representing a growth of about 24.8%[24] - The Group's production facilities underwent necessary maintenance in April 2023, temporarily reducing capacity and negatively impacting profit margins[104] - The overall magnesium industry faced significant challenges in the first half of the year due to declining demand and high market inventories[100] - The Group has undertaken necessary production maintenance to improve efficiency, which temporarily reduced production capacity and negatively impacted profit margins[106] - The company has not reported any new product launches or significant market expansions during this period[20] Market Conditions - The average selling price of products declined by approximately 49% compared to the same period last year due to the depreciation of the RMB and low market magnesium prices[104] - Magnesium prices have dropped by 40.6% compared to the same period last year, returning to low levels seen two years ago[100] - The cost of main raw materials for producing magnesium ingots has decreased by less than 20% compared to the previous year, leading to a narrowing profit margin[100] - The management believes that the trend of "magnesium replacing aluminium" will become clearer, with increasing emphasis on lightweighting and energy conservation in the magnesium industry[116] Corporate Governance - The Company has complied with the corporate governance code, except for the separation of roles between the Chairman and CEO[165] - The Company has complied with the Code on Corporate Governance Practices, except for the dual role of Chairman and CEO held by Mr. Shum Sai Chit since 2015[168] - The Audit Committee held two meetings to review accounting principles and internal control matters during the period[167] - All Directors confirmed compliance with the Model Code for Securities Transactions throughout the six months ended 30 June 2023[172] Future Outlook - The Group is considering equity fundraising opportunities to strengthen its capital base and improve liquidity[135] - The magnesium market is currently in a downturn, but long-term prospects are promising due to China's abundant magnesium resources and strong production capabilities[107]

香港交易及結算所有限公司及香港聯合交易所有限公司對本公告的內容概不負責，對其準確性或完整 性亦不發表任何聲明，並明確表示，概不對因本公告全部或任何部分內容而產生或因倚賴該等內容而 引致的任何損失承擔任何責任。 稀 鎂 科 技 集 團 控 股 有 限 公 司 RARE EARTH MAGNESIUM TECHNOLOGY GROUP HOLDINGS LIMITED （於百慕達註冊成立之有限公司） （股份代號：601） 2 0 2 3年 中 期 業 績 公 告 稀鎂科技集團控股有限公司（「本公司」）之董事會（「董事會」）欣然宣佈本公司及其附 屬公司截至2023年6月30日止六個月期間的未經審核業績。本公告列載本公司2023 年中期業績報告全文，並符合香港聯合交易所有限公司證券上市規則內有關中期業 績初步公告須附載資料的要求。本公司2023年中期業績報告的印刷版本將於2023 年9月8日寄發予本公司股東，並可於其時在香港交易及結算所有限公司的網站 www.hkexnews.hk 及本公司的網站www.remt.com.hk 閱覽。 承董事會命 ...

Magnesium Market Overview - The average price of magnesium ingot in 2022 was RMB30,686/ton, a year-on-year increase of 19.88%, with the highest price reaching RMB51,500/ton in January and the lowest at RMB21,500/ton in December[10]. - The production costs of magnesium remain high due to increased investment in environmental protection and rising raw material costs, putting pressure on profit margins[11]. - The magnesium price is expected to be supported by cost factors and rigid demand in the market despite the ongoing decline in prices[11]. - The magnesium product business incurred losses due to a downturn in China's magnesium ingot market, which saw a decline after a sharp rise in 2021[85]. - The total cost of magnesium production continues to rise, influenced by environmental regulations and the need for upgrades[11]. - The magnesium alloy's weight reduction potential is 30% to 40% compared to aluminum alloys, enhancing its application in automotive parts[26]. - Automotive lightweighting is projected to have a 46% energy-saving potential, making it a key driver for the demand for lightweight materials such as magnesium and aluminum alloys[18]. - The transition of magnesium parts from small to large components is becoming more prominent due to advancements in die-casting technology[26]. - The future outlook for magnesium alloys includes applications in electric vehicles, biomedicine, and 5G base stations, indicating broad market potential[31]. - The market expects that the economic recovery will provide new opportunities for the magnesium industry, despite current challenges[11]. Financial Performance - The Group's revenue for the year was HK$383,899,000, a decrease of 7.7% compared to HK$416,060,000 in 2021[39]. - The overall gross profit margin decreased by 4.4% to 12.1%, down from 16.5% in the previous year[41]. - Profit attributable to shareholders was HK$1,404,000, a significant recovery from a loss of HK$331,883,000 in 2021[41]. - The total assets of the Group decreased to HK$1,873,174,000 from HK$2,360,619,000 in 2021[40]. - The total equity of the Group was HK$1,095,952,000, down from HK$1,188,942,000 in the previous year[40]. - The Group's revenue in 2022 decreased by approximately HK$32,161,000 or 7.7% compared to the previous year, with total sales volume of magnesium products dropping from 16,901 tonnes in 2021 to 11,098 tonnes in 2022[52]. - The gross profit margin decreased from 16.5% in 2021 to 12.1% in 2022 due to high production costs and weak demand for magnesium raw materials[53]. - Selling and distribution expenses were approximately HK$3,073,000 in 2022, accounting for about 0.8% of revenue, down from 1.1% in 2021[54]. - Administrative expenses increased to approximately HK$126,222,000 in 2022 from HK$99,610,000 in 2021, primarily due to a provision for long outstanding prepayment[55]. - The Group recognized a gain on debt restructuring of approximately HK$267,382,000 for the year ended 31 December 2022[57]. - Finance costs decreased significantly by approximately HK$48,478,000 or 69.9% to HK$20,923,000 in 2022[71]. - The gearing ratio improved to 34.3% from 37.1% in the previous year, reflecting better financial stability[40]. Debt and Liquidity Management - The Group successfully completed its debt restructuring on October 8, 2022, after more than two years of efforts[34]. - The successful implementation of the Creditors' Scheme resulted in a shift from net current liabilities of HK$483,515,000 as of 31 December 2021 to net current assets of HK$254,946,000 as of 31 December 2022[75]. - As of December 31, 2022, the Group's current borrowings were approximately HK$114,592,000, while cash and cash equivalents were only approximately HK$28,599,000, indicating liquidity risk[103]. - The allowance for expected credit loss on trade receivables increased to approximately HK$104,191,000 in 2022 from HK$53,243,000 in 2021[70]. Operational and Risk Management - The Group is exposed to operational risks due to internal process deficiencies or external events, which are monitored and managed by functional departments[98]. - The Group has established a framework for managing operational and investment risks, focusing on balancing risk and return across different investments[106][107]. - Management has implemented credit risk monitoring procedures to minimize exposure, including regular assessments of clients' transaction records and credit history[102]. - The internal control system aims to manage and mitigate risks associated with achieving business objectives[199]. - A review of the effectiveness of the internal control system was conducted during the year[200]. - The adequacy of resources, qualifications, and experience of staff in accounting and financial reporting was assessed[200]. Corporate Governance - The Company has complied with the Code on Corporate Governance Practices during the year ended 31 December 2022, with deviations disclosed in the "Chairman and Chief Executive Officer" section[130]. - The Company has established relevant committees and adopted internal policies to enhance corporate governance and protect stakeholder interests[129]. - The Board consists of five directors, including two executive directors and three independent non-executive directors[134]. - The Audit Committee comprises three Independent Non-executive Directors, ensuring independent oversight of financial reporting[160]. - The Company has adopted a "Board Diversity Policy" as part of its corporate governance practices[158]. - The Nomination Committee is responsible for assessing the independence of Independent Non-executive Directors[174]. - The Company acknowledges the benefits of Board member diversity and bases appointments on meritocracy and competence[179]. - The Company Secretary has over 10 years of experience in auditing, accounting, financial management, and corporate finance[185]. - The Company will review its current governance structure periodically to ensure efficiency in decision-making[154]. - The terms of appointment for Non-executive Directors are fixed for a specific term and subject to retirement by rotation and re-election[152]. Employee and Stakeholder Relations - As of December 31, 2022, the Group employed approximately 377 employees, with no significant labor disputes affecting normal operations[115]. - The Group has broadened recruitment channels and enhanced training programs to retain key personnel amid competitive talent demands[107]. - The Group maintains good relationships with stakeholders and conducts various engagement activities, including annual meetings and seminars[116].

香港交易及結算所有限公司及香港聯合交易所有限公司對本公佈的內容概不負責，對其準確性或完整 性亦不發表任何聲明，並明確表示，概不對因本公佈全部或任何部份內容而產生或因倚賴該等內容而 引致的任何損失承擔任何責任。 稀 鎂 科 技 集 團 控 股 有 限 公 司 RARE EARTH MAGNESIUM TECHNOLOGY GROUP HOLDINGS LIMITED （於百慕達註冊成立之有限公司） （股份代號：601） 2 0 2 2年 全 年 業 績 公 告 稀鎂科技集團控股有限公司（「本公司」）董事會（「董事會」）欣然宣佈本公司及其附屬公 司截至2022年12月31日止年度的經審核業績。本公告列載本公司2022年年報全文， 並符合香港聯合交易所有限公司證券上市規則內有關全年業績初步公告須附載資料 的要求。本公司2022年年報的印刷版本將於2023年4月28日寄發予本公司股東，並可 於聯交所網站www.hkexnews.hk及本公司的網站www.remt.com.hk閱覽。 承董事會命 稀鎂科技集團控股有限公司 ...

Financial Performance - Revenue for the six months ended June 30, 2022, was HK$238,936,000, representing a 30.9% increase from HK$182,632,000 in the same period of 2021[8]. - Gross profit for the same period was HK$57,410,000, compared to HK$20,932,000 in 2021, indicating a significant improvement in profitability[8]. - Loss before tax increased to HK$86,321,000, compared to a loss of HK$45,639,000 in the prior year, reflecting ongoing challenges[8]. - Total comprehensive loss for the period attributable to owners was HK$191,848,000, compared to HK$23,732,000 in the same period last year[10]. - Basic and diluted loss per share was 1.46 cents, up from 0.71 cents in the previous year, indicating a worsening financial position[10]. - The company reported a loss for the period of HK$96,188,000 for the six months ended June 30, 2022, compared to a loss of HK$46,655,000 for the same period in 2021, indicating an increase in losses of 106.06%[19]. - The loss after tax for the period was HK$96,188,000, compared to a loss of HK$46,655,000 in the same period of 2021[120][122]. - The Group recorded a loss of approximately HK$96,188,000 for the six months ended 30 June 2022, compared to a loss of HK$46,655,000 for the same period in 2021[27]. Assets and Liabilities - Non-current assets decreased to HK$1,604,199,000 from HK$1,750,470,000, showing a decline in long-term asset value[14]. - Current assets totaled HK$522,319,000, down from HK$610,149,000, indicating a reduction in liquidity[14]. - Total current liabilities were HK$1,054,420,000, slightly reduced from HK$1,093,664,000, reflecting some improvement in short-term obligations[14]. - Net current liabilities increased to HK$532,101,000 from HK$483,515,000, indicating a growing financial strain[14]. - As of June 30, 2022, the total equity of the company decreased to HK$997,559,000 from HK$1,188,942,000 as of December 31, 2021, representing a decline of approximately 16.06%[16]. - The total non-current liabilities decreased to HK$74,539,000 as of June 30, 2022, from HK$78,013,000 as of December 31, 2021, reflecting a reduction of 4.73%[16]. - The Group's current liabilities exceeded its current assets by approximately HK$532,101,000, an increase from HK$483,515,000 as of 31 December 2021[29]. - The Group's current borrowings amounted to approximately HK$837,663,000 as of 30 June 2022, down from HK$876,043,000 as of 31 December 2021[29]. Cash Flow and Operating Activities - Cash generated from operating activities for the six months ended June 30, 2022, was HK$33,658,000, a decrease of 37.03% compared to HK$53,385,000 for the same period in 2021[21]. - The company’s cash and cash equivalents at the end of the period increased to HK$26,289,000 from HK$7,086,000, marking a significant increase of 270.73%[24]. - The finance costs for the six months ended June 30, 2022, were HK$25,006,000, slightly down from HK$25,632,000 in the same period of 2021[21]. Creditors' Scheme and Restructuring - The Company has successfully implemented a creditors' scheme, which became effective on 31 May 2022, involving an equity-for-debt swap and extension of repayment periods[31]. - As part of the creditors' scheme, the Company allotted 65,843,905 scheme shares and issued convertible bonds in the principal amount of HK$458,389,736 as of 5 August 2022[31]. - The total admitted claims of the creditors' scheme amounted to HK$763,285,097, which became effective on May 31, 2022[110][111]. - The debts and relevant accrued interests totaling approximately HK$889,168,000 as of June 30, 2022, will be discharged due to the successful implementation of the creditors' scheme[112]. - The Creditors' Scheme proposed by the Company was approved by the requisite statutory majorities on 1 March 2022 and became effective on 31 May 2022[164]. Market and Industry Outlook - The company continues to explore new strategies for market expansion and product development to improve future performance[7]. - The magnesium industry is expected to grow significantly as applications expand into electric vehicles, biomedicine, and 5G technologies[127]. - The company anticipates benefiting from industry and policy advantages as the trend of "magnesium replacing aluminum" becomes more pronounced[131]. - Management anticipates continued uncertainty in economic activities due to pandemic prevention measures and global energy crisis-related raw material price fluctuations[123]. Share Capital and Options - The Company has implemented a capital reorganization, consolidating every twenty shares of par value HK$0.1 into one share of par value HK$2.00[106]. - Following the capital reduction, the issued share capital will be reduced by cancelling HK$1.99 on each of the then issued consolidated shares, lowering the par value to HK$0.01[106]. - As of 30 June 2022, there were options to subscribe for a total of 17,170,000 Shares outstanding under the share option scheme[184]. - The total number of shares available for issue under the share option scheme was 40,291,950, representing approximately 12.2% of the issued share capital as of the report date[193]. - The share consolidation of 20-to-1 became effective on 14 July 2022, adjusting all figures accordingly[199]. Compliance and Governance - The Company received a disclaimer of opinion from auditors regarding the appropriateness of using the going concern basis for the consolidated financial statements due to uncertainties in management's future action plans[171]. - The material uncertainty regarding the Group's ability to continue as a going concern remains as of the date of approval for the issuance of the consolidated financial statements[38]. - The directors believe that other related party transactions do not fall under the definition of "connected transaction" as per the Listing Rules[95]. - The company has taken remedial measures to enhance internal controls following non-compliance with reporting and approval requirements related to connected transactions[89].

Magnesium Industry Overview - The average price of magnesium in 2021 was RMB 25,244 per ton, representing an increase of 86% year-on-year, with a lowest price of RMB 13,950 per ton and a highest price of RMB 70,000 per ton[11][14]. - The magnesium price has experienced significant fluctuations, with an increase of 89% from the historic high in 2008, reaching a new high in 14 years[11][14]. - The implementation of the "Dual Control of Total Energy Consumption and Energy Intensity" policy has significantly impacted magnesium production, leading to a cautious approach from downstream companies and weaker demand[14][17]. - The high magnesium prices have suppressed production demand in downstream industries, affecting the sustainable development of the magnesium market[14]. - The magnesium industry is expected to play a crucial role in promoting green, low-carbon, and high-quality development in the future[10][13]. Company Performance - The company's revenue for the year was HKD 416,060,000, a decrease of 44.1% compared to HKD 744,836,000 in 2020[32]. - The overall gross profit margin decreased by 1% to 16.5%[32]. - Shareholders' attributable loss was HKD 331,883,000, compared to HKD 74,011,000 in 2020[32]. - Total sales volume decreased to 16,901 tonnes in 2021 from 39,156 tonnes in 2020[46]. - EBITDA decreased by HK$97,385,000 or 73.1% to HK$35,835,000 in 2021[40]. Financial Challenges and Restructuring - The creditors' scheme approved on March 1, 2022, allows the company to pay off debts in phases over the next five years[28]. - The company is facing a winding-up petition due to an outstanding principal amount of US$20,707,777.78, which includes unpaid interest and default interest[63]. - The proposed creditors' scheme includes options for term extension and convertible bond swaps, subject to court approval[66]. - The company is undergoing a restructuring process with the appointment of joint provisional liquidators to oversee debt management and maintain its stock exchange listing[60]. - The Group's current liabilities exceeded its current assets by approximately HK$483,515,000 as of December 31, 2021[117]. Operational and Management Insights - The company holds 22 technical patents and is recognized as a national-level high and advanced technology enterprise[4]. - The innovative vertical retorts magnesium smelting technology has characteristics such as high mechanisation, small foot-print, less labor, low labor intensity, small investment, and low energy consumption[19][23]. - The company plans to focus on green and low-carbon production to leverage new opportunities in the magnesium industry[26]. - The management is focused on minimizing credit risk by regularly assessing clients' transaction records and credit history[110]. - The Group has adopted green initiatives in daily operations, including resource recycling, energy saving measures, and water saving practices[128]. Corporate Governance - The Group has implemented corporate governance practices in line with the Code on Corporate Governance Practices, with no significant deviations reported[140]. - The Company has established four committees: Audit Committee, Remuneration Committee, Nomination Committee, and Executive Management Committee[170]. - The Audit Committee is responsible for providing independent and professional advice on financial reporting and reviewing the internal control of the Group[171]. - The Company has adopted a Board Diversity Policy, considering various objective criteria such as gender, age, and professional qualifications for Board appointments[191]. - The Company Secretary has over 10 years of experience in auditing, accounting, financial management, and corporate finance[196]. Employee and Stakeholder Relations - As of December 31, 2021, the Group employed 365 staff, down from 382 in 2020, and provided various employee benefits[97]. - The Group recognizes the importance of balancing risk and return in its investment decision process and has established proper investment assessment procedures[120]. - The Company encourages shareholders to provide feedback and inquiries regarding management and corporate governance[200]. - The Group has maintained compliance with relevant laws and regulations in Mainland China and Hong Kong, with no material non-compliance reported as of the report date[129]. - The Group's commitment to social responsibility includes efforts to improve the sustainability of the communities in which it operates[128].

Financial Performance - Revenue for the six months ended June 30, 2021, was HK$182,632,000, a decrease of 50.5% compared to HK$368,178,000 for the same period in 2020[9]. - Gross profit for the same period was HK$20,932,000, down 72.2% from HK$75,465,000 in 2020[9]. - Loss before tax increased significantly to HK$45,639,000, compared to a loss of HK$2,795,000 in the prior year, marking a substantial deterioration in financial performance[9]. - The total comprehensive loss attributable to owners of the Company for the period was HK$23,732,000, compared to HK$58,098,000 in the same period last year, indicating an improvement in overall loss despite the ongoing challenges[11]. - The company reported a basic and diluted loss per share of 0.71 cents for the period, compared to 0.19 cents in the previous year[11]. - For the six months ended June 30, 2021, the loss before income tax was HK$45,639,000, compared to a loss of HK$2,795,000 for the same period in 2020, reflecting a significant increase in losses[23]. - The company reported a total comprehensive loss of HK$23,732,000 for the six months ended June 30, 2021, compared to a total comprehensive loss of HK$58,098,000 for the same period in 2020[21]. - The loss after tax for the Period was HK$46,655,000, compared to a loss of HK$12,440,000 for the same period in 2020[119]. Assets and Liabilities - Non-current assets as of June 30, 2021, totaled HK$1,831,106,000, an increase from HK$1,783,924,000 at the end of 2020[16]. - Current liabilities increased to HK$1,017,712,000 from HK$953,709,000 at the end of 2020, reflecting rising financial obligations[16]. - As of June 30, 2021, total non-current liabilities decreased to HK$76,479,000 from HK$151,201,000 as of December 31, 2020, representing a reduction of approximately 49.3%[18]. - The company's net assets as of June 30, 2021, were HK$1,429,352,000, down from HK$1,451,922,000 at the end of 2020, indicating a decline of about 1.6%[18]. - The Group's current borrowings amounted to approximately HK$873,316,000, while cash and cash equivalents were only approximately HK$7,086,000[37]. - As of June 30, 2021, total borrowings amounted to HK$873,316,000, a slight increase from HK$872,319,000 as of December 31, 2020[81]. - The total amount of borrowings classified as current liabilities was HK$873,316,000, reflecting an increase from HK$796,938,000 in the previous period[81]. Cash Flow and Investments - Cash generated from operating activities for the six months ended June 30, 2021, was HK$53,385,000, a recovery from a cash used in operations of HK$66,049,000 in the same period of the previous year[23]. - The net cash used in investing activities was HK$81,893,000 for the first half of 2021, compared to a net cash generated of HK$661,000 in the same period of 2020[26]. - The net decrease in cash and cash equivalents was HK$29,356,000 in 2021, compared to HK$213,156,000 in 2020[26]. Debt and Restructuring - The Group could not fulfill certain covenants related to borrowings amounting to approximately HK$837,421,000, which became repayable on demand[37]. - The Group is facing significant uncertainty regarding its ability to continue as a going concern, indicating potential difficulties in realizing assets and discharging liabilities in the normal course of business[40]. - The Company is actively exploring a debt restructuring plan, which may involve equity-to-debt swaps and extensions of repayment periods, subject to creditor negotiations and court approvals[49]. - A proposed restructuring plan has not yet been formulated, and its eventual outcome remains uncertain, which raises doubts about the Group's ongoing viability[51]. - The Company is negotiating with creditors regarding a scheme of arrangement for debt restructuring, which may involve refinancing and debt compromises[49]. - The restructuring plan is expected to be implemented through arrangements with creditors, likely requiring court sanctions[42]. - The Company anticipates it is unlikely to refinance its offshore borrowings due in the next couple of months due to defaults[109]. - The Company received a petition for winding up due to failure to repay an outstanding principal of US$20,707,777.78[109]. Operational Performance - The overall gross profit margin of the magnesium products business was 11.5%, down approximately 9 percentage points from 20.5% in the same period last year[119]. - Total sales volume decreased from 18,674 tons in the corresponding period in 2020 to 9,353 tons in the Period[119]. - Selling and distribution expenses decreased to approximately HK$1,982,000 in 2021 from HK$4,860,000 in 2020, with a ratio to income of 1.1%[131]. - Administrative expenses increased to approximately HK$49,424,000 in 2021, up by HK$16,829,000 from HK$32,595,000 in 2020[132]. - The Group employed 365 employees as of June 30, 2021, a decrease from 636 employees on June 30, 2020[159]. Shareholder and Corporate Governance - The Company did not recommend any payment of interim dividends for the six months ended June 30, 2021, consistent with the previous year[67]. - The Company will update shareholders on any material developments regarding the restructuring efforts[49]. - The company complied with the Code on Corporate Governance Practices, with a noted deviation regarding attendance at the annual general meeting by a non-executive director[199]. - The total number of options held by directors includes 20,000,000 options for Shum Sai Chit, representing a personal interest of 0.76% in the company[184]. Market Outlook - The penetration rate of new energy vehicles is projected to reach 15-25% by 2025, with global sales expected to exceed 11 million units[123]. - The demand for magnesium as a lightweight material is anticipated to significantly increase in the long term due to its role in enhancing battery life for new energy vehicles[123].

Financial Performance - The Group recorded an operating income of approximately HK$744.8 million for the year ended December 31, 2020, with an after-tax loss of approximately HK$74.0 million, resulting in an overall gross profit margin of 17.5%[21] - The Group's revenue for 2020 was HK$744,836,000, a decrease of 50.8% compared to HK$1,515,291,000 in 2019[37] - The overall gross profit margin decreased by 10.0% to 17.5% in 2020, down from 27.5% in 2019[39] - Loss attributable to shareholders was HK$74,011,000 in 2020, compared to a profit of HK$209,732,000 in 2019[39] - EBITDA for 2020 was HK$133,220,000, a decrease of 70.2% from HK$447,150,000 in 2019[45] - The total sales volume of the Group's products decreased from 60,559 tons in 2019 to 39,156 tons in 2020, significantly impacting performance[45] - The Group recorded a consolidated net loss of approximately HK$74,011,000 for the year ended 31 December 2020[179] Market and Industry Trends - In 2020, China's magnesium output was about 907,000 tons, down 6.4% year-on-year, and the export volume was approximately 393,800 tons, down 12.78% year-on-year[21] - The average magnesium usage per vehicle in China increased to about 5 kg in 2019, while developed countries reached up to 40 kg, indicating significant growth potential in the domestic automotive sector[25] - The global compound annual growth rate for magnesium in the automotive sector is projected to be 23.7% over the next five years[25] - The magnesium industry is considered a strategic new material for the 21st century, with strong and stiff properties, good thermal and electrical conductivity, and low processing costs[22] - The Chinese Government's plan predicts that by 2025, new energy vehicle sales will exceed 5 million, representing about 20% of total new vehicle sales[30] Company Strategy and Innovation - The company aims to leverage lightweight innovation to create opportunities for future growth in the magnesium sector[6] - The company is focused on expanding its market presence and enhancing its product offerings in response to the evolving industry landscape[6] - The company plans to adopt a cautious approach to business development in 2021, focusing on product, technology, and marketing innovation[76] - The company aims to enhance overall competitiveness and profitability by exploring new-quality customers while retaining loyal ones[77] - The company will expand its market network to cater to the demand for lightweight materials in the post-epidemic era[77] Operational Challenges - The pandemic has significantly impacted the magnesium industry, leading to challenges in both supply and demand sides of the industrial chain[20] - The Group is undergoing a restructuring process due to defaults related to its controlling shareholder's notes, which has caused cross defaults on certain borrowings[64] - A petition for winding up the Company was filed in February 2021 due to failure to repay outstanding debts totaling US$20,707,777.78[68] - The Group's liquidity risk is highlighted by its inability to raise sufficient funds to meet financial obligations, as indicated by the significant gap between liabilities and assets[102] Corporate Governance - The Group has established relevant committees and adopted internal policies to enhance corporate governance and transparency[128] - The Company complied with the Code on Corporate Governance Practices, with some deviations noted regarding attendance at general meetings[129] - The Board is responsible for formulating overall strategies and policies, reviewing financial performance, and overseeing management operations[136] - The Audit Committee held four meetings in the year ended December 31, 2020, to review the Group's annual results and evaluate the effectiveness of internal controls[160][163][167] - The Company has adopted a Board Diversity Policy to enhance the diversity of its Board members based on meritocracy and competence[178] Employee and Workforce Management - The company has reduced its workforce from 722 employees in 2019 to 382 employees as of December 31, 2020[88] - The Group has implemented measures to optimize its compensation structure to retain key personnel and enhance employee training and career development opportunities[106] - The number of employees was approximately 382 as of December 31, 2020, with remuneration determined based on performance, work experience, and market conditions[115] Financial Management - Finance costs rose to approximately HK$97,857,000, an increase of 35.8% from HK$72,064,000 in 2019[54] - The Group's interest coverage ratio decreased to 1.36 times, indicating reduced ability to cover interest expenses[63] - Cash in bank at the end of the year was HK$46,289,000, including pledged bank deposits[63] Compliance and Risk Management - The Group's operations must comply with relevant laws and regulations in Mainland China and Hong Kong, with no material non-compliance reported for the year ended 31 December 2020[114] - The internal control system is designed to manage and mitigate risks associated with achieving business objectives[197] - The Company regularly reminds directors and employees about compliance with policies regarding inside information[199]

Financial Performance - Revenue for the six months ended June 30, 2020, was HK$368,178,000, a decrease of 49.3% compared to HK$726,229,000 for the same period in 2019[9]. - Gross profit for the same period was HK$75,465,000, down 63.5% from HK$206,318,000 in 2019[9]. - Loss before tax for the six months was HK$2,795,000, compared to a profit of HK$149,813,000 in the prior year[9]. - The net loss attributable to owners of the Company for the period was HK$12,440,000, a significant decline from a profit of HK$116,295,000 in 2019[9]. - Total comprehensive loss for the period was HK$58,098,000, compared to a total comprehensive income of HK$87,417,000 in the previous year[11]. - The Company reported a basic and diluted loss per share of HK$0.19 cents, compared to earnings of HK$1.77 cents per share in the previous year[11]. - For the six months ended June 30, 2020, the Group recorded a loss of approximately HK$12,440,000[39]. - The loss after tax for the Period is HK$12,440,000, compared to a profit after tax of HK$116,295,000 for the same period in 2019[142]. Assets and Liabilities - Non-current assets decreased to HK$1,582,386,000 as of June 30, 2020, from HK$1,666,026,000 at the end of 2019[16]. - Current assets totaled HK$799,439,000, down from HK$888,298,000 at the end of 2019[16]. - Current liabilities decreased to HK$500,408,000 from HK$804,577,000 at the end of 2019[16]. - The net current assets increased to HK$299,031,000, compared to HK$83,721,000 at the end of 2019[16]. - As of June 30, 2020, total non-current liabilities increased to HK$546,641,000 from HK$361,860,000 in the previous year, representing a 51.1% increase[18]. - The company's net assets decreased to HK$1,334,776,000 from HK$1,387,887,000, reflecting a decline of 3.8%[18]. - The total borrowings decreased to HK$448,384,000 as of June 30, 2020, compared to HK$487,442,000 as of December 31, 2019, reflecting a reduction of approximately 8.0%[87]. Cash Flow - Operating activities generated a net cash outflow of HK$66,049,000 for the six months ended June 30, 2020, compared to a cash inflow of HK$41,911,000 in the prior year[24]. - Net cash used in financing activities was HK$147,768,000, compared to HK$19,282,000 in the previous period[28]. - The net decrease in cash and cash equivalents for the period was HK$213,156,000, significantly higher than HK$3,060,000 in the prior period[28]. - The Group's cash and cash equivalents at the end of the period were HK$32,687,000, down from HK$123,926,000 at the end of the previous period[28]. Debt Restructuring - The Bermuda Court appointed joint provisional liquidators for the Group to oversee a coordinated debt restructuring process[35]. - The Company is exploring debt restructuring options, including equity restructuring to raise cash from third-party investors through equity issuance[47]. - The Group is considering a debt restructuring that may involve refinancing and/or a compromise or arrangement of debts and liabilities[47]. - The directors believe it is appropriate to prepare the consolidated financial statements on a going concern basis, dependent on successful negotiations with creditors[46]. - If the Group cannot continue as a going concern, adjustments will be made to write down asset values and reclassify non-current assets and liabilities[46]. Operational Impact - The COVID-19 pandemic has severely impacted the Group's operations, leading to logistics obstruction and a sharp decline in sales due to weak export orders[141]. - The Group will closely monitor the ongoing pandemic and adjust operational strategies to respond to market changes[145]. Share Capital and Options - The company's share capital increased slightly to HK$658,439,000 from HK$657,439,000, indicating a growth of 0.2%[21]. - The Group's treasury policy aims to manage significant foreign currency exposure cautiously and minimize foreign currency risk[176]. - As of June 30, 2020, options to subscribe for a total of 401,400,000 shares were outstanding under the share option scheme[180]. - The total interests of directors in the company, including share options, amount to 143,818,236 shares, which is approximately 2.26% of the issued share capital[190]. Management and Governance - The company applied for "light touch" joint provisional liquidators on July 3, 2020, for debt restructuring purposes[120]. - Century Sunshine Group Holdings Limited, the controlling shareholder, defaulted on the redemption of SGD101,750,000 notes on July 3, 2020, triggering events of default for certain borrowings[119]. - The Bermuda Court granted the appointment of joint provisional liquidators on July 16, 2020, with powers to act jointly and severally[164].