Magnesium Production and Market Trends - In 2024, global magnesium production reached approximately 1.13 million tons, with China contributing 1.026 million tons, accounting for 90.8% of the total, reflecting a year-on-year increase of 25%[20] - The average domestic price of magnesium in 2024 was RMB 17,920 per ton, a year-on-year decrease of 13%, with prices hitting a low of RMB 16,000 per ton in December, resulting in overall industry losses[20] - China's magnesium ingot exports grew by 13.6% year-on-year in 2024, but the average export price fell by 7.1%[21] - The magnesium-aluminum price ratio dropped to 0.76 as of February 21, 2025, indicating a significant cost advantage for magnesium, with magnesium priced at RMB 15,800 per ton compared to aluminum at RMB 20,800 per ton[28] - The total national inventory of magnesium is expected to exceed 80,000 tons by December 2024, marking a historical high due to weak demand and significant capacity release[23] - The magnesium industry is facing challenges from weak demand in traditional sectors and increased electricity costs due to China's "dual carbon" policy[22] - The magnesium price has been under pressure due to inventory buildup and cautious procurement by downstream companies[21] - The magnesium industry is experiencing accelerated consolidation, leading to the exit of smaller capacities and further price depressions[22] - The magnesium market is currently facing a "strong supply and weak demand" pattern, with prices under downward pressure due to environmental and cost challenges[59] Company Financial Performance - The Group's revenue for 2024 was HK$242.7 million, a decrease of 7.9% compared to HK$263.5 million in 2023[64] - The overall gross loss for the year was HK$51.4 million, improved from a gross loss of HK$85.3 million in 2023[64] - Loss attributable to shareholders was HK$408.4 million, slightly improved from HK$423.6 million in 2023[64] - The sales volume of magnesium products increased from 12,300 tons in 2023 to 13,678 tons in 2024, but the average selling price dropped from HK$21,337 per ton to HK$17,564 per ton[67] - Administrative expenses decreased to approximately HK$57.5 million from HK$83.7 million in 2023, mainly due to cost-cutting measures[72] - The Group recognized a non-recurring impairment provision of HK$252.1 million on non-current assets, reflecting ongoing losses in the magnesium business[77] - The gearing ratio increased to 69.8% in 2024 from 47.7% in 2023, indicating higher financial leverage[79] - Cash at bank decreased to HK$24.7 million in 2024 from HK$39.9 million in 2023[83] - The recoverable amount of the cash-generating unit was estimated at HK$741.5 million, based on five-year cash flow projections[85] - The Group recorded a consolidated net loss of approximately HK$408,419,000 for the year ended 31 December 2024[176] Operational and Strategic Initiatives - The company is focusing on the lightweighting of new energy vehicles, with magnesium alloys being applied in structural components, achieving a 30% weight reduction and 40% cost savings compared to aluminum alloys[29] - Magnesium alloys are expected to drive the development of a 200,000-ton magnesium alloy electric motor housing industry, with a weight reduction of 30% compared to aluminum[38] - The company aims to balance short-term pressures with long-term strategic layouts amidst a sluggish industry environment[19] - The company is exploring new applications for magnesium alloys in aerospace, robotics, and building templates, leveraging their lightweight and high-performance properties[45] - The company plans to upgrade its production facilities to meet ultra-low emission standards by 2026, requiring substantial investment[56] Governance and Compliance - The Company has complied with the Code on Corporate Governance Practices throughout the year ended December 31, 2024, with specific deviations disclosed[128] - The Board held a total of four meetings during the year ended December 31, 2024, ensuring regular oversight of the Group's strategies and financial performance[139] - All Directors confirmed compliance with the Model Code for Securities Transactions throughout the year ended December 31, 2024[128] - The Board comprises five Directors, including the Chairman and Chief Executive Officer, responsible for overall strategy formulation and financial performance monitoring[137] - The Company has established relevant committees to enhance internal controls and transparency in business operations[127] - The Audit Committee held four meetings in the year ended December 31, 2024, reviewing the final results for the period ended December 31, 2023, and the interim results for the six months ended June 30, 2024[158] - The Audit Committee confirmed that the accounting principles and practices adopted, as well as the disclosures made in the financial statements, were appropriate, accurate, and fair[158] - The Company has adopted the Terms of Reference of the Audit Committee in compliance with the Code[156] - The Company does not have a separate chairman and Chief Executive Officer, with Mr. Shum Sai Chit holding both positions, which deviates from the Corporate Governance Code[151] Risk Management and Challenges - The Group's liquidity risk is exacerbated by the need for significant capital investment for environmental upgrades amidst tight cash flow[99] - The Group has authorized a team to manage credit risk by determining credit limits and monitoring overdue debts, ensuring regular assessments of all clients[88] - The Group's management regularly assesses operational risks and implements measures to improve internal controls[97] - Investment risk is a core aspect of the Group's decision-making process, with established procedures for investment assessment and due diligence[103] - The local government has mandated the completion of facility upgrades to ensure compliance with environmental standards, impacting operational timelines[56] Employee and Corporate Social Responsibility - The Group employed approximately 340 employees as of 31 December 2024, with no significant labor disputes affecting normal operations[115] - The Group is committed to improving corporate governance practices to enhance transparency and protect stakeholder interests[122] - The Group has adopted green initiatives including resource recycling, energy saving measures, and water saving practices in daily operations[109] - The Company recognizes the benefits of diversity among its Board members and bases appointments on meritocracy and competence[177] Financial Management and Audit - The total remuneration paid/payable to external auditors for audit services was HK$790,000 and for non-audit services was HK$145,000, totaling HK$935,000 for the year ended December 31, 2024[179] - The Remuneration Committee held one meeting in the year ended December 31, 2024 to review the remuneration policies of Directors and senior management[168] - The Nomination Committee also held one meeting in the year ended December 31, 2024 to review the structure and diversity of the Board[172] - The Company Secretary has over 10 years of experience in auditing, accounting, financial management, and corporate finance[182] - The Company Secretary participated in no less than 15 hours of relevant professional training during the year ended December 31, 2024[183]

Magnesium Production and Market Trends - For the year ending December 31, 2024, global magnesium production is expected to be approximately 1.13 million tons, with China accounting for 1.026 million tons, or 90.8% of the total, reflecting a significant year-on-year increase of 25%[24]. - The average domestic price for magnesium in 2024 was RMB 17,920 yuan/ton, representing a year-on-year decrease of 13%, with prices hitting a low of RMB 16,000 yuan/ton in December, leading to overall industry losses[24]. - China's magnesium ingot exports grew by 13.6% year-on-year in 2024, but the average price fell by 7.1%[25]. - By December 2024, the national total inventory of magnesium is expected to exceed 80,000 tons, marking a historical high due to significant capacity release and weak demand[27]. - The magnesium industry continues to face cost pressures due to China's "dual carbon" policy, which has raised electricity costs, and the EU's Carbon Border Adjustment Mechanism (CBAM), increasing export uncertainties[26]. - The overall industry remains sluggish, necessitating a balance between short-term pressures and long-term strategic layouts[23]. - The decline in magnesium prices is attributed to weak demand in traditional application fields and cautious procurement by downstream companies[25]. - The magnesium industry is experiencing an acceleration of consolidation, leading to the exit of small capacities and further depressing prices[26]. - The average price of magnesium in 2024 saw a stepwise decline, with an annual drop of 21%[24]. - The industry is under pressure from inventory levels, with the imbalance between supply and demand causing magnesium prices to drop below RMB 16,000 yuan/ton[27]. - The magnesium-aluminum price ratio has dropped to 0.76, the lowest since 2018, highlighting magnesium's cost advantages as it remains below the theoretical ratio of 1.5[36][37]. Applications and Innovations in Magnesium - SAIC Motor Corporation's use of magnesium alloys in electric drive housings reduces weight by 30% and costs by 40%, marking a significant advancement in the application of magnesium alloys[37]. - The world's first biodegradable magnesium cranial fixation system began clinical trials in June 2024, indicating growth in medical applications for magnesium alloys[39]. - By 2050, China's hydrogen demand is expected to reach 60 million tons, requiring an estimated 1.92 million tons of magnesium for hydrogen storage[48]. - Magnesium alloys are projected to have an average compound annual growth rate of 18% in the low-altitude economy, with the market potentially exceeding RMB 2 trillion by 2030[51]. - New applications for magnesium alloys are expanding in sectors such as new energy vehicles, 3C electronics, and medical innovations, indicating a diversification of use cases[37][39]. Financial Performance and Challenges - The Group's revenue for 2024 was HK$242.7 million, a decrease of 7.9% compared to HK$263.5 million in 2023[63]. - The overall gross loss for the year was HK$51.4 million, improved from a gross loss of HK$85.3 million in 2023[63]. - Loss attributable to shareholders was HK$408.4 million, slightly improved from HK$423.6 million in 2023[63]. - The total assets decreased to HK$1,025.2 million in 2024 from HK$1,442.5 million in 2023[65]. - The gearing ratio increased to 69.8% in 2024 from 47.7% in 2023, indicating higher financial leverage[65]. - The sales volume of magnesium products increased from 12,300 tons in 2023 to 13,678 tons in 2024[71]. - The average selling price of magnesium products decreased from HK$21,337 per ton in 2023 to HK$17,564 per ton in 2024[71]. - Administrative expenses were approximately HK$57.5 million in 2024, down from HK$83.7 million in 2023 due to cost-cutting measures[73]. - Financial costs totaled HK$54.9 million in 2024, an increase of 12.5% year-on-year[75]. - The Group recognized a non-recurring impairment provision of HK$252.1 million on non-current assets, reflecting ongoing challenges in the magnesium business[74]. - In 2024, the Group's magnesium product business incurred losses due to the global economic slowdown, leading to an impairment assessment of non-current assets[81]. - The carrying amounts for property, plant, and equipment were approximately HK$687.79 million, down from HK$1,020.50 million in 2023, indicating a significant decline[81]. - The impairment loss recognized for property, plant, and equipment was HK$233.84 million, compared to HK$188.94 million in 2023, reflecting a year-on-year increase[83]. - As of December 31, 2024, the Group's cash in bank was HK$24.72 million, down from HK$39.95 million in 2023, highlighting liquidity challenges[80]. - Current borrowings amounted to approximately HK$108.83 million, raising concerns about liquidity risk if sufficient funds cannot be raised[91]. Corporate Governance and Compliance - The Group has established relevant committees and adopted internal policies to enhance corporate governance practices[117]. - The Board held four meetings during the year ended 31 December 2024, ensuring regular oversight of the Group's strategies and financial performance[131]. - The Company has complied with the Code on Corporate Governance Practices as set out in the Listing Rules, with some deviations disclosed[120]. - The Board is responsible for overseeing the Group's daily operations and ensuring adequate resources for accounting and financial reporting functions[129]. - The company has appointed sufficient Independent Non-executive Directors, with at least one possessing appropriate accounting or financial management expertise[134]. - The Board has received annual confirmation of independence from each Independent Non-executive Director as required under the Listing Rules[134]. - The company has three committees: Audit Committee, Remuneration Committee, and Nomination Committee, with the Audit Committee consisting of three Independent Non-executive Directors[150]. - The Audit Committee's main responsibility is to provide independent and professional financial reporting advice and review the Group's internal controls[150]. - The company has adopted a "Board Diversity Policy" to enhance corporate governance practices[144]. - The Company has formulated an inside information policy to guide the handling of inside information and regularly reminds directors and employees about compliance[189]. - The Group is committed to enhancing investor relationships by increasing transparency and facilitating two-way communication with shareholders[192]. - The Company encourages shareholders to send their inquiries and concerns regarding management and corporate governance[182]. Employee Relations and Management - The Group employs approximately 340 employees as of December 31, 2024[108]. - Employee remuneration is determined based on performance, work experience, and current market conditions[108]. - The Group has not experienced any significant labor disputes or changes in employee relations affecting normal operations[108]. - The Group maintains good relationships with business partners, shareholders, investors, and banks to achieve long-term goals[109]. - The Company encourages Directors to participate in continuous professional development courses to enhance their knowledge and skills[139]. - All Directors have provided records of training received during the year ended December 31, 2024[139].

Financial Performance - Revenue for the six months ended June 30, 2024, was HK$106,454,000, a 3% increase from HK$103,004,000 in the same period of 2023[6] - Gross loss for the period was HK$24,402,000, improved from a gross loss of HK$35,039,000 in the prior year[6] - Loss before tax for the period was HK$79,804,000, compared to a loss of HK$113,282,000 in the same period last year[6] - Total comprehensive loss for the period was HK$115,078,000, down from HK$186,527,000 in the previous year[7] - Basic and diluted loss per share was 13 cents, an improvement from 28 cents in the same period of 2023[7] - The company reported a loss before income tax of HK$79,804,000 for the six months ended June 30, 2024, compared to a loss of HK$113,282,000 for the same period in 2023, showing an improvement of approximately 29.5%[14] - For the six months ended June 30, 2024, the company reported a loss attributable to owners of HK$79,593,000, compared to a loss of HK$113,238,000 for the same period in 2023, representing a 29.7% improvement in loss[23] - The post-tax loss for the period decreased to HK$79,593,000, down from HK$113,238,000 in 2023[58] Comprehensive Loss and Other Financial Metrics - Total comprehensive loss for the period was HK$115,078,000, down from HK$186,527,000 in the previous year[7] - Other comprehensive loss included an exchange difference on translating foreign operations of HK$35,485,000, compared to HK$73,289,000 in the prior year[7] - The company recorded a total comprehensive loss of HK$186,527,000 for the six months ended June 30, 2024, compared to a total comprehensive loss of HK$115,078,000 for the same period in 2023, indicating a worsening of about 62.1%[13] Assets and Liabilities - Total non-current assets decreased from HK$1,101,300,000 as of December 31, 2023, to HK$1,034,489,000 as of June 30, 2024, representing a decline of approximately 6.1%[9] - Current assets decreased from HK$341,231,000 as of December 31, 2023, to HK$296,864,000 as of June 30, 2024, a reduction of about 12.9%[9] - Net current assets decreased from HK$156,480,000 as of December 31, 2023, to HK$117,729,000 as of June 30, 2024, indicating a decline of approximately 24.8%[9] - Total liabilities increased from HK$829,070,000 as of December 31, 2023, to HK$833,470,000 as of June 30, 2024, reflecting a slight increase of about 0.5%[10] - The company's net assets decreased from HK$612,961,000 as of December 31, 2023, to HK$497,883,000 as of June 30, 2024, a decline of approximately 18.7%[10] - The company's total equity decreased from HK$612,961,000 as of December 31, 2023, to HK$497,883,000 as of June 30, 2024, reflecting a decrease of about 18.7%[10] Cash Flow and Financing - Cash generated from operating activities was HK$13,544,000 for the six months ended June 30, 2024, compared to HK$4,385,000 for the same period in 2023, representing an increase of about 208.5%[14] - The Group's cash and cash equivalents at the end of the reporting period were HK$41,164,000, an increase from HK$32,666,000 as of June 30, 2023[15] - The Group's working capital and capital expenditure needs were primarily financed through shareholders' equity, cash generated from operations, and borrowings[74] - The Group is considering possible equity fundraising opportunities to strengthen its capital base and enhance liquidity[74] - The company is actively seeking financing options, including venture capital and equity financing, to address capital demands amid a weak market environment[60][61] Operational Performance - The overall gross loss margin of the magnesium product business was 22.9%, improved from 34.0% in 2023[58] - Total sales volume increased from 4,745 tons in the same period of 2023 to 6,236 tons during the period[58] - Selling and distribution costs increased by approximately HK$326,000, representing 1.2% of total revenue, up from 0.9% in 2023, primarily due to increased sales volume[68][70] - General administrative expenses decreased by HK$19,056,000 compared to the previous year, mainly due to reduced professional fees related to a prior court petition[69][71] Governance and Compliance - The board of directors consists of two executive directors and two independent non-executive directors, ensuring a balanced governance structure[2] - The Company has adhered to the corporate governance practices as set out in the Listing Rules, with noted deviations regarding the roles of chairman and CEO[85] - Following the retirement of Mr. Kwong Ping Man, the Company currently has only two independent non-executive directors, which does not comply with Listing Rules 3.10(1) and 3.21[88] - The Company plans to appoint a suitable candidate as an independent non-executive director within three months of Mr. Kwong's retirement to comply with Listing Rules 3.11 and 3.23[88] Legal and Regulatory Matters - The company has taken various remedial measures to enhance its internal control and prevent recurrence of non-compliance issues related to connected transactions[41] - The company has not complied with certain reporting and approval requirements regarding guarantees provided for loans, as disclosed in previous announcements[41] - The Group is actively communicating with creditors to resolve lawsuits and facilitate the debt restructuring process for Baishan Tianan[47] - Baishan Tianan received a court summons regarding a breach of loan terms, with the bank demanding repayment of approximately RMB64 million in principal, along with interest and other costs[44] Market Conditions - The magnesium industry is currently experiencing a downturn due to declining prices, but metal magnesium and magnesium alloys are still in a growth phase of their life cycle[63][64] - The management believes that metal magnesium will thrive across various industries, aligning with the national "Dual Carbon" policy and future energy conservation trends[66]

Financial Proceeds - The net proceeds from the rights issue are approximately HKD 14.4 million[2] - 50% of the net proceeds (HKD 7.2 million) is allocated for ongoing administrative and operational expenses[4] - Another 50% (HKD 7.2 million) is designated to promote the growth of the existing magnesium business, including support for production costs and raw material procurement[4] - As of December 31, 2023, HKD 2.1 million of the net proceeds has been utilized, leaving a remaining balance of HKD 12.3 million[6] - The expected timeline for utilizing the unutilized net proceeds is by June 30, 2024[4]

Market Conditions - In 2023, the average monthly price of magnesium ingots in China decreased from RMB 21,811 per ton in January to RMB 20,433 per ton in December, resulting in an annual average price of RMB 21,953 per ton, a decline of 27.5% year-on-year, marking a three-year low [10]. - The magnesium market continues to face pressure into 2024, with prices expected to decline further as downstream purchasing remains cautious and factories report significant losses [13]. - The overall economic environment in 2023 was unfavorable, contributing to the decline in magnesium prices and impacting the financial performance of the company [13]. Financial Performance - The Group's revenue for 2023 was HK$263,491,000, a decrease of 31.4% compared to HK$383,899,000 in 2022 [30]. - 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 [30]. - The loss attributable to shareholders was HK$423,600,000, compared to a profit of HK$1,404,000 in 2022 [30]. - The average selling price of magnesium products dropped from HK$34,592 per ton in 2022 to HK$21,337 per ton in 2023, significantly impacting revenue [34]. - Revenue decreased by approximately HK$120,408,000, or 31.4%, compared to the previous year, primarily due to a substantial drop in the average selling price of magnesium products from HK$34,592 per ton in 2022 to HK$21,337 per ton in 2023 [38][40]. - The Group recorded a consolidated net loss of approximately HK$423,600,000 for the year ended 31 December 2023 [138]. Asset and Equity Changes - The total assets of the Group decreased to HK$1,442,531,000 in 2023 from HK$1,873,174,000 in 2022 [32]. - The total equity of the Group also declined to HK$612,961,000 in 2023 from HK$1,095,952,000 in 2022 [32]. - The Group reported accumulated losses of approximately HK$30,317,000 as of December 31, 2023 [190]. Operational Challenges - The Group faces operational risks due to inadequate internal processes and external events, with management regularly assessing key operational exposures and implementing relevant measures [68]. - The Group is facing challenges due to weak market demand and tight cash flow, which may exacerbate operational burdens and funding shortages [70]. - The Group's subsidiaries and newly acquired enterprises may lag behind in certain environmental and duty requirements due to long operational history, prompting close monitoring of environmental policy impacts on business development [79]. Financing and Capital Needs - The management is actively seeking financing options to address the capital needs for environmental upgrades and transformations [22]. - The management is actively seeking financing options, including venture capital, equity financing, and project partnerships, to address the significant capital investment required for environmental upgrades mandated by local government regulations [70]. - 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 a liquidity risk if sufficient funds cannot be raised to meet financial obligations [67]. Governance and Compliance - The Group has established proper investment assessment and due diligence procedures to balance risk and return across different investments, with regular updates submitted to the Board [74]. - The Group has established relevant committees and adopted internal policies to enhance corporate governance and protect stakeholder interests [93]. - The Company has established a corporate governance function, which the Board has actively performed during the review year [111]. - The Board is responsible for reviewing and monitoring the Group's financial performance, including the preparation and approval of financial statements [98]. Employee and Labor Relations - The Group employed approximately 352 employees as of December 31, 2023, with remuneration determined based on performance, work experience, and market conditions [83]. - There were no significant labor disputes or changes in employee relations affecting normal operations during the year [83]. - The Group is committed to optimizing its compensation structure and enhancing recruitment channels to attract and retain skilled personnel amid competitive industry conditions [76]. Environmental and Social Responsibility - The Group recognizes the importance of environmental protection for its long-term development and will continue to improve management practices [186]. - The Group is committed to improving long-term sustainability of the communities in which it operates, adhering to environmental laws and regulations, and implementing green initiatives [79]. Investor Relations - The Group is committed to enhancing investor relations by increasing transparency to the investment community [162]. - The Group encourages two-way communication with investors via its website [162]. - The Group's commitment to transparency is reflected in its regular updates and shareholder meetings [162]. - The Group has a strategic focus on maintaining strong investor relations to support its growth initiatives [162].

Magnesium Market Performance - The average price of magnesium ingots in 2023 was 21,953 yuan/ton, a decrease of 27.5% compared to the previous year, reaching a three-year low[13]. - The monthly price of magnesium decreased from 21,811 yuan/ton in January to 20,433 yuan/ton in December 2023[18]. - The magnesium market continues to face heavy pressure, with downstream purchases being generally cautious and factories suffering severe losses[18]. - The overall economic environment in 2023 was unfavorable, contributing to the decline in magnesium prices[18]. - The Group's performance in 2023 was impacted by high costs and continuously declining magnesium prices, putting pressure on profitability[27]. - The magnesium-aluminum price ratio remained low, with 9 months below 1.2, reaching a minimum of 1.08 and ending the year at 1.18, indicating a significant cost-effectiveness advantage for magnesium[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 aims to promote downstream applications of magnesium-based products, leveraging its cost-effectiveness compared to aluminum[26]. 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]. - 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's gearing ratio was 47.7% in 2023, up from 34.3% in 2022[52]. - The Group recorded a consolidated net loss of approximately HK$423,600,000 for the year ended 31 December 2023[153]. - 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]. Corporate Governance - The company plans to release its full annual report on April 30, 2024, which will be available on the Hong Kong Stock Exchange and the company's website[3]. - The company is committed to enhancing its corporate governance and will provide a comprehensive governance report in its annual report[6]. - The board of directors includes executive and independent non-executive members, ensuring a balanced governance structure[7]. - The Company has established relevant committees and adopted internal policies to enhance corporate governance practices and protect stakeholder interests[104]. - The Company complied with the Code on Corporate Governance Practices as set out in the Listing Rules, with no significant deviations reported[105]. - The Board includes five directors, with at least one independent non-executive director possessing appropriate accounting or financial management expertise[115]. - The Company has adopted a "Board Diversity Policy" to enhance corporate governance practices[125]. - The Company has established a framework for compliance with legal and regulatory requirements, which is monitored by the Board[125]. - The Board will periodically review the current structure of roles and responsibilities to ensure effective corporate governance[129]. - The Company Secretary has over 10 years of experience in auditing, accounting, financial management, and corporate finance[158]. Risk Management - The Group is actively seeking financing options, including venture capital and equity financing, to address the financial pressures from environmental upgrades and market demand challenges[27]. - The management is focused on creating conditions for offshore financing to support environmental upgrades and transformation needs[31]. - The Group has established procedures for credit risk management, including regular assessments of clients' transaction records and credit history to minimize exposure[74]. - The Group's interest rate risk is analyzed dynamically, with management considering cost-effective methods to mitigate this risk when appropriate[73]. - The Group's operational risk management involves regular assessments and improvements to internal controls to mitigate risks arising from inadequate processes or external events[76]. - 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]. Environmental Compliance - The Group is committed to complying with environmental regulations and has adopted green initiatives, including resource recycling and energy-saving measures[89]. - The local government in Hami, Xinjiang, has mandated upgrades for magnesium production facilities, which are crucial for compliance with national environmental policies[78][79]. - The Group emphasizes the importance of environmental protection for its long-term development and will continue to review and improve management practices[197]. Stakeholder Engagement - The Group is committed to enhancing investor relations by increasing transparency and facilitating communication with shareholders[176]. - The Company regularly sends corporate communication documents to shareholders and publishes announcements on its website and the Stock Exchange[177]. - The management team includes experienced individuals such as Mr. Shum, who has over 40 years in textile manufacturing and trading[179]. - Independent non-executive directors bring extensive experience in finance and compliance, with Mr. Kwong having over 15 years in accounting and Mr. Cheung over 40 years in auditing[184][185]. - The Company encourages investors to communicate through its website to foster ongoing dialogue[177]. Employee Relations - The Group employed approximately 352 employees as of December 31, 2023, with no significant changes in employee relations affecting operations[93]. - The Group's management emphasizes the importance of systematic staff training to enhance employee effectiveness and corporate culture[88]. - The Company will periodically analyze its remuneration system to ensure competitiveness in attracting and retaining key personnel[88].

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].