[Condensed Consolidated Performance](index=1&type=section&id=Condensed%20Consolidated%20Performance) [Condensed Consolidated Statement of Profit or Loss](index=1&type=section&id=Condensed%20Consolidated%20Statement%20of%20Profit%20or%20Loss) For the six months ended June 30, 2025, the Group's revenue decreased by 2.9% year-on-year to HK$487,743 thousand, with profit for the period at HK$12,183 thousand, a slight decrease of 4.0% from the same period last year. Gross profit remained largely stable, but operating profit and profit before tax both decreased | Metric | 2025 (HK$ thousand) | 2024 (HK$ thousand) | Change (HK$ thousand) | Change (%) | | :--- | :--- | :--- | :--- | :--- | | Revenue | 487,743 | 502,149 | (14,406) | -2.9% | | Cost of sales | (350,604) | (364,755) | 14,151 | -3.9% | | Gross profit | 137,139 | 137,394 | (255) | -0.2% | | Other income | 19,097 | 28,779 | (9,682) | -33.6% | | Operating profit | 21,023 | 26,364 | (5,341) | -20.2% | | Profit before tax | 15,015 | 16,904 | (1,889) | -11.2% | | Profit for the period | 12,183 | 12,688 | (505) | -4.0% | | Basic earnings per share | 0.2 HK cents | 0.2 HK cents | 0 | 0% | [Condensed Consolidated Statement of Comprehensive Income](index=2&type=section&id=Condensed%20Consolidated%20Statement%20of%20Comprehensive%20Income) For the six months ended June 30, 2025, the Group recorded total comprehensive income of HK$77,690 thousand, primarily benefiting from a significant positive change in exchange differences on translation of foreign operations, reversing the comprehensive loss from the same period last year | Metric | 2025 (HK$ thousand) | 2024 (HK$ thousand) | Change (HK$ thousand) | | :--- | :--- | :--- | :--- | | Profit for the period | 12,183 | 12,688 | (505) | | Exchange differences on translation of foreign operations | 65,507 | (35,578) | 101,085 | | Total comprehensive income / (loss) for the period | 77,690 | (22,890) | 100,580 | [Condensed Consolidated Statement of Financial Position](index=3&type=section&id=Condensed%20Consolidated%20Statement%20of%20Financial%20Position) As of June 30, 2025, the Group's total assets and net assets both increased. Non-current assets rose, current assets slightly decreased, but current liabilities significantly reduced, leading to improvements in net current assets and total assets less current liabilities | Metric | June 30, 2025 (HK$ thousand) | December 31, 2024 (HK$ thousand) | Change (HK$ thousand) | Change (%) | | :--- | :--- | :--- | :--- | :--- | | Total non-current assets | 1,154,660 | 1,114,755 | 39,905 | 3.6% | | Total current assets | 1,332,296 | 1,355,562 | (23,266) | -1.7% | | Total current liabilities | 421,882 | 484,051 | (62,169) | -12.8% | | Net current assets | 910,414 | 871,511 | 38,903 | 4.5% | | Total assets less current liabilities | 2,065,074 | 1,986,266 | 78,808 | 4.0% | | Total non-current liabilities | 39,028 | 38,348 | 680 | 1.8% | | Net assets | 2,026,046 | 1,947,918 | 78,128 | 4.0% | | Total equity | 2,026,046 | 1,947,918 | 78,128 | 4.0% | [Condensed Consolidated Statement of Cash Flows](index=5&type=section&id=Condensed%20Consolidated%20Statement%20of%20Cash%20Flows) For the six months ended June 30, 2025, net cash flow from operating activities significantly increased, cash outflow from investing activities substantially decreased, while financing activities shifted from net inflow to net outflow, primarily due to repayment of bank loans | Metric | 2025 (HK$ thousand) | 2024 (HK$ thousand) | Change (HK$ thousand) | | :--- | :--- | :--- | :--- | | Net cash generated from operating activities | 70,583 | 23,174 | 47,409 | | Net cash used in investing activities | (52,333) | (254,278) | 201,945 | | Net cash (used in) / generated from financing activities | (97,644) | 110,065 | (207,709) | | Net decrease in cash and cash equivalents | (79,394) | (121,039) | 41,645 | | Cash and cash equivalents at end of period | 439,269 | 556,885 | (117,616) | [Condensed Consolidated Statement of Changes in Equity](index=6&type=section&id=Condensed%20Consolidated%20Statement%20of%20Changes%20in%20Equity) As of June 30, 2025, total equity attributable to owners of the Company amounted to HK$1,858,604 thousand, an increase from the beginning of the year, primarily driven by profit for the period and positive exchange differences on translation of foreign operations | Metric | January 1, 2025 (HK$ thousand) | June 30, 2025 (HK$ thousand) | Change (HK$ thousand) | | :--- | :--- | :--- | :--- | | Total equity attributable to owners of the Company | 1,794,395 | 1,858,604 | 64,209 | | Non-controlling interests | 153,523 | 167,442 | 13,919 | | Total equity | 1,947,918 | 2,026,046 | 78,128 | - Profit for the period was **HK$2,205 thousand**, and exchange differences on translation of foreign operations amounted to **HK$61,566 thousand**, jointly driving equity growth[8](index=8&type=chunk) [Notes to the Condensed Financial Statements](index=7&type=section&id=Notes%20to%20the%20Condensed%20Financial%20Statements) [1. Company Information](index=7&type=section&id=1.%20Company%20Information) International Precision Group Limited was incorporated in the Cayman Islands in 2002 and listed on the Hong Kong Stock Exchange in 2004, primarily manufacturing and selling precision metal parts for automotive, hydraulic, and electronic equipment - The Company was incorporated in the Cayman Islands on July 10, 2002, and listed on the Main Board of the Hong Kong Stock Exchange on November 1, 2004[9](index=9&type=chunk) - Its principal business involves the manufacturing and sale of precision metal parts for automotive components, hydraulic equipment parts, and electronic equipment parts[9](index=9&type=chunk) [2. Basis of Preparation](index=7&type=section&id=2.%20Basis%20of%20Preparation) The unaudited condensed consolidated financial statements are prepared in accordance with HKAS 34 and Appendix D2 of the Listing Rules, using the historical cost convention, presented in Hong Kong dollars, with all values rounded to the nearest thousand - The financial statements are prepared in accordance with Hong Kong Accounting Standard 34 Interim Financial Reporting issued by the Hong Kong Institute of Certified Public Accountants and the applicable disclosure requirements of Appendix D2 to the Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited[10](index=10&type=chunk) - The statements are prepared on the historical cost basis, except for derivative financial instruments which are measured at fair value, and are presented in Hong Kong dollars[10](index=10&type=chunk) [3. Significant Accounting Policies](index=7&type=section&id=3.%20Significant%20Accounting%20Policies) The accounting policies adopted in this interim period are consistent with those of the previous year, with the initial adoption of HKFRS amendments issued by the HKICPA, which had no significant impact on financial position or performance - The accounting policies are consistent with those adopted in the annual financial statements for the year ended December 31, 2024[11](index=11&type=chunk) - The Group has initially adopted amendments to HKAS 21 (Amendment) Lack of Exchangeability and other amendments, which had no significant impact on the financial position and performance for the current and prior periods[11](index=11&type=chunk) [4. Operating Segment Information](index=8&type=section&id=4.%20Operating%20Segment%20Information) The Group is organized into six reportable segments based on customer location: Thailand, Malaysia, Mainland China/Macau/Hong Kong, North America, Europe, and other countries. Segment performance is primarily assessed by monitoring revenue and gross profit, with assets and liabilities reported periodically - The Group manages its business by coordinating departments based on customer location, divided into six reportable segments: Thailand, Malaysia, Mainland China, Macau and Hong Kong, North America, Europe, and other countries[12](index=12&type=chunk)[14](index=14&type=chunk) - Segment performance is primarily assessed based on revenue and gross profit, with segment assets and liabilities reported periodically to senior management[13](index=13&type=chunk) Revenue and Gross Profit by Geographical Region (HK$ thousand) | Region | 2025 H1 Revenue | 2025 H1 Gross Profit | 2024 H1 Revenue | 2024 H1 Gross Profit | | :--- | :--- | :--- | :--- | :--- | | Thailand | 2,405 | 676 | 9,562 | 2,616 | | Malaysia | 12,441 | 3,498 | 14,068 | 3,849 | | Mainland China, Macau and Hong Kong | 291,649 | 82,003 | 275,248 | 75,311 | | North America | 95,630 | 26,888 | 102,037 | 27,919 | | Europe | 66,862 | 18,800 | 86,503 | 23,668 | | Other countries | 18,756 | 5,274 | 14,731 | 4,031 | | **Total** | **487,743** | **137,139** | **502,149** | **137,394** | [5. Revenue and Other Income and Gains](index=10&type=section&id=5.%20Revenue%20and%20Other%20Income%20and%20Gains) The Group's revenue primarily derives from the sale of hydraulic equipment and automotive parts, with total revenue for H1 2025 at HK$487,743 thousand, a 2.9% year-on-year decrease. Total other income and gains were HK$19,097 thousand, a reduction from the prior period, mainly due to decreased exchange differences and bank interest income - Revenue represents the net invoiced value of goods sold during the period, after deducting returns and trade discounts[17](index=17&type=chunk) Revenue Composition (HK$ thousand) | Revenue Category | 2025 H1 | 2024 H1 | Change (HK$ thousand) | Change (%) | | :--- | :--- | :--- | :--- | :--- | | Sales of automotive parts | 216,366 | 226,890 | (10,524) | -4.6% | | Sales of hydraulic equipment parts | 254,322 | 251,685 | 2,637 | 1.0% | | Sales of electronic parts | 12,143 | 14,327 | (2,184) | -15.2% | | Others | 4,912 | 9,247 | (4,335) | -46.9% | | **Total Revenue** | **487,743** | **502,149** | **(14,406)** | **-2.9%** | Other Income and Gains (HK$ thousand) | Category | 2025 H1 | 2024 H1 | Change (HK$ thousand) | | :--- | :--- | :--- | :--- | | Bank interest income | 1,976 | 4,671 | (2,695) | | Government grants | 5,902 | 6,278 | (376) | | Dividend income | 2,223 | 2,522 | (299) | | Rental income | 4,776 | 5,266 | (490) | | Others | 3,836 | 2,577 | 1,259 | | Gain on disposal of property, plant and equipment | – | 231 | (231) | | Gain on disposal of financial assets at fair value through profit or loss | 384 | – | 384 | | Net exchange differences | – | 7,234 | (7,234) | | **Total** | **19,097** | **28,779** | **(9,682)** | [6. Finance Costs](index=11&type=section&id=6.%20Finance%20Costs) For the six months ended June 30, 2025, the Group's finance costs significantly decreased by 38.9% to HK$5,360 thousand, primarily due to reduced bank loan interest and financial arrangement fees | Category | 2025 H1 (HK$ thousand) | 2024 H1 (HK$ thousand) | Change (HK$ thousand) | Change (%) | | :--- | :--- | :--- | :--- | :--- | | Interest on bank loans | 5,056 | 8,174 | (3,118) | -38.1% | | Financial arrangement fees | 256 | 510 | (254) | -49.8% | | Interest on lease liabilities | 48 | 93 | (45) | -48.4% | | **Total** | **5,360** | **8,777** | **(3,417)** | **-38.9%** | [7. Profit Before Tax](index=11&type=section&id=7.%20Profit%20Before%20Tax) The Group's profit before tax is stated after deducting various expenses, including cost of inventories sold, depreciation, amortization, share option expenses, and auditor's remuneration. Notably, a net exchange difference loss was recorded this period, compared to a gain in the prior period | Item | 2025 H1 (HK$ thousand) | 2024 H1 (HK$ thousand) | Change (HK$ thousand) | | :--- | :--- | :--- | :--- | | Cost of inventories sold | 350,604 | 364,755 | (14,151) | | Depreciation of property, plant and equipment | 46,334 | 39,334 | 7,000 | | Depreciation of right-of-use assets | 464 | 863 | (399) | | Amortisation | 5,239 | 5,073 | 166 | | Equity-settled share option expenses | 438 | – | 438 | | Auditor's remuneration | 1,320 | 1,236 | 84 | | Net exchange differences | 4,914 | (7,234) | 12,148 | | Loss / (gain) on disposal of property, plant and equipment | 772 | (231) | 1,003 | [8. Income Tax](index=12&type=section&id=8.%20Income%20Tax) For the six months ended June 30, 2025, the Group's income tax expense was HK$2,832 thousand, a decrease from the prior period, primarily due to the recognition of deferred tax assets - Hong Kong Profits Tax is provided at a rate of **16.5%**, with other regions calculated at their respective prevailing local tax rates[21](index=21&type=chunk) | Category | 2025 H1 (HK$ thousand) | 2024 H1 (HK$ thousand) | Change (HK$ thousand) | | :--- | :--- | :--- | :--- | | Current | 4,151 | 4,216 | (65) | | Deferred | (1,319) | – | (1,319) | | **Total** | **2,832** | **4,216** | **(1,384)** | [9. Earnings Per Share](index=12&type=section&id=9.%20Earnings%20Per%20Share) For the six months ended June 30, 2025, both basic and diluted earnings per share remained at **0.2 HK cents**, consistent with the prior period, despite a slight decrease in profit attributable to equity holders of the Company | Metric | 2025 H1 | 2024 H1 | | :--- | :--- | :--- | | Profit attributable to equity holders of the Company (HK$ thousand) | 2,205 | 2,378 | | Weighted average number of ordinary shares in issue (thousand shares) | 1,052,254 | 1,052,254 | | Basic earnings per share (HK cents) | 0.2 | 0.2 | | Diluted earnings per share (HK cents) | 0.2 | 0.2 | [10. Interim Dividend Per Share](index=13&type=section&id=10.%20Interim%20Dividend%20Per%20Share) The Board does not recommend the payment of an interim dividend for the six months ended June 30, 2025, consistent with the same period last year - The Board does not recommend the payment of an interim dividend for the six months ended June 30, 2025 (2024: nil per ordinary share)[25](index=25&type=chunk) [11. Property, Plant and Equipment](index=13&type=section&id=11.%20Property,%20Plant%20and%20Equipment) As of June 30, 2025, the net book value of property, plant and equipment was HK$1,012,201 thousand, an increase from December 31, 2024, primarily due to additions and exchange adjustments during the period Net Book Value of Property, Plant and Equipment (HK$ thousand) | Item | June 30, 2025 | December 31, 2024 | Change (HK$ thousand) | | :--- | :--- | :--- | :--- | | **Total** | **1,012,201** | **973,341** | **38,860** | - Additions to property, plant and equipment amounted to **HK$63,042 thousand** during the period, with exchange adjustments of **HK$96,485 thousand**[26](index=26&type=chunk) [12. Inventories](index=14&type=section&id=12.%20Inventories) As of June 30, 2025, the Group's total inventories amounted to HK$327,693 thousand, a slight increase from December 31, 2024, primarily reflecting growth in work-in-progress and finished goods inventories | Inventory Category | June 30, 2025 (HK$ thousand) | December 31, 2024 (HK$ thousand) | Change (HK$ thousand) | | :--- | :--- | :--- | :--- | | Raw materials | 83,579 | 97,580 | (14,001) | | Consumables | 18,293 | 16,321 | 1,972 | | Work-in-progress | 86,698 | 70,298 | 16,400 | | Finished goods | 139,123 | 134,722 | 4,401 | | **Total** | **327,693** | **318,921** | **8,772** | [13. Trade Receivables](index=14&type=section&id=13.%20Trade%20Receivables) As of June 30, 2025, total trade receivables amounted to HK$404,617 thousand, an increase from December 31, 2024. The Group grants customers credit terms of 60 to 120 days and maintains strict control over overdue balances - The Group's trade terms with customers are primarily on an open account basis, with credit periods generally ranging from **60 to 120 days**[28](index=28&type=chunk) Ageing Analysis of Trade Receivables (HK$ thousand) | Ageing | June 30, 2025 | December 31, 2024 | Change (HK$ thousand) | | :--- | :--- | :--- | :--- | | Within 1 month | 217,981 | 175,321 | 42,660 | | 1 to 2 months | 72,156 | 71,405 | 751 | | 2 to 3 months | 52,212 | 51,043 | 1,169 | | 3 to 4 months | 34,483 | 35,049 | (566) | | 4 to 12 months | 24,943 | 37,450 | (12,507) | | Over 1 year | 2,842 | – | 2,842 | | **Total** | **404,617** | **370,268** | **34,349** | [14. Cash and Bank Balances](index=15&type=section&id=14.%20Cash%20and%20Bank%20Balances) As of June 30, 2025, cash and bank balances amounted to HK$439,269 thousand, a decrease from December 31, 2024, primarily due to a reduction in pledged and restricted deposits | Item | June 30, 2025 (HK$ thousand) | December 31, 2024 (HK$ thousand) | Change (HK$ thousand) | | :--- | :--- | :--- | :--- | | Bank deposits, bank and cash in hand | 458,232 | 549,893 | (91,661) | | Less: Pledged and restricted deposits | (18,963) | (34,733) | 15,770 | | **Cash and cash equivalents** | **439,269** | **515,160** | **(75,891)** | [15. Trade Payables](index=15&type=section&id=15.%20Trade%20Payables) As of June 30, 2025, total trade payables amounted to HK$106,366 thousand, a slight increase from December 31, 2024 | Ageing | June 30, 2025 (HK$ thousand) | December 31, 2024 (HK$ thousand) | Change (HK$ thousand) | | :--- | :--- | :--- | :--- | | Within 1 month | 59,541 | 64,756 | (5,215) | | 1 to 2 months | 23,190 | 21,781 | 1,409 | | 2 to 3 months | 12,812 | 6,312 | 6,500 | | Over 3 months | 10,823 | 12,311 | (1,488) | | **Total** | **106,366** | **105,160** | **1,206** | [16. Share Capital](index=15&type=section&id=16.%20Share%20Capital) As of June 30, 2025, the Group's authorized share capital and issued and fully paid share capital remained unchanged at HK$200,000 thousand and HK$105,225 thousand, respectively | Item | June 30, 2025 (HK$ thousand) | December 31, 2024 (HK$ thousand) | | :--- | :--- | :--- | | Authorized share capital | 200,000 | 200,000 | | Issued and fully paid share capital | 105,225 | 105,225 | - There were no changes in the issued and fully paid share capital for the six months ended June 30, 2025, and for the year ended December 31, 2024[30](index=30&type=chunk) [17. Bank and Other Borrowings](index=16&type=section&id=17.%20Bank%20and%20Other%20Borrowings) As of June 30, 2025, total bank and other borrowings amounted to HK$205,776 thousand, a significant decrease from December 31, 2024, primarily due to the repayment of secured bank loans | Loan Category | June 30, 2025 (HK$ thousand) | December 31, 2024 (HK$ thousand) | Change (HK$ thousand) | | :--- | :--- | :--- | :--- | | Bank loans – secured | – | 110,000 | (110,000) | | Bank loans – secured with a repayment on demand clause | 199,486 | 171,541 | 27,945 | | Bank loans – unsecured | – | 4,242 | (4,242) | | Other loans – non-controlling shareholders | 6,290 | 5,981 | 309 | | **Total** | **205,776** | **291,764** | **(85,988)** | Bank Loan Maturity Profile (HK$ thousand) | Maturity Period | June 30, 2025 | December 31, 2024 | Change (HK$ thousand) | | :--- | :--- | :--- | :--- | | Within 1 year or on demand | 44,645 | 128,040 | (83,395) | | In the second year | 16,626 | 15,863 | 763 | | In the third to fifth year | 80,234 | 52,835 | 27,399 | | Over 5 years | 57,981 | 89,045 | (31,064) | | **Total** | **199,486** | **285,783** | **(86,300)** | [18. Capital Commitments](index=17&type=section&id=18.%20Capital%20Commitments) As of June 30, 2025, the Group's total contracted but unprovided capital commitments amounted to HK$10,690 thousand, a decrease from December 31, 2024, primarily reflecting reduced commitments for buildings and plant and machinery | Item | June 30, 2025 (HK$ thousand) | December 31, 2024 (HK$ thousand) | Change (HK$ thousand) | | :--- | :--- | :--- | :--- | | Plant and machinery | 1,474 | 3,299 | (1,825) | | Buildings | 9,216 | 15,321 | (6,105) | | **Total** | **10,690** | **18,620** | **(7,930)** | [19. Related Party Transactions](index=17&type=section&id=19.%20Related%20Party%20Transactions) As of June 30, 2025, total remuneration paid to key management personnel amounted to HK$5,674 thousand, a decrease from the same period last year | Item | June 30, 2025 (HK$ thousand) | December 31, 2024 (HK$ thousand) | Change (HK$ thousand) | | :--- | :--- | :--- | :--- | | Short-term employee benefits | 5,434 | 6,299 | (865) | | Post-employment benefits | 240 | 222 | 18 | | **Total remuneration paid to key management personnel** | **5,674** | **6,521** | **(847)** | [Chairman's Report](index=18&type=section&id=Chairman's%20Report) [Business Review](index=18&type=section&id=Business%20Review) Amidst a complex international economic environment, the Group's H1 2025 sales slightly decreased by 2.9% to HK$487,743 thousand. Sales of hydraulic equipment parts grew by 1.0%, while automotive and electronic equipment parts businesses declined. The Group is addressing challenges through cost control and the commencement of production at its Thailand factory - Affected by the US tariff war, the Russia-Ukraine conflict, and domestic industry 'involution', the Group's overall revenue remained relatively stable, with H1 sales recorded at **HK$487,743 thousand**, a year-on-year decrease of **2.9%**[35](index=35&type=chunk) - Sales of hydraulic equipment parts business were **HK$254,322 thousand**, a year-on-year increase of **1.0%**, primarily achieved through price reductions to maintain volume and expansion into the agricultural machinery sector[36](index=36&type=chunk) - Sales of automotive parts business were **HK$216,366 thousand**, a year-on-year decrease of **4.6%**, negatively impacted by both US tariff policies and increased penetration of new energy vehicles. Some parts have been transferred to the Thailand factory for production[37](index=37&type=chunk) - Sales of electronic equipment parts business were **HK$12,143 thousand**, a year-on-year decrease of **15.2%**, largely maintaining last year's level[37](index=37&type=chunk) - Through cost optimization measures such as lean projects, enhanced automation, and optimized supply chain management, the Group maintained its gross profit margin at **28.1%** (prior period: **27.4%**)[38](index=38&type=chunk) [Financial Review](index=20&type=section&id=Financial%20Review) Despite a 2.9% decrease in total sales, the gross profit margin was maintained at 28.1% through cost control and automation. The reduction in other income was mainly due to lower exchange gains from a weaker US dollar and decreased bank interest income. Administrative expenses increased due to a non-wholly owned subsidiary's closure and exchange losses, but finance costs significantly decreased by 38.9% due to bank loan repayments. Net profit for the period slightly declined by 4.0% - Total sales decreased by **2.9%** year-on-year to **HK$487,743 thousand**, but the gross profit margin was maintained at **28.1%** (prior period: **27.4%**), with gross profit at **HK$137,139 thousand**[39](index=39&type=chunk) - Total other income amounted to **HK$19,097 thousand**, a year-on-year decrease, primarily due to unrealized exchange gains from a weaker US dollar (prior period exchange gain: **HK$7,234 thousand**) and a **HK$2,695 thousand** reduction in bank interest income[39](index=39&type=chunk) - Administrative expenses and other expenses were **HK$91,251 thousand**, a year-on-year increase of **6.5%**, mainly due to **HK$2,200 thousand** compensation from the closure of a non-wholly owned subsidiary and **HK$4,914 thousand** exchange losses from a weaker US dollar, partially offset by **HK$851 thousand** savings in utilities[40](index=40&type=chunk) - Research and development expenses were **HK$29,875 thousand**, a slight decrease, but continuous investment is maintained to preserve market competitiveness[41](index=41&type=chunk) - Finance costs were **HK$5,360 thousand**, a year-on-year decrease of **38.9%**, primarily due to the use of internal funds to repay bank loans[41](index=41&type=chunk) - Net profit for the period was **HK$12,183 thousand**, a year-on-year decrease of **4.0%**[41](index=41&type=chunk) [Pledge of the Group's Assets](index=21&type=section&id=Pledge%20of%20the%20Group's%20Assets) The Group reduced total bank and other borrowings by HK$85,988 thousand by repaying high-cost bank loans with internal funds. Some loans are secured by subsidiary equity and properties, with certain deposits restricted for loan repayment or letter of guarantee issuance - Total bank and other borrowings amounted to **HK$205,776 thousand**, a decrease of **HK$85,988 thousand** from the end of last year, primarily due to the use of internal funds to repay high-cost bank loans[42](index=42&type=chunk) - Loans are guaranteed by the Company and its subsidiaries, and secured by equity interests in subsidiaries and properties[42](index=42&type=chunk) - As of June 30, 2025, no deposits were pledged to secure general working capital (December 31, 2024: **HK$20,000 thousand**)[43](index=43&type=chunk) - Deposits of **HK$16,660 thousand** were restricted solely for loan repayment purposes[43](index=43&type=chunk) [Liquidity, Financial Resources and Financial Ratios](index=22&type=section&id=Liquidity,%20Financial%20Resources%20and%20Financial%20Ratios) The Group's net cash flow from operating activities significantly increased to HK$70,583 thousand, primarily benefiting from improved working capital management and the release of restricted funds. Cash outflow from investing activities substantially decreased, while net cash outflow from financing activities was mainly used for repaying high-cost bank loans. Overall net cash increased - Net cash generated from operating activities was **HK$70,583 thousand**, a year-on-year increase of **HK$47,409 thousand**, primarily due to improved working capital management and reduced restricted funds releasing liquidity[44](index=44&type=chunk) - Net cash outflow from investing activities was **HK$52,333 thousand**, a year-on-year decrease of **HK$201,945 thousand**, mainly due to significant acquisition expenditures in the prior period[45](index=45&type=chunk) - Net cash outflow from financing activities was **HK$97,644 thousand**, primarily due to the use of internal funds to repay high-cost bank loans[45](index=45&type=chunk) - As of June 30, 2025, the Group's net cash was **HK$233,493 thousand**, an increase of **HK$10,097 thousand** from December 31, 2024[45](index=45&type=chunk) [Currency Risk and Management](index=23&type=section&id=Currency%20Risk%20and%20Management) The Group faces foreign currency exchange rate fluctuation risks, particularly the negative impact of RMB appreciation on profitability, as revenue is primarily settled in USD, EUR, and RMB, while expenses are settled in JPY, RMB, THB, and HKD. Management continuously assesses and implements measures to mitigate these risks - The Group is exposed to foreign currency exchange rate fluctuation risks, with revenue primarily settled in USD, EUR, and RMB, while expenses are settled in JPY, RMB, THB, and HKD[46](index=46&type=chunk) - RMB appreciation would have a negative impact on the Group's profitability[46](index=46&type=chunk) - Management continuously assesses foreign exchange risks and takes measures to mitigate them when necessary[46](index=46&type=chunk) [Human Resources](index=23&type=section&id=Human%20Resources) The Group is committed to talent pipeline development and employee safety training, with a share option scheme and retirement benefit plans in place. As of June 30, 2025, the total number of employees was **2,138**, a year-on-year decrease of **119** employees - The Company formulates a talent pipeline reserve list and development plans to ensure an ample supply of core talent[47](index=47&type=chunk) - To protect employees, the Company enhances production safety awareness and training, strengthening employees' understanding of risk points on production lines[47](index=47&type=chunk) - A share option scheme is in place to encourage and reward contributions from selected participants, and a Mandatory Provident Fund Scheme and local retirement benefit plans are established for employees[47](index=47&type=chunk) - As of June 30, 2025, the total number of employees was **2,138**, a decrease of **119** employees from the same period last year[47](index=47&type=chunk) [Outlook](index=24&type=section&id=Outlook) Facing a complex international economic environment and tariff policies, the Group will mitigate operational risks by expanding domestic sales and shifting US customer orders to its Thailand production base. The second half will focus on sales breakthroughs, developing new regional markets (e.g., Eastern Europe and Southeast Asia), accelerating new product R&D and mass production, and recruiting key talent to enhance production processes and R&D capabilities - To reduce reliance on overseas sales markets, the Group will expand its domestic sales market by launching new products; sales in the China region have increased from **55%** in the prior period to **60%** in the current period[48](index=48&type=chunk) - To mitigate tariff risks, the Group continues to gradually transfer US customer orders to its Thailand production base while expanding into Southeast Asian markets[48](index=48&type=chunk) - The primary task for the second half is sales breakthroughs, developing new regional markets (e.g., Eastern Europe and Southeast Asia), actively seeking new projects, accelerating new product sample progress, and achieving mass production[48](index=48&type=chunk) - The Group will drive future development through R&D, iterating and upgrading products, optimizing functions, and recruiting key talent to enhance production processes and R&D capabilities[48](index=48&type=chunk) [Additional Information](index=25&type=section&id=Additional%20Information) [Purchase, Redemption or Sale of the Company's Listed Securities](index=25&type=section&id=Purchase,%20Redemption%20or%20Sale%20of%20the%20Company's%20Listed%20Securities) For the six months ended June 30, 2025, neither the Company nor its subsidiaries purchased, sold, or redeemed any listed securities, and the Company held no treasury shares - For the six months ended June 30, 2025, neither the Company nor any of its subsidiaries purchased, sold, or redeemed any of the Company's listed securities on the Stock Exchange[51](index=51&type=chunk) - As of June 30, 2025, the Company did not hold any treasury shares[51](index=51&type=chunk) [Interim Dividend](index=25&type=section&id=Interim%20Dividend) The Board does not recommend the payment of any interim dividend for the six months ended June 30, 2025, consistent with the same period last year - The Board does not recommend the payment of any interim dividend for the six months ended June 30, 2025 (2024: nil)[52](index=52&type=chunk) [Standard Code for Securities Transactions](index=25&type=section&id=Standard%20Code%20for%20Securities%20Transactions) The Company has adopted its own code of conduct no less exacting than the Listing Rules' Standard Code, and established written guidelines for employees. All Directors confirmed compliance with the code, with no non-compliance by relevant employees identified - The Company has adopted its own code of conduct no less exacting than the Standard Code set out in Appendix C3 of the Listing Rules, and has established written guidelines for employees[53](index=53&type=chunk) - All Directors confirmed compliance with their own code and the Standard Code throughout the six months ended June 30, 2025[53](index=53&type=chunk) - The Company is not aware of any non-compliance by relevant employees with the written guidelines for employees[53](index=53&type=chunk) [Events After the Reporting Period](index=25&type=section&id=Events%20After%20the%20Reporting%20Period) Save as disclosed in this announcement, there have been no significant events after June 30, 2025, and up to the date of this announcement - There have been no significant events after June 30, 2025, and up to the date of this announcement[54](index=54&type=chunk) [Corporate Governance](index=26&type=section&id=Corporate%20Governance) The Company is committed to maintaining high corporate governance standards and has adopted the Corporate Governance Code in Appendix C1 Part 2 of the Listing Rules. Despite the Chairman and CEO roles being combined and independent non-executive directors missing a general meeting, the Board believes this structure benefits shareholders overall - The Company has adopted the Corporate Governance Code set out in Appendix C1 Part 2 of the Listing Rules and considers that it has complied with the code during the review period[55](index=55&type=chunk) - The roles of Chairman and Chief Executive Officer are combined and held by Mr. Zeng Guangsheng, which the Board believes provides strong and consistent leadership, benefiting shareholders as a whole[56](index=56&type=chunk) - Non-executive Director Mr. Chen Kuangguo and Independent Non-executive Director Mr. Yang Rusheng were unable to attend the Annual General Meeting held on May 16, 2025, due to other work commitments, constituting a deviation from Corporate Governance Code Provision C.1.5[56](index=56&type=chunk) - The Audit Committee has reviewed the accounting principles and practices adopted by the Group and discussed matters relating to risk management, internal control, and financial reporting procedures[55](index=55&type=chunk) [Publication of Interim Results Announcement and Interim Report](index=27&type=section&id=Publication%20of%20Interim%20Results%20Announcement%20and%20Interim%20Report) This interim results announcement has been published on the Stock Exchange's website and the Company's website. The interim report will be dispatched to shareholders and published on the websites in due course - This interim results announcement has been published on the website of the Stock Exchange (www.hkexnews.hk) and the Company's website (http://www.ipegroup.com)[57](index=57&type=chunk) - The Company's interim report for the six months ended June 30, 2025, will be dispatched to shareholders and published on the aforementioned websites in due course[57](index=57&type=chunk) [Board of Directors](index=27&type=section&id=Board%20of%20Directors) As of the date of this announcement, the Board of Directors comprises seven directors, including two executive directors (Mr. Zeng Guangsheng, also Chairman and CEO; Mr. Wu Kaiping), two non-executive directors (Ms. Zeng Jing; Mr. Chen Kuangguo), and three independent non-executive directors (Mr. Yang Rusheng; Mr. Zhang Zhenyu; Mr. Zhu Jianbiao) - The Board of Directors consists of seven directors: Mr. Zeng Guangsheng (Chairman and Chief Executive Officer), Mr. Wu Kaiping (Executive Director), Ms. Zeng Jing, Mr. Chen Kuangguo (Non-executive Directors), Mr. Yang Rusheng, Mr. Zhang Zhenyu, and Mr. Zhu Jianbiao (Independent Non-executive Directors)[58](index=58&type=chunk)

Company Overview - International Precision Group Limited (IPE Group) was established in 1990 and listed on the Hong Kong Stock Exchange on November 1, 2004, with stock code 00929. It is a member of China Baoan Group, one of the first batch of listed companies in New China [4] - The company is headquartered in Hong Kong and has production bases in Thailand and mainland China, including Guangzhou, Dongguan, Changshu, Yangzhou, Shanghai, and Wuhu. It also has sales offices in Hong Kong, Guangzhou, Bangkok, and Europe [4] - IPE Group specializes in high-end precision manufacturing, providing products for the automotive, hydraulic, and humanoid robot sectors, and has established long-term partnerships with Fortune 500 clients [4] Financial Performance - As of December 31, 2024, IPE Group achieved total operating revenue of 935 million yuan, representing a year-on-year growth of 12.38%. The net profit attributable to shareholders was 9.8132 million yuan, with a significant increase of 86.99%. The gross profit margin stood at 28.29%, and the debt-to-asset ratio was 21.15% [2] Market Position and Valuation - Currently, there are no institutional investment ratings for IPE Group. The company's price-to-earnings (P/E) ratio is 41.21, ranking 29th in the industry, while the average P/E ratio for the automotive industry is 17.49, with a median of 9.54 [3] - Comparatively, other companies in the automotive interior sector have significantly lower P/E ratios, such as 1.08 for China Automotive Interior (00048.HK), 3.37 for Pulin Chengshan (01809.HK), and 5.39 for BRILLIANCE CHI (01114.HK) [3] Recent Stock Performance - As of August 14, the Hang Seng Index fell by 0.37% to 25,519.32 points. IPE Group's stock closed at 0.455 HKD per share, marking an increase of 9.64% with a trading volume of 645,000 shares and a turnover of 276,700 HKD [1] - Over the past month, IPE Group has experienced a cumulative decline of 1.19%, and since the beginning of the year, the stock has dropped by 16.16%, underperforming the Hang Seng Index, which has risen by 27.69% [2]

公司秘書 譚耀忠 董事會會議召開日期 國際精密集團有限公司（「本公司」，連同其附屬公司為「本集團」）之董事（「董事」）會 （「董事會」）謹此宣佈，本公司將於二零二五年八月二十日（星期三）舉行董事會會議，其 中議程包括考慮及批准本集團截至二零二五年六月三十日止六個月之綜合中期業績公告 及其刊發，以及考慮派發中期股息之建議（如有）。 承董事會命 國際精密集團有限公司 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。 IPE GROUP LIMITED 國際精密集團有限公司 （於開曼群島註冊成立之有限公司） （股份代號：929） 香港，二零二五年八月八日 於本公告日期，董事會包括兩名執行董事，分別為曾廣勝先生（主席兼行政總裁）及吳凱 平先生；兩名非執行董事，分別為曾靜女士及陳匡國先生；以及三名獨立非執行董事， 分別為楊如生先生、張振宇先生及朱劍彪先生。 ...

股份發行人及根據《上市規則》第十九B章上市的香港預託證券發行人的證券變動月報表 截至月份: 2025年7月31日 狀態: 新提交 致：香港交易及結算所有限公司 公司名稱: 國際精密集團有限公司 呈交日期: 2025年8月6日 FF301 第 1 頁 共 10 頁 v 1.1.1 FF301 II. 已發行股份及/或庫存股份變動 | 1. 股份分類 | 普通股 | 股份類別 | 不適用 | | 於香港聯交所上市 (註1) | 是 | | | --- | --- | --- | --- | --- | --- | --- | --- | | 證券代號 (如上市) | 00929 | 說明 | | | | | | | | | 已發行股份（不包括庫存股份）數目 | | 庫存股份數目 | | 已發行股份總數 | | | 上月底結存 | | | 1,052,254,135 | | 0 | | 1,052,254,135 | | 增加 / 減少 (-) | | | | | | | | | 本月底結存 | | | 1,052,254,135 | | 0 | | 1,052,254,135 | 第 2 頁 共 10 頁 v 1 ...

Company Overview - Qingdao Wangshengyuan Metal Technology Co., Ltd. is located in Jiaozhou, Qingdao, Shandong Province, with a strategic position near major transportation hubs, including Qingdao Liuting International Airport (70 km), Qingdao Port (80 km), and Huangdao Port (60 km) [1] - The company covers an area of 216 acres with a building area of over 30,000 square meters, employing more than 380 staff and having a total investment exceeding 120 million yuan [1] Production Capabilities - The company utilizes advanced international equipment such as dual-station wax injection machines, shell hanging chains, medium-frequency induction furnaces, machining centers, and ultrasonic cleaning machines, specializing in precision casting and CNC machining processes [3] - It produces precision castings made from stainless steel, carbon steel, alloy steel, and heat-resistant steel, with main products including automotive engine components, valve bodies, marine hardware, mechanical parts, and medical equipment [3] - The annual production capacity reaches 1,500 tons, with 95% of products exported to countries and regions such as South Korea, Japan, Europe, and North America [3] Certifications and Technology - The company obtained ISO 9001 quality management system certification in August 2013, followed by safety production standardization level three certification in January 2017, and updated IATF 16949:2016 quality management system certification in April 2018 [5] - It is recognized as a high-tech enterprise in Qingdao and has received certificates for specialized and innovative products (technologies), holding over ten utility model patents [5] Equipment and Standards - The company boasts advanced equipment and strong technical capabilities, with comprehensive testing methods including spectrometric analysis, coordinate measuring machines, X-ray inspection, fluorescent magnetic particle testing, electronic endoscopes, and universal testing machines [7] - It can produce castings according to various international standards, including Chinese (GB), American (ASTM, AISI), German (DIN), British (BS), Japanese (JIS), and Korean (KS) standards [7] Industry Events - The 21st Shanghai International Foundry Exhibition is scheduled to take place from December 2 to 4, 2025, at the Shanghai New International Expo Center, expecting over 1,000 foundry and related enterprises with an exhibition area of 40,000 square meters and more than 30,000 professional visitors [9][11][12][13]

Group 1 - International Precision Group Limited (IPE Group) was established in 1990 and listed on the Hong Kong Stock Exchange on November 1, 2004, with stock code 00929 [2] - IPE Group is a subsidiary of China Baoan Group, which is one of the first batch of listed companies in New China, founded in July 1983 [2] - The company operates in high-end precision manufacturing, providing products for automotive, hydraulic, and humanoid robots, and has become a comprehensive solution provider for Fortune Global 500 clients [2] Group 2 - IPE Group has established production bases in Thailand and various cities in mainland China, including Guangzhou, Dongguan, Changshu, Yangzhou, Shanghai, and Wuhu [2] - The company has accumulated five core competitive advantages over 30 years, including advanced automation manufacturing technology, refined processing techniques, precision testing equipment, international-level heat treatment production lines, and rich material selection experience [2] - IPE Group's automotive products are exported overseas and have received multiple awards for excellence from major automotive manufacturers in Europe and the US, establishing long-term stable partnerships with clients such as General Motors, Bosch, Continental Group, BorgWarner, and Danfoss [2]

Financial Performance - The company reported a significant increase in revenue, achieving a total of $500 million for the fiscal year, representing a 20% growth compared to the previous year[19]. - Revenue for the year ended December 31, 2024, reached HKD 1,010,006 thousand, a 12.4% increase from HKD 898,733 thousand in 2023[23]. - Gross profit margin improved to 28.3% in 2024 from 24.8% in 2023, reflecting better cost management[25]. - Net profit for the year was HKD 30,111 thousand, up from HKD 15,645 thousand in 2023, representing a 92.5% increase[23]. - The total sales revenue for the year 2024 was HK$1,010,006,000, an increase of HK$111,273,000 or 12.4% compared to the previous year[35]. - The gross profit for 2024 was HK$285,705,000, up HK$62,881,000 or 28.2% from HK$222,824,000 in the previous year, with a gross margin increase to 28.3%[38]. - The net profit after tax for the year was HK$30,111,000, a significant increase of 92.5% from HK$15,645,000 in the previous year[39]. Market Expansion - The company provided a positive outlook for the next fiscal year, projecting a revenue growth of 25% and aiming to reach $625 million[19]. - The company is expanding its market presence in Southeast Asia, targeting a 30% market share in the region by 2025[19]. - The company plans to expand its market presence in North America, which accounted for 19% of revenue in 2024[27]. - The company plans to focus on developing new products and expanding into overseas markets, particularly ASEAN and Eastern Europe[41]. Product Development - New product development includes the launch of a precision hydraulic control system, expected to contribute $50 million in revenue in the first year[19]. - The company has filed 88 patent applications and obtained 71 patents, enhancing its competitive edge in new product development[39]. Operational Efficiency - The company has invested $10 million in R&D for advanced manufacturing technologies, aiming to improve efficiency by 15%[19]. - The company plans to enhance its supply chain management, aiming to reduce costs by 10% over the next year[19]. - The company aims to optimize cost structures and enhance operational efficiency through lean projects and improved supply chain collaboration[41]. Corporate Governance - The company emphasizes the importance of good corporate governance for its success and sustainability, adhering to the corporate governance code as per the Hong Kong Stock Exchange regulations[64]. - The board of directors is responsible for overall business management and monitoring, with a focus on enhancing shareholder value through strategic policy approval[65]. - The company has a commitment to regularly review and enhance its corporate governance practices to meet regulatory requirements and shareholder expectations[64]. - The board has delegated certain responsibilities to senior management for implementing decisions and coordinating daily operations[66]. Leadership and Management - The company reported a significant leadership team with extensive experience in finance and management, including the CEO and executive directors with backgrounds in economics and business administration[54][55][56][57][58][59]. - The CEO, Mr. Zeng Guangsheng, has been with the group since 2016 and holds a PhD in economics, indicating strong academic credentials[54]. - The CFO, Mr. Wu Kaiping, has been responsible for overall financial management since joining in 2016, showcasing a focus on financial oversight[54]. - The independent directors bring over 30 years of experience in finance, auditing, and taxation, enhancing the board's governance capabilities[56][57]. Environmental, Social, and Governance (ESG) - The company emphasizes environmental, social, and governance (ESG) factors, with board members involved in ESG committees and initiatives[57][58]. - The company aims to become a leading provider of high-precision manufacturing services and solutions, focusing on technological innovation and market expansion[82]. - The company is committed to integrating ESG principles into its strategic decision-making and operational processes, reflecting its responsibility to society[130]. - The ESG committee, consisting of executive and independent non-executive directors, oversees all ESG topics and reports regularly to the board[130]. Sustainability Initiatives - The company has achieved multiple local and international certifications, including IATF16949:2016 and ISO9001:2015, demonstrating operational excellence[134]. - The company has implemented measures to improve energy efficiency and reduce environmental impact, adhering strictly to environmental laws and regulations[182]. - The company has successfully connected a 1.49 MW distributed photovoltaic project to the grid, with an expected annual generation of 1.5 million kWh, significantly reducing greenhouse gas emissions[167]. - The company aims to further reduce environmental impact through the expansion of renewable energy projects and energy efficiency upgrades[167]. Employee and Workforce Management - The workforce increased to 2,173 employees as of December 31, 2024, up by 108 from 2,065 employees a year earlier, including the addition of two subsidiaries[53]. - The company has implemented appropriate recruitment measures to ensure diversity among candidates for senior management positions[105]. - The gender ratio of the company's workforce, including senior management and other employees, is approximately 1:0.66, indicating a commitment to gender diversity in key positions[105]. Risk Management - The board is responsible for evaluating and determining the nature and extent of risks the group is willing to accept to achieve strategic objectives, ensuring effective risk management and internal control systems are in place[111]. - The group has established an internal audit function to identify and assess risks related to daily operations and report findings to the board[112]. - The board has reviewed the effectiveness of the risk management and internal control systems and considers them to be effective and sufficient[112].

Financial Performance - Revenue for the year increased by 12.4% to HKD 1,010,000,000 compared to HKD 898,700,000 in the previous year[2] - Profit for the year surged by 92.5% to HKD 30,100,000, up from HKD 15,600,000 in the previous year[2] - Basic earnings per share rose to HKD 1.01 from HKD 0.54 in the previous year[2] - Total revenue for the year ended December 31, 2024, was HKD 1,010,006,000, an increase of 12.4% compared to HKD 898,733,000 in 2023[16] - Gross profit for 2024 was HKD 285,705,000, compared to HKD 222,824,000 in 2023, indicating a year-over-year increase of about 28.2%[21] - Net profit after tax for the year was HKD 30,111,000, a significant increase of HKD 14,466,000 or 92.5% compared to HKD 15,645,000 in the previous year[45] - Basic earnings per share for 2024 were HKD 10,597,000, compared to HKD 5,667,000 in 2023, showing a substantial increase of approximately 87.5%[28] Revenue Breakdown - Revenue from hydraulic equipment parts increased significantly to HKD 485,904,000, up 33.3% from HKD 364,444,000 in the previous year[16] - Sales of electronic equipment parts decreased to HKD 27,244,000, down 24.8% from HKD 36,192,000 in 2023[16] - Total customer revenue for 2024 reached HKD 1,010,006,000, an increase from HKD 898,733,000 in 2023, representing a growth of approximately 12.4%[21] - Sales of hydraulic equipment parts amounted to HKD 485,904,000, achieving double-digit growth and becoming the largest revenue segment for the company[40] - Automotive parts sales recorded HKD 444,860,000, remaining roughly flat compared to the previous year despite pressures from declining orders in traditional automotive projects[41] - Sales in the electronic equipment parts segment decreased by HKD 8,948,000 or 24.7%, totaling HKD 27,244,000 due to overall market contraction[41] Cash and Assets - The company reported a net cash position of HKD 223,400,000, equivalent to HKD 21.23 per share, down from HKD 488,800,000 or HKD 46.45 per share in the previous year[2] - Total assets decreased to HKD 1,986,266,000 from HKD 2,119,470,000 in the previous year[6] - The net cash position as of December 31, 2024, is HKD 223,396,000, a decrease of HKD 265,458,000 from HKD 488,854,000 last year[55] - The total cost of investment properties and other properties amounted to HKD 2,788,135 thousand, an increase from HKD 2,671,207 thousand at the beginning of the year, representing a growth of approximately 4.4%[31] - The net book value of intangible assets as of December 31, 2023, was HKD 68,362 thousand, down from HKD 71,972 thousand at the beginning of the year, indicating a decrease of about 5.5%[32] Liabilities and Equity - Current liabilities increased to HKD 484,051,000 from HKD 427,357,000 in the previous year[6] - Non-current liabilities decreased significantly to HKD 38,348,000 from HKD 155,280,000 in the previous year[6] - Total equity decreased to HKD 1,947,918,000 from HKD 1,964,190,000 in the previous year[6] - The total bank borrowings increased to HKD 285,783,000 from HKD 166,355,000 in the previous year, primarily due to acquisition costs and new factory construction[52] Research and Development - Research and development costs rose to HKD 80,641,000 in 2024 from HKD 57,696,000 in 2023, reflecting a significant increase of approximately 39.7%[26] - Research and development expenses increased due to the acquisition of Yutai Hydraulic and Wuhu Yingnuo, with 88 patents applied for and 71 patents obtained[44] Corporate Governance - The company has adopted corporate governance principles and has complied with the corporate governance code for the year ending December 31, 2024, with some exceptions noted[62] - The audit committee consists of three independent non-executive directors, ensuring compliance with accounting principles and discussing risk management and internal controls[63] - The board of directors includes executive and independent non-executive members, ensuring diverse governance[67] Future Outlook - Future outlook includes continued focus on expanding product lines and market presence, particularly in hydraulic equipment[16] - The company plans to enhance its competitive advantage by focusing on new products, technologies, and processes while optimizing cost structures and expanding into new markets[46] - The average forecast sales growth rate for the next five years is projected at 4%, up from 3% in 2023[34]

[Company Information and Structure](index=2&type=section&id=Company%20Information%20and%20Structure) [Company Information](index=2&type=section&id=Company%20Information) This section provides the basic company information for International Precision Group Limited, including the board of directors and committee members, registered office, principal place of business, legal advisors, auditors, and listing information - The Chairman and Chief Executive Officer of the company is Mr. Zeng Guangsheng[9](index=9&type=chunk) - The company is registered in the Cayman Islands and listed on the Main Board of The Stock Exchange of Hong Kong with stock code **929**[41](index=41&type=chunk)[40](index=40&type=chunk) [Company Profile](index=6&type=section&id=Company%20Profile) International Precision Group primarily manufactures and sells precision metal parts for automotive, hydraulic, electronic equipment, and other instruments, serving top-tier multinational corporations and supporting new project development - The Group's principal business involves the manufacturing and sale of precision metal parts for applications in automotive, hydraulic equipment, and electronic devices[41](index=41&type=chunk) - The Group serves top-tier multinational corporations in the IT, hydraulic power, automotive, and electrical appliance industries, providing solutions for new project development[41](index=41&type=chunk) [Company Milestones](index=7&type=section&id=Company%20Milestones) This section reviews the company's key development milestones, from its establishment in Singapore in 1990 to its expansion in Hong Kong, Thailand, and mainland China, culminating in its listing on the Hong Kong Main Board in 2004 - The company was listed on the Main Board of The Stock Exchange of Hong Kong on **November 1, 2004**[42](index=42&type=chunk) - In recent years, several of the company's subsidiaries (e.g., Guangzhou Huitong, Dongguan Keda, Guangzhou Xinhao) have been recognized as high-tech enterprises or 'specialized, refined, unique, and innovative' SMEs, and have received awards in hydraulic technology[42](index=42&type=chunk) [Group Structure](index=8&type=section&id=Group%20Structure) This section presents the organizational chart of International Precision Group Limited as of June 30, 2024, detailing its network of principal subsidiaries and associates across mainland China, Hong Kong, Thailand, and the British Virgin Islands - The Group manages its manufacturing and sales operations in mainland China and Thailand through multiple investment holding companies established in the British Virgin Islands and Hong Kong[43](index=43&type=chunk) - The Group has a deep presence in the hydraulic business sector, owning several related subsidiaries such as Guangzhou Huitong Precision Hydraulic and Jiangsu Kaimai Hydraulic Control System[43](index=43&type=chunk) [Financial and Operational Analysis](index=10&type=section&id=Financial%20and%20Operational%20Analysis) [Financial Highlights](index=10&type=section&id=Financial%20Highlights) This section provides an overview of the Group's key financial ratios, business segments, and geographical revenue composition, highlighting a gross profit margin recovery to 27.4% and hydraulic business becoming the largest revenue source Key Financial Ratios Analysis | Metric | June 30, 2024 | December 31, 2023 | | :--- | :--- | :--- | | Current Ratio | 4.12 | 3.43 | | Gearing Ratio | 15.6% | 9.4% | | Gross Profit Margin | 27.4% | 24.8% | | Net Profit Margin | 2.5% | 1.7% | | Earnings Per Share | 0.2 HK cents | 0.54 HK cents | - By business segment, hydraulic business revenue of **HK$252 million** in H1 2024 surpassed automotive business revenue of **HK$227 million** for the first time, becoming the Group's largest revenue source[47](index=47&type=chunk)[54](index=54&type=chunk) - By geographical region, revenue from mainland China, Macau, and Hong Kong markets increased from **45%** in the prior period to **55%** in H1 2024[48](index=48&type=chunk)[49](index=49&type=chunk) [Management Discussion and Analysis](index=13&type=section&id=Management%20Discussion%20and%20Analysis) Management reviews H1 2024 performance, noting a 19.6% increase in total sales to HK$502 million and a 54.1% rise in net profit to HK$12.69 million, driven by hydraulic business acquisitions and automotive order recovery [Business Review](index=13&type=section&id=Business%20Review) In H1 2024, the Group's total sales increased by 19.6% to HK$502 million, with hydraulic equipment parts sales surging by 39.8% due to acquisitions and organic growth, while electronic equipment parts sales continued to decline H1 2024 Sales by Business Segment | Business Segment | H1 2024 (HK$ '000) | Proportion (%) | H1 2023 (HK$ '000) | Proportion (%) | Change (%) | | :--- | :--- | :--- | :--- | :--- | :--- | | Automotive Parts | 226,890 | 45.2 | 207,303 | 49.4 | +9.4 | | Hydraulic Equipment Parts | 251,685 | 50.1 | 180,051 | 42.9 | +39.8 | | Electronic Equipment Parts | 14,327 | 2.9 | 22,130 | 5.3 | -35.3 | | Others | 9,247 | 1.8 | 10,277 | 2.4 | -10.0 | | **Total** | **502,149** | **100** | **419,761** | **100** | **+19.6** | - The Group's net profit increased by **54.1%** year-on-year to **HK$12.69 million**, primarily due to increased sales and a gross profit margin improvement from **23.0%** to **27.4%**[54](index=54&type=chunk)[58](index=58&type=chunk) [Financial Review](index=14&type=section&id=Financial%20Review) The Group's gross profit increased by 42.5% to HK$137 million, with a 4.4 percentage point rise in gross profit margin to 27.4%, while sales, administrative, R&D, and finance costs all increased due to acquisitions and business expansion - Sales and distribution expenses increased by **HK$5.5 million** year-on-year, mainly due to expanded scale post-acquisition and increased marketing activities[56](index=56&type=chunk) - Administrative expenses increased by **HK$7.88 million** year-on-year, primarily due to patent amortization and increased salaries and benefits from acquisitions[56](index=56&type=chunk) - Finance costs increased by **HK$4.41 million** year-on-year to **HK$8.78 million**, mainly due to increased bank borrowings for acquisitions[58](index=58&type=chunk) [Liquidity, Financial Resources, and Financial Ratios](index=17&type=section&id=Liquidity%2C%20Financial%20Resources%2C%20and%20Financial%20Ratios) As of June 30, 2024, the Group's net cash decreased significantly to HK$254 million from HK$489 million at year-end, primarily due to acquisition payments and capital expenditures, necessitating new bank borrowings Condensed Cash Flow Statement (Six Months Ended June 30) | Item (HK$ '000) | H1 2024 | H1 2023 | | :--- | :--- | :--- | | Net cash inflow from operating activities | 23,174 | 39,818 | | Net cash outflow from investing activities | (254,278) | (35,474) | | Net cash inflow/(outflow) from financing activities | 110,065 | (24,312) | - The Group's net cash decreased from **HK$489 million** at the end of 2023 to **HK$254 million** at the end of June 2024, a reduction of **HK$233 million**[60](index=60&type=chunk) [Human Resources](index=18&type=section&id=Human%20Resources) As of June 30, 2024, the Group employed 2,257 staff, an increase of 86 year-on-year, with total staff costs for the first half of the year amounting to approximately HK$120 million, up 9.5% - As of June 30, 2024, the Group's total number of employees was **2,257**, compared to **2,171** in the prior period[63](index=63&type=chunk) - Total staff costs for H1 2024 were approximately **HK$119.663 million**, compared to **HK$109.302 million** in the prior period[63](index=63&type=chunk) [Outlook](index=18&type=section&id=Outlook) Management anticipates future challenges including new energy vehicle impact on traditional fuel cars, unstable Sino-US relations, and intensified price competition in the domestic hydraulic industry, driving a strategic focus on sales breakthroughs, R&D, cost reduction, and transformation - External risks faced by the company include the impact of new energy vehicles on the traditional automotive market, unstable Sino-US relations, and intensified price competition in the domestic hydraulic industry[64](index=64&type=chunk) - Response strategies include developing new products and clients, increasing recruitment of key talent to enhance R&D, and promoting automation and lean production to improve efficiency[64](index=64&type=chunk) [Condensed Consolidated Financial Statements](index=19&type=section&id=Condensed%20Consolidated%20Financial%20Statements) [Condensed Consolidated Statement of Profit or Loss](index=19&type=section&id=Condensed%20Consolidated%20Statement%20of%20Profit%20or%20Loss) This statement presents the income, costs, expenses, and profit for the six months ended June 30, 2024, with profit for the period increasing by 54.1% to HK$12.69 million from HK$8.23 million in the prior year Condensed Consolidated Statement of Profit or Loss (Six Months Ended June 30) | Item (HK$ '000) | 2024 (Unaudited) | 2023 (Unaudited) | | :--- | :--- | :--- | | Revenue | 502,149 | 419,761 | | Gross Profit | 137,394 | 96,418 | | Operating Profit | 26,364 | 12,282 | | Profit Before Tax | 16,904 | 7,306 | | **Profit for the Period** | **12,688** | **8,231** | | Profit/(Loss) attributable to equity holders of the Company | 2,378 | (1,249) | | Basic earnings per share | 0.2 HK cents | -0.1 HK cents | [Condensed Consolidated Statement of Comprehensive Income](index=20&type=section&id=Condensed%20Consolidated%20Statement%20of%20Comprehensive%20Income) This statement shows that after accounting for a foreign exchange loss of HK$35.58 million, the total comprehensive loss for the six months ended June 30, 2024, amounted to HK$22.89 million Condensed Consolidated Statement of Comprehensive Income (Six Months Ended June 30) | Item (HK$ '000) | 2024 (Unaudited) | 2023 (Unaudited) | | :--- | :--- | :--- | | Profit for the period | 12,688 | 8,231 | | Exchange differences on translation of foreign operations | (35,578) | (51,844) | | **Total comprehensive (loss)/income for the period** | **(22,890)** | **(43,613)** | [Condensed Consolidated Statement of Financial Position](index=21&type=section&id=Condensed%20Consolidated%20Statement%20of%20Financial%20Position) This statement outlines the assets, liabilities, and equity as of June 30, 2024, showing net assets of HK$1.941 billion, a slight decrease from HK$1.964 billion at the end of 2023, with an increase in total bank and other borrowings Condensed Consolidated Statement of Financial Position Summary | Item (HK$ '000) | June 30, 2024 (Unaudited) | December 31, 2023 (Audited) | | :--- | :--- | :--- | | Non-current assets | 1,112,483 | 1,082,453 | | Current assets | 1,359,194 | 1,464,374 | | Current liabilities | 330,237 | 427,357 | | Non-current liabilities | 200,140 | 155,280 | | **Net Assets** | **1,941,300** | **1,964,190** | | Cash and bank balances | 556,885 | 674,400 | | Bank and other borrowings (current + non-current) | 302,467 | 185,546 | [Condensed Consolidated Statement of Cash Flows](index=23&type=section&id=Condensed%20Consolidated%20Statement%20of%20Cash%20Flows) This statement indicates a net decrease of HK$121 million in cash and cash equivalents for the six months ended June 30, 2024, with net cash generated from operating activities offset by significant outflows from investing activities and inflows from financing activities Condensed Consolidated Statement of Cash Flows (Six Months Ended June 30) | Item (HK$ '000) | 2024 (Unaudited) | 2023 (Unaudited) | | :--- | :--- | :--- | | Net cash generated from operating activities | 23,174 | 39,818 | | Net cash used in investing activities | (254,278) | (35,474) | | Net cash generated from/(used in) financing activities | 110,065 | (24,539) | | **Net decrease in cash and cash equivalents** | **(121,039)** | **(20,195)** | | Cash and cash equivalents at beginning of period | 674,400 | 729,058 | | **Cash and cash equivalents at end of period** | **556,885** | **705,552** | [Condensed Consolidated Statement of Changes in Equity](index=24&type=section&id=Condensed%20Consolidated%20Statement%20of%20Changes%20in%20Equity) This statement shows a decrease in total equity from HK$1.964 billion at the beginning of the year to HK$1.941 billion at period-end, primarily due to a total comprehensive loss of HK$22.89 million for the period - As of January 1, 2024, total equity was **HK$1,964,190 thousand**[73](index=73&type=chunk) - Total comprehensive income for the period was negative **HK$22,890 thousand**, primarily comprising exchange difference losses of **HK$35,578 thousand** and profit for the period of **HK$12,688 thousand**[73](index=73&type=chunk) - As of June 30, 2024, total equity was **HK$1,941,300 thousand**[73](index=73&type=chunk) [Notes to the Condensed Financial Statements](index=25&type=section&id=Notes%20to%20the%20Condensed%20Financial%20Statements) [Operating Segment Information (Note 4)](index=26&type=section&id=Operating%20Segment%20Information) This note discloses the Group's revenue and gross profit by customer location, with mainland China, Macau, and Hong Kong contributing the largest portion in H1 2024, followed by North America and Europe Revenue and Gross Profit by Geographical Region (H1 2024, HK$ '000) | Region | Revenue | Gross Profit | | :--- | :--- | :--- | | Mainland China, Macau, and Hong Kong | 275,248 | 75,311 | | North America | 102,037 | 27,919 | | Europe | 86,503 | 23,668 | | Malaysia | 14,068 | 3,849 | | Thailand | 9,562 | 2,616 | | Other Countries | 14,731 | 4,031 | | **Total** | **502,149** | **137,394** | [Revenue and Other Income and Gains (Note 5)](index=28&type=section&id=Revenue%20and%20Other%20Income%20and%20Gains) This note details revenue by product and other income sources, with hydraulic equipment parts sales being the highest at HK$252 million in H1 2024, and total other income amounting to HK$28.78 million Revenue by Product Category (Six Months Ended June 30, HK$ '000) | Product Category | 2024 | 2023 | | :--- | :--- | :--- | | Sales of automotive parts | 226,890 | 207,303 | | Sales of hydraulic equipment parts | 251,685 | 180,051 | | Sales of electronic parts | 14,327 | 22,130 | | Others | 9,247 | 10,277 | | **Total** | **502,149** | **419,761** | - Total other income and gains amounted to **HK$28.78 million**, including net exchange differences of **HK$7.23 million** and government grants of **HK$6.28 million**; the prior period included **HK$7.8 million** in fire insurance compensation, which is absent this period[84](index=84&type=chunk) [Bank and Other Borrowings (Note 17)](index=35&type=section&id=Bank%20and%20Other%20Borrowings) As of June 30, 2024, the Group's total bank borrowings significantly increased to HK$297 million from HK$166 million at the end of 2023, primarily secured by deposits, corporate guarantees, equity, and real estate, with interest rates ranging from 3.20% to 6.01% Bank and Other Borrowings (HK$ '000) | Item | June 30, 2024 | December 31, 2023 | | :--- | :--- | :--- | | Bank loans - secured | 296,641 | 150,000 | | Bank loans - unsecured | – | 16,355 | | Other borrowings - unsecured | 5,826 | 19,191 | | **Total** | **302,467** | **185,546** | - Collateral for secured bank loans includes **HK$20 million** in deposits, corporate guarantees, equity interests in subsidiaries, and real estate[102](index=102&type=chunk) [Other Information](index=38&type=section&id=Other%20Information) [Major Shareholders' Interests](index=40&type=section&id=Major%20Shareholders%27%20Interests) This section discloses major shareholders holding over 5% interest in the company, with China Baoan Group Co., Ltd. holding 54.22% through Baoan Technology Co., Ltd. as the controlling shareholder, and Mr. Cui Shaoan and his spouse collectively holding 11.72% Major Shareholders' Shareholding (June 30, 2024) | Name of Major Shareholder | Capacity | Number of Shares Held | Percentage of Issued Share Capital | | :--- | :--- | :--- | :--- | | Baoan Technology Co., Ltd. | Directly Beneficially Owned | 570,546,250 | 54.22% | | China Baoan Group Co., Ltd. | Through Controlled Corporation | 570,546,250 | 54.22% | | Tottenhill Limited | Directly Beneficially Owned | 109,206,975 | 10.38% | | Mr. Cui Shaoan | Through Controlled Corporation and Individually | 123,295,725 | 11.72% | [Share Option Schemes](index=41&type=section&id=Share%20Option%20Schemes) The company maintains share option schemes to incentivize contributors, with details provided for the expired 2011 scheme and the current 2022 scheme, including terms, eligibility, limits, and changes in granted options, noting no new options were granted during the period - The '2011 Share Option Scheme' expired on **May 17, 2021**; as of June 30, 2024, **54,700,000** unexercised share options remain under this scheme[117](index=117&type=chunk)[124](index=124&type=chunk)[125](index=125&type=chunk) - The company adopted a new '2022 Share Option Scheme' on **January 14, 2022**; as of June 30, 2024, **50,700,000** unexercised share options remain under this scheme, with **54,225,413** shares available for future grants[117](index=117&type=chunk)[128](index=128&type=chunk)[138](index=138&type=chunk) - During the reporting period, the company did not grant, exercise, cancel, or cause any share options to lapse under any share option scheme[142](index=142&type=chunk)[125](index=125&type=chunk)[138](index=138&type=chunk) [Interim Dividend](index=48&type=section&id=Interim%20Dividend) The Board of Directors does not recommend the payment of any interim dividend for the six months ended June 30, 2024 - The Board of Directors does not recommend the payment of an interim dividend for the six months ended June 30, 2024 (2023: nil)[144](index=144&type=chunk)[92](index=92&type=chunk) [Corporate Governance](index=49&type=section&id=Corporate%20Governance) The company is committed to high corporate governance standards, largely complying with the HKEX Corporate Governance Code, with the only deviation being the Chairman and CEO roles held by Mr. Zeng Guangsheng, which the Board believes provides strong leadership - The company complied with the principles and code provisions of the Corporate Governance Code, with the only deviation being the non-segregation of the roles of Chairman and Chief Executive Officer as per Code Provision C.2.1[148](index=148&type=chunk) - Mr. Zeng Guangsheng holds both the Chairman and Chief Executive Officer positions; the Board believes this structure provides strong and consistent leadership for the Group, benefiting shareholders as a whole[148](index=148&type=chunk)

Financial Statements [Condensed Consolidated Statement of Profit or Loss](index=1&type=section&id=Condensed%20Consolidated%20Statement%20of%20Profit%20or%20Loss) The Group's H1 2024 revenue increased **19.6%** to **HKD 502.1 million**, with operating profit up **114.6%** to **HKD 26.36 million** and profit for the period rising **54.1%** to **HKD 12.69 million**, turning basic EPS positive to **HKD 0.2 cents** | Metric (HKD Thousands) | H1 2024 (Unaudited) | H1 2023 (Unaudited) | Y-o-Y Change | | :--- | :--- | :--- | :--- | | **Revenue** | **502,149** | **419,761** | **+19.6%** | | Gross Profit | 137,394 | 96,418 | +42.5% | | Operating Profit | 26,364 | 12,282 | +114.6% | | Profit Before Tax | 16,904 | 7,306 | +131.4% | | **Profit for the Period** | **12,688** | **8,231** | **+54.1%** | | Profit/(Loss) Attributable to Equity Holders of the Company | 2,378 | (1,249) | Turned Profitable | | **Basic Earnings Per Share** | **0.2 HK Cents** | **-0.1 HK Cents** | **Turned Profitable** | [Condensed Consolidated Statement of Comprehensive Income](index=2&type=section&id=Condensed%20Consolidated%20Statement%20of%20Comprehensive%20Income) Despite a **HKD 12.69 million** profit for the period, total comprehensive income resulted in a net loss of **HKD 22.89 million** due to **HKD 35.58 million** in foreign currency translation losses, a narrower loss than **HKD 43.61 million** in the prior year | Metric (HKD Thousands) | H1 2024 (Unaudited) | H1 2023 (Unaudited) | | :--- | :--- | :--- | | Profit for the Period | 12,688 | 8,231 | | Exchange Differences on Translation of Foreign Operations | (35,578) | (51,844) | | **Total Comprehensive Income for the Period** | **(22,890)** | **(43,613)** | [Condensed Consolidated Statement of Financial Position](index=3&type=section&id=Condensed%20Consolidated%20Statement%20of%20Financial%20Position) As of June 30, 2024, total assets were **HKD 2.47 billion** and net assets **HKD 1.94 billion**, largely stable from year-end 2023, with non-current assets rising due to property, plant, and equipment investments, while non-current liabilities increased to support M&A and expansion | Metric (HKD Thousands) | June 30, 2024 (Unaudited) | December 31, 2023 (Unaudited) | | :--- | :--- | :--- | | Non-current Assets | 1,112,483 | 1,082,453 | | Current Assets | 1,359,194 | 1,464,374 | | **Total Assets** | **2,471,677** | **2,546,827** | | Current Liabilities | 330,237 | 427,357 | | Non-current Liabilities | 200,140 | 155,280 | | **Total Liabilities** | **530,377** | **582,637** | | **Net Assets** | **1,941,300** | **1,964,190** | [Condensed Consolidated Statement of Cash Flows](index=5&type=section&id=Condensed%20Consolidated%20Statement%20of%20Cash%20Flows) H1 2024 net cash from operating activities decreased to **HKD 23.17 million**, while investing activities saw a **HKD 254.28 million** net outflow due to M&A and fixed asset investments, leading to a **HKD 110.07 million** net financing inflow and a **HKD 121.04 million** net decrease in cash to **HKD 556.89 million** | Activity (HKD Thousands) | H1 2024 (Unaudited) | H1 2023 (Unaudited) | | :--- | :--- | :--- | | Net Cash Generated from Operating Activities | 23,174 | 39,818 | | Net Cash Used in Investing Activities | (254,278) | (35,474) | | Net Cash Generated From/(Used In) Financing Activities | 110,065 | (24,539) | | **Net Decrease in Cash and Cash Equivalents** | **(121,039)** | **(20,195)** | | Cash and Cash Equivalents at End of Period | 556,885 | 705,552 | [Condensed Consolidated Statement of Changes in Equity](index=6&type=section&id=Condensed%20Consolidated%20Statement%20of%20Changes%20in%20Equity) As of June 30, 2024, total equity slightly decreased from **HKD 1.964 billion** to **HKD 1.941 billion**, with profit for the period contributing **HKD 2.38 million** to shareholders' equity, offset by **HKD 37.84 million** in exchange differences, resulting in a **HKD 35.46 million** reduction in equity attributable to owners of the Company - Total comprehensive income for the period was **HKD -22.89 million**, with **HKD -35.46 million** attributable to equity holders of the Company and **HKD 12.57 million** to non-controlling interests[6](index=6&type=chunk) Notes to the Financial Statements [Company Information, Basis of Preparation and Principal Accounting Policies](index=7&type=section&id=Company%20Information%2C%20Basis%20of%20Preparation%20and%20Principal%20Accounting%20Policies) The report is prepared in accordance with HKAS 34 'Interim Financial Reporting', with accounting policies consistent with the 2023 annual financial statements, focusing on manufacturing and selling precision metal parts for automotive, hydraulic, and electronic equipment - The Group's principal business involves manufacturing and selling precision metal parts for automotive components, hydraulic equipment, and electronic devices[8](index=8&type=chunk) - The interim financial statements are prepared in accordance with HKAS 34 and the Listing Rules, with accounting policies consistent with the prior year[9](index=9&type=chunk)[10](index=10&type=chunk) [Segment Information](index=8&type=section&id=Segment%20Information) The Group segments business by customer geography, with Mainland China, Macau, and Hong Kong as the largest market, generating **HKD 275.25 million** in H1 2024 revenue, a **45.7%** increase, while North America grew **18.2%** to **HKD 102.04 million**, and Europe saw a decline | Region (HKD Thousands) | H1 2024 Revenue | H1 2023 Revenue | Y-o-Y Change | | :--- | :--- | :--- | :--- | | Mainland China, Macau & Hong Kong | 275,248 | 188,887 | +45.7% | | North America | 102,037 | 86,326 | +18.2% | | Europe | 86,503 | 102,497 | -15.6% | | Malaysia | 14,068 | 21,384 | -34.2% | | Thailand | 9,562 | 6,321 | +51.3% | | Other Countries | 14,731 | 14,346 | +2.7% | | **Total** | **502,149** | **419,761** | **+19.6%** | [Revenue and Other Income](index=10&type=section&id=Revenue%20and%20Other%20Income) In H1 2024, hydraulic equipment parts sales grew **39.8%** to **HKD 251.69 million**, becoming the largest revenue source, while auto parts sales increased **9.4%** to **HKD 226.89 million**, and electronic parts business continued to decline by **35.3%** | Business Segment (HKD Thousands) | H1 2024 Revenue | H1 2023 Revenue | Y-o-Y Change | | :--- | :--- | :--- | :--- | | Sales of Hydraulic Equipment Parts | 251,685 | 180,051 | +39.8% | | Sales of Automotive Parts | 226,890 | 207,303 | +9.4% | | Sales of Electronic Parts | 14,327 | 22,130 | -35.3% | | Others | 9,247 | 10,277 | -10.0% | | **Total** | **502,149** | **419,761** | **+19.6%** | [Finance and Taxation](index=11&type=section&id=Finance%20and%20Taxation) H1 2024 finance costs doubled year-on-year from **HKD 4.37 million** to **HKD 8.78 million** due to increased bank loans for M&A, while income tax expense was **HKD 4.22 million**, compared to a **HKD 0.925 million** tax credit in the prior period - Finance costs were **HKD 8.78 million**, doubling from **HKD 4.37 million** in the prior year, primarily due to increased interest on bank and other borrowings[14](index=14&type=chunk)[31](index=31&type=chunk) - Income tax expense for the period was **HKD 4.22 million**, compared to a tax credit of **HKD 0.925 million** in the prior period[17](index=17&type=chunk) [Earnings Per Share](index=12&type=section&id=Earnings%20Per%20Share) Basic and diluted earnings per share both turned profitable at **HKD 0.2 cents**, up from **HKD -0.1 cents** in the prior year, primarily due to profit attributable to equity holders of the Company improving from a **HKD 1.25 million** loss to a **HKD 2.38 million** profit | Metric | H1 2024 (Unaudited) | H1 2023 (Unaudited) | | :--- | :--- | :--- | | Profit/(Loss) Attributable to Equity Holders of the Company (HKD Thousands) | 2,378 | (1,249) | | Weighted Average Number of Ordinary Shares in Issue (Thousands) | 1,052,254 | 1,052,254 | | **Basic and Diluted Earnings Per Share** | **0.2 HK Cents** | **-0.1 HK Cents** | [Dividends](index=13&type=section&id=Dividends) The Board does not recommend an interim dividend for the six months ended June 30, 2024, consistent with the prior period's policy - The Board does not recommend paying any interim dividend for the six months ended June 30, 2024 (2023: Nil)[20](index=20&type=chunk)[39](index=39&type=chunk) [Key Balance Sheet Items](index=13&type=section&id=Key%20Balance%20Sheet%20Items) As of June 30, 2024, key balance sheet items remained largely stable, with property, plant, and equipment net book value slightly increasing due to construction in progress, inventory decreasing from **HKD 330.5 million** to **HKD 315.1 million**, and trade receivables rising from approximately **HKD 324 million** to **HKD 361 million**, with most within three months - Net book value of property, plant and equipment increased from **HKD 924 million** to **HKD 948 million**, primarily due to construction in progress rising from **HKD 35.34 million** to **HKD 103 million**[21](index=21&type=chunk) Inventories (HKD Thousands) | Inventories (HKD Thousands) | June 30, 2024 | December 31, 2023 | | :--- | :--- | :--- | | Raw Materials | 78,709 | 99,655 | | Work-in-progress | 80,439 | 88,445 | | Finished Goods | 135,768 | 125,787 | | **Total** | **315,136** | **330,503** | - Total trade receivables amounted to **HKD 361 million**, with approximately **84%** (**HKD 308 million**) aged within three months[23](index=23&type=chunk) Management Discussion and Analysis [Business Review](index=16&type=section&id=Business%20Review) In H1 2024, the Group's total sales grew **19.6%**, primarily driven by hydraulic equipment parts, which saw a **39.8%** sales increase due to last year's acquisition and synergies, accounting for over **50%** of total sales, while auto parts sales rose **9.4%** due to deferred European ICE bans, and electronic parts continued to decline - Hydraulic equipment parts business sales increased by **HKD 71.63 million** year-on-year due to last year's successful acquisition, accounting for over half of total sales[28](index=28&type=chunk) - Automotive parts business orders rebounded due to Europe's delayed ban on internal combustion engine vehicles, with sales increasing **9.4%** year-on-year[28](index=28&type=chunk) Business Segment Sales | Business Segment | H1 2024 Sales (HKD Thousands) | Proportion | Y-o-Y Change | | :--- | :--- | :--- | :--- | | Automotive Parts | 226,890 | 45.2% | +9.4% | | Hydraulic Equipment Parts | 251,685 | 50.1% | +39.8% | | Electronic Equipment Parts | 14,327 | 2.9% | -35.3% | | **Total** | **502,149** | **100%** | **+19.6%** | [Financial Review](index=18&type=section&id=Financial%20Review) Gross profit increased **42.5%** and gross margin improved from **23.0%** to **27.4%** due to sales growth and M&A synergies, despite increased selling, administrative, and R&D expenses, and doubled finance costs from acquisition-related loans, ultimately driving a **54.1%** rise in net profit to **HKD 12.69 million** - Gross margin increased by **4.4 percentage points** from **23.0%** to **27.4%** year-on-year, primarily due to lean manufacturing, cost control, and M&A synergies[29](index=29&type=chunk)[30](index=30&type=chunk) - Due to the acquisition, patent amortization expenses within administrative expenses increased by **HKD 4.39 million**, and R&D expenses increased by **HKD 4.72 million**[31](index=31&type=chunk) - Finance costs increased by **HKD 4.41 million** year-on-year due to the larger scale of acquisition-related loans[31](index=31&type=chunk) [Liquidity, Financial Strategy and Financial Ratios](index=19&type=section&id=Liquidity%2C%20Financial%20Strategy%20and%20Financial%20Ratios) The Group relies on internal cash flow and bank financing, with total bank loans increasing to **HKD 297 million** for M&A and new plant construction; H1 operating cash inflow decreased, while investing cash outflow significantly rose due to **HKD 168 million** M&A payments and **HKD 95.43 million** fixed asset investments, resulting in net cash decreasing from **HKD 489 million** to **HKD 254 million** - Total bank loans increased from **HKD 166 million** to **HKD 297 million**, primarily used for M&A payments and new plant construction costs[32](index=32&type=chunk) - Net cash outflow from investing activities was **HKD 254 million**, mainly comprising **HKD 168 million** for prior year M&A outstanding payments and **HKD 95.43 million** for property, plant, and equipment purchases[5](index=5&type=chunk)[34](index=34&type=chunk) - Net cash (cash and bank balances less total bank borrowings) decreased from **HKD 489 million** to **HKD 254 million**[34](index=34&type=chunk) [Human Resources](index=21&type=section&id=Human%20Resources) As of June 30, 2024, the Group had **2,257** employees, an increase of **86** year-on-year, with total remuneration of approximately **HKD 120 million** in H1, focusing on talent development, safety, and employee incentives through share option schemes Employee and Remuneration Data | Metric | June 30, 2024 | June 30, 2023 | | :--- | :--- | :--- | | Number of Employees | 2,257 | 2,171 | | Total Remuneration (HKD Thousands) | 119,663 | 109,302 | [Outlook](index=22&type=section&id=Outlook) The Group anticipates challenges from new energy vehicles, potential global construction machinery demand decline, and domestic hydraulic industry price competition, thus focusing on 'sales breakthroughs, R&D-driven innovation, cost reduction and efficiency improvement, and transformation and upgrading' to strengthen its market position - Challenges include new energy vehicles displacing traditional internal combustion engine vehicle markets, anticipated decline in global construction machinery sales, and intensifying price competition in the domestic hydraulic industry[37](index=37&type=chunk) - Strategies include focusing on 'sales breakthroughs, R&D-driven innovation, cost reduction and efficiency improvement, and transformation and upgrading', increasing investment in new product development, new customer acquisition, talent recruitment, and automation projects[37](index=37&type=chunk) Supplementary Information and Corporate Governance [Dividends and Securities Transactions](index=23&type=section&id=Dividends%20and%20Securities%20Transactions) The Board decided not to declare an interim dividend for 2024, and neither the Company nor its subsidiaries purchased, sold, or redeemed any listed securities during the period, while adhering to adopted codes of conduct for directors' and employees' securities transactions - The Board does not recommend paying any interim dividend for the six months ended June 30, 2024[39](index=39&type=chunk) - Neither the Company nor any of its subsidiaries purchased, sold, or redeemed any of the Company's listed securities during the period[38](index=38&type=chunk) [Corporate Governance](index=24&type=section&id=Corporate%20Governance) The Company maintains high corporate governance standards, complying with most code provisions, with the only deviation being the combined roles of Chairman and Chief Executive Officer held by Mr. Zeng Guangsheng, which the Board believes provides strong unified leadership, and the Audit Committee has reviewed these interim results - The Company complies with the Corporate Governance Code, with the only deviation from Code Provision C.2.1 being the combined roles of Chairman and Chief Executive Officer held by Mr. Zeng Guangsheng[42](index=42&type=chunk) - The Audit Committee, comprising three independent non-executive directors, has reviewed the Group's interim results for the six months ended June 30, 2024[43](index=43&type=chunk)