齊合環保集團有限公 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。 CHIHO ENVIRONMENTAL GROUP LIMITED （於開曼群島註冊成立之有限公司） （股份代號：976） 成立特別調查委員會 及 委任獨立法證調查員及獨立內部監控顧問 本公告由齊合環保集團有限公司（「本公司」，連同其附屬公司統稱為「本集團」）根據 香港聯合交易所有限公司（「聯交所」）證券上市規則（「上市規則」）第13.09(2)(a)條及 第13.24A條，以及香港法例第571章證券及期貨條例第XIVA部項下內幕消息條文而 作出。 茲提述(i)本公司日期為二零二五年一月十三日的公告，內容有關本公司若干非全資 附屬公司（「標集團公司」）的違規事項（「違規事項」）；(ii)本公司日期為二零二五年三 月三十一日的公告，內容有關本集團延遲刊發截至二零二四年十二月三十一日止年 度的年度業績公告（「二零二四年年度業績」）、本公司董事（「董事」）會（「董事會」）會 議延期及本 ...

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: 齊合環保集團有限公司 呈交日期: 2025年8月1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) | 00976 | 說明 | | 普通股 | | | | | | | | 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 | | | | 1,605,152,291 | | 0 | | 1,605,152,291 | | 增加 / 減少 (-) | | | | | | | | | | 本月底結存 | | | | 1,605,152,291 | | 0 | | 1,605,152, ...

Group 1 - The company, Qi He Environmental Protection (00976), has received a letter from the Stock Exchange regarding the guidelines for the resumption of trading, which must be fulfilled by June 27, 2025 [1] - The company is required to conduct an independent legal investigation into violations and assess their impact on business operations and financial status, and to disclose the results [1] - The company must publish all outstanding financial results as required by listing rules and address any audit revisions [1] Group 2 - The company must demonstrate that there are no reasonable regulatory concerns regarding the integrity, capability, or character of the management team or individuals with significant influence over the company [1] - An independent internal control review must be conducted to ensure compliance with listing rules [1] - The company is responsible for developing a resumption action plan and must comply with all resumption guidelines to regain trading approval [1][2]

Company Operations and Strategy - Chiho Environmental Group Limited operates across three continents: Asia, Europe, and North America, focusing on metal recycling[4] - The company has invested in end-of-life vehicle and electric lithium battery recycling projects, with the first phase launched in September 2022[5] - In Germany, Chiho operates 88 yards, covering South-West, Central, and Eastern regions, utilizing advanced post-shredder material recovery technology[6] - The Czech Republic operations include 43 yards with a strong market share in the ferrous market, covering both old and new scrap[7] - Future focus in North America will shift towards brokerage business after divesting most loss-making operations[7] - The company emphasizes building long-term partnerships with customers, partners, and suppliers to ensure mutual growth[2] - Chiho aims to achieve stable and continuous returns for shareholders while fulfilling corporate social responsibilities[2] - The company is a major metal importer and domestic trader in Mainland China, enhancing its market presence[5] - Chiho's operations in Thailand involve a joint venture for dismantling scrap motors and trading mixed scrap metal[5] - The company is committed to becoming a global leader in resource recycling and environmental protection[1] Financial Performance - For the six months ended June 30, 2024, total revenue was HK$8,852.8 million, a slight increase of 0.4% compared to HK$8,821.7 million in the same period of 2023[8] - The Asia segment reported revenue of HK$867.1 million, representing a growth of 13.7% from HK$762.5 million in 2023[8] - Gross profit decreased by 4.2% to HK$537.5 million from HK$561.3 million year-on-year[8] - The net profit for the period was HK$39.7 million, down 20.9% from HK$50.2 million in the previous year[8] - The company's gross profit margin was 6.1%, a decrease of 4.7% compared to 6.4% in 2023[8] - Total assets increased by 2.3% to HK$8,918.8 million as of June 30, 2024, compared to HK$8,720.4 million at the end of 2023[9] - Cash, pledged and restricted bank deposits decreased significantly by 48.8% to HK$190.3 million from HK$371.5 million[9] - The company achieved positive growth in revenue in the first half of 2024, reversing the downturn experienced since the second half of the previous year[15] - The Group's total sales volume for the first half of 2024 was 1.8 million tonnes, with revenue of HK$8,852.8 million[17] - The European market accounted for 90.3% of total segment revenue, generating HK$8,098.4 million, down from HK$8,224.8 million in 2023[26] Operational Challenges and Responses - The company has strengthened financial controls and is focusing on cost reduction and efficiency enhancement in response to unfavorable economic conditions[14] - The Group aims to stabilize its existing businesses and enhance the quality of key operations amid ongoing geopolitical conflicts and rising operational costs[20] - The Group focused on improving operational management and internal efficiency to stabilize its subsidiaries in Asia amid high procurement costs and declining scrap steel prices[18] - The Group is implementing measures in Europe to generate cash flow from operations, including controlling capital and operating expenditures, and speeding up inventory sales and collection of trade receivables[120] Legal and Regulatory Matters - The ongoing legal case HCA 2939/2016 involves a claim for damages related to a convertible bond, with the case still in progress awaiting judgment[65] - The Board does not consider the claims HCA 3040/2015 and HCA 2939/2016 to be of material importance[65] - The Shanghai Stock Exchange has requested Loncin Motor to monitor the development of a lawsuit regarding the requisition of a shareholders' meeting, which may pose litigation risks[73] - The outcome of the restructuring remains uncertain, with potential risks of the controlling shareholders being declared bankrupt if not successfully implemented[74] Shareholder and Governance Matters - The Group aims to increase transparency with investors and shareholders to strengthen corporate governance and elicit feedback on strategic plans[79] - The remuneration of employees is determined by senior management based on market standards, individual performance, and contributions[79] - The Group will provide additional visibility around strategic plans to enhance understanding of its business and market activities[79] - The company has complied with all applicable code provisions in the Corporate Governance Code throughout the six months ended June 30, 2024[88] - The company is in the process of identifying a suitable candidate to fill the chief executive officer vacancy[89] Future Outlook and Growth Plans - The company provided an optimistic outlook, projecting a revenue growth of 10-15% for the next quarter, driven by new product launches and market expansion[190] - The company aims to launch three new products in Q3 2024, which are expected to contribute an additional $20 million in revenue[190] - The company is planning to expand its market presence in Southeast Asia, targeting a 30% market share by the end of 2025[190] - The company has established partnerships with two major distributors in Europe, aiming to increase sales by 40% in that region[190] Financial Risks and Management - The Group's financial risk management policies have not changed since December 31, 2023[123] - The Group's activities expose it to various financial risks, including market risk, credit risk, and liquidity risk[123] - The Group is actively seeking other financing sources, including debt or equity financing, to enhance its capital structure and reduce overall financing expenses[120] - The Directors believe that the extension of the Syndicated Term Loan can be concluded in due course, based on historical renewal experience and the adequacy of collateral held by the lender[116]

Financial Performance - For the six months ended June 30, 2024, the company reported revenue of HKD 8,852.8 million, a slight increase from HKD 8,821.7 million in the same period of 2023, representing a growth of 0.4%[1] - Gross profit for the period was HKD 537.5 million, down from HKD 561.3 million in 2023, indicating a decrease of 4.3%[1] - The net profit for the period was HKD 39.7 million, a decline of 20.9% compared to HKD 50.2 million in the previous year[2] - Total revenue for the six months ended June 30, 2024, was HKD 8,965.5 million, compared to HKD 8,991.3 million for the same period in 2023[13] - The group reported a segment profit of HKD 166.3 million for the six months ended June 30, 2024, compared to HKD 194.0 million for the same period in 2023[13] - The company reported a net profit attributable to shareholders of HKD 50.5 million for the six months ended June 30, 2024, down from HKD 53.2 million in the same period of 2023[21] - Basic earnings per share remained stable at HKD 0.03 for both the six months ended June 30, 2024, and 2023[21] - The total income tax expense for the six months ended June 30, 2024, was HKD 33.4 million, a decrease from HKD 50.5 million in the same period of 2023[17] Assets and Liabilities - The company's total assets as of June 30, 2024, amounted to HKD 8,918.8 million, an increase from HKD 8,720.4 million at the end of 2023, reflecting a growth of 2.3%[5] - The company's cash and cash equivalents decreased to HKD 189.2 million from HKD 366.5 million in the previous year, a decline of 48.3%[5] - The company's equity attributable to shareholders was HKD 4,849.8 million, down from HKD 4,931.5 million at the end of 2023, a decrease of 1.7%[6] - As of June 30, 2024, the total borrowings of the group amounted to HKD 1,010.4 million, with HKD 833.0 million classified as current borrowings[9] - The outstanding balance of the syndicated term loan has been reduced to HKD 390.0 million as of June 30, 2024, after repaying a total of HKD 1,943.3 million over the past years[9] - The company's asset-liability ratio as of June 30, 2024, was 11.3%, up from 10.4% at the end of 2023[40] Operational Efficiency - The company’s administrative expenses slightly decreased to HKD 455.8 million from HKD 461.7 million, a reduction of 1.9%[1] - The company is focusing on enhancing operational efficiency and cost control in response to rising procurement prices and declining sales prices in the recycling sector[30] - The company continues to implement measures in Europe to generate cash flow from operations, including controlling capital and operating expenses[10] - The company aims to stabilize its existing recycling and trading businesses while exploring high-return projects and enhancing collaboration with market participants[31] - The company is committed to dynamic cost reduction and efficiency improvement strategies to navigate the economic downturn[31] Sales and Revenue Breakdown - External sales in Asia for the six months ended June 30, 2024, were HKD 754.4 million, an increase from HKD 679.0 million in the same period of 2023[13] - The Asian region saw a revenue increase of 13.7% year-on-year, reaching HKD 867.1 million, with gross profit rising by 133.2%[30] - The European division sales decreased by 4.0% to 1.76 million tons, with revenue declining by 1.5% to HKD 8,098.4 million compared to the same period last year[51] - The gross profit for the European division fell by 20.6% to HKD 513.7 million, with the gross profit margin decreasing from 7.9% to 6.3%[51] Debt and Financing - The group is actively seeking additional financing sources, including debt or equity financing, to improve its capital structure and reduce overall financing costs[10] - The company has a remaining loan balance of $50,000,000 (equivalent to 376.0 million HKD) due by March 30, 2024, which constitutes a default under the financing agreement[56] - The company has received a demand letter from the financing agent for immediate repayment of the outstanding loan balance and applicable default interest[56] - The company is in discussions with the financing agent to further extend the loan's final repayment date[56] Employee and Governance - The group has a total of 2,632 employees as of June 30, 2024, compared to 2,617 employees as of December 31, 2023[64] - Employee costs for the six months ended June 30, 2024, amounted to approximately HKD 480.8 million, slightly up from HKD 479.8 million in the previous year[64] - The board aims to enhance transparency and corporate governance to align with the best interests of investors and shareholders[65] - The company has complied with all applicable provisions of the Corporate Governance Code, with a temporary exception regarding the separation of the roles of Chairman and CEO[66] Restructuring and Legal Matters - The restructuring process of the controlling shareholder, Longxin Group, is ongoing, with potential legal challenges regarding asset sales[58] - The court has extended the execution period of the restructuring plan by six months, now set to end on February 21, 2025[60] - The company believes that the restructuring and potential asset sales will not have a significant adverse impact on its operations and financial condition[60] - The company is monitoring the developments of the restructuring closely and will report any substantial progress or changes[60] Miscellaneous - The company did not declare or recommend any dividends for the interim periods ending June 30, 2024, and 2023[19] - The company has not engaged in any purchase, sale, or redemption of its listed securities during the six months ended June 30, 2024[68] - The company is currently seeking a suitable candidate for the CEO position following the resignation of the previous CEO on June 25, 2024[66] - The group has adopted a commodity price risk hedging policy, which has been updated to align with changing operational conditions[62]

Operations and Market Presence - Chiho operates 88 yards in Germany, covering South-West, Central, and Eastern Germany, with advanced post-shredder material recovery technology[17]. - The company has invested in the construction of end-of-life vehicles and electric lithium battery recovery projects, with the first phase officially kicked off in September 2022[14]. - Chiho is a market leader in ferrous scrap trading in Austria, operating 13 yards in a joint venture with Voestalpine Group[19]. - The company has a strong market share in the ferrous market in the Czech Republic, covering both old and new scrap markets[18]. - In Romania, Chiho operates 40 yards, focusing on heavily populated and industrialized areas, with significant scrap export capabilities to Turkey[18]. - Chiho's facilities in Hong Kong are recognized as one of the most diversified and comprehensive e-waste recycling centers[12]. - The company has joint ventures in Thailand for dismantling scrap motors and other mixed scrap metal, with ferrous scraps sold domestically and non-ferrous scraps exported[15]. - Chiho's operations in Slovenia include 17 yards with strong non-ferrous operations, including paper and plastic recycling[19]. - A new metal recycling yard in Plzen, Czech Republic commenced operations in August 2023, enhancing Chiho's business presence in Central Europe[31]. Financial Performance - The Group's total sales tonnage for 2023 was 3.64 million tonnes, with revenue of HK$16,479.7 million, representing a year-on-year decrease of 4.2% and 15.8% respectively[25]. - European operations accounted for 3.45 million tonnes in metal sales, generating revenue of HK$14,960.9 million, impacted by high inflation and the ongoing Russia-Ukraine conflict[29]. - Asian operations saw a year-on-year sales tonnage increase of 11.8%, with gross profit margin rising to 1.3%[36]. - Total revenue for 2023 was HK$16,479.7 million, a decrease of 15.8% compared to HK$19,574.3 million in 2022[61]. - Gross profit decreased by 14.1% to HK$1,038.0 million from HK$1,207.7 million in the previous year[63]. - The Group sold 3.64 million tonnes of recycled products in 2023, a 4.2% decrease from 3.80 million tonnes sold in 2022[61]. - Loss attributable to shareholders for the year was HK$9.3 million, compared to a profit of HK$264.5 million in the previous year[70]. - Loss per share for 2023 was HK$0.01, down from earnings per share of HK$0.16 in 2022[70]. - Cash generated from operations before changes in working capital was HK$543.2 million, down from HK$699.4 million in 2022[71]. - The gross profit margin slightly increased from 6.2% to 6.3% due to improved sales bargaining power[64]. Research and Development - The company is actively cooperating with European research institutes to develop lithium battery recycling technology suitable for various types and models[10]. - The Group has secured a total of seven inventions and patents related to waste lithium battery recycling, four patents for ELV recycling, and four patents for aluminum recycling in China[36]. - The Qishun Recycling Project in Zhejiang Province obtained qualification for dismantling End-of-Life Vehicles (ELV) and is experiencing increasing collection and dismantling volumes[36]. Strategic Initiatives and Goals - The Group plans to stabilize existing businesses such as metal recycling and expand into new areas like power lithium battery utilization, while investing in technological R&D[47]. - The European Union's "Fit for 55" plan aims to reduce greenhouse gas emissions by 55% compared to 1990 levels by 2030, emphasizing the recyclability of the automotive industry[44]. - The Group is committed to contributing to global carbon reduction strategies and assisting customers in achieving sustainable development goals[48]. - The Group's strategic focus includes strengthening technological innovation and enhancing development momentum in the renewable resources industry[47]. Corporate Governance and Management - The company emphasizes the importance of corporate governance and compliance, as evidenced by the public reprimand received by Mr. Tu from the Shanghai Stock Exchange[159]. - The Group's leadership is well-educated, with degrees from reputable institutions, enhancing their capability to drive the Company's strategic initiatives[167][183]. - The company is expanding its board with experienced professionals to enhance governance and strategic oversight[189]. - The board's diverse backgrounds in finance, law, and management will support the company's growth initiatives[199]. - The appointment of Mr. Liu is expected to strengthen the investment strategy and asset management capabilities of the company[186]. Employee and Labor Relations - The total staff costs for the year were approximately HK$954.3 million, a decrease from HK$975.6 million in 2022[139]. - As of December 31, 2023, the Group had a workforce of 2,617 employees, down from 2,748 employees in 2022[138]. - The Group has not experienced any significant difficulties in recruiting and retaining qualified staff, maintaining good relationships with employees[138]. - Employee compensation is determined based on market standards, individual performance, and contributions to the group[141]. Risk Management - The Group's risk management strategy includes a commodity price risk hedging policy to mitigate adverse effects on financial performance[133]. - The Group continues to monitor its foreign currency borrowings to minimize foreign currency risk due to volatile exchange rates[134].

Financial Performance - The company reported a loss of HKD 19.2 million for the year ended December 31, 2023, compared to a profit of HKD 237.4 million in the previous year[2]. - The net loss attributable to shareholders for the year ended December 31, 2023, was HKD 9.3 million, compared to a profit of HKD 264.5 million in 2022, resulting in a basic loss per share of HKD (0.01) versus HKD 0.16 in the previous year[25]. - The group reported a net loss of HKD 22.0 million from fair value changes and impairments, compared to a profit of HKD 131.6 million in 2022[34]. - Total external revenue for the year was HKD 16,479.7 million, down 15.8% from HKD 19,574.3 million in the previous year[93]. - Gross profit for the year was HKD 1,038.0 million, a decrease of 14.1% from HKD 1,207.7 million in the previous year, primarily due to rising freight costs and weak metal demand in Europe[94]. Equity and Liabilities - Total equity increased to HKD 4,874.5 million in 2023 from HKD 4,780.7 million in 2022, reflecting a growth of approximately 1.96%[3]. - The total liabilities amounted to HKD 3,845.9 million, slightly up from HKD 3,792.3 million in the previous year[3]. - The company’s total borrowings reached HKD 903.1 million, with HKD 786.5 million classified as current borrowings[8]. - The group had unutilized credit of approximately HKD 1,207.0 million as of December 31, 2023, compared to HKD 1,135.8 million in 2022[30]. - The group's debt-to-asset ratio improved to 10.4% from 13.3% in the previous year, reflecting effective cost control measures and reduced external debt pressure[71]. Cash Flow and Working Capital - The group's operating cash flow before changes in working capital was HKD 543.2 million, a decrease from HKD 699.4 million in 2022[111]. - Cash and cash equivalents stood at HKD 366.5 million as of December 31, 2023[8]. - The group recorded a net cash outflow from operating activities of HKD 47.5 million[162]. - As of December 31, 2023, the group had trade receivables with a carrying amount of HKD 1,407.4 million, an increase from HKD 1,274.2 million in 2022[29]. - Trade and bills receivables increased from HKD 1,290.5 million on December 31, 2022, to HKD 1,417.6 million on December 31, 2023, with accounts receivable turnover days increasing from 24 days to 31 days[101]. Operational Performance - For the fiscal year ending December 31, 2023, the group's total sales volume and revenue were 3.64 million tons and HKD 16,479.7 million, representing a year-on-year decline of 4.2% and 15.8% respectively[57]. - The European region, which accounts for over 90% of the group's performance, was impacted by rising energy prices and demand fluctuations, resulting in no sales or revenue growth; however, the Asian region saw a sales volume increase of 11.8% and a gross profit increase of 247.5%[57]. - The group sold 3.64 million tons of recycled products in 2023, a decrease of 4.2% compared to 3.80 million tons in 2022[93]. - The group launched a metal recycling facility in Plzeň, Czech Republic, in August 2023, which is expected to strengthen its business presence in Central Europe[59]. - The group is focusing on business transformation in North America to better allocate resources to other operations, indicating a strategic shift in resource management[176]. Strategic Initiatives - The company is focusing on improving operational cash flow by controlling capital and operational expenditures and expediting accounts receivable collection[12]. - The group aims to expand its business in the recycling of power lithium batteries and strengthen cooperation with upstream and downstream partners[90]. - The group remains committed to responding to global carbon reduction strategies and aims to leverage its operational and technological advantages to support sustainable development[64]. - The group has adopted a commodity price risk hedging policy, which has been updated to align with changing operational conditions[148]. - The group is enhancing operational management to drive growth in the Asian region following the lifting of COVID-19 restrictions in China[181]. Employee and Operational Metrics - As of December 31, 2023, the group employed 2,617 employees, a decrease from 2,748 employees as of December 31, 2022[150]. - The total employee costs for the group amounted to approximately HKD 954.3 million, a decrease from HKD 975.6 million in 2022[197]. - The average interest rate for bank borrowings ranged from 0.9% to 12% as of December 31, 2023, consistent with the previous year[47]. - The group invested HKD 447.5 million in tangible assets during the year, aimed at improving production efficiency[102]. - The restructuring plan execution has been delayed by six months, now set to be completed by May 21, 2024[109]. Market Challenges and Opportunities - The group faces challenges from geopolitical conflicts and economic uncertainties but sees opportunities in the low-carbon economy and industrial green transformation[84]. - The North American division experienced a significant decline in revenue, recording only HKD 4.1 million for the year, down from HKD 35.7 million in 2022[176]. - The European division reported a gross profit of HKD 1,031.4 million, a decrease of 16.9% compared to the previous year, with a gross margin of 6.9% for 2023, slightly down from 7.0% in 2022[175]. - The Asian division's metal sales increased by 11.8% year-on-year, with an improved gross margin of 1.3%, compared to a gross loss margin of 0.9% in 2022[181]. - The group continues to manage liquidity risk by utilizing bank loans to maintain a balance between securing funds and maintaining flexibility[179].

Financial Performance - Total external revenue for the first half of 2023 was HK$8,821.7 million, a decrease of 25.4% compared to HK$11,826.0 million for the same period last year[36]. - Gross profit for the first half of 2023 was HK$561.3 million, a decrease of 20.0% from HK$701.2 million in the same period last year, primarily due to increased energy prices in Germany and weak demand for metals in Europe[60]. - Profit before interest and tax (EBIT) for the first half of 2023 was HK$194.0 million, a decrease of 51.8% from HK$402.1 million in the same period last year[51]. - Profit for the period attributable to shareholders was HK$50.2 million, down 72.9% from HK$185.4 million in the same period last year[51]. - Basic earnings per share for the first half of 2023 was HK$0.03, compared to HK$0.12 in the previous financial period[85]. - The gross profit margin increased from 5.9% in the first half of 2022 to 6.4% in the first half of 2023, attributed to a focus on high-margin businesses[63]. - The gross profit for the European segment was HK$645.3 million, a decrease of 9.8% year-on-year, with the gross profit margin increasing from 6.5% in 2022 to 7.8% in 2023[125]. Market and Operational Developments - The joint venture project in Zouping City, Shandong Province, has successfully commenced operations with a recycled aluminum capacity exceeding 1,500 tonnes per month, which will gradually increase[6]. - The Group is actively expanding its operations in Southeast Europe with two new recycling yards expected to commence production in the second half of 2024[7]. - The Group is accelerating qualification applications for investment projects in the Asian market, focusing on the recycling of end-of-life vehicles and new energy power batteries[6]. - The Group is expanding its recycling development projects in Hungary and the Czech Republic, laying a foundation for business expansion in Central Europe[84]. - The Group is actively investing in a recycling yard development project in Southeastern Europe to expand its business networks in the Balkans[84]. - The Group is collaborating with a German automobile manufacturer on a circular economy project to improve the quality of secondary raw materials for end-of-life vehicle recycling[89]. Recycling and Sustainability Initiatives - The EU's Circular Economy Action Plan aims to enhance the recycling and reuse of materials from end-of-life vehicles (ELVs), promoting the use of recycled materials in new vehicles[17]. - By 2025, resource recycling standards will be a key component of China's carbon peak and carbon neutrality standards system[19]. - In 2022, approximately 3,991,000 end-of-life vehicles (ELVs) were recycled in China, representing a 32.9% year-on-year increase from 3,002,000 units in 2021[20]. - The equivalent weight of recycled ELVs in 2022 was approximately 8,207,000 tonnes, reflecting a 21.0% year-on-year increase[20]. - From January to May 2023, China recycled 115,000 tonnes of used power batteries, surpassing the total amount recycled in the entire previous year[20]. Challenges and Market Conditions - The market recovery in the first half of 2023 was slower than expected, with no significant changes in downstream demand, leading to a supply surplus[10]. - The global economic downturn and inflation pressures have led to a slowdown in demand and lower-than-expected growth in recycled metal sales[32]. - The Asian segment reported a loss of HK$102.6 million in the first half of 2023, compared to a loss of HK$64.0 million in the same period of 2022[107]. - The North American segment sold 65 tonnes of recycled products, down from 1,000 tonnes in the same period of 2022, with segment revenue decreasing to HK$4.0 million from HK$26.9 million[107]. Financial Position and Risk Management - As of June 30, 2023, shareholders' funds amounted to HK$4,958.8 million, reflecting a 2.8% increase from HK$4,826.5 million as of December 31, 2022[155]. - The Group's cash, bank balances, and pledged bank deposits totaled HK$357.6 million as of June 30, 2023, down from HK$766.0 million as of December 31, 2022[155]. - Total external borrowings were HK$928.8 million as of June 30, 2023, a decrease of HK$213.3 million compared to HK$1,142.1 million as of December 31, 2022[155]. - The gearing ratio improved to 10.5% as of June 30, 2023, down from 13.3% as of December 31, 2022[155]. - The Group's risk management strategy includes hedging policies for commodity price and foreign currency risks to mitigate adverse financial impacts[124]. - The Group closely monitors trade debtors to minimize potential impairment losses related to credit risk[124]. Employee Relations and Corporate Governance - The Group's total staff costs for the six months ended 30 June 2023 were approximately HK$479.8 million, compared to HK$493.8 million in 2022[128]. - The Group continues to maintain good relationships with employees and provides various internal and external training programs[128]. - The Group aims to increase transparency with investors and shareholders to strengthen corporate governance and gather feedback on strategic plans[129].

Financial Performance Summary [Consolidated Income Statement](index=1&type=section&id=Consolidated%20Income%20Statement) The company experienced significant declines in revenue and profit attributable to owners in H1 2023, driven by global economic downturn and weak metal demand Key Income Statement Data for H1 2023 | Metric | Six Months Ended June 30 (HKD million) | YoY Change | | :--- | :--- | :--- | | **Revenue** | **2023**: 8,821.7 <br> **2022**: 11,826.0 | -25.4% | | **Gross Profit** | **2023**: 561.3 <br> **2022**: 701.2 | -20.0% | | **Profit Before Income Tax** | **2023**: 100.7 <br> **2022**: 301.1 | -66.6% | | **Profit for the Period** | **2023**: 50.2 <br> **2022**: 185.4 | -72.9% | | **Profit Attributable to Owners of the Company** | **2023**: 53.2 <br> **2022**: 199.5 | -73.3% | | **Basic Earnings Per Share (HKD)** | **2023**: 0.03 <br> **2022**: 0.12 | -75.0% | [Consolidated Statement of Comprehensive Income](index=3&type=section&id=Consolidated%20Statement%20of%20Comprehensive%20Income) The company achieved a turnaround to total comprehensive income in H1 2023, primarily driven by positive exchange differences compared to a prior-year loss Total Comprehensive Income/(Loss) for H1 2023 | Metric | Six Months Ended June 30 (HKD million) | | :--- | :--- | | **Profit for the Period** | **2023**: 50.2 <br> **2022**: 185.4 | | **Exchange Differences** | **2023**: 78.3 <br> **2022**: (390.1) | | **Total Comprehensive Income/(Loss) for the Period** | **2023**: 128.9 <br> **2022**: (205.0) | [Consolidated Balance Sheet](index=4&type=section&id=Consolidated%20Balance%20Sheet) The Group's total assets and equity showed slight growth as of June 30, 2023, maintaining a stable asset structure Balance Sheet Summary | Metric (HKD million) | As of June 30, 2023 | As of December 31, 2022 | | :--- | :--- | :--- | | **Total Assets** | 8,816.4 | 8,573.0 | | **Total Liabilities** | 3,906.8 | 3,792.3 | | **Total Equity** | 4,909.6 | 4,780.7 | Notes to the Financial Statements [Going Concern Basis](index=6&type=section&id=1.1.1%20Going%20Concern%20Basis) Despite significant uncertainties from maturing current borrowings, the Board maintains the going concern basis, supported by active refinancing and cash flow management efforts - The company is negotiating new secured long-term borrowings of no less than **HKD 783.6 million** with financial institutions to address maturing debt[24](index=24&type=chunk) Liquidity Position as of June 30, 2023 | Metric | Amount (HKD million) | | :--- | :--- | | **Cash and Cash Equivalents** | 351.1 | | **Total Borrowings** | 928.8 | | **Current Borrowings** | 801.6 | [Segment Information](index=8&type=section&id=3%20Segment%20Information) Europe remains the dominant segment despite declining revenue and profit, while Asia's loss expanded and North America's operations significantly contracted Revenue and Profit/(Loss) by Segment (Six Months Ended June 30) | Segment | Revenue (HKD million) | Segment (Loss)/Profit (HKD million) | | :--- | :--- | :--- | | | **2023** / 2022 | **2023** / 2022 | | **Asia** | **679.0** / 888.8 | **(102.6)** / (64.0) | | **Europe** | **8,138.7** / 10,910.3 | **337.4** / 425.7 | | **North America** | **4.0** / 26.9 | **(5.9)** / 26.9 | [Earnings Per Share](index=12&type=section&id=8%20Earnings%20Per%20Share) Basic earnings per share for H1 2023 significantly declined to HKD 0.03, a 75% drop, due to reduced profit attributable to owners Basic Earnings Per Share Calculation | Metric | Six Months Ended June 30 | | :--- | :--- | | | **2023** / 2022 | | **Profit Attributable to Owners of the Company for the Period (HKD million)** | **53.2** / 199.5 | | **Weighted Average Number of Ordinary Shares in Issue (thousand shares)** | **1,605,153** / 1,605,153 | | **Basic Earnings Per Share (HKD)** | **0.03** / 0.12 | Management Discussion and Analysis [Chairman's Statement](index=15&type=section&id=Chairman%27s%20Statement) The Chairman highlighted macroeconomic headwinds impacting H1 2023 sales and revenue, while the Group responded by deepening lean management, advancing strategic projects, and fostering technological innovation - Affected by macroeconomic headwinds, total sales volume in H1 2023 was **1.9 million tonnes**, with revenue of **HKD 8.8217 billion**, falling short of expected growth[57](index=57&type=chunk) - The Group achieved phased progress in metal recycling projects in Central Europe (Hungary, Czech Republic) and Southeast Europe (Balkan region), aiming to expand its business network[58](index=58&type=chunk) - The Group is deeply collaborating with a German automaker to explore intelligent recycling processes for enhancing the quality of secondary raw materials from end-of-life vehicles, securing German government funding[58](index=58&type=chunk) [Operations and Business Review](index=16&type=section&id=Operations%20and%20Business%20Review) The Group navigated a challenging economic environment by improving European margins, expanding in Central and Southeast Europe, growing Asian joint venture capacity, and strategically downsizing North American operations - The European region successfully increased its gross margin from **6.5% to 7.8%** by implementing a 'stable operating foundation' strategy[72](index=72&type=chunk) - A new metal recycling yard in the Czech Republic is scheduled for completion by September 2023, expected to add **500,000 tonnes** of annual capacity[72](index=72&type=chunk) - The joint venture project in Zouping, Shandong, in the Asian market, has achieved recycled aluminum production capacity exceeding **1,500 tonnes per month** and is steadily increasing[73](index=73&type=chunk) [Financial Review](index=19&type=section&id=Financial%20Review) The Group's H1 2023 financial performance weakened with a 25.4% revenue decline, yet gross margin improved to 6.4% and operating expenses decreased due to strategic focus and cost control Key Financial Indicators for H1 2023 | Metric | H1 2023 | H1 2022 | Change | | :--- | :--- | :--- | :--- | | **Revenue (HKD million)** | 8,821.7 | 11,826.0 | -25.4% | | **Gross Profit (HKD million)** | 561.3 | 701.2 | -20.0% | | **Gross Margin** | 6.4% | 5.9% | +0.5pp | | **Operating Expenses (HKD million)** | 484.8 | 525.2 | -7.7% | [Liquidity and Financial Resources](index=21&type=section&id=Liquidity%20and%20Financial%20Resources) The Group faces liquidity challenges from maturing debt despite an improved gearing ratio and reduced external borrowings, with management actively pursuing refinancing Key Liquidity and Gearing Ratios | Metric | As of June 30, 2023 | As of December 31, 2022 | | :--- | :--- | :--- | | **Current Ratio** | 1.34 | 1.31 | | **Gearing Ratio** | 10.5% | 13.3% | - Total external borrowings decreased by **HKD 213.3 million** from end-2022 to **HKD 928.8 million**[83](index=83&type=chunk) [Working Capital Changes](index=22&type=section&id=Working%20Capital%20Changes) The Group significantly improved its net operating cycle, demonstrating better working capital management efficiency despite a slight increase in inventory turnover days Working Capital Turnover Days (H1) | Metric | 2023 | 2022 | | :--- | :--- | :--- | | **Inventory Turnover Days** | 30 | 25 | | **Accounts Receivable Turnover Days** | 31 | 32 | | **Accounts Payable Turnover Days** | 34 | 33 | [Business Review by Segment](index=25&type=section&id=Business%20Review%20by%20Segment) Europe improved gross margin despite revenue decline, North America recorded a loss due to strategic transformation, and Asia's loss expanded with reduced revenue - **Europe**: Revenue was **HKD 8.225 billion** (YoY -25.0%), with gross margin improving to **7.8%**, and segment profit at **HKD 337 million**[115](index=115&type=chunk) - **North America**: Business transformation led to revenue decreasing to **HKD 4 million**, resulting in a segment loss of **HKD 5.9 million**[116](index=116&type=chunk)[118](index=118&type=chunk) - **Asia**: Revenue was **HKD 763 million** (YoY -14.6%), with segment loss expanding to **HKD 103 million**[119](index=119&type=chunk) [Outlook](index=16&type=section&id=Outlook) Management anticipates continued economic headwinds in H2 2023 but remains optimistic about long-term recovery driven by circular economy and decarbonization, focusing on strategic optimization and innovation across regions - At the macro level, 'circular economy' and 'decarbonization transformation' will continue to be long-term demands across economies, presenting development opportunities for the industry[69](index=69&type=chunk) - Europe strategy: Stabilize existing business, optimize product structure, and innovate production technology[69](index=69&type=chunk) - Asia strategy: Seize opportunities from China's carbon neutrality goals, explore new markets, identify new growth drivers, and enhance independent R&D capabilities[69](index=69&type=chunk) Other Important Information [Controlling Shareholder Restructuring](index=28&type=section&id=Controlling%20Shareholder%20Restructuring) The company's indirect controlling shareholder is undergoing court-supervised restructuring, which the Board believes has no material adverse effect on the company's independent operations or financial position - The company's indirect controlling shareholders (e.g., Loncin Group) are implementing a restructuring plan, but the Board believes it has no material adverse impact on the independently operated company[128](index=128&type=chunk)[136](index=136&type=chunk) - The Hong Kong SFC has confirmed that this restructuring will not trigger mandatory general offer obligations under the Takeovers Code[128](index=128&type=chunk) [Corporate Governance](index=31&type=section&id=Corporate%20Governance) The company complied with the Corporate Governance Code, resolving a temporary deviation where the Chairman and CEO roles were combined by reappointing independent individuals and restoring duty segregation - The company briefly deviated from the Corporate Governance Code's requirement for separation of Chairman and Chief Executive Officer roles[147](index=147&type=chunk) - Effective March 21, 2023, Mr. Qin Yongming was appointed Chairman and Mr. Zhang Wei was appointed Chief Executive Officer, bringing the company into full compliance with the Code[148](index=148&type=chunk) [Interim Dividend](index=32&type=section&id=Interim%20Dividend) The Board does not recommend an interim dividend for the six months ended June 30, 2023 - The company has neither paid nor proposed any dividends for the current or prior interim periods[63](index=63&type=chunk)[153](index=153&type=chunk)

Financial Performance - Revenue for 2022 decreased by 10.8% to HK$19,574.3 million from HK$21,950.4 million in 2021[7] - Gross profit fell by 36.0% to HK$1,207.7 million compared to HK$1,888.5 million in the previous year[7] - Profit for the year decreased by 65.7% to HK$237.4 million from HK$692.0 million in 2021[7] - Cash generated from operations increased by 38.3% to HK$902.9 million compared to HK$653.0 million in 2021[7] - The European segment reported a revenue decline of 6.8% to HK$17,841.4 million from HK$19,150.0 million[7] - Asia segment revenue decreased by 16.1% to HK$1,787.1 million from HK$2,130.8 million in 2021[7] - The North American segment reported a significant decline, with only 0.001 million tonnes of recycled products sold in 2022 compared to 0.21 million tonnes in 2021, resulting in segment revenue dropping to HK$35.7 million from HK$1,012.4 million[39] - The Southeast Asia segment experienced a gross loss of HK$15.7 million in 2022, a significant decline from a gross profit of HK$94.0 million in 2021, leading to a segment loss of HK$104.0 million[22] Operational Efficiency - Total external borrowings decreased from HK$1,661.9 million in 2021 to HK$1,142.1 million in 2022, with approximately HK$935.0 million at fixed interest rates[12] - The gearing ratio decreased from 16.7% in 2021 to 13.3% in 2022, indicating reduced external debt pressure[12] - Inventory as of December 31, 2022, was HK$1,323.7 million, down from HK$1,567.8 million in 2021, with inventory turnover days improving from 29 days to 26 days[12] - Trade and bills receivables decreased from HK$1,774.9 million in 2021 to HK$1,290.5 million in 2022, with receivables turnover days decreasing from 30 days to 24 days[15] - Capital expenditure increased to HK$453.8 million in 2022 from HK$260.5 million in 2021, aimed at improving production efficiency[16] Sustainability and Innovation - The company aims to enhance recycling services and R&D capabilities to provide competitive solutions[5] - The company is committed to integrating traditional R&D with smart and data-driven approaches in response to rapid technological advancements[5] - The European Union has updated its carbon reduction target from 55% to 57%, reflecting a broader commitment to sustainability[2] - The Group has implemented various resource conservation initiatives and aims to embed sustainability into daily management, complying with all relevant environmental regulations in PRC and Germany during the reporting period[126] - The Group maintains strong relationships with scrap metal suppliers, which is crucial for procurement, and conducts regular evaluations to secure quality suppliers[176] Corporate Governance - The Group plans to enhance transparency with investors and shareholders to strengthen corporate governance and improve communication regarding strategic plans[49] - The Group is committed to maintaining the highest standards of ethical conduct and has implemented a whistle-blowing policy to deter corruption and promote good corporate practices[101] - The Group's management team includes individuals with diverse backgrounds in finance, investment management, and corporate governance[84][90][96] - The Group's board of directors includes independent non-executive directors with extensive experience in strategic management and academic research[114] Human Resources - As of December 31, 2022, the Group had a workforce of 2,748 employees, a decrease from 2,866 employees in 2021[25] - Total staff costs for the year were approximately HK$975.6 million, down from HK$1,111.0 million in 2021[45] - The company aims to retain competent employees by determining remuneration based on market standards and individual performance[45] - The company has not experienced significant difficulties in recruiting and retaining qualified staff, maintaining good relationships with employees[25] Strategic Initiatives - The company aims to improve recycling services and R&D capabilities while expanding its core business in Europe and new business in Asia amidst a complex global economic environment[188] - The company operates a joint venture with Voestalpine Group in Austria, leading the market for ferrous scrap trading in the country[184] - The company established joint ventures in Southeast Asia, including partnerships in Thailand and Malaysia, focusing on dismantling scrap motors and mixed scrap metal, with ferrous scraps sold domestically and non-ferrous scraps exported to other markets[185] - In the Greater China region, the company faced significant operational challenges due to pandemic restrictions, but managed to enhance recovery efficiency and made progress on new projects, including a smart recycling project in Taizhou, Zhejiang, which completed construction and equipment installation by the end of 2022[187] Compliance and Risk Management - The Group's risk management strategy aims to mitigate market risks including commodity price risk, foreign currency risk, interest rate risk, credit risk, and liquidity risk[25] - The Group's credit risk management includes cash collection practices for sales of most recycled products to minimize financial asset carrying amounts[25] - The Group confirms compliance with applicable disclosure requirements under Chapter 14A of the Listing Rules for related party transactions[196] Shareholder Relations - The Company did not recommend the payment of a final dividend for the year ended 31 December 2022, compared to Nil in 2021[151] - The Group aims to be a global market leader in resource recycling and environmental protection, providing quality returns to shareholders[181]