Financial Performance - The company reported a total asset value of 446,482 thousand HKD for the year ending December 31, 2023, an increase of 59% from 281,024 thousand HKD in the previous year[11]. - The net current asset value increased to 174,331 thousand HKD, up from 124,116 thousand HKD, reflecting a growth of 40%[11]. - The company experienced a comprehensive loss of 17,168 thousand HKD for the year, a significant improvement compared to a loss of 210,859 thousand HKD in the previous year[22]. - The basic and diluted loss per share improved to 2.1 HKD cents from 63.0 HKD cents year-over-year[22]. - Total revenue for the twelve months ending December 31, 2023, was HKD 632,874,000, compared to HKD 709,306,000 for the previous year, reflecting a decrease of approximately 10.8%[44]. - The gross profit for the same period was HKD 35,721,000, down from HKD 42,506,000 year-over-year, indicating a decline of about 16.5%[44]. - The company recorded a net loss of approximately HKD 11,309,000 for the twelve months ending December 31, 2023, with net assets of about HKD 123,186,000[31]. - The operating loss for the twelve months was HKD 11,346,000, a significant improvement compared to HKD 129,667,000 in the previous year[44]. - The group reported a loss attributable to shareholders of approximately HKD 8.8 million, a significant reduction of about HKD 188.7 million or 95.6% compared to the previous year[156]. Asset and Liability Management - Non-current liabilities decreased significantly to 96,929 thousand HKD from 207,399 thousand HKD, indicating improved financial stability[12]. - The company reported cash and cash equivalents of 106,225 thousand HKD, an increase from 76,117 thousand HKD in the previous year, representing a growth of 39%[11]. - The total liabilities of the company slightly increased to HKD 369,080,000 in 2023 from HKD 364,307,000 in 2022[97]. - The outstanding principal of convertible bonds as of December 31, 2023, was HKD 93 million, with a maximum issuance of 46,500,000 shares upon conversion[69]. - The company recorded a significant decrease in interest expenses on convertible bonds, from HKD 46,552,000 in 2022 to HKD 30,461,000 in 2023[87]. - The company’s interest expenses on bank and other borrowings decreased significantly from HKD 2,511,000 in 2022 to HKD 172,000 in 2023[87]. Business Development and Strategy - The company acquired Green Credit Technology (Shenzhen) Co., Ltd., enhancing its blockchain technology capabilities and driving business growth[14]. - The company is focused on carbon credit asset trading and carbon neutrality-related business, positioning itself in a growing market[7]. - The company plans to continue developing existing carbon projects and seek new carbon projects to ensure a steady supply of carbon credit assets[32]. - The group aims to reduce China's CO2 emissions by 2% through its carbon-negative business, targeting a direct reduction contribution of 100 million tons from afforestation and another 100 million tons from commercial carbon capture, utilization, and storage projects[149]. - The group plans to collaborate with TUS Holdings and its subsidiaries to develop "zero-carbon" and "low-carbon" industrial parks, leveraging its dual-carbon digital control platform[162]. - The group is actively expanding its carbon asset development, operation, and management business, focusing on carbon credit asset development and management, carbon consulting, and carbon neutrality planning[157]. Employee and Operational Insights - As of December 31, 2023, the group had approximately 302 employees, with total employee costs amounting to HKD 88.4 million[58]. - Total employee benefits expenses (excluding directors and highest executive remuneration) amounted to HKD 94,865,000, a slight decrease from HKD 96,561,000 in the previous year[88]. - Administrative and selling expenses decreased to HKD 64,688,000 from HKD 86,014,000, showing a reduction of about 24.8%[44]. - The group has established a professional team and organizational structure for its carbon neutrality business, including the Industrial Carbon Negative Department and the Natural Carbon Negative Department[149]. Market and Revenue Trends - The global carbon neutrality business segment generated revenue of approximately HKD 152.6 million during the period, down from approximately HKD 209.2 million in the previous year, mainly due to decreased sales of carbon credit assets in Singapore[125]. - The ecological governance segment reported revenue of approximately HKD 480.3 million, a slight decrease of about HKD 19.8 million or 4% compared to the previous year[183]. - The group recorded a gross profit of approximately HKD 35.7 million for the year, a decrease of about HKD 6.8 million or 16.0% compared to the previous year[155]. Future Outlook and Plans - The financial year-end date has been changed from December 31 to June 30, with the next audited financial statements covering an 18-month period from January 1, 2023, to June 30, 2024[61]. - The company aims to expand its emerging carbon neutrality business segment, focusing on carbon credit asset development, management, investment, and carbon consulting, in line with national commitments to achieve carbon neutrality by 2060[141]. - The group has 11 major ongoing projects as of December 31, 2023, including two construction and maintenance projects and several civil engineering projects[152]. - The group launched the "Green Finance Open Platform" in collaboration with partners to reduce the barriers for users in accessing green financial tools[148]. Shareholder and Capital Management - The group issued and allocated 40,000,000 new shares on May 5, 2023, as part of the conversion of convertible bonds amounting to HKD 160,000,000[178]. - On April 26, 2023, the company issued and allotted 80,000,000 new shares at a conversion price of HKD 2.00 per share, following the partial conversion of convertible bonds with a principal amount of HKD 160,000,000[196]. - On October 11, 2023, the company approved a resolution to increase its authorized share capital from HKD 5,000,000 to HKD 100,000,000 by creating an additional 9,500,000,000 shares[199]. - On October 27, 2023, a total of 89,300,000 placement shares were successfully issued and allotted to no less than six independent third-party subscribers, with no subscribers becoming major shareholders of the company[200].

Financial Performance - Revenue for the six months ended June 30, 2023, was HK$197,513,000, a decrease of 14.6% compared to HK$231,099,000 in the same period of 2022[5]. - Gross profit increased to HK$16,339,000, up 32.1% from HK$12,351,000 year-on-year[5]. - Operating loss for the period was HK$36,835,000, compared to an operating profit of HK$3,523,000 in the previous year[5]. - Loss for the period attributable to owners of the Company was HK$36,294,000, compared to a profit of HK$3,916,000 in 2022[9]. - Total comprehensive expense for the period was HK$39,345,000, significantly higher than HK$2,203,000 in the prior year[9]. - Basic loss per share for the period was HK$9.9 cents, compared to earnings of HK$1.3 cents in the previous year[9]. - The Group reported a loss before tax of HK$36,835,000 for the six months ended June 30, 2023, compared to a profit of HK$3,438,000 in the same period of 2022[34]. - The Group reported a loss attributable to owners of approximately HK$36.3 million for the six months ended 30 June 2023, compared to a profit of approximately HK$3.9 million in 2022[167]. - Basic and diluted loss per share for the six months ended 30 June 2023 were HK$9.9 cents, while in 2022, basic and diluted earnings per share were HK$1.3 cents and HK$5.4 cents respectively[168]. Assets and Liabilities - Non-current assets increased to HK$53,321,000 as of June 30, 2023, compared to HK$33,514,000 at the end of 2022[12]. - Current assets decreased to HK$260,905,000 from HK$281,024,000 at the end of 2022[12]. - Current liabilities increased to HK$160,124,000, up from HK$156,908,000 at the end of 2022[12]. - As of June 30, 2023, total non-current liabilities decreased to HK$87,738,000 from HK$207,399,000 as of December 31, 2022, representing a reduction of approximately 57.7%[13]. - The net assets increased to HK$66,364,000 as of June 30, 2023, compared to net liabilities of HK$49,769,000 at the end of 2022, indicating a turnaround in financial position[13]. - Total equity attributable to owners of the Company reached HK$68,099,000 as of June 30, 2023, up from a deficit of HK$49,146,000 at the end of 2022[13]. - The share capital increased to HK$4,465,000 as of June 30, 2023, compared to HK$3,205,000 at the end of 2022, reflecting a growth of approximately 39.2%[13]. - The total allowance for impairment loss on contract assets decreased from HK$1,222,000 in December 2022 to HK$764,000 in June 2023, indicating improved asset quality[71]. - The liability component of convertible bonds decreased to HK$57,529,000 as of June 30, 2023, down from HK$177,544,000 at the beginning of the year, a reduction of 67.6%[92]. Cash Flow - Net cash flows generated from operating activities for the six months ended June 30, 2023, were HK$11,786,000, a significant improvement from a cash outflow of HK$36,199,000 in the same period of 2022[17]. - Total cash flows used in investing activities amounted to HK$21,023,000, compared to HK$12,987,000 in the prior year, reflecting increased investments in subsidiaries and intangible assets[17]. - Cash and cash equivalents at the end of the period were HK$76,595,000, down from HK$84,941,000 at the end of June 2022, indicating a decrease of approximately 9.5% year-over-year[17]. - The company reported a net increase in cash of HK$359,000 for the six months ended June 30, 2023, contrasting with a decrease of HK$3,285,000 in the same period of 2022[17]. Share Capital and Equity - The Company issued new shares amounting to HK$15,000,000 during the period, contributing to the increase in share capital[16]. - The company’s share capital increased by HK$800,000 and HK$250,584,000 due to the issuance of 80,000,000 conversion shares in April 2023[132]. - The company’s share premium account increased by HK$125,640,000 from the issuance of 40,000,000 conversion shares in May 2023[133]. - The company’s total issued share capital as of June 30, 2023, was HK$4,465,000, reflecting the impact of recent share issuances[127]. Segment Performance - The Company operates two reportable segments: Global Carbon Neutral Business and Civil Engineering and Construction Business, which are monitored separately for performance assessment[30]. - For the six months ended June 30, 2023, the total segment revenue was HK$197,513,000, a decrease of 14.5% compared to HK$231,099,000 for the same period in 2022[34]. - The Global Carbon Neutral segment generated revenue of HK$3,337,000, significantly down from HK$420,000 in 2022, while the Civil Engineering and Construction segment revenue decreased to HK$194,176,000 from HK$230,679,000[34]. - The revenue of the Global Carbon Neutral Business for 1H2023 was approximately HK$3.3 million, a significant increase from approximately HK$0.4 million in 2022[178]. Carbon Credit and Environmental Initiatives - The Company’s principal activities include trading of carbon-credit assets and development in carbon neutral related fields, which are expected to drive future growth[22]. - The company is focused on carbon capture, utilization, and storage (CCUS) technologies, which are central to its global carbon neutral business strategy[22]. - The Group's carbon neutral business management team consists of experts with extensive experience in financial, asset management, and corporate management fields, enhancing its operational capabilities[184]. - The Group aims to achieve negative carbon emissions of 100 million metric tons each from nature-based solutions and technology-based solutions, contributing to a 2% reduction in China's CO2 emissions[197]. - The Group's investment in afforestation is expected to absorb 100 million metric tons of CO2, while the development of CCUS projects will also reduce 100 million metric tons of CO2 emissions[197]. Acquisitions and Strategic Developments - The Group acquired 73% equity interest in Shenzhen Jianxin Zhuhe Technology Company Limited on March 27, 2023, resulting in significant goodwill recognized[83]. - The acquisition of Jianxin Zhuhe is expected to enhance the company's position in the carbon-neutral business and generate good financial returns[140]. - The Group acquired a 73% equity interest in The Green Credit Technology Co., Ltd., a leading blockchain-based digital technology service provider in China, to enhance carbon-neutral development[193]. Governance and Leadership Changes - The company’s chairman, Ms. Chan Tan Na Donna, resigned on February 20, 2023, indicating potential changes in leadership[69].

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之內容概不負責，對其 準確性或完整性亦不發表任何聲明，並明確表示，概不就因本公告全部或任何部分內容 而產生或因依賴該等內容而引致之任何損失承擔任何責任。 （於開曼群島註冊成立之有限公司） （股份代號：1372） 截至二零二三年六月三十日止六個月之中期業績公告 中國碳中和發展集團有限公司（「本公司」）之董事（「董事」）會（「董事會」）公佈本公司及其 附屬公司（統稱「本集團」）截至二零二三年六月三十日止六個月之未經審核簡明綜合中期 業績及財務狀況，連同於去年同期之比較數字如下。此簡明綜合中期財務資料未經審 核，惟已由本公司之審核委員會（「審核委員會」）審閱： 財務摘要 未經審核 截至六月三十日止六個月 二零二三年 二零二二年 千港元 千港元 收入 197,513 231,099 ...

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之內容概不負責，對其準確性或完整 性亦不發表任何聲明，並明確表示，概不就因本公告全部或任何部分內容而產生或因依賴該等內容而 引致之任何損失承擔任何責任。 （於開曼群島註冊成立之有限公司） （股份代號：1372） 有關本公司二零二二年經審核業績公告之補充公告 茲提述中國碳中和發展集團有限公司（「本公司」，連同其附屬公司統稱「本集團」）於二零二 三年三月三十日刊發的公告，內容有關本集團截至二零二二年十二月三十一日止年度的經審核年 度業績（「二零二二年經審核業績公告」）。除文義另有所指外，本公告所用詞彙具二零二二年 經審核業績公告所界定的相同涵義。 本公司董事局（「董事局」）謹此就二零二二年經審核業績公告中出現之筆誤作出澄清。 暫停辦理股份過戶登記 董事局注意到，二零二二年經審核業績公告第33頁「暫停辦理股份過戶登記」一段中出現無心之 筆誤。董事局謹此澄清（更正處已標識下劃線，以便參考），為符合資格出席應屆股東週年大會， ...

Financial Performance - The Group recorded a consolidated revenue of approximately HK$709.3 million for the year ended 31 December 2022, representing an increase of approximately 51.6% compared to HK$468.0 million in 2021[12]. - The gross profit for the year was approximately HK$42.5 million, an increase of approximately 18.4% from HK$35.9 million in 2021[12]. - The loss attributable to owners of the Company was approximately HK$197.5 million, compared to a profit of approximately HK$267.7 million in 2021[12]. - Basic and diluted loss per share for the year were HK$63.0 cents, compared to earnings per share of HK$103.4 cents and HK$69.4 cents in 2021[47][50]. - Adjusted net loss attributable to owners, excluding one-off non-operating items, was approximately HK$122.9 million, compared to a profit of HK$35.7 million in 2021[49][50]. Global Carbon Neutral Business - Revenue from the Global Carbon Neutral Business was approximately HK$209.2 million, a significant increase from approximately HK$0.5 million in 2021[19]. - The segment loss for the Global Carbon Neutral Business was approximately HK$30.8 million, compared to a segment profit of approximately HK$149.0 million in 2021[19]. - The Group aims to align with China's commitment to achieve carbon neutrality before 2060 and expand its carbon neutral business operations[18]. - The Group's unique market position focuses on carbon credit asset development, operation and management, investment, and carbon consulting[13]. - The outlook for the Carbon Neutral Business is positive, with expectations for accelerated development in carbon trading markets in China[27]. Civil Engineering and Construction Business - For the year ended 31 December 2022, revenue from the Civil Engineering and Construction Business was approximately HK$500.1 million, representing a 6.5% increase from HK$467.6 million in 2021, and accounted for approximately 70.5% of the Group's total revenue[95]. - The gross profit for the Civil Engineering and Construction Business decreased to approximately HK$26.0 million in 2022 from approximately HK$36.0 million in 2021, resulting in a gross profit margin decline to approximately 5.2% from 7.6% due to rising wages and construction costs[97]. - The operating environment for the Civil Engineering and Construction Business is expected to remain challenging due to rising costs and labor shortages, but the Group is confident in securing business opportunities[28]. - The Group secured 5 new substantial contracts in 2022, including civil engineering improvement works and public housing development projects[103]. Financial Management and Capital Structure - Administrative and selling expenses rose to approximately HK$86.0 million, reflecting an increase of approximately 33.1% from HK$64.6 million in 2021, driven by the expansion of the Global Carbon Neutral Business[40]. - Finance costs decreased to approximately HK$59.4 million, down approximately 21.6% from HK$75.8 million in 2021, due to initiatives to reduce the Group's gearing[41]. - The Group recorded a loss of approximately HK$74.6 million on the partial early repayment of a promissory note, which is expected to reduce long-term finance costs[42]. - The Group's gearing ratio was not available as of 31 December 2022 due to a net deficit in equity, compared to a gearing ratio of 173.0% as of 31 December 2021[111]. - The Group's financial position is expected to improve through the subscriptions, enhancing liquidity and reducing the gearing ratio[136]. Carbon Credit Assets and Development - The balance of carbon-credit assets inventory decreased significantly from approximately HK$193.2 million in 2021 to approximately HK$8.9 million in 2022, a reduction of approximately 95.4%[107]. - The carbon credit assets held by the Group are primarily generated by the Verra mechanism in the United States and the Gold Standard mechanism in Switzerland, mainly consisting of Verified Carbon Standard (VCS) credits[64][65]. - The Group completed the sale and delivery of 2 million tons of high-quality carbon credit assets in Singapore, marking one of the largest carbon emission reduction transactions in Asia[67][70]. - The Group's carbon asset development has diversified co-developers across various industries, enhancing the overall value of its carbon credit asset portfolio[64][65]. Strategic Initiatives and Partnerships - The establishment of the "China Carbon Neutral Development Group ASEAN Strategic Committee" aims to expand the Group's business in the ASEAN region[68][71]. - A memorandum of understanding was signed with SMRT Experience Pte Ltd to jointly develop carbon neutral business in the ASEAN region, leveraging SMRT's extensive media and retail networks[69][71]. - The cooperation with SMRT Corporation includes the development of a carbon emission information database and a carbon emission counting and monitoring system[77]. - The Group aims to establish a "Zero-Carbon Community" across Singapore by exploring enterprises and individuals within SMRT Corporation's ecosystem[77]. Corporate Governance and Leadership - The Group has complied with the Corporate Governance Code (CG Code) since December 11, 2013, ensuring high standards of corporate governance to protect shareholder interests[196]. - The Group regularly reviews its corporate governance practices to ensure compliance with the CG Code and adapt to the latest developments[198]. - The board of directors includes experts with diverse backgrounds in finance, technology, and ecological development, strengthening the company's governance[179][182]. - The leadership team comprises individuals with over 20 years of experience in their respective fields, ensuring robust strategic direction[167][173]. Environmental Commitment and Certifications - The Group's environmental management system has obtained ISO 14001 certification, emphasizing its commitment to sustainable construction and reducing carbon emissions[93]. - The Group's commitment to environmental management is reflected in its ISO 9001 and ISO 14001 certifications, ensuring quality and environmental standards[190]. - The Group's corporate culture aligns with China's strategy for carbon peak by 2030 and carbon neutrality by 2060, focusing on carbon neutral initiatives[195].

Financial Performance - Revenue for the six months ended June 30, 2022, was HK$231,099,000, an increase from HK$218,695,000 in the same period of 2021, representing a growth of approximately 0.18%[5] - Gross profit for the period was HK$12,351,000, down from HK$14,973,000 in the previous year, indicating a decline of about 17.6%[5] - Operating profit for the period was HK$3,523,000, significantly lower than HK$54,999,000 in the same period last year, reflecting a decrease of approximately 93.6%[5] - Profit for the period, excluding one-off non-operating gains, was HK$3,438,000, compared to HK$54,999,000 in the previous year, a decline of about 93.7%[5] - Total comprehensive income for the period was a loss of HK$2,203,000, compared to a profit of HK$409,079,000 in the same period of 2021[10] - The company reported a basic earnings per share of 1.3 HK cents, down from 183.0 HK cents in the previous year[10] - The diluted earnings per share was 5.4 HK cents, compared to 104.4 HK cents in the same period last year[10] - Profit attributable to owners of the Company for the six months ended June 30, 2022, was HK$3,916,000, a significant decrease from HK$407,964,000 in the same period of 2021[65] - The adjusted net profit, excluding one-off non-operating gains, was HK$3.4 million, compared to HK$55.0 million in 2021, indicating a decline of approximately 93.8%[132] Assets and Liabilities - Total non-current assets decreased to HK$25,866,000 as of June 30, 2022, down from HK$37,151,000 as of December 31, 2021, representing a decline of approximately 30.5%[14] - Total current assets increased to HK$516,881,000 as of June 30, 2022, up from HK$447,666,000 as of December 31, 2021, reflecting an increase of about 15.5%[14] - Net current assets rose to HK$336,353,000 as of June 30, 2022, compared to HK$272,066,000 as of December 31, 2021, indicating a growth of approximately 23.7%[14] - Total non-current liabilities amounted to HK$235,043,000 as of June 30, 2022, an increase from HK$222,156,000 as of December 31, 2021, marking a rise of about 5.5%[15] - Net assets increased significantly to HK$127,176,000 as of June 30, 2022, compared to HK$87,061,000 as of December 31, 2021, representing a growth of approximately 46.1%[15] - Cash and cash equivalents were reported at HK$84,941,000 as of June 30, 2022, slightly down from HK$88,266,000 as of December 31, 2021, a decrease of approximately 3.7%[14] Segment Performance - The Group operates two reportable segments: Global Carbon Neutral Business and Civil Engineering and Construction Business[35][39]. - Segment revenue for 2022 was HK$420,000, compared to HK$231,099,000 in 2021, indicating a significant increase[40] - Segment results showed a profit of HK$41,409,000 in 2022, down from HK$104,008,000 in 2021, reflecting a decrease of approximately 60%[40] - The revenue from the Global Carbon Neutral Business was approximately HK$0.42 million, with a segment profit of approximately HK$41.4 million, down from approximately HK$104.0 million in 2021[140] Cash Flow - For the six months ended June 30, 2022, the net cash flows used in operating activities amounted to HK$36,199,000, an improvement from HK$68,323,000 in the same period of 2021[21] - The net cash flows used in investing activities were HK$12,987,000, compared to HK$23,737,000 in the prior year, indicating a reduction in investment outflows[21] - The financing activities generated net cash flows of HK$45,901,000, a significant decrease from HK$143,124,000 in the previous year[21] Carbon-Credit Assets - The company reported a significant increase in carbon-credit assets, which rose to HK$244,768,000 as of June 30, 2022, from HK$193,188,000 as of December 31, 2021, representing an increase of approximately 26.7%[14] - The Group's carbon asset operation and management business focuses on carbon consulting, auditing, and development services, with plans to extend into carbon trading, options, futures, and custody services[146] - The Group officially incorporated its subsidiary, Singapore Carbon Neutral Development (Group) Pte. Ltd., to expand its carbon neutrality-related business in the ASEAN region[147] Share Capital and Financing - The company issued new shares amounting to HK$31,000,000 during the reporting period[19] - The Group raised approximately HK$31.0 million by issuing 10,000,000 shares during the first half of 2022, enhancing its capital and equity[137] - The company issued zero coupon convertible bonds with an aggregate principal amount of HK$390,000,000 as part of the acquisition of the Automotive Engines Business[102] - The total carrying amount of convertible bonds was HK$480,557,000 as of June 30, 2022, down from HK$482,935,000 as of December 31, 2021[101] Strategic Initiatives - The Group established the "ASEAN Strategic Committee" to enhance its carbon neutral business strategy and promote entry into the ASEAN market[175] - A memorandum of understanding was signed with SMRT Experience Pte Ltd for strategic cooperation to develop carbon neutral business in the ASEAN region, leveraging Singapore's position in the carbon market[176] - The Group plans to initiate the establishment of a Global Carbon Asset Fund in collaboration with well-known institutions, intending to invest 1 million tons of VCS carbon credit assets[177] Challenges and Outlook - The civil engineering and construction business faces challenges such as rising costs and labor shortages, but the Group remains confident in securing promising opportunities due to its extensive experience[186] - The Group's carbon neutral business strategy will continue to be actively developed in the second half of 2022[174]

Financial Performance - The Group recorded a segment profit of approximately HK$149.0 million for the Global Carbon Neutral Business in 2021[12]. - The operating profit for the year was approximately HK$41.7 million, a turnaround from a loss of approximately HK$286.1 million in 2020[12]. - Profit attributable to owners of the Company for the year was approximately HK$267.7 million, compared to approximately HK$302.0 million in 2020[12]. - Revenue from the Civil Engineering and Construction Business was approximately HK$467.6 million, slightly down from approximately HK$475.3 million in 2020, with segment profit increasing to approximately HK$7.2 million from approximately HK$2.6 million[45]. - The Group recorded a gain of approximately HK$269.2 million from the disposal of its wholly owned subsidiary, which represented the entire Automotive Engines Business[45]. - The Group raised approximately HK$421.1 million through the issuance of 82,000,000 shares, significantly improving its capital structure[45]. - The Group waived approximately HK$99.3 million in interest payable on promissory notes as part of its efforts to reduce liabilities[45]. - The gearing ratio as of December 31, 2021, was 173%, reflecting a significant improvement from a negative equity position in 2020[109]. - The company's financial position was significantly improved due to the aforementioned corporate actions[108]. Carbon Neutral Business Development - The Group's carbon asset operation and management business focuses on carbon consulting, auditing, and development services, aiming to expand into carbon trading and related areas[19]. - The carbon negative business segment includes the development of carbon capture, utilization, and storage (CCUS) technology, along with investments in afforestation[20]. - The Group established a unique market position in carbon neutral operations, focusing on carbon credit asset development and management[13]. - The Group enhanced its organizational structure and management team to adapt to the new carbon neutral business[14]. - The Group is focused on developing carbon asset projects and aims to promote carbon neutrality and eco-friendly awareness across society in 2022[26]. - The Group plans to carry out its first CCUS project for a client, emphasizing its commitment to carbon neutral business development[26]. - The Group has made significant progress in expanding its carbon neutral business, focusing on carbon credit asset development, management, and investment[38]. - The Group's strategic planning for carbon neutrality aligns with the Chinese government's policies promoting carbon neutrality[38]. - The Group's carbon neutral business includes both industrial carbon negative and natural carbon negative initiatives, contributing to sustainable green investments[26]. - The Group is actively investing in projects that genuinely reduce emissions and respond to climate change[26]. - The Group's strategic focus on carbon neutral business includes carbon credit asset development, operation, management, and consulting services, establishing a unique market position[47][51]. - The Group's carbon neutral business management team consists of experts with extensive experience in financial and asset management, enhancing the company's capabilities in the carbon market[51]. - The Group's organizational structure has been optimized to support its carbon neutral business, including the establishment of specialized divisions for carbon asset management and negative carbon initiatives[49][52]. - The Group aims to create a win-win business cooperation model through collaboration with Beijing Jinmao Green Building Technology Co., Ltd. on low-carbon cities and green construction[58]. - The Group's carbon consulting business will integrate digital solutions to support financial institutions in achieving carbon neutrality under the national "dual carbon" strategies[66]. - The Group is preparing to establish the Global Carbon Asset Investment Management Fund, L.P. to enhance its leadership in carbon asset operation and attract more funds to the carbon market[80]. - The Group aims to cut China's CO2 emissions by 2% through its carbon negative business, targeting negative carbon emissions of 100 million metric tons from nature-based and technology-based solutions[80]. - The investment in afforestation is expected to absorb 100 million metric tons of CO2, while CCUS projects will reduce another 100 million metric tons of CO2 emissions[80]. Civil Engineering and Construction Business - The Civil Engineering and Construction Business managed to record stable performance despite challenges from the COVID-19 outbreak[21]. - The civil engineering and construction business is expected to face challenges such as rising labor costs and material prices, but the Group remains confident in securing business opportunities due to its extensive experience[27]. - As of December 31, 2021, the Group has significant contracts in civil engineering, including a contract sum of HK$173 million for barrier-free access facilities[33]. - For the year ended 31 December 2021, revenue from the Civil Engineering and Construction Business was approximately HK$467.6 million, representing about 99.9% of the total revenue of the Group[88]. - The gross profit for the Civil Engineering and Construction Business increased to approximately HK$36 million, with a gross profit margin of 7.6%, up from 3.1% in 2020[88]. - The Group secured 6 new substantial contracts during the year, including projects at LOHAS Park and Lamma Power Station[90][93]. - The Group's environmental management system has achieved ISO 14001 certification, emphasizing its commitment to sustainable construction practices[88]. - The operating environment in Hong Kong is expected to remain challenging due to rising wages and construction material costs, but the Group is confident in securing new business opportunities[99]. Corporate Governance and Management - Mr. Chen Xinwei has been appointed as the CEO and executive director since March 2, 2021, leading the Group's Carbon Neutral Business[176]. - Mr. Di Ling, appointed as an executive director on March 18, 2021, is responsible for developing corporate strategies for the Carbon Neutral Business[181]. - Dr. Cui Dingjun, also appointed on March 18, 2021, is an expert in fluid mechanics and has extensive experience in energy conservation projects[182]. - Mr. Chen Lei, appointed as an executive director on May 13, 2021, is a well-known expert in ecological construction in China[186]. - The company focuses on strategic investments in the Carbon Neutral Business, with a team of experienced directors leading various initiatives[181][182]. - The Group aims to mobilize resources effectively to ensure the implementation of carbon-neutral strategies[176]. - The company has a strong emphasis on risk management and corporate finance, as demonstrated by the backgrounds of its executive directors[181][182]. - The leadership team includes professionals with over 20 years of experience in global capital markets and financial services[176][181]. - The board of directors includes members with diverse expertise, enhancing the company's strategic direction in the carbon-neutral sector[181][186]. - The independent directors bring a wealth of knowledge in technology and finance, which is crucial for the company's innovation and market expansion strategies[192]. Strategic Partnerships and Collaborations - The Group has established a strategic cooperation agreement with Sinochem Environmental Holdings Co., Ltd. to develop carbon asset projects, leveraging its resources in China's ecological environment and carbon emissions reduction technologies[57]. - A joint venture named China Carbon Infogem Technologies Development (Shenzhen) Co., Ltd. was formed with Shenzhen Infogem Technologies Co., Ltd. to provide integrated digital carbon neutral solutions for financial institutions, enterprises, and governments[65]. - The Group's carbon asset development projects include partnerships with China Everbright Group Ltd. and Canvest Environmental Protection Group Company Limited for specific emission reduction initiatives[62]. - The Group formed a joint venture, China Carbon Nanjing, focusing on carbon asset development consulting and providing comprehensive consulting services for achieving carbon neutrality for over 40,000 enterprises in Heilongjiang Pilot FTZ[69][70]. - The Group won a bid for a carbon neutral project in Heilongjiang Pilot FTZ, enhancing its strategic position as a "one-stop" carbon neutral solutions provider[70][71]. Market Position and Future Outlook - The Group's competitive advantages include high-quality service delivery and strong client relationships, which have contributed to stable performance despite market challenges[90]. - The Paris Agreement and global carbon neutrality goals create diversified demand for carbon assets, which the Group plans to leverage for long-term growth[95][99]. - The company is focused on sectors including life sciences, clean energy, green finance, and fintech, as indicated by the expertise of its board members[189]. - The focus on green finance and clean energy aligns with global trends towards sustainability, positioning the company favorably for future investments[189].

(formerly known as Bisu Technology Group International Limited 比速科技集團國際有限公司) (Incorporated in the Cayman Islands with limited liability) （於開曼群島註冊成立之有限公司） Stock Code 股份代號：1372 2020 Annual Report 年報 CONTENTS 目錄 2 Corporate Information 公司資料 4 Director's Statement 董事報告 9 Summary of Significant Contracts on Hand 重大手頭合約概要 11 Management Discussion and Analysis 管理層討論及分析 32 Biographical Details of Directors and Senior Management 董事及高級管理層履歷 39 Corporate Governance Report 企業管治報告 68 Report of the Directors 董事會報告 86 Env ...

[Financial Statements](index=3&type=section&id=Financial%20Statements) [Condensed Consolidated Statement of Profit or Loss and Other Comprehensive Income](index=3&type=section&id=Condensed%20Consolidated%20Statement%20of%20Profit%20or%20Loss%20and%20Other%20Comprehensive%20Income) The company achieved a net profit of **HKD 499 million** in H1 2020, a turnaround from a **HKD 264 million** loss, primarily due to one-off debt restructuring gains, with revenue down **12.3%** and gross profit turning positive 2020 H1 Key Profit or Loss Indicators (HKD Thousand) | Indicator | 2020 H1 (Unaudited) | 2019 H1 (Unaudited) | Y-o-Y Change | | :--- | :--- | :--- | :--- | | **Revenue** | 215,823 | 246,196 | -12.3% | | **Gross profit/(loss)** | 5,998 | (24,680) | Turnaround to profit | | **Net gain on derecognition of convertible bonds** | 293,712 | — | Not applicable | | **Gain on modification of promissory notes** | 294,577 | — | Not applicable | | **Profit/(loss) for the period** | 499,053 | (264,268) | Turnaround to profit | | **Profit/(loss) attributable to owners of the parent** | 499,053 | (263,446) | Turnaround to profit | | **Basic earnings/(loss) per share (HK Cents)** | 249.5 | (131.7) | Turnaround to profit | | **Diluted earnings/(loss) per share (HK Cents)** | 129.9 | (131.7) | Turnaround to profit | - The key driver for the turnaround was one-off gains from debt restructuring, including approximately **HKD 294 million** from the derecognition of convertible bonds and approximately **HKD 295 million** from the modification of promissory notes, totaling approximately **HKD 588 million**[5](index=5&type=chunk)[219](index=219&type=chunk) [Condensed Consolidated Statement of Financial Position](index=5&type=section&id=Condensed%20Consolidated%20Statement%20of%20Financial%20Position) As of June 30, 2020, the company's net debt improved to **HKD 466 million** from **HKD 975 million**, with total liabilities decreasing to **HKD 830 million**, mainly due to debt restructuring reclassifying current to non-current liabilities Key Balance Sheet Indicators as of June 30, 2020 (HKD Thousand) | Indicator | June 30, 2020 (Unaudited) | Dec 31, 2019 (Audited) | Change | | :--- | :--- | :--- | :--- | | **Total non-current assets** | 4,119 | 51,929 | -92.1% | | **Total current assets** | 364,425 | 387,166 | -5.9% | | **Total current liabilities** | 403,489 | 1,367,928 | -70.5% | | **Total non-current liabilities** | 429,076 | 45,922 | +834.4% | | **Net current liabilities** | (41,064) | (980,762) | Significant improvement | | **Net debt** | (466,021) | (974,755) | Significant improvement | - The significant decrease in current liabilities was primarily due to the reclassification of convertible bonds (originally **HKD 386 million**) and promissory notes (originally **HKD 554 million**) to non-current liabilities after terms were revised, greatly improving the company's short-term solvency[12](index=12&type=chunk)[15](index=15&type=chunk) [Condensed Consolidated Statement of Changes in Equity](index=7&type=section&id=Condensed%20Consolidated%20Statement%20of%20Changes%20in%20Equity) As of June 30, 2020, the company's total equity deficit narrowed from **HKD 975 million** to **HKD 466 million**, primarily due to the **HKD 499 million** profit recorded, partially offsetting accumulated losses - The **HKD 499 million** profit recorded during the period was the main reason for the improvement in the equity deficit, reducing accumulated losses from **HKD 1.37 billion** to **HKD 870 million**[38](index=38&type=chunk) [Condensed Consolidated Statement of Cash Flows](index=8&type=section&id=Condensed%20Consolidated%20Statement%20of%20Cash%20Flows) In H1 2020, operating cash flow turned negative with a net outflow of **HKD 8.8 million**, indicating weakened core business cash generation, and period-end cash decreased to **HKD 55.9 million** 2020 H1 Cash Flow Statement Summary (HKD Thousand) | Item | 2020 H1 | 2019 H1 | | :--- | :--- | :--- | | **Net cash flow from operating activities** | (8,802) | 31,459 | | **Net cash flow used in investing activities** | (106) | (16,184) | | **Net cash flow from financing activities** | (1,844) | 13,058 | | **Net decrease in cash and cash equivalents** | (10,751) | 28,333 | | **Cash and cash equivalents at period-end** | 55,876 | 51,689 | [Notes to the Condensed Consolidated Interim Financial Information](index=9&type=section&id=Notes%20to%20the%20Condensed%20Consolidated%20Interim%20Financial%20Information) [1. Corporate Information & 2. Basis of Preparation](index=9&type=section&id=1.%20Corporate%20Information%20%26%202.%20Basis%20of%20Preparation) The company operates in civil engineering and automotive engines, facing 'going concern' uncertainty due to **HKD 466 million** net debt and **HKD 41.06 million** net current liabilities, though management expects sufficient working capital via debt revisions, shareholder support, and cost control - The Group primarily operates in two main businesses: civil engineering and construction, and automotive engines[45](index=45&type=chunk) - Despite recording a profit during the reporting period, the company still had net current liabilities of **HKD 41.06 million** and net debt of **HKD 466 million** as of June 30, 2020, raising significant doubts about its ability to continue as a going concern[51](index=51&type=chunk) - Management's confidence in the company's going concern is primarily based on: (i) alleviated repayment pressure from convertible bonds and promissory notes through revised terms; (ii) a commitment from the major shareholder to provide additional financial support of no less than **HKD 58.6 million**; and (iii) the implementation of strict cost control measures[51](index=51&type=chunk)[53](index=53&type=chunk) [4. Segment Information](index=13&type=section&id=4.%20Segment%20Information) The civil engineering segment is the Group's pillar, with revenue up **21.1%** and contributing **98.9%** of total revenue, while the automotive engine business saw a **96.5%** revenue decline and **HKD 52.96 million** segment loss, severely impacting overall performance Segment Performance by Business Segment (HKD Thousand) | Business Segment | 2020 H1 Revenue | 2019 H1 Revenue | 2020 H1 Segment Result | 2019 H1 Segment Result | | :--- | :--- | :--- | :--- | :--- | | **Civil Engineering and Construction** | 213,397 | 176,244 | 401 | (7,480) | | **Automotive Engines** | 2,426 | 69,952 | (52,955) | (194,436) | | **Total** | 215,823 | 246,196 | (52,554) | (201,916) | [12. Goodwill](index=22&type=section&id=12.%20Goodwill) Significant impairment losses of **HKD 16.34 million** on goodwill and **HKD 28.9 million** on property, plant, and equipment were recognized for the automotive engine business due to stalled customer restructuring, dim production prospects, and COVID-19 impacts - The primary reasons for impairment are the ongoing and uncertain restructuring of automotive engine business customers (especially BAIC Yinxiang) and unsatisfactory progress in resuming production, coupled with the impact of the pandemic, resulting in minimal operations for this business[111](index=111&type=chunk)[112](index=112&type=chunk) - Based on pessimistic forecasts for future cash flows, the company conducted an impairment assessment for the automotive engine cash-generating unit (CGU), recognizing impairment losses on related assets[113](index=113&type=chunk)[115](index=115&type=chunk) [14. Accounts Receivables](index=30&type=section&id=14.%20Accounts%20Receivables) Impairment provisions for accounts receivable reached **HKD 485 million**, mostly from the automotive engine business, due to high collection risk from customer restructuring delays and financial distress, prompting aggressive debt recovery efforts Accounts Receivable and Impairment by Business Segment (HKD Thousand) | Business Segment | Gross | Impairment | Net | | :--- | :--- | :--- | :--- | | **Civil Engineering and Construction** | 37,465 | (63) | 37,402 | | **Automotive Engines** | 655,056 | (484,879) | 170,177 | | **Total** | 692,521 | (484,942) | 207,579 | - The default rate for automotive engine business customers was assessed at **100%**, with the company accruing impairment based on estimated recovery rates ranging from **12.5%** to **38.1%** for different customers[162](index=162&type=chunk)[163](index=163&type=chunk) [17. Convertible Bonds & 18. Promissory Notes](index=38&type=section&id=17.%20Convertible%20Bonds%20%26%2018.%20Promissory%20Notes) Major term revisions to convertible bonds and promissory notes were central to H1 performance, extending bond maturity to 2025 and making notes perpetual, significantly enhancing liquidity and generating **HKD 588 million** in one-off accounting gains, directly leading to the turnaround - The maturity date of convertible bonds was extended by five years to February 4, 2025, with this revision leading to the derecognition of a portion of the liability and generating a gain of **HKD 294 million**[187](index=187&type=chunk)[184](index=184&type=chunk) - The promissory notes' term was modified to perpetual, with a fixed interest rate of **5%**, generating a gain of **HKD 295 million**[198](index=198&type=chunk) - The convertible bonds and promissory notes originally held by Power Expert were transferred to LE Group Holdings Pte. Ltd. on February 3, 2020[191](index=191&type=chunk)[201](index=201&type=chunk) [Management Discussion and Analysis](index=45&type=section&id=Management%20Discussion%20and%20Analysis) [Business and Financial Review](index=45&type=section&id=Business%20and%20Financial%20Review) In H1 2020, Group performance turned profitable due to one-off debt restructuring gains, with civil engineering growing **21.1%** despite challenges, while automotive engine revenue collapsed **96.5%** and operations halted due to stalled customer restructuring and pandemic impacts [Civil Engineering and Construction Business](index=46&type=section&id=Civil%20Engineering%20and%20Construction%20Business) Despite COVID-19 and economic downturns, this business showed robust performance, with revenue growing to **HKD 213.4 million**, accounting for **98.9%** of Group revenue, securing four new contracts, and holding **HKD 609 million** in total contract value for ongoing projects Civil Engineering and Construction Business Financial Performance (HKD Million) | Indicator | 2020 H1 | 2019 H1 | Change | | :--- | :--- | :--- | :--- | | **Revenue** | 213.4 | 176.2 | +21.1% | | **Gross profit** | 6.1 | 1.6 | +281.3% | | **Gross profit margin** | 2.8% | 0.9% | +1.9 ppt | - As of June 30, 2020, the Group secured four new contracts, including two from HKT[228](index=228&type=chunk)[230](index=230&type=chunk) [Automotive Engines Business](index=48&type=section&id=Automotive%20Engines%20Business) This business segment saw revenue plummet **96.5%** to **HKD 2.4 million** due to uncertain major customer restructuring and severe pandemic impacts, leading to minimal operations and significant impairment losses Automotive Engines Business Financial Performance (HKD Million) | Indicator | 2020 H1 | 2019 H1 | Change | | :--- | :--- | :--- | :--- | | **Revenue** | 2.4 | 70.0 | -96.5% | | **Gross loss** | 0.1 | 0.5 | -80.0% | - The core reason for the business's distress is the slow and uncertain restructuring progress of major customers (such as BAIC Yinxiang), with unknown plans for resuming production, directly leading to a depletion of orders[232](index=232&type=chunk) [Prospects](index=49&type=section&id=Prospects) Management is cautious for H2 2020, expecting civil engineering to seek stable development, while the automotive engine business faces a bleak outlook with focus on debt recovery and potential divestment, alongside continued cost control and pursuit of new opportunities - Civil Engineering Business: Despite a challenging operating environment in Hong Kong, the company is confident in securing business opportunities through its extensive experience and will continue to adopt a prudent bidding strategy[235](index=235&type=chunk) - Automotive Engine Business: Customer restructuring delays are expected to continue adversely impacting the business, with dim prospects for recovery, leading the company's strategy to shift towards maximizing debt recovery and considering divestment of the business[236](index=236&type=chunk)[238](index=238&type=chunk)[241](index=241&type=chunk) - Overall Group Strategy: The Group will continue to strictly control costs and seek new business opportunities to improve performance and shareholder value[239](index=239&type=chunk)[240](index=240&type=chunk) [Principal Risks and Uncertainties](index=50&type=section&id=Principal%20Risks%20and%20Uncertainties) The Group faces multiple risks: market demand and raw material price volatility, intense competition, evolving regulatory compliance, significant credit risk from automotive engine receivables, liquidity risk from net debt, and external shocks from events like COVID-19 - Credit Risk: Primarily arises from accounts receivable in the automotive engine business, where customers' financial conditions lead to significant delays and uncertainties in collection[247](index=247&type=chunk)[250](index=250&type=chunk) - Liquidity Risk: As of June 30, 2020, the Group was in a net debt position, and despite mitigation measures, there remains a risk of inability to meet financial obligations as they fall due[248](index=248&type=chunk)[251](index=251&type=chunk) - Event Risk: The COVID-19 pandemic has severely impacted the local economy, increasing operating costs and safety regulation pressures, with its long-term effects remaining uncertain[249](index=249&type=chunk)[252](index=252&type=chunk) [Capital Structure, Financial Resources, Liquidity and Gearing](index=52&type=section&id=Capital%20Structure%2C%20Financial%20Resources%2C%20Liquidity%20and%20Gearing) As of June 30, 2020, the Group held **HKD 55.9 million** in cash, and debt restructuring reclassified most debt to non-current, significantly reducing net current liabilities to **HKD 46.3 million** and improving the current ratio to **0.9**, greatly alleviating short-term liquidity pressure - Debt restructuring was key to improving liquidity: the convertible bond maturity was extended to 2025, and promissory notes became perpetual, significantly easing the company's repayment pressure[255](index=255&type=chunk)[260](index=260&type=chunk) Liquidity Indicator Changes | Indicator | June 30, 2020 | Dec 31, 2019 | | :--- | :--- | :--- | | **Cash and cash equivalents (HKD Million)** | 55.9 | 64.8 | | **Net current liabilities (HKD Million)** | 46.3 | 980.8 | | **Current ratio** | 0.9 | 0.3 | [Other Information](index=58&type=section&id=Other%20Information) [Corporate Governance](index=58&type=section&id=Corporate%20Governance) During the reporting period, the company had several deviations from the Corporate Governance Code, including a vacant Chairman position, non-executive directors without specific terms, and an executive director failing to retire by rotation as required - The company's Chairman position remained vacant, violating Code Provision A.2.1 which requires separation of Chairman and Chief Executive roles[284](index=284&type=chunk) - Non-executive directors were not appointed for specific terms, violating Code Provision A.4.1[285](index=285&type=chunk) - Mr. Xing Bin, an executive director, inadvertently failed to retire by rotation at the 2019 Annual General Meeting as required, violating Code Provision A.4.2, with the company subsequently taking steps to rectify this issue[290](index=290&type=chunk) [Directors' and Substantial Shareholders' Interests](index=61&type=section&id=Directors'%20and%20Substantial%20Shareholders'%20Interests) As of June 30, 2020, directors held no interests, while substantial shareholders included Mr. Jiang Jianhui (holding **150 million** shares, **75.0%**) and Mr. Arrab Chalid (holding convertible bonds for **195 million** shares, potential **97.5%**) Substantial Shareholders' Shareholding | Shareholder Name | Nature of Interest | Number of Shares/Underlying Shares Held | Approximate Percentage of Issued Share Capital | | :--- | :--- | :--- | :--- | | **Mr. Jiang Jianhui** | Controlled corporation interest | 150,000,000 | 75.0% | | **Youth Force Asia Ltd** | Beneficial owner | 150,000,000 | 75.0% | | **Mr. Arrab Chalid** | Controlled corporation interest | 195,000,000 (Underlying Shares) | 97.5% | | **LE Group Holdings Pte Ltd** | Beneficial owner | 195,000,000 (Underlying Shares) | 97.5% | [Corporate Information](index=64&type=section&id=Corporate%20Information) - The report lists the company's registered office, principal place of business, board members, committee members, company secretary, share registrar, auditor (Cheng Feng CPA Limited), and share listing information (stock code: 1372)[323](index=323&type=chunk)[326](index=326&type=chunk)

[Corporate Information](index=3&type=section&id=Corporate%20Information) The report details the company's fundamental registration information, principal business location, board and committee member rosters, share registrar, auditor, and share listing particulars - The report provides the company's basic registration information, principal place of business, lists of board and committee members, share registrar, auditor, and share listing information[4](index=4&type=chunk)[6](index=6&type=chunk)[8](index=8&type=chunk) [Director's Statement](index=6&type=section&id=Director's%20Statement) [Financial Highlights](index=6&type=section&id=Financial%20Highlights) In FY2019, the company's financial performance significantly deteriorated, marked by a 38.2% revenue decline, a shift to gross loss, and a substantial increase in loss attributable to owners of the parent, resulting in HKD 975 million in net liabilities and severe liquidity pressure FY2019 Financial Performance Summary (HKD '000) | Metric | FY2019 | FY2018 | Year-on-Year Change | | :--- | :--- | :--- | :--- | | **Financial Performance** | | | | | Revenue | 459,109 | 743,414 | -38.2% | | Gross (Loss)/Profit | (52,556) | 11,782 | From profit to loss | | Gross (Loss)/Profit Margin | (11.4%) | 1.6% | -13.0pp | | Loss Attributable to Owners of Parent | (905,423) | (703,767) | +28.7% | | **Financial Position** | | | | | Total Assets | 439,095 | 1,307,390 | -66.4% | | Total Liabilities | 1,413,850 | 1,400,349 | +1.0% | | Net Liabilities | (974,755) | (92,959) | Liabilities expanded | | Current Ratio | 0.3 | 1.3 | -76.9% | [Business Overview](index=8&type=section&id=Business%20Overview) In 2019, the Group's automotive engine business faced severe challenges due to a key customer's financial distress, leading to a sharp revenue decline and significant impairment losses, while the civil engineering and construction business also saw revenue decline and a shift to loss, with plans for industrial hemp cultivation terminated due to financing difficulties - The Group's consolidated revenue for 2019 decreased by **38.2%** year-on-year to **HKD 459 million**, with loss attributable to owners expanding to **HKD 905 million**[14](index=14&type=chunk) - The annual loss was primarily attributable to a **38.2%** revenue decline resulting in a gross loss of **HKD 52.6 million**, inventory impairment provisions of approximately **HKD 33.1 million** for the automotive engine business, fair value impairment losses of approximately **HKD 88 million** for intangible assets and **HKD 276 million** for goodwill, and additional expected credit losses of approximately **HKD 349 million** on trade receivables and bills from automotive engine business customers[14](index=14&type=chunk)[16](index=16&type=chunk)[17](index=17&type=chunk)[18](index=18&type=chunk) [Automotive Engines Business](index=10&type=section&id=Automotive%20Engines%20Business) The automotive engine business sharply deteriorated in 2019, with revenue plummeting 70.6% to HKD 81.3 million and average monthly production dropping 83.7%, primarily due to a key customer's financial distress and bankruptcy filing, leading to over HKD 700 million in impairment and expected credit losses on related intangible assets, goodwill, and trade receivables Key Metrics for Automotive Engines Business | Metric | FY2019 | FY2018 | Year-on-Year Change | | :--- | :--- | :--- | :--- | | Revenue (HKD Mn) | 81.3 | 276.5 | -70.6% | | Average Monthly Production (Units) | 181 | 1,108 | -83.7% | | Gross Margin (Excluding Impairment & Amortization) | 2.5% | 10.9% | -8.4pp | - Due to deteriorating business prospects, the Group recorded significant non-cash impairment losses related to the automotive engine business, including approximately **HKD 88 million** in fair value impairment loss on intangible assets, approximately **HKD 276 million** on goodwill, and approximately **HKD 349 million** in expected credit losses on trade receivables and bills[23](index=23&type=chunk) - A major customer, BAIC Yinxiang Automobile Co., Ltd., faced a bankruptcy petition in September 2019, exacerbating business uncertainties[21](index=21&type=chunk) [Civil Engineering and Construction Business](index=12&type=section&id=Civil%20Engineering%20and%20Construction%20Business) In 2019, civil engineering and construction business revenue decreased by 19.1% to HKD 378 million, shifting from a 2.6% gross margin to a 5.3% gross loss margin due to market conditions, with 12 significant projects under construction by year-end Financial Performance of Civil Engineering and Construction Business | Metric | FY2019 | FY2018 | | :--- | :--- | :--- | | Revenue (HKD Mn) | 377.8 | 466.9 (Estimated) | | Gross (Loss)/Profit Margin | -5.3% | 2.6% | [Withdrawal from Industrial Hemp Business](index=12&type=section&id=Withdrawal%20from%20Industrial%20Hemp%20Business) The Group attempted to enter the industrial hemp cultivation and processing business in mid-2019 via acquisition but decided to divest all related interests due to a worsening global economic outlook and prolonged financing acquisition, with no plans to re-enter this business - The Group decided to withdraw from the industrial hemp business due to decreased optimism regarding the global economic and business environment outlook, which required more time to secure sufficient financing[25](index=25&type=chunk) [Outlook](index=12&type=section&id=Outlook) The Board maintains a cautious outlook for 2020, anticipating continued pressure on the automotive engine business due to customer restructuring delays and the COVID-19 pandemic, while remaining confident in securing new opportunities in the challenging Hong Kong construction sector, with plans to implement cost controls and conduct a strategic portfolio review for diversification - The automotive engine business is expected to continue facing adverse impacts in 2020 due to customer restructuring delays and the COVID-19 pandemic[25](index=25&type=chunk) - The Group plans to conduct a strategic portfolio review of its businesses in February 2020, focusing on new construction-related business opportunities and potential business diversification[30](index=30&type=chunk)[32](index=32&type=chunk) [Summary of Significant Contracts on Hand](index=14&type=section&id=Summary%20of%20Significant%20Contracts%20on%20Hand) [Civil Engineering and Construction Contracts](index=14&type=section&id=Civil%20Engineering%20and%20Construction%20Contracts) As of December 31, 2019, the Group held several significant civil engineering and construction contracts, including road and drainage works, utilities civil engineering, and building construction and maintenance, with specific contract amounts not provided for some due to their nature Selected Significant Contracts on Hand (HKD Mn) | Contract Category | Contract Details | Contract Amount | | :--- | :--- | :--- | | Road and Drainage Works | Provision of barrier-free access facilities for road structures (Contract 8) | 203 | | Road and Drainage Works | Provision of barrier-free access facilities for road structures (Contract 9) | 173 | | Building Construction and Maintenance | Renovation and new entrance works for Tsuen Wan West Station | 80 | | Building Construction and Maintenance | Superstructure works for Tseung Kwan O Depot Phase II Section 4 | 92 | [Management Discussion and Analysis](index=16&type=section&id=Management%20Discussion%20and%20Analysis) [Business and Financial Review](index=16&type=section&id=Business%20and%20Financial%20Review) This section details FY2019 operating results, reiterating a 38.2% revenue decline and expanded losses primarily attributed to sales downturns, inventory impairment, and significant intangible asset, goodwill, and trade receivables impairment in the automotive engine business, with basic and diluted loss per share widening to HKD 4.527 - Due to the deteriorating performance of the automotive engine business, the Group recorded significant impairments, including approximately **HKD 88 million** in fair value impairment of intangible assets, approximately **HKD 276 million** in fair value impairment of goodwill, and approximately **HKD 349 million** in expected credit losses on trade receivables and bills[48](index=48&type=chunk)[51](index=51&type=chunk) - For the year ended December 31, 2019, basic and diluted loss per share was approximately **HKD 4.527**, compared to approximately **HKD 3.519** in 2018[47](index=47&type=chunk) [Business Segment Analysis](index=18&type=section&id=Business%20Segment%20Analysis) This section provides an in-depth analysis of segment performance, highlighting the automotive engine business's sharp revenue and production decline due to key customer issues and significant impairment losses, the civil engineering and construction business's 19.1% revenue decrease and shift to a 5.3% gross loss margin, and the confirmed withdrawal from industrial hemp cultivation Revenue by Business Segment (HKD Mn) | Business Segment | FY2019 | FY2018 | Year-on-Year Change | | :--- | :--- | :--- | :--- | | Automotive Engines Business | 81.3 | 276.5 | -70.6% | | Civil Engineering and Construction Business | 377.8 | 466.9 | -19.1% | | **Total** | **459.1** | **743.4** | **-38.2%** | [Prospect](index=22&type=section&id=Prospect) Management maintains a cautious outlook for 2020, citing global economic recession signs, US-China trade conflicts, Hong Kong's political environment, and the COVID-19 pandemic as challenges, anticipating continued negative impacts on the automotive engine business from customer restructuring delays, while remaining confident in the construction sector and planning strategic portfolio reviews for diversification and cost control - Management maintains a cautious and conservative outlook for 2020, primarily influenced by macroeconomic factors such as global economic slowdown, US-China trade conflicts, and the COVID-19 pandemic[64](index=64&type=chunk) - The Group plans to conduct a strategic portfolio review of its businesses in February 2020, evaluating strategic options in Hong Kong and internationally, with a focus on new opportunities and potential diversification in the construction sector[67](index=67&type=chunk)[70](index=70&type=chunk) [Principal Risks and Uncertainties](index=23&type=section&id=Principal%20Risks%20and%20Uncertainties) The Group faces multiple risks, including business risks from market price and demand fluctuations, intense industry competition, policy risks from compliance requirements, credit risk from severe payment delays by automotive engine business customers, and liquidity risk due to net current liabilities and net liabilities, compounded by macroeconomic uncertainties like US-China trade conflicts, Hong Kong's economic downturn, and the COVID-19 pandemic - The Group's principal risks include business risk, industry risk, policy risk, credit risk, liquidity risk, and other macroeconomic risks such as the US-China trade war and the COVID-19 pandemic[71](index=71&type=chunk)[72](index=72&type=chunk)[75](index=75&type=chunk)[76](index=76&type=chunk)[77](index=77&type=chunk)[78](index=78&type=chunk)[84](index=84&type=chunk) - As of December 31, 2019, the Group recorded net current liabilities and net liabilities, indicating exposure to liquidity risk[78](index=78&type=chunk)[82](index=82&type=chunk) [Capital Structure, Financial Resources, Liquidity and Gearing](index=25&type=section&id=Capital%20Structure%2C%20Financial%20Resources%2C%20Liquidity%20and%20Gearing) By the end of 2019, the Group's cash and equivalents increased to HKD 64.8 million, yet total assets sharply declined by 66.4% due to significant impairments, resulting in net current liabilities of HKD 981 million (from HKD 131 million net current assets) and a deteriorated current ratio of 0.3, with liquidity improved by extending convertible bond maturity and converting promissory notes to perpetual status Liquidity Metrics Changes | Metric | December 31, 2019 | December 31, 2018 | | :--- | :--- | :--- | | Cash and Cash Equivalents (HKD Mn) | 64.8 | 27.0 | | Total Assets (HKD Mn) | 439.1 | 1,307.4 | | Net Current (Liabilities)/Assets (HKD Mn) | (980.8) | 130.7 | | Current Ratio | 0.3 | 1.3 | - The company reached agreements with convertible bond and promissory note holders to extend the convertible bond maturity by five years to 2025 and convert promissory notes to perpetual status, which helps improve the Group's liquidity position[89](index=89&type=chunk)[91](index=91&type=chunk) [Going Concern](index=28&type=section&id=Going%20Concern) Despite significant net losses, net current liabilities, and net liabilities in FY2019, coupled with COVID-19 impacts, the Directors believe the Group remains a going concern, based on measures including extended convertible bond and promissory note terms, a commitment from a major shareholder for at least HKD 58.6 million in additional funding, ongoing automotive business customer restructuring, and implemented cost control measures - Despite recording a net loss of **HKD 906 million** and net current liabilities of **HKD 981 million**, the Board believes the company remains a going concern[94](index=94&type=chunk) - Key measures supporting going concern include extending repayment terms for convertible bonds and promissory notes, securing a commitment from a major shareholder for at least **HKD 58.6 million** in additional funding, ongoing restructuring of the automotive engine business customer, and implementing stringent cost control measures[94](index=94&type=chunk)[96](index=96&type=chunk) [Employees and Remuneration Policies](index=32&type=section&id=Employees%20and%20Remuneration%20Policies) As of end-2019, the Group had approximately 452 employees in Hong Kong and China, a decrease from 611 in 2018, with remuneration policies regularly reviewed based on market terms, company performance, and individual qualifications - As of December 31, 2019, the Group's employee count was **452**, a **26%** decrease from **611** in 2018[113](index=113&type=chunk) [Biographical Details of Directors and Senior Management](index=34&type=section&id=Biographical%20Details%20of%20Directors%20and%20Senior%20Management) This section provides detailed personal biographies of executive directors, non-executive directors, independent non-executive directors, and senior management, including their age, academic background, professional qualifications, and internal and external appointments - This section provides detailed personal biographies of executive directors, non-executive directors, independent non-executive directors, and senior management, including their age, academic background, professional qualifications, and internal and external appointments[117](index=117&type=chunk)[119](index=119&type=chunk)[121](index=121&type=chunk)[123](index=123&type=chunk)[125](index=125&type=chunk)[128](index=128&type=chunk) [Corporate Governance Report](index=40&type=section&id=Corporate%20Governance%20Report) [Compliance with the CG Code](index=40&type=section&id=Compliance%20with%20the%20CG%20Code) During the reporting period, the company largely complied with the Corporate Governance Code, but noted deviations including the absence of separate Chairman and Chief Executive Officer roles (functions performed by all executive directors), non-executive directors lacking specific terms, the Chairman's absence from the AGM due to the lack of a designated Chairman, and an executive director's oversight in not retiring by rotation as required - The company had several deviations from the Corporate Governance Code during the reporting year, such as the non-separation of Chairman and Chief Executive Officer roles and non-executive directors lacking specific terms[132](index=132&type=chunk)[133](index=133&type=chunk)[134](index=134&type=chunk) [The Board and its Committees](index=42&type=section&id=The%20Board%20and%20its%20Committees) This section details the Board's responsibilities, composition, and changes, noting significant member turnover during the period, with the Board responsible for overall leadership and strategic decisions; the company established Audit, Remuneration, and Nomination Committees, all chaired by independent non-executive directors to oversee specific matters, also outlining director appointment, re-election, meeting attendance, training, nomination, and diversity policies - During the reporting period and up to the report date, there were multiple changes in Board members, including resignations and new appointments of several directors[143](index=143&type=chunk)[148](index=148&type=chunk) - The company has established Audit, Remuneration, and Nomination Committees, all composed of and chaired by independent non-executive directors[186](index=186&type=chunk)[201](index=201&type=chunk)[207](index=207&type=chunk) - The Board has adopted nomination and board diversity policies, acknowledging the current gender imbalance among its members (all male)[212](index=212&type=chunk)[226](index=226&type=chunk)[236](index=236&type=chunk) [Risk Management and Internal Control](index=59&type=section&id=Risk%20Management%20and%20Internal%20Control) The Board is responsible for maintaining sound risk management and internal control systems, conducting annual effectiveness reviews covering financial, operational, and compliance controls, and has reviewed and deemed the systems appropriate for FY2019 - The Board is responsible for maintaining and annually reviewing the effectiveness of the Group's risk management and internal control systems, deeming the 2019 systems appropriate[244](index=244&type=chunk)[248](index=248&type=chunk) [Shareholder Rights](index=61&type=section&id=Shareholder%20Rights) This section clarifies key shareholder rights, including attending and voting at general meetings, requisitioning extraordinary general meetings (requiring at least 10% of paid-up share capital with voting rights), electing and re-electing directors and auditors, and communicating with the company and accessing information, also detailing meeting procedures to ensure effective shareholder communication - Shareholders holding not less than **10%** of the company's paid-up share capital with voting rights are entitled to requisition an extraordinary general meeting[256](index=256&type=chunk) [Report of the Directors](index=66&type=section&id=Report%20of%20the%20Directors) [Principal Activities and Business Review](index=66&type=section&id=Principal%20Activities%20and%20Business%20Review) This report reiterates the Group's principal activities as the development, production, and sale of automotive engines, alongside civil engineering and building construction and maintenance, directing readers to the 'Director's Statement' and 'Management Discussion and Analysis' sections for detailed business reviews, significant events, and future developments - The Group is principally engaged in (i) the development, production, and sale of automotive engines; and (ii) civil engineering and building construction and maintenance businesses[280](index=280&type=chunk) [Major Customers and Suppliers](index=68&type=section&id=Major%20Customers%20and%20Suppliers) The Group exhibits very high customer and supplier concentration, with the largest customer accounting for 42.5% of total revenue and the top five customers for 98.8% in 2019; similarly, the top five suppliers accounted for 71.6% of total cost of sales, and the largest supplier for 38.5%, posing significant operational risks due to this high concentration Customer and Supplier Concentration | Concentration Metric | FY2019 | FY2018 | | :--- | :--- | :--- | | Largest Customer as % of Total Revenue | 42.5% | 22.3% | | Top Five Customers as % of Total Revenue | 98.8% | 74.7% | | Largest Supplier as % of Cost of Sales | 38.5% | 20.7% | | Top Five Suppliers as % of Cost of Sales | 71.6% | 46.6% | [Shareholding Concentration](index=71&type=section&id=Shareholding%20Concentration) The Hong Kong SFC announced on May 10, 2019, that as of April 23, 2019, controlling shareholders and 19 other shareholders collectively held 90.6% of the company's issued shares, leaving only 9.4% held by other shareholders, warning investors to exercise extreme caution due to potential significant share price volatility from limited trading caused by this high concentration - The Hong Kong SFC noted that as of April 23, 2019, controlling shareholders and 19 other shareholders collectively held **90.6%** of the company's shares, with public float at only **9.4%**, indicating a risk of high shareholding concentration[301](index=301&type=chunk) [Share Option Scheme](index=76&type=section&id=Share%20Option%20Scheme) The company adopted a share option scheme in March 2016 to incentivize and reward eligible contributors to the Group, granting 12 million share options on April 26, 2019, at an exercise price of HKD 7.128 per share, including 500,000 options to Director Mr. Lam Wah - On April 26, 2019, the company granted **12,000,000** share options under the share option scheme, with an exercise price of **HKD 7.128** and an expiry date of April 25, 2024[334](index=334&type=chunk)[335](index=335&type=chunk) [Environmental, Social and Governance Report](index=82&type=section&id=Environmental%2C%20Social%20and%20Governance%20Report) [Caring for Environment](index=85&type=section&id=Caring%20for%20Environment) This section outlines the Group's environmental commitments and practices, focusing on Hong Kong's civil engineering and construction business, demonstrating compliance with environmental regulations and ISO 14001 certification, detailing measures in green management, water consumption, noise control, construction waste management (3R policy), and energy saving (green office policy), with office greenhouse gas emissions decreasing by 2% and paper consumption by 26% during the period - The Group's environmental management system is ISO 14001 certified, and it strictly adheres to Hong Kong's environmental regulations in its construction business[368](index=368&type=chunk)[370](index=370&type=chunk) - During the reporting period, total Scope 2 greenhouse gas emissions from the Hong Kong headquarters and engineering business headquarters offices decreased by **2%** year-on-year[379](index=379&type=chunk)[380](index=380&type=chunk) [Caring for People](index=93&type=section&id=Caring%20for%20People) This section details the Group's policies and performance in employment and labor practices, health and safety, development and training, and operational practices, emphasizing a non-discriminatory, fair, and harmonious workplace, strict prohibition of child and forced labor, OHSAS 18001 certification for occupational health and safety with zero fatalities, and practices in supply chain management, product quality, anti-corruption, and community investment - As of the end of 2019, the Group's total number of employees was **452**, a decrease from **611** in the same period last year[397](index=397&type=chunk)[404](index=404&type=chunk) Safety Performance (Hong Kong Civil Engineering and Construction Business) | Metric | FY2019 | FY2018 | | :--- | :--- | :--- | | Fatalities | 0 | 0 | | Lost Time Injuries | 5 | 7 | | Lost Time Injury Rate | 2.5 | 3.4 | - The Group's occupational health and safety management system is OHSAS 18001 certified[418](index=418&type=chunk) [Independent Auditor's Report](index=104&type=section&id=Independent%20Auditor's%20Report) [Auditor's Opinion](index=104&type=section&id=Auditor's%20Opinion) Auditor Cheng & Co. Certified Public Accountants Limited believes the consolidated financial statements fairly present the Group's consolidated financial position as of December 31, 2019, and its consolidated financial performance and cash flows for the year then ended, in accordance with Hong Kong Financial Reporting Standards and the disclosure requirements of the Hong Kong Companies Ordinance - The auditor issued a standard unmodified opinion, stating that the financial statements fairly present the company's financial position[453](index=453&type=chunk) [Material Uncertainty Related to Going Concern](index=105&type=section&id=Material%20Uncertainty%20Related%20to%20Going%20Concern) The auditor draws attention to Note 2 of the financial statements, which highlights the Group's significant losses, net current liabilities, and net liabilities in FY2019, indicating a material uncertainty that may cast significant doubt on the Group's ability to continue as a going concern; however, the auditor's opinion is not modified in respect of this matter, implying adequate disclosure by management - The auditor's report includes a 'Material Uncertainty Related to Going Concern' paragraph, emphasizing that the Group's significant losses and net liability position may cast significant doubt on its ability to continue as a going concern[456](index=456&type=chunk)[458](index=458&type=chunk) [Key Audit Matters](index=106&type=section&id=Key%20Audit%20Matters) The auditor identified two key audit matters: the impairment assessment of goodwill and intangible assets, which involves significant management judgment in forecasting future cash flows; and the recoverability of trade receivables and bills, which involves material amounts and significant judgment and assumptions in determining expected credit losses - Key Audit Matter One: Impairment assessment of goodwill and intangible assets, where management's forecasts of future cash flows for the cash-generating unit involve significant judgment due to delayed resumption of production by the automotive engine business customer[463](index=463&type=chunk)[466](index=466&type=chunk) - Key Audit Matter Two: Recoverability of trade receivables and bills, considered a key audit matter due to the material amounts involved (**47%** of total assets) and significant judgment required in the expected credit loss model[468](index=468&type=chunk)[471](index=471&type=chunk) [Consolidated Financial Statements](index=115&type=section&id=Consolidated%20Financial%20Statements) [Consolidated Statement of Profit or Loss and Other Comprehensive Income](index=115&type=section&id=Consolidated%20Statement%20of%20Profit%20or%20Loss%20and%20Other%20Comprehensive%20Income) In FY2019, the Group's revenue was HKD 459 million, a 38.2% year-on-year decrease, resulting in a gross loss of HKD 52.56 million due to higher cost of sales than revenue; after significant goodwill and intangible asset impairments (totaling HKD 364 million) and high administrative expenses, loss before tax reached HKD 922 million, with a final annual loss of HKD 906 million, of which HKD 905 million was attributable to owners of the parent Consolidated Statement of Profit or Loss Summary (HKD '000) | Item | FY2019 | FY2018 | | :--- | :--- | :--- | | Revenue | 459,109 | 743,414 | | Gross (Loss)/Profit | (52,556) | 11,782 | | Goodwill Impairment | (275,821) | (174,933) | | Intangible Assets Impairment | (88,042) | (430,928) | | Loss Before Tax | (922,494) | (769,826) | | Loss for the Year | (906,245) | (703,767) | | Loss Attributable to Owners of Parent | (905,423) | (703,767) | [Consolidated Statement of Financial Position](index=117&type=section&id=Consolidated%20Statement%20of%20Financial%20Position) As of end-2019, the Group's total assets sharply decreased from HKD 1.307 billion to HKD 439 million, primarily due to significant reductions in goodwill, intangible assets, and trade receivables, while total liabilities remained at HKD 1.414 billion, severely deteriorating the balance sheet from HKD 92.96 million net liabilities to HKD 975 million net liabilities, with net current liabilities reaching HKD 981 million Consolidated Statement of Financial Position Summary (HKD '000) | Item | December 31, 2019 | December 31, 2018 | | :--- | :--- | :--- | | **Assets** | | | | Total Non-current Assets | 51,929 | 681,157 | | Total Current Assets | 387,166 | 626,233 | | **Total Assets** | **439,095** | **1,307,390** | | **Liabilities and Equity** | | | | Total Current Liabilities | 1,367,928 | 495,519 | | Total Non-current Liabilities | 45,922 | 904,830 | | **Total Liabilities** | **1,413,850** | **1,400,349** | | **Net Liabilities** | **(974,755)** | **(92,959)** | [Consolidated Statement of Cash Flows](index=120&type=section&id=Consolidated%20Statement%20of%20Cash%20Flows) In FY2019, the Group generated net cash flow from operating activities of HKD 42.66 million, a significant improvement from a net outflow of HKD 44.29 million in the prior year, primarily due to reduced contract assets and inventories, with net cash outflow from investing activities of HKD 16.28 million and net cash inflow from financing activities of HKD 16.72 million, resulting in year-end cash and cash equivalents increasing to HKD 64.78 million Consolidated Statement of Cash Flows Summary (HKD '000) | Item | FY2019 | FY2018 | | :--- | :--- | :--- | | Net Cash Flows from/(used in) Operating Activities | 42,655 | (44,292) | | Net Cash Flows used in Investing Activities | (16,279) | (2,486) | | Net Cash Flows from Financing Activities | 16,719 | 18,557 | | Net Increase/(Decrease) in Cash and Cash Equivalents | 43,095 | (28,221) | | Cash and Cash Equivalents at End of Year | 64,777 | 21,706 | [Notes to Financial Statements](index=122&type=section&id=Notes%20to%20Financial%20Statements) The notes to the financial statements provide detailed explanations of accounting policies, key accounting judgments and estimates, and in-depth breakdowns of various financial statement items, with important notes covering the going concern assumption (Note 2), segment information (Note 5), goodwill and intangible asset impairment testing assumptions and processes (Notes 16, 17), expected credit losses on trade receivables (Note 20), and changes in terms of convertible bonds and promissory notes (Notes 26, 27) - Note 2 details management's basis and measures for concluding that the company remains a going concern despite significant losses and net liabilities[513](index=513&type=chunk)[515](index=515&type=chunk) - Notes 16 and 17 disclose key assumptions for goodwill and intangible asset impairment tests, such as cash flow forecasts, growth rates, and discount rates, explaining the reasons for significant impairments[730](index=730&type=chunk)[733](index=733&type=chunk) [Five-Year Financial Summary](index=236&type=section&id=Five-Year%20Financial%20Summary) This section provides summary data on the Group's performance, assets, and liabilities for the past five financial years, facilitating comparative analysis of long-term financial performance trends - This section provides summary data on the Group's performance, assets, and liabilities for the past five financial years, facilitating comparative analysis of long-term financial performance trends[3](index=3&type=chunk)