（在開曼群島註冊成立之有限公司） （Stock Code 股份代號：1673） NOTIFICATION LETTER 通知信函 HUAZHANG TECHNOLOGY HOLDING LIMITED 華章科技控股有限公司 (Incorporated in the Cayman Islands with limited liability) Dear Registered Shareholders, Huazhang Technology Holding Limited (the "Company") – Notice of publication of (i) Annual Report 2024 and (ii) Circular in relation to general mandates to issue and repurchase Shares, re-election of retiring Directors, re-appointment of auditor and notice of annual general meeting, and (iii) Proxy Form of the ...

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 通 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 就 因 本 通 告 全 部 或 任 何 部 分 內 容 而 產 生 或 因 倚 賴 該 等 內 容 而 引 致 的 任 何 損 失 承 擔 任 何 責 任。 HUAZHANG TECHNOLOGY HOLDING LIMITED 華章科技控股有限公司 （在開曼群島註冊成立的有限公司） （股份代號：1673） 股 東 週 年 大 會 通 告 茲 通 告 華 章 科 技 控 股 有 限 公 司（「本 公 司」）謹 訂 於2024年11月29日 上 午10時 正 假 座 香 港 尖 沙 咀 廣 東 道5號 海 洋 中 心9樓901室 舉 行 股 東 週 年 大 會，藉 以 處 理 下 列 事 項： 作 為 特 別 事 項，考 慮 並 酌 情 通 過 下 列 決 議 案（不 論 有 否 修 訂）為 普 通 決 議 案： 普 通 決 議 案 – 1 – 1. 省 覽 及 批 准 本 公 ...

此 乃 要 件 請 即 處 理 閣 下 對 本 通 函 任 何 方 面 或 應 採 取 的 行 動 如 有 任 何 疑 問，應 諮 詢 股 票 經 紀 或 其 他 註 冊 證 券 買 賣 商、銀 行 經 理、律 師、專 業 會 計 師 或 其 他 專 業 顧 問。 閣 下 如 已 將 名 下 的 華 章 科 技 控 股 有 限 公 司（「本 公 司」）股 份 全 部 售 出 或 轉 讓，應 立 即 將 本 通 函 及 隨 附 的 代 表 委 任 表 格 送 交 買 主 或 承 讓 人，或 送 交 經 手 買 賣 或 轉 讓 的 銀 行、股 票 經 紀 或 其 他 代 理 商，以 便 轉 交 買 主 或 承 讓 人。 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 通 函 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 就 因 本 通 函 全 部 或 任 何 部 分 內 容 而 產 生 或 因 倚 賴 該 等 內 容 而 引 致 的 任 何 損 失 承 擔 任 何 責 任。 HUA ...

Financial Performance - For the fiscal year ending June 30, 2024, the company reported revenue of approximately RMB 448.0 million, a decrease of about 15.3% compared to RMB 528.9 million in the previous year[6]. - Gross profit for the same period was approximately RMB 79.7 million, down approximately 4.1% from RMB 83.2 million year-over-year[6]. - The company recorded a net loss attributable to shareholders of RMB 18.7 million, an improvement from a loss of RMB 51.2 million in the prior year[6]. - The company's revenue for the year ended June 30, 2024, decreased by approximately 15.3% to RMB 448.0 million, while gross profit fell by about 4.1% to RMB 79.7 million[26]. - The company recorded a loss of approximately RMB 18.6 million, a decrease in loss of about RMB 34.2 million compared to the same period last year[26]. - New contract amounts decreased by approximately 14.5% to about RMB 391.3 million, with an uncompleted contract amount of approximately RMB 401.3 million[27]. - Project contracting service revenue decreased by approximately 42.5% from RMB 178.5 million for the year ended June 30, 2023, to RMB 102.6 million for the year ended June 30, 2024[38]. - Environmental product sales revenue decreased by approximately 44.6% from RMB 10.1 million for the year ended June 30, 2023, to RMB 5.6 million for the year ended June 30, 2024[39]. Asset Management - Non-current assets decreased to RMB 245.5 million from RMB 267.0 million year-over-year, reflecting ongoing asset management efforts[6]. - Current assets increased to RMB 737.4 million from RMB 705.3 million, indicating a stable liquidity position[6]. - Cash and cash equivalents increased to approximately RMB 96.5 million as of June 30, 2024, compared to RMB 44.0 million as of June 30, 2023[53]. - The debt-to-asset ratio decreased from approximately 16.4% as of June 30, 2023, to 14.7% as of June 30, 2024, due to an increase in equity following a public offering[56]. Operational Efficiency - The gross margin improved to 17.8% from 15.7% in the previous year, indicating better cost management despite lower revenue[6]. - Lean management practices have been effectively implemented across departments, yielding significant improvements in operational efficiency[9]. - The gross profit margin for project contracting services increased from approximately 5.0% to 15.0% due to improved cost control measures[38]. - The gross profit margin for environmental products increased significantly from approximately 27.4% to 54.6%[39]. Strategic Partnerships and Projects - The company achieved significant project milestones, including the successful implementation of a domestically produced dilution hydraulic headbox, enhancing its competitive edge[8]. - The company has established partnerships with over 20 leading domestic and international brands, strengthening its market position[8]. - The company successfully signed contracts for advanced paper production systems, including a contract for a 6800/1000 long net paper machine control system with Yadu Paper[27]. - The company aims to enhance automation, digitalization, and intelligence in the paper industry, collaborating with leading suppliers to provide cost-effective solutions[29]. Research and Development - R&D expenses amounted to approximately RMB 25.7 million for the year ended June 30, 2024, a decrease of about 10.1% from RMB 28.6 million for the year ended June 30, 2023[44]. - The group registered a total of 339 patents as of June 30, 2024, including 113 invention patents, 117 utility model patents, and 55 software copyrights[31]. Environmental and Sustainability Initiatives - The company emphasizes the importance of sustainable development and is actively exploring new business opportunities in the environmental sector[67]. - The company has outlined its commitment to environmental, social, and governance (ESG) measures, aligning with national trends towards sustainability[74]. - The company aims to reduce emission intensity by 5% for electricity consumption, water usage, non-hazardous waste, and greenhouse gas emissions by 2030, using 2021/2022 as the baseline year[89]. - The environmental management system is established based on the international standard ISO 14001, integrating sustainability into daily operations[88]. - The company has established sustainable waste management practices to mitigate environmental impacts from waste disposal[101]. Employee and Labor Relations - The total employee cost for the year ending June 30, 2024, was approximately RMB 62.5 million, down from RMB 72.6 million for the year ended June 30, 2023, with a reduction in the number of employees from 245 to 228[65]. - Employee turnover rate increased to 10.15% in 2024, compared to 7.95% for women and 17.39% for men[126]. - Average training hours per employee were 39.25 in 2024, with 68.90% of employees receiving training[134]. - The company has maintained a zero incident record for work-related fatalities over the past three years[129]. Governance and Compliance - The board of directors is responsible for overseeing environmental, social, and governance (ESG) issues, ensuring effective risk control and internal monitoring mechanisms[80]. - The company has implemented a whistleblowing policy to encourage reporting of potential misconduct related to financial reporting and compliance[150]. - The company has a zero-tolerance policy towards corruption and has not encountered any significant violations of anti-corruption laws during the reporting period[149]. Market Outlook - The domestic paper products market is expected to transition from off-peak to peak season, with demand anticipated to strengthen due to policies promoting consumption and economic recovery[67]. - The Chinese paper industry is expected to see structural recovery in demand, particularly during traditional peak seasons in the second half of the year[24].

Revenue and Profit Performance - Revenue decreased by 15.3% to RMB 448.04 million in FY2024 compared to RMB 528.92 million in FY2023[1] - Gross profit declined by 4.1% to RMB 79.72 million, with gross margin improving to 17.8% from 15.7% in the previous year[1] - Net loss narrowed significantly by 64.8% to RMB 18.60 million, with the loss ratio improving to -4.2% from -10.0%[1] - Basic and diluted loss per share improved to RMB 0.016 from RMB 0.044 in FY2023[1] - Operating loss reduced to RMB 18.23 million from RMB 38.24 million, a 52.3% improvement[2] - The group recorded a loss of approximately RMB 18.6 million for the year ended June 30, 2024, a decrease of RMB 34.2 million compared to the same period last year[65] - Revenue for the year ended June 30, 2024, decreased by 15.3% to RMB 448.0 million, and gross profit decreased by 4.1% to RMB 79.7 million[65] - Revenue decreased by 15.3% from RMB 528.9 million in FY2023 to RMB 448.0 million in FY2024, while gross margin increased from 15.7% to 17.8% due to cost control efforts[72] - Net loss decreased by 64.8% from RMB 52.8 million in FY2023 to RMB 18.6 million in FY2024, with the net loss ratio improving from 10.0% to 4.2%[84] Segment Performance - The company operates in four reportable segments: Industrial Products, Project Contracting Services, Environmental Products, and Support Services[14] - Total revenue for the year ending June 30, 2024, was RMB 448,044,777, with industrial products contributing RMB 288,329,929, project contracting services contributing RMB 102,612,145, environmental products contributing RMB 5,635,900, and support services contributing RMB 51,466,803[15] - The company reported a gross profit of RMB 79,719,708, with industrial products contributing RMB 50,367,656, project contracting services contributing RMB 15,343,962, environmental products contributing RMB 3,076,238, and support services contributing RMB 10,931,852[15] - Industrial product sales remained stable, decreasing slightly by 0.4% from RMB 289.6 million in FY2023 to RMB 288.3 million in FY2024, with gross margin dropping from 20.3% to 17.5%[73] - Project contracting service revenue decreased by 42.5% from RMB 178.5 million in FY2023 to RMB 102.6 million in FY2024, but gross margin improved from 5.0% to 15.0% due to enhanced cost control[74] - Environmental product sales decreased by 44.6% from RMB 10.1 million in FY2023 to RMB 5.6 million in FY2024, while gross margin significantly increased from 27.4% to 54.6%[75] - Support service revenue increased slightly by 1.4% from RMB 50.8 million in FY2023 to RMB 51.5 million in FY2024, with gross margin decreasing from 24.8% to 21.2%[76] Financial Position and Liquidity - Total assets increased slightly to RMB 982.95 million from RMB 972.31 million, indicating stable financial position[4] - Cash and cash equivalents more than doubled to RMB 96.45 million from RMB 43.98 million, showing improved liquidity[4] - Total liabilities decreased to RMB 558,070,555 in 2024 from RMB 620,706,409 in 2023, reflecting a reduction of RMB 62,635,854[5] - Net assets increased to RMB 424,877,436 in 2024 from RMB 351,600,246 in 2023, showing growth of RMB 73,277,190[5] - Cash and cash equivalents increased to RMB 96.5 million as of June 30, 2024, compared to RMB 44.0 million in the previous year[85] - The asset-to-liability ratio improved to 14.7% as of June 30, 2024, from 16.4% in the previous year, reflecting better financial health[87] - The company maintained a strong liquidity position with sufficient cash and bank financing to support trade activities[94] Costs and Expenses - Finance costs net decreased to RMB 1.12 million from RMB 1.87 million, reflecting better financial management[2] - Administrative expenses decreased by 5.0% from RMB 80.0 million in FY2023 to RMB 76.0 million in FY2024, mainly due to reduced professional fees and employee costs[78] - R&D expenses decreased by 10.1% from RMB 28.6 million in FY2023 to RMB 25.7 million in FY2024, with the company aiming to improve paper equipment technology to international standards[79] - Financial and contract asset impairment losses decreased by 50.6% from RMB 16.4 million in FY2023 to RMB 8.1 million in FY2024[80] - Net financing costs decreased from RMB 1.9 million in FY2023 to RMB 1.1 million in FY2024, primarily due to reduced interest on other payables[82] - Total employee cost for the year ending June 30, 2024 was RMB 62.5 million, a decrease from RMB 72.6 million in the previous year[97] Contracts and Liabilities - Contract liabilities increased to RMB 152,879,736 in 2024 from RMB 123,064,299 in 2023, showing growth of RMB 29,815,437[5] - Contract liabilities increased to RMB 152,879,736 in 2024 from RMB 123,064,299 in 2023, driven by new contracts signed during the year[23][24] - Revenue recognized from contract liabilities was RMB 73,488,926 in 2024, compared to RMB 81,213,540 in 2023[26] - The remaining performance obligations for sales and project contracts totaled RMB 401,297,686 in 2024, with RMB 271,408,828 expected to be recognized within one year[26] - The court ruled that the plaintiff is entitled to a breach of contract compensation of RMB 32,994,295, which has been recognized in the consolidated financial statements[61] - The bank accounts of Zhejiang Huazhang were frozen for an amount of approximately RMB 37.6 million, effective from January 12, 2022, and extended for another year on December 20, 2023[61] Industry and Market Trends - China's GDP grew by 5% year-on-year in the first half of 2024, contributing to the recovery of the paper industry[62] - National production of machine-made paper and paperboard reached 76.613 million tons in the first half of 2024, an increase of 11.8% year-on-year[62] - Revenue for the paper and paper products industry above designated size reached RMB 699.21 billion, a year-on-year increase of 6.0%, with total profits of RMB 22.79 billion, up 104.9% year-on-year[62] - The paper equipment industry is moving towards technological innovation, environmental sustainability, and automation[63] - The non-woven fabric industry in China is experiencing rapid growth, driven by advancements in production technology and strong downstream market demand[64] - The company expects the domestic paper market to transition from off-season to peak season, with potential strengthening of terminal demand[98] Business Development and Projects - The company signed a series of influential orders, including a contract with Yadu Paper for the main drive control system, main drive motor, and MCS system for a 6800/1000 T-paper machine[66] - The company provided the main drive control system and DCS for a 5260/950 corrugated paper production line for Pingfeng Paper[66] - The company signed a contract with Zhaolong Paper for the drive control system, main drive motor, and MCS system for a 5480/850 high-strength corrugated paper machine[66] - The company provided a 3300/600 multifunctional paper production line with main drive control system, DCS, intelligent MCC system, and other automation equipment for Jiangxi Zhengguan Environmental Protection[66] - The company signed a contract with Fengsheng Paper for a 150,000-ton special paper drive project[66] - The company won a bid for a 5600/900 card production line project for Jintianhe Paper's food-grade packaging materials[66] - The company signed a total package contract with Sun Paper for a PM464860/600 special paper machine[66] - The company achieved a breakthrough with the Jilin Shanying PM61 corrugated paper project, reaching a speed of 1000m/min[68] - The company successfully launched two non-woven fabric projects, including the Sateri Tongling flushable wet wipes project and the Xiezhuo Medical flushable production line[70] - The company is actively expanding its global waste recycling business, leveraging over 20 years of industry experience and seeking investment opportunities overseas[71] Corporate Governance and Compliance - The amendments to the accounting policies have no significant impact on the company's financial position and performance, but have affected the disclosure of accounting policies in the consolidated financial statements[11] - The company has not early adopted the following new and revised Hong Kong Financial Reporting Standards (HKFRS) that have been issued but are not yet effective: HKFRS 10, HKAS 28, HKFRS 16, HKAS 1, HKAS 7, HKFRS 7, and HKAS 21[12] - HKFRS 18, which introduces new requirements for the presentation and disclosure of financial statements, will become effective for annual periods beginning on or after January 1, 2027[13] - The company has complied with the corporate governance code, except for deviations related to the separation of the chairman and CEO roles, which were temporarily handled by executive directors until the appointment of a new chairman on May 3, 2024[112] - The company's chairman did not attend the 2023 annual general meeting due to the vacancy in the chairman position until May 3, 2024[113] - All directors confirmed full compliance with the standard code regarding securities transactions as of June 30, 2024[114] - The company's audit committee, established on May 6, 2013, consists of three independent non-executive directors: Mr. Xing Kaineng, Mr. Yao Yangyang, and Ms. Zhang Dongfang, with Mr. Xing Kaineng serving as the current chairman[116] - The audit committee reviewed the company's financial system, accounting policies, financial status, and reporting procedures, including the consolidated financial statements for the fiscal year ending June 30, 2024[116] - The financial data for the fiscal year ending June 30, 2024, has been agreed upon by the company's auditor, He Xin Certified Public Accountants Co., Ltd., and matches the amounts in the audited consolidated financial statements[117] - The company and its subsidiaries did not purchase, sell, or redeem any listed securities during the fiscal year ending June 30, 2024[118] - The 2024 Annual General Meeting (AGM) will be held on November 29, 2024, with details to be provided in a circular and notice of AGM to be issued in accordance with the listing rules[119] - The board of directors does not recommend the payment of a final dividend for the fiscal year ending June 30, 2024 (2023: none)[120] - The annual results announcement and annual report are available on the Hong Kong Exchanges and Clearing Limited (HKEX) website and the company's website, with the 2024 annual report to be published and mailed to shareholders as required[120] - The executive directors as of the announcement date are Mr. Fang Hui (Chairman), Mr. Chen Hongwei, and Mr. Cai Haifeng, with independent non-executive directors being Mr. Xing Kaineng, Mr. Yao Yangyang, and Ms. Zhang Dongfang[121] Share Issuance and Capital Management - The company issued 532,044,689 new shares at HKD 0.20 per share, raising approximately HKD 104,500,000 (RMB 95,786,749) after deducting transaction costs of HKD 1,500,000 (RMB 1,374,929)[59] - The company's share capital and share premium increased to RMB 767,839,957 in 2024 from RMB 672,053,208 in 2023, with share capital rising to RMB 13,824,333 from RMB 8,907,761[59] - The company plans to issue 532,044,689 new shares at HKD 0.20 per share, raising approximately HKD 104.5 million net proceeds for business expansion and loan repayment[99] - The company has allocated HKD 3.8 million from the 2021 share subscription proceeds for working capital to purchase and process waste materials, with HKD 96.2 million remaining for potential acquisitions[101] - The company raised HKD 48.1 million net proceeds from its listing on the Hong Kong Stock Exchange in 2013[102] - The company's share subscription in 2021 raised HKD 100 million net proceeds, initially intended for a Dubai recycling project but later used for working capital[100] - The company has utilized approximately RMB 26.3 million from the net proceeds since the listing date until December 31, 2021, with RMB 21.8 million remaining unused as of December 31, 2021[103] - The board has decided to reallocate the unused net proceeds of approximately RMB 21.8 million, originally intended for capacity expansion, cost-saving construction, and market awareness, to repay bank loans (RMB 8 million), R&D expenses (RMB 5 million), and administrative and management expenses (RMB 8.8 million)[103] - As of June 30, 2024, the actual use of net proceeds includes RMB 18.299 million for capacity expansion, RMB 5.208 million for product development and innovation, and RMB 8 million for bank loan repayment[104] - The company raised approximately HKD 106.0 million through a public offering, with net proceeds of HKD 104.5 million allocated for repaying bank loans, expanding industrial automation and related businesses, and general working capital[106] - As of June 30, 2024, HKD 40.88 million of the net proceeds from the public offering has been used for bank loan repayment, while HKD 31.38 million remains unused for business expansion and support services[106] - The company has utilized approximately HKD 45.4 million from the proceeds of the public offering, with an unused balance of HKD 59.1 million currently deposited in deposits and/or money market instruments[107] - No share options were granted or exercised under the share option plan as of June 30, 2024[108] Legal and Regulatory Matters - The company's subsidiary, Zhejiang Huazhang Technology, has appealed a court judgment and had RMB 37.6 million frozen in bank accounts, with a retrial of the case ongoing as of September 5, 2024[109][110] - The court ruled that the plaintiff is entitled to a breach of contract compensation of RMB 32,994,295, which has been recognized in the consolidated financial statements[110] Environmental and Sustainability Initiatives - The company is focusing on sustainable development by introducing permanent magnet motors and IE5 ultra-efficient motors to reduce carbon emissions in the paper industry[99] - The company aims to enhance its competitiveness through strategic partnerships with domestic and international suppliers and by optimizing its management system[99] - The company is exploring new business opportunities in the environmental protection sector to increase group revenue[99]

Financial Performance - The company's revenue for the six months ended December 31, 2023, increased by approximately 6.3% to RMB 166.97 million compared to RMB 157.07 million in the same period of 2022[3]. - Gross profit decreased by approximately 11.0% to RMB 27.85 million, resulting in a gross margin of 16.7%, down from 19.9%[3]. - The net loss for the period was approximately RMB 18.66 million, a significant reduction of about 32.6% from a loss of RMB 27.67 million in the previous year[3]. - Revenue increased by approximately 6.3% from RMB 157.1 million for the six months ended December 31, 2022, to RMB 167.0 million for the six months ended December 31, 2023[26]. - Gross margin decreased from approximately 19.9% to 16.7% during the same period, primarily due to intensified competition in the current economic environment[26]. - Project contracting service revenue increased by approximately 41.1% from RMB 38.3 million for the six months ended December 31, 2022, to RMB 54.0 million for the six months ended December 31, 2023[28]. - The gross margin for project contracting services rose from approximately 4.3% to 16.4% due to improved cost control[28]. - Environmental business sales revenue decreased by approximately 21.2% from RMB 5.8 million to RMB 4.6 million, primarily due to intense market competition[30]. - The gross margin for environmental business dropped from approximately 41.0% to 25.9%[30]. - Support services revenue fell by approximately 41.9% from RMB 29.0 million to RMB 16.9 million, reflecting reduced demand in the current economic environment[31]. - The total comprehensive loss for the period was RMB 18,364,700, which includes a loss of RMB 18,341,933[101]. - The company reported a loss before tax of RMB 18,346,896 for the period, with a net loss of RMB 18,659,745[123]. - The company reported a net cash inflow from operating activities of RMB 2,672,281 for the six months ended December 31, 2023, compared to a net cash outflow of RMB 15,886,248 in the same period of 2022[104]. Operational Highlights - New contract amounts signed decreased by approximately 8.8% to RMB 178.0 million, with an uncompleted contract amount of approximately RMB 468.6 million[13]. - The company aims to enhance its service by becoming a leading integrated platform for products, technology, and services in the paper industry, focusing on automation and digitalization[13]. - The company has partnered with several paper manufacturers, including Yadu Paper and Pingfeng Paper, to provide advanced control systems for their production lines[13]. - The company is actively seeking opportunities in the global waste recycling market, with a trading volume of approximately RMB 0.2 million in waste materials for the six months ended December 31, 2023[21]. - The company has established strategic partnerships with leading suppliers to enhance product offerings and improve customer satisfaction[23]. - The company aims to enhance its competitive advantage by focusing on technological innovation and the development of a self-controlled, efficient supply chain[23]. Research and Development - R&D expenditure for the six months ended December 31, 2023, was approximately RMB 10.7 million, with 18 new patents applied for[16]. - The company has a total of 174 registered patents, including 65 invention patents, 73 utility model patents, and 36 software copyrights as of December 31, 2023[16]. Financial Position - Cash and cash equivalents as of December 31, 2023, were approximately RMB 37.4 million, down from RMB 44.0 million as of June 30, 2023[43]. - The debt-to-asset ratio decreased from approximately 16.4% to 15.9% due to a reduction in interest-bearing loans[45]. - The total employee cost for the six months ended December 31, 2023, was approximately RMB 24.6 million, down from RMB 32.1 million for the same period in 2022, reflecting a reduction of about 23.1%[54]. - The group maintained a strong cash position and bank financing to support trade, ensuring readiness for future growth opportunities[52]. - The company had a total equity of RMB 333,502,041 as of December 31, 2023, down from RMB 351,600,246 at the beginning of the period[101]. - The company incurred a loss of RMB 27,309,171 for the six months ended December 31, 2022, indicating a significant year-over-year improvement in financial performance[101]. Shareholder Information - Major shareholder Dao He Investment Limited held approximately 21.69% of the company's shares as of December 31, 2023[59]. - As of December 31, 2023, the company had issued a total of 1,064,089,378 shares, with 153,846,153 shares registered under Dao He, which is committed to subscribing for 76,923,076 shares in the public offering[64]. - The company has not engaged in any purchase, sale, or redemption of its listed securities during the six months ending December 31, 2023[65]. - The company has not participated in any arrangements for directors or their family members to acquire shares or bonds of the company during the six months ending December 31, 2023[63]. Legal and Compliance - The company is currently involved in a legal dispute, with a court ruling that has led to the freezing of approximately RMB 37.6 million in bank accounts, which remains in effect until January 2023[84][85]. - The company has complied with the corporate governance code, with some deviations noted due to vacancies in key positions[87][88]. Stock Options and Employee Benefits - A total of 85,940,000 stock options were granted under the new stock option plan, with a fair value estimated at approximately HKD 9,034,000 (around RMB 7,481,960)[196]. - The total number of stock options granted to directors and employees was 34,410,000, with 1,330,000 options having expired during the period[188]. - The company recognized an expense of RMB 584,307 related to the stock options granted, compared to RMB 1,987,371 for the same period in 2022[196]. - The expected volatility used in the valuation of stock options is 70.10%, based on comparable companies' market quotes as of May 31, 2022[196]. - The risk-free interest rate used in the stock option valuation model is 2.80%[196].

Financial Performance - Revenue for the six months ended December 31, 2023, was RMB 166,969,868, representing a 6.3% increase from RMB 157,068,849 in the same period of 2022[2]. - Gross profit decreased to RMB 27,845,454, down 11.0% from RMB 31,288,624, resulting in a gross margin of 16.7%, down from 19.9%[2]. - The net loss for the period was RMB (18,659,745), a 32.6% improvement compared to RMB (27,667,141) in the previous year[2]. - Basic and diluted loss per share was RMB (1.72), improved from RMB (2.57) in the same period last year[2]. - The overall comprehensive loss for the period totaled RMB (18,682,512), compared to RMB (26,338,169) in the previous year[17]. - For the six months ended December 31, 2023, the total revenue from external customers was RMB 157,068,849, with contributions from Industrial Products (RMB 83,904,048), Contracting Services (RMB 38,316,797), Environmental Products (RMB 5,833,178), and Support Services (RMB 29,014,826)[30]. - The company reported a net loss of RMB 27,667,141 for the six months ended December 31, 2023, compared to a net loss of RMB 27,353,830 in the previous period[30]. - The company reported a basic loss attributable to shareholders of RMB (18,341,933) for the six months ended December 31, 2023, compared to a loss of RMB (27,309,171) for the same period in 2022, indicating an improvement in performance[39]. - The basic loss per share for the six months ended December 31, 2023, was RMB (1.72), a decrease from RMB (2.57) for the same period in 2022, reflecting a reduction in losses[39]. - The company recorded a net impairment loss on accounts receivable of RMB (181,153,700) as of December 31, 2023, compared to RMB (179,566,793) as of June 30, 2023, reflecting ongoing challenges in collections[44]. - The company’s net financing income was reported at RMB (1,815,593), reflecting a decrease from RMB (3,366,685) in the previous year[53]. - Net loss reduced by approximately 32.6% from RMB 27.7 million to RMB 18.7 million, with a net loss margin decreasing from 17.6% to 11.2%[116]. Assets and Liabilities - Total liabilities as of December 31, 2023, amounted to RMB 621,706,770, slightly up from RMB 620,706,409[19]. - Total assets reached RMB 955,208,811, with a significant portion in industrial products and project contracting services[14]. - The company reported a net asset value of RMB 333,502,041, down from RMB 351,600,246[19]. - The total assets as of December 31, 2023, amounted to RMB 972,306,655, while total liabilities were RMB 620,706,409[31]. - As of December 31, 2023, the company's net accounts receivable amounted to RMB 88,406,933, down from RMB 113,204,157 as of June 30, 2023, showing a decrease in receivables[44]. - The total amount of accounts payable and other payables as of December 31, 2023, was RMB 393,388,268, showing a slight increase from RMB 390,255,878 as of June 30, 2023[91]. - The group's interest-bearing loans decreased from approximately RMB 69.0 million as of June 30, 2023, to approximately RMB 63.0 million as of December 31, 2023, resulting in a reduction in the debt-to-asset ratio from 16.4% to 15.9%[164]. Operational Highlights - The company did not declare any interim dividend for the six months ended December 31, 2023[2]. - The company did not declare any dividends for the six months ending December 31, 2023, maintaining the same stance as the previous year[56]. - The company is currently evaluating the potential impact of new accounting standards on its financial statements but has not yet estimated the effects[26]. - There were no significant impacts on the group's performance and financial position from the adoption of new accounting standards and amendments[24]. - The company’s operational challenges stem from downstream demand weakness, raw material price fluctuations, and inventory consumption issues, impacting overall performance[73]. - The group has established an intelligent manufacturing technology center focused on R&D and engineer training, promoting digital platform construction[80]. - The group has successfully launched a new company exhibition center and an internet platform, which have become major highlights of the company[80]. - The group is actively practicing corporate social responsibility through initiatives such as the "Huazhang Cup" educational awards[80]. - The group has received recognition for its high-tech enterprise status and has passed various project verifications and certifications, enhancing its market competitiveness[79]. - The group continues to seek opportunities for waste recycling processing plants overseas, aiming to expand its global footprint in the green environmental business[124]. Research and Development - The group has increased R&D investment to meet the rising technical requirements in the paper industry, achieving several high-quality technological results and receiving various project rewards and recognitions[79]. - As of December 31, 2023, the group's R&D expenditure was approximately RMB 10.7 million, with 18 new patent applications filed, bringing the total registered patents to 174[101]. - Research and development expenses decreased by approximately 26.4% from RMB 14.5 million for the six months ended December 31, 2022, to RMB 10.7 million for the six months ended December 31, 2023, accounting for about 9.2% and 6.4% of revenue respectively[156]. - The company plans to allocate approximately 30.0% of the net proceeds from the public offering for marketing and investments related to industrial automation products[106]. - The company plans to enhance its paper-making technology and quality to meet international standards, including smart production processes[156]. Market and Industry Trends - The paper industry in China saw a production increase of 6.6% in 2023, totaling 144.1 million tons, despite a 2.4% decline in revenue for large paper and paper product enterprises, which amounted to RMB 1,392.62 billion[73]. - The non-woven fabric industry in China is undergoing structural adjustment and industrial upgrading after the pandemic, with traditional advantages gradually weakening and new advantages such as technology, talent, management, capital, and brand emerging[75]. - The demand for non-woven fabrics is expected to continue growing due to global economic recovery and the rise of emerging markets, alongside the continuous emergence of new materials, technologies, and processes[75]. - The group anticipates that the average growth rate of the light industry will be around 4% from 2023 to 2024, with the scale of enterprise operating income expected to exceed RMB 25 trillion[96]. - The company anticipates a moderate recovery in demand for the paper industry in 2024, following stable growth in 2023[117]. Strategic Initiatives - The company aims to enhance its competitiveness and expand into potential businesses outside the paper industry[106]. - The company plans to enhance service capabilities and improve customer satisfaction through quality assurance and strategic partnerships with leading suppliers[126]. - The company has set a target to increase its production capacity, with an investment of RMB 23,521,000 planned for capacity expansion[176]. - The company has incurred management expenses of RMB 3,000,000 related to employee salary adjustments, expected to be utilized by December 31, 2024[176]. - The company has allocated RMB 1,500,000 for hiring additional employees, with a portion expected to be utilized by December 31, 2024[176].

Financial Performance - The company reported a revenue of approximately RMB 528.9 million for the year ended June 30, 2023, representing an increase of about 63.3% compared to the previous year[9]. - Gross profit for the same period was approximately RMB 83.2 million, reflecting a significant increase of about 150.8% year-over-year[9]. - The company's net loss attributable to shareholders was RMB 51.2 million, with a net loss margin of 9.7%[6]. - The net loss for the fiscal year ending June 30, 2023, was approximately RMB 52.8 million, a significant reduction of about 85.6% compared to the loss in the same period of 2022[29]. - Revenue increased by approximately 63.3% from RMB 323.9 million for the year ended June 30, 2022, to RMB 528.9 million for the year ended June 30, 2023, driven by the expansion into the non-woven fabric market and several large project contracting services[40]. - Gross margin improved from approximately 10.2% for the year ended June 30, 2022, to approximately 15.7% for the year ended June 30, 2023, due to the absence of losses from a specific project in the latter year[40]. - Industrial product sales revenue rose by approximately 75.6% from RMB 164.9 million to RMB 289.6 million, primarily due to the expansion into the non-woven fabric market[41]. - Project contracting service revenue surged by approximately 112.8% from RMB 83.8 million to RMB 178.5 million, attributed to three large contracting projects contributing approximately RMB 165.8 million[42]. - Environmental business sales revenue decreased by approximately 20.8% from RMB 12.8 million to RMB 10.1 million, mainly due to intense market competition[46]. - The total amount of uncompleted contracts as of June 30, 2023, was approximately RMB 449.9 million, down from RMB 599.3 million in 2022[30]. Assets and Liabilities - Non-current assets decreased to RMB 267.0 million, while current assets slightly decreased to RMB 705.3 million[6]. - The capital debt ratio increased to 16.4%, up from 8.9% in the previous year[6]. - Cash and cash equivalents decreased to approximately RMB 44.0 million as of June 30, 2023, from RMB 141.0 million as of June 30, 2022[64]. - Borrowings increased to approximately RMB 69.0 million as of June 30, 2023, from RMB 38.5 million as of June 30, 2022[67]. - The debt-to-asset ratio increased to approximately 16.4% as of June 30, 2023, from 8.9% as of June 30, 2022[68]. - Accounts receivable and other receivables decreased from RMB 222.5 million as of June 30, 2022, to RMB 175.3 million as of June 30, 2023[70]. Strategic Initiatives - The company has continued to explore market opportunities through strategic partnerships with Siemens, Rockwell, Danfoss, and VACON[9]. - The company is committed to diversifying its revenue streams by investing more resources in automation and other suitable development opportunities[11]. - The company aims to improve its operational efficiency and market competitiveness through technological advancements and strategic partnerships[13]. - The company aims to further allocate resources to environmental-related businesses, anticipating growth in this sector due to global waste recycling market potential[38]. - The group has identified opportunities for market expansion in automation and overseas markets, diversifying its business beyond the paper industry[82]. Research and Development - The company's R&D expenditure for the fiscal year was approximately RMB 28.6 million, supporting sustainable and high-quality development[33]. - Research and development expenses decreased by approximately 37.7% from RMB 45.9 million for the year ended June 30, 2022, to RMB 28.6 million for the year ended June 30, 2023, representing about 14.2% and 5.4% of the group's revenue for the respective periods[51]. Governance and Management - The company appointed Mr. Chen Hongwei as Executive Director on April 1, 2022, who has over 27 years of experience in business and operations management[12]. - Mr. Fang Hui, appointed as Executive Director on April 29, 2021, is responsible for the overall business development and operational management of solid waste metal resource recovery, with a background in solid waste recycling and environmental protection[13]. - The company’s independent non-executive director, Mr. Xing Kaineng, has extensive experience in corporate governance, auditing, and accounting, enhancing the company's governance framework[18]. - Ms. Zhang Dongfang, appointed as an independent non-executive director, has rich experience in business management, having served as CEO of Vinda International Holdings Limited and Shanghai Jahwa United Co., Ltd.[20]. - The management team includes professionals with diverse backgrounds in finance, engineering, and environmental management, contributing to strategic decision-making[12][13][18][20]. Environmental, Social, and Governance (ESG) - The group has established an Environmental, Social, and Governance (ESG) Committee to systematically manage ESG issues and report regularly to the board[98]. - The ESG report is prepared in accordance with the guidelines set out in the Hong Kong Stock Exchange's listing rules[94]. - The group aims to enhance its ESG performance and create greater value for society through stakeholder collaboration[101]. - The board is responsible for overseeing the group's ESG issues, including management policies and risk control mechanisms[97]. - The company aims to reduce emission density by 5% for electricity consumption, water usage, non-hazardous waste, and greenhouse gas emissions by 2030, using 2021/2022 as the baseline year[111]. - The company emphasizes environmental sustainability by integrating eco-friendly practices into daily operations[141]. - The company has implemented various measures to improve energy efficiency, including closing idle machines and using energy-efficient office equipment[133]. - The company is committed to enhancing water conservation awareness among employees and has implemented specific water-saving measures[134]. Employee Management - The total employee cost for the year ended June 30, 2023, was approximately RMB 72.6 million, down from RMB 80.8 million in 2022, reflecting a reduction in workforce from 267 to 245 employees[79]. - The total number of employees as of June 30, 2023, was 245, down from 267 in 2022, indicating a decrease of approximately 8.24%[158]. - Employee turnover rate for 2023 was 22.27%, with 57 employees leaving the company during the reporting period[158]. - A total of 2,630 hours of training were provided to employees during the reporting period, with an average training time of 18.01 hours per employee and 63.76% of employees receiving training[171]. - The average training hours for male employees were 18.82 hours, while female employees received an average of 15.56 hours of training[171]. Community Engagement and Compliance - The group is committed to community investment as a strategic development component, encouraging employee participation in charitable activities[194]. - The group has implemented a whistleblowing policy to encourage employees to report potential misconduct related to financial reporting and compliance[192]. - All directors received online anti-corruption training during the reporting period, enhancing the group's anti-corruption awareness[193]. - The company has a zero-tolerance policy towards the use of child labor and forced labor, with no reported violations during the reporting period[172].

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，並明確表示概不就 因本公告全部或任何部分內容而產生或因倚賴該等內容而引致的任何損 失承擔任何責任。 HUAZHANG TECHNOLOGY HOLDING LIMITED 華 章 科 技 控 股 有 限 公 司 （在開曼群島註冊成立的有限公司） （股份代號：1673） 截 至2023年6月30日 止 年 度 年 度 業 績 公 告 財務摘要 截至6月30日止年度 2023 2022 變幅 人民幣元 人民幣元 % 收入 528,921,014 323,868,801 63.3 毛利 83,163,610 33,154,639 150.8 毛利率 15.7% 10.2% 年內虧損 (52,831,060) (366,738,839) –85.6 虧損率 –10.0% –113.2% 本公司股東應佔虧損 (51,248,791) (363,753,165) –85.9 年內本公司股東應佔每股 虧損（每股人民幣分） ...

Financial Performance - The company's revenue for the six months ended December 31, 2022, decreased by approximately 10.7% to RMB 157.1 million compared to RMB 175.8 million in the same period of 2021[3]. - Gross profit increased by approximately 91.3% to RMB 31.3 million, resulting in a gross margin of 19.9%, up from 9.3% in the previous year[3]. - The net loss for the period was reduced by approximately 63.7% to RMB 27.7 million from RMB 76.2 million in the prior year[3]. - Revenue decreased by approximately 10.7% to RMB 157.1 million for the six months ending December 31, 2022, compared to RMB 175.8 million for the same period in 2021[25]. - The gross profit margin increased significantly from approximately 9.3% to 19.9% during the same period, mainly due to the absence of project loss provisions[25]. - The net loss for the period decreased from RMB 76.2 million to RMB 27.7 million, with a net loss margin reduction from 43.3% to 17.6%[38]. - Basic and diluted loss per share improved to RMB 2.57 from RMB 8.60, reflecting better financial performance[103]. - The company reported a net loss of RMB 27,309,171 for the six months ended December 31, 2022, compared to a net loss of RMB 76,273,080 for the same period in 2021, reflecting a significant reduction in losses of approximately 64.2%[109]. Business Development - The company has expanded its business into new areas, including non-woven fabric and tobacco production equipment, to enhance competitiveness[11]. - The company anticipates a recovery in the paper industry in 2023, driven by improved consumer and business confidence following adjustments to pandemic control measures[7]. - The company is focusing on capital expenditure to upgrade equipment and systems in response to new regulatory requirements for energy and resource efficiency in the paper industry[7]. - The company has signed two significant projects in the wet-laid non-woven fabric equipment sector, totaling RMB 70 million, and has begun implementation[14]. - The company secured a contract worth RMB 119.8 million for a production line project with Hunan Jinye Tobacco Co., which is currently in the implementation phase[14]. - The company plans to expand resources in environmental protection-related businesses, anticipating growth in this sector due to global waste recycling market potential[21]. - The company aims to leverage its reputation and quality products to secure more domestic orders while expanding into Southeast Asian markets like Vietnam and Malaysia[22]. Research and Development - R&D expenses for the company amounted to approximately RMB 14.5 million, with 75 new patents applied for during the six months ending December 31, 2022[17]. - The company has been recognized with multiple honors, including being named a "National-level Specialized and Innovative 'Little Giant' Enterprise" and completing key R&D project assessments[17]. - Research and development expenses decreased by approximately 49.1% from RMB 28.5 million to RMB 14.5 million, representing 16.2% and 9.2% of total revenue for the respective periods[32]. Financial Position - Cash and cash equivalents as of December 31, 2022, were approximately RMB 52.6 million, down from RMB 141.0 million as of June 30, 2022[40]. - The total assets as of December 31, 2022, amounted to RMB 1,007,953,846, with the industrial products segment holding RMB 365,280,509[135]. - The company's total liabilities decreased from RMB 645,742,910 on June 30, 2022, to RMB 636,241,378 on December 31, 2022, representing a decline of approximately 1.2%[107]. - The company’s total equity decreased from RMB 396,063,266 on June 30, 2022, to RMB 371,712,468 on December 31, 2022, a decline of about 6.1%[107]. - The company’s inventory increased from RMB 138,104,557 on June 30, 2022, to RMB 162,922,185 on December 31, 2022, an increase of approximately 17.9%[106]. - The company reported total revenue of RMB 157,068,849 for the six months ended December 31, 2022, with contributions from various segments: Industrial Products (RMB 83,904,048), Project Contracting Services (RMB 38,316,797), Environmental Products (RMB 5,833,178), and Support Services (RMB 29,014,826)[132]. Shareholder Information - Major shareholder 博榮控股有限公司 held 295,422,000 shares, representing approximately 27.76% of the company[59]. - Dao He Investment Limited holds 14.46% of the shares, totaling 153,846,153 shares[60]. - Yang Wei and Yang Runquan each control 33.30% of the shares, amounting to 354,290,400 shares[60]. - Wealthy Land Investments Group Limited has a 11.65% stake with 123,964,000 shares[60]. - The total number of issued shares as of December 31, 2022, is 1,064,089,378 shares[65]. Legal and Compliance - The company continues to monitor ongoing legal proceedings and assess their impact on the group[94]. - The board has complied with the corporate governance code, except for the absence of a chairman and CEO, which has led to a temporary delegation of responsibilities[95]. - Trading of the company's shares has been suspended since October 3, 2022, pending compliance with the resumption guidance disclosed on November 28, 2022[101]. Risk Management - The company continues to manage foreign exchange risks associated with transactions primarily denominated in RMB, USD, and HKD[53]. - Financial risks faced by the company include market risk (foreign exchange risk, cash flow interest rate risk, and fair value interest rate risk), credit risk, and liquidity risk[127]. Capital Expenditure and Investments - Capital expenditure for the six months ended December 31, 2022, was approximately RMB 0.5 million, a significant decrease from RMB 7.1 million in 2021[48]. - The company has not participated in any share buyback arrangements during the reporting period[66]. - The company has not adopted any new accounting standards or amendments during the reporting period that began on July 1, 2022[119].