Financial Performance - The group's total revenue for the year was approximately RMB 149.8 million, a decrease of about 39.6% from RMB 248.2 million in 2021[15]. - Revenue from the automatic meter reading and other business segment increased to approximately RMB 88.1 million, representing an increase of about 82.6% compared to RMB 48.3 million in 2021, accounting for approximately 58.8% of total revenue[15]. - The smart manufacturing and industrial automation business segment recorded revenue of approximately RMB 61.7 million, a decrease of about 69.1% from RMB 199.9 million in 2021, accounting for approximately 41.2% of total revenue[16]. - The group reported a loss attributable to equity shareholders of approximately RMB 118.6 million, an increase from RMB 55.3 million in the same period of 2021[17]. - Gross profit decreased to approximately RMB 39.1 million from RMB 43.0 million in 2021, with a gross margin increase to approximately 26.1% from 17.3%[24]. - The company recorded a net loss of approximately RMB 119.1 million for the review year, with current liabilities exceeding current assets by RMB 16.0 million[163]. Cost Management - The company will maintain a lean cost strategy to reduce operating expenses in response to future risks and pressures[7]. - The group maintained a lean cost strategy to reduce operating expenses in response to revenue declines due to the pandemic[16]. - Sales and marketing expenses decreased by approximately 30.0% to about RMB 17.3 million from RMB 24.7 million in the same period of 2021[27]. - General and administrative expenses reduced by approximately 9.2% to about RMB 55.2 million from RMB 60.8 million in the same period of 2021[28]. - Financing costs decreased by approximately 22.4% to about RMB 7.4 million from RMB 9.5 million in the same period of 2021[31]. Research and Development - The R&D team consisted of 47 employees as of December 31, 2022, representing about 31% of the total workforce, focusing on power line carrier chip design and software development for the oil and petrochemical industry[20]. - The company is strategically investing in product development in areas such as broadband technology, streetlight control, building energy management, and photovoltaic management to seize market opportunities[6]. - Research and development expenses increased by approximately 13.6% to about RMB 22.3 million from RMB 19.6 million in the same period of 2021, mainly due to increased amortization of capitalized development costs related to broadband technology[30]. Market Opportunities - The market demand for power line carrier communication products remains stable, driven by the Chinese government's push for broadband technology and smart city construction[6]. - The overall market potential for smart meters is large, driven by the integration of distributed energy sources and the increasing demand for charging stations and energy storage[10]. - The rapid development of the intelligent manufacturing industry is anticipated to create significant opportunities for the company, with government policies supporting digitalization and networking in manufacturing[11]. - The company believes that the industrial automation market in China will continue to grow due to low penetration rates and rising labor costs[55]. Corporate Governance - The company has adhered to the corporate governance code throughout the review year, except for the deviation regarding independent non-executive directors' attendance at the annual general meeting[171]. - The board comprises a total of six directors, including three independent non-executive directors, fulfilling the requirement of at least one with appropriate professional qualifications[182]. - The company has established a code of conduct for directors' securities transactions, ensuring compliance with the standards set forth in the listing rules[173]. - The company aims to maintain a suitable balance of diversity across all levels of the organization, including gender, age, and professional experience[200]. Shareholder Information - The total issued share capital of the company as of December 31, 2022, was approximately HKD 185,709, divided into 1,857,088,606 ordinary shares with a par value of HKD 0.0001 each[84]. - The largest customer accounted for approximately 24.3% of the total revenue for the year, down from 36.9% in 2021, while the top five customers contributed about 63.6% of total revenue, compared to 74.0% in 2021[148]. - Major shareholders include Seashore Fortune with 93,543,624 shares (5.0%) and SB Asia Investment Fund II L.P. with 197,340,537 shares (10.6%)[122]. Debt and Financing - The company extended the maturity date of the convertible bonds by 12 months to August 13, 2022, through a second amendment and extension agreement[43]. - The company fully redeemed its convertible bonds with a principal amount of HKD 150 million on September 2, 2022, and paid all accrued interest[43]. - The company plans to utilize the net proceeds from the general mandate subscription, totaling approximately HKD 14.5 million, to repay outstanding debts and reduce its debt-to-asset ratio[156]. - The company is in discussions with creditors to extend the repayment date of a HKD 120 million loan due on August 11, 2023[163]. Risk Management - The group faced various major risks and uncertainties, which are discussed in the relevant sections of the report[86]. - The group has not entered into any foreign currency forward contracts or other hedging instruments to mitigate foreign exchange risks during the review year[97]. Strategic Initiatives - The company plans to develop new broadband dual-mode products and expand its market presence in the broadband power line communication sector[55]. - The company aims to form strategic alliances with international system integrators to enhance its smart manufacturing and industrial automation business[56]. - The company is exploring industrial automation systems, particularly in the maintenance and safety integrity systems for the oil and petrochemical industry, utilizing its core technological capabilities[10].

香港交易及結算所有限公司及香港聯合交易所有限公司對本公告的內容 概不負責，對其準確性或完整性亦不發表任何聲明，並明確表示，概不對 因本公告全部或任何部分內容而產生或因倚賴該等內容而引致的任何損 失承擔任何責任。 RISECOMM GROUP HOLDINGS LIMITED 瑞 斯 康 集 團 控 股 有 限 公 司 （於開曼群島註冊成立之有限公司） （股份代號：1679） 截 至2022年12月31日 止 年 度 的 年 度 業 績 公 告 財務摘要 • 營 業 額 約 為 人 民 幣149.8百 萬 元（2021年：約 人 民 幣248.2百 萬 元）， 下降約39.6%。 • 來自自動抄表（「自動抄表」）及其他業務分部的營業額較2021年同期 上漲約82.6%至約人民幣88.1百萬元（2021年：約人民幣48.3百萬元）。 • 來自智慧製造及工業自動化（「智慧製造及工業自動化」）業務分部的 營業額較2021年同期減少約69.1%至約人民幣61.7百萬元（2021年：約 人民幣199.9百萬元）。 ...

Revenue Performance - The company recorded a revenue of approximately RMB 616 million for the period, representing an increase of about 63.4% compared to RMB 377 million in the same period of 2021[13]. - The smart manufacturing and industrial automation segment achieved a revenue of approximately RMB 379 million, up approximately 439.0% from RMB 70 million in the same period of 2021, accounting for about 61.5% of total revenue[16]. - The automatic meter reading and other business segment reported a revenue of approximately RMB 237 million, down about 22.7% from RMB 307 million in the same period of 2021, contributing approximately 38.5% to total revenue[16]. - The company's revenue increased from approximately RMB 37.7 million in the same period of 2021 to approximately RMB 61.6 million, representing a growth of about 63.4%[21]. - The smart manufacturing and industrial automation segment's revenue rose by approximately 439.0%, contributing RMB 17.5 million and RMB 18.2 million from safety production projects and software licensing projects, respectively[21]. - For the six months ended June 30, 2022, the group’s revenue for the six months ended June 30, 2022, was RMB 61,611 thousand, compared to RMB 37,705 thousand for the same period in 2021, representing a growth of 63.5%[171]. - Revenue from the automatic meter reading and other businesses was RMB 23,710 thousand, down from RMB 30,673 thousand in the previous year, a decrease of 22.7%[171]. - The smart manufacturing and industrial automation business generated revenue of RMB 37,901 thousand, significantly up from RMB 7,032 thousand, marking an increase of 438.5%[179]. Financial Losses - The company experienced a loss attributable to owners of the company increasing from approximately RMB 17.5 million in the same period of 2021 to approximately RMB 34.7 million[16]. - The company reported a loss attributable to owners of approximately RMB 34.7 million, compared to a loss of about RMB 17.5 million in the same period of 2021[31]. - The operating loss increased to RMB 25.8 million compared to RMB 8.3 million in the previous year, reflecting a significant deterioration in operational performance[108]. - The net loss attributable to the owners of the company for the period was RMB 34.7 million, compared to RMB 17.5 million in 2021, marking an increase of 98.5%[111]. - The company incurred a total comprehensive loss of RMB (41,952) thousand for the six months ended June 30, 2022, compared to a loss of RMB (13,760) thousand in the same period of 2021[121]. - The group experienced a pre-tax loss of RMB 34,096 thousand for the six months ended June 30, 2022, compared to a loss of RMB 22,230 thousand in the previous year[184]. Cost and Expenses - Gross profit decreased from approximately RMB 16.9 million in 2021 to approximately RMB 16.1 million, a decline of about 4.9%, with the gross margin dropping from approximately 44.9% to about 26.1%[22]. - Other income decreased by approximately 47.5% from RMB 4.4 million in 2021 to about RMB 2.3 million, primarily due to a reduction in government subsidies[23]. - General and administrative expenses decreased by approximately 3.2% from RMB 24.7 million in 2021 to about RMB 23.9 million, mainly due to reduced depreciation of machinery and strict cost control measures[28]. - The cost of sales for the group was RMB 45,521 thousand for the six months ended June 30, 2022, compared to RMB 20,782 thousand in the same period of 2021, reflecting an increase of 118.5%[179]. - The cost of sold inventory for the same period was RMB 27,979 thousand, significantly higher than RMB 14,001 thousand in 2021, reflecting a 99% increase[192]. Research and Development - As of June 30, 2022, the R&D team consisted of 50 employees, maintaining a stable workforce compared to 51 employees in the same period of 2021[20]. - Research and development expenses for the period were RMB 9.1 million, slightly up from RMB 9.0 million in the previous year, showing a commitment to innovation[108]. - Research and development expenses totaled RMB 9,122 thousand for the period, slightly up from RMB 9,078 thousand in the previous year[179]. - The company has established a significant intellectual property portfolio, including 25 patents and 129 software copyrights, reflecting its R&D achievements in power line carrier communication technology[20]. Assets and Liabilities - As of June 30, 2022, the group's current assets were approximately RMB 229.2 million, down from RMB 263.2 million as of December 31, 2021[34]. - Cash and cash equivalents totaled approximately RMB 64.1 million, a decrease from RMB 91.7 million as of December 31, 2021[34]. - Total interest-bearing liabilities amounted to approximately RMB 145.4 million, an increase from RMB 133.5 million as of December 31, 2021[34]. - The net debt-to-equity ratio was approximately 53.4% as of June 30, 2022, compared to 21.6% as of December 31, 2021[34]. - The company reported a net cash outflow from operating activities of RMB (23,661) thousand for the six months ended June 30, 2022, compared to a net inflow of RMB 29,707 thousand in the same period of 2021[121]. - The company’s total liabilities amounted to RMB 268,868 thousand, compared to RMB 277,746 thousand, indicating a slight decrease of about 3.2%[116]. - Current liabilities exceeded current assets by approximately RMB 438,000 as of June 30, 2022[124]. - The company’s inventory increased to RMB 19,617 thousand from RMB 15,890 thousand, an increase of approximately 23.3%[113]. Strategic Initiatives - The company is leveraging its core technology capabilities to explore the industrial automation system field, particularly in maintenance and safety integrity systems for the oil and petrochemical industry[11]. - The smart manufacturing industry is expected to expand rapidly, driven by national policy support and the transition towards digital and intelligent manufacturing[11]. - The company is expanding its broadband power line communication products into more provincial markets, enhancing competitiveness in the domestic market[54]. - The industrial automation market in China is expected to continue healthy growth due to low penetration rates and rising labor costs, particularly in the petrochemical sector[54]. - The company plans to form strategic alliances with international system integrators to enhance its smart manufacturing and industrial automation business segments[55]. - The company aims to develop proprietary smart factory applications and integrate big data platforms to enhance its core competitiveness[55]. - The company is exploring new business investment opportunities to enhance shareholder value and diversify growth in the long term[55]. - The government’s push for smart city construction and energy-saving initiatives is expected to drive sales in the automatic meter reading business[54]. Corporate Governance - The company has adopted the corporate governance code as per the listing rules and has complied with it, except for the absence of two independent non-executive directors at the annual general meeting[87]. - The company does not recommend the payment of an interim dividend for the period[86]. - The company has not made any significant acquisitions or disposals of subsidiaries or associates during the period[97]. - The company has not engaged in any purchase, sale, or redemption of its listed securities during the period[99]. - The company has adopted all new and revised Hong Kong Financial Reporting Standards effective from January 1, 2022, with no significant impact on the financial statements[130].

Revenue Growth and Market Demand - The overall revenue growth was recorded due to the easing of economic conflicts between China and the US, as well as the gradual recovery of the Chinese economy from the COVID-19 pandemic[10]. - The demand for power line carrier communication products began to rise, supported by the Chinese government's promotion of broadband technology and smart city construction[10]. - The number of tenders for electric meters and electricity information collection systems by the State Grid reached approximately 66.74 million, a year-on-year increase of about 26% compared to 2020[13]. - The overall market demand for power line carrier communication remains promising despite increased competition from state-owned enterprises and large tech companies entering the chip market[13]. - The company plans to expand its broadband powerline products into more provincial markets, enhancing competitiveness in the domestic market[49]. - The industrial automation market in China is expected to grow healthily due to low penetration rates and rising labor costs[49]. Financial Performance - The company's total revenue for the review year was approximately RMB 248.2 million, an increase of about 16.7% compared to RMB 212.7 million in 2020[18]. - The automatic meter reading and other business segment recorded revenue of approximately RMB 48.3 million, a decrease of about 11.7% from RMB 54.7 million in 2020, accounting for approximately 19.5% of total revenue[19]. - The smart manufacturing and industrial automation business segment achieved revenue of approximately RMB 199.9 million, an increase of about 26.5% from RMB 158.0 million in 2020, representing approximately 80.5% of total revenue[20]. - The software licensing revenue increased by approximately 157.1% to about RMB 82.5 million due to a significant rise in the number of high-value contracts awarded[20]. - The company reduced its loss attributable to equity shareholders from approximately RMB 126.0 million in 2020 to about RMB 55.3 million in the review year[21]. - Gross profit increased from approximately RMB 33.5 million in 2020 to approximately RMB 43.0 million in the review year, representing a growth of about 28.3%[27]. - Gross margin rose from approximately 15.8% in 2020 to approximately 17.3% in the review year, an increase of about 1.5 percentage points, primarily due to the construction contract services segment's gross margin improvement from approximately 2.1% to approximately 6.3%[27]. Cost Management and Expenses - The company is committed to maintaining a lean cost strategy to mitigate future risks and pressures arising from the pandemic and economic uncertainties[11]. - The company maintained a lean cost strategy to mitigate operational expenses amid uncertainties caused by the pandemic[20]. - Sales and marketing expenses increased by approximately 29.3% from about RMB 19.1 million in 2020 to approximately RMB 24.7 million in the review year, driven by higher project consultation costs in the smart manufacturing and industrial automation segments[30]. - General and administrative expenses decreased by approximately 21.3% from about RMB 77.2 million in 2020 to approximately RMB 60.8 million in the review year, mainly due to reduced amortization of intangible assets[31]. - Research and development expenses fell by approximately 9.7% from about RMB 21.7 million in 2020 to approximately RMB 19.6 million in the review year, attributed to strict cost control measures[32]. Research and Development - The smart manufacturing and industrial automation segment is exploring opportunities in the industrial automation systems field, particularly in maintenance and safety integrity systems for the oil and petrochemical industry[14]. - The company has strategically planned to allocate resources for product development in broadband technology, streetlight control, building energy management, and photovoltaic power management[10]. - The R&D team consisted of 51 employees as of December 31, 2021, representing about 31% of the total workforce, focusing on power line carrier chip design and software development for the oil and petrochemical industry[24]. - The company holds a significant intellectual property portfolio, including 22 patents and 129 software copyrights, reflecting its achievements in power line carrier communication technology[24]. - The company will leverage its R&D resources to develop proprietary applications and integrate big data platforms, enhancing its core competitiveness[50]. Environmental and Compliance - The company has implemented several environmental policies in compliance with regulations, including evaluating environmental impacts during the design and procurement phases[80]. - Two major operating subsidiaries of the company have obtained ISO 14001:2015 environmental management system certification, valid until May 2024 and December 2024 respectively[80]. - The company has not received any pollution-related complaints or warnings during the review period and has not faced any fines or legal actions for violating environmental laws in China[80]. - The company has established compliance and risk management policies, ensuring adherence to significant laws and regulations affecting its operations[84]. Management and Governance - The company’s management team has extensive experience in the electronics and smart technology industries, with key executives having over 20 to 30 years of relevant experience[72][73]. - The company has maintained a stable core management team and focuses on employee training and development, providing onboarding and ongoing training to enhance skills[82]. - The company has not experienced any significant labor disputes or controversies with the Chinese government's labor department during the review year[82]. - The company confirmed that all independent non-executive directors are independent individuals as per the requirements of the Listing Rules[146]. Share Capital and Dividends - The total issued share capital of the company as of December 31, 2021, was approximately HKD 177,591, divided into 1,775,908,606 ordinary shares with a par value of HKD 0.0001 each[77]. - The company intends to distribute at least 30% of its profits attributable to equity shareholders as dividends, subject to various conditions[90]. - The company does not recommend the distribution of a final dividend for the review year, with distributable reserves as of December 31, 2021, being zero[93]. Share Options and Convertible Bonds - The company has a share option plan that allows for a maximum of 10% of the total issued shares (80,000,000 shares) to be granted under the plan[132]. - The exercise price for the share options is set at HKD 1.724 per share[136]. - The company has a convertible bond with a total principal amount of HKD 150,000,000, convertible at an adjusted price of HKD 0.80 per share[124]. - A total of 2,930,000 share options became invalid due to the resignation of relevant employees during the specified exercise period[137].

Revenue Performance - The group recorded a revenue of approximately RMB 37.7 million for the period, representing an increase of about 1.4% compared to RMB 37.2 million in the same period of 2020[14]. - The automatic meter reading and other business segment achieved a revenue of approximately RMB 30.7 million, up approximately 87.0% from RMB 16.4 million in the same period of 2020, accounting for about 81.4% of the group's total revenue[14]. - Revenue increased from approximately RMB 37.2 million in the same period of 2020 to approximately RMB 37.7 million, an increase of about 1.4%, driven by an 87.0% increase in revenue from the automatic meter reading and other business segments[22]. - For the six months ended June 30, 2021, the revenue from the Automatic Meter Reading and Other Services segment was RMB 30,673,000, while the Manufacturing and Industrial Automation segment generated RMB 7,032,000, totaling RMB 37,705,000[131]. - The revenue from power line carrier chips was RMB 12,818,000, up from RMB 5,141,000 in the previous year, representing a growth of 149%[125]. - The revenue from automatic meter maintenance services increased to RMB 9,326,000 from RMB 4,761,000, marking a growth of 96%[125]. Profitability and Losses - The loss attributable to the company's owners decreased from approximately RMB 56.4 million in the same period of 2020 to approximately RMB 17.5 million, mainly due to a reversal of impairment losses on financial assets of about RMB 12.7 million[18]. - Gross profit increased from approximately RMB 11.9 million in the same period of 2020 to approximately RMB 16.9 million, an increase of about 42.5%, with the gross profit margin rising from about 32.0% to approximately 44.9%[23]. - The company reported a net loss attributable to owners of RMB 17,521,000, a reduction from RMB 56,418,000 in the prior year, reflecting a decrease of approximately 68.9%[99]. - The company reported a net loss before tax of RMB (22,230,000) for the six months ended June 30, 2021, compared to a loss of RMB (67,392,000) in 2020[136]. - Total comprehensive loss for the period was RMB 13,760 thousand, significantly reduced from RMB 57,426 thousand in the previous year, indicating a 76.0% decrease[101]. Expenses and Cost Management - Selling and marketing expenses increased by approximately 8.4% from about RMB 8.0 million in the same period of 2020 to approximately RMB 8.6 million, primarily due to increased marketing and promotional activities[26]. - General and administrative expenses decreased by approximately 29.3% from about RMB 34.9 million in the same period of 2020 to approximately RMB 24.7 million, mainly due to reduced intangible asset amortization and cost control measures[29]. - Research and development expenses decreased by approximately 17.8% from about RMB 11.0 million in the same period of 2020 to approximately RMB 9.1 million, due to strict cost control measures and a reduction in the R&D team size[30]. - The company has implemented cost control measures and is focusing on timely collection of receivables to generate sufficient operating cash flow[115]. Financial Position and Assets - As of June 30, 2021, the group's current assets were approximately RMB 311.9 million, an increase from RMB 281.6 million as of December 31, 2020[33]. - The group's cash and cash equivalents totaled approximately RMB 147.1 million, up from RMB 121.7 million as of December 31, 2020[33]. - Total assets as of June 30, 2021, amounted to RMB 535,304 thousand, compared to RMB 518,349 thousand as of December 31, 2020, showing a growth of 3.0%[104]. - The company’s total liabilities reached RMB 535,304 thousand, up from RMB 518,349 thousand, indicating a 3.0% increase[106]. - Trade receivables as of June 30, 2021, were RMB 103,338,000, down from RMB 163,125,000 on December 31, 2020, indicating a decrease of about 36.7%[169]. Strategic Initiatives and Market Position - The group continues to explore the industrial automation systems field, particularly in maintenance and safety integrity systems for the oil and petrochemical industries, with the market size for smart manufacturing solutions in China expected to reach RMB 283.7 billion in 2021[12]. - The group is leveraging its core technology capabilities to explore various aspects of the smart manufacturing sector, capitalizing on the significant market potential[12]. - The company intends to form strategic alliances with internationally recognized system integrators to expand its smart manufacturing and industrial automation business segments[52]. - The company plans to enhance market promotion of broadband power line products and expand into more provincial markets, aiming to strengthen competitiveness in the domestic market[51]. Corporate Governance and Shareholder Information - The company has adopted the corporate governance code as per the listing rules, with some deviations noted[82]. - The company did not recommend the payment of an interim dividend for the period[81]. - The total number of issued shares was 986,619,071, with significant shareholdings reported by major stakeholders[55][62]. - The company has a total of 64,500,000 shares available for issuance under the share option plan, representing approximately 6.54% of the issued share capital as of June 30, 2021[77]. Debt and Financing - Total interest-bearing liabilities amounted to approximately RMB 260.2 million as of June 30, 2021, compared to RMB 254.3 million as of December 31, 2020[34]. - The company issued convertible bonds totaling HKD 150 million with an annual coupon rate of 4%, aimed at raising funds for the acquisition of a subsidiary[41]. - The company has extended the maturity date of convertible bonds by an additional 12 months, from August 13, 2021, to August 13, 2022[115]. - The company is considering further fundraising through equity financing to address financial obligations[118].

Economic Challenges - The company faced severe challenges in 2020 due to the economic conflict between China and the US, as well as the COVID-19 pandemic, impacting its strategic development and expansion plans[9]. - The company is facing economic uncertainties due to the COVID-19 pandemic and trade disputes between China and the U.S., which may negatively impact operations[179]. Revenue and Financial Performance - The group recorded a revenue of approximately RMB 212.7 million for the year, a decrease of 2.7% compared to RMB 218.6 million in 2019[19]. - The automatic meter reading and other business segment generated revenue of approximately RMB 54.7 million, down about 60.9% from RMB 139.8 million in 2019, accounting for 25.7% of total revenue[20]. - The smart manufacturing and industrial automation business segment achieved revenue of approximately RMB 158.0 million, an increase of 100.8% from RMB 78.7 million in 2019, representing 74.3% of total revenue[21]. - Revenue decreased from approximately RMB 218.6 million in 2019 to approximately RMB 212.7 million in the review year, a decline of about 2.7%[26]. - Gross profit fell from approximately RMB 64.8 million in 2019 to approximately RMB 33.5 million, representing a decrease of about 48.3%[27]. - Gross margin decreased from approximately 29.6% in 2019 to about 15.8% in the review year, a drop of approximately 13.8 percentage points[27]. - Other income decreased by approximately 28.9% from RMB 11.4 million in 2019 to RMB 8.1 million in the review year, primarily due to a reduction in government subsidies[28]. - The company reported a net loss of approximately RMB 126.0 million for the review year, with current liabilities exceeding current assets by RMB 75.5 million[179]. Research and Development - The company developed a power line carrier communication chip that passed testing and obtained registration certification, enabling market promotion of automatic meter reading products[9]. - Continuous investment in the dual-mode technology (broadband carrier + wireless) is expected to enhance the effectiveness and reliability of the electricity information collection system[10]. - The company is focused on enhancing its research and development capabilities in power line carrier communication technology to improve its automatic meter reading products[90]. - Research and development expenses decreased by approximately 31.3% from RMB 31.6 million in 2019 to approximately RMB 21.7 million in the review year[32]. Market Position and Strategy - The company is positioned as a leading manufacturer in the power line communication chip design sector, following successful testing of its dual-mode communication technology[10]. - The smart manufacturing and industrial automation segments contributed to revenue diversification, reducing reliance on the Chinese power grid ecosystem[10]. - The company aims to stabilize revenue growth through ongoing marketing efforts in the oil and petrochemical sectors[10]. - The company plans to enhance its broadband power line communication products and expand market promotion in 2021, focusing on dual-mode technology solutions[51]. - The industrial automation market in China is expected to grow due to low penetration rates and rising labor costs, with the company targeting opportunities in the oil and petrochemical sectors[51]. Corporate Governance and Leadership - The company reported a significant leadership change, with Mr. Yue Jingxing stepping down as CEO on June 24, 2020, while remaining an executive director[54]. - Mr. Liu Weiliang, appointed as an executive director on January 19, 2021, has approximately 20 years of experience in accounting, corporate finance, and private equity investment[56]. - The board includes members with extensive experience in financial services and capital markets, enhancing the company's governance and strategic oversight[61]. - The company has a diverse board with members holding various qualifications, including CPA and legal qualifications, which strengthens its operational capabilities[65]. - The board of directors consists of executive directors, non-executive directors, and independent non-executive directors, ensuring a balanced distribution of authority and responsibilities[198]. Share Capital and Financing - The company reported a total issued share capital of approximately HKD 98,662, divided into 986,619,071 ordinary shares with a par value of HKD 0.0001 each as of December 31, 2020[81]. - The company issued convertible bonds totaling HKD 150 million with a coupon rate of 4%, raising approximately HKD 146 million for the acquisition of Chui Wo[42]. - The initial conversion price of the convertible bonds was set at HKD 2.50 per share, later adjusted to HKD 0.80 per share, representing a discount of approximately 68.0%[43][44]. - The company has adopted a dividend policy intending to distribute no less than 30% of the profit attributable to equity shareholders as dividends, subject to operational performance and other factors[95]. - The board does not recommend the distribution of a final dividend for the reviewed year[98]. Employee and Operational Management - The company emphasizes employee training and development, providing onboarding and ongoing training to maintain technical skills[86]. - The company has not experienced any significant labor disputes or regulatory issues during the review year[86]. - The company had a total of 177 employees as of December 31, 2020, down from 221 employees in 2019[172]. Risk Management - The company continues to assess foreign exchange risks to manage the impact of currency fluctuations on its business[92]. - The majority of the group's business is settled in RMB, while foreign exchange transactions are primarily conducted in USD, exposing the group to exchange rate fluctuations[92]. Customer and Supplier Relationships - The largest customer accounted for approximately 41.5% of the group's total revenue in the review year, up from 19.2% in 2019[166]. - The total revenue from the top five customers represented about 70.0% of the group's total revenue, compared to 43.3% in 2019[166]. - The largest supplier accounted for approximately 13.7% of the group's total procurement, down from 23.0% in 2019[166]. - The total procurement from the top five suppliers represented about 49.1% of the group's total procurement, compared to 63.5% in 2019[166].

Business Segments and Market Opportunities - The company operates in two main business segments: automatic meter reading and smart manufacturing, focusing on power line carrier communication products for China's State Grid[11]. - During the review period, the company reported a significant increase in demand for smart meters, with approximately 77.2 million units tendered by the State Grid in 2019, up from 52.8 million in 2018[11]. - The market for smart manufacturing solutions in China is projected to exceed RMB 238 billion in 2020, indicating substantial growth opportunities for the company[11]. - The company has developed proprietary integrated circuit designs and advanced power line carrier communication technology for smart meter systems, positioning itself as a leader in the market[12]. - The company is exploring industrial automation systems, particularly in the oil and petrochemical sectors, leveraging its core technological capabilities[11]. - The company expects to continue benefiting from the ongoing procurement of power line carrier products by the State Grid starting in 2020[11]. - An independent market survey predicts that the State Grid will procure approximately 87.7 million automatic meter reading products annually from 2018 to 2021[53]. - The bidding quantity for smart meters and other terminals is expected to grow at a compound annual growth rate (CAGR) of 11.5% from 2017 to 2021[53]. - The company plans to launch broadband automatic meter reading products in the second half of 2020, following the expected certification from the China Electric Power Research Institute[54]. - The company aims to form strategic alliances with internationally renowned system integrators to expand its smart manufacturing and industrial automation business segments[55]. Financial Performance - The company's revenue for the review period was approximately RMB 37.2 million, a decrease of 58.5% compared to RMB 89.6 million in the same period of 2019[21]. - The automatic meter reading and other business segments recorded revenue of approximately RMB 16.4 million, down 75.2% from RMB 66.1 million in 2019, accounting for about 44.1% of total revenue[21]. - The smart manufacturing and industrial automation business segment generated revenue of RMB 20.8 million, an 11.5% decrease from RMB 23.5 million in 2019, contributing approximately 55.9% to total revenue[16]. - The company's loss attributable to equity shareholders increased from RMB 40.8 million in 2019 to approximately RMB 56.4 million during the review period[17]. - Gross profit decreased from RMB 20.8 million in 2019 to approximately RMB 11.9 million, a decline of 42.8%, while the gross profit margin increased by 8.8 percentage points to about 32.0%[22]. - Other income fell by approximately 72.7% to RMB 3.3 million, primarily due to a reduction in government subsidies from RMB 8.2 million in 2019 to RMB 2.4 million[24]. - Sales and marketing expenses decreased by approximately 55.8% to RMB 8.0 million, attributed to strict cost control measures[25]. - General and administrative expenses rose by approximately 15.4% to RMB 52.4 million, mainly due to increased impairment losses on overdue trade receivables[26]. - Research and development expenses decreased by approximately 30.8% to RMB 11.0 million, due to strict cost control and a reduction in the R&D team size[27]. - The company recorded a fair value loss of approximately RMB 6.0 million for financial instruments measured at fair value during the review period, compared to a fair value gain of approximately RMB 7.1 million in the same period of 2019[28]. - The company recognized a tax credit of approximately RMB 11.0 million during the review period, while a tax expense of approximately RMB 1.0 million was recorded in the same period of 2019, primarily due to the recognition of deferred tax assets arising from tax losses[29]. - The company incurred a total sales cost of RMB 25,298 thousand for the six months ended June 30, 2020, compared to RMB 68,824 thousand in the same period of 2019, a decrease of about 63.3%[151]. Assets and Liabilities - As of June 30, 2020, the company's current assets were approximately RMB 315.6 million, down from approximately RMB 326.5 million as of December 31, 2019, with cash and cash equivalents totaling approximately RMB 114.3 million[36]. - The total interest-bearing liabilities amounted to approximately RMB 260.0 million as of June 30, 2020, compared to approximately RMB 253.2 million as of December 31, 2019, with a net debt-to-capital ratio of approximately 86.1%[37]. - Non-current assets decreased to RMB 276,097 thousand as of June 30, 2020, down from RMB 292,056 thousand at the end of 2019, a decline of 5.5%[109]. - Current liabilities increased to RMB 129,192 thousand, compared to RMB 101,807 thousand at the end of 2019, representing a 26.8% increase[111]. - The company's cash and cash equivalents decreased to RMB 114,345 thousand from RMB 145,110 thousand, a decline of 21.2%[109]. - The company’s net assets decreased to RMB 169,231 thousand as of June 30, 2020, down from RMB 225,145 thousand at the end of 2019, a decrease of 24.8%[112]. - The company recognized COVID-19 related rent concessions amounting to RMB 92,000 thousand during the reporting period[135]. Share Capital and Equity - The total number of issued shares as of June 30, 2020, was 986,619,071 shares[61]. - Major shareholders include Seashore Fortune with 9.48% (93,543,624 shares) and SB Asia Investment holding 20.00% (197,340,537 shares) of the total issued capital[64]. - The total issued share capital as of June 30, 2020, was approximately 986,619,071 shares[73]. - The employee stock option plan allows for a total of 66,830,000 shares to be issued, representing about 6.77% of the total issued capital as of June 30, 2020[76]. - The convertible bonds associated with SRA Holdings could potentially issue 187,500,000 shares upon conversion, with a total principal amount of HKD 150,000,000[71]. - Cisco Systems, Inc. holds a 38.9% interest in SB Asia Investment, which is significant for corporate governance[70]. - The stock options granted under the plan have a total exercise price of HKD 1.71 per share[76]. - The company has not granted any stock options to directors or major shareholders during the review period[77]. - The stock option plan was adopted on May 16, 2017, to reward selected participants for their contributions[75]. - The total number of shares available for issuance under the pre-IPO stock option plan increased from 495,180 to 16,210,417 shares after the capitalization issuance[79]. - The company reported a total of HKD 158.2 million in net proceeds from its global offering, with HKD 107.4 million utilized by June 30, 2020, leaving HKD 50.8 million unutilized[97]. - Research and development for power line carrier communication technology received an allocation of HKD 95.7 million, with HKD 41.5 million utilized and HKD 16.4 million remaining unutilized as of June 30, 2020[97]. Operational Challenges and Strategic Responses - The company anticipates increased competition in the power line carrier communication market due to the entry of state-owned enterprises and large tech companies in China[11]. - The company has not recorded any impairment losses for goodwill in its automatic meter reading and other businesses during the review period, despite delays in product launches due to the COVID-19 pandemic[34]. - The company has not made any significant investments during the review period[43]. - The company has not entered into any foreign currency forward contracts or other hedging instruments to mitigate exchange rate risks during the review period[39]. - The company experienced delays in launching broadband automatic meter reading products due to the COVID-19 pandemic, potentially affecting market share[196]. Employee and Governance - The company has a total of 198 employees as of June 30, 2020, down from 221 employees as of December 31, 2019, indicating a reduction in workforce[98]. - The board of directors did not recommend the payment of an interim dividend for the review period[83]. - The audit committee has reviewed the unaudited interim financial results for the review period, ensuring compliance with accounting principles and internal controls[99]. - The company has adopted a set of conduct rules for securities trading, confirming compliance by all directors during the review period[88]. - There were no significant acquisitions or disposals of subsidiaries or associated companies during the review period[89].

Economic Challenges - The company faced significant challenges in 2019 due to economic conflicts between the US and China, as well as the COVID-19 pandemic, impacting its strategic development and expansion plans[13]. - The decline in revenue was primarily due to reduced demand from the State Grid for narrowband automatic meter reading products and delays in the launch of broadband automatic meter reading products[25]. - The company’s automatic meter reading business has been impacted by delays in the deployment and procurement by State Grid and China Southern Power Grid, affecting financial performance[109]. Revenue and Financial Performance - The company recorded a revenue of approximately RMB 218.6 million for the year, a decrease of 54.1% compared to RMB 475.8 million in 2018[24]. - The automatic meter reading and other business segment generated revenue of approximately RMB 139.8 million, down 59.8% from RMB 347.4 million in 2018, accounting for about 64.0% of total revenue[25]. - The smart manufacturing and industrial automation segment reported revenue of approximately RMB 78.7 million, a decrease of 38.7% from RMB 128.4 million in 2018, representing about 36.0% of total revenue[26]. - The company incurred a loss attributable to equity shareholders of approximately RMB 236.8 million, compared to a profit of RMB 4.2 million in 2018[26]. - Gross profit fell from approximately RMB 159.5 million in 2018 to about RMB 64.8 million, a decrease of approximately 59.4%[32]. - Gross margin decreased from approximately 33.5% in 2018 to about 29.6%, a drop of approximately 3.9 percentage points[32]. Product Development and Market Strategy - The broadband automatic meter reading products based on power line carrier communication were delayed in 2019, but the company is confident in launching these products in the second half of 2020[14]. - The company reported that its broadband chipsets for power line carrier communication passed all functional tests by the China Electric Power Research Institute on March 2, 2020[13]. - The company plans to enhance its capabilities in power line carrier communication technology and expedite the market launch of broadband automatic meter reading products[110]. - The company aims to explore direct service provision to clients and gain valuable technical and project experience to accelerate R&D for various industrial applications[14]. - The company is committed to capturing ongoing demand from the State Grid's upgrade of automatic meter reading systems[14]. Corporate Governance and Management - The company aims to enhance corporate governance to protect shareholder value amidst the challenging economic environment[24]. - The board consists of experienced professionals from various sectors, enhancing corporate governance and decision-making[80]. - The board of directors emphasizes high levels of corporate governance to protect shareholder interests and enhance corporate value[194]. - Continuous efforts in compliance and risk management are highlighted as key strategies for sustainable growth[78]. Employee and Shareholder Engagement - The company has established retirement plans for eligible employees in China and operates a mandatory provident fund scheme for employees in Hong Kong[167]. - The company has maintained a stable core management team and is committed to employee training and development[105]. - The company has adopted an employee stock option plan to incentivize and reward eligible participants contributing to its operations[186]. Market Outlook and Competition - The overall market for power line carrier communication products is expected to see increased competition, particularly from state-owned enterprises and large tech companies entering the chipset market[19]. - The industrial automation market in China is expected to continue healthy growth due to low penetration rates and rising labor costs, with a focus on smart oil fields and factories[66]. - The smart manufacturing market in China is projected to exceed RMB 238 billion by 2020, indicating significant growth potential for market participants[20]. Financial Position and Liabilities - As of December 31, 2019, the group's current assets were approximately RMB 326.5 million, a decrease from RMB 577.2 million as of December 31, 2018[46]. - The total interest-bearing liabilities amounted to RMB 253.2 million as of December 31, 2019, down from RMB 404.8 million in the previous year[47]. - The net debt-to-equity ratio was approximately 48.0% as of December 31, 2019, compared to 34.4% as of December 31, 2018[47]. Share Capital and Stock Options - As of December 31, 2019, the total issued share capital of the company was approximately HKD 98,662, divided into 986,619,071 ordinary shares with a par value of HKD 0.0001 per share[98]. - The stock option plan adopted on May 16, 2017, allows for the issuance of stock options to selected participants as a reward for their contributions to the group[148]. - The maximum number of shares involved in the stock option plan cannot exceed 10% of the total issued shares as of June 9, 2017, which is 80,000,000 shares, representing approximately 8.11% of the company's issued capital[149]. Customer and Supplier Concentration - The largest customer accounted for approximately 19.2% of the total revenue, while the top five customers contributed about 43.3% of the total revenue in the review year[176]. - The largest supplier represented around 23.0% of the total procurement, with the top five suppliers accounting for approximately 63.5% of the total procurement, including outsourcing service costs[176].

Financial Performance - Risecomm Group Holdings Limited reported a revenue of HKD 1.2 billion for the interim period, representing a year-on-year increase of 15%[4] - The company achieved a net profit of HKD 300 million, which is a 20% increase compared to the same period last year[4] - The gross margin improved to 45%, up from 40% in the previous year, indicating better cost management[4] - The company reported a significant increase in recurring revenue, which now accounts for 60% of total revenue, up from 50% last year[4] - The company recorded a revenue of approximately RMB 89.6 million for the period, a decrease of 48.6% compared to RMB 174.4 million in the same period of 2018[22] - The company's revenue decreased significantly from approximately RMB 174.4 million in the same period of 2018 to about RMB 89.6 million, representing a decline of approximately 48.6%[31] - The loss attributable to equity shareholders increased sharply from approximately RMB 9.2 million in 2018 to about RMB 40.8 million during the review period[23] - The gross profit for the same period was RMB 20,797 thousand, while the gross profit for the previous year was RMB 47,234 thousand, indicating a significant decline[147] - The operating loss for the six months ended June 30, 2019, was RMB 46,507 thousand, compared to an operating loss of RMB 14,880 thousand in the prior year, reflecting a worsening financial performance[147] - The net loss for the period was RMB 40,801 thousand, compared to a net loss of RMB 9,195 thousand in the same period last year, showing an increase in losses[147] - Basic loss per share for the period was RMB (4.94), compared to RMB (1.12) in the previous year, indicating a deterioration in earnings per share[147] - The total comprehensive loss for the period was RMB (40,663) thousand, compared to RMB (10,459) thousand in the prior year, highlighting a significant increase in overall losses[151] Market Expansion and Strategy - The company provided a positive outlook, projecting a revenue growth of 10-15% for the next fiscal year[4] - Risecomm is investing in new product development, with an allocation of HKD 100 million towards R&D initiatives[4] - The company plans to expand its market presence in Southeast Asia, targeting a 30% increase in market share within the next two years[4] - Risecomm is exploring potential acquisitions to enhance its technology capabilities, with a focus on companies in the IoT sector[4] - The management highlighted a strategic shift towards cloud-based solutions, aiming for a 40% contribution to total revenue by 2025[4] - The company has a backlog of unfulfilled contracts in the smart manufacturing and industrial automation segment totaling no less than RMB 200 million, with revenue recognition periods ranging from one to five years[28] - The group plans to form strategic alliances with internationally renowned system integrators to expand its smart manufacturing and industrial automation business, providing value-added solutions[64] - The group is currently awaiting final testing and approval for its broadband automatic meter reading products based on power line carrier communication, with expectations to launch in the second half of 2019[59] - The group aims to enhance its competitive edge in the automatic meter reading industry in China by launching broadband products based on power line carrier communication[59] Research and Development - The R&D team consisted of 86 employees as of June 30, 2019, representing about 33% of the total workforce, focusing on power line carrier chip design and product development[29] - The company has established a substantial intellectual property portfolio, including 16 patents and 104 software copyrights[29] - Research and development expenses decreased by approximately 10.0% from about HKD 17.7 million in the same period of 2018 to about HKD 15.9 million during the review period, primarily due to a reduction in the R&D team from 101 employees to 86[40] - The company is integrating its R&D resources with external partners to further develop its smart factory applications and knowledge base, enhancing its core competitiveness[64] Shareholder Information - Seashore Fortune Limited holds 91,943,624 shares, representing 10.96% of the total issued share capital as of June 30, 2019[77] - Chen Junling holds 97,527,845 shares, accounting for 11.62% of the total issued share capital as of June 30, 2019[78] - SB Asia Investment has a significant stake of 197,340,537 shares, which is 23.52% of the total issued share capital as of June 30, 2019[81] - Spitzer Fund VI L.P. owns 155,575,000 shares, representing 18.54% of the total issued share capital as of June 30, 2019[94] - Software Research Associates, Inc. holds 60,000,000 shares, which is 7.15% of the total issued share capital as of June 30, 2019[94] - The total issued share capital of the company as of June 30, 2019, is 839,110,071 shares[70] - The company has no other directors or senior executives holding shares or related interests as of June 30, 2019[70] - The company’s major shareholders have disclosed their interests in accordance with the Securities and Futures Ordinance[101] Corporate Governance - The company confirmed compliance with the corporate governance code during the review period[119] - The board of directors has adopted a code of conduct for securities transactions in accordance with the listing rules[120] - The company will continue to review and monitor its corporate governance status to maintain high standards[119] Financial Position and Liabilities - The group's current assets were approximately RMB 369.3 million as of June 30, 2019, down from RMB 577.2 million as of December 31, 2018, with cash and cash equivalents totaling approximately RMB 160.3 million[53] - Total interest-bearing liabilities amounted to approximately RMB 327.9 million as of June 30, 2019, down from RMB 404.8 million as of December 31, 2018, with a net debt-to-equity ratio of approximately 45.2%[54] - The group had cash and cash equivalents of RMB 160,292 thousand as of June 30, 2019, down from RMB 267,037 thousand at the end of 2018, indicating a decrease in liquidity[155] - The total assets less current liabilities amounted to RMB 749,239 thousand as of June 30, 2019, compared to RMB 687,320 thousand at the end of 2018, showing an increase in net assets[155] - The total equity decreased to RMB 370,921 thousand as of June 30, 2019, down from RMB 400,786 thousand at the end of 2018, reflecting a decline of about 7.4%[159] Cash Flow and Investments - The net cash used in operating activities was RMB (10,229) thousand, a decrease from RMB (17,267) thousand in the same period of 2018, indicating an improvement of approximately 40%[174] - The net cash used in investing activities was RMB (91,218) thousand, significantly higher than RMB (1,028) thousand in the previous year, reflecting increased investment in subsidiary acquisitions and property[174] - The net cash used in financing activities was RMB (5,292) thousand, with interest payments on convertible bonds and lease payments contributing to this figure[174] - The company reported a significant increase in interest income, rising to RMB 1,183 thousand from RMB 323 thousand in the previous year, representing a growth of approximately 267%[174] Accounting Policies - The company adopted the revised Hong Kong Financial Reporting Standard No. 16 on January 1, 2019, which affected the comparative figures[159] - The company adopted new accounting policies under HKFRS 16, capitalizing all leases except for short-term and low-value asset leases[189] - The initial measurement of lease liabilities is based on the present value of lease payments, discounted using the incremental borrowing rate of 4.75%[195] - The company will measure the right-of-use assets at cost, including any initial direct costs incurred[189]

Business Strategy and Diversification - The company aims to expand its non-automatic meter reading revenue share to create a more balanced revenue distribution and reduce inherent risks associated with reliance on the State Grid ecosystem[17]. - The diversification into smart manufacturing and industrial automation has helped offset losses from the automatic meter reading business[17]. - The company aims to diversify its business beyond automatic meter reading to reduce inherent risks associated with reliance on this segment[27]. - The company is focusing on developing broadband products based on power line carrier communication to maintain competitiveness in the automatic meter reading industry in China[59]. - The company plans to utilize its extensive network communication capabilities to promote the application of its power line carrier communication technology, which offers significant cost advantages[61]. - The company is expanding its business into new markets to manage risks associated with the automatic meter reading business[108]. Financial Performance - The company's revenue for the fiscal year ending December 31, 2018, was approximately RMB 475.8 million, an increase of 49.9% compared to RMB 317.3 million in 2017[23]. - The automatic meter reading and other business segment generated revenue of approximately RMB 347.4 million, up about 9.5% from RMB 317.3 million in 2017, accounting for approximately 73.0% of total revenue[24]. - The smart manufacturing and industrial automation segment recorded revenue of approximately RMB 128.4 million, representing 27.0% of total revenue, as it was not applicable in 2017[28]. - The company's net profit attributable to equity shareholders decreased by approximately 66.8% to RMB 4.2 million from RMB 12.7 million in 2017, primarily due to increased general and administrative expenses[29]. - Revenue increased by approximately 49.9% from RMB 317.3 million in 2017 to RMB 475.8 million in the review year, driven by an increase in automatic meter reading and new revenue from smart manufacturing and industrial automation[33]. - Gross profit rose from RMB 145.7 million in 2017 to RMB 159.5 million, representing a growth of about 9.5%[34]. - Gross margin decreased from approximately 45.9% in 2017 to about 33.5% in the review year, a decline of approximately 12.4 percentage points due to increased competition and lower margins from certain sales[35]. - Other income decreased by approximately 31.3% from RMB 16.3 million in 2017 to RMB 11.2 million, primarily due to a foreign exchange loss of RMB 2.7 million in 2018[36]. Research and Development - The company has established a continuous R&D effort to expand its automatic meter reading product series to meet existing market demands[16]. - The company has established core capabilities in designing advanced integrated circuits for power line carrier communication products since 2006[30]. - The company is awaiting approval from relevant authorities for its broadband power line carrier communication products, which are key R&D projects[30]. - The company plans to continue its research and development in power line communication technology, with HKD 95.7 million allocated for this purpose[171]. Corporate Governance - The board of directors is committed to maintaining a high level of corporate governance to protect shareholder interests and enhance corporate value[183]. - The board consists of executive, non-executive, and independent non-executive directors, ensuring a diverse range of expertise[192]. - Independent non-executive directors maintain independence as per listing rules, with annual confirmations received[195]. - The board is collectively responsible for guiding and supervising the company's affairs, including strategy formulation and performance monitoring[199]. - The chairman and CEO roles are held by different individuals to ensure effective leadership and management[194]. Employee and Management - The company has a strong management team with members holding significant qualifications and experience in finance, engineering, and administration[81][83]. - The management team is committed to providing independent judgment and monitoring the group's performance, ensuring accountability[81]. - The company maintains a stable core management team and provides ongoing training to employees to ensure they maintain current technical levels[103]. - The company has a commitment to improving employee welfare and has not experienced any significant labor disputes during the review period[103]. Market and Industry Trends - The smart manufacturing market in China reached RMB 156 billion in 2018 and is expected to exceed RMB 238 billion by 2020, presenting significant growth opportunities for the company[21]. - The industrial automation market in China is expected to continue healthy growth due to low penetration rates and rising labor costs, with the company leveraging its technology and intellectual property in this sector[60]. - The company anticipates a rebound in demand for smart meters and other terminals in the 2019 national grid centralized bidding, with expected procurement reaching 87.7 million units by 2021, reflecting an 11.5% CAGR from 2017 to 2021[59]. Shareholder Information - The company reported a total issued share capital of approximately HKD 81,125, divided into 811,247,421 ordinary shares with a par value of HKD 0.0001 each as of December 31, 2018[97]. - Major shareholders include Seashore Fortune with 11.33% (91,943,624 shares) and Chen Junling with 12.02% (97,527,845 shares) as of December 31, 2018[131]. - The company has a stock option plan allowing for the issuance of up to 80,000,000 shares, approximately 9.72% of the total issued share capital[142]. - The stock option plan is valid for 10 years starting from June 9, 2017, aimed at rewarding selected participants for their contributions[141]. Risk Management - The company continues to assess foreign exchange risks due to fluctuations in the exchange rates of RMB and USD, which may impact its foreign currency transactions[109]. - The company has implemented compliance and risk management policies to ensure adherence to significant legal and regulatory requirements[106].