（股份代號：2187） 盈利警告 本公告根據香港聯合交易所有限公司證券上市規則（「上市規則」）第13.09(2)(a) 條及香港法例第571章證券及期貨條例第XIVA部項下內幕消息條文（定義見上 市規則）而作出。 智欣集團控股有限公司（「本公司」）董事（「董事」）會（「董事會」）謹此知會本公 司股東及潛在投資者，根據對本公司及其附屬公司（統稱「本集團」）未經審核 綜合管理賬目所作之初步審閱以及本集團目前可得資料，預期本集團於截至 二零二五年六月三十日止六個月（「有關期間」）將錄得淨虧損約人民幣50.0百萬 元，而二零二四年同期的純利則約為人民幣1.2百萬元。該虧損主要歸因於本 集團經營預拌混凝土及預製混凝土構件業務錄得虧損淨額。總體虧損程度被 本集團於有關期間回收鐵礦石尾礦及環保磚塊製造業務之所得純利部分抵銷。 香港交易及結算所有限公司及香港聯合交易所有限公司對本公告的內容概不負責，對其準確 性或完整性亦不發表任何聲明，並明確表示，概不對因本公告全部或任何部份內容而產生或 因倚賴該等內容而引致的任何損失承擔任何責任。 Zhixin Group Holding Limited 智欣集團控股有限公司 （於開曼群島 ...

Financial Performance - The company recorded revenue of approximately RMB 580.4 million for the fiscal year 2024, an increase of about RMB 67.6 million or approximately 13.2% compared to RMB 512.8 million in fiscal year 2023[9]. - Gross profit decreased from approximately RMB 104.2 million in fiscal year 2023 to approximately RMB 54.4 million in fiscal year 2024, a decline of about 47.8%[10]. - The net loss for fiscal year 2024 was approximately RMB 75.2 million, compared to a net profit of approximately RMB 10.1 million in fiscal year 2023[10]. - Revenue from ready-mixed concrete sales increased from approximately RMB 259.0 million in fiscal year 2023 to approximately RMB 302.9 million in fiscal year 2024, an increase of about 17.0%[17]. - Revenue from precast concrete components sales decreased significantly from approximately RMB 85.4 million in fiscal year 2023 to approximately RMB 14.1 million in fiscal year 2024, a drop of about 83.5%[18]. - Revenue from iron ore tailings recovery and eco-brick sales increased from approximately RMB 168.4 million in fiscal year 2023 to approximately RMB 263.4 million in fiscal year 2024, an increase of about 56.4%[19]. - Sales cost increased by approximately RMB 117.4 million or about 28.7% from RMB 408.6 million in FY2023 to RMB 526.0 million in FY2024, primarily due to increased revenue from iron ore tailings recovery and eco-bricks[20]. - Gross profit decreased by approximately RMB 49.8 million or about 47.8% from RMB 104.2 million in FY2023 to RMB 54.4 million in FY2024, with overall gross margin dropping from approximately 20.3% to 13.9%[21]. - The gross profit from precast concrete components recorded a loss of approximately RMB 24.8 million in FY2024, compared to a profit of RMB 3.9 million in FY2023[23]. - Other income increased by approximately RMB 6.0 million or about 121.4% from RMB 4.9 million in FY2023 to RMB 10.9 million in FY2024, mainly due to increased government subsidies[25]. - Net other losses increased by approximately RMB 8.0 million or 22,269.4% from RMB 36,000 in FY2023 to RMB 8.1 million in FY2024, primarily due to losses from the sale of properties, plants, and equipment[26]. - Administrative expenses increased by approximately RMB 28.4 million or about 52.4% from RMB 54.3 million in FY2023 to RMB 82.7 million in FY2024, mainly due to production losses in precast concrete components and increased employee costs[28]. Production and Operations - The company has temporarily halted the production of precast concrete components in fiscal year 2024 to mitigate further losses[10]. - The company is optimistic about the prospects of iron ore tailings comprehensive utilization, with over 100 million tons of tailings available for processing in Hainan Province[12]. - The competitive landscape for ready-mixed concrete and precast concrete components remains intense, particularly against state-owned enterprises, impacting profit margins[10]. - The company plans to expand its precast concrete component production capacity, with an allocation of HKD 24.5 million, of which HKD 18.0 million has been utilized[44]. - The company anticipates increased competition in the Xiamen precast concrete and precast concrete component market, which may pressure revenue and gross margins[45]. - The company has identified the comprehensive utilization of iron ore tailings in Hainan as a significant future revenue source due to abundant supply and high demand in nearby areas[45]. Shareholder Information - The largest customer accounts for approximately 9.6% of total revenue for the fiscal year 2024, while the top five customers account for about 31.3%[60]. - The company does not recommend any final dividend for the fiscal year 2024, and there is no established dividend policy[50][51]. - As of December 31, 2024, the company's current liabilities net amount was approximately RMB 72.5 million, compared to a net current asset value of approximately RMB 21.1 million as of December 31, 2023[33]. - The debt-to-equity ratio as of December 31, 2024, was approximately 48%, down from 49% as of December 31, 2023[33]. - The company had no significant acquisitions or investments in FY2024[39][40]. - The net proceeds from the share sale amount to approximately HKD 238.7 million, with HKD 231.4 million already utilized as of December 31, 2023[44]. - As of December 31, 2024, the company has distributable reserves of approximately RMB 184.1 million, down from RMB 189.1 million the previous year[57]. - As of December 31, 2024, the company has 748,000,000 shares issued[73]. - Mr. Ye Zhi Jie holds 274,706,100 shares, representing 36.73% of the company's issued share capital[71]. - Mr. Huang Wen Gui owns 121,568,700 shares, accounting for 16.25% of the company's issued share capital[71]. Corporate Governance - The board of directors emphasizes the importance of good corporate governance standards to protect shareholder interests and enhance corporate value[96]. - The company has adopted a code of conduct for directors regarding securities trading, ensuring compliance with established standards[99]. - The board of directors is responsible for strategic planning and ensuring sustainable development, with regular reviews of board composition and contributions[102]. - The company promotes a culture of integrity, accountability, and transparency among its directors and management[95]. - The company has established anti-corruption policies and reporting systems to maintain its corporate culture[95]. - The board believes that its corporate governance practices comply with the relevant codes and will continue to monitor and review these practices[98]. - The company has established a whistleblowing policy to encourage stakeholders to report any suspected fraud or misconduct[145]. - The board has delegated the responsibility for selecting and appointing directors to the nomination committee, which considers various diversity factors[147]. - The company has implemented a formal and transparent process for establishing remuneration policies for directors and senior management[123]. - The remuneration policy for directors and senior management is reviewed based on the company's performance and market data[80]. - The company has engaged an independent internal control consulting firm to review its major business processes and internal control systems for the fiscal year 2024[141]. - The board conducts an annual review of the effectiveness of the risk management and internal control systems[143]. - The company has established four committees: audit committee, remuneration committee, nomination committee, and strategic committee[113]. - The audit committee consists of three independent non-executive directors, with the chairperson possessing appropriate professional qualifications[115]. - The audit committee held two meetings in fiscal year 2024, with full attendance from its members[116]. - The company held one meeting of the Remuneration Committee in fiscal year 2024, with full attendance from all members[121]. - The Nomination Committee also held one meeting in fiscal year 2024, with all members present[126]. - The Strategic Committee is responsible for reviewing the company's expansion into emerging markets and the development of new products[129]. - The company confirmed that there are no significant uncertainties affecting its ability to continue as a going concern[131]. - The company secretary position was transitioned to Mr. Yuan Zhiwei effective August 8, 2024, following the resignation of Mr. Zhong Dezhu[134]. - The company ensures compliance with accounting standards and corporate governance codes as per the responsibilities outlined for the board of directors[131]. - All independent non-executive directors have confirmed their independence in accordance with listing rules[109]. - The board has a clear division of responsibilities between the chairman and the CEO to ensure a balance of power[108]. - The company has no plans for re-election of directors at the upcoming annual general meeting[70]. - In the fiscal year 2024, the company reported a total of 10 executives receiving compensation below RMB 1,000,000, a decrease of 18.18% from 11 in fiscal year 2023[85]. - There were no management or administrative contracts established for the majority of the company's business in fiscal year 2024[86]. - The details of remuneration for directors and the five highest-paid individuals are included in the financial statements[83]. - There are no indemnity provisions for any directors or associated companies during the fiscal year[81]. - There are no significant transactions or contracts involving directors with substantial interests during the fiscal year[78]. - The company has not established any arrangements that would result in directors holding interests in competing businesses during the fiscal year[79]. Environmental, Social, and Governance (ESG) Initiatives - The company is committed to environmental protection and sustainable development, implementing green office measures to reduce energy consumption[88]. - The board is responsible for identifying and assessing environmental, social, and governance (ESG) risks, and has formed a dedicated ESG working group to implement related measures[165]. - The ESG report covers the period from January 1, 2024, to December 31, 2024, aligning with the company's fiscal year[164]. - The ESG working group is tasked with collecting and monitoring ESG data, and reporting significant ESG matters to the board[168]. - The company emphasizes stakeholder engagement to understand and respond to their concerns regarding ESG issues[172]. - The company adheres to the "comply or explain" principle in its ESG reporting, ensuring transparency and accountability[170]. - The company has been recognized as a green factory by the Ministry of Industry and Information Technology of China[178]. - The company has established three environmental goals, promoting principles of "recycling," "reuse," "water conservation," and "energy saving" among employees[178]. - In the fiscal year 2024, the company complied with all applicable laws and regulations regarding emissions and waste management, with no significant claims or penalties related to environmental protection[179]. - The company has implemented an ISO 14001 certified environmental management system to reduce greenhouse gas emissions primarily from logistics activities[180]. - The company has established monitoring procedures to ensure water usage remains within reasonable limits, with no issues in obtaining applicable water sources in fiscal year 2024[184][185]. - The company produces minimal non-hazardous industrial waste during production, adhering to national standards for waste management[186]. - The company has installed automatic watering systems and dust-sealing designs in warehouses to minimize dust emissions during the loading process[187]. - The company encourages employees to cultivate water-saving habits and manages wastewater according to national discharge standards[184][185]. - The company has developed policies to minimize the use of natural resources and reduce the environmental impact of its operations[180]. - In fiscal year 2024, the company reported direct emissions (Scope 1) of 4,238 tons of CO2, a decrease of 49% from 8,317 tons in fiscal year 2023[189]. - Indirect emissions (Scope 2) increased to 16,118 tons of CO2 in fiscal year 2024, up 19% from 13,499 tons in fiscal year 2023[189]. - The company achieved a reduction in solid waste to 231 tons in fiscal year 2024, down from 398 tons in fiscal year 2023, representing a 42% decrease[192]. - Water consumption increased to 317 thousand cubic meters in fiscal year 2024, compared to 135 thousand cubic meters in fiscal year 2023, reflecting a 135% increase[192]. - The company aims to maintain current emission control and resource usage levels over the next two years, with plans to set and disclose new reduction targets thereafter[193]. - The company utilized 23,026 thousand kWh of electricity in fiscal year 2024, an increase of 19% from 19,284 thousand kWh in fiscal year 2023[192]. - The company plans to use vehicles that meet EU Stage VI standards for logistics activities to address future stricter emission standards[200]. - The company reported a significant reduction in sulfur dioxide (SOx) emissions to 1.05 tons in fiscal year 2024, down from 30.05 tons in fiscal year 2023, a decrease of 96.5%[189]. - The company is committed to managing suppliers and hiring environmentally friendly suppliers to meet customer expectations for green operations[200]. - The company has implemented a supply chain management plan to diversify its supply chain and monitor supplier financial and operational performance[200].

Financial Performance - For the fiscal year ending December 31, 2024, the company reported total revenue of RMB 580,370,000, an increase of 13.2% compared to RMB 512,770,000 for the fiscal year 2023[3]. - The company's gross profit decreased to RMB 54,378,000, down 47.8% from RMB 104,190,000 in the previous year[3]. - Operating loss for the year was RMB 56,286,000, compared to an operating profit of RMB 30,719,000 in 2023[3]. - The net loss attributable to shareholders was RMB 75,199,000, a significant decline from a profit of RMB 10,078,000 in the prior year[3]. - Total revenue for the year ended December 31, 2024, was RMB 580.37 million, an increase from RMB 512.77 million in the previous year, representing a growth of approximately 13.2%[20]. - The gross profit for the year was RMB 54.38 million, compared to RMB 104.19 million in the previous year, indicating a decline of about 47.8%[20]. - The company reported a net loss of RMB 75.20 million for the year, compared to a profit of RMB 10.08 million in the previous year, reflecting a significant downturn in financial performance[20]. - Total expenses for the year ended December 31, 2024, amounted to RMB 622,564 thousand, an increase of 28.1% from RMB 485,941 thousand in 2023[28]. - The cost of goods sold recognized as an expense for the year ended December 31, 2024, was RMB 368,333,000, an increase from RMB 278,015,000 in 2023[58]. Assets and Liabilities - The company's total assets decreased to RMB 1,132,654,000 from RMB 1,352,247,000, reflecting a reduction of approximately 16.2%[4]. - Current liabilities exceeded current assets by approximately RMB 72,483,000, raising concerns about the company's liquidity[10]. - The total equity attributable to shareholders decreased to RMB 377,949,000 from RMB 453,148,000, a decline of approximately 16.6%[4]. - The company’s total liabilities were RMB 754.71 million, compared to RMB 899.10 million in the previous year, indicating a reduction of approximately 16.1%[23]. - The total bank borrowings as of December 31, 2024, amounted to RMB 360,389,000, down from RMB 435,027,000 in 2023[66]. - The debt-to-equity ratio as of December 31, 2024, was approximately 48%, a slight decrease from 49% on December 31, 2023[89]. Operational Challenges - The company has suspended production in its prefabricated concrete component business, contributing to the overall financial challenges faced[10]. - The group has suspended the production of prefabricated concrete components due to ongoing market stagnation and intense competition[45]. - The company plans to improve operational performance and cash flow by enhancing accounts receivable collection and increasing production capacity in its iron ore tailings recovery business[11]. Expenses and Costs - The company’s administrative expenses totaled RMB 78.10 million for the year, reflecting an increase from RMB 49.18 million in the previous year[20]. - Employee benefits expenses increased to RMB 65,731 thousand, reflecting a rise of 6.9% compared to RMB 61,815 thousand in 2023[28]. - The net financing cost for the year was RMB (18,165) thousand, compared to RMB (16,649) thousand in 2023, indicating an increase of 9.1%[30]. - The income tax expense for the year was RMB 748 thousand, a decrease of 81.2% from RMB 3,992 thousand in 2023[31]. - The impairment provision for property, plant, and equipment was RMB 26,767 thousand, a significant increase from RMB 2,260 thousand in 2023[28]. Revenue Segmentation - The segment performance showed that the ready-mixed concrete division generated revenue of RMB 302.90 million, while the precast concrete components and recycled iron ore segments generated RMB 14.09 million and RMB 263.38 million, respectively[20]. - Revenue from ready-mixed concrete sales rose from approximately RMB 259.0 million in FY2023 to approximately RMB 302.9 million in FY2024, an increase of about 17.0%[73]. - Revenue from precast concrete components decreased significantly from approximately RMB 85.4 million in FY2023 to approximately RMB 14.1 million in FY2024, a decline of about 83.5%[74]. - Revenue from iron ore tailings recovery products and eco-bricks increased from approximately RMB 168.4 million in FY2023 to approximately RMB 263.4 million in FY2024, up by about 56.4%[75]. Future Outlook - The revenue growth rate is projected to be 20.8% annually from 2025 to 2029, compared to 2.2% in 2023[57]. - The average gross profit margin is expected to be 31%, down from 48% in 2023[57]. - The group plans to expand its precast concrete component capacity with an allocation of HKD 24.5 million, expected to be completed by December 2025[98]. Corporate Governance - The group has adhered to the corporate governance code as per the Hong Kong Stock Exchange regulations during the fiscal year 2024[99].

Financial Performance - The company's revenue for the six months ended June 30, 2024, was approximately RMB 244.1 million, an increase of about 5.7% compared to RMB 231.0 million for the same period in 2023[10]. - Gross profit increased by approximately 38.9% to about RMB 45.5 million, with a gross margin of 18.6%, up from 14.2% in the previous year[11]. - The net profit for the period was approximately RMB 1.2 million, a decrease of about 89.0% compared to RMB 10.6 million in the same period last year[10]. - Revenue from ready-mixed concrete sales was RMB 130.0 million, a 16.1% increase from RMB 112.0 million in the previous year[14]. - Revenue from precast concrete components decreased by approximately 76.1% to RMB 10.6 million, down from RMB 44.2 million due to increased price pressure from competitors[15]. - Revenue from iron ore tailings recovery and eco-brick sales increased by approximately 38.4% to RMB 103.5 million, compared to RMB 74.8 million in the previous year[16]. - The overall gross profit increased by approximately RMB 12.7 million or about 38.9% to approximately RMB 45.5 million, with the gross profit margin rising from 14.2% to 18.6%[18]. - The profit for the period was approximately RMB 1.2 million, a decrease from RMB 10.6 million in the previous period[24]. - The company reported a net profit attributable to owners of the company of RMB 1,172 thousand, a decrease from RMB 10,649 thousand in the prior year[37]. - Basic and diluted earnings per share were RMB 0.002, down from RMB 0.014 in the same period last year, indicating lower profitability per share[37]. Operational Efficiency - Operating profit decreased to RMB 9,891 thousand from RMB 22,456 thousand, indicating challenges in operational efficiency[37]. - The company plans to focus on enhancing operational efficiency and exploring new market opportunities to drive future growth[37]. - Selling expenses increased by approximately 45.8% to about RMB 10.5 million, mainly due to increased transportation costs from a significant rise in the sales volume of iron ore tailings recovery products[20]. - Administrative expenses rose by approximately 37.9% to about RMB 29.1 million, attributed to increases in non-direct employee costs and professional fees[21]. - Net financing costs increased by approximately 44.3% to about RMB 10.0 million, mainly due to a reduction in capitalized interest included in construction costs[22]. Assets and Liabilities - As of June 30, 2024, the current assets net value was approximately RMB 4.4 million, down from RMB 21.1 million as of December 31, 2023[25]. - The total assets as of June 30, 2024, were RMB 1,270,647 thousand, down from RMB 1,352,247 thousand at the end of 2023, indicating a reduction in asset base[39]. - Total liabilities decreased to RMB 816,327 thousand from RMB 899,099 thousand, reflecting a reduction in financial obligations[39]. - The total borrowings (excluding factoring loans) as of June 30, 2024, were RMB 384,111,000, compared to RMB 423,157,000 as of December 31, 2023, indicating a reduction in debt levels[58]. - The company’s total liabilities decreased to RMB 416,032,000 as of June 30, 2024, from RMB 435,027,000 as of December 31, 2023, indicating improved financial health[96]. Cash Flow and Liquidity - Net cash flow from operating activities was RMB 53,998 thousand, compared to RMB 40,175 thousand in the previous year, showing improved cash generation[41]. - Cash and cash equivalents at the end of the period increased to RMB 26,212 thousand from RMB 13,327 thousand, showing improved liquidity[41]. - The total cash and cash equivalents as of June 30, 2024, were RMB 26,212,000, slightly up from RMB 26,367,000 as of December 31, 2023[89]. Market Outlook - The company expects continued strong revenue from iron ore tailings recovery and eco-brick business, despite market pressures on ready-mixed and precast concrete components[11]. - The company remains optimistic about the business prospects for iron ore tailings utilization due to sufficient supply in Hainan[11]. - The company expects business momentum to continue in the second half of 2024, driven by abundant supply of iron ore tailings in Hainan Province and strong demand from nearby regions[36]. Corporate Governance - The group has established sound corporate governance principles to protect shareholder interests and enhance corporate value[106]. - The company has complied with the corporate governance code principles and has adopted best practices where applicable as of June 30, 2024[107]. - The group continues to review and monitor its corporate governance practices to ensure compliance with the corporate governance code[107]. Shareholder Information - Major shareholders include Zhixin Investment Holdings Limited with a beneficial interest of 274,706,100 shares, representing 36.73% of the issued share capital[111]. - The total number of issued shares as of June 30, 2024, is 748,000,000[111]. - The company did not declare or propose any dividends for the six months ended June 30, 2024, consistent with the previous year[78]. Risk Management - The financial risk management plan focuses on minimizing potential adverse impacts on financial performance due to market unpredictability[49]. - The group has not used any derivative financial instruments to hedge certain risk exposures during the reporting period[49]. - The group’s credit risk is primarily associated with cash and bank balances, trade receivables, and other receivables[50]. - The group has identified significant adverse changes in business, financial, or economic conditions as key indicators for assessing credit risk[55].

Financial Performance - The company's revenue for the six months ended June 30, 2024, was approximately RMB 244.1 million, an increase of about 5.7% compared to RMB 231.0 million for the same period in 2023[4]. - Gross profit increased by approximately 38.9% to about RMB 45.5 million, with a gross margin of 18.6%, up from 14.2% in the previous year[5]. - Net profit for the period was approximately RMB 1.2 million, representing a decrease of about 89.0% compared to RMB 10.6 million in the same period last year[4]. - Revenue from ready-mixed concrete sales increased by approximately 16.1% to RMB 130.0 million, driven by higher average selling prices[8]. - Revenue from the sale of prefabricated concrete components decreased by approximately 76.1% to about RMB 10.6 million due to competitive pricing pressures[4]. - Revenue from iron ore tailings recovery and eco-brick sales increased by approximately 38.4% to about RMB 103.5 million[4]. - Overall gross profit rose to RMB 45.5 million, an increase of approximately 38.9% from RMB 32.8 million for the six months ended June 30, 2023, with gross margin improving from 14.2% to 18.6%[12]. - The company reported a basic and diluted earnings per share of RMB 0.002, down from RMB 0.014 in the previous year[31]. - The company’s profit attributable to owners for the six months ended June 30, 2024, was RMB 1,172,000, a significant decrease of 89.0% from RMB 10,649,000 in the same period of 2023[71]. Expenses and Costs - Selling expenses increased by approximately 45.8% to RMB 10.5 million, driven by higher transportation costs due to increased sales volume of iron ore tailings recovery products[14]. - Administrative expenses rose by approximately 37.9% to RMB 29.1 million, primarily due to increases in non-direct employee costs and professional fees[15]. - The total expenses amounted to RMB 238,131,000, an increase of 5.7% compared to RMB 226,528,000 for the same period in 2023[65]. - The cost of raw materials and consumables decreased to RMB 126,214,000 from RMB 142,924,000, reflecting a reduction of 11.7%[65]. - The depreciation of property, plant, and equipment increased to RMB 15,637,000 from RMB 9,315,000, reflecting a rise of 67.5%[65]. Assets and Liabilities - As of June 30, 2024, the group's current assets net value was approximately RMB 4.4 million, down from RMB 21.1 million as of December 31, 2023[19]. - Total assets as of June 30, 2024, were RMB 1,270,647,000, down from RMB 1,352,247,000 at the end of 2023[32]. - Total liabilities decreased to RMB 816,327,000 from RMB 899,099,000, indicating a reduction of 9.2%[33]. - The company’s total liabilities as of June 30, 2024, amounted to RMB 801,247,000, compared to RMB 894,257,000 as of December 31, 2023[52]. - The company’s total trade receivables aged within one year were RMB 265,526,000 as of June 30, 2024, compared to RMB 277,987,000 as of December 31, 2023[88]. Cash Flow and Financing - The company’s cash flow from operating activities was RMB 53,998,000, an increase from RMB 40,175,000 in the same period last year[35]. - The total cash and cash equivalents as of June 30, 2024, were RMB 26,212,000, slightly up from RMB 26,367,000 as of December 31, 2023[83]. - The company’s borrowings (excluding factoring loans) as of June 30, 2024, totaled RMB 384,111,000, with a breakdown of RMB 256,427,000 due within one year[52]. - The company’s total borrowings as of June 30, 2024, were RMB 416,032,000, down from RMB 435,027,000 as of December 31, 2023, showing a reduction in debt levels[90]. - As of June 30, 2024, the group has undrawn financing facilities amounting to RMB 55,550,000 for bank loans due within one year, compared to RMB 15,050,000 as of December 31, 2023, indicating a significant increase in available credit[20]. Corporate Governance and Shareholder Information - The company has committed to maintaining high standards of corporate governance, which is essential for protecting shareholder interests and enhancing corporate value[100]. - Mr. Ye Zhi Jie holds a 36.73% equity interest in the company, with 274,706,100 shares, as of June 30, 2024, maintaining his position as a major shareholder[103]. - Mr. Huang Wen Gui owns 16.25% of the company with 121,568,700 shares, reinforcing the significant ownership concentration among key stakeholders[104]. - The company did not declare any dividends for the six months ended June 30, 2024, consistent with the previous year[72]. - The total remuneration for key management personnel for the six months ended June 30, 2024, is approximately RMB 2,144,000, a slight decrease from RMB 2,174,000 in the same period of 2023[99]. Market Outlook and Strategic Initiatives - The company expects continued growth in the second half of 2024, driven by strong demand for tailings in Hainan Province[30]. - The company plans to maintain competitiveness by offering price discounts to certain customers in the prefabricated concrete components market[5]. - The company has invested in advanced automated assembly lines, including fully automated production equipment for iron ore tailings recovery, with an annual processing capacity of 3 million tons[5]. - The group plans to continue enhancing its market presence through strategic agreements and product development initiatives[55].

[Supplementary Announcement: Supplementary Information for 2023 Annual Report](index=1&type=section&id=Supplementary%20Announcement) This announcement provides supplementary information to the 2023 annual report, primarily updating the use of proceeds from the share offer [Purpose and Background of the Announcement](index=1&type=section&id=Purpose%20and%20Background) This announcement provides supplementary information for Zixin Group Holdings Limited's 2023 annual report, primarily updating the use of proceeds from the share offer - This is a supplementary announcement to the 2023 annual report of Zixin Group Holdings Limited (Stock Code: 2187)[1](index=1&type=chunk) - The announcement aims to provide supplementary information for the 2023 annual report[1](index=1&type=chunk) [Update on Use of Proceeds](index=1&type=section&id=Use%20of%20Proceeds%20Update) The company updated the unutilized net proceeds from the share offer for expanding precast concrete component capacity and their estimated utilization time, indicating a delay in the plan Unutilized Net Proceeds from Share Offer and Estimated Utilization Time | Metric | As of December 31, 2022 | As of December 31, 2023 | | :--- | :--- | :--- | | Unutilized Net Proceeds (RMB) | approximately 7.3 million | approximately 6.5 million | | Estimated Utilization Time | Before December 2023 | Before December 2025 | [Reason for Delay and Management Decision](index=2&type=section&id=Reason%20for%20Delay) Due to the precast concrete component business's underperformance in FY2023, management decided to postpone the use of proceeds for expanding its capacity - The precast concrete component business performed below expectations in FY2023[2](index=2&type=chunk) - The Group's management decided to postpone the plan for using proceeds to expand the Group's precast concrete component production capacity[2](index=2&type=chunk) [Board Information](index=2&type=section&id=Board%20Information) The announcement was issued by Mr. Ye Zhijie, Chairman and Executive Director, listing board members as of the announcement date - The announcement was issued by Mr. Ye Zhijie, Chairman and Executive Director of the Board[2](index=2&type=chunk) - Board members include Executive Directors Mr. Ye Zhijie, Mr. Huang Wengui, Mr. Lai Quanshui, Mr. Qiu Limiao, Mr. Ye Dan, and Mr. Huang Kaining; and Independent Non-executive Directors Ms. Wang Duanxiu, Mr. Cai Huinong, and Mr. Jiang Qinjian[2](index=2&type=chunk) - The announcement date is Hong Kong, August 20, 2024[2](index=2&type=chunk)

Financial Performance - In the fiscal year 2023, the total revenue from audit services was RMB 2,200,000, a decrease of 4.35% from RMB 2,300,000 in the fiscal year 2022[8]. - The company reported a revenue of RMB 496.2 million for the fiscal year 2023, a decrease from RMB 634.2 million in fiscal year 2022, indicating a decline of approximately 21.8%[68]. - The total number of full-time employees as of December 31, 2023, is 438, down from 508 in 2022[151]. - The overall employee turnover rate during the reporting period is 24.3%, a decrease from 38.2% in the previous fiscal year[153]. Environmental, Social, and Governance (ESG) Initiatives - The board has approved the Environmental, Social, and Governance (ESG) report, confirming that it fairly presents the company's management approach and performance in ESG matters[25]. - The company has established a governance framework to manage environmental, social, and governance risks effectively[52]. - The company continues to engage with stakeholders to understand their concerns and expectations, ensuring compliance with laws and regulations while fulfilling social responsibilities[54]. - The company has implemented various environmental protection measures, including the use of LED lighting to reduce energy consumption[63]. - The company aims to achieve optimal levels in emission control and resource utilization considering new business expansions[67]. - The company has set three environmental goals focusing on recycling, reusing, water conservation, and energy saving to enhance employee environmental awareness[77]. Risk Management and Compliance - The company has implemented a risk management and internal control system to monitor financial, operational, and compliance-related risks[9]. - The company has a policy to ensure timely and fair disclosure of inside information to maintain market fairness[43]. - The company has established a supplier code of conduct to set expectations for ethical and compliant behavior among suppliers[113]. - The company has a strong focus on compliance and regulatory matters, with key personnel having over 30 years of experience in accounting and compliance[123][125][126]. Employee Management and Training - The company provided 529 hours of training during the reporting period, with an average training time of 1.21 hours per employee, a decrease from 2.11 hours in the previous fiscal year[159]. - The company has implemented a competitive compensation system to attract and retain talent, ensuring compliance with national laws regarding employee benefits[174]. - The company aims to achieve a 100% training coverage rate for its anti-corruption training program within four years, with a three-year rolling training plan for employees[182]. - The employee turnover rate was 2.1% for females and 22.2% for males, with the majority of male turnover coming from the production department[173]. Product Quality and Safety - The company has not encountered any significant product recalls, liability claims, or failures to pass regulatory inspections in product quality during the fiscal year 2023[121]. - The company has implemented measures to ensure product safety and fulfill product responsibilities at various operational stages[117]. - The company has established a quality control process throughout its operations, including strict inspections and testing before product delivery[101]. - The company reported no product recalls during the year, indicating strong product management and compliance[134]. Community Engagement and Social Responsibility - The company is committed to maintaining communication with stakeholders and responding to their needs in a timely manner[54]. - The company has committed to maintaining close communication with the community and is concerned about vulnerable groups within it[191]. - The company maintains a zero-tolerance policy towards child labor and forced labor, strictly adhering to relevant national laws[156]. - The company aims to promote gender diversity and has implemented policies to ensure female employees receive their entitled benefits and create a supportive work environment[176].

Revenue and Profitability - Revenue from the sale of iron ore tailings recovery products and eco-bricks increased from approximately RMB 27.9 million in FY2022 to approximately RMB 168.4 million in FY2023, representing a growth of approximately 503.6%[7] - Net profit for the year increased from approximately RMB 1.3 million in FY2022 to approximately RMB 10.1 million in FY2023[9] - Total revenue decreased from RMB 634.15 million in FY2022 to RMB 512.77 million in FY2023, a decline of approximately 19.1%[26] - Basic earnings per share increased from RMB 0.002 in FY2022 to RMB 0.013 in FY2023[26] - The total revenue for the year ended December 31, 2023, was RMB 634,152 thousand, an increase from RMB 576,727 thousand in 2022, representing a growth of approximately 9.9%[47] - The gross profit for the same period was RMB 57,425 thousand, compared to RMB 51,425 thousand in 2022, indicating a gross margin improvement[47] - The company reported a net loss of RMB 2,357 thousand for the year, a decrease from a profit of RMB 1,253 thousand in the previous year[48] - The company's profit attributable to owners for the year ended December 31, 2023, was RMB 10,078,000, compared to RMB 1,253,000 in 2022, representing a significant increase[58] - The basic earnings per share for the year ended December 31, 2023, was RMB 0.013, up from RMB 0.002 in 2022, indicating strong growth in profitability[58] Assets and Liabilities - The total assets decreased from RMB 1,385.099 million in FY2022 to RMB 1,352.247 million in FY2023[28] - The total equity attributable to the owners of the company increased from RMB 443.070 million in FY2022 to RMB 453.148 million in FY2023[28] - Trade receivables decreased from RMB 704.195 million in FY2022 to RMB 610.359 million in FY2023, a reduction of approximately 13.3%[4] - The company's total liabilities as of December 31, 2023, were RMB 899,099 thousand, compared to RMB 942,029 thousand in 2022, indicating a decrease in total liabilities[48] - The total equity and liabilities amounted to RMB 1,352,247,000 as of December 31, 2023, compared to RMB 1,385,099,000 in the previous year[61] - The debt-to-equity ratio as of December 31, 2023, is approximately 49%, a decrease from 52% on December 31, 2022[146] Costs and Expenses - Gross profit decreased from approximately RMB 57.43 million in FY2022 to approximately RMB 104.19 million in FY2023, with a gross margin decline from 8.1% to 6.3%[19][26] - The company’s financing costs for the year were RMB 16,671 thousand, compared to RMB 13,259 thousand in 2022, reflecting an increase in borrowing costs[49] - The company’s employee benefit expenses decreased to RMB 61,815 thousand in 2023 from RMB 72,078 thousand in 2022, a reduction of approximately 14.3%[49] - Administrative expenses increased by approximately RMB 11.9 million or 28.1% to about RMB 54.3 million in fiscal year 2023 from approximately RMB 42.4 million in fiscal year 2022[143] - The net financing costs increased from approximately RMB 13.1 million in the fiscal year 2022 to approximately RMB 16.6 million in the fiscal year 2023, an increase of about 26.7%[170] Investments and Future Outlook - The company has signed an investment contract to invest RMB 350.0 million (approximately HKD 385.0 million) in tailings comprehensive utilization and various building materials production projects in Hainan Province[178] - The company anticipates a revenue growth rate of 2.2% annually from 2024 to 2028, up from 2% in 2022[90] - The average gross profit margin is projected to be 48%, an increase from 40% in 2022[90] - The company plans to expand its precast concrete component production capacity with an investment of HKD 24.5 million, aiming for completion by December 2025[180] - The total investment for the quartz mine deep processing and lightweight environmental building materials project in Longyan City, Fujian Province, is estimated at RMB 1,100 million (approximately HKD 1,242.5 million)[192] Operational Changes - The group has completed the construction of an advanced automatic assembly line with an annual production capacity of 3 million tons of iron tailings, which began operations in May 2023[132] - The company has commenced sales of iron ore tailings recovery products since May 2023, expanding its product offerings[43] - The company did not successfully acquire mining rights in a public auction held on December 28, 2023, leading to the invalidation of the investment contract[192] - The company has not declared or proposed any dividends for the year ended December 31, 2023, consistent with 2022[109] Employee and Governance - As of December 31, 2023, the company had 438 employees, a decrease from 508 employees as of December 31, 2022[179] - The company has complied with the corporate governance code as per the Hong Kong Stock Exchange listing rules during the fiscal year 2023[196] - The company’s financial statements for the fiscal year 2023 have been reviewed by its auditor, confirming compliance with applicable accounting standards[198] - The company will hold its annual general meeting on June 18, 2024, in Hong Kong[184]

Financial Performance - For the six months ended June 30, 2023, the company's revenue was approximately RMB 231.0 million, a decrease of about 24.7% compared to the same period last year[12]. - Gross profit for the same period was approximately RMB 32.8 million, down about 9.2% year-on-year[12]. - The period profit increased significantly to approximately RMB 10.6 million, representing a year-on-year increase of approximately 1,909.2%[21]. - Revenue from the sale of ready-mixed concrete decreased by approximately 48.5% to about RMB 112.0 million, while revenue from the sale of precast concrete components decreased by approximately 46.1% to about RMB 44.2 million[20]. - Revenue from the sale of iron ore tailings recovery and eco-bricks increased by approximately 907.5% to about RMB 74.8 million[20]. - Revenue for the six months ended June 30, 2023, was RMB 231,018 thousand, a decrease of 24.6% compared to RMB 306,675 thousand for the same period in 2022[105]. - Operating profit increased significantly to RMB 22,456 thousand from RMB 7,786 thousand, indicating a strong operational performance[105]. - Net profit attributable to the owners of the company for the period was RMB 10,649 thousand, compared to RMB 530 thousand in the previous year[105]. - The company achieved a net profit of approximately RMB 10.6 million, which is about 20 times that of the same period last year, with a net profit margin of approximately 4.6%[115]. Assets and Liabilities - As of June 30, 2023, trade payables amounted to RMB 385.5 million, compared to RMB 348.4 million as of December 31, 2022[30]. - The company reported a total equity of approximately RMB 364.7 million as of June 30, 2023[27]. - The company’s total liabilities increased to RMB 451,635,000 as of June 30, 2023, from RMB 443,595,000 as of December 31, 2022, marking a growth of 1.3%[36]. - Total assets as of June 30, 2023, amounted to RMB 1,416,780 thousand, an increase from RMB 1,385,099 thousand at the end of 2022[107]. - Total liabilities increased to RMB 963,061 thousand from RMB 942,029 thousand, indicating a rise in financial obligations[110]. - The debt-to-equity ratio as of June 30, 2023, was approximately 50.4%, a slight decrease from 51.5% as of December 31, 2022[137]. Cash Flow and Financing - For the six months ended June 30, 2023, the net cash flow from operating activities was RMB 40,175,000, a significant increase from RMB 1,927,000 in the same period last year, representing a growth of approximately 1,925%[79]. - The cash flow from investing activities showed a net outflow of RMB 37,758,000, compared to a net outflow of RMB 75,580,000 in the previous year, indicating a reduction in investment losses by about 50%[79]. - The company reported a cash inflow from bank borrowings of RMB 72,220,000, up from RMB 50,500,000 in the prior year, reflecting a 43% increase in financing activities[79]. - The total cash and cash equivalents at the end of the period were RMB 13,327,000, down from RMB 30,388,000 at the end of the previous period, marking a decrease of approximately 56%[79]. - The company’s financing costs included interest payments of RMB 11,065,000, which increased from RMB 7,285,000 in the previous year, indicating a rise of about 52%[79]. - The company has unutilized financing facilities amounting to RMB 7,012,000 as of June 30, 2023, compared to RMB 1,422,000 as of December 31, 2022[43]. Shareholder Information - The company has issued 748 million shares as of June 30, 2023, with a total share capital of approximately RMB 6.36 million[26]. - The largest shareholder, Zhi Xin Investment Holdings Limited, holds 274,706,100 shares, representing 36.73% of the total shares[65]. - The second largest shareholder, Yao He Holdings Limited, owns 121,568,700 shares, accounting for 16.25% of the total shares[65]. - The company did not declare an interim dividend for the six months ended June 30, 2023[72]. Operational Segments - The company operates primarily in three segments: ready-mixed concrete, precast concrete components, and iron ore tailings recovery and eco-bricks[23]. - The company is focused on expanding its operations in the concrete materials manufacturing sector in Xiamen, Fujian Province, China[23]. - The company completed the acquisition of 瑞圖明盛環保建材 (Ruitu Mingsheng) in December 2021, which has expanded its operations into the production and sale of eco-friendly bricks in Hainan Province[82]. - The company plans to continue expanding its market presence and product offerings, particularly in the eco-brick segment, which was established through the acquisition of a new subsidiary[176]. Management and Governance - The total remuneration for key management personnel was approximately RMB 2,379,000 for the six months ended June 30, 2023, compared to RMB 1,630,000 for the same period in 2022, reflecting a year-on-year increase of 46%[58]. - The strategic committee was formed on April 6, 2023, with four executive directors, including the newly appointed executive director, Mr. Lai Chuen Shui[68]. - The board of directors has not reported any conflicts of interest with competing businesses as of June 30, 2023[69]. - The company is in compliance with corporate governance codes and standards regarding securities trading by directors[60]. Taxation - For the six months ended June 30, 2023, the income tax expense was RMB 4,853,000 compared to a tax credit of RMB 45,000 in the same period of 2022, indicating a significant increase in tax liability[197]. - The current income tax for China was RMB 6,599,000, up from RMB 1,564,000 in the previous year, reflecting a substantial rise in taxable income[197]. - The group is subject to a corporate income tax rate of 25% in China, with a preferential rate of 15% applicable to Xiamen Zhixin Construction Technology Co., Ltd[200].

[Company Information](index=3&type=section&id=Company%20Information) [Board of Directors and Company Secretary](index=3&type=section&id=Board%20of%20Directors%20and%20Company%20Secretary) The Board of Directors of Zhixin Group Holding Limited comprises six executive directors and three independent non-executive directors, with audit, nomination, remuneration, and strategy committees, and Mr. Yuan Zhiwei and Mr. Zhong Dezhu as joint company secretaries - The Board members include Executive Directors Mr. Ye Zhijie, Mr. Huang Wengui, Mr. Lai Quanshui, Mr. Qiu Limiao, Mr. Ye Dan, and Mr. Huang Kaining; and Independent Non-executive Directors Ms. Wang Duanxiu, Ms. Cai Huinong, and Mr. Jiang Qinjian[2](index=2&type=chunk) - The company has an audit committee, a nomination committee, a remuneration committee, and a strategy committee[29](index=29&type=chunk) - The joint company secretaries are Mr. Yuan Zhiwei and Mr. Zhong Dezhu[29](index=29&type=chunk) [Registration and Principal Place of Business](index=3&type=section&id=Registration%20and%20Principal%20Place%20of%20Business) The company is incorporated in the Cayman Islands, with its headquarters and principal place of business in Xiamen, Fujian Province, China, and its principal place of business in Hong Kong located in Causeway Bay, with stock code 2187 - The Company was incorporated in the Cayman Islands as an exempted company on 14 November 2018[78](index=78&type=chunk) - The Group's headquarters are located in Xiamen, Fujian Province, China[91](index=91&type=chunk) - The Company's stock code is **2187**[11](index=11&type=chunk) [Financial Highlights](index=5&type=section&id=Financial%20Highlights) [Key Financial Data](index=5&type=section&id=Key%20Financial%20Data) For the six months ended 30 June 2023, the company's revenue was approximately RMB 231.0 million, a year-on-year decrease of 24.7%, gross profit decreased by 9.2% to RMB 32.8 million, and profit for the period significantly increased by 1,909.2% to RMB 10.6 million Key Financial Data for the Six Months Ended June 30 | Indicator | 2023 (RMB thousand) | 2022 (RMB thousand) | Change % | | :----- | :------------------ | :------------------ | :------- | | Revenue | 231,018 | 306,675 | (24.7%) | | Gross Profit | 32,777 | 36,080 | (9.2%) | | Profit for the Period | 10,649 | 530 | 1,909.2% | - The decrease in revenue was primarily due to additional price concessions offered by the Group to some customers as a result of market price competition in the ready-mixed concrete and precast concrete components markets[14](index=14&type=chunk) - The decrease was partially offset by increased revenue from the sale of eco-friendly bricks and new revenue streams from the sale of products such as iron ore and aggregates produced from iron ore tailings recycling during the period[14](index=14&type=chunk) [Chairman's Statement](index=6&type=section&id=Chairman%27s%20Statement) [Business Overview and Outlook](index=6&type=section&id=Business%20Overview%20and%20Outlook) The Group is a concrete building materials manufacturer and supplier in Xiamen, Fujian Province, China, also engaged in comprehensive utilization of iron ore tailings and production of eco-friendly bricks in Changjiang, Hainan Province, with business segments including ready-mixed concrete, precast concrete components, and iron ore tailings recycling and eco-friendly bricks, maintaining optimism for strong revenue from the latter despite market pressures on traditional segments - The Group is a manufacturer and supplier of concrete building materials in Xiamen, Fujian Province, China, and is engaged in the comprehensive utilization of iron ore tailings and the production of eco-friendly bricks in Changjiang, Hainan Province, China[23](index=23&type=chunk) - Business segments can be broadly divided into three categories: ready-mixed concrete, precast concrete components, and iron ore tailings recycling and eco-friendly bricks[23](index=23&type=chunk) - The Group is confident that the iron ore tailings recycling and eco-friendly bricks business will continue to generate strong revenue this year, and is very optimistic about the business prospects of comprehensive utilization of iron ore tailings[15](index=15&type=chunk) [New Business Investments and Performance](index=6&type=section&id=New%20Business%20Investments%20and%20Performance) Since the acquisition of Ruitu Mingsheng in December 2021, the Group has made significant investments in a fully automated iron ore tailings recycling production line with an annual processing capacity of 3 million tons, receiving government subsidies of approximately RMB 10.2 million, with eco-friendly bricks and iron ore tailings recycling businesses achieving profits and gross margins of 49.4% and 54.8% respectively during the period - The Group has made significant investments in advanced automated assembly lines, including fully automated and integrated production equipment for iron ore tailings recycling, with an annual processing capacity of **3 million tons**[24](index=24&type=chunk) - During the period, the Group received government subsidies and incentives of approximately **RMB 10.2 million** for investing in the tailings production line[24](index=24&type=chunk) - The eco-friendly bricks and iron ore tailings recycling businesses achieved profits during the period, with gross margins reaching **49.4%** and **54.8%** respectively[24](index=24&type=chunk) [Management Discussion and Analysis](index=7&type=section&id=Management%20Discussion%20and%20Analysis) [Business Review](index=7&type=section&id=Business%20Review) During the period, the Group's total revenue was approximately RMB 231.0 million, a year-on-year decrease of 24.7%, with ready-mixed concrete and precast concrete components revenues decreasing by 48.5% and 46.1% respectively due to market price competition, while iron ore tailings recycling and eco-friendly bricks revenue significantly increased by 907.5% to RMB 74.8 million, becoming a new growth driver - The Group's revenue was approximately **RMB 231.0 million**, a decrease of approximately **24.7%** compared to approximately RMB 306.7 million for the six months ended 30 June 2022[32](index=32&type=chunk) Revenue Changes by Business Segment | Business Segment | 2023 Revenue (RMB million) | 2022 Revenue (RMB million) | Change % | | :----------------- | :------------------------ | :------------------------ | :------- | | Ready-mixed Concrete | 112.0 | 217.3 | (48.5%) | | Precast Concrete Components | 44.2 | 82.0 | (46.1%) | | Iron Ore Tailings Recycling and Eco-friendly Bricks | 74.8 | 7.4 | 907.5% | - The increase in revenue from iron ore tailings recycling and eco-friendly bricks was mainly due to increased sales volume of eco-friendly bricks and new revenue streams from the sale of products produced from iron ore tailings recycling during the period[26](index=26&type=chunk) [Cost of Sales, Gross Profit, and Gross Margin](index=7&type=section&id=Cost%20of%20Sales%2C%20Gross%20Profit%2C%20and%20Gross%20Margin) Cost of sales decreased by 26.7% year-on-year to RMB 198.2 million, primarily due to lower sales of ready-mixed concrete and precast concrete components, while overall gross profit decreased by 9.2% to RMB 32.8 million, but the overall gross margin increased from 11.8% to 14.2%, mainly driven by increased sales of high-margin iron ore tailings recycling and eco-friendly bricks - Cost of sales decreased by approximately **RMB 72.4 million** or approximately **26.7%** from approximately RMB 270.6 million for the six months ended 30 June 2022 to approximately **RMB 198.2 million** for the current period[27](index=27&type=chunk) - The Group's overall gross profit decreased by approximately **RMB 3.3 million** or approximately **9.2%** from approximately RMB 36.1 million for the six months ended 30 June 2022 to approximately **RMB 32.8 million** for the current period[27](index=27&type=chunk) - The Group's overall gross margin increased from approximately **11.8%** for the six months ended 30 June 2022 to approximately **14.2%** for the current period, mainly due to increased sales of higher-margin products from iron ore tailings recycling and eco-friendly bricks[27](index=27&type=chunk) [Other Income and Expenses](index=8&type=section&id=Other%20Income%20and%20Expenses) Other income increased by 178.3% to RMB 19.6 million during the period, mainly from government subsidies and incentives, while net other losses decreased by 86.3% to RMB 0.4 million, sales expenses decreased by 48.5% to RMB 7.2 million, administrative expenses decreased by 9.5% to RMB 21.1 million, and net finance costs decreased by 4.8% to RMB 7.0 million - Other income increased by approximately **178.3%** to approximately **RMB 19.6 million**, mainly due to an increase in non-recurring government subsidies and incentives to approximately **RMB 11.2 million**[40](index=40&type=chunk) - Net other losses decreased by approximately **86.3%** to approximately **RMB 0.4 million**, mainly due to a one-off compensation expense arising from the early termination of the lease for the precast concrete components production plant in the same period last year[41](index=41&type=chunk) Key Expense Changes | Expense Category | 2023 (RMB million) | 2022 (RMB million) | Change % | | :------- | :-------------------- | :-------------------- | :------- | | Sales Expenses | 7.2 | 13.9 | (48.5%) | | Administrative Expenses | 21.1 | 23.3 | (9.5%) | | Net Finance Costs | 7.0 | 7.3 | (4.8%) | [Profit for the Period and Liquidity](index=8&type=section&id=Profit%20for%20the%20Period%20and%20Liquidity) Profit for the period was approximately RMB 10.6 million, a significant increase from the prior year, with net current liabilities of approximately RMB 4.1 million compared to net current assets at the end of last year, cash and cash equivalents of approximately RMB 13.3 million, and a gearing ratio of approximately 50.4%, slightly lower than 51.5% at the end of last year - Profit for the period was approximately **RMB 10.6 million** (six months ended 30 June 2022: RMB 530,000)[38](index=38&type=chunk) - As at 30 June 2023, the Group's net current liabilities were approximately **RMB 4.1 million** (31 December 2022: net current assets of approximately RMB 39.8 million)[38](index=38&type=chunk) Liquidity and Borrowings | Indicator | 30 June 2023 (RMB million) | 31 December 2022 (RMB million) | | :--------------- | :--------------------------- | :---------------------------- | | Cash and Cash Equivalents | 13.3 | 17.5 | | Current Borrowings | 305.7 | 257.4 | | Non-current Borrowings | 146.0 | 186.2 | | Gearing Ratio | 50.4% | 51.5% | [Capital Commitments and Significant Investments](index=9&type=section&id=Capital%20Commitments%20and%20Significant%20Investments) As of 30 June 2023, the Group's capital commitments were approximately RMB 133.0 million, with no significant acquisitions or disposals during the period, and the company has signed an investment contract to build a quartz mine deep processing and lightweight eco-friendly building materials production project in Yongding District, Longyan City, Fujian Province, with a total investment of RMB 1,100 million - As at 30 June 2023, the Group's capital commitments were approximately **RMB 133.0 million** (31 December 2022: RMB 148.3 million)[49](index=49&type=chunk) - During the period, the Group did not undertake any significant acquisitions or disposals related to subsidiaries, associates, and joint ventures[56](index=56&type=chunk) - On 16 May 2023, the Company entered into an investment agreement with Longyan Yongding Natural Resources Bureau, conditionally agreeing to invest in the construction of a quartz mine deep processing and lightweight eco-friendly building materials production project in Yongding District, Longyan City, Fujian Province, China, with a total investment of **RMB 1,100 million**[50](index=50&type=chunk) [Employees and Use of Proceeds](index=10&type=section&id=Employees%20and%20Use%20of%20Proceeds) As of 30 June 2023, the Group had 497 employees, a decrease from the prior year, with employee remuneration determined by qualifications, responsibilities, contributions, and experience, and net proceeds from the share offer of approximately HKD 238.7 million were mainly used for expanding precast concrete component production capacity, enhancing IT and environmental systems, purchasing vehicles, and general working capital, most of which have been utilized - As at 30 June 2023, the Group had **497 employees** (30 June 2022: 553 employees)[65](index=65&type=chunk) - Employee remuneration is determined with reference to factors such as qualifications, responsibilities, contributions, and experience[65](index=65&type=chunk) Use of Proceeds from Share Offer | Use | Disclosed Updated Net Proceeds to be Used (HKD million) | Net Proceeds Used as at 30 June 2023 (HKD million) | Net Proceeds Unused as at 30 June 2023 (HKD million) | Expected Timeline for Using Unused Net Proceeds | | :--------------------------------- | :-------------------------------------- | :--------------------------------------------- | :--------------------------------------------- | :----------------------------------- | | Expanding precast concrete component production capacity | 24.5 | 0.2 | 7.1 | Before December 2024 | | Enhancing IT systems | 1.2 | — | — | Not applicable | | Improving environmental protection systems | 1.2 | — | — | Not applicable | | Purchasing mixer trucks and concrete pump trucks | 2.0 | — | — | Not applicable | | General working capital | 105.3 | — | — | Not applicable | | Repaying borrowings | 104.5 | — | — | Not applicable | | **Total** | **238.7** | **0.2** | **7.1** | | [Prospects](index=10&type=section&id=Prospects) The Board is optimistic about the Group's business maintaining an upward trend in the second half of 2023, with the iron ore tailings comprehensive utilization business in Changjiang County, Hainan Province, expected to become a major revenue source due to abundant tailings supply and strong demand in neighboring areas - The Board is optimistic that the Group's business will maintain an upward trend in the second half of 2023 compared to the first half of the year[68](index=68&type=chunk) - The comprehensive utilization of iron ore tailings in Hainan is poised to become one of the Group's main revenue sources, owing to the abundant supply of iron ore tailings available for processing in Changjiang County, Hainan Province, coupled with anticipated strong demand for tailings output resources in neighboring areas[68](index=68&type=chunk) [Condensed Consolidated Interim Statement of Comprehensive Income](index=11&type=section&id=Condensed%20Consolidated%20Interim%20Statement%20of%20Comprehensive%20Income) [Statement of Comprehensive Income](index=11&type=section&id=Statement%20of%20Comprehensive%20Income) For the six months ended 30 June 2023, Zhixin Group recorded revenue of RMB 231,018 thousand and gross profit of RMB 32,777 thousand, with profit for the period at RMB 10,649 thousand and basic and diluted earnings per share of RMB 0.014 Condensed Consolidated Interim Statement of Comprehensive Income (For the Six Months Ended June 30) | Indicator | 2023 (RMB thousand) | 2022 (RMB thousand) | | :------------------------- | :------------------ | :------------------ | | Revenue | 231,018 | 306,675 | | Cost of sales | (198,241) | (270,595) | | Gross profit | 32,777 | 36,080 | | Other income | 19,562 | 7,028 | | Net other losses | (358) | (2,606) | | Sales expenses | (7,180) | (13,932) | | Administrative expenses | (21,107) | (23,318) | | Impairment loss on financial assets (increase) / reversal | (1,238) | 4,534 | | Operating profit | 22,456 | 7,786 | | Net finance costs | (6,954) | (7,301) | | Profit before income tax | 15,502 | 485 | | Income tax expense / (credit) | (4,853) | 45 | | Profit and total comprehensive income for the period attributable to owners of the Company | 10,649 | 530 | | Basic and diluted earnings per share (RMB) | 0.014 | 0.00071 | [Condensed Consolidated Interim Statement of Financial Position](index=12&type=section&id=Condensed%20Consolidated%20Interim%20Statement%20of%20Financial%20Position) [Statement of Financial Position](index=12&type=section&id=Statement%20of%20Financial%20Position) As of 30 June 2023, Zhixin Group's total assets were RMB 1,416,780 thousand, total equity was RMB 453,719 thousand, total liabilities were RMB 963,061 thousand, and net current liabilities were approximately RMB 4.1 million Condensed Consolidated Interim Statement of Financial Position (As at June 30) | Indicator | 30 June 2023 (RMB thousand) | 31 December 2022 (RMB thousand) | | :--------------- | :------------------------- | :-------------------------- | | **Assets** | | | | Non-current assets | 619,171 | 600,625 | | Current assets | 797,609 | 784,474 | | **Total Assets** | **1,416,780** | **1,385,099** | | **Equity** | | | | Total equity | 453,719 | 443,070 | | **Liabilities** | | | | Non-current liabilities | 161,400 | 197,363 | | Current liabilities | 801,661 | 744,666 | | **Total Liabilities** | **963,061** | **942,029** | | **Total Equity and Liabilities** | **1,416,780** | **1,385,099** | - As at 30 June 2023, the Group's net current liabilities were approximately **RMB 4.1 million** (31 December 2022: net current assets of approximately RMB 39.8 million)[38](index=38&type=chunk) [Condensed Consolidated Interim Statement of Changes in Equity](index=14&type=section&id=Condensed%20Consolidated%20Interim%20Statement%20of%20Changes%20in%20Equity) [Statement of Changes in Equity](index=14&type=section&id=Statement%20of%20Changes%20in%20Equity) For the six months ended 30 June 2023, total equity attributable to owners of the Company increased from RMB 443,070 thousand at the beginning of the period to RMB 453,719 thousand at the end of the period, primarily due to profit for the period of RMB 10,649 thousand Condensed Consolidated Interim Statement of Changes in Equity (For the Six Months Ended June 30) | Indicator | Share Capital (RMB thousand) | Reserves (RMB thousand) | Retained Earnings (RMB thousand) | Total (RMB thousand) | | :------------------- | :---------------- | :---------------- | :-------------------- | :---------------- | | As at 1 January 2023 | 6,358 | 364,659 | 72,053 | 443,070 | | Profit for the period | — | — | 10,649 | 10,649 | | As at 30 June 2023 | 6,358 | 364,659 | 82,702 | 453,719 | | As at 1 January 2022 | 6,358 | 364,659 | 70,800 | 441,817 | | Profit for the period | — | — | 530 | 530 | | As at 30 June 2022 | 6,358 | 364,659 | 71,330 | 442,347 | [Condensed Consolidated Interim Statement of Cash Flows](index=15&type=section&id=Condensed%20Consolidated%20Interim%20Statement%20of%20Cash%20Flows) [Statement of Cash Flows](index=15&type=section&id=Statement%20of%20Cash%20Flows) For the six months ended 30 June 2023, net cash generated from operating activities was RMB 40,175 thousand, net cash used in investing activities was RMB 37,758 thousand, and net cash used in financing activities was RMB 6,579 thousand, with cash and cash equivalents at the end of the period totaling RMB 13,327 thousand Condensed Consolidated Interim Statement of Cash Flows (For the Six Months Ended June 30) | Cash Flow Category | 2023 (RMB thousand) | 2022 (RMB thousand) | | :------------------- | :------------------ | :------------------ | | Net cash generated from operating activities | 40,175 | 1,927 | | Net cash used in investing activities | (37,758) | (75,580) | | Net cash used in financing activities | (6,579) | (3,158) | | Net decrease in cash and cash equivalents | (4,162) | (76,811) | | Cash and cash equivalents at beginning of period | 17,483 | 107,199 | | Cash and cash equivalents at end of period | 13,327 | 30,388 | [Notes to the Condensed Consolidated Interim Financial Statements](index=16&type=section&id=Notes%20to%20the%20Condensed%20Consolidated%20Interim%20Financial%20Statements) [1 General Information of the Group](index=16&type=section&id=1%20General%20Information%20of%20the%20Group) Zhixin Group primarily engages in the manufacturing and sale of ready-mixed concrete and precast concrete components in Xiamen, Fujian Province, China, and since the acquisition of Ruitu Mingsheng in December 2021, its business has expanded to include eco-friendly brick manufacturing and comprehensive utilization of iron ore tailings in Changjiang City, Hainan Province, China - The Company is an investment holding company and its subsidiaries (collectively, the "Group") are principally engaged in the manufacturing and sale of ready-mixed concrete and precast concrete components in Xiamen, Fujian Province, the People's Republic of China ("China")[91](index=91&type=chunk) - The Group commenced the manufacturing and sale of eco-friendly bricks and comprehensive utilization of iron ore tailings in Changjiang City, Hainan Province, China in 2022, following the completion of the acquisition of Ruitu Mingsheng Environmental Building Materials (Changjiang) Co., Ltd. ("Ruitu Mingsheng") in December 2021[91](index=91&type=chunk) [2 Basis of Preparation](index=16&type=section&id=2%20Basis%20of%20Preparation) The condensed consolidated interim financial statements are prepared in accordance with Hong Kong Accounting Standard 34 "Interim Financial Reporting" and should be read in conjunction with the annual consolidated financial statements for the year ended 31 December 2022 - These condensed consolidated interim financial statements for the six months ended 30 June 2023 have been prepared in accordance with Hong Kong Accounting Standard ("HKAS") 34 "Interim Financial Reporting"[82](index=82&type=chunk) - The condensed consolidated interim financial statements do not include all the information and disclosures normally required in the annual consolidated financial statements, and should therefore be read in conjunction with the annual consolidated financial statements for the year ended 31 December 2022[82](index=82&type=chunk) [3 Significant Accounting Policies](index=17&type=section&id=3%20Significant%20Accounting%20Policies) The principal accounting policies applied in preparing the condensed consolidated interim financial statements are consistent with those applied in the annual consolidated financial statements, with the adoption of new and revised standards including HKFRS 17 and amendments to HKAS 1, 8, and 12 - The principal accounting policies applied in preparing these condensed consolidated interim financial statements are consistent with those applied in the annual consolidated financial statements for the year ended 31 December 2022 and the relevant interim financial period, except for the adoption of new and revised standards as set out below[85](index=85&type=chunk) New and Revised Standards Adopted by the Group | Standard | Effective for annual periods beginning on or after | | :-------------------------------------------------------------- | :----------------------------------- | | HKFRS 17 (Insurance Contracts) | 1 January 2023 | | Amendments to HKAS 1, HKFRS Practice Statement 2 (Disclosure of Accounting Policies) | 1 January 2023 | | Amendments to HKAS 8 (Definition of Accounting Estimates) | 1 January 2023 | | Amendments to HKAS 12 (Deferred Tax related to Assets and Liabilities arising from a Single Transaction) | 1 January 2023 | [4 Estimates](index=18&type=section&id=4%20Estimates) The preparation of interim financial statements requires management to make judgments, estimates, and assumptions that affect the application of accounting policies and the reported amounts of assets, liabilities, income, and expenses, and actual results may differ from these estimates - The preparation of interim financial statements requires management to make judgments, estimates, and assumptions that affect the application of accounting policies and the reported amounts of assets and liabilities, income, and expenses[219](index=219&type=chunk) - Actual results may differ from these estimates[219](index=219&type=chunk) [5 Financial Risk Management](index=19&type=section&id=5%20Financial%20Risk%20Management) The Group is exposed to various financial risks including market risk (foreign exchange and interest rate risk), credit risk, and liquidity risk, with risk management plans aimed at minimizing adverse impacts on financial performance, and no derivative financial instruments were used for hedging during the period, with risk management policies remaining unchanged since the end of the last financial year - The Group's activities expose it to a variety of financial risks: market risk (including foreign exchange risk and interest rate risk), credit risk, and liquidity risk[227](index=227&type=chunk) - The Group's overall risk management programme focuses on the unpredictability of financial markets and seeks to minimise potential adverse effects on the Group's financial performance[227](index=227&type=chunk) - There have been no changes in the Group's risk management policies since the end of the last financial year[228](index=228&type=chunk) [5.1 Financial Risk Factors](index=19&type=section&id=5.1%20Financial%20Risk%20Factors) The Group's financial risk factors primarily include credit risk and liquidity risk, with credit risk arising mainly from cash and bank balances, restricted bank balances, and trade receivables, and liquidity risk managed by controlling the maturity dates of financial assets and liabilities - The Group is exposed to credit risk in relation to its cash and bank balances, restricted bank balances, trade receivables, and other receivables[229](index=229&type=chunk) - To manage credit risk arising from cash and bank balances and restricted bank balances, these amounts are mainly deposited with banks with high credit ratings[230](index=230&type=chunk) [5.2 Fair Value Estimation of Financial Assets and Liabilities Measured at Amortized Cost](index=22&type=section&id=5.2%20Fair%20Value%20Estimation%20of%20Financial%20Assets%20and%20Liabilities%20Measured%20at%20Amortized%20Cost) This report does not provide detailed information on the fair value estimation of financial assets and liabilities measured at amortized cost [6 Segment Information](index=23&type=section&id=6%20Segment%20Information) The Group's business is divided into three operating segments: ready-mixed concrete, precast concrete components, and iron ore tailings recycling and eco-friendly bricks, with the latter segment achieving significant profit during the period, while the ready-mixed concrete and precast concrete components segments recorded losses - The Group's business has identified the following three operating segments: (i) ready-mixed concrete; (ii) precast concrete components; and (iii) iron ore tailings recycling and eco-friendly bricks[103](index=103&type=chunk) Segment Results (For the Six Months Ended 30 June 2023) | Segment | Revenue (RMB thousand) | Gross Profit (RMB thousand) | Segment Results (RMB thousand) | | :------------------- | :---------------- | :---------------- | :-------------------- | | Ready-mixed Concrete | 111,972 | (10,093) | (22,647) | | Precast Concrete Components | 44,209 | 3,355 | (5,065) | | Iron Ore Tailings Recycling and Eco-friendly Bricks | 74,837 | 39,515 | 33,948 | | **Total** | **231,018** | **32,777** | **6,236** | [6.1 Segment Information of the Group](index=23&type=section&id=6.1%20Segment%20Information%20of%20the%20Group) The Group's segment information shows that the iron ore tailings recycling and eco-friendly bricks business achieved significant revenue and segment results growth in the first half of 2023, while traditional ready-mixed concrete and precast concrete components businesses faced challenges with declining revenue and segment results Reconciliation of Segment Results to Profit for the Period (For the Six Months Ended 30 June 2023) | Item | Amount (RMB thousand) | | :------------------------- | :---------------- | | Reportable segment results | 6,236 | | Unallocated costs and expenses | (1,746) | | Other income | 19,562 | | Net other losses | (358) | | Reversal of impairment loss on financial assets | (1,238) | | Net finance costs | (6,954) | | Profit before income tax | 15,502 | | Income tax expense | (4,853) | | Profit and total comprehensive income for the period | 10,649 | Segment Assets and Liabilities (As at 30 June 2023) | Segment | Segment Assets (RMB thousand) | Segment Liabilities (RMB thousand) | | :------------------- | :-------------------- | :-------------------- | | Ready-mixed Concrete | 532,663 | 303,522 | | Precast Concrete Components | 393,957 | 106,689 | | Iron Ore Tailings Recycling and Eco-friendly Bricks | 404,031 | 78,725 | | **Total** | **1,330,651** | **488,936** | [6.2 Contract Liabilities](index=26&type=section&id=6.2%20Contract%20Liabilities) As of 30 June 2023, the Group's total contract liabilities were RMB 9,077 thousand, primarily from the iron ore tailings recycling and eco-friendly bricks business, related to customer advances and recognized before goods delivery Contract Liabilities (RMB thousand) | Business Segment | 30 June 2023 | 31 December 2022 | | :----------------- | :------------ | :------------- | | Iron Ore Tailings Recycling and Eco-friendly Bricks | 7,097 | 131 | | Precast Concrete Components | 1,223 | 560 | | Ready-mixed Concrete | 757 | 1,587 | | **Total** | **9,077** | **2,278** | - Contract liabilities represent the Group's obligation to provide services to customers for consideration received from customers; if a customer pays consideration before the Group delivers goods to them, the Group recognizes a contract liability[106](index=106&type=chunk) - For the six months ended 30 June 2023, revenue recognized from contract liabilities was **RMB 1,748 thousand**, an increase from RMB 1,503 thousand in the same period last year[108](index=108&type=chunk) [7 Expenses by Nature](index=27&type=section&id=7%20Expenses%20by%20Nature) For the six months ended 30 June 2023, the Group's total expenses were RMB 226,528 thousand, a decrease from RMB 307,845 thousand in the prior year, mainly due to reductions in raw materials and consumables used, employee benefit expenses, and transportation expenses Expenses by Nature (For the Six Months Ended June 30) | Expense Category | 2023 (RMB thousand) | 2022 (RMB thousand) | | :------------------- | :------------------ | :------------------ | | Raw materials and consumables used | 142,924 | 203,708 | | Employee benefit expenses | 29,083 | 38,986 | | Outsourcing service fees | 12,879 | 12,214 | | Depreciation of property, plant and equipment | 9,315 | 9,252 | | Depreciation of right-of-use assets | 2,224 | 2,404 | | Transportation expenses | 8,984 | 17,474 | | Utilities | 6,819 | 3,390 | | Impairment provision for inventories | 973 | 1,727 | | **Total** | **226,528** | **307,845** | [8 Income Tax Expense / (Credit)](index=28&type=section&id=8%20Income%20Tax%20Expense%20%2F%20%28Credit%29) For the six months ended 30 June 2023, income tax expense was approximately RMB 4,853 thousand, compared to an income tax credit of RMB 45 thousand in the prior year, primarily due to increased taxable profit from the iron ore tailings recycling and eco-friendly bricks business in China, with Chinese subsidiaries subject to a 25% corporate income tax rate, and some enjoying a preferential rate of 15% Income Tax Expense / (Credit) (For the Six Months Ended June 30) | Item | 2023 (RMB thousand) | 2022 (RMB thousand) | | :----------------- | :------------------ | :------------------ | | Current income tax | 6,599 | 1,564 | | Deferred income tax | (1,746) | (1,609) | | **Income Tax Expense / (Credit)** | **4,853** | **(45)** | - Income tax expense was approximately **RMB 4.9 million**, due to increased taxable profit from the Group's iron ore tailings recycling and eco-friendly bricks business in China[37](index=37&type=chunk) - The Company's subsidiaries incorporated in China are subject to corporate income tax at a rate of **25%**, except for Xiamen Zhixin Construction Engineering Technology Co., Ltd., which is subject to a preferential tax rate of **15%**[125](index=125&type=chunk) [9 Basic and Diluted Earnings Per Share](index=29&type=section&id=9%20Basic%20and%20Diluted%20Earnings%20Per%20Share) For the six months ended 30 June 2023, basic earnings per share significantly increased to RMB 0.014 from RMB 0.00071 in the prior year, and diluted earnings per share were the same as basic earnings per share due to no potential dilutive ordinary shares outstanding during the period Basic Earnings Per Share (For the Six Months Ended June 30) | Indicator | 2023 (Unaudited) | 2022 (Unaudited) | | :------------------------- | :---------------- | :---------------- | | Profit attributable to owners of the Company (RMB thousand) | 10,649 | 530 | | Weighted average number of ordinary shares issued | 748,000,000 | 748,000,000 | | Basic earnings per share (RMB) | 0.014 | 0.00071 | - As there were no potential dilutive ordinary shares outstanding as at 30 June 2023, the diluted earnings per share presented are the same as the basic earnings per share[127](index=127&type=chunk) [10 Dividends](index=29&type=section&id=10%20Dividends) No dividends were paid, declared, or proposed for the six months ended 30 June 2023 - No dividends were paid, declared, or proposed for the six months ended 30 June 2023 (2022: Nil)[123](index=123&type=chunk) [11 Property, Plant and Equipment, Right-of-Use Assets, Investment Properties and Intangible Assets](index=30&type=section&id=11%20Property%2C%20Plant%20and%20Equipment%2C%20Right-of-Use%20Assets%2C%20Investment%20Properties%20and%20Intangible%20Assets) As of 30 June 2023, the Group's total property, plant and equipment, right-of-use assets, investment properties, and intangible assets amounted to RMB 583,566 thousand, with additions to property, plant and equipment of RMB 24,388 thousand during the period Changes in Non-current Assets (RMB thousand) | Asset Category | As at 1 January 2023 | Additions | Depreciation / Amortization | Disposals | As at 30 June 2023 | | :----------- | :------------- | :----- | :--------- | :----- | :-------------- | | Property, Plant and Equipment | 390,405 | 24,388 | (9,428) | (377) | 404,988 | | Right-of-Use Assets | 104,547 | 1,031 | (2,224) | — | 103,354 | | Investment Properties | 36,347 | — | (595) | — | 35,752 | | Intangible Assets | 39,513 | — | (41) | — | 39,472 | - Assets pledged to secure the Group's borrowings are set out in note 20(a)[132](index=132&type=chunk) [12 Inventories](index=30&type=section&id=12%20Inventories) As of 30 June 2023, the Group's total inventories were RMB 87,685 thousand, a significant increase from RMB 22,571 thousand as of 31 December 2022, primarily due to a substantial increase in raw material inventories, with an impairment provision for inventories of RMB 2,010 thousand Inventory Composition (RMB thousand) | Inventory Category | 30 June 2023 | 31 December 2022 | | :--------------- | :------------ | :------------- | | Raw materials | 71,963 | 8,771 | | Work in progress | 3,884 | 623 | | Finished goods | 13,848 | 14,214 | | Less: Impairment provision for inventories | (2,010) | (1,037) | | **Total** | **87,685** | **22,571** | - The impairment provision for inventories was **RMB 1,037 thousand** at the beginning of the period, increased by **RMB 2,010 thousand** during the period, and was **RMB 2,010 thousand** at the end of the period[139](index=139&type=chunk) [13 Trade Receivables](index=31&type=section&id=13%20Trade%20Receivables) As of 30 June 2023, total trade receivables were RMB 640,973 thousand, a decrease from RMB 692,387 thousand as of 31 December 2022, with the largest proportion of trade receivables due within one year, and the Group having transferred some receivables to factoring agents while retaining overdue payment and credit risk Trade Receivables (RMB thousand) | Item | 30 June 2023 | 31 December 2022 | | :--------------- | :------------ | :------------- | | Current trade receivables | 654,242 | 704,195 | | Less: Impairment provision | (13,269) | (11,808) | | **Current Net** | **640,973** | **692,387** | | Non-current retention receivables | 26,192 | 26,947 | | Less: Impairment provision | (1,330) | (1,553) | | **Non-current Net** | **24,862** | **25,394** | | **Total** | **665,835** | **717,781** | Ageing Analysis of Trade Receivables (RMB thousand) | Ageing | 30 June 2023 | 31 December 2022 | | :------- | :------------ | :------------- | | Within 1 year | 385,850 | 465,067 | | 1 to 2 years | 195,291 | 205,149 | | 2 to 3 years | 81,848 | 52,185 | | Over 3 years | 17,445 | 8,741 | | **Total** | **680,434** | **731,142** | - As at 30 June 2023, the carrying amount of trade receivables included receivables subject to factoring arrangements of **RMB 17,261,000**. The Group has transferred the related receivables to factoring agents but retained overdue payment and credit risk[141](index=141&type=chunk) [14 Prepayments, Deposits and Other Receivables](index=32&type=section&id=14%20Prepayments%2C%20Deposits%20and%20Other%20Receivables) As of 30 June 2023, total prepayments, deposits, and other receivables amounted to RMB 55,624 thousand, an increase from RMB 52,032 thousand as of 31 December 2022, primarily comprising prepayments for raw materials and operating expenses, and recoverable deductible VAT Prepayments, Deposits and Other Receivables (RMB thousand) | Item | 30 June 2023 | 31 December 2022 | | :------------------- | :------------ | :------------- | | Prepayments for raw materials and operating expenses | 29,056 | 25,527 | | Recoverable deductible VAT | 8,771 | 12,925 | | Rental receivables | 6,176 | 5,530 | | Refundable deposits | 5,294 | 4,682 | | Other receivables | 6,327 | 3,368 | | **Total** | **55,624** | **52,032** | [15 Cash and Bank Balances](index=33&type=section&id=15%20Cash%20and%20Bank%20Balances) As of 30 June 2023, the Group's total cash and bank balances were RMB 13,327 thousand, a decrease from RMB 17,483 thousand as of 31 December 2022, with restricted bank balances reduced to zero Cash and Bank Balances (RMB thousand) | Item | 30 June 2023 | 31 December 2022 | | :----------------- | :------------ | :------------- | | Cash on hand and at bank | 13,327 | 17,483 | | Restricted bank balances | — | 1 | | **Total** | **13,327** | **17,484** | - Restricted bank balances are bank deposits held and pledged for the issuance of bills payable[151](index=151&type=chunk) [16 Share Capital](index=33&type=section&id=16%20Share%20Capital) As of 30 June 2023, the Company's authorized share capital was 3,000,000,000 ordinary shares with a par value of HKD 0.01 each, totaling RMB 25,500 thousand, and issued share capital was 748,000,000 ordinary shares, totaling RMB 6,358 thousand, remaining unchanged from the beginning of the period Share Capital (RMB thousand) | Share Capital Category | Number of Ordinary Shares | Share Capital (HKD thousand) | Share Capital (RMB thousand) | | :------- | :------------ | :------------ | :---------------- | | Authorized | 3,000,000,000 | 30,000 | 25,500 | | Issued | 748,000,000 | 7,480 | 6,358 | [17 Reserves](index=33&type=section&id=17%20Reserves) As of 30 June 2023, the Group's total reserves amounted to RMB 364,659 thousand, including share premium, capital reserve, and statutory reserve, remaining unchanged from the beginning of the period Reserves (RMB thousand) | Reserve Category | Share Premium | Capital Reserve | Statutory Reserve | Total | | :------- | :------- | :------- | :------- | :------ | | As at 1 January 2023 to 30 June 2023 | 220,966 | 127,135 | 16,558 | 364,659 | | As at 1 January 2022 to 30 June 2022 | 220,966 | 127,135 | 16,558 | 364,659 | [18 Trade Payables](index=34&type=section&id=18%20Trade%20Payables) As of 30 June 2023, total trade payables were RMB 385,537 thousand, an increase from RMB 348,408 thousand as of 31 December 2022, with most trade payables due within one year Trade Payables (RMB thousand) | Item | 30 June 2023 | 31 December 2022 | | :----------- | :------------ | :------------- | | Trade payables | 385,537 | 348,408 | Ageing Analysis of Trade Payables (RMB thousand) | Ageing | 30 June 2023 | 31 December 2022 | | :------- | :------------ | :------------- | | Within one year | 328,619 | 325,543 | | One to two years | 48,408 | 19,158 | | Over two years | 8,510 | 3,707 | | **Total** | **385,537** | **348,408** | [19 Other Payables and Accrued Expenses](index=35&type=section&id=19%20Other%20Payables%20and%20Accrued%20Expenses) As of 30 June 2023, total other payables and accrued expenses amounted to RMB 93,208 thousand, a decrease from RMB 134,873 thousand as of 31 December 2022, primarily due to a reduction in amounts due to related parties Other Payables and Accrued Expenses (RMB thousand) | Item | 30 June 2023 | 31 December 2022 | | :------------------- | :------------ | :------------- | | Payables for purchase of property, plant and equipment | 37,811 | 52,091 | | Amounts due to related parties | 21,688 | 44,502 | | Employee benefit payables | 4,022 | 4,223 | | Payables for acquisition of subsidiaries | 3,000 | 4,500 | | Other taxes payable | 2,822 | 10,289 | | Others | 7,090 | 5,681 | | **Total** | **93,208** | **134,873** | [20 Borrowings](index=35&type=section&id=20%20Borrowings) As of 30 June 2023, the Group's total borrowings were RMB 451,635 thousand, comprising current borrowings of RMB 305,675 thousand and non-current borrowings of RMB 145,960 thousand, with most bank borrowings secured and guaranteed by subsidiaries, directors and their spouses, and an independent third-party credit guarantee company Total Borrowings (RMB thousand) | Borrowing Category | 30 June 2023 Current | 30 June 2023 Non-current | 30 June 2023 Total | 31 December 2022 Current | 31 December 2022 Non-current | 31 December 2022 Total | | :----------- | :---------------- | :------------------ | :---------------- | :----------------- | :------------------- | :----------------- | | Bank borrowings | 288,414 | 145,960 | 434,374 | 237,801 | 186,208 | 424,009 | | Factoring borrowings | 17,261 | — | 17,261 | 19,586 | — | 19,586 | | **Total Borrowings** | **305,675** | **145,960** | **451,635** | **257,387** | **186,208** | **443,595** | - The Group's secured bank borrowings as at 30 June 2023 were pledged by the Group's assets as set out in note 20(a), and guaranteed by three subsidiaries of the Group, Mr. Huang Wengui, Mr. Ye Zhijie and their spouses, and an independent third-party credit guarantee company[155](index=155&type=chunk) Borrowing Repayment Schedule (RMB thousand) | Repayment Period | 30 June 2023 | | :--------- | :------------ | | Within 1 year | 305,675 | | 1 to 2 years | 18,277 | | 2 to 3 years | 9,987 | | Over 3 years | 117,696 | | **Total** | **451,635** | [21 Lease Liabilities](index=37&type=section&id=21%20Lease%20Liabilities) As of 30 June 2023, the Group's current lease liabilities were RMB 1,227 thousand, primarily for land and building leases used as warehouses and factories Lease Liabilities (RMB thousand) | Lease Category | 30 June 2023 Current | 30 June 2023 Non-current | 30 June 2023 Total | | :----------------- | :---------------- | :------------------ | :---------------- | | Land and buildings used as warehouses and factories | 1,227 | — | 1,227 | - The Group leases land for its operations, and these liabilities are measured at the net present value of the lease payments outstanding over the lease term[177](index=177&type=chunk) [22 Commitments](index=38&type=section&id=22%20Commitments) As of 30 June 2023, the Group's capital commitments were RMB 133,009 thousand, mainly for property, plant and equipment, and irrevocable short-term operating lease commitments were RMB 396 thousand Capital Commitments (RMB thousand) | Commitment Category | 30 June 2023 | 31 December 2022 | | :----------------- | :------------ | :------------- | | Contracted but not provided for: Property, plant and equipment | 133,009 | 148,338 | Irrevocable Short-term Operating Leases (RMB thousand) | Lease Category | 30 June 2023 | 31 December 2022 | | :------- | :------------ | :------------- | | Warehouses | 396 | 2,060 | [23 Related Party Transactions](index=39&type=section&id=23%20Related%20Party%20Transactions) The Group engaged in related party transactions, including the repayment of shareholder advances from Mr. Ye Zhijie of RMB 22,814 thousand, with amounts due to Mr. Ye Zhijie totaling RMB 21,688 thousand as of 30 June 2023, and key management personnel compensation amounting to RMB 2,379 thousand Transactions with Related Parties (For the Six Months Ended June 30) | Transaction Item | 2023 (RMB thousand) | 2022 (RMB thousand) | | :------------------- | :------------------ | :------------------ | | Amounts from a shareholder — Mr. Ye Zhijie | — | 16,963 | | Repayment of amounts from a shareholder — Mr. Ye Zhijie | (22,814) | — | Balances with Related Parties (RMB thousand) | Balance Item | 30 June 2023 | 31 December 2022 | | :------------------- | :------------ | :------------- | | Amounts due to a related party — Mr. Ye Zhijie | 21,688 | 44,502 | - Key management personnel compensation for the six months ended 30 June 2023 was approximately **RMB 2,379,000** (2022: RMB 1,630,000)[180](index=180&type=chunk) [Corporate Governance and Other Information](index=39&type=section&id=Corporate%20Governance%20and%20Other%20Information) [Compliance with Corporate Governance Code](index=40&type=section&id=Compliance%20with%20Corporate%20Governance%20Code) The Board is committed to establishing sound corporate governance principles and confirms that for the six months ended 30 June 2023, the Company has applied the principles and complied with the code provisions of the Corporate Governance Code - The Board is committed to establishing sound corporate governance principles and practices and achieving high standards of corporate governance[182](index=182&type=chunk) - The Board has reviewed the Company's corporate governance practices and is satisfied that for the six months ended 30 June 2023, the Company has applied the principles and complied with the code provisions set out in the Corporate Governance Code[183](index=183&type=chunk) [Compliance with Model Code for Securities Transactions by Directors](index=40&type=section&id=Compliance%20with%20Model%20Code%20for%20Securities%20Transactions%20by%20Directors) The Company has adopted a code of conduct for directors' securities transactions, with terms no less exacting than the Model Code, and directors have confirmed compliance with the required standards of the Model Code and the relevant code of conduct after specific enquiry - The Company has adopted a code of conduct regarding securities transactions by directors (the terms of which are no less exacting than the required standards set out in the Model Code) as the code of conduct for directors' dealings in the Company's securities[183](index=183&type=chunk) - Following specific enquiry by the Company to all Directors, the Directors confirmed that they had complied with the required standards set out in the Model Code and the code of conduct for directors' dealings for the six months ended 30 June 2023[183](index=183&type=chunk) [Directors' and Chief Executive's Interests and/or Short Positions in Shares, Underlying Shares and Debentures of the Company and its Associated Corporations](index=41&type=section&id=Directors%27%20and%20Chief%20Executive%27s%20Interests%20and%2For%20Short%20Positions%20in%20Shares%2C%20Underlying%20Shares%20and%20Debentures%20of%20the%20Company%20and%20its%20Associated%20Corporations) As of 30 June 2023, several directors held interests in the company's shares, with Mr. Ye Zhijie holding 36.73% through a controlled corporation, Mr. Huang Wengui holding 16.25%, and other directors also holding beneficial interests Directors' Interests in the Company's Shares | Director | Nature of Interest | Number of Shares Held | Approximate Percentage of Interest in the Company's Issued Share Capital | | :--------- | :----------- | :----------------- | :--------------------------------- | | Mr. Ye Zhijie | Controlled corporation interest | 274,706,100 (L) | 36.73% | | Mr. Huang Wengui | Controlled corporation interest | 121,568,700 (L) | 16.25% | | Mr. Lai Quanshui | Beneficial interest | 30,000,000 (L) | 4.01% | | Mr. Huang Kaining | Beneficial interest | 6,000,000 (L) | 0.80% | | Mr. Qiu Limiao | Beneficial interest | 56,000 (L) | 0.01% | | Mr. Ye Dan | Beneficial interest | 50,000 (L) | 0.01% | - Mr. Ye Zhijie is the sole shareholder of Zhixin Investment Holdings Limited, which holds **274,706,100 shares**[196](index=196&type=chunk) - Mr. Huang Wengui is the sole shareholder of Yaohe Holdings Limited, which holds **121,568,700 shares**[185](index=185&type=chunk) [Substantial Shareholders' Interests and/or Short Positions in Shares and Underlying Shares of the Company](index=42&type=section&id=Substantial%20Shareholders%27%20Interests%20and%2For%20Short%20Positions%20in%20Shares%20and%20Underlying%20Shares%20of%20the%20Company) As of 30 June 2023, Zhixin Investment Holdings Limited and Ms. Hong Wei (spouse of Mr. Ye Zhijie) held 36.73% of the shares, Yaohe Holdings Limited and Ms. Lin Lingling (spouse of Mr. Huang Wengui) held 16.25%, Mr. Lai Yiyang held 7.82%, and Ms. Yang Min held 6.68% Substantial Shareholders' Long Positions in the Company's Shares | Name / Company Name | Nature of Interest | Number of Shares Held | Approximate Percentage of Interest in the Company's Issued Share Capital | | :----------------- | :------- | :----------------- | :--------------------------------- | | Zhixin Investment Holdings Limited | Beneficial interest | 274,706,100 | 36.73% | | Ms. Hong Wei | Spouse's interest | 274,706,100 | 36.73% | | Yaohe Holdings Limited | Beneficial interest | 121,568,700 | 16.25% | | Ms. Lin Lingling | Spouse's interest | 121,568,700 | 16.25% | | Mr. Lai Yiyang | Beneficial interest | 58,480,000 | 7.82% | | Ms. Yang Min | Beneficial interest | 49,980,000 | 6.68% | - Ms. Hong Wei is the spouse of Mr. Ye Zhijie; under the SFO, Ms. Hong Wei is deemed to be interested in all shares in which Mr. Ye Zhijie is deemed to be interested[192](index=192&type=chunk) - Ms. Lin Lingling is the spouse of Mr. Huang Wengui; under the SFO, Ms. Lin Lingling is deemed to be interested in all shares in which Mr. Huang Wengui is deemed to be interested[201](index=201&type=chunk) [Changes in Directors](index=43&type=section&id=Changes%20in%20Directors) Mr. Lai Quanshui has been appointed as an executive director and, together with Mr. Huang Wengui, Mr. Qiu Limiao, and Mr. Ye Dan, forms the Strategy Committee, with Mr. Lai serving as Chairman, effective 6 April 2023 - Mr. Lai Quanshui has been appointed as an executive director[203](index=203&type=chunk) - The Strategy Committee has been established, comprising four executive directors: Mr. Lai Quanshui, Mr. Huang Wengui, Mr. Qiu Limiao, and Mr. Ye Dan, with Mr. Lai serving as the Chairman of the Strategy Committee, effective 6 April 2023[203](index=203&type=chunk) [Directors' Interests in Competing Business](index=43&type=section&id=Directors%27%20Interests%20in%20Competing%20Business) For the six months ended 30 June 2023, no director had any interest in any business that competes or is likely to compete, directly or indirectly, with the Group's business, nor any conflict of interest with the Group - For the six months ended 30 June 2023, no director had any interest in any business that competes or is likely to compete, directly or indirectly, with the Group's business, nor any conflict of interest with the Group[204](index=204&type=chunk) [Interim Dividend](index=43&type=section&id=Interim%20Dividend) The Board does not recommend the payment of an interim dividend for the six months ended 30 June 2023 - The Board does not recommend the payment of an interim dividend for the six months ended 30 June 2023[210](index=210&type=chunk) [Review of Interim Financial Statements](index=43&type=section&id=Review%20of%20Interim%20Financial%20Statements) The unaudited condensed consolidated interim financial statements of the Company and its subsidiaries for the six months ended 30 June 2023 and this interim report have been reviewed by the Audit Committee - The unaudited condensed consolidated interim financial statements of the Company and its subsidiaries for the six months ended 30 June 2023 and this interim report have been reviewed by the Audit Committee[209](index=209&type=chunk) [Purchase, Sale or Redemption of the Company's Listed Securities](index=43&type=section&id=Purchase%2C%20Sale%20or%20Redemption%20of%20the%20Company%27s%20Listed%20Securities) For the six months ended 30 June 2023, neither the Company nor any of its subsidiaries purchased, sold, or redeemed any of the Company's listed securities - For the six months ended 30 June 2023, neither the Company nor any of its subsidiaries purchased, sold, or redeemed any of the Company's listed securities[195](index=195&type=chunk) [Glossary](index=43&type=section&id=Glossary) [Glossary](index=43&type=section&id=Glossary) This section provides definitions for key terms used in the interim report to ensure readers have a clear understanding of the report's content - In this interim report, unless the context otherwise requires, the following terms shall have the following meanings[212](index=212&type=chunk)