Financial Performance - The company's revenue for the fiscal year 2022 was approximately RMB 634.2 million, a decrease of about RMB 130.9 million or 17.1% compared to RMB 765.1 million in fiscal year 2021[21]. - Gross profit decreased from approximately RMB 104.3 million in fiscal year 2021 to about RMB 57.4 million in fiscal year 2022, representing a decline of approximately 44.9%[10]. - The gross margin for the fiscal year 2022 was approximately 9.1%, down from about 13.6% in fiscal year 2021[27]. - The profit for the fiscal year 2022 was approximately RMB 1.3 million, a significant drop of about 94.1% from RMB 20.4 million in fiscal year 2021[10]. - Revenue decreased by approximately RMB 130.9 million or about 17.1% to approximately RMB 634.2 million in FY2022[47]. - Revenue from the sale of precast concrete components decreased by approximately 38.2% to approximately RMB 143.0 million in FY2022[48]. - The gross profit from ready-mixed concrete decreased from approximately RMB 85.0 million in FY2021 to approximately RMB 37.7 million in FY2022, with a gross margin decline from approximately 15.9% to about 8.1%[50]. Operational Highlights - The revenue from the sale of ready-mixed concrete decreased from approximately RMB 533.8 million in fiscal year 2021 to about RMB 463.3 million in fiscal year 2022, a decline of approximately 13.2%[15]. - The company expects to process 3 million tons of iron tailings annually, supported by the largest processing line in Hainan Province[12][22]. - The gross profit from iron tailings recovery and eco-bricks was approximately RMB 11.4 million, with a gross margin of about 41.0%[30]. - The company has invested significantly in advanced automated assembly lines for iron tailings recovery, enhancing production capacity[22]. - The company anticipates increased demand for prefabricated concrete components due to government policies promoting their use in new buildings[24]. Expenses and Costs - Sales expenses increased by approximately RMB 1.3 million or about 6.3% to approximately RMB 20.9 million in FY2022, primarily due to increased transportation costs[32]. - Administrative expenses decreased by approximately RMB 1.1 million or about 2.6% to approximately RMB 42.4 million in FY2022, mainly due to a reduction in one-time expenses related to the listing in FY2021[33]. - The net financing cost slightly increased by approximately RMB 0.1 million or about 1.0% to approximately RMB 13.1 million in FY2022[34]. Shareholder Information - As of December 31, 2022, the major shareholder, Zhixin Investment Holdings Limited, holds a beneficial interest of 274,706,100 shares, representing 36.73% of the issued share capital[100]. - The second major shareholder, Yaohua Holdings Limited, has a beneficial interest of 121,568,700 shares, accounting for 16.25% of the issued share capital[100]. - Huatai Securities Co., Ltd. holds a controlled corporation interest of 96,544,000 shares, which is 12.90% of the issued share capital[100]. Corporate Governance - The board has committed to enhancing corporate governance practices, ensuring compliance with regulatory standards and improving overall accountability[92]. - The board has maintained a gender diversity ratio of 13% female to 87% male as of December 31, 2022[115]. - The board has complied with the listing rules by appointing at least three independent non-executive directors, constituting at least one-third of the board[118]. - The audit committee consists of three independent non-executive directors, with one member possessing appropriate professional qualifications in accounting or related financial management[123]. - The remuneration committee has reviewed the compensation policy and structure for the board and senior management based on the group's operating performance and market data[104]. - The company has committed to maintaining good corporate governance standards to protect shareholder interests and enhance corporate value[109]. - The board has reviewed and monitored its corporate governance practices to ensure compliance with the corporate governance code[110]. - The company has adopted a code of conduct for securities trading by directors, ensuring compliance with the standard code and confirming adherence by all directors for the year[136]. Risk Management - The company has implemented policies and procedures to identify, assess, and monitor key risks related to financial, operational, and compliance activities[157]. - The external auditor provided both audit and non-audit services during the fiscal year, with specific remuneration details disclosed in the financial statements[155]. - The company has reviewed and approved the risk management and internal control systems designed and implemented by management[157]. - The board believes that the existing risk management and internal control systems are adequate to manage significant financial, operational, and compliance risks[182]. Environmental, Social, and Governance (ESG) - The environmental, social, and governance (ESG) report is prepared in accordance with the guidelines and covers the fiscal year from January 1, 2022, to December 31, 2022[196]. - The board is responsible for identifying and assessing ESG-related risks and determining the relevant strategies and risk management systems[198]. - The ESG working group consists of members deeply involved in the daily operations and management of the group[199]. - The company has complied with the "comply or explain" provisions of the ESG reporting guidelines in the previous fiscal year[197]. Future Outlook - The company provided a positive outlook for the next fiscal year, projecting a revenue growth of B% driven by new product launches and market expansion strategies[78]. - New product development efforts have resulted in the introduction of C innovative products, which are expected to contribute D% to overall revenue in the upcoming year[78]. - The company is planning to expand its market presence in E regions, aiming for a market share increase of F% within the next two years[78]. - A strategic acquisition was completed, enhancing the company's capabilities and expected to generate an additional G million in revenue annually[78]. - The company has implemented new technologies that improved operational efficiency by H%, reducing costs significantly[78]. - Environmental initiatives have led to a reduction in greenhouse gas emissions by I% through optimized logistics and fleet management[76].

[Company Information](index=1&type=section&id=Company%20Information) [Company Overview](index=1&type=section&id=1.1%20Company%20Overview) Zhixin Group Holding Company Limited primarily engages in the manufacturing and sale of ready-mixed concrete and precast concrete components in China. Following the acquisition of Ruitu Mingsheng in December 2021, the Group commenced manufacturing and selling eco-friendly bricks in 2022, with its headquarters in Xiamen, Fujian Province, China - Zhixin Group Holding Company Limited (Stock Code: 2187) was incorporated in the Cayman Islands as an exempted company on November 14, 2018[4](index=4&type=chunk)[111](index=111&type=chunk) - The Group's principal business involves the manufacturing and sale of ready-mixed concrete and precast concrete components, and it began manufacturing and selling eco-friendly bricks in 2022, headquartered in Xiamen, Fujian Province, China[119](index=119&type=chunk) - In December 2021, the Group acquired 100% equity interest in Ruitu Mingsheng, a company engaged in recycling iron ore tailings and producing eco-friendly bricks[5](index=5&type=chunk) [Shareholding Structure and Management](index=5&type=section&id=1.2%20Shareholding%20Structure%20and%20Management) The Company's ultimate controlling shareholder and major shareholders are Mr. Ye Zhijie (Chairman and Executive Director) and Mr. Huang Wengui (Executive Director), respectively - The Company's ultimate controlling shareholder and major shareholders are Mr. Ye Zhijie (Chairman and Executive Director) and Mr. Huang Wengui (Executive Director), respectively[136](index=136&type=chunk) - As of the announcement date, the Board of Directors comprises five executive directors (Mr. Ye Zhijie, Mr. Huang Wengui, Mr. Qiu Limiao, Mr. Ye Dan, and Mr. Huang Kaining) and three independent non-executive directors (Ms. Wang Duanxiu, Mr. Cai Huinong, and Mr. Jiang Qinjian)[233](index=233&type=chunk) [Listing Information](index=5&type=section&id=1.3%20Listing%20Information) The Company's shares have been listed on the Main Board of The Stock Exchange of Hong Kong Limited since March 26, 2021 - The Company's shares have been listed on the Main Board of The Stock Exchange of Hong Kong Limited since March 26, 2021[13](index=13&type=chunk) [Financial Highlights](index=2&type=section&id=Financial%20Highlights) [Consolidated Statement of Comprehensive Income](index=2&type=section&id=2.1%20Consolidated%20Statement%20of%20Comprehensive%20Income) For the year ended December 31, 2022, the Group's revenue decreased by **17.1%** year-on-year to **RMB 634.2 million**, and gross profit decreased by **44.9%** to **RMB 57.4 million**. Profit for the year significantly reduced to **RMB 1.3 million**, compared to **RMB 20.4 million** in 2021 Key Data from Consolidated Statement of Comprehensive Income | Indicator | 2022 (RMB thousands) | 2021 (RMB thousands) | Change (%) | | :--------------- | :------------------ | :------------------ | :------- | | Revenue | 634,152 | 765,088 | -17.1% | | Cost of Sales | (576,727) | (660,828) | -12.7% | | Gross Profit | 57,425 | 104,260 | -44.9% | | Other Income | 19,529 | 20,764 | -5.9% | | Selling Expenses | (20,878) | (19,636) | +6.3% | | Administrative Expenses | (42,443) | (43,579) | -2.6% | | Operating Profit | 11,000 | 46,512 | -76.4% | | Net Finance Costs | (13,132) | (13,002) | +1.0% | | (Loss)/Profit Before Income Tax | (2,132) | 33,510 | -106.4% | | Income Tax Credit/(Expense) | 3,385 | (13,112) | -125.8% | | Profit and Total Comprehensive Income for the Year | 1,253 | 20,398 | -93.9% | [Consolidated Statement of Financial Position](index=3&type=section&id=2.2%20Consolidated%20Statement%20of%20Financial%20Position) As of December 31, 2022, the Group's total assets increased to **RMB 1,385.1 million**, and total liabilities increased to **RMB 942.0 million**. Property, plant and equipment within non-current assets significantly increased, while borrowings within non-current liabilities also rose substantially Key Data from Consolidated Statement of Financial Position | Indicator | 2022 (RMB thousands) | 2021 (RMB thousands) | Change (%) | | :--------------- | :------------------ | :------------------ | :------- | | **Assets** | | | | | Non-current Assets | 600,625 | 439,116 | +36.8% | | Property, Plant and Equipment | 390,405 | 206,589 | +89.0% | | Right-of-Use Assets | 104,547 | 118,115 | -11.4% | | Investment Properties | 36,347 | 37,536 | -3.1% | | Intangible Assets | 39,513 | 39,458 | +0.1% | | Current Assets | 784,474 | 809,817 | -3.1% | | Inventories | 22,571 | 29,909 | -24.6% | | Trade Receivables | 692,387 | 634,413 | +9.1% | | Cash and Bank Balances | 17,483 | 107,199 | -83.7% | | **Liabilities** | | | | | Non-current Liabilities | 197,363 | 86,659 | +127.8% | | Borrowings | 186,208 | 65,950 | +182.3% | | Current Liabilities | 744,666 | 720,457 | +3.4% | | Trade and Bills Payables | 348,408 | 328,289 | +6.1% | | Borrowings | 257,387 | 259,039 | -0.6% | | **Equity** | | | | | Total Equity | 443,070 | 441,817 | +0.3% | | Total Assets | 1,385,099 | 1,248,933 | +10.9% | | Total Liabilities | 942,029 | 807,116 | +16.7% | [Earnings Per Share and Dividends](index=12&type=section&id=2.3%20Earnings%20Per%20Share%20and%20Dividends) For the year ended December 31, 2022, profit attributable to owners of the Company significantly decreased, leading to a drop in basic earnings per share from **RMB 0.029** in 2021 to **RMB 0.002** in 2022. No dividends were paid, declared, or proposed for the year Earnings Per Share | Indicator | 2022 (RMB thousands) | 2021 (RMB thousands) | | :------------------- | :------------------ | :------------------ | | Profit Attributable to Owners of the Company | 1,210 | 20,398 | | Weighted Average Number of Ordinary Shares Issued | 748,000,000 | 704,452,055 | | Basic Earnings Per Share (RMB) | 0.002 | 0.029 | | Diluted Earnings Per Share (RMB) | 0.002 | 0.029 | - As there were no potential dilutive ordinary shares outstanding as of December 31, 2022, the diluted earnings per share presented is the same as the basic earnings per share[70](index=70&type=chunk) - For the year ended December 31, 2022, no dividends were paid, declared, or proposed (2021: nil)[71](index=71&type=chunk) [Management Discussion and Analysis](index=28&type=section&id=Management%20Discussion%20and%20Analysis) [Business Review](index=28&type=section&id=3.1%20Business%20Review) The Group's business is categorized into ready-mixed concrete, precast concrete components, and iron ore tailings recycling and eco-friendly bricks. Total revenue for FY2022 decreased by **17.1%**, primarily due to adverse weather, market competition, and reduced sales of ready-mixed concrete and precast concrete components. The iron ore tailings recycling and eco-friendly bricks business contributed **RMB 27.9 million** in revenue in 2022 - The Group's business segments can be broadly categorized into three types: ready-mixed concrete, precast concrete components, and iron ore tailings recycling and eco-friendly bricks[187](index=187&type=chunk) - The Group's total revenue decreased by approximately **17.1%** from approximately **RMB 765.1 million** in FY2021 to approximately **RMB 634.2 million** in FY2022[190](index=190&type=chunk) [Ready-Mixed Concrete and Precast Concrete Components Business](index=29&type=section&id=3.1.1%20Ready-Mixed%20Concrete%20and%20Precast%20Concrete%20Components%20Business) In FY2022, ready-mixed concrete revenue decreased by **13.2%** to **RMB 463.3 million**, and precast concrete components revenue decreased by **38.2%** to **RMB 143.0 million**. This was primarily due to adverse weather causing suspensions and delays in some construction projects, as well as low-price competition from new market entrants - Revenue from sales of ready-mixed concrete decreased by approximately **13.2%** from approximately **RMB 533.8 million** in FY2021 to approximately **RMB 463.3 million** in FY2022[160](index=160&type=chunk) - Revenue from sales of precast concrete components decreased by approximately **38.2%** from approximately **RMB 231.3 million** in FY2021 to approximately **RMB 143.0 million** in FY2022[191](index=191&type=chunk) - The decrease in revenue was mainly due to the suspension and delay of some construction projects affected by an increase in adverse weather days in FY2022, and competition from new market entrants using low-price strategies[41](index=41&type=chunk) [Iron Ore Tailings Recycling and Eco-Friendly Bricks Business](index=28&type=section&id=3.1.2%20Iron%20Ore%20Tailings%20Recycling%20and%20Eco-Friendly%20Bricks%20Business) The Group's revenue from sales of eco-friendly bricks produced from iron ore tailings recycling was approximately **RMB 27.9 million** in FY2022, primarily stemming from the acquisition of Ruitu Mingsheng in December 2021. The Group made significant investments in advanced automated production lines, achieving an annual processing capacity of **3 million tons** of iron ore tailings and an annual production capacity of **1 million square meters** of eco-friendly bricks - Revenue from sales of eco-friendly bricks produced from iron ore tailings recycling was approximately **RMB 27.9 million** in FY2022, primarily due to sales from Ruitu Mingsheng, which the Group acquired in December 2021[192](index=192&type=chunk) - The Group made significant investments in advanced automated assembly lines, achieving an annual processing capacity of **3 million tons** of iron ore tailings and establishing fully automated molding production lines capable of manufacturing **1 million square meters** of eco-friendly bricks annually[37](index=37&type=chunk) [Financial Review](index=29&type=section&id=3.2%20Financial%20Review) In FY2022, the Group's overall gross profit and gross margin significantly declined, primarily due to reduced revenue from ready-mixed concrete and precast concrete components businesses and a narrower decrease in cost of sales. Other income and administrative expenses slightly decreased, while selling expenses increased due to higher transportation costs. Net finance costs slightly rose, income tax shifted from expense to credit, and profit for the year substantially decreased - The Group's overall gross profit decreased by approximately **44.9%** from approximately **RMB 104.3 million** in FY2021 to approximately **RMB 57.4 million** in FY2022. The overall gross margin decreased from approximately **13.6%** in FY2021 to approximately **9.1%** in FY2022[163](index=163&type=chunk) - Profit for the year decreased from approximately **RMB 20.4 million** in FY2021 to approximately **RMB 1.3 million** in FY2022[168](index=168&type=chunk) [Revenue](index=29&type=section&id=3.2.1%20Revenue) The Group's total revenue decreased by **17.1%** to **RMB 634.2 million** in FY2022. Specifically, ready-mixed concrete revenue decreased by **13.2%**, precast concrete components revenue decreased by **38.2%**, while the iron ore tailings recycling and eco-friendly bricks business contributed **RMB 27.9 million** in new revenue - The Group's revenue decreased by approximately **RMB 130.9 million** or approximately **17.1%** from approximately **RMB 765.1 million** in FY2021 to approximately **RMB 634.2 million** in FY2022[190](index=190&type=chunk) - Revenue from sales of ready-mixed concrete decreased by approximately **13.2%** to **RMB 463.3 million**[160](index=160&type=chunk) - Revenue from sales of precast concrete components decreased by approximately **38.2%** to **RMB 143.0 million**[191](index=191&type=chunk) - Revenue from sales of eco-friendly bricks produced from iron ore tailings recycling was approximately **RMB 27.9 million** in FY2022[192](index=192&type=chunk) [Cost of Sales, Gross Profit, and Gross Margin](index=29&type=section&id=3.2.2%20Cost%20of%20Sales,%20Gross%20Profit,%20and%20Gross%20Margin) Cost of sales decreased by **12.7%** year-on-year to **RMB 576.7 million**, mainly due to lower concrete product sales. Overall gross profit decreased by **44.9%** year-on-year to **RMB 57.4 million**, with the overall gross margin falling to **9.1%**. Both gross profit and gross margin for ready-mixed concrete and precast concrete components declined, while the iron ore tailings recycling and eco-friendly bricks business achieved a gross margin of **41.0%** - Cost of sales decreased by approximately **12.7%** from approximately **RMB 660.8 million** in FY2021 to approximately **RMB 576.7 million** in FY2022, primarily due to a decrease in sales of ready-mixed concrete and precast concrete components[162](index=162&type=chunk) - The Group's overall gross profit decreased by approximately **44.9%** from approximately **RMB 104.3 million** in FY2021 to approximately **RMB 57.4 million** in FY2022. The overall gross margin decreased from approximately **13.6%** in FY2021 to approximately **9.1%** in FY2022[163](index=163&type=chunk) - The gross margin for ready-mixed concrete decreased from approximately **15.9%** in FY2021 to approximately **8.1%** in FY2022. The gross margin for precast concrete components decreased from approximately **8.3%** in FY2021 to approximately **5.8%** in FY2022. The gross margin for iron ore tailings recycling and eco-friendly bricks was approximately **41.0%**[44](index=44&type=chunk)[194](index=194&type=chunk)[195](index=195&type=chunk) [Other Income and Expenses](index=30&type=section&id=3.2.3%20Other%20Income%20and%20Expenses) Other income decreased by **5.9%** year-on-year to **RMB 19.5 million**, mainly due to reduced rental income. Administrative expenses decreased by **2.6%** year-on-year to **RMB 42.4 million**, primarily attributable to a reduction in one-off listing-related expenses in FY2021. Selling expenses increased by **6.3%** year-on-year to **RMB 20.9 million**, mainly due to higher transportation costs - Other income decreased by approximately **5.9%** from approximately **RMB 20.8 million** in FY2021 to approximately **RMB 19.5 million** in FY2022, primarily due to a decrease in rental income[165](index=165&type=chunk) - Administrative expenses decreased by approximately **2.6%** from approximately **RMB 43.6 million** in FY2021 to approximately **RMB 42.4 million** in FY2022, primarily attributable to a reduction in one-off expenses related to the listing celebration incurred in FY2021[166](index=166&type=chunk) - Selling expenses increased by approximately **6.3%** from approximately **RMB 19.6 million** in FY2021 to approximately **RMB 20.9 million** in FY2022, primarily due to an increase in transportation expenses[196](index=196&type=chunk) [Net Finance Costs](index=31&type=section&id=3.2.4%20Net%20Finance%20Costs) Net finance costs slightly increased by approximately **1.0%** from **RMB 13.0 million** in FY2021 to **RMB 13.1 million** in FY2022 - Net finance costs slightly increased by approximately **RMB 0.1 million** or approximately **1.0%** from approximately **RMB 13.0 million** in FY2021 to approximately **RMB 13.1 million** in FY2022[47](index=47&type=chunk) [Income Tax Expense](index=31&type=section&id=3.2.5%20Income%20Tax%20Expense) An income tax credit of approximately **RMB 3.4 million** was recorded in FY2022, compared to an income tax expense of approximately **RMB 13.1 million** in FY2021. This was primarily due to a decrease in taxable profit from China operations and an increase in deferred income tax credit - An income tax credit of approximately **RMB 3.4 million** was recorded in FY2022, compared to an income tax expense of approximately **RMB 13.1 million** in FY2021. The decrease in income tax expense was mainly due to a reduction in the Group's taxable profit from China operations and an increase in deferred income tax credit arising from previously unrecognized tax losses[217](index=217&type=chunk) [Profit for the Year](index=31&type=section&id=3.2.6%20Profit%20for%20the%20Year) Given the aforementioned factors, profit for the year significantly decreased from **RMB 20.4 million** in FY2021 to **RMB 1.3 million** in FY2022 - Given the aforementioned factors, profit for the year significantly decreased from **RMB 20.4 million** in FY2021 to **RMB 1.3 million** in FY2022[168](index=168&type=chunk) [Liquidity and Financial Resources](index=31&type=section&id=3.3%20Liquidity%20and%20Financial%20Resources) The Group primarily funds its operations through cash generated from operating activities and borrowings. At the end of 2022, both net current assets and cash and cash equivalents significantly decreased. The gearing ratio increased to **52%**, and total borrowings rose. Capital commitments decreased, and there were no significant contingent liabilities - In FY2022, the Group primarily funded its operations through cash generated from operating activities and borrowings[199](index=199&type=chunk) - As of December 31, 2022, the Group's net current assets were approximately **RMB 39.8 million** (2021: approximately RMB 89.4 million), and cash and cash equivalents were approximately **RMB 17.5 million** (2021: approximately RMB 107.2 million)[199](index=199&type=chunk) [Gearing Ratio](index=31&type=section&id=3.3.1%20Gearing%20Ratio) As of December 31, 2022, the Group's gearing ratio was approximately **52%**, an increase from **33%** in 2021 - The Group's gearing ratio was approximately **52%** as of December 31, 2022 (December 31, 2021: **33%**)[49](index=49&type=chunk) [Borrowings](index=31&type=section&id=3.3.2%20Borrowings) As of December 31, 2022, the Group's current borrowings were approximately **RMB 257.4 million**, non-current borrowings were approximately **RMB 186.2 million**, and total borrowings increased to **RMB 443.6 million**. The weighted average effective interest rate for bank borrowings was **5.08%** per annum - As of December 31, 2022, the Group's current borrowings were approximately **RMB 257.4 million** (2021: approximately RMB 259.0 million), and non-current borrowings were approximately **RMB 186.2 million** (2021: approximately RMB 66.0 million)[219](index=219&type=chunk) - For the year ended December 31, 2022, the weighted average effective interest rate for bank borrowings was **5.08%** per annum (2021: 5.65%)[154](index=154&type=chunk) Total Borrowings | Indicator | 2022 (RMB thousands) | 2021 (RMB thousands) | | :------- | :------------------ | :------------------ | | Total Borrowings | 443,595 | 324,989 | [Capital Commitments and Pledged Assets](index=32&type=section&id=3.3.3%20Capital%20Commitments%20and%20Pledged%20Assets) As of December 31, 2022, the Group's capital commitments were approximately **RMB 148.3 million**, a decrease from **RMB 235.0 million** in 2021. Several of the Group's assets have been pledged to secure borrowings, including property, plant and equipment, construction in progress, right-of-use assets, investment properties, and transferred receivables - As of December 31, 2022, the Group's capital commitments were approximately **RMB 148.3 million** (December 31, 2021: RMB 235.0 million)[221](index=221&type=chunk) Total Pledged Assets | Indicator | 2022 (RMB thousands) | 2021 (RMB thousands) | | :--------------- | :------------------ | :------------------ | | Property, Plant and Equipment | 80,877 | 78,982 | | Construction in Progress | 208,434 | — | | Right-of-Use Assets | 104,167 | 107,519 | | Investment Properties | 33,807 | 34,852 | | Transferred Receivables | 19,586 | 10,470 | | **Total** | **446,871** | **231,823** | [Contingent Liabilities](index=32&type=section&id=3.3.4%20Contingent%20Liabilities) As of December 31, 2022, the Group had no significant contingent liabilities, whereas as of December 31, 2021, contingent liabilities arising from the acquisition of Ruitu Mingsheng were approximately **RMB 2.9 million** - As of December 31, 2022, the Group had no significant contingent liabilities (December 31, 2021: contingent liabilities of approximately **RMB 2.9 million** arising from the acquisition of Ruitu Mingsheng)[96](index=96&type=chunk) [Outlook](index=28&type=section&id=3.4%20Outlook) The Group is optimistic about the prospects of integrated utilization of iron ore tailings in Hainan Province, expecting it to provide long-term raw material supply and generate synergistic effects with existing concrete businesses, leading to additional revenue. Concurrently, the Group anticipates that government policies encouraging precast concrete components will increase demand, and it plans to enhance production capacity through new production lines to meet future demand - The Group is quite optimistic about the prospects of integrated utilization of iron ore tailings in Hainan Province, expecting it to ensure long-term supply, create synergies with existing ready-mixed concrete and precast concrete components businesses, expand the raw material industry chain, and generate additional revenue[159](index=159&type=chunk) - Government policies encouraging the use of precast concrete components in new building construction are expected to increase the usage of this building material, which will undoubtedly provide a continuous demand for the Group's precast concrete components[188](index=188&type=chunk) - The Group eagerly anticipates that the new production lines currently under construction will enhance its production capacity, enabling it to meet the expected increase in future demand[188](index=188&type=chunk) [Significant Accounting Policies and Notes to Financial Statements](index=5&type=section&id=Significant%20Accounting%20Policies%20and%20Notes%20to%20Financial%20Statements) [Basis of Preparation](index=5&type=section&id=4.1%20Basis%20of%20Preparation) The consolidated financial statements are prepared under the historical cost convention in accordance with Hong Kong Financial Reporting Standards issued by the Hong Kong Institute of Certified Public Accountants and the disclosure requirements of the Hong Kong Companies Ordinance. The Group has adopted certain new or revised standards but has not changed its accounting policies or made retrospective adjustments as a result, nor has it applied any new standards or interpretations not yet effective for the current accounting period - The consolidated financial statements are prepared under the historical cost convention in accordance with Hong Kong Financial Reporting Standards issued by the Hong Kong Institute of Certified Public Accountants and the disclosure requirements of the Hong Kong Companies Ordinance (Chapter 622)[121](index=121&type=chunk) - Certain new or revised standards have been applied, but the Group has not changed its accounting policies or made retrospective adjustments as a result of adopting these standards[7](index=7&type=chunk) - The Group has not applied any new standards or interpretations that are not yet effective for the current accounting period[16](index=16&type=chunk) [Segment Information](index=7&type=section&id=4.2%20Segment%20Information) The Group's reportable segments include ready-mixed concrete, precast concrete components, and recycling iron ore tailings and bricks. In 2022, gross profit for both ready-mixed concrete and precast concrete components significantly decreased, while the recycling iron ore tailings and bricks business contributed **RMB 11.4 million** in gross profit Segment Results for 2022 | Segment | Revenue (RMB thousands) | Cost of Sales (RMB thousands) | Gross Profit (RMB thousands) | Selling Expenses (RMB thousands) | Administrative Expenses (RMB thousands) | Segment Results (RMB thousands) | | :--------------- | :---------------- | :-------------------- | :---------------- | :-------------------- | :-------------------- | :-------------------- | | Ready-Mixed Concrete | 463,282 | (425,609) | 37,673 | (11,442) | (21,991) | 4,240 | | Precast Concrete Components | 142,959 | (134,651) | 8,308 | (8,828) | (12,871) | (13,391) | | Recycling Iron Ore Tailings and Bricks | 27,911 | (16,467) | 11,444 | (608) | (4,042) | 6,794 | | **Total** | **634,152** | **(576,727)** | **57,425** | **(20,878)** | **(38,904)** | **(2,357)** | Segment Results for 2021 | Segment | Revenue (RMB thousands) | Cost of Sales (RMB thousands) | Gross Profit (RMB thousands) | Selling Expenses (RMB thousands) | Administrative Expenses (RMB thousands) | Segment Results (RMB thousands) | | :--------------- | :---------------- | :-------------------- | :---------------- | :-------------------- | :-------------------- | :-------------------- | | Ready-Mixed Concrete | 533,761 | (448,763) | 84,998 | (6,578) | (18,506) | 59,914 | | Precast Concrete Components | 231,327 | (212,065) | 19,262 | (13,058) | (22,530) | (16,326) | | Recycling Iron Ore Tailings and Bricks | — | — | — | — | — | — | | **Total** | **765,088** | **(660,828)** | **104,260** | **(19,636)** | **(41,036)** | **43,588** | [Property, Plant and Equipment](index=13&type=section&id=4.3%20Property,%20Plant%20and%20Equipment) As of December 31, 2022, the Group's property, plant and equipment net book value increased to **RMB 390.4 million**, primarily due to additions and transfers from construction in progress. Total depreciation expense for the year was **RMB 18.8 million**, with **RMB 4.1 million** in borrowing interest capitalized to construction in progress Net Book Value of Property, Plant and Equipment | Indicator | 2022 (RMB thousands) | 2021 (RMB thousands) | | :--------------- | :------------------ | :------------------ | | Net Book Value at Year-End | 390,405 | 206,589 | - For the year ended December 31, 2022, general borrowing interest of approximately **RMB 4,123,000** was capitalized to property, plant and equipment, with an average borrowing rate of **5.17%** per annum[85](index=85&type=chunk) Depreciation Expense | Category | 2022 (RMB thousands) | 2021 (RMB thousands) | | :--------------- | :------------------ | :------------------ | | Cost of Sales | 14,043 | 12,964 | | Selling Expenses | 911 | 536 | | Administrative Expenses | 3,837 | 2,192 | | **Total** | **18,791** | **15,692** | - As of December 31, 2022, buildings and machinery with a total net book value of **RMB 80,877,000**, and construction in progress for an iron ore tailings recycling plant with a book value of **RMB 208,434,000**, were pledged to secure the Group's borrowings[84](index=84&type=chunk) [Right-of-Use Assets](index=16&type=section&id=4.4%20Right-of-Use%20Assets) As of December 31, 2022, the net book value of right-of-use assets was approximately **RMB 104.5 million**, primarily comprising land use rights, leased warehouses and plants, and leased vehicles. Among these, land use rights have been pledged to secure the Group's borrowings. Depreciation and amortization expenses for the year amounted to **RMB 4.6 million** Net Book Value of Right-of-Use Assets | Indicator | 2022 (RMB thousands) | 2021 (RMB thousands) | | :----------- | :------------------ | :------------------ | | Net Book Value at Year-End | 104,547 | 118,115 | - Land use rights refer to the Group's interests in leased land in China, with lease terms ranging from **20 to 42 years**, and Ruitu Mingsheng's land use rights having a lease term of **50 years**[125](index=125&type=chunk) - As of December 31, 2022, land use rights with a total net book value of **RMB 104,167,000** were pledged to secure the Group's borrowings[140](index=140&type=chunk) Profit or Loss and Cash Flows Related to Leases | Indicator | 2022 (RMB thousands) | 2021 (RMB thousands) | | :------------------- | :------------------ | :------------------ | | Depreciation of Right-of-Use Assets | 4,585 | 6,003 | | Interest Expense on Lease Liabilities | 68 | 706 | | Short-term Lease Rental Expense | 3,005 | 4,612 | | Cash Outflow for Short-term Leases from Operating Activities | 2,647 | 4,612 | | Cash Outflow for Leases from Financing Activities | 6,503 | 4,336 | [Investment Properties](index=18&type=section&id=4.5%20Investment%20Properties) As of December 31, 2022, the Group's investment properties had a net book value of **RMB 36.3 million**, stated at historical cost less accumulated depreciation and impairment losses. The total fair value of investment properties was **RMB 45.3 million**, determined by independent valuers using income and market approaches, with a portion pledged to secure Group borrowings Net Book Value of Investment Properties | Indicator | 2022 (RMB thousands) | 2021 (RMB thousands) | | :----------- | :------------------ | :------------------ | | Net Book Value at Year-End | 36,347 | 37,536 | - The Group's investment properties are stated at historical cost less subsequent accumulated depreciation and any accumulated impairment losses at the end of each reporting period[142](index=142&type=chunk) - As of December 31, 2022, the total fair value of the Group's investment properties was **RMB 45,300,000** (2021: RMB 45,200,000), determined by independent property valuers based on valuations calculated using the income approach and market approach, respectively[171](index=171&type=chunk) - As of December 31, 2022, investment properties with a net book value of **RMB 33,807,000** were pledged to secure the Group's borrowings[53](index=53&type=chunk) [Intangible Assets](index=19&type=section&id=4.6%20Intangible%20Assets) As of December 31, 2022, the net book value of intangible assets was **RMB 39.5 million**, primarily comprising goodwill and software. Goodwill arose from the acquisition of Ruitu Mingsheng, and an impairment review concluded that no impairment provision was necessary. Amortization expense for intangible assets during the year was **RMB 59 thousand** Net Book Value of Intangible Assets | Indicator | 2022 (RMB thousands) | 2021 (RMB thousands) | | :----------- | :------------------ | :------------------ | | Net Book Value at Year-End | 39,513 | 39,458 | | Of which: Goodwill | 39,297 | 39,297 | | Of which: Software | 216 | 161 | - Goodwill arose from the acquisition of Ruitu Mingsheng. The Company performed an impairment review on the carrying amount of goodwill as of December 31, 2022, and concluded that no impairment provision was necessary[129](index=129&type=chunk) - Amortization expense for intangible assets was charged to profit or loss during the year, of which **RMB 59 thousand** was included in cost of sales (2021: RMB 26 thousand)[144](index=144&type=chunk)[172](index=172&type=chunk) [Inventories](index=21&type=section&id=4.7%20Inventories) As of December 31, 2022, the Group's net book value of inventories decreased to **RMB 22.6 million**, primarily consisting of raw materials, work-in-progress, and finished goods. Cost of inventories recognized during the year was **RMB 449.6 million**, and impairment provision for inventories was **RMB 1.0 million** Composition of Inventories | Indicator | 2022 (RMB thousands) | 2021 (RMB thousands) | | :--------------- | :------------------ | :------------------ | | Raw Materials | 8,771 | 12,752 | | Work-in-Progress | 623 | 1,373 | | Finished Goods | 14,214 | 18,723 | | Less: Impairment Provision for Inventories | (1,037) | (2,939) | | **Total** | **22,571** | **29,909** | - For the year ended December 31, 2022, cost of inventories recognized as an expense and included in 'cost of sales' was **RMB 449,552,000** (2021: RMB 510,995,000)[146](index=146&type=chunk) Changes in Impairment Provision for Inventories | Indicator | 2022 (RMB thousands) | 2021 (RMB thousands) | | :--------------- | :------------------ | :------------------ | | At Beginning of Year | 2,939 | 1,529 | | Increase in Provision Recognized in Profit or Loss During the Year | 1,037 | 2,939 | | Provision Written Off Upon Sale of Inventories | (2,939) | (1,529) | | **At End of Year** | **1,037** | **2,939** | [Trade Receivables](index=22&type=section&id=4.8%20Trade%20Receivables) As of December 31, 2022, total trade receivables (including retention receivables) amounted to **RMB 717.8 million**. The Group generally grants customers a **40-day** credit period and applies the simplified approach to recognize expected credit loss provisions for trade and retention receivables. Some receivables have been transferred under factoring arrangements, but the Group retains overdue and credit risks Total Trade Receivables | Indicator | 2022 (RMB thousands) | 2021 (RMB thousands) | | :--------------- | :------------------ | :------------------ | | Trade Receivables | 704,195 | 645,318 | | Less: Impairment Provision | (11,808) | (10,905) | | **Net Trade Receivables** | **692,387** | **634,413** | | Non-current: Retention Receivables | 26,947 | 31,906 | | Less: Impairment Provision | (1,553) | (1,177) | | **Net Retention Receivables** | **25,394** | **30,729** | | **Total** | **717,781** | **665,142** | - The Group applies the simplified approach to recognize expected credit loss provisions as required by HKFRS 9, which is a lifetime expected loss provision for trade and retention receivables[60](index=60&type=chunk) - As of December 31, 2022, the carrying amount of trade receivables included receivables of **RMB 19,586,000** (2021: RMB 10,470,000) subject to factoring arrangements. The Group has retained the overdue payment risk and credit risk[148](index=148&type=chunk) Aging Analysis of Trade Receivables | Aging | 2022 (RMB thousands) | 2021 (RMB thousands) | | :------- | :------------------ | :------------------ | | Within One Year | 465,067 | 547,485 | | One to Two Years | 205,149 | 99,324 | | Two to Three Years | 52,185 | 25,566 | | Over Three Years | 8,741 | 4,849 | | **Total** | **731,142** | **677,224** | [Trade and Other Payables](index=24&type=section&id=4.9%20Trade%20and%20Other%20Payables) As of December 31, 2022, total trade and bills payables amounted to **RMB 348.4 million**, and total other payables and accruals amounted to **RMB 134.9 million**. Due to their short-term nature, their carrying amounts approximate their fair values and are primarily denominated in RMB Total Trade and Other Payables | Indicator | 2022 (RMB thousands) | 2021 (RMB thousands) | | :------------------- | :------------------ | :------------------ | | Trade and Bills Payables | 348,408 | 328,289 | | Other Payables and Accruals | 134,873 | 112,870 | | **Total** | **483,281** | **441,159** | - Due to the short-term nature of trade and bills payables and other payables and accruals, their carrying amounts approximate their fair values at the reporting date[30](index=30&type=chunk) Aging Analysis of Trade and Bills Payables | Aging | 2022 (RMB thousands) | 2021 (RMB thousands) | | :------- | :------------------ | :------------------ | | Within One Year | 325,543 | 312,519 | | One to Two Years | 19,158 | 12,104 | | Over Two Years | 3,707 | 3,666 | | **Total** | **348,408** | **328,289** | Currency Composition of Trade and Other Payables | Currency | 2022 (RMB thousands) | 2021 (RMB thousands) | | :----- | :------------------ | :------------------ | | RMB | 480,693 | 440,817 | | HKD | 2,588 | 342 | | **Total** | **483,281** | **441,159** | [Income Tax](index=11&type=section&id=4.10%20Income%20Tax) The Group applies different tax rates in various jurisdictions: Cayman Islands and British Virgin Islands are tax-exempt, Hong Kong profits tax rate is **16.5%** (no taxable profit for the year), and China corporate income tax rate is **25%**, with Xiamen Zhixin Construction Technology Co., Ltd. enjoying a preferential tax rate of **15%**. The Group has not recognized deferred income tax liabilities for unremitted earnings of its Chinese subsidiaries - The Company is incorporated in the Cayman Islands as an exempted company and is not subject to Cayman Islands taxation. The Group's subsidiaries incorporated in the British Virgin Islands are exempted companies and are not subject to British Virgin Islands taxation[64](index=64&type=chunk) - Hong Kong profits tax has been provided at a rate of **16.5%** on the estimated assessable profit for the year. During the year, the Group had no assessable profit in Hong Kong[64](index=64&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 Technology Co., Ltd., which enjoys a preferential tax rate of **15%**[64](index=64&type=chunk) - As of December 31, 2022, no deferred income tax liability was recognized for withholding tax payable on the unremitted earnings of the Group's Chinese subsidiaries. The Group does not intend to distribute their respective unremitted profits in the foreseeable future[67](index=67&type=chunk)[109](index=109&type=chunk) [Other Information](index=32&type=section&id=Other%20Information) [Significant Acquisitions and Disposals](index=33&type=section&id=5.1%20Significant%20Acquisitions%20and%20Disposals) Except for the disclosed acquisition of Ruitu Mingsheng, the Group did not undertake any significant acquisitions or disposals related to subsidiaries, associates, and joint ventures in FY2022 - Save as disclosed above, the Group did not undertake any significant acquisitions or disposals related to subsidiaries, associates, and joint ventures in FY2022[98](index=98&type=chunk) [Significant Investments](index=33&type=section&id=5.2%20Significant%20Investments) As of December 31, 2022, the Group had no significant investments - As of December 31, 2022, the Group had no significant investments[204](index=204&type=chunk) [Use of Proceeds](index=33&type=section&id=5.3%20Use%20of%20Proceeds) The net proceeds from the Company's share offer amounted to approximately **HKD 238.7 million**. As of December 31, 2022, most of the proceeds were used for general working capital and repayment of borrowings, a small portion for expanding precast concrete component production capacity, and the remainder for enhancing IT systems, improving environmental protection systems, and purchasing vehicles - The Company obtained net proceeds from the share offer of approximately **HKD 238.7 million**[100](index=100&type=chunk) Use of Net Proceeds from Share Offer | Purpose | Disclosed Updated Intended Use of Net Proceeds (HKD millions) | Net Proceeds Utilized as at December 31, 2022 (HKD millions) | Net Proceeds Unutilized as at December 31, 2022 (HKD millions) | Expected Timeline for Utilization of Unutilized Net Proceeds | | :------------------------- | :------------------------------------ | :-------------------------------------------- | :-------------------------------------------- | :----------------------------------- | | Expand Production Capacity for Precast Concrete Components | 24.5 | 17.2 | 7.3 | Before December 2023 | | Enhance Information Technology Systems | 1.2 | 1.2 | — | N/A | | Improve Environmental Protection Systems | 1.2 | 1.2 | — | N/A | | Purchase Mixer Trucks and Concrete Pump Trucks | 2.0 | 2.0 | — | N/A | | General Working Capital | 105.3 | 105.3 | — | N/A | | Repay Borrowings | 104.5 | 104.5 | — | N/A | | **Total** | **238.7** | **231.4** | **7.3** | | [Employees and Remuneration Policy](index=33&type=section&id=5.4%20Employees%20and%20Remuneration%20Policy) As of December 31, 2022, the Group had **508** employees, a decrease from 613 in 2021. Employee remuneration is determined based on qualifications, responsibilities, contributions, and experience, with some factory workers outsourced to enhance human resource efficiency and flexibility - As of December 31, 2022, the Group had **508** employees (2021: 613 employees)[225](index=225&type=chunk) - Employee remuneration is determined with reference to factors such as qualifications, responsibilities, contributions, and experience[225](index=225&type=chunk) - The Group outsources some factory workers for its precast concrete components production lines to certain labor service companies to enhance human resource efficiency, flexibility, and management capabilities[225](index=225&type=chunk) [Currency Risk](index=32&type=section&id=5.5%20Currency%20Risk) Most of the Group's subsidiaries operate in China, with RMB as their functional currency. The Group does not expect to face significant currency risk and currently has no foreign currency hedging policy, but management will continue to monitor and consider hedging if necessary - Most of the Group's subsidiaries operate in China, and their functional currency is RMB[220](index=220&type=chunk) - The Group does not expect to face any significant currency risk that could materially impact its operating results. Currently, the Group has no foreign currency hedging policy[220](index=220&type=chunk) - The Group's management will continue to monitor foreign currency risk and will consider hedging significant foreign currency risks when necessary[220](index=220&type=chunk) [Capital Structure](index=32&type=section&id=5.6%20Capital%20Structure) The Group's capital structure has remained unchanged since its listing, comprising equity attributable to owners of the Company, including issued share capital and reserves. The Board regularly reviews the capital structure, considering the cost of capital and associated risks - The Group's capital structure has remained unchanged since the Company's shares were listed on The Stock Exchange of Hong Kong Limited[202](index=202&type=chunk) - The Group's capital structure comprises equity attributable to owners of the Company, including issued share capital and reserves[202](index=202&type=chunk) - The Board regularly reviews the Group's capital structure, considering the cost of capital and risks associated with various types of capital[202](index=202&type=chunk) [Corporate Governance](index=34&type=section&id=5.7%20Corporate%20Governance) To the best knowledge of the Directors, the Company has complied with the code provisions set out in the Corporate Governance Code contained in Appendix 14 to the Listing Rules of the Stock Exchange for the year ended December 31, 2022 - To the best knowledge of the Directors, the Company has complied with the code provisions set out in the Corporate Governance Code contained in Appendix 14 to the Listing Rules of the Stock Exchange for the year ended December 31, 2022[101](index=101&type=chunk) [Events After Reporting Period](index=34&type=section&id=5.8%20Events%20After%20Reporting%20Period) Except as disclosed in this announcement, no significant events materially affecting the Group occurred from the end of the Company's reporting period up to the date of this announcement. The Company will hold its annual general meeting on June 27, 2023 - Save as disclosed in this announcement, no significant events materially affecting the Group occurred from the end of the Company's reporting period up to the date of this announcement[102](index=102&type=chunk) - The Company will hold its annual general meeting in Hong Kong on **Tuesday, June 27, 2023**[208](index=208&type=chunk) [Purchase, Sale or Redemption of Listed Securities](index=34&type=section&id=5.9%20Purchase,%20Sale%20or%20Redemption%20of%20Listed%20Securities) For the year ended December 31, 2022, neither the Company nor any of its subsidiaries purchased, sold, or redeemed any of the Company's listed securities - For the year ended December 31, 2022, neither the Company nor any of its subsidiaries purchased, sold, or redeemed any of the Company's listed securities[80](index=80&type=chunk) [Review and Publication](index=35&type=section&id=5.10%20Review%20and%20Publication) The financial figures for the Group's results for the year ended December 31, 2022, have been reviewed by the auditor, PricewaterhouseCoopers, and are consistent with the consolidated financial statements. The Audit Committee has reviewed the audited financial statements and found them to comply with applicable accounting standards, Listing Rules, and other legal requirements. This results announcement has been published on the Company's website and the Stock Exchange's website - The financial figures for the Group's results for the year ended December 31, 2022, as presented in this results announcement, have been compared by the Group's auditor, PricewaterhouseCoopers, with the amounts contained in the Group's consolidated financial statements for the year ended December 31, 2022, and these amounts are in agreement[210](index=210&type=chunk) - The Audit Committee has reviewed the Group's audited financial statements for the year ended December 31, 2022, and is of the opinion that they comply with applicable accounting standards, the Listing Rules, and other legal requirements, and that adequate disclosures have been made[231](index=231&type=chunk) - This results announcement is published on the Company's website at www.xiamenzhixin.com and on the Stock Exchange's website at www.hkexnews.hk[232](index=232&type=chunk)

Financial Management - The company utilized approximately RMB 88.8 million (equivalent to HKD 104.5 million) of unutilized proceeds for early repayment of loans as of June 30, 2021[2] - The total bank financing increased from approximately RMB 302 million as of December 31, 2020, to approximately RMB 319.5 million as of December 31, 2021, and further to approximately RMB 361.5 million as of June 30, 2022[5] - The company received a recommendation from a bank to repay three entrusted loans totaling RMB 68.8 million to enhance its unsecured credit limit[3]

Financial Performance - For the six months ended June 30, 2022, the company's revenue was approximately RMB 306.7 million, a decrease of about 4.4% compared to RMB 320.7 million for the same period in 2021[9]. - Gross profit for the same period decreased by approximately 33.2% to about RMB 36.1 million, down from RMB 54.0 million in the previous year[10]. - Net profit for the period was approximately RMB 530,000, representing a significant decrease of about 94.8% compared to RMB 10.2 million in the prior year[11]. - The gross margin and net margin for the period were approximately 11.8% and 0.2%, respectively[13]. - Revenue from ready-mixed concrete sales was RMB 217.3 million, a decrease of about 3.7% from RMB 225.7 million in the same period last year[21]. - Revenue from precast concrete components decreased by approximately 13.7% to about RMB 82.0 million compared to the previous year[9]. - Overall gross profit decreased by approximately 33.2% to RMB 36.1 million, with a gross profit margin of about 11.8%, down from 16.9% for the six months ended June 30, 2021[26]. - The gross profit from ready-mixed concrete decreased by approximately 33.0% to RMB 27.4 million, attributed to a decline in average selling prices and rising raw material costs[27]. - The gross profit from precast concrete components fell by approximately 60.3% to RMB 5.2 million, mainly due to project delays and increased sales costs[28]. - Other income decreased by approximately 10.4% to RMB 7.0 million, primarily due to a reduction in non-recurring government subsidies and incentives[30]. - Selling expenses increased by approximately 14.9% to RMB 13.9 million, mainly due to increased transportation costs for precast concrete components outside Xiamen, Fujian Province[34]. - Administrative expenses rose by approximately 27.9% to RMB 23.3 million, primarily due to increased employee costs[35]. - Net financing costs increased by approximately 5.3% to RMB 7.3 million, mainly due to higher interest expenses on bank borrowings[37]. - The company reported a net impairment loss reversal of RMB 4,534 thousand, compared to a reversal of RMB 2,032 thousand in the previous year[87]. - The company reported a profit attributable to owners of RMB 530,000 for the six months ended June 30, 2022, a decrease of 94.8% compared to RMB 10,221,000 for the same period in 2021[163]. Operational Developments - The company plans to expand production capacity to meet the anticipated increase in demand for precast concrete components[14]. - The company has successfully acquired land use rights for a new production facility, leading to the early termination of the lease for the precast concrete components production plant[13]. - The company remains optimistic about the precast concrete components industry due to favorable government policies promoting prefabricated construction[14]. - The company plans to continue expanding its operations in the recycling and brick manufacturing sectors, leveraging the acquisition of Ruitu Changjiang to enhance its market position[133]. Cash Flow and Financing - The company's current assets net value was approximately RMB 87.0 million as of June 30, 2022, down from RMB 89.4 million as of December 31, 2021[40]. - The debt-to-equity ratio increased to approximately 40.1% as of June 30, 2022, compared to 33.4% as of December 31, 2021[40]. - The company reported a decrease in cash and cash equivalents of RMB 76,811 thousand for the period, compared to an increase of RMB 51,190 thousand in the same period last year[97]. - Cash and cash equivalents dropped significantly to RMB 30,388 thousand from RMB 107,199 thousand, a decline of 71.7%[89]. - The company made payments for the acquisition of subsidiaries amounting to RMB 30,000 thousand, reflecting ongoing strategic investments[97]. - The company’s total cash outflow from operating activities was RMB 13,145 thousand, compared to an outflow of RMB 11,218 thousand in the previous year, indicating a slight increase in operational cash usage[97]. - The company’s financing costs, including interest paid, totaled RMB 7,285 thousand, compared to RMB 6,898 thousand in the previous year, showing an increase in financing expenses[97]. Shareholder Information - As of June 30, 2022, the company had a total of 748,000,000 shares issued, with major shareholders holding significant stakes: Zhixin Investment Holdings Limited at 36.73%, Yaohe Holdings Limited at 16.25%, and Huatai Securities Co., Ltd. at 14.12%[68][69]. - The company did not recommend the payment of an interim dividend for the six months ended June 30, 2022[77]. - The company has a commitment to transparency, with all published information available on its website[79]. Risk Management - The group faces various financial risks, including market risk (foreign exchange and interest rate risks), credit risk, and liquidity risk, with no use of derivative financial instruments for hedging during the period[116]. - The group assessed credit risk based on the financial condition of customers, historical experience, and macroeconomic factors, including the impact of COVID-19 on customer repayment capabilities[126]. - The group’s overall risk management plan focuses on minimizing potential adverse impacts on financial performance due to market unpredictability[116]. Assets and Liabilities - As of June 30, 2022, total assets amounted to RMB 1,247,760,000, with total liabilities of RMB 805,413,000, resulting in a net asset value of RMB 442,347,000[138]. - The total bank borrowings as of June 30, 2022, were RMB 342,780,000, compared to RMB 324,989,000 at the end of 2021, reflecting a slight increase of approximately 5.5%[189]. - The company’s property, plant, and equipment increased to RMB 240,833,000 as of June 30, 2022, from RMB 206,589,000 at the beginning of the year[167]. - The company’s capital reserves increased to RMB 127,135,000 as of June 30, 2022, from RMB 100,000,000 in 2021, representing a growth of 27.1%[183].

Financial Performance - The company's revenue for the fiscal year 2021 was approximately RMB 765.1 million, a decrease of about RMB 19.8 million or approximately 2.5% compared to RMB 784.9 million in fiscal year 2020[6] - Gross profit decreased from approximately RMB 152.5 million in fiscal year 2020 to approximately RMB 104.3 million in fiscal year 2021, representing a decline of about 31.6%[17] - Net profit fell from approximately RMB 62.6 million in fiscal year 2020 to approximately RMB 20.4 million in fiscal year 2021, a decrease of about 67.4%[6] - The gross margin and net margin for fiscal year 2021 were approximately 13.6% and 2.7%, respectively[6] - The sales revenue from ready-mixed concrete decreased from approximately RMB 537.4 million in fiscal year 2020 to approximately RMB 533.8 million in fiscal year 2021, a decline of about 0.7%[14] - The sales revenue from precast concrete components decreased from approximately RMB 247.5 million in fiscal year 2020 to approximately RMB 231.3 million in fiscal year 2021, a decline of about 6.5%[15] - The cost of sales increased from approximately RMB 632.4 million in fiscal year 2020 to approximately RMB 660.8 million in fiscal year 2021, an increase of about RMB 28.4 million or approximately 4.5%[16] - Other income rose from approximately RMB 49 million in FY2020 to approximately RMB 208 million in FY2021, representing an increase of about 324.5%[21] - Selling expenses decreased from approximately RMB 220 million in FY2020 to approximately RMB 196 million in FY2021, a reduction of about 10.9%[22] - Administrative expenses increased from approximately RMB 302 million in FY2020 to approximately RMB 436 million in FY2021, an increase of about 44.1%[23] - Net financing costs slightly decreased from approximately RMB 136 million in FY2020 to approximately RMB 130 million in FY2021, a decline of about 4.3%[24] - Income tax expenses decreased from approximately RMB 230 million in FY2020 to approximately RMB 131 million in FY2021, a reduction of about 43.0%[25] - The net profit for the year decreased from approximately RMB 626 million in FY2020 to approximately RMB 204 million in FY2021[28] Acquisitions and Expansion - The company successfully acquired land use rights adjacent to its existing production facility in August 2021, which will allow for new production lines and additional storage space for precast concrete components[6] - In November 2021, the company signed an agreement to conditionally acquire 100% equity of Ruitu Ming Sheng, expanding into solid waste processing and environmentally friendly building materials[7] - The company completed the acquisition of all equity interests in Rui Tu Ming Sheng in December 2021, which focuses on processing solid waste to produce and sell environmentally friendly building materials[36] - The company plans to expand its precast concrete component production capacity, with an allocation of HKD 199.6 million, of which HKD 7.1 million has been used[41] - The company has reallocated approximately HKD 4.7 million of unutilized proceeds for expanding precast concrete capacity due to a successful land acquisition[41] Shareholder Information - The largest customer accounted for approximately 15.9% of total revenue in the fiscal year 2021, while the top five customers represented about 40.4%[62] - The company does not recommend any final dividend for the fiscal year 2021, and future dividends will depend on various factors including market conditions and financial performance[52] - The company has no provisions for preemptive rights for existing shareholders regarding new shares under its articles or Cayman Islands law[66] - As of December 31, 2021, Mr. Ye Zhi Jie held 364,706,100 shares, representing approximately 48.76% of the company's issued share capital[76] - Mr. Huang Wen Gui held 121,568,700 shares, representing approximately 16.25% of the company's issued share capital[76] - The total number of issued shares as of the report date was 748,000,000[77] - The company has not established any arrangements that would allow directors or senior management to hold any interests in the company's shares during the fiscal year 2021[77] Corporate Governance - The company has confirmed the independence of all independent non-executive directors as per Listing Rule 3.13[72] - The service contracts for executive directors are for an initial term of three years, starting from March 4, 2021[73] - The company reported no arrangements that would allow directors to profit from the purchase of shares or debt securities during the fiscal year 2021[85] - There were no significant transactions, arrangements, or contracts in which directors had a substantial interest during the fiscal year 2021[86] - The company maintained compliance with all relevant laws and regulations, including the Cayman Islands Companies Law and listing rules, during the fiscal year 2021[95] - The audit committee reviewed the annual performance and financial statements of the group and the company for the year ended December 31, 2021[96] - The company has adopted a code of conduct for directors regarding securities trading, ensuring compliance with the standard code[102] - There were no known incidents of non-compliance with the standards set forth in the code of conduct for directors during the fiscal year 2021[103] - The board is committed to establishing sound corporate governance principles and practices to protect shareholder interests and enhance corporate value[101] - The company will continue to review and monitor its corporate governance practices to ensure compliance with the corporate governance code[101] - The board of directors held one annual general meeting and six board meetings during the fiscal year 2021, with all directors attending all board meetings[126] - The audit committee, composed of three independent non-executive directors, held two meetings in the fiscal year 2021, with full attendance from its members[139] - The company has established three committees: the audit committee, the remuneration committee, and the nomination committee, each with specific written terms of reference[135] - The chairman and CEO roles are held by Mr. Ye Zhi Jie and Mr. Huang Wen Gui, respectively, ensuring a clear division of responsibilities[128] - The company has received annual written confirmations of independence from all independent non-executive directors, affirming their compliance with listing rules[131] - The company arranged training courses for all directors to enhance their knowledge and skills, covering topics such as corporate governance and regulatory updates[134] - The company has a policy for the appointment and re-election of directors, ensuring that one-third of the directors retire at each annual general meeting[132] - The audit committee is responsible for recommending the appointment and remuneration of external auditors, ensuring their independence and effectiveness[140] - The company has committed to continuous professional development for its directors, providing them with relevant reading materials and compliance handbooks[134] - The board regularly reviews the composition and contributions of its directors to ensure diversity and sustainability[126] - The company held two remuneration committee meetings in the fiscal year 2021, with attendance as follows: Huang Youling (0/1), Jiang Qinjian (1/1), Wang Duanxiu (2/2), Cai Huinong (2/2) [146] - The remuneration committee reviewed the remuneration of directors and senior management, with details disclosed in the financial statements notes 9 and 33 of the annual report [149] - The external auditor provided audit services for the fiscal year 2021, with total fees amounting to RMB 2,314,000, compared to RMB 3,020,000 in the previous year [162] - The company confirmed that there are no significant uncertainties affecting its business or doubts regarding its ability to continue as a going concern [160] - The company’s remuneration committee adopted the recommendations outlined in the corporate governance code E.1.2(c)(ii) [148] - The company’s nomination committee held two meetings in the fiscal year 2021, with attendance as follows: Cai Huinong (2/2), Wang Duanxiu (2/2), Huang Youling (0/1), Jiang Qinjian (1/1) [156] - The external auditor provided non-audit services in the previous year amounting to RMB 2,740,000, which were related to services provided for the share offering [162] - The company’s board of directors is responsible for preparing and presenting true and fair financial statements based on applicable statutory requirements [160] - The company’s nomination committee is responsible for evaluating the independence of independent non-executive directors [157] - The company’s joint company secretary received no less than 15 hours of relevant professional training as required by the listing rules [164] Risk Management and ESG - The company has adopted a risk management and internal control framework based on the internationally recognized framework issued by the Committee of Sponsoring Organizations, ensuring effective management of significant financial, operational, and compliance risks[166] - An independent internal control consulting firm was engaged to review key business processes and internal control systems, with findings and recommendations submitted to the board and audit committee[171] - The board believes that the existing risk management and internal control systems are adequate and effective in managing significant risks associated with financial, operational, and compliance matters[174] - The company has reported a comprehensive environmental, social, and governance (ESG) report for the fiscal year 2021, covering the period from January 1, 2021, to December 31, 2021[194] - The board of directors is responsible for identifying and assessing ESG-related risks and determining the strategies and scope for ESG initiatives[195] - An ESG working group has been established, consisting of four members, including the chairman of the audit committee, CEO, COO, and an executive director, to implement ESG measures and monitor related data[195] - The company has complied with the "comply or explain" provisions of the ESG reporting guidelines for the fiscal year 2020[194] - The ESG working group is required to hold meetings at least once a year to ensure active participation in ESG matters[197] - The company has a structured approach to managing ESG risks, including risk management and internal control systems[195] - The ESG report has been approved by the board, confirming that it fairly presents the company's management methods and performance in ESG matters[194] - The company has established a comprehensive index for compliance with ESG reporting guidelines for reference[194] - The company is committed to continuous monitoring and improvement of its ESG performance through data collection and analysis[196] - The board has the authority to engage experts to assist in researching and preparing ESG-related matters, with costs borne by the company[198]

Financial Performance - The company's revenue for the six months ended June 30, 2021, was approximately RMB 320.7 million, an increase of about 13.3% compared to RMB 283.1 million for the same period in 2020[10]. - Gross profit increased by approximately 21.8% to about RMB 54.0 million, with a gross margin of approximately 16.9%[11][20]. - Net profit for the period was approximately RMB 10.2 million, representing a significant increase of about 42.9% from RMB 7.2 million in the same period last year[12][20]. - Revenue from ready-mixed concrete sales was RMB 225.7 million, a 5.3% increase from RMB 214.3 million in the previous year[23]. - Revenue from precast concrete components surged by approximately 38.0% to RMB 95.0 million, up from RMB 68.8 million in the prior year[24]. - Overall gross profit rose by approximately RMB 9.7 million or about 21.8% to RMB 54.0 million, with gross margin increasing to approximately 16.9% from 15.7%[28]. - Ready-mixed concrete gross profit increased by approximately 46.6% to RMB 40.9 million, with gross margin rising to approximately 18.1% from 13.0%[29]. - Prefabricated concrete components gross profit decreased by approximately 20.2% to RMB 13.1 million, with gross margin dropping to approximately 13.8% from 23.9%[30]. - The net profit attributable to the company's owners was RMB 10,221,000, a rise of 42.9% from RMB 7,154,000 in 2020[106]. - Basic earnings per share increased to RMB 0.015, compared to RMB 0.013 in the same period last year[106]. Expenses and Costs - Sales cost increased by approximately RMB 27.9 million or about 11.7% to RMB 266.6 million, primarily due to increased sales volume and rising steel prices[25]. - Selling expenses increased by approximately 53.6% to RMB 12.1 million, primarily due to increased transportation costs from sales outside Xiamen[32]. - Administrative expenses rose by approximately 29.8% to RMB 18.2 million, attributed to overall salary increases for administrative staff[33]. - The company incurred approximately RMB 9.5 million in listing expenses after successfully listing on the main board of the Stock Exchange on March 26, 2021[11]. - The company incurred financing costs of RMB (9,520,000), which contributed to the net loss for the period[174]. Assets and Liabilities - As of June 30, 2021, the group's current assets net value was approximately RMB 278.8 million, up from RMB 61.9 million at the end of 2020[41]. - Total assets as of June 30, 2021, amounted to RMB 905,805,000, an increase from RMB 808,323,000 at the end of 2020[109]. - Total liabilities decreased to RMB 474,165,000 from RMB 641,354,000 at the end of 2020, indicating improved financial health[112]. - The total carrying amount of trade receivables as of June 30, 2021, is RMB 513,103,000, with an expected loss provision totaling RMB 3,140,000[156]. - The total financial liabilities as of June 30, 2021, amount to RMB 462,885,000, with RMB 404,524,000 due within 1 year[160]. - The company’s borrowings (including interest payable) total RMB 213,034,000 as of June 30, 2021[160]. Cash Flow and Investments - Operating cash flow for the six months ended June 30, 2021, was RMB (129,587) thousand, compared to RMB (18,685) thousand for the same period in 2020, indicating a significant increase in cash outflow[123]. - Cash used in investing activities was RMB (10,998) thousand for the first half of 2021, up from RMB (5,083) thousand in the same period of 2020, reflecting increased investment efforts[123]. - Cash inflow from financing activities amounted to RMB 191,775 thousand for the six months ended June 30, 2021, compared to RMB 28,976 thousand in the prior year, showing a substantial increase in financing[123]. - The net increase in cash and cash equivalents was RMB 51,190 thousand for the first half of 2021, compared to RMB 5,208 thousand in the same period of 2020, indicating improved liquidity[123]. - The company reported a cash balance of RMB 81,675 thousand at the end of June 2021, compared to RMB 21,352 thousand at the end of June 2020, reflecting a strong cash position[123]. Market Position and Future Outlook - The company aims to expand production capacity to meet the rising demand for precast concrete components, driven by favorable government policies promoting prefabricated construction[15]. - The company is optimistic about the future of the precast concrete components industry, bolstered by government initiatives to accelerate the upgrade of the construction sector in China[15]. - The board is optimistic about business growth in the second half of 2021, driven by government policies supporting prefabricated construction in China[61]. - The group plans to leverage funds from the share sale to expand production capacity and increase market share in the rapidly growing precast concrete component industry in China[61]. - The company is committed to consolidating its leading market position in Fujian Province to maximize returns for shareholders[15]. Shareholder Information - Major shareholders include Zhixin Investment Holdings Limited with 364,706,100 shares (48.76%) and Luohe Holdings Limited with 121,568,700 shares (16.25%) as of the report date[77]. - The total number of issued shares is 748,000,000, which is the basis for calculating the percentage of shareholdings[78]. - The company did not recommend the payment of an interim dividend for the six months ended June 30, 2021[94]. - The company is committed to providing timely and accurate information to shareholders and investors through various reports and announcements[95]. - The company’s website is a resource for all published information, ensuring transparency for stakeholders[95]. Compliance and Governance - The independent auditor reviewed the interim financial statements for the six months ended June 30, 2021, confirming compliance with relevant accounting standards[89]. - The independent auditor's review did not reveal any issues that would suggest the financial data was not prepared in accordance with the relevant standards[99]. - There were no changes in directors or any other disclosures required under the listing rules during the reporting period[86]. - The company reported no interests from directors in any competing businesses as of June 30, 2021[87]. - The company’s financial statements are prepared in accordance with Hong Kong Accounting Standards, specifically HKAS 34 for interim financial reporting[99].

Financial Performance - The company recorded revenue of approximately RMB 784.9 million for the fiscal year 2020, an increase of about RMB 194.1 million or approximately 32.9% compared to RMB 590.8 million in the previous year[9] - Gross profit increased from approximately RMB 114.4 million in the previous year to approximately RMB 152.5 million, representing a year-on-year growth of about 33.3%[9] - Net profit rose from approximately RMB 41.8 million to approximately RMB 62.6 million, marking an increase of about 49.8%[9] - The gross margin and net profit margin for the fiscal year 2020 were approximately 19.4% and 8.0%, respectively[10] - Revenue from ready-mixed concrete increased by approximately 20.3% to about RMB 537.4 million, driven by higher sales volume and average selling prices[16] - Revenue from precast concrete components surged by approximately 71.9% to about RMB 247.5 million, primarily due to increased sales volume and average selling prices of other construction components[17] - The total cost of sales for the fiscal year 2020 was approximately RMB 632.4 million, attributed to increased sales volume and reliance on outsourced labor for production[18] - Other income rose by approximately RMB 1.3 million or about 33.9% from approximately RMB 3.7 million for the year ended December 31, 2019, to approximately RMB 4.9 million for the fiscal year 2020, mainly due to an increase in non-recurring government subsidies and incentives[25] Expenses and Costs - Selling expenses increased by approximately RMB 8.3 million or about 60.8% from approximately RMB 13.7 million for the year ended December 31, 2019, to approximately RMB 22.0 million for the fiscal year 2020, primarily due to increased transportation costs from sales of precast concrete components outside Xiamen, Fujian Province[26] - Administrative expenses increased by approximately RMB 2.1 million or about 7.3% from approximately RMB 28.2 million for the year ended December 31, 2019, to approximately RMB 30.2 million for the fiscal year 2020, mainly due to overall salary increases for administrative staff and performance bonuses linked to production[27] - Net financing costs increased by approximately RMB 4.9 million or about 55.6% from approximately RMB 8.7 million for the year ended December 31, 2019, to approximately RMB 13.6 million for the fiscal year 2020, primarily due to additional bank borrowings of RMB 37.5 million and three entrusted loans totaling approximately RMB 68.8 million obtained in Q4 2019[28] Assets and Liabilities - As of December 31, 2020, the group's current assets net value was approximately RMB 61.9 million, compared to approximately RMB 2.4 million as of December 31, 2019, with cash and cash equivalents of approximately RMB 30.5 million, up from approximately RMB 16.1 million[33] - The debt-to-equity ratio as of December 31, 2020, was approximately 152.8%, down from 208.0% as of December 31, 2019[33] Strategic Plans and Market Outlook - The company aims to strengthen its market leadership in Fujian Province and expand its business scale, particularly in the precast concrete components sector, to achieve sustainable growth[11] - The company is optimistic about the precast concrete components industry, driven by government policies promoting prefabricated construction[11] - The company plans to enhance its capital structure through share sales to accelerate production capacity expansion in response to anticipated demand growth[11] - The company aims to continue expanding its operational scale and market share in the rapidly growing precast concrete components industry in China, supported by favorable government policies and funding from the share sale[49] Customer and Supplier Concentration - The largest customer accounted for approximately 18.6% of total revenue for the fiscal year 2020, while the top five customers represented about 41.6% of total revenue[70] - The largest supplier contributed approximately 17.9% of total purchases, with the top five suppliers accounting for around 54.8% of total purchases in fiscal year 2020[70] Dividend Policy - The company does not have a dividend policy, and future dividends will be declared at the discretion of the board based on various factors including market conditions and financial performance[58] - The company reported no distributable reserves available for distribution to shareholders as of December 31, 2020[66] - The board does not recommend the payment of any final dividend for the fiscal year 2020[57] Corporate Governance - The company is committed to environmental protection and sustainable development, implementing green office measures to reduce energy consumption[125] - The board of directors has reviewed and believes that the company has applied the principles of the corporate governance code during the fiscal year 2020[132] - The company has adopted a code of conduct for securities trading by directors, ensuring compliance with the standards set forth[133] - The board is responsible for strategic planning and ensuring sustainable development, with a focus on maintaining diversity among board members[139] - The company has established three committees: the audit committee, the remuneration committee, and the nomination committee, each with specific written terms of reference[163] - The audit committee is responsible for overseeing the integrity of the financial statements and compliance with accounting standards and regulations[5] - The company has established a risk management and internal control system, ensuring adequate resources and training for staff involved in financial reporting[8] - The company has adopted the recommended code of corporate governance as outlined in the guidelines[181] Risk Management - The company faces significant risks including cash flow mismatches, credit risk from trade receivables, and seasonal demand fluctuations for concrete products[63] - The company has a clear division of responsibilities between the chairman and the CEO to ensure a balance of power[151] - The company has established policies and procedures to identify, assess, and monitor key risks related to financial, operational, and compliance activities[198] - Key risks are identified and assessed based on their significance and likelihood of occurrence[200] Shareholder Information - The company has a total of 748,000,000 shares issued as of December 31, 2020[98] - Mr. Ye Zhi Jie holds 364,706,100 shares, representing 48.76% of the company's issued share capital[104] - Mr. Huang Wen Gui owns 121,568,700 shares, accounting for 16.25% of the company's issued share capital[104] - The company has a total of 74,725,200 shares held by Chen Man Hong, representing 9.99% of the issued share capital[104] - The company has no knowledge of any other individuals outside of directors and senior management holding interests in the company's shares that require disclosure[113] Compliance and Training - All directors have participated in training courses to enhance their knowledge and skills related to corporate governance and compliance[162] - The company has not been made aware of any incidents of non-compliance with the standards of conduct by directors and employees[134] - The company has not engaged in any related party transactions that require disclosure under the listing rules for the fiscal year 2020[71]