Financial Performance - For the fiscal year 2024, total revenue was approximately RMB 142.4 million, a decrease of about 29.5% compared to RMB 201.9 million in fiscal year 2023[4]. - Sales revenue from spherical graphite and its by-products was approximately RMB 29.4 million, down 70.5% from RMB 99.6 million in the previous fiscal year[4]. - Sales revenue from flake graphite concentrate increased by 7.5% to approximately RMB 109.0 million, compared to RMB 101.3 million in fiscal year 2023[4]. - Gross profit for fiscal year 2024 was approximately RMB 41.6 million, a decrease of 43.6% from RMB 73.7 million in fiscal year 2023, with a gross margin decline from 36.5% to 29.2%[4]. - The net loss for fiscal year 2024 was approximately RMB 12.5 million, compared to a net profit of RMB 21.3 million in fiscal year 2023, representing a decline of 158.6%[4]. - The decline in sales prices, particularly for spherical graphite products, was attributed to a slowdown in the downstream anode industry and intensified competition in the graphite market[4]. - Total revenue for the fiscal year 2024 was approximately RMB 142.4 million, a year-on-year decrease of 29.5% due to weak market demand in the natural graphite industry and intense competition[14]. - The gross profit for the fiscal year 2024 was approximately RMB 41.6 million, a decrease of 43.6% year-on-year, with a gross margin of 29.2%, down 7.3 percentage points[14]. - The company recorded a net loss of approximately RMB 12.5 million for the fiscal year 2024, compared to a net profit of approximately RMB 21.3 million in the previous year[14]. - Revenue from sales of spherical graphite and its by-products accounted for approximately 20.7% of total revenue in FY2024, down from 49.3% in FY2023[44]. - The sales revenue from flake graphite concentrates increased to RMB 108.966 million in FY2024, representing 76.5% of total revenue[43]. - The company recorded a tax credit of approximately RMB 1.0 million for fiscal year 2024, compared to a tax expense of approximately RMB 2.8 million for fiscal year 2023[57]. - The adjusted net loss under non-Hong Kong Financial Reporting Standards for fiscal year 2024 was RMB 15.9 million, down from an adjusted profit of RMB 18.7 million in fiscal year 2023[59]. Production and Sales - Sales volume of spherical graphite was 3,089 tons, a decrease of 52.0% year-on-year, with a gross margin of 16.6%, down 18.9 percentage points[15]. - The total production of spherical graphite is planned to decrease from approximately 8,700 tons in fiscal year 2023 to approximately 3,200 tons in fiscal year 2024[15]. - The total sales volume of flake graphite concentrate in fiscal year 2024 was 45,432 tons, compared to 36,348 tons in fiscal year 2023[46]. - Revenue from flake graphite concentrate sales increased to approximately RMB 109.0 million in fiscal year 2024, up by about 7.5% from RMB 101.3 million in fiscal year 2023[47]. - Revenue from spherical graphite sales dropped significantly to approximately RMB 29.4 million in fiscal year 2024, a decrease of about 70.5% from RMB 99.6 million in fiscal year 2023[47]. Strategic Focus and Market Adaptation - The company has shifted its focus to increase sales of flake graphite concentrate to maintain profitability amid challenging market conditions[4]. - The company is exploring new strategies for market expansion and product development to adapt to the evolving market landscape[4]. - The company plans to adopt a conservative strategy for business expansion and development in response to market changes during the industry's turbulent period[23]. - The company aims to strengthen its competitiveness in the anode materials sector while maintaining its core business in refractory materials manufacturing[23]. - The company aims to enhance employee engagement and accountability to achieve long-term sustainable growth and success in the graphite industry[97]. - In 2024, the company will focus on business expansion, customer satisfaction, operational safety and efficiency, and environmentally friendly production[97]. Research and Development - The company continues to enhance its research and development capabilities, focusing on innovative processes in the natural graphite industry[19]. - Research and development expenses decreased to approximately RMB 10.9 million in fiscal year 2024, a reduction of about 36.5% from RMB 17.2 million in fiscal year 2023[55]. Corporate Governance - The company has adhered to all applicable corporate governance code provisions during the reporting period, except for a specific provision related to the chairman and CEO[98]. - The board of directors is responsible for overseeing the company's overall strategy and financial performance, including risk management and compliance with legal regulations[99]. - The board consists of two executive directors and four independent non-executive directors, ensuring a strong independent element in its composition[106]. - The company has established a robust internal control system to monitor financial performance and risk management[99]. - The audit committee consists of four members, including Mr. He as the chairman, who has appropriate accounting and financial management expertise[114]. - The company has established various committees, including the audit committee, remuneration committee, nomination committee, and compliance committee, operating under the board's adopted terms of reference[112]. - The board has confirmed the effectiveness of the risk management and internal control systems during the reporting period[133]. Shareholder Information - The company did not recommend a final dividend for the fiscal year 2024, consistent with no dividend in fiscal year 2023[169]. - The company has a rigorous and ongoing strategic planning process to identify and assess opportunities and challenges, creating a planned action plan for sustainable long-term value for shareholders[97]. - The company has established long-term stable relationships with its top five customers and suppliers[159]. - The company emphasizes the importance of maintaining good relationships with stakeholders to achieve long-term goals[158]. Environmental Commitment - The company is committed to sustainable development and reducing energy consumption to minimize environmental impact[166].

Industry Overview - Graphene is a two-dimensional carbon nanomaterial with a hexagonal lattice structure, known for its excellent thermal conductivity, optical properties, and stability, applicable in various fields such as physics, materials, and electronics [1][3] - The graphene industry chain consists of upstream graphite resources and production equipment, midstream graphene film and powder manufacturing, and downstream applications in new energy, coatings, health, environmental protection, chemical new materials, and electronic information [3][4] Industry Development History - The theoretical research on graphene began in 1947, but the first independent two-dimensional graphene crystal was obtained in 2004, marking the material's emergence [7] - Since 2013, graphene has been included in China's "12th Five-Year" and "13th Five-Year" plans, promoting the establishment of numerous graphene companies and transitioning to mass production [7] Policy Background - China's support for the graphene industry began in 2012 with the release of the "12th Five-Year" development plan, emphasizing the importance of graphene in the new material sector [10][12] - The "14th Five-Year" plan highlights the strategic position of graphene in manufacturing, encouraging its application in various fields such as electrochemical energy storage and flexible electronics [10][12] Current Industry Status - As of 2023, China's graphene powder production capacity reached 20,000 tons per year, while graphene film production capacity reached 2.4 million square meters per year [14][16] - The market size of the graphene industry grew from 140 billion yuan in 2020 to 400 billion yuan in 2023, reflecting a year-on-year increase of 19.4% [16] Competitive Landscape - The industry features a competitive landscape where foreign companies lead in technology while domestic companies excel in manufacturing [18] - The first tier of leading companies includes Bettery, Fangda Carbon, and Carbon Yuan Technology, which have established comprehensive production lines and significant market shares [18] Business Comparison - In 2023, Fangda Carbon generated approximately 470.74 million yuan in graphene revenue, accounting for 91.89% of its total business, while Dimensional Carbon's graphene revenue was 14.74 million yuan, representing 100% of its business [21] - Bettery's graphene business is focused on lithium-ion battery materials, contributing to its overall product line [21] Regional Distribution - The rapid development of the graphene industry in China has led to the emergence of several large-scale companies, particularly in the East China region, including Guangdong, Shandong, Jiangsu, and Zhejiang [22] Future Development Trends - The advancement in graphene preparation and application technologies is expected to expand its use in various downstream products, including therapeutic clothing, second-generation graphene phones, and energy storage devices [25] - The ongoing research and industrialization of graphene are anticipated to continue growing, with applications in lithium-ion batteries, lithium-sulfur batteries, and supercapacitors [25]

Group 1 - The investment heat in the graphene industry has declined, with the number of financing events dropping from 20 in 2023 to 6 in 2024 [1][2] - The graphene industry is in a rapid development phase, with most financing events occurring in the angel and A rounds, particularly in the angel round with 19 events [2][12] - Financing in the graphene industry is primarily focused on material research and production, with a significant number of events occurring in this area from 2016 to 2024 [5][6] Group 2 - The main investment entities in the graphene industry are primarily investment firms, with notable representatives including Guoke Investment and Zhongguancun Venture Capital [12] - Mergers and acquisitions in the graphene industry are mainly characterized by vertical integration, enhancing the competitiveness and sustainability of companies [14][15] - Key merger and acquisition events include the acquisition of Zhaluteqi graphite mining company by Del Future and the acquisition of 68% of New Energy Technology by Two-Dimensional Carbon [15][14]

▲免费服务一年，定制报告，市场需求或课题调研，欢迎来电咨询 ！！！ 1 石墨化阴极碳块市场概述 1.1 石墨化阴极碳块行业概述及统计范围 1.2.3 石墨阴极碳块 1.2 按照不同产品类型，石墨化阴极碳块主要可以分为如下几个类别 1.2.1 全球不同产品类型石墨化阴极碳块规模增长趋势2020 VS 2024 VS 2031 1.2.2 半石墨阴极碳块 1.2.4 石墨化阴极碳块 1.3 从不同应用，石墨化阴极碳块主要包括如下几个方面 1.3.1 全球不同应用石墨化阴极碳块规模增长趋势2020 VS 2024 VS 2031 1.3.2 <200 KA 1.3.3 200-300 KA 1.3.4 >300 KA 1.4 行业发展现状分析 1.4.1 石墨化阴极碳块行业发展总体概况 1.4.2 石墨化阴极碳块行业发展主要特点 1.4.3 石墨化阴极碳块行业发展影响因素 1.4.3.1 石墨化阴极碳块有利因素 2025-2031全球及中国石墨化阴极碳块市场，研制生产及需求规模研究报告 【市场人员】：张炜 【出版机构】：智信中科研究网 ▲资料来源：更多资料请参考智信中科研究网发布内容！！！ 1.4.3.2 石墨化阴 ...

Financial Performance - For the fiscal year 2024, total revenue decreased by approximately 29.5% to RMB 142.4 million from RMB 202.0 million in fiscal year 2023[5]. - Sales revenue from spherical graphite and its by-products dropped by approximately 70.5% to RMB 29.4 million compared to RMB 99.6 million in the previous fiscal year[5]. - Sales revenue from flake graphite concentrate increased by approximately 7.5% to RMB 109.0 million from RMB 101.3 million in fiscal year 2023[5]. - Gross profit for fiscal year 2024 was approximately RMB 41.6 million, a decrease of about 43.6% from RMB 73.7 million in fiscal year 2023, with a gross margin decline from 36.5% to 29.2%[5]. - The net loss for fiscal year 2024 was approximately RMB 12.5 million, compared to a net profit of RMB 21.3 million in fiscal year 2023, representing a decline of 158.6%[5]. - Total revenue for the fiscal year ending December 31, 2024, was approximately RMB 142.4 million, a year-on-year decrease of 29.5% due to low demand in the natural graphite market and intense competition[14]. - The company recorded a net loss of approximately RMB 12.5 million for the year, compared to a net profit of approximately RMB 21.3 million in the previous year[14]. - Revenue from spherical graphite and its by-products decreased from approximately RMB 996 million in FY2023 to about RMB 294 million in FY2024, a decline of approximately 70.5%[47]. - Revenue from flake graphite concentrate increased from approximately RMB 1,013 million in FY2023 to about RMB 1,090 million in FY2024, an increase of approximately 7.5%[47]. - Total revenue from graphite products decreased to approximately RMB 1,384 million in FY2024, down from approximately RMB 2,010 million in FY2023, a decline of approximately 31.1%[47]. Production and Operations - The company reduced production of spherical graphite due to a slowdown in the downstream anode industry and intensified competition in the graphite market[5]. - The total production of spherical graphite is planned to decrease from approximately 8,700 tons in the previous fiscal year to about 3,200 tons in the current fiscal year[15]. - Sales volume of spherical graphite was 3,089 tons, a decrease of 52.0% year-on-year, with a gross margin of 16.6%, down 18.9 percentage points[15]. - The company focused on mining activities and waste removal at the North Mountain mine, with a total of 2,667,000 tons of material mined in FY2024, including 2,176,000 tons of unprocessed marble and waste[41]. - The company is applying for mining rights for graphite resources below 150 meters elevation at the Beishan mine, with an estimated total resource of approximately 54.9 million tons[16]. - A new beneficiation plant and processing facility are under construction at the Beishan mine to ensure sustainable future capacity growth[17]. - The company completed the acquisition of industrial land in Weihai, Shandong Province, to prepare for downstream supporting facilities[17]. Governance and Management - The board of directors includes executive directors Zhao Liang and Li Weihai, along with independent non-executive directors, ensuring a diverse governance structure[7]. - The company maintains a diversified board structure and emphasizes compliance and risk management to ensure healthy operations[20]. - The company has reported a significant increase in overall financial management and corporate governance under the leadership of CFO Li Weihai, who has over 15 years of experience in accounting and compliance[81]. - The management team includes experienced professionals such as General Manager Wang Guilu, who has been with the company since June 2006, overseeing sales and marketing activities[91]. - The board is committed to maintaining high standards of corporate governance, as reported during the governance report period[96]. - The company emphasizes the importance of effective corporate governance practices to protect shareholder interests and enhance shareholder value[98]. - The board consists of two executive directors and four independent non-executive directors, ensuring strong independent elements[105]. - The company has established various committees, including the audit committee, remuneration committee, nomination committee, and compliance committee[112]. Financial Management - The company recorded a net financial cost of approximately RMB 4.1 million for the fiscal year 2024, compared to a net financial income of approximately RMB 0.9 million for the fiscal year 2023, primarily due to increased borrowing costs[56]. - The effective tax rate for the company's main subsidiaries was 15% for both fiscal years 2024 and 2023, benefiting from government tax incentives[57]. - The company aims to optimize production costs by enhancing graphite mining operations, which is expected to provide a long-term competitive advantage[61]. - The total capitalized costs for mining activities in FY2024 were approximately RMB 10.4 million, compared to RMB 9.3 million in FY2023[40]. - The company has revised the use of net proceeds from the global offering to focus on land acquisition, with RMB 71.7 million allocated for this purpose[62]. - The company has obtained several bank loans and arranged guarantees for these loans during the 2024 fiscal year[180]. Market Outlook - In 2024, China's new energy vehicle production and sales are expected to reach 12.89 million and 12.87 million units, representing year-on-year growth of 34.4% and 35.5% respectively, with new energy vehicles accounting for 40.9% of total vehicle sales, an increase of 9.3 percentage points from 2023[22]. - The global shipment of anode materials is projected to reach 2.21 million tons in 2024, a year-on-year increase of 21.3%, with China's share rising to 95.9%[22]. - The company is optimistic about the long-term market prospects for natural graphite despite current industry challenges, driven by national policies and increasing strategic importance[23]. Corporate Social Responsibility - The company has received the "Green Factory" honor from the China Non-Metallic Mining Industry Association, reflecting its commitment to environmental responsibility[21]. - The company is committed to reducing energy consumption and minimizing environmental impact as part of its corporate social responsibility[166]. Shareholder Relations - The company emphasizes effective communication with shareholders to enhance investor relations[149]. - The company has established a shareholder communication policy to ensure effective and efficient communication with shareholders[149]. - The company is focused on sustainable profit growth and will consider business development needs and financial stability when deciding on dividends[161]. Employee and Board Diversity - The board diversity policy aims to enhance performance quality, with a current composition of 1 female and 5 male directors[123]. - The company emphasizes the importance of candidates' abilities and experiences over gender in recruitment, despite a higher proportion of male employees in the mining industry[122]. - The company aims to enhance employee engagement and accountability to achieve long-term sustainable growth and success in the graphite industry[97].

[Corporate Information](index=3&type=section&id=Corporate%20Information) [Corporate Information and Governance Structure](index=3&type=section&id=Corporate%20Information%20and%20Governance%20Structure) This section outlines China Graphite Group Co., Ltd.'s corporate governance structure and key contact information, including board members, committees, and registration details - The company's Board of Directors includes Mr. Zhao Liang (Chairman and CEO) and Mr. Li Weihai as executive directors, along with four independent non-executive directors[3](index=3&type=chunk) - The company has established an Audit Committee, Nomination Committee, Remuneration Committee, and Compliance Committee to ensure sound corporate governance[3](index=3&type=chunk) - The company's headquarters and principal place of business in China are located in Yan Jun Farm, Luobei County, Hegang City, Heilongjiang Province, China, with stock code 2237[3](index=3&type=chunk) [Definitions](index=4&type=section&id=Definitions) [Report Terminology Definitions](index=4&type=section&id=Report%20Terminology%20Definitions) This section defines key terms and abbreviations used in the interim report, ensuring consistent understanding of content, covering financial periods, company entities, mine names, regulatory bodies, and product types - "First Half of 2024" refers to the six months ended June 30, 2024[6](index=6&type=chunk) - "Beishan Mine" refers to the graphite mine located approximately 28 kilometers northwest of Luobei County, Heilongjiang Province, for which the company obtained mining rights in 2019[6](index=6&type=chunk) - "The Group" or "we" refers to China Graphite Group Co., Ltd. and its subsidiaries[6](index=6&type=chunk) [Chairman's Statement on 2024 Interim Results](index=7&type=section&id=Chairman's%20Statement%20on%202024%20Interim%20Results) [Interim Results Performance](index=8&type=section&id=Interim%20Results%20Performance) The Group's total revenue for the first half of 2024 decreased by **22.8%** year-on-year, gross profit margin significantly dropped to **8.0%**, and a net loss of **RMB 16.2 million** was recorded, impacted by intensified competition in the new energy vehicle industry, a sluggish downstream market, and graphite export controls 2024 First Half Interim Results Performance | Indicator | 2024 First Half (RMB million) | 2023 First Half (RMB million) | Year-on-Year Change (%) | | :--- | :--- | :--- | :--- | | Total Revenue | 36.4 | 47.2 | -22.8% | | Spherical Graphite and By-products Revenue | 10.2 | 34.9 | -70.8% | | Flake Graphite Concentrate Revenue | 25.1 | 11.9 | +110.9% | | Gross Profit | 2.9 | 16.9 | -82.8% | | Gross Profit Margin | 8.0% | 35.8% | -27.8 percentage points | | Net Loss | 16.2 | 3.3 | +390.9% | - Intense competition in the new energy vehicle industry, a sluggish downstream market, and graphite export control measures were the primary reasons for the decline in revenue and profit[14](index=14&type=chunk) [Production and Operations Under Pressure](index=8&type=section&id=Production%20and%20Operations%20Under%20Pressure) In the first half of 2024, the Group faced challenges in product sales volume and pricing due to industry shutdown periods, weak downstream demand, and increased market competition, resulting in a significant decrease in spherical graphite sales volume and gross profit margin, though flake graphite concentrate sales volume increased, with the Group responding by focusing on traditional industry sales and expanding refractory material customers - The first quarter of 2024 was a traditional shutdown period for graphite enterprises in Luobei County, exacerbating weak downstream demand and fierce competition in the industry[16](index=16&type=chunk) 2024 First Half Major Graphite Product Sales Volume | Product Type | 2024 First Half Sales Volume (tonnes) | 2023 First Half Sales Volume (tonnes) | Year-on-Year Change (%) | | :--- | :--- | :--- | :--- | | Spherical Graphite | 923 | 1,899 | -51.4% | | Micro-graphite Powder | 986 | 3,849 | -74.4% | | Flake Graphite Concentrate | 10,109 | 3,689 | +174.0% | 2024 First Half Major Graphite Product Gross Profit Margin | Product Type | 2024 First Half Gross Profit Margin (%) | 2023 First Half Gross Profit Margin (%) | Change (percentage points) | | :--- | :--- | :--- | :--- | | Spherical Graphite Sales Segment | -21.2% (Gross Loss Margin) | 33.0% | -54.2 | | Flake Graphite Concentrate Sales Segment | 20.1% | 44.6% | -24.5 | - The Group increased sales volume of flake graphite concentrate by expanding sales to refractory material customers[16](index=16&type=chunk) [Prudent Development for Future Growth](index=9&type=section&id=Prudent%20Development%20for%20Future%20Growth) The Group is actively advancing the development of the Beishan Mine, applying for mining rights below 150 meters above sea level and planning to increase graphite mining volume to over **500,000 tonnes** annually, while also constructing new beneficiation and processing plants, and has acquired industrial land in Weihai, Shandong, for future downstream development, maintaining an optimistic outlook on the industry's medium to long-term prospects - The Beishan Mine boasts rich and high-grade graphite resources, and the Group is applying for mining rights for resources below 150 meters above sea level[17](index=17&type=chunk) - Plans are underway to increase the graphite mining volume at the Beishan Mine to over **500,000 tonnes** annually to ensure graphite supply[17](index=17&type=chunk) - Approval has been obtained from the National Forestry and Grassland Administration to use forest land near the Beishan Mine for constructing new beneficiation and processing plants[17](index=17&type=chunk) - Successfully acquired industrial land in Weihai City, Shandong Province, preparing for future development of related downstream facilities[18](index=18&type=chunk) - The Group remains optimistic about the medium to long-term development of the graphite and downstream anode industry, adjusting its development pace in the second half of the year based on market changes[18](index=18&type=chunk) [Emphasis on Scientific Research](index=10&type=section&id=Emphasis%20on%20Scientific%20Research) With over two decades of experience in the natural graphite industry, the Group adheres to the philosophy of "deep accumulation for breakthrough innovation," continuously deepening innovation leadership, collaborating with renowned universities and research institutes, holding over **90 patents**, and achieving breakthroughs in advanced processes such as flotation column technology, micro-graphite powder processing into graphene, and airless purification - The Group has over **twenty years** of deep experience in the natural graphite industry, committed to innovation leadership[19](index=19&type=chunk) - As of June 30, 2024, the Group holds over **90 patents**[19](index=19&type=chunk) - Innovatively developed advanced processes including flotation column technology for short-flow graphite beneficiation, micro-graphite powder processing into graphene, and airless purification[19](index=19&type=chunk) [Corporate Governance](index=10&type=section&id=Corporate%20Governance) The Group upholds principles of openness, transparency, and efficiency in corporate governance, strictly complying with listing rules, and ensuring high-level corporate governance through a diversified board structure, compliant operations, and a robust risk management system - The Group adheres to principles of openness, transparency, and efficiency in corporate governance, strictly complying with listing rules[20](index=20&type=chunk) - The diversified board structure, with independent non-executive directors leveraging their experience and expertise, enhances the company's governance structure and decision-making mechanisms[21](index=21&type=chunk) - Strengthened compliance management capabilities, focusing on key areas such as mine exploitation, product R&D, production safety, and product sales, continuously improving compliance review and guidance[21](index=21&type=chunk) - Improved risk management system, enhancing risk foresight, and strengthening supervision from mine to factory in key areas to ensure healthy enterprise operations[21](index=21&type=chunk) [Full Year and Future Outlook](index=11&type=section&id=Full%20Year%20and%20Future%20Outlook) Despite intense competition in the graphite industry during the first half, China's new energy vehicle sector retains growth momentum supported by macro policies, and the Group, leveraging its own mines and the low energy consumption of natural graphite, is actively adapting to the competitive landscape, seizing market opportunities, and enhancing operational performance to create shareholder value - In the first half, tariffs imposed by Europe and the US suppressed the development of China's new energy vehicles, prompting Chinese automakers to explore markets in Africa, Southeast Asia, and South America[23](index=23&type=chunk) - Domestic policies support the development of new energy vehicles, including trade-in subsidies and gradual removal of purchase restrictions[23](index=23&type=chunk) - The Group's own mines ensure natural graphite supply, and natural graphite production has low energy consumption, aligning with national "dual carbon" policy requirements[23](index=23&type=chunk) - The Group is striving to adapt to the industry's competitive landscape, seize market opportunities, and enhance operational performance to create value for shareholders[23](index=23&type=chunk) [Acknowledgements](index=11&type=section&id=Acknowledgements) Chairman Mr. Zhao Liang, on behalf of the Board, extends sincere gratitude to all shareholders, customers, communities, and the Group's employees - Chairman Mr. Zhao Liang, on behalf of the Board, expresses gratitude to all supporters and employees[24](index=24&type=chunk) [Management Discussion and Analysis](index=12&type=section&id=Management%20Discussion%20and%20Analysis) [Exploration, Development and Mining Production Activities](index=12&type=section&id=Exploration,%20Development%20and%20Mining%20Production%20Activities) In the first half of 2024, the Group primarily focused on mining activities at the Beishan Mine, removing waste rock and extracting unprocessed graphite ore, with total extracted material increasing year-on-year, though unprocessed graphite ore volume slightly decreased, and some mining activities were subcontracted to third parties - In the first half of 2024, the Group did not conduct exploration work at the Beishan Mine, focusing mainly on mining activities and waste rock removal[24](index=24&type=chunk) Beishan Mine Extracted Material Volume | Material Type | 2024 First Half (tonnes) | 2023 First Half (tonnes) | Year-on-Year Change (%) | | :--- | :--- | :--- | :--- | | Total Extracted Material | 1,385,000 | 982,000 | +41.0% | | Unprocessed Marble and Waste Rock | 1,256,000 | 823,000 | +52.6% | | Unprocessed Graphite Ore | 129,000 | 159,000 | -18.8% | - Some mining production activities (such as blasting, graphite processing, transportation, equipment leasing) were subcontracted to independent third parties, with total costs of approximately **RMB 8.4 million**[25](index=25&type=chunk) [Mining Costs](index=13&type=section&id=Mining%20Costs) Mining costs increased to approximately **RMB 10.5 million** in the first half of 2024, primarily due to an increase in total extracted material, with blasting services, salaries and benefits, and machinery expenses being the main components Mining Cost Details | Item | 2024 First Half (RMB thousand) | 2023 First Half (RMB thousand) | | :--- | :--- | :--- | | Depreciation | 966 | 1,679 | | Blasting Services | 3,620 | 2,294 | | Fuel Costs | 861 | 758 | | Salaries and Benefits | 1,150 | 1,039 | | Machinery Expenses | 1,880 | 1,534 | | Amortization of Mining Rights | 356 | 458 | | Raw Materials | 977 | 961 | | Repairs and Maintenance | 61 | 42 | | Others | 579 | 403 | | **Total** | **10,450** | **9,171** | - Mining costs increased by approximately **14%**, primarily due to the increase in the total volume of materials extracted in the first half of 2024[26](index=26&type=chunk) [Financial Review](index=13&type=section&id=Financial%20Review) This section provides a detailed review of the Group's financial performance in the first half of 2024, including revenue composition, cost of sales, gross profit, various expenses, and net loss, with total revenue and gross profit significantly declining due to market competition and export controls, leading to an expanded loss 2024 First Half Revenue Composition | Business Segment | 2024 First Half (RMB thousand) | Proportion (%) | 2023 First Half (RMB thousand) | Proportion (%) | | :--- | :--- | :--- | :--- | :--- | | Sales of Spherical Graphite and By-products | 10,233 | 28.1 | 34,867 | 73.9 | | Sales of Flake Graphite Concentrate | 25,107 | 68.9 | 11,939 | 25.3 | | Sales of Unprocessed Marble | 1,097 | 3.0 | 405 | 0.8 | | **Total** | **36,437** | **100.0** | **47,211** | **100.0** | - Total revenue decreased by approximately **22.8%** year-on-year, primarily due to slower market growth in the downstream anode industry, intense competition in the graphite market, and export control measures[31](index=31&type=chunk) - Cost of sales increased by approximately **10.6%** to **RMB 33.5 million**, mainly affected by increased depreciation, maintenance expenses, and inventory impairment provisions[33](index=33&type=chunk) - Gross profit decreased by approximately **82.8%** year-on-year to **RMB 2.9 million**, with gross profit margin falling from **35.8%** to **8.0%**, primarily due to lower spherical graphite prices and sales volume, as well as inventory provisions[34](index=34&type=chunk) - Other income and other gains increased to **RMB 1.3 million**, mainly from government subsidies for R&D activities[36](index=36&type=chunk) - Selling and distribution expenses increased by approximately **47.1%** to **RMB 2.5 million**, mainly due to increased marketing expenses for product promotion[37](index=37&type=chunk) - General and administrative expenses increased by approximately **18.0%** to **RMB 13.1 million**, primarily due to increased office and training expenses and reduced exchange gains[38](index=38&type=chunk) - Research and development expenses decreased to **RMB 3.2 million** due to fewer R&D activities during the period[39](index=39&type=chunk) - Net finance costs were **RMB 2.6 million**, compared to net finance income in the prior period, mainly due to increased interest expenses from higher borrowings[40](index=40&type=chunk) - Income tax expense was **RMB 0.4 million**, primarily due to the reversal of tax credits from 2023 that were denied after reassessment[41](index=41&type=chunk) - Loss after tax for the first half of 2024 expanded to **RMB 16.2 million**, compared to **RMB 3.3 million** in the prior period[42](index=42&type=chunk) [Revenue](index=13&type=section&id=Revenue) Total revenue for the first half of 2024 was **RMB 36.4 million**, a **22.8%** year-on-year decrease, with spherical graphite and by-products sales revenue significantly declining, while flake graphite concentrate sales revenue notably increased, and unprocessed marble sales revenue also rose 2024 First Half Revenue by Business Segment | Business Segment | 2024 First Half (RMB thousand) | Proportion (%) | 2023 First Half (RMB thousand) | Proportion (%) | | :--- | :--- | :--- | :--- | :--- | | Sales of Spherical Graphite and By-products | 10,233 | 28.1 | 34,867 | 73.9 | | Sales of Flake Graphite Concentrate | 25,107 | 68.9 | 11,939 | 25.3 | | Sales of Unprocessed Marble | 1,097 | 3.0 | 405 | 0.8 | | **Total** | **36,437** | **100.0** | **47,211** | **100.0** | [Revenue from Sales of Spherical Graphite and By-products](index=14&type=section&id=Revenue%20from%20Sales%20of%20Spherical%20Graphite%20and%20By-products) In the first half of 2024, revenue from spherical graphite and by-products sales significantly decreased by **70.8%** to **RMB 10.2 million**, primarily due to substantial declines in both sales volume and average selling price for SG-10 and SG-9 spherical graphite models, as well as a significant reduction in micro-graphite powder sales Spherical Graphite and By-products Sales Data | Product Type | 2024 First Half Revenue (RMB thousand) | 2024 First Half Sales Volume (tonnes) | 2024 First Half Average Selling Price (RMB/tonne) | 2023 First Half Revenue (RMB thousand) | 2023 First Half Sales Volume (tonnes) | 2023 First Half Average Selling Price (RMB/tonne) | | :--- | :--- | :--- | :--- | :--- | :--- | :--- | | Spherical Graphite SG-10 | 4,867 | 423 | 11,506 | 10,163 | 638 | 15,929 | | Spherical Graphite SG-9 | 4,204 | 500 | 8,408 | 16,508 | 1,261 | 13,091 | | Subtotal (Spherical Graphite) | 9,071 | 923 | 9,828 | 26,671 | 1,899 | 14,045 | | Micro-graphite Powder | 1,162 | 986 | 1,178 | 8,196 | 3,849 | 2,129 | | **Total** | **10,233** | **1,909** | | **34,867** | **5,748** | | - Revenue from spherical graphite and by-products sales decreased from approximately **RMB 34.9 million** in the first half of 2023 to approximately **RMB 10.2 million** in the first half of 2024[30](index=30&type=chunk) [Revenue from Sales of Flake Graphite Concentrate](index=15&type=section&id=Revenue%20from%20Sales%20of%20Flake%20Graphite%20Concentrate) In the first half of 2024, revenue from flake graphite concentrate sales increased by **110.9%** year-on-year to **RMB 25.1 million**, accounting for **68.9%** of total revenue, with sales volume significantly increasing, particularly for models 194 and 195, despite a decrease in average selling price Flake Graphite Concentrate Sales Data | Product Type | 2024 First Half Revenue (RMB thousand) | 2024 First Half Sales Volume (tonnes) | 2024 First Half Average Selling Price (RMB/tonne) | 2023 First Half Revenue (RMB thousand) | 2023 First Half Sales Volume (tonnes) | 2023 First Half Average Selling Price (RMB/tonne) | | :--- | :--- | :--- | :--- | :--- | :--- | :--- | | 193 | 4,284 | 1,704 | 2,514 | 3,177 | 939 | 3,383 | | 194 | 12,379 | 4,570 | 2,709 | 2,703 | 682 | 3,963 | | 195 | 4,297 | 1,524 | 2,820 | 832 | 201 | 4,139 | | Others | 4,147 | 2,311 | 1,794 | 5,227 | 1,867 | 2,800 | | **Total** | **25,107** | **10,109** | **2,484** | **11,939** | **3,689** | **3,236** | - Revenue from flake graphite concentrate sales increased from approximately **RMB 11.9 million** in the first half of 2023 to approximately **RMB 25.1 million** in the first half of 2024[30](index=30&type=chunk) [Revenue from Sales of Unprocessed Marble](index=16&type=section&id=Revenue%20from%20Sales%20of%20Unprocessed%20Marble) In the first half of 2024, revenue from sales of unprocessed marble increased to approximately **RMB 1.1 million**, primarily driven by increased demand from construction projects in nearby areas Unprocessed Marble Sales Revenue | Indicator | 2024 First Half (RMB million) | 2023 First Half (RMB million) | | :--- | :--- | :--- | | Revenue from Sales of Unprocessed Marble | 1.1 | 0.4 | - The increase in unprocessed marble sales was due to increased demand from certain customers for construction projects in nearby areas[32](index=32&type=chunk) [Cost of Sales](index=16&type=section&id=Cost%20of%20Sales) In the first half of 2024, cost of sales increased to approximately **RMB 33.5 million**, a **10.6%** year-on-year increase, mainly affected by increased depreciation, repair expenses, and inventory impairment provisions Cost of Sales Change | Indicator | 2024 First Half (RMB million) | 2023 First Half (RMB million) | Year-on-Year Change (%) | | :--- | :--- | :--- | :--- | | Cost of Sales | 33.5 | 30.3 | +10.6% | - The increase in cost of sales was primarily due to an increase in depreciation of approximately **RMB 1.1 million** from production machinery and tailings dam improvement projects, an increase in repair expenses of approximately **RMB 0.4 million**, and an increase in inventory impairment provisions of approximately **RMB 1.1 million**[33](index=33&type=chunk) [Gross Profit and Gross Profit Margin](index=17&type=section&id=Gross%20Profit%20and%20Gross%20Profit%20Margin) In the first half of 2024, gross profit significantly decreased to **RMB 2.9 million**, and gross profit margin fell to **8.0%**, with spherical graphite and by-products shifting from gross profit to gross loss, and flake graphite concentrate also experiencing a notable decline in gross profit and gross profit margin, primarily due to market competition and inventory provisions Gross Profit and Gross Profit Margin Details | Business Segment | 2024 First Half Gross Profit (RMB thousand) | 2024 First Half Gross Profit Margin (%) | 2023 First Half Gross Profit (RMB thousand) | 2023 First Half Gross Profit Margin (%) | | :--- | :--- | :--- | :--- | :--- | | Sales of Spherical Graphite and By-products | (2,172) | (21.2) | 11,519 | 33.0 | | Sales of Flake Graphite Concentrate | 5,040 | 20.1 | 5,328 | 44.6 | | Sales of Unprocessed Marble | 55 | 5.0 | 36 | 8.9 | | **Total** | **2,923** | **8.0** | **16,883** | **35.8** | - Spherical graphite and by-products shifted from gross profit to gross loss, primarily due to intense competition in the graphite market leading to lower prices and sales volume, and the recognition of inventory provisions of approximately **RMB 1.1 million**[34](index=34&type=chunk) - Gross profit and gross profit margin for flake graphite concentrate decreased, mainly due to a decline in average selling price from **RMB 3,236** per tonne to **RMB 2,484** per tonne[35](index=35&type=chunk) [Other Income and Other Gains](index=17&type=section&id=Other%20Income%20and%20Other%20Gains) In the first half of 2024, other income and other gains increased to approximately **RMB 1.3 million**, primarily benefiting from the recognition of approximately **RMB 1.6 million** in government subsidies for R&D activities Other Income and Other Gains | Item | 2024 First Half (RMB thousand) | 2023 First Half (RMB thousand) | | :--- | :--- | :--- | | Government Subsidies | 1,598 | - | | Other Income/(Loss) | (257) | 35 | | (Loss)/Gain on Disposal of Property, Plant and Equipment | (23) | 45 | | **Total** | **1,318** | **80** | - The increase was mainly due to the recognition of government subsidies of approximately **RMB 1.6 million** related to R&D activities in the first half of 2024[36](index=36&type=chunk) [Selling and Distribution Expenses](index=18&type=section&id=Selling%20and%20Distribution%20Expenses) In the first half of 2024, selling and distribution expenses increased to approximately **RMB 2.5 million**, a **47.1%** year-on-year increase, primarily due to increased marketing expenses for product promotion Selling and Distribution Expenses Change | Indicator | 2024 First Half (RMB million) | 2023 First Half (RMB million) | Year-on-Year Change (%) | | :--- | :--- | :--- | :--- | | Selling and Distribution Expenses | 2.5 | 1.7 | +47.1% | - The increase was mainly due to an increase in marketing expenses of approximately **RMB 0.6 million** for product promotion in the first half of 2024[37](index=37&type=chunk) [General and Administrative Expenses](index=18&type=section&id=General%20and%20Administrative%20Expenses) In the first half of 2024, general and administrative expenses increased to approximately **RMB 13.1 million**, an **18.0%** year-on-year increase, primarily due to increased office and training expenses and reduced exchange gains General and Administrative Expenses Change | Indicator | 2024 First Half (RMB million) | 2023 First Half (RMB million) | Year-on-Year Change (%) | | :--- | :--- | :--- | :--- | | General and Administrative Expenses | 13.1 | 11.1 | +18.0% | - This was mainly due to an increase in office and training expenses of approximately **RMB 1.2 million** and a decrease in exchange gains of approximately **RMB 0.8 million** from Hong Kong dollar-denominated assets in the first half of 2024[38](index=38&type=chunk) [Research and Development Expenses](index=18&type=section&id=Research%20and%20Development%20Expenses) In the first half of 2024, research and development expenses decreased to approximately **RMB 3.2 million**, primarily due to fewer R&D activities conducted during the period Research and Development Expenses Change | Indicator | 2024 First Half (RMB million) | 2023 First Half (RMB million) | | :--- | :--- | :--- | | Research and Development Expenses | 3.2 | 8.3 | - Research and development expenses decreased in the first half of 2024 due to fewer R&D activities conducted during the period[39](index=39&type=chunk) [Net Finance (Costs)/Income](index=18&type=section&id=Net%20Finance%20(Costs)%2FIncome) In the first half of 2024, the Group recorded net finance costs of approximately **RMB 2.6 million**, compared to net finance income in the prior period, primarily due to increased interest expenses from higher borrowings and interest expenses incurred from land acquisition Net Finance (Costs)/Income | Item | 2024 First Half (RMB thousand) | 2023 First Half (RMB thousand) | | :--- | :--- | :--- | | Finance Income | 338 | 873 | | Finance Costs | (2,924) | (311) | | **Net Finance (Costs)/Income** | **(2,586)** | **562** | - This was mainly due to an increase in interest expenses on borrowings of approximately **RMB 1.5 million** and interest expenses of approximately **RMB 1.1 million** incurred from the acquisition of certain land in the first half of 2024[40](index=40&type=chunk) [Income Tax (Expense)/Credit](index=19&type=section&id=Income%20Tax%20(Expense)%2FCredit) Income tax expense for the first half of 2024 was approximately **RMB 0.4 million**, primarily due to the reversal of tax credits obtained in 2023 after reassessment and denial, with the Group's main operating subsidiaries, as high-tech enterprises, enjoying a preferential tax rate of **15%** Income Tax (Expense)/Credit | Item | 2024 First Half (RMB thousand) | 2023 First Half (RMB thousand) | | :--- | :--- | :--- | | Current Income Tax | - | (2,277) | | Under/(Over) Provision in Prior Years | 639 | (303) | | Deferred Income Tax | (235) | 1,682 | | **Income Tax Expense/(Credit)** | **404** | **(898)** | - The Group's main operating subsidiaries, Yixiang New Energy and Yixiang Graphite, as high-tech enterprises, are subject to a preferential tax rate of **15%**[41](index=41&type=chunk) - Income tax expense was mainly due to the reversal of tax credits obtained for the year ended December 31, 2023, which were denied after reassessment by the Chinese tax authorities during the period[41](index=41&type=chunk) [Loss for the First Half of 2024](index=19&type=section&id=Loss%20for%20the%20First%20Half%20of%202024) The loss after tax for the first half of 2024 expanded to approximately **RMB 16.2 million**, primarily attributable to slower market growth in the downstream anode industry, intense competition in the graphite market, and export control measures leading to a significant decline in revenue and gross profit Loss for the Period | Indicator | 2024 First Half (RMB million) | 2023 First Half (RMB million) | | :--- | :--- | :--- | | Loss After Tax | 16.2 | 3.3 | - The loss was mainly due to slower market growth in the downstream anode industry, intense competition in the graphite market, and graphite export control measures, resulting in a decrease in graphite selling prices and spherical graphite sales volume, with revenue and gross profit decreasing by approximately **RMB 10.8 million** and **RMB 14.0 million**, respectively[43](index=43&type=chunk) [Use of Proceeds from Global Offering](index=19&type=section&id=Use%20of%20Proceeds%20from%20Global%20Offering) The Group has adjusted the use of net proceeds from its global offering, allocating the entire **RMB 71.7 million** to land acquisition to align with its business focus of increasing graphite mining volume to over **500,000 tonnes** annually, and to secure land for the construction of new beneficiation and processing plants - The net proceeds from the global offering were approximately **RMB 71.7 million**[44](index=44&type=chunk) - The Board has shifted its strategic focus from "output-oriented" to "production cost optimization" and adjusted the use of unutilized proceeds[45](index=45&type=chunk) - The net proceeds have been fully utilized for land acquisition to increase graphite mining volume to over **500,000 tonnes** annually and to construct new beneficiation plants, new processing plants, and tailings ponds[45](index=45&type=chunk) Revised Use of Net Proceeds from Global Offering | Business Use Stated in Prospectus | Net Proceeds (RMB million) | Revised Allocation of Net Proceeds (RMB million) | Net Proceeds Utilized as of Report Date (RMB million) | Net Proceeds Unutilized as of Report Date (RMB million) | | :--- | :--- | :--- | :--- | :--- | | Land Acquisition Costs | 23.2 | 71.7 | 71.7 | 0 | | Construction Costs | 22.7 | 0 | 0 | 0 | | Purchase and Installation of Machinery and Equipment | 25.8 | 0 | 0 | 0 | | **Total** | **71.7** | **71.7** | **71.7** | **0** | - Approximately **RMB 71.7 million** of the net proceeds has been utilized for the acquisition of forest land costing approximately **RMB 86.9 million**, with the remaining cost funded by operating cash flow and bank borrowings[45](index=45&type=chunk) [Liquidity, Capital Resources and Capital Structure](index=21&type=section&id=Liquidity,%20Capital%20Resources%20and%20Capital%20Structure) The Group's financial position remains sound, but in the first half of 2024, the current ratio and net cash level decreased, with the gearing ratio turning to **6.8%**, primarily due to reduced trade receivables and increased borrowings resulting from the graphite market downturn - The Group's operations and growth are primarily funded by cash generated from operating activities and bank loans, maintaining a sound financial position[47](index=47&type=chunk) Key Financial Ratios | Indicator | End of 2024 First Half | End of 2023 First Half | | :--- | :--- | :--- | | Net Loss Margin | 44.5% | 7.1% | | Current Ratio (times) | 1.5 | 2.9 | | Gearing Ratio | 6.8% | Not Applicable (Net Cash Position) | - The decrease in the current ratio was mainly due to a reduction in trade receivables and bills receivable of approximately **RMB 86.6 million** and an increase in borrowings of approximately **RMB 60.2 million**, resulting from the graphite market downturn and intense competition[49](index=49&type=chunk) - As of June 30, 2024, the Group's interest-bearing borrowings were approximately **RMB 126.7 million**, with unutilized bank facilities of approximately **RMB 73.2 million**[47](index=47&type=chunk) - As of December 31, 2023, the Group was in a net cash position, while the gearing ratio as of June 30, 2024, was approximately **6.8%**, reflecting increased borrowing to cope with the competitive environment and support development[49](index=49&type=chunk) [Treasury Policy](index=23&type=section&id=Treasury%20Policy) The Board will continue to follow a prudent policy in managing cash balances and maintain strong and robust liquidity to meet working capital needs and business expansion - The Board will continue to follow a prudent policy in managing the Group's cash balances and maintain strong and robust liquidity[50](index=50&type=chunk) [Pledge of the Group's Assets](index=23&type=section&id=Pledge%20of%20the%20Group's%20Assets) The Group's bank financing is secured by guarantees from controlling shareholders, property, land use rights, mining rights, certain trade receivables, and guarantees from subsidiaries - The Group's bank financing is secured by guarantees provided by controlling shareholders, property, land use rights, mining rights, certain trade receivables, and guarantees provided by the Group's subsidiaries[51](index=51&type=chunk) [Contingent Liabilities](index=23&type=section&id=Contingent%20Liabilities) As of June 30, 2024, the Directors confirmed that the Group had no significant contingent liabilities and was not involved in any litigation that could materially adversely affect its business - As of December 31, 2023, and June 30, 2024, the Directors confirmed that the Group had no contingent liabilities[51](index=51&type=chunk) - The Group is not currently involved in any litigation that could materially adversely affect its business, operating results, or financial position[51](index=51&type=chunk) [Financial Risks](index=23&type=section&id=Financial%20Risks) The Group faces interest rate risk, credit risk, liquidity risk, and foreign exchange risk, with management committed to minimizing the impact of these financial risks through prudent policies and monitoring measures - The Group faces interest rate risk, credit risk, and liquidity risk[52](index=52&type=chunk) [Interest Rate Risk](index=23&type=section&id=Interest%20Rate%20Risk) Most of the Group's assets and liabilities are interest-free or bear fixed interest rates, so fair value interest rate risk is not severe, and there is no significant cash flow interest rate risk, thus no interest rate hedging policy is currently in place - Most of the Group's assets and liabilities are interest-free or bear fixed interest rates, so the fair value interest rate risk faced is not severe[53](index=53&type=chunk) - The Group does not face significant cash flow interest rate risk and currently has no interest rate hedging policy[53](index=53&type=chunk) [Credit Risk](index=24&type=section&id=Credit%20Risk) The Group mitigates credit risk by offering credit terms not exceeding three months, managing customer databases, implementing clear credit policies, and regularly assessing expected credit losses on trade receivables - The Group generally offers credit terms not exceeding **three months** to customers to mitigate credit risk[54](index=54&type=chunk) - The sales team is responsible for managing the customer database and implementing clear credit policies, regularly conducting aging analysis and assessment of expected credit losses on trade receivables[54](index=54&type=chunk) [Liquidity Risk](index=24&type=section&id=Liquidity%20Risk) The Group monitors and maintains adequate levels of cash and cash equivalents and monitors bank borrowings to ensure compliance with loan covenants, with the Directors believing there is no significant liquidity risk currently - The Group monitors and maintains levels of cash and cash equivalents that management deems sufficient to fund operations and mitigate the impact of cash flow fluctuations[55](index=55&type=chunk) - Management monitors the utilization of bank borrowings to ensure compliance with loan covenants, and the Directors believe the Group does not have significant liquidity risk[55](index=55&type=chunk) [Foreign Exchange Risk](index=25&type=section&id=Foreign%20Exchange%20Risk) The Group's assets and liabilities are primarily denominated in RMB, with some HKD-denominated deposits facing foreign exchange risk, but this risk is not significant, thus no foreign currency hedging policy is currently in place - The Group's assets and liabilities are primarily denominated in RMB, with most denominated in the functional currency of transaction-related businesses[56](index=56&type=chunk) - Certain HKD-denominated bank deposits face foreign exchange risk, but this risk is not significant to the Group, and there is currently no foreign currency hedging policy[56](index=56&type=chunk) [Purchase, Sale or Redemption of the Company's Listed Securities](index=25&type=section&id=Purchase,%20Sale%20or%20Redemption%20of%20the%20Company's%20Listed%20Securities) In the first half of 2024, neither the Company nor any of its subsidiaries purchased, sold, or redeemed any of the Company's listed securities - In the first half of 2024, neither the Company nor any of its subsidiaries purchased, sold, or redeemed any of the Company's listed securities[57](index=57&type=chunk) [Employees and Remuneration Policy](index=25&type=section&id=Employees%20and%20Remuneration%20Policy) As of June 30, 2024, the Group's total number of employees decreased to **199**, primarily due to staff reductions to control costs amidst intense competition in the graphite industry, with the Group recruiting employees based on industry experience, educational background, and job requirements, offering fixed salaries and allowances Employee Count Change | Indicator | June 30, 2024 | December 31, 2023 | | :--- | :--- | :--- | | Total Employees | 199 | 288 | | Full-time Employees | 150 | 198 | | Mass Outsourcing Service Provider Workers | 49 | 90 | - The decrease in total employees was mainly due to intense competition in the graphite industry, leading the Group to reduce redundant staff to control costs in the first half of 2024[58](index=58&type=chunk) - The Group recruits employees based on various factors such as industry experience in graphite mining, educational background, and job vacancy requirements, paying fixed salaries and other allowances according to position and responsibilities[58](index=58&type=chunk) [Relationships with Suppliers, Customers and Other Stakeholders](index=26&type=section&id=Relationships%20with%20Suppliers,%20Customers%20and%20Other%20Stakeholders) The Group values good relationships with suppliers, customers, communities, and governments, confirming no significant disputes occurred in the first half of 2024 - The Group recognizes the importance of maintaining good relationships with suppliers, customers, communities, and governments[59](index=59&type=chunk) - In the first half of 2024, there were no important or significant disputes between the Group and its suppliers, customers, and/or stakeholders[59](index=59&type=chunk) [Commitments](index=26&type=section&id=Commitments) As of June 30, 2024, the Group had no significant capital commitments - As of June 30, 2024, and December 31, 2023, the Group had no significant capital commitments[60](index=60&type=chunk) [Interim Dividend](index=26&type=section&id=Interim%20Dividend) The Board does not recommend the payment of an interim dividend for the first half of 2024 - The Board does not recommend the payment of an interim dividend for the first half of 2024 (first half of 2023: nil)[61](index=61&type=chunk) [Significant Events After the First Half of 2024](index=26&type=section&id=Significant%20Events%20After%20the%20First%20Half%20of%202024) Except as disclosed in this report, no significant post-balance sheet events occurred for the Company or the Group after June 30, 2024, and up to the date of this report - Except as disclosed in this report, no significant post-balance sheet events occurred for the Company or the Group after June 30, 2024, and up to the date of this report[62](index=62&type=chunk) [Major Investments Held, Major Acquisitions and Disposals of Subsidiaries, Associates and Joint Ventures, and Future Plans for Major Investments or Capital Assets](index=26&type=section&id=Major%20Investments%20Held,%20Major%20Acquisitions%20and%20Disposals%20of%20Subsidiaries,%20Associates%20and%20Joint%20Ventures,%20and%20Future%20Plans%20for%20Major%20Investments%20or%20Capital%20Assets) The Group has completed the acquisition of equity in Shandong Ruisheng Carbon Material Technology Co., Ltd. and land rights for constructing purification facilities and producing lithium-ion battery anode materials, and has also obtained land use rights in Heilongjiang to increase graphite mining volume and build new beneficiation and processing plants - The Group has completed the acquisition of equity in Shandong Ruisheng Carbon Material Technology Co., Ltd. and land rights located in Weihai City, Nanhai New District, Shandong Province, China, for constructing purification facilities and producing anode materials for lithium-ion batteries[62](index=62&type=chunk) - Formal approval has been obtained from the National Forestry and Grassland Administration for the acquisition of forest land use rights in Luobei County, Hegang City, Heilongjiang, China, at a cost of **RMB 86,922**[63](index=63&type=chunk) - This forest land will be used to increase graphite mining volume to over **500,000 tonnes** annually, and to construct new beneficiation plants, new processing plants, and tailings ponds[63](index=63&type=chunk) - As of the date of this report, the Board has not approved any other plans for major investments or additions to capital assets[63](index=63&type=chunk) [Share Option Scheme](index=27&type=section&id=Share%20Option%20Scheme) In the first half of 2024, no share options were granted, lapsed, exercised, or cancelled under the share option scheme, and there were no outstanding share options - In the first half of 2024, no share options were granted, lapsed, exercised, or cancelled under the share option scheme[64](index=64&type=chunk) - As of the date of this interim report, there were no outstanding share options[64](index=64&type=chunk) [Directors' Interests in Contracts](index=27&type=section&id=Directors'%20Interests%20in%20Contracts) As of June 30, 2024, none of the Company's Directors had any direct or indirect material interest in any contract entered into by the Company or its subsidiaries during the first half of 2024 that had a significant impact on the Group's business - As of June 30, 2024, none of the Company's Directors had any direct or indirect material interest in any contract entered into by the Company, its holding company, its subsidiaries, or any of its fellow subsidiaries during the first half of 2024 that had a significant impact on the Group's business[65](index=65&type=chunk) [Directors' and Chief Executive's Interests and Short Positions in Shares, Underlying Shares and Debentures](index=28&type=section&id=Directors'%20and%20Chief%20Executive's%20Interests%20and%20Short%20Positions%20in%20Shares,%20Underlying%20Shares%20and%20Debentures) As of June 30, 2024, Mr. Zhao Liang, Chairman and CEO, beneficially owned **75.0%** of the Company's issued shares through Sandy Mining Limited, making him the major controlling shareholder, with no other Directors or chief executives holding disclosable interests in shares or underlying shares Directors' and Chief Executive's Interests in Shares | Name of Director/Chief Executive of the Company | Position | Capacity/Nature of Interest | Number of Shares Held | Approximate Percentage of Total Issued Shares of the Company | | :--- | :--- | :--- | :--- | :--- | | Mr. Zhao Liang | Chairman, Executive Director and Chief Executive Officer | Interest in Controlled Corporation | 1,200,000,000 | 75.0% | - Mr. Zhao Liang beneficially owns **75.0%** of the issued shares through Sandy Mining Limited and is deemed to have an interest under the Securities and Futures Ordinance[67](index=67&type=chunk) - Save as disclosed above, no other Directors or chief executives of the Company had any disclosable interests or short positions in the shares, underlying shares, or debentures of the Company or any of its associated corporations[68](index=68&type=chunk) [Directors' Rights to Acquire Shares or Debentures](index=29&type=section&id=Directors'%20Rights%20to%20Acquire%20Shares%20or%20Debentures) At no time during the first half of 2024 did the Company or any of its subsidiaries enter into any arrangements enabling Directors to acquire benefits by purchasing shares or debentures of the Company or any other corporate entity, nor did any Director, their spouse, or children under 18 years of age possess any rights to subscribe for equity or debt securities of the Company or any other corporate entity - At no time during the first half of 2024 did the Company or any of its subsidiaries enter into any arrangements enabling Directors to acquire benefits by purchasing shares or debentures of the Company or any other corporate entity[70](index=70&type=chunk) - No Director, nor their spouse or children under the age of 18, had any right to subscribe for equity or debt securities of the Company or any other corporate entity, nor had any such rights been exercised[70](index=70&type=chunk) [Substantial Shareholders' and Other Persons' Interests and Short Positions in Shares and Underlying Shares](index=29&type=section&id=Substantial%20Shareholders'%20and%20Other%20Persons'%20Interests%20and%20Short%20Positions%20in%20Shares%20and%20Underlying%20Shares) As of June 30, 2024, apart from the Directors and chief executive, Sandy Mining Limited, as a substantial shareholder, beneficially owned **75.0%** of the Company's issued shares, with no other persons holding disclosable interests of **5%** or more Substantial Shareholders' and Other Persons' Interests in Shares | Name of Substantial Shareholder/Other Person of the Company | Nature of Interest | Number of Shares Held | Approximate Percentage of Total Issued Shares of the Company | | :--- | :--- | :--- | :--- | | Sandy Mining Limited | Beneficial Owner | 1,200,000,000 | 75.0% | - Save as disclosed above, the Company was not aware of any other persons (other than the Directors and chief executive of the Company) who had disclosable interests of **5%** or more in the shares and underlying shares[72](index=72&type=chunk) [Compliance with Relevant Laws and Regulations](index=30&type=section&id=Compliance%20with%20Relevant%20Laws%20and%20Regulations) To the best of the Board's and management's knowledge, the Group has complied in all material respects with relevant laws and regulations that have a significant impact on its business and operations, with no serious breaches or non-compliance with applicable laws and regulations in the first half of 2024 - The Group has complied in all material respects with relevant laws and regulations that have a significant impact on its business and operations[73](index=73&type=chunk) - In the first half of 2024, the Group had no serious breaches or non-compliance with applicable laws and regulations[73](index=73&type=chunk) [Compliance with Corporate Governance Code](index=30&type=section&id=Compliance%20with%20Corporate%20Governance%20Code) The Company is committed to maintaining a high level of corporate governance and has complied with all applicable provisions of the Corporate Governance Code in the first half of 2024, except for the non-segregation of Chairman and CEO functions (Code Provision C.2.1), which the Board believes benefits Group management and is effectively balanced by independent directors - The Company is committed to achieving and maintaining the highest level of corporate governance that best suits the needs and interests of the Company and its subsidiaries[74](index=74&type=chunk) - In the first half of 2024, the Company complied with all applicable code provisions of the Corporate Governance Code, save for code provision C.2.1 of Part 2 of the Corporate Governance Code[74](index=74&type=chunk) - Mr. Zhao Liang holds both the positions of Chairman and Chief Executive Officer of the Company, which the Board believes benefits the Group's management and is effectively balanced by experienced senior management and the Board[75](index=75&type=chunk) [Compliance with Model Code](index=31&type=section&id=Compliance%20with%20Model%20Code) The Company has adopted the Model Code for Securities Transactions by Directors of Listed Issuers as set out in Appendix 10 to the Listing Rules, and all Directors have confirmed their compliance with the Code throughout the first half of 2024 - The Company has adopted the Model Code for Securities Transactions by Directors of Listed Issuers as set out in Appendix 10 to the Listing Rules[76](index=76&type=chunk) - All Directors have confirmed that they have complied with the required trading standards and conduct guidelines for Directors' securities transactions as set out in the Model Code throughout the first half of 2024[76](index=76&type=chunk) [Board Committees](index=31&type=section&id=Board%20Committees) The Board has established an Audit Committee, Remuneration Committee, Nomination Committee, and Compliance Committee, each operating under terms of reference adopted by the Board to enhance corporate governance and decision-making efficiency - The Board has established an Audit Committee, Remuneration Committee, Nomination Committee, and Compliance Committee[77](index=77&type=chunk) [Audit Committee](index=31&type=section&id=Audit%20Committee) The Audit Committee comprises four members, with Mr. Zhao Zhiqiao, an independent non-executive Director, serving as Chairman, and its primary responsibilities include recommending the appointment of auditors, reviewing financial statements, and overseeing internal control and risk management systems - The Audit Committee comprises four members, with Mr. Zhao Zhiqiao, an independent non-executive Director with appropriate accounting and financial management expertise, serving as Chairman[78](index=78&type=chunk) - Its primary responsibilities are to make recommendations to the Board on the appointment, re-appointment, and removal of external auditors; review financial statements; provide important advice on financial reporting procedures; and oversee internal control and risk management systems[78](index=78&type=chunk) [Remuneration Committee](index=31&type=section&id=Remuneration%20Committee) The Remuneration Committee comprises five members, with Mr. Liu Zezheng serving as Chairman, and its primary responsibility is to make recommendations to the Board on the remuneration policy, structure, and terms of Directors and senior management - The Remuneration Committee comprises five members, including four independent non-executive Directors and one executive Director, with Mr. Liu Zezheng serving as Chairman of the committee[79](index=79&type=chunk) - Its primary responsibilities are to make recommendations to the Board on the remuneration policy and structure for Directors and senior management, and on establishing formal and transparent procedures for developing remuneration policy[79](index=79&type=chunk) [Nomination Committee](index=32&type=section&id=Nomination%20Committee) The Nomination Committee comprises five members, with Mr. Zhao Liang serving as Chairman, and its primary responsibilities are to review the Board's structure, size, and composition, and to make recommendations on Director appointments and Board management - The Nomination Committee comprises five members, including four independent non-executive Directors and one executive Director, with Mr. Zhao serving as Chairman of the committee[81](index=81&type=chunk) - Its primary responsibilities are to make recommendations to review the Board's structure, size, and composition (including skills, knowledge, and experience); and to review and make recommendations to the Board on matters relating to the appointment of Directors and Board management[81](index=81&type=chunk) [Compliance Committee](index=32&type=section&id=Compliance%20Committee) The Compliance Committee comprises three members, with Mr. Liu Zezheng serving as Chairman, and its primary responsibilities are to ensure compliance with regulatory matters and to oversee the adequacy and effectiveness of regulatory compliance procedures and systems - The Compliance Committee comprises three members, including two independent non-executive Directors and one executive Director, with Mr. Liu Zezheng serving as Chairman of the committee[82](index=82&type=chunk) - Its primary responsibilities are to ensure compliance with regulatory matters and to oversee the adequacy and effectiveness of regulatory compliance procedures and systems[82](index=82&type=chunk) [Review of Interim Results](index=32&type=section&id=Review%20of%20Interim%20Results) The Company's Audit Committee has reviewed the Group's interim results for the first half of 2024 and this interim report, concluding that the unaudited interim condensed consolidated financial statements comply with applicable accounting standards and Listing Rules and provide adequate disclosure - The Group's interim results for the first half of 2024 and this interim report have been reviewed by the Audit Committee[83](index=83&type=chunk) - The Audit Committee is of the opinion that the Group's unaudited interim condensed consolidated financial statements for the first half of 2024 comply with applicable accounting standards and Listing Rules and provide adequate disclosure[83](index=83&type=chunk) [Financial Performance](index=33&type=section&id=Financial%20Performance) [Interim Condensed Consolidated Statement of Comprehensive Income](index=33&type=section&id=Interim%20Condensed%20Consolidated%20Statement%20of%20Comprehensive%20Income) For the six months ended June 30, 2024, the Group's total revenue was **RMB 36,437 thousand**, gross profit was **RMB 2,923 thousand**, loss for the period and total comprehensive loss was **RMB 16,218 thousand**, and basic and diluted loss per share was **RMB 1.01 cents** Summary of Interim Condensed Consolidated Statement of Comprehensive Income | Item | 2024 First Half (RMB thousand) | 2023 First Half (RMB thousand) | | :--- | :--- | :--- | | Revenue | 36,437 | 47,211 | | Cost of Sales | (33,514) | (30,328) | | Gross Profit | 2,923 | 16,883 | | Other Income and Other Gains | 1,318 | 80 | | Selling and Distribution Expenses | (2,531) | (1,721) | | General and Administrative Expenses | (13,093) | (11,129) | | Research and Development Expenses | (3,239) | (8,300) | | Impairment Loss on Financial Assets | 1,443 | (316) | | Operating Loss | (13,179) | (4,503) | | Net Finance (Costs)/Income | (2,586) | 562 | | Share of Loss of an Associate | - | (49) | | Loss Before Income Tax | (15,814) | (4,240) | | Income Tax (Expense)/Credit | (404) | (898) | | **Loss and Total Comprehensive Loss for the Period** | **(16,218)** | **(3,342)** | | Loss and Total Comprehensive Loss Attributable to Owners of the Company | (16,218) | (3,342) | | Loss Per Share — Basic and Diluted (cents) | (1.01) | (0.21) | [Interim Condensed Consolidated Statement of Financial Position](index=34&type=section&id=Interim%20Condensed%20Consolidated%20Statement%20of%20Financial%20Position) [Interim Condensed Consolidated Statement of Financial Position](index=34&type=section&id=Interim%20Condensed%20Consolidated%20Statement%20of%20Financial%20Position) As of June 30, 2024, the Group's total assets were **RMB 606,435 thousand**, total liabilities were **RMB 173,844 thousand**, and total equity attributable to owners of the Company was **RMB 432,591 thousand**, with both non-current assets and current liabilities increasing Summary of Interim Condensed Consolidated Statement of Financial Position | Item | June 30, 2024 (RMB thousand) | December 31, 2023 (RMB thousand) | | :--- | :--- | :--- | | **Assets** | | | | Non-current Assets | 355,062 | 232,635 | | Current Assets | 251,373 | 342,990 | | **Total Assets** | **606,435** | **575,625** | | **Equity** | | | | Total Equity Attributable to Owners of the Company | 432,591 | 448,809 | | **Liabilities** | | | | Non-current Liabilities | 7,268 | 8,926 | | Current Liabilities | 166,576 | 117,890 | | **Total Liabilities** | **173,844** | **126,816** | | **Total Equity and Liabilities** | **606,435** | **575,625** | - The increase in non-current assets was mainly due to an increase in property, plant and equipment, right-of-use assets, and prepayments[86](index=86&type=chunk) - The increase in current liabilities was mainly due to an increase in borrowings and contract liabilities[87](index=87&type=chunk) [Interim Condensed Consolidated Statement of Changes in Equity](index=36&type=section&id=Interim%20Condensed%20Consolidated%20Statement%20of%20Changes%20in%20Equity) [Interim Condensed Consolidated Statement of Changes in Equity](index=36&type=section&id=Interim%20Condensed%20Consolidated%20Statement%20of%20Changes%20in%20Equity) For the six months ended June 30, 2024, total equity attributable to owners of the Company decreased from **RMB 270,908 thousand** at the beginning of the period to **RMB 255,143 thousand**, primarily due to a loss for the period of **RMB 16,218 thousand** Summary of Interim Condensed Consolidated Statement of Changes in Equity | Item | Share Capital (RMB thousand) | Share Premium (RMB thousand) | Statutory Reserve (RMB thousand) | Other Reserves (RMB thousand) | Retained Earnings (RMB thousand) | Total (RMB thousand) | | :--- | :--- | :--- | :--- | :--- | :--- | :--- | | Balance at January 1, 2024 | 1,375 | 303,829 | 15,193 | (142,496) | 270,908 | 447,434 | | Loss and Total Comprehensive Loss for the Period | - | - | - | - | (16,218) | (16,218) | | Transfer to Other Reserves | - | - | - | (453) | 453 | - | | **Balance at June 30, 2024** | **1,375** | **303,829** | **15,193** | **(142,949)** | **255,143** | **431,216** | - A loss for the period of **RMB 16,218 thousand** was the main reason for the decrease in total equity[89](index=89&type=chunk) [Interim Condensed Consolidated Statement of Cash Flows](index=37&type=section&id=Interim%20Condensed%20Consolidated%20Statement%20of%20Cash%20Flows) [Interim Condensed Consolidated Statement of Cash Flows](index=37&type=section&id=Interim%20Condensed%20Consolidated%20Statement%20of%20Cash%20Flows) For the six months ended June 30, 2024, the Group's net cash from operating activities was **RMB 62,640 thousand**, net cash used in investing activities was **RMB 138,136 thousand**, and net cash from financing activities was **RMB 58,327 thousand**, resulting in a net decrease in cash and cash equivalents of **RMB 17,169 thousand** Summary of Interim Condensed Consolidated Statement of Cash Flows | Item | 2024 First Half (RMB thousand) | 2023 First Half (RMB thousand) | | :--- | :--- | :--- | | Net Cash from Operating Activities | 62,640 | 66,066 | | Net Cash Used in Investing Activities | (138,136) | (28,833) | | Net Cash from/(Used in) Financing Activities | 58,327 | (24,058) | | **Net (Decrease)/Increase in Cash and Cash Equivalents** | **(17,169)** | **13,175** | | Cash and Cash Equivalents at Beginning of Period | 111,918 | 110,182 | | Effect of Exchange Rate Changes on Cash and Cash Equivalents | 94,933 | 184 | | **Cash and Cash Equivalents at End of Period** | **94,933** | **113,434** | - Net cash outflow from investing activities significantly increased, mainly due to the purchase of property, plant and equipment and land use rights[90](index=90&type=chunk) - Net cash inflow from financing activities was primarily from proceeds from borrowings[90](index=90&type=chunk) [Notes to the Interim Condensed Consolidated Financial Information](index=38&type=section&id=Notes%20to%20the%20Interim%20Condensed%20Consolidated%20Financial%20Information) [1 General Information](index=38&type=section&id=1%20General%20Information) China Graphite Group Co., Ltd. was incorporated in the Cayman Islands and primarily engages in the manufacturing and sale of graphite products, with Mr. Zhao Liang as the ultimate controlling party, and its shares were listed on the Main Board of the Stock Exchange on July 18, 2022 - The Company was incorporated in the Cayman Islands as an exempted company with limited liability on August 3, 2020[92](index=92&type=chunk) - The Company and its subsidiaries are principally engaged in the manufacturing and sale of graphite products[92](index=92&type=chunk) - The Company's ultimate holding company is Sandy Mining Limited, and the ultimate controlling party is Mr. Zhao Liang[92](index=92&type=chunk) - The Company's shares were listed on the Main Board of The Stock Exchange of Hong Kong Limited on July 18, 2022[92](index=92&type=chunk) [2 Basis of Presentation](index=38&type=section&id=2%20Basis%20of%20Presentation) This interim condensed consolidated financial information is presented in RMB, rounded to the nearest thousand, approved for publication by the Board on August 28, 2024, is unaudited, and prepared in accordance with Hong Kong Accounting Standard 34 - This interim condensed consolidated financial information is presented in RMB, and all values have been rounded to the nearest thousand[92](index=92&type=chunk) - This interim condensed consolidated financial information is unaudited and was approved for publication by the Board on August 28, 2024[92](index=92&type=chunk) - This interim condensed consolidated financial information has been prepared in accordance with Hong Kong Accounting Standard 34 "Interim Financial Reporting" issued by the Hong Kong Institute of Certified Public Accountants[92](index=92&type=chunk) [3 Accounting Policies](index=38&type=section&id=3%20Accounting%20Policies) The accounting policies applied are consistent with those of the previous financial year, except for estimated income tax and the adoption of certain new and revised standards, which management has initially assessed and expects will not have a significant impact on the Group's financial position and operating results - The accounting policies applied are consistent with those used in the previous financial year and the corresponding interim reporting period, except for estimated income tax and the adoption of the following new and revised standards[92](index=92&type=chunk) - The Group has adopted several new or revised standards, but they have no significant financial impact on the interim condensed consolidated financial information[94](index=94&type=chunk) - Management has conducted a preliminary assessment and expects that the new and revised standards and interpretations not yet effective will not have any significant impact on the Group's financial position and operating results[94](index=94&type=chunk) [4 Significant Accounting Estimates and Judgements](index=40&type=section&id=4%20Significant%20Accounting%20Estimates%20and%20Judgements) The preparation of interim condensed consolidated financial information requires management to make judgments, estimates, and assumptions that affect the application of accounting policies and the amounts reported in the financial statements, with the primary sources of estimation uncertainty consistent with those described in the 2023 annual consolidated financial statements - In preparing this interim condensed consolidated financial information, the significant judgments made by management in applying the Group's accounting policies and the primary sources of estimation uncertainty are consistent with those described in the annual consolidated financial statements for the year ended December 31, 2023[95](index=95&type=chunk) [5 Financial Risk Management](index=40&type=section&id=5%20Financial%20Risk%20Management) The Group faces foreign exchange risk, cash flow and fair value interest rate risk, credit risk, and liquidity risk, with risk management plans aimed at minimizing potential adverse effects, and risk management policies remaining unchanged since December 31, 2023 - The Group's activities expose it to various financial risks, including foreign exchange risk, cash flow and fair value interest rate risk, credit risk, and liquidity risk[97](index=97&type=chunk) - The Group's overall risk management program aims to minimize potential adverse effects on the Group's financial performance due to the unpredictability of financial markets[97](index=97&type=chunk) - Risk management policies have not changed since December 31, 2023[97](index=97&type=chunk) [5.1 Financial Risk Factors](index=40&type=section&id=5.1%20Financial%20Risk%20Factors) The Group's activities expose it to various financial risks, including foreign exchange risk, cash flow and fair value interest rate risk, credit risk, and liquidity risk, and it is committed to minimizing the potential adverse effects of these risks - The Group's activities expose it to various financial risks, including foreign exchange risk, cash flow and fair value interest rate risk, credit risk, and liquidity risk[97](index=97&type=chunk) [5.2 Fair Value Estimation](index=40&type=section&id=5.2%20Fair%20Value%20Estimation) The carrying amounts of trade receivables, bills receivable, deposits, other receivables, cash and cash equivalents, as well as trade payables, accrued expenses, other payables, and borrowings, after deducting impairment provisions, are assumed to approximate their fair values - The carrying amounts of trade receivables and bills receivable, deposits, other receivables and cash and cash equivalents, as well as trade payables, accrued expenses and other payables and borrowings, net of impairment provisions, are assumed to approximate their fair values[98](index=98&type=chunk) [5.3 Capital Risk Management](index=41&type=section&id=5.3%20Capital%20Risk%20Management) The Group manages capital to safeguard its ability to continue as a going concern and maximize shareholder returns, maintaining its capital structure by monitori

Financial Performance - China Graphite Group Limited announced its interim results for the six months ending June 30, 2024[1]. - The company reported a significant increase in revenue, with a year-on-year growth of 25%[2]. - For the first half of 2024, the group's total revenue was approximately RMB 36.4 million, a year-on-year decrease of 22.8%[16]. - The group recorded a net loss of approximately RMB 16.2 million, compared to a net loss of RMB 3.3 million in the same period last year[16]. - The net loss after tax for the first half of 2024 was approximately RMB 16.2 million, compared to RMB 3.3 million in the same period of 2023, attributed to intensified market competition and export restrictions[43]. - The company reported revenue of RMB 36,437,000 for the six months ending June 30, 2024, compared to RMB 33,514,000 for the same period in 2023, representing an increase of approximately 9%[85]. - The gross profit for the period was RMB 2,923,000, with a gross margin of approximately 8%[85]. - The net loss for the period was RMB 16,218,000, compared to a net loss of RMB 11,129,000 in the previous year, indicating a deterioration in performance[85]. - Basic and diluted loss per share was RMB 1.01, compared to RMB 0.21 in the prior year[85]. Revenue Breakdown - Sales revenue from spherical graphite and its by-products was approximately RMB 10.2 million, down from RMB 34.9 million in the same period last year[16]. - Revenue from the sale of spherical graphite and its by-products decreased to approximately RMB 10.23 million in the first half of 2024, down from RMB 34.87 million in the same period of 2023, representing a decline of about 70.7%[31]. - Total revenue from graphite product sales fell to approximately RMB 35.3 million in the first half of 2024, a decrease of about 24.6% from RMB 46.8 million in the first half of 2023[32]. - Revenue from the sale of flake graphite concentrate accounted for approximately 68.9% of total revenue in the first half of 2024, compared to 25.3% in the same period of 2023[30]. - For the six months ended June 30, 2024, the total revenue from the sale of flake graphite was RMB 28,484,000 (with inter-segment revenue of RMB 3,377,000), while the revenue from the sale of spherical graphite and its by-products was RMB 16,480,000 (with inter-segment revenue of RMB 5,150,000), totaling RMB 44,964,000 (with inter-segment revenue of RMB 8,527,000)[103]. Cost and Expenses - Sales cost in the first half of 2024 rose to approximately RMB 33.5 million, a 10.6% increase from RMB 30.3 million in the first half of 2023, primarily due to increased depreciation and maintenance expenses[34]. - The gross profit margin for spherical graphite sales was 21.2%, down from 33.0% in the same period last year[17]. - The gross profit from the sale of flake graphite decreased from approximately RMB 5.3 million and a gross margin of 44.6% in the first half of 2023 to approximately RMB 5.0 million and a gross margin of 20.1% in the first half of 2024[36]. - The company incurred capital expenditures of RMB 138,136,000 during the period, primarily for the purchase of property, plant, and equipment[91]. - The total expenses amounted to RMB 52,377,000, with significant costs in raw materials and production[116]. Market and Strategic Outlook - The company provided a positive outlook, projecting a revenue growth of 20% for the next fiscal year[2]. - New product development includes the launch of a high-purity graphite line, expected to contribute an additional 10% to revenue[2]. - The company is expanding its market presence in Southeast Asia, targeting a 30% market share by 2025[2]. - A strategic acquisition of a local competitor is in progress, which is anticipated to enhance production capacity by 40%[2]. - The company remains optimistic about the long-term development of the graphite industry despite current adjustments[19]. - The Chinese government's supportive policies for the new energy vehicle industry are expected to drive future growth[24]. Operational Efficiency and Investments - The company is investing in new technologies to improve production efficiency, aiming for a 15% reduction in operational costs[2]. - The group plans to increase the graphite extraction volume at the Beishan mine to over 500,000 tons per year to ensure stable supply[18]. - The company has shifted its strategic focus from "production-oriented" to "production cost optimization" to enhance operational efficiency[46]. - The company has implemented a prudent cash management policy to ensure sufficient liquidity for operational needs and business expansion[51]. Corporate Governance and Compliance - The company has complied with all applicable corporate governance codes, except for the specific provision C.2.1 regarding the separation of the roles of Chairman and CEO[75]. - The Audit Committee has reviewed the interim financial results for the first half of 2024 and confirmed that the unaudited interim consolidated financial statements comply with applicable accounting standards and listing rules[84]. - The company has established various committees, including the Audit Committee, Remuneration Committee, Nomination Committee, and Compliance Committee, to ensure effective governance and oversight[78][80][82][83]. - There were no significant violations of applicable laws and regulations during the first half of 2024[74]. - The company is committed to maintaining a high level of corporate governance to protect shareholder interests and enhance shareholder value[75]. Employee and Management Information - As of June 30, 2024, the group had a total of 199 employees, a decrease from 288 employees as of December 31, 2023, primarily due to cost control measures in response to intense competition in the graphite industry[59]. - For the six months ended June 30, 2024, the total remuneration for key management personnel was RMB 2,428,000, an increase from RMB 2,368,000 in the same period of 2023, reflecting a growth of approximately 2.5%[186]. - Employee benefits expenses for Zhao Changshan, Zhao Changhai, and Zhang Yuqin amounted to RMB 360,000, consistent with the previous year, while Sun Yao's expenses remained at RMB 378,000[184]. Financial Position and Liquidity - The company's total borrowings increased to approximately RMB 126.7 million as of June 30, 2024, compared to RMB 66.4 million at the end of 2023[48]. - The current ratio decreased to 1.5 as of June 30, 2024, down from 2.9 at the end of 2023, primarily due to a decline in trade receivables[49][50]. - The company maintains a strong cash position with cash and cash equivalents of approximately RMB 94.9 million as of June 30, 2024[48]. - The company faces financial risks including interest rate risk, credit risk, and liquidity risk, but currently does not have significant exposure to these risks[53][54][56]. - The company's cash and cash equivalents were RMB 94,933,000 as of June 30, 2024, a decrease from RMB 111,918,000 at the end of 2023, indicating tighter liquidity conditions[156]. Acquisitions and Investments - The group successfully acquired industrial land in Weihai, Shandong Province, for future downstream development[19]. - The group acquired equity and land rights of Shandong Ruisheng Carbon Material Technology Co., Ltd. for RMB 55,888,422, with RMB 27,944,211 paid as of the announcement date[63]. - The group obtained formal approval for the acquisition of land use rights in Heilongjiang for RMB 86,922, aimed at increasing graphite extraction capacity to over 500,000 tons annually[64]. Risk Management - The overall risk management plan aims to minimize potential adverse effects on the group's financial performance due to unpredictable financial market conditions[98]. - The company has a maximum credit risk exposure of RMB 94,931,000 as of June 30, 2024, down from RMB 111,917,000 at the end of 2023, indicating a reduction in financial risk[155].

Financial Performance - Total revenue for the fiscal year 2023 was approximately RMB 201.99 million, a decrease of about 26.2% compared to RMB 273.60 million in fiscal year 2022[2]. - Gross profit for fiscal year 2023 was approximately RMB 73.66 million, a decrease of 45.8% from RMB 135.90 million in fiscal year 2022, with a gross margin dropping from 49.7% to 36.5%[2][3]. - Net profit for fiscal year 2023 was approximately RMB 21.32 million, down 73.0% from RMB 78.98 million in the previous year[2][3]. - The total sales revenue from graphite products fell to approximately RMB 201 million in fiscal year 2023, down from RMB 269.7 million in fiscal year 2022, representing a decrease of about 25.5%[47]. - The net profit after tax decreased from approximately RMB 79.0 million in fiscal year 2022 to about RMB 21.3 million in fiscal year 2023, primarily due to a decline in revenue and gross profit[61]. Revenue Breakdown - Sales revenue from spherical graphite and its by-products was approximately RMB 99.63 million, down 24.1% from RMB 131.33 million in the previous year[3]. - Sales revenue from flake graphite concentrate was approximately RMB 101.33 million, a decline of 26.8% from RMB 138.34 million in fiscal year 2022[3]. - The sales volume of spherical graphite was 6,440 tons, a year-on-year decrease of 10.2%, with a gross margin of 35.5%, down 9.9 percentage points[16]. - The sales volume of flake graphite concentrate was 36,348 tons, a year-on-year decrease of 0.1%, with a gross margin of 37.8%, down 16.9 percentage points[16]. Dividend and Reserves - The board of directors decided not to recommend a final dividend for fiscal year 2023, compared to a dividend of 1.6 HK cents in fiscal year 2022[3]. - The company aims to retain reserves for future expansion, indicating a strategic focus on growth despite current financial challenges[3]. Market Conditions - The company anticipates continued challenges in the graphite industry due to increased competition and declining product prices[3]. - The overall market environment remains challenging, with a significant price war in the lithium-ion battery industry impacting the natural graphite market[12]. Production and Capacity - The production of flake graphite concentrate increased from 52,000 tons in the fiscal year 2022 to approximately 57,000 tons in fiscal year 2023, a year-on-year growth of about 9.6%[16]. - The annual production capacity for flake graphite concentrate and spherical graphite is approximately 60,000 tons and 10,000 tons, respectively, with significant increases expected upon the completion of a new processing plant[20]. - The company plans to increase graphite extraction capacity to over 500,000 tons per year, focusing on production cost optimization[66]. Research and Development - The company holds over 90 patents and has developed advanced processes such as flotation column technology and fluorine-free purification, reflecting its strong R&D capabilities[22]. - Research and development expenses increased to approximately RMB 17.2 million in fiscal year 2023, a rise of about 49.6% from RMB 11.5 million in fiscal year 2022[57]. Cash Flow and Financing - Operating cash flow for fiscal year 2023 was RMB 27.633 million, down from RMB 77.335 million in 2022[71]. - Financing cash inflow for fiscal year 2023 was RMB 30.941 million, mainly from bank loans of RMB 56.4 million, offset by dividend payments of RMB 23 million[75]. - The company has secured bank financing with a total approved credit line of RMB 140 million, with RMB 16.964 million in bank loans and RMB 29.464 million in discounted bill financing drawn at interest rates of 3.85% and 3.50% respectively[80]. Corporate Governance - The board of directors is responsible for overseeing the company's overall strategy and business performance, including financial performance and risk management systems[122]. - The company has complied with all applicable corporate governance code provisions during the reporting period, except for a specific provision related to the chairman and CEO[120]. - The company emphasizes effective corporate governance practices as a fundamental element to protect shareholder interests and enhance shareholder value[120]. Employee and Management - Employee count increased to 288 as of December 31, 2023, from 196 in FY2022, aligning with expected production increases to support business growth[82]. - The company aims to enhance the proportion of female employees in senior management positions through targeted hiring and promotion strategies[160]. Risk Management - The risk management and internal control systems have been reviewed and deemed effective, with no significant concerns identified during the annual assessment[169]. - The company employs a self-assessment method for risk control and management, regularly evaluating its risk status[168]. Future Outlook - The company provided a positive outlook for the next fiscal year, projecting a revenue growth of 10% to 12%[99]. - New product launches are expected to contribute an additional 200 million in revenue in the upcoming year[99].

Corporate Governance - The Audit Committee held two meetings during the reporting period to review and discuss the interim and final performance of the company and its subsidiaries[6]. - The company has established a Remuneration Committee consisting of five members, which met once during the reporting period to discuss and determine the remuneration policy for executive directors and senior management[8]. - The Nomination Committee, comprising five members, convened once during the reporting period to review the independence of independent non-executive directors and matters related to the board's structure and composition[11]. - The company has complied with the listing rules by appointing at least three independent non-executive directors, constituting at least one-third of the board[13]. - The financial statements for the fiscal year 2023 have been reviewed by the Audit Committee[7]. - The company encourages all directors to participate in relevant training courses, with costs covered by the company[1]. - The Remuneration Committee is responsible for proposing remuneration policies and reviewing the performance of executive directors[8]. - The Nomination Committee will consider the company's diversity policy when assessing board composition and recommending candidates[9]. - The company has maintained a transparent process for the appointment and re-election of directors, with specific terms outlined in service agreements[14]. - The Audit Committee's main responsibilities include overseeing internal controls and risk management systems[4]. - The board of directors is responsible for leading and controlling the company, ensuring effective oversight of operations and financial performance[17]. - The company has established a compliance committee to ensure adherence to regulatory requirements and effective compliance systems[26]. - All directors have confirmed compliance with the standard code of conduct for securities trading during the reporting period[28]. - The board has a mechanism in place to obtain independent views and opinions, which is reviewed annually for effectiveness[29]. - The attendance rate for the annual general meeting and board meetings was 100% for all directors[31]. - The board consists of two executive directors and four independent non-executive directors, ensuring a strong independent element in governance[34]. - The chairman and CEO roles are held by the same individual, Mr. Zhao, which the board believes benefits the management of the group[34]. Financial Performance - Total revenue for the fiscal year 2023 was approximately RMB 201.99 million, a decrease of 26.2% compared to RMB 273.60 million in fiscal year 2022[37]. - Gross profit for fiscal year 2023 was approximately RMB 73.66 million, down 45.8% from RMB 135.90 million in fiscal year 2022, with a gross margin of 36.5% compared to 49.7% in the previous year[38]. - Net profit for fiscal year 2023 was approximately RMB 21.32 million, a decline of 73.0% from RMB 78.98 million in fiscal year 2022, resulting in a net profit margin of 10.6% compared to 28.9% in the prior year[37]. - Sales of spherical graphite and its by-products totaled RMB 99.63 million, down 24.1% from RMB 131.33 million in fiscal year 2022[37]. - Sales of flake graphite concentrate were RMB 101.33 million, a decrease of 26.8% from RMB 138.34 million in the previous fiscal year[37]. - The company decided not to declare a final dividend for the fiscal year 2023, compared to a dividend of 1.6 HK cents in fiscal year 2022, to retain reserves for future expansion[38]. - The company experienced intensified competition in the graphite industry, leading to a decline in product prices during fiscal year 2023[38]. - For the fiscal year ending December 31, 2023, the total revenue of the group was approximately RMB 202.0 million, a year-on-year decrease of 26.2% due to increased competition in the natural graphite industry[50]. - The net profit for the fiscal year was approximately RMB 21.3 million, a decrease of about 73.0% compared to RMB 79.0 million in the fiscal year 2022[63]. - In the second half of the fiscal year, total revenue was approximately RMB 154.8 million, a year-on-year decrease of 14.0%, significantly narrowing from a 49.5% decline in the first half[50]. - The group anticipates continued growth in the global new energy vehicle market, driven by technological advancements and increasing consumer demand for environmentally friendly transportation[62]. - The adjusted net profit for the fiscal year 2023 is approximately RMB 18.7 million, a decrease from RMB 83.8 million in fiscal year 2022, reflecting a decline of about 77.7%[136]. - The net cash generated from operating activities is approximately RMB 27.6 million, primarily due to a pre-tax profit of about RMB 24.1 million[141]. - Revenue from the sale of spherical graphite accounted for approximately 49.3% of total revenue in fiscal year 2023, compared to 48.0% in fiscal year 2022[144]. - Revenue from the sale of flake graphite decreased from approximately RMB 138.3 million in fiscal year 2022 to about RMB 101.3 million in fiscal year 2023, representing a decline of approximately 26.8%[147]. - The gross profit for fiscal year 2023 is approximately RMB 73.7 million, with a gross profit margin of about 36.5%, down from RMB 135.9 million and 49.7% in fiscal year 2022[151]. - The financing cost turned from approximately RMB 0.5 million in fiscal year 2022 to a financial income of about RMB 0.9 million in fiscal year 2023[156]. - The income tax expense decreased from approximately RMB 15.0 million in the fiscal year 2022 to about RMB 2.8 million in the fiscal year 2023, primarily due to a reduction in net profit from subsidiaries[157]. - The net profit after tax dropped from approximately RMB 79.0 million in the fiscal year 2022 to about RMB 21.3 million in the fiscal year 2023[158]. Operational Highlights - The production of flake graphite concentrate increased from 52,000 tons in the fiscal year 2022 to approximately 57,000 tons in the fiscal year 2023, representing a year-on-year growth of about 9.6%[52]. - The sales volume of flake graphite concentrate was 36,348 tons, a slight decrease of 0.1% year-on-year, with a gross margin of 37.8%, down 16.9 percentage points year-on-year[53]. - The group plans to significantly increase the permitted graphite extraction capacity at the Beishan mine, supported by the acquisition of nearby forest land for new processing facilities[56]. - The group aims to enhance its research capabilities and focus on high value-added products in the natural graphite anode sector to strengthen its core competitiveness[58]. - The sales volume of spherical graphite was 6,440 tons, a year-on-year decrease of 10.2%, with a partial gross margin of 35.5%, down 9.9 percentage points[75]. - The company has acquired 1,496,539 square meters of forest land for approximately RMB 86.9 million to facilitate expected increases in mining activities[92]. - The company has completed exploration drilling covering 0.2651 square kilometers at the Beishan mine, with a total expenditure of approximately RMB 4.3 million[119]. - The company has shifted its strategic focus from "production-oriented" to "production cost optimization" in response to recent business environment changes[137]. - The company continues to invest in the development of new processing plants to maintain and strengthen its graphite production capacity[139]. - The company has increased its workforce to 288 employees as of December 31, 2023, up from 196 in the previous fiscal year, aligning with expected production increases[172]. - The company has not made any significant investments or acquisitions other than those disclosed in the report for the fiscal year 2023[177]. Cash Flow and Financial Position - The current ratio decreased from 4.7 in 2022 to 2.9 in 2023, indicating a decline in liquidity[169]. - The company has utilized approximately RMB 71.7 million of the net proceeds for the acquisition of land costing about RMB 86.9 million, with the remaining land cost of approximately RMB 15.2 million funded by operating cash flow and bank loans[164]. - As of December 31, 2023, the company had cash and cash equivalents of approximately RMB 111.9 million, exceeding total borrowings by about RMB 66.4 million, indicating a positive net cash position[171]. - The net cash used in investing activities was approximately RMB 58.2 million, primarily for tailings storage improvement and purchasing property, plant, and equipment[190]. - The net cash generated from financing activities was approximately RMB 30.9 million, mainly from bank borrowings of RMB 56.4 million, offset by dividend payments of RMB 23.0 million[191]. - The gross profit margin for fiscal year 2023 was 36.5%, down from 49.7% in fiscal year 2022[192]. - The net profit margin for fiscal year 2023 was 10.6%, a decrease from 28.9% in fiscal year 2022[192]. - The current ratio decreased due to borrowings increasing from approximately RMB 10.0 million in fiscal year 2022 to RMB 66.4 million in fiscal year 2023[195]. - Capital expenditures for fiscal year 2023 were approximately RMB 58.2 million, compared to RMB 52.9 million in fiscal year 2022[198]. - The company did not have any contingent liabilities or significant lawsuits that could adversely affect its business or financial condition as of December 31, 2023[199]. - The company has adopted a cautious funding and financial policy to manage overall business operations[187]. - The company did not use any financial instruments for hedging in the fiscal year 2023[187].

Financial Performance - In the first half of 2023, the total revenue of China Graphite Group was RMB 47.2 million, a year-on-year decrease of 49.6% due to weak downstream demand for natural graphite [11]. - Revenue decreased from approximately RMB 93.6 million in the first half of 2022 to about RMB 47.2 million in the first half of 2023, while gross profit fell from RMB 41.3 million to RMB 16.9 million during the same period [27]. - The group’s gross profit for the first half of 2023 was RMB 16.9 million, a decrease of 59.1% year-on-year, with a gross margin of 35.8%, down 8.3% year-on-year [83]. - The company recorded a net loss of approximately RMB 3.3 million, compared to a net profit of about RMB 13.2 million in the same period of 2022, primarily due to increased competition in the automotive market and a slowdown in the growth of the lithium-ion battery industry [27]. - For the six months ended June 30, 2023, the company reported a loss attributable to owners of the group of RMB 3,342,000 compared to a profit of RMB 13,249,000 for the same period in 2022, representing a significant decline [183]. - The net loss before tax for the period was RMB 4,240,000, with total comprehensive loss for the period amounting to RMB 10,056,000 [144]. - The company reported a total comprehensive loss of RMB 3,342 thousand for the period, reflecting the overall financial performance [104]. Sales and Production - Sales volume of spherical graphite was 1,899 tons, a year-on-year decrease of 42.9%, with a gross margin of 33.0%, down 9.2 percentage points [14]. - The company expects production capacity to increase to 500,000 tons per year, reaching the current government-approved limit for mining in China [17]. - As of the first half of 2023, the company has mined approximately 159,000 tons of unprocessed graphite ore, a significant increase from about 6,000 tons in the same period last year [17]. - The graphite industry has shown signs of demand recovery starting from Q3 2023, with a projected increase in sales of natural graphite products due to inventory replenishment by companies [61]. Cash Flow and Financial Position - The company's cash flow from operating activities was approximately RMB 56.1 million in the first half of 2023, down from RMB 67.4 million in the first half of 2022 [31]. - Cash and cash equivalents increased to RMB 113.4 million at the end of the first half of 2023, compared to RMB 65.9 million at the end of the first half of 2022 [31]. - Total assets as of June 30, 2023, amounted to RMB 475.738 million, down from RMB 530.749 million [85]. - Total liabilities as of June 30, 2023, were RMB 51.589 million, indicating a decrease in financial obligations [85]. - The company’s total equity decreased to RMB 424,149,000 from RMB 450,515,000 as of December 31, 2022 [139]. Research and Development - The company has increased R&D investment to enhance product quality and improve processes in response to market challenges [10]. - The company has initiated several R&D projects aimed at optimizing production efficiency for flake and spherical graphite and developing new product models [21]. - Research and development expenses amounted to RMB 8,297 thousand, indicating the company's commitment to innovation despite financial losses [100]. Corporate Governance - The company has established an Audit Committee, Compensation Committee, Nomination Committee, and Compliance Committee to enhance corporate governance and oversight [57][58][73]. - The Audit Committee has reviewed the interim results for the first half of 2023, ensuring compliance with financial reporting standards [59]. - The company has adhered to all applicable provisions of the Corporate Governance Code during the first half of 2023, with one exception noted [68]. - The company is committed to ensuring compliance with regulatory matters and maintaining effective compliance systems [73]. Strategic Initiatives - The company plans to relocate its graphite purification business to Weihai, Shandong Province, to take advantage of lower costs and favorable government policies [15]. - The company aims to strengthen its core competitiveness in the natural graphite industry through continuous exploration and innovation [21]. - The company is focused on exploring new strategies for market expansion and product development in response to current challenges [83]. - The company aims to become a unique player in the natural graphite anode materials industry, leveraging opportunities in the expanding electric vehicle market [61]. Market Outlook - The International Energy Agency (IEA) forecasts that electric vehicle sales in China will exceed 8 million units in 2023, representing a growth of over 30% compared to 2022, with a penetration rate surpassing 35% [61]. - The company aims to enhance its market position through strategic initiatives, although specific future outlooks and product developments were not detailed in the provided data [100].