[Corporate Information](index=2&type=section&id=Corporate%20Information) This section provides core corporate information including the company's basic registration details, board and committee members, principal places of business, legal advisors, auditors, and principal bankers - The Chairman of the Board is Dr. Chen Ping, with executive directors including Ms. Wang Zishi, Mr. Feng Yijing, and Mr. Wang Jun[3](index=3&type=chunk) - The company's auditor is Ernst & Young[5](index=5&type=chunk) - The company's principal places of business are located in Nanjing, China, and Hong Kong[4](index=4&type=chunk) [Management Discussion and Analysis](index=5&type=section&id=Management%20Discussion%20and%20Analysis) [Business Overview & Highlights](index=5&type=section&id=Business%20Overview%20%26%20Highlights) The company, a Chinese IoT data transmission and communication equipment provider, experienced a significant performance decline in H1 2024, with revenue plummeting 82.4% to RMB 31.1 million and a net loss of RMB 30.7 million, primarily due to project delays and lack of communication equipment sales | Metric | H1 2024 (Unaudited) | H1 2023 (Unaudited) | Year-on-Year Change | | :--- | :--- | :--- | :--- | | **Revenue** | RMB 31.1 million | RMB 176.7 million | -82.4% | | **Gross Profit** | RMB 1.3 million | RMB 27.2 million | -95.1% | | **(Net Loss)/Profit** | (RMB 30.7 million) | RMB 10.3 million | Turn from Profit to Loss | | **Adjusted (Net Loss)/Profit** | (RMB 25.9 million) | RMB 12.2 million | Turn from Profit to Loss | - Key reasons for revenue decline include: (i) IoT industry clients delaying projects due to cash flow concerns and macroeconomic uncertainty; and (ii) no communication equipment sales during the reporting period due to insufficient client demand[8](index=8&type=chunk) - In terms of business structure, non-5G business revenue decreased by **70.1%** year-on-year to **RMB 31.1 million**, while 5G business revenue dropped from **RMB 72.8 million** in the same period last year to zero[10](index=10&type=chunk)[12](index=12&type=chunk) [Outlook](index=7&type=section&id=Outlook) Facing a complex macroeconomic environment and intense industry competition, the Group plans to implement multiple measures in 2024 to ensure sustainable development, focusing on client diversification, technology upgrades, and risk management - The company plans to address challenges through: **Client Diversification**: Expanding 5G private network business to advanced manufacturing, transportation, environmental protection, and energy sectors to broaden the client base; **Technology Upgrades**: Leveraging AI and big data to enhance its Universal IoT Platform, extending its application in industrial IoT; **Risk Management**: Strengthening trade receivables collection, monitoring credit risk, and implementing prudent cost control measures to ensure sufficient operating cash flow[15](index=15&type=chunk) [Business Performance](index=8&type=section&id=Business%20Performance) This section details the IoT industry outlook, the company's competitive advantages, and reviews the performance of its data transmission and processing services and communication equipment sales, noting that all revenue came from data transmission services with zero equipment sales, and analyzes client concentration, new contracts, and R&D investment [Industry and Strengths](index=8&type=section&id=Industry%20and%20Strengths) China's IoT market, particularly 5G applications, is projected to grow, and despite intense competition, the company is confident in seizing opportunities through its focus on network connectivity and platform layers, one-stop solutions, and R&D capabilities - According to Frost & Sullivan, China's 5G private network market is expected to grow at a CAGR of approximately **62.2%** between 2021 and 2026, with the market size projected to reach approximately **RMB 491.9 billion** by 2026[15](index=15&type=chunk) - The company is positioned as an IoT solution provider focused on the network connectivity and platform layers, operating in a competitive market with over **30,000** participants[16](index=16&type=chunk)[17](index=17&type=chunk) [Data Transmission and Processing Services](index=10&type=section&id=Data%20Transmission%20and%20Processing%20Services) As the sole revenue source during the reporting period, data transmission and processing services revenue decreased by 73.4% to RMB 31.1 million, with non-5G network services revenue down 67.5% and 5G private network services revenue plummeting to zero, indicating clients opted for more basic network solutions amid economic uncertainty | Service Type | H1 2024 (RMB '000) | H1 2023 (RMB '000) | Year-on-Year Change | | :--- | :--- | :--- | :--- | | Non-5G Network Services | 31,050 | 95,552 | -67.5% | | 5G Private Network Services | 0 | 21,061 | -100.0% | | **Total** | **31,050** | **116,613** | **-73.4%** | [Sales of Telecommunication Equipment](index=11&type=section&id=Sales%20of%20Telecommunication%20Equipment) Due to insufficient client demand, the telecommunication equipment sales business generated no revenue in H1 2024, compared to RMB 58.5 million in the prior year period - Revenue from telecommunication equipment sales decreased from **RMB 58.5 million** in H1 2023 to zero in H1 2024, primarily due to insufficient client demand[23](index=23&type=chunk)[24](index=24&type=chunk) [Customers, Contracts, and R&D](index=12&type=section&id=Customers%2C%20Contracts%2C%20and%20R%26D) The company exhibits high client concentration, with its top five clients accounting for 97.2% of total revenue; in H1 2024, it secured 12 new contracts averaging RMB 2.5 million each, and continues to invest in R&D, holding 38 utility model patents, 21 invention patents, and 90 copyrights in China - Revenue from the top five clients increased from **85.2%** in the same period of 2023 to **97.2%** in H1 2024, indicating further increased client concentration[25](index=25&type=chunk) - As of June 30, 2024, the Group held **38** utility model patents, **21** invention patents, and **90** copyrights in China[26](index=26&type=chunk) [Financial Review](index=14&type=section&id=Financial%20Review) This section provides an in-depth analysis of the company's H1 2024 financial performance, covering revenue, costs, profitability, financial position, and cash flow, highlighting significant declines in revenue and gross margin, increased administrative expenses due to R&D, and net cash outflow from operating activities [Revenue Analysis](index=14&type=section&id=Revenue%20Analysis) Total revenue for H1 2024 was RMB 31.1 million, a year-on-year decrease of 82.4%, with all revenue derived from non-5G business in the Chinese market, as data transmission services revenue fell by 73.4% and equipment sales revenue dropped to zero | Revenue Source | H1 2024 (RMB '000) | H1 2023 (RMB '000) | | :--- | :--- | :--- | | **By Business Segment** | | | | Data Transmission and Processing Services | 31,050 | 116,613 | | Sales of Equipment | 0 | 58,524 | | **By Technology** | | | | 5G Business | 0 | 72,830 | | Non-5G Business | 31,050 | 103,914 | | **Total** | **31,050** | **176,744** | [Costs and Expenses](index=16&type=section&id=Costs%20and%20Expenses) Cost of sales decreased by 80.1% in line with revenue, but administrative expenses surged 86.9% to RMB 26.0 million due to increased R&D spending (from RMB 4.5 million to RMB 12.5 million) and higher staff costs from equity-settled share options and severance, while impairment losses on financial assets expanded from RMB 1.7 million to RMB 6.5 million - Administrative expenses increased by **86.9%** year-on-year, primarily due to: (i) R&D expenses increasing to **RMB 12.5 million** (H1 2023: RMB 4.5 million); and (ii) higher staff costs from equity-settled share option expenses and severance payments[34](index=34&type=chunk)[35](index=35&type=chunk) - Impairment losses on financial assets increased from **RMB 1.7 million** in the same period last year to **RMB 6.5 million**, mainly due to an increase in trade receivables overdue for more than one year[37](index=37&type=chunk) [Profitability Analysis](index=17&type=section&id=Profitability%20Analysis) Due to declining revenue and gross margin, the company's gross profit plummeted 95.1% to RMB 1.3 million, with gross margin narrowing from 15.4% to 4.3%, resulting in a pre-tax and net loss of RMB 30.7 million, and an adjusted net loss of RMB 25.9 million, a reversal from profitability in the prior year | Metric | H1 2024 | H1 2023 | | :--- | :--- | :--- | | **Gross Profit** | RMB 1.3 million | RMB 27.2 million | | **Gross Margin** | 4.3% | 15.4% | | **(Net Loss)/Profit** | (RMB 30.7 million) | RMB 10.3 million | - The decline in gross margin was primarily attributable to: (i) intensified market competition; (ii) absence of high-margin US IoT antenna export business; and (iii) lower cooperation prices adopted to develop new clients[38](index=38&type=chunk) | Item (RMB '000) | H1 2024 | H1 2023 | | :--- | :--- | :--- | | **(Loss)/Profit for the period** | (30,742) | 10,291 | | Add: Equity-settled share option expenses | 4,809 | 1,887 | | **Adjusted (Net Loss)/Profit for the period** | **(25,933)** | **12,178** | [Financial Position and Liquidity](index=19&type=section&id=Financial%20Position%20and%20Liquidity) As of June 30, 2024, cash and cash equivalents decreased to RMB 14.1 million, mainly due to a net cash outflow of RMB 18.1 million from operating activities; total trade receivables slightly declined, but impairment provisions grew 15.2% to RMB 49.3 million, while the gearing ratio remained stable at 2.6% and capital expenditure dropped to zero - Cash and cash equivalents decreased from **RMB 33.2 million** at the end of 2023 to **RMB 14.1 million** at the end of the reporting period, primarily due to a net cash outflow of approximately **RMB 18.1 million** from operating activities[40](index=40&type=chunk)[47](index=47&type=chunk) | Trade and Bills Receivables (RMB '000) | June 30, 2024 | December 31, 2023 | | :--- | :--- | :--- | | Gross Trade Receivables | 312,636 | 321,254 | | Impairment | (49,279) | (42,785) | | **Net** | **263,357** | **279,831** | - The gearing ratio (total debt/total equity) remained stable at **2.6%**, consistent with the end of 2023[44](index=44&type=chunk) [Corporate Governance and Other Information](index=23&type=section&id=Corporate%20Governance%20and%20Other%20Information) [Corporate Governance Practices](index=23&type=section&id=Corporate%20Governance%20Practices) The company is committed to maintaining good corporate governance but deviated from the Corporate Governance Code's requirement for separation of Chairman and CEO roles, with Dr. Chen Ping currently holding both positions, which the Board believes ensures leadership unity and decision-making efficiency - The company deviated from Corporate Governance Code provision C.2.1, as the roles of Chairman and Chief Executive Officer are not separated, both held by Dr. Chen Ping[49](index=49&type=chunk) [Use of Proceeds from the Global Offering](index=25&type=section&id=Use%20of%20Proceeds%20from%20the%20Global%20Offering) The company disclosed the use of HKD 47.1 million net proceeds from its December 2022 global offering, with HKD 31.6 million utilized and HKD 15.5 million remaining unutilized as of June 30, 2024, primarily for R&D, business development, and working capital, with no significant changes or delays | Use | Net Proceeds Allocated (HKD million) | Utilized During Reporting Period (HKD million) | Unutilized as of Period End (HKD million) | | :--- | :--- | :--- | :--- | | Further R&D | 17.5 | 4.8 | 10.9 | | R&D of Industrial-grade Wireless LAN | 5.5 | 2.4 | - | | Development of Digital Foundation | 7.4 | 5.7 | - | | Upgrading R&D Infrastructure | 4.1 | - | 3.0 | | Enhancing Business Development Capabilities | 3.5 | 0.2 | 1.6 | | Additional Working Capital | 4.7 | 4.4 | - | | **Total** | **47.1** | **17.5** | **15.5** | [Directors' and Shareholders' Interests](index=26&type=section&id=Directors%27%20and%20Shareholders%27%20Interests) This section discloses the interests of the company's directors, chief executives, and substantial shareholders in the company's shares as of June 30, 2024, as required by the Securities and Futures Ordinance, highlighting Executive Director Dr. Chen Ping (through his spouse Ms. Wang Zishi) and Ms. Wang Zishi as key shareholding directors - Executive Director Dr. Chen Ping is deemed to be interested in **130,026,676** shares, representing **57.79%** of the company's issued share capital, derived from his spouse Ms. Wang Zishi's holdings[54](index=54&type=chunk)[59](index=59&type=chunk) - Substantial shareholder Howkingtech Holding Limited holds **121,124,579** shares, representing **53.83%** of the company's issued share capital[61](index=61&type=chunk) [Share Option and Award Schemes](index=30&type=section&id=Share%20Option%20and%20Award%20Schemes) The company operates a Share Option Scheme and a Share Award Scheme; as of the reporting period, 22,500,000 share options remained unexercised under the Share Option Scheme at an exercise price of HKD 1.56, while no award shares were granted under the Share Award Scheme, though the company held 10,656,973 treasury shares for the plan - As of June 30, 2024, **22,500,000** share options remained unexercised under the Share Option Scheme, with an exercise price of **HKD 1.56** per share, and no options were exercised, cancelled, or lapsed[69](index=69&type=chunk)[124](index=124&type=chunk) - During the reporting period, no award shares were granted, vested, cancelled, or lapsed under the Share Award Scheme; as of the period end, the number of treasury shares held for the scheme was **10,656,973** shares[71](index=71&type=chunk)[132](index=132&type=chunk) [Other Information](index=32&type=section&id=Other%20Information) The Board resolved not to declare an interim dividend for 2024, the Audit Committee reviewed the unaudited interim results, and no significant events occurred after the reporting period - The Board resolved not to declare any interim dividend for the six months ended June 30, 2024[71](index=71&type=chunk) [Interim Financial Statements](index=33&type=section&id=Interim%20Financial%20Statements) [Interim Condensed Consolidated Statement of Profit or Loss and Other Comprehensive Income](index=33&type=section&id=Interim%20Condensed%20Consolidated%20Statement%20of%20Profit%20or%20Loss%20and%20Other%20Comprehensive%20Income) The financial statements show the company recorded revenue of RMB 31.1 million and a net loss of RMB 30.7 million for the six months ended June 30, 2024, compared to RMB 176.7 million revenue and RMB 10.3 million net profit in the prior year period, resulting in a basic loss per share of RMB 14.34 cents | Item (RMB '000) | H1 2024 (Unaudited) | H1 2023 (Unaudited) | | :--- | :--- | :--- | | Revenue | 31,050 | 176,744 | | Gross Profit | 1,325 | 27,203 | | (Loss)/Profit before tax | (30,742) | 12,049 | | **(Loss)/Profit for the period** | **(30,742)** | **10,291** | | Total comprehensive (loss)/income | (31,356) | 9,797 | | Basic (loss)/earnings per share | (RMB 14.34 cents) | RMB 4.58 cents | [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 company's total assets were RMB 312.6 million, total liabilities RMB 70.7 million, and net assets RMB 241.8 million, with net current assets at RMB 217.4 million, and trade and bills receivables (net) of RMB 263.4 million being the primary asset | Item (RMB '000) | June 30, 2024 (Unaudited) | December 31, 2023 (Audited) | | :--- | :--- | :--- | | Total Non-current Assets | 24,860 | 28,147 | | Total Current Assets | 287,710 | 322,622 | | **Total Assets** | **312,570** | **350,769** | | Total Current Liabilities | 70,274 | 81,465 | | Total Non-current Liabilities | 466 | 927 | | **Total Liabilities** | **70,740** | **82,392** | | **Net Assets** | **241,830** | **268,377** | | **Total Equity** | **241,830** | **268,377** | [Interim Condensed Consolidated Statement of Changes in Equity](index=36&type=section&id=Interim%20Condensed%20Consolidated%20Statement%20of%20Changes%20in%20Equity) As of June 30, 2024, total shareholders' equity decreased from RMB 268.4 million at the beginning of the year to RMB 241.8 million, primarily due to a net loss of RMB 30.7 million for the period, partially offset by RMB 4.8 million in equity-settled share option expenses - Total shareholders' equity decreased from **RMB 268,377 thousand** at the end of 2023 to **RMB 241,830 thousand** as of June 30, 2024, with a net change of **-RMB 26,547 thousand**[77](index=77&type=chunk) - The primary item leading to the decrease in equity was a loss for the period of **RMB 30,742 thousand**, while equity-settled share option expenses increased equity by **RMB 4,809 thousand**[77](index=77&type=chunk) [Interim Condensed Consolidated Statement of Cash Flows](index=38&type=section&id=Interim%20Condensed%20Consolidated%20Statement%20of%20Cash%20Flows) In H1 2024, the company experienced a net cash outflow of RMB 18.1 million from operating activities, a net cash inflow of RMB 5.9 million from investing activities, and a net cash outflow of RMB 0.7 million from financing activities, resulting in a net decrease in cash and cash equivalents of RMB 12.9 million, with an ending balance of RMB 14.1 million | Item (RMB '000) | H1 2024 (Unaudited) | H1 2023 (Unaudited) | | :--- | :--- | :--- | | Net cash flows from operating activities | (18,134) | (32,551) | | Net cash flows from investing activities | 5,923 | 59,729 | | Net cash flows from financing activities | (665) | (26,896) | | **Net (decrease)/increase in cash and cash equivalents** | **(12,876)** | **282** | | Cash and cash equivalents at beginning of period | 27,540 | 47,301 | | **Cash and cash equivalents at end of period** | **14,098** | **48,684** | [Notes to the Interim Condensed Consolidated Financial Statements](index=40&type=section&id=Notes%20to%20the%20Interim%20Condensed%20Consolidated%20Financial%20Statements) This section provides supplementary information to the financial statements, including accounting policies, segment information, detailed revenue and client breakdowns, aging analysis of key assets and liabilities, and related party transactions, highlighting that all revenue originated from mainland China, trade receivables aging deteriorated, and significant equity-settled share option expenses were included in key management personnel compensation - All revenue was derived from clients in mainland China and recognized at a point in time as "IoT application data transmission and processing services"[89](index=89&type=chunk)[96](index=96&type=chunk)[97](index=97&type=chunk) | Aging Analysis of Trade and Bills Receivables (Net) | June 30, 2024 (RMB '000) | December 31, 2023 (RMB '000) | | :--- | :--- | :--- | | Within 1 year | 147,569 | 191,340 | | 1 to 2 years | 82,215 | 71,072 | | 2 to 3 years | 27,577 | 11,205 | | Over 3 years | 5,996 | 6,214 | | **Total** | **263,357** | **279,831** | - Total remuneration paid to key management personnel was **RMB 6.709 million**, including **RMB 4.697 million** in equity-settled share option expenses[134](index=134&type=chunk) [Definitions](index=62&type=section&id=Definitions) [Definitions](index=62&type=section&id=Definitions) This section provides clear definitions for specific terms and abbreviations used throughout the report to ensure accurate reader comprehension, covering technical terms like "5G" and "IoT," company-specific terms such as "Universal IoT Platform," and regulatory and financial terms like "Corporate Governance Code" and "Share Option Scheme" - **Universal IoT Platform** is defined as the Group's self-developed centralized data platform for IoT solutions, providing infrastructure functions for upper-layer applications[146](index=146&type=chunk) - **Share Option Scheme** refers to the share option scheme adopted by the company on November 11, 2022[146](index=146&type=chunk) - **Share Award Scheme** refers to the Howkingtech Share Award Scheme adopted by the company on May 16, 2023[146](index=146&type=chunk)

Financial Performance - Revenue for the six months ended June 30, 2024, was RMB 31,050 thousand, a decrease of 82.5% compared to RMB 176,744 thousand for the same period in 2023[3] - Gross profit for the same period was RMB 1,325 thousand, down 95.1% from RMB 27,203 thousand year-on-year[3] - The adjusted net loss for the period was RMB 30,742 thousand, compared to a profit of RMB 10,291 thousand in the previous year[3] - Basic loss per share for the period was RMB (14.34), compared to earnings of RMB 4.58 per share in the same period last year[3] - The net loss for the six months ending June 30, 2024, was approximately RMB 30.7 million, compared to a net profit of RMB 10.3 million in the same period of 2023[32] - The group reported revenue of RMB 31.05 million for the six months ended June 30, 2024, a decrease of approximately 82.4% from RMB 176.74 million in the same period of 2023[46] - The company's gross profit fell by 95.1% to RMB 1.3 million for the six months ending June 30, 2024, compared to RMB 27.2 million in the prior year[32] - The group recorded a loss before tax of approximately RMB 30.7 million for the six months ended June 30, 2024, compared to a profit of RMB 12.0 million for the same period in 2023[51] Expenses and Costs - Administrative expenses increased significantly to RMB 25,990 thousand, up 87.0% from RMB 13,909 thousand in the prior period[3] - Total employee costs, including share-based payment expenses, amounted to approximately RMB 11.6 million, an increase of about 5.6% compared to the same period in 2023[44] - Employee costs increased from RMB 3.96 million in 2023 to RMB 8.61 million in 2024, largely due to increased share-based payment expenses and severance payments[49] - Sales costs decreased by approximately 80.1% to RMB 29.73 million from RMB 149.54 million, primarily due to a sharp decline in revenue[48] - The group's research and development costs increased significantly to RMB 12,536,000 in the first half of 2024, compared to RMB 4,538,000 in the same period of 2023, representing a growth of 176%[19] Assets and Liabilities - Total current assets decreased to RMB 287,710 thousand from RMB 322,622 thousand, reflecting a decline of 10.8%[5] - Total non-current assets were valued at RMB 24,860 thousand, down from RMB 28,147 thousand, a decrease of 11.4%[5] - The net asset value attributable to equity holders of the parent company was RMB 241,830 thousand, down from RMB 268,377 thousand, a decline of 9.9%[6] - Trade receivables amounted to RMB 312,636,000 as of June 30, 2024, slightly down from RMB 321,254,000 at the end of 2023, indicating a decrease of 5.1%[23] - The impairment loss on trade receivables increased to RMB 49,279,000 as of June 30, 2024, compared to RMB 42,785,000 at the end of 2023, reflecting a rise of 15.5%[26] - Cash and cash equivalents decreased from approximately RMB 33.2 million as of December 31, 2023, to approximately RMB 14.1 million as of June 30, 2024, primarily due to a net cash outflow from operating activities of approximately RMB 18.1 million[53] Revenue Sources - Revenue from customer contracts for the six months ended June 30, 2024, was RMB 31,050 thousand, a decrease of 82.5% compared to RMB 176,744 thousand for the same period in 2023[16] - Revenue from IoT application data transmission and processing services was RMB 31,050 thousand, while sales of communication equipment generated no revenue in the current period[17] - The company recorded zero revenue from 5G business for the six months ending June 30, 2024, down from RMB 72.8 million in the same period of 2023[32] - Revenue from communication equipment sales decreased to zero in the first half of 2024, down from RMB 58.5 million in the same period of 2023, primarily due to insufficient customer demand[41] - Revenue from the top five customers amounted to approximately RMB 30.2 million, accounting for about 97.2% of total revenue, compared to 85.2% in the same period of 2023[42] Market and Business Strategy - The company continues to focus on providing Internet of Things (IoT) application data transmission and processing services, indicating ongoing commitment to its core business despite financial challenges[7] - The company plans to diversify its customer base in the 5G private network sector, targeting industries such as advanced manufacturing, transportation, environmental protection, and energy[33] - The company aims to enhance its industry data platform using artificial intelligence and big data to support industrial IoT applications[33] - The Chinese IoT market is expected to grow at a compound annual growth rate (CAGR) of approximately 13.3% from 2021 to 2026, reaching about RMB 546.6 billion by 2026[34] - The 5G-based IoT market is projected to grow at a CAGR of approximately 62.2% from 2021 to 2026, reaching around RMB 491.9 billion by 2026[34] Corporate Governance - The company is committed to maintaining good corporate governance standards and procedures, ensuring high standards of ethics, transparency, accountability, and integrity in all business operations[67] - The audit committee, composed of three independent non-executive directors, has reviewed the unaudited interim results for the six months ending June 30, 2024, confirming compliance with applicable accounting principles and standards[68] - The company has adopted a share incentive plan on May 16, 2023, to enhance employee motivation and retention[70] - The company has also implemented a stock option plan adopted on November 11, 2022, to further incentivize its employees[70] - The company emphasizes the importance of internal control measures across all business aspects to enhance accountability and transparency to shareholders[67]

Risk Management and Compliance - The Group has established a risk control plan to strengthen the management of trade receivables and ensure effective risk control[5]. - The Group has ceased business activities in Russia after fulfilling all contractual obligations in December 2022 to mitigate compliance risks[9]. - The Company has established a dedicated team to monitor uncertainties and potential risks related to international sanctions[9]. - The Group will implement a whistleblowing mechanism to encourage reporting of irregularities among staff[9]. - The company emphasizes compliance operations and full tax payment as part of its commitment to commercial ethics[54]. ESG Initiatives and Governance - The Board is responsible for managing and supervising ESG matters, ensuring that the Company integrates sustainable development into its business[18]. - The Company has prioritized stakeholder expectations and demands, identifying important ESG issues through interviews and questionnaires[18]. - The ESG Working Group is responsible for evaluating the effectiveness of ESG initiatives and reporting to the Board[18]. - The company has established an ESG governance structure comprising a Board of Directors and an ESG Working Group to oversee ESG policies and performance[41]. - The ESG Working Group is responsible for developing and reviewing the company's ESG-related visions, goals, and strategic plans, and monitoring their implementation[21]. - The company identified a total of 22 material ESG issues relevant to its sustainable development and stakeholders' assessments[57]. - 16 issues were classified as high importance, including innovative research and development, information security, and product quality[60]. Financial Performance - Revenue increased by approximately 36.0% from RMB 323.9 million in 2022 to RMB 440.6 million in 2023[128]. - Adjusted net profit decreased to approximately RMB 36.0 million in 2023 from approximately RMB 51.0 million in 2022[128]. - The Group's gross profit for 2023 was RMB 83.8 million, down from RMB 95.6 million in 2022[125]. - Profit before tax for 2023 was RMB 34.5 million, slightly up from RMB 33.2 million in 2022[125]. - The Group's net profit for 2023 was RMB 25.5 million, down from RMB 28.5 million in 2022[164]. - The Group's total assets as of December 31, 2023, were RMB 350.8 million, a slight decrease from RMB 358.7 million in 2022[157]. Revenue Breakdown - Revenue from IoT application data transmission and processing services grew by approximately 59.7% from RMB 238.1 million in 2022 to RMB 380.3 million in 2023[138]. - Non-5G network services revenue increased strongly by approximately 98.2%, from approximately RMB172.7 million in 2022 to approximately RMB342.3 million in 2023[152]. - Revenue from private 5G network services decreased to approximately RMB38.0 million in 2023 from RMB65.4 million in 2022[175]. - Sales of telecommunication equipment decreased by approximately 29.2% from approximately RMB82.2 million in 2022 to approximately RMB58.2 million in 2023[178]. Environmental Impact and Sustainability - The Company adheres to low-carbon and sustainable development principles, focusing on energy efficiency and the use of energy-saving equipment to reduce GHG emissions[65]. - The Company complies with various environmental laws and regulations, ensuring proper waste management and disposal during the reporting period[82]. - The Company has not violated any environmental regulations during the reporting period, demonstrating commitment to sustainable development[88]. - The Company generated a total of 2.02 kg of hazardous waste, with a generation intensity of 0.005 kg per RMB million of revenue[84]. - The total non-hazardous waste generated was 9.13 kg, with a generation intensity of 0.021 kg per RMB million of revenue[84]. Research and Development - The Group aims to enhance its ability to attract, recruit, and train qualified personnel, particularly in the R&D team, to maintain competitiveness in the rapidly evolving 5G technology industry[10]. - The company aims to enhance its R&D capabilities by recruiting technology talents, with a target of expanding the R&D team by 37.2% by December 2024[37]. - The Group plans to strengthen independent research and development capabilities and actively study advanced technologies in the 5G era[139]. - The Group registered 55 utility model patents, 23 invention patents, one international PCT, and 90 copyrights in the PRC as of December 31, 2023, showcasing strong innovation capabilities[183]. Customer Relations and Market Strategy - The company aims to strengthen communication mechanisms with customers to maintain customer satisfaction[54]. - The Group aims to broaden and diversify its customer base to reduce high customer concentration over time[200]. - The average contract value of new customers increased by 49.5% from RMB4.8 million in 2022 to RMB7.1 million in 2023[179]. - The Group secured 75 new contracts in 2023, with an average contract value of approximately RMB 5.6 million, representing a 21.3% increase from 72 contracts in 2022[181].

Financial Performance - For the year ended December 31, 2023, the company reported revenue of RMB 440,550,000, an increase from RMB 323,964,000 in 2022, representing a growth of approximately 36.2%[14] - The net profit for the year was RMB 25,493,000, down from RMB 28,504,000 in the previous year, indicating a decrease of about 7.1%[4] - The adjusted net profit, calculated under non-Hong Kong Financial Reporting Standards, was RMB 36,014,000, compared to RMB 51,040,000 in 2022, reflecting a decline of approximately 29.4%[14] - The total comprehensive income for the year was RMB 25,611,000, down from RMB 29,494,000 in 2022, a decrease of about 13.0%[6] - Basic earnings per share attributable to ordinary equity holders of the parent were RMB 11.61, compared to RMB 14.93 in the previous year, a decline of approximately 22.5%[7] - The company’s gross profit was RMB 83,827,000, down from RMB 95,550,000 in 2022, reflecting a decline of about 12.3%[14] - Total revenue for the year ended December 31, 2023, was RMB 440,550,000, an increase of 36.2% from RMB 323,964,000 in 2022[44] - Revenue from customers in mainland China was RMB 433,814,000, up from RMB 305,251,000 in 2022, representing a growth of 42.0%[44] - Revenue from other countries decreased to RMB 6,736,000 from RMB 18,713,000, a decline of 64.0%[44] Expenses and Liabilities - The company incurred administrative expenses of RMB 38,112,000, reduced from RMB 47,982,000 in the prior year, showing a decrease of about 20.0%[3] - The financing costs for the year were RMB 220,000, slightly up from RMB 219,000 in 2022, indicating a marginal increase[3] - The total cost of sales increased to RMB 356.7 million in 2023 from RMB 228.4 million in 2022[166] - Research and development expenses were RMB 9.6 million in 2023, a decrease from RMB 11.3 million in 2022[166] - In 2023, the group's sales and marketing expenses remained relatively stable at approximately RMB 36 million, compared to RMB 38 million in 2022[167] - Employee costs, including share-based payment expenses, increased by approximately 23.5% to RMB 24.9 million in 2023 from the previous year's RMB 20.1 million[173] - The group’s compliance costs increased to approximately RMB 7.1 million in 2023 due to listing-related expenses[168] - Total liabilities decreased to RMB 81,465,000 from RMB 102,388,000, a reduction of 20.5%[57] Assets and Receivables - Trade receivables and notes receivable amounted to RMB 279,831,000, an increase from RMB 214,010,000 in the previous year[57] - Non-current assets totaled RMB 28,147,000, significantly up from RMB 13,034,000 in 2022[57] - Current assets decreased to RMB 322,622,000 from RMB 345,652,000, a decline of 6.7%[57] - The company reported a net asset value of RMB 241,157,000, slightly down from RMB 243,264,000 in the previous year[57] - Total trade receivables increased by approximately 35.0% from RMB 238.0 million in 2022 to approximately RMB 321.3 million in 2023[185] - Net trade receivables rose by about 30.8% from RMB 214.0 million in 2022 to approximately RMB 279.8 million in 2023[185] - The company has made significant progress in collecting overdue trade receivables, contributing to the reduction in aged receivables[200] Market and Business Strategy - The company primarily engages in providing Internet of Things (IoT) application data transmission and processing services, as well as communication equipment[19] - The company plans to enhance its industry data platform using artificial intelligence and big data, expanding its functionality to industrial IoT applications[136] - The Chinese IoT market is projected to grow at a compound annual growth rate (CAGR) of approximately 13.3%, reaching about RMB 546.6 billion by 2026[137] - The 5G-based IoT market is expected to grow at a CAGR of approximately 62.2%, reaching about RMB 491.9 billion by 2026[137] - The company aims to expand its 5G private network customer base in advanced manufacturing, transportation, environmental protection, and energy sectors[148] Compliance and Accounting Standards - The group is currently assessing the impact of the revised accounting standards on its financial statements, with an initial evaluation indicating no significant impact[27] - The revised standards clarify the classification of liabilities as current or non-current, emphasizing that the classification is not affected by the entity's ability to exercise deferral rights[27] - The group has implemented mandatory temporary exemptions related to the OECD's Pillar Two rules, which do not affect the group as it is not within the scope of these rules[25] - The revised standards require full recognition of gains or losses when assets are sold or injected into joint ventures that constitute a business[26] - The group has adopted the revised standards retroactively, ensuring compliance with the latest accounting requirements[27] Customer and Contract Information - The company secured 75 new contracts in 2023, an increase of about 21.3% compared to 72 contracts in 2022[160] - The average contract value for new customers rose by 49.5% from RMB 4.8 million in 2022 to RMB 7.1 million in 2023[158] - The group’s remaining performance obligations are expected to be recognized within one year[87] - The group recognized a net impairment loss of RMB 72,000 on contract assets at the end of the reporting period[99] Cash Flow and Financial Health - As of December 31, 2023, cash and cash equivalents totaled RMB 27,540,000, a decrease of 41.8% from RMB 47,301,000 in 2022[112] - Cash and cash equivalents decreased from approximately RMB 120.7 million in 2022 to about RMB 33.2 million in 2023, primarily due to investments and other expenses[197] - The company is focused on improving cash flow through effective management of trade receivables[200] - The overall strategy includes enhancing collection processes to minimize aged receivables and improve financial health[200]

Financial Performance - Revenue for the first half of 2023 reached RMB 176.7 million, a significant increase of approximately 109.6% compared to RMB 84.3 million in the same period of 2022[10] - Gross profit slightly decreased by 9.0% to RMB 27.2 million from RMB 29.9 million in the previous year[12] - Net profit increased by approximately 71.1% to RMB 10.3 million, up from RMB 6.0 million in the same period of 2022[12] - Adjusted net profit remained relatively stable at RMB 12.2 million compared to RMB 13.1 million in the previous year[12] - The company's revenue from non-5G network services increased by approximately 281.9% to RMB 95.6 million in the first half of 2023, compared to RMB 25.0 million in the same period of 2022[20] - Revenue from 5G private network services rose by approximately 289.9% to RMB 21.1 million in the first half of 2023, up from RMB 5.4 million in the same period of 2022[20] - Total revenue from IoT application data transmission and processing services surged by approximately 283.4% to RMB 116.6 million in the first half of 2023, compared to RMB 30.4 million in the same period of 2022[20] - The company's communication equipment sales revenue increased by approximately 10.0% to RMB 58.5 million in the first half of 2023, driven by a 13.5% growth in 5G communication equipment sales[23] - The group reported a pre-tax profit of RMB 10,291,000 for the six months ended June 30, 2023, compared to RMB 6,016,000 in 2022, marking an increase of 71%[111] Business Growth and Strategy - The company recorded a 42.8% growth in 5G business revenue, increasing from RMB 51.0 million to RMB 72.8 million[11] - Non-5G business revenue surged by approximately 212.1%, rising from RMB 33.3 million to RMB 103.9 million[11] - The company plans to upgrade and improve data transmission services and enhance its 5G private network offerings[13] - Strategic acquisitions will be selectively pursued to enrich the product portfolio and enhance market position[14] - The company aims to strengthen its R&D capabilities by expanding its talent pool and investing in R&D infrastructure[13] - Marketing capabilities will be enhanced to diversify the customer base and capture opportunities in the industrial IoT market[13] - The company continues to explore market expansion opportunities and new strategies to enhance shareholder value[71] - The company is expanding its overseas distribution network, particularly in Russia, for its vehicle-mounted antennas[141] Research and Development - The company has registered 90 utility model patents, 19 invention patents, 2 industrial design patents, and 82 copyrights as of June 30, 2023, showcasing its strong innovation and research capabilities[26] - The company is focused on research and development (R&D) to innovate new products and technologies[141] - The net proceeds from the global offering amounted to approximately HKD 47.1 million, with 37.2% allocated for recruiting technology talent to expand the R&D team[62] - The company plans to utilize the net proceeds for further R&D to improve its 5G private network services, with expected completion by December 2024[62] Financial Position and Cash Flow - The group's sales cost for the six months ended June 30, 2023, rose by approximately 174.8% to RMB 149.5 million, primarily due to a significant increase in material costs[35] - Material costs accounted for approximately 72.6% of total sales costs in 2023, up from 32.2% in 2022, reflecting a 519.4% increase year-on-year[35] - Cash and cash equivalents increased slightly from RMB 47.3 million at the end of 2022 to RMB 48.7 million at the end of June 2023[43] - For the six months ended June 30, 2023, the net cash used in operating activities was approximately RMB 32.6 million, compared to RMB 2.7 million in the same period of 2022, mainly due to an increase in trade receivables and a decrease in other payables[51] - The net cash generated from investing activities for the six months ended June 30, 2023, was approximately RMB 59.7 million, primarily from the sale of fixed deposits amounting to RMB 125.6 million[51] - The company reported a decrease in inventory from RMB 5,619,000 to RMB 3,131,000, a reduction of 44.2%[85] - The company experienced a significant increase in cash and cash equivalents, ending the period with RMB 48,684,000, up from RMB 34,248,000 as of June 30, 2022, reflecting an increase of approximately 42.3%[91] Shareholder Information and Corporate Governance - The total number of issued shares is 225,000,000[65] - Dr. Chen Ping holds a total of 130,026,676 shares, representing approximately 57.79% of the company's equity[64] - Howkingtech International Holding Ltd. owns 121,124,579 shares, accounting for 53.83% of the company's equity[69] - The company is focused on maintaining strong corporate governance and transparency in its operations[70] - The company has adopted a share award scheme on May 16, 2023, aimed at recognizing contributions and attracting suitable personnel for further development[76] - The company has implemented a stock option plan adopted on November 11, 2022, to incentivize key personnel[141] Market Trends and Industry Insights - The IoT industry in China has a compound annual growth rate (CAGR) of approximately 26.2% from 2016 to 2021, expected to further grow at a CAGR of about 13.3% from 2021 to 2026, reaching approximately RMB 5.466 trillion by 2026[16] - The 5G-based IoT market is projected to grow at a CAGR of approximately 62.2% from 2021 to 2026, reaching around RMB 491.9 billion by 2026[16] Employee and Management Information - The group had a total of 66 employees as of June 30, 2023, down from 75 employees at the end of 2022, with employee costs amounting to approximately RMB 11.0 million, a 10.1% increase year-on-year[30] - The total remuneration for key management personnel amounted to RMB 4,038,000 for the six months ended June 30, 2023, compared to RMB 2,414,000 for the same period in 2022, reflecting a significant increase[133]

香港交易及結算所有限公司及香港聯合交易所有限公司對本公告之內容概不 負責，對其準確性或完整性亦不發表任何聲明，並明確表示概不就因本公告全 部或任何部分內容而產生或因倚賴該等內容而引致的任何損失承擔任何責任。 Howkingtech International Holding Limited 濠 暻 科 技 國 際 控 股 有 限 公 司* （於開曼群島註冊成立的有限公司） （股份代號：2440） 截 至 二 零 二 三 年 六 月 三 十 日 止 六 個 月 的 中 期 業 績 公 告 財務摘要 截至六月三十日止六個月 二零二三年 二零二二年 （未經審核） （未經審核） 人民幣千元 人民幣千元 收益 176,744 84,316 銷售成本 (149,541) (54,412) 毛利 27,203 29,904 純利 10,291 6,016 經調整純利（非香港財務報告準則計量）(1) 12,178 13,106 附註： (1) 購股權開支及上市開支並未納入非香港財務報告準則計量。 ...

Revenue Growth - The company's revenue for 2022 reached approximately RMB 323.964 million, representing a growth of about 70.9% compared to RMB 189.6 million in 2021[11]. - Revenue from IoT application data transmission and processing services increased from approximately RMB 123.298 million in 2021 to about RMB 238.073 million in 2022, marking a growth rate of approximately 93.1%[7]. - Revenue from 5G business grew from approximately RMB 72.874 million in 2021 to about RMB 119.803 million in 2022, achieving a growth rate of approximately 64.4%[7]. - The group's revenue for the year ended December 31, 2022, was approximately RMB 323.96 million, representing a 70.8% increase from RMB 189.55 million in 2021[29]. - Non-5G business revenue increased approximately 75.0% to about RMB 204.2 million in 2022, up from approximately RMB 116.7 million in 2021[30]. - The group recorded a strong growth in data transmission and processing services, with revenue increasing approximately 93.1% to about RMB 238.1 million in 2022[37]. - Approximately 74.0% of the group's revenue was generated in the second half of 2022, compared to 62.0% in 2021[73]. - The company aims to leverage the growing IoT market in China to maintain its business momentum despite economic challenges[94]. Profitability - The adjusted net profit for 2022 was approximately RMB 51.04 million, up 22.2% from RMB 41.76 million in 2021[31]. - The group's net profit declined by approximately 17.1% from RMB 34.4 million in 2021 to RMB 28.5 million in 2022[81]. - The basic and diluted earnings per share for the year 2022 were RMB 14.93, compared to RMB 18.19 in 2021, indicating a decrease in profitability per share[112]. - The adjusted net profit for the year was RMB 51.04 million, reflecting a growth of approximately 22.2% compared to the previous year when excluding IPO expenses[81]. Assets and Liabilities - The total assets of the company as of December 31, 2022, amounted to RMB 358.686 million, compared to RMB 352.697 million in 2021[5]. - The total liabilities as of December 31, 2022, amounted to RMB 214,010 thousand, compared to RMB 140,751 thousand in the previous year, indicating a substantial increase in overall liabilities[146]. - The total liabilities due within one year increased to RMB 169,291 thousand in 2022 from RMB 68,857 thousand in 2021, reflecting a significant rise in short-term obligations[146]. - As of December 31, 2022, the company's debt-to-equity ratio was approximately 4.7%, an increase from about 4.1% as of December 31, 2021, due to total debt rising from approximately RMB 62 million to RMB 122 million[148]. Research and Development - Research and development expenses rose approximately 15.5% to RMB 11.3 million in 2022, up from RMB 9.8 million in 2021[42]. - The company has a strong focus on R&D, with 42 employees dedicated to this area, representing about 56.0% of the total workforce[42]. - The company plans to strengthen its R&D capabilities by recruiting more talent and investing in R&D infrastructure to support ongoing projects[57]. - The company allocated a significant portion of the funds raised from its recent IPO to research and development activities to enhance future business growth[85]. Market Position and Strategy - The company has successfully positioned itself as a notable supplier in the rapidly growing 5G private network market since its establishment in 2012[10]. - Strategic acquisitions are being considered to enrich the product portfolio and enhance the company's technology and market position[15]. - The company plans to enhance its marketing capabilities and expand its customer base by hiring more business development personnel[33]. - The company aims to upgrade its data transmission services and improve its 5G private network offerings to capture growing opportunities in the industrial IoT market[32]. International Operations - Revenue from the US market decreased by approximately 32.1% from RMB 155 million in 2021 to RMB 105 million in 2022, primarily due to global chip shortages affecting US customers' procurement orders[47]. - Revenue from the Russian market significantly dropped by approximately 66.4% from RMB 243 million in 2021 to RMB 82 million in 2022, as the company ceased sales to Russian distributors to avoid international sanctions[47]. - The company ceased operations in Russia by the end of 2022 due to international sanctions, fulfilling all existing contractual obligations[101]. Financial Management - The company's gross profit increased by approximately 21.3% from RMB 788 million in 2021 to RMB 956 million in 2022, although the gross margin declined from approximately 41.6% to 29.5%[52]. - The sales cost increased by approximately 106.2% from RMB 110.8 million in 2021 to RMB 228.4 million in 2022, primarily due to changes in revenue structure[74]. - Administrative expenses rose by approximately 69.8% to RMB 48,000 thousand in 2022, primarily due to increased R&D spending and listing expenses[99]. - The company reported a decrease in financing costs to RMB 219 thousand from RMB 500 thousand in the previous year, indicating improved financial management[112]. Future Outlook - The company plans to continue expanding its market presence and investing in new product development to drive future growth[112]. - The company aims to achieve high-quality business development in 2023, leveraging recent government measures to stimulate economic growth in China[56]. - New product launches are anticipated to contribute an additional D million in revenue, with a focus on innovative technology solutions[172]. - The company is investing in R&D, allocating G% of its budget to develop new technologies and improve existing products[172].

香港交易及結算所有限公司及香港聯合交易所有限公司對本公告之內容概不 負責，對其準確性或完整性亦不發表任何聲明，並明確表示概不就因本公告全 部或任何部分內容而產生或因倚賴該等內容而引致的任何損失承擔任何責任。 Howkingtech International Holding Limited 濠 暻 科 技 國 際 控 股 有 限 公 司* （於開曼群島註冊成立的有限公司） （股份代號：2440） 截 至 二 零 二 二 年 十 二 月 三 十 一 日 止 年 度 的 年 度 業 績 公 告 財務摘要 截至十二月三十一日止年度 二零二二年 二零二一年 人民幣千元 人民幣千元 收益 323,964 189,552 銷售成本 (228,414) (110,753) 毛利 95,550 78,799 純利 28,504 34,380 經調整純利（非香港財務報告準則計量）(1) 51,040 41,755 附註： (1) 上市開支並未納入非香港財務報告準則計量。 截至二零二二年十二月三十一日止年度的年度業績 ...