Financial Performance - For the year ended December 31, 2023, the total revenue was RMB 10,522,925 thousand, a decrease of 5.6% compared to RMB 11,150,234 thousand in 2022[2] - The gross profit for the year was RMB 1,844,980 thousand, slightly down from RMB 1,867,026 thousand in the previous year, resulting in a gross margin of approximately 17.5%[2] - The net profit for the year was RMB 645,544 thousand, representing a significant increase of 61.0% from RMB 400,340 thousand in 2022[3] - Basic and diluted earnings per share increased to RMB 0.15 from RMB 0.09, reflecting a growth of 66.7%[3] - The total comprehensive income for the year was RMB 605,216 thousand, compared to RMB 311,801 thousand in 2022, marking an increase of 94.0%[5] - The group’s profit before tax for 2023 was RMB 772,657,000, an increase of 76.0% compared to RMB 438,924,000 in 2022[23] Revenue Breakdown - Revenue from wheel loaders was RMB 4,334,100, accounting for 41.2% of total revenue, down from RMB 5,213,928 (46.8%) in the previous year[17] - The sales revenue from the domestic market saw significant declines, with the northern region down 14.6% and the southwestern region down 26.9%[56] - Export sales increased by 20.12% year-on-year, reaching approximately RMB 3,074 million, accounting for 29.2% of total sales, up from 23.0% in the previous year[56] - The sales revenue from wheel loaders decreased by 22.18% to approximately RMB 4,058 million, representing about 38.56% of total revenue[58] - The sales revenue from excavators increased by 13.41% to approximately RMB 1,258 million, benefiting from strong export performance[59] - Forklift sales revenue rose by 8.48% to approximately RMB 3,659 million, accounting for about 34.78% of total revenue[60] Expenses and Costs - Research and development expenses decreased to RMB 437,700 thousand from RMB 516,019 thousand, a reduction of 15.2%[2] - Capital expenditures for the year were RMB 152,046, a decrease from RMB 305,895 in 2022, reflecting a reduction of approximately 50.4%[16] - The total cost of sold inventory for 2023 was RMB 8,132,270,000, a decrease of 7.1% from RMB 8,756,277,000 in 2022[21] - The total tax expense for 2023 was RMB 127,113,000, significantly higher than RMB 38,584,000 in 2022, reflecting an increase of 229.5%[22] Assets and Liabilities - Total assets as of December 31, 2023, were RMB 12,480,883 thousand, up from RMB 11,585,891 thousand in 2022, indicating a growth of 7.7%[6] - The company’s total assets as of December 31, 2023, were RMB 15,623,542, compared to RMB 15,390,930 in 2022, indicating an increase of approximately 1.5%[18] - The company’s total liabilities were RMB 5,642,022, slightly up from RMB 5,639,775 in the previous year[18] - The net current assets increased to RMB 6,889,480 thousand from RMB 6,720,890 thousand, reflecting a rise of 2.5%[7] Cash Flow and Financial Position - Cash and cash equivalents increased to RMB 3,470,777,000 in 2023 from RMB 2,031,973,000 in 2022, while total cash and bank balances rose to RMB 4,922,636,000 from RMB 3,688,228,000[47] - The company’s cash deposits for financing leases decreased to RMB 5,809,000 in 2023 from RMB 6,307,000 in 2022, a decline of about 7.9%[31] - The company has a significant amount of cash and bank balances held in foreign currencies, with USD equivalent to RMB 771,973,000 and HKD equivalent to RMB 2,710,000 as of December 31, 2023[49] Shareholder Information - The proposed final dividend for 2023 is RMB 310,513,000, translating to RMB 0.08 per ordinary share, down from RMB 0.10 per share in 2022[24] - The company reported a final dividend of HKD 0.08 per share for the year ending December 31, 2023, subject to shareholder approval[89] - The company paid a final dividend of HKD 0.1 per share based on the 2022 operating performance of HKD 428 million (approximately RMB 375 million)[85] Future Outlook and Strategy - The company plans to continue expanding its market presence and investing in new technologies to drive future growth[17] - The company aims for a GDP growth target of around 5% in 2024, with expectations for infrastructure investment to stabilize domestic demand for engineering machinery[75] - The company plans to enhance its international marketing talent and expand marketing channels to increase market share and improve overall efficiency[75]

Financial Performance - For the six months ended June 30, 2023, the revenue was RMB 5,726,128 thousand, a decrease of 4.68% compared to RMB 6,007,274 thousand for the same period in 2022[6]. - EBITDA for the same period was RMB 399,834 thousand, representing an increase of 270.46% from RMB 107,930 thousand in the previous year[6]. - Net profit attributable to equity holders of the parent company was RMB 307,399 thousand, up 107.79% from RMB 147,937 thousand in the prior year[6]. - Basic earnings per share increased to RMB 0.07, a rise of 133.33% compared to RMB 0.03 in the previous period[6]. - The gross profit margin improved to 16.49%, up from 14.70%, reflecting a 1.79% increase[6]. - The net profit margin also increased to 5.37%, up 2.91% from 2.46% in the previous year[6]. - The total comprehensive income for the period was RMB 267,799 thousand, significantly higher than RMB 85,082 thousand in the same period last year[12]. - The company's pre-tax profit for the period was RMB 379,670, compared to RMB 163,487 for the same period in 2022, showing a significant increase[26][28]. Cash Flow and Assets - The net cash flow from operating activities for the six months ended June 30, 2023, was RMB 918,814 thousand, a significant increase of 60.5% compared to RMB 571,953 thousand for the same period in 2022[19]. - Cash and cash equivalents increased to RMB 3,675,115 thousand as of June 30, 2023, up from RMB 2,031,973 thousand at the end of 2022, marking a growth of 81%[20]. - The total amount of current assets was RMB 11,838,815 thousand, slightly up from RMB 11,585,891 thousand as of December 31, 2022[13]. - The total assets as of June 30, 2023, were RMB 15,130,005, a slight decrease from RMB 15,390,930 as of December 31, 2022[29]. - The total liabilities decreased to RMB 5,485,902 from RMB 5,639,775 at the end of 2022[31]. - The company's total cash and bank balances, including fixed deposits, reached RMB 4,386,303 thousand as of June 30, 2023, compared to RMB 3,688,228 thousand as of December 31, 2022, marking an increase of approximately 18.9%[50]. Inventory and Receivables - Inventory turnover days decreased by 8 days to 121 days, while trade payables turnover days improved by 5 days to 134 days[6]. - The total inventory as of June 30, 2023, was RMB 2,745,318 thousand, down 23.5% from RMB 3,591,273 thousand as of December 31, 2022[40]. - The group’s trade receivables as of June 30, 2023, amounted to RMB 3,090,932 thousand, an increase of 1.2% from RMB 3,054,426 thousand as of December 31, 2022[41]. - The company recorded a decrease in inventory by RMB 853,136 thousand for the six months ended June 30, 2023, compared to a decrease of RMB 880,614 thousand in the same period of 2022[19]. Liabilities and Equity - Current liabilities totaled RMB 5,427,202 thousand, an increase of 11.5% from RMB 4,865,001 thousand as of December 31, 2022[14]. - Total equity as of June 30, 2023, was RMB 9,644,103 thousand, a slight decrease from RMB 9,751,155 thousand as of December 31, 2022[15]. - The company’s total liabilities related to trade payables and notes payable were RMB 301,939 thousand as of December 31, 2022, down from RMB 418,201 thousand, showing a reduction of about 28%[53]. Market Performance - Revenue from external customers in mainland China was RMB 4,234,347, down from RMB 5,007,361 in 2022, indicating a decrease of about 15.4%[29]. - The sales of wheel loaders accounted for 42.3% of total machinery sales, totaling RMB 2,420,800, down from 47.4% in the previous year[32]. - The sales revenue of wheel loaders decreased by 15.0% to RMB 2,421 million, compared to RMB 2,848 million in the same period of 2022[79]. - The sales revenue from overseas markets surged by 49.2% to RMB 1,492 million, partially offsetting the decline in the domestic market[78]. Governance and Management - The company has implemented improvements in its internal control system, focusing on procurement, supply chain management, and financial supervision[100]. - The board believes that the dual role of the CEO and Chairman held by Mr. Li is appropriate for maintaining policy continuity and business stability[98]. - The company emphasizes high transparency and effective communication as key components of its investor relations strategy[101]. - The company has established a performance evaluation and assessment mechanism for its management team to enhance oversight[100]. Employee and Investor Relations - The group employed approximately 7,105 employees as of June 30, 2023[109]. - The company received over 28 visits and communication sessions with domestic and international investors in the first half of 2023[101]. - The company has committed to enhancing its investor relations framework to protect shareholders' rights and ensure timely information disclosure[100].

Financial Performance - The revenue for the six months ended June 30, 2023, was RMB 5,726,128, a decrease of 4.7% compared to RMB 6,007,274 for the same period in 2022[2] - Gross profit for the same period was RMB 944,452, representing a gross margin of approximately 16.5%, compared to RMB 882,791 in 2022[2] - The net profit for the six months ended June 30, 2023, was RMB 307,404, an increase of 108.5% from RMB 147,839 in 2022[3] - Basic and diluted earnings per share for the period were RMB 0.07, compared to RMB 0.03 in the previous year[3] - The company reported a total comprehensive income of RMB 267,799 for the six months ended June 30, 2023, compared to RMB 85,082 in 2022[3] - The operating profit for the six months ended June 30, 2023, was RMB 379,670 thousand, compared to RMB 163,487 thousand in the same period of 2022, showing an increase of approximately 132.5%[13][14] - The pre-tax profit for the six months ended June 30, 2023, was RMB 4,332,198 thousand, a decrease from RMB 5,044,160 thousand in the same period of 2022, representing a decline of approximately 14.1%[20] - The income tax expense for the period was RMB 72,266 thousand, significantly higher than RMB 15,648 thousand in the previous year, indicating an increase of approximately 360.5%[21] - The overall gross margin increased to 16.49%, up 1.79 percentage points from 14.70% in the same period of 2022[33] - Net profit for the period was RMB 307 million, representing a significant increase of 107.43% from RMB 148 million in the previous year[33] Assets and Liabilities - Total assets as of June 30, 2023, were RMB 11,838,815, an increase from RMB 11,585,891 as of December 31, 2022[4] - Current liabilities totaled RMB 5,427,202, an increase from RMB 4,865,001 at the end of 2022[4] - The company’s non-current assets decreased to RMB 3,291,190 from RMB 3,805,039 as of December 31, 2022[4] - The total assets as of June 30, 2023, were RMB 15,130,005 thousand, a slight decrease from RMB 15,390,930 thousand as of December 31, 2022[16] - The total liabilities as of June 30, 2023, were RMB 5,485,902 thousand, down from RMB 5,639,775 thousand as of December 31, 2022, reflecting a decrease of approximately 2.7%[16] - The total equity as of June 30, 2023, was approximately RMB 9,644 million, a decrease of 1.1% from RMB 9,751 million as of December 31, 2022[41] - The current ratio as of June 30, 2023, was 2.18, down from 2.38 as of December 31, 2022, indicating a decrease in liquidity[41] - The total debt-to-asset ratio as of June 30, 2023, was approximately 36.26%, slightly improved from 36.64% as of December 31, 2022[42] Cash Flow and Financing - The company’s cash and cash equivalents were RMB 3,675,115 as of June 30, 2023, compared to RMB 2,031,973 at the end of 2022[4] - Cash and cash equivalents totaled RMB 3,675,115 thousand as of June 30, 2023, a significant increase from RMB 2,031,973 thousand at the end of 2022, representing an increase of approximately 81%[29] - The company’s bank loans amounted to RMB 734,719 thousand, with actual annual interest rates ranging from 5.35% to 5.85%[32] - The company’s cash flow management strategy includes internal cash generation, bank loans, and retained earnings to meet operational funding needs[39] Sales and Market Performance - The revenue from external customers in mainland China was RMB 4,234,347 thousand, down from RMB 5,007,361 thousand in 2022, indicating a decrease of about 15.4%[15] - Sales of wheel loaders and forklifts accounted for 42.3% and 33.8% of total sales, respectively, for the six months ended June 30, 2023[17] - Sales of wheel loaders decreased by 15.0% to RMB 2,421 million, with the sales proportion dropping to 42.3% from 47.4% year-on-year[35] - Forklift sales slightly decreased by 0.7% to RMB 1,935 million, maintaining a sales proportion of 33.8% of total revenue[36] - Excavator sales increased by 22.2% to RMB 672 million, driven by strong international market demand post-pandemic[37] - Parts sales rose by 6.7% to approximately RMB 668 million, attributed to increased sales of complete machines[38] - Export revenue grew by 49.19% year-on-year, significantly contributing to the overall revenue despite domestic market challenges[33] Operational Highlights - The company continues to focus on the manufacturing and distribution of construction machinery, including wheel loaders and excavators, while exploring financing leasing options[9] - The group purchased assets in China at a cost of RMB 76,513 thousand for the six months ended June 30, 2023, down from RMB 156,324 thousand in the same period of 2022, reflecting a decrease of approximately 51%[23] - Trade receivables, net of impairment, amounted to RMB 2,527,004 thousand as of June 30, 2023, compared to RMB 2,453,314 thousand at the end of 2022, showing an increase of approximately 3%[25] - Trade payables and notes payable were RMB 3,195,401 thousand as of June 30, 2023, down from RMB 3,793,466 thousand at the end of 2022, indicating a decrease of approximately 15.8%[30] - The group’s inventory as of June 30, 2023, was RMB 2,745,318 thousand, a decrease from RMB 3,591,273 thousand at the end of 2022, reflecting a decline of approximately 23.5%[24] Governance and Compliance - The company remains focused on customer needs and market trends, aiming to enhance product competitiveness and expand both domestic and international markets[47] - The company has received independence confirmations from Mr. Qian and Mr. Wu, who have served for over nine years, ensuring their independence according to listing rules[52] - The board believes that Mr. Li's dual role as Chairman and CEO is appropriate and beneficial for the company's policy continuity and business stability[53] - The company has adopted the standard code of conduct for directors' securities transactions, confirming compliance by all directors during the year[54] - The interim results for the six months ending June 30, 2023, have been reviewed by external auditors, confirming consistency with unaudited financial data[55] - No interim dividend has been recommended for the six months ending June 30, 2023, consistent with the previous year[56] - The 2023 interim report will be sent to shareholders and published on the Hong Kong Stock Exchange website at an appropriate time[57]

Financial Performance - Total revenue for 2022 was HKD 12.731 billion, a decrease of 18.56% from HKD 13.691 billion in 2021[4] - Net profit for 2022 was HKD 457 million, down 68.60% from HKD 1.275 billion in 2021[4] - EBITDA for 2022 was HKD 734 million, a decline of 58.17% from HKD 1.755 billion in 2021[4] - Basic earnings per share decreased to HKD 0.09, down 70.00% from HKD 0.30 in 2021[4] - The company reported a gross profit margin of 16.74%, down from 17.95% in the previous year[4] - Total revenue decreased by 18.6% to approximately RMB 11,150 million, primarily due to a decline in investment spending in the infrastructure and real estate sectors[23] - Gross profit decreased by approximately 24%, with the gross profit margin dropping from 17.9% to 16.7%[24] - The company reported a significant decrease in income tax expense to RMB 38,584 thousand from RMB 177,487 thousand in the previous year[146] - The total comprehensive income for the year attributable to owners of the parent was RMB 311,915 thousand, down from RMB 1,297,381 thousand in 2021[147] Cash Flow and Financial Position - Cash flow from operating activities was HKD 2.12 billion, with total cash and financial assets amounting to HKD 6.645 billion at year-end[8] - The company maintained a healthy debt-to-asset ratio of 36.64% at year-end, which is considered industry best[8] - The company maintained a strong cash position, with robust operating cash flow and improved asset quality[10] - Cash and bank balances increased by approximately RMB 7 million, with net cash inflow from operating activities of approximately RMB 1,857 million[20] - The operating cash flow for the year ended December 31, 2022, was RMB 1,856,727 thousand, a significant increase from RMB 419,684 thousand in 2021, representing a growth of approximately 342%[153] - The company’s cash and cash equivalents at the end of 2022 were RMB 2,031,973 thousand, slightly up from RMB 2,025,005 thousand at the beginning of the year[154] Dividends and Shareholder Returns - Proposed dividend per share is HKD 0.10, with a payout ratio of 94% of net profit[8] - The company declared a final dividend of HKD 0.10 per share for the year ended December 31, 2022, compared to HKD 0.22 per share in the previous year, totaling HKD 942 million in 2021[36] - The company paid dividends totaling RMB 765,435 thousand in 2022, a decrease from RMB 1,186,910 thousand in the previous year, indicating a reduction of approximately 35%[154] Sales and Market Performance - The company's excavator sales revenue decreased by 40.8% to approximately RMB 1,109 million, down from RMB 1,873 million in 2021[14] - The company's wheel loader sales accounted for 46.8% of total revenue, decreasing by 21.1% to approximately RMB 5,214 million[13] - The sales revenue from the eastern region of China decreased by 37.3% to approximately RMB 1,608 million[12] - The sales proportion of forklifts increased by 4.57 percentage points to 30.25% during the reporting period[11] - Forklift product sales revenue decreased by 4.1% to approximately RMB 3,373 million, accounting for about 30.2% of total revenue[15] Research and Development - The company emphasized product research and development, particularly in new energy loaders and forklifts, enhancing core component technology[10] - The company reported a decrease in research and development expenses to RMB 516,019 thousand from RMB 622,557 thousand in the previous year, a reduction of 17.1%[146] Corporate Governance - The board consists of 8 members, including 1 non-executive director and 3 independent non-executive directors, with a gender diversity ratio of approximately 13% female representation[84] - The board is committed to enhancing corporate governance practices to increase transparency and trust among shareholders and stakeholders[66] - The company has adopted the corporate governance code principles and aims to maintain high standards of governance, although there are some deviations noted[71] - The independent non-executive directors confirmed their independence in accordance with the listing rules[74] Environmental, Social, and Governance (ESG) Initiatives - The company is committed to improving its environmental performance and reducing pollution during production processes[53] - The company has established an ESG governance framework consisting of the Board of Directors, an ESG working group, and executive departments to oversee and manage ESG-related activities[102] - The company aims to minimize its environmental impact through clean production and pollution control initiatives[109] - The company has implemented an ISO14001 environmental management system to ensure effective operation and continuous improvement in environmental management[109] - The company has a strong commitment to corporate social responsibility, focusing on resource conservation and environmental friendliness[101] Risk Management - The company has established a risk management and internal control system to identify, assess, and manage significant risks to achieve business objectives[86] - The internal audit department is responsible for reviewing the adequacy and effectiveness of the risk management and internal control systems, reporting to the board and audit committee[87] Supplier and Inventory Management - The company has set a maximum inventory level for long-cycle procurement items to mitigate supply risks and avoid inventory stagnation[126] - The company plans supplier capacity at 120% of production requirements to ensure alignment with production schedules[128] - The supplier management platform underwent an upgrade, enhancing collaboration efficiency and integrating data links with the QMS system[124] Audit and Compliance - The audit committee reviewed the company's financial statements and compliance with regulatory requirements for the year 2022[79] - The independent auditor's report confirms that the consolidated financial statements present a true and fair view of the group's financial performance[136] - The board of directors is responsible for preparing the financial statements and ensuring they are free from material misstatement due to fraud or error[143]

Shareholder Information - The company clarified the deadline for shareholders to submit transfer documents for the annual general meeting is May 22, 2023, at 4:30 PM[3] Earnings Announcement - All other information in the earnings announcement remains unchanged[4]

Financial Performance - The total revenue for the year ended December 31, 2022, was RMB 11,150,234, a decrease of 18.5% from RMB 13,690,520 in 2021[2] - Gross profit for the year was RMB 1,867,026, down 23.9% from RMB 2,457,418 in the previous year[2] - The net profit for the year was RMB 400,340, representing a decline of 68.6% compared to RMB 1,275,426 in 2021[3] - The company reported a total comprehensive income of RMB 311,801, significantly lower than RMB 1,297,424 in the previous year[6] - The basic and diluted earnings per share for the year were RMB 0.09, down from RMB 0.30 in 2021[4] - The company reported a pre-tax profit of RMB 438,924 thousand for the year ended December 31, 2022, down from RMB 1,452,913 thousand in 2021, indicating a decrease of approximately 69.8%[20] - Total revenue from the sale of goods decreased to RMB 8,756,277,000 in 2022 from RMB 10,609,999,000 in 2021, reflecting a decline of about 17.4%[25] - The comprehensive gross profit margin for the group was 16.74%, a decline of 1.21 percentage points from 17.95% in 2021[55] - The sales revenue from the excavator segment decreased by 40.8% to approximately RMB 1,109 million, compared to RMB 1,873 million in 2021[58] - The sales revenue from the forklift segment slightly decreased by 4.1% to approximately RMB 3,373 million, while its sales revenue accounted for about 30.2% of total revenue[59] - The sales revenue from the wheeled loader segment accounted for approximately 46.8% of total revenue, decreasing by 21.1% to about RMB 5,214 million[57] - Other income decreased by approximately RMB 621 million year-on-year, primarily due to a decrease in the fair value of financial asset products and the recognition of investment income from the sale of a subsidiary last year[69] Assets and Liabilities - Total assets decreased to RMB 15,390,930 from RMB 16,602,217, reflecting a decline of 7.3%[8] - Current assets totaled RMB 11,585,891, down 7.1% from RMB 12,467,915 in 2021[8] - The company's net asset value was RMB 9,751,155, a decrease of 4.4% from RMB 10,204,789 in the previous year[9] - The company’s total liabilities as of December 31, 2022, were RMB 5,639,775 thousand, compared to RMB 6,397,428 thousand in 2021, indicating a decrease of approximately 11.9%[20] - The total asset-liability ratio was approximately 36.64% as of December 31, 2022, down from 38.53% in 2021[66] - The total accumulated depreciation and impairment for property, plant, and equipment as of December 31, 2022, was RMB 4,086,231,000, compared to RMB 3,837,224,000 at the beginning of the year[31] Expenses - Research and development expenses amounted to RMB 516,019, a reduction of 17.1% from RMB 622,557 in the prior year[2] - Capital expenditures for the year were RMB 305,895 thousand, down from RMB 358,179 thousand in the previous year, showing a decrease of approximately 14.5%[21] - Sales and distribution expenses decreased by 27.4% to approximately RMB 509 million, attributed to changes in finished product service policies and reduced transportation and service fees due to lower sales revenue[70] - Financial costs increased significantly to RMB 19,687,000 in 2022 from RMB 11,432,000 in 2021, marking an increase of approximately 72.2%[24] Cash Flow and Dividends - The company’s cash and cash equivalents stood at RMB 2,031,973 thousand in 2022, slightly up from RMB 2,020,005 thousand in 2021, reflecting a marginal increase of 0.1%[48] - The proposed final dividend for 2022 is HKD 0.10 per share, down from HKD 0.22 per share in 2021, representing a decrease of about 54.5%[29] - The company proposed a final dividend of HKD 0.10 per share for the year ended December 31, 2022, with no interim dividend paid during the year[84] - The final dividend is expected to be paid on or before July 18, 2023, to shareholders listed on June 5, 2023[88] Market Outlook and Strategy - The company plans to focus on expanding its market presence and enhancing its product offerings in the upcoming year[11] - The Chinese government has set a GDP growth target of around 5% for 2023, indicating a resilient economic outlook despite a complex environment[73] - The company is committed to long-term development strategies, focusing on R&D investment in new products and technologies to enhance competitiveness and market share[74] - The board of directors emphasizes maintaining high standards of corporate governance and transparency to enhance shareholder value[75] Accounting Standards - The financial statements are prepared in accordance with Hong Kong Financial Reporting Standards and are based on historical cost, except for certain financial instruments measured at fair value[12] - The group has adopted revised Hong Kong Financial Reporting Standards during the year, which did not significantly impact the financial position or performance[15] - The revised HKFRS 3 clarifies the framework for financial reporting without major changes to requirements, and the group did not identify any contingent assets or liabilities during the year[16]

Financial Performance - The company's revenue for the six months ended June 30, 2022, was RMB 6,007,274 thousand, a decrease of 26.66% compared to RMB 8,191,260 thousand for the same period in 2021[7] - Operating profit dropped to RMB 107,930 thousand, down 89.51% from RMB 1,028,647 thousand year-on-year[7] - EBITDA attributable to equity holders was RMB 308,643 thousand, a decline of 75.97% from RMB 1,284,374 thousand in the previous year[7] - Basic earnings per share decreased to RMB 0.03, down 86.36% from RMB 0.22 in the same period last year[7] - Total comprehensive income for the period was RMB 85,082 thousand, compared to RMB 957,248 thousand in the same period last year[15] - The company reported a significant decline in pre-tax profit to RMB 163,487 thousand, down from RMB 1,101,954 thousand in the previous year[14] - Net profit for the period was approximately RMB 148 million, a decrease of RMB 797 million or 84.35% compared to RMB 945 million in the same period of 2021[75] Profitability Metrics - The gross profit margin for the period was 14.70%, down from 18.69%, reflecting a decrease of 3.99 percentage points[7] - Net profit margin fell to 2.46%, a decline of 9.07 percentage points from 11.53% in the previous year[7] - The company reported a pre-tax profit of RMB 134,798 thousand for the first half of 2022, down from RMB 164,078 thousand in the same period of 2021[36] - Other income decreased to RMB 26,680 thousand in 2022 from RMB 38,692 thousand in 2021, primarily due to a reduction in government grants[34] Asset and Liability Management - As of June 30, 2022, the total non-current assets amounted to RMB 3,960,974 thousand, compared to RMB 4,134,302 thousand as of December 31, 2021, reflecting a decrease of approximately 4.2%[16] - The total current assets were reported at RMB 11,859,406 thousand, down from RMB 12,467,915 thousand, indicating a decline of about 4.9%[16] - Current liabilities totaled RMB 5,559,540 thousand, a slight decrease from RMB 5,659,178 thousand, representing a reduction of approximately 1.8%[17] - The net asset value decreased to RMB 9,524,436 thousand from RMB 10,204,789 thousand, showing a decline of around 6.6%[18] - The total liabilities as of June 30, 2022, were RMB 6,295,944 thousand, slightly down from RMB 6,397,428 thousand at the end of 2021[31] Cash Flow and Liquidity - The operating cash flow before changes in working capital for the six months ended June 30, 2022, was RMB 417,176 thousand, compared to RMB 866,016 thousand for the same period in 2021, reflecting a significant decrease of approximately 52.1%[22] - The cash and cash equivalents increased to RMB 2,527,699 thousand from RMB 2,025,005 thousand, marking an increase of about 24.8%[16] - The cash and cash equivalents at the end of the period were RMB 2,527,699 thousand, a decrease of 21.9% from RMB 3,241,892 thousand at the end of 2021[24] - The total cash and cash equivalents, including time deposits, increased to RMB 3,216,035 thousand as of June 30, 2022, up from RMB 2,809,239 thousand as of December 31, 2021, reflecting a growth of 14.4%[51] Inventory and Receivables - Inventory turnover days decreased to 129 days, down from 140 days year-on-year[7] - The company reported a decrease in inventory, contributing to a cash flow improvement of RMB 880,614 thousand compared to RMB 50,822 thousand in the previous year[22] - The company experienced a decrease in trade receivables, which amounted to RMB 3,122,985 thousand, down from RMB 3,255,311 thousand, indicating a decline of approximately 4.1%[16] - Trade receivables as of June 30, 2022, were RMB 3,833,096 thousand, down from RMB 4,128,161 thousand at the end of 2021[42] Market and Sales Performance - Total sales of construction machinery for the first half of 2022 amounted to RMB 6,007,274 thousand, a decrease of 26.7% from RMB 8,191,260 thousand in the same period of 2021[32] - Wheel loaders accounted for 47.4% of total sales in 2022, generating RMB 2,847,877 thousand, compared to 47.6% and RMB 3,897,669 thousand in 2021[32] - Forklift sales increased to RMB 1,947,952 thousand, representing 32.4% of total sales, up from 25.5% in 2021[32] - Excavator sales revenue dropped by 56.5% to approximately RMB 550 million, down from RMB 1,264 million in the same period of 2021, accounting for 9.2% of total revenue[81] - Export sales increased significantly, with a sales proportion rising from 8.76% in the same period last year to 16.65%, and overseas sales revenue grew by 39.4%[76] Strategic Initiatives and Future Outlook - The company plans to continue expanding its market presence and product offerings in the construction machinery sector[24] - The company aims to enhance confidence and improve expectations by focusing on the sustainable and healthy development of core products such as loaders, excavators, forklifts, and road machinery[88] - The company plans to increase investment in product research and development and technology team building, emphasizing the application of new energy technologies in engineering machinery products[88] - Future outlook suggests a projected revenue increase of 20% for the next fiscal year, driven by new product launches and market expansion strategies[113] - The company has completed a strategic acquisition of a local competitor, expected to enhance operational efficiency and customer reach[113] Corporate Governance and Management - The board of directors believes that maintaining the dual role of the chairman and CEO is appropriate for ensuring policy continuity and business stability[97] - The company has adopted the corporate governance code and confirmed compliance with the standards for securities trading by directors[98] - The company has implemented improvements in its internal control system, focusing on procurement, supply chain management, and quality enhancement[99] - The company emphasizes high transparency in management and timely information disclosure as key factors for success[100] Employee and Investor Relations - The group employed approximately 7,687 employees as of June 30, 2022[110] - During the first half of 2022, the company received over 25 investor communication sessions due to reduced in-person visits caused by the COVID-19 pandemic[100]

Financial Performance - Revenue increased by 6.29% to RMB 13,690,520,000, reaching a historical high[8] - Net profit for 2021 was RMB 1,275,383,000, a decrease of 34.90% compared to the previous year[8] - EBITDA decreased by 34.15% to RMB 1,755,164,000, reflecting challenges in cost management[8] - In 2021, the company achieved a total revenue of RMB 13,691 million, an increase of RMB 811 million or 6.29% compared to RMB 12,880 million in 2020[15] - The company's net profit for the year was approximately RMB 1,275 million, a decrease of RMB 685 million or 34.92% from RMB 1,960 million in the previous year, primarily due to rising raw material prices[15] - The comprehensive gross profit margin decreased to 17.95%, down 5.42 percentage points from 23.37% in 2020[15] - The company reported a total comprehensive income of RMB 1,297,424 thousand for the year, down from RMB 1,993,372 thousand in 2020[149] - The company reported a total comprehensive income of RMB 1,297,381,000 for the year, compared to RMB 1,993,372,000 in the previous year[153] Cash Flow and Dividends - Cash flow from operating activities was RMB 517,000,000, with total cash and financial assets amounting to RMB 6,514,000,000[12] - Proposed dividend of RMB 0.22 per share, with a payout ratio of 60% of net profit[12] - The company declared a final dividend of HKD 0.22 per share for the year ended December 31, 2021, compared to a final dividend of HKD 0.33 per share for the previous year, totaling HKD 1,412 million (approximately RMB 1,187 million) for the prior year[37] - Declared dividends for the year amounted to RMB 1,186,910,000, reflecting a significant cash outflow from retained earnings[152] - The company paid dividends of RMB 1,186,910 thousand in 2021, an increase from RMB 976,062 thousand in 2020[155] Market Position and Sales - The company retained the largest market share in the domestic loader market and ranked among the top three in forklifts[12] - The sales volume of loaders maintained the industry-leading position, while forklift sales exceeded 75,000 units, solidifying a top-three position in the industry[13] - Export sales increased significantly by 74.04% to approximately RMB 1,504 million, compared to RMB 864 million in 2020[16] - The market share of forklifts increased to 25.7%, up 4.7% from the previous year, while excavator sales decreased to 13.7%, down 5.1% from 2020[15] - Wheel loader sales increased by 5.2% to approximately RMB 6,611 million, accounting for 48.3% of total sales[17] - Forklift sales rose by 29.7% to RMB 3,516 million, representing 25.7% of total sales[18] - Excavator sales decreased by 22.5% to RMB 1,873 million, making up 13.7% of total sales[19] Research and Development - The company focused on enhancing product quality and invested more in R&D, particularly in new energy loaders and forklifts[13] - R&D expenses increased by approximately RMB 44 million due to enhanced investment in electric forklift development[28] - The company will continue to increase investment in product research and development, focusing on four major product categories and core components to improve product structure and performance[30] - The company aims to enhance the level of product series and accelerate the transformation and upgrading of products, particularly in the development and application of new energy technologies[30] - The company plans to strengthen its digitalization and intelligent transformation efforts, increasing R&D expenditure and enhancing the overall level of its technical team[30] Risk Management and Corporate Governance - The company emphasized risk control and management innovation to ensure operational quality amid fierce market competition[13] - The board of directors is committed to maintaining high standards of corporate governance and transparency to enhance shareholder value[66] - The company has adopted a corporate governance code to ensure compliance with securities trading standards among directors[71] - The company aims to enhance its management practices to improve competitiveness and operational efficiency, ensuring sustainable development for greater shareholder returns[71] - The company has implemented a comprehensive budget management and performance evaluation system to monitor operational conditions and adjust management measures accordingly[86] Environmental and Social Responsibility - The company is committed to improving its environmental performance and reducing pollution during its production processes[52] - The company has established an ISO 14001 environmental management system to ensure effective operation and continuous improvement in environmental management[107] - The company aims to reduce the impact of its operations on the environment through clean production and pollution control initiatives[107] - The company has invested over 100 million in environmental governance over the past three years, achieving a 100% compliance rate for emissions standards[118] - The company has implemented a strict anti-corruption framework, ensuring compliance with internal and external regulations[135] Employee and Workforce Management - Employee count stood at 8,198 as of December 31, 2021, with an average monthly turnover rate of 1.46%[116] - The company offers over 1,000 training courses covering various modules, enhancing employees' professional knowledge and skills[120] - The company has achieved national secondary certification for safety production standardization, with 100% coverage of safety operation procedures across all positions[118] - The company strictly adheres to labor laws, ensuring no violations related to labor standards were found during the reporting period[121] Financial Position and Assets - Total assets as of December 31, 2021, amounted to RMB 16,602,217 thousand, compared to RMB 17,274,236 thousand in 2020[150] - Total current liabilities decreased to RMB 5,659,178,000 from RMB 7,095,283,000, representing a reduction of approximately 20.2% year-over-year[151] - Net current assets increased to RMB 6,808,737,000, up from RMB 6,108,074,000, reflecting a growth of about 11.4%[151] - Non-current liabilities totaled RMB 738,250,000, significantly up from RMB 84,678,000, marking an increase of approximately 769.5%[151] - Net asset value reached RMB 10,204,789,000, compared to RMB 10,094,275,000, showing a growth of about 1.1%[151] Audit and Compliance - The audit aimed to provide reasonable assurance that the financial statements are free from material misstatement due to fraud or error[146] - The company’s directors are responsible for preparing true and fair consolidated financial statements in accordance with applicable financial reporting standards[145] - The audit procedures were designed to identify and assess risks of material misstatement in the financial statements[146] - The external auditor, Ernst & Young, received approximately RMB 2.89 million for audit and review services for the year ended December 31, 2021, compared to RMB 2.76 million in 2020[79]

[Financial Highlights](index=3&type=section&id=Financial%20Highlights) This chapter summarizes the consolidated financial performance of China Lonking Holdings Limited and its subsidiaries for the six months ended June 30, 2021, showing significant revenue growth but a decline in profitability metrics compared to the prior period 2021 H1 Key Financial Indicators Comparison | Indicator | Six Months Ended June 30, 2021 (RMB thousands) | Six Months Ended June 30, 2020 (RMB thousands) | Change (+/-) | | :--- | :--- | :--- | :--- | | Revenue | 8,191,260 | 6,513,807 | +25.75% | | Operating Profit | 1,028,647 | 1,064,603 | -3.38% | | EBITDA | 1,284,374 | 1,291,572 | -0.56% | | Profit attributable to owners of the parent | 944,563 | 943,608 | +0.10% | | Basic earnings per share | 0.22 | 0.22 | +0.00% | | Net asset value per share | 2.30 | 2.11 | +9.00% | | Consolidated gross profit margin | 18.69% | 22.89% | -4.20% | | Net profit margin | 11.53% | 14.49% | -2.96% | | EBITDA margin | 15.68% | 19.83% | -4.15% | | Return on equity | 9.58% | 10.44% | -0.86% | | Current ratio | 1.77 | 1.80 | -0.03% | | Interest coverage ratio | 70.40 | 84.70 | -14.30% | | Total debt to equity ratio | 87.94% | 77.65% | +10.29% | | Inventory turnover days | 102 | 107 | -5 Days | | Trade and bills payables turnover days | 140 | 140 | +0 Days | | Trade receivables turnover days | 93 | 83 | +10 Days | [Review Report on Interim Condensed Consolidated Financial Information](index=5&type=section&id=Review%20Report%20on%20Interim%20Condensed%20Consolidated%20Financial%20Information) Ernst & Young has reviewed the Group's interim condensed consolidated financial information for the six months ended June 30, 2021, finding no material matters suggesting non-compliance with HKAS 34 - The review was conducted in accordance with Hong Kong Standard on Review Engagements 2410 issued by the HKICPA, with a scope smaller than an audit, thus no audit opinion is expressed[9](index=9&type=chunk) - The review concluded that no matters were found to suggest the interim condensed consolidated financial information was not prepared in all material respects in accordance with HKAS 34[10](index=10&type=chunk) [Interim Condensed Consolidated Statement of Profit or Loss](index=7&type=section&id=Interim%20Condensed%20Consolidated%20Statement%20of%20Profit%20or%20Loss) This chapter presents the Group's consolidated profit or loss for the six months ended June 30, 2021, showing significant revenue growth but decreased gross profit margin and profit before tax, with profit for the period remaining stable Interim Condensed Consolidated Statement of Profit or Loss Key Data | Indicator | Six Months Ended June 30, 2021 (RMB thousands) | Six Months Ended June 30, 2020 (RMB thousands) | | :--- | :--- | :--- | | Revenue | 8,191,260 | 6,513,807 | | Cost of sales | (6,660,466) | (5,023,023) | | Gross profit | 1,530,794 | 1,490,784 | | Profit before tax | 1,101,954 | 1,125,055 | | Income tax expense | (157,367) | (181,219) | | Profit for the period | 944,587 | 943,836 | | Profit attributable to owners of the parent | 944,563 | 943,608 | | Basic earnings per share (RMB) | 0.22 | 0.22 | [Interim Condensed Consolidated Statement of Comprehensive Income](index=8&type=section&id=Interim%20Condensed%20Consolidated%20Statement%20of%20Comprehensive%20Income) This chapter presents the Group's comprehensive income for the six months ended June 30, 2021, with total comprehensive income for the period increasing due to exchange differences and fair value changes of financial assets Interim Condensed Consolidated Statement of Comprehensive Income Key Data | Indicator | Six Months Ended June 30, 2021 (RMB thousands) | Six Months Ended June 30, 2020 (RMB thousands) | | :--- | :--- | :--- | | Profit for the period | 944,587 | 943,836 | | Financial assets at fair value through other comprehensive income: fair value changes | (2,955) | 792 | | Income tax effect | 446 | (119) | | Exchange differences arising from translation of overseas operations | 15,170 | (3,912) | | Other comprehensive income/(loss) for the period, net of tax | 12,661 | (3,239) | | Total comprehensive income for the period | 957,248 | 940,597 | | Total comprehensive income attributable to owners of the parent | 957,224 | 940,368 | [Interim Condensed Consolidated Statement of Financial Position](index=9&type=section&id=Interim%20Condensed%20Consolidated%20Statement%20of%20Financial%20Position) This chapter presents the Group's financial position as of June 30, 2021, showing increases in total assets and current assets, a slight decrease in total equity, and increases in both current and non-current liabilities Interim Condensed Consolidated Statement of Financial Position Key Data | Indicator | June 30, 2021 (RMB thousands) | December 31, 2020 (RMB thousands) | | :--- | :--- | :--- | | Total non-current assets | 4,471,104 | 4,070,879 | | Total current assets | 14,068,366 | 13,203,357 | | Total current liabilities | 7,939,337 | 7,095,283 | | Total non-current liabilities | 735,520 | 84,678 | | Net assets | 9,864,613 | 10,094,275 | | Equity attributable to owners of the parent | 9,862,108 | 10,091,794 | | Total equity | 9,864,613 | 10,094,275 | [Interim Condensed Consolidated Statement of Changes in Equity](index=12&type=section&id=Interim%20Condensed%20Consolidated%20Statement%20of%20Changes%20in%20Equity) This chapter details the Group's equity movements for the six months ended June 30, 2021, showing total comprehensive income of RMB 957,248 thousands, but a reduction in total equity due to factors like declared dividends - As of June 30, 2021, equity attributable to owners of the parent was **RMB 9,862,108 thousands**, a decrease from **RMB 10,091,794 thousands** as of January 1, 2020[17](index=17&type=chunk) - Total comprehensive income for the period was **RMB 957,248 thousands**, of which **RMB 957,224 thousands** was attributable to owners of the parent[17](index=17&type=chunk) - Dividends declared during the period amounted to **RMB 1,186,910 thousands**, leading to a reduction in equity[17](index=17&type=chunk) [Interim Condensed Consolidated Statement of Cash Flows](index=14&type=section&id=Interim%20Condensed%20Consolidated%20Statement%20of%20Cash%20Flows) This chapter presents the Group's cash flows for the six months ended June 30, 2021, showing increased net cash from operating activities, a shift from net outflow to net inflow from investing activities, reduced net cash outflow from financing activities, and a net increase in cash and cash equivalents Interim Condensed Consolidated Statement of Cash Flows Key Data | Indicator | Six Months Ended June 30, 2021 (RMB thousands) | Six Months Ended June 30, 2020 (RMB thousands) | | :--- | :--- | :--- | | Net cash flows from operating activities | 446,941 | 406,669 | | Net cash flows from/(used in) investing activities | 57,790 | (113,611) | | Net cash flows used in financing activities | (46,780) | (61,843) | | Net increase in cash and cash equivalents | 457,951 | 231,215 | | Cash and cash equivalents at end of period | 3,241,892 | 2,733,009 | [Notes to the Interim Condensed Consolidated Financial Information](index=16&type=section&id=Notes%20to%20the%20Interim%20Condensed%20Consolidated%20Financial%20Information) This chapter provides detailed notes to the interim condensed consolidated financial information, covering company information, accounting policies, revenue recognition, segment information, asset and liability composition, equity changes, related party transactions, and fair value measurement of financial instruments [1. Company Information](index=16&type=section&id=1.%20Company%20Information) The Group's principal activities include manufacturing and distributing construction machinery and providing finance lease services; the Company is incorporated in the Cayman Islands and listed on the HKEX, with Ms. Ni Yinying as the ultimate controlling party - The Group's principal activities are the manufacture and distribution of wheel loaders, road rollers, excavators, forklifts, and other construction machinery, and the provision of finance leases[22](index=22&type=chunk) - The Company was incorporated in the Cayman Islands on May 11, 2004, and its shares are listed on the Main Board of the Stock Exchange of Hong Kong[22](index=22&type=chunk) - Ms. Ni Yinying, a non-executive director of the Company, is the ultimate controlling party of the Company[22](index=22&type=chunk) [2. Basis of Preparation and Changes in the Group's Accounting Policies](index=16&type=section&id=2.%20Basis%20of%20Preparation%20and%20Changes%20in%20the%20Group's%20Accounting%20Policies) This interim condensed consolidated financial information is prepared in accordance with HKAS 34, with accounting policies consistent with the annual financial statements, and the adoption of revised HKFRSs had no material impact [2.1 Basis of Preparation](index=16&type=section&id=2.1%20Basis%20of%20Preparation) The interim condensed consolidated financial information is prepared in accordance with HKAS 34 "Interim Financial Reporting" and should be read in conjunction with the Group's annual financial statements as of December 31, 2020 - The interim condensed consolidated financial information is prepared in accordance with Hong Kong Accounting Standard 34 'Interim Financial Reporting'[23](index=23&type=chunk) - This information does not include all disclosures required in annual financial statements and should be read in conjunction with the annual financial statements as of December 31, 2020[23](index=23&type=chunk) [2.2 Changes in Accounting Policies and Disclosures](index=17&type=section&id=2.2%20Changes%20in%20Accounting%20Policies%20and%20Disclosures) The accounting policies adopted for this interim condensed consolidated financial information are consistent with the annual consolidated financial statements, with the initial adoption of revised HKFRSs having no material impact on performance or financial position - Accounting policies are consistent with the 2020 annual consolidated financial statements, with only the initial adoption of revised Hong Kong Financial Reporting Standards[24](index=24&type=chunk) - The adoption of new and revised standards had no significant impact on the preparation and presentation of the results and financial position for current and prior periods[24](index=24&type=chunk) [3. Revenue from Contracts with Customers](index=17&type=section&id=3.%20Revenue%20from%20Contracts%20with%20Customers) The Group's revenue from customer contracts primarily stems from the sale of construction machinery, recognized when goods are transferred, with approximately 9% of sales denominated in non-functional currencies - The Group's revenue from contracts with customers primarily arises from the sale of wheel loaders, road rollers, excavators, forklifts, and other construction machinery[25](index=25&type=chunk) - Revenue is recognized when goods are transferred at a point in time[25](index=25&type=chunk) - Approximately **9%** (2020: 5%) of sales are denominated in currencies other than the functional currency of the operating units[25](index=25&type=chunk) [4. Operating Segment Information](index=18&type=section&id=4.%20Operating%20Segment%20Information) The Group's operating segments include sales of construction machinery, finance leases, and financial investments, with construction machinery sales contributing the majority of revenue and segment results, and total revenue increasing by 25.75% year-on-year for the six months ended June 30, 2021 Operating Segment Revenue and Results (Six Months Ended June 30, 2021) | Segment | Revenue (RMB thousands) | Results (RMB thousands) | | :--- | :--- | :--- | | Sales of construction machinery | 8,191,112 | 938,540 | | Finance leases of construction machinery | 148 | 106 | | Financial investments | – | 101,178 | | Total | 8,191,260 | 1,039,824 | Analysis of Construction Machinery Sales by Product (Six Months Ended June 30, 2021) | Product | 2021 (RMB thousands) | 2021 (%) | 2020 (RMB thousands) | 2020 (%) | | :--- | :--- | :--- | :--- | :--- | | Wheel loaders | 3,897,669 | 47.6 | 3,216,119 | 49.4 | | Excavators | 1,264,224 | 15.4 | 1,282,636 | 19.7 | | Forklifts | 2,087,748 | 25.5 | 1,348,666 | 20.7 | | Parts | 888,015 | 10.8 | 617,112 | 9.5 | | Road rollers | 53,456 | 0.7 | 48,524 | 0.7 | | Subtotal | 8,191,112 | 100.0 | 6,513,057 | 100.0 | | Finance lease interest income | 148 | – | 750 | – | | Total | 8,191,260 | 100.0 | 6,513,807 | 100.0 | - The Group's operating activities are not seasonal[30](index=30&type=chunk) [5. Other Income and Other Gains and Losses](index=21&type=section&id=5.%20Other%20Income%20and%20Other%20Gains%20and%20Losses) This chapter analyzes the Group's other income and other gains and losses for the six months ended June 30, 2021, showing government grants as the primary source of other income, while other gains and losses were mainly influenced by gains from disposal of a subsidiary and fair value gains on financial assets Analysis of Other Income | Item | 2021 (RMB thousands) | 2020 (RMB thousands) | | :--- | :--- | :--- | | Government grants | 35,807 | 27,309 | | Penalty income | 17 | 1,905 | | Others | 2,868 | 9,400 | | Total | 38,692 | 38,614 | Analysis of Other Gains and Losses | Item | 2021 (RMB thousands) | 2020 (RMB thousands) | | :--- | :--- | :--- | | Loss on disposal of items of property, plant and equipment | (749) | (260) | | Write-down of inventories to net realizable value | 10,358 | 163 | | Fair value gains on financial assets at fair value through profit or loss, net | 96,461 | 305,616 | | Gains on derivative instruments | 4,717 | 4,717 | | Gains on bills receivable | 5,306 | – | | Gains on disposal of a subsidiary | 213,530 | – | | Exchange (losses)/gains | (5,515) | 5,026 | | Total | 324,108 | 247,327 | [6. Profit Before Tax](index=22&type=section&id=6.%20Profit%20Before%20Tax) This chapter outlines the composition of profit before tax for the six months ended June 30, 2021, with major expenses including inventory costs, depreciation, staff costs, and product warranty provisions, offset by gains from disposal of a subsidiary and fair value gains Major Deductions/(Credits) from Profit Before Tax | Item | 2021 (RMB thousands) | 2020 (RMB thousands) | | :--- | :--- | :--- | | Cost of inventories recognized as expense | 6,660,466 | 5,023,023 | | Depreciation of property, plant and equipment | 164,078 | 150,140 | | Staff costs, including directors' emoluments | 389,691 | 318,134 | | Provision for product warranties | 143,985 | 111,739 | | Gains on disposal of a subsidiary | (213,530) | – | | Fair value gains | (96,461) | (305,616) | | Interest income | (89,186) | (73,893) | | Government grants related to income | (35,807) | (27,309) | [7. Income Tax Expense](index=23&type=section&id=7.%20Income%20Tax%20Expense) This chapter explains the Group's income tax expense for the six months ended June 30, 2021, primarily comprising current income tax expense and deferred income tax expense, totaling RMB 157,367 thousands Composition of Income Tax Expense | Item | 2021 (RMB thousands) | 2020 (RMB thousands) | | :--- | :--- | :--- | | Current income tax expense | 149,670 | 161,292 | | Deferred income tax expense related to origination and reversal of temporary differences | 7,697 | 19,927 | | Income tax expense recognized in the consolidated statement of profit or loss | 157,367 | 181,219 | [8. Dividends Payable to Shareholders](index=23&type=section&id=8.%20Dividends%20Payable%20to%20Shareholders) The Board does not recommend an interim dividend for the six months ended June 30, 2021, while the 2020 final dividend of HKD 0.33 per share was paid on July 23, 2021 - The Directors do not recommend the payment of an interim dividend for the six months ended June 30, 2021[35](index=35&type=chunk) - The proposed final dividend of **HKD 0.33** per ordinary share for the year ended December 31, 2020, was paid on July 23, 2021[35](index=35&type=chunk) [9. Property, Plant and Equipment](index=23&type=section&id=9.%20Property%2C%20Plant%20and%20Equipment) For the six months ended June 30, 2021, the Group purchased property, plant and equipment worth RMB 148,415 thousands and disposed of assets with a net book value of RMB 760 thousands, resulting in a net loss of RMB 749 thousands - For the six months ended June 30, 2021, the Group purchased assets (including property, plant and machinery) at a cost of **RMB 148,415 thousands**, an increase compared to the same period last year[36](index=36&type=chunk) - The Group disposed of assets with a net book value of **RMB 760 thousands**, resulting in a net loss on disposal of **RMB 749 thousands**[36](index=36&type=chunk) [10. Inventories](index=24&type=section&id=10.%20Inventories) This chapter presents the Group's inventory composition as of June 30, 2021, totaling RMB 3,713,262 thousands, a slight decrease from the end of 2020, primarily consisting of finished goods, raw materials, and work in progress Composition of Inventories | Item | June 30, 2021 (RMB thousands) | December 31, 2020 (RMB thousands) | | :--- | :--- | :--- | | Raw materials | 1,305,379 | 1,190,225 | | Work in progress | 232,217 | 198,312 | | Finished goods | 2,175,666 | 2,365,355 | | Total | 3,713,262 | 3,753,892 | [11. Trade Receivables](index=24&type=section&id=11.%20Trade%20Receivables) The Group offers trade customers credit terms of 6 to 24 months, with total trade receivables amounting to RMB 4,570,684 thousands as of June 30, 2021, an increase from the end of 2020, with the 0-90 days aging category being the largest - The Group offers trade customers credit terms of **6 to 24 months**, with longer terms available for customers with good credit records[38](index=38&type=chunk) Aging Analysis of Trade Receivables | Aging | June 30, 2021 (RMB thousands) | December 31, 2020 (RMB thousands) | | :--- | :--- | :--- | | 0 to 90 days | 2,454,603 | 2,083,775 | | 91 to 180 days | 1,168,054 | 835,302 | | 181 to 360 days | 773,862 | 740,618 | | Over 1 year | 174,165 | 130,517 | | Total | 4,570,684 | 3,790,212 | | Less: Non-current portion | (666,339) | (603,090) | | Current portion | 3,904,345 | 3,187,122 | [12. Prepayments, Deposits and Other Receivables](index=25&type=section&id=12.%20Prepayments%2C%20Deposits%20and%20Other%20Receivables) This chapter presents the Group's prepayments, deposits, and other receivables as of June 30, 2021, totaling RMB 686,882 thousands, a decrease from the end of 2020, primarily including prepayments, deductible VAT, and net loans receivable Composition of Prepayments, Deposits and Other Receivables | Item | June 30, 2021 (RMB thousands) | December 31, 2020 (RMB thousands) | | :--- | :--- | :--- | | Prepayments | 481,979 | 623,774 | | Deductible VAT | 67,061 | 93,516 | | Receivables for consideration on disposal of a subsidiary | 27,639 | – | | Deposits | 2,590 | 3,147 | | Total other receivables | 107,613 | 157,061 | | Total | 686,882 | 877,498 | - A significant portion of other receivables includes loans receivable from sales agents for machine repurchases, with the recovery of finance lease receivables being unsatisfactory due to deteriorating external operating conditions[40](index=40&type=chunk) [13. Financial Assets at Fair Value Through Other Comprehensive Income](index=26&type=section&id=13.%20Financial%20Assets%20at%20Fair%20Value%20Through%20Other%20Comprehensive%20Income) The Group classifies bills receivable held for collecting cash flows and for sale as financial assets at fair value through other comprehensive income, amounting to RMB 326,521 thousands as of June 30, 2021 - The Group has classified bills receivable held for collecting contractual cash flows and for selling as financial assets at fair value through other comprehensive income[42](index=42&type=chunk) Financial Assets at Fair Value Through Other Comprehensive Income | Item | June 30, 2021 (RMB thousands) | December 31, 2020 (RMB thousands) | | :--- | :--- | :--- | | Bills receivable, at fair value | 326,521 | 211,428 | [14. Equity Investments at Fair Value Through Other Comprehensive Income](index=26&type=section&id=14.%20Equity%20Investments%20at%20Fair%20Value%20Through%20Other%20Comprehensive%20Income) The Group has irrevocably designated unlisted equity investments as at fair value through other comprehensive income due to their strategic nature, totaling RMB 1,450 thousands as of June 30, 2021 - Unlisted equity investments have been irrevocably designated as at fair value through other comprehensive income due to their strategic nature[43](index=43&type=chunk) Equity Investments at Fair Value Through Other Comprehensive Income | Item | June 30, 2021 (RMB thousands) | December 31, 2020 (RMB thousands) | | :--- | :--- | :--- | | Unlisted equity investments, at fair value | 1,450 | 1,450 | [15. Financial Assets at Fair Value Through Profit or Loss](index=27&type=section&id=15.%20Financial%20Assets%20at%20Fair%20Value%20Through%20Profit%20or%20Loss) The Group's financial assets at fair value through profit or loss primarily comprise listed and unlisted equity investments, totaling RMB 2,443,042 thousands, with unlisted investments being wealth management and fund products issued by PRC financial institutions Composition of Financial Assets at Fair Value Through Profit or Loss | Item | June 30, 2021 (RMB thousands) | December 31, 2020 (RMB thousands) | | :--- | :--- | :--- | | Listed equity investments, at fair value – non-current | 270,414 | 289,730 | | Unlisted equity investments, at fair value – current | 1,605,664 | 1,538,021 | | Unlisted equity investments, at fair value – non-current | 566,964 | 518,830 | | Total | 2,443,042 | 2,346,581 | - Listed equity investments are classified as financial assets at fair value through profit or loss as they are held for trading purposes[44](index=44&type=chunk) - Unlisted equity investments are wealth management and fund investment products issued by PRC financial institutions and investment companies, which are mandatorily classified as financial assets at fair value through profit or loss because their contractual cash flows are not solely payments of principal and interest[45](index=45&type=chunk) [16. Cash and Cash Equivalents and Pledged Bank Deposits](index=27&type=section&id=16.%20Cash%20and%20Cash%20Equivalents%20and%20Pledged%20Bank%20Deposits) This chapter presents the Group's cash and cash equivalents and pledged bank deposits as of June 30, 2021, totaling RMB 4,183,889 thousands, with cash and bank balances amounting to RMB 3,241,892 thousands Cash and Cash Equivalents and Pledged Bank Deposits | Item | June 30, 2021 (RMB thousands) | December 31, 2020 (RMB thousands) | | :--- | :--- | :--- | | Cash and bank balances | 3,241,892 | 2,480,567 | | Time deposits | 941,997 | 1,137,547 | | Total | 4,183,889 | 3,618,114 | | Less: Pledged for long-term bank loans | (356,000) | – | | Less: Pledged for short-term bank loans | – | (356,000) | | Less: Pledged for bank acceptance bills | (493,922) | (441,251) | | Less: Other pledged | (92,075) | (40,296) | | Cash and cash equivalents | 3,241,892 | 2,780,567 | - Pledged bank deposits refer to deposits pledged to banks to obtain bank borrowings or financing, and are classified as current or non-current assets accordingly[46](index=46&type=chunk) [17. Trade and Bills Payables](index=28&type=section&id=17.%20Trade%20and%20Bills%20Payables) This chapter presents the aging analysis of the Group's trade and bills payables as of June 30, 2021, totaling RMB 5,303,825 thousands, with the 0-180 days aging category accounting for the vast majority Aging Analysis of Trade and Bills Payables | Aging | June 30, 2021 (RMB thousands) | December 31, 2020 (RMB thousands) | | :--- | :--- | :--- | | 0 to 180 days | 5,238,278 | 4,812,807 | | 181 days to 1 year | 13,070 | 28,308 | | 1 to 2 years | 8,899 | 32,771 | | 2 to 3 years | 19,018 | 9,497 | | Over 3 years | 24,560 | 16,775 | | Total | 5,303,825 | 4,900,158 | - Bills payable have an aging period of within six months and are secured by pledged bank deposits of **RMB 493,922 thousands**[47](index=47&type=chunk) [18. Other Payables and Accruals](index=28&type=section&id=18.%20Other%20Payables%20and%20Accruals) This chapter presents the Group's other payables and accruals as of June 30, 2021, totaling RMB 1,100,465 thousands, primarily including accrued sales commissions, wages and salaries payable, and contract liabilities Composition of Other Payables and Accruals | Item | June 30, 2021 (RMB thousands) | December 31, 2020 (RMB thousands) | | :--- | :--- | :--- | | Accrued sales commissions | 659,499 | 582,684 | | Other payables | 89,921 | 81,514 | | Wages and salaries payable | 114,316 | 161,226 | | Contract liabilities | 68,500 | 77,422 | | Payables for acquisition of property, plant and equipment | 31,895 | 28,473 | | Other taxes payable | 9,341 | 10,489 | | Finance lease deposits | 7,762 | 8,100 | | Investment management fees | 38,662 | 43,662 | | Other accrued expenses | 80,569 | 65,253 | | Total | 1,100,465 | 1,058,823 | [19. Interest-Bearing Bank Borrowings](index=29&type=section&id=19.%20Interest-Bearing%20Bank%20Borrowings) This chapter presents the Group's interest-bearing bank borrowings as of June 30, 2021, totaling RMB 656,863 thousands, all of which are non-current secured bank loans pledged by certain time deposits Interest-Bearing Bank Borrowings | Item | Effective Annual Interest Rate (%) | Maturity | June 30, 2021 (RMB thousands) | December 31, 2020 (RMB thousands) | | :--- | :--- | :--- | :--- | :--- | | Current bank loans – secured | – | 2021 | – | 663,452 | | Non-current bank loans – secured | 1.30-1.35 | 2024 | 656,863 | – | | Total | | | 656,863 | 663,452 | - Certain bank loans of the Group are secured by pledged time deposits of **RMB 356,000 thousands**[51](index=51&type=chunk) [20. Commitments](index=29&type=section&id=20.%20Commitments) This chapter discloses the Group's capital commitments of RMB 43,929,410 thousands as of June 30, 2021, primarily related to the acquisition of property, plant and equipment in Shanghai, Fujian, and Jiangxi, China - As of June 30, 2021, the Group had capital commitments of **RMB 43,929,410**, primarily related to the acquisition of property, plant and equipment located in Shanghai, Fujian, and Jiangxi, China[52](index=52&type=chunk) [21. Disposal of a Subsidiary](index=30&type=section&id=21.%20Disposal%20of%20a%20Subsidiary) On January 21, 2021, the Group disposed of its entire equity interest in Henan Lonking Machinery Manufacturing Co., Ltd. for a cash consideration of RMB 745,000 thousands, recognizing a gain of approximately RMB 213,530 thousands and generating net cash and cash equivalents inflow of RMB 240,818 thousands - On January 21, 2021, the Group disposed of its entire equity interest in Henan Lonking Machinery Manufacturing Co., Ltd. for a cash consideration of **RMB 745,000 thousands**[53](index=53&type=chunk) - A gain of **RMB 213,530 thousands** was recognized from the disposal of the subsidiary[54](index=54&type=chunk) Analysis of Net Cash and Cash Equivalents Inflow from Disposal of a Subsidiary | Item | June 30, 2021 (RMB thousands) | | :--- | :--- | | Cash consideration | 745,000 | | Cash and bank balances disposed of | (476,543) | | Cash consideration not yet received as of June 30, 2021 | (27,639) | | Net cash and cash equivalents inflow from disposal of a subsidiary | 240,818 | [22. Related Party Transactions](index=31&type=section&id=22.%20Related%20Party%20Transactions) This chapter discloses the total amount and balances of the Group's related party transactions for the six months ended June 30, 2021, primarily involving purchases from and receivables/payables to related parties, and also lists key management personnel remuneration Transactions and Balances with Key Related Parties (Six Months Ended June 30, 2021) | Related Party | Transaction Type | 2021 (RMB thousands) | 2020 (RMB thousands) | | :--- | :--- | :--- | :--- | | Longyan Jinlong Machinery Co., Ltd. | Purchases from related parties | 38,649 | 26,900 | | | Amounts due to related parties | 6,882 | 10,138 | | Hercules (Shanghai) Automation Equipment Co., Ltd. | Purchases from related parties | 27,033 | 15,117 | | | Amounts due from related parties | 1,863 | 12,935 | | | Amounts due to related parties | 6,913 | 7,852 | | Shanghai Ruifande Machinery Co., Ltd. | Sales to related parties | 4 | 4 | | | Amounts due from related parties | 256 | 252 | | | Amounts due to related parties | 56 | 56 | | Shanghai Longtui Environmental Technology Co., Ltd. | Sales to related parties | – | 346 | | | Purchases from related parties | 362 | 222 | | | Amounts due from related parties | 10 | 10 | | | Amounts due to related parties | 191 | 408 | Key Management Personnel Remuneration | Item | 2021 (RMB thousands) | 2020 (RMB thousands) | | :--- | :--- | :--- | | Short-term employee benefits | 12,249 | 12,000 | | Contributions to retirement schemes | 79 | 41 | | Total remuneration paid to key management personnel | 12,328 | 12,041 | [23. Financial Instruments by Category](index=33&type=section&id=23.%20Financial%20Instruments%20by%20Category) This chapter details the carrying amounts of the Group's financial assets and liabilities by category as of June 30, 2021, and December 31, 2020, including financial instruments measured at fair value through profit or loss, fair value through other comprehensive income, and amortized cost - As of June 30, 2021, total financial liabilities amounted to **RMB 6,142,970 thousands**, primarily comprising trade and bills payables, financial liabilities included in other payables and accruals, and interest-bearing bank borrowings[62](index=62&type=chunk) - As of December 31, 2020, total financial liabilities amounted to **RMB 5,743,844 thousands**[65](index=65&type=chunk) [24. Fair Value and Fair Value Hierarchy of Financial Instruments](index=36&type=section&id=24.%20Fair%20Value%20and%20Fair%20Value%20Hierarchy%20of%20Financial%20Instruments) This chapter describes the Group's fair value measurement methods and hierarchy for financial instruments, with management assessing that the fair values of most short-term financial instruments approximate their carrying amounts, and fair values are estimated using market quotations and discounted cash flow models - Management assesses that the fair values of short-term financial instruments such as cash and cash equivalents, current portion of trade receivables, and trade and bills payables approximate their carrying amounts[66](index=66&type=chunk) - The fair value of listed equity investments is calculated based on market quotations, while unlisted investments are estimated using discounted cash flow valuation models[67](index=67&type=chunk) Fair Value Hierarchy of Assets Measured at Fair Value (As of June 30, 2021) | Item | Quoted Prices in Active Markets (Level 1) (RMB thousands) | Significant Observable Inputs (Level 2) (RMB thousands) | Significant Unobservable Inputs (Level 3) (RMB thousands) | Total (RMB thousands) | | :--- | :--- | :--- | :--- | :--- | | Financial assets at fair value through other comprehensive income | – | – | 326,521 | 326,521 | | Equity investments designated at fair value through other comprehensive income | – | – | 1,450 | 1,450 | | Financial assets at fair value through profit or loss | 270,414 | 2,172,628 | – | 2,443,042 | | Total | 270,414 | 2,172,628 | 327,971 | 2,771,013 | [Management Discussion and Analysis](index=40&type=section&id=Management%20Discussion%20and%20Analysis) This chapter discusses the Group's operating results, financial position, and outlook for the six months ended June 30, 2021, highlighting significant revenue growth and strong export performance, but a decline in consolidated gross profit margin, with management emphasizing strategies to consolidate market position, expand international markets, optimize product structure, and increase R&D investment [Performance and Business Review](index=40&type=section&id=Performance%20and%20Business%20Review) In the first half of 2021, the Group achieved total revenue of RMB 8,191 million, a 25.75% year-on-year increase, with export sales growing by 128.5% to 8.8% of total sales, though the consolidated gross profit margin decreased to 18.69% - The Group achieved total revenue of **RMB 8,191 million** in the first half, a year-on-year increase of **25.75%**[72](index=72&type=chunk) - Export sales increased by **128.5%** year-on-year, raising their proportion of total sales from **4.8%** in the prior period to **8.8%**[72](index=72&type=chunk) - The consolidated gross profit margin decreased by **4.20 percentage points** from **22.89%** in the same period of 2020 to **18.69%** in 2021[72](index=72&type=chunk) - The Group achieved a net profit of approximately **RMB 945 million** in the first half, a slight increase from **RMB 944 million** in the prior period[72](index=72&type=chunk) [Geographical Performance](index=41&type=section&id=Geographical%20Performance) In the first half of 2021, the Company's sales performed well overall, with significant increases in all regions except Southwest and Central China, and overseas sales growing by 128.5% to approximately RMB 717 million - Sales in the Northeast region increased by **39.7%** to **RMB 313 million**[73](index=73&type=chunk) - Sales in the Eastern and Southern regions increased by **32.9%** to **RMB 1,613 million** and **35.9%** to **RMB 933 million**, respectively[73](index=73&type=chunk) - Sales in the Northern and Northwestern regions increased by **25.8%** to **RMB 2,035 million** and **21.7%** to **RMB 831 million**, respectively[73](index=73&type=chunk) - Overseas sales increased by **128.5%** to approximately **RMB 717 million**[73](index=73&type=chunk) [Product Analysis](index=41&type=section&id=Product%20Analysis) In the first half of 2021, the Group's product sales significantly increased across categories, with wheel loaders remaining the primary product, forklifts becoming the second largest with notable growth, excavators experiencing a slight decline, and parts sales also growing substantially [Wheel Loaders](index=41&type=section&id=Wheel%20Loaders) In the first half of 2021, wheel loader sales reached RMB 3,898 million, a 21.2% increase year-on-year, with ZL50 loaders as the main model and rapid growth in small and medium-sized loaders - In the first half of 2021, wheel loader sales amounted to **RMB 3,898 million**, an increase of **21.2%** compared to the prior period[74](index=74&type=chunk) - ZL50 loaders were the main model, growing by **19.0%** to **RMB 3,121 million**[74](index=74&type=chunk) - Sales of small and medium-sized loaders grew rapidly, with ZL30 loaders increasing by **44.8%** to **RMB 378 million**[74](index=74&type=chunk) [Excavators](index=41&type=section&id=Excavators) Excavator product sales decreased by 1.4% year-on-year to RMB 1,264 million, reducing their proportion of the Group's sales revenue by approximately 4% to 15%, mainly due to slower infrastructure investment growth and increased industry competition - Excavator product sales decreased by **1.4%** year-on-year to **RMB 1,264 million**[75](index=75&type=chunk) - Excavator sales as a proportion of the Group's sales revenue decreased by approximately **4%** to **15%**[75](index=75&type=chunk) [Forklifts and Road Rollers](index=42&type=section&id=Forklifts%20and%20Road%20Rollers) Forklift product sales increased by 54.8% to RMB 2,088 million, becoming the Group's second-largest product, primarily driven by a significant increase in demand from the logistics and warehousing industries, while road roller sales grew by 10.2% to RMB 53 million - Forklift product sales increased by **54.8%** to **RMB 2,088 million**, becoming the Group's second-largest product[76](index=76&type=chunk) - Road roller sales increased by **10.2%** to **RMB 53 million**, accounting for **1%** of the Group's total sales[76](index=76&type=chunk) [Parts](index=42&type=section&id=Parts) During the period, as sales of the Group's other products significantly increased, demand for parts rose substantially, with parts sales growing by 43.9% to RMB 888 million - Parts sales increased by **43.9%** to **RMB 888 million**, primarily due to a significant increase in sales of the Group's other products[77](index=77&type=chunk) [Financial Review](index=42&type=section&id=Financial%20Review) This chapter reviews the Group's financial position, including increased cash and bank balances, maintained current ratio, changes in capital structure, growth in capital expenditure, and fluctuations in revenue, expenses, and receivables [Cash and Bank Balances](index=42&type=section&id=Cash%20and%20Bank%20Balances) As of June 30, 2021, the Group's cash and bank balances were approximately RMB 3,242 million, an increase of about RMB 461 million from the end of 2020, primarily from net cash inflow from operating activities - As of June 30, 2021, the Group had bank balances and cash of approximately **RMB 3,242 million**, an increase of approximately **RMB 461 million** from December 31, 2020[78](index=78&type=chunk) - The increase in cash and bank balances was primarily due to net cash inflow from operating activities of **RMB 447 million**, net cash inflow from investing activities of **RMB 58 million**, and net cash outflow from financing activities of **RMB 47 million**[78](index=78&type=chunk) - Pledged bank deposits amounted to approximately **RMB 942 million**, an increase of approximately **RMB 104 million** from the end of 2020[78](index=78&type=chunk) [Liquidity and Financial Resources](index=43&type=section&id=Liquidity%20and%20Financial%20Resources) The Group is committed to maintaining a solid financial position, with total shareholders' funds of approximately RMB 9,865 million and a current ratio of 1.77 as of June 30, 2021, and the Directors believe the Group has sufficient resources to support its operations - As of June 30, 2021, total shareholders' funds were approximately **RMB 9,865 million**, a **2.3%** decrease from December 31, 2020[80](index=80&type=chunk) - As of June 30, 2021, the Group's current ratio was **1.77** (December 31, 2020: 1.86)[80](index=80&type=chunk) - The Directors believe the Group has sufficient resources to support its working capital requirements and meet its foreseeable capital expenditures[80](index=80&type=chunk) [Capital Structure](index=43&type=section&id=Capital%20Structure) As of June 30, 2021, the Group's total debt-to-asset ratio was approximately 46.79%, an increase from 41.56% at the end of 2020, and no shares of the Company were purchased, sold, or redeemed by the Company or its subsidiaries during the period - As of June 30, 2021, the total debt-to-asset ratio was approximately **46.79%** (December 31, 2020: 41.56%)[81](index=81&type=chunk) - During the period ended June 30, 2021, neither the Company nor any of its subsidiaries purchased, sold, or redeemed any shares of the Company or any other listed securities[81](index=81&type=chunk) [Capital Expenditure](index=43&type=section&id=Capital%20Expenditure) During the period, the Group added approximately RMB 148 million in property, plant and equipment to align with its strategy and product transformation, with these expenditures fully funded by internal resources and general borrowings - During the period, the Group added approximately **RMB 148 million** in property, plant and equipment, an increase from the prior period[82](index=82&type=chunk) - Capital expenditures were fully funded by the Group's internal resources and general borrowings[82](index=82&type=chunk) [Revenue](index=43&type=section&id=Revenue) In the first half of 2021, the Group's sales significantly increased, primarily driven by China's COVID-19 control, economic recovery, government domestic demand policies, and global economic recovery boosting international market sales - In the first half of 2021, the Group's sales significantly increased, mainly due to the control of the COVID-19 pandemic in China and a good economic recovery[83](index=83&type=chunk) - Under government policies to stabilize domestic demand and expand infrastructure, the construction machinery industry experienced strong demand[83](index=83&type=chunk) - Influenced by factors such as the post-pandemic global economic recovery, international market sales also increased significantly[83](index=83&type=chunk) [Disposal of a Subsidiary](index=44&type=section&id=Disposal%20of%20a%20Subsidiary) On January 21, 2021, the Group disposed of its entire equity interest in Henan Lonking Machinery Manufacturing Co., Ltd. for a cash consideration of RMB 745,000,000, recognizing a gain of approximately RMB 214 million - The Group disposed of its entire equity interest in Henan Lonking Machinery Manufacturing Co., Ltd. for a cash consideration of **RMB 745,000,000**[84](index=84&type=chunk) - The Group recognized a gain of approximately **RMB 214 million** from the disposal of the subsidiary[84](index=84&type=chunk) [Other Gains and Losses](index=44&type=section&id=Other%20Gains%20and%20Losses) Other gains and losses increased by approximately RMB 77 million year-on-year in the first half, primarily due to a recognized gain of about RMB 214 million from the disposal of the Henan subsidiary, partially offset by a decrease of approximately RMB 141 million in fair value gains from wealth management products - Other gains and losses increased by approximately **RMB 77 million** in the first half compared to the prior period[85](index=85&type=chunk) - This was primarily due to a recognized gain of approximately **RMB 214 million** from the disposal of the Henan subsidiary[85](index=85&type=chunk) - Fair value changes in wealth management products recognized in the current period amounted to approximately **RMB 96 million**, a decrease of approximately **RMB 141 million** from the prior period[85](index=85&type=chunk) [Selling and Distribution Expenses](index=44&type=section&id=Selling%20and%20Distribution%20Expenses) Selling and distribution expenses increased by approximately RMB 85 million year-on-year, mainly due to higher transportation costs resulting from significantly increased sales and a substantial rise in service costs due to increased service provisions - Selling and distribution expenses increased by approximately **RMB 85 million** compared to the prior period[86](index=86&type=chunk) - This was primarily due to increased transportation costs resulting from significantly higher sales during the period[86](index=86&type=chunk) - The corresponding increase in service provisions led to a substantial rise in service costs[86](index=86&type=chunk) [Research and Development Expenses](index=44&type=section&id=Research%20and%20Development%20Expenses) Research and development expenses significantly increased by 18.3% to approximately RMB 319 million during the period, largely in line with sales growth, primarily due to direct material inputs and higher labor costs for R&D activities - Research and development expenses significantly increased by **18.3%** to approximately **RMB 319 million** during the period[87](index=87&type=chunk) - The increase in R&D expenses was primarily due to direct material inputs and higher labor costs for R&D activities[87](index=87&type=chunk) [Trade Receivables](index=45&type=section&id=Trade%20Receivables) Trade receivables increased by approximately RMB 780 million, or 20.6%, at the end of the period compared to the end of 2020, primarily due to increased domestic and international sales during the period - Trade receivables increased by approximately **RMB 780 million**, or **20.6%**, at the end of the period compared to the end of 2020[89](index=89&type=chunk) - This was primarily due to increased domestic and international sales during the period[89](index=89&type=chunk) [Prepayments, Deposits and Other Receivables](index=45&type=section&id=Prepayments%2C%20Deposits%20and%20Other%20Receivables) Prepayments, deposits, and other receivables decreased by approximately RMB 191 million at the end of the period compared to the end of last year, mainly due to the Group's adjustment of raw material inventory in anticipation of lower market demand and operating rates in the second half, and reduced interest receivable - Prepayments, deposits, and other receivables decreased by approximately **RMB 191 million** at the end of the period compared to the end of last year[90](index=90&type=chunk) - This was primarily due to the Group's adjustment of raw material inventory in anticipation of lower market demand and operating rates in the second half[90](index=90&type=chunk) - The Group collected interest on time deposits matured during the period, leading to a decrease in interest receivable compared to the end of last year[90](index=90&type=chunk) [Capital Commitments](index=45&type=section&id=Capital%20Commitments) As of June 30, 2021, the Group had contracted capital expenditures of approximately RMB 44 million for the acquisition of property, plant and equipment, not yet accounted for in the financial statements, representing an increase from the end of 2020 - As of June 30, 2021, the Group had contracted capital expenditures of approximately **RMB 44 million** for the acquisition of property, plant and equipment, not yet accounted for in the financial statements[91](index=91&type=chunk) [Outlook](index=46&type=section&id=Outlook) The Group anticipates both opportunities and challenges in the construction machinery industry in the second half of 2021, and will continue to focus on core products, adhere to the "agency system" marketing principle, strengthen channel integration and market layout, enhance international expansion, and continuously improve quality management and increase R&D investment to adapt to market changes and achieve sustainable development - China's economy is steadily improving, with macro policies continuing to support the real economy, and resilient infrastructure and real estate investment will continue to unleash domestic demand in the construction machinery industry[92](index=92&type=chunk) - Overseas markets are expected to further boost exports of construction machinery products, benefiting from vaccine promotion and global economic recovery[92](index=92&type=chunk) - The Group will focus on the high-quality, sustainable development of its four main product categories: loaders, excavators, forklifts, road machinery, and core components[92](index=92&type=chunk) - In marketing, the Group will adhere to the 'agency system' principle, strengthen channel integration and market planning, optimize product structure, and utilize flexible 'one region, one policy' marketing strategies to expand overseas market share[92](index=92&type=chunk) - Regarding quality, the Group will continue to improve its quality management system, strengthen quality management and supervision of supplier products, and comprehensively enhance the quality of all product categories[92](index=92&type=chunk) - In R&D and technology, the Group will increase R&D investment, accelerate product transformation and upgrading, especially in the R&D reserves and market launch of large-tonnage loaders, new energy loaders, new energy forklifts, medium and large excavators, and related components[92](index=92&type=chunk)[93](index=93&type=chunk) - The Group will build a data-centric digital and intelligent platform, promote streamlined and information-based management processes, and accelerate the application of the Group's digital technology capabilities and the improvement of intelligent manufacturing levels[93](index=93&type=chunk) [Corporate Governance](index=47&type=section&id=Corporate%20Governance) This chapter outlines the Company's corporate governance practices, with the Board committed to maintaining high standards and complying with the Corporate Governance Code in Appendix 14 of the Listing Rules, noting certain deviations regarding directors' liability insurance, independent non-executive directors' attendance at general meetings, and the Chairman also serving as CEO [Code Provision A.1.8](index=47&type=section&id=Code%20Provision%20A.1.8) The Company has not yet made appropriate insurance arrangements for potential legal actions against directors, as the Board believes reasonably priced and adequately covered directors' liability insurance products are not yet available in the market - The Company has not yet arranged directors' liability insurance due to the lack of reasonably priced and adequately covered products in the market[95](index=95&type=chunk) [Code Provision A.6.7](index=47&type=section&id=Code%20Provision%20A.6.7) Three independent non-executive directors were unable to attend the Annual General Meeting held on May 26, 2021, deviating from the Code Provision requiring independent non-executive directors to attend general meetings - Three independent non-executive directors were unable to attend the Annual General Meeting held on May 26, 2021, due to other important commitments[96](index=96&type=chunk) [Code Provision A.4.3](index=48&type=section&id=Code%20Provision%20A.4.3) Mr. Qian Shizheng has served as an independent non-executive director for over nine years, and his re-election was approved by shareholders via an independent resolution at the 2021 Annual General Meeting, with the Board believing he maintains his independence - Mr. Qian Shizheng has been appointed as an independent non-executive director for over nine years, and his re-election was approved by shareholders via an independent resolution[97](index=97&type=chunk) - The Board believes Mr. Qian maintains his independence despite serving for over nine years, as his extensive experience meets the Group's needs and he provides independent judgment[97](index=97&type=chunk) [Code Provision A.2.1](index=48&type=section&id=Code%20Provision%20A.2.1) Mr. Li Xinyan, the Company's Chairman, also serves as Chief Executive Officer, deviating from the Code Provision requiring separation of these roles, but the Board believes this arrangement helps maintain policy continuity and business stability - Mr. Li Xinyan, the Company's Executive Director and Chairman of the Board, has also served as Chief Executive Officer since December 21, 2015, holding both positions concurrently[98](index=98&type=chunk) - The Board believes Mr. Li's concurrent holding of both positions is appropriate and in the best interests of the Company, helping to maintain policy continuity and business stability[98](index=98&type=chunk) [Compliance with the Model Code for Securities Transactions by Directors of Listed Issuers](index=49&type=section&id=Compliance%20with%20the%20Model%20Code%20for%20Securities%20Transactions%20by%20Directors%20of%20Listed%20Issuers) The Company has adopted the Model Code for Securities Transactions by Directors of Listed Issuers as set out in Appendix 10 of the Listing Rules, and all Directors confirmed compliance with its provisions during the year - The Company has adopted the Model Code for Securities Transactions by Directors of Listed Issuers as set out in Appendix 10 of the Listing Rules as its code of conduct for directors' securities transactions[100](index=100&type=chunk) - Following specific inquiries to all Directors, each Director confirmed compliance with the required standards set out in the Model Code during the year[100](index=100&type=chunk) [Improvements to Internal Control System](index=49&type=section&id=Improvements%20to%20Internal%20Control%20System) In the first half of 2021, the Company implemented several improvements to its internal control system, including strengthening supply chain management, enhancing monitoring and information management, refining decision-making mechanisms, reinforcing financial supervision, and establishing performance evaluation and assessment mechanisms - Further strengthening the management of the Group's supply chain to broaden channels, enhance quality, and make products more competitive[101](index=101&type=chunk) - Further improving the construction of the monitoring system and information management to achieve institutionalized, procedural, and standardized company operations[101](index=101&type=chunk) - Strengthening financial supervision by arranging a comprehensive audit of the Company by professionals at least every six months[101](index=101&type=chunk) - Establishing and further refining management team assessment procedures for effective supervision and establishing performance evaluation and assessment mechanisms[101](index=101&type=chunk) [Investor Relations Management](index=50&type=section&id=Investor%20Relations%20Management) This chapter emphasizes the Company's commitment to investor relations management, ensuring investor rights through effective communication and high transparency, maintaining good communication with domestic and international investors via conference calls despite the pandemic, and striving to create value for all stakeholders [Information Disclosure](index=50&type=section&id=Information%20Disclosure) The Company views effective communication as central to investor relations, believing high transparency and timely information dissemination are crucial for success, and communicated with 46 domestic and international investors through over 25 conference calls in the first half - The Company regards effective communication as the core of investor relations and believes that highly transparent management and timely dissemination of information to investors are crucial factors for the Company's success[102](index=102&type=chunk) - During the six months ended June 30, 2021, the Company received communications from **46** domestic and international investors, including over **25** conference calls[102](index=102&type=chunk) [Interests of Other Stakeholders](index=50&type=section&id=Interests%20of%20Other%20Stakeholders) While committed to maximizing shareholder value, the Company also strives to provide high-quality products and services to customers, development opportunities for employees, and demonstrates a strong sense of responsibility towards shareholders, investors, employees, customers, suppliers, and society, actively participating in public welfare - While committed to maximizing shareholder value, the Company also strives to provide high-quality products and services to customers and career development opportunities for employees[103](index=103&type=chunk) - The Company has a strong sense of responsibility towards shareholders, investors, employees, customers, suppliers, and society, and operates with integrity[103](index=103&type=chunk) - While pursuing profit growth, the Company also gives back to society by managing its business in compliance with relevant laws and environmental regulations, improving corporate governance, enhancing corporate transparency, and actively participating in public welfare and contributing to local social development[103](index=103&type=chunk) [Contact](index=50&type=section&id=Contact) This chapter provides investor relations contact information for communication - The investor relations contact person is Ms. Lv Zhenzhen, reachable at phone: **86-21-3760 2000 (5676)**, email: **Lzz@Lonking.cn**[103](index=103&type=chunk) [Disclosure of Interests](index=51&type=section&id=Disclosure%20of%20Interests) This chapter discloses the interests of the Company's Directors and Chief Executive in shares and underlying shares, as well as the interests of substantial shareholders in the Company's issued share capital, ensuring compliance with the Securities and Futures Ordinance [Directors' and Chief Executive's Interests in Shares and Underlying Shares](index=51&type=section&id=Directors'%20and%20Chief%20Executive's%20Interests%20in%20Shares%20and%20Underlying%20Shares) As of June 30, 2021, the Company's Directors and Chief Executive held registrable interests in the shares of the Company or its associated corporations, with Ms. Ni Yinying holding 56.03% of the Company's issued share capital [Long Positions in Shares and Underlying Shares of the Company](index=51&type=section&id=Long%20Positions%20in%20Shares%20and%20Underlying%20Shares%20of%20the%20Company) As of June 30, 2021, Ms. Ni Yinying held 2,398,273,188 ordinary shares of the Company, representing 56.03% of the issued share capital Directors' Long Positions in Shares of the Company | Director Name | Capacity | Number of Shares Held | Percentage of Issued Share Capital | | :--- | :--- | :--- | :--- | | Ni Yinying | Beneficial owner | 2,398,273,188 | 56.03% | | Chen Chao | Beneficial owner | 1,596,000 | 0.04% | | Zheng Kewen | Beneficial owner | 429,900 | 0.01% | | Total | | 2,400,299,088 | 56.08% | [Long Positions in Shares and Underlying Shares of Lonking (Shanghai) Machinery Co., Ltd., an Associated Corporation of the Company](index=52&type=section&id=Long%20Positions%20in%20Shares%20and%20Underlying%20Shares%20of%20Lonking%20%28Shanghai%29%20Machinery%20Co.%2C%20Ltd.%2C%20an%20Associated%20Corporation%20of%20the%20Company) Mr. Li Xinyan and Ms. Ni Yinying indirectly hold 0.11% equity interest in Lonking (Shanghai) Machinery Co., Ltd. through Shanghai Lonking Machinery Co., Ltd Directors' Long Positions in Shares of Associated Corporations | Director Name | Capacity | Registered Capital | Percentage of Issued Share Capital | | :--- | :--- | :--- | :--- | | Mr. Li Xinyan | Corporation (Note 1) | 480,000 | 0.11% | | Ms. Ni Yinying | Corporation (Note 1) | 480,000 | 0.11% | - This **0.11%** equity interest in Lonking (Shanghai) Machinery Co., Ltd. is held by Shanghai Lonking Machinery Co., Ltd., which is owned by Mr. Li Xinyan and Ms. Ni Yinying with **39.5%** and **60.5%** equity interests, respectively[108](index=108&type=chunk) [Substantial Shareholders](index=52&type=section&id=Substantial%20Shareholders) As of June 30, 2021, in addition to the Directors' interests, Citigroup Inc. was a substantial shareholder of the Company, holding 213,321,188 ordinary shares, representing 4.98% of the issued share capital Substantial Shareholders' Long Positions in Shares of the Company | Shareholder Name | Capacity | Number of Ordinary Shares in which Interests are Held | Percentage of the Company's Issued Share Capital | | :--- | :--- | :--- | :--- | | Citigroup Inc. | Investment Manager | 213,321,188 | 4.98% | [Other Information](index=53&type=section&id=Other%20Information) This chapter provides other important information about the Group, including no interim dividend recommendation, employee and remuneration policies, no purchase, sale, or redemption of listed securities during the period, and the Audit Committee's review of interim results [Interim Dividend](index=53&type=section&id=Interim%20Dividend) The Directors do not recommend the payment of any interim dividend for the six months ended June 30, 2021 - The Directors do not recommend the payment of any interim dividend for the six months ended June 30, 2021[111](index=111&type=chunk) [Employees and Remuneration Policy](index=53&type=section&id=Employees%20and%20Remuneration%20Policy) The Group's employee remuneration policy is formulated by the Human Resources Department based on performance, qualifications, and abilities, with Directors' remuneration determined by the Remuneration Committee, and the Group employed approximately 8,237 staff as of June 30, 2021 - The Group's employee remuneration policy is formulated by the Human Resources Department based on employees' performance, qualifications, and abilities[112](index=112&type=chunk) - The remuneration of the Company's Directors is determined by the Remuneration Committee based on operating results, individual performance, and market statistics[112](index=112&type=chunk) - As of June 30, 2021, the Group employed approximately **8,237** staff[112](index=112&type=chunk) [Purchase, Sale or Redemption of the Company's Listed Securities](index=53&type=section&id=Purchase%2C%20Sale%20or%20Redemption%20of%20the%20Company's%20Listed%20Securities) During the period ended June 30, 2021, neither the Company nor any of its subsidiaries purchased, sold, or redeemed any shares of the Company or any other listed securities - During the period ended June 30, 2021, neither the Company nor any of its subsidiaries purchased, sold, or redeemed any shares of the Company or any other listed securities[113](index=113&type=chunk) [Audit Committee Review of Accounts](index=53&type=section&id=Audit%20Committee%20Review%20of%20Accounts) The Company's Audit Committee, together with management and external auditors, has reviewed the interim results for the six months ended June 30, 2021, and continuously reviews accounting principles and practices - The Audit Committee, together with management and external auditors, has continuously reviewed the accounting principles and practices adopted by the Group[113](index=113&type=chunk) - The interim results for the six months ended June 30, 2021, have been reviewed by the Company's Audit Committee[113](index=113&type=chunk) [Company Information](index=54&type=section&id=Company%20Information) This chapter provides detailed company information for China Lonking Holdings Limited, including Board members, committee compositions, company secretary, office addresses, legal advisers, auditor, stock code, and principal bankers [Board of Directors](index=54&type=section&id=Board%20of%20Directors) The Board of Directors comprises executive directors, a non-executive director, and independent non-executive directors, with Mr. Li Xinyan serving as Chairman and Chief Executive Officer - Executive Directors include Mr. Li Xinyan (Chairman and Chief Executive Officer), Mr. Chen Chao, Mr. Zheng Kewen, and Mr. Yin Kunlun[114](index=114&type=chunk) - The Non-executive Director is Ms. Ni Yinying[114](index=114&type=chunk) - Independent Non-executive Directors include Dr. Qian Shizheng, Mr. Wu Jianming, and Mr. Yu Taiwei[114](index=114&type=chunk) [Audit Committee](index=54&type=section&id=Audit%20Committee) The Audit Committee is chaired by Dr. Qian Shizheng, with Mr. Yu Taiwei and Ms. Ni Yinying as members - The Audit Committee is chaired by Dr. Qian Shizheng, with Mr. Yu Taiwei and Ms. Ni Yinying as members[114](index=114&type=chunk) [Remuneration Committee](index=54&type=section&id=Remuneration%20Committee) The Remuneration Committee is chaired by Dr. Qian Shizheng, with Ms. Ni Yinying as a member - The Remuneration Committee is chaired by Dr. Qian Shizheng, with Ms. Ni Yinying as a member[114](index=114&type=chunk) [Nomination Committee](index=54&type=section&id=Nomination%20Committee) The Nomination Committee is chaired by Mr. Yu Taiwei, with Ms. Ni Yinying as a member - The Nomination Committee is chaired by Mr. Yu Taiwei, with Ms. Ni Yinying as a member[114](index=114&type=chunk) [Executive Committee](index=54&type=section&id=Executive%20Committee) The Executive Committee is chaired by Mr. Li Xinyan, who also serves as Chief Executive Officer, with Mr. Chen Chao, Mr. Zheng Kewen, and Mr. Yin Kunlun as members - The Executive Committee is chaired by Mr. Li Xinyan, who also serves as Chief Executive Officer, with Mr. Chen Chao, Mr. Zheng Kewen, and Mr. Yin Kunlun as members[114](index=114&type=chunk) [Company Secretary](index=54&type=section&id=Company%20Secretary) The Company Secretary is Mr. Zhu Xun - The Company Secretary is Mr. Zhu Xun[114](index=114&type=chunk) [Head Office](index=54&type=section&id=Head%20Office) The Company's Head Office is located at No. 26 Minyi Road, Xinqiao Town, Songjiang Industrial Zone, Shanghai, China - The Head Office is located at No. 26 Minyi Road, Xinqiao Town, Songjiang Industrial Zone, Shanghai, China, Postcode: 201612[114](index=114&type=chunk) [Registered Office](index=54&type=section&id=Registered%20Office) The Company's Registered Office is located at Cricket Square, Hutchins Drive, P.O. Box 2681, Grand Cayman KY1-1111, Cayman Islands - The Registered Office is located at Cricket Square, Hutchins Drive, P.O. Box 2681, Grand Cayman KY1-1111, Cayman Islands[114](index=114&type=chunk) [Investor Relations](index=54&type=section&id=Investor%20Relations) Investor relations contact information is provided for communication - The investor relations contact person is Ms. Lv Zhenzhen, reachable at phone: **86-21-3760 2000 (5676)**, email: **Lzz@Lonking.cn**[114](index=114&type=chunk) [Principal Place of Business in Hong Kong](index=55&type=section&id=Principal%20Place%20of%20Business%20in%20Hong%20Kong) The Company's Principal P

Financial Performance - Revenue for the year increased by 9.68% to RMB 12,880,448,000 compared to RMB 11,743,824,000 in the previous year[8] - Net profit grew by 19.22% to RMB 1,959,235,000 from RMB 1,643,405,000 in 2019[8] - EBITDA increased by 13.19% to RMB 2,665,470,000, up from RMB 2,354,852,000[8] - The gross profit margin slightly decreased to 23.37% from 23.93% in the previous year[8] - The interest coverage ratio improved significantly to 135 from 50, reflecting better earnings relative to interest expenses[8] - The comprehensive gross profit margin was 23.37%, a slight decrease of 0.56 percentage points from 23.93% in the previous year[15] - The net profit for the year was approximately RMB 1,960 million, representing a year-on-year increase of 19.21% from RMB 1,644 million in the previous year[15] - The company reported a significant increase in trade payables, which rose by RMB 1,468,943 thousand in 2020 compared to RMB 208,949 thousand in 2019[141] - The retained earnings as of December 31, 2020, were RMB 7,001,348 thousand, up from RMB 6,099,776 thousand in 2019, showing an increase of approximately 14.8%[138] Market Position and Sales - The company maintained a market share of 1st in the domestic loader market, with excavator sales showing steady growth[12] - The sales of wheel loaders accounted for 49% of total sales, with total sales amounting to approximately RMB 6,284 million[18] - The sales revenue from the Northeast, Eastern, and Northwestern regions increased by 42%, 16%, and 17% respectively, reaching approximately RMB 463 million, RMB 2,417 million, and RMB 1,299 million[16] - The sales revenue from international markets surged by 40% to approximately RMB 864 million, driven by growth in the "Belt and Road" markets[16] - The sales proportion of excavators increased by 0.7% to 18.8%, while forklifts accounted for 21.0%, up by 0.8%[15] Cash Flow and Financial Health - The cash flow from operating activities was RMB 1,071,000,000, with total cash and financial assets at RMB 5,965,000,000 at year-end[12] - The company's debt-to-asset ratio at year-end was 42%, indicating a healthy financial structure[12] - As of December 31, 2020, the group had cash and bank balances of approximately RMB 2,781 million, up from RMB 2,502 million in 2019, an increase of about RMB 279 million[21][22] - Total net assets increased by 11% to approximately RMB 10,094 million as of December 31, 2020, compared to RMB 9,077 million in 2019[23] - The total debt-to-asset ratio was approximately 41.56% as of December 31, 2020, compared to 37.90% in 2019[24] Research and Development - The company emphasized R&D investment, particularly in new energy loaders and forklifts, leading to significant progress in these areas[14] - The company plans to continue investing in research and development, with R&D expenses amounting to RMB 578,946 thousand in 2020, compared to RMB 550,074 thousand in 2019[134] - New product development initiatives are underway, with an investment of HKD 200 million allocated for R&D in the next fiscal year[36] Dividends and Shareholder Value - The proposed dividend per share is HKD 0.33, totaling over HKD 1.4 billion, marking a historical high for the company[12] - The company proposed a final dividend of HKD 0.33 per share for the year ended December 31, 2020, compared to a final dividend of HKD 0.25 per share for the previous year, totaling HKD 1,070 million for 2019[40] - The total distributable reserves of the company as of December 31, 2020, amounted to approximately RMB 7,457 million, an increase from RMB 6,522 million in 2019[42] - The board of directors remains committed to enhancing shareholder value through sustainable growth strategies[34] Corporate Governance and Compliance - The board of directors consists of 9 members, including 5 executive directors, 1 non-executive director, and 3 independent non-executive directors[80] - The company has adopted the standard code of conduct for securities trading as per the listing rules, ensuring compliance by all directors for the year ended December 31, 2020[78] - The audit committee reviewed the financial statements and internal control mechanisms for the fiscal year ending December 31, 2020[84] - The board confirmed compliance with all applicable laws and regulations, with no significant violations impacting the business[66] Environmental and Social Responsibility - The company is committed to improving its environmental performance and reducing pollution during its production processes[60] - The company emitted a total of 263,709 tons of CO2, 0.548 tons of methane, and 0.0787 tons of nitrous oxide in 2020[102] - The company discharged 587,627 tons of wastewater, achieving a 100% compliance rate with urban drainage standards[102] - The company achieved an industrial water reuse rate of 85% and reduced water consumption significantly[105] - The company actively participates in social and public welfare activities, contributing to local community development while maintaining business growth[100] Risk Management - The company faces market risks due to a potential decline in demand for its products, including wheel loaders, road rollers, excavators, and forklifts, as the engineering machinery industry enters a relatively stable period[68] - The company relies on a limited number of suppliers for key raw materials and components, which poses operational risks if supply is disrupted[70] - The company has established a risk management and internal control system to identify and manage significant risks to achieve its business objectives[91] Employee and Workforce Management - The company employed approximately 8,220 employees as of December 31, 2020[59] - The average monthly employee turnover rate was 1.69% in 2020, with a total of 8,220 employees[107] - Male employees accounted for 84.86% of the workforce, with the majority aged between 26-40 years[108] - The company offers over 3,000 online training courses to enhance employee skills and knowledge, aligning career development with business growth[111] Financial Reporting and Audit - The independent auditor's report indicates that the audit provides reasonable assurance that the financial statements are free from material misstatement due to fraud or error[132] - The auditor evaluated the appropriateness of accounting policies and the reasonableness of accounting estimates and related disclosures made by the board[133] - The financial statements are prepared in accordance with Hong Kong Financial Reporting Standards and are based on historical cost conventions, except for certain financial instruments measured at fair value[150]