Financial Performance - Total revenues for the six months ended June 30, 2023, were HK$151.3 million (US$19.4 million), a decrease of 7% from HK$163.1 million in the same period of 2022[2]. - Gross profit for the same period was HK$50 million (US$6.4 million), down 13% from HK$57.6 million in the prior year, resulting in a gross margin of 33% compared to 35.7%[2][17]. - Net loss increased by 3% to HK$69.9 million (US$9 million) for the six months ended June 30, 2023, compared to a net loss of HK$67.9 million in the same period of 2022[3]. - The net loss attributable to Graphex Group Limited for the six months ended June 30, 2023, was HK$72,117, compared to a net loss of HK$67,699 in the same period of 2022[45]. - The company reported a loss per share of HK$0.099 for the six months ended June 30, 2023, compared to HK$0.131 in the previous year[45]. Revenue Breakdown - Revenue from the Graphene Products Business decreased by 6% to HK$97.1 million, primarily due to exchange rate fluctuations, but showed a slight increase of 1% when excluding these effects[9]. - The Landscape Architecture and Design Business reported a revenue decline of 6% to HK$54.2 million, attributed to fewer new contracts[10]. Expenses and Losses - Research and development expenses increased slightly to HK$10.8 million, reflecting enhanced efforts in the Graphene products business[23]. - Selling and marketing expenses increased by 30% to approximately HK$3 million, driven by higher costs in the Landscape architecture and design business and marketing efforts in the U.S.[21]. - Total other expenses netted approximately HK$32.1 million, an increase of 2% from HK$31.4 million in the previous year, primarily due to decreased service income from the landscape segment[25]. - Graphene Products Business reported a loss before tax of approximately HK$10.7 million for the six months ended June 30, 2023, compared to a loss of HK$8.7 million for the same period in 2022, indicating an increase in loss due to decreased revenue[28]. - Landscape Architecture and Design Business experienced a loss before income tax of approximately HK$13 million for the six months ended June 30, 2023, down from HK$14 million in 2022, primarily due to exchange rate fluctuations[29]. Cash Flow and Assets - Net cash used in operating activities decreased to approximately HK$9.4 million for the six months ended June 30, 2023, from HK$12.1 million in 2022, mainly due to an increase in trade receivables in the Graphene Products Business[33]. - Total current assets increased to HK$283.8 million as of June 30, 2023, from HK$235.1 million as of December 31, 2022, driven by higher trade and notes receivables[41]. - Total liabilities increased to HK$560.4 million as of June 30, 2023, compared to HK$532.1 million as of December 31, 2022, reflecting changes in current liabilities[43]. Capital Expenditures and Financing - Capital expenditures rose to approximately HK$0.9 million for the six months ended June 30, 2023, from HK$0.2 million in 2022, primarily for equipment purchases in the Graphene Products and Landscape Architecture businesses[36]. - The company had outstanding corporate bonds of approximately HK$115.4 million and promissory notes of approximately HK$123.6 million as of June 30, 2023, unchanged from December 31, 2022[37]. - Convertible notes with a principal amount of US$20,000 were converted into shares at a conversion price of HK$0.65 in September 2023, reflecting ongoing financing activities[39]. Strategic Initiatives - The Group plans to expand production capacity significantly, with new facilities in China and the USA totaling 105,000 metric tons, potentially increasing total capacity to 215,000 metric tons[4]. - The company entered into a Cooperation Agreement with the Nanshu Town Government for the "Graphite Anode Material Project" in July 2023, indicating a strategic market expansion initiative[38]. - Graphex aims to expand its global operations to support energy transition and electrification efforts worldwide[46]. - Graphex's strategic focus is on enhancing renewable energy technologies, particularly for EV batteries and lithium-ion batteries[46]. - The company holds patents in various areas, including products, production methods, machinery design, and environmental protection, supporting its competitive position in the market[46]. Foreign Currency Impact - The company experienced a foreign currency translation adjustment loss of HK$15,747 for the six months ended June 30, 2023[45].

Financial Performance - The company reported a loss of HKD 41,775,000 for the six months ended June 30, 2023, compared to a loss of HKD 59,858,000 for the same period in 2022, representing a 30.2% improvement in performance[16]. - The company reported a pre-tax loss of HKD 46,780,000, an improvement from a loss of HKD 65,302,000 in the previous year[9]. - The net loss for the period was approximately HKD 41.8 million, compared to a net loss of HKD 59.9 million in the same period of 2022[39]. - Loss attributable to equity holders of the parent was HKD 43,968,000, a 26.3% reduction from HKD 59,633,000 in the prior year[33]. - The basic loss per share attributable to ordinary equity holders was HKD 6.06, a 47.6% improvement from HKD 11.56 in the previous year[33]. - The company reported a significant increase in restaurant revenue, which was HKD 1,745,000 compared to HKD 460,000 in the previous year, marking a 279.3% increase[33]. Revenue and Sales - Revenue for the six months ended June 30, 2023, was HKD 151,274,000, a decrease of 7.3% compared to HKD 163,133,000 in 2022[33]. - The company's graphene product revenue was HKD 97,103,000, down 6.1% from HKD 103,438,000 in 2022[33]. - Landscape design revenue decreased by 6.2% to HKD 54,171,000 from HKD 57,738,000[33]. - Total revenue for the six months ended June 30, 2023, was HKD 151,274,000, a decrease of 7.4% from HKD 163,133,000 in the same period of 2022[73]. - Revenue from graphene products was HKD 97,103,000, down from HKD 103,438,000, representing a decline of 6.5% year-over-year[73]. Assets and Liabilities - Total assets as of June 30, 2023, increased by 0.9% to HKD 903,143,000 compared to HKD 894,676,000 as of December 31, 2022[3]. - Total liabilities as of June 30, 2023, were HKD 537,668,000, with HKD 114,516,000 in graphene products, HKD 59,827,000 in landscape design, and HKD 5,067,000 in dining[103]. - The company’s total liabilities decreased from HKD 288,194,000 to HKD 257,000,000, a reduction of 10.8%[21]. - The total equity attributable to equity holders of the parent decreased slightly to HKD 365,475,000 from HKD 369,842,000[23]. - The debt ratio as of June 30, 2023, was approximately 66.4%, down from 76.9% as of December 31, 2022[46]. Cash Flow and Financial Costs - The company reported an operating cash flow loss of HKD 8,332,000 for the six months ended June 30, 2023, compared to a positive cash flow of HKD 820,000 in the same period of 2022[9]. - Cash and bank balances decreased significantly by 44.5% to HKD 17,459,000 from HKD 31,470,000[3]. - The company received interest income of HKD 771,000, significantly up from HKD 115,000 in the previous year, marking a 572.2% increase[21]. - Financial costs decreased significantly to approximately HKD 12.7 million from HKD 28.9 million year-on-year[39]. - Interest expenses for the six months ended June 30, 2023, were HKD 12,744,000, a decrease from HKD 28,888,000 in the same period of 2022[114]. Inventory and Trade Receivables - The company recorded a decrease in inventory by HKD 7,429,000, compared to a decrease of HKD 32,735,000 in the same period last year[9]. - Trade receivables increased significantly by HKD 88,232,000, compared to an increase of HKD 64,863,000 in the previous year[9]. - The company’s trade receivables and notes receivable, net of impairment provisions, increased to HKD 181,572,000 as of June 30, 2023, compared to HKD 103,019,000 at the end of 2022, reflecting a growth of 76.2%[150]. Strategic Focus and Future Outlook - The company is focusing on developing new products and technologies to enhance market competitiveness[10]. - Future outlook includes potential market expansion and strategic acquisitions to drive growth[10]. - The company aims to expand its market presence, particularly in mainland China, where revenue was HKD 138,178,000, down from HKD 151,064,000 in the previous year[73]. Government Support and Subsidies - The company has received government subsidies to promote its business in the region, with no conditions or contingencies attached[92]. - The company received government subsidies totaling HKD 914,000 during the reporting period, compared to HKD 301,000 in the previous year, representing an increase of 203.0%[139].

香港交易及結算所有限公司及香港聯合交易所有限公司對本公佈的內容概不負責，對其準確性或完 整性亦不發表任何聲明，並明確表示，概不對因本公佈全部或任何部分內容而產生或因倚賴該等內 容而引致的任何損失承擔任何責任。 本公佈僅供說明用途，並不構成在香港、美國或任何其他地方認購任何證券的任何邀請，本公佈（或 其任何部分）或分發本公佈之事實亦不會構成任何認購證券合約或邀請的基準或有關依據，且僅供說 明用途。分發本公佈可能在若干司法管轄區受到法律限制，而獲得本公佈內容提述資料的人士應自 行了解及遵守任何該等限制。任何未能遵守此等限制之情況可能構成任何有關司法管轄區的違法行 為。本公佈提述的證券尚未根據任何證券法律及規例發行、登記或獲准在香港、美國或任何其他地 方向公眾發售或流通。概無作出任何該等證券將會在香港、美國或任何其他地方發行或就此登記或 獲准向公眾發售或流通之表述。除非已根據一九三三年美國證券法（經修訂）（「證券法」）項下進行登 記或已在證券法項下獲豁免登記，否則證券不得在美國境內發售或出售。在美國的任何證券公開發 售將以招股章程進行，並可向發行人取得有關招股章程，當中載有有關發行人及其管理層的詳細資 料及財務報表 ...

香港交易及結算所有限公司及香港聯合交易所有限公司對本公佈的內容概不負責，對其準確性或完 整性亦不發表任何聲明，並明確表示，概不對因本公佈全部或任何部分內容而產生或因倚賴該等內 容而引致的任何損失承擔任何責任。 本公佈僅供說明用途，並不構成在香港、美國或任何其他地方認購任何證券的任何邀請，本公佈（或 其任何部分）或分發本公佈之事實亦不會構成任何認購證券合約或邀請的基準或有關依據，且僅供說 明用途。分發本公佈可能在若干司法管轄區受到法律限制，而獲得本公佈內容提述資料的人士應自 行了解及遵守任何該等限制。任何未能遵守此等限制之情況可能構成任何有關司法管轄區的違法行 為。本公佈提述的證券尚未根據任何證券法律及規例發行、登記或獲准在香港、美國或任何其他地 方向公眾發售或流通。概無作出任何該等證券將會在香港、美國或任何其他地方發行或就此登記或 獲准向公眾發售或流通之表述。除非已根據一九三三年美國證券法（經修訂）（「證券法」）項下進行登 記或已在證券法項下獲豁免登記，否則證券不得在美國境內發售或出售。在美國的任何證券公開發 售將以招股書進行，並可向發行人取得有關招股說明書，當中載有有關發行人及其管理層的詳細資 料及財務報表 ...

Regulatory Environment - The company is classified as an "emerging growth company" and intends to utilize exemptions from various reporting and financial disclosure requirements, including presenting only two years of audited financial statements[29]. - The company can remain an emerging growth company for up to five years or until annual gross revenues exceed $1.07 billion or the market value of its ordinary shares held by non-affiliates exceeds $700 million[31]. - The company is subject to uncertainties regarding future regulatory requirements, including potential approvals from the CSRC and CAC for overseas listings and offerings[41]. - The PRC government has significant authority to regulate the company's operations, which could materially affect its financial condition and results of operations[42]. - The company does not utilize a VIE structure and believes its subsidiaries are not directly affected by recent PRC regulatory actions[45]. - The PRC government may intervene in operations or impose restrictions on foreign investment, which could significantly impact the company's ability to offer securities[121]. - Regulatory bodies in the United States may face limitations in conducting investigations or inspections of the company's operations in the PRC[122]. - The draft Overseas Listing Rules require PRC companies to file with the CSRC for overseas offerings, with significant penalties for non-compliance[135]. - The company cannot assure timely compliance with new regulatory requirements, which may disrupt operations and adversely affect financial condition[131]. - The 2021 Negative List requires PRC companies in prohibited businesses to obtain governmental approval for overseas listings, impacting foreign investment operations[138]. - Substantial uncertainties exist regarding the Overseas Listing Rules and their implications for PRC companies, particularly concerning follow-on offerings[139]. - The Revised Review Measures mandate cybersecurity reviews for online platform operators with over one million users intending to list abroad, effective February 15, 2022[140]. - Approval from CSRC or CAC may be required for future offerings, with potential delays or rescissions impacting business operations and financial conditions[142]. - The PRC government has not formally acknowledged the legality of VIE structures, posing risks to companies utilizing such arrangements[144]. - The Foreign Investment Law (2019) introduces uncertainties regarding contractual arrangements as a form of foreign investment, potentially affecting VIE structures[151]. - The PRC Cybersecurity Law mandates that personal information and important data must be stored in China, with potential cybersecurity reviews for critical infrastructure operators[194]. - Companies with personal information of over 1 million users must file for cybersecurity review before listing abroad, as per recent measures[195]. - The interpretation and implementation of the PRC Foreign Investment Law may impact the company's corporate structure and financial results[190]. - The Opinions on Strictly Cracking Down on Illegal Securities Activities emphasize the need for tighter supervision of overseas listings by PRC companies[193]. Financial Condition - The company has incurred continued losses from operations and has a working capital deficiency as of December 31, 2022[120]. - The auditor has expressed substantial doubt about the company's ability to continue as a going concern due to an accumulated deficit and continued operational losses[120]. - The company is financially dependent on timely distributions from its subsidiaries, which could adversely affect its results if not received[96]. - The company may experience net operating cash outflows due to the production of graphene products not selling at the same rate as production, potentially affecting cash flow[94]. - The company faces significant risks from potential accidents involving heavy equipment or hazardous substances, which could lead to civil lawsuits and regulatory enforcement proceedings, negatively impacting financial condition[70]. - The company may face significant losses from legal claims, some of which may not be covered by insurance, adversely impacting financial condition and reputation[114]. - The company is subject to numerous health, safety, and environmental regulations in the PRC, which may increase compliance costs over time[69]. - The company may incur additional costs to meet client specifications, which could lead to disputes and negatively affect profitability[79]. - The profitability of the landscape architecture business is contingent on accurate service fee estimates; incorrect estimates could result in lower returns or losses[77]. - The performance of the property markets in the PRC and Hong Kong is critical to the company's business prospects, with potential downturns adversely affecting opportunities for new projects[87]. Market and Competition - The company must continually invest in expanding production capacity to meet increasing market demand[49]. - The company is currently able to produce spherical graphite with a particle size of 6-9 microns, which is expected to be the next iteration of technology[63]. - The company faces risks related to customer concentration, relying on a few customers for a significant portion of its revenue[51]. - Government policies significantly affect demand for electric vehicles and renewable energy, which could impact the company's business[50]. - The company operates in competitive markets, facing competition from larger and better-funded competitors[52]. - Increased demand for Li-ion battery technologies may lead to lower battery prices, causing price pressure on the company's products and increasing competition from alternative electric storage technologies[71]. - The landscape architecture business faces increasing competition, particularly for small contracts, which may necessitate a focus on larger projects or geographic expansion to sustain revenue growth[75]. - Budgetary constraints from clients, particularly local governments, may impact demand for landscape architecture services, potentially leading to revenue declines[76]. Operational Risks - The company relies on third-party IT systems for processing and storing sensitive information, which are vulnerable to cyber incidents that could disrupt operations and lead to significant costs[72]. - Joint ventures and agreements with third parties expose the company to counterparty risks, which could adversely affect operating results if partners fail to meet their obligations[74]. - The company may struggle to attract and retain qualified employees, which could delay expansion plans and increase labor costs[112]. - Events such as natural disasters could disrupt operations and materially affect business[119]. - Changes in the PRC's economic, political, or social conditions could materially adversely affect the company's business and results of operations[124]. - The PRC legal system's uncertainties could limit legal protections and complicate the enforcement of rights, impacting business operations[157]. Tax and Compliance - Under PRC laws, wholly foreign-owned enterprises can only pay dividends from accumulated after-tax profits, and must set aside at least 10% of these profits for statutory reserves until they reach 50% of registered capital[98]. - Dividends and gains from equity interests may be subject to withholding tax under PRC tax laws, affecting foreign investors[159]. - Under the PRC EIT Law, a 10% withholding tax applies to dividends and other income paid to non-resident enterprises unless a tax treaty provides a reduced rate[160]. - For Hong Kong non-resident companies owning at least 25% of a PRC enterprise, the effective withholding tax on dividends is currently 5%[160]. - Loans to PRC subsidiaries are subject to statutory limits and must be registered with the State Administration of Foreign Exchange (SAFE)[163]. - The total amount of foreign debts for foreign-invested companies is limited by the difference between total investment approved and registered capital[163]. - Enhanced scrutiny by PRC tax authorities on acquisition transactions may negatively impact future acquisitions[185]. - Under Circular 7, non-resident enterprises conducting indirect transfers may face PRC enterprise income tax at a rate of up to 10% if deemed abusive[187]. - The PRC Enterprise Income Tax Law imposes a 25% tax rate on global income for enterprises classified as "resident enterprises" with a "de facto management body" in the PRC[182]. - Current enterprise income tax rates for certain subsidiaries are 15%, which is preferential treatment for High and New Technology Enterprises, subject to local government approval[184]. Corporate Governance - Approximately 94.3% of the company's ordinary shares are beneficially owned by officers, directors, and significant shareholders, which may lead to conflicts of interest[224]. - The company is a foreign private issuer under US laws, which subjects it to more lenient reporting obligations compared to US issuers[227]. - As a foreign private issuer, the company is exempt from certain provisions of the Exchange Act, including specific proxy solicitation regulations and insider trading reporting requirements[228]. - The company intends to furnish quarterly reports to the SEC on Form 6-K, which may differ from the information required in quarterly reports on Form 10-Q for US domestic issuers[228]. - Annual reports for foreign private issuers are due 120 days after the fiscal year-end, compared to 90 days for US domestic issuers[228]. - The company will follow home country corporate governance practices, which may provide less protection to holders of its ADSs compared to US issuers[229]. - The legal protections available to shareholders in the Cayman Islands are significantly less than those in the US, which may complicate legal actions against the company[210]. - The company's operations are primarily conducted outside the US, making it difficult for shareholders to enforce judgments obtained in US courts[212]. - Future developments in the Hong Kong legal and political systems could limit legal protections and impact the company's operations[206]. - The company faces uncertainties regarding compliance with the economic substance requirements in the Cayman Islands, which could affect its business operations[209]. Auditor and Inspection - The company’s auditor, Marcum Asia CPAs LLP, has been regularly inspected by the PCAOB and is not subject to recent determinations affecting other firms[46]. - The PCAOB has reported that it is unable to inspect or investigate registered public accounting firms in mainland China and Hong Kong, which may affect investor confidence in financial statements[219]. - The company’s auditor, Marcum Asia CPAs LLP, is headquartered in New York and is subject to PCAOB inspections, mitigating some risks associated with non-US auditors[215]. - The company is subject to the Holding Foreign Companies Accountability Act (HFCA Act), which could prohibit trading of its securities if its auditor is not inspected by the PCAOB for three consecutive years[221].

Financial Performance - Total revenue for the year ended December 31, 2022, was HKD 341,241,000, a decrease of 13% compared to HKD 391,035,000 in 2021[4] - Graphene product revenue decreased by 12% to HKD 214,614,000 from HKD 242,921,000[4] - Adjusted segment EBITDA was HKD 74,463,000, down 3% from HKD 76,557,000 in the previous year[4] - The company reported a pre-tax loss of HKD 71,971,000, an increase of 45% from HKD 49,774,000 in 2021[4] - Total assets decreased by 18% to HKD 894,676,000 from HKD 1,096,905,000[4] - Cash and bank balances increased by 4% to HKD 31,470,000 from HKD 30,240,000[4] - The company reported a net loss attributable to equity holders of approximately HKD 69.7 million for the year ended December 31, 2022, compared to a net loss of approximately HKD 53.5 million for the year ended December 31, 2021[56] - Gross profit decreased to approximately HKD 120.0 million, a decline of about 19.1% from HKD 148.3 million for the year ended December 31, 2021[45] - Gross margin decreased by approximately 2.7 percentage points to about 35.2% from approximately 37.9% for the year ended December 31, 2021[45] - Selling, marketing, and administrative expenses decreased to approximately HKD 160.9 million, down about 18.5% from HKD 197.5 million for the same period last year[46] Business Operations and Strategy - The company plans to expand its production capacity in China to meet increasing battery demand and enhance profitability[15] - Graphex Technologies LLC is expected to become a leading player in the North American market for battery anode materials[15] - The company aims to explore synergies between its new energy initiatives and landscape design business[16] - The company produced slightly over 10,000 tons of spherical graphite in 2022, with all products manufactured and sold in China, and plans to expand production in China and the U.S. in the coming months[31] - The company is exploring the feasibility of establishing additional anode material production facilities in Detroit and Canada[27] - The company anticipates that the energy storage vertical will stimulate the next wave of major growth, further driving the battery industry[26] - The company’s strategy includes selling all of its China-manufactured anode materials in the rapidly growing Asia-Pacific market[26] - The company plans to invest at least RMB 200 million in a graphite deep processing production facility, with an annual output of 30,000 tons of high-purity spherical graphite and 10,000 tons of battery anode materials[63] - The first phase of the project is expected to be completed by Q2 2023, with an annual output of 20,000 tons of high-purity spherical graphite[63] - The company is developing various graphite mining operations worldwide to ensure upstream supply commitments for battery super factories[83] Market and Industry Insights - The landscape design segment faced challenges due to COVID-19 and the downturn in the real estate market, leading to a focus on cost control[16] - The restaurant segment generated approximately HKD 3.8 million in revenue, accounting for about 1.1% of total revenue, primarily impacted by COVID-19-related restaurant closures[35] - According to TD Cowen, the annual battery manufacturing capacity in the USA is expected to reach approximately 920 GW by 2031, sufficient to produce 15 million electric vehicles annually[83] - Each electric vehicle requires 70 kg of graphite, indicating that the 920 GW capacity will necessitate 1 million tons of graphite anode material in the USA[83] - The global graphite production in 2022 was 1.3 million tons, highlighting the significant demand for graphite in the upcoming years[83] Corporate Governance and Compliance - The company emphasizes high standards of corporate governance to ensure shareholder rights and enhance corporate value and accountability[124] - The company has adopted the revised corporate governance code effective from January 1, 2022, which includes new requirements for core shareholder protection standards and board diversity[124] - The company confirms compliance with the standard code for securities trading by all directors for the year ending December 31, 2022[125] - The company has a strong focus on corporate governance with independent non-executive directors[106] - The board currently consists of nine members, including three executive directors, one non-executive director, and five independent non-executive directors, ensuring a diverse and qualified composition[145] - The independent non-executive directors have confirmed their compliance with independence standards as per listing rules[145] - The company has established specific committees, including the audit committee, remuneration committee, and nomination committee, to enhance governance effectiveness[163] - The board is responsible for executing corporate governance functions and reviews the governance policies annually[171] Risk Management and Internal Controls - The company has a robust internal control and risk management system in place[151] - The risk management system includes identifying risks, assessing their likelihood and impact, and managing responses to ensure effective communication with the board[175] - The internal audit function operates independently and assesses the risk management and internal control systems through interviews and operational efficiency tests[185] - The company has sufficient resources and training programs in place to support its risk management and internal control systems[184] Shareholder Engagement and Financial Policies - The company emphasizes effective communication with shareholders and stakeholders, encouraging attendance at the upcoming annual general meeting[194] - The company adopted a dividend policy on January 8, 2019, allowing shareholders to share in profits while retaining sufficient reserves for future development[127] - The board will consider various factors, including actual and expected financial performance, retained earnings, and capital expenditure requirements, when deciding on dividend distributions[130] - There is no preset dividend payout ratio, and past dividend distribution records cannot be used as a reference for future dividends[131] - The board has the discretion to review and amend the dividend policy as necessary[132] Future Outlook and Development - The company has not provided any future outlook or performance guidance in the provided content[1] - The company is committed to research and development to keep pace with significant technological changes in the industry, ensuring competitiveness in the graphite business[177] - The company continues to monitor the overall impact of COVID-19 on its operations and has implemented various proactive measures and contingency plans to maintain business continuity[177]

香港交易及結算所有限公司及香港聯合交易所有限公司對本公佈的內容概不負責，對其準確性 或完整性亦不發表任何聲明，並明確表示，概不對因本公佈全部或任何部分內容而產生或因倚 賴該等內容而引致的任何損失承擔任何責任。 本公佈僅供說明用途，並不構成收購、購買或認購本公司任何證券的邀請或要約。本公佈僅供 說明用途，並不構成在香港、美國或任何其他地方認購任何證券的任何邀請，本公佈（或其任 何部分）或分發本公佈之事實亦不會構成任何認購證券合約或邀請的基準或有關依據，且僅供 說明用途。分發本公佈可能在若干司法管轄區受到法律限制，而獲得本公佈內容提述資料的人 士應自行了解及遵守任何該等限制。任何未能遵守此等限制之情況可能構成任何有關司法管轄 區的違法行為。本公佈提述的證券尚未根據任何證券法律及規例發行、登記或獲准在香港、美 國或任何其他地方向公眾發售或流通。概無作出任何該等證券將會在香港、美國或任何其他地 方發行或就此登記或獲准向公眾發售或流通之表述。除非已根據一九三三年美國證券法（經修 訂）（「證券法」）項下進行登記或已在證券法項下獲豁免登記，否則證券不得在美國境內發售或 出售。在美國的任何證券公開發售將以招股說明書進行，並可 ...

Revenue Performance - Revenue for the six months ended June 30, 2022, was HKD 163,133,000, a decrease of 10.7% compared to HKD 182,622,000 in 2021[5] - The graphene product business generated revenue of HKD 103,438,000, a decline of 3.6% from HKD 107,297,000 in 2021[5] - The landscape design business saw a revenue drop of 17.4%, from HKD 69,910,000 in 2021 to HKD 57,738,000 in 2022[5] - Revenue from restaurant management services was HKD 1,957,000, showing a slight increase from HKD 1,863,000 in the previous year[41] - The group's landscape design services revenue decreased to approximately HKD 57.7 million for the six months ended June 30, 2022, a decline of about 17.5% compared to HKD 69.9 million for the same period in 2021 due to lockdowns in multiple cities in China[177] - The total revenue for the group decreased to approximately HKD 163.1 million for the first half of 2022, a year-on-year decrease of about 10.7% from HKD 182.6 million in the same period of 2021[183] Financial Performance - Adjusted EBITDA for the same period was HKD 25,659,000, down 19.0% from HKD 31,670,000 in the previous year[5] - The company reported a pre-tax loss of HKD 65,302,000, an improvement of 8.9% compared to a loss of HKD 71,659,000 in the prior year[5] - The company reported a loss of HKD 59,858,000 for the six months ended June 30, 2022, compared to a loss of HKD 67,117,000 for the same period in 2021, representing a 1.9% improvement[15] - Total comprehensive loss for the period amounted to HKD 90,603,000, which is an increase of 54.5% from HKD 58,625,000 in the previous year[15] - The company recorded a net loss of HKD 59,633,000 for the six months ended June 30, 2022, with current liabilities amounting to HKD 64,678,000[35] - The company reported a significant increase in total assets from HKD 1,096,905,000 as of December 31, 2021, to HKD 1,105,712,000 by June 30, 2022[57] Asset and Liability Management - Total assets decreased by 5.5% to HKD 1,036,114,000 from HKD 1,096,905,000[6] - Net assets increased significantly by 72.3% to HKD 329,147,000 from HKD 191,012,000[6] - Cash and bank balances decreased by 9.8% to HKD 27,267,000 from HKD 30,240,000[6] - The company's debt reduced by 31.5% to HKD 321,950,000 from HKD 469,759,000[6] - The company's current liabilities decreased to HKD 365,864,000 from HKD 373,865,000, showing a reduction of 2.1%[18] - The company's total non-current liabilities decreased significantly from HKD 532,028,000 to HKD 341,103,000, a reduction of 35.9%[20] Cash Flow and Investment Activities - Operating cash flow for the period was HKD 820,000, a significant recovery from a cash outflow of HKD 11,512,000 in the previous year[28] - The company recorded a net cash outflow from investing activities of HKD 3,953,000, compared to a net inflow of HKD 5,659,000 in the prior year, indicating a shift in investment strategy[30] - The company experienced a decrease in inventory by HKD 32,735,000, contrasting with an increase of HKD 23,411,000 in the same period last year, suggesting improved inventory management[28] Strategic Initiatives and Future Plans - The company plans to focus on expanding its market presence and enhancing product development in the upcoming quarters, aiming for a more robust recovery[29] - The company has plans for market expansion and new product development, focusing on enhancing its graphene product offerings[52] - The company is actively exploring strategic acquisitions to bolster its market position and enhance operational capabilities[52] - The company is constructing a new production facility in the Jixi Mingshan Graphite Industrial Park in Heilongjiang Province, China, aiming to increase production capacity to 40,000 tons[175] Shareholder and Capital Management - The company did not recommend any interim dividend for the six months ended June 30, 2022, consistent with the previous year[89] - The company is actively considering raising new capital through the issuance of new equity and/or bonds to improve liquidity[35] - The company issued convertible bonds amounting to HKD 6,587,000 during the period, compared to HKD 46,500,000 in the previous year, indicating a reduction in financing through this method[30] - The company plans to issue convertible bonds and warrants in tranches, with a maximum total amount of 15,000,000 USD (equivalent to 116,250,000 HKD) under an agreement with Lexinter International Inc.[115] Operational Challenges - The company recognized impairment losses of HKD 16,454,000 related to financial and contract assets within the landscape design services segment[62] - The group recorded an increase in impairment losses on financial and contract assets to approximately HKD 16.5 million, up about 57.1% from HKD 10.5 million in the previous year, reflecting adverse market conditions[190] - The company is assessing the impact of COVID-19 on its financial performance and is responding to changing market conditions[37]

Financial Performance - Revenue for the year ended December 31, 2021, was HKD 391,035,000, a slight increase of 0.6% compared to HKD 388,852,000 in 2020[6] - Adjusted EBITDA for the year was HKD 76,557,000, down 10.0% from HKD 85,021,000 in 2020[6] - The company reported a pre-tax loss of HKD 49,774,000, an improvement of 51.6% compared to a loss of HKD 102,897,000 in the prior year[6] - The gross profit margin fell to approximately 37.9%, a decrease of about 2.5 percentage points from 40.4% for the year ended December 31, 2020[61] - Net loss attributable to equity holders of the parent was approximately HKD 53.5 million, compared to a net loss of approximately HKD 91.7 million for the year ended December 31, 2020[68] - The group's restaurant revenue decreased to approximately HKD 18.0 million, accounting for about 5% of total revenue, primarily due to restaurant closures caused by the COVID-19 pandemic[36] Revenue Contributions - Graphene product revenue increased by 12.7% to HKD 242,921,000 from HKD 215,462,000 in the previous year[6] - The graphene business contributed revenue of HKD 242.9 million, accounting for 62% of the total revenue, with an adjusted EBITDA of HKD 53.9 million, representing 70.4% of the group's adjusted EBITDA[30] - The landscape design segment contributed approximately HKD 130.1 million in revenue, representing 33% of total revenue, with an adjusted EBITDA of HKD 6.7 million, accounting for 9% of the group's adjusted EBITDA[34] Strategic Expansion Plans - The company plans to expand battery anode material production capacity significantly in Jixi, Heilongjiang[15] - A joint venture is planned with an experienced U.S. developer to establish a coated spherical graphite production facility in Warren, Michigan[15] - The company plans to expand spherical graphite production in Jixi, Heilongjiang, and establish a coated spherical graphite production facility in Michigan, USA, through a joint venture with Emerald Energy Solutions LLC[26] - The company announced a partnership with Desatec GmbH to supply graphene to the European market, aiming to become a key player in the global electric vehicle supply chain[26] Market Demand and Trends - The demand for spherical graphite is projected to increase significantly, with expectations of rapid growth in electric vehicle production and sales[30] - The electric vehicle industry is experiencing unprecedented growth, with a significant increase in demand for battery materials driven by the global transition to electric mobility[100] - The company anticipates a substantial increase in electric vehicle production over the next decade, which will drive demand for graphite and other key materials[102] - The demand for spherical graphite is projected to reach approximately 400,000 tons in 2022, increasing threefold to 1.25 million tons by 2026[106] COVID-19 Impact - The landscape architecture and design business is adapting to challenges posed by COVID-19 by enhancing cost efficiency and incorporating renewable energy elements[16] - The group anticipates that the COVID-19 pandemic will continue to negatively impact the restaurant business in 2022, with no significant contribution expected to the group's performance and financial position[36] - The group expects ongoing challenges in the restaurant sector due to the pandemic, impacting future revenue growth and operational strategies[36] Corporate Governance and Management - The company has implemented a board diversity policy to enhance performance quality, considering factors such as gender, age, and professional experience[164] - The board currently consists of ten members, including four executive directors, one non-executive director, and five independent non-executive directors[186] - The company has established a governance policy that has been reviewed and discussed by the board, affirming its effectiveness[190] - The board has authorized management to oversee the daily management and execution of the strategies approved by the board[189] Employee and Shareholder Engagement - The group employed approximately 489 employees as of December 31, 2021, with a stock option plan granting 25,500,000 options during the year[79] - The company aims to achieve long-term returns for shareholders through a sustainable business model focused on recurring profit growth and maintaining strong financial health[156] - The company has adopted a dividend policy since January 8, 2019, allowing shareholders to share in profits while retaining sufficient reserves for future development[157] Financial Instruments and Capital Structure - The company has issued convertible bonds totaling $15,000,000, with an interest rate of 5.5% and a conversion price initially set at HK$0.65 per share[89] - The company issued a total of $6,910,000 in new convertible bonds on January 10, 2022, with a conversion price of HKD 0.65 per share, allowing the conversion into 82,338,461 new shares[97] - The company has engaged in fundraising activities in Hong Kong and the United States to support the development of its graphene product business[88]

[Financial Highlights](index=3&type=section&id=%E8%B2%A1%E5%8B%99%E6%91%98%E8%A6%81) [Performance Overview](index=3&type=section&id=2.1%20%E4%B8%9A%E7%BB%A9%E6%A6%82%E8%A7%88) For the six months ended June 30, 2021, the company's total revenue increased by **17.7%** to **HKD 182,622 Thousand**, primarily driven by strong growth in the graphene products business, while loss attributable to owners of the parent expanded by **31.7%** to **HKD 64,701 Thousand**, and basic loss per share increased to **13.44 HK cents** Performance Overview (Thousand HKD) | Metric | 2021 (Thousand HKD) | 2020 (Thousand HKD) | Change | | :--- | :--- | :--- | :--- | | Revenue | 182,622 | 155,173 | +17.7% | | Graphene Products Business Revenue | 107,297 | 84,507 | +27.0% | | Landscape Design Business Revenue | 69,910 | 64,605 | +8.2% | | Catering Revenue | 5,415 | 6,061 | -10.7% | | Adjusted EBITDA* | 31,670 | 32,052 | -1.19% | | Graphene Products Business Adjusted EBITDA | 23,951 | 19,149 | +25.1% | | Landscape Design Business Adjusted EBITDA | 6,654 | 10,556 | -37.0% | | Catering Adjusted EBITDA | 1,065 | 2,347 | -54.6% | | Loss Before Tax | (71,659) | (63,879) | +12.2% | | Loss Attributable to Owners of the Parent | (64,701) | (49,146) | +31.7% | | Basic Loss Per Share Attributable to Ordinary Equity Holders of the Parent (HK cents) | (13.44) | (10.19) | +31.9% | - Adjusted EBITDA is defined as earnings before interest expense, tax, depreciation and amortisation, excluding fair value changes of financial assets at fair value through profit or loss, goodwill write-off, impairment losses on other intangible assets and property, plant and equipment, share of losses of associates and joint ventures, impairment losses on financial and contract assets, and corporate expenses[7](index=7&type=chunk) [Financial Position](index=3&type=section&id=2.2%20%E8%B4%A2%E5%8A%A1%E7%8A%B6%E5%86%B5) As of June 30, 2021, the company's total assets slightly decreased by **1.4%**, net assets and shareholders' equity decreased by **14.6%** and **10.9%** respectively, cash and bank balances significantly reduced by **24.6%**, while debt marginally increased by **1.0%** Financial Position (Thousand HKD) | Metric | June 30, 2021 (Thousand HKD) | December 31, 2020 (Thousand HKD) | Change | | :--- | :--- | :--- | :--- | | Total Assets | 1,089,074 | 1,104,239 | -1.4% | | Net Assets | 143,960 | 168,530 | -14.6% | | Shareholders' Equity | 152,768 | 171,517 | -10.9% | | Cash and Bank Balances | 28,445 | 37,709 | -24.6% | | Debt | 551,949 | 546,649 | +1.0% | [Company Information](index=4&type=section&id=%E5%85%AC%E5%8F%B8%E8%B3%87%E6%96%99) [Board of Directors and Corporate Governance](index=4&type=section&id=3.1%20%E8%91%A3%E4%BA%8B%E6%9C%83%E4%B8%8E%E5%85%AC%E5%8F%B8%E6%B2%BB%E7%90%86) The company's Board of Directors comprises Executive, Non-executive, and Independent Non-executive Directors, supported by an Audit Committee, Remuneration Committee, and Nomination Committee to ensure a sound corporate governance structure, with its website at www.graphexgroup.com - The Board of Directors comprises Mr Liu Xingda, Mr Chan Yik Yan, Mr Tian Ming, Mr Yang Liu, Mr Qiu Bin (Executive Directors); Mr Ma Lida, Mr Tu Wenzhe (Non-executive Directors); Ms Tam Yip Fung Sin, Mr Wang Yuncai, Mr Liao Guangsheng, Mr Tang Zhaodong, Mr Chan Kai Kwong (Independent Non-executive Directors)[10](index=10&type=chunk) - The company has an Audit Committee (Chairman: Mr Liao Guangsheng), a Remuneration Committee (Chairman: Ms Tam Yip Fung Sin), and a Nomination Committee (Chairman: Mr Liu Xingda)[10](index=10&type=chunk) - The company's website is www.graphexgroup.com, and its principal bankers include Bank of China (Hong Kong), Bank of Communications, Industrial Bank Co Ltd, The Bank of East Asia, and The Hongkong and Shanghai Banking Corporation[10](index=10&type=chunk) [Unaudited Condensed Interim Consolidated Statement of Profit or Loss](index=5&type=section&id=%E6%9C%AA%E7%B6%93%E5%AF%A9%E6%A0%B8%E4%B8%AD%E6%9C%9F%E7%B0%A1%E6%98%8E%E7%B6%9C%E5%90%88%E6%90%8D%E7%9B%8A%E8%A1%A8) [Profit or Loss Statement Overview](index=5&type=section&id=4.1%20%E6%8D%9F%E7%9B%8A%E8%A1%A8%E6%A6%82%E8%A7%88) For the six months ended June 30, 2021, the company's revenue increased to **HKD 182,622 Thousand**, with a gross profit of **HKD 70,861 Thousand**, but a significant increase in administrative expenses led to an expanded loss before tax of **HKD 71,659 Thousand**, a loss for the period of **HKD 67,117 Thousand**, and a loss attributable to owners of the parent of **HKD 64,701 Thousand** Profit or Loss Statement Overview (Thousand HKD) | Metric | 2021 (Thousand HKD) | 2020 (Thousand HKD) | | :--- | :--- | :--- | | Revenue | 182,622 | 155,173 | | Cost of Sales | (111,761) | (90,264) | | Gross Profit | 70,861 | 64,909 | | Other Income and Gains | 8,033 | 6,921 | | Selling and Marketing Expenses | (6,235) | (8,017) | | Administrative Expenses | (100,317) | (74,298) | | Impairment Loss on Financial and Contract Assets, Net | (10,460) | (6,394) | | Impairment Loss on Property, Plant and Equipment | (3,926) | (6,530) | | Goodwill Write-off | — | (3,278) | | Impairment Loss on Other Intangible Assets | — | (10,844) | | Finance Costs | (29,439) | (24,978) | | Loss Before Tax | (71,659) | (63,879) | | Loss for the Period | (67,117) | (58,104) | | Loss Attributable to Owners of the Parent | (64,701) | (49,146) | | Basic Loss Per Share Attributable to Ordinary Equity Holders of the Parent (HK cents) | (13.44) | (10.19) | [Unaudited Condensed Interim Consolidated Statement of Comprehensive Income](index=6&type=section&id=%E6%9C%AA%E7%B6%93%E5%AF%A9%E6%A0%B8%E4%B8%AD%E6%9C%9F%E7%B0%A1%E6%98%8E%E7%B6%9C%E5%90%88%E5%85%A8%E9%9D%A2%E6%94%B6%E7%9B%8A%E8%A1%A8) [Comprehensive Income Statement Overview](index=6&type=section&id=5.1%20%E5%85%A8%E9%9D%A2%E6%94%B6%E7%9B%8A%E8%A1%A8%E6%A6%82%E8%A7%88) For the six months ended June 30, 2021, the company's loss for the period was **HKD 67,117 Thousand**, and despite exchange differences on translation of foreign operations contributing **HKD 8,492 Thousand** in other comprehensive income, the total comprehensive loss for the period reached **HKD 58,625 Thousand**, with **HKD 56,155 Thousand** attributable to owners of the parent Comprehensive Income Statement Overview (Thousand HKD) | Metric | 2021 (Thousand HKD) | 2020 (Thousand HKD) | | :--- | :--- | :--- | | Loss for the Period | (67,117) | (58,104) | | Exchange Differences on Translation of Foreign Operations | 8,492 | (15,722) | | Other Comprehensive Income/(Loss) for the Period, After Tax | 8,492 | (15,722) | | Total Comprehensive Loss for the Period | (58,625) | (73,826) | | Attributable to Owners of the Parent | (56,155) | (64,901) | | Non-controlling Interests | (2,470) | (8,925) | [Unaudited Condensed Interim Consolidated Statement of Financial Position](index=7&type=section&id=%E6%9C%AA%E7%B6%93%E5%AF%A9%E6%A0%B8%E4%B8%AD%E6%9C%9F%E7%B0%A1%E6%98%8E%E7%B6%9C%E5%90%88%E8%B2%A1%E5%8B%99%E7%8B%80%E6%B3%81%E8%A1%A8) [Statement of Financial Position Overview](index=7&type=section&id=6.1%20%E8%B5%84%E4%BA%A7%E8%B4%9F%E5%80%BA%E8%A1%A8%E6%A6%82%E8%A7%88) As of June 30, 2021, the company's total non-current assets were **HKD 812,815 Thousand**, total current assets were **HKD 276,259 Thousand**, total current liabilities were **HKD 290,366 Thousand**, resulting in net current liabilities of **HKD 14,107 Thousand**, total non-current liabilities were **HKD 654,748 Thousand**, and ultimately net assets of **HKD 143,960 Thousand** Statement of Financial Position Overview (Thousand HKD) | Metric | June 30, 2021 (Thousand HKD) | December 31, 2020 (Thousand HKD) | | :--- | :--- | :--- | | Total Non-current Assets | 812,815 | 841,733 | | Total Current Assets | 276,259 | 262,506 | | Total Current Liabilities | 290,366 | 316,940 | | Net Current Liabilities | (14,107) | (54,434) | | Total Non-current Liabilities | 654,748 | 618,769 | | Net Assets | 143,960 | 168,530 | | Total Equity | 143,960 | 168,530 | - Non-current assets primarily included other intangible assets (**HKD 622,130 Thousand**), goodwill (**HKD 101,939 Thousand**), and property, plant and equipment (**HKD 80,699 Thousand**)[18](index=18&type=chunk) - Among current assets, trade and bills receivables (**HKD 117,465 Thousand**) and inventories (**HKD 52,057 Thousand**) accounted for a larger proportion[18](index=18&type=chunk) [Unaudited Condensed Interim Consolidated Statement of Changes in Equity](index=9&type=section&id=%E6%9C%AA%E7%B6%93%E5%AF%A9%E6%A0%B8%E4%B8%AD%E6%9C%9F%E7%B0%A1%E6%98%8E%E7%B6%9C%E5%90%88%E6%AC%8A%E7%9B%8A%E8%AE%8A%E5%8B%95%E8%A1%A8) [Changes in Equity Overview](index=9&type=section&id=7.1%20%E6%9D%83%E7%9B%8A%E5%8F%98%E5%8A%A8%E6%A6%82%E8%A7%88) For the six months ended June 30, 2021, total equity attributable to owners of the parent decreased from **HKD 171,517 Thousand** at the beginning of the period to **HKD 152,768 Thousand** at the end, mainly due to a loss for the period of **HKD 64,701 Thousand**, while the issuance of convertible notes and equity-settled share-based transactions increased equity, and dividend payments to non-controlling interests reduced it Changes in Equity Overview (Thousand HKD) | Equity Item | January 1, 2021 (Thousand HKD) | June 30, 2021 (Thousand HKD) | | :--- | :--- | :--- | | Total Equity Attributable to Owners of the Parent | 171,517 | 152,768 | | Non-controlling Interests | (2,987) | (8,808) | | Total Equity | 168,530 | 143,960 | | Loss for the Period | (64,701) | (64,701) | | Exchange Differences on Translation of Foreign Operations | — | 8,546 | | Issue of Convertible Notes | — | 21,827 | | Shares Issued upon Conversion of Convertible Notes | — | 1,512 | | Equity-settled Share-based Transactions | — | 14,067 | | Dividends Paid to Non-controlling Interests | — | (3,351) | - As of June 30, 2021, total equity attributable to owners of the parent was **HKD 152,768 Thousand**, non-controlling interests were **HKD (8,808) Thousand**, and total equity was **HKD 143,960 Thousand**[23](index=23&type=chunk) [Unaudited Condensed Interim Consolidated Statement of Cash Flows](index=11&type=section&id=%E6%9C%AA%E7%B6%93%E5%AF%A9%E6%A0%B8%E4%B8%AD%E6%9C%9F%E7%B0%A1%E6%98%8E%E7%B6%9C%E5%90%88%E7%8F%BE%E9%87%91%E6%B5%81%E9%87%8F%E8%A1%A8) [Cash Flow Statement Overview](index=11&type=section&id=8.1%20%E7%8E%B0%E9%87%91%E6%B5%81%E9%87%8F%E6%A6%82%E8%A7%88) For the six months ended June 30, 2021, net cash flows used in operating activities were **HKD (11,512) Thousand**, net cash flows from investing activities were **HKD 5,659 Thousand**, and net cash flows used in financing activities were **HKD (4,321) Thousand**, resulting in cash and cash equivalents at the end of the period of **HKD 28,445 Thousand**, a decrease of **HKD 10,174 Thousand** from the beginning of the period Cash Flow Statement Overview (Thousand HKD) | Cash Flow Type | 2021 (Thousand HKD) | 2020 (Thousand HKD) | | :--- | :--- | :--- | | Net Cash Flows (Used in)/From Operating Activities | (11,512) | 16,885 | | Net Cash Flows From/(Used in) Investing Activities | 5,659 | (12,586) | | Net Cash Flows Used in Financing Activities | (4,321) | (28,012) | | Net Decrease in Cash and Cash Equivalents | (10,174) | (23,713) | | Cash and Cash Equivalents at Beginning of Period | 37,709 | 53,882 | | Cash and Cash Equivalents at End of Period | 28,445 | 27,881 | - Operating cash outflow was primarily affected by an increase in inventories and an increase in trade and bills receivables[28](index=28&type=chunk) - In financing activities, proceeds from the issuance of convertible notes amounted to **HKD 46,500 Thousand**, but repayment of corporate bonds of **HKD 36,500 Thousand** and interest payments led to a net outflow[30](index=30&type=chunk) [Notes to the Unaudited Condensed Interim Consolidated Financial Statements](index=12&type=section&id=%E6%9C%AA%E7%B6%93%E5%AF%A9%E6%A0%B8%E4%B8%AD%E6%9C%9F%E7%B0%A1%E6%98%8E%E7%B6%9C%E5%90%88%E8%B2%A1%E5%8B%99%E5%A0%B1%E8%A1%A8%E9%99%84%E6%B3%A8) [Company and Group Information](index=13&type=section&id=1.%20%E5%85%AC%E5%8F%B8%E8%88%87%E9%9B%86%E5%9C%98%E8%B3%87%E6%96%99) Graphex Electric Vehicle New Materials Holdings Limited (formerly Pan Asia Environmental International Holdings Limited), incorporated in the Cayman Islands, primarily engages in the processing and sale of graphite and graphene-related products, landscape design services, and catering services - The company was incorporated in the Cayman Islands on November 25, 2013[32](index=32&type=chunk) - Its principal businesses are graphene products, landscape design services, and catering services[32](index=32&type=chunk) [Basis of Preparation and Changes in Group Accounting Policies](index=13&type=section&id=2.%20%E7%B7%A8%E8%A3%BD%E5%9F%BA%E6%BA%96%E5%8F%8A%E6%9C%AC%E9%9B%86%E5%9C%98%E6%9C%83%E8%A8%88%E6%94%BF%E7%AD%96%E8%AE%8A%E5%8B%95) The condensed interim consolidated financial statements are prepared in accordance with International Accounting Standard 34 and presented in HKD, with the Directors assessing that the Group has sufficient financial resources to operate on a going concern basis, supported by future cash flow forecasts and issued convertible notes - The condensed interim consolidated financial statements are prepared in accordance with International Accounting Standard 34 and presented in HKD[33](index=33&type=chunk) - As of June 30, 2021, the Group recorded a loss attributable to owners of the parent of **HKD 64,701 Thousand** and had net current liabilities of **HKD 14,107 Thousand**[35](index=35&type=chunk) - The Directors believe that, based on cash flow forecasts for the next **12 months** and proceeds from issued convertible notes, the Group will have sufficient liquidity, and the going concern basis is appropriate[35](index=35&type=chunk) [Revenue](index=14&type=section&id=3.%20%E6%94%B6%E5%85%A5) For the six months ended June 30, 2021, the company's total revenue was **HKD 182,622 Thousand**, with sales of graphene and related products contributing **HKD 107,297 Thousand** (**27%** increase), landscape design services contributing **HKD 69,910 Thousand** (**8.2%** increase), and catering revenue at **HKD 5,415 Thousand** (**10.7%** decrease), with Mainland China being the primary source of revenue Revenue (Thousand HKD) | Type of Goods or Services | 2021 (Thousand HKD) | 2020 (Thousand HKD) | | :--- | :--- | :--- | | Sales of Graphene and Related Products | 107,297 | 84,507 | | Landscape Design Services | 69,910 | 64,605 | | Catering Revenue | 3,552 | 4,250 | | Catering Management Services | 1,863 | 1,811 | | **Total Revenue** | **182,622** | **155,173** | Geographical Market (Thousand HKD) | Geographical Market | 2021 (Thousand HKD) | 2020 (Thousand HKD) | | :--- | :--- | :--- | | Mainland China | 169,785 | 140,530 | | Hong Kong | 12,406 | 12,477 | | Others | 431 | 2,166 | | **Total Revenue** | **182,622** | **155,173** | - Revenue recognition timing: Revenue from goods transferred at a point in time was **HKD 107,297 Thousand**, and revenue from services transferred over time was **HKD 75,325 Thousand**[41](index=41&type=chunk) [Operating Segment Information](index=15&type=section&id=4.%20%E7%B6%93%E7%87%9F%E5%88%86%E9%83%A8%E8%B3%87%E6%96%99) The company operates in three segments: graphene products, landscape design, and catering, with the graphene products business showing growth in both revenue and adjusted EBITDA, while landscape design revenue increased but adjusted EBITDA decreased, and both revenue and adjusted EBITDA declined for the catering business, resulting in a Group loss before tax of **HKD 71,659 Thousand** - The Group's operating segments include graphene products, landscape design services, and catering services[43](index=43&type=chunk) 2021 Segment Results (Thousand HKD) | Segment | Revenue | Segment Results | Adjusted EBITDA | | :--- | :--- | :--- | :--- | | Graphene Products Business | 107,297 | (4,719) | 23,951 | | Landscape Design Services | 69,910 | (9,850) | 6,654 | | Catering | 5,415 | (4,379) | 1,065 | | **Total** | **182,622** | **(18,948)** | **31,670** | 2020 Segment Results (Thousand HKD) | Segment | Revenue | Segment Results | Adjusted EBITDA | | :--- | :--- | :--- | :--- | | Graphene Products Business | 84,507 | (7,100) | 19,149 | | Landscape Design Services | 64,605 | 379 | 10,556 | | Catering | 6,061 | (25,433) | 2,347 | | **Total** | **155,173** | **(32,154)** | **32,052** | - As of June 30, 2021, the Group's total assets were **HKD 1,089,074 Thousand** and total liabilities were **HKD 945,114 Thousand**[56](index=56&type=chunk) [Other Income and Gains](index=21&type=section&id=5.%20%E5%85%B6%E4%BB%96%E6%94%B6%E5%85%A5%E5%8F%8A%E6%94%B6%E7%9B%8A) For the six months ended June 30, 2021, total other income and gains amounted to **HKD 8,033 Thousand**, an increase from **HKD 6,921 Thousand** in the prior year, primarily driven by growth in service income and government grants Other Income and Gains (Thousand HKD) | Item | 2021 (Thousand HKD) | 2020 (Thousand HKD) | | :--- | :--- | :--- | | Service Income | 6,154 | 1,375 | | Interest Income | 356 | 1,094 | | Government Grants | 862 | 1,722 | | Other Gains | 661 | 2,485 | | **Total** | **8,033** | **6,921** | - Government grants have been received with no unfulfilled conditions or contingencies[75](index=75&type=chunk) [Finance Costs](index=21&type=section&id=6.%20%E8%B2%A1%E5%8B%99%E6%88%90%E6%9C%AC) For the six months ended June 30, 2021, total finance costs increased to **HKD 29,439 Thousand** from **HKD 24,978 Thousand** in the prior year, primarily comprising interest on other interest-bearing borrowings, promissory notes, and convertible notes Finance Costs (Thousand HKD) | Item | 2021 (Thousand HKD) | 2020 (Thousand HKD) | | :--- | :--- | :--- | | Interest on Other Interest-Bearing Borrowings | 12,784 | 10,540 | | Interest on Promissory Notes | 12,271 | 11,587 | | Interest on Lease Liabilities | 2,905 | 2,851 | | Interest on Convertible Notes | 1,457 | — | | Interest on Bank Loans | 22 | — | | **Total** | **29,439** | **24,978** | [Loss Before Tax](index=22&type=section&id=7.%20%E9%99%A4%E7%A8%85%E5%89%8D%E8%99%A7%E6%90%8D) For the six months ended June 30, 2021, the company's loss before tax was **HKD 71,659 Thousand**, with major costs including cost of sales of **HKD 111,761 Thousand**, amortisation and depreciation of **HKD 33,782 Thousand**, research and development costs of **HKD 12,937 Thousand**, and employee benefit expenses of **HKD 74,672 Thousand**, while impairment loss on financial and contract assets significantly increased Loss Before Tax (Thousand HKD) | Item | 2021 (Thousand HKD) | 2020 (Thousand HKD) | | :--- | :--- | :--- | | Cost of Sales | 111,761 | 90,264 | | Amortisation and Depreciation | 33,782 | 34,674 | | Research and Development Costs | 12,937 | 4,138 | | Employee Benefit Expenses | 74,672 | 51,861 | | Impairment Loss on Financial and Contract Assets | 10,460 | 6,394 | | Impairment Loss on Property, Plant and Equipment | 3,926 | 6,530 | - Employee benefit expenses included **HKD 11,688 Thousand** for equity-settled share-based internal expenses, compared to zero in the prior period[81](index=81&type=chunk) - Research and development costs significantly increased from **HKD 4,138 Thousand** to **HKD 12,937 Thousand**[81](index=81&type=chunk) [Income Tax](index=23&type=section&id=8.%20%E6%89%80%E5%BE%97%E7%A8%85) For the six months ended June 30, 2021, the company received an income tax credit of **HKD 4,542 Thousand**, with Hong Kong profits tax at **16.5%**, certain high-tech enterprises in Mainland China enjoying a preferential tax rate of **15%**, other subsidiaries at **25%**, and the Italian subsidiary at **27.9%** Income Tax (Thousand HKD) | Item | 2021 (Thousand HKD) | 2020 (Thousand HKD) | | :--- | :--- | :--- | | Current Tax: Hong Kong | — | 295 | | Current Tax: Mainland China | 441 | 1,792 | | Current Tax: Italy | — | 115 | | Deferred Tax | (4,983) | (7,977) | | **Total Tax Credit for the Period** | **(4,542)** | **(5,775)** | - High-tech enterprises in Mainland China (e.g., Pan Asia Landscape Design (Shanghai) Co Ltd and Heilongjiang Mudanjiang Reclamation Tan'ao Graphene Deep Processing Co Ltd) enjoy a preferential corporate income tax rate of **15%**[83](index=83&type=chunk) - Qianhai Pan Asia Landscape Design (Shenzhen) Co Ltd, whose business falls within industries encouraged in the Qianhai area, is provided for at a **15%** tax rate[83](index=83&type=chunk) [Dividends](index=24&type=section&id=9.%20%E8%82%A1%E6%81%AF) The Board does not recommend the payment of any interim dividend for the six months ended June 30, 2021, consistent with the prior year - The Board does not recommend the payment of an interim dividend for the **six months** ended June 30, 2021[89](index=89&type=chunk) [Loss Per Share Attributable to Ordinary Equity Holders of the Parent](index=24&type=section&id=10.%20%E6%AF%8D%E5%85%AC%E5%8F%B8%E6%99%AE%E9%80%9A%E6%AC%8A%E7%9B%8A%E6%8C%81%E6%9C%89%E4%BA%BA%E6%87%89%E4%BD%B5%E6%AF%8F%E8%82%A1%E8%99%A7%E6%90%8D) For the six months ended June 30, 2021, basic loss per share attributable to ordinary equity holders of the parent increased to **13.44 HK cents** from **10.19 HK cents** in the prior year, with no diluted adjustment made due to the anti-dilutive effect of share options and convertible notes Loss Per Share (HK cents) | Metric | 2021 (HK cents) | 2020 (HK cents) | | :--- | :--- | :--- | | Basic Loss Per Share | (13.44) | (10.19) | | Diluted Loss Per Share | (13.44) | (10.19) | - Basic loss per share is calculated based on the loss attributable to ordinary equity holders of the parent of **HKD 64,701 Thousand** and the weighted average of **481,397,723 ordinary shares** outstanding[90](index=90&type=chunk) - No diluted adjustment was made to the basic loss per share for the period as the outstanding share options and convertible notes had an anti-dilutive effect on the basic loss per share amount[91](index=91&type=chunk) [Investments in Associates](index=25&type=section&id=11.%20%E6%96%BC%E8%81%AF%E7%87%9F%E5%85%AC%E5%8F%B8%E4%B9%8B%E6%8A%95%E8%B3%87) As of June 30, 2021, the company's investment in associates (primarily Shanghai Teddy Friends Investment Management Co Ltd and its subsidiary Sudi) had a carrying amount of **HKD 689 Thousand**, and despite holding a **20%** equity interest, the company exercises significant influence and accounts for it using the equity method, with the Teddy Group recording a loss of **HKD 1,401 Thousand** for the year Investments in Associates (Thousand HKD) | Metric | June 30, 2021 (Thousand HKD) | December 31, 2020 (Thousand HKD) | | :--- | :--- | :--- | | Carrying Amount of Investments in Associates | 689 | 854 | | Teddy Group Loss for the Year | (1,401) | (2,097) | | Teddy Group Revenue | 338 | 2,026 | - The company indirectly holds Shanghai Teddy Friends Investment Management Co Ltd (Teddy) and its subsidiary Suzhou Sudi Investment Development Co Ltd (Sudi)[94](index=94&type=chunk) - The company holds a **20%** equity interest in Teddy and has significant influence over its board and operating and financial policies, thus accounting for it as an associate[95](index=95&type=chunk) [Trade and Bills Receivables](index=27&type=section&id=12.%20%E6%87%89%E6%94%B6%E8%B2%BF%E6%98%93%E8%B3%AC%E6%AC%BE%E5%8F%8A%E6%87%89%E6%94%B6%E7%A5%A8%E6%93%9A) As of June 30, 2021, total trade and bills receivables significantly increased to **HKD 117,465 Thousand** from **HKD 69,808 Thousand** as of December 31, 2020, with the provision for lifetime expected credit losses rising to **HKD 55,383 Thousand**, and the company's credit period typically being **two months**, extending up to **six months** for key customers Trade and Bills Receivables (Thousand HKD) | Metric | June 30, 2021 (Thousand HKD) | December 31, 2020 (Thousand HKD) | | :--- | :--- | :--- | | Total Trade and Bills Receivables | 172,848 | 118,650 | | Provision for Lifetime Expected Credit Losses | (55,383) | (48,842) | | **Net Amount** | **117,465** | **69,808** | Ageing Analysis (Net of Provision) (Thousand HKD) | Ageing | June 30, 2021 (Thousand HKD) | December 31, 2020 (Thousand HKD) | | :--- | :--- | :--- | | Within 6 months | 100,475 | 53,796 | | Over 6 months but within 1 year | 11,648 | 6,955 | | Over 1 year but within 2 years | 2,395 | 7,472 | | Over 2 years but within 3 years | 2,947 | 1,585 | - The company implements strict controls over outstanding receivables to mitigate credit risk and has no significant concentration of credit risk[102](index=102&type=chunk) [Trade Payables](index=28&type=section&id=13.%20%E6%87%89%E4%BB%98%E8%B2%BF%E6%98%93%E8%B3%AC%E6%AC%BE) As of June 30, 2021, total trade payables increased to **HKD 20,398 Thousand** from **HKD 16,138 Thousand** as of December 31, 2020, with trade payables being interest-free and typically settled within **three months** Trade Payables (Thousand HKD) | Ageing | June 30, 2021 (Thousand HKD) | December 31, 2020 (Thousand HKD) | | :--- | :--- | :--- | | Within 1 year | 14,542 | 10,775 | | Over 1 year but within 2 years | 2,267 | 2,880 | | Over 2 years but within 3 years | 1,135 | 1,539 | | Over 3 years | 2,454 | 944 | | **Total** | **20,398** | **16,138** | - Trade payables are interest-free and typically settled within **three months**[106](index=106&type=chunk) [Interest-Bearing Borrowings](index=28&type=section&id=14.%20%E8%A8%88%E6%81%AF%E5%80%9F%E6%AC%BE) As of June 30, 2021, total current interest-bearing borrowings amounted to **HKD 134,854 Thousand**, and total non-current interest-bearing borrowings were **HKD 85,658 Thousand**, with corporate bonds being the primary form of interest-bearing borrowings, carrying interest rates between **4%** and **18%** and having various maturity dates 2021 Interest-Bearing Borrowings (Thousand HKD) | Type | Current | Non-current | | :--- | :--- | :--- | | Bank Loans | 6,009 | — | | Other Borrowings | 13,551 | 245 | | Corporate Bonds | 115,294 | 85,413 | | **Total** | **134,854** | **85,658** | 2020 Interest-Bearing Borrowings (Thousand HKD) | Type | Current | Non-current | | :--- | :--- | :--- | | Bank Overdrafts | 3,445 | — | | Other Borrowings | 13,117 | 245 | | Corporate Bonds | 149,712 | 76,041 | | **Total** | **172,274** | **76,286** | - Corporate bonds are denominated in HKD, have maturities of **one to two years**, and effective interest rates ranging from **9.13% to 10.04%**[119](index=119&type=chunk)[120](index=120&type=chunk) - Other borrowings include unsecured loans denominated in RMB and HKD, with interest rates ranging from interest-free to **18%**[118](index=118&type=chunk) [Promissory Notes](index=31&type=section&id=15.%20%E6%89%BF%E5%85%8C%E7%A5%A8%E6%93%9A) As of June 30, 2021, the carrying amount of promissory notes was **HKD 306,879 Thousand**, an increase from **HKD 298,089 Thousand** at the beginning of the period, with the notes issued on August 7, 2019, having a face value of **HKD 348,080 Thousand**, a **four-year** term, an annual interest rate of **2%**, and an effective annual interest rate of **8.4%** Promissory Notes (Thousand HKD) | Item | June 30, 2021 (Thousand HKD) | December 31, 2020 (Thousand HKD) | | :--- | :--- | :--- | | Carrying Amount at Beginning of Period | 298,089 | 281,307 | | Effective Interest Received | 12,271 | 23,743 | | Interest Payable and Included in Other Payables and Accruals | (3,481) | (6,961) | | **Carrying Amount at End of Period** | **306,879** | **298,089** | - The promissory notes are **four-year** unsecured notes denominated in HKD, with an annual interest rate of **2%** and an effective annual interest rate of **8.4%**[121](index=121&type=chunk)[122](index=122&type=chunk) [Convertible Notes](index=32&type=section&id=16.%20%E5%8F%AF%E6%8F%9B%E8%82%A1%E7%A5%A8%E6%93%9A) As of June 30, 2021, the total carrying amount of convertible notes was **HKD 44,022 Thousand**, comprising a liability component of **HKD 24,558 Thousand** and an equity component of **HKD 19,464 Thousand**, with the company having issued convertible notes totaling **USD 6,000,000** under a subscription agreement, carrying an annual interest rate of **5.5%** and an initial conversion price of **HKD 0.65 per share** Convertible Notes (Thousand HKD) | Item | Equity Component (Thousand HKD) | Liability Component (Thousand HKD) | Total (Thousand HKD) | | :--- | :--- | :--- | :--- | | January 1, 2021 | — | — | — | | Issue of Convertible Notes | 21,827 | 24,673 | 46,500 | | Effective Interest Received | — | 1,457 | 1,457 | | Converted into Shares | (2,363) | (1,512) | (3,875) | | **June 30, 2021** | **19,464** | **24,558** | **44,022** | - The company entered into a subscription agreement with Lexinter International Inc to issue convertible notes and warrants for a total amount not exceeding **USD 15,000,000**[126](index=126&type=chunk) - As of June 30, 2021, convertible notes totaling **USD 6,000,000** (**HKD 46,500,000**) were issued, with an initial conversion price of **HKD 0.65 per share** and an annual interest rate of **5.5%**[126](index=126&type=chunk) [Share Capital and Treasury Shares](index=33&type=section&id=17.%20%E8%82%A1%E6%9C%AC%E5%8F%8A%E5%BA%AB%E5%AD%98%E8%82%A1%E4%BB%BD) As of June 30, 2021, the company had **488,251,538** issued and fully paid ordinary shares, with share capital amounting to **HKD 4,883 Thousand**, and during the period, **5,961,538 shares** were issued upon conversion of convertible notes, and **9,931,275 shares** were granted under the Share Award Scheme, leading to a reduction in treasury shares Share Capital and Treasury Shares (Thousand HKD) | Item | June 30, 2021 (Thousand HKD) | December 31, 2020 (Thousand HKD) | | :--- | :--- | :--- | | Issued and Fully Paid Ordinary Share Capital | 4,883 | 4,823 | | Treasury Shares | — | (99) | Summary of Share Capital Movements (Thousand HKD) | Item | Nominal Value of Shares | Share Premium Account | | :--- | :--- | :--- | | January 1, 2021 | 4,823 | 355,685 | | Shares Issued upon Conversion of Convertible Notes | 60 | 3,815 | | **June 30, 2021** | **4,883** | **359,500** | Summary of Treasury Shares Movements (Thousand HKD) | Item | Nominal Value of Shares | Share Premium Account | | :--- | :--- | :--- | | January 1, 2021 | (99) | (13,042) | | Shares Granted under Share Award Scheme | 99 | 5,762 | | **June 30, 2021** | **—** | **(7,280)** | - The Share Award Scheme aims to recognize employee contributions, retain talent, and attract suitable talent, with a validity period of **ten years**[136](index=136&type=chunk) - On January 28, 2021, **9,931,275 shares** were granted to and accepted and vested by certain Directors and other participants, with a fair value of approximately **HKD 5,859 Thousand**[135](index=135&type=chunk) [Share Option Scheme](index=35&type=section&id=18.%20%E8%B3%BC%E8%82%A1%E6%AC%8A%E8%A8%88%E5%8A%83) The company's Share Option Scheme, approved on June 3, 2014, aims to reward eligible participants for their contributions to the Group's successful operations, and for the six months ended June 30, 2021, **25,500,000 share options** were granted to certain Directors and employees with an exercise price of **HKD 0.65**, all of which have vested, and the fair value of approximately **HKD 7.7 Million** was recognized as an expense - The Share Option Scheme became effective on June 25, 2014, aiming to provide incentives to eligible participants including Directors, employees, suppliers, customers, and technical support personnel[141](index=141&type=chunk) - For the **six months** ended June 30, 2021, **25,500,000 share options** were granted to and accepted and vested by certain Directors and employees, with an exercise price of **HKD 0.65**[145](index=145&type=chunk)[148](index=148&type=chunk) - The fair value of the granted share options was approximately **HKD 7.7 Million**, recognized as share option expense in the statement of profit or loss[148](index=148&type=chunk) Share Option Fair Value Estimation Assumptions (June 30, 2021) | Metric | Directors | Employees | | :--- | :--- | :--- | | Dividend Yield (%) | — | — | | Expected Volatility (%) | 73.28% | 73.28% | | Risk-free Rate (%) | 0.73% | 0.73% | | Exercise Multiple | 2.8 | 2.2 | | Fair Value of Share Options (HKD per share) | 0.30 | 0.28 | [Significant Related Party Transactions](index=38&type=section&id=19.%20%E9%87%8D%E5%A4%A7%E9%97%9C%E9%80%A3%E6%96%B9%E4%BA%A4%E6%98%93) During the period, the company engaged in several significant related party transactions, including providing and repaying loans to Pan Asia International Trading Co Ltd, Dalian Pengya International Trading Co Ltd, and Shanghai Yigui Brand Management Co Ltd, as well as receiving or paying interest, with these loans carrying interest rates between **8%** and **12%** Related Party Transactions (Thousand HKD) | Transaction Type | 2021 (Thousand HKD) | 2020 (Thousand HKD) | | :--- | :--- | :--- | | Loans Provided to Pan Asia International Trading Co Ltd | — | 2,100 | | Loans Provided to Shanghai Yigui Brand Management Co Ltd | 4,569 | — | | Repayment of Loans from Pan Asia International Trading Co Ltd | — | 6,315 | | Repayment of Loans from Shanghai Yigui Brand Management Co Ltd | 4,174 | — | | Repayment of Loans from Pan Asia International Trading Co Ltd | 6,549 | — | | Interest Income from Shanghai Yigui Brand Management Co Ltd | 76 | — | | Interest Expense Paid to Pan Asia International Trading Co Ltd | 39 | — | | Interest Expense Paid to Shanghai Yigui Brand Management Co Ltd | 176 | — | - The revolving loan provided to Pan Asia International Trading Co Ltd was for **one year**, unsecured, with an annual interest rate of **12%**[152](index=152&type=chunk) - The short-term loan provided to Shanghai Yigui Brand Management Co Ltd had an annual interest rate of **8%**, with an outstanding balance of **RMB 1,480,000** as of June 30, 2021[153](index=153&type=chunk) [Events After the Reporting Period](index=39&type=section&id=20.%20%E5%A0%B1%E5%91%8A%E6%9C%9F%E5%BE%8C%E4%BA%8B%E9%A0%85) Subsequent to the reporting period, Chengdu Taihaowei Catering Co Ltd ceased operations on August 1, 2021, due to continuous losses and pandemic impacts, and the company filed a draft registration statement on Form F-1 with the US SEC on August 4, 2021, for a proposed initial public offering of American Depositary Shares in the United States, seeking listing on the Nasdaq Capital Market - Chengdu Taihaowei Catering Co Ltd (operating a Thai restaurant) ceased operations on August 1, 2021, due to continuous losses, reduced customer demand caused by the pandemic, and uncertain business prospects[155](index=155&type=chunk) - The company filed a draft registration statement on Form F-1 with the US SEC on August 4, 2021, for a proposed initial public offering of American Depositary Shares in the United States[155](index=155&type=chunk) - The company plans to apply for the listing of its American Depositary Shares on the Nasdaq Capital Market, subject to the registration statement becoming effective and approval from the Hong Kong Stock Exchange[155](index=155&type=chunk) [Comparative Figures](index=39&type=section&id=21.%20%E6%AF%94%E8%BC%83%E6%95%B8%E5%AD%97) Certain comparative figures have been reclassified to conform to the current period's presentation - Certain comparative figures have been reclassified to conform to the current period's presentation[156](index=156&type=chunk) [Approval of Interim Financial Information](index=39&type=section&id=22.%20%E6%89%B9%E5%87%86%E4%B8%AD%E6%9C%9F%E8%B2%A1%E5%8B%99%E8%B3%87%E6%96%99) The Board approved and authorized the publication of the financial statements on August 30, 2021 - The Board approved and authorized the publication of the financial statements on August 30, 2021[157](index=157&type=chunk) [Management Discussion and Analysis](index=40&type=section&id=%E7%AE%A1%E7%90%86%E5%B1%A4%E8%A8%8E%E8%AB%96%E8%88%87%E5%88%86%E6%9E%90) [Business Review](index=40&type=section&id=9.1%20%E6%A5%AD%E5%8B%99%E5%9B%9E%E9%A1%A7) The company rebranded as Graphex Electric Vehicle New Materials Holdings Limited to align with its mission in renewable energy, with the graphene products business becoming the primary revenue driver and achieving strong growth, the landscape design business remaining stable, and the catering business being adversely affected by the COVID-19 pandemic and subsequently scaled down - The company changed its name to Graphex Electric Vehicle New Materials Holdings Limited to reflect its corporate mission of developing technologies and optimizing processes for renewable energy utilization[160](index=160&type=chunk) - The graphene products business continues to be the main contributor to the Group's revenue, the landscape design business remains stable, and the catering business is adversely affected by the COVID-19 pandemic[160](index=160&type=chunk) [Graphene Products Business](index=40&type=section&id=9.1.1%20%E7%9F%B3%E5%A2%A8%E7%83%AF%E7%94%A2%E5%93%81%E6%A5%AD%E5%8B%99) For the six months ended June 30, 2021, the graphene products business generated **HKD 107.3 Million** in revenue, a **27% growth**, with adjusted EBITDA increasing by **25%**, as the company completed new production facilities to boost capacity to **40,000 tonnes** and invested **HKD 10.7 Million** in R&D to capitalize on the rising demand for spherical graphite in electric vehicles and energy storage systems Graphene Products Business (Million HKD) | Metric | 2021 (Million HKD) | 2020 (Million HKD) | Change | | :--- | :--- | :--- | :--- | | Revenue | 107.3 | 84.5 | +27% | | Adjusted EBITDA | 24.0 | 19.1 | +25% | - The graphene products business primarily produces natural spherical graphite for lithium-ion battery anodes in electric vehicles and energy storage systems[161](index=161&type=chunk) - The company has completed the construction of new production facilities in Qitaihe City, Heilongjiang Province, increasing capacity to **40,000 tonnes**, and invested **HKD 10.7 Million** in research and development[161](index=161&type=chunk) [Landscape Design Business](index=40&type=section&id=9.1.2%20%E6%99%AF%E8%A7%80%E8%A8%AD%E8%A8%88%E6%A5%AD%E5%8B%99) For the six months ended June 30, 2021, landscape design business revenue increased to **HKD 69.9 Million**, a **8.2% growth**, primarily due to accelerated project progress and settlement, with **69 new contracts** signed totaling **HKD 67.9 Million**, a **52.9% decrease** from the prior year due to a one-off large project Landscape Design Business (Million HKD) | Metric | 2021 (Million HKD) | 2020 (Million HKD) | Change | | :--- | :--- | :--- | :--- | | Revenue | 69.9 | 64.6 | +8.2% | | New Contract Number | 69 | 64 | +7.8% | | New Contract Value | 67.9 | 144.2 | -52.9% | - The increase in revenue was primarily due to accelerated progress and settlement of landscape design projects in the first half of 2021, gradually recovering from the slowdown caused by the COVID-19 pandemic in 2020[162](index=162&type=chunk) - The decrease in new contract value was mainly due to a one-off large project recorded in the prior period[166](index=166&type=chunk) [Catering Business](index=41&type=section&id=9.1.3%20%E9%A4%90%E9%A3%B2%E6%A5%AD%E5%8B%99) For the six months ended June 30, 2021, catering revenue decreased by **10.7%** to **HKD 5.4 Million**, representing approximately **3%** of the Group's total revenue, and due to the impact of the COVID-19 pandemic, the company ceased operations of its Chengdu restaurant in China in August 2021, now only providing management services for one Shanghai restaurant, with no intention to further expand its catering business Catering Business (Million HKD) | Metric | 2021 (Million HKD) | 2020 (Million HKD) | Change | | :--- | :--- | :--- | :--- | | Revenue | 5.4 | 6.1 | -10.7% | - The decrease in catering revenue was primarily due to the continuous deterioration of the market environment since the outbreak of the COVID-19 pandemic, leading to the termination and/or scaling down of China restaurant operations[167](index=167&type=chunk) - The company ceased operations of its Chengdu restaurant in China in August 2021 and currently only provides management services for one Shanghai restaurant, with no intention to further expand its catering business[167](index=167&type=chunk) [Financial Review](index=41&type=section&id=9.2%20%E8%B2%A1%E5%8B%99%E5%9B%9E%E9%A1%A7) For the six months ended June 30, 2021, the company's total revenue increased by **17.7%**, but gross margin declined to **38.8%**, administrative expenses significantly increased by **35.0%** due to share-based payments and R&D investments, impairment loss on financial and contract assets increased by **63.6%**, while impairment loss on property, plant and equipment decreased by **39.9%**, ultimately leading to an expanded net loss attributable to owners of the parent of **HKD 64.7 Million** [Revenue](index=41&type=section&id=9.2.1%20%E6%94%B6%E5%85%A5) In the first half of 2021, the Group's total revenue increased to **HKD 182.6 Million**, a **17.7% growth**, with the graphene products segment contributing **HKD 107.3 Million** (**27% growth**) and the landscape design segment contributing **HKD 69.9 Million** (**8.2% growth**) Revenue (Million HKD) | Metric | 2021 (Million HKD) | 2020 (Million HKD) | Change | | :--- | :--- | :--- | :--- | | Total Revenue | 182.6 | 155.2 | +17.7% | | Graphene Products Segment Revenue | 107.3 | 84.5 | +27% | | Landscape Design Segment Revenue | 69.9 | 64.6 | +8.2% | [Cost of Sales](index=42&type=section&id=9.2.2%20%E9%8A%B7%E5%94%AE%E6%88%90%E6%9C%AC) For the six months ended June 30, 2021, cost of sales increased by **23.8%** to **HKD 111.8 Million**, consistent with the revenue growth in the graphene products and landscape design segments Cost of Sales (Million HKD) | Metric | 2021 (Million HKD) | 2020 (Million HKD) | Change | | :--- | :--- | :--- | :--- | | Cost of Sales | 111.8 | 90.3 | +23.8% | - The increase in cost of sales is consistent with the increase in revenue from the graphene products and landscape design segments[171](index=171&type=chunk) [Gross Profit and Gross Margin](index=42&type=section&id=9.2.3%20%E6%AF%9B%E5%88%A9%E5%8F%8A%E6%AF%9B%E5%88%A9%E7%8E%87) For the six months ended June 30, 2021, gross profit increased by **9.2%** to **HKD 70.9 Million**, but gross margin decreased from **41.8%** to **38.8%**, primarily due to a reduction in the total value of new contracts awarded in the landscape design segment Gross Profit and Gross Margin (Million HKD) | Metric | 2021 (Million HKD) | 2020 (Million HKD) | Change | | :--- | :--- | :--- | :--- | | Gross Profit | 70.9 | 64.9 | +9.2% | | Gross Margin | 38.8% | 41.8% | -3.0% | - The slight decrease in gross margin was mainly due to a reduction in the total value of new contracts awarded in the landscape design segment[172](index=172&type=chunk) [Selling and Marketing Expenses](index=42&type=section&id=9.2.4%20%E9%8A%B7%E5%94%AE%E5%8F%8A%E7%87%9F%E9%8A%B7%E9%96%8B%E6%94%AF) For the six months ended June 30, 2021, selling and marketing expenses decreased by **22.2%** to **HKD 6.2 Million**, primarily due to the scaling down of the catering business Selling and Marketing Expenses (Million HKD) | Metric | 2021 (Million HKD) | 2020 (Million HKD) | Change | | :--- | :--- | :--- | :--- | | Selling and Marketing Expenses | 6.2 | 8.0 | -22.2% | - The decrease in selling and marketing expenses was primarily due to the scaling down of the catering business[173](index=173&type=chunk) [Administrative Expenses](index=42&type=section&id=9.2.5%20%E8%A1%8C%E6%94%BF%E9%96%8B%E6%94%AF) For the six months ended June 30, 2021, administrative expenses increased by **35.0%** to **HKD 100.3 Million**, primarily due to increased share-based payment expenses, higher R&D costs for new graphene products, and increased professional fees related to the proposed US initial public offering Administrative Expenses (Million HKD) | Metric | 2021 (Million HKD) | 2020 (Million HKD) | Change | | :--- | :--- | :--- | :--- | | Administrative Expenses | 100.3 | 74.3 | +35.0% | - The increase in administrative expenses was mainly due to (i) increased share-based payment expenses; (ii) increased research and development costs for new graphene products; and (iii) increased auditor's remuneration and professional fees related to the proposed initial public offering in the US[174](index=174&type=chunk) [Impairment Loss on Financial and Contract Assets](index=42&type=section&id=9.2.6%20%E9%87%91%E8%9E%8D%E5%8F%8A%E5%90%88%E7%B4%84%E8%B3%87%E7%94%A2%E6%B8%9B%E5%80%BC%E8%99%A7%E6%90%8D) For the six months ended June 30, 2021, impairment loss on financial and contract assets increased by **63.6%** to **HKD 10.5 Million**, primarily reflecting the negative impact of unfavorable