Compliance and Governance - The first quarterly report for 2022 indicates that China Singyes New Materials Holdings Limited is committed to providing accurate and complete information in compliance with GEM Listing Rules[5]. - The report emphasizes the directors' responsibility for the accuracy of the information provided, highlighting the company's commitment to transparency[8]. - The company has maintained compliance with the Corporate Governance Code, except for a deviation regarding the roles of Chairman and Chief Executive Officer being held by the same individual[111]. - The company has established an Audit Committee consisting of three independent non-executive Directors to oversee financial reporting and risk management[116]. - The Audit Committee has reviewed the financial reporting process and confirmed compliance with applicable accounting principles for the unaudited consolidated financial statements for the three months ended March 31, 2022[118]. - The company has confirmed that all Directors complied with the required standards of dealings regarding securities transactions during the relevant period[112]. - The company emphasizes the importance of good corporate governance in its management structures and internal control procedures[110]. Financial Performance - Revenue for the three months ended March 31, 2022, was RMB 16,335,000, a decrease of 15.8% compared to RMB 19,384,000 for the same period in 2021[21]. - Gross profit for the same period was RMB 1,331,000, down 66.0% from RMB 3,912,000 in 2021[21]. - Loss before tax for Q1 2022 was RMB 1,795,000, compared to a profit of RMB 381,000 in Q1 2021[21]. - The company reported a loss for the period of RMB 1,491,000, a significant decline from a profit of RMB 285,000 in the previous year[21]. - Total comprehensive loss for the period was RMB 685,000, compared to a comprehensive income of RMB 1,003,000 in Q1 2021[21]. - Basic and diluted loss per share for Q1 2022 was RMB (0.004), compared to earnings per share of RMB 0.001 in Q1 2021[21]. - Other income and gains increased to RMB 3,593,000 in Q1 2022 from RMB 3,296,000 in the same period last year, reflecting a growth of 9.1%[21]. - Selling and distribution expenses decreased to RMB 1,636,000 from RMB 2,009,000, a reduction of 18.6% year-over-year[21]. - Administrative expenses rose to RMB 4,358,000, up 14.4% from RMB 3,808,000 in Q1 2021[21]. - The company experienced a foreign exchange gain of RMB 264,000 in Q1 2022, compared to a loss of RMB 236,000 in the same period last year[21]. Revenue Breakdown - Revenue from the sale of ITO film was RMB 8,079,000, down 14.3% from RMB 9,422,000 in the previous year[44]. - Revenue from Smart PDLC products was RMB 7,593,000, a decrease of 11.0% compared to RMB 8,561,000 in the same period last year[44]. - Revenue from LED Display and Projection System was RMB 0, down from RMB 964,000 in the previous year, indicating a complete cessation of this revenue stream[44]. - Domestic revenue from Mainland China was RMB 12,244,000, a decline of 30.7% from RMB 17,697,000 in the prior year[45]. - Revenue from other geographical markets increased to RMB 4,091,000, up 142.9% from RMB 1,687,000 in the same period last year[45]. Cost and Expenses - The cost of inventories sold for the three months ended March 31, 2022 was RMB 14,848,000, slightly down from RMB 15,026,000 in the same period of 2021[52]. - Employee benefit expenses for the three months ended March 31, 2022 totaled RMB 4,973,000, an increase from RMB 4,536,000 in the same period of 2021[52]. - The total tax credit for the period was RMB (304,000), compared to a tax expense of RMB 96,000 for the same period in 2021[55]. - The Group's deferred income released to profit or loss was RMB 124,000 for the three months ended March 31, 2022, compared to RMB 115,000 in the same period of 2021[47]. - The depreciation of property, plant, and equipment for the three months ended March 31, 2022 was RMB 1,997,000, down from RMB 2,654,000 in the same period of 2021[52]. - The Group's research costs for the three months ended March 31, 2022 were RMB 1,235,000, a decrease from RMB 1,778,000 in the same period of 2021[52]. Share Option Scheme - The company has adopted a Share Option Scheme allowing for the issuance of up to 10% of the total issued share capital, which amounts to 480,000,000 shares as of October 17, 2017[126]. - The maximum number of shares that can be issued to any eligible participant under the Share Option Scheme in any 12-month period is limited to 1% of the total issued shares unless approved by shareholders[132]. - The exercise price for share options must be at least the higher of the closing price on the date of grant or the average closing price for the five business days preceding the grant[139]. - The Share Option Scheme will remain in effect for ten years from October 17, 2017, expiring on the day before the tenth anniversary unless terminated earlier[140]. - The total number of outstanding share options as of March 31, 2022, was 7,790,000, with no options exercised during the period[147]. Shareholding Structure - As of March 31, 2022, Top Access Management Limited holds 324,324,325 shares, representing approximately 62.37% of the total shareholding[152]. - China Shuifa Singyes Energy Holdings Limited has an interest in a controlled corporation, also holding 324,324,325 shares, equating to 62.37%[152]. - Water Development (HK) Holdings Co., Limited, another controlled corporation, holds 324,324,325 shares, which is 62.37% of the shareholding[152]. - AMATA Limited is a beneficial owner of 40,000,000 shares, representing 7.69% of the total shareholding[154]. - Kunlun Holdings Group Limited holds 26,021,206 shares, which is 5.00% of the total shareholding[154]. - As of March 31, 2022, the total issued share capital is 520,000,000 shares[154]. - The interests and short positions of directors and chief executives have been disclosed according to the Securities and Futures Ordinance[156]. - The company has no other persons or corporations with interests in shares or underlying shares that require disclosure under the provisions of the Securities and Futures Ordinance[155]. - The percentage of shareholding is calculated based on the total issued shares as of March 31, 2022[154]. - The company maintains a register of interests as required by the Securities and Futures Ordinance[156].

Financial Performance - For the year ended December 31, 2021, the Group's revenue was RMB 131.3 million, representing a year-on-year decrease of 30.6%[21] - Revenue from ITO film sales was approximately RMB 47.8 million for the year ended December 31, 2021, representing an increase of approximately RMB 4.7 million or 10.9% from RMB 43.1 million in 2020[36] - Revenue from Smart PDLC products was approximately RMB 41.5 million for the year ended December 31, 2021, a decrease of approximately RMB 7.4 million or 15.1% from RMB 48.9 million in 2020[37] - Revenue from LED Display and Projection System was approximately RMB 11.5 million for the year ended December 31, 2021, a significant increase of approximately RMB 11.3 million or 52 times from RMB 0.2 million in 2020[41] - Revenue from other products was approximately RMB 30.4 million for the year ended December 31, 2021, representing a significant increase of approximately RMB 22.1 million or 2.7 times from RMB 8.3 million in 2020[42] - The company recorded a loss attributable to owners of approximately RMB 18.2 million for the year ended December 31, 2021, compared to a profit of approximately RMB 584,000 for the same period in 2020[43] - The company's cost of sales for the year ended December 31, 2021, was approximately RMB 106.2 million, an increase of approximately RMB 29.3 million or 38.1% from approximately RMB 76.9 million for the same period in 2020[51][54] - Gross profit increased by approximately RMB 1.4 million or 6.0%, from approximately RMB 23.6 million for the year ended December 31, 2020, to approximately RMB 25.0 million for the year ended December 31, 2021[56][60] - The gross profit margin decreased from approximately 23.5% for the year ended December 31, 2020, to approximately 19.1% for the same period in 2021, mainly due to a drop in selling prices in response to competition[56][60] Production and Market Development - The production of ITO film recorded a year-on-year increase of 10%, accounting for nearly 65% of the market share in the PRC[22] - Official bulk production of motor vehicle films was realized, establishing a foundation for entering the motor vehicle sector[24] - The market development for multimedia screen door systems for railways achieved breakthroughs in cities such as Lanzhou and Jinan[24] - Participation in public sector construction projects, including a museum in Shenyang and Guiyang Longdongbao Airport, facilitated the application of low-carbon, energy-conservative technologies[24] - The company successfully launched mass production of automotive films in 2021, laying a solid foundation for entering the automotive industry[26] - The company aims to strengthen its technology research and development to consolidate its leading position in the new material industry[29] Expenses and Financial Management - Selling and distribution expenses were approximately RMB 6.1 million for the year ended December 31, 2021, a decrease of approximately RMB 2.7 million or 30.1% from approximately RMB 8.8 million for the same period in 2020[57][61] - Administrative expenses were approximately RMB 26.0 million for the year ended December 31, 2021, an increase of approximately RMB 0.3 million or 1.2% from approximately RMB 25.7 million for the same period in 2020[58][62] - The company did not have any bank borrowings as of December 31, 2021, and plans to satisfy liquidity requirements through operating cash flows, bank borrowings, and proceeds from the listing[65][66] Risk Factors and Market Conditions - The Group's reliance on a single regional market in China poses a risk, as any decline in market demand could adversely affect operating performance[113] - The Group's entire production process is currently based in a single facility in China, which could lead to significant operational disruptions if affected by natural disasters[114] - The ITO film industry in China has seen rapid growth, but key production technologies and market share remain dominated by a few players, indicating potential competitive pressures[97] - The Smart PDLC Products market is experiencing increased competition from both established manufacturers and new entrants, leading to price competition and pressure on production costs[104] - The Group's brand and reputation are critical for sales success, and any failure to maintain these could adversely impact financial results and sustainable development[107] Corporate Governance - The Board has complied with GEM Listing Rules, maintaining at least three independent non-executive Directors, representing more than one-third of the Board[133] - The Company has adopted a code of conduct for directors' securities transactions, ensuring compliance with GEM Listing Rules[126] - The Board has received annual confirmations of independence from each independent non-executive Director, affirming their compliance with GEM Listing Rules[136] - The Company has developed and reviewed policies on corporate governance, compliance, and training for Directors and senior management[124] - The Board believes that combining the roles of Chairman and Chief Executive Officer will not impair the balance of power and authority within the Company[142] - The Company has established a structure and procedural rules for Board meetings to address major operational matters effectively[142] - The attendance of executive Directors at Board meetings was 100%, with Mr. Sun Jinli having attended four meetings before his resignation[132] - The Company encourages shareholders to express their views on corporate governance matters directly to the Board[124] Audit and Risk Management - The Audit Committee held five meetings during the year ended December 31, 2021, with three meetings attended by the external auditor to discuss the financial reporting process[157] - The Audit Committee reviewed the accounting principles and practices adopted by the Group and confirmed compliance with applicable accounting principles for the audited consolidated financial statements for the year ended December 31, 2021[159] - The effectiveness of internal controls and risk management was reviewed by the Audit Committee, covering financial, operational, and compliance controls[160] - The Company has established a Remuneration Committee to recommend overall remuneration policy and structure for all Directors and senior management, ensuring no Director determines their own remuneration[164] - The Board is responsible for directing and approving the Group's overall strategies, while management teams handle operational duties[148] - The Board has assessed and reviewed the risk management policies and internal control procedures of the Group, considering them effective and adequate[194] - The external auditor's responsibility is to form an independent opinion on the consolidated financial statements prepared by the Board[190] - The Group has engaged external independent professionals to review its risk management and internal control systems[194] Shareholder Communication and Dividend Policy - The Group did not make any material acquisitions or disposals during the year ended December 31, 2021, and has no plans for significant investments or capital assets[85] - The Directors did not recommend a final dividend for the year, maintaining a dividend payout ratio dependent on actual performance[87] - The Group has not entered into any agreements to hedge against currency risks as of December 31, 2021[91] - The Company maintains a transparent and timely disclosure policy to keep shareholders informed of its business performance and strategies[200] - The Company ensures equal access to information for all shareholders and investors through its communication policies[200]

Financial Performance - Revenue for the nine months ended September 30, 2021, increased to RMB 81,476,000, representing a 11.0% growth compared to RMB 72,953,000 in the same period of 2020[22]. - Gross profit for the nine months ended September 30, 2021, was RMB 17,795,000, a decrease of 4.7% from RMB 18,667,000 in the previous year[22]. - Profit for the period was RMB 2,167,000, down 59.0% from RMB 5,296,000 for the same period in 2020[22]. - Total comprehensive income for the nine months ended September 30, 2021, was RMB 1,635,000, a decline of 59.5% compared to RMB 4,030,000 in 2020[22]. - The company reported a basic and diluted earnings per share of RMB 0.001 for the nine months ended September 30, 2021, down from RMB 0.010 in the same period of 2020[22]. - Other income and gains for the nine months ended September 30, 2021, increased to RMB 12,719,000, compared to RMB 5,742,000 in the previous year[22]. - Selling and distribution expenses decreased to RMB 5,627,000 for the nine months ended September 30, 2021, from RMB 6,900,000 in 2020, reflecting an 18.5% reduction[22]. - The total comprehensive income attributable to equity shareholders of the company was RMB 742,000 for the nine months ended September 30, 2021, compared to RMB 4,190,000 in the same period of 2020[22]. - The profit before tax for the nine months ended September 30, 2021, was impacted by a cost of inventories sold amounting to RMB 63,681,000, an increase from RMB 54,286,000 in the same period of 2020, representing a growth of approximately 17.5%[61]. - Employee benefit expenses for the nine months ended September 30, 2021, totaled RMB 12,394,000, slightly decreased from RMB 12,966,000 in the same period of 2020, indicating a reduction of about 4.4%[61]. - Research costs for the nine months ended September 30, 2021, were RMB 6,876,000, which is comparable to RMB 6,852,000 in the same period of 2020, showing a marginal increase of 0.4%[61]. - The basic earnings per share for the nine months ended September 30, 2021, was RMB 1,274,000, a decrease from RMB 5,456,000 in the same period of 2020, indicating a decline of about 76.7%[64]. - The group recorded foreign exchange gains of RMB 979,000 for the nine months ended September 30, 2021, compared to RMB 1,116,000 in the same period of 2020, representing a decrease of approximately 12.3%[56]. - Current tax expense for the nine months ended September 30, 2021, was RMB 388,000, with no tax expense recorded in the same period of 2020[63]. - Deferred income released to profit or loss for the nine months ended September 30, 2021, was RMB 3,814,000, an increase from RMB 3,095,000 in the same period of 2020, reflecting a growth of approximately 23.2%[56]. Revenue Breakdown - Revenue from contracts with customers for the three months ended September 30, 2021, was RMB 29,304,000, representing an increase of 5.93% compared to RMB 27,658,000 for the same period in 2020[41]. - For the nine months ended September 30, 2021, total revenue from contracts with customers reached RMB 81,476,000, up 11.00% from RMB 72,953,000 in the prior year[41]. - ITO film sales contributed RMB 12,118,000 for the three months ended September 30, 2021, a significant increase of 34.93% from RMB 8,994,000 in the same period of 2020[42]. - Smart Light-adjusting Film revenue decreased to RMB 7,604,000 for the three months ended September 30, 2021, down 30.00% from RMB 10,917,000 in the previous year[42]. - The revenue from Smart Light-adjusting Glass increased to RMB 6,062,000 for the three months ended September 30, 2021, compared to RMB 1,533,000 in the same period of 2020, marking a growth of 295.00%[42]. - Domestic revenue from Mainland China accounted for RMB 27,980,000 for the three months ended September 30, 2021, which is an increase from RMB 27,658,000 in the same period of 2020[45]. - The Group's principal revenue is generated in Mainland China, with total revenue from this region for the nine months ended September 30, 2021, amounting to RMB 75,377,000, up from RMB 70,445,000 in the previous year[45]. - The Group's revenue recognition for goods transferred at a point in time was RMB 29,304,000 for the three months ended September 30, 2021, compared to RMB 27,658,000 in the same period of 2020[48]. - For the three months ended September 30, 2021, revenue from Customer A was RMB 4,418,000, while revenue from Customer B for the same period was RMB 3,385,000[53]. Market and Competition - The Group faced intense competition in a saturated domestic market, impacting gross profit despite sales growth[71]. - The Group is focusing on research and development to maintain competitiveness and diversify its product range in response to market trends[86]. - The Group's key operating subsidiary is ranked as a leading manufacturer of Smart Light-adjusting Products in the PRC by market share[81]. Corporate Governance - The board of directors includes both executive and independent non-executive members, ensuring governance and oversight[14]. - The Company has established an Audit Committee to review financial reporting processes and internal controls, consisting of three independent non-executive Directors[128]. - The Audit Committee reviewed the unaudited condensed consolidated financial statements for the nine months ended September 30, 2021, and confirmed compliance with applicable accounting principles[130]. - The Company has adopted a code of conduct for directors' securities transactions, ensuring compliance with GEM Listing Rules[126]. - The Company recognizes the importance of good corporate governance and has complied with applicable code provisions during the Relevant Period[120]. - The roles of Chairman and Chief Executive Officer were combined under Mr. Zhang Chao, with measures in place to maintain the balance of power and authority within the Company[122]. Share Options and Capital Structure - The total number of Shares available under the Share Option Scheme is capped at 10% of the total issued share capital as of 17 October 2017, which amounts to 480,000,000 Shares[139]. - As of September 30, 2021, a total of 7,790,000 share options remain unexercised, down from 8,590,000 at the beginning of the year, reflecting a forfeiture of 800,000 options during the period[159]. - The exercise price for the share options is set at HK$1.16 per share[159]. - The company’s share options plan allows for the exercise of options even after the plan is terminated, as long as they were granted before termination[155]. - The maximum number of Shares that can be issued to any Eligible Person in any 12-month period shall not exceed 1% of the number of Shares in issue[144]. - The Share Option Scheme will remain in force for ten years from 17 October 2017, expiring on the day before the tenth anniversary unless terminated earlier[151]. Use of Proceeds - Net proceeds from the listing amounted to HK$ 93.5 million, which will be utilized for various business strategies including overseas expansion and R&D[104]. - Actual use of net proceeds includes HK$ 9.8 million for overseas business expansion and HK$ 21.1 million for R&D of new materials and products[110]. - The actual use of proceeds was lower than planned due to delays in automation and installation of production lines, exacerbated by the COVID-19 pandemic[113]. - As of September 30, 2021, approximately HK$77.1 million of the net proceeds from the Share Offer had been utilized, with the unused net proceeds deposited in licensed banks[112]. Employee Information - The total headcount as of September 30, 2021, was 150 full-time employees, with a remuneration package that includes basic salary, allowances, and bonuses[115]. Shareholding Structure - Top Access Management Limited holds 324,324,325 shares, representing approximately 62.37% of the total shareholding[164]. - AMATA Limited and Mr. Luo Jingxi each hold 40,000,000 shares, accounting for 7.69% of the total shareholding[166]. - Kunlun Holdings Group Limited holds 26,021,206 shares, which is 5.00% of the total shareholding[166]. - Water Development (HK) Holdings Co., Limited has a beneficial interest in 1,687,008,585 shares of Shuifa Singyes, representing approximately 66.92% of its issued share capital[166]. - The total number of shares issued as of September 30, 2021, was 520,000,000[171]. - Mr. Liu Hongwei holds 202,038,750 shares of Shuifa Singyes, representing approximately 8.01% of the total registered share capital[175]. - The total interest held by Mr. Liu Hongwei, including beneficial interest, amounts to 203,538,750 shares, or 8.07% of the total[175]. Compliance and Non-competition - Shuifa Singyes has confirmed compliance with the Deed of Non-competition during the nine months ended September 30, 2021[187]. - No business interests that compete with the Group's business were reported by Directors or controlling shareholders during the nine months ended September 30, 2021[188]. - The controlling shareholder, Shui Fa Xing Ye, has confirmed compliance with the non-competition agreement as of September 30, 2021, and up to the report date[189]. - No directors or controlling shareholders have any competing business interests or conflicts of interest with the group as of September 30, 2021[190].

[Corporate Information](index=4&type=section&id=CORPORATE%20INFORMATION) This section outlines the company's core corporate data, including board composition, committees, and key advisors - The report details core corporate information, including the board, committees, and advisors; notably, **Mr. Du Peng and Mr. Nie Yuanzhou were appointed as executive directors on January 25, 2021**, following the resignation of Mr. Sun Jinli and Mr. Tang Liwen[12](index=12&type=chunk) [Corporate Governance](index=7&type=section&id=CORPORATE%20GOVERNANCE) The company details its corporate governance practices, noting compliance with the code despite a deviation in the roles of Chairman and CEO [Corporate Governance Overview](index=7&type=section&id=CORPORATE%20GOVERNANCE%20OVERVIEW) The company reports compliance with the Corporate Governance Code, except for the deviation of combining the Chairman and CEO roles - **Mr. Zhang Chao has served as both Chairman and CEO since January 25, 2021**, a deviation from code provision A.2.1 which requires these roles to be separate[24](index=24&type=chunk)[26](index=26&type=chunk) - The Audit Committee, composed of three independent non-executive directors, has reviewed the unaudited interim financial statements and found them compliant with accounting principles and adequately disclosed[31](index=31&type=chunk)[32](index=32&type=chunk)[33](index=33&type=chunk) - The company and its subsidiaries **did not purchase, sell, or redeem any of the company's listed securities** during the reporting period[30](index=30&type=chunk) [Other Information](index=9&type=section&id=OTHER%20INFORMATION) This section discloses details on the share option scheme, major shareholder interests, director holdings, and non-compete undertakings [Share Option Scheme](index=9&type=section&id=SHARE%20OPTION%20SCHEME) The company details its share option scheme, noting no new grants or exercises during the period, with some options forfeited upon employee departure - The share option scheme, adopted on October 17, 2017 for a 10-year period, aims to incentivize contributions from eligible participants[38](index=38&type=chunk)[39](index=39&type=chunk)[58](index=58&type=chunk) Changes in Share Option Scheme in H1 2021 | Item | Number ('000) | | :--- | :--- | | **Outstanding at January 1, 2021** | **8,590** | | Granted during the period | – | | Exercised during the period | – | | Forfeited during the period | (800) | | Lapsed during the period | – | | **Outstanding at June 30, 2021** | **7,790** | [Interests and Short Positions of Substantial Shareholders](index=14&type=section&id=INTERESTS%20AND%20SHORT%20POSITIONS%20OF%20SUBSTANTIAL%20SHAREHOLDERS) This section discloses substantial shareholders with interests of 5% or more as of June 30, 2021, led by Top Access Management Limited Substantial Shareholders' Holdings (as at June 30, 2021) | Shareholder Name | Number of Shares | Approximate Percentage of Shareholding | | :--- | :--- | :--- | | Top Access Management Limited | 324,324,325 | 62.37% | | China Shuifa Singyes Energy Holdings Limited | 324,324,325 | 62.37% | | Shuifa Group Co, Ltd | 324,324,325 | 62.37% | | AMATA Limited | 40,000,000 | 7.69% | | Kunlun Holding Group Co, Ltd | 26,021,206 | 5.00% | [Directors' and Chief Executive's Interests](index=17&type=section&id=DIRECTORS'%20AND%20CHIEF%20EXECUTIVE'S%20INTERESTS) This section discloses director and chief executive interests in the company and its associated corporations, including a notable holding by a non-executive director - **Non-executive Director Liu Hongwei is deemed interested in 203,538,750 shares (8.07%)** of the intermediate holding company, Shuifa Singyes (HKEX: 750)[82](index=82&type=chunk)[88](index=88&type=chunk) [Interest in Competing Businesses](index=19&type=section&id=INTEREST%20IN%20COMPETING%20BUSINESSES) The company confirms its controlling shareholder has complied with the non-compete undertaking and no directors engaged in competing businesses - The controlling shareholder, Shuifa Singyes, confirmed its compliance with the non-compete undertaking dated June 23, 2017, for the reporting period[92](index=92&type=chunk)[93](index=93&type=chunk) [Management Discussion and Analysis](index=20&type=section&id=MANAGEMENT%20DISCUSSION%20AND%20ANALYSIS) This section provides a comprehensive review of the Group's business performance, financial results, and future outlook [Business Review](index=20&type=section&id=BUSINESS%20REVIEW) The Group's sales grew in H1 2021, but intense price competition eroded gross profit, leading to a significant drop in net profit Revenue Performance by Product Line in H1 2021 (RMB million) | Product Line | H1 2021 Revenue | H1 2020 Revenue | YoY Change | | :--- | :--- | :--- | :--- | | ITO conductive film | 25.1 | 21.5 | +16.4% | | Smart dimming film | 13.0 | 14.2 | -8.5% | | Smart dimming glass | 4.3 | 5.0 | -13.9% | | LED glass | 6.7 | 0 | N/A | | Subway media display | 2.9 | 3.1 | -7.4% | - Despite a **15.2% YoY revenue increase**, profit attributable to company owners **plunged 83.1%** to RMB 0.4 million from RMB 2.5 million in the prior period[111](index=111&type=chunk) - The profit decline was primarily driven by a swing in financial asset impairment, from a **RMB 5.6 million reversal in H1 2020 to a RMB 2.8 million loss in H1 2021**[111](index=111&type=chunk) [Outlook and Prospects](index=22&type=section&id=OUTLOOK%20AND%20PROSPECTS) Management anticipates continued market competition, focusing on product diversification while maintaining a cautious approach to expansion and R&D - The Group's strategy to counter market challenges is to enrich and diversify its product portfolio[112](index=112&type=chunk)[115](index=115&type=chunk) - The Group will maintain a prudent and stable strategy, remaining cautious about production line expansion and new R&D projects[113](index=113&type=chunk) [Financial Review](index=23&type=section&id=FINANCIAL%20REVIEW) Revenue grew 15.2% to RMB 52.2 million, but gross margin fell to 20.1% due to price competition, while the gearing ratio remained stable Key Financial Indicators for H1 2021 | Indicator | H1 2021 | H1 2020 | Change | | :--- | :--- | :--- | :--- | | Revenue | RMB 52.2 million | RMB 45.3 million | +15.2% | | Gross Profit | RMB 10.5 million | RMB 11.7 million | -10.5% | | Gross Margin | 20.1% | 25.8% | -5.7pp | | Administrative Expenses | RMB 10.3 million | RMB 12.2 million | -15.8% | - As of June 30, 2021, the Group had **no bank borrowings** and maintained a stable gearing ratio of **32.5%**[127](index=127&type=chunk)[134](index=134&type=chunk) - The company faces a customer lawsuit over product quality, resulting in a **RMB 10 million freeze on bank cash**, though management has not made a provision, citing a strong defense[136](index=136&type=chunk)[140](index=140&type=chunk) - Of the HK$93.5 million net proceeds from the 2017 listing, **HK$77.1 million had been utilized** by June 30, 2021, with some production line plans delayed[155](index=155&type=chunk)[156](index=156&type=chunk) [Review Report](index=29&type=section&id=REVIEW%20REPORT) This section contains the independent auditor's review report on the interim financial information [Auditor's Review Report](index=29&type=section&id=AUDITOR'S%20REVIEW%20REPORT) Independent auditor KPMG issued a standard review conclusion, stating no issues were found to suggest the interim financials were not prepared in accordance with IAS 34 - The auditor, KPMG, conducted its review in accordance with Hong Kong Standard on Review Engagements 2410[169](index=169&type=chunk) - The review conclusion provides a standard negative assurance, indicating no matters were found suggesting non-compliance in the preparation of the financial report[170](index=170&type=chunk) [Interim Condensed Financial Report](index=31&type=section&id=INTERIM%20CONDENSED%20FINANCIAL%20REPORT) This section presents the unaudited interim condensed consolidated financial statements, including the income statement, balance sheet, cash flow statement, and related notes [Condensed Consolidated Statement of Profit or Loss and Other Comprehensive Income](index=31&type=section&id=Condensed%20consolidated%20statement%20of%20profit%20or%20loss%20and%20other%20comprehensive%20income) Revenue for H1 2021 grew 15.2% to RMB 52.2 million, but profit attributable to equity holders fell 83.1% to RMB 0.4 million due to lower gross profit and other factors Summary of Income Statement for H1 2021 (RMB '000) | Item | H1 2021 | H1 2020 | | :--- | :--- | :--- | | Revenue | 52,172 | 45,295 | | Gross Profit | 10,470 | 11,701 | | Profit before tax | 1,263 | 2,514 | | Profit for the period | 1,097 | 2,411 | | Profit attributable to equity holders of the Company | 422 | 2,497 | | Basic earnings per share (RMB) | 0.001 | 0.005 | [Condensed Consolidated Statement of Financial Position](index=33&type=section&id=Condensed%20consolidated%20statement%20of%20financial%20position) As of June 30, 2021, the company's net assets remained stable at RMB 241.5 million, with net current assets of RMB 152.7 million indicating healthy short-term liquidity Summary of Statement of Financial Position (RMB '000) | Item | June 30, 2021 | December 31, 2020 | | :--- | :--- | :--- | | Non-current assets | 103,435 | 96,357 | | Current assets | 216,479 | 219,700 | | Current liabilities | 63,782 | 65,448 | | Non-current liabilities | 14,647 | 9,157 | | **Net Assets** | **241,485** | **241,452** | [Condensed Consolidated Statement of Cash Flows](index=36&type=section&id=Condensed%20consolidated%20statement%20of%20cash%20flows) Operating activities generated a net cash inflow of RMB 4.4 million in H1 2021, a significant improvement, though overall cash decreased due to investment and financing outflows Summary of Cash Flow Statement for H1 2021 (RMB '000) | Item | H1 2021 | H1 2020 | | :--- | :--- | :--- | | Net cash from/(used in) operating activities | 4,432 | (12,040) | | Net cash (used in)/from investing activities | (2,462) | 3,220 | | Net cash (used in)/from financing activities | (3,066) | 1,285 | | **Net decrease in cash and cash equivalents** | **(1,096)** | **(7,535)** | | Cash and cash equivalents at end of period | 7,191 | 19,429 | [Notes to Unaudited Interim Condensed Financial Report](index=38&type=section&id=Notes%20to%20unaudited%20interim%20condensed%20financial%20report) The notes provide supplementary details, highlighting revenue concentration in mainland China, aging trade receivables, and the acquisition of a subsidiary - Revenue is predominantly generated from Mainland China, accounting for **approximately 90.8%** of the total[214](index=214&type=chunk) - Net trade and bills receivables stood at RMB 149 million, with **approximately 89% (RMB 133 million) aged over 6 months**, indicating elevated credit risk; an impairment loss of RMB 2.8 million was recognized[254](index=254&type=chunk)[259](index=259&type=chunk) - The Group acquired a 60% stake in Sishui Yixin Renewable Resources for zero consideration on February 8, 2021, recognizing **goodwill of approximately RMB 0.7 million** due to the target's net liabilities[321](index=321&type=chunk)[323](index=323&type=chunk)

2021 CHARACTERISTICS OF GEM OF THE STOCK EXCHANGE OF HONG KONG LIMITED (THE "STOCK EXCHANGE") GEM has been positioned as a market designed to accommodate small and mid-sized companies to which a higher investment risk may be attached than other companies listed on the Stock Exchange. Prospective investors should be aware of the potential risks of investing in such companies and should make the decision to invest only after due and careful consideration. Given that the companies listed on GEM are generally s ...

(Incorporated in the Bermuda with limited liability) （於百慕達註冊成立的有限公司） Annual Report 年度報告 2020 CHARACTERISTICS OF GEM OF THE STOCK EXCHANGE OF HONG KONG LIMITED (THE "STOCK EXCHANGE") GEM has been positioned as a market designed to accommodate small and mid-sized companies to which a higher investment risk may be attached than other companies listed on the Stock Exchange. Prospective investors should be aware of the potential risks of investing in such companies and should make the decision to invest only aft ...

Financial Performance - China Singyes New Materials Holdings Limited reported a revenue of HKD 150 million for Q3 2020, representing a 10% increase compared to the same period last year[12]. - The company achieved a gross profit margin of 25% in Q3 2020, up from 22% in Q3 2019, indicating improved operational efficiency[12]. - The company reported a net profit of HKD 20 million for Q3 2020, a significant increase from HKD 10 million in Q3 2019, reflecting strong financial performance[12]. - Revenue for the nine months ended September 30, 2020, was RMB 72,953,000, a decrease of 31.6% compared to RMB 106,661,000 for the same period in 2019[20]. - Gross profit for the nine months ended September 30, 2020, was RMB 18,667,000, down 54.5% from RMB 41,096,000 in the previous year[20]. - Profit for the period was RMB 5,296,000, representing a decline of 49.8% compared to RMB 10,549,000 for the same period in 2019[20]. - Total comprehensive income for the nine months ended September 30, 2020, was RMB 4,030,000, down 66.9% from RMB 12,230,000 in 2019[20]. - Basic and diluted earnings per share for the nine months ended September 30, 2020, were RMB 0.010, a decrease of 50% from RMB 0.020 in the same period of 2019[20]. Revenue Breakdown - For the three months ended September 30, 2020, the revenue from contracts with customers was RMB 27,658,000, a decrease of 35.3% compared to RMB 42,691,000 for the same period in 2019[37]. - Sales of ITO film for the three months ended September 30, 2020, were RMB 8,994,000, a decline of 16.8% from RMB 10,813,000 in 2019[41]. - Sales of smart light-adjusting film for the nine months ended September 30, 2020, were RMB 25,145,000, down 33.1% from RMB 37,573,000 in the same period in 2019[41]. - Revenue from ITO film sales for the nine months ended 30 September 2020 was RMB 30,532,000, a decrease of RMB 7,288,000 or 19.3% compared to RMB 37,820,000 for the same period in 2019[78]. - Revenue from Smart Light-adjusting Film sales for the nine months ended 30 September 2020 was RMB 25,145,000, a decrease of RMB 12,428,000 or 33.1% from RMB 37,573,000 for the same period in 2019[83]. - Revenue from Smart Light-adjusting Glass sales for the nine months ended 30 September 2020 was RMB 6,510,000, a decrease of RMB 2,845,000 or 30.4% from RMB 9,355,000 for the same period in 2019[84]. - Revenue from Smart Light-adjusting Projection System sales for the nine months ended 30 September 2020 was RMB 129,000, compared to RMB 140,000 for the same period in 2019[85]. - Revenue from other products for the nine months ended September 30, 2020, was RMB 10,637,000, a decrease of RMB 2,442,000 or 18.7% from RMB 13,079,000 for the same period in 2019[90]. Cost Management - Operational costs have been reduced by 5% due to improved supply chain management and cost control measures implemented in Q3 2020[12]. - Selling and distribution expenses decreased to RMB 6,900,000 for the nine months ended September 30, 2020, down 6.6% from RMB 7,391,000 in the previous year[20]. - Administrative expenses remained stable at RMB 17,602,000 for the nine months ended September 30, 2020, compared to RMB 17,490,000 in 2019[20]. - The Group's profit before tax for the three months ended September 30, 2020, was impacted by a cost of inventories sold amounting to RMB 20,692,000, compared to RMB 18,749,000 in 2019[63]. - The Group's employee benefit expense for the three months ended September 30, 2020, was RMB 4,289,000, compared to RMB 4,395,000 in 2019[63]. Future Outlook - Future guidance indicates an expected revenue growth of 15% for the next quarter, driven by increased demand in the renewable energy sector[12]. - The company has set a target to expand its market presence in Southeast Asia, aiming for a 20% market share by 2023[12]. - The company plans to invest HKD 30 million in R&D for new materials technology in the upcoming fiscal year[12]. - The Group is cautiously expanding production lines and conducting R&D projects to meet expected future demand as the industry recovers from the COVID-19 crisis[92]. Shareholder Information - As of September 30, 2020, Top Access Management Limited holds 324,324,325 shares, representing approximately 62.37% of the shareholding[164]. - Water Development (HK) Holdings Co., Limited is the legal and beneficial owner of 1,687,008,585 shares of Shuifa Singyes, accounting for approximately 66.92% of its issued share capital[168]. - AMATA Limited holds 40,000,000 shares, which is about 7.69% of the total shareholding[164]. - Kunlun Holdings Group Limited owns 26,021,206 shares, representing 5.00% of the total[164]. - The percentage of shareholding is calculated based on 520,000,000 shares in issue as of 30 September 2020[168]. Corporate Governance - The Audit Committee was established on July 21, 2017, in compliance with GEM Listing Rules, with primary duties including reviewing financial reporting processes and internal controls[135]. - The Audit Committee consists of three independent non-executive Directors, with Ms. Pan Jianli serving as the chairperson[136]. - The Audit Committee reviewed the accounting principles and practices for the nine months ended September 30, 2020, and confirmed compliance with applicable accounting principles[137]. Events and Changes - The company did not recommend the payment of a dividend for the nine months ended September 30, 2020[121]. - There were no significant events after the end of the reporting period[71]. - The company has not redeemed or purchased any of its listed securities during the relevant period[129].

CORPORATE INFORMATION [Board and Management](index=4&type=section&id=Board%20and%20Management) The report lists the company's board members, committee members (Audit, Remuneration, Nomination), and key management personnel, with Mr. Liu Hongwei serving as Non-executive Director and Chairman - The company's board of directors comprises three executive directors, one non-executive director, and three independent non-executive directors, with **Mr. Liu Hongwei** serving as the Non-executive Director and Chairman[12](index=12&type=chunk)[13](index=13&type=chunk) - The company has established an Audit Committee, Remuneration Committee, and Nomination Committee, all with independent non-executive director participation, chaired by **Ms. Pan Jianli**, **Mr. Pan Jianguo**, and **Mr. Liu Hongwei**, respectively[12](index=12&type=chunk)[13](index=13&type=chunk) [Corporate Structure and Advisors](index=5&type=section&id=Corporate%20Structure%20and%20Advisors) The report details the company's legal advisors, auditor (Ernst & Young), principal bankers, registered office, and principal place of business, noting its GEM listing with stock code 8073 - The company's auditor is **Ernst & Young**[15](index=15&type=chunk) - The company is listed on the GEM of The Stock Exchange of Hong Kong Limited, with stock code **8073**[18](index=18&type=chunk) CORPORATE GOVERNANCE [Governance Compliance](index=7&type=section&id=Governance%20Compliance) The company confirms compliance with GEM Listing Rules' Corporate Governance Code during the reporting period, with all directors adhering to the securities dealing code and no listed securities transactions - The company believes it has applied and complied with all applicable code provisions of Appendix 15 to the GEM Listing Rules, the Corporate Governance Code, for the six months ended June 30, 2020[20](index=20&type=chunk)[23](index=23&type=chunk) - During the reporting period, neither the company nor any of its subsidiaries purchased, sold, or redeemed any of the company's listed securities[22](index=22&type=chunk)[25](index=25&type=chunk) [Audit Committee](index=8&type=section&id=Audit%20Committee) The Audit Committee, comprising three independent non-executive directors, oversees financial reporting and internal controls, having reviewed and approved the interim condensed consolidated financial statements for the six months ended June 30, 2020 - The Audit Committee comprises three independent non-executive directors: **Ms. Pan Jianli** (Chairperson), **Mr. Pan Jianguo**, and **Dr. Li Ling**[29](index=29&type=chunk)[31](index=31&type=chunk) - The Audit Committee has reviewed the interim financial report and believes it has been prepared in accordance with applicable accounting principles and practices and has made adequate disclosures[30](index=30&type=chunk)[31](index=31&type=chunk) OTHER INFORMATION [Share Option Scheme](index=9&type=section&id=Share%20Option%20Scheme) The company's 2017 share option scheme has granted 9.44 million options, representing 1.815% of issued shares, with 5.56 million forfeited and 0.7 million lapsed in H1 2020 due to resignations - As of the reporting date, **9.44 million** share options have been granted under the Share Option Scheme, representing **1.815%** of the company's issued shares[39](index=39&type=chunk)[42](index=42&type=chunk) - For the period ended June 30, 2020, a total of **5.56 million** share options were forfeited due to the resignation of grantees, and **0.7 million** share options were lapsed by one grantee[39](index=39&type=chunk)[42](index=42&type=chunk) [Substantial Shareholders' Interests](index=12&type=section&id=Substantial%20Shareholders'%20Interests) As of June 30, 2020, Top Access Management Limited holds 62.37% of the company, wholly owned by Shuifa Singyes and ultimately controlled by Shuifa Group, with other major shareholders including AMATA Limited (7.69%) and Kunlun Holdings Group Co., Ltd. (5.00%) Substantial Shareholders' Interests as of June 30, 2020 | Shareholder Name | Number of Shares Held | Approximate Shareholding Percentage | | :--- | :--- | :--- | | Top Access Management Limited | 324,324,325 | 62.37% | | China Shuifa Singyes Energy Group Co., Ltd. | 324,324,325 | 62.37% | | AMATA Limited | 40,000,000 | 7.69% | | Kunlun Holdings Group Co., Ltd. | 26,021,206 | 5.00% | - The entire issued share capital of Top Access is legally and beneficially owned by Shuifa Singyes, approximately **66.92%** equity interest of which is held by Shuifa Group (Hong Kong), which is ultimately wholly owned by Shuifa Group, thus Shuifa Group is deemed the ultimate controlling shareholder of the company[63](index=63&type=chunk) [Directors' and Chief Executive's Interests](index=15&type=section&id=Directors'%20and%20Chief%20Executive's%20Interests) As of June 30, 2020, Mr. Liu Hongwei, Non-executive Director and Chairman, is deemed to have an 8.08% interest in Shuifa Singyes, an associate of the company, through his controlled entity Strong Eagle Holdings Ltd - Mr. Liu Hongwei, Non-executive Director and Chairman, through holding **53%** of the equity interest in Strong Eagle Holdings Ltd., is deemed to have an interest in **203.80 million shares** of Shuifa Singyes, representing **8.08%** of Shuifa Singyes' issued share capital[68](index=68&type=chunk)[73](index=73&type=chunk) [Competing Businesses](index=17&type=section&id=Competing%20Businesses) The controlling shareholder, Shuifa Singyes, has confirmed compliance with its non-competition undertaking during the reporting period, with no competing businesses or conflicts of interest identified for directors, controlling shareholders, or their associates - The controlling shareholder, Shuifa Singyes, has confirmed its compliance with the undertakings in the non-competition deed for the six months ended June 30, 2020[75](index=75&type=chunk)[77](index=77&type=chunk) - During the reporting period, none of the company's directors, controlling shareholders, or their respective close associates held any business or interest that competes or may compete with the Group's business[76](index=76&type=chunk)[78](index=78&type=chunk) MANAGEMENT DISCUSSION AND ANALYSIS [Business Review](index=18&type=section&id=Business%20Review) The Group primarily develops, produces, and sells ITO conductive films and smart dimming products, experiencing decreased sales and revenue across all product lines in H1 2020 due to COVID-19 related delays in customer resumption of work - Due to the impact of the COVID-19 pandemic, many customers delayed resuming work, leading to delayed delivery of some sales orders and a year-on-year decrease in sales volume in H1 2020[81](index=81&type=chunk)[83](index=83&type=chunk) H1 2020 Product Revenue | Product | H1 2020 Revenue (RMB) | H1 2019 Revenue (RMB) | YoY Change | | :--- | :--- | :--- | :--- | | ITO Conductive Film | 21,538,000 | 27,007,000 | -20.3% | | Smart Dimming Film | 14,228,000 | 24,808,000 | -42.6% | | Smart Dimming Glass | 4,977,000 | 6,386,000 | -22.1% | | Smart Dimming Projection System | 42,000 | 140,000 | -70.0% | | Others | 4,510,000 | 5,629,000 | -19.9% | [Outlook and Prospects](index=20&type=section&id=Outlook%20and%20Prospects) Despite Q1 impacts, sales have gradually recovered since Q2 as the pandemic is controlled in China, with management cautiously optimistic about industry recovery and committed to R&D and prudent capacity expansion - The company believes that market participants in the technology industry must invest significant resources in research and development to maintain competitiveness[96](index=96&type=chunk)[99](index=99&type=chunk) - Since the second quarter of 2020, as the COVID-19 pandemic has been brought under control in China, the company's business has gradually recovered, and cash flow remains stable[97](index=97&type=chunk)[99](index=99&type=chunk) [Financial Review](index=21&type=section&id=Financial%20Review) In H1 2020, revenue decreased by 29.2% to RMB 45.3 million, gross profit fell by 50.5% to RMB 11.7 million with margin declining to 25.8% due to product mix and fixed costs, and administrative expenses rose by 19.4% from increased depreciation and R&D Key Financial Indicators | Financial Metric (RMB thousand) | H1 2020 | H1 2019 | YoY Change | | :--- | :--- | :--- | :--- | | Revenue | 45,295 | 63,970 | -29.2% | | Cost of Sales | 33,594 | 40,321 | -16.7% | | Gross Profit | 11,701 | 23,649 | -50.5% | | Administrative Expenses | 12,249 | 10,260 | +19.4% | - Gross profit margin decreased from **37.0%** in the same period last year to **25.8%**, primarily due to: 1) an increased proportion of lower-margin ITO film sales; and 2) higher unit fixed costs resulting from reduced production volume in Q1[104](index=104&type=chunk)[106](index=106&type=chunk) - Administrative expenses increased by **19.4%**, mainly due to increased depreciation from the acquisition of production machinery and higher research costs for developing new "smart color-changing glass" materials[110](index=110&type=chunk)[114](index=114&type=chunk) [Liquidity and Capital Resources](index=22&type=section&id=Liquidity%20and%20Capital%20Resources) As of June 30, 2020, the Group had no bank borrowings, a stable gearing ratio of 24.5%, and capital expenditure of RMB 17.83 million for ITO conductive film capacity expansion, with RMB 10 million in bank cash frozen due to a product quality dispute - As of June 30, 2020, the Group had **no bank borrowings**[112](index=112&type=chunk)[115](index=115&type=chunk) Liquidity and Capital Resources Metrics | Metric | June 30, 2020 | December 31, 2019 | | :--- | :--- | :--- | | Gearing Ratio | 24.5% | 27.7% | | Capital Commitments | 6,200,000 RMB | 13,620,000 RMB | - Capital expenditure for the first half of the year amounted to **RMB 17.83 million**, primarily for purchasing production machinery and equipment to expand ITO conductive film production capacity[117](index=117&type=chunk)[121](index=121&type=chunk) - Due to a product quality dispute lawsuit, **RMB 10 million** of the company's bank cash was frozen by the court, but management, based on legal counsel's advice, believes it has strong defenses and has not made any loss provision for this[120](index=120&type=chunk)[124](index=124&type=chunk) [Use of Proceeds](index=24&type=section&id=Use%20of%20Proceeds) Of the HKD 93.5 million net proceeds from the 2017 listing, approximately HKD 63.4 million has been used as of June 30, 2020, with slower-than-planned utilization due to delays in production line automation and installation - As of June 30, 2020, approximately **HKD 63.4 million** of the net proceeds of **HKD 93.5 million** from the listing has been utilized[139](index=139&type=chunk) - The actual use of proceeds was lower than planned, mainly due to delays in the automation and installation of production lines, as finding suitable equipment manufacturers took longer than expected[140](index=140&type=chunk)[143](index=143&type=chunk) [Dividends and Employees](index=26&type=section&id=Dividends%20and%20Employees) The Board does not recommend an interim dividend for 2020, and as of June 30, 2020, the Group employed 129 full-time staff - The Board does not recommend the payment of an interim dividend for the six months ended June 30, 2020[141](index=141&type=chunk)[144](index=144&type=chunk) - As of June 30, 2020, the Group had a total of **129** full-time employees[142](index=142&type=chunk)[145](index=145&type=chunk) INDEPENDENT REVIEW REPORT [Auditor's Conclusion](index=27&type=section&id=Auditor's%20Conclusion) Ernst & Young's independent review found no material non-compliance with IAS 34 in the interim financial information, while noting that the comparative financial statements for H1 2019 were not reviewed - The auditor Ernst & Young's conclusion is that nothing has come to their attention that causes them to believe the interim financial information is not prepared, in all material respects, in accordance with International Accounting Standard 34 "Interim Financial Reporting"[154](index=154&type=chunk)[157](index=157&type=chunk) - The auditor specifically noted that the comparative condensed consolidated financial statements for the six months ended June 30, 2019, were not reviewed[155](index=155&type=chunk)[158](index=158&type=chunk) INTERIM CONDENSED FINANCIAL INFORMATION [Consolidated statement of profit or loss and other comprehensive income](index=29&type=section&id=Consolidated%20statement%20of%20profit%20or%20loss%20and%20other%20comprehensive%20income) For H1 2020, the Group reported RMB 45.3 million in revenue, a 29.2% decrease, with profit for the period significantly down by 63.9% to RMB 2.41 million, and basic earnings per share at RMB 0.005 Consolidated Statement of Profit or Loss and Other Comprehensive Income | Metric (RMB thousand) | H1 2020 (Unaudited) | H1 2019 (Unaudited) | | :--- | :--- | :--- | | REVENUE | 45,295 | 63,970 | | Gross profit | 11,701 | 23,649 | | PROFIT BEFORE TAX | 2,514 | 8,032 | | PROFIT FOR THE PERIOD | 2,411 | 6,695 | | Profit attributable to owners of the company | 2,497 | 6,259 | | Basic EPS (RMB) | 0.005 | 0.012 | [Consolidated statement of financial position](index=31&type=section&id=Consolidated%20statement%20of%20financial%20position) As of June 30, 2020, total assets were RMB 309 million, total liabilities RMB 60.73 million, and net assets RMB 248 million, a slight decrease from year-end 2019, with stable net current assets of RMB 158 million Consolidated Statement of Financial Position | Metric (RMB thousand) | June 30, 2020 (Unaudited) | December 31, 2019 | | :--- | :--- | :--- | | Total non-current assets | 100,831 | 105,000 | | Total current assets | 208,097 | 214,100 | | **Total assets** | **308,928** | **319,100** | | Total current liabilities | 50,566 | 55,644 | | Total non-current liabilities | 10,165 | 13,525 | | **Total liabilities** | **60,731** | **69,169** | | **Net assets** | **248,197** | **249,931** | | **Total equity** | **248,197** | **249,931** | [Consolidated statement of cash flows](index=34&type=section&id=Consolidated%20statement%20of%20cash%20flows) H1 2020 saw a net cash outflow from operating activities of RMB 12.04 million, contrasting with a net inflow last year, primarily due to inventory increase and trade payables decrease, with net cash inflows from investing and financing activities Consolidated Statement of Cash Flows | Metric (RMB thousand) | H1 2020 (Unaudited) | H1 2019 (Unaudited) | | :--- | :--- | :--- | | Net cash flows from/(used in) operating activities | (12,040) | 10,530 | | Net cash flows from/(used in) investing activities | 3,220 | (30,855) | | Net cash flows from/(used in) financing activities | 1,285 | (3,580) | | **Net decrease in cash and cash equivalents** | **(7,535)** | **(23,905)** | | Cash and cash equivalents at end of period | 19,429 | 44,386 | [Notes to interim condensed financial information](index=36&type=section&id=Notes%20to%20interim%20condensed%20financial%20information) Financial notes detail accounting policies, segment information, revenue, related party transactions, and contingent liabilities, including RMB 10 million in frozen bank deposits due to a product quality dispute, and disclose the 2019 final dividend and various related party transactions - The Group's business is considered a single reportable segment, primarily generating revenue in Mainland China, which contributed **RMB 42.79 million** in revenue in H1 2020, accounting for **94.5%** of total revenue[192](index=192&type=chunk)[194](index=194&type=chunk) - As of June 30, 2020, total trade and bills receivables amounted to **RMB 134 million**, of which **RMB 96.07 million** was overdue for more than three months[233](index=233&type=chunk)[238](index=238&type=chunk) - The company declared a final dividend of **HKD 1.0 cent per share** for the year ended December 31, 2019, totaling approximately **RMB 4.76 million**, which was paid in July 2020[214](index=214&type=chunk)[216](index=216&type=chunk) - The notes disclose various related party transactions with the parent company, intermediate holding company, and fellow subsidiaries, including leases, catering services, goods sales, and fund transfers[283](index=283&type=chunk)[290](index=290&type=chunk)

(Incorporated in the Bermuda with limited liability) (於百慕達註冊成立的有限公司) 2020 第一季度業績報告 FIRST QUARTERLY REPORT CHARACTERISTICS OF GEM OF THE STOCK EXCHANGE OF HONG KONG LIMITED (THE "STOCK EXCHANGE") GEM has been positioned as a market designed to accommodate small and mid-sized companies to which a higher investment risk may be attached than other companies listed on the Stock Exchange. Prospective investors should be aware of the potential risks of investing in such companies and should make the decision to in ...

[CHAIRMAN'S STATEMENT](index=7&type=section&id=CHAIRMAN%27S%20STATEMENT) [Performance Overview and Business Development](index=7&type=section&id=CHAIRMAN%27S%20STATEMENT) In 2019, the Group achieved 14.5% revenue growth and RMB 18.2 million profit attributable to shareholders, driven by a 174.5% increase in ITO conductive film sales and enhanced market share for smart dimming products Key Financial Indicators for 2019 | Metric | Amount | | :--- | :--- | | **Revenue** | RMB 148 million | | Year-on-year Growth | 14.5% | | **Profit Attributable to Shareholders** | RMB 18.2 million | | **Proposed Final Dividend** | HK 1.0 cent per share | - ITO conductive film sales revenue reached **RMB 51.9 million**, representing a **174.5% year-on-year increase**, primarily due to the acquisition of Huabei Co., Ltd. in December 2018[24](index=24&type=chunk)[28](index=28&type=chunk) - Combined revenue from smart dimming film and smart dimming glass businesses totaled **RMB 67 million**, with increasing brand recognition and market share[25](index=25&type=chunk)[28](index=28&type=chunk) [Technology Development and Future Plans](index=8&type=section&id=TECHNOLOGY%20DEVELOPMENT) The Group maintains technology-driven innovation, achieving **40% market share** in China's smart dimming film market in 2019, and plans to expand market share through M&A while strengthening R&D in functional film materials - In 2019, the Group's market share for smart dimming film in mainland China reached **40%**[30](index=30&type=chunk)[32](index=32&type=chunk) - The smart color-changing glass R&D project was selected as a Zhuhai City innovation project, receiving **RMB 12 million** in government grants[30](index=30&type=chunk)[32](index=32&type=chunk) - Future plans include building a manufacturing industry cluster centered on conductive films and smart dimming products through mergers and acquisitions[31](index=31&type=chunk)[33](index=33&type=chunk) [MANAGEMENT DISCUSSION AND ANALYSIS](index=8&type=section&id=MANAGEMENT%20DISCUSSION%20AND%20ANALYSIS) [Business Review](index=8&type=section&id=BUSINESS%20REVIEW) In 2019, the Group's business segments showed mixed performance, with ITO conductive film revenue surging **174.5%** due to an acquisition, while smart dimming projection systems declined **87.7%**, leading to a **7.9%** decrease in profit attributable to owners due to increased impairment losses on trade receivables 2019 Revenue Performance by Business Segment | Business Segment | 2019 Revenue (RMB) | 2018 Revenue (RMB) | Year-on-year Change | | :--- | :--- | :--- | :--- | | ITO Conductive Film | 51,948,000 | 18,923,000 | +174.5% | | Smart Dimming Film | 49,231,000 | 47,700,000 | +3.2% | | Smart Dimming Glass | 17,762,000 | 17,010,000 | +4.4% | | Smart Dimming Projection System | 3,237,000 | 26,405,000 | -87.7% | | Other Goods and Services | 25,856,000 | 19,254,000 | +34.3% | - Profit attributable to owners slightly decreased by **7.9%** from **RMB 19.79 million** in 2018 to **RMB 18.22 million** in 2019, primarily due to increased impairment losses on trade receivables[44](index=44&type=chunk)[46](index=46&type=chunk) [Outlook and Prospects](index=10&type=section&id=OUTLOOK%20AND%20PROSPECTS) The Group plans to focus on film products and expand into overseas markets, with the COVID-19 pandemic causing only a one-week production delay and limited impact on operations and financials by the report date - Future strategy will shift focus to film products, with plans to expand business into overseas markets[48](index=48&type=chunk)[51](index=51&type=chunk) - COVID-19 pandemic caused a one-week production delay until February 9, 2020, but production has since returned to normal levels with over **95%** of employees back to work, indicating limited impact[55](index=55&type=chunk)[58](index=58&type=chunk) [Financial Review](index=11&type=section&id=FINANCIAL%20REVIEW) In 2019, total revenue grew **14.5%** to **RMB 148 million**, primarily from ITO conductive film sales, though gross margin decreased to **39.8%**; the Group maintained a stable **27.7%** gearing ratio with no bank borrowings 2019 Financial Performance Summary | Metric | 2019 (RMB) | 2018 (RMB) | Year-on-year Change | | :--- | :--- | :--- | :--- | | **Revenue** | 148,034,000 | 129,292,000 | +14.5% | | **Cost of Sales** | 89,052,000 | 70,089,000 | +27.1% | | **Gross Profit** | 58,982,000 | 59,203,000 | -0.4% | | **Gross Margin** | 39.8% | 45.8% | -6.0pp | | **Administrative Expenses** | 22,686,000 | 20,740,000 | +9.4% | Analysis of Use of Listing Proceeds (as of 2019/12/31) | Business Strategy | Planned Use (HKD million) | Actual Use (HKD million) | Balance (HKD million) | | :--- | :--- | :--- | :--- | | Overseas Business Expansion | 9.8 | 4.2 | 5.6 | | New Materials and Product R&D | 21.1 | 11.5 | 9.6 | | Purchase of Machinery and Equipment | 6.8 | 6.8 | — | | Enhancement of Wide ITO Conductive Film | 4.3 | 4.3 | — | | Working Capital | 7.3 | 7.3 | — | | China Sales and Marketing | 8.7 | 4.7 | 4.0 | | Smart Dimming Product Fully Automatic Production Line | 12.0 | 12.0 | — | | Laser Home Theater System | 3.0 | 0.8 | 2.2 | | Smart Dimming Product Ultra-wide Production Line | 11.5 | — | 11.5 | | Glass Processing Fully Automatic Production Line | — | 9.0 | 9.0 | - As of December 31, 2019, the Group had **no bank borrowings**, with a stable gearing ratio of **27.7%** compared to **26.1%** in 2018[72](index=72&type=chunk)[83](index=83&type=chunk) - The Group faces a product quality dispute lawsuit, resulting in **RMB 12.52 million** in bank cash being frozen by the court; however, directors believe they have strong defenses and have not recognized related losses[91](index=91&type=chunk)[95](index=95&type=chunk) [Possible Risks and Uncertainties](index=18&type=section&id=POSSIBLE%20RISKS%20AND%20UNCERTAINTIES%20FACING%20THE%20COMPANY) The Group faces significant business and financial risks, including intense competition in ITO conductive film and smart dimming product markets, intellectual property protection challenges, and reliance on a single production base in China - The ITO conductive film market is highly competitive with numerous participants and potential consolidation, while the smart dimming product market faces price pressure from large manufacturers and new entrants[111](index=111&type=chunk)[112](index=112&type=chunk)[115](index=115&type=chunk) - Protecting self-developed technology and proprietary knowledge is crucial for competitiveness, with increased intellectual property infringement claims risk as the Group expands into overseas markets[119](index=119&type=chunk)[120](index=120&type=chunk)[121](index=121&type=chunk) - All production activities are conducted at a single facility leased from the controlling shareholder, making the Group vulnerable to significant business disruption and profitability impact from any natural disaster or accident[125](index=125&type=chunk)[127](index=127&type=chunk) [CORPORATE GOVERNANCE REPORT](index=21&type=section&id=CORPORATE%20GOVERNANCE%20REPORT) [Board and Committees](index=22&type=section&id=Board%20and%20Committees) The company complied with corporate governance codes, with a board comprising executive, non-executive, and independent non-executive directors, and distinct roles for Chairman and CEO, supported by audit, remuneration, and nomination committees to ensure oversight - The company has applied and complied with all applicable code provisions of the Corporate Governance Code in Appendix 15 of the GEM Listing Rules[131](index=131&type=chunk) - The roles of Chairman (Mr. Liu Hongwei) and Chief Executive Officer (Mr. Sun Jinli) are held by different individuals, ensuring clear segregation of duties[148](index=148&type=chunk)[151](index=151&type=chunk) - The company has established Audit, Remuneration, and Nomination Committees, whose composition and responsibilities comply with Listing Rules, and all committees held meetings in 2019 to fulfill their duties[162](index=162&type=chunk)[174](index=174&type=chunk)[180](index=180&type=chunk) [Risk Management and Internal Control](index=32&type=section&id=Risk%20Management%20and%20Internal%20Control) The Board is responsible for the Group's risk management and internal control systems, reviewing their effectiveness annually, and currently opts for external professional internal audit services due to cost-effectiveness, with this approach re-evaluated yearly - The Board is responsible for risk management and internal control systems, having reviewed their effectiveness during the reporting year, covering financial, operational, and compliance controls[197](index=197&type=chunk) - The Group currently lacks an internal audit function, as the Board deems external professional services more cost-effective given the company's size, a need that will be reviewed annually[198](index=198&type=chunk)[199](index=199&type=chunk) [Shareholders' Rights](index=33&type=section&id=SHAREHOLDERS%27%20RIGHTS) The report outlines shareholder communication channels and key rights, including procedures for convening extraordinary general meetings, proposing resolutions, and submitting inquiries to the Board, ensuring transparency and participation - Shareholders holding not less than **10%** of the paid-up share capital have the right to request an extraordinary general meeting[211](index=211&type=chunk)[213](index=213&type=chunk) - Shareholders holding not less than **5%** of the total voting rights or at least **100** shareholders may submit written requests for the company to propose resolutions or circulate statements at general meetings[212](index=212&type=chunk)[214](index=214&type=chunk) [REPORT OF THE DIRECTORS](index=42&type=section&id=REPORT%20OF%20THE%20DIRECTORS) [Principal Activities and Business Review](index=43&type=section&id=Principal%20Activities%20and%20Business%20Review) The company, an investment holding entity, primarily engages in R&D, production, and sales of ITO conductive films and related smart dimming products in mainland China, with a change in ultimate control due to a share subscription by Shuifa Group (Hong Kong) Holdings Limited in 2019 - The Group's principal activities involve the R&D, production, and sales of ITO conductive films and related downstream products (smart dimming films, glass, and projection systems), primarily operating in mainland China[275](index=275&type=chunk)[279](index=279&type=chunk) - In 2019, controlling shareholder China Singyes Solar Technologies Holdings Limited allotted and issued **1,687,008,585** new shares to Shuifa Group (Hong Kong) Holdings Limited, resulting in the latter holding **66.92%** equity in Singyes Solar and indirectly changing the Company's ultimate control[283](index=283&type=chunk)[285](index=285&type=chunk) [Dividends and Reserves](index=45&type=section&id=Dividends%20and%20Reserves) The Board recommends a final dividend of HK 1.0 cent per share for 2019, with distributable reserves of approximately RMB 6.34 million as of year-end, and plans to transfer RMB 10 million from share premium to contributed surplus for distribution - The Board recommends a final dividend of **HK 1.0 cent** per share for 2019, lower than **HK 1.2 cents** in 2018[298](index=298&type=chunk)[305](index=305&type=chunk) - As of end-2019, the company's distributable reserves were **RMB 6.34 million**, with plans to transfer **RMB 10 million** from the share premium account to the contributed surplus account for distribution[301](index=301&type=chunk)[302](index=302&type=chunk) [Major Customers and Suppliers](index=47&type=section&id=Major%20Customers%20and%20Suppliers) In 2019, the Group's customer and supplier concentration was moderate, with the top five customers accounting for 27% of total revenue and the top five suppliers for 43.5% of total purchases, and no related party interests among them 2019 Customer and Supplier Concentration | Category | Percentage of Total (%) | | :--- | :--- | | **Top Five Customers** | 27% | | **Largest Customer** | 6.9% | | **Top Five Suppliers** | 43.5% | | **Largest Supplier** | 12.3% | [Share Option Scheme](index=50&type=section&id=SHARE%20OPTION%20SCHEME) The company adopted a share option scheme in 2017, granting 21 million options in 2018 at HK 1.16 per share, with 5.3 million forfeited by end-2019 due to resignations, leaving 15.7 million outstanding, representing 3.019% of issued shares - On January 31, 2018, the company granted **21,000,000** share options under the scheme, with an exercise price of **HK 1.16** per share[337](index=337&type=chunk)[341](index=341&type=chunk) - As of end-2019, **5,300,000** share options were forfeited due to employee resignations, leaving **15,700,000** outstanding[337](index=337&type=chunk)[341](index=341&type=chunk) [Interests and Short Positions of Substantial Shareholders](index=52&type=section&id=INTERESTS%20AND%20SHORT%20POSITIONS%20OF%20SUBSTANTIAL%20SHAREHOLDERS) As of December 31, 2019, Top Access Management Limited, wholly owned by China Singyes Solar, held 62.37% of the company's issued share capital, making it the direct controlling shareholder, with Shuifa Group as the ultimate controlling party and AMATA Limited holding 7.69% Substantial Shareholders' Shareholdings (as of 2019/12/31) | Shareholder Name | Capacity/Nature of Interest | Number of Shares Held | Percentage of Shareholding (%) | | :--- | :--- | :--- | :--- | | Top Access Management Limited | Beneficial owner | 324,324,325 | 62.37% | | China Singyes Solar Technologies Holdings Limited | Interest in controlled corporation | 324,324,325 | 62.37% | | Shuifa Group Co., Ltd. | Interest in controlled corporation | 324,324,325 | 62.37% | | AMATA Limited | Beneficial owner | 40,000,000 | 7.69% | [INDEPENDENT AUDITOR'S REPORT](index=63&type=section&id=INDEPENDENT%20AUDITOR%27S%20REPORT) [Opinion and Key Audit Matters](index=64&type=section&id=Opinion%20and%20Key%20Audit%20Matters) Ernst & Young issued an unqualified opinion on the 2019 consolidated financial statements, identifying impairment assessments of trade receivables and goodwill as key audit matters due to significant management judgment and estimation - Auditor Ernst & Young issued an **unqualified opinion** on the financial statements, deeming them to fairly present the Group's financial position[432](index=432&type=chunk)[435](index=435&type=chunk) - Key audit matters include the **impairment assessment of trade receivables** and **impairment assessment of goodwill**, due to significant management judgment and estimation involved[438](index=438&type=chunk)[443](index=443&type=chunk)[448](index=448&type=chunk) - For trade receivables impairment, auditors assessed the accounting process for impairment provisions, checked aging analysis accuracy, and evaluated expected credit loss methodology; for goodwill impairment, they assessed management's cash flow forecasts, key assumptions (e.g., growth and discount rates), and engaged internal valuation experts for review[441](index=441&type=chunk)[451](index=451&type=chunk) [AUDITED FINANCIAL STATEMENTS](index=71&type=section&id=AUDITED%20FINANCIAL%20STATEMENTS) [Consolidated Statement of Profit or Loss and Other Comprehensive Income](index=72&type=section&id=Consolidated%20Statement%20of%20Profit%20or%20Loss) In 2019, the Group's revenue was RMB 148.03 million, a 14.5% increase, with gross profit stable at RMB 58.98 million, but profit for the year decreased 6.6% to RMB 18.51 million due to increased impairment losses on trade receivables, resulting in basic earnings per share of RMB 0.035 Consolidated Statement of Profit or Loss Summary (RMB thousand) | Item | 2019 (RMB thousand) | 2018 (RMB thousand) | | :--- | :--- | :--- | | **Revenue** | 148,034 | 129,292 | | **Gross Profit** | 58,982 | 59,203 | | Impairment Loss on Trade Receivables | (7,779) | (5,242) | | **Profit Before Tax** | 21,118 | 22,705 | | **Profit for the Year** | 18,513 | 19,828 | | **Profit Attributable to Owners of the Company** | 18,221 | 19,788 | | **Basic Earnings Per Share (RMB)** | 0.035 | 0.041 | [Consolidated Statement of Financial Position](index=74&type=section&id=Consolidated%20Statement%20of%20Financial%20Position) As of end-2019, the Group's total assets were RMB 319.1 million, total liabilities RMB 69.17 million, and net assets RMB 249.93 million, all showing slight increases, with non-current assets significantly growing due to property, plant, and equipment additions Consolidated Statement of Financial Position Summary (RMB thousand) | Item | 2019 (RMB thousand) | 2018 (RMB thousand) | | :--- | :--- | :--- | | **Total Non-current Assets** | 105,000 | 57,751 | | **Total Current Assets** | 214,100 | 237,464 | | **Total Assets** | **319,100** | **295,215** | | **Total Current Liabilities** | 55,644 | 58,653 | | **Total Non-current Liabilities** | 13,525 | 2,419 | | **Total Liabilities** | **69,169** | **61,072** | | **Net Assets** | **249,931** | **234,143** | | **Total Equity Attributable to Owners of the Company** | 244,464 | 228,968 | [Consolidated Statement of Cash Flows](index=76&type=section&id=Consolidated%20Statement%20of%20Cash%20Flows) In 2019, net cash from operating activities significantly improved to RMB 31.48 million, but net cash used in investing activities was RMB 65.1 million, primarily for property, plant, and equipment, resulting in a net decrease of RMB 41.39 million in cash and cash equivalents, ending the year at RMB 26.93 million Consolidated Statement of Cash Flows Summary (RMB thousand) | Item | 2019 (RMB thousand) | 2018 (RMB thousand) | | :--- | :--- | :--- | | **Net Cash from Operating Activities** | 31,482 | (14,694) | | **Net Cash (Used in) from Investing Activities** | (65,098) | 81 | | **Net Cash Used in Financing Activities** | (7,771) | (2,678) | | **Net Decrease in Cash and Cash Equivalents** | (41,387) | (17,291) | | **Cash and Cash Equivalents at Beginning of Year** | 68,279 | 85,538 | | **Cash and Cash Equivalents at End of Year** | 26,932 | 68,279 | [5-YEAR FINANCIAL SUMMARY](index=200&type=section&id=5-YEAR%20FINANCIAL%20SUMMARY) [5-Year Financial Summary](index=200&type=section&id=5-YEAR%20FINANCIAL%20SUMMARY) From 2015 to 2019, the Group's revenue grew from RMB 60.48 million to RMB 148.03 million, and total assets increased from RMB 89.75 million to RMB 319.1 million, with profit for the year showing a fluctuating upward trend after a dip in 2016 Five-Year Financial Data Summary (RMB thousand) | Item | 2015 (RMB thousand) | 2016 (RMB thousand) | 2017 (RMB thousand) | 2018 (RMB thousand) | 2019 (RMB thousand) | | :--- | :--- | :--- | :--- | :--- | :--- | | **Revenue** | 60,477 | 90,887 | 115,823 | 129,292 | 148,034 | | **Profit for the Year** | 7,696 | 6,381 | 14,026 | 19,828 | 18,513 | | **Total Assets** | 89,753 | 126,484 | 239,923 | 295,215 | 319,100 | | **Total Liabilities** | 31,269 | 48,857 | 54,660 | 61,072 | 69,169 | | **Net Assets** | 58,484 | 77,627 | 185,263 | 234,143 | 249,931 |