烯石电车新材料(06128) - 2021 - 中期财报

Financial Highlights Performance Overview 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] Financial Position 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 Board of Directors and Corporate Governance 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] - 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] - 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] Unaudited Condensed Interim Consolidated Statement of Profit or Loss Profit or Loss Statement Overview 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 Comprehensive Income Statement Overview 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 Statement of Financial Position Overview 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] - Among current assets, trade and bills receivables (HKD 117,465 Thousand) and inventories (HKD 52,057 Thousand) accounted for a larger proportion[18] Unaudited Condensed Interim Consolidated Statement of Changes in Equity Changes in Equity Overview 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] Unaudited Condensed Interim Consolidated Statement of Cash Flows Cash Flow Statement Overview 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] - 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] Notes to the Unaudited Condensed Interim Consolidated Financial Statements Company and Group Information 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] - Its principal businesses are graphene products, landscape design services, and catering services[32] Basis of Preparation and Changes in Group Accounting Policies 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] - 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] - 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] Revenue 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] Operating Segment Information 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] 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] Other Income and Gains 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] Finance Costs 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 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] - Research and development costs significantly increased from HKD 4,138 Thousand to HKD 12,937 Thousand[81] Income Tax 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] - 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] Dividends 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] Loss Per Share Attributable to Ordinary Equity Holders of the Parent 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] - 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] Investments in Associates 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] - 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] Trade and Bills Receivables 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] Trade Payables 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] Interest-Bearing Borrowings 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][120] - Other borrowings include unsecured loans denominated in RMB and HKD, with interest rates ranging from interest-free to 18%[118] Promissory Notes 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][122] Convertible Notes 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] - 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] Share Capital and Treasury Shares 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] - 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] Share Option Scheme 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] - 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][148] - 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] 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 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] - 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] Events After the Reporting Period 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] - 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] - 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] Comparative Figures 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] Approval of Interim Financial Information 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] Management Discussion and Analysis Business Review 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] - 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] Graphene Products Business 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] - 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] Landscape Design Business 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] - The decrease in new contract value was mainly due to a one-off large project recorded in the prior period[166] Catering Business 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] - 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] Financial Review 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 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 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] Gross Profit and Gross Margin 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] Selling and Marketing Expenses 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] Administrative Expenses 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] Impairment Loss on Financial and Contract Assets 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