东吴水泥(00695) - 2025 - 中期业绩

Financial Highlights Overview of Financial Highlights For the six months ended June 30, 2025, the Group's revenue significantly increased by 18.0%, gross margin improved, and loss attributable to owners of the Company substantially narrowed, indicating improved operating conditions | Indicator | Six Months Ended June 30, 2025 (HKD Thousand) | Six Months Ended June 30, 2024 (HKD Thousand) | Change (HKD Thousand) | Percentage Change | | :--- | :--- | :--- | :--- | :--- | | Revenue | 125,811 | 106,613 | 19,198 | 18.0% | | Gross Margin | -4.6% | -7.3% | 2.7% | - | | Loss Attributable to Owners of the Company | (9,155) | (35,874) | 26,719 | -74.5% | Condensed Consolidated Interim Financial Statements Condensed Consolidated Interim Statement of Profit or Loss and Other Comprehensive Income For the six months ended June 30, 2025, the Group's revenue grew, gross loss narrowed, operating loss significantly decreased, with substantial improvements in loss for the period and total comprehensive income, and a significant reduction in loss per share | Indicator | 2025 (HKD Thousand) | 2024 (HKD Thousand) | | :--- | :--- | :--- | | Revenue | 125,811 | 106,613 | | Gross Loss | (5,756) | (7,813) | | Operating Loss | (7,948) | (28,903) | | Loss for the Period | (12,966) | (39,981) | | Total Comprehensive Income for the Period | 2,977 | (56,554) | | Loss Attributable to Owners of the Company for the Period | (9,155) | (35,874) | | Loss Per Share from Continuing and Discontinued Operations (Basic and Diluted) | (0.017) | (0.065) | Condensed Consolidated Interim Statement of Financial Position As of June 30, 2025, the Group's total assets slightly decreased, but net current assets remained stable, net assets grew, and total equity increased, indicating a sound financial structure | Indicator | June 30, 2025 (HKD Thousand) | December 31, 2024 (HKD Thousand) | | :--- | :--- | :--- | | Total Non-current Assets | 424,875 | 430,227 | | Total Current Assets | 534,623 | 612,008 | | Total Current Liabilities | 309,990 | 383,353 | | Net Current Assets | 224,633 | 228,655 | | Net Assets | 489,588 | 476,845 | | Total Equity | 489,588 | 476,845 | Condensed Consolidated Interim Statement of Changes in Equity For the six months ended June 30, 2025, total equity attributable to owners of the Company increased, mainly due to reduced loss for the period and changes in exchange reserves, with non-controlling interests also growing | Indicator | June 30, 2025 (HKD Thousand) | January 1, 2024 (HKD Thousand) | | :--- | :--- | :--- | | Total Equity Attributable to Owners of the Company | 391,239 | 534,855 | | Non-controlling Interests | 98,349 | 101,884 | | Total Equity | 489,588 | 636,739 | | Loss for the Period (Attributable to Owners of the Company) | (9,155) | (35,874) | | Exchange Differences Arising from Translation of Financial Statements of Overseas Operations (Attributable to Owners of the Company) | 14,195 | (13,916) | Condensed Consolidated Interim Statement of Cash Flows For the six months ended June 30, 2025, the Group's net cash used in operating activities decreased, net cash from investing activities significantly increased, and net cash used in financing activities increased, resulting in a net increase in cash and cash equivalents | Indicator | 2025 (HKD Thousand) | 2024 (HKD Thousand) | | :--- | :--- | :--- | | Net Cash Used in Operating Activities | (766) | (57,479) | | Net Cash From Investing Activities | 222,747 | 23,635 | | Net Cash (Used in) / From Financing Activities | (95,631) | 37,715 | | Net Increase in Cash and Cash Equivalents | 126,350 | 3,871 | | Cash and Cash Equivalents at End of Period | 268,647 | 25,676 | Notes to the Condensed Consolidated Interim Financial Statements General Information East Wu Cement International Limited was incorporated in the Cayman Islands, primarily engaged in cement production and sales, magnetic materials and other application products production and sales, and trading business, with its principal place of business in Jiangsu Province, China - The Company was incorporated in the Cayman Islands on November 29, 2011, and listed on the Main Board of the Hong Kong Stock Exchange since June 13, 2012[14][15] - The Group is primarily engaged in cement production and sales, magnetic materials and other application products production and sales, and trading business, with its principal place of business in Fenhu Economic Development Zone, Wujiang City, Jiangsu Province, China[14] Basis of Preparation These condensed consolidated interim financial information are prepared in accordance with HKAS 34 and the Listing Rules, adopting the same accounting policies as the 2024 annual financial statements, and were approved for issue by the Board on August 22, 2025 - The financial information is prepared in accordance with Hong Kong Accounting Standard 34 issued by the Hong Kong Institute of Certified Public Accountants and the applicable disclosure provisions of the Listing Rules of the Hong Kong Stock Exchange[16] - The financial information has been prepared on the historical cost basis, except for certain financial instruments measured at fair value where applicable[19] Significant Accounting Policies Revisions to HKFRS accounting standards adopted during the period had no significant impact on the Group's financial performance and position, and no new standards or amendments not yet effective have been adopted - Revisions to HKFRS accounting standards applied during the period had no significant impact on the Group's financial performance and position for the current and prior periods and/or the disclosures contained in these condensed consolidated interim financial statements[20] Application of Judgments and Estimates In preparing the financial information, management made judgments, estimates, and assumptions affecting the application of accounting policies and the reported amounts of assets and liabilities, and actual results may differ from these estimates - In preparing the financial information, management is required to make judgments, estimates, and assumptions that affect the application of accounting policies and the reported amounts of assets and liabilities, revenue, and expenses[23] Financial Risk Management The Group's operations involve various financial risks including foreign exchange, cash flow interest rate, credit, and liquidity risks, and it strives to maintain sufficient cash and credit lines to meet liquidity needs, with no significant changes in risk management policies since year-end - The Group's operations involve various types of financial risks: foreign exchange risk, cash flow interest rate risk, credit risk, and liquidity risk[24] - The Group strives to maintain sufficient cash and credit lines to meet its liquidity requirements, funding working capital needs through working capital, bank borrowings, and equity holder support[26] Segment Reporting The Group segments its business into reportable segments based on reports reviewed by the chief operating decision-maker, including cement production and sales, magnetic materials and other application products production and sales, trading business (continuing operations), and biotechnology research and development (discontinued operations) - The Group's reportable operating segments include: cement production and sales, production and sales of magnetic materials and other application products, trading business (continuing operations), and biotechnology research and development (discontinued operations)[28][30] Segment Results for the Six Months Ended June 30, 2025 (HKD Thousand): | Segment | Revenue | Results | | :--- | :--- | :--- | | Cement Production and Sales | 118,641 | 15,572 | | Magnetic Materials and Other Application Products | 7,170 | (20,520) | | Trading Business | – | (871) | | Biotechnology Research and Development (Discontinued Operations) | – | (13) | | Total | 125,811 | (5,832) | Segment Results for the Six Months Ended June 30, 2024 (HKD Thousand): | Segment | Revenue | Results | | :--- | :--- | :--- | | Cement Production and Sales | 92,689 | (12,353) | | Magnetic Materials and Other Application Products | 13,866 | (11,784) | | Trading Business | 58 | (287) | | Biotechnology Research and Development (Discontinued Operations) | – | (13,439) | | Total | 106,613 | (37,863) | Revenue The Group's revenue from continuing operations significantly increased during the reporting period, primarily contributed by the cement production and sales segment, with a substantial increase in ordinary Portland cement sales Revenue from Contracts with Customers (HKD Thousand): | Product Category | 2025 | 2024 | | :--- | :--- | :--- | | Cement Production and Sales Segment | 118,641 | 92,689 | | Sales of Ordinary Portland Cement (Strength Grade 42.5) | 85,809 | 66,003 | | Production and Sales of Magnetic Materials and Other Application Products Segment | 7,170 | 13,866 | | Trading Business Segment | – | 58 | | Total | 125,811 | 106,613 | - Contract liabilities of HKD 11,109,000 as of January 1, 2025, were recognized as revenue for the six months ended June 30, 2025, upon satisfaction of performance obligations[35] Other Income and Net Other Gains The Group's other income and net other gains significantly increased, primarily due to gains from the transfer of cement clinker production capacity quotas and fair value changes of financial assets at fair value through profit or loss Other Income and Net Other Gains (HKD Thousand): | Item | 2025 | 2024 | | :--- | :--- | :--- | | Government Grants | 951 | 1,950 | | Fair Value Changes of Financial Assets at Fair Value Through Profit or Loss | 2,479 | – | | Gains from Transfer of Cement Clinker Production Capacity Quotas | 22,052 | – | | Total | 26,401 | 2,668 | - The Company transferred cement clinker production capacity quotas in the first quarter of 2025 to replace self-produced clinker, as self-production costs were higher than external procurement[36] Income Tax Credit The Group's income tax credit significantly increased during the reporting period, mainly due to changes in deferred tax, with no taxable profits in Hong Kong, and Chinese subsidiaries subject to corporate income tax rates of 15% or 25% Income Tax Credit (HKD Thousand): | Item | 2025 | 2024 | | :--- | :--- | :--- | | Current Tax - Corporate Income Tax | 14 | 20 | | Current Tax - China Withholding Tax | 4,111 | – | | Deferred Tax | (8,375) | (1,337) | | Income Tax Credit Related to Continuing Operations | (4,250) | (1,299) | - Certain subsidiaries incorporated in China and recognized as high-tech enterprises are subject to a reduced corporate income tax rate of 15%, while others are subject to 25%[37] Discontinued Operations / Disposal of Subsidiaries The Group completed the disposal of its biotechnology research and development business subsidiary on June 26, 2025; this discontinued operation incurred a slight loss during the reporting period, but significantly reduced compared to the same period last year - The Group completed the disposal of Oriental Health Science Limited and its subsidiaries, primarily engaged in biotechnology research and development in China, on June 26, 2025[40] Results of Disposed Group (HKD Thousand): | Item | 2025 | 2024 | | :--- | :--- | :--- | | Loss for the Period from Discontinued Operations | (13) | (13,439) | | Loss for the Period from Discontinued Operations Attributable to Owners of the Company | (115) | (13,080) | | Loss on Disposal of Subsidiaries | (7,073) | – | - The net assets of the disposed group at the disposal date were HKD 573,000, with a total cash consideration of HKD 2,150,000[42] Property, Plant and Equipment As of June 30, 2025, the Group's carrying amount of property, plant and equipment slightly increased, mainly due to additions and exchange differences, with some assets pledged as collateral for bank borrowings Carrying Amount of Property, Plant and Equipment (HKD Thousand): | Period | Carrying Amount | | :--- | :--- | | As of January 1, 2025 | 222,022 | | Additions | 4,375 | | Depreciation | (10,030) | | Exchange Differences | 7,136 | | As of June 30, 2025 | 223,503 | | As of January 1, 2024 | 220,625 | | As of June 30, 2024 | 234,110 | - As of June 30, 2025, certain land use rights and property, plant and equipment were pledged as collateral for the Group's bank borrowings of HKD 157,110,000[44] Goodwill As of June 30, 2025, the Group's carrying amount of goodwill decreased due to impairment losses and exchange differences, primarily allocated to the Cheng Zheng cash-generating unit in the magnetic materials and other application products segment Carrying Amount of Goodwill (HKD Thousand): | Period | Carrying Amount | | :--- | :--- | | As of January 1, 2025 | 47,183 | | Impairment Loss | (8,554) | | Exchange Differences | 1,379 | | As of June 30, 2025 | 40,008 | | As of January 1, 2024 | 61,589 | | As of June 30, 2024 | 47,563 | - Goodwill is primarily allocated to the Cheng Zheng cash-generating unit, for the production and sales of magnetic materials and other application products segment[45] - For the six months ended June 30, 2025, an impairment loss of HKD 8,554,000 was recognized, mainly due to underperformance of the cash-generating unit and the competitive environment[47] Intangible Assets As of June 30, 2025, the Group's carrying amount of intangible assets (technical know-how) decreased due to amortization and exchange differences, amortized on a straight-line basis over an estimated useful life of 10 years Carrying Amount of Intangible Assets (Technical Know-how) (HKD Thousand): | Period | Carrying Amount | | :--- | :--- | | As of January 1, 2025 | 12,845 | | Amortization | (1,479) | | Exchange Differences | 392 | | As of June 30, 2025 | 11,758 | | As of January 1, 2024 | 22,046 | | As of June 30, 2024 | 14,420 | - Technical know-how refers to intellectual property with a finite useful life, and is amortized on a straight-line basis over its estimated useful life of 10 years[48] Investments in Associates The Group's investments in associates primarily include Suzhou Dongtong Environmental Protection Technology Co., Ltd. and Zhuhai Huiyin Huiheng Equity Investment Fund Management Co., Ltd., both accounted for using the equity method, with a share of loss from associates during the period Carrying Amount of Investments in Associates (HKD Thousand): | Period | Carrying Amount | | :--- | :--- | | As of Beginning of Period and Beginning of Year | 32,417 | | Share of Results of Associates | (211) | | Exchange Differences | 1,058 | | As of End of Period and End of Year | 33,264 | - The Group holds a 43.2% interest in Suzhou Dongtong Environmental Protection Technology Co., Ltd., primarily engaged in R&D of environmental protection technologies and related services[49] - The Group holds a 30% interest in Zhuhai Huiyin Huiheng Equity Investment Fund Management Co., Ltd., primarily engaged in financial investment management[49] Financial Assets at Fair Value Through Profit or Loss The Group's financial assets at fair value through profit or loss primarily consist of trust funds under a trust agreement with Guomin Trust Co., Ltd., with a carrying amount of HKD 109,576,000 at period-end Financial Assets at Fair Value Through Profit or Loss (HKD Thousand): | Period | Carrying Amount | | :--- | :--- | | As of June 30, 2025 | 109,576 | | As of December 31, 2024 | 108,027 | - These trust funds are managed by Guomin Trust, aiming to generate investment returns for the Group, and are classified as non-current assets[56] Inventories As of June 30, 2025, the Group's total inventories slightly increased, mainly composed of raw materials, with work in progress and finished goods remaining relatively stable Inventories (HKD Thousand): | Item | June 30, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Raw Materials | 129,653 | 125,105 | | Work in Progress | 13,447 | 13,564 | | Finished Goods | 57,435 | 57,862 | | Total | 200,535 | 196,531 | Trade and Other Receivables As of June 30, 2025, the Group's total trade and other receivables increased, primarily including trade receivables from third parties, prepayments, and other receivables, with corresponding impairment provisions recognized Trade and Other Receivables (HKD Thousand): | Item | June 30, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Trade Receivables and Bills Receivable, Net | 25,221 | 24,850 | | Prepayments and Deposits | 11,190 | 17,550 | | Other Receivables | 21,667 | 13,219 | | Total Trade and Other Receivables | 57,833 | 55,460 | - The Group generally grants credit terms of 30 to 90 days to customers, with major customers granted revolving credit limits not exceeding 365 days[59] - Other receivables include consideration receivable from the disposal of subsidiaries and transfer of cement clinker production capacity quotas of approximately HKD 2,191,000 and HKD 2,575,000 respectively[63] Trade and Other Payables As of June 30, 2025, the Group's total trade and other payables decreased, mainly comprising trade payables, bills payable, and other payables, with most denominated in RMB Trade and Other Payables (HKD Thousand): | Item | June 30, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Trade Payables | 31,511 | 27,298 | | Bills Payable | 10,616 | 29,426 | | Other Payables | 34,015 | 36,395 | | Consideration Payable | 21,912 | 21,217 | | Total | 106,573 | 123,688 | - The Group's main suppliers grant credit terms of 30 to 90 days, and most trade and other payables are denominated in RMB[65] Borrowings As of June 30, 2025, the Group's total borrowings slightly decreased, mainly including bank borrowings and other unsecured loans, with some bank borrowings secured by equity interests in subsidiaries, land use rights, and property, plant and equipment Borrowings (HKD Thousand): | Item | June 30, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Bank Borrowings (Unsecured) | 127,330 | 133,959 | | Bank Borrowings (Secured) | 157,110 | 155,096 | | Other Loans (Unsecured) | 10,700 | 10,700 | | Total Bank and Other Loans | 295,140 | 299,755 | - Approximately HKD 157,110,000 of bank borrowings are secured by equity interests in the Company's subsidiaries, land use rights, and the Group's property, plant and equipment[72] Deferred Income The Group's deferred income primarily consists of government grants from local Chinese government authorities to support R&D activities of subsidiaries, with a portion recognized in profit or loss during the period Deferred Income (HKD Thousand): | Item | 2025 | 2024 | | :--- | :--- | :--- | | As of January 1 | 20,232 | 23,278 | | Credited to Profit or Loss | (915) | (1,115) | | Exchange Differences | 645 | (604) | | As of June 30 | 19,962 | 21,305 | - Deferred income refers to government grants received from local Chinese government authorities to support R&D activities of subsidiaries[70] Deferred Tax The Group's net deferred tax liabilities decreased, mainly affected by withholding tax on profits attributable to equity holders and tax losses, with some tax losses not yet recognized as deferred tax assets Deferred Tax (HKD Thousand): | Item | June 30, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Deferred Tax Assets | 6,766 | 7,392 | | Deferred Tax Liabilities | (24,872) | (33,191) | | Total | (18,106) | (25,799) | - The Group has unused tax losses of approximately HKD 87,897,000 available to offset future profits, of which approximately HKD 60,831,000 has not been recognized as deferred tax assets[73] Share Capital As of June 30, 2025, the Company's issued share capital was HKD 5,520,000, divided into 552,000,000 shares with a par value of HKD 0.01 each, remaining unchanged from the same period last year Share Capital (HKD Thousand): | Period | Number of Ordinary Shares (Thousand Shares) | Par Value of Ordinary Shares (HKD Thousand) | | :--- | :--- | :--- | | As of June 30, 2025 | 552,000 | 5,520 | | As of December 31, 2024 | 552,000 | 5,520 | Loss Per Share For the six months ended June 30, 2025, the Group's basic and diluted loss per share significantly narrowed, loss per share from continuing operations also substantially decreased, and there were no dilutive potential ordinary shares Loss Per Share (HKD Per Share): | Item | 2025 | 2024 | | :--- | :--- | :--- | | From Continuing and Discontinued Operations (Basic and Diluted) | (0.017) | (0.065) | | From Continuing Operations (Basic and Diluted) | (0.016) | (0.041) | | From Discontinued Operations (Basic and Diluted) | (0.000) | (0.024) | - Basic loss per share is calculated by dividing the loss for the period attributable to owners of the Company of HKD 9,155,000 by the weighted average number of ordinary shares outstanding of 552,000,000 shares[75] Dividends For the six months ended June 30, 2025, the Company did not declare an interim dividend, but a special dividend of HKD 0.136 per share declared in December 2024 was paid - No dividends were declared for the six months ended June 30, 2025[78] - A special dividend of HKD 0.136 per share declared on December 5, 2024, was paid on or about March 31, 2025[78][135] Lease Liabilities As of June 30, 2025, the Group's total lease liabilities decreased, mainly including leased land and buildings, presented as current and non-current portions Lease Liabilities (HKD Thousand): | Item | June 30, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Current Portion | 389 | 382 | | Non-current Portion | 267 | 463 | | Total | 656 | 845 | Future Lease Payments Maturity Profile (June 30, 2025, HKD Thousand): | Period | Minimum Lease Payments | Interest | Present Value | | :--- | :--- | :--- | :--- | | Not Later Than One Year | 405 | (16) | 389 | | Later Than One Year But Not Later Than Two Years | 270 | (3) | 267 | | Total | 675 | (19) | 656 | Related Party Transactions The Group's key management compensation decreased, and other payables include amounts due to companies controlled by a director, with no significant non-exempt related party transactions under the Listing Rules during the period Key Management Compensation (HKD Thousand): | Item | 2025 | 2024 | | :--- | :--- | :--- | | Basic Salaries and Benefits in Kind | 1,544 | 2,419 | - Other payables include amounts due to companies controlled by Mr. Jiang of HKD 3,839,000, which are unsecured, interest-free, and repayable on demand[83] - There were no non-exempt related party transactions or non-exempt continuing related party transactions under the Listing Rules during the period[86] Capital Commitments As of June 30, 2025, the Group had no capital commitments, a significant decrease compared to commitments for the acquisition of property, plant and equipment as of December 31, 2024 Commitments for Acquisition of (HKD Thousand): | Item | June 30, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Property, Plant and Equipment | – | 151 | Fair Value Measurement of Financial Assets and Liabilities The Group's fair value measurement of financial assets and liabilities uses market observable inputs, categorized into different levels based on observability, with financial assets at fair value through profit or loss primarily being unlisted private equity funds, classified as Level 3 Carrying Amounts and Fair Values of Financial Assets and Liabilities (HKD Thousand): | Item | June 30, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Total Financial Assets | 432,474 | 504,236 | | Total Financial Liabilities | 401,707 | 498,583 | - The Group's unlisted private equity funds are classified as Level 3, with their fair value recognized based on valuations provided by fund managers, measured by the ownership proportion of the private equity fund's net assets[93] Reconciliation of Financial Assets at Fair Value Through Profit or Loss (Level 3) (HKD Thousand): | Item | 2025 | 2024 | | :--- | :--- | :--- | | As of January 1 | 108,027 | – | | Total Gains or Losses - Fair Value Changes of Financial Assets | 2,479 | – | | Distributions | (4,431) | – | | Exchange Differences | 3,501 | (521) | | As of June 30 | 109,576 | 53,470 | Management Discussion and Analysis Industry Overview The Group analyzed industry dynamics across four segments: cement, rare earth, biopharmaceutical, and international trading. The cement industry faces weak demand and falling prices, the rare earth industry is affected by policy regulation and export controls, the biopharmaceutical segment has ceased investment, and the international trading segment is seeking diversified business models Cement Segment In the first half of 2025, the cement industry was characterized by "unchanged weak demand, prices high first then low, and improved efficiency year-on-year," with a stable first quarter but weaker-than-expected demand and accelerating price declines in the second quarter, leading to increased operating pressure as prices fell below cost in many regions - In the first half of 2025, China's GDP grew by 5.3% year-on-year, national fixed asset investment grew by 2.8% year-on-year, and national real estate development investment decreased by 11.2% year-on-year[98] - In the first half of 2025, national cement output was 815 million tons, a year-on-year decrease of 4.3%, the lowest level for the same period since 2010[98] - The average price of PO42.5 bulk cement in Nanjing, Hangzhou, and Shanghai decreased by 7.1%, 4.3%, and 4.8% respectively compared to the same period last year[100] Rare Earth Segment China's rare earth industry has seen increased concentration and strengthened national control, with export restrictions on some heavy rare earths. The Group's rare earth segment revenue fell short of expectations due to insufficient production scale leading to high unit fixed costs and rising raw material prices, and is actively seeking technological innovation and strategic cooperation opportunities - China is the world's largest producer, consumer, and exporter of rare earth materials, with rare earth reserves of approximately 44 million tons (40% of global total) and production of 270,000 tons (70% of global total) in 2024[101] - The Ministry of Industry and Information Technology issued the "Interim Measures for the Administration of Total Volume Control of Rare Earth Mining and Rare Earth Smelting and Separation (Draft for Public Comment)," including monazite and imported rare earth mineral products in the control scope[102] - The Ministry of Commerce and the General Administration of Customs implemented export controls on 7 categories of medium and heavy rare earth related items, including samarium, gadolinium, terbium, dysprosium, lutetium, scandium, and yttrium[102] Biopharmaceutical Segment The Group ceased investment in the biopharmaceutical sector in the first half of 2024 and completed the disposal of related assets on June 26, 2025, as CAR-T drug R&D proved far more challenging than anticipated - The Group ceased investment in the biopharmaceutical sector in the first half of 2024 and completed the disposal of related assets on June 26, 2025, as CAR-T drug R&D proved far more challenging than anticipated[104] International Trading Segment In the first half of 2025, the international trading segment was affected by geopolitical factors and market uncertainties, leading to sharp fluctuations in commodity prices, and the Group is actively seeking diversified business models and strategic cooperation partners - The Group is continuously striving to seek and expand diversified business models in international trading, focusing on finding strategic partners with synergistic effects, and actively exploring potential business opportunities[105] Revenue During the reporting period, the Group's revenue was approximately HKD 125,811,000, a year-on-year increase of 18.0%, primarily contributed by the cement segment, which saw revenue grow by 28.0% and sales volume increase by 33.3% Revenue Analysis by Product Category (Six Months Ended June 30): | Product Category | 2025 Sales Volume (Thousand Tons) | 2025 Revenue (HKD Thousand) | 2024 Sales Volume (Thousand Tons) | 2024 Revenue (HKD Thousand) | | :--- | :--- | :--- | :--- | :--- | | PO 42.5 Cement | 394 | 85,809 | 293 | 66,003 | | PC 42.5 Cement | 120 | 28,947 | 91 | 21,897 | | PSS 32.5 | 23 | 3,885 | – | – | | PC 32.5 | – | – | 19 | 4,761 | | Total Cement Product Sales Volume | 537 | 118,641 | 403 | 92,661 | - The increase in cement segment revenue was mainly due to active promotion of staggered production, which eased supply-demand imbalances and narrowed the decline in market demand[106] - The Company achieved significant sales growth in Zhejiang Province compared to the same period last year, demonstrating the effectiveness of multi-regional sales channel expansion[111] Gross Profit and Gross Margin During the reporting period, the cement segment's gross loss narrowed and gross margin improved, primarily benefiting from cost reduction and efficiency enhancement, and price recovery. The rare earth segment still recorded a gross loss due to insufficient production scale and high costs Gross Profit and Gross Margin (Six Months Ended June 30): | Segment | 2025 Gross Loss (HKD Thousand) | 2025 Gross Margin | 2024 Gross Loss (HKD Thousand) | 2024 Gross Margin | | :--- | :--- | :--- | :--- | :--- | | Cement Segment | (3,873) | -3.3% | (5,192) | -5.6% | | Rare Earth Segment | (1,883) | -26.3% | - | - | - The narrowing of gross loss in the cement segment was mainly due to the Company's cost reduction and efficiency enhancement through optimized management, while also actively promoting dual initiatives of price recovery and cost optimization[113] - The rare earth segment's production and sales have not yet achieved scale, resulting in higher unit fixed costs and a gross loss; the Group is actively exploring diversified business opportunities and potential strategic collaborations[113] Other Income The Group's other income significantly increased by 889.5% during the reporting period, primarily due to the transfer of 750,000 tons/year cement clinker production capacity quotas Other Income (HKD Thousand): | Period | Amount | | :--- | :--- | | 2025 | 26,401 | | 2024 | 2,668 | | Percentage Change | 889.5% | - This increase was mainly due to the Company's transfer of 750,000 tons/year cement clinker production capacity quotas during the reporting period, and it will continue to ensure supply through external procurement of clinker to replace self-production[115] Distribution Costs The Group's distribution costs decreased by 39.7%, primarily benefiting from refined management reforms, improved management efficiency, and enhanced resource allocation efficiency Distribution Costs (HKD Thousand): | Period | Amount | | :--- | :--- | | 2025 | 1,022 | | 2024 | 1,695 | | Percentage Change | -39.7% | - Distribution costs accounted for approximately 0.8% of the Group's revenue, largely consistent with approximately 1.4% in the same period last year[116] Administrative Expenses The Group's administrative expenses decreased by 13.8%, primarily due to efficient allocation of administrative resources and cost savings achieved through management optimization Administrative Expenses (HKD Thousand): | Period | Amount | | :--- | :--- | | 2025 | 19,017 | | 2024 | 22,063 | | Percentage Change | -13.8% | Income Tax Credit The Group's income tax credit significantly increased during the reporting period, primarily due to the release of deferred tax liabilities related to withholding tax on distributable profits Income Tax Credit (HKD Thousand): | Period | Amount | | :--- | :--- | | 2025 | 4,250 | | 2024 | 1,299 | | Percentage Change | 227.2% | Net Profit Margin The Group's net profit margin significantly improved during the reporting period, primarily benefiting from domestic cement industry policies driving performance recovery, slowing market demand, and gains from the transfer of cement clinker production capacity quotas Net Profit Margin: | Period | Net Profit Margin | | :--- | :--- | | 2025 | -10.3% | | 2024 | -37.5% | | Change | 27.2% | - The increase in net profit margin was mainly due to domestic cement industry policies driving performance recovery, slowing overall market demand in China, and gains from the transfer of cement clinker production capacity quotas[120] Liquidity and Capital Resources The Group's liquidity primarily stems from operating cash flows, bank loans, and trade payables. During the reporting period, cash and cash equivalents significantly increased, and the gearing ratio decreased, indicating improved liquidity Cash Flow As of June 30, 2025, the Group's cash and cash equivalents significantly increased by 98.3%, primarily due to withdrawals from short-term deposits during the reporting period Cash and Cash Equivalents (HKD Thousand): | Period | Amount | | :--- | :--- | | June 30, 2025 | 268,647 | | December 31, 2024 | 135,495 | | Percentage Change | 98.3% | Borrowings As of June 30, 2025, the Group's total bank borrowings slightly decreased by 1.6%, remaining stable, with some borrowings secured by property, plant and equipment, land use rights, and equity interests in subsidiaries Borrowings (HKD Thousand): | Period | Amount | | :--- | :--- | | June 30, 2025 | 295,140 | | December 31, 2024 | 299,755 | | Percentage Change | -1.6% | - As of June 30, 2025, borrowings of approximately HKD 157,110,000 were secured by the Group's property, plant and equipment, land use rights, and equity interests in subsidiaries[124] Gearing Ratio As of June 30, 2025, the Group's gearing ratio decreased to 96.0%, an improvement from 118.6% as of December 31, 2024 Gearing Ratio: | Period | Ratio | | :--- | :--- | | June 30, 2025 | 96.0% | | December 31, 2024 | 118.6% | | Change | -22.6% | Capital Expenditure and Capital Commitments The Group's capital expenditure significantly increased, primarily from the cement segment, and there were no capital commitments at the end of the reporting period Capital Expenditure (HKD Thousand): | Period | Amount | | :--- | :--- | | June 30, 2025 | 4,375 | | Same Period in 2024 | 966 | | Change | 3,409 | - As of June 30, 2025, the Group had no capital commitments (December 31, 2024: HKD 4,521,000)[130] Pledged Assets As of June 30, 2025, property, plant and equipment, land use rights, and equity interests in subsidiaries of the rare earth segment were pledged as collateral for the Group's bank borrowings - As of June 30, 2025, property, plant and equipment with a carrying amount of approximately HKD 18,781,000, land use rights of approximately HKD 2,286,000, and equity interests in subsidiaries of the rare earth segment were pledged as collateral for certain bank borrowings of the Group[131] Contingent Liabilities As of June 30, 2025, the Group had no significant contingent liabilities - As of June 30, 2025, the Group had no significant contingent liabilities[132] Foreign Exchange Risk The Group's operating activities are primarily in mainland China, mainly denominated in RMB, and were not significantly affected by exchange rate fluctuations during the reporting period, with no hedging measures implemented, but future RMB exchange rate fluctuations may impact financial position - The Group's operating activities are primarily in mainland China, with operating expenses and capital expenditures mainly denominated in RMB, and a small portion in HKD[133] - During the reporting period, the Group was not significantly affected by exchange rate fluctuations in its operating business and working capital, nor did it implement any hedging measures[133] Significant Acquisitions and Disposals of Subsidiaries and Associates During the reporting period, the Group did not make any significant acquisitions or disposals of its subsidiaries or associates - During the reporting period, the Group did not make any significant acquisitions or disposals of its subsidiaries or associates[134] Interim Dividends The Board decided not to pay any dividends for this interim period, but a special dividend of HKD 0.136 per share declared in December 2024 was paid - The Board did not recommend the payment of any interim dividend for the six months ended June 30, 2025[135] - A special dividend of HKD 0.136 per share declared on December 5, 2024, was paid on or about March 31, 2025[135] Employees and Remuneration Policy As of June 30, 2025, the Group had 275 employees, with total remuneration of approximately HKD 13,999,000 during the reporting period, and remuneration levels are determined based on responsibilities, performance, contributions, and market conditions Employees and Remuneration (Six Months Ended June 30): | Indicator | 2025 | | :--- | :--- | | Number of Employees | 275 | | Total Employee Remuneration (HKD Thousand) | 13,999 | - Employee remuneration levels are commensurate with their responsibilities, performance, and contributions, and are determined with reference to their merits, qualifications, and abilities, as well as the advice of the Company's Remuneration Committee[136] Other Information Future Outlook The Group will focus on "enhancing overall shareholder value" as its core objective, comprehensively strengthening its integrated competitiveness through optimizing operations, focusing on markets and products, solidifying its talent base, exploring diversified investment opportunities, and optimizing its asset structure - The Group will take "enhancing overall shareholder value and maximizing shareholder value" as its core objective, optimizing the company's development strategy from multiple dimensions[137] - For the rare earth segment, the Company is seeking diversified business opportunities and actively exploring potential strategic collaborations, including but not limited to expanding into other rare and precious metal businesses and seeking opportunities to dispose of the rare earth segment[137] Share Capital As of June 30, 2025, the Company's issued share capital was HKD 5,520,000, divided into 552,000,000 shares with a par value of HKD 0.01 each - As of June 30, 2025, the Company's issued share capital was HKD 5,520,000, divided into 552,000,000 shares with a par value of HKD 0.01 each[138] Supplementary Information on Share Option Scheme The Company's share option scheme adopted on May 28, 2015, expired on May 28, 2025, with no share options granted since its adoption, and the scheme limit was 55,200,000 shares - Since the adoption of the share option scheme, the Company has not granted any share options under the scheme[140] - The total number of shares available for issue under the share option scheme was 55,200,000 shares, representing 10% of the total issued shares as of the date of this interim report[140] - The share option scheme expired at the close of business on May 28, 2025, being the tenth anniversary of its adoption date[142] Repurchase, Sale or Redemption of the Company's Listed Securities During the reporting period, neither the Company nor any of its subsidiaries purchased, sold, or redeemed any of the Company's listed securities - During the reporting period, neither the Company nor any of its subsidiaries purchased, sold, or redeemed any of the Company's listed securities[143] Material Litigation and Arbitration To the best of the Directors' knowledge, the Group was not involved in any material litigation, arbitration, or claims during the reporting period - To the best of the Directors' knowledge, the Group was not involved in any material litigation, arbitration, or claims during the reporting period, nor was it involved in any significant outstanding or threatened litigation or claims against the Company[144] Compliance with Corporate Governance Code The Company has adopted the Corporate Governance Code set out in Appendix C1 to the Listing Rules and complied with it during the reporting period - The Company has adopted the code provisions of the Corporate Governance Code set out in Appendix C1 to the Listing Rules as its own corporate governance code[145] - During the reporting period, the Company complied with the Corporate Governance Code[146] Compliance with Model Code The Company has adopted the Model Code set out in Appendix C3 to the Listing Rules as the code of conduct for Directors' securities transactions, and all Directors confirmed compliance with it during the reporting period - The Company has adopted the Model Code set out in Appendix C3 to the Listing Rules as the code of conduct for Directors' securities transactions[147] - Following specific enquiries made to all Directors, they have confirmed their compliance with the required standards set out in the Model Code during the reporting period[147] Audit Committee The Company's Audit Committee has reviewed the Group's unaudited interim financial report for the six months ended June 30, 2025, and believes it was prepared in compliance with applicable accounting standards and requirements - The Company's Audit Committee has reviewed the Group's unaudited interim financial report for the six months ended June 30, 2025, and discussed financial reporting, risk management, and internal control matters with management[148] - The Audit Committee believes that these financial statements were prepared in compliance with applicable accounting standards and requirements, and appropriate disclosures have been made[148] Events After Reporting Period As of the date of this announcement, no significant events requiring additional disclosure or potentially affecting the Company have occurred after the reporting period - As of the date of this announcement, no significant events requiring additional disclosure or potentially affecting the Company have occurred after the reporting period[149] Board of Directors As of the date of this announcement, the Board of Directors includes Executive Directors Mr. Liu Dong and Mr. Wu Junxian; Non-executive Directors Mr. Jiang Xueming and Ms. Xie Yingxia; and Independent Non-executive Directors Mr. Yuan Yuan, Mr. Yu Liwen, and Mr. Suo Suo - The Board of Directors includes Executive Directors Mr. Liu Dong and Mr. Wu Junxian; Non-executive Directors Mr. Jiang Xueming and Ms. Xie Yingxia; and Independent Non-executive Directors Mr. Yuan Yuan, Mr. Yu Liwen, and Mr. Suo Suo[151]