筑友智造科技(00726) - 2025 - 中期业绩

Company Announcement and Interim Results Summary This section provides an overview of the company's interim results announcement Interim Results Announcement Chuyu Smart Manufacturing Technology Group Co., Ltd. announced its unaudited condensed consolidated results for the six months ended June 30, 2025, with comparative financial data for the same period in 2024 - This announcement is released by the Board of Directors of Chuyu Smart Manufacturing Technology Group Co., Ltd., covering the unaudited condensed consolidated results for the six months ended June 30, 2025[2] Condensed Consolidated Financial Statements This section presents the company's condensed consolidated financial performance and position Condensed Consolidated Statement of Profit or Loss and Other Comprehensive Income For the six months ended June 30, 2025, the company experienced a significant revenue decline, a shift from profit to loss, increased gross loss, and higher operating and period losses, leading to an expanded basic loss per share Condensed Consolidated Statement of Profit or Loss and Other Comprehensive Income (For the six months ended June 30) | Indicator | 2025 (HK$ Thousand) | 2024 (HK$ Thousand) | | :--- | :--- | :--- | | Revenue | 50,170 | 235,289 | | (Gross Loss) / Gross Profit | (29,923) | 3,038 | | Operating Loss | (247,259) | (141,663) | | Loss Before Income Tax | (286,524) | (184,704) | | Loss for the Period | (286,524) | (185,064) | | Loss for the period attributable to owners of the Company | (270,848) | (170,487) | | Loss per share attributable to owners of the Company (HK Cents) | (8.73) | (5.50) | | Total comprehensive loss for the period | (260,313) | (201,481) | - Basic loss per share attributable to owners of the Company expanded from 5.50 HK Cents in the same period of 2024 to 8.73 HK Cents in 2025[3] - Regarding other comprehensive income/(loss), exchange differences arising from the translation of overseas operations shifted from a loss of HK$15,274 thousand in 2024 to a gain of HK$24,119 thousand in 2025[4] Condensed Consolidated Statement of Financial Position As of June 30, 2025, the company's total assets and net assets both decreased, and net current liabilities expanded, reflecting challenging financial conditions Condensed Consolidated Statement of Financial Position (As of June 30) | Indicator | 2025 (HK$ Thousand) | 2024 (HK$ Thousand) | | :--- | :--- | :--- | | Total Assets | 5,255,685 | 5,489,993 | | Net Current Liabilities | (936,798) | (793,249) | | Net Assets | 1,758,899 | 2,018,536 | | Equity attributable to owners of the Company | 1,128,781 | 1,372,569 | - Non-current assets slightly decreased from HK$3,627,316 thousand as of December 31, 2024, to HK$3,609,308 thousand as of June 30, 2025[5] - Current assets decreased from HK$1,862,677 thousand as of December 31, 2024, to HK$1,646,377 thousand as of June 30, 2025, primarily due to a reduction in trade and other receivables[5] - Non-current liabilities increased from HK$815,531 thousand as of December 31, 2024, to HK$913,611 thousand as of June 30, 2025, mainly due to increased borrowings[6] Notes to the Financial Statements This section provides detailed explanations and disclosures supporting the condensed consolidated financial statements Basis of Preparation The Group's condensed consolidated interim financial statements are prepared in accordance with HKAS 34, revised under the historical cost convention, emphasizing significant uncertainties regarding going concern and mitigation plans - The financial statements are prepared in accordance with Hong Kong Accounting Standard 34 “Interim Financial Reporting” issued by the Hong Kong Institute of Certified Public Accountants, and are revised under the historical cost convention, with certain financial assets and investment properties measured at fair value being revalued[7] Going Concern Basis The company faces severe going concern risks, including substantial losses, net current liabilities, cash shortages, bank loan defaults, and multiple lawsuits; mitigation plans are in place, but their success remains highly uncertain - For the six months ended June 30, 2025, the Group incurred a loss of HK$286,524,000 and had net current liabilities exceeding current assets by HK$936,798,000[8] - The Group failed to repay principal of RMB245,454,000 (approximately HK$269,153,000) and interest of RMB86,277,000 (approximately HK$94,607,000) on several commercial bank borrowings by their due dates, constituting events of default[9] - Several suppliers and banks initiated multiple lawsuits against the Group for overdue payables and borrowings totaling approximately RMB636,838,000 (approximately HK$698,326,000)[10] - To alleviate liquidity pressure, the Group plans to negotiate repayment, renewal, and extension of overdue borrowings with lenders (successfully extended RMB237,520,000), seek new financing, negotiate repayment schedules with suppliers, increase sales and accelerate receivables collection, and dispose of assets and investments[12][13] - Despite the mitigation plans, significant uncertainty remains regarding the Group's ability to implement these plans and measures[14] Significant Accounting Policies The accounting policies adopted in these financial statements are consistent with the prior year, with new and revised standards having no material impact or requiring retrospective adjustments - The accounting policies adopted in the preparation of the unaudited condensed consolidated financial statements are consistent with those applied in the annual consolidated financial statements for the year ended December 31, 2024[15] - New and revised Hong Kong Financial Reporting Standards effective for accounting periods beginning on or after January 1, 2025, had no significant impact on the Group's financial statements and required no retrospective adjustments[15] Segment Information The Group operates under a centralized management model, with the Board of Directors treating the entire Group as a single business segment, thus no segment information is presented - The Group adopts centralized management, and the Board of Directors considers the entire Group as a single business segment, therefore no segment information is presented[17] Revenue For the six months ended June 30, 2025, the Group's revenue significantly decreased, primarily due to reduced sales of prefabricated assembled building components and decoration and landscaping services, with consulting and equipment sales revenue falling to zero Revenue Components (For the six months ended June 30) | Revenue Source | 2025 (HK$ Thousand) | 2024 (HK$ Thousand) | | :--- | :--- | :--- | | Sales of prefabricated assembled building components | 42,488 | 201,093 | | Decoration and landscaping services | 2,062 | 25,932 | | Rental income | 5,620 | 4,124 | | Consulting services | – | 3,489 | | Sales of prefabricated assembled building equipment | – | 651 | | Total Revenue | 50,170 | 235,289 | Other Income The Group's other income remained relatively stable during the reporting period, primarily derived from bank deposit interest and other miscellaneous income Other Income Components (For the six months ended June 30) | Income Source | 2025 (HK$ Thousand) | 2024 (HK$ Thousand) | | :--- | :--- | :--- | | Bank deposit interest income | 10 | 39 | | Others | 523 | 454 | | Total | 533 | 493 | Other Losses — Net For the six months ended June 30, 2025, the Group's net other losses increased, primarily comprising losses from disposal of equipment and fair value changes of investment properties Other Losses — Net (For the six months ended June 30) | Loss Source | 2025 (HK$ Thousand) | 2024 (HK$ Thousand) | | :--- | :--- | :--- | | Loss on disposal of equipment | (9,130) | (8,727) | | Net exchange loss | – | (9) | | Fair value changes of investment properties | (6,455) | – | | Others | (848) | (3,021) | | Total | (16,433) | (11,757) | Expenses by Nature The Group's total expenses for the six months ended June 30, 2025, significantly decreased, mainly due to substantial reductions in raw materials and consumables, employee benefits, and transportation costs, reflecting a contraction in business scale Expenses by Nature (For the six months ended June 30) | Expense Item | 2025 (HK$ Thousand) | 2024 (HK$ Thousand) | | :--- | :--- | :--- | | Raw materials and consumables used | 17,679 | 128,876 | | Employee benefit expenses | 44,777 | 63,485 | | Subcontracting charges | 11,825 | 15,448 | | Subcontracting charges related to decoration and landscaping services | – | 12,369 | | Depreciation | 52,503 | 58,009 | | Transportation expenses | 5,738 | 14,467 | | Legal and professional fees | 3,138 | 8,728 | | Total cost of sales, selling and distribution expenses and administrative expenses | 186,985 | 345,717 | Income Tax Expense The Group had no Hong Kong profits tax provision for the six months ended June 30, 2025, with PRC subsidiaries applying preferential corporate income tax rates of 25% or 15%, resulting in a significant reduction in current income tax expense - No Hong Kong profits tax provision was made as the Group had no estimated taxable profits in Hong Kong for the six months ended June 30, 2025[22] - The applicable corporate income tax rate for PRC subsidiaries is generally 25%, with some subsidiaries enjoying a preferential rate of 15%[22] Income Tax Expense (For the six months ended June 30) | Indicator | 2025 (HK$ Thousand) | 2024 (HK$ Thousand) | | :--- | :--- | :--- | | Current income tax — PRC corporate income tax | – | 360 | Dividends The Board of Directors does not recommend the payment of any dividends for the six months ended June 30, 2025 - The Board of Directors does not recommend the payment of any dividends for the six months ended June 30, 2025[23] Loss Per Share The Group's basic loss per share for the six months ended June 30, 2025, was 8.73 HK Cents, an increase from the prior year, with diluted loss per share being the same due to the anti-dilutive effect of share options Loss Per Share Calculation (For the six months ended June 30) | Indicator | 2025 | 2024 | | :--- | :--- | :--- | | Consolidated loss attributable to owners of the Company (HK$ Thousand) | (270,848) | (170,487) | | Weighted average number of ordinary shares in issue (Thousand shares) | 3,101,096 | 3,101,096 | | Basic loss per share (HK Cents) | (8.73) | (5.50) | Basic Loss Per Share Basic loss per share is calculated by dividing the consolidated loss attributable to owners of the Company by the weighted average number of ordinary shares in issue during the period - The consolidated loss attributable to owners of the Company was HK$270,848 thousand, resulting in a basic loss per share of 8.73 HK Cents[24] Diluted Loss Per Share Due to the anti-dilutive effect of share options, diluted loss per share for the six months ended June 30, 2025 and 2024, was equal to the respective basic loss per share - The calculation of diluted loss per share for the six months ended June 30, 2025 and 2024, did not include share options as their inclusion would have an anti-dilutive effect[25] - Consequently, the diluted loss per share for the six months ended June 30, 2025 and 2024, was equal to the respective basic loss per share[25] Trade and Other Receivables and Prepayments As of June 30, 2025, the Group's total trade and other receivables and prepayments decreased, with a significant increase in impairment provisions for trade receivables and a higher proportion of receivables over two years old Trade and Other Receivables and Prepayments (As of June 30) | Item | 2025 (HK$ Thousand) | 2024 (HK$ Thousand) | | :--- | :--- | :--- | | Trade receivables — Third parties | 852,664 | 973,546 | | Trade receivables — Related parties | 704,583 | 722,479 | | Impairment provision for trade and other receivables | (360,384) | (292,166) | | Total (after provision) | 1,511,446 | 1,722,876 | Ageing Analysis of Trade Receivables and Bills Receivable (As of June 30) | Ageing | 2025 (HK$ Thousand) | 2024 (HK$ Thousand) | | :--- | :--- | :--- | | Less than one year | 353,925 | 330,899 | | One to two years | 317,644 | 846,663 | | Over two years | 935,953 | 564,923 | | Total | 1,607,522 | 1,742,485 | - Impairment provision for trade and other receivables increased from HK$292,166 thousand as of December 31, 2024, to HK$360,384 thousand as of June 30, 2025[26] - Trade receivables and bills receivable with an ageing over two years significantly increased from HK$564,923 thousand as of December 31, 2024, to HK$935,953 thousand as of June 30, 2025[27] Trade and Other Payables As of June 30, 2025, the Group's total trade and other payables remained stable, but interest payable significantly increased, and the proportion of trade payables over one year old remained high Trade and Other Payables (As of June 30) | Item | 2025 (HK$ Thousand) | 2024 (HK$ Thousand) | | :--- | :--- | :--- | | Trade payables — Third parties | 1,047,032 | 1,083,001 | | Trade payables — Related parties | 16,072 | 16,692 | | Accrued tax liabilities | 122,583 | 135,738 | | Interest payable | 94,607 | 61,972 | | Total | 1,615,174 | 1,612,263 | Ageing Analysis of Trade Payables (As of June 30) | Ageing | 2025 (HK$ Thousand) | 2024 (HK$ Thousand) | | :--- | :--- | :--- | | Less than one year | 72,958 | 247,893 | | Over one year | 990,146 | 851,800 | | Total | 1,063,104 | 1,099,693 | - Interest payable increased from HK$61,972 thousand as of December 31, 2024, to HK$94,607 thousand as of June 30, 2025[29] - Trade payables with an ageing over one year increased from HK$851,800 thousand as of December 31, 2024, to HK$990,146 thousand as of June 30, 2025[29] Borrowings As of June 30, 2025, the Group's total borrowings slightly increased, and a significant portion of non-current borrowings was reclassified as current liabilities due to bank loan defaults, exacerbating liquidity pressure Borrowings Components (As of June 30) | Item | 2025 (HK$ Thousand) | 2024 (HK$ Thousand) | | :--- | :--- | :--- | | Total non-current borrowings | 817,834 | 719,994 | | Total current borrowings | 880,615 | 959,656 | | Total Borrowings | 1,698,449 | 1,679,650 | - The Group failed to repay principal of RMB245,454,000 (approximately HK$269,153,000) and interest of RMB86,277,000 (approximately HK$94,607,000) on several commercial bank borrowings by their due dates, constituting events of default[32] - Due to the default events, borrowings of RMB393,954,000 (approximately HK$431,990,000) became immediately repayable upon demand by lenders, of which RMB203,981,000 (approximately HK$223,676,000) was originally non-current and has been reclassified as current liabilities[32] - All borrowings are denominated in RMB and are secured by the Group's property, plant and equipment, right-of-use assets, and restricted cash deposits and/or guaranteed by subsidiaries or related parties[32] Management Discussion and Analysis This section provides management's perspective on the Group's operational performance, financial condition, and future strategies Business Review In the first half of 2025, the Group's operating performance was severely impacted by a complex global economy, a Chinese construction industry downturn, and a shrinking real estate market, leading to significant revenue and gross profit declines and expanded losses - In the first half of 2025, China's real estate development enterprises saw a 9.1% year-on-year decrease in housing construction area and a 20.0% decrease in new housing starts, with the prefabricated building industry facing shrinking market demand, market saturation, and overcapacity[33] Overview of Operating Performance for the First Half of 2025 | Indicator | H1 2025 | Y-o-Y Change | | :--- | :--- | :--- | | Sales Revenue | Approx. HK$50.2 million | Decreased by approx. 78.7% | | Gross Loss | Approx. HK$29.9 million | Shifted from profit to loss | | Net Loss Attributable to Parent Company | HK$270.8 million | Increased by approx. 58.9% | Deepening Transformation and Upgrading, Actively Expanding Diversified Markets Facing a severe market, the Group actively promotes business transformation from traditional housing construction to a technology-integrated application service enterprise, expanding into diversified markets like wind power towers, municipal construction, industrial park development, and overseas business, significantly increasing the proportion of transformation and state-owned enterprise orders in new contracts - The Group accelerated its technology marketing and all-staff marketing efforts, continuously promoting business transformation and market upgrading, committed to evolving into a technology-integrated application service enterprise[35] - Building on traditional housing construction, the Group vigorously promoted transformation and upgrading, and new business expansion, making progress in areas such as wind power towers, municipal construction, industrial park development, and overseas business[35] New Contract Situation in H1 2025 | Order Type | Amount | Proportion | | :--- | :--- | :--- | | Accumulated new contracts (all external orders) | RMB180 million | - | | New transformation and upgrading and new business orders | RMB54 million | 30% | | New central/state-owned enterprise orders | RMB114 million | 63% (Y-o-Y increase of 18 percentage points) | | New strategic client orders | RMB98 million | 54% | - Overseas markets developed rapidly, with the Group making progress on international orders, including the Hong Kong Light Public Housing project, California project in the US, El Salvador project, Riyadh project in Saudi Arabia, and Australian villa project, all currently being followed up[37] Optimizing Operations for Stability, Collaborating for Breakthroughs The Group maintains quality development in its PC business, operating 19 PC factories and 1 prefabricated decoration industrial park. In the first half, PC component sales contract value, production, and sales volumes all significantly decreased. The company is addressing market challenges by strengthening operational cash collection, optimizing personnel structure, and fostering cooperation and exchanges - As of June 30, 2025, the Group operates 19 PC factories and 1 prefabricated decoration industrial park nationwide, with an available capacity of 725,000 cubic meters[38] PC Component Business Data for H1 2025 | Indicator | H1 2025 | Y-o-Y Change | | :--- | :--- | :--- | | Sales Contract Value | Approx. RMB180 million | Decreased by approx. 44% | | Production Volume | Approx. 41,200 cubic meters | Decreased by approx. 48% | | Sales Volume | Approx. 43,000 cubic meters | Decreased by approx. 54% | - In the first half, operating cash collection reached RMB277 million, including RMB108 million in cash (accounting for 40%), and bad debt recovery of RMB10 million was achieved[39] - In the first half, 192 employees were optimized, representing a 27% reduction in personnel, leading to a 24% decrease in monthly labor costs to RMB5.31 million[39] - Held a partner conference, released customer satisfaction survey reports and supplier credit evaluation results, and participated in a carbon neutrality technology exchange conference to seek business cooperation opportunities[40][41] Future Outlook Looking ahead, the Group plans to leverage national "dual carbon" strategy and prefabricated building policy benefits, deepen its full industrial chain advantages, expand into emerging application scenarios like wind power hybrid towers, industrial multi-story buildings, and water conservancy projects, and activate existing renovation and rural revitalization markets. Concurrently, it will strengthen technological leadership, deepen digital-intelligent industrial integration, and actively expand international markets through a "domestic factory + overseas factory" model to upgrade the industry Continued Policy Benefits Release, Dual Carbon Drives Industry Upgrading With China's high-quality economic development and the deepening implementation of the "dual carbon" strategy, the construction industry will experience structural recovery and sustained growth momentum. Prefabricated construction, as a core carrier of green building, will continue to benefit from policy support, with market penetration expected to accelerate - The deepening implementation of the domestic "dual carbon" strategy injects definite growth momentum into the construction industry, with building carbon emissions accounting for 51.3% of the national total[42] - The Ministry of Housing and Urban-Rural Development's "14th Five-Year Plan" clearly targets prefabricated buildings to account for 30% of new construction by 2025, further increasing to 40% by 2030[42] Deepening Full Industrial Chain Advantages, Expanding into Emerging Application Scenarios The Group will consolidate its EMPC full-chain capabilities, integrate PC component, landscaping, and decoration businesses, and prioritize emerging areas like wind power hybrid towers, industrial multi-story buildings, and water conservancy projects. Concurrently, it will activate market opportunities through existing renovation, rural revitalization, and new infrastructure initiatives Consolidating Full Industrial Chain Synergistic Capabilities The Group will leverage its design-manufacturing-centralized procurement-logistics-assembly (EMPC) full-chain capabilities to deepen the integration of PC components, landscaping, and decoration businesses, building a service system covering the entire lifecycle of prefabricated buildings, with a focus on wind power hybrid towers, industrial multi-story buildings, and water conservancy projects - The Group will leverage its EMPC full-chain capabilities to deepen the integration of PC components, landscaping, and decoration businesses, building a service system covering the entire lifecycle of prefabricated buildings[43] - Key focus areas include wind power hybrid towers (targeting a 18% increase in single-project profit margin), industrial multi-story buildings (promoting standardized product packages to reduce comprehensive costs by 20%), and water conservancy projects (developing prefabricated caissons and culvert modules to reduce river treatment costs by 30%) in emerging fields[43][44] Activating Existing Market and New Infrastructure Opportunities The Group plans to launch "old house renovation + prefabricated decoration" packages through Jianye Xinsheng Life Resources, promote standardized prefabricated farmhouse product packages to capture the rural revitalization market, and expand into new infrastructure areas like municipal pipe networks and railway protection components - Leveraging Jianye Xinsheng Life Resources, the Group will launch "old house renovation + prefabricated decoration" packages, focusing on community renewal and industrialized interior decoration[45] - Promote standardized prefabricated farmhouse product packages, combining with new rural construction policies to capture the grassroots market[45] - Expand into new infrastructure areas such as municipal pipe networks and railway protection components, enriching order structure and improving capacity utilization[45] Strengthening Technological Leadership, Deepening Digital-Intelligent Industrial Integration The Group will adhere to its "technology leadership" strategy, increase R&D investment, and promote research and commercialization of cutting-edge prefabricated construction technologies, including the RIFF system and prestressed composite slabs. Concurrently, it will achieve standardized, industrialized, and intelligent operations across the entire industrial chain through digital management systems and BIM+ERP integration, with plans to promote its digital systems both domestically and internationally - The Group adheres to "technology leadership" as its development policy and will continue to focus on R&D investment, strengthening research into cutting-edge prefabricated building technologies[46] - Developed new large-span prestressed composite floor slab products and dry-wet hybrid connection high-efficiency prefabricated building technology products (RIFF system), and has obtained national patents[47] - The Group possesses the industry's most comprehensive and advanced digital management system, committed to creating an innovative full industrial chain collaborative model and implementing the "Home Smart Manufacturing" strategy[49] - Deepen BIM+ERP system integration to achieve data interoperability across design, manufacturing, and construction processes, controlling component production error rates to <0.5mm and reducing rework costs[49] - Plans to promote its digital systems within the industry, serving domestic and international PC manufacturing factories, leading the construction industry into digital-intelligent transformation and upgrading[50] - In terms of technology marketing, the full-year target is for technology marketing-driven orders to account for ≥35% of contract value[51] Deepening Domestic Ecological Cooperation, Breaking Through International Market Layout The Group will focus on the domestic market, securing state-owned enterprise resources, introducing strategic investors, and strengthening strategic client relationships and new client development. Concurrently, it will actively expand international markets with MIC modular buildings and integrated villas as core products, exploring an "equity investment + local OEM" industrial model Seizing Domestic Market Opportunities The Group plans to deepen cooperation with state-owned enterprises like China Construction and China Nuclear Construction, undertake large-scale infrastructure projects through EPC joint ventures, and introduce strategic investors such as China Energy Engineering and Tie Jian Tou to optimize debt-to-asset ratios and secure policy-favored orders. Concurrently, it will strengthen strategic client maintenance and new client development, and promote all-staff marketing - Secure state-owned enterprise resources, deepen cooperation with central enterprises like China Construction and China Nuclear Construction, undertake large-scale infrastructure projects through EPC joint venture models, and improve profit margins[52] - Introduce strategic investors such as China Energy Engineering and Tie Jian Tou to optimize debt-to-asset ratios and secure policy and order preferences[52] - Strengthen coordination, synergize resources from all parties to advance strategic client development, engage new clients, maintain existing clients, and sign strategic cooperation agreements[52] Expanding International Markets The Group will position low-rise technical products like villas for overseas export, with MIC modular buildings and integrated villas as core products, actively following up on key projects such as Hong Kong Light Public Housing and California villas in the US. Concurrently, it will engage in technology export and collaborate with state-owned enterprises involved in overseas housing construction, leveraging China's prefabricated building technology advantages - Product positioning focuses on low-rise technical products such as villas, with MIC modular buildings and integrated villas as core and primary export products for overseas markets[53] - Plans for the second half include signing contracts for the Hong Kong Light Public Housing and Bafang Canal renovation projects, and promoting the signing of the California villa project in the US[53] - Conduct technology export and engage in deep cooperation with central enterprises involved in overseas housing construction to achieve complementary advantages[54] Upgrading Industrial Model The Group will adopt a "domestic factory + overseas factory" dual production model, with MIC assembled houses as the primary overseas export product, supplemented by full dry-assembly system and RIFF system components. It will also reduce heavy asset investment through an "equity investment + local OEM" model and strive to establish nomadic factories in suitable countries - Adopt a "domestic factory + overseas factory" dual production model, with overseas exports primarily consisting of MIC assembled houses, supplemented by full dry-assembly system and RIFF system components[55] - Reduce heavy asset investment through an "equity investment + local OEM" model[55] - Strive to establish nomadic factories in suitable countries, potentially adopting a cooperation model with investors where Chuyu holds control, and investors bear transportation, factory lease, and operating costs, achieving shared profits[55] Revenue from Sales of Prefabricated Assembled Building Components As of June 30, 2025, the Group signed third-party prefabricated component sales contracts totaling approximately RMB181.47 million, with a total volume of 89,809 cubic meters. Sales revenue primarily came from third parties, with related party sales revenue falling to zero - As of June 30, 2025, the Group had signed third-party prefabricated component sales contracts totaling approximately RMB181,470,000, with a total volume of 89,809 cubic meters[56] Revenue from Sales of Prefabricated Assembled Building Components (For the six months ended June 30) | Sales Source | 2025 (HK$ Thousand) | 2024 (HK$ Thousand) | | :--- | :--- | :--- | | Sales revenue — Third parties | 42,488 | 173,072 | | Sales revenue — Related parties | – | 28,021 | | Total | 42,488 | 201,093 | - As of June 30, 2025, a cumulative total of 1,973 patents have been authorized[58] Operational Plants The Group operates 13 technology parks nationwide, with an estimated annual production capacity of 845 thousand cubic meters, covering a total land area of 2,022 mu and a total plant area of 332,855 square meters Overview of Operational Plants | Region | Estimated Annual Capacity (Approx. Thousand Cubic Meters) | Land Area (Approx. Mu) | Plant Area (Approx. Square Meters) | | :--- | :--- | :--- | :--- | | Nanjing Technology Park | 90 | 151 | 35,981 | | Zhengzhou Technology Park | 80 | 235 | 19,659 | | Hefei Technology Park | 70 | 154 | 22,398 | | Huizhou Technology Park | 65 | 61 | 22,284 | | Changsha Technology Park | 60 | 352 | 33,433 | | Zhoukou Technology Park | 60 | 135 | 20,639 | | Qingdao Jiaozhou Technology Park | 60 | 93 | 19,339 | | Luoyang Technology Park | 60 | 308 | 55,260 | | Jiaozuo Technology Park | 60 | 80 | 19,383 | | Huai'an Technology Park | 60 | 120 | 19,356 | | Nantong Technology Park | 60 | 100 | 26,154 | | Xiangtan Technology Park | 60 | 100 | 19,310 | | Chongqing Technology Park | 60 | 133 | 19,659 | | Total | 845 | 2,022 | 332,855 | Government Grants for the First Half of 2025 As a national high-tech enterprise, the Group's technological innovation capabilities are recognized by the government, receiving grants for contributions to energy conservation, environmental protection, industrial upgrading, and smart manufacturing, though the grant amount significantly decreased in H1 2025 - As a national high-tech enterprise, the Group's technological innovation capabilities are widely recognized by government authorities, receiving honorary awards and financial support[60] - The Group has made significant contributions to energy-saving and environmental protection projects, promoting industrial upgrading and transformation, and smart manufacturing, driving local employment and industrial development[60] Government Grants (For the six months ended June 30) | Indicator | 2025 (HK$ Thousand) | 2024 (HK$ Thousand) | | :--- | :--- | :--- | | Government grants | 401 | 5,470 | Financial Review This section provides a detailed analysis of the Group's financial performance and position during the reporting period Performance Review The Group's performance significantly deteriorated in H1 2025, with substantial revenue decline, increased gross loss, and expanded loss for the period, primarily from prefabricated assembled building engineering, decoration and landscaping services, patent technology licensing, consulting services, and equipment sales - The Group's principal activities are engaging in prefabricated assembled building engineering, decoration and landscaping services, granting patent technology usage rights, consulting services, and selling equipment in the People's Republic of China[62] Revenue The Group's revenue significantly decreased by approximately HK$185.1 million from HK$235.3 million in H1 2024 to HK$50.2 million in H1 2025, mainly due to fewer customers, reduced sales of prefabricated assembled building components and consulting services, and lower smart landscaping and smart decoration business revenue - The Group's revenue decreased by approximately HK$185,100,000 from approximately HK$235,300,000 for the six months ended June 30, 2024, to approximately HK$50,200,000 for the six months ended June 30, 2025[63] - The decrease in revenue was primarily attributable to a reduction in the number of customers, leading to decreased revenue from sales of prefabricated assembled building components and consulting services, as well as lower revenue from smart landscaping and smart decoration businesses[63] Cost of Sales The Group's cost of sales decreased from approximately HK$232.3 million in H1 2024 to HK$80.1 million in H1 2025, primarily due to reduced sales volume of prefabricated assembled building components - For the six months ended June 30, 2025, the Group recorded cost of sales of approximately HK$80,100,000 (2024: approximately HK$232,300,000)[65] - The decrease in cost of sales was primarily due to the reduced sales volume of prefabricated assembled building components[65] Other Income The Group's other income remained stable at approximately HK$0.5 million in H1 2025, primarily from bank deposit interest income - The Group's other income remained unchanged at approximately HK$500,000 for the six months ended June 30, 2024, and June 30, 2025[66] Other Losses — Net For the six months ended June 30, 2025, net other losses were approximately HK$16.4 million, mainly comprising losses from disposal of equipment and fair value changes of investment properties - For the six months ended June 30, 2025, net other losses were approximately HK$16,400,000, primarily including a loss on disposal of equipment of approximately HK$9,100,000 and fair value changes of investment properties of approximately HK$6,500,000[67] Selling and Distribution Expenses Selling and distribution expenses decreased by approximately HK$12.7 million from HK$22.2 million in H1 2024 to HK$9.5 million in H1 2025, directly related to the sales of prefabricated assembled building components - Selling and distribution expenses decreased by approximately HK$12,700,000 from approximately HK$22,200,000 for the six months ended June 30, 2024, to approximately HK$9,500,000 for the six months ended June 30, 2025[68] Administrative Expenses Administrative expenses increased by approximately HK$6.1 million from HK$91.3 million in H1 2024 to HK$97.4 million in H1 2025, primarily due to increased amortization expenses incurred by factories - Administrative expenses increased by approximately HK$6,100,000 from approximately HK$91,300,000 for the six months ended June 30, 2024, to approximately HK$97,400,000 for the six months ended June 30, 2025[69] - The increase in administrative expenses was due to increased amortization expenses incurred by factories[69] Finance Costs Finance costs decreased by approximately HK$3.7 million from HK$43.0 million in H1 2024 to HK$39.3 million in H1 2025, primarily from interest expenses on bank borrowings - Finance costs decreased by approximately HK$3,700,000 from approximately HK$43,000,000 for the six months ended June 30, 2024, to approximately HK$39,300,000 for the six months ended June 30, 2025[70] Loss for the Period Due to the aforementioned factors, the Group recorded a loss of approximately HK$286.5 million for the six months ended June 30, 2025, an increase from approximately HK$185.1 million in the same period of 2024 - For the six months ended June 30, 2025, the Group recorded a loss of approximately HK$286,500,000, compared to a loss of approximately HK$185,100,000 for the same period in 2024[71] Liquidity and Financial Resources As of June 30, 2025, the Group's current assets, cash and cash equivalents both decreased, with a deteriorating current ratio and an increased net debt-to-equity ratio, indicating heightened liquidity pressure Overview of Liquidity and Financial Resources (As of June 30) | Indicator | 2025 (HK$ Thousand) | 2024 (HK$ Thousand) | | :--- | :--- | :--- | | Current Assets | 1,646,400 | 1,862,700 | | Current Liabilities | 2,583,200 | 2,655,900 | | Current Ratio | 0.6 | 0.7 | | Total Borrowings | 1,698,400 | 1,679,700 | | Net Debt-to-Equity Ratio | 102% | 86.0% | | Cash and cash equivalents | 2,900 | 6,400 | | Restricted cash | 25,100 | 26,800 | - The Group had interest-bearing bank and other borrowings of approximately HK$1,698,400,000, all denominated in RMB, with annual interest rates ranging from 3.10% to 6.95%[74] Capital Structure As of June 30, 2025, the company had a total of 3,101,095,730 shares in issue, with a market capitalization of approximately HK$204.7 million - As of June 30, 2025, the total number of shares in issue was 3,101,095,730[75] - Based on the closing price of HK$0.066 per share on June 30, 2025, the Company's market capitalization was approximately HK$204,700,000[75] General Information This section provides information on the company's corporate governance, securities transactions, and board composition Corporate Governance Practices The company is committed to high corporate governance standards; the Chairman and CEO roles are combined, deviating from Listing Rules but deemed beneficial for strategy execution and operational efficiency, while one non-executive director was absent from the AGM due to business commitments - Mr. Guo Weiqiang holds both the Chairman and Chief Executive Officer positions, which deviates from code provision C.2.1 of the Corporate Governance Code set out in Appendix C1 of the Listing Rules[76] - The Board believes that combining the roles of Chairman and Chief Executive Officer facilitates the execution of the Group's business strategies and enhances its operational efficiency[76] - Mr. Wang Jun was unable to attend the Company's Annual General Meeting held on May 20, 2025, due to business commitments, which deviates from code provision C.1.6[77] - Save as disclosed, the Company has fully complied with the code provisions of the Corporate Governance Code set out in Appendix C1 of the Listing Rules[78] Code for Securities Transactions The company adopted the Model Code for Securities Transactions by Directors of Listed Issuers as its code of conduct, with all directors confirming full compliance, and a similar code adopted for relevant employees - The Company has adopted the Model Code for Securities Transactions by Directors of Listed Issuers as set out in Appendix C3 of the Listing Rules[79] - All Directors have confirmed that they have fully complied with the required standards set out in the Model Code for the six months ended June 30, 2025[79] Purchase, Sale or Redemption of Securities For the six months ended June 30, 2025, neither the company nor its subsidiaries purchased, sold, or redeemed any of the company's listed securities - For the six months ended June 30, 2025, neither the Company nor any of its subsidiaries purchased, sold, or redeemed any of the Company's listed securities[80] Review of Interim Results The company's Audit Committee has reviewed the Group's interim results and unaudited condensed consolidated financial statements for the six months ended June 30, 2025 - The Company's Audit Committee has reviewed the Group's interim results and unaudited condensed consolidated financial statements for the six months ended June 30, 2025[81] Board of Directors As of the announcement date, the Board comprises Executive Directors Mr. Guo Weiqiang (Chairman) and Ms. Wang Yuping, Non-executive Directors Mr. Wang Jun and Mr. Guo Jianfeng, and Independent Non-executive Directors Mr. Jiang Hongqing, Mr. Li Zhiming, and Mr. Ma Lishan - The Board of Directors includes Mr. Guo Weiqiang (Chairman) and Ms. Wang Yuping as Executive Directors; Mr. Wang Jun and Mr. Guo Jianfeng as Non-executive Directors; and Mr. Jiang Hongqing, Mr. Li Zhiming, and Mr. Ma Lishan as Independent Non-executive Directors[83]