烯石电车新材料(06128) - 2025 - 中期业绩

Announcement and Company Information This section covers disclaimers, legal notices, and the company's basic information regarding the unaudited interim financial results Disclaimer and Legal Notice This announcement is for illustrative purposes only, does not constitute a securities subscription invitation, and the HKEX bears no responsibility for its content - This announcement is for illustrative purposes only and does not constitute an invitation to subscribe for any securities[2] - Hong Kong Exchanges and Clearing Limited and The Stock Exchange of Hong Kong Limited take no responsibility for the contents of this announcement, make no representation as to its accuracy or completeness, and expressly disclaim any liability whatsoever[1] - The securities mentioned in this announcement have not been and will not be offered or sold to the public in Hong Kong, the United States, or any other jurisdiction under any securities laws and regulations[2] Company Information and Announcement Scope This announcement by Graphex Group Limited presents its unaudited interim consolidated financial results for the six months ended June 30, 2025, reviewed by the Audit Committee - The company name is GRAPHEX GROUP LIMITED (烯石電動汽車新材料控股有限公司), stock code: 6128[3] - This announcement presents the unaudited interim consolidated financial results for the six months ended June 30, 2025, including comparative figures for the same period in 2024[4] - This announcement has been reviewed by the Company's Audit Committee and complies with the requirements of the Listing Rules of the Stock Exchange of Hong Kong regarding information to be included in preliminary announcements of interim results[4] Financial Highlights This section provides an overview of key financial metrics, including revenue, adjusted segment EBITDA, and net loss, along with explanations of non-IFRS measures Overview of Key Financial Indicators For the six months ended June 30, 2025, total revenue decreased by 18% to HK$76,835 thousand, while adjusted segment EBITDA significantly increased by 103% to HK$9,525 thousand Key Financial Data for the Six Months Ended June 30, 2025 | Indicator | 2025 (HK$ thousand) | 2024 (HK$ thousand) | Change (%) | | :--- | :--- | :--- | :--- | | Revenue | 76,835 | 93,742 | (18)% | | Graphene Products Revenue | 48,389 | 61,489 | (21)% | | Landscape Design Revenue | 28,446 | 32,253 | (12)% | | Adjusted Segment EBITDA | 9,525 | 4,682 | 103% | | Loss Before Tax | (28,016) | (57,303) | (51)% | | Loss Attributable to Owners of the Company | (24,631) | (54,096) | (55)% | | Basic Loss Per Share (HK cents) | (6.23) | (16.83) | (63)% | Key Balance Sheet Data as of June 30, 2025 | Indicator | June 30, 2025 (HK$ thousand) | December 31, 2024 (HK$ thousand) | Change (%) | | :--- | :--- | :--- | :--- | | Total Assets | 891,292 | 809,348 | 10% | | Net Assets | 379,310 | 280,360 | 35% | | Shareholders' Equity | 379,270 | 280,359 | 35% | | Cash and Bank Balances | 11,242 | 15,547 | (28)% | | Debt | 222,023 | 235,980 | (6)% | Explanation of Non-IFRS Financial Measures The company uses adjusted segment EBITDA as a supplementary non-IFRS measure to evaluate operating performance, excluding non-recurring or non-operating items for clearer insights - Adjusted segment EBITDA is a non-IFRS financial measure used to assess operating performance[5] - This indicator is defined as profit before interest expense, tax, depreciation, and amortization, excluding changes in fair value of financial assets, goodwill write-offs, impairment losses, share of loss of associates, loss on derecognition of bills payable, unallocated other income and gains, and corporate expenses[6] - Management believes this indicator provides useful information for investors to understand and evaluate the company's overall operating performance and compare it with peer companies[5] Unaudited Interim Condensed Consolidated Financial Statements This section presents the unaudited interim condensed consolidated financial statements, including the income statement, statement of comprehensive income, and statement of financial position Condensed Consolidated Statement of Profit or Loss For the six months ended June 30, 2025, revenue was HK$76,835 thousand, gross profit was HK$27,789 thousand, and the loss for the period significantly narrowed to HK$24,592 thousand Summary of Condensed Consolidated Statement of Profit or Loss | Indicator | 2025 (HK$ thousand) | 2024 (HK$ thousand) | | :--- | :--- | :--- | | Revenue | 76,835 | 93,742 | | Cost of Sales | (49,046) | (63,375) | | Gross Profit | 27,789 | 30,367 | | Other Income and Gains | 3,017 | 6,934 | | Administrative Expenses | (49,975) | (67,270) | | Research and Development Costs | (2,554) | (7,760) | | Loss Before Tax | (28,016) | (57,303) | | Loss for the Period | (24,592) | (54,046) | | Loss Attributable to Owners of the Company | (24,631) | (54,096) | | Basic Loss Per Share (HK cents) | (6.23) | (16.83) | Condensed Consolidated Statement of Comprehensive Income For the six months ended June 30, 2025, the loss for the period was HK$24,592 thousand, with other comprehensive income from foreign currency translation differences narrowing the total comprehensive loss to HK$17,089 thousand Summary of Condensed Consolidated Statement of Comprehensive Income | Indicator | 2025 (HK$ thousand) | 2024 (HK$ thousand) | | :--- | :--- | :--- | | Loss for the Period | (24,592) | (54,046) | | Exchange Differences on Translation of Foreign Operations | 7,503 | (3,706) | | Other Comprehensive Income for the Period, Net of Tax | 7,503 | (3,706) | | Total Comprehensive Loss for the Period | (17,089) | (57,752) | | Total Comprehensive Loss Attributable to Owners of the Company | (17,128) | (57,802) | Condensed Consolidated Statement of Financial Position As of June 30, 2025, total assets increased by 10% to HK$891,292 thousand, with net assets growing significantly by 35% to HK$379,310 thousand, despite a net current liability of HK$43,274 thousand Summary of Condensed Consolidated Statement of Financial Position | Indicator | June 30, 2025 (HK$ thousand) | December 31, 2024 (HK$ thousand) | | :--- | :--- | :--- | | Total Non-Current Assets | 540,684 | 546,951 | | Total Current Assets | 350,608 | 262,397 | | Total Current Liabilities | 393,882 | 367,013 | | Net Current Liabilities | (43,274) | (104,616) | | Total Assets Less Current Liabilities | 497,410 | 442,335 | | Total Non-Current Liabilities | 118,100 | 161,975 | | Net Assets | 379,310 | 280,360 | | Total Equity | 379,310 | 280,360 | Notes to the Unaudited Interim Condensed Consolidated Financial Statements This section provides detailed notes on the company and group information, basis of preparation, accounting policy changes, and specific financial statement items Company and Group Information Graphex Group Limited, incorporated in the Cayman Islands, primarily engages in graphene product development for EV lithium-ion batteries and landscape design services - The company was incorporated in the Cayman Islands on November 25, 2013[11] - The Group's principal activities include the development and processing of graphene products (graphite anode materials for lithium-ion batteries used in electric vehicles, energy storage systems, and other applications) and landscape design services[11] Basis of Preparation and Going Concern Interim financial statements are prepared under IAS 34 in HKD; despite losses and net current liabilities, the Board believes the Group can continue as a going concern due to various liquidity measures - The interim condensed consolidated financial statements are prepared in accordance with International Accounting Standard 34 "Interim Financial Reporting" and presented in HKD[12] - The Group recorded a loss attributable to owners of the Company of HK$24,631 thousand for the six months ended June 30, 2025, and net current liabilities of HK$43,274 thousand at period-end[14] - The Board has taken several measures to improve liquidity, including securing a short-term loan of HK$50,000 thousand, implementing cost control, discussing new funding with potential investors, and receiving a bank's letter of intent for RMB400 million project financing[15][18] Basis of Preparation The interim condensed consolidated financial statements are prepared in HKD according to IAS 34 and should be read in conjunction with the Group's 2024 annual financial statements - The interim condensed consolidated financial statements are prepared in accordance with International Accounting Standard 34 "Interim Financial Reporting"[12] - The financial statements are presented in HKD, with all values rounded to the nearest thousand[12] Going Concern Basis Despite losses and net current liabilities, the Board, after reviewing cash flow forecasts and implementing measures like short-term loans and potential financing, believes the Group can continue as a going concern - The Group recorded a loss attributable to owners of the Company of HK$24,631 thousand and net current liabilities of HK$43,274 thousand for the six months ended June 30, 2025[14] - The Board has secured a short-term loan of HK$50,000 thousand, implemented cost control measures, and is discussing new funding with potential investors[15][18] - Graphex (Shandong) New Energy Technology Co Ltd has received a bank's letter of intent to provide RMB400 million in bank financing for its project[18] Changes in Accounting Policies Accounting policies adopted for the interim financial information are consistent with the prior year, with the adoption of new standards effective January 1, 2025, having no significant impact - The accounting policies adopted in preparing the interim condensed consolidated financial information are consistent with those applied in the Group's annual consolidated financial statements for the year ended December 31, 2024[17] - The adoption of IAS 21 (Amendments) "Lack of Exchangeability" had no significant impact on the preparation and presentation of the results and financial position for the current and prior periods[17] Revenue Analysis For the six months ended June 30, 2025, total revenue was HK$76,835 thousand, with graphene product sales contributing HK$48,389 thousand and landscape design services HK$28,446 thousand, primarily from Mainland China Revenue Analysis (By Type of Goods or Services) | Type of Goods or Services | 2025 (HK$ thousand) | 2024 (HK$ thousand) | | :--- | :--- | :--- | | Sales of Graphene Products | 48,389 | 61,489 | | Landscape Design Services | 28,446 | 32,253 | | Total Revenue | 76,835 | 93,742 | Revenue Analysis (By Geographical Market) | Geographical Market | 2025 (HK$ thousand) | 2024 (HK$ thousand) | | :--- | :--- | :--- | | Mainland China | 61,930 | 79,587 | | Hong Kong | 14,241 | 12,629 | | Others | 664 | 1,526 | | Total Revenue | 76,835 | 93,742 | Timing of Revenue Recognition | Timing of Revenue Recognition | 2025 (HK$ thousand) | 2024 (HK$ thousand) | | :--- | :--- | :--- | | Goods Transferred at a Point in Time | 48,389 | 61,489 | | Services Transferred Over Time | 28,446 | 32,253 | | Total Revenue | 76,835 | 93,742 | Operating Segment Information The Group operates two segments: graphene products and landscape design, with graphene products contributing HK$48,389 thousand in revenue and HK$10,563 thousand in adjusted EBITDA for the period - The Group's principal operating segments are the processing and sale of graphite and graphene-related products (Graphene Products Segment) and the provision of landscape design services (Landscape Design Segment)[20] Segment Revenue and Adjusted EBITDA | Segment | 2025 Revenue (HK$ thousand) | 2024 Revenue (HK$ thousand) | 2025 Adjusted EBITDA (HK$ thousand) | 2024 Adjusted EBITDA (HK$ thousand) | | :--- | :--- | :--- | :--- | :--- | | Graphene Products | 48,389 | 61,489 | 10,563 | 7,374 | | Landscape Design | 28,446 | 32,253 | (1,038) | (2,692) | | Total | 76,835 | 93,742 | 9,525 | 4,682 | Segment Revenue and Results For the six months ended June 30, 2025, external sales for the Graphene Products segment were HK$48,389 thousand, and for Landscape Design, HK$28,446 thousand, resulting in a total segment loss of HK$11,123 thousand Segment Revenue and Results (2025) | Segment | Sales to External Customers (HK$ thousand) | Segment Results (HK$ thousand) | | :--- | :--- | :--- | | Graphene Products | 48,389 | (13,886) | | Landscape Design | 28,446 | 2,763 | | Total | 76,835 | (11,123) | Segment Assets and Liabilities As of June 30, 2025, total segment assets were HK$838,313 thousand, with the Graphene Products segment accounting for HK$736,242 thousand and total segment liabilities amounting to HK$210,824 thousand Segment Assets and Liabilities (June 30, 2025) | Segment | Segment Assets (HK$ thousand) | Segment Liabilities (HK$ thousand) | | :--- | :--- | :--- | | Graphene Products | 736,242 | 120,671 | | Landscape Design | 102,071 | 90,153 | | Total | 838,313 | 210,824 | Other Segment Information As of June 30, 2025, the Group recognized a net reversal of impairment loss on financial and contract assets of HK$4,496 thousand, with total depreciation and amortization of HK$24,080 thousand Other Segment Information (June 30, 2025) | Indicator | Graphene Products (HK$ thousand) | Landscape Design (HK$ thousand) | Total (HK$ thousand) | | :--- | :--- | :--- | :--- | | Impairment Loss Recognized in Profit or Loss – Financial and Contract Assets | 1,579 | (6,075) | (4,496) | | Depreciation and Amortization | 22,425 | 1,655 | 24,080 | | Capital Expenditure | – | 49 | 49 | Other Income and Gains For the six months ended June 30, 2025, total other income and gains decreased to HK$3,017 thousand, primarily comprising service income, interest income, government grants, and reversal of payables Analysis of Other Income and Gains | Item | 2025 (HK$ thousand) | 2024 (HK$ thousand) | | :--- | :--- | :--- | | Service Income | 1,420 | 4,969 | | Interest Income | 682 | 786 | | Government Grants | 431 | 291 | | Reversal of Payables | 277 | – | | Total | 3,017 | 6,934 | - Government grants have been received with no unfulfilled conditions or contingencies[30] Finance Costs For the six months ended June 30, 2025, total finance costs slightly decreased to HK$8,249 thousand, mainly consisting of interest on interest-bearing borrowings, bills payable, and lease liabilities Analysis of Finance Costs | Item | 2025 (HK$ thousand) | 2024 (HK$ thousand) | | :--- | :--- | :--- | | Interest on Interest-Bearing Borrowings | 4,911 | 4,621 | | Interest on Convertible Notes | 510 | 928 | | Interest on Bills Payable | 2,295 | 2,871 | | Interest on Lease Liabilities | 533 | 558 | | Total | 8,249 | 8,978 | Components of Loss Before Tax For the six months ended June 30, 2025, the loss before tax was HK$28,016 thousand, influenced by cost of sales, depreciation, R&D costs, employee benefits, and a net reversal of impairment loss on financial assets Major Components of Loss Before Tax | Item | 2025 (HK$ thousand) | 2024 (HK$ thousand) | | :--- | :--- | :--- | | Cost of Sales | 49,046 | 63,375 | | Amortization and Depreciation | 24,425 | 24,826 | | Research and Development Costs | 2,554 | 7,760 | | Employee Benefit Expenses | 27,356 | 41,289 | | Net Impairment Loss on Financial and Contract Assets | (4,496) | 6,704 | Income Tax The Group's income tax varies by jurisdiction, with Hong Kong at 16.5%, certain Mainland China subsidiaries at a preferential 15%, others at 25%, and US subsidiaries at 21%, resulting in a total tax credit of HK$3,424 thousand - Hong Kong profits tax rate is 16.5%[33] - Pan Asia Landscape Design (Shanghai) Co Ltd, Qianhai Pan Asia Landscape Design (Shenzhen) Co Ltd, and Heilongjiang Mudanjiang Agricultural Reclamation Tan Ao Graphene Deep Processing Co Ltd enjoy a preferential corporate income tax rate of 15%[33][34] - Other Mainland China subsidiaries are taxed at the statutory corporate income tax rate of 25%, and Graphex Technologies, LLC in the US is taxed at 21%[34][35] Total Tax Credit for the Period | Item | 2025 (HK$ thousand) | 2024 (HK$ thousand) | | :--- | :--- | :--- | | Deferred Tax | (3,424) | (3,257) | | Total Tax Credit for the Period | (3,424) | (3,257) | Dividends The Board does not recommend the payment of any interim dividend for the six months ended June 30, 2025, consistent with the prior period - The Board does not recommend the payment of any interim dividend for the six months ended June 30, 2025[37] Loss Per Share Attributable to Owners of the Company For the six months ended June 30, 2025, basic loss per share attributable to owners of the Company significantly narrowed to 6.23 HK cents, calculated based on the period's loss and adjusted weighted average shares Loss Per Share Attributable to Owners of the Company | Indicator | 2025 (HK cents) | 2024 (HK cents) | | :--- | :--- | :--- | | Basic Loss Per Share | (6.23) | (16.83) | - Basic loss per share is calculated based on the loss attributable to owners of the Company of HK$24,631 thousand and the weighted average number of ordinary shares in issue of 395,606,713 during the period[38] - The weighted average number of ordinary shares used in the calculation of basic loss per share has been adjusted for the bonus element of the share consolidation and rights issue, and comparative figures have been restated[39] Trade and Bills Receivables As of June 30, 2025, net trade and bills receivables decreased to HK$105,678 thousand, with the Group providing credit terms of 2 to 6 months and maintaining a strict credit policy Trade and Bills Receivables | Item | June 30, 2025 (HK$ thousand) | December 31, 2024 (HK$ thousand) | | :--- | :--- | :--- | | Trade and Bills Receivables | 202,606 | 276,606 | | Impairment Provision | (96,928) | (94,545) | | Net Amount | 105,678 | 182,061 | - The Group's credit period is two months, extendable up to six months for key customers, with credit limits in place[40] Ageing Analysis of Trade and Bills Receivables | Ageing | June 30, 2025 (HK$ thousand) | December 31, 2024 (HK$ thousand) | | :--- | :--- | :--- | | Within 6 Months | 39,388 | 71,681 | | Over 6 Months but Within 1 Year | 45,596 | 41,076 | | Over 1 Year but Within 2 Years | 20,694 | 69,304 | | Total | 105,678 | 182,061 | Trade Payables As of June 30, 2025, total trade payables decreased to HK$31,405 thousand, are interest-free, and typically settled within three months Ageing Analysis of Trade Payables | Ageing | June 30, 2025 (HK$ thousand) | December 31, 2024 (HK$ thousand) | | :--- | :--- | :--- | | Within 1 Year | 29,280 | 49,364 | | Over 1 Year but Within 2 Years | 50 | 55 | | Over 2 Years but Within 3 Years | 19 | 19 | | Over 3 Years | 2,056 | 2,024 | | Total | 31,405 | 51,462 | - Trade payables are interest-free and normally settled within three months[42] Share Capital As of June 30, 2025, the company's issued and fully paid ordinary share capital was HK$46,949 thousand, reflecting changes from a 5-to-1 share consolidation and a rights issue that raised approximately HK$115.7 million Issued and Fully Paid Share Capital | Share Capital Type | June 30, 2025 (HK$ thousand) | December 31, 2024 (HK$ thousand) | | :--- | :--- | :--- | | Ordinary Shares | 46,949 | 11,738 | | Preference Shares | 3,236 | 3,236 | - The company completed a share consolidation on March 26, 2025, consolidating every five shares of HK$0.01 par value into one consolidated share of HK$0.05 par value[46] - The company completed a rights issue on May 21, 2025, allotting and issuing 704,226,370 shares on the basis of three rights shares for every one existing share held, raising net proceeds of approximately HK$115.7 million[46] Warrants As of June 30, 2025, the company had 341,911,763 outstanding warrants, exercisable at HK$0.17 per ordinary share, with their quantity and exercise price adjusted due to share consolidation and rights issue - As of June 30, 2025, the company had 341,911,763 outstanding warrants[47] - Each warrant entitles the holder to subscribe for one ordinary share of the company at an exercise price of HK$0.17 per ordinary share[47] - The number and exercise price of the warrants have been adjusted due to the share consolidation and rights issue[47] Events After Reporting Period and Comparative Figures No significant events affecting the Group occurred after June 30, 2025, and certain comparative figures have been restated for consistent presentation - No significant events affecting the Group occurred after the six months ended June 30, 2025[48] - Certain comparative figures have been restated to conform to the presentation for the current period[49] Events After Reporting Period No significant events affecting the Group have occurred after the six months ended June 30, 2025, other than those disclosed in this interim report - Save as disclosed in this interim report, no significant events affecting the Group have occurred after the six months ended June 30, 2025[48] Comparative Figures Certain comparative information has been restated to ensure consistency with the presentation requirements for the current period - Certain comparative figures have been restated to conform to the presentation for the current period[49] Approval of Financial Statements The Board of Directors approved and authorized the publication of these interim financial statements on August 28, 2025 - The Board of Directors approved and authorized the publication of the financial statements on August 28, 2025[50] Management Discussion and Analysis This section provides a comprehensive review of the Group's business and financial performance, liquidity, capital commitments, and future outlook Business Review For the six months ended June 30, 2025, graphene product revenue decreased due to competition, while landscape design revenue declined due to the slowdown in China's real estate market - Graphene Products segment revenue decreased by 21.3% year-on-year to approximately HK$48.4 million, accounting for 63% of total revenue, primarily due to intense competition leading to price reductions[51] - The Graphene Products segment's adjusted EBITDA increased by 43.2% year-on-year to approximately HK$10.6 million, mainly attributable to effective cost control measures[51] - Landscape Design Services segment revenue decreased by approximately 11.8% to approximately HK$28.4 million, primarily due to the slowdown in China's real estate development market[53] - The total value of new contracts for the landscape design business decreased by approximately 37.6% to approximately HK$29.7 million, with the number of new contracts falling from 57 to 43[55] Graphene Products Business Graphene product revenue decreased by 21.3% to HK$48.4 million, but adjusted EBITDA grew by 43.2% to HK$10.6 million due to cost control, with the company securing new patents for silicon-carbon anode materials - Graphene Products segment revenue decreased by 21.3% to approximately HK$48.4 million, while adjusted EBITDA increased by 43.2% to approximately HK$10.6 million[51] - Total production was approximately 5,000 tonnes of spherical graphite, with all products manufactured and sold in China[51] - The company has obtained three new patents and filed one new patent application related to innovative processing technology and manufacturing of silicon-carbon anode materials[52] Landscape Design Business Landscape design revenue decreased by 11.8% to HK$28.4 million due to the slowing Chinese real estate market, with new contracts totaling HK$29.7 million, a 37.6% reduction - Landscape Design Services segment revenue decreased by approximately 11.8% to approximately HK$28.4 million, primarily due to the slowdown in China's real estate development market[53] - For the six months ended June 30, 2025, the total value of new contracts decreased to approximately HK$29.7 million, a reduction of approximately 37.6% compared to the same period last year[55] - Approximately 71.4% of new contracts were for projects located in China, and approximately 28.6% were for projects located in Hong Kong[54] Financial Review Total revenue decreased by 18% to HK$76.8 million, but gross profit margin improved to 36%, and administrative expenses significantly reduced, leading to a 55% narrower loss attributable to owners of the company - Total revenue decreased by 18% year-on-year to approximately HK$76.8 million, primarily due to unfavorable market and economic conditions[56] - Cost of sales decreased by 22.7% to approximately HK$49 million, largely consistent with the decrease in revenue[57] - Gross profit margin increased from approximately 32% in the prior period to approximately 36%, primarily due to an increase in the gross profit margin of the Graphene Products segment[58] - Administrative expenses decreased by 25.7% to approximately HK$50 million, primarily due to a reduction in share-based payment expenses of approximately HK$11.6 million and a decrease in overall salaries of approximately HK$6.1 million[60] - A reversal of impairment loss on financial and contract assets of approximately HK$4.5 million was recognized, a 167.2% improvement compared to an impairment loss of approximately HK$6.7 million in the prior period, mainly due to the recovery of an other receivable of approximately HK$5.7 million[61] - Loss attributable to owners of the Company was approximately HK$24.6 million, a significant reduction from HK$54.1 million in the prior period[62] Revenue Total revenue for the first half of 2025 decreased by 18% to HK$76.8 million, with both graphene products and landscape design segments experiencing declines due to adverse market conditions - The Group's total revenue decreased to approximately HK$76.8 million, a year-on-year reduction of approximately 18%[56] - Revenue from the Graphene Products segment decreased by approximately 21.3% to approximately HK$48.4 million, and revenue from the Landscape Design segment decreased by approximately 11.8% to approximately HK$28.4 million[56] Cost of Sales For the six months ended June 30, 2025, the cost of sales decreased by 22.7% to approximately HK$49 million, consistent with the reduction in revenue from both operating segments - Cost of sales decreased to approximately HK$49 million, a reduction of approximately 22.7% compared to the prior period[57] - The decrease in cost of sales was broadly consistent with the reduction in revenue from both the Graphene Products segment and the Landscape Design segment[57] Gross Profit and Gross Profit Margin Gross profit decreased by 8.3% to HK$27.8 million, but the gross profit margin improved from 32% to 36%, primarily driven by an increased margin in the graphene segment - Gross profit decreased to approximately HK$27.8 million, a reduction of approximately 8.3% compared to the prior period[58] - Gross profit margin increased from approximately 32% in the prior period to approximately 36%, primarily due to an increase in the gross profit margin of the Graphene Products segment[58] Selling and Marketing Expenses Selling and marketing expenses decreased by 41.7% to approximately HK$0.7 million, mainly attributable to the reduction in revenue from the graphene segment - Selling and marketing expenses decreased to approximately HK$0.7 million, a reduction of approximately 41.7% compared to the prior period[59] - This decrease was primarily due to the reduction in revenue from the Graphene Products segment[59] Administrative Expenses Administrative expenses decreased by 25.7% to approximately HK$50 million, mainly due to a reduction in share-based payment expenses and overall salaries - Administrative expenses decreased to approximately HK$50 million, a reduction of approximately 25.7% compared to the prior period[60] - The decrease was primarily influenced by a reduction in share-based payment expenses of approximately HK$11.6 million and a decrease in the Group's overall salaries of approximately HK$6.1 million[60] Impairment Loss on Financial and Contract Assets The Group recognized a reversal of impairment loss of approximately HK$4.5 million on trade receivables, contract assets, and other receivables, a significant improvement from the prior period's impairment loss - The Group recognized a reversal of impairment loss on trade receivables, contract assets, and other receivables of approximately HK$4.5 million[61] - This reversal of impairment loss represents a 167.2% reduction compared to an impairment loss of approximately HK$6.7 million in the prior period[61] - The reduction was primarily due to the Group's recovery of an other receivable of approximately HK$5.7 million during the period[61] Net Loss For the six months ended June 30, 2025, the loss attributable to owners of the Company significantly narrowed to approximately HK$24.6 million, reflecting the combined benefits of cost control and impairment reversals - Loss attributable to owners of the Company was approximately HK$24.6 million, compared to approximately HK$54.1 million in the prior period[62] Liquidity, Financial Resources, and Gearing Ratio As of June 30, 2025, the Group's current ratio improved to 0.89x, cash and bank balances were HK$11.2 million, and the gearing ratio significantly decreased to 58.5% due to the rights issue Liquidity and Gearing Ratio | Indicator | June 30, 2025 (HK$ thousand) | December 31, 2024 (HK$ thousand) | | :--- | :--- | :--- | | Current Assets | 350,608 | 262,397 | | Current Liabilities | 393,882 | 367,013 | | Current Ratio | 0.89x | 0.71x | | Cash and Bank Balances | 11,242 | 15,547 | | Gearing Ratio | 58.5% | 84.2% | - The current ratio was approximately 0.89x, an improvement from 0.71x as of December 31, 2024, primarily due to the completion of the rights issue during the period[64] - The gearing ratio was approximately 58.5%, a significant decrease from 84.2% as of December 31, 2024[64] - The capital structure primarily comprises issued ordinary shares, preference shares, and debt securities, with outstanding corporate bonds of approximately HK$110.1 million, bills payable of approximately HK$39.2 million, and convertible notes of approximately HK$3.8 million at period-end[65] Contingent Liabilities As of June 30, 2025, the Group had no significant contingent liabilities, though interests in a wholly-owned subsidiary were pledged as security for convertible notes and warrants - As of June 30, 2025, the Group had no significant contingent liabilities[66] - The interests in Sky Global Limited, an indirect wholly-owned subsidiary of the company, were pledged to Jeffrey Abramovitz as beneficiary, related to his subscription of the company's convertible notes and warrants, with a total principal amount of US$15,000,000[67] Capital Commitments As of June 30, 2025, the Group had contracted capital commitments of HK$35,032 thousand for property, plant, and equipment, with significant planned investments in graphite deep processing facilities in Jixi and Nanshu Capital Commitments | Item | June 30, 2025 (HK$ thousand) | December 31, 2024 (HK$ thousand) | | :--- | :--- | :--- | | Contracted but Not Provided For Property, Plant and Equipment | 35,032 | 5,637 | - The company plans to establish a graphite deep processing production facility within the Jixi (Mashan) Graphite Industrial Park, with an estimated total investment of not less than RMB200 million for the first phase[69] - The Nanshu Town graphite anode material project (Phase I) has been delayed due to insufficient local power supply, with an estimated total investment of approximately RMB1 billion[70] - The second phase of the Nanshu Town graphite deep processing project has an estimated investment of RMB2 billion, primarily for the production and processing of lithium battery anode materials, with no formal agreements entered into to date[70] Foreign Currency Risk Operating primarily in Hong Kong and China with transactions mostly in HKD and RMB, the Group has not identified significant foreign currency risk and monitors its position closely - The Group primarily operates and invests in Hong Kong and China, with most transactions denominated and settled in HKD and RMB[71] - No significant foreign currency risk has been identified for financial assets in China, as their denominated currency is substantially the same as the functional currency of the relevant Group entities involved in the transactions[71] - The Board will closely monitor foreign currency positions and consider managing foreign currency risk through non-financial means, managing foreign currencies used for transactions, early and delayed payments, and receivables management, among other natural hedging techniques[71] Share Consolidation and Rights Issue During the six months ended June 30, 2025, the company completed a 5-to-1 share consolidation and a rights issue, resulting in changes to its authorized share capital and the issuance of 704,226,370 new shares - The company undertook a share consolidation, whereby every five issued and unissued shares of HK$0.01 par value were consolidated into one consolidated share of HK$0.05 par value[72] - The company conducted a rights issue on the basis of three rights shares for every one consolidated share held, at a subscription price of HK$0.170 per rights share[72] - The share consolidation became effective on March 26, 2025, changing the company's authorized share capital to HK$90,000,000. On May 22, 2025, the company allotted and issued 704,226,370 shares under the rights issue[73][74] Human Resources and Employee Remuneration As of June 30, 2025, the Group had 219 employees, offering competitive remuneration, comprehensive benefits, and share schemes to attract and retain talent - As of June 30, 2025, the Group had 219 employees[75] - Employee remuneration is determined based on job nature, market trends, and individual performance, with benefits including Mandatory Provident Fund, employee retirement schemes, social security contributions, medical coverage, insurance, and training and development programs[75] - The Group has a range of company and subsidiary-level share schemes to reward employee contributions and attract talent[76] Significant Investments and Future Plans Apart from disclosed capital commitments, there were no other significant investments, acquisitions, or disposals of subsidiaries during the review period, and no further major investment plans are currently authorized - Save as disclosed in this interim report, there were no other significant investments held, nor any significant acquisitions or disposals of subsidiaries during the review period[77] - As of the date of this interim report, the Board has not authorized any plans for other significant investments or additions to capital assets[77] Outlook Despite slower electrification in the West, global battery demand is rising, and the company remains committed to producing high-quality anode materials, exploring growth paths, and seeking new investment opportunities - Despite slower electrification progress in Western countries, demand for batteries has significantly increased in other parts of the world[78] - The Group will continue to focus on producing the highest quality battery anode materials and implement expansion plans as appropriate[78] - The company is exploring additional growth avenues, seeking new investment opportunities to improve its financial position, and closely monitoring market trends and strategic partnerships to maintain ongoing resilience and adaptability[78] Corporate Governance and Other Information This section details the company's commitment to high corporate governance standards, compliance with the Model Code, and information regarding the Audit Committee and interim results review Corporate Governance Practices The company is committed to high corporate governance standards, and the Board confirms compliance with the applicable code provisions of the Corporate Governance Code for the reporting period ended June 30, 2025 - The company is committed to achieving high standards of corporate governance to safeguard shareholders' interests and enhance corporate value and accountability[79] - The Directors confirm that the company has complied with the applicable code provisions of the Corporate Governance Code set out in Appendix C1 to the Listing Rules for the reporting period ended June 30, 2025[79] Standard Code for Directors' Securities Transactions The company has adopted the Model Code for Securities Transactions by Directors of Listed Issuers, and all directors confirmed compliance for the six months ended June 30, 2025 - The company has adopted the Model Code for Securities Transactions by Directors of Listed Issuers as set out in Appendix C3 to the Listing Rules as its code of conduct for directors' securities transactions[80] - All Directors confirmed their compliance with the required standards set out in the Model Code for the six months ended June 30, 2025[80] Purchase, Sale or Redemption of the Company's Listed Securities Neither the company nor its subsidiaries purchased, sold, or redeemed any of the company's listed securities during 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 during the six months ended June 30, 2025[81] Audit Committee The company's Audit Committee, comprising three independent non-executive directors with Mr. Liao Kwong Sang as chairman, reviews and oversees the Group's financial reporting and internal control procedures - The company has established an Audit Committee in accordance with Rule 3.21 of the Listing Rules and the Corporate Governance Code[82] - The Audit Committee is responsible for reviewing and overseeing the Group's financial reporting process and internal control procedures[82] - The Audit Committee comprises three independent non-executive directors: Mr. Liao Kwong Sang (Chairman), Ms. Tam Yip Fung Sin, and Mr. Wong Wan Choi[82] Review of Interim Results The unaudited interim results for the six months ended June 30, 2025, were reviewed by the Audit Committee, which deemed them prepared in compliance with applicable accounting standards and Listing Rules - The Group's interim results for the six months ended June 30, 2025, have not been reviewed by external auditors[83] - The interim results have been reviewed by the company's Audit Committee, which is of the opinion that their preparation complies with applicable accounting standards and requirements, as well as the Listing Rules, and that adequate disclosures have been made[83] Interim Dividend The Board does not recommend the payment of any interim dividend for the six months ended June 30, 2025, consistent with the prior period - The Board does not recommend the payment of any interim dividend for the six months ended June 30, 2025[84] Publication of Interim Results Announcement and Interim Report This announcement is published on the HKEX and company websites, and the interim report for the six months ended June 30, 2025, will be available on these websites in due course - This announcement is published on the HKEX website www.hkexnews.hk and the company's website www.graphexgroup.com[85](index=85&type=chunk) - The interim report for the six months ended June 30, 2025, will be available on the aforementioned websites in due course[85] Board of Directors As of August 28, 2025, the Board comprises three executive directors, one non-executive director, and three independent non-executive directors - As of August 28, 2025, the executive directors are Mr. Liu Hing Tat, Mr. Chan Yik Yan, and Mr. Qiu Bin[86] - The non-executive director is Mr. Ma Li Da[86] - The independent non-executive directors are Ms. Tam Yip Fung Sin, Mr. Wong Wan Choi, and Mr. Liao Kwong Sang[86]