中国高速传动(00658) - 2025 - 中期业绩

Announcement and Financial Summary Financial Summary This announcement presents the unaudited interim results of China High Speed Transmission Equipment Group Co., Ltd. for the six months ended June 30, 2025, summarizing key financial indicators that show a slight decrease in revenue but significant improvements in gross profit and net loss Financial Summary for the Six Months Ended June 30, 2025 | Metric | As of June 30, 2025 (RMB thousands) | As of June 30, 2024 (RMB thousands) | Change | | :--- | :--- | :--- | :--- | | Revenue from contracts with customers | 9,978,981 | 10,159,694 | -1.8% | | Gross Profit | 1,852,086 | 1,354,468 | 36.7% | | Loss for the period attributable to owners of the Company | (136,061) | (528,733) | -74.3% | | Basic and diluted loss per share (RMB) | (0.083) | (0.323) | -74.3% | | Total Assets (at period-end) | 38,635,484 | 37,709,287 | 2.5% | | Total Liabilities (at period-end) | 25,793,742 | 25,150,002 | 2.6% | | Net Assets (at period-end) | 12,841,742 | 12,559,285 | 2.2% | | Net assets per share (RMB) | 7.9 | 7.7 | 2.6% | | Gearing ratio (%) | 66.8 | 66.7 | 0.1 percentage points | Interim Condensed Consolidated Financial Statements Interim Condensed Consolidated Statement of Profit or Loss The statement of profit or loss indicates a slight revenue decrease, but a substantial increase in gross profit, a shift from operating loss to profit, and a significant narrowing of loss attributable to owners of the Company Key Data from Interim Condensed Consolidated Statement of Profit or Loss | Metric | As of June 30, 2025 (RMB thousands) | As of June 30, 2024 (RMB thousands) | | :--- | :--- | :--- | | Revenue from contracts with customers | 9,978,981 | 10,159,694 | | Cost of sales | (8,126,895) | (8,805,226) | | Gross Profit | 1,852,086 | 1,354,468 | | Operating profit / (loss) | 469,477 | (192,051) | | Profit / (loss) for the period | 241,619 | (347,131) | | Profit / (loss) for the period attributable to owners of the Company | (136,061) | (528,733) | | Basic and diluted loss per share (RMB) | (0.083) | (0.323) | Interim Condensed Consolidated Statement of Comprehensive Income The statement of comprehensive income shows improved profit for the period, but a total comprehensive loss attributable to owners of the Company due to fair value changes of equity instruments at fair value through other comprehensive income Key Data from Interim Condensed Consolidated Statement of Comprehensive Income | Metric | As of June 30, 2025 (RMB thousands) | As of June 30, 2024 (RMB thousands) | | :--- | :--- | :--- | | Profit / (loss) for the period | 241,619 | (347,131) | | Other comprehensive income / (loss), net of tax | 40,838 | (133,202) | | Total comprehensive income / (loss) for the period | 282,457 | (480,333) | | Total comprehensive income / (loss) for the period attributable to owners of the Company | (94,910) | (660,791) | Interim Condensed Consolidated Statement of Financial Position The statement of financial position as of June 30, 2025, indicates growth in both total assets and total liabilities, with a significant improvement in net current assets Key Data from Interim Condensed Consolidated Statement of Financial Position | Metric | As of June 30, 2025 (RMB thousands) | As of December 31, 2024 (RMB thousands) | Change | | :--- | :--- | :--- | :--- | | Total Assets | 38,635,484 | 37,709,287 | 2.5% | | Non-current Assets | 13,058,912 | 13,522,531 | -3.4% | | Current Assets | 25,576,572 | 24,186,756 | 5.7% | | Total Liabilities | 25,793,742 | 25,150,002 | 2.6% | | Current Liabilities | 18,239,131 | 18,152,973 | 0.5% | | Non-current Liabilities | 7,554,611 | 6,997,029 | 8.0% | | Net Assets | 12,841,742 | 12,559,285 | 2.2% | | Net Current Assets | 7,337,441 | 6,033,783 | 21.6% | Notes to the Interim Condensed Consolidated Financial Information Basis of Preparation and Accounting Policies This interim condensed consolidated financial information is prepared in accordance with IAS 34 and HKEX Listing Rules, adopting amendments to IFRS accounting standards without significant impact on financial position - This interim financial information is unaudited but has been reviewed by the audit committee and independent professional accountants, Grant Thornton Hong Kong Limited[4][11] - The Group has initially applied the amendments to IAS 21 "Lack of Exchangeability," which did not have a significant impact on its financial position and performance[12] Revenue and Operating Segment Information The Group's business is divided into four reportable segments: wind power and industrial gear transmission equipment, rail transit gear transmission equipment, trading business, and others, with wind power and industrial gear transmission equipment being the primary revenue source, and trading business having been suspended - The Group has four reportable operating segments: wind power and industrial gear transmission equipment, rail transit gear transmission equipment, trading business, and others (including lighting engineering, municipal landscape engineering, and design-procurement-construction engineering)[14][15] Revenue by Segment for H1 2025 | Segment | Revenue from external customers (RMB thousands) | | :--- | :--- | | Wind power and industrial gear transmission equipment | 9,802,673 | | Rail transit gear transmission equipment | 175,716 | | Trading business | － | | Others | 592 | | Total | 9,978,981 | Revenue by Region for H1 2025 | Region | Revenue from external customers (RMB thousands) | | :--- | :--- | | China | 8,797,341 | | United States | 722,901 | | Europe | 108,380 | | Other countries | 350,359 | | Total | 9,978,981 | Other Income and Net (Losses) / Gains Other income primarily consists of government subsidies and scrap sales, while net other losses are mainly affected by fair value losses on financial assets at fair value through profit or loss Composition of Other Income for H1 2025 | Item | 2025 (RMB thousands) | 2024 (RMB thousands) | | :--- | :--- | :--- | | Dividend income | 633 | 3,624 | | Government grants | 78,263 | 90,319 | | Sales of scrap and materials | 60,652 | 52,090 | | Others | 18,340 | 18,428 | | Total | 157,888 | 164,461 | Net Other (Losses) / Gains for H1 2025 | Item | 2025 (RMB thousands) | 2024 (RMB thousands) | | :--- | :--- | :--- | | Net (loss) / gain on disposal of property, plant and equipment | (2,031) | 8,143 | | Net foreign exchange gains | 41,631 | 1,143 | | Net fair value (loss) / gain on financial assets at fair value through profit or loss | (428,515) | 8,851 | | Impairment loss on property, plant and equipment (recognised) / reversed | (7,284) | 2,670 | | Total | (396,199) | 20,807 | Expenses by Nature Total expenses decreased, primarily due to a significant reduction in cost of inventories sold, although employee benefit expenses, depreciation, and inventory write-downs increased Expenses by Nature for H1 2025 | Item | 2025 (RMB thousands) | 2024 (RMB thousands) | | :--- | :--- | :--- | | Cost of inventories sold | 7,275,677 | 8,006,992 | | Employee benefit expenses | 941,656 | 918,920 | | Depreciation of property, plant and equipment | 390,406 | 351,199 | | Depreciation of right-of-use assets | 9,288 | 8,589 | | Write-down of inventories | 129,060 | 11,731 | | Other expenses | 435,226 | 430,128 | | Total | 9,181,313 | 9,727,559 | Net Finance Costs Net finance costs significantly decreased, mainly due to reduced interest expenses on bank and other borrowings and the absence of interest expenses on put option liabilities Net Finance Costs for H1 2025 | Item | 2025 (RMB thousands) | 2024 (RMB thousands) | | :--- | :--- | :--- | | Finance income (interest income from bank deposits) | 42,545 | 62,895 | | Interest expenses on bank and other borrowings | (187,748) | (273,802) | | Put option liabilities: reversal of discount | – | (129,000) | | Net finance costs | (145,203) | (338,240) | Income Tax Expense / (Credit) Income tax shifted from a credit to an expense, primarily due to an increase in current income tax and a decrease in deferred tax credit Income Tax Expense / (Credit) for H1 2025 | Item | 2025 (RMB thousands) | 2024 (RMB thousands) | | :--- | :--- | :--- | | Current income tax – expense for the period | 122,932 | 83,158 | | Deferred tax | (49,756) | (266,791) | | Income tax expense / (credit) | 73,176 | (183,633) | - Corporate income tax for PRC subsidiaries is levied at a rate of 25%, with some high-tech development enterprises enjoying a preferential rate of 15%[25] - Hong Kong profits tax is calculated on a two-tiered basis, with the first HK$2 million at 8.25% and the remainder at 16.5%[26] Loss Per Share and Dividends Basic loss per share significantly narrowed, and the Board of Directors does not recommend declaring an interim dividend Loss Per Share for H1 2025 | Metric | 2025 (RMB thousands) | 2024 (RMB thousands) | | :--- | :--- | :--- | | Loss attributable to owners of the Company | (136,061) | (528,733) | | Weighted average number of ordinary shares in issue (thousands) | 1,635,291 | 1,635,291 | | Basic loss per share (RMB) | (0.083) | (0.323) | - The Directors do not recommend the declaration of any interim dividend for the six months ended June 30, 2025[31] Trade and Other Receivables Total trade receivables increased, but trade receivables from trading business customers were fully provided for impairment loss, and the Group is pursuing legal actions or investigations for insurance redemption and EPC project-related amounts Trade and Other Receivables (net of loss allowance) | Item | As of June 30, 2025 (RMB thousands) | As of December 31, 2024 (RMB thousands) | | :--- | :--- | :--- | | Trade receivables | 7,607,642 | 6,159,052 | | Other receivables | 1,375,738 | 1,441,015 | | Total | 8,983,380 | 7,600,067 | - Trade receivables from trading business customers were fully provided for impairment loss of RMB 3,188,981,000[32] - The Group has initiated legal proceedings for RMB 612,600,000 receivable from an insurance company, with a favorable outcome expected[35] Impairment Loss on Financial Assets Recognized for H1 2025 | Item | 2025 (RMB thousands) | 2024 (RMB thousands) | | :--- | :--- | :--- | | Impairment loss on trade receivables recognized | 13,398 | 561,762 | | Impairment loss on other receivables recognized | 76,482 | 247,692 | | Total | 89,880 | 809,454 | Trade and Bills Payables and Other Payables Total trade and bills payables increased, while other payables decreased Trade and Bills Payables and Other Payables | Item | As of June 30, 2025 (RMB thousands) | As of December 31, 2024 (RMB thousands) | | :--- | :--- | :--- | | Trade payables | 4,982,816 | 4,287,778 | | Bills payables | 5,554,190 | 5,084,115 | | Other payables | 1,358,203 | 1,816,485 | | Total | 11,895,209 | 11,188,378 | Borrowings Total borrowings slightly increased, with a higher proportion of non-current borrowings and a lower proportion of current borrowings Composition of Borrowings | Item | As of June 30, 2025 (RMB thousands) | As of December 31, 2024 (RMB thousands) | | :--- | :--- | :--- | | Current borrowings | 4,163,025 | 4,237,783 | | Non-current borrowings | 5,341,462 | 4,928,562 | | Total | 9,504,487 | 9,166,345 | - Secured borrowings are collateralized by assets, including 100% equity interest in NGC Huai'an[41] Contingent Liabilities and Capital Commitments As of June 30, 2025, the Group had no financial guarantee liabilities but still had contracted capital commitments not yet provided for - As of June 30, 2025, bank loans granted to an associate have been fully repaid, and no liabilities for financial guarantees are recognized in the consolidated statement of financial position[42] Capital Commitments | Item | As of June 30, 2025 (RMB thousands) | | :--- | :--- | | Property, plant and equipment | 494,056 | Assets Pledged as Security The Group pledges bills receivable, property, plant and equipment, right-of-use assets, and pledged bank deposits as security for bank credit Total Pledged Assets | Item | As of June 30, 2025 (RMB thousands) | As of December 31, 2024 (RMB thousands) | | :--- | :--- | :--- | | Bills receivable | 237,245 | 220,059 | | Property, plant and equipment | 2,622,856 | 3,551,839 | | Right-of-use assets | 491,403 | 497,957 | | Pledged bank deposits | 3,296,512 | 2,810,765 | | Total | 6,648,016 | 7,080,620 | Business Review Overall Business Performance During the review period, the Group's sales revenue slightly decreased by 1.8%, but gross profit margin significantly improved to 18.6%, and loss attributable to owners of the Company narrowed by 74.3% Overall Business Performance for H1 2025 | Metric | 2025 (RMB thousands) | 2024 (RMB thousands) | Change | | :--- | :--- | :--- | :--- | | Sales revenue | 9,978,981 | 10,159,694 | -1.8% | | Gross profit margin | 18.6% | 13.3% | +5.3 percentage points | | Loss attributable to owners of the Company | (136,061) | (528,733) | -74.3% | | Basic loss per share (RMB) | (0.083) | (0.323) | -74.3% | - The reduction in loss was primarily due to the suspension of trading business, absence of significant impairment provisions, and increased revenue and profit from the wind power and industrial gear transmission equipment business[46] Wind Power Gear Transmission Equipment Sales revenue for wind power gear transmission equipment business increased by 61.5% year-on-year to RMB 8,867,412,000, with the Group leading in offshore large-megawatt wind power equipment and actively expanding overseas markets and technological innovation Sales Revenue of Wind Power Gear Transmission Equipment Business | Period | Sales revenue (RMB thousands) | Year-on-year growth | | :--- | :--- | :--- | | H1 2025 | 8,867,412 | 61.5% | | H1 2024 | 5,489,427 | - | - The Group is a leader in products and technology for offshore large-megawatt wind power gear transmission equipment, with large-megawatt products such as 13.6MW-20MW already delivered in batches[47] - Actively expanding overseas customers, including international wind turbine manufacturers like GE Vernova and Siemens Energy Wind Power, and strengthening cooperation through overseas subsidiaries[48] Industrial Gear Transmission Equipment Sales revenue for industrial gear transmission equipment business decreased by 19.3% year-on-year to RMB 935,261,000, as the Group adheres to a green development strategy, promotes product technology upgrades, and strengthens international expansion Sales Revenue of Industrial Gear Transmission Equipment Business | Period | Sales revenue (RMB thousands) | Year-on-year change | | :--- | :--- | :--- | | H1 2025 | 935,261 | -19.3% | | H1 2024 | 1,158,771 | - | - Adhering to a green development strategy, developing standardized, modular, intelligent products, and high-efficiency, high-reliability, low-energy consumption electromechanical control integrated drive systems[49] - Showing positive development trends in high-end equipment manufacturing and localization of core equipment, with significant improvement in overseas market applications[49] Rail Transit Gear Transmission Equipment Sales revenue for rail transit gear transmission equipment business increased by 29.4% year-on-year to RMB 175,716,000, with products widely used in high-speed rail and subway systems, achieving multiple international certifications and successful international market expansion Sales Revenue of Rail Transit Gear Transmission Equipment Business | Period | Sales revenue (RMB thousands) | Year-on-year growth | | :--- | :--- | :--- | | H1 2025 | 175,716 | 29.4% | | H1 2024 | 135,792 | - | - Products have obtained ISO/TS 22163, CRCC certification, and IRIS system "Silver Label" certification, successfully applied in rail transit transmission equipment in China and multiple countries and regions[51] Domestic and Export Sales Overseas sales increased by 19.8% year-on-year to RMB 1,181,640,000, accounting for 11.8% of total sales, with major customers located in the United States, Europe, India, and Brazil Overseas Sales and Proportion | Metric | H1 2025 (RMB thousands) | H1 2024 (RMB thousands) | Change | | :--- | :--- | :--- | :--- | | Overseas sales | 1,181,640 | 985,961 | 19.8% | | Percentage of total sales | 11.8% | 9.7% | +2.1 percentage points | Market Outlook and Challenges Facing global economic slowdown, severe damage to international trade order, and low-price competition and overcapacity in the wind power industry, the Group will respond through technological innovation, supply chain optimization, and expansion into emerging and overseas markets - The global environment is complex and volatile, while China's economy maintains steady progress, with GDP growing by 5.3% year-on-year in the first half[53] - The wind power industry faces challenges such as low-price competition, overcapacity, increasing share of gearbox self-production by turbine manufacturers, and intensifying international trade barriers[55] - The industrial gear industry has entered a mature market competition phase, with declining demand due to steel and cement industry capacity reduction, prompting the Group to "maintain existing markets" and "seek new growth" by expanding into emerging sectors and overseas exports[56] - With slowing growth in domestic subway construction, the Group will actively explore domestic and international markets for subway gear transmission equipment[57] Strategic Outlook for H2 2025 In the second half, the Group will continue to adhere to its strategic focus of "innovative thinking, zero-defect quality, professional service, and customer proximity," enriching its product matrix, enhancing quality and service, and anchoring green development with technological innovation leading transformation - The strategic focus for the second half is "innovative thinking, zero-defect quality, professional service, and customer proximity"[58] - The Group will continue to grasp market trends, tap market potential, and actively explore new spaces for business growth[58] - Anchoring green development, with technological innovation as the engine, leading economic green and low-carbon transformation[58] Financial Performance Analysis Revenue Analysis Total sales revenue decreased by 1.8% year-on-year, primarily due to the suspension of trading business, but wind power gear transmission equipment sales significantly increased Revenue Changes by Business Segment | Business Segment | 2025 (RMB thousands) | 2024 (RMB thousands) | Change | | :--- | :--- | :--- | :--- | | Wind power gear transmission equipment | 8,867,412 | 5,489,427 | 61.5% | | Industrial gear transmission equipment | 935,261 | 1,158,771 | -19.3% | | Rail transit gear transmission equipment | 175,716 | 135,792 | 29.4% | | Trading business | – | 3,373,243 | Not applicable | | Other products | 592 | 2,461 | -75.9% | | Total | 9,978,981 | 10,159,694 | -1.8% | - The trading business has been suspended since November 2024, which is one of the main reasons for the decrease in total revenue[59] Gross Profit Margin and Gross Profit Analysis Consolidated gross profit margin increased by 5.3 percentage points to 18.6%, and consolidated gross profit grew by 36.7% year-on-year, mainly due to increased gross profit from wind power and industrial gear transmission equipment and the suspension of the lower-margin trading business Changes in Gross Profit Margin and Gross Profit | Metric | 2025 (RMB thousands) | 2024 (RMB thousands) | Change | | :--- | :--- | :--- | :--- | | Consolidated gross profit margin | 18.6% | 13.3% | +5.3 percentage points | | Consolidated gross profit | 1,852,086 | 1,354,468 | 36.7% | Other Income and Net (Losses) / Gains Analysis Other income slightly decreased by 4.0%, while net other losses shifted from a gain to a loss year-on-year, primarily affected by fair value losses on financial assets at fair value through profit or loss Changes in Other Income and Net (Losses) / Gains | Metric | 2025 (RMB thousands) | 2024 (RMB thousands) | Change | | :--- | :--- | :--- | :--- | | Other income | 157,888 | 164,461 | -4.0% | | Net other (losses) / gains | (396,199) | 20,807 | From gain to loss | - Net other losses were primarily due to fair value losses on financial assets at fair value through profit or loss[63] Selling and Distribution Expenses Analysis Selling and distribution expenses increased by 36.3% year-on-year, with their percentage of sales revenue rising to 3.1%, mainly including product packaging, transportation, staff costs, and business expenses Changes in Selling and Distribution Expenses | Metric | 2025 (RMB thousands) | 2024 (RMB thousands) | Change | | :--- | :--- | :--- | :--- | | Selling and distribution expenses | 305,682 | 224,312 | 36.3% | | Percentage of sales revenue | 3.1% | 2.2% | +0.9 percentage points | Administrative Expenses Analysis Administrative expenses increased by 3.2% year-on-year, with their percentage of sales revenue rising to 3.0%, primarily due to increased professional service fees for legal and independent investigations Changes in Administrative Expenses | Metric | 2025 (RMB thousands) | 2024 (RMB thousands) | Change | | :--- | :--- | :--- | :--- | | Administrative expenses | 297,208 | 287,906 | 3.2% | | Percentage of sales revenue | 3.0% | 2.8% | +0.2 percentage points | - The increase in administrative expenses was mainly due to increased professional service fees for legal and independent investigations[65] Research and Development Costs Analysis Research and development costs increased by 10.1% year-on-year, with their percentage of sales revenue rising to 4.5%, indicating the Group's continued increase in R&D investment Changes in Research and Development Costs | Metric | 2025 (RMB thousands) | 2024 (RMB thousands) | Change | | :--- | :--- | :--- | :--- | | Research and development costs | 451,528 | 410,115 | 10.1% | | Percentage of sales revenue | 4.5% | 4.0% | +0.5 percentage points | Net Impairment Loss on Financial Assets Recognized Analysis Net impairment loss on financial assets recognized significantly decreased by 88.9%, primarily including impairment losses on trade and other receivables Changes in Net Impairment Loss on Financial Assets Recognized | Metric | 2025 (RMB thousands) | 2024 (RMB thousands) | Change | | :--- | :--- | :--- | :--- | | Net impairment loss on financial assets recognized | 89,880 | 809,454 | -88.9% | - Impairment losses primarily included impairment loss on trade receivables of RMB 13,398,000 and impairment loss on other receivables of RMB 76,482,000[67] Finance Costs Analysis Finance costs decreased by 53.2% year-on-year, mainly due to the absence of interest expenses on put option liabilities and a reduction in loan interest rates and scale Changes in Finance Costs | Metric | 2025 (RMB thousands) | 2024 (RMB thousands) | Change | | :--- | :--- | :--- | :--- | | Finance costs | 187,748 | 401,135 | -53.2% | - The decrease in finance costs was mainly due to the absence of interest expenses on put option liabilities (RMB 129,000,000 in the prior period) and a reduction in loan interest rates and scale[68] Assets, Liabilities and Liquidity Analysis Both total assets and total liabilities increased, with net current assets significantly rising by 21.6% and total cash and bank balances increasing by 8.4%, indicating improved liquidity Key Data on Assets, Liabilities and Liquidity | Metric | As of June 30, 2025 (RMB thousands) | As of December 31, 2024 (RMB thousands) | Change | | :--- | :--- | :--- | :--- | | Total Assets | 38,635,484 | 37,709,287 | 2.5% | | Total Liabilities | 25,793,742 | 25,150,002 | 2.6% | | Net Current Assets | 7,337,441 | 6,033,783 | 21.6% | | Total cash and bank balances | 7,248,677 | 6,684,984 | 8.4% | | Total borrowings | 9,504,487 | 9,166,345 | 3.7% | - The Directors believe the Group has sufficient funds to support working capital and capital expenditures[71] Risk Management and Capital Structure Capital Structure and Gearing Ratio The Group primarily funds its operations through shareholders' equity, bank credit, and internal resources, with the gearing ratio slightly increasing to 66.8% - The Group primarily funds its business operations through shareholders' equity, bank and other credit, and internal resources[73] Gearing Ratio | Metric | As of June 30, 2025 | As of December 31, 2024 | Change | | :--- | :--- | :--- | :--- | | Gearing ratio (%) | 66.8 | 66.7 | +0.1 percentage points | - As of June 30, 2025, borrowings at fixed interest rates accounted for approximately 41.6% of total borrowings[74] Exchange Rate Fluctuation Risk The Group faces exchange rate risk, but actively manages net foreign currency assets and liabilities to mitigate it, recording net exchange gains during the review period - The Group primarily operates in China, with export sales and imported equipment denominated in USD and EUR, exposing it to exchange rate risk[77] Net Exchange Gains | Period | Net exchange gains (RMB thousands) | | :--- | :--- | | H1 2025 | 41,631 | | H1 2024 | 1,143 | Interest Rate Risk Changes in bank loan interest rates will directly impact the Group's debt costs, and the Group will actively monitor credit policies and strengthen cash management to reduce finance costs - Changes in the loan prime rate announced by the People's Bank of China will directly impact the Group's debt costs[78] - The Group will actively monitor changes in credit policies, strengthen cash management, broaden financing channels, and strive to reduce finance costs[78] Other Information Employees and Remuneration As of June 30, 2025, the Group had approximately 8,107 employees, with staff costs of approximately RMB 941,656,000 Number of Employees and Staff Costs | Metric | As of June 30, 2025 | As of June 30, 2024 | | :--- | :--- | :--- | | Number of employees | 8,107 | 7,897 | | Staff costs (RMB thousands) | 941,656 | 918,920 | Material Acquisitions and Disposals During the review period, the Group did not undertake any material acquisitions or disposals of subsidiaries and associates - During the review period, the Group did not undertake any material acquisitions or disposals of subsidiaries and associates[80] Excerpt from Independent Practitioner's Review Report Basis for Qualified Conclusion The accountants could not obtain sufficient evidence regarding the accuracy of trading business-related amounts, EPC project progress and costs, and the valuation of financial assets at fair value through profit or loss - The total carrying amount of trade receivables and prepayments from trading business, approximately RMB 3,188,981,000 (June 30, 2025), has been fully impaired, but the accountants could not obtain sufficient evidence regarding their existence, accuracy, valuation, and completeness[82][84] - Trading business-related amounts are subject to criminal and independent investigations, and the accountants could not determine if they constitute related party balances and if disclosures are complete[83][84] - There is uncertainty regarding the total carrying amount of contract liabilities, prepayments, and inventories under EPC projects, and the accountants could not obtain sufficient evidence to confirm project progress and revenue/cost recognition[85][86][87] - For equity investments in three limited partnerships (financial assets at fair value through profit or loss), a fair value loss of RMB 423,300,000 was recognized, but the accountants could not obtain sufficient evidence regarding the accuracy of their carrying amount and valuation[88] Qualified Conclusion Except for the potential impact of the matters described in the "Basis for Qualified Conclusion" section, the accountants found no other matters suggesting the interim financial statements were not prepared in accordance with IAS 34 - Except for the potential impact of the matters described in the "Basis for Qualified Conclusion" paragraph, the accountants found no other matters suggesting that the interim financial statements were not prepared in all material respects in accordance with IAS 34[89] Views of the Company and Audit Committee on the Qualified Conclusion Treatment of Trade Receivables and Prepayments from Trading Business Management has fully provided for impairment losses on trading business-related amounts and is fully assisting criminal and independent investigations to resolve issues and protect company interests, with all bulk commodity trading operations suspended - Management has fully provided for impairment losses on trade receivables and prepayments arising from the trading business, considering this a prudent measure[90] - The relevant amounts are suspected of embezzlement and misappropriation, subject to criminal and independent investigations, and management will fully assist and take legal action[90] - All bulk commodity trading operations have been suspended[90] Treatment of Transactions Under EPC Projects Investigation into EPC project costs and progress is difficult due to incomplete handover information from former directors and uncooperative subcontractors; management is taking legal action and believes investigation results will help resolve matters related to the qualified conclusion - EPC projects were managed by former directors, with incomplete handover information making cost and progress investigations difficult[92] - Management is taking legal action and believes the results of the investigation and reconciliation will help resolve matters related to the qualified conclusion[92] Treatment of Financial Assets at Fair Value Through Profit or Loss Valuation of equity investments in three limited partnerships is challenging due to unavailable documents; management has engaged lawyers for due diligence and recognized a fair value loss of RMB 423 million based on prudence - Documents and information required for the valuation of equity investments in three limited partnerships are not yet available, and the valuation work is incomplete[94] - Management has engaged lawyers for due diligence, concluding that the recoverability of certain receivables is very low, and recognized a fair value loss of RMB 423 million based on prudent considerations[94] Corporate Governance and Other Matters Compliance with Corporate Governance Code The company complies with the Corporate Governance Code, but the roles of Chairman and CEO are performed by the same person, an arrangement the Board believes benefits business development and will be reviewed periodically - The Company complies with Appendix C1 "Corporate Governance Code" of the Listing Rules, except for deviation from Code Provision C.2.1 (roles of Chairman and Chief Executive should be separate)[96] - The Board believes that Mr. Hu Jichun serving as both Chairman and Chief Executive Officer is beneficial for business development and management and will periodically review the possibility of separating the roles[97] Standard Code for Securities Transactions by Directors The company has adopted the Standard Code and confirms that all directors have complied with its provisions during the review period - The Company has adopted Appendix C3 "Model Code for Securities Transactions by Directors of Listed Issuers" of the Listing Rules, and all Directors confirm compliance during the review period[98] Dealings in Listed Securities During the review period, neither the company nor its subsidiaries purchased, sold, or redeemed any of the company's listed securities - During the review period, neither the Company nor its subsidiaries purchased, sold, or redeemed any of the Company's listed securities[99] Events After Reporting Period Except as disclosed in this announcement, no other significant events affecting the company and its subsidiaries occurred after the review period and up to the date of this announcement - Except as disclosed in this announcement, no other significant events affecting the Company and its subsidiaries occurred after the review period and up to the date of this announcement[100]