中国石墨(02237) - 2025 - 中期业绩

Company Information This section provides key contact and professional service information for the company, including board composition, auditors, legal counsel, and share registrar Board and Committee Composition This section lists the members of the company's Board of Directors, including executive and independent non-executive directors, as well as the members and chairpersons of the Audit, Nomination, Remuneration, and Compliance Committees - The Board of Directors includes Mr. Zhao Liang, Chairman and Chief Executive Officer, Mr. Li Weihai, Executive Director, and four independent non-executive directors: Mr. Shen Shifu, Mr. Liu Ze Zheng, Ms. Zhao Jingran, and Mr. He Kaidong[4][6] - The Chairman of the Audit Committee is Mr. He Kaidong, the Chairman of the Nomination Committee is Mr. Zhao Liang, the Chairman of the Remuneration Committee is Mr. Liu Ze Zheng, and the Chairman of the Compliance Committee is Mr. Liu Ze Zheng[6] Company Contact and Professional Service Information This section provides key contact and service information for the company, including its principal place of business, registered office, company secretary, authorized representatives, independent auditor, legal counsel, share registrar, and principal bankers - The company's headquarters and principal place of business in China are located at Building 1, Graphite Development Zone, Yan Jun Farm, Luobei County, Hegang City, Heilongjiang Province, China[6] - The independent auditor is PricewaterhouseCoopers, and the legal counsel is Tian Yuan Law Firm[6][7] - The company's stock code is 2237[2][7] Definitions This section defines key terms and abbreviations used in the interim report to ensure clear and consistent understanding, covering time periods, mine names, company entities, offering-related terms, and major shareholders Key Terminology Definitions This section provides definitions for key terms and abbreviations used throughout the interim report, ensuring clarity and consistency in understanding the content - "First half of 2024" refers to the six months ended June 30, 2024, and "first half of 2025" refers to the six months ended June 30, 2025[10] - "Beishan Mine" refers to the graphite mine located approximately 28 kilometers northwest of Luobei County, Heilongjiang Province, for which the Group obtained mining rights in 2019[10] - "The Group" or "we" refers to China Graphite Group Limited and its subsidiaries[10] - "Mr. Zhao" refers to Mr. Zhao Liang, the Chairman of the Board, Executive Director, Chief Executive Officer, and controlling shareholder of the Company[13] Chairman's Report on 2025 Interim Results The Chairman's report highlights the company's performance in the first half of 2025, addressing industry opportunities and challenges, operational adjustments, and future development strategies Industry Overview and Challenges The Chairman's report indicates that the rapid development of new energy vehicles and new materials industries presents opportunities for the graphite industry, but also intensifies downstream market competition, leading to challenges such as low-price competition and inefficient resource utilization in the natural graphite sector - The rapid development of China's new energy vehicle and new materials industries brings significant opportunities for the graphite industry, but also intensifies fierce competition in the downstream market[18] - The natural graphite industry faces challenges such as low-price competition and inefficient resource utilization, with cost pressures being passed on to upstream material suppliers[18] Interim Performance Review The Group achieved total revenue of RMB 39.8 million in the first half of 2025, a 9.3% year-on-year increase, with gross profit significantly growing by 106.9% to RMB 6.0 million, and gross margin improving by 7.0 percentage points to 15.0%, while net loss decreased compared to the same period last year Interim Performance in First Half of 2025 | Indicator | First Half of 2025 (RMB million) | First Half of 2024 (RMB million) | Year-on-Year Change (%) | | :--- | :--- | :--- | :--- | | Total Revenue | 39.8 | 36.4 | +9.3% | | Gross Profit | 6.0 | 2.9 | +106.9% | | Gross Margin | 15.0% | 8.0% | +7.0 percentage points | | Net Loss | (11.9) | (16.2) | -26.5% (Loss reduction) | | Revenue from Spherical Graphite and By-products | 4.8 | 10.2 | -52.9% | | Revenue from Flake Graphite Concentrate | 30.3 | 25.1 | +20.7% | | Revenue from Unprocessed Marble | 4.6 | - | - | Production and Operations In the first half of 2025, following the traditional shutdown period in Luobei County, the Group rationally adjusted its operational strategy in response to capacity expansion and intensified homogeneous competition, focusing on product quality improvement and cost reduction. Sales volume of spherical graphite decreased by 23.6%, while sales volume of flake graphite concentrate increased by 22.8%, as the Group strategically reallocated resources to the flake graphite concentrate business - The first quarter of the first half of 2025 was the traditional shutdown period for graphite enterprises in Luobei County, with significant capacity expansion in some key domestic graphite producing areas, intensifying homogeneous competition[20] - After resuming production, the Group rationally adjusted its operational strategy, actively improving product quality and maximizing cost reduction, leading to slight improvements in sales and effective cost control[20] Sales Volume of Major Products in First Half of 2025 | Product | Sales Volume in First Half of 2025 (tons) | Year-on-Year Change (%) | | :--- | :--- | :--- | | Spherical Graphite | 705 | -23.6% | | Flake Graphite Concentrate | 12,409 | +22.8% | - Given the weak demand and price competition in the downstream anode material market, the Group has strategically reallocated resources to the flake graphite concentrate business[21] Prudent Development and Future Outlook The Group is leveraging the rich, high-grade graphite resources of the Beishan Mine to reduce costs and ensure profitability through its own ore supply. It is currently applying for mining rights below 150 meters above sea level and actively advancing the construction of new beneficiation and processing plants to secure long-term capacity, while maintaining an optimistic yet cautious approach to future industry development - The Beishan Mine has abundant and high-grade graphite resources; using ore from its own mine can achieve upstream and downstream synergy, reducing costs and ensuring profitability[22] - The Beishan Mine's mining permit covers elevations from 150 to 274 meters above sea level, with graphite ore reserves of approximately 7.0 million tons; the Group is currently applying for mining rights for resources below 150 meters above sea level[22] - The Group is actively advancing the construction of new beneficiation and processing plants at Beishan, funded by proceeds from its initial public offering, to secure long-term capacity[22] - Despite the anode material and graphite industries entering an adjustment period, the Group remains optimistic about the industry's future and will prudently adjust its development pace according to market changes[22] Continuous Enhancement of Scientific Research Capabilities The Group has been deeply rooted in the natural graphite industry for over two decades, adhering to the philosophy of "innovation-driven development." It has collaborated with renowned domestic universities to research and develop advanced technologies such as flotation column technology, graphene processing from micronized graphite, and fluorine-free purification. In the future, it will continue to deepen innovation, establish strategic partnerships, focus on key areas, enhance industrial technology levels, and forge high-value-added products - The Group has been deeply rooted in the natural graphite industry for over two decades, adhering to the philosophy of "accumulating before innovating, and innovating with accumulation," continuously deepening innovation leadership[23] - It has successively collaborated with several renowned domestic universities and research institutes, undertaking and completing multiple major scientific research projects, accumulating strong product research and development capabilities[23] - It has innovatively developed advanced processes such as flotation column technology for short-process graphite beneficiation, graphene processing from micronized graphite, and fluorine-free purification[23] - In the future, it will deeply implement the "innovation-driven development" strategy, establish strategic partnerships with upstream and downstream enterprises, focus on key areas, accelerate the transformation of scientific and technological achievements, enhance industrial technology levels, and forge high-value-added products[23] Corporate Governance The Group adheres to principles of openness, transparency, and efficiency in corporate governance, strictly complying with listing rules to ensure a high standard of governance. Through a diversified board structure, the professional experience of independent non-executive directors, compliant operations, and a robust risk management system, it ensures healthy corporate operations - The Group consistently adheres to principles of openness, transparency, and efficiency in corporate governance, strictly complying with listing rules to ensure a high standard of corporate governance[24] - It adheres to a diversified board member structure policy and director nomination policy, fully leveraging the experience and expertise of independent non-executive directors to improve the corporate governance structure and decision-making mechanisms[24] - It insists on compliant operations, enhances compliance management capabilities, strengthens a company-wide compliance culture, and improves the risk management system, reinforcing supervision in key areas to ensure healthy corporate operations[24] Social Responsibility and Corporate Honors As the first listed enterprise in Hegang City, Heilongjiang Province, the Group prioritizes employee well-being, creating a safe and healthy work environment and promoting a diverse and equitable culture. It also integrates environmental protection into daily management, striving for harmonious coexistence between humans and nature, and has been awarded the title of "Green Factory in the Non-Metallic Mineral Industry" - The Group believes employees are the foundation of the enterprise, striving to create a safe and healthy working environment, committed to protecting employee rights, and advocating a diverse and equitable work culture[26] - The Group highly values the impact of its business operations on the environment and nature, integrating environmental protection concepts into internal daily management and work to achieve a vision of harmonious coexistence between humans and nature[26] - The Group was awarded the honorary title of "Green Factory in the Non-Metallic Mineral Industry" by the China Non-Metallic Minerals Industry Association[26] Full Year and Future Outlook In the first half of 2025, China's new energy vehicle production and sales both achieved double-digit growth, continuously unleashing industrial vitality. Looking ahead to the second half, under "two new" policies and new product supply, automotive consumption is expected to continue growing. Although the natural graphite industry is in an adjustment period, the Group remains optimistic about its medium-to-long-term market prospects, will adjust its development pace according to market changes, and build a mutually beneficial industrial ecosystem - In the first half of 2025, China's automobile production and sales both exceeded 15 million units for the first time, with new energy vehicle production and sales increasing by approximately 41.4% and 40.3%, respectively[27] - Looking ahead to the second half, the "two new" policies will continue to be implemented in an orderly manner, coupled with a continuous enrichment of new product supply from enterprises, which will help drive sustained growth in automotive consumption[27] - The natural graphite industry is currently in a phased adjustment period, but from a medium-to-long-term perspective, the Group is optimistic about its market prospects, driven by the deepening implementation of national "dual carbon" policies and the emphasis on strategic non-metallic mineral resources[27] - The Group will adjust its development pace according to market changes, establish cooperative relationships with upstream and downstream enterprises, and build a standardized, orderly, and mutually beneficial new graphite industry ecosystem[27] Acknowledgements The Chairman, on behalf of the Board, extends sincere gratitude to shareholders, customers, and all sectors of society, and expresses deep appreciation for the hard work and dedication of all Group employees - The Chairman, on behalf of the Board, extends sincere gratitude to shareholders and customers for their continued trust, and to all sectors of society for their invaluable support[29] - The Chairman expresses deep appreciation for the hard work and dedication of all Group employees[29] Management Discussion and Analysis This section provides a detailed analysis of the group's operational and financial performance, including exploration, mining, costs, revenue, expenses, liquidity, and risk management Exploration, Development and Mining Production Activities In the first half of 2025, the Group did not conduct exploration drilling or development contracts at the Beishan Mine, focusing primarily on mining activities and waste rock removal to obtain unprocessed graphite ore. Total material extracted during the period was approximately 1,806,000 tons, of which unprocessed graphite ore was approximately 221,000 tons, a significant year-on-year increase. Some mining production activities were subcontracted to third parties, leading to increased related expenses - In the first half of 2025, the Group did not conduct any exploration drilling or enter into any contracts or commitments related to development activities at the Beishan Mine[31] - The Group focused on mining activities and removing waste rock at the Beishan Mine to obtain unprocessed graphite ore[31] Mined Material Volume at Beishan Mine | Material Type | First Half of 2025 (tons) | First Half of 2024 (tons) | | :--- | :--- | :--- | | Total Material | 1,806,000 | 1,385,000 | | Unprocessed Marble and Waste Rock | 1,585,000 | 1,256,000 | | Unprocessed Graphite Ore | 221,000 | 129,000 | - The Group subcontracted certain mining production activities to independent third parties, totaling approximately RMB 11.0 million (first half of 2024: RMB 8.4 million), primarily due to increased mining activities during the period[32] Mining Costs Mining costs increased to approximately RMB 14.0 million in the first half of 2025, up from RMB 10.5 million in the same period last year, mainly due to the increased total volume of extracted materials, leading to higher blasting services, machinery rental, and fuel costs Mining Cost Breakdown | Item | First Half of 2025 (RMB thousand) | First Half of 2024 (RMB thousand) | | :--- | :--- | :--- | | Total | 13,999 | 10,450 | | Capitalized Portion | 4,622 | 6,973 | | Portion included in cost of mined graphite ore | 4,882 | 2,435 | | Portion included in cost of mined marble | 4,495 | 1,042 | - Mining costs increased from approximately RMB 10.5 million in the first half of 2024 to approximately RMB 14.0 million in the first half of 2025[33] - The increase in costs was mainly due to the increased total volume of materials mined in the first half of 2025, leading to an increase of approximately RMB 0.7 million in blasting service expenses, RMB 1.0 million in machinery rental expenses, and RMB 1.0 million in fuel costs for mining equipment, respectively[33] Financial Review The Group's total revenue increased by 9.3% year-on-year in the first half of 2025, with gross profit significantly growing by 106.9%, and gross margin improving to 15.0%. Despite a decline in spherical graphite sales, this was partially offset by increased sales of flake graphite concentrate and unprocessed marble. Through cost control, net loss significantly narrowed Revenue Revenue by Business Segment | Business Segment | First Half of 2025 (RMB thousand) | Proportion (%) | First Half of 2024 (RMB thousand) | Proportion (%) | | :--- | :--- | :--- | :--- | :--- | | Sales of Spherical Graphite and By-products | 4,836 | 12.2 | 10,233 | 28.1 | | Sales of Flake Graphite Concentrate | 30,323 | 76.2 | 25,107 | 68.9 | | Sales of Unprocessed Marble | 4,636 | 11.6 | 1,097 | 3.0 | | Total | 39,795 | 100.0 | 36,437 | 100.0 | Revenue from Sales of Spherical Graphite and By-products - Revenue from sales of spherical graphite and by-products decreased from approximately RMB 10.2 million in the first half of 2024 to approximately RMB 4.8 million in the first half of 2025, with its proportion of total revenue falling from 28.1% to 12.2%[34][38] Spherical Graphite and By-products Sales Data | Product | Period | Revenue (RMB thousand) | Sales Volume (tons) | Average Selling Price (RMB/ton) | | :--- | :--- | :--- | :--- | :--- | | Spherical Graphite (SG-9) | 2025 H1 | 3,328 | 418 | 7,962 | | Spherical Graphite (SG-17) | 2025 H1 | 1,272 | 287 | 4,432 | | Spherical Graphite (SG-10) | 2024 H1 | 4,867 | 423 | 11,506 | | Spherical Graphite (SG-9) | 2024 H1 | 4,204 | 500 | 8,408 | | Micronized Graphite Powder | 2025 H1 | 236 | 206 | 1,146 | | Micronized Graphite Powder | 2024 H1 | 1,162 | 986 | 1,178 | Revenue from Sales of Flake Graphite Concentrate - Revenue from sales of flake graphite concentrate increased from approximately RMB 25.1 million in the first half of 2024 to approximately RMB 30.3 million in the first half of 2025, with its proportion of total revenue increasing from 68.9% to 76.2%[34][38] Flake Graphite Concentrate Sales Data | Product Type | Period | Revenue (RMB thousand) | Sales Volume (tons) | Average Selling Price (RMB/ton) | | :--- | :--- | :--- | :--- | :--- | | 193 | 2025 H1 | 2,451 | 1,029 | 2,382 | | 194 | 2025 H1 | 18,376 | 7,415 | 2,478 | | 195 | 2025 H1 | 7,310 | 2,770 | 2,639 | | Other | 2025 H1 | 2,186 | 1,195 | 1,829 | | Total | 2025 H1 | 30,323 | 12,409 | 2,444 | | Total | 2024 H1 | 25,107 | 10,109 | 2,484 | Revenue from Sales of Unprocessed Marble - Revenue from sales of unprocessed marble in the first half of 2025 was approximately RMB 4.6 million, a significant increase from RMB 1.1 million in the first half of 2024[40] - The increase in sales was mainly due to increased demand for construction projects from certain customers in nearby areas and the sales team's efforts to develop new customers[40] Cost of Sales - Cost of sales increased to approximately RMB 33.8 million in the first half of 2025, an increase of approximately 0.9% from approximately RMB 33.5 million in the first half of 2024, consistent with the increase in revenue[41] - Despite the increase in cost of sales, improved production efficiency resulted in savings of approximately RMB 1.7 million in utilities, partially offset by an increase of approximately RMB 0.9 million in maintenance costs for production machinery and workplaces[41] - The remaining increase in production costs was mainly due to increased mining expenses, such as rental costs for mining equipment and their fuel costs, which rose with increased mining activities in the first half of 2025[41] Gross Profit and Gross Margin Gross Profit and Gross Margin by Business Segment | Business Segment | Gross Profit in First Half of 2025 (RMB thousand) | Gross Margin in First Half of 2025 (%) | Gross Profit in First Half of 2024 (RMB thousand) | Gross Margin in First Half of 2024 (%) | | :--- | :--- | :--- | :--- | :--- | | Sales of Spherical Graphite and By-products | (352) | (7.3) | (2,172) | (21.2) | | Sales of Flake Graphite Concentrate | 6,196 | 20.4 | 5,040 | 20.1 | | Sales of Unprocessed Marble | 141 | 3.0 | 55 | 5.0 | | Total | 5,985 | 15.0 | 2,923 | 8.0 | - The Group's gross profit increased from approximately RMB 2.9 million in the first half of 2024 to approximately RMB 6.0 million in the first half of 2025, with gross margin increasing from 8.0% to 15.0%[42] - The general increase in gross margin was mainly attributable to management's adjustment of production strategies and implementation of cost control measures, such as efficient utilization of utilities, streamlined human resource allocation, and enhanced equipment maintenance[43] Other Income and Other Gains - Other income and gains decreased from RMB 1.3 million in the same period of 2024 to approximately RMB 0.5 million in the first half of 2025[44] - This decrease was primarily due to a reduction in government grants from approximately RMB 1.6 million in the first half of 2024 to approximately RMB 0.5 million in the first half of 2025[44] Selling and Distribution Expenses - In the first half of 2025, selling and distribution expenses increased to approximately RMB 3.3 million, an increase of approximately 32.0% from approximately RMB 2.5 million in the first half of 2024[45] - The increase in expenses was mainly due to an increase of approximately RMB 0.9 million in transportation costs, resulting from product deliveries to major customers located far from operational sites[45] General and Administrative Expenses - In the first half of 2025, general and administrative expenses decreased to approximately RMB 12.0 million, a decrease of approximately 8.4% from approximately RMB 13.1 million in the first half of 2024[46] - This decrease was mainly due to the Group's cost control measures, including a reduction in salaries of approximately RMB 0.5 million, a reduction in utilities for administrative offices of approximately RMB 0.2 million, and a reduction in office expenses of approximately RMB 0.3 million[46] Research and Development Expenses - Research and development expenses in the first half of 2025 remained at approximately RMB 3.2 million, consistent with the first half of 2024[47] - Research and development activities primarily focused on projects aimed at continuously improving production efficiency and adjusting product specifications to meet customer needs and requirements[47] Net Finance Costs - Net finance costs decreased from approximately RMB 2.6 million in the first half of 2024 to approximately RMB 1.1 million in the first half of 2025[50] - This decrease was mainly due to reduced use of discounted bill financing in the first half of 2025, leading to a decrease in interest expenses of approximately RMB 0.5 million, and the absence of approximately RMB 1.1 million in land acquisition interest expenses incurred in the first half of 2024[50] Income Tax Credit - In the first half of 2025, the Group recognized an income tax credit of approximately RMB 11 thousand[51] - This was primarily due to operating losses at the subsidiary level resulting in no taxable income during the period, and also included a reversal of over-provision for income tax expenses from the previous year[51] - The Group's principal operating subsidiaries, Yixiang New Energy and Yixiang Graphite, as high-tech enterprises, are eligible for tax incentives granted by the Chinese government, with an applicable tax rate of 15%[51] Loss for the First Half of 2025 - Loss after tax for the first half of 2025 was approximately RMB 11.9 million, a decrease of approximately RMB 4.3 million compared to approximately RMB 16.2 million in the first half of 2024[52] - The reduction in loss was mainly attributable to improved production efficiency, an increase in gross margin from 8.0% to 15.0%, and a reduction in administrative expenses due to streamlined employee structure and reduced office expenses[52] Liquidity, Capital Resources and Capital Structure The Group maintains a sound financial position with sufficient working capital. As of June 30, 2025, the capital structure was approximately RMB 424.4 million, net current assets were approximately RMB 72.1 million, cash and cash equivalents increased to approximately RMB 61.4 million, and interest-bearing borrowings decreased to approximately RMB 76.8 million. The gearing ratio significantly improved to 3.5% - The Group's financial position remains sound, and working capital is expected to be sufficient to fund its future business operations[53] Key Data on Liquidity, Capital Resources and Capital Structure | Indicator | As of June 30, 2025 (RMB million) | As of December 31, 2024 (RMB million) | | :--- | :--- | :--- | | Capital Structure (Equity and Reserves) | 424.4 | 436.3 | | Net Current Assets | 72.1 | 90.1 | | Cash and Cash Equivalents | 61.4 | 32.5 | | Interest-bearing Borrowings | 76.8 | 80.0 | | Unutilized Bank Facilities | 103.2 | 110.0 | | Current Ratio (times) | 1.7 | 1.7 | | Gearing Ratio | 3.5% | 9.8% | - The gearing ratio improved from approximately 9.8% as of December 31, 2024, to approximately 3.5% as of June 30, 2025, mainly due to an increase in cash and cash equivalents and accelerated collection of customer payments[57] Treasury Policy The Board will continue to follow a prudent policy in managing the Group's cash balances and maintain strong and robust liquidity to meet working capital requirements and business expansion needs - The Directors will continue to follow a prudent policy in managing the Group's cash balances[58] - Maintain strong and robust liquidity to meet working capital requirements and business expansion needs[58] Pledge of the Group's Assets As of June 30, 2025, the Group's bank facilities were secured by guarantees provided by the controlling shareholder, property, plant and equipment, land use rights, and mining rights. Compared to December 31, 2024, trade receivables are no longer used as collateral - The Group's bank facilities are secured by guarantees provided by the controlling shareholder, property, plant and equipment, land use rights, and mining rights[59][180] - As of June 30, 2025, no trade receivables were pledged as collateral for bank facilities, compared to approximately RMB 12.755 million as of December 31, 2024[180] Contingent Liabilities The Directors confirm that the Group had no contingent liabilities as of June 30, 2025, and December 31, 2024, and is not currently involved in any litigation that could have a material adverse effect on its business, operating results, or financial condition - As of June 30, 2025, and December 31, 2024, the Directors confirmed that the Group had no contingent liabilities[60][191] - The Group is not currently involved in any litigation that could have a material adverse effect on its business, operating results, or financial condition[60] Financial Risks The Group faces interest rate risk, credit risk, and liquidity risk, which are managed through prudent policies and monitoring measures. Interest rate risk is not severe as most assets and liabilities are interest-free or fixed-rate; credit risk is managed through strict credit policies; and liquidity risk is controlled by maintaining sufficient cash and monitoring borrowings. Foreign exchange risk is not significant Interest Rate Risk - Most of the Group's assets and liabilities are interest-free or bear interest at fixed rates, making fair value interest rate risk not severe[63] - The Group does not face significant cash flow interest rate risk and currently has no hedging policy for interest rate risk[63][64] Credit Risk - The Group's maximum credit risk of financial loss due to counterparty failure to fulfill obligations arises from the carrying amounts of the relevant recognized financial assets stated in the interim condensed consolidated statement of financial position[65] - To minimize credit risk, the Group generally grants credit periods of no more than three months to customers and implements clear credit policies, tightening risk profiles and adopting prudent policies to manage credit risk for trade receivables[65] Liquidity Risk - The Group monitors and maintains levels of cash and cash equivalents that management deems sufficient to fund operations and mitigate the impact of cash flow fluctuations[66] - Management monitors the utilization of bank borrowings to ensure compliance with loan covenants. As of June 30, 2025, the Directors believe the Group has no significant liquidity risk[66] Foreign Exchange Risk - The Group's assets and liabilities are primarily denominated in RMB, with most denominated in the functional currency of transaction-related businesses[67] - In the first half of 2025, the Group had certain HKD-denominated deposits in banks, but this foreign exchange risk is not significant to the Group, and therefore, there is currently no foreign currency hedging policy[67] Purchase, Sale or Redemption of the Company's Listed Securities In the first half of 2025, neither the Company nor any of its subsidiaries purchased, sold, or redeemed any of the Company's listed securities - In the first half of 2025, neither the Company nor any of its subsidiaries purchased, sold, or redeemed any of the Company's listed securities[68] Employees and Remuneration Policy As of June 30, 2025, the Group had a total of 159 employees, a decrease from 189 as of December 31, 2024, primarily due to intensified industry competition and cost control policies. The Group recruits employees based on experience, educational background, and vacancy requirements, paying fixed salaries and allowances, and does not negotiate employment terms through labor unions - As of June 30, 2025, the Group had a total of 159 employees (December 31, 2024: 189), of whom 117 were full-time employees[69] - The decrease in total employees was mainly due to intensified competition in the graphite industry and the implementation of cost control policies to streamline the employee structure in the first half of 2025[69] - The Group recruits employees based on various factors such as industry experience in the graphite mining sector, educational background, and vacancy requirements, and pays fixed salaries and other allowances according to positions and responsibilities[69] - Employees have never negotiated their employment terms through any labor union or collective bargaining agreement[69] Relationships with Suppliers, Customers and Other Stakeholders The Group recognizes the importance of maintaining good relationships with suppliers, customers, communities, and governments, and had no significant or material disputes with these stakeholders in the first half of 2025 - The Group recognizes the importance of maintaining good relationships with suppliers, customers, communities, and governments for achieving its objectives and long-term goals[70] - In the first half of 2025, the Group had no significant or material disputes with suppliers, customers, and/or stakeholders[70] Commitments As of June 30, 2025, and December 31, 2024, the Group had no significant capital commitments - As of June 30, 2025, and December 31, 2024, the Group had no significant capital commitments[72][190] Interim Dividend The Board does not recommend the payment of an interim dividend for the first half of 2025, consistent with the first half of 2024 - The Board does not recommend the payment of an interim dividend for the first half of 2025 (first half of 2024: nil)[73][145] Significant Events After the First Half of 2025 Except as disclosed elsewhere in this report, no significant post-balance sheet events occurred for the Company or the Group after June 30, 2025, and up to the date of this report - Except as disclosed elsewhere in this report, no significant post-balance sheet events occurred for the Company or the Group after June 30, 2025, and up to the date of this report[74][192] Major Investments Held, Major Acquisitions and Disposals of Subsidiaries, Associates and Joint Ventures, and Future Plans for Major Investments or Capital Assets In the first half of 2025, the Group held no other major investments, nor were there any major acquisitions or disposals of subsidiaries, associates, and joint ventures, and the Board had not approved any other major investments or plans to increase capital assets - In the first half of 2025, no other major investments were held, nor were there any major acquisitions or disposals of subsidiaries, associates, and joint ventures[75] - As of the date of this report, the Board had not approved any other major investments or plans to increase capital assets[75] Share Option Scheme The Company conditionally adopted a share option scheme on June 21, 2022, with a ten-year validity period. In the first half of 2025, no share options were granted, lapsed, exercised, or cancelled, and there were no outstanding share options. The scheme authorizes the grant of up to 160,000,000 share options, representing approximately 10% of the issued shares - The share option scheme was conditionally adopted on June 21, 2022, with a ten-year validity period, expiring on June 20, 2032[76] - In the first half of 2025, no share options were granted, lapsed, exercised, or cancelled under the share option scheme, and there were no outstanding share options[76] - The number of share options authorized for grant under the scheme is 160,000,000, representing approximately 10% of the Company's issued shares as of the date of this report[76] Directors' Interests in Contracts As of June 30, 2025, none of the Company's Directors had any direct or indirect material interest in any contract entered into by the Company, its holding company, its subsidiaries, or any of its fellow subsidiaries during the first half of 2025 that was significant to the Group's business - As of June 30, 2025, none of the Company's Directors had any direct or indirect material interest in any contract entered into by the Company, its holding company, its subsidiaries, or any of its fellow subsidiaries during the first half of 2025 that was significant to the Group's business[78] Directors' and Chief Executive's Interests and Short Positions in Shares, Underlying Shares and Debentures As of June 30, 2025, Mr. Zhao Liang, Chairman and Chief Executive Officer, beneficially owned a 75.0% long position in the Company's issued shares through his wholly-owned Sandy Mining Limited. Other than this, no other Directors or Chief Executive had any disclosable interests or short positions in shares, underlying shares, and debentures Directors' and Chief Executive's Interests in Shares | Name of Director/Chief Executive of the Company | Position | Capacity/Nature of Interest | Number of Shares Held | Approximate Percentage of Total Issued Shares of the Company | | :--- | :--- | :--- | :--- | :--- | | Mr. Zhao | Chairman, Executive Director and Chief Executive Officer | Interest in controlled corporation | 1,200,000,000 (Long Position) | 75.0% | - Mr. Zhao beneficially owns 75.0% of the issued shares through his wholly-owned Sandy Mining Limited[79] - Save as disclosed above, no Director or Chief Executive of the Company had any disclosable interests or short positions in the shares, underlying shares, or debentures of the Company or any of its associated corporations[80] Directors' Rights to Acquire Shares or Debentures During the first half of 2025, neither the Company nor any of its subsidiaries had any arrangements enabling Directors to acquire benefits by means of the acquisition of shares or debentures of the Company or any other body corporate, nor did any Director or their spouse or children under 18 years of age have any right to subscribe for equity or debt securities of the Company or any other body corporate - During the first half of 2025, neither the Company nor any of its subsidiaries had any arrangements enabling Directors to acquire benefits by means of the acquisition of shares or debentures of the Company or any other body corporate[81] - No Director or their spouse or children under 18 years of age had any right to subscribe for equity or debt securities of the Company or any other body corporate, nor had any such rights been exercised[81] Substantial Shareholders and Other Persons' Interests and Short Positions in Shares and Underlying Shares As of June 30, 2025, other than the Directors and Chief Executive of the Company, Sandy Mining Limited was the only substantial shareholder holding 5% or more interest in the Company's shares, beneficially owning 75.0% of the issued shares Substantial Shareholders' Interests in Shares | Name of Substantial Shareholder/Other Person of the Company | Nature of Interest | Number of Shares Held | Approximate Percentage of Total Issued Shares of the Company | | :--- | :--- | :--- | :--- | | Sandy Mining | Beneficial Owner | 1,200,000,000 (Long Position) | 75.0% | - Save as disclosed above, no other person (other than the Directors and Chief Executive of the Company) was known to have a disclosable interest of 5% or more in the shares and underlying shares[85] Compliance with Relevant Laws and Regulations To the best of the Board's and management's knowledge, the Group has complied in all material respects with relevant laws and regulations that have a significant impact on its business and operations, with no serious breaches or non-compliance with applicable laws and regulations in the first half of 2025 - The Group has complied in all material respects with relevant laws and regulations that have a significant impact on its business and operations[86] - In the first half of 2025, the Group had no serious breaches or non-compliance with applicable laws and regulations[86] Compliance with Corporate Governance Code The Company has complied with all applicable code provisions of the Corporate Governance Code in the first half of 2025, except for the non-segregation of the roles of Chairman and Chief Executive Officer (both held by Mr. Zhao Liang). The Board believes this arrangement benefits the Group's management, and the Board, comprising experienced senior management and independent directors, provides effective checks and balances - The Company has complied with all applicable code provisions of the Corporate Governance Code in the first half of 2025, save for code provision C.2.1 of Part 2 of the Corporate Governance Code (the roles of Chairman and Chief Executive Officer are not segregated)[87] - Mr. Zhao Liang holds both the roles of Chairman and Chief Executive Officer of the Company, and the Board believes this arrangement benefits the Group's management due to his extensive experience in the graphite mining industry[87] - The Board currently comprises two executive directors and four independent non-executive directors, whose composition provides a robust level of independence, effectively balancing Mr. Zhao's power and authority[88] Compliance with Model Code All Directors have confirmed that they have complied with the Model Code for Securities Transactions by Directors of Listed Issuers as set out in Appendix 10 to the Listing Rules throughout the first half of 2025 - All Directors have confirmed that they have complied with the required standards of dealing and conduct set out in the Model Code for securities transactions by Directors throughout the first half of 2025[89] Board Committees The Group has established an Audit Committee, Remuneration Committee, Nomination Committee, and Compliance Committee under the Board of Directors, with each committee operating under terms of reference adopted by the Board to enhance corporate governance Audit Committee - The Audit Committee comprises four members, with Mr. He Kaidong (Independent Non-executive Director) as Chairman[91] - Its primary responsibilities include making recommendations to the Board on the appointment, re-appointment, and removal of external auditors; reviewing financial statements; overseeing internal control and risk management systems; and providing advice and recommendations on corporate governance matters[91] Remuneration Committee - The Remuneration Committee comprises four members, including three independent non-executive directors and one executive director, with Mr. Liu Ze Zheng as Chairman[92] - Its primary responsibilities include making recommendations to the Board on the remuneration policy and structure for Directors and senior management, as well as employee benefit arrangements[92] Nomination Committee - The Nomination Committee comprises four members, including three independent non-executive directors and one executive director, with Mr. Zhao Liang as Chairman[94] - Its primary responsibilities include making recommendations to review the structure, size, and composition of the Board; and reviewing and making recommendations to the Board on the appointment of Directors and Board succession planning[94] Compliance Committee - The Compliance Committee comprises three members, including two independent non-executive directors and one executive director, with Mr. Liu Ze Zheng as Chairman[95] - Its primary responsibilities include ensuring compliance with regulatory matters and that regulatory compliance procedures and systems are adequate and effective[95] Review of Interim Results The Company's Audit Committee has reviewed the Group's interim results for the first half of 2025 and this interim report with management, confirming their compliance with applicable accounting standards and Listing Rules, and that adequate disclosures have been made - The Company's Audit Committee has reviewed the accounting policies adopted by the Group and discussed audit, risk management, internal control systems, and financial reporting matters with management[96] - The Audit Committee is of the opinion that the Group's unaudited interim condensed consolidated financial statements for the first half of 2025 comply with applicable accounting standards and Listing Rules and have made adequate disclosures[96] Interim Condensed Consolidated Statement of Comprehensive Income This statement presents the group's financial performance for the six months ended June 30, 2025, showing revenue, costs, and net loss Financial Performance for the First Half of 2025 The Group's consolidated statement of comprehensive income for the six months ended June 30, 2025, shows an increase in total revenue, a significant improvement in gross profit, a substantial narrowing of net loss, and an improvement in basic and diluted loss per share Summary of Interim Condensed Consolidated Statement of Comprehensive Income | Indicator | Six Months Ended June 30, 2025 (RMB thousand) | Six Months Ended June 30, 2024 (RMB thousand) | | :--- | :--- | :--- | | Revenue | 39,795 | 36,437 | | Cost of Sales | (33,810) | (33,514) | | Gross Profit | 5,985 | 2,923 | | Other Income and Other Gains | 545 | 1,318 | | Selling and Distribution Expenses | (3,253) | (2,531) | | General and Administrative Expenses | (12,019) | (13,093) | | Research and Development Expenses | (3,191) | (3,239) | | Net Finance Costs | (1,135) | (2,586) | | Loss and Total Comprehensive Loss for the Period | (11,890) | (16,218) | | Basic and Diluted Loss Per Share | (0.74) cents | (1.01) cents | Interim Condensed Consolidated Statement of Financial Position This statement provides a snapshot of the group's assets, liabilities, and equity as of June 30, 2025, highlighting changes in key financial positions Financial Position as of June 30, 2025 As of June 30, 2025, the Group's total assets were RMB 540.27 million, total liabilities were RMB 115.85 million, and total equity was RMB 424.42 million. Cash and cash equivalents significantly increased, while trade receivables and bills receivable substantially decreased Summary of Interim Condensed Consolidated Statement of Financial Position | Indicator | As of June 30, 2025 (RMB thousand) | As of December 31, 2024 (RMB thousand) | | :--- | :--- | :--- | | Total Assets | 540,269 | 562,392 | | Non-current Assets | 357,377 | 351,442 | | Current Assets | 182,892 | 210,950 | | Total Equity | 424,418 | 436,308 | | Total Liabilities | 115,851 | 126,084 | | Non-current Liabilities | 5,061 | 5,261 | | Current Liabilities | 110,790 | 120,823 | | Cash and Cash Equivalents | 61,371 | 32,484 | | Trade and Bills Receivables | 77,455 | 147,823 | Interim Condensed Consolidated Statement of Changes in Equity This statement details the changes in the group's equity for the six months ended June 30, 2025, including net loss and transfers to reserves Changes in Equity for the First Half of 2025 The Group's statement of changes in equity for the six months ended June 30, 2025, shows that opening equity was RMB 436.31 million, and due to a loss of RMB 11.89 million for the period and transfers to other reserves, closing equity decreased to RMB 424.42 million Summary of Interim Condensed Consolidated Statement of Changes in Equity | Item | Share Capital (RMB thousand) | Share Premium (RMB thousand) | Statutory Reserve (RMB thousand) | Other Reserves (RMB thousand) | Retained Earnings (RMB thousand) | Total (RMB thousand) | | :--- | :--- | :--- | :--- | :--- | :--- | :--- | | Balance as of January 1, 2025 | 1,375 | 303,829 | 15,193 | (143,128) | 259,039 | 436,308 | | Loss for the period | – | – | – | – | (11,890) | (11,890) | | Transfer to other reserves | – | – | – | (536) | 536 | – | | Balance as of June 30, 2025 | 1,375 | 303,829 | 15,193 | (143,664) | 247,685 | 424,418 | Interim Condensed Consolidated Statement of Cash Flows This statement summarizes the cash inflows and outflows from operating, investing, and financing activities for the six months ended June 30, 2025 Cash Flows for the First Half of 2025 The Group's statement of cash flows for the six months ended June 30, 2025, shows net cash generated from operating activities of RMB 54.35 million, net cash used in investing activities of RMB 20.89 million, net cash used in financing activities of RMB 4.57 million, with cash and cash equivalents increasing to RMB 61.37 million at period-end Summary of Interim Condensed Consolidated Statement of Cash Flows | Indicator | Six Months Ended June 30, 2025 (RMB thousand) | Six Months Ended June 30, 2024 (RMB thousand) | | :--- | :--- | :--- | | Net cash generated from operating activities | 54,353 | 62,640 | | Net cash used in investing activities | (20,885) | (138,136) | | Net cash (used in)/generated from financing activities | (4,568) | 58,327 | | Net increase/(decrease) in cash and cash equivalents | 28,900 | (17,169) | | Cash and cash equivalents at end of period | 61,371 | 94,933 | Notes to the Interim Condensed Consolidated Financial Information This section provides detailed explanatory notes to the interim condensed consolidated financial information, covering accounting policies, estimates, and financial risk management General Information China Graphite Group Limited was incorporated in the Cayman Islands as an investment holding company, primarily engaged in the manufacturing and sale of graphite products. The Company's shares were listed on the Main Board of the Hong Kong Stock Exchange on July 18, 2022, with Mr. Zhao Liang as the ultimate controlling party - China Graphite Group Limited was incorporated in the Cayman Islands on August 3, 2020, as an investment holding company[107] - The Company and its subsidiaries are principally engaged in the manufacturing and sale of graphite products, with Mr. Zhao Liang as the ultimate controlling party[107] - The Company's shares were listed on the Main Board of The Stock Exchange of Hong Kong Limited on July 18, 2022[108] Basis of Presentation The interim condensed consolidated financial information for the six months ended June 30, 2025, has been prepared in accordance with Hong Kong Accounting Standard 34 "Interim Financial Reporting" issued by the Hong Kong Institute of Certified Public Accountants and should be read in conjunction with the annual report for the year ended December 31, 2024 - This interim condensed consolidated financial information has been prepared in accordance with Hong Kong Accounting Standard 34 "Interim Financial Reporting" issued by the Hong Kong Institute of Certified Public Accountants[110] - This interim condensed consolidated financial information does not include all the information and disclosures normally included in an annual financial report and should be read in conjunction with the annual report for the year ended December 31, 2024[110] Accounting Policies The accounting policies applied by the Group are consistent with those of the prior financial year, and the adoption of new and revised standards has no significant financial impact on the interim condensed consolidated financial information. Management expects that new and revised standards not yet effective will also not have any significant impact on the Group's financial position and operating results - The accounting policies applied are consistent with those used in the prior financial year and the corresponding interim reporting period, except for estimated income tax and the adoption of new and revised standards[111] - The adoption of new and revised standards such as HKAS 21 and HKFRS 1 (Amendments) has no significant financial impact on the interim condensed consolidated financial information[112] - Management has performed a preliminary assessment and expects that the adoption of new and revised standards and interpretations not yet effective will not have any significant impact on the Group's financial position and operating results[113] Significant Accounting Estimates and Judgements The preparation of interim condensed consolidated financial information requires management to make judgments, estimates, and assumptions that affect the application of accounting policies and the reported amounts of assets and liabilities, income, and expenses. The key sources of significant judgments and estimation uncertainties are consistent with those described in the annual consolidated financial statements for the year ended December 31, 2024 - The preparation of interim condensed consolidated financial information requires management to make judgments, estimates, and assumptions that affect the application of accounting policies and the reported amounts of assets and liabilities, income, and expenses[115] - The key sources of significant judgments and estimation uncertainties made by management in applying the Group's accounting policies in preparing this interim condensed consolidated financial information are consistent with those described in the annual consolidated financial statements for the year ended December 31, 2024[115] Financial Risk Management The Group faces various financial risks, including foreign exchange, cash flow and fair value interest rate, credit, and liquidity risks, which are minimized through prudent risk management plans. Risk management policies have not changed since December 31, 2024, and capital risk management aims to safeguard the ability to continue as a going concern and maximize shareholder returns, with a significant improvement in the gearing ratio Financial Risk Factors - The Group's activities expose it to various financial risks, including foreign exchange risk, cash flow and fair value interest rate risk, credit risk, and liquidity risk[116] - The Group's overall risk management program focuses on the unpredictability of financial markets and seeks to minimize potential adverse effects on the Group's financial performance[116] - Risk management policies have not changed since December 31, 2024[117] Fair Value Estimation - The carrying amounts of trade and bills receivables, deposits, other receivables, and cash and cash equivalents, as well as trade payables, accrued expenses and other payables, and borrowings, net of impairment provisions, are assumed to approximate their fair values[118] - The fair values of financial assets and liabilities for disclosure purposes are estimated by discounting the future contractual cash flows at the current market interest rates available for similar financial instruments to the Company[118] Capital Risk Management - The Group manages its capital to safeguard its ability to continue as a going concern, to provide returns for owners, and thereby to obtain sufficient financial resources from owners[119] - Capital risk management policies have not changed since December 31, 2024[119] Debt-to-Capital Ratio | Indicator | As of June 30, 2025 (RMB thousand) | As of December 31, 2024 (RMB thousand) | | :--- | :--- | :--- | | Net Debt | 15,453 | 47,516 | | Total Equity | 424,418 | 436,308 | | Total Capital | 439,871 | 483,824 | | Debt-to-Capital Ratio | 3.5% | 9.8% | Revenue and Segment Information The Group operates in two segments: sales of flake graphite concentrate and sales of spherical graphite and its by-products and unprocessed marble. All revenue from external customers is derived from customers in China, with one customer contributing over 10% of total revenue in the first half of 2025. As of June 30, 2025, contract liabilities related to customer contracts amounted to RMB 10,443,000 - The Group operates in two segments: sales of flake graphite concentrate and sales of spherical graphite and its by-products and unprocessed marble[123] - All of the Group's revenue from external customers is derived from customers located in China[132] - For the six months ended June 30, 2025, revenue from 1 customer (Customer A) individually accounted for over 10% of the Group's revenue, amounting to RMB 5,643 thousand[132] - As of June 30, 2025, the Group recognized customer advances of RMB 10,443,000 for the sale of graphite products as contract liabilities[133] Other Income and Other Gains The Group's other income and other gains for the first half of 2025 amounted to RMB 545 thousand, a decrease from RMB 1,318 thousand in the first half of 2024, primarily due to reduced government subsidies Breakdown of Other Income and Other Gains | Item | Six Months Ended June 30, 2025 (RMB thousand) | Six Months Ended June 30, 2024 (RMB thousand) | | :--- | :--- | :--- | | Government subsidies | 521 | 1,598 | | Loss on disposal of property, plant and equipment | – | (23) | | Others | 24 | (257) | | Total | 545 | 1,318 | - Government subsidies mainly relate to the Group's research and development activities[135] - As of June 30, 2025, government subsidies of RMB 1,551,000 related to equipment purchases were recognized as deferred income under non-current liabilities[135] Expenses by Nature The Group's total expenses by nature for the first half of 2025 were approximately RMB 52.27 million, largely consistent with the same period last year. Raw materials for production, transportation fees, and repair and maintenance expenses increased, while utilities and resource taxes and other miscellaneous taxes decreased Summary of Expenses by Nature | Item | Six Months Ended June 30, 2025 (RMB thousand) | Six Months Ended June 30, 2024 (RMB thousand) | | :--- | :--- | :--- | | Raw materials used – production | 12,015 | 8,322 | | Changes in inventories of finished goods and work-in-progress | (5,603) | (8,171) | | Transportation expenses | 2,158 | 1,249 | | Depreciation of property, plant and equipment | 11,654 | 11,191 | | Employee benefit expenses | 7,603 | 8,204 | | Utilities expenses | 7,639 | 9,591 | | Repair and maintenance expenses | 2,954 | 1,829