智欣集团控股(02187) - 2025 - 中期财报

Company Information The company is incorporated in the Cayman Islands, headquartered in Xiamen, Fujian Province, China, with a principal place of business in Hong Kong - Zixin Group Holdings Limited is incorporated in the Cayman Islands, stock code 2187, headquartered in Xiamen, Fujian Province, China, with a principal place of business in Hong Kong[6][7] - The Board of Directors comprises six executive directors, including Mr. Ye Zhijie (Chairman), and three independent non-executive directors, with audit, nomination, remuneration, and strategy committees established[6] Financial Highlights The group's revenue increased by 6.4% year-on-year, but gross profit significantly declined by 82.6%, resulting in a net loss for the period Financial Highlights for the Six Months Ended June 30 | Indicator | 2025 (RMB thousands) | 2024 (RMB thousands) | Change % | | :--- | :--- | :--- | :--- | | Revenue | 259,673 | 244,079 | 6.4% | | Gross Profit | 7,905 | 45,517 | (82.6%) | | (Loss) / Profit for the Period | (49,061) | 1,172 | (4,286.1%) | - Revenue increased by 6.4% year-on-year to RMB 259.7 million, driven by ready-mixed concrete (14.0% growth) and iron ore tailings recycling and eco-friendly bricks (6.8% growth) businesses[9] - Gross profit significantly decreased by 82.6% to RMB 7.9 million, with the period shifting from profit to a loss of RMB 49.1 million[10][11] Chairman's Report The group, a concrete building materials manufacturer in Xiamen, saw revenue growth driven by iron ore tailings recycling, but overall gross profit and net profit declined - The Group is a concrete building materials manufacturer and supplier in Xiamen, Fujian Province, China, also engaged in comprehensive utilization of iron ore tailings and eco-friendly brick production in Changjiang, Hainan Province[12] - For the six months ended June 30, 2025, revenue grew by 6.4% to RMB 259.7 million, primarily due to increased revenue from iron ore tailings recycling and ready-mixed concrete, partially offset by a decrease in precast concrete components revenue[12] - Overall gross profit decreased by 82.6% to RMB 7.9 million, mainly due to a gross loss of approximately RMB 19.3 million from the ready-mixed concrete business, resulting in a net loss of approximately RMB 49.1 million for the period[13] - Looking ahead, market pressure on ready-mixed concrete and precast concrete components is expected to persist, while the iron ore tailings recycling and eco-friendly bricks business will continue to generate strong revenue[13] Management Discussion and Analysis This section provides a detailed analysis of the group's financial performance, liquidity, and risk factors for the period Business Review The group's total revenue increased by 6.4% year-on-year, driven by ready-mixed concrete and iron ore tailings recycling, despite a significant decline in precast concrete components Revenue Changes by Business Segment | Business Segment | 2025 (RMB thousands) | 2024 (RMB thousands) | Change % | | :--- | :--- | :--- | :--- | | Ready-mixed Concrete | 148,200 | 130,000 | 14.0% | | Precast Concrete Components | 870 | 10,600 | (91.8%) | | Iron Ore Tailings Recycling and Eco-friendly Bricks | 110,600 | 103,500 | 6.8% | | Total Revenue | 259,700 | 244,100 | 6.4% | - Ready-mixed concrete revenue moderately increased, but the segment remains in a loss-making position with narrowing profit margins due to intense competition in the Xiamen market[20] - Precast concrete components revenue significantly decreased by 91.8%, resulting in a segment loss, primarily due to market price competition[19][20] - Iron ore tailings recycling and eco-friendly bricks revenue increased by 6.8%, mainly due to higher selling prices[20] Cost of Sales Cost of sales increased by 26.8% to RMB 251.8 million, mainly due to higher revenue from iron ore tailings recycling and increased raw material costs for ready-mixed concrete - Cost of sales increased by approximately RMB 53.2 million or 26.8% to RMB 251.8 million[21] - Key reasons include increased revenue from iron ore tailings recycling and eco-friendly bricks, and rising raw material costs for ready-mixed concrete despite falling selling prices due to price competition[21] - Depreciation of precast concrete components production lines was reclassified to administrative expenses due to temporary suspension of production, partially offsetting the increase in cost of sales[21] Gross Profit and Gross Margin Overall gross profit significantly decreased by 82.6% to RMB 7.9 million, primarily due to a gross loss of RMB 19.3 million in the ready-mixed concrete business - Overall gross profit decreased by approximately RMB 37.6 million or 82.6% from RMB 45.5 million to RMB 7.9 million[22] - The decline in gross profit is primarily attributable to a gross loss of approximately RMB 19.3 million from the ready-mixed concrete business (compared to a gross profit of approximately RMB 12.9 million in the same period last year)[23] Other Income Other income increased by 83.4% to RMB 5.2 million, mainly due to non-recurring government grants and compensation for delayed trade receivables settlement - Other income increased by approximately 83.4% to approximately RMB 5.2 million[24] - Primarily due to non-recurring government grants and awards received, and compensation for delayed settlement of trade receivables[24] Selling Expenses Selling expenses decreased by 38.1% to RMB 6.5 million, mainly due to reduced sales volume of precast concrete components - Selling expenses decreased by approximately 38.1% to approximately RMB 6.5 million[25] - Primarily due to a decrease in sales volume of precast concrete components[25] Administrative Expenses Administrative expenses increased by 46.5% to RMB 42.6 million, mainly due to the reclassification of depreciation for temporarily suspended precast concrete component production lines - Administrative expenses increased by approximately 46.5% to approximately RMB 42.6 million[26] - Primarily due to the reclassification of depreciation for precast concrete component production lines to administrative costs following temporary suspension of production[26] Net Finance Costs Net finance costs decreased by 13.6% to RMB 8.7 million, primarily due to a reduction in interest on bank borrowings - Net finance costs decreased by approximately 13.6% to approximately RMB 8.7 million[27] - Primarily due to a decrease in interest on bank borrowings[27] Income Tax (Expense) / Credit Income tax shifted from a credit to an expense of RMB 1.2 million, mainly due to losses in the ready-mixed concrete and precast concrete components businesses - Income tax expense for the period was approximately RMB 1.2 million (compared to a credit of approximately RMB 1.3 million in the same period last year)[28] - The low income tax expense is primarily due to losses in the ready-mixed concrete and precast concrete components businesses[28] (Loss) / Profit for the Period The group recorded a loss of approximately RMB 49.1 million for the period, compared to a profit of RMB 1.2 million in the prior year - The loss for the period was approximately RMB 49.1 million (compared to a profit of RMB 1.2 million in the same period last year)[29] Liquidity and Financial Resources The group funds operations through cash from operating activities and borrowings, with net current liabilities of RMB 37.5 million and a gearing ratio of 54% as of June 30, 2025 - The Group primarily funds its operations through cash generated from operating activities and borrowings[30] Overview of Liquidity and Financial Resources | Indicator | June 30, 2025 (RMB thousands) | December 31, 2024 (RMB thousands) | | :--- | :--- | :--- | | Net Current Liabilities | 37,500 | 72,500 | | Cash and Cash Equivalents | 15,700 | 19,000 | | Current Borrowings | 121,100 | 227,700 | | Non-current Borrowings | 260,200 | 132,700 | | Gearing Ratio | 54% | 48% | Currency Risk Operating primarily in China with RMB as the functional currency, the group does not anticipate significant currency risk and has no foreign currency hedging policy - Most of the Group's subsidiaries operate in China, with RMB as their functional currency[32] - No significant currency risk is expected to materially impact operating results, and there is currently no foreign currency hedging policy in place[32] Capital Commitments As of June 30, 2025, the group's capital commitments amounted to approximately RMB 451.8 million, an increase from the end of 2024 Capital Commitments | Date | Amount (RMB thousands) | | :--- | :--- | | June 30, 2025 | 451,800 | | December 31, 2024 | 404,300 | Pledged Assets Details regarding the pledging of the group's assets are provided in Note 20 to the condensed consolidated interim financial statements - Details regarding the pledging of the Group's assets are set out in Note 20 to the condensed consolidated interim financial statements[34] Contingent Liabilities The group had no contingent liabilities as of June 30, 2025, and December 31, 2024 - As of June 30, 2025, and December 31, 2024, the Group had no contingent liabilities[35] Capital Structure The group's capital structure, consisting of equity attributable to owners, has remained unchanged since listing and is regularly reviewed by the Board - The Group's capital structure has remained unchanged since its listing, comprising equity attributable to owners of the Company[36] - The Board regularly reviews the Group's capital structure, considering the cost of capital and associated risks[36] Significant Acquisitions and Disposals The group did not undertake any significant acquisitions or disposals related to subsidiaries, associates, or joint ventures during the period - During the period, the Group did not undertake any significant acquisitions or disposals related to subsidiaries, associates, or joint ventures[37] Significant Investments The group did not have any significant investments during the period - During the period, the Group did not have any significant investments[38] Employees and Remuneration Policy As of June 30, 2025, the group had 376 employees, with remuneration determined by qualifications, responsibilities, contributions, and experience, and some factory workers outsourced for efficiency - As of June 30, 2025, the Group had 376 employees (June 30, 2024: 462 employees)[39] - Employee remuneration is determined with reference to factors such as qualifications, responsibilities, contributions, and experience[39] - The Group outsources some precast concrete component production line workers to certain labor service companies to enhance human resource efficiency and flexibility[39] Use of Proceeds Net proceeds from the share offer were approximately HKD 238.7 million, with HKD 5.4 million utilized for expanding precast concrete component production capacity as of June 30, 2025 - Net proceeds from the share offer were approximately HKD 238.7 million[40] Overview of Use of Net Proceeds (HKD millions) | Use | Updated Proposed Use | Utilized as of Dec 31, 2024 | Utilized from Jan 1 to Jun 30, 2025 | Unutilized as of Jun 30, 2025 | Expected Timeline | | :--- | :--- | :--- | :--- | :--- | :--- | | Expand precast concrete component production capacity | 24.5 | 5.4 | — | 5.4 | Before Dec 2025 | | Enhance IT systems | 1.2 | — | — | — | Not applicable | | Improve environmental protection systems | 1.2 | — | — | — | Not applicable | | Purchase mixer trucks and concrete pump trucks | 2.0 | — | — | — | Not applicable | | General working capital | 105.3 | — | — | — | Not applicable | | Repay borrowings | 104.5 | — | — | — | Not applicable | | Total | 238.7 | 5.4 | — | 5.4 | | Prospects Increased competition in Xiamen's ready-mixed and precast concrete markets pressures profits, while Hainan's iron ore tailings utilization business is expected to remain a strong revenue source - Increased competition in Xiamen's ready-mixed concrete and precast concrete component markets significantly pressures and harms the Group's profits[41] - The comprehensive utilization of iron ore tailings in Hainan continues to be a primary revenue source for the Group, expected to remain strong due to ample supply and robust demand in neighboring areas[41] Condensed Consolidated Interim Statement of Comprehensive Income This statement presents the group's financial performance, showing a shift from profit to a significant loss for the six months ended June 30, 2025 Condensed Consolidated Interim Statement of Comprehensive Income (For the Six Months Ended June 30) | Indicator | 2025 (RMB thousands) | 2024 (RMB thousands) | | :--- | :--- | :--- | | Revenue | 259,673 | 244,079 | | Cost of Sales | (251,768) | (198,562) | | Gross Profit | 7,905 | 45,517 | | Other Income | 5,203 | 2,837 | | Other Net Losses | (1,601) | (512) | | Selling Expenses | (6,483) | (10,470) | | Administrative Expenses | (42,617) | (29,099) | | Impairment Loss on Financial Assets (Increase) / Reversal | (1,594) | 1,618 | | Operating Profit | (39,187) | 9,891 | | Net Finance Costs | (8,669) | (10,032) | | Loss Before Income Tax | (47,856) | (141) | | Income Tax (Expense) / Credit | (1,205) | 1,313 | | (Loss) / Profit and Total Comprehensive (Loss) / Income for the Period Attributable to Owners of the Company | (49,061) | 1,172 | | Basic and Diluted (Loss) / Earnings Per Share (RMB) | (0.066) | 0.002 | Condensed Consolidated Interim Statement of Financial Position This statement provides a snapshot of the group's assets, liabilities, and equity as of June 30, 2025, showing a slight decrease in total assets and equity, with an increase in total liabilities Condensed Consolidated Interim Statement of Financial Position (As at June 30, 2025) | Indicator | June 30, 2025 (RMB thousands) | December 31, 2024 (RMB thousands) | | :--- | :--- | :--- | | Assets | | | | Total Non-current Assets | 646,184 | 601,421 | | Total Current Assets | 483,663 | 531,233 | | Total Assets | 1,129,847 | 1,132,654 | | Equity | | | | Total Equity | 328,888 | 377,949 | | Liabilities | | | | Total Non-current Liabilities | 279,768 | 150,989 | | Total Current Liabilities | 521,191 | 603,716 | | Total Liabilities | 800,959 | 754,705 | | Total Equity and Liabilities | 1,129,847 | 1,132,654 | - As of June 30, 2025, total assets slightly decreased to RMB 1,129.8 million, with non-current assets increasing and current assets decreasing[44] - Total equity decreased to RMB 328.9 million, and total liabilities increased to RMB 801.0 million, primarily due to an increase in non-current borrowings[44][46] Condensed Consolidated Interim Statement of Changes in Equity This statement details changes in the group's equity for the six months ended June 30, 2025, reflecting a decrease primarily due to the loss incurred during the period Condensed Consolidated Interim Statement of Changes in Equity (For the Six Months Ended June 30, 2025) | Indicator | Share Capital (RMB thousands) | Reserves (RMB thousands) | Retained Earnings (RMB thousands) | Total (RMB thousands) | | :--- | :--- | :--- | :--- | :--- | | As at January 1, 2025 | 6,358 | 364,659 | 6,932 | 377,949 | | Loss for the period | — | — | (49,061) | (49,061) | | As at June 30, 2025 | 6,358 | 364,659 | (42,129) | 328,888 | | As at January 1, 2024 | 6,358 | 364,659 | 82,131 | 453,148 | | Profit for the period | — | — | 1,172 | 1,172 | | As at June 30, 2024 | 6,358 | 364,659 | 83,303 | 454,320 | - As of June 30, 2025, total equity attributable to owners of the Company was RMB 328.9 million, a decrease from the beginning of the period, mainly due to a loss of RMB 49.1 million incurred, resulting in retained earnings turning into accumulated losses[47] Condensed Consolidated Interim Statement of Cash Flows This statement summarizes the group's cash flows from operating, investing, and financing activities, showing a significant decrease in operating cash flow and an increase in cash used for investing activities Condensed Consolidated Interim Statement of Cash Flows (For the Six Months Ended June 30, 2025) | Activity Type | 2025 (RMB thousands) | 2024 (RMB thousands) | | :--- | :--- | :--- | | Net Cash Generated from Operating Activities | 8,262 | 53,998 | | Net Cash Used in Investing Activities | (70,506) | (28,874) | | Net Cash Generated from / (Used in) Financing Activities | 58,933 | (24,780) | | Net (Decrease) / Increase in Cash and Cash Equivalents | (3,311) | 344 | | Cash and Cash Equivalents at End of Period | 15,705 | 26,212 | - Net cash generated from operating activities significantly decreased to RMB 8.3 million, while net cash used in investing activities increased to RMB 70.5 million, primarily for the purchase of property, plant and equipment[49] - Financing activities shifted from cash used to cash generated of RMB 58.9 million, mainly due to increased proceeds from bank borrowings[49] - Cash and cash equivalents at the end of the period decreased to RMB 15.7 million[49] Notes to the Condensed Consolidated Interim Financial Statements This section provides detailed explanatory notes to the condensed consolidated interim financial statements, covering general information, accounting policies, risk management, and specific financial items General Information of the Group The group, incorporated in the Cayman Islands, primarily manufactures and sells ready-mixed and precast concrete components in China, and has expanded into eco-friendly bricks and iron ore tailings recycling since 2022 - The Company was incorporated in the Cayman Islands on November 14, 2018, as an investment holding company[50] - The Group is principally engaged in the manufacture and sale of ready-mixed concrete and precast concrete components in China, and since 2022, in the manufacture and sale of eco-friendly bricks and iron ore tailings recycling products[50] - The Company's shares have been listed on the Main Board of The Stock Exchange of Hong Kong Limited since March 26, 2021[51] Basis of Preparation The condensed consolidated interim financial statements are prepared in accordance with HKAS 34 "Interim Financial Reporting" and should be read in conjunction with the annual consolidated financial statements for the year ended December 31, 2024 - The condensed consolidated interim financial statements have been prepared in accordance with Hong Kong Accounting Standard 34 "Interim Financial Reporting"[55] - These statements should be read in conjunction with the annual consolidated financial statements for the year ended December 31, 2024[55] Significant Accounting Policies The significant accounting policies applied in these interim financial statements are consistent with the prior year, with the adoption of new and revised standards, including HKAS 21 (Amendment) "Lack of Exchangeability" - The significant accounting policies applied in the preparation of the condensed consolidated interim financial statements are consistent with those applied in the annual consolidated financial statements for the year ended December 31, 2024[56] - The Group adopted HKAS 21 (Amendment) "Lack of Exchangeability", effective from January 1, 2025[57][58] - Several new and revised standards (e.g., HKFRS 9, 18, 19) are not yet effective, and the Group is assessing their full impact[59] Estimates Preparing interim financial statements requires management judgments, estimates, and assumptions that affect reported amounts of assets, liabilities, income, and expenses, with actual results potentially differing from estimates - The preparation of interim financial statements requires management to make judgments, estimates, and assumptions that affect the application of accounting policies and the reported amounts of assets and liabilities, and income and expenses[60] - The significant judgments made by management in applying the Group's accounting policies and the key sources of estimation uncertainty were the same as those applied to the annual consolidated financial statements for the year ended December 31, 2024[60] Financial Risk Management The group faces market, credit, and liquidity risks, with risk management plans aimed at minimizing adverse effects, and no changes in policies since the last year-end Financial Risk Factors The group's activities are exposed to market (foreign exchange and interest rate), credit, and liquidity risks, with an overall risk management plan focused on mitigating adverse impacts, and no derivative financial instruments used for hedging during the period - The Group's activities expose it to various financial risks: market risk (including foreign exchange risk and interest rate risk), credit risk, and liquidity risk[61] - 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[61] - There have been no changes in the Group's risk management policies since the end of the last annual period[62] Credit Risk The group's credit risk primarily arises from cash and bank balances, trade receivables, and other receivables, with expected credit losses for trade receivables measured using a simplified approach based on aging and customer credit quality - The Group is exposed to credit risk in relation to its cash and bank balances, restricted bank balances, trade receivables, and other receivables[63] - The Group applies the simplified approach under HKFRS 9 to measure expected credit losses, which requires the use of the lifetime expected loss allowance for all trade receivables[66] Expected Loss Allowance for Trade Receivables (RMB thousands) | Aging | June 30, 2025 Gross Carrying Amount | June 30, 2025 Total Loss Allowance | December 31, 2024 Gross Carrying Amount | December 31, 2024 Total Loss Allowance | | :--- | :--- | :--- | :--- | :--- | | Within one year | 260,933 | 4,574 | 260,628 | 2,592 | | One to two years | 50,038 | 2,193 | 69,641 | 3,089 | | Two to three years | 58,410 | 8,618 | 59,356 | 12,257 | | Over three years | 39,240 | 17,500 | 32,649 | 13,353 | | Total | 408,621 | 32,885 | 422,274 | 31,291 | Liquidity Risk The group manages liquidity risk through an analysis of contractual maturities of non-derivative financial liabilities, showing various maturities for borrowings, interest payables, trade payables, and other payables Maturity Analysis of Non-Derivative Financial Liabilities (RMB thousands) | Liability Type | Within One Year (2025) | One to Two Years (2025) | Two to Five Years (2025) | Over Five Years (2025) | Total (2025) | | :--- | :--- | :--- | :--- | :--- | :--- | | Borrowings (excluding factoring borrowings) | 71,200 | 53,800 | 44,900 | 161,510 | 331,410 | | Interest Payable | 12,818 | 637 | 3,923 | 12,408 | 29,786 | | Trade Payables | 322,425 | — | — | — | 322,425 | | Other Payables and Accrued Charges | 63,545 | — | — | — | 63,545 | | Total | 469,988 | 54,437 | 48,823 | 173,918 | 747,166 | Fair Value Estimation of Financial Assets and Liabilities Measured at Amortized Cost The carrying amounts of the group's current financial assets and liabilities approximate their fair values at the reporting date due to their short-term nature - The Group's current financial assets (including cash and bank balances and trade and other receivables) and current financial liabilities (including trade and other payables, bank borrowings, and lease liabilities) are short-term in nature[71] - Their carrying amounts approximate their fair values at the reporting date[71] Segment Information The group operates in three segments: ready-mixed concrete, precast concrete components, and recycled iron ore tailings and bricks, with the latter performing well while the former two recorded losses Segment Information of the Group For the six months ended June 30, 2025, the recycled iron ore tailings and bricks segment reported a profit of RMB 11.9 million, while ready-mixed concrete and precast concrete components segments recorded losses of RMB 39.1 million and RMB 10.4 million, respectively Segment Results (For the Six Months Ended June 30, 2025) | Segment | Revenue (RMB thousands) | Gross Profit (RMB thousands) | Segment Results (RMB thousands) | | :--- | :--- | :--- | :--- | | Ready-mixed Concrete | 148,220 | (19,268) | (39,124) | | Precast Concrete Components | 870 | 330 | (10,371) | | Recycled Iron Ore Tailings and Bricks | 110,583 | 26,843 | 11,933 | | Total | 259,673 | 7,905 | (37,562) | - Additions to non-current assets were primarily concentrated in the recycled iron ore tailings and bricks segment, amounting to RMB 63.5 million[75] - Total segment assets amounted to RMB 1,053.8 million, with the recycled iron ore tailings and bricks segment accounting for the largest proportion[75] Contract Liabilities As of June 30, 2025, the group's total contract liabilities were RMB 7.2 million, mainly from ready-mixed concrete, with RMB 4.3 million revenue recognized from opening contract liabilities during the period Contract Liabilities (RMB thousands) | Business Segment | June 30, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Recycled Iron Ore Tailings and Bricks | 469 | 3,732 | | Precast Concrete Components | 100 | — | | Ready-mixed Concrete | 6,587 | 1,321 | | Total | 7,156 | 5,053 | - Contract liabilities relate to non-refundable customer advances and fluctuate due to varying project durations[77] - Revenue recognized from opening contract liabilities during the period was RMB 4.3 million (2024: RMB 3.0 million)[79] Expenses by Nature Total cost of sales, selling expenses, and administrative expenses amounted to RMB 300.9 million, primarily comprising raw materials and consumables used, employee benefit expenses, and outsourcing service fees Expenses by Nature (For the Six Months Ended June 30) | Expense Item | 2025 (RMB thousands) | 2024 (RMB thousands) | | :--- | :--- | :--- | | Raw materials and consumables used | 195,381 | 126,214 | | Employee benefit expenses | 28,220 | 27,645 | | Outsourcing service fees | 16,949 | 18,101 | | Depreciation of property, plant and equipment | 15,375 | 15,637 | | Transportation expenses | 16,758 | 17,232 | | Total | 300,868 | 238,131 | - Raw materials and consumables used represent the largest expense item, significantly increasing year-on-year during the period[80] Income Tax Expense / (Credit) Income tax expense for the period was RMB 1.2 million, mainly comprising China income tax, with Chinese subsidiaries subject to a 25% corporate income tax rate, and some enjoying a preferential rate of 15% Income Tax Expense / (Credit) (For the Six Months Ended June 30) | Item | 2025 (RMB thousands) | 2024 (RMB thousands) | | :--- | :--- | :--- | | Current income tax — China income tax | 1,274 | (1,868) | | Deferred income tax | (69) | 555 | | Income Tax Expense / (Credit) | 1,205 | (1,313) | - The Company is incorporated in the Cayman Islands and is not subject to Cayman Islands taxation; British Virgin Islands subsidiaries are also exempt from taxation; Hong Kong profits tax is provided at 16.5%, but there was no assessable profit during the period[82][83][84] - Chinese subsidiaries are subject to a corporate income tax rate of 25%, except for Xiamen Zhixin Construction Technology Co., Ltd. and Zhixin Environmental Technology (Changjiang) Co., Ltd., which enjoy a preferential tax rate of 15%[84] Basic and Diluted (Loss) / Earnings Per Share Basic loss per share was RMB 0.066, compared to basic earnings per share of RMB 0.002 in the prior year, with diluted loss per share being the same due to no potential dilutive ordinary shares Basic (Loss) / Earnings Per Share (For the Six Months Ended June 30) | Indicator | 2025 | 2024 | | :--- | :--- | :--- | | (Loss) / Profit attributable to owners of the Company (RMB thousands) | (49,061) | 1,172 | | Weighted average number of ordinary shares in issue | 748,000,000 | 748,000,000 | | Basic (Loss) / Earnings Per Share (RMB) | (0.066) | 0.002 | - As there were no potential dilutive ordinary shares outstanding as of June 30, 2025, the diluted earnings per share presented are the same as the basic earnings per share[87] Dividends No dividends were paid, declared, or proposed by the company for the six months ended June 30, 2025 - For the six months ended June 30, 2025, no dividends were paid, declared, or proposed (2024: Nil)[88] Property, Plant and Equipment, Right-of-Use Assets, Investment Properties and Intangible Assets As of June 30, 2025, the group's total property, plant and equipment, right-of-use assets, investment properties, and intangible assets amounted to RMB 624.9 million, with additions of RMB 60.8 million to property, plant and equipment and total depreciation and amortization of RMB 17.6 million during the period Movements in Non-Current Assets (RMB thousands) | Asset Category | January 1, 2025 | Additions | Depreciation / Amortization | Disposals | June 30, 2025 | | :--- | :--- | :--- | :--- | :--- | :--- | | Property, Plant and Equipment | 412,302 | 60,758 | (15,375) | (1,432) | 456,253 | | Right-of-Use Assets | 100,367 | — | (1,695) | — | 98,672 | | Investment Properties | 31,085 | — | (557) | — | 30,528 | | Intangible Assets | 39,403 | 19 | (17) | — | 39,405 | | Total | 583,157 | 60,777 | (17,644) | (1,432) | 624,858 | - The Group has pledged certain assets to secure borrowings, details of which are set out in Note 20(a)[89] Inventories As of June 30, 2025, the group's total inventories amounted to RMB 18.5 million, comprising raw materials and finished goods, with an impairment allowance of RMB 1.4 million Composition of Inventories (RMB thousands) | Item | June 30, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Raw materials | 13,047 | 12,702 | | Finished goods | 6,884 | 7,892 | | Less: Impairment allowance for inventories | (1,410) | (1,601) | | Total | 18,521 | 18,993 | - The closing balance of inventory impairment allowance was RMB 1.4 million, with zero increase in allowance recognized in profit or loss during the period, and RMB 191 thousand of allowance written off[90] Trade Receivables As of June 30, 2025, the group's total trade receivables were RMB 413.6 million, with an impairment allowance of RMB 32.9 million, and RMB 49.9 million subject to factoring arrangements Overview of Trade Receivables (RMB thousands) | Item | June 30, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Current trade receivables | 434,748 | 479,913 | | Less: Impairment allowance | (30,966) | (28,696) | | Non-current retention receivables | 11,756 | 16,405 | | Less: Impairment allowance | (1,919) | (2,595) | | Total | 413,619 | 465,027 | - The carrying amount of trade receivables includes receivables subject to factoring arrangements of RMB 49.9 million (December 31, 2024: RMB 38.1 million)[92] Aging Analysis of Trade Receivables (RMB thousands) | Aging | June 30, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Within 1 year | 261,330 | 261,204 | | 1 to 2 years | 51,130 | 74,880 | | 2 to 3 years | 71,449 | 99,729 | | Over 3 years | 62,595 | 60,505 | | Total | 446,504 | 496,318 | Prepayments, Deposits and Other Receivables As of June 30, 2025, total prepayments, deposits, and other receivables amounted to RMB 45.7 million, primarily comprising prepayments for raw materials and operating expenses, recoverable deductible VAT, and refundable deposits Composition of Prepayments, Deposits and Other Receivables (RMB thousands) | Item | June 30, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Prepayments for raw materials and operating expenses | 15,100 | 12,796 | | Recoverable deductible VAT | 7,430 | 6,973 | | Rental receivables | 4,089 | 4,840 | | Refundable deposits | 10,110 | 9,285 | | Other receivables | 8,926 | 8,093 | | Total | 45,655 | 41,987 | - Due to their short-term nature, the carrying amounts of prepayments, deposits, and other receivables approximate their fair values at the reporting date[94] Cash and Bank Balances As of June 30, 2025, the group's cash and bank balances decreased to RMB 15.7 million, with restricted bank balances representing pledged bank deposits Cash and Bank Balances (RMB thousands) | Item | June 30, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Cash on hand and at bank | 15,705 | 19,036 | - Restricted bank balances represent bank deposits pledged for the issuance of bills payable[95] Share Capital As of June 30, 2025, the company's authorized share capital was 3,000,000,000 shares, with 748,000,000 shares issued, totaling RMB 6.4 million, remaining unchanged since January 1, 2025 Overview of Share Capital | Item | Number of Ordinary Shares | Share Capital (RMB thousands) | | :--- | :--- | :--- | | Authorized Share Capital (June 30, 2025) | 3,000,000,000 | 25,500 | | Issued Share Capital (June 30, 2025) | 748,000,000 | 6,358 | - Share capital remained unchanged as of January 1, 2025, and June 30, 2025[96] Reserves As of June 30, 2025, the group's total reserves amounted to RMB 364.7 million, including share premium, capital reserve, and statutory reserve, remaining unchanged since January 1, 2025 Composition of Reserves (RMB thousands) | Item | Share Premium | Capital Reserve | Statutory Reserve | Total | | :--- | :--- | :--- | :--- | :--- | | From January 1, 2025 to June 30, 2025 | 220,966 | 127,135 | 16,558 | 364,659 | - Total reserves remained unchanged from January 1, 2025, to June 30, 2025[96] Trade Payables As of June 30, 2025, the group's total trade payables were RMB 322.4 million, primarily due within one year, with carrying amounts approximating fair values Trade Payables (RMB thousands) | Item | June 30, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Trade payables — Third parties | 322,425 | 299,173 | Aging Analysis of Trade Payables (RMB thousands) | Aging | June 30, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Within one year | 266,976 | 246,851 | | One to two years | 15,555 | 50,035 | | Over two years | 39,894 | 2,287 | | Total | 322,425 | 299,173 | Other Payables and Accrued Charges As of June 30, 2025, total other payables and accrued charges amounted to RMB 70.4 million, mainly comprising payables for property, plant and equipment purchases and amounts due to related parties Composition of Other Payables and Accrued Charges (RMB thousands) | Item | June 30, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Payables for property, plant and equipment purchases | 31,972 | 31,079 | | Amounts due to related parties | 16,605 | 7,919 | | Accrued operating expenses | 9,691 | 10,432 | | Employee benefit payables | 2,903 | 7,138 | | Other tax payables | 3,436 | 6,336 | | Others | 5,755 | 7,060 | | Total | 70,362 | 69,964 | - Due to their short-term nature, the carrying amounts of other payables and accrued charges approximate their fair values at the reporting date[98] Borrowings As of June 30, 2025, the group's total borrowings were RMB 381.3 million, with a significant increase in non-current borrowings, primarily secured bank and factoring borrowings, collateralized by various assets and guarantees Bank Borrowings The group's total bank borrowings of RMB 381.3 million include secured bank and factoring borrowings, collateralized by assets such as property, plant and equipment, and guaranteed by the company and individuals Overview of Borrowings (RMB thousands) | Borrowing Type | June 30, 2025 Current | June 30, 2025 Non-current | June 30, 2025 Total | December 31, 2024 Current | December 31, 2024 Non-current | December 31, 2024 Total | | :--- | :--- | :--- | :--- | :--- | :--- | :--- | | Secured bank borrowings | 71,200 | 260,210 | 331,410 | 189,637 | 132,691 | 322,328 | | Factoring borrowings | 49,890 | — | 49,890 | 38,061 | — | 38,061 | | Total Borrowings | 121,090 | 260,210 | 381,300 | 227,698 | 132,691 | 360,389 | - Secured bank borrowings are collateralized by the Group's assets, including property, plant and equipment, construction in progress, right-of-use assets, investment properties, and transferred receivables[100][101] - Borrowings are also collateralized by corporate guarantees from certain subsidiaries, and guarantees from Mr. Ye Zhijie and his spouse, Mr. Huang Wengui, and an independent third-party credit guarantee company[100] Repayment Schedule As of June 30, 2025, the group's total borrowings were RMB 381.3 million, with RMB 121.1 million due within one year and RMB 190.3 million due after more than three years Borrowings Repayment Schedule (RMB thousands) | Repayment Period | June 30, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Within one year | 121,090 | 227,698 | | One to two years | 25,000 | 16,058 | | Two to three years | 44,900 | 19,980 | | Over three years | 190,310 | 96,653 | | Total | 381,300 | 360,389 | Undrawn Borrowing Facilities As of June 30, 2025, the group had RMB 248.6 million in undrawn borrowing facilities, all of which were floating-rate bank borrowings maturing within one year Undrawn Borrowing Facilities (RMB thousands) | Maturity Period | June 30, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Maturing within one year | 248,640 | 800 | | Maturing in one to two years | — | 25,550 | | Maturing in two to three years | — | — | | Maturing after three years | — | 187 | | Total | 248,640 | 26,537 | Commitments As of June 30, 2025, the group's total capital commitments amounted to RMB 451.7 million, primarily for contracted but unprovided property, plant and equipment Capital Commitments (RMB thousands) | Item | June 30, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Contracted but not provided for — Property, plant and equipment | 451,719 | 115,447 | | Authorized but not provided for — Property, plant and equipment | — | 288,805 | | Total | 451,719 | 404,252 | Related Party Transactions The group engaged in related party transactions, mainly involving advances from and repayments to Mr. Ye Zhijie, and amounts payable to Mr. Ye Zhijie and Mr. Huang Kaining, which are unsecured, interest-free, and repayable on demand Transactions with Related Parties During the period, the group received advances of RMB 8.7 million from Mr. Ye Zhijie, compared to repayments of RMB 1.6 million in the prior year Transactions with Related Parties (RMB thousands) | Item | 2025 | 2024 | | :--- | :--- | :--- | | Advances from / (Repayments to) related parties — Mr. Ye Zhijie | 8,686 | (1,553) | Balances with Related Parties As of June 30, 2025, amounts payable to related parties, Mr. Ye Zhijie and Mr. Huang Kaining, totaled RMB 16.6 million, used to supplement working capital, unsecured, interest-free, and repayable on demand Amounts Due to Related Parties (RMB thousands) | Related Party | June 30, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Mr. Ye Zhijie | 9,233 | 547 | | Mr. Huang Kaining | 7,372 | 7,372 | | Total | 16,605 | 7,919 | - Amounts due to Mr. Ye Zhijie and Mr. Huang Kaining are related party advances used to supplement the Group's working capital needs, unsecured, interest-free, and repayable on demand[105] Key Management Personnel Remuneration Key management personnel remuneration for the six months ended June 30, 2025, was approximately RMB 1.6 million, a decrease from the prior year - Key management personnel remuneration for the six months ended June 30, 2025, was approximately RMB 1,645,000 (2024: RMB 2,144,000)[105] Corporate Governance and Other Information This section outlines the company's commitment to sound corporate governance principles and compliance with relevant codes and regulations Corporate Governance The Board is committed to establishing sound corporate governance principles and confirms the company's compliance with the Corporate Governance Code during the period - The Board is committed to establishing sound corporate governance principles and practices and achieving high standards of corporate governance[107] - The Board has reviewed the Company's corporate governance practices and is satisfied that for the six months ended June 30, 2025, the Company has applied the principles and complied with the code provisions set out in the Corporate Governance Code[108] Compliance with the Model Code for Securities Transactions by Directors The company adopted a code of conduct no less exacting than the Model Code, and all directors confirmed compliance during the period, with the code also applied to relevant employees with inside information - The Company has adopted a code of conduct regarding securities transactions by directors, the terms of which are no less exacting than the required standard set out in the Model Code[109] - Following specific enquiries made by the Company to all Directors, the Directors confirmed that they had complied with the required standards set out in the Model Code and the code of conduct regarding directors' dealings for the six months ended June 30, 2025[109] Directors' and Chief Executive's Interests and/or Short Positions in the Shares, Underlying Shares and Debentures of the Company and its Associated Corporations As of June 30, 2025, Mr. Ye Zhijie and Mr. Huang Wengui held substantial shares through controlled corporations, while Mr. Lai Quanshui, Mr. Qiu Limiao, and Mr. Ye Dan also held beneficial interests Directors' Interests in the Company's Shares | Director | Nature of Interest | Number of Shares Interested | Approximate Percentage of Interest in the Company's Issued Share Capital | | :--- | :--- | :--- | :--- | | Mr. Ye Zhijie | Interest in controlled corporation | 274,706,100 (L) | 36.73% | | Mr. Huang Wengui | Interest in controlled corporation | 121,568,700 (L) | 16.25% | | Mr. Lai Quanshui | Beneficial interest | 10,000,000 (L) | 1.34% | | Mr. Qiu Limiao | Beneficial interest | 56,000 (L) | 0.01% | | Mr. Ye Dan | Beneficial interest | 50,000 (L) | 0.01% | - Mr. Ye Zhijie is the sole shareholder of Zhixin Investment Holdings Limited, and Mr. Huang Wengui is the sole shareholder of Yaohao Holdings Limited, and are therefore deemed to be interested in the shares held by them[113] Substantial Shareholders' Interests and/or Short Positions in the Shares and Underlying Shares of the Company As of June 30, 2025, Zhixin Investment Holdings Limited, Yaohao Holdings Limited, their respective spouses, and Huatai Securities Co., Ltd. and its subsidiaries were substantial shareholders of the company Substantial Shareholders' Long Positions in the Company's Shares | Name / Company Name | Nature of Interest | Number of Shares Interested | Approximate Percentage of Interest in the Company's Issued Share Capital | | :--- | :--- | :--- | :--- | | Zhixin Investment Holdings Limited | Beneficial interest | 274,706,100 | 36.73% | | Ms. Hong Wei | Spouse's interest | 274,706,100 | 36.73% | | Yaohao Holdings Limited | Beneficial interest | 121,568,700 | 16.25% | | Ms. Lin Lingling | Spouse's interest | 121,568,700 | 16.25% | | Huatai Securities Co., Ltd. | Interest in controlled corporation | 37,718,000 | 5.04% | | Huatai International Financial Holdings Company Limited | Interest in controlled corporation | 37,718,000 | 5.04% | | Huatai Financial Holdings (Hong Kong) Limited | Beneficial interest | 37,718,000 | 5.04% | - Ms. Hong Wei is the spouse of Mr. Ye Zhijie, and Ms. Lin Lingling is the spouse of Mr. Huang Wengui, and are deemed to be interested in the shares held by their respective spouses under the Securities and Futures Ordinance[117] - Huatai Securities Co., Ltd. and its subsidiaries (Huatai International Financial Holdings Company Limited, Huatai Financial Holdings (Hong Kong) Limited) hold shares through controlled corporate interests[117] Changes in Directors There were no changes in directors or their information requiring disclosure under the Listing Rules for the six months ended June 30, 2025 - For the six months ended June 30, 2025, there were no changes in directors or their information requiring disclosure under the Listing Rules[118] Directors' Interests in Competing Businesses No directors held interests in any business competing or potentially competing with the group, nor had any conflicts of interest, for the six months ended June 30, 2025 - For the six months ended June 30, 2025, no director held any interest in any business competing or potentially competing, directly or indirectly, with the Group's business[119] - Nor were there any actual or potential conflicts of interest with the Group[119] 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 - For the six months ended June 30, 2025, neither the Company nor any of its subsidiaries purchased, sold, or redeemed any of the Company's listed securities[120] Review of Interim Financial Statements The unaudited condensed consolidated interim financial statements and this interim report for the six months ended June 30, 2025, have been reviewed by the Audit Committee - The unaudited condensed consolidated interim financial statements of the Company and its subsidiaries for the six months ended June 30, 2025, and this interim report have been reviewed by the Audit Committee[121] Interim Dividend The Board of Directors does not recommend the payment of an interim dividend for the six months ended June 30, 2025 - The Board of Directors does not recommend the payment of an interim dividend for the six months ended June 30, 2025[122] Glossary This section provides definitions for key terms used throughout the report