德基科技控股(01301) - 2025 - 中期财报

Company Information Board and Committee Composition This section lists the members and recent changes of DG Technology Holdings Limited's Board of Directors and its committees (Audit, Remuneration, Nomination, Risk Management), reflecting key personnel configurations in corporate governance - Ms. Cai Qunli was appointed Chairman and Chief Executive Officer of the Board on June 23, 2025, while Mr. Cai Hongneng resigned as Chairman on the same day[3] - Ms. Hu Bingbing was appointed Independent Non-executive Director, Chairman of the Remuneration Committee, and member of the Audit and Risk Management Committees on September 1, 2025, while Mr. Huo Weishun resigned as Independent Non-executive Director on the same day[3][4] Company Contact and Professional Service Information This section provides basic contact and professional service information, including the company's registered office, principal places of business, share registrar, auditor, legal counsel, principal bankers, and company website - The company's registered office is in the Cayman Islands, its principal place of business in Hong Kong is in Sheung Wan, and its principal place of business in China is in Langfang City, Hebei Province[5] - PricewaterhouseCoopers is the company's auditor, and Mintz Group LLP is the legal counsel[5] - The company's website is **www.dgtechnology.com**[6](index=6&type=chunk) Management Discussion and Analysis Business Review The Group continued as a leading participant in China's and overseas road construction and maintenance machinery industry in H1 2025, primarily providing asphalt mixing plants, RAP crushing equipment, and sand-making machines, while actively expanding environmental protection features, increasing R&D investment, and growing overseas markets - The Group's core products are asphalt mixing plants, including conventional and recycling equipment, capable of producing asphalt mixtures for various road construction and maintenance grades[8] - In H1 2025, China's GDP grew by 5.3% year-on-year, infrastructure expenditure increased by 4.6% year-on-year, and the average operating rate of national construction machinery reached 44.8%[8][9] - During the period, 23 asphalt mixing plant sales contracts were completed (H1 2024: 10), with revenue increasing by 51.7% to RMB215,096,000, and gross profit increasing by 48.6% to RMB73,360,000[9] - The Group actively expanded into Southeast Asian and Belt and Road Initiative markets, and collaborated with LiuGong Machinery to develop mid-range asphalt mixing plant solutions[10] - As of June 30, 2025, the Group held 262 registered patents (16 invention, 8 design) and 31 software copyrights, with 29 additional patent applications pending[14] - The Group was ranked 45th among the 'Top 50 Specialized Manufacturers of China Construction Machinery', received the 'Outstanding Performance Award for Sustainable Institutions' at the UN Sustainable Development Goals Hong Kong Achievement Awards, and was honored as an 'Environmental Excellence Enterprise' and '10+ Years Environmental Pioneer' at the BOC Hong Kong Corporate Environmental Leadership Awards[16] Outlook The Group remains optimistic about China's road construction market in H2 2025, anticipating continued government investment to drive equipment demand, while focusing on developing Asian markets and diversifying products through Canadian partnerships to ensure long-term stable growth - National infrastructure expenditure is projected to exceed RMB3 trillion in 2025, with transportation development remaining a top priority, continuously driving demand for road construction equipment[17] - By 2025, the Asian market is expected to account for nearly 60% of global infrastructure spending, and the Group will focus on developing this market[17] - The Group established a strategic partnership with a Canadian company specializing in road construction vehicles to diversify products and expand its market footprint[17] - Ms. Cai Qunli was appointed Chairman of the Board, and will lead the company to achieve long-term stable and sustainable growth[18] Financial Review For the six months ended June 30, 2025, the Group's total revenue increased by 51.7% year-on-year to RMB215.1 million, gross profit grew by 48.6% to RMB73.4 million, and gross margin slightly decreased by 0.7 percentage points to 34.1%, with net loss attributable to owners of the Company narrowing to RMB4.2 million, primarily due to increased revenue and gross profit Key Financial Indicators for H1 2025 | Indicator | H1 2025 (RMB thousands) | H1 2024 (RMB thousands) | Change (%) | | :--- | :--- | :--- | :--- | | Total Revenue | 215,096 | 141,811 | 51.7% | | Cost of Sales | (141,736) | (92,443) | 53.3% | | Gross Profit | 73,360 | 49,368 | 48.6% | | Gross Margin | 34.1% | 34.8% | -0.7 percentage points | | Net Loss Attributable to Owners of the Company | (4,221) | (5,683) | -25.8% | Asphalt Mixing Plant Sales Performance | Indicator | H1 2025 (RMB thousands) | H1 2024 (RMB thousands) | Change (%) | | :--- | :--- | :--- | :--- | | Revenue | 170,213 | 112,578 | 51.2% | | Gross Profit | 61,108 | 34,773 | 75.7% | | Gross Margin | 35.9% | 30.9% | +5.0 percentage points | | Number of Contracts | 23 | 10 | +13 | | Average Contract Value | 7,401 | 11,258 | -34.3% | Asphalt Mixing Plant Sales by Equipment Type | Equipment Type | H1 2025 Revenue (RMB thousands) | H1 2024 Revenue (RMB thousands) | Change (%) | | :--- | :--- | :--- | :--- | | Recycling Equipment | 28,276 | 75,139 | -62.4% | | Conventional Equipment | 141,937 | 37,439 | 279.1% | Asphalt Mixing Plant Sales by Region | Region | H1 2025 Revenue (RMB thousands) | H1 2024 Revenue (RMB thousands) | Change (%) | | :--- | :--- | :--- | :--- | | Mainland China | 160,269 | 73,800 | 117.2% | | Outside Mainland China | 9,944 | 38,778 | -74.4% | - Revenue from sales of spare parts and refurbished equipment increased by 48.9% to RMB32,624,000, with a gross margin of 46.6%[29] - Revenue from sales of other asphalt specialized equipment increased by 67.3% to RMB12,259,000, with a gross margin of 21.0%[30] - Distribution costs increased by 52%, consistent with revenue growth; administrative expenses increased by 3.3%, mainly due to higher R&D and staff costs[33][34] - Net finance income decreased, primarily due to lower interest income from bank deposits[37] Working Capital Management The Group's working capital management shows a slight decrease in net current assets and current ratio, but a reduction in inventory turnover days, while trade receivables and bills payable turnover days both increased, reflecting expanded sales activities and optimized supplier payment terms Key Working Capital Indicators | Indicator | June 30, 2025 (RMB thousands) | December 31, 2024 (RMB thousands) | Change | | :--- | :--- | :--- | :--- | | Net Current Assets | 386,600 | 393,386 | -1.7% | | Current Ratio | 2.8 times | 3.3 times | -0.5 times | | Inventories | 219,295 | 212,960 | +3.0% | | Trade and Bills Receivables | 212,888 | 169,189 | +25.8% | | Trade and Bills Payables | 117,273 | 90,398 | +29.7% | - Inventory turnover days decreased by 38 days from 314 days to 276 days, mainly due to an increase in raw materials and work-in-progress for signed but unrecognised sales contracts[40] - Trade receivables and bills receivable turnover days increased by 33 days from 131 days to 164 days, primarily due to a higher proportion of contracts completed with PRC customers at period-end[41] - Trade payables and bills payable turnover days increased by 7 days from 126 days to 133 days, reflecting more favorable payment terms negotiated with suppliers and subcontractors[42] Liquidity and Financial Resources The Group primarily relies on internal cash flow and bank credit for funding, with cash and cash equivalents and pledged bank deposits increasing as of June 30, 2025, and no borrowings. Cash flow from operating activities turned positive, while cash outflows from investing and financing activities decreased Liquidity Position | Indicator | June 30, 2025 (RMB thousands) | December 31, 2024 (RMB thousands) | | :--- | :--- | :--- | | Cash and Cash Equivalents | 55,882 | 48,926 | | Pledged Bank Deposits | 24,986 | 21,672 | | Borrowings | Nil | Nil | Cash Flow Changes | Activity Type | H1 2025 (RMB thousands) | H1 2024 (RMB thousands) | | :--- | :--- | :--- | | Net Cash Generated From/(Used In) Operating Activities | 19,485 | (29,834) | | Net Cash (Used In)/Generated From Investing Activities | (1,166) | 7,408 | | Net Cash Used In Financing Activities | (10,576) | (42,231) | Capital Commitments and Contingent Liabilities As of June 30, 2025, the Group had contracted capital commitments for property, plant and equipment of RMB663,000 and provided a finance lease guarantee of up to RMB94,333,000 for its associate, Shanghai Tuopu Capital Commitments | Item | June 30, 2025 (RMB thousands) | December 31, 2024 (RMB thousands) | | :--- | :--- | :--- | | Contracted - Property, Plant and Equipment | 663 | 648 | - The Group provided a guarantee to Shanghai Tuopu for an amount up to RMB94,333,000 (December 31, 2024: RMB85,756,000)[45] Pledged Assets As of June 30, 2025, the Group pledged certain property, plant and equipment, land use rights, and bank deposits to secure bills payable and bank financing Pledged Assets | Asset Category | June 30, 2025 (RMB thousands) | December 31, 2024 (RMB thousands) | | :--- | :--- | :--- | | Property, Plant and Equipment | 23,619 | 24,749 | | Land Use Rights | 4,116 | 4,180 | | Bank Deposits | 24,986 | 21,672 | Foreign Exchange Risk The Group faces foreign exchange risk from sales and purchases denominated in USD and EUR, with RMB exchange rate fluctuations potentially impacting export prices and raw material costs. Management continuously monitors this risk but did not use financial hedging instruments during the period - The Group is exposed to foreign exchange risk arising from sales and purchases denominated in foreign currencies, including USD and EUR[47] - Appreciation or depreciation of the RMB against these foreign currencies may impact the Group's export sales and raw material procurement costs[47] - For the six months ended June 30, 2025, the Group did not use any financial instruments for hedging purposes[47] Material Investments and Significant Acquisitions or Disposals For the six months ended June 30, 2025, the Group did not undertake any material investments or significant acquisition or disposal activities - For the six months ended June 30, 2025, the Group had no material investments or significant acquisitions or disposals[48] Other Information Directors' and Chief Executive's Interests and Short Positions in Shares, Underlying Shares, and Debentures This section discloses the interests of the Company's directors and chief executive and their associates in the Company's shares and shares of associated corporations as of June 30, 2025, and explains the impact of certain director position changes on equity disclosure Directors' Interests in Shares and Underlying Shares of the Company | Director Name | Nature of Interest | Number of Shares and Underlying Shares Held | Approximate Percentage of Company's Equity | | :--- | :--- | :--- | :--- | | Mr. Cai Hongneng | Controlled Corporation Interest | 345,696,000 | 55.14% | | Mr. Cai Hongneng | Beneficial Owner | 57,236,000 | 9.13% | | Ms. Cai Qunli | Beneficial Owner | 4,150,000 | 0.64% | | Mr. Cai Hanting | Beneficial Owner | 4,150,000 | 0.64% | | Mr. Liu Jingzhi | Controlled Corporation Interest | 13,500,000 | 2.15% | | Mr. Liu Jingzhi | Spouse's Interest | 150,000 | 0.02% | | Mr. Liu Jingzhi | Beneficial Owner | 2,000,000 | 0.32% | | Mr. Liu Jinzhi | Controlled Corporation Interest | 9,000,000 | 1.44% | | Mr. Liu Jinzhi | Beneficial Owner | 2,000,000 | 0.32% | | Mr. Chen Linghong | Beneficial Owner | 300,000 | 0.05% | | Mr. Li Zongjin | Beneficial Owner | 300,000 | 0.05% | | Mr. Li Weiyi | Beneficial Owner | 300,000 | 0.05% | | Mr. Huo Weishun | Beneficial Owner | 400,000 | 0.06% | | Mr. Alain Vincent Fontaine | Beneficial Owner | 293,113 | 0.05% | Directors' Interests in Shares and Underlying Shares of Associated Corporations | Director Name | Name of Associated Corporation | Nature of Interest | Approximate Percentage of Equity | | :--- | :--- | :--- | :--- | | Mr. Cai Hongneng | Hanming Investment Holdings Limited | Beneficial Owner | 40% | | Ms. Cai Qunli | Hanming Investment Holdings Limited | Beneficial Owner | 20% | | Mr. Cai Hanting | Hanming Investment Holdings Limited | Beneficial Owner | 20% | - Mr. Cai Hongneng resigned as Chairman and Executive Director on June 23, 2025, but remains a substantial shareholder, holding a total of approximately 64.27% of the Company's equity[54] - Mr. Huo Weishun resigned as Independent Non-executive Director on September 1, 2025, and held 400,000 shares as of June 30, 2025[54] Substantial Shareholders' and Other Persons' Interests and Short Positions in Shares and Underlying Shares This section lists the substantial shareholders holding 5% or more of the Company's issued share capital and their shareholdings as of June 30, 2025 Substantial Shareholders' Shareholding | Substantial Shareholder Name/Name | Nature of Interest | Number of Shares Held | Approximate Percentage of the Company | | :--- | :--- | :--- | :--- | | Hanming Investment Holdings Limited | Beneficial Owner | 345,696,000 | 55.14% | | Mr. Cai Hongneng | Controlled Corporation Interest | 345,696,000 | 55.14% | | Mr. Cai Hongneng | Beneficial Owner | 57,236,000 | 9.13% | | SURE PRECISION LIMITED | Controlled Corporation Interest | 43,967,003 | 7.01% | Share Option Scheme The Company has a share option scheme to incentivize employees and directors, which stipulates terms for grant, exercise price, exercise period, and share quantity limits. For the six months ended June 30, 2025, no share options were cancelled, exercised, or granted, and no share option expenses were recognized - The Share Option Scheme was adopted on May 6, 2015, with a 10-year validity, aiming to recognize and reward the contributions of employees and directors of the Group's member companies[56] - The exercise price of share options shall be at least the highest of the nominal value of the shares, the closing price on the offer date, or the average closing price for the five business days immediately preceding the offer date[57] - The maximum number of shares that may be granted under the scheme shall not exceed 10% of the total issued shares as of May 27, 2015 (i.e., 60,000,000 shares)[58] - For the six months ended June 30, 2025, no share options were cancelled, exercised, or lapsed, and no share options were granted under the Share Option Scheme[59] - No share option expenses were recognized for the periods ended June 30, 2025, and 2024[60] Sufficient Public Float For the six months ended June 30, 2025, the Company consistently maintained a sufficient public float of not less than 25% of its issued shares as required by the Listing Rules - As of the date of this interim report, the Company has consistently maintained a sufficient public float of not less than 25% of its issued shares as required by the Listing Rules[62] Employees and Remuneration Policy As of June 30, 2025, the Group's employee count increased to 352, with total staff costs of approximately RMB38.5 million. The remuneration policy is based on employee performance, market conditions, and business needs, offering various benefits and training, with no share options granted during the period Employee and Remuneration Overview | Indicator | June 30, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Number of Employees | 352 employees | 330 employees | | Total Staff Costs (H1 2025) | RMB38,502,000 | RMB33,511,000 (H1 2024) | - The Group's remuneration policy is formulated based on employee performance, market conditions, business needs, and expansion plans, including salaries, discretionary bonuses, and provident fund contributions[63] - No share options were granted for the six months ended June 30, 2025, and 2024[63] Interim Dividend For the six months ended June 30, 2025, the Board did not recommend the payment of any interim dividend, consistent with the same period last year - For the six months ended June 30, 2025, the Board did not recommend the payment of any interim dividend (six months ended June 30, 2024: same)[64] Purchase, Sale or Redemption of the Company's Listed Securities For the six months ended June 30, 2025, the Company purchased 5,184,000 of its own shares and cancelled 12,424,000 shares, with no listed securities sold during the period Listed Securities Transactions | Transaction Type | Quantity (shares) | Cost (RMB thousands) | | :--- | :--- | :--- | | Purchase of Own Shares | 5,184,000 | 2,962 | | Cancellation of Shares | 12,424,000 | 7,795 | - For the six months ended June 30, 2025, the Company did not sell any listed securities[65] Corporate Governance Code The Company complied with all provisions of the Corporate Governance Code in H1 2025, except for the combined roles of Chairman and CEO held by Ms. Cai Qunli, for which the Board has taken measures to ensure checks and balances - The Company complied with all code provisions of the Corporate Governance Code, except for the roles of Chairman and Chief Executive Officer being combined and held by Ms. Cai Qunli, which deviates from code provision C.2.1[66] - The Board has ensured that reasonable measures and safeguards are in place to maintain effective checks and balances, preserve the Board's independence, and ensure the robust operation of the Company's corporate governance framework[66] Model Code for Securities Transactions The Company adopted the Model Code for Securities Transactions as set out in Appendix C3 of the Listing Rules as the code of conduct for directors' securities transactions, and all directors confirmed compliance throughout the period - The Company has adopted the Model Code as set out in Appendix C3 of the Listing Rules, and all directors have confirmed their compliance with the Model Code throughout the period[67] Review of Interim Results The Group's interim results for the six months ended June 30, 2025, were reviewed by the Audit Committee and by PricewaterhouseCoopers in accordance with Hong Kong Standard on Review Engagements 2410 - The Group's interim results for the six months ended June 30, 2025, were reviewed by the Audit Committee, which comprises three independent non-executive directors[68] - PricewaterhouseCoopers has reviewed the unaudited interim condensed consolidated financial information in accordance with Hong Kong Standard on Review Engagements 2410[69] Changes in Directors' Information This section details changes in Board members and their committee roles for the period up to September 1, 2025, including appointments and resignations of the Chairman, Independent Non-executive Directors, Company Secretary, and various committee members - Mr. Cai Hongneng resigned as Chairman and Executive Director, and Ms. Cai Qunli was appointed Chairman and member of the Nomination Committee[70] - Mr. Li Zongjin resigned as Independent Non-executive Director and member of several committees, and Mr. Li Weiyi was appointed Chairman of the Nomination Committee[70] - Mr. Huo Weishun resigned as Independent Non-executive Director and was appointed Chief Financial Officer, Company Secretary, and Authorized Representative[70] - Ms. Hu Bingbing was appointed Independent Non-executive Director, Chairman of the Remuneration Committee, and member of the Audit and Risk Management Committees[71] Review Report on Interim Financial Information Introduction and Scope of Review PricewaterhouseCoopers reviewed DG Technology Holdings Limited's interim financial information for the six months ended June 30, 2025, in accordance with Hong Kong Standard on Review Engagements 2410. The scope of review is less than an audit, thus no audit opinion is expressed - The auditor has reviewed the Group's interim financial information for the six months ended June 30, 2025, which complies with Hong Kong Accounting Standard 34 'Interim Financial Reporting' issued by the Hong Kong Institute of Certified Public Accountants[72] - The review was conducted in accordance with Hong Kong Standard on Review Engagements 2410, which is substantially less in scope than an audit, and therefore no audit opinion is expressed[73] Conclusion Based on the review, the auditor found no matters that lead them to believe the Group's interim financial information is not prepared in all material respects in accordance with Hong Kong Accounting Standard 34 'Interim Financial Reporting' - Based on the review, the auditor found no matters that lead them to believe the Group's interim financial information is not prepared in all material respects in accordance with Hong Kong Accounting Standard 34 'Interim Financial Reporting' issued by the Hong Kong Institute of Certified Public Accountants[74] Interim Condensed Consolidated Statement of Profit or Loss This interim condensed consolidated statement of profit or loss shows that for the six months ended June 30, 2025, the Group's revenue significantly increased by 51.7%, gross profit grew by 48.6%, and both operating loss and loss attributable to owners of the Company narrowed, reflecting improved operating conditions Interim Condensed Consolidated Statement of Profit or Loss Summary | Indicator | H1 2025 (RMB thousands) | H1 2024 (RMB thousands) | | :--- | :--- | :--- | | Revenue | 215,096 | 141,811 | | Cost of Sales | (141,736) | (92,443) | | Gross Profit | 73,360 | 49,368 | | Other Income and Other Gains/(Losses) - Net | 1,952 | 422 | | Distribution Costs | (50,872) | (33,537) | | Administrative Expenses | (32,631) | (31,598) | | Impairment Loss (Provision)/Reversal - Net for Trade Receivables | (33) | 3,350 | | Operating Loss | (8,224) | (11,995) | | Net Finance Income | 3,259 | 5,714 | | Share of Profit of an Associate - Net | 1,077 | 1,066 | | Loss Before Income Tax | (3,888) | (5,215) | | Income Tax Expense | (333) | (468) | | Loss for the Period Attributable to Owners of the Company | (4,221) | (5,683) | | Loss Per Share Attributable to Owners of the Company for the Period (RMB cents) | (0.66) | (0.89) | Interim Condensed Consolidated Statement of Comprehensive Income This interim condensed consolidated statement of comprehensive income shows that for the six months ended June 30, 2025, the Group's loss for the period was RMB4,221,000, and with other comprehensive loss from currency translation differences, the total comprehensive loss attributable to owners of the Company was RMB6,663,000, a slight improvement from the prior period Interim Condensed Consolidated Statement of Comprehensive Income Summary | Indicator | H1 2025 (RMB thousands) | H1 2024 (RMB thousands) | | :--- | :--- | :--- | | Loss for the Period | (4,221) | (5,683) | | Currency Translation Differences | (2,442) | (1,060) | | Other Comprehensive Loss for the Period, Net of Tax | (2,442) | (1,060) | | Total Comprehensive Loss for the Period Attributable to Owners of the Company | (6,663) | (6,743) | Interim Condensed Consolidated Statement of Financial Position This interim condensed consolidated statement of financial position shows that as of June 30, 2025, the Group's total assets increased to RMB770.9 million, total liabilities increased to RMB215.2 million, while total equity slightly decreased to RMB555.7 million Interim Condensed Consolidated Statement of Financial Position Summary | Indicator | June 30, 2025 (RMB thousands) | December 31, 2024 (RMB thousands) | | :--- | :--- | :--- | | Total Non-current Assets | 173,752 | 176,731 | | Total Current Assets | 597,137 | 560,947 | | Total Assets | 770,889 | 737,678 | | Total Equity | 555,654 | 565,279 | | Total Non-current Liabilities | 4,698 | 4,838 | | Total Current Liabilities | 210,537 | 167,561 | | Total Liabilities | 215,235 | 172,399 | | Total Equity and Liabilities | 770,889 | 737,678 | Interim Condensed Consolidated Statement of Changes in Equity This interim condensed consolidated statement of changes in equity shows that for the six months ended June 30, 2025, total equity attributable to owners of the Company slightly decreased due to loss for the period, currency translation differences, and share repurchases, with no dividends distributed Interim Condensed Consolidated Statement of Changes in Equity Summary | Item | H1 2025 (RMB thousands) | H1 2024 (RMB thousands) | | :--- | :--- | :--- | | Total Equity at Beginning of Period | 565,279 | 603,522 | | Loss for the Period | (4,221) | (5,683) | | Currency Translation Differences | (2,442) | (1,060) | | Share Repurchases | (2,962) | – | | Dividends Paid | – | (39,898) | | Total Equity at End of Period | 555,654 | 556,881 | Interim Condensed Consolidated Statement of Cash Flows This interim condensed consolidated statement of cash flows shows that for the six months ended June 30, 2025, the Group generated net cash of RMB19.5 million from operating activities, a significant improvement from the prior period. Investing activities turned into net cash outflow, and net cash outflow from financing activities substantially decreased, leading to a net increase in cash and cash equivalents Interim Condensed Consolidated Statement of Cash Flows Summary | Activity Type | H1 2025 (RMB thousands) | H1 2024 (RMB thousands) | | :--- | :--- | :--- | | Net Cash Generated From/(Used In) Operating Activities | 19,485 | (29,834) | | Net Cash (Used In)/Generated From Investing Activities | (1,166) | 7,408 | | Net Cash Used In Financing Activities | (10,576) | (42,231) | | Net Increase/(Decrease) in Cash and Cash Equivalents | 7,743 | (64,657) | | Cash and Cash Equivalents at End of Period | 55,882 | 95,148 | Notes to the Interim Condensed Consolidated Financial Information General Information This section outlines DG Technology Holdings Limited and its subsidiaries' principal business activities, including the production, distribution, R&D, and sale of asphalt mixing plants, other asphalt specialized equipment, spare parts, and refurbished equipment, confirming the company's shares were listed on the Main Board of the Hong Kong Stock Exchange on May 27, 2015 - The Group is principally engaged in the production, distribution, research and development, and sale of asphalt mixing plants, other asphalt specialized equipment, spare parts, and refurbished equipment[85] - The Company's shares were listed on the Main Board of The Stock Exchange of Hong Kong Limited on May 27, 2015[86] Basis of Preparation This interim condensed consolidated financial information is 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 financial statements 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[87] - The interim condensed consolidated financial information should be read in conjunction with the annual financial statements for the year ended December 31, 2024[87] Accounting Policies The Group's accounting policies are consistent with those in the 2024 annual financial statements, with only the adoption of HKAS 21 and HKFRS 1 (Amendments) 'Lack of Exchangeability' having no significant impact on the interim financial information. This section also lists new and revised standards and interpretations not yet adopted - The accounting policies adopted are consistent with those applied in the annual financial statements for the year ended December 31, 2024, except for the adoption of HKAS 21 and HKFRS 1 (Amendments) 'Lack of Exchangeability'[88][89] - The adoption of the above amendments did not have any significant financial impact on this interim condensed consolidated financial information[89] - The Group is assessing the potential impact of new and revised standards and interpretations not yet adopted (including HKFRS 18, HKFRS 19, etc.), and currently cannot state whether they will have a significant impact[90][91] Financial Risk Management The Group faces various financial risks, including market risk (foreign exchange, cash flow, and fair value interest rate risks), credit risk, and liquidity risk. Risk management policies have not changed since December 31, 2024, and the carrying amounts of financial assets and liabilities due within one year approximate their fair values - The Group's operations expose it to various financial risks: market risk (including foreign exchange risk, cash flow and fair value interest rate risk), credit risk, and liquidity risk[92] - The risk management policies have not changed since December 31, 2024[93] - The carrying amounts of the Group's financial assets and liabilities due within one year approximate their fair values[94] Estimates The preparation of interim condensed consolidated financial information requires management to make judgments, estimates, and assumptions, which are the same as those applied in the consolidated financial statements for the year ended December 31, 2024 - In preparing this interim condensed consolidated financial information, the significant judgments made by management in applying the Group's accounting policies and the key sources of estimation uncertainty are the same as those applied in the Group's consolidated financial statements for the year ended December 31, 2024[95] Segment Information The Group has only one main operating segment: the sale of asphalt mixing plants, spare parts, refurbished equipment, and other asphalt specialized equipment. Revenue from Mainland China significantly increased, while revenue from outside Mainland China decreased. Non-current assets are primarily located in Mainland China - The Group has determined that it has only one main operating segment, which is the sale of asphalt mixing plants, spare parts, refurbished equipment, and other asphalt specialized equipment[96] Revenue Composition | Revenue Source | H1 2025 (RMB thousands) | H1 2024 (RMB thousands) | | :--- | :--- | :--- | | Sales of Asphalt Mixing Plants | 170,213 | 112,578 | | Sales of Spare Parts and Refurbished Equipment | 32,624 | 21,906 | | Sales of Other Asphalt Specialized Equipment | 12,259 | 7,327 | | Total | 215,096 | 141,811 | Revenue from External Customers by Country | Region | H1 2025 (RMB thousands) | H1 2024 (RMB thousands) | | :--- | :--- | :--- | | Mainland China | 198,656 | 97,388 | | Outside Mainland China | 16,440 | 44,423 | | Total | 215,096 | 141,811 | Geographical Location of Non-current Assets | Region | June 30, 2025 (RMB thousands) | December 31, 2024 (RMB thousands) | | :--- | :--- | :--- | | Mainland China | 111,910 | 112,580 | | Outside Mainland China | 51,081 | 53,057 | | Total | 162,991 | 165,637 | - For the six months ended June 30, 2025, and 2024, there were no customers whose transactions exceeded 10% of the Group's revenue[102] Other Income and Other Gains/(Losses) - Net For the six months ended June 30, 2025, the Group's other income and other gains, net, amounted to RMB1,952,000, primarily from government grants and net exchange gains, a significant increase from RMB422,000 in the prior period Other Income and Other Gains/(Losses) - Net | Item | H1 2025 (RMB thousands) | H1 2024 (RMB thousands) | | :--- | :--- | :--- | | Government Grants | 1,124 | 1,034 | | Net Exchange Gains/(Losses) | 437 | (1,187) | | Others | 409 | 186 | | Total | 1,952 | 422 | - Government grants primarily refer to financial support provided by the government to assist operating activities, with no unfulfilled conditions or other contingencies attached[103] Operating Loss This section lists the main components of operating loss for the six months ended June 30, 2025, including cost of inventories, employee benefit expenses, depreciation and amortization, and impairment provisions for trade receivables and inventories Components of Operating Loss | Item | H1 2025 (RMB thousands) | H1 2024 (RMB thousands) | | :--- | :--- | :--- | | Cost of Inventories | 132,049 | 87,607 | | Employee Benefit Expenses | 38,502 | 33,511 | | Depreciation and Amortization | 3,812 | 4,309 | | Impairment Loss Provision/(Reversal) - Net for Trade Receivables | 33 | (3,350) | | Impairment Loss Provision/(Reversal) - Net for Inventories | 5,515 | (3,199) | Income Tax Expense For the six months ended June 30, 2025, income tax expense primarily consisted of deferred tax expense of RMB468,000. The Group made no provision for Hong Kong profits tax and PRC corporate income tax due to no taxable profits. Langfang DG, as a high-tech enterprise, enjoys a preferential income tax rate of 15% and a 100% additional deduction for R&D expenses Income Tax Expense | Item | H1 2025 (RMB thousands) | H1 2024 (RMB thousands) | | :--- | :--- | :--- | | Deferred Income Tax | 468 | 333 | - The Group had no taxable profits subject to Hong Kong profits tax and PRC corporate income tax during the period, thus no related provisions were made[107] - Langfang DG, as a 'High-New Technology Enterprise', enjoys a preferential income tax rate of 15%, and eligible R&D expenses are entitled to a 100% additional tax deduction[107] Loss Per Share For the six months ended June 30, 2025, basic loss per share attributable to owners of the Company was RMB0.66 cents, narrowing from RMB0.89 cents in the prior period. There were no potential dilutive shares during the period, so diluted loss per share was the same as basic loss per share Loss Per Share Calculation | Indicator | H1 2025 | | :--- | :--- | | Loss Attributable to Owners of the Company (RMB thousands) | (4,221) | | Weighted Average Number of Ordinary Shares Issued | 638,516,000 | | Basic Loss Per Share (RMB cents) | (0.66) | - For the periods ended June 30, 2025, and 2024, diluted loss per share was the same as basic loss per share, as there were no potential dilutive shares[109] Property, Plant and Equipment and Intangible Assets This section details the changes in the net book value of the Group's property, plant and equipment and intangible assets for the six months ended June 30, 2025, including the impact of additions, disposals, depreciation, amortization, and exchange differences Changes in Net Book Value of Property, Plant and Equipment and Intangible Assets | Item | Property, Plant and Equipment (RMB thousands) | Intangible Assets (RMB thousands) | | :--- | :--- | :--- | | At January 1, 2025 | 100,080 | 1,485 | | Additions | 1,412 | – | | Disposals | (2) | – | | Amortization | – | (234) | | Depreciation | (3,578) | – | | Exchange Differences | (1,517) | (4) | | At June 30, 2025 | 96,395 | 1,247 | Net Investment in an Associate As of June 30, 2025, the Group's net investment in an associate increased to RMB65,349,000, primarily from its share of profit. The Group also provided a finance lease guarantee for Shanghai Tuopu, amounting to RMB94,333,000 Changes in Investment in an Associate | Item | H1 2025 (RMB thousands) | H1 2024 (RMB thousands) | | :--- | :--- | :--- | | Balance at January 1 | 64,072 | 62,256 | | Additions | 200 | – | | Share of Net Profit | 1,077 | 1,066 | | Balance at June 30 | 65,349 | 63,322 | - The Group provided a guarantee to Shanghai Tuopu for an amount up to RMB94,333,000 (December 31, 2024: RMB85,756,000)[111] Trade and Bills Receivables As of June 30, 2025, the Group's total trade and bills receivables increased to RMB212,888,000. Customers are generally granted credit terms of up to 18 months, with impairment provisions made based on individual assessment or common credit risk characteristics. This section also provides an aging analysis of trade receivables Total Trade and Bills Receivables | Item | June 30, 2025 (RMB thousands) | December 31, 2024 (RMB thousands) | | :--- | :--- | :--- | | Trade Receivables from Third Parties | 277,733 | 230,749 | | Less: Loss Allowance | (63,673) | (63,640) | | Less: Discounting Impact | (4,528) | (3,984) | | Bills Receivable | 3,356 | 6,064 | | Total | 212,888 | 169,189 | - The Group's customers are generally granted credit terms of up to 18 months[113] - Impairment provisions for trade receivables are made based on individual assessment or common credit risk characteristics[114] Aging Analysis of Trade Receivables | Aging | June 30, 2025 (RMB thousands) | December 31, 2024 (RMB thousands) | | :--- | :--- | :--- | | Within 1 Year | 207,566 | 147,779 | | 1 to 2 Years | 4,584 | 19,022 | | 2 to 3 Years | 5,122 | 3,282 | | Over 3 Years | 60,461 | 60,666 | | Total | 277,733 | 230,749 | Trade and Other Payables and Contract Liabilities As of June 30, 2025, the Group's total trade and other payables and contract liabilities increased to RMB210,039,000. Bills payable are secured by certain of the Group's assets. This section also provides an aging analysis of trade and bills payables Total Trade and Other Payables and Contract Liabilities | Item | June 30, 2025 (RMB thousands) | December 31, 2024 (RMB thousands) | | :--- | :--- | :--- | | Trade Payables | 60,568 | 26,307 | | Bills Payable | 56,705 | 64,091 | | Amount Due to a Related Party | 252 | 252 | | Other Payables and Accruals | 42,818 | 34,652 | | Contract Liabilities | 49,696 | 41,320 | | Total | 210,039 | 166,622 | - The Group's bills payable of RMB56,705,000 are secured by pledged bank deposits of approximately RMB20,080,000, buildings of RMB23,619,000, and land use rights of RMB4,116,000[116] Aging Analysis of Trade and Bills Payables | Aging | June 30, 2025 (RMB thousands) | December 31, 2024 (RMB thousands) | | :--- | :--- | :--- | | Within 3 Months | 107,950 | 56,814 | | After 3 Months but Within 6 Months | 5,311 | 28,082 | | After 6 Months but Within 1 Year | 1,916 | 3,342 | | Over 1 Year | 2,096 | 2,160 | | Total | 117,273 | 90,398 | Share Capital, Share Premium and Other Reserves This section details the composition and changes in the Group's share capital, share premium, and other reserves. As of June 30, 2025, the number of issued shares decreased due to share repurchases and cancellations. Share premium is distributable, capital reserve originates from controlling shareholder contributions, and statutory reserve and special safety production fund are established according to PRC regulations Issued and Fully Paid Share Capital | Item | Number of Shares (thousands of shares) | RMB thousands | | :--- | :--- | :--- | | At January 1, 2025 | 639,408 | 5,059 | | Cancellation of Repurchased Shares | (12,424) | – | | At June 30, 2025 | 626,984 | 5,059 | - For the six months ended June 30, 2025, the Company repurchased 5,184,000 of its own shares (at a cost of approximately RMB2,962,000) and cancelled 12,424,000 repurchased shares (at a total cost of approximately RMB7,795,000)[119] - The Company's share premium account is available for distribution to shareholders, provided that immediately following the date of the proposed dividend distribution, the Company is able to pay its debts as they fall due in the ordinary course of business[120] - Capital reserve includes contributions from controlling shareholders arising from transactions with owners (in their capacity as equity owners)[121] - Statutory general reserve is established in accordance with relevant PRC regulations and statutes, and can be used to offset prior year losses or be converted into capital[122] - In accordance with PRC regulations, the Group's PRC subsidiaries are required to transfer a special safety production fund to a special reserve account at a fixed ratio based on production volume[123] Dividends For the six months ended June 30, 2025, the Company neither paid, declared, nor proposed any interim dividend, consistent with the prior period - For the six months ended June 30, 2025, no interim dividend was paid, declared, or proposed (2024: nil)[124] Capital Commitments As of June 30, 2025, the Group had contracted capital commitments for property, plant and equipment of RMB663,000, with no authorized but uncontracted capital commitments Capital Commitments | Item | June 30, 2025 (RMB thousands) | December 31, 2024 (RMB thousands) | | :--- | :--- | :--- | | Contracted: Property, Plant and Equipment | 663 | 648 | - As of June 30, 2025, there were no authorized but uncontracted capital commitments (December 31, 2024: same)[125] Related Party Transactions and Balances The Group is controlled by Hanming Investment Holdings Limited, with the ultimate controlling party being the Cai family. As of June 30, 2025, the amount due to a related party (an entity controlled by the Cai family) was RMB252,000, which is unsecured, interest-free, and repayable on demand - The Group is controlled by Hanming Investment Holdings Limited, which owns approximately 55% of the Company's shares, with the ultimate controlling party being the Cai family[126] Year-end Related Party Balances | Item | June 30, 2025 (RMB thousands) | December 31, 2024 (RMB thousands) | | :--- | :--- | :--- | | Amount Due to a Related Party - Cai Family Controlled Entity | 252 | 252 | - The amount due to a related party is unsecured, interest-free, and repayable on demand[128]