Graphex Group Ltd 6-K, filed Oct 5, 2023
Graphex Group Ltd (GRFXY)
About this 6-K
Graphex Group Ltd filed this 6-K on October 5, 2023.
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 6-K
REPORT OF FOREIGN PRIVATE ISSUER
PURSUANT TO RULE 13a-16 OR 15d-16
UNDER THE SECURITIES EXCHANGE ACT OF 1934
For the month of October 2023
Commission File Number 001-41471
Graphex Group Limited
(Translation of registrant’s name into English)
11/F COFCO Tower 262 Gloucester Road Causeway Bay
Hong Kong
Tel: + 852 2559 9438
(Address of Principal Executive Offices)
Indicate by check mark whether the registrant files or will file annual reports under cover of Form 20-F or Form 40-F:
☒ Form 20-F ☐ Form 40-F
Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(1): ☐
Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(7): ☐
Graphex Group Limited
Form 6-K
TABLE OF CONTENTS
| Item | Page | |
| Other Information | 1 | |
| Signatures | 2 | |
| Exhibit Index | 3 |
The board (the “Board”) of directors (the “Directors”) of Graphex Group Limited (the “Company”) has announced the unaudited condensed consolidated interim consolidated financial results of the Company and its subsidiaries (collectively, the “Group”) as of, and for the six months ended, 30 June 2023, together with the comparative unaudited figures for the corresponding period in 2022, in conformity with U.S. generally accepted accounting principles.
| 1 |
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
| GRAPHEX GROUP LIMTED | ||
| By: | /s/ Andross Chan | |
| Andross Chan | ||
| Chief Executive Officer | ||
Date: October 4, 2023
| 2 |
| Exhibit No. | Exhibit | |
| 99.1 | Unaudited Financial Results as of and for the six-month period ended June 30, 2023 | |
| 101.INS(2) | Inline XBRL Instance Document | |
| 101.SCH(2) | Inline XBRL Taxonomy Extension Schema Document | |
| 101.CAL(2) | Inline XBRL Taxonomy Extension Calculation Linkbase Document | |
| 101.DEF(2) | Inline XBRL Taxonomy Extension Definition Linkbase Document | |
| 101.LAB(2) | Inline XBRL Taxonomy Extension Label Linkbase Document | |
| 101.PRE(2) | Inline XBRL Taxonomy Extension Presentation Linkbase Document |
| 3 |
EXHIBIT 99.1
Graphex Group Limited Announces Unaudited Financial Results For The First Half of 2023
HONG KONG, October 4, 2023 — Graphex Group Limited (“Graphex” the “Company” or the “Group”) (NYSE American: GRFX and HKEX: 6128), a global leader in mid-stream processing of specialized natural graphite used for electric vehicle (EV) lithium-ion (Li-ion) batteries, today announced its unaudited interim financial results for the six months ended June 30, 2023.
Financial Highlights for the Six Months Ended June 30, 2023
Total revenues were HK$ 151.3 million (US$ 19.4 million) for the six months ended June 30, 2023, representing a decrease of 7% compared with the total revenues of HK$ 163.1 million for the six months ended June 30, 2022.
Gross profit was HK$ 50 million (US$ 6.4 million) for the six months ended June 30, 2023, representing a decrease of 13% compared with our gross profit of HK$ 57.6 million for the six months ended June 30, 2022.
Gross margin was 33% for the six months ended June 30, 2023, compared with a gross margin of 35.7% for the six months ended June 30, 2022.
Loss from operations was HK$ 43.3 million (US$ 5.6 million) for the six months ended June 30, 2023, representing an increase of 4% compared with loss from operations of HK$ 41.7 million for the six months ended June 30, 2022.
Net loss was HK$ 69.9 million (US$ 9 million) for the six months ended June 30, 2023, representing an increase of 3% compared with net loss of HK$ 67.9 million for the six months ended June 30, 2022.
Amid global economic challenges, the Group set out expansion plans that will create opportunities and values for shareholders in the coming years. The Company believes that electrification is an irreversible trend. While lithium-ion batteries play a significant role in electrification, graphite processing capabilities are essential because graphite is the anode material that accounts for about 25% by weight of a lithium-ion battery. The Company believes that the global demand for graphite anode material will continue to be driven by the global development of the EV industry, energy storage infrastructures, consumer electronics, and robotics.
Operation highlights
Graphene Products Business
The production capacity of graphite anode material of the Group is limited by the current factory size. Therefore, the need for expansion of production capacity is important and that will involve construction of new production facilities. The Group has announced to build production facilities of graphite anode material in Mashan Graphite Industrial Park, Jixi, Heilongjiang, PRC for 40,000 metric tons, in Nanshu Industrial Park, Laixi, Shandong, PRC for 50,000 metric tons, and in Emerald Business Park, Warren, MI, USA for 15,000 metric tons through its joint venture company Graphex Michigan 1 LLC. The Group is also exploring the feasibilities to construct a 100,000 metric tons production facility in Canada. If the abovementioned new facilities are fully in operation, the Group will have a total production capacity of 215,000 metric tons of graphite anode material, which is over 20 times of the current capacity. As the production capacity increases, the revenue of the Group shall increase accordingly. The current market price of the graphite anode material is generally steady with minor fluctuations.
Landscape Architecture Business
The Group maintains its market position as one of the leading landscape architecture providers predominantly in the PRC and Hong Kong. It offers landscape architecture services to clients including governments, private property developers, state-owned property developers, design services companies and engineering companies in the PRC and Hong Kong.
Catering Business
The Group has terminated all its catering business in 2023 due to adverse market conditions. The Group does not intend to restart any catering business in the future.
Financial Results for the Six Months Ended June 30, 2023
Revenues
Revenue for the six months ended June 30, 2023, was approximately HK$151.3 million compared to approximately HK$163.1 million for the six months ended June 30, 2022. The decrease of HK$11.8 million or 7% was mainly due to a decrease in revenue from our Landscape architecture and design services of about HK$3.5 million, together with the decrease in revenue from our Graphene products and our Catering business, which declined about HK$6.3 million and HK$2 million, respectively.
| For the six months ended June 30, | ||||||||||||
| 2022 | 2023 | 2023 | ||||||||||
| HK$’000 | HK$’000 | US$’000 | ||||||||||
| (Unaudited) | (Unaudited) | (Unaudited) | ||||||||||
| Type of goods or services | ||||||||||||
| -Graphene products | 103,438 | 97,103 | 12,449 | |||||||||
| -Landscape architecture and design services | 57,738 | 54,171 | 6,945 | |||||||||
| -Catering | 1,957 | - | - | |||||||||
| Total Revenue | 163,133 | 151,274 | 19,394 | |||||||||
Graphene Products Business
Revenue from our Graphene Products Business for the six months ended June 30, 2023 was approximately HK$97.1 million compared to approximately HK$103.4 million for the six months ended June 30, 2022. The decrease of HK$6.3 million or 6% was primarily due to the fluctuation of exchange rate in RMB. The average exchange rate of the RMB to the HK$ for the period ended June 30, 2023 was approximately 1.13 compared to approximately 1.21 for the six months ended June 30, 2022. If the fluctuation of exchange rate in RMB is excluded, the revenue has a slight increase by 1% due to a slight increase in sales quantity offset by a slight decrease in average selling price
Landscape Architecture and Design Business
Revenue from our Landscape architecture and design business for the six months ended June 30, 2023 was approximately HK$54.2 million compared to approximately HK$57.7 million for the six months ended June 30, 2022. The decrease of HK$3.5 million or 6% was primarily due to the decrease in new contracts.
Catering Business
Revenue from our Catering business for the six months ended June 30, 2023 was nil compared to approximately HK$2 million for the six months ended June 30, 2022. The decrease was primarily due to cease of operation of restaurants in China due to the continuous deterioration in market environment since the outbreak of the COVID-19 pandemic.
Cost of revenues
Cost of goods for the six months ended June 30, 2023 was approximately HK$101.3 million compared to approximately HK$105.6 million for the six months ended June 30, 2022. The decrease of HK$4.3 million or 4% was mainly due to a decrease in cost of goods from our Graphene Products of about HK$2.6 million and together with the decrease in cost of goods from our Landscape architecture and design and Catering business which declined about HK$1.5 million and HK$0.2 million, respectively.
| For the six months ended June 30 | ||||||||||||
| 2022 | 2023 | 2023 | ||||||||||
| HK$’000 | HK$’000 | US$’000 | ||||||||||
| (Unaudited) | (Unaudited) | (Unaudited) | ||||||||||
| Graphene products | 71,682 | 69,028 | 8,850 | |||||||||
| Landscape architecture and design | 33,723 | 32,214 | 4,130 | |||||||||
| Catering | 168 | - | - | |||||||||
| Total cost of revenues | 105,573 | 101,242 | 12,980 | |||||||||
Graphene Products Business
Cost of revenues from our Graphene products business for the six months ended June 30, 2023 was approximately HK$69.1 million compared to approximately HK$71.7 million for the six months ended June 30, 2022. The decrease of HK$2.6 million or 4% was primarily due to the fluctuation of exchange rate in RMB. If the fluctuation of exchange rate in RMB is excluded, the cost of revenues has a slight increase by 3% due to increase in average unit cost.
Landscape Architecture and Design Business
Cost of revenues from our Landscape architecture and design business for the six months ended June 30, 2023 was approximately HK$32.2 million compared to approximately HK$33.7 million for the six months ended June 30, 2022. The decrease of HK$1.5 million or 4% was in line with the decrease in revenue.
Catering Business
Cost of revenues from our Catering business for the six months ended June 30, 2023 was approximately HK$nil compared to approximately HK$0.2 million for the six months ended June 30, 2022. The decrease was primarily due to the cessation of operations in PRC caused by the continuous deterioration in market environment since the outbreak of the COVID-19 pandemic.
Gross Profit
Gross profit for the six months ended June 30, 2023 was approximately HK$50 million compared to approximately HK$57.6 million for the six months ended June 30, 2022. The decrease of HK$7.6 million or 13%, was due to the decrease of gross profit from our Graphene Products Business, which was about HK$3.7 million, and together with the reductions in gross profits from our Landscape architecture and design business and Catering business, which were about HK$2.1 million and HK$1.8 million, respectively.
| For the six months ended June 30, | ||||||||||||
| 2022 | 2023 | 2023 | ||||||||||
| HK$’000 | HK$’000 | US$’000 | ||||||||||
| (Unaudited) | (Unaudited) | (Unaudited) | ||||||||||
| Graphene products | 31,756 | 28,075 | 3,599 | |||||||||
| Landscape architecture and design | 24,015 | 21,957 | 2,815 | |||||||||
| Catering | 1,789 | - | - | |||||||||
| Total gross profit | 57,560 | 50,032 | 6,414 | |||||||||
| For the six months ended June 30, | ||||||||
| 2022 | 2023 | |||||||
| (Unaudited) | (Unaudited) | |||||||
| % | % | |||||||
| Graphene products | 31 | % | 29 | % | ||||
| Landscape architecture and design | 42 | % | 41 | % | ||||
| Catering | 91 | % | - | |||||
Graphene Products Business
Gross profit from our Graphene Products Business for the six months ended June 30, 2023, was approximately HK$28.1 million compared to approximately HK$31.8 million for the six months ended June 30, 2022. If not considering the exchange rate fluctuation, the gross profit decreased by HK$1.2 million which was primarily due to the decrease in the selling price of graphene related products.
Landscape Architecture and Design Business
Gross profit from our Landscape architecture and design business for the six months ended June 30, 2023 was approximately HK$22 million compared to approximately HK$24.0 million for the six months ended June 30, 2022. The decrease of HK$2 million was primarily due to costs incurred while project completions were delayed, primarily, due to the COVID-19 epidemic but no additional revenue charged to our customers.
Catering Business
Gross profit from our Catering business for the six months ended June 30, 2023 was nil compared to approximately HK$1.8 million for the six months ended June 30, 2022. The decrease was due to the cease of providing restaurant management service in Shanghai since January 2023.
Selling and Marketing Expenses
Selling and marketing expenses for the six months ended June 30, 2023 were approximately HK$3 million compared to approximately HK$2.3 million for the six months ended June 30, 2022. The increase of approximately HK$0.7 million or 30% was attributable to the increase in selling and marketing expenses in our Landscape architecture and design business of about HK$0.3 million and the increase in relevant expense in our Graphene products business of about HK$0.4 million due to the marketing expenses incurred for the U.S. market.
General and Administrative Expenses
General and administrative expenses for the six months ended June 30, 2023 were approximately HK$68.9 million compared to approximately HK$77.4 million for the six months ended June 30, 2022. The decrease of approximately HK$8.5 million or 11% was primarily caused by (i) the decrease in the overall salaries by approximately HK$4.1 million of the Group which is attributable to the cost control measures implemented since 2022, and (ii) the fluctuation of exchange rate in RMB by approximately HK$3.7 million.
Research and Development Expenses
Research and development expenses for the six months ended June 30, 2023 were approximately HK$10.8 million compared to approximately HK$10.7 million for the six months ended June 30, 2022. The increase of approximately HK$0.1 million was primarily due to the increase in research and development efforts by HK$0.4 million for our Graphene products business in early 2023 compared to lockdown of Jixi in early 2022 and set off by the decrease of research and development expenses in our Landscape architecture and design business of about HK$0.3 million.
Provision for Credit loss
Provision for credit loss for the six months ended June 30, 2023, was approximately HK$10.7 million compared to approximately HK$8.8 million for the six months ended June 30, 2022. The increase of approximately HK$1.9 million or 21.6% was primarily due to the decrease in reversal of provision for credit loss for other receivables of HK$4.9 million in 2022, set off by the decrease of provision for credit loss for account receivables and contract assets of HK$0.9 million and HK$2.1 million, respectively, due to the post-Covid recovery.
Total Other Expenses, net
Net total other expenses for the six months ended June 30, 2023 was approximately HK$32.1 million compared to approximately HK$31.4 million for the six months ended June 30, 2022. The increase of approximately HK0.7 million or 2% was primarily caused by the decrease in service income of HK$2.7 million from landscape segment due to the less favorable market and economic environment.
Loss Before Taxes
Losses before taxes for the six months ended June 30, 2023 were approximately HK$75.4 million compared to approximately HK$73.1 million for the six months ended June 30, 2022. The increase of approximately HK$2.3 million or 3% was primarily caused by the decrease in other income in 2023.
| For the six months ended June 30, | ||||||||||||
| 2022 | 2023 | 2023 | ||||||||||
| HK$’000 | HK$’000 | US$’000 | ||||||||||
| Graphene products | 8,738 | 10,726 | 1,375 | |||||||||
| Landscape architecture and design | 14,036 | 13,014 | 1,668 | |||||||||
| Catering | (166 | ) | (1,680 | ) | (215 | ) | ||||||
| Corporate expenses | 50,491 | 53,310 | 6,835 | |||||||||
| Total loss before tax | 73,099 | 75,370 | 9,663 | |||||||||
Graphene Products Business
Loss before tax from our Graphene Products Business for the six months ended June 30, 2023 was approximately HK$10.7 million compared to approximately loss before tax HK$8.7 million for the six months ended June 30, 2022. The increase of loss before income tax was due to decrease in revenue in 2023.
Landscape Architecture and Design Business
Loss before income tax from our Landscape architecture and design Business for the six months ended June 30, 2023 was approximately HK$13 million compared to approximately loss before tax HK$14 million for the six months ended June 30, 2022. The decrease in loss before income tax of HK$1 million was primarily due to the fluctuation of exchange rate in RMB.
Catering Business
Profit before income tax from our Catering business for the six months ended June 30, 2023 was approximately HK$1.7 million compared to approximately HK$0.2 million for the six months ended June 30, 2022. The change of HK$1.5 million was due to a one-off other income was received during the period ended June 30, 2023.
Cash Flows
For the six months ended June 30, 2022 and 2023
The following table summarizes the key components of our cash flows for the six months ended June 30, 2022 and 2023:
| For the six months ended June 30, | ||||||||||||
| 2022 | 2023 | 2023 | ||||||||||
| HK$’000 | HK$’000 | US$’000 | ||||||||||
| Selected Consolidated Statements of Cash Flows Data: | ||||||||||||
| Net cash used in operating activities | (12,126 | ) | (9,363 | ) | (1,200 | ) | ||||||
| Net cash used in investing activities | (4,131 | ) | (4,103 | ) | (526 | ) | ||||||
| Net cash (used in) provided by financing activities | 14,707 | (610 | ) | (79 | ) | |||||||
| Effect of exchange rate on cash | (1,477 | ) | 65 | 8 | ||||||||
| Net decrease in cash | (3,027 | ) | (14,011 | ) | (1,797 | ) | ||||||
| Cash and cash equivalents and restricted cash at beginning of period | 31,463 | 31,470 | 4,035 | |||||||||
| Cash and cash equivalents and restricted cash at end of period | 28,436 | 17,459 | 2,238 | |||||||||
Operating Activities
Net cash used in operating activities was approximately HK$9.4 million for the six months ended June 30, 2023, compared to approximately HK$12.1 million net cash used in operating activities for the six months ended June 30, 2022. The decrease of approximately HK$2.7 million was mainly attributable to the increase in trade receivables of Graphene Products Business.
Investing Activities
Net cash used in investing activities was approximately HK$4.1 million for the six months ended June 30, 2023 compared to approximately HK$4.1 million for the six months ended June 30, 2022.
Financing Activities
Net cash used in financing activities was approximately HK$0.6 million for the six months ended June 30, 2023, compared to approximately HK$14.7 million provided by financing activities for the six months ended June 30, 2022. The change was mainly attributable to the decreased proceed from short-term borrowings and no additional convertible notes were issued during the six months ended June 30, 2023.
Capital Expenditures
We had capital expenditures of approximately HK$0.2 million and approximately HK$0.9 million for the six months ended June 30, 2022 and 2023, respectively. Our capital expenditures were mainly used for purchases of equipment in our Graphene products Business and Landscape architecture and design business. We intend to fund our future capital expenditures with lease financing and other financing alternatives. We will continue to make capital expenditures to support the growth of our business.
Borrowings
As of December 31, 2022, we had outstanding corporate bonds of approximately HK$115.4 million and outstanding promissory notes of approximately HK$123.6 million. As of June 30, 2023, we had outstanding corporate bonds of approximately HK$115.4 million and outstanding promissory notes of approximately HK$123.6 million.
Recent Development
On July 14, 2023, convertible notes with principal amount of US$70,000 (equivalent HK$542,500) were converted into shares at conversion price of HK$0.65 and the Company allotted and issued a total of 834,615 conversion shares to the convertible note holder.
On July 19, 2023, the Company entered into the Cooperation Agreement with the Nanshu Town Government pursuant to which the Company and the Nanshu Town Government intended to have a cooperation in the “Graphite Anode Material Project” in Laixi City Nanshu Town New Material Industrial Park which is situated in Nanshu Town, Laixi City, Shandong Province, the PRC. Further details are set out in the Form 6-K filed by the Company on July 19, 2023.
On July 24, 2023, the Board resolved to grant a total of 22,990,000 Awarded Shares, to 16 share award grantees, pursuant to the 2023 Share Award Scheme at nil consideration, subject to the acceptances by the Grantees. Further details are set out in Form 6-K filed by the Company on July 24, 2023.
On September 21, 2023, convertible notes with principal amount of US$20,000 (equivalent HK$155,000) were converted into shares at conversion price of HK$0.65 and the Company allotted and issued a total of 238,461 conversion shares to the convertible note holder.
Unaudited Interim Condensed Consolidated Financial Statements
GRAPHEX GROUP LIMITED
UNAUDITED INTERIM CONDENSED CONSOLIDATED BALANCE SHEETS
As of December 31, 2022 | As of June 30, 2023 | As of June 30, 2023 | ||||||||||
| HK$’000 | HK$’000 | US$’000 | ||||||||||
| ASSETS | ||||||||||||
| CURRENT ASSETS | ||||||||||||
| Cash and cash equivalents | 31,470 | 17,459 | 2,238 | |||||||||
| Trade and notes receivables, net | 101,133 | 180,986 | 23,203 | |||||||||
| Trade and notes receivables – related parties | 1,886 | 586 | 75 | |||||||||
| Inventories, net | 16,901 | 9,234 | 1,184 | |||||||||
| Loan receivables – related parties | 11,098 | 13,897 | 1,782 | |||||||||
| Prepayments, other receivables and other current assets, net | 41,592 | 34,554 | 4,430 | |||||||||
| Equity investment, fair value | 31 | 24 | 3 | |||||||||
| Contract assets | 29,584 | 26,471 | 3,394 | |||||||||
| Contract assets – related party | 1,050 | 156 | 20 | |||||||||
| Tax recoverable | 373 | 384 | 49 | |||||||||
| Total current assets | 235,118 | 283,751 | 36,378 | |||||||||
| PROPERTY AND EQUIPMENT, NET | 35,403 | 30,747 | 3,942 | |||||||||
| OTHER ASSETS | ||||||||||||
| Goodwill | 101,939 | 101,939 | 13,069 | |||||||||
| Other intangible assets, net | 492,185 | 452,330 | 57,991 | |||||||||
| Investment in unconsolidated associates | 227 | - | - | |||||||||
| Equity investment, fair value | 94 | 91 | 12 | |||||||||
| Prepayments and deposits | 4,902 | 5,825 | 747 | |||||||||
| Deferred tax assets, net | 4,903 | 6,353 | 814 | |||||||||
| Total non-current assets | 604.250 | 566,538 | 72,633 | |||||||||
| TOTAL ASSETS | 874,771 | 881,036 | 112,953 | |||||||||
| LIABILITIES AND SHAREHOLDERS’ EQUITY | ||||||||||||
| CURRENT LIABILITIES | ||||||||||||
| Current portion of corporate bonds payable | 112,867 | 26,832 | 3,440 | |||||||||
| Bank borrowing | 11,194 | 10,846 | 1,390 | |||||||||
| Convertible notes | 17,373 | 3,758 | 482 | |||||||||
| Short-term borrowings | 2,911 | 7,967 | 1,021 | |||||||||
| Short-term borrowings – related parties | 1,478 | - | - | |||||||||
| Trade payable | 13,398 | 75,384 | 9,664 | |||||||||
| Other payables and accruals | 48,320 | 56,481 | 7,241 | |||||||||
| Other payables – related parties | 686 | 262 | 34 | |||||||||
| Lease liabilities | 5,146 | 4,556 | 584 | |||||||||
| Taxes payable | 33,898 | 32,164 | 4,124 | |||||||||
| Contract liabilities | 37,410 | 33,982 | 4,357 | |||||||||
| Dividend payable to non-controlling interest | 1,511 | - | - | |||||||||
| Total current liabilities | 286,192 | 252,232 | 32,337 | |||||||||
As of December 31, 2022 | As of June 30, 2023 | As of June 30, 2023 | ||||||||||
| HK$’000 | HK$’000 | US$’000 | ||||||||||
| OTHER LIABILITIES | ||||||||||||
| Promissory notes | 123,590 | 123,590 | 15,845 | |||||||||
| Corporate bonds payable | 2,500 | 88,540 | 11,351 | |||||||||
| Convertible notes | 15,166 | - | - | |||||||||
| Short-term borrowing | 11,000 | 11,000 | 1,410 | |||||||||
| Noncurrent portion of lease liabilities | 18,648 | 15,979 | 2,049 | |||||||||
| Deferred tax liabilities | 75,035 | 69,108 | 8,860 | |||||||||
| Total other liabilities | 245,939 | 308,217 | 39,515 | |||||||||
| TOTAL LIABILITIES | 532,131 | 560,449 | 71,852 | |||||||||
| COMMITMENTS AND CONTINGENCIES | ||||||||||||
| EQUITY | ||||||||||||
| Ordinary shares, HK$0.01 par value; authorized – 2,000,000,000 shares; issued and outstanding 683,493,072 and 777,446,915 as of December 31, 2022 and June 30, 2023, respectively | 6,835 | 7,774 | 997 | |||||||||
| Preference shares, 323,657,534 shares as of December 31, 2022 and June 30, 2023 | 3,236 | 3,236 | 415 | |||||||||
| Additional paid-in capital | 790,966 | 853,642 | 109,441 | |||||||||
| Accumulated deficit | (454,557 | ) | (526,674 | ) | (67,522 | ) | ||||||
| Statutory reserves | 13,476 | 13,476 | 1,728 | |||||||||
| Accumulated other comprehensive loss | (6,574 | ) | (22,456 | ) | (2,880 | ) | ||||||
| Total Graphex Group Limited Shareholders’ Equity | 353,382 | 328,998 | 42,179 | |||||||||
| Non-controlling interests | (10,742 | ) | (8,411 | ) | (1,078 | ) | ||||||
| TOTAL EQUITY | 342,640 | 320,587 | 41,101 | |||||||||
| TOTAL LIABILITIES AND EQUITY | 874,771 | 881,036 | 112,953 | |||||||||
GRAPHEX GROUP LIMITED
UNAUDITED INTERIM CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS
| For the six months ended June 30, | ||||||||||||
| 2022 | 2023 | 2023 | ||||||||||
| HK$’000 | HK$’000 | US$’000 | ||||||||||
| REVENUES | ||||||||||||
| Revenues – third parties | 161,081 | 151,194 | 19,384 | |||||||||
| Revenues – related parties | 2,052 | 80 | 10 | |||||||||
| Total revenues | 163,133 | 151,274 | 19,394 | |||||||||
| COST OF REVENUES | (105,573 | ) | (101,242 | ) | (12,980 | ) | ||||||
| GROSS PROFIT | 57,560 | 50,032 | 6,414 | |||||||||
| OPERATING EXPENSES | ||||||||||||
| Selling and marketing expenses | 2,257 | 2,956 | 379 | |||||||||
| General and administrative expenses | 77,418 | 68,860 | 8,828 | |||||||||
| Research & development expense | 10,734 | 10,800 | 1,385 | |||||||||
| Provision for credit loss | 8,833 | 10,705 | 1,372 | |||||||||
| Total operating expenses | 99,242 | 93,321 | 11,964 | |||||||||
| LOSS FROM OPERATIONS | (41,682 | ) | (43,289 | ) | (5,550 | ) | ||||||
| OTHER INCOME (EXPENSE) | ||||||||||||
| Finance expenses | (39,721 | ) | (38,397 | ) | (4,923 | ) | ||||||
| Interest income | 781 | 582 | 75 | |||||||||
| Service income | 4,418 | 1,659 | 213 | |||||||||
| Dividend income | 63 | 92 | 12 | |||||||||
| Government grants | 301 | 914 | 117 | |||||||||
| Waiver of interest on convertible notes | 2,377 | 1,160 | 149 | |||||||||
| Investment loss in unconsolidated affiliates | (265 | ) | (230 | ) | (29 | ) | ||||||
| Fair value change – equity investment | (11 | ) | (6 | ) | (1 | ) | ||||||
| Other income, net | 640 | 2,145 | 274 | |||||||||
| Total other expenses, net | (31,417 | ) | (32,081 | ) | (4,113 | ) | ||||||
| LOSS BEFORE TAX | (73,099 | ) | (75,370 | ) | (9,663 | ) | ||||||
| INCOME TAX BENEFIT | 5,175 | 5,446 | 698 | |||||||||
| NET LOSS | (67,924 | ) | (69,924 | ) | (8,965 | ) | ||||||
| Less: (loss) income attributable to non-controlling interests | (225 | ) | 2,193 | 281 | ||||||||
| NET LOSS ATTRIBUTABLE TO GRAPHEX GROUP LIMITED | (67,699 | ) | (72,117 | ) | (9,246 | ) | ||||||
| NET LOSS | (67,924 | ) | (69,924 | ) | (8,965 | ) | ||||||
| OTHER COMPREHENSIVE LOSS | ||||||||||||
| Foreign currency translation adjustment | (29,895 | ) | (15,747 | ) | (2,019 | ) | ||||||
| COMPREHENSIVE LOSS | (97,819 | ) | (85,671 | ) | (10,984 | ) | ||||||
| Less: Comprehensive (loss) income attributable to non-controlling interest | (141 | ) | 2,331 | 299 | ||||||||
| COMPREHENSIVE LOSS ATTRIBUTABLE TO GRAPHEX GROUP LIMITED | (97,678 | ) | (88,002 | ) | (11,283 | ) | ||||||
| WEIGHTED AVERAGE NUMBER OF ORDINARY SHARES | ||||||||||||
| Basic and Diluted | 516,055,804 | 725,781,129 | 725,781,129 | |||||||||
| LOSS PER SHARE | ||||||||||||
| Basic and Diluted | (0.131 | ) | (0.099 | ) | (0.013 | ) | ||||||
About Graphex:
Graphex Group Limited, a Cayman Island company with principal offices in Hong Kong and regional offices in Shanghai and Royal Oak, MI, USA. Graphex is focused on the development of technologies and products to enhance renewable energy, particularly the enrichment of spherical graphite and graphene, key components for EV batteries and lithium-ion batteries for other use cases. Proficient in the commercial deep processing of graphite, Graphex has extensive commercial experience producing battery grade purified spherical graphite to the power battery market, currently at a volume of 10,000 metric tons per annum (tpa) with intentions to expand production to over 100,000 tpa over the next three years. With a strategy to expand its global operations to support energy transition and electrification efforts worldwide, Graphex is currently among the top suppliers of specialized spherical graphite to the EV and renewable energy industries and holds patents in areas including products, production methods, machinery design, and environmental protection.
Safe Harbor / Forward-Looking Statements:
This unaudited financial results as of and for the six-month period ended June 30, 2023 contains “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. These forward-looking statements can be identified by terminology such as “will,” “expects,” “anticipates,” “future,” “intends,” “plans,” “believes,” “estimates” and similar statements. Statements that are not historical facts, including statements about the Company’s beliefs and expectations, are forward-looking statements. Among other things, the business outlook and quotations from management in this exhibit, as well as the Company’s strategic and operational plans, contain forward-looking statements. The Company may also make written or oral forward-looking statements in its periodic reports to the U.S. Securities and Exchange Commission (“SEC”) on Forms 20-F and 6-K, in its annual report to shareholders and other written materials and in oral statements made by its officers, directors or employees to third parties. Forward-looking statements involve inherent risks and uncertainties. A number of factors could cause actual results to differ materially from those contained in any forward-looking statement, including but not limited to the following: the Company’s goals and strategies; the Company’s future business development, financial condition and results of operations; the expected growth of the Company’s industry; and the Company’s expectations regarding demand for and market acceptance of its products and services. Further information regarding these and other risks is included in the Company’s annual report on Form 20-F and current report on Form 6-K and other documents filed with the SEC. All information provided in this exhibit is as of the date of this exhibit, and the Company does not undertake any obligation to update any forward-looking statement, except as required under applicable laws.