Financial Statements/ESG Information INTERIM REPORT 2024

(Incorporated in the Cayman Islands with limited liability)

Stock Code: 8128

INTERIM REPORT

2024

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CHARACTERISTICS OF THE GEM OF THE STOCK EXCHANGE OF HONG KONG LIMITED (THE "STOCK EXCHANGE")

GEM has been positioned as a market designed to accommodate small and mid-sized companies to which a higher investment risk may be attached than other companies listed on the Stock Exchange. Prospective investors should be aware of the potential risks of investing in such companies and should make the decision to invest only after due and careful consideration.

Given that the companies listed on GEM are generally small and mid- sized companies, there is a risk that securities traded on GEM may be more susceptible to high market volatility than securities traded on the main board of the Stock Exchange and no assurance is given that there will be a liquid market in the securities traded on GEM.

Hong Kong Exchanges and Clearing Limited and the Stock Exchange take no responsibility for the contents of this report, make no representation as to its accuracy or completeness and expressly disclaim any liability whatsoever for any loss howsoever arising from or in reliance upon the whole or any part of the contents of this report.

This report, for which the directors of CHYY Development Group Limited (the "Company") collectively and individually accept full responsibility, includes particulars given in compliance with the Rules Governing the Listing of Securities on the GEM (the "GEM Listing Rules") of The Stock Exchange for the purpose of giving information with regard to the Company. The directors, having made all reasonable enquiries, confirm that to the best of their knowledge and belief the information contained in this report is accurate and complete in all material respects and not misleading or deceptive, and there are no other matters the omission of which would make any statement herein or this report misleading.

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CHYY Development Group Limited

Interim Report 2024

HIGHLIGHTS

Revenue for the six months ended 30 June 2024 (the "Review Period") amounted to approximately HK$31,472,000.

Net profit after tax of the Group for the Review Period amounted to approximately HK$159,000.

No dividend was declared for the Review Period.

FINANCIAL REVIEW

The following table provides a brief summary of the financial results of CHYY Development Group Limited (the "Company") and its subsidiaries (collectively the "Group"). For more detailed information, please refer to the unaudited consolidated financial statements for the Review Period and for the six months ended 30 June 2023.

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During the Review Period, the Group's revenue from business amounted to approximately HK$31,472,000 and approximately HK$34,377,000 for the corresponding period last year. The revenue decreased by approximately HK$2,905,000 as compared with that of corresponding period last year which was mainly attributable to the decrease in new contracts of engineering projects secured in the first half year.

Other income and gains decreased from approximately HK$5,739,000 in the corresponding period last year to approximately HK$4,730,000 for the six months ended 30 June 2024. The decrease was mainly due to the waiver of other payables in the corresponding period of last year.

Selling and distribution expenses amounted to approximately HK$5,048,000 and HK$6,237,000 for the six months ended 30 June 2024 and 2023 respectively. The selling and distribution expenses for the Review Period decreased as compared with the corresponding period last year which was mainly due to the Group's further salary reforms, as well as the enhancing of controls to minimize the expenses incurred during Review Period.

During the Review Period, administrative expenses decreased by approximately HK$6,932,000 or 29.9% as compared with that of six months ended 30 June 2023. Administrative expenses decreased which was mainly attributable to the decrease in remuneration and the relevant expenses.

Finance costs amounted to approximately HK$1,810,000 for the six months ended 30 June 2024 as compared with approximately HK$2,052,000 for the corresponding period last year. The finance costs mainly attributed by leased liabilities.

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CHYY Development Group Limited

Interim Report 2024

For the six months ended 30 June 2024, the profit for the period was approximately HK$159,000, whereas the loss was approximately HK$16,022,000 for the corresponding period last year. The turnaround from loss to profit was mainly due to the decrease in expenses and increase in reversal.

Order Book

As at 30 June 2024, the Group has contracts on hand of approximately HK$50,000,000 (30 June 2023: HK$66,000,000).

Liquidity, Capital Structure and Gearing Ratio

Net current liabilities of the Group as at 30 June 2024 was approximately HK$20,665,000 (net current liabilities as at 31 December 2023: approximately HK$29,308,000).

As at 30 June 2024, the Group had cash and cash equivalents of approximately HK$53,110,000 (31 December 2023: approximately HK$69,553,000). In addition, the Group had time deposits of approximately HK$11,057,000. Cash and cash equivalents on the condensed consolidated statement of financial position include funds available for general corporate purposes.

Non-controlling interests amounted to approximately HK$28,585,000 which mainly represents the interests attributable to non-controlling shareholders of the Group's subsidiaries in the PRC.

The gearing ratio of the Group, based on total net debt (including lease liabilities, trade and bills payables, financial liabilities included in other payables and accruals, less cash and cash equivalents) to the equity (representing equity attributable to owners of the parent) plus net debt of the Group, was 54.98% as at 30 June 2024 (31 December 2023: 55.7%).

Charges on Asset

As at 30 June 2024, the Group did not have any charges on asset.

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Material Acquisition and Disposal

The Group did not have any material acquisition and disposal during the six months ended 30 June 2024.

Significant Investment Held

As at 30 June 2024, the Group still held 4.99965% of equity interests in Beijing Life Insurance Co. Ltd., which is an equity investments designated at fair value through other comprehensive income. The size of investment as compared to the Group's total assets as at 30 June 2024 is 22.42%.

On 13 November 2020, Ever Source Investment Management Co., Ltd.（恒有 源投資管理有限公司）("Ever Source Investment"), an indirect wholly owned subsidiary of the Company, entered into equity transfer agreement and subsequently supplemented by a supplemental agreement to sell 4.99965% equity interests in Beijing Life Insurance Co. Ltd. for a cash consideration of RMB237,000,000. At the extraordinary general meeting held on 19 February 2021, the Shareholders of the Company passed the ordinary resolution in respect of the equity transfer agreement. Details of the transaction can be referred to the Company's circular dated 26 January 2021.

Before October 2021, Ever Source Investment has received the consideration of RMB237,000,000. As announced on 25 June 2024, Ever Source Investment, a subsidiary of the Group, received the final judgment from the Beijing High People's Court（北京市高級人民法院）on 24 June 2024, please refer to the Company's announcement for details. As of 30 June 2024, the change of shareholder registration had not been completed for this transaction. Therefore, the equity transfer has not been completed as of the date of this announcement.

Treasury Policies

The Group continues to adopt a conservative treasury policy with all bank deposits being kept in either Hong Kong dollars, or in local currencies of the operating subsidiaries of the Group, keeping a minimum exposure to foreign exchange risks.

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CHYY Development Group Limited

Interim Report 2024

Contingent Liabilities

As at 30 June 2024, the Group had no material contingent liabilities (31 December 2023: Nil).

Employees

As at 30 June 2024, the Group had approximately 198 employees in total (31 December 2023: approximately 218). The remuneration package of the employees is determined with reference to their performance, experience and their positions, duties and responsibilities in the Group.

Other Information

On 27 October 2023, the Company entered into the agreement (the "Agreement") with GBT Green Energy Holding Group Limited (the "Vendor") and Mr. Wang Chenglin*（王成林）(the "Guarantor"), pursuant to which the Vendor has conditionally agreed to sell and the Company has conditionally agreed to acquire the shares of the Hydrogen Energy Technology Limited (the "Target Company"), a company incorporated in the British Virgin Islands with limited liability, representing 80% of the entire issued share capital of the Target Company, at a maximum total consideration of HK$70,200,000. On 16 March 2024, the Company, the Vendor and the Guarantor entered into a side letter supplemental to the Agreement under which the parties have agreed to revise the terms to the Consideration and the Conditions Precedent under the Agreement.

Upon Completion, the Target Company will become a non wholly-owned subsidiary of the Company, and the financial information of the Target Group will be consolidated into the Group's financial statements.

On 28 March 2024, the Company, the Vendor and the Guarantor entered into a second side letter pursuant to which the Company, the Vendor and the Guarantor agreed to extend the Long Stop Date from 31 March 2024 to 30 June 2024 (or such later date as the Company, the Vendor Guarantor may agree in writing) as additional time is required for the fulfilment of the Conditions Precedent.

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As of 30 June 2024, the Conditions Precedent were not fulfilled (or waived) and no agreement was reached by the Vendor and the Company to further extend the Long Stop Date. Hence, the Agreement (as supplemented and revised from time to time) has lapsed.

Please refer to the announcements of the Company dated 27 October 2023, 18 March 2024, 28 March 2024 and 2 July 2024 for detail information.

BUSINESS REVIEW AND OUTLOOK

During the period under review, the Group continued to facilitate the adjustments to its business structure, focusing on its "main business", vigorously promoting "quality improvement", concentrating on "efficiency enhancement", and strengthening "management and control". Based on the strategy of "deepening the industry and refining products", the Group enhanced the competitiveness of differentiated operation services and operating efficiency.

During the period under review, the Group's operating income decreased compared with the same period last year, mainly due to the impact from the overall economic environment, which led to a decrease in new orders. Although the revenue decreased, the gross profit margin increased, mainly because the Group strictly implemented cost control to prioritize budget and control and manage the process, and continuously optimized the design, resulting in cost reduction.

During the period under review, under the trend of continuous decline in business and tight funds, a special debt collection team was established and the Group assigned responsibilities to each employee, implemented commitments and strictly evaluated performance, which had a relatively obvious effect, especially in recovering certain of project payments with a long age and large amounts, alleviating the current tight funds situation.

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CHYY Development Group Limited

Interim Report 2024

During the period under review, the Group further consolidated its internal control management to adjust the employee performance appraisal system, approval process management, approval authority control, attendance management and vehicle management. We also strengthened the independent project accounting system and budget management system, and achieved a relatively obvious effect, especially in terms of expenses, which dropped significantly compared with the same period last year.

In order to adapt to the next stage of the Group's re-entrepreneurial development, we must be clearly aware of the difficulties, opportunities and challenges in development, and accelerate the adaptation to the new normal of innovation-driven and carbon peaking and carbon neutrality goals. The Group has actively adjusted its internal organizational structure and resources, and set up "one department and four centers" as the main management line to further improve management efficiency and comprehensive utilization of resources.

The Group's management believes that under the strategic guidance of the Board, we will continue to adhere to high-quality development, actively and effectively respond to difficulties and challenges, and restart after defeating the epidemic. Under the carbon peaking and carbon neutrality goals, the Group will use new quality productive forces to promote the integration of the heating and cooling industries, and further realize clean heating of geothermal heat pumps in winter in northern China and high-quality development of emerging industries integrating heating and cooling. The Group will use the original and most stringent shallow geothermal energy collection technology to maintain groundwater quality according to local conditions, realize industrial development to use shallow geothermal energy as an alternative energy source for winter heating, further improving the scientific and rational use of heating energy with "matching temperatures and comparable energy grades".

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FINANCIAL RESULTS

The Board of Directors (the "Board") of CHYY Development Group Limited (the "Company") is pleased to announce the unaudited consolidated results of the Company and its subsidiaries (collectively the "Group") for the six months ended 30 June 2024 together with the unaudited comparative figures for the corresponding period in 2023 as follows:

CONDENSED CONSOLIDATED STATEMENT OF PROFIT OR LOSS

For the six months ended 30 June 2024

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