Financial Statements/ESG Information - INTERIM REPORT 2025

(Incorporated in the Cayman Islands with limited liability)

Stock Code: 8128

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.

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 2024.

Six months ended 30 June

During the Review Period, the Group's revenue from business amounted to approximately HK$32,469,000 and approximately HK$31,472,000 for the corresponding period last year. Revenue increased by approximately HK$997,000 as compared with the same period of the previous year. Rose slightly by 3.17%.

Other income and gains increased from approximately HK$4,730,000 in the corresponding period last year to approximately HK$11,143,000 for the six months ended 30 June 2025. This growth was primarily attributable to the recognition of financial subsidies related to prior periods, totaling HK$6,510,000 during the Review Period.

Selling and distribution expenses amounted to approximately HK$4,579,000 and HK$5,048,000 for the six months ended 30 June 2024 and 2025 respectively. The selling and distribution expenses for the Review Period decreased as compared with the corresponding period last year. The main reason was that during the Review Period, the Group further strengthened control to reduce the occurrence of expenses.

During the Review Period, administrative expenses increased by approximately HK$1,211,000 or 7.46% as compared with that of six months ended 30 June 2024. Administrative expenses increased which was mainly attributable to the increase in legal service expenses.

Finance costs amounted to approximately HK$1,531,000 for the six months ended 30 June 2025 as compared with approximately HK$1,817,000 for the corresponding period last year. The finance costs mainly attributed by leased liabilities.

For the six months ended 30 June 2025, the profit for the period was approximately HK$3,662,000, whereas the profit was approximately HK$159,000 for the corresponding period last year. The significant increase in profits is mainly due to the rise in gross profit margin, the increase in other income, and the increase in income from affiliated and joint ventures.

Order Book

As at 30 June 2025, the Group has contracts on hand of approximately HK$80,000,000 (30 June 2024: HK$50,000,000).

Liquidity, Capital Structure and Gearing Ratio

Net current liabilities of the Group as at 30 June 2025 was approximately HK$5,914,000 (net current liabilities as at 31 December 2024: approximately HK$10,168,000).

As at 30 June 2025, the Group had cash and cash equivalents of approximately HK$46,353,000 (31 December 2024: approximately HK$52,586,000). 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$18,042,000 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 46% as at 30 June 2025 (31 December 2024: 49%).

Charges on Asset

As at 30 June 2025, the Group did not have any charges on asset.

Material Acquisition and Disposal

The Group did not have any material acquisition and disposal during the six months ended 30 June 2025.

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.

Contingent Liabilities

As at 30 June 2025, the Group had no material contingent liabilities (31 December 2024: Nil).

Employees

As at 30 June 2025, the Group had approximately 181 employees in total (31 December 2024: approximately 193). The remuneration package of the employees is determined with reference to their performance, experience and their positions, duties and responsibilities in the Group.

During the Review Period, the Group achieved a slight increase in revenue compared to the same period last year, with an improvement in gross profit margin. This was primarily attributed to the Group's rigorous implementation of cost control measures, process management optimization, and continuous design enhancements, which collectively contributed to cost reductions.

During the Review Period, the Group implemented an exclusive agency system for HYY geothermal heat pump high-efficiency clean heating project, promoting the development of an integrated heat pump green industry. Market expansion served as the "driving force," further broadening market reach. The Group focused on key operational reform tasks, continuously adjusting its layout, optimizing mechanisms, and strengthening safeguards to ensure business alignment and enhance operational sustainability and stability.

During the Review Period, the Group prioritized project collaborations with financially robust and reputable partners based on its actual capital situation. It seized development opportunities, leveraging its strengths and distinctive features to deepen its core business focus.

During the Review Period, the Group centered on project management control, accelerating the conversion of in-progress projects into output value. It reinforced independent project and unit accounting systems.

During the Review Period, the Group treated financial capital as a "safeguard," strengthening fund management to mitigate financial risks. It continuously improved its capital management system and optimized cash flow while enhancing financial oversight and advancing financial approval process reforms to reduce financial risks.

In October 2024, the National Development and Reform Commission and five other ministries jointly issued the Guidelines on Vigorously Promoting Renewable Energy Substitution Initiatives, providing favorable support for the Group's promotion of shallow geothermal energy as an alternative heating source.

For years, the company has adhered to a quality-driven corporate strategy, meeting the public's demand for a better life by continuously improving product, engineering, and service quality standards. It has cultivated a distinguished, high-quality brand, driving high-quality corporate development.

Under the Board of Directors' leadership, the Group's management proactively addressed various operational challenges, achieving industrial-scale growth during the Group's U-shaped recovery phase. This milestone further advanced the high-quality development of the emerging industry of integrated geothermal heat pump clean heating and cooling solutions for northern winters.

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 2025 together with the unaudited comparative figures for the corresponding period in 2024 as follows:

For the six months ended 30 June 2025

Six months ended 30 June

Six months ended 30 June

For the six months ended 30 June 2025

Six months ended 30 June

2025 2024

HK$'000 HK$'000

(Unaudited) (Unaudited)

Profit for the period 3,662 159

Other comprehensive income (loss):

Other comprehensive income (loss)

that may be reclassified to profit or loss in subsequent periods:

Exchange differences:

Exchange differences on translation of

foreign operations 993 (1,451)

Share of other comprehensive loss

of a joint venture (222) (338) Share of other comprehensive income (loss)

of associates 3,110 (157)

Net other comprehensive income (loss) that may be reclassified to profit or loss

in subsequent periods 3,881 (1,946)

Other comprehensive income (loss) for

the period, net of tax 3,881 (1,946)

Total comprehensive profit (loss) for

At 30 June 2025

For the six months ended 30 June 2025

Attributable to owners of the parent

Shares held for Share

Attributable to owners of the parent

Assets

Exchange

Non-

12

Share

Share

Awards

Treasury Statutory revaluation Contributed

Special

Capital fluctuation Accumulated

controlling

Total

For the six months ended 30 June 2025

Six months ended 30 June

For the six months ended 30 June 2025

1. CORPORATE INFORMATION

   CHYY Development Group Limited (the "Company") was incorporated in Cayman Islands as an exempted company with limited liability and its shares are listed on the GEM of The Stock Exchange of Hong Kong Limited (the "Stock Exchange").

   The addresses of the registered office and principal place of business in Hong Kong of the Company are P.O. Box 31119, Grand Pavilion, Hibiscus Way, 802 West Bay Road, Grand Cayman KY1-1205, Cayman Islands and 8/F, Chung Hing Commercial Building, 62-63 Connaught Road Central, Central, Hong Kong respectively.

   During the six months ended 30 June 2025, the Group was involved in the following principal activities:

   • Provision, installation and maintenance of shallow geothermal energy utilisation system

   • Trading of air conditioning/shallow geothermal heat pump products

   • Investment in properties for their potential rental income

   • Trading of securities and other types of investments

2. BASIS OF PREPARATION AND ACCOUNTING POLICIES

   The condensed consolidated interim financial statements for the six months ended 30 June 2025 have been prepared in accordance with the applicable disclosure requirements of Chapter 18 of the Rules Governing the Listing of Securities on the GEM of The Stock Exchange of Hong Kong Limited (the "GEM Listing Rules") and with Hong Kong Accounting Standard 34 ("HKAS 34"), Interim Financial Reporting, issued by the Hong Kong Institute of Certified Public Accountants (the "HKICPA"). The condensed consolidated interim financial statements are presented in Hong Kong dollars and all values are rounded to the nearest thousand except when otherwise indicated.

   The accounting policies and methods of computation used in the preparation of the condensed consolidated interim financial statements for the six months ended 30 June 2025 are consistent with those adopted in the annual financial statements for the year ended 31 December 2024. The condensed consolidated interim financial statements for the six months ended 30 June 2025 should be read in conjunction with the annual financial statements for the year ended 31 December 2024.

   On 1 January 2025, the Group has adopted all the new and revised Hong Kong Financial Reporting Standards ("HKFRSs"), amendments and interpretations that are effective from that date and are relevant to its operations. The adoption of these new/revised HKFRSs, amendments and interpretations has no material effect on the results reported for the current or prior periods.

3. OPERATING SEGMENT INFORMATION

   For management purposes, the Group is organised into business units based on their products and services and has four reportable operating segments as follows:

   1. Shallow geothermal energy segment - provision, installation and maintenance of shallow geothermal energy utilisation system;

   2. Air conditioning/shallow geothermal heat pump segment - trading of air conditioning/shallow geothermal heat pump products;

   3. Property investment and development segment - investments in properties for their potential rental income; and

   4. Securities investment and trading segment - trading of securities and other types of investment.

   Management monitors the results of the Group's operating segments separately for the purpose of making decisions about resource allocation and performance assessment. Segment performance is evaluated based on reportable segment profit/loss, which is a measure of adjusted profit/loss before tax. The adjusted profit/loss before tax is measured consistently with the Group's profit/loss before tax except that share of profits and losses of associates and a joint venture, interest income, certain other income, certain administration costs, and non-lease-related finance costs are excluded from such measurement.

   Segment assets exclude certain investments in associates, deferred tax assets, time deposits, restricted cash and cash and cash equivalents as these assets are managed on a group basis.

   Segment liabilities exclude certain amounts due to associates and related companies, interest-bearing bank borrowings, deferred tax liabilities and tax payable as these liabilities are managed on a group basis.

   Intersegment sales and transfers are transacted with reference to the selling prices used for sales made to third parties at the then prevailing market prices.

   1. Segment revenue and results

      The following tables present revenue and profit information for the Group's operating segments for the six months ended 30 June 2025 and 2024, respectively:

      Shallow geothermal energy

      Air conditioning/Shallow geothermal heat pump

      Property investment and development

      Securities investment

      and trading Total

      Six months ended 30 June

      Six months ended 30 June

      Six months ended 30 June

      Six months ended 30 June

      Six months ended 30 June

      2025 2024 2025 2024 2025 2024 2025 2024 2025 2024

      HK$'000 HK$'000 HK$'000 HK$'000 HK$'000 HK$'000 HK$'000 HK$'000 HK$'000 HK$'000

      (Unaudited) (Unaudited) (Unaudited) (Unaudited) (Unaudited) (Unaudited) (Unaudited) (Unaudited) (Unaudited) (Unaudited)

      Segment revenue (note 4) Sales to external customers	29,586		30,617		101		635		2,782		220		- -		31,472		31,472
      Intersegment sales	1,138		3,130		-		-		-		-		- -		3,130		3,130
      	30,724		33,747		101		635		2,782		220		- -		34,602		34,602
      Reconciliation: Elimination of intersegment
      sales															(1,138)		(3,130)
      Revenue															32,469		31,472
      Segment results	10,059		9,185		18		635		1,254		220		- -		11,331		9,500
      Reconciliation: Elimination of intersegment
      results															-		-
      Share of profits and losses of
      associates															201		(5,605)
      Unallocated other income															9,545		4,562
      Corporate and other unallocated
      expenses															(15,834)		(9,692)
      Finance costs (other than interest
      on lease liabilities)															(1,408)		(1,568)
      (Loss) before tax															3,835		(2,803)

   2. Segment assets and liabilities

   The following tables present assets and liabilities information for the Group's operating segments as at 30 June 2025 and 31 December 2024, respectively:

   			30 June 2025
   		Air
   		conditioning/	Property
   	Shallow	shallow	investment	Securities
   	geothermal	geothermal	and	investment
   	energy HK$'000	heat pump HK$'000	development HK$'000	and trading HK$'000	Total HK$'000
   	(Unaudited)	(Unaudited)	(Unaudited)	(Unaudited)	(Unaudited)
   Segment assets Reconciliation:	268,356	6	487,891	60,426	816,679
   Elimination of intersegment
   receivables					(55,258)
   Corporate and other unallocated
   assets					72,816
   Total assets					834,237
   Segment liabilities Reconciliation:	275,206	-	87,253	8,990	371,449
   Elimination of intersegment payables					(55,258)
   Corporate and other unallocated
   liabilities					225,231
   Total liabilities					541,422

   			30 June 2024
   		Air
   		conditioning/	Property
   	Shallow	shallow	investment	Securities
   	geothermal	geothermal	and	investment
   	energy HK$'000	heat pump HK$'000	development HK$'000	and trading HK$'000	Total HK$'000
   	(Unaudited)	(Unaudited)	(Unaudited)	(Unaudited)	(Unaudited)
   Segment assets Reconciliation:	569,572	7,955	485,484	314,484	1,377,496
   Elimination of intersegment
   receivables					(308,377)
   Corporate and other unallocated
   assets					92,323
   Total assets					1,161,442
   Segment liabilities Reconciliation:	587,798	23,107	331,659	9,870	952,434
   Elimination of intersegment payables					(308,377)
   Corporate and other unallocated
   liabilities					240,900
   Total liabilities					884,957

4. REVENUE, OTHER INCOME AND GAINS

   An analysis of revenue is as follows:

   Six months ended 30 June

   2025 2024

   HK$'000 HK$'000

   (Unaudited) (Unaudited)

   Revenue from contracts with customers 29,687 31,252

   Revenue from other sources

   32,469

   31,472

   
   
   

   Rental income 2,782 220

   Disaggregated revenue information for revenue from contracts with customers

   For the six months ended 30 June 2025

   		Air
   		conditioning/
   	Shallow	shallow
   	geothermal	geothermal
   Segments	energy HK$'000	heat pump HK$'000		Total HK$'000
   	(Unaudited)	(Unaudited)		(Unaudited)
   Types of goods or services:
   Sale of industrial products	-	101		101
   Construction services	29,586	-		29,586
   Total revenue from contracts with customers	29,586	101		29,687
   Geographical markets:
   Mainland China	29,586	101		29,687
   Timing of revenue recognition:
   Goods transferred at a point in time	-	101		101
   Services transferred over time	29,586	-		29,586
   Total revenue from contracts with customers	29,586	101		29,687

   For the six months ended 30 June 2024
   			Air
   			conditioning/
   	Shallow		shallow
   	geothermal		geothermal
   Segments	energy HK$'000		heat pump HK$'000		Total HK$'000
   	(Unaudited)		(Unaudited)		(Unaudited)
   Types of goods or services:
   Sale of industrial products	-		635		635
   Construction services	30,617		-		30,617
   Total revenue from contracts with customers	30,617		635		31,252
   Geographical markets:
   Mainland China	30,617		635		31,252
   Timing of revenue recognition:
   Goods transferred at a point in time	-		635		635
   Services transferred over time	30,617		-		30,617
   Total revenue from contracts with customers	30,617		635		31,252

   Set out below is the reconciliation of the revenue from contracts with customers with the amounts disclosed in the segment information:

   For the six months ended 30 June 2025

   		Air
   		conditioning/
   	Shallow	shallow
   	geothermal	geothermal
   Segments	energy HK$'000	heat pump HK$'000		Total HK$'000
   	(Unaudited)	(Unaudited)		(Unaudited)
   Revenue from contracts with customers:
   External customers	32,368	101		32,469
   Intersegment sales	1,138	-		1,138
   	33,506	101		33,607
   Intersegment adjustments and eliminations	(1,138)	-		(1,138)
   Total revenue from contracts with customers	32,368	101		32,469

   For the six months ended 30 June 2024
   			Air
   			conditioning/
   	Shallow		shallow
   	geothermal		geothermal
   Segments	energy HK$'000		heat pump HK$'000		Total HK$'000
   	(Unaudited)		(Unaudited)		(Unaudited)
   Revenue from contracts with customers:
   External customers	30,617		635		31,252
   Intersegment sales	3,130		-		3,130
   	33,747		635		34,382
   Intersegment adjustments and eliminations	(3,130)		-		(3,130)
   Total revenue from contracts with customers	30,617		635		31,252

   Six months ended 30 June

   2025 2024

   	HK$'000 (Unaudited)		HK$'000 (Unaudited)
   Other income
   Interest income	1,570		1,749
   Sale of scrap materials	-		-
   Dividend income from equity investment
   designated at fair value through other
   comprehensive income	2,283		1,221
   Waive of trade payables	-		65
   Subsidy income	6,519		-
   Others	771		1,695
   	11,143		4,730

5. FINANCE COSTS

   An analysis of finance costs is as follows:

   Six months ended 30 June

   2025 2024

   	HK$'000 (Unaudited)		HK$'000 (Unaudited)
   Interest on bank loans	-		392
   Interest on lease liabilities	1,408		1,425
   	1,408		1,817

6. PROFIT (LOSS) BEFORE TAX

   The Group's profit (loss) before tax is arrived at after charging:

   Six months ended 30 June

   	2025 HK$'000 (Unaudited)	2024 HK$'000 (Unaudited)
   Cost of inventories sold	9,991	9,782
   Cost of services provided	13,270	12,981
   Depreciation	1,839	2,270
   Employee benefit expense (including directors' and chief executive's remuneration)	8,087	12,400

7. INCOME TAX EXPENSE

   Pursuant to the laws and regulations of the Cayman Islands and the BVI, the Group is not subject to any income tax in the Cayman Islands and the BVI during both periods.

   No provision for Hong Kong profits tax has been made as the Group did not have any assessable profits subject to Hong Kong profits tax during both periods.

   Under the Law of the PRC on Enterprise Income Tax (the "EIT Law") and Implementation Regulation of the EIT Law, except as stated below, the tax rate of all the other PRC subsidiaries is 25% from 1 January 2008 onwards.

   Pursuant to the income tax rules and regulations of the PRC, certain subsidiaries were recognised as high and new technology enterprises and the income tax rate applicable to these subsidiaries was 15% for the six months ended 30 June 2025 (six months ended 30 June 2024: 15%).

   Six months ended 30 June

   	2025 HK$'000 (Unaudited)		2024 HK$'000 (Unaudited)
   Current - Mainland China	173		53
   Over-provision in prior years Deferred	- -		(3,015) -
   Total tax charge for the period	173		(2,962)

8. DIVIDENDS

   No interim dividend was paid, declared or proposed during the six months ended 30 June 2025, nor has any dividend been proposed since the end of the interim reporting period (six months ended 30 June 2024: Nil).

9. PROFIT (LOSS) PER SHARE ATTRIBUTABLE TO ORDINARY EQUITY HOLDERS OF THE PARENT

   The calculation of the basic (loss) per share amounts is based on the (loss) for the period attributable to ordinary equity holders of the parent, and the weighted average number of ordinary shares of 4,513,233,715 (30 June 2024: 4,526,925,163) in issue during the period.

   The calculations of basic and diluted (loss) per share are based on:

   Six months ended 30 June

   	2025 HK$'000 (Unaudited)	2024 HK$'000 (Unaudited)
   Earnings/(Loss)
   Earnings/(loss) for the period attributable to
   ordinary equity holders of the parent	3,948	176

   Shares

   Weighted average number of ordinary shares in issue during the period used in the basic

   Number of shares

   '000 '000

   earnings/(loss) per share calculation 4,513,234 4,526,925

10. PROPERTY, PLANT AND EQUIPMENT

During the six months ended 30 June 2025, the Group did not have any material acquisition of property, plant and equipment.

The Group's trading terms with its customers are mainly on credit. The credit period is generally three months. The Group seeks to maintain strict control over its outstanding receivables and has a credit control department to minimise credit risk. Overdue balances are reviewed regularly by senior management. In view of the aforementioned and the fact that the Group's trade receivables relate to a large number of diversified customers, there is no significant concentration of credit risk. The Group does not hold any collateral or other credit enhancements over its trade receivable balances. Trade receivables are non-interest-bearing.

3,174

4,811

An ageing analysis of the trade receivables as at the end of the reporting period, based on the invoice date and net of loss allowance, is as follows:

1. TRADE AND BILLS PAYABLES

   An ageing analysis of the trade and bills payables as at the end of the reporting period, based on the invoice date, is as follows:

   30 June

   2025

   31 December

   2024

   HK$'000 HK$'000

   (Unaudited) (Audited)

   Within 90 days 15,271 22,968

   91 to 180 days 13,587 13,867

   181 to 365 days 11,884 17,048

   Over 365 days 78,854 85,486

   119,596 139,369

   The trade and bills payables are non-interest-bearing and are normally settled in six months.

2. SHARE CAPITAL

   Number of shares

   US$0.01 each Share capital Share capital

   	30 June	31 December	30 June	31 December	30 June	31 December
   	2025	2024	2025	2024	2025	2024
   	'000	'000	US$'000	US$'000	HK$'000	HK$'000
   	(excluding	(excluding
   	treasury	treasury
   	shares)	shares)
   	(Unaudited)	(Audited)	(Unaudited)	(Audited)	(Unaudited)	(Audited)
   Ordinary shares
   Issued and fully paid	4,523,909	4,505,573	45,239	45,056	353,043	353,043

3. CAPITAL COMMITMENTS

   The Group did not have any material capital commitment at the end of the reporting period.

4. RELATED PARTY TRANSACTIONS

   1. Amounts due from/to related companies and associates are included in the condensed consolidated statement of financial position.

   2. In addition to the transactions detailed elsewhere in these financial statements, the Group had the following transactions with related parties during the period:

      Six months ended 30 June

      	2025 HK$'000 (Unaudited)	2024 HK$'000 (Unaudited)
      Associates: Purchases of products	-	-
      Other related parties: Rental expense	330	330

   3. Compensation of key management personnel of the Group

      Six months ended 30 June

      	2025 HK$'000 (Unaudited)		2024 HK$'000 (Unaudited)
      Short term employee benefits Post-employment benefits	3,956 -		3,820 -
      Total compensation paid to key management personnel	3,956		3,820

5. FAIR VALUE OF FINANCIAL INSTRUMENTS

The carrying amounts and fair values of the Group's financial instruments, other than those with carrying amounts that reasonably approximate to fair values, are as follows:

Carrying amounts Fair values

The Group's finance department headed by the finance manager is responsible for determining the policies and procedures for the fair value measurement of financial instruments. The finance manager reports directly to the chief financial officer and the audit committee.