Interim report 2024/25

2 EV DYNAMICS (HOLDINGS) LIMITED Interim Report 2024/25

Management Discussion and Analysis

The board of directors (the "Board") of Ev Dynamics (Holdings) Limited (the "Company") is pleased to present the unaudited consolidated interim results of the Company and its subsidiaries (the "Group") for the six months ended 30 September 2024.

RESULTS

During the six months ended 30 September 2024, the Group recorded revenue of approximately HK$2.2 million (six months ended 30 September 2023: HK$35.6 million) derived from the sale of electric vehicles. Gross profit amounted to approximately HK$0.6 million (six months ended 30 September 2023: HK$5.1 million), with the gross profit ratio of 29.7% (six months ended 30 September 2023: 14.3%).

The Group recorded a loss of approximately HK$41.7 million for the six months ended 30 September 2024 (six months ended 30 September 2023: HK$104.2 million). The decrease in loss was mainly due to a significant reduction in loss on change in fair value and realised loss on disposal of financial assets at fair value through profit or loss ("FVTPL") to approximately HK$21.9 million (six months ended 30 September 2023: HK$97.5 million).

The loss attributable to owners of the Company for the six months ended 30 September 2024 was approximately HK$41.2 million (six months ended 30 September 2023: HK$99.3 million). Basic and diluted loss per share (after adjustment of 2024 Share Consolidation) for the six months ended 30 September 2024 was HK$0.222 per share (six months ended 30 September 2023: HK$0.535 per share).

INTERIM DIVIDEND

The directors of the Company do not recommend the payment of any interim dividend for the six months ended 30 September 2024 (six months ended 30 September 2023: HK$nil).

Management Discussion and Analysis

BUSINESS REVIEW

Electric vehicles and new energy business

The Group, through its subsidiary, Chongqing Suitong New Energy Automotive Manufacturing Co., Ltd. ("Suitong"), has a production base in Chongqing engaged in the manufacture of electric buses and their entire electric power and control systems, the manufacture of other buses, and the marketing and selling of vehicle components.

Hong Kong market

During the reporting period, a 12-meter electric bus was ready to be delivered to a Hong Kong non-governmental organization upon completion of the vehicle type approval and examination. This is a new order from the Hong Kong Productivity Council ("HKPC") after the successful delivery of the earlier order of electric buses for the Airport Authority Hong Kong and the Hong Kong Anti-Cancer Society. This vehicle is specifically designed to be accessible to seniors and those with disabilities, with features such as an extra-low platform for easy accessibility. The Group is fully confident that we are in an extremely well position in this market segment and are expecting more orders for 12-meter smart electric buses going through HKPC or other customers coming.

The Group had launched its full electric 19-seats low-floor minibus ("APEX-MINI"), a model that is powered by fast-charging batteries with a unique low-floor design, is suitable for both the franchise and non-franchise minibus sectors in Hong Kong. During the reporting period, the Group has completed a trial order and delivered the first unit of APEX MINI to a local green minibus operator. Another order received from a non-governmental organization is currently under production and expected to be completed by the end of 2025.

4 EV DYNAMICS (HOLDINGS) LIMITED Interim Report 2024/25

Management Discussion and Analysis

During the year ended 31 March 2024, the Group has been successfully awarded a contract of supplying the first electric mobile command unit (the "EMCU") for the Hong Kong Fire Services Department. This EMCU is equipped with a powerful 350kW electric motor, and a battery capacity of 422kWh. There is also a high-capacity uninterruptable power supply system to support the wireless communication and electronic dispatch system, with a generator and a public power connection device to ensure the continuous normal operation of the system in any situation.

We will continue to explore the business opportunities in the Hong Kong market, and we believe that we will be able to successfully market and sell our vehicles and remain competitive in this sector.

Southeast Asian market

In the past few years, the Group has developed a customized city bus - "COMET", a fully green transportation designed for emerging markets such as the Philippine and India. The Group believes that COMET is by far the most suitable and feasible model for replacing the Jeepneys in the Philippines. Up to the date of this report, over 65 units of COMET has been delivered. The overall production schedule of further units has been postponed due to the delay in progress payment from the customer because of the current market sentiment and the prevailing high interest rate.

Apart from the Philippines market, the Group has been continued to explore new market opportunities and promote the new energy products and solutions among Asian markets such as Thailand and Singapore. During the reporting period, the Group has received a trial order to provide an electric conversion kit to a customer in Thailand for their project of electrification of local transportation.

Management Discussion and Analysis

American and European market

The Group has also developed a logistic vehicle type "cabin chassis platform", which is a complete chassis with a driver cabin, and with powertrain, battery pack, steering, wheels, and brakes, etc. Subsequent to the delivery of the first 10 testing units of electric chassis to a world largest bakery company in Mexico in early 2022, the Group has received further orders to supply 1,000 units in aggregate of this model, of which 200 units orders have already been completed in the first half of 2023. The remaining units have been partly completed since end 2023 but the delivery is still held up because of modification requests from the customer. As disclosed in the announcement dated 14 August 2024, the Group successfully sourced a local reseller for the distribution of the completed units of the cabin chassis platform in Mexico. However, due to the pressure in the working capital of the Group, the shipment of the first batch of units order has been postponed in order to minimize the outflow of working capital.

In 2021, the Company acquired a total of 9,157 shares in Quantron AG ("Quantron"), a company incorporated in Germany principally engaged in e-mobility in inner-city and regional passenger and freight transport. The Group has been continuing the divestment in Quantron since the mid of 2022 given the deterioration of the Quantron's financial performance over the years.

As disclosed in the last annual report, on 12 March 2024, the Company has entered into a loan agreement (the "Loan Agreement") with a lender (the "Lender") for advance of a loan facility of approximately EUR0.6 million for three months (the "Loan"), which is secured by a pledge of 2,666 Quantron shares (the "Pledged Quantron Shares"). In June 2024, because of the pressure of short-term working capital the Group, no repayment on the principal made at the maturity of the loan and thus the Lender has enforced the Pledged Quantron Shares which were eventually transferred to the Lender as full settlement of the Loan. Subsequent to the reporting period, on 29 October 2024, the Augsburg judiciary has officially announced the opening of insolvency proceedings against Quantron. Therefore, the carrying value of the remaining 1,195 shares in Quantron (representing approximately 1.7% of the total issued capital) has been fully impaired during the six months ended 30 September 2024.

6 EV DYNAMICS (HOLDINGS) LIMITED Interim Report 2024/25

Management Discussion and Analysis

Business outlook

Although the Group has concluded sizable contracts and orders from overseas, the recent sluggish economic sentiment and the rising market interest rate have inevitably created pressure on our customers, causing the overall delivery schedule to remain slow. Also geopolitical factors have posed difficulties and challenges to the Group. Nevertheless, the Group has continued exploring solutions and opportunities in different market sectors. We are confident that our new energy business will be the key growing factors in the near future.

Suitong Disposal

On 2 June 2023, the Group entered into a sale and purchase agreement (the "Disposal Agreement") for selling its entire equity interests in a group of subsidiaries (the "Target Group") to a purchaser (the "Purchaser") at a consideration of RMB34 million (the "Suitong Disposal"). The intended assets to be disposed are certain intangible assets including the modified bus enterprise status which is embedded with the entity of Chongqing Suitong New Energy Automotive Manufacturing Co., Ltd. ("Suitong"), one of the subsidiaries of the Target Group, where all other major assets and liabilities of the Target Group will be retained in the Group prior to the completion through restructuring. The Company will continue to possess the production facilities of Suitong and the qualifications to manufacture and export electric vehicles to overseas customers. There are no material impact on the business operation of the Company during and after the transitional period.

Since the second half of 2023, the Group has completed certain restructuring steps in accordance with the Disposal Agreement. However, the relationship between the Group and the Purchaser deteriorated and the Suitong Disposal still remains incompleted up to the date of this report because of a series of disagreements on the execution process such as (i) failure to make progress payments by the Purchaser in accordance with the Disposal Agreement; and (ii) failure to facilitate and cooperate with the transfer of the major assets of Suitong to the Group including land use rights, etc. The Group has repeatedly urged the Purchaser to fulfill the agreement in the past year. Government representatives of Chongqing Wulong District have also been involved regarding this matter with several meetings held to assist and facilitate mediation, but eventually to no avail.

Management Discussion and Analysis

On 21 August 2024, the Purchaser filed an application for arbitration ("CQ Arbitration") to the Chongqing Arbitration Commission against the Group claiming the return of the consideration of RMB34 million plus penalty of RMB6.8 million and compensation of approximately RMB40 million. On 3 September 2024, the Group has received an enforcement notice from the Third Intermediate People's Court of Chongqing that the equity interests in Chongqing Suitong New Energy Automotive Manufacturing Co. Ltd (重慶穗通新能源汽車製造有限公司), Shenzhen New Energy Technology Company Limited (深圳市中動智慧新能源技術有限公司) and Dongguan Sinocop Electric Vehicles Company Limited (東莞中銅電動汽車有限公司) held by the Group were frozen for three years. The Group strongly opposes the Purchaser's unreasonable accusations and claims and has appointed the PRC attorney to respond actively. The Group is currently gathering evidence in defense and expects to submit the counterclaim by December 2024. Meanwhile, as at the date of this report, active communication and negotiation were in progress between the Group, Wulong government officials, and the Purchaser to sort out other potential solutions to the dispute.

8 EV DYNAMICS (HOLDINGS) LIMITED Interim Report 2024/25

Management Discussion and Analysis

Mining and production of mineral products

The Group's wholly-owned subsidiary, Guangxi Weiri Mining Company Limited (the "Guangxi Weiri"), owns the Glauberite Mine located in the Guangxi Zhuang Autonomous Region of the PRC. The product extracted from the Glauberite Mine is thenardite, an important raw material used in chemical and light industrial manufacturing. No exploration, development or production activity related to the Glauberite Mine was conducted during the six months ended 30 September 2024. The mineral resources available have not changed since its acquisition on 28 February 2014. Details regarding these resources are available in the "Mineral Resources and Ore Reserves" section below.

The Revised Mining Plan

As stated in the previous annual report and the supplemental announcement dated 14 August 2024, the Company is considering the possibility of implementing the Revised Mining Plan, which utilises the latest modern technology to allow the extraction of the minerals in the Glauberite Mine in a more efficient manner as compared to the original mining plan.

In January 2024, China Tianchen Engineering Corporation ("TCC") has issued the feasibility studies report on the Revised Mining Plan (the "Feasibility Report"), which is intended for an annual production of 100,000 tons of baking soda and 80,000 tons of ammonium sulfate. Based on the opinion of TCC, the Revised Mining Plan which utilises (i) the Guangxi Land, the infrastructure and resources of Guangxi Weiri; and (ii) latest mining technology and extraction solutions provided by the Institute of Process Engineering of Chinese Academy of Sciences ("CAS"), is more economically efficient than the original mining plan. It is expected that, upon the implementation of the Revised Mining Plan, the Glauberite Mine generate positive revenue and net profit annually. Based on the preliminary estimation conducted by TCC, an initial investment and working capital of around RMB350 million is required for the construction of the above infrastructure and the operation of the Revised Mining Plan. It is expected to take around 18 to 24 months to complete the construction work upon commencement of the project.

The Company had been negotiating with a number of potential investors for fundraising opportunities for financing the implementation of the Revised Mining Plan. The Company also considered to collaborate with other mining companies in the PRC, including state-owned mining companies, to jointly develop the Glauberite Mine and implement the Revised Mining Plan. However, given the recent investment sentiment and macroeconomic environment, no fundraising and collaboration opportunities have yet to materialise in this regard.