GRAPHEX

Graphex Group Limited

烯石電動汽車新材料控股有限公司

(Incorporated in the Cayman Islands with limited liability)

Stock Code: 6128

2025

ANNUAL REPORT

2 Financial Highlights
3 Corporate Information
4 Chairman's Statement
8 Management Discussion and Analysis
22 Biographies of Directors and Senior Management
27 Corporate Governance Report
49 Report of the Directors
64 Environmental, Social and Governance Report
103 Independent Auditor's Report
109 Consolidated Statement of Profit or Loss
110 Consolidated Statement of Comprehensive Income
111 Consolidated Statement of Financial Position
113 Consolidated Statement of Changes in Equity
115 Consolidated Statement of Cash Flows
117 Notes to the Consolidated Financial Statements
234 Five-Year Financial Summary

FINANCIAL HIGHLIGHTS

| Results | For the year ended
31 December | | |
| --- | --- | --- | --- |
| | 2025 | 2024 | Change |
| | HK$'000 | HK$'000 | |
| Revenue | 137,561 | 187,850 | (27)% |
| Graphene products | 75,125 | 117,951 | (36)% |
| Landscape architecture | 62,436 | 69,899 | (11)% |
| Adjusted segment EBITDA* | 14,606 | 20,109 | (27)% |
| Graphene products | 14,842 | 17,734 | (16)% |
| Landscape architecture | (236) | 2,375 | (110)% |
| Loss before tax | (387,587) | (119,168) | 225% |
| Loss attributable to owners of the parent | (364,644) | (111,435) | 227% |
| | HK cents | HK cents
(Restated) | |
| Basic loss per share attributable to ordinary equity holders of
the parent | (54.6) | (32.2) | 69% |

Non-IFRS Measure

Results	At 31 December
	2025	2024	Change
	HK$'000	HK$'000
Total assets	541,935	809,348	(33)%
Net assets	41,298	280,360	(85)%
Shareholder's equity	31,505	280,359	(89)%
Cash and bank balances	27,280	15,547	75%
Debt (including lease liabilities)	223,644	235,980	(5)%

To supplement our consolidated financial statements which are presented in accordance with International Financial Reporting Standards ("IFRSs"), adjusted segment EBITDA is used as an additional financial measure throughout this annual report. The financial measure is presented because it is used by management to evaluate operating performance. The Company believes that non-IFRS measure may provide useful information to help investors and others understand and evaluate the Company's consolidated results of operations in the same manner as management and in comparing financial results across accounting periods and to those of our peer companies. However, non-IFRS financial measure does not have a standardised meaning prescribed by IFRSs and therefore may not be comparable to similar measures presented by other companies.

Adjusted segment EBITDA used herein is defined as earnings before interest expense, taxation, depreciation and amortisation, and excludes fair value change on financial assets at fair value through profit or loss, written off of goodwill, impairment losses of other intangible assets and property, plant and equipment, share of results of associates and joint ventures and impairment/(reversal of impairment) on financial and contract assets, loss on promissory note derecognised and other corporate expenses.

Please refer to note 4 to the consolidated financial statements in this annual report for reconciliation of loss before tax, an IFRS measure, to adjusted segment EBITDA.

Graphex Group Limited Annual Report 2025 3

CORPORATE INFORMATION

BOARD OF DIRECTORS

Executive Directors

Mr. Lau Hing Tat Patrick
Mr. Chan Yick Yan Andross
Mr. Qiu Bin
Mr. Zhao Aiyong (appointed on 25 March 2026)

Non-executive Director

Mr. Ma Lida

Independent non-executive Directors

Mr. Liu Kwong Sang
Mr. Ren Chunyu (appointed on 25 March 2026)
Mr. Wang Yuncai (resigned on 5 February 2026)
Ms. Tam Ip Fong Sin (passed away on 10 January 2026)
Mr. Tang Zhaodong (retired on 27 June 2025)

COMPANY SECRETARY

Mr. Kwok Ka Hei

REGISTERED OFFICE

Windward 3
Regatta Office Park
P.O. Box 1350
Grand Cayman KY1-1108
Cayman Islands

HEADQUARTER, HEAD OFFICE AND PRINCIPAL PLACE OF BUSINESS IN HONG KONG

11/F COFCO Tower
262 Gloucester Road
Causeway Bay
Hong Kong

AUDIT COMMITTEE

Mr. Liu Kwong Sang (Chairman)
Mr. Ren Chunyu (appointed on 25 March 2026)

REMUNERATION COMMITTEE

Mr. Liu Kwong Sang (Chairman)
Mr. Ren Chunyu (appointed on 25 March 2026)

NOMINATION COMMITTEE

CORPORATE WEBSITE

www.graphexgroup.com

AUTHORISED REPRESENTATIVES

Mr. Kwok Ka Hei
Mr. Chan Yick Yan Andross

ALTERNATES TO AUTHORISED REPRESENTATIVES

Mr. Lau Hing Tat Patrick

PRINCIPAL BANKERS

Bank of China (Hong Kong)
Bank of Communication
The Bank of East Asia
The Hongkong and Shanghai Banking

PRINCIPAL SHARE REGISTRAR OFFICE

Ocorian Trust (Cayman) Limited
Windward 3
Regatta Office Park
P.O. Box 1350
Grand Cayman KY1-1108
Cayman Islands

HONG KONG SHARE REGISTRAR

Tricor Investor Services Limited
17/F, Far East Finance Centre
16 Harcourt Road
Hong Kong

ADR DEPOSITARY

Bank of New York Mellon

INVESTOR RELATIONS

Email: [email protected]

LEGAL ADVISER AS TO HONG KONG

Tso Au Yim & Yeung

AUDITOR

Crowe (HK) CPA Limited

CHAIRMAN'S STATEMENT

CHAIRMAN'S STATEMENT

Lau Hing Tat Patrick, JP
Chairman

Dear Shareholders,

On behalf of the Board of Graphex Group Limited, I am pleased to present the 2025 annual report of the Group. This year has been both challenging and transformative for our organization, and I would like to express my sincere gratitude to our shareholders, employees, and partners for their unwavering support during this pivotal period.

Throughout 2025, the Group has achieved several significant milestones that have laid a strong foundation for future growth. Most notably, with the successful completion of a rights issue, we secured essential funding to advance our strategic initiatives. These funds enabled the construction of a state-of-the-art anode material processing facility in Xuancheng, Anhui, PRC. With an annual production capacity of 15,000 metric tons, this facility positions Graphex to meet the increasing demand for high-quality anode materials in the rapidly expanding Chinese lithium-ion battery market.

CHAIRMAN'S STATEMENT

In addition to strengthening our core business, we have expanded into the electric vehicle (EV) sector through the establishment of an EV production facility by Xuzhou Hachi Motor Car Technologies Limited in Xuzhou, Jiangsu, PRC. This strategic move allows the Group to participate directly in the short-range EV market, leveraging synergies between our material production capabilities and the growing demand for electric mobility solutions in China.

Furthermore, the Group has undertaken a comprehensive review of its international operations, resulting in the decision to dispose of Graphex Technologies LLC. The principal terms of this disposal were approved by our shareholders at the recent Extraordinary General Meeting (EGM). This divestiture marks a deliberate and positive shift in our business strategy, allowing us to refocus resources on the dynamic and reliable Chinese market. We believe this streamlining of our operations will enhance our agility, strengthen our market position, and drive sustainable growth for the Group.

Looking ahead, Graphex Group remains committed to innovation, operational excellence, and delivering value to our shareholders. We will continue to adapt to evolving market conditions and seize new opportunities. We are confident that our strategic direction will ensure long-term success.

Yours sincerely,

Lau Hing Tat Patrick, JP
Chairman

Hong Kong, 31 March 2026

Graphex Group Limited Annual Report 2025

MANAGEMENT DISCUSSION AND ANALYSIS

BUSINESS REVIEW

Graphene Products Business

The revenue contributed by the Graphene Products Segment for the year ended 31 December 2025 recorded a year-to-year decline of 36% to approximately HK$75.1 million, representing 55% of the total revenue of the Group. The decline in revenue is due to drop in sales order received from the customers caused by keen competition. The adjusted EBITDA of Graphene Products Segment is down 16% to approximately HK$14.8 million compared to that of 2024. For the year ended 31 December 2025, the total output of spherical graphite was approximately 7,800 metric tons. All of the spherical graphite is produced and sold in China in 2025.

2025 was challenging in terms of pricing and material sourcing. Having said that, we are able to kickstart the implementation of a new anode material production plant in Xuzhou, Anhui with a production capacity of 15,000 metric tons high quality anode material for the Chinese market. The construction of the plant has been completed, and the equipment will be delivered soon.

Building the plant in Xuzhou, Anhui reflects our commitment to expanding production capabilities and meeting the increasing demand for anode materials in one of the world's fastest-growing energy storage markets. The completion of construction and imminent equipment delivery demonstrate our operational resilience and ability to adapt despite the challenges faced in 2025.

The Company also announced its decision to dispose Graphex Technologies LLC. Shareholders of the Company approved the principal terms of the disposal at an EGM held on 20 March 2026. The disposal marks a major adjustment of the Company's business strategy to concentrate its resources in the establishment of the Chinese market, which the Company views as reliable and dynamic.

The divestiture of Graphex Technologies LLC was reached following careful consideration of our overall strategy and long-term goals. By concentrating resources exclusively in China, we can leverage existing relationships and infrastructure, respond swiftly to market trends, and strengthen our competitive edge within a robust economic environment. We believe this transition will position us for sustainable growth and profitability moving forward.

MANAGEMENT DISCUSSION AND ANALYSIS

Landscape Architecture Design Business

For the year ended 31 December 2025, the Landscape Architecture segment contributed revenue of approximately HK$62.4 million, representing approximately 45% of the Group's total revenue. The segment revenue decreased by HK$7.5 million from approximately HK$69.9 million, representing a 11% drop. The gross profit margin of the Landscape Architecture business decreased by approximately 3 percentage points to about 55% for the year ended 31 December 2025, as compared with that of 58% for the year ended 31 December 2024.

The reduction in revenue was mainly due to slowdown in real estate development market in China. Despite challenging market conditions in 2025, impact on our Landscape Architecture segment was relatively less rigorous compared to the industry as a whole. We have continued to exercise tight cost control on our landscape architecture design business while maintaining the quality of our production.

The Group has strived to ensure the provision of quality landscape architecture services and sustain our market leadership in the industry.

The number of new contracts and contract sum entered by the Group during 2023 to 2025 are set out as follows:

Year ended 31 December	No. of new contracts	Contract sum (HK$ million)
2025	75	49.4
2024	89	67.8
2023	89	67.6

Graphex Group Limited Annual Report 2025

FINANCIAL REVIEW

Revenue

The Graphene segment contributed revenue of approximately HK$75.1 million to the Group, representing a decrease of approximately 36%, compared with HK$118.0 million for the year ended 31 December 2024. The Group's total revenue decreased to approximately HK$137.6 million, compared with HK$187.9 million for the year ended 31 December 2024, representing year-on-year decrease of approximately 27%.

Cost of sales

Cost of sales decreased to approximately HK$84.2 million for the year ended 31 December 2025, representing a decrease of approximately 30%, as compared with that of approximately HK$119.5 million for the year ended 31 December 2024. Cost of sales mainly represented staff cost in respect of the landscape architecture business and cost of inventories in respect of the Graphene business. The decrease was generally in line with the decrease in revenue.

Gross profit and gross profit margin

Gross profit decreased to approximately HK$53.3 million for the year ended 31 December 2025, representing a decrease of approximately 22%, as compared with that of approximately HK$68.3 million for the year ended 31 December 2024.

Gross profit margin increased by approximately 3 percentage points to approximately 39% for the year ended 31 December 2025, as compared with that of approximately 36% for the year ended 31 December 2024. The overall increase in gross profit margin was due to the increase of gross profit margin in graphene products segment during the reporting year.

Selling, marketing and administrative expenses

Selling, marketing and administrative expenses decreased to approximately HK$108.7 million for the year ended 31 December 2025, representing a decrease of approximately 20%, as compared with that of approximately HK$136.2 million for the same period in 2024. The decrease was mainly due to (i) the decrease in selling and marketing expenses which is in line with the decrease in revenue; and (ii) the decrease in share-based payment expenses including share awards to directors, employees and consultants.

Impairment of other intangible assets

During the year ended 31 December 2025, due to the unfavourable changes in global and domestic economic conditions, business environment and market uncertainties caused by the international geo-political conflicts which have been intensified in 2025, the sales orders from customers for the Group's graphene products decreased significantly and revenue from external customers dropped by 36.4% during the year ended 31 December 2025.

For the impairment testing of other intangible assets-customer relationships, patents and trademarks, at 31 December 2025, the Group engaged International Valuation Limited ("IVL") (2024: IVL), an independent firm of qualified valuers not related to the Group and with qualifications and experiences in valuing similar assets, to determine the fair value of the trademarks, customer relationships and patents.

The valuations were based on income-approach and the calculations involve cash flow projections based on financial budgets approved by management covering a 5-years period and a terminal beyond 5-years growth rate of 2% (2024: 2%). This terminal growth rate is based on the relevant industry growth forecasts and does not exceed the average long-term growth rate for the relevant industry. Other key assumptions relate to the estimation of cash inflows/outflows which include budgeted sales and gross profit margin, selling prices and direct costs and such estimations are based on the past performance and management's business plans and expectations for the market development, taking into account future global demand for lithium-ion batteries, for which graphene products are applied as their graphite anode materials, driven by electric vehicles, energy storage systems, drones and robotics.

The pre-tax discount rates reflect current market assessments of the time value of money and the risks specific to the trademarks, customer relationships and patents and have been applied to discount projected cash flows of trademarks, customer relationships and patents to their present value as their fair value at 31 December 2025.

The following valuation methods and pre-tax discount rates have been adopted for the valuations at 31 December 2025:

Trademarks: relief from royalty method, at a pre-tax discount rate of 18.2%;
Customer relationships: multi-period excess earning method, at a pre-tax discount rate of 18.85%;
Patents: multi-period excess earning method, at a pre-tax discount rate of 23.95%

The relief-from-royalty method is a valuation approach that estimates the value of the trademarks based on the hypothetical royalties that an entity would incur if it lacked ownership and needed to license the asset from an external party. These implied licence savings reflect the trademarks' value contribution.

The Multi-Period Excess Earnings Method is an income-based valuation technique used to estimate the fair value of customer relationships and patents by calculating the present value of future cash flows attributable to each of the customer relationships and patents. It isolates these earnings of each of customer relationships and patents by subtracting "contributory asset charges" (CACs) – fair returns on supporting assets which are working capital, fixed assets, workforce and any other intangibles – from the total projected earnings.

Based on the valuation conducted by IVL (2024: IVL), at 31 December 2025, the fair value of trademarks, customer relationships and patents were approximately HK$111,714,000, HK$nil and HK$86,360,000 and, accordingly, impairment loss on trademarks, customer relationships and patents of approximately HK$17,833,000 (2024: HK$nil), HK$97,519,000 (2024: HK$nil) and HK$58,903,000 (2024: HK$nil) were recognised and charged to consolidated profit or loss for the year ended 31 December 2025. At 31 December 2025, the impairment of customer relationships, trademarks and patents were primarily attributable to unfavourable changes in global and domestic economic conditions, business environment and increasing market uncertainties caused by the international geo-political conflicts which have been intensifying in 2025.

MANAGEMENT DISCUSSION AND ANALYSIS

Impairment of goodwill allocated to Graphene Products Business

During the year ended 31 December 2025, due to the unfavourable changes in global and domestic economic conditions, business environment and increasing market uncertainties caused by the international geo-political conflicts which have been intensified in 2025, the sales orders from customers for the Group's graphene products decreased significantly for the year ended 31 December 2025. During the year ended 31 December 2025, in respect of the Graphene Products Business, the revenue from external customers and adjusted EBITDA (as defined in note 4) were approximately HK$75 million (2024: HK$118 million) of approximately HK$14.8 million (2024: HK$17.7 million), respectively. The ratio of adjusted EBITDA over revenue of the Graphene Products Business was about 19.8% (2024: 15%).

For the impairment assessment of the Graphene Products Business identified as a cash generating unit (the "CGU") at 31 December 2025, the Group engaged IVL (2024: IVL), an independent firm of qualified valuers not related to the Group and with qualifications and experiences in valuing similar assets.

As at 31 December 2025, goodwill, together with other intangible assets, property, plant and equipment and rights-of-use assets, with carrying amounts of HK$198,074,000 (2024: HK$408,181,000), HK$8,307,000 (2024: HK$8,939,000) and HK$10,088,000 (2024: HK$11,020,000), respectively, are allocated to the CGU. The recoverable amount of the CGU is the higher of value in use and fair value less cost of disposal, based on the income approach using the discounting cash flow method. The key assumptions are the discount rates, growth rates and expected changes in selling price and direct costs of graphene during the projection period. The directors of the Company estimate discount rates using pre-tax rates that reflect current market assessments of the time value of money and the risks specific to the CGU. The growth rate is based on industry growth forecasts. Changes in selling prices and direct costs are based on past practices and expectations of future changes in the market.

The cash flow projections are based on financial budgets approved by management covering a 5-year period and a pre-tax discount rate of 17.5% (2024: 19.5%) for the year ended 31 December 2025. The cash flows projections beyond the 5-year period are extrapolated using a terminal growth rate of 2% (2024: 2%). This terminal growth rate is based on the industry growth forecasts and does not exceed the average long-term growth rate for the industry, and reflects the expectations for the future market development. The ratio of EBITDA over revenue is estimated to be about 17.8% to 26.8% (2024: 19.0% to 28.1%) during the budget for the next 5 years, taking into account of global demand for lithium-ion batteries, for which graphene products are applied as their graphite anode materials, driven by electric vehicles, energy storage systems, drones and robotics.

Based on the assessment at 31 December 2025, the recoverable amount of the CGU was approximately HK$368,165,000, determined on the basis of fair value less cost of disposal, which was less than its aggregate carrying amount of HK$470,104,000 by approximately HK$101,939,000, and accordingly, the goodwill impairment loss of approximately HK$101,939,000 (2024: HK$nil) was recognised and charged to consolidated profit or loss for the year ended 31 December 2025. At 31 December 2024, the recoverable amount of the CGU was approximately HK$655,184,000 which exceeded its aggregate carrying amount of approximately HK$637,984,000 and no impairment was required for the year ended 31 December 2024.

At 31 December 2025, the impairment of goodwill was primarily attributable to unfavourable changes in global and domestic economic conditions, business environment and increasing market uncertainties caused by the international geo-political conflicts which have been intensifying in 2025.

Impairment loss on financial and contract assets

It mainly represented impairment loss of trade and bills receivables, contract assets, and other receivables. Such impairment loss increased to approximately HK$37.9 million for the year ended 31 December 2025, representing an increase of approximately 36.8%, as compared with that of approximately HK$27.7 million for the same period in 2024. The impairment mainly reflected the Group's credit loss under the less favourable market and economic environment which negatively affected the Group's collectability on financial and contract assets.

During the period after 31 December 2025 and up to 31 March 2026, the subsequent settlements received from the customers are analyzed as follows:

	At 31 December 2025 HK$’000	Subsequent settlements received up to 31 March 2026 HK$’000	%
Contract assets, net	7,349	2,829	38%
Trade and bills receivables, net of provisions for impairments
Within 6 months	33,855	6,624	20%
Over 6 months but within 1 year	6,807	482	7%
Over 1 year but within 2 years	1,483	189	13%
Over 2 years but within 3 years	-	-	-
Over 3 years	-	-	-
	42,145	7,295	17%
	49,494	10,124	20%

For the long outstanding balances, the Company has taken a series of actions from time to time including suspension of the project, issuing of demand notes by legal counsel and lodge of legal proceedings.

Net loss

As a result of the foregoing, the loss attributable to owners of the parent was approximately HK$364.4 million for the year ended 31 December 2025, as compared with loss attributable to owners of the parent of approximately HK$111.4 million for the year ended 31 December 2024.

Liquidity, financial resources and gearing

The Group's objectives for capital management are to safeguard the Group's ability to continue as a going concern in order to maintain an optimal capital structure and reduce the cost of capital, while maximising the return to shareholders through improving the debt and equity balance.

| | As at
31 December
2025
HK$'000 | As at
31 December
2024
HK$'000 |
| --- | --- | --- |
| Current assets | 256,372 | 262,397 |
| Current liabilities | 439,027 | 367,013 |
| Current ratio | 0.58x | 0.71x |

The current ratio of the Group at 31 December 2025 was approximately 0.58 times as compared to that of approximately 0.71 times at 31 December 2024.

At 31 December 2025, the Group had a total cash and bank balances of approximately HK$27.3 million (31 December 2024: HK$15.5 million). The cash and bank balances were mainly held in HK$ and RMB.

At 31 December 2025, the Group's gearing ratio was approximately 541.5% (represented by total interest-bearing other borrowings, lease liabilities, convertible notes and promissory note at the end of the period divided by total equity at the end of the respective period multiplied by 100%) (31 December 2024: 84.2%).

At 31 December 2025, the capital structure of the Company mainly comprised issued ordinary shares, preference shares and debt securities. As of 31 December 2025, the Company had outstanding issued bonds of approximately HK$104.6 million, issued promissory notes of approximately HK$29 million, convertible notes of HK$3.8 million and 941,313,336 ordinary shares and 323,657,534 preference shares in issue.

Graphex Group Limited Annual Report 2025 17

Contingent liabilities

The Group had no significant contingent liabilities as at 31 December 2025.

Pledge of assets

On 19 January 2021, the entire issued capital of Think High Global Limited, an indirect wholly-owned subsidiary of the Company established under the laws of the British Virgin Islands, which directly holds 100% of the equity interest of the graphene products business was charged in favour of Lexinter International Inc., a corporation incorporated under the laws of the Province of Ontario which is wholly owned by Jeffrey Abramovitz, an individual carrying Canadian nationality, who shall subscribe the convertible notes and warrants issued by the Company in the aggregate principal amount of US$15,000,000 pursuant to the subscription agreement and supplemental agreement entered into on 19 January 2021 and 24 May 2021 respectively.

More details of the pledge were set out in the announcements of the Company dated 19 January 2021 and 24 May 2021, and circular of the Company dated 30 June 2021.

Capital commitments

(i) At 31 December 2025 and 2024, the Group had the following capital commitments at the end of the reporting period:

| | 2025
HK$'000 | 2024
HK$'000 |
| --- | --- | --- |
| Contracted, but not provided for: | | |
| Acquisition of property, plant and equipment | 51,381 | 5,637 |

(ii) On 11 November 2025, Graphex (Anhui) New Energy Materials Co., Limited ("Graphex Anhui"), an indirect non-wholly owned subsidiary of the Group, entered into an equipment purchase agreement with the Vendor. Pursuant to the agreement, Graphex Anhui has agreed to purchase, and the Vendor has agreed to sell, equipment for a total consideration of RMB42,252,200 (equivalent to approximately HK$46,270,384 at an exchange rate of RMB1:HK$1.0951) for the Group's project in Anhui, the PRC. As at 31 December 2025, Graphex Anhui had paid RMB7,214,000 (equivalent to approximately HK$7,987,000) and recognised the amount as prepayments under the Group's consolidated statement of financial position.

Foreign exchange exposure

The Group mainly operates and invests in Hong Kong and the PRC but most of the transactions are denominated and settled in HK$ and RMB. No significant foreign currency risk has been identified for the financial assets in the PRC as they were basically denominated in a currency same as the functional currencies of the group entities to which these transactions relate. Nevertheless, the Directors will closely monitor the Group's foreign currency position and consider natural hedge technique to manage its foreign currency exposures by non-financial methods, managing the transaction currency, leading and lagging payments, receivable management, etc.. Save for meeting working capital needs, the Group only holds minimum foreign currency.

Human resources and employees' remuneration

As at 31 December 2025, the Group had around 217 employees. Employees are remunerated according to nature of the job, market trend and individual performance. Employee bonus is distributable based on the performance of the respective subsidiaries and the employees concerned.

The Group offers competitive remuneration and benefit package to employees. Employee benefits include mandatory provident fund, employee pension schemes in the PRC, contributions to social security system, medical coverage, insurance, training and development programs. As to defined contribution schemes, there is no forfeited contribution available for the Group to reduce its existing level of contributions to the retirement benefit scheme during the year.

During the year ended 31 December 2025, the Group had maintained a number of share schemes at the Company and subsidiary levels in order to recognise the contributions by selected eligible participants who are directors, officers, employees and service providers of the Group and to provide them with incentives for the continual operation and development of the Group and/or attract suitable personnel to join the Group.

MANAGEMENT DISCUSSION AND ANALYSIS

USE OF RIGHTS ISSUE PROCEEDS

During the year ended 31 December 2025, the Company conducted a share consolidation (the "Share Consolidation") pursuant to which every five (5) issued and unissued shares of HK$0.01 each would be consolidated into one (1) consolidated share (the "Consolidated Share") of HK$0.05 each. The Company also completed a rights issue (the "Rights Issue") on the basis of three (3) rights shares (the "Rights Shares") for every one (1) Consolidated Share held on the record date for determining entitlements under the Rights Issue, at the subscription price (the "Subscription Price") of HK$0.17 per Rights Share.

On 26 March 2025, the Share Consolidation became effective. The authorised share capital of the Company became HK$90,000,000 divided into 1,800,000,000 Consolidated Shares of HK$0.05 each, of which 234,761,352 Consolidated Shares (fully paid or credited as fully paid) were issued.

On 22 May 2025, a total of 704,226,370 shares were allotted and issued by the Company pursuant to the Rights Issue. The Company has raised aggregate gross proceeds of approximately HK$119.7 million from the rights issue before the deduction of transaction costs. The total transaction costs incurred in connection with the rights issue are approximately HK$4 million.

Set out below are details of the allocation of the net proceeds, the utilised and remaining amounts of net proceeds in relation to the Rights Issue as at 31 December 2025:

| Uses | Intended use
HK$ million | Utilised net proceeds
up to
31 December 2025
HK$ million | Remaining balance
as of
31 December 2025
HK$ million |
| --- | --- | --- | --- |
| Implementation of the project in Graphene Products Business | 57.9 | 57.9 | – |
| Repayment of outstanding loans and interests | 34.7 | 34.7 | – |
| General working capital | 23.1 | 23.1 | – |
| | 115.7 | 115.7 | – |

Please refer to the announcements of the Company dated 3 December 2024, 8 January 2025, 24 March 2025, 2 May 2025 and 21 May 2025, the circular of the Company dated 27 January 2025 and the prospectus of the Company dated 7 April 2025 for further details.

Graphex Group Limited Annual Report 2025 19

EVENTS AFTER THE REPORTING PERIOD

On 3 February 2026, Allied Apex Limited ("Allied Apex"), a non-wholly owned subsidiary of the Company, entered into a sale and purchase agreement with an independent third party that Allied Apex acquired 40% of the issued share capital of Tronche International New Energy Vehicles Co., Limited ("Tronche") with a consideration of HK$1,500,000 in cash. Upon completion, Tronche became an indirect non wholly-owned subsidiary of the Company, and accordingly Tronche and its subsidiaries will be consolidated into the Group's financial statements. For further details, please refer to the Company's announcement dated 24 October 2025 and 3 February 2026.
On 1 December 2025, the Vendor, a wholly-owned subsidiary of the Company, the Purchaser, an independent third party whose shares are listed and traded on the OTCQB market, and the Disposal Company, a wholly-owned subsidiary of the Company, entered into an option agreement (the "Agreement"). Pursuant to the Agreement, the Vendor conditionally agreed to grant, and the Purchaser conditionally agreed to acquire, an option (the "Option") at a consideration of US$500,000 (equivalent to approximately HK$3,900,000) in cash.

The Option entitles the Purchaser, at its discretion, to require the Vendor to proceed with a possible disposal (the "Possible Disposal"), under which the Vendor would sell 100% of the issued and outstanding limited liability units of shares of the Disposal Company (the "Sale Units") to the Purchaser at a total consideration comprising (i) cash consideration of US$3,000,000 (equivalent to approximately HK$23,400,000) and (ii) 29,000,000 new shares of common stock of the Purchaser (the "Consideration Shares").

On 20 March 2026, resolutions related to the Possible Disposal was duly passed by the shareholders by way of poll at the extraordinary general meeting. For further details, please refer to the Company's announcement dated 2 December 2025, 22 December 2025 and 20 March 2026 and circular dated 29 January 2026.

Graphex Group Limited Annual Report 2025 21

PROSPECTS

Looking ahead, the global surge in demand for lithium-ion batteries – driven by the rapid expansion of electric vehicles (EVs), energy storage systems, drones, and robotics – will continue to be a major catalyst for our graphene business. As these industries evolve and grow, they require increasingly sophisticated and high-performance anode materials, reinforcing the importance of our production capabilities. With the commencement of operations at our state-of-the-art Xuancheng facility, which boasts an annual production capacity of 15,000 metric tons, we are well-positioned to supply premium anode materials that address the needs of these fast-growing sectors. This strategic investment not only strengthens our core business, but also enhances our ability to respond to changing market requirements and technological advancements.

In parallel, our entry into the electric vehicle manufacturing market through the establishment of Xuzhou Hachi Motor Car Technologies Limited marks a significant step forward. Xuzhou Hachi will spearhead a new business segment for the Company, opening up opportunities to participate directly in the expanding EV ecosystem and capitalize on synergies between our material production and vehicle manufacturing expertise. Together, these initiatives underline our commitment to innovation and diversification, setting the stage for sustained growth and long-term value creation for shareholders.

BIOGRAPHIES OF DIRECTORS AND SENIOR MANAGEMENT

EXECUTIVE DIRECTORS

Mr. Lau Hing Tat Patrick (劉興達), JP, aged 66, is the Chairman of the Board and an executive Director since 25 November 2013. He has over 42 years of experience in operation and management in landscape architecture service industry. Mr. Lau joined the Group in October 1986 as managing director of Earthasia Limited responsible for formulating corporate and business strategies and making major corporate and operational decisions and became one of the directors and shareholders in February 1987. He has been the director of Earthasia Limited since February 1987, the director of Earthasia (International) Limited since October 2004, the director and legal representative of Earthasia (Shanghai) Co. Ltd. since November 2004, the director of Graphex Innovation and Technology Limited since August 2017. The aforementioned companies are principal subsidiaries, among others, of the Group in which Mr. Lau acts as a director or senior executive for the purpose of overseeing the management of such businesses.

Prior to joining the Group, Mr. Lau gained his experience in another two landscape architecture companies, namely, (i) Urbis Travis Morgan Limited from March 1985 to September 1986, and (ii) EBC Hong Kong (怡境師) from August 1983 to February 1985, as a landscape architect responsible for landscape design and project management.

Mr. Lau obtained his bachelor's degree in Landscape Architecture from the University of Toronto in June 1983. He obtained his master's degree in Urban Design from the University of Hong Kong in November 1991. Mr. Lau was qualified as a professional member in the grade of Associate of the Landscape Institute in the United Kingdom in January 1987. He has been a registered landscape architect under LARO since September 1999. He served in HKILA as president from September 1994 to May 1998 and has been a fellow member of HKILA since November 2008. He has taken up the positions of chairman of Asian Habitat Society (亞洲人居環境協會) and director of the Hong Kong Coalition of Professional Service. Mr. Lau is currently a member of Buildings Appeal Tribunal Panel. He was a member of the Town Planning Appeal Board Panel from 2021 to 2024. He was a member of the Urban Forestry Advisory Panel from 2017 to 2023. He was a district councillor of the Hong Kong Eastern District Council from 2004 to 2011. He was also a member of the following institutions, namely, (i) the Community Involvement Committee on Greening from March 2011 to February 2013, (ii) the Harbour-front Enhancement Committee from May 2004 to August 2009, (iii) the Harbourfront Commission from July 2010 to June 2013, (iv) the Lands and Development Advisory Committee from July 2009 to July 2015. Mr. Lau was appointed Justice of the Peace in July 2017.

Mr. Lau has not held any directorships in any listed public companies in the past three years.

Mr. Lau does not have any relationship with any Directors, senior management, substantial shareholders or controlling shareholder of the Company.

As at the date of this annual report, Mr. Lau held 28,945,089 Shares by himself. Under the SFO, Mr. Lau's interest in the Company is 28,945,089 Shares, representing approximately $3.07\%$ of the issued share capital of the Company.

BIOGRAPHIES OF DIRECTORS AND SENIOR MANAGEMENT

Mr. Chan Yick Yan Andross (陳奕仁), aged 63, is the Chief Executive Officer and an executive Director since 25 November 2013. He has over 40 years of experience in operation and management in landscape architecture service industry. He first joined the Group in January 1991 as managing director of Earthasia Limited responsible for formulating corporate and business strategies and making major corporate and operational decisions. Mr. Chan has been the director of Earthasia Limited since December 1995; the director of Earthasia (International) Limited since October 2004; the director of Earthasia (Shanghai) Co. Ltd. since November 2004; the director and legal representative of Earthasia (Xiamen) Co. Ltd. since March 2013; the director of Graphex Innovation and Technology Limited since August 2017. The aforementioned companies are principal subsidiaries, among others, of the Group in which Mr. Chan acts as a director or senior executive for the purpose of overseeing the management of such businesses.

Prior to joining the Group, Mr. Chan has the following working experience relevant to his present positions in the Company:

Name of company	Principal business activities	Roles	Responsibilities	Period of services
BCG Landscape Architects Inc.	Landscape architecture, urban design, environmental planning	Partner and landscape architect	Design and project management	From September 1989 to January 1991
EDA Collaborative Inc.	Landscape architecture, urban design, environmental planning, tourism design	Intermediate landscape architect	Design and project management, detail design and working drawings	From August 1988 to August 1989
EBC Hong Kong (怡境師)	Landscape architecture and planning	Landscape architect	Design development, detailed design, contract administration and supervision	From July 1985 to February 1988

Mr. Chan obtained his bachelor's degree in Landscape Architecture from the University of Toronto in June 1985. He obtained his master's degree in architecture (landscape planning and design) from Tongji University (同濟大學) in June 2014. Mr. Chan was qualified as a professional member in the grade of Associate of the Landscape Institute in the United Kingdom in January 1988. He was a member of the Ontario Association of Landscape Architects and the Canadian Society of Landscape Architects in July 1989 and 1990, respectively. Mr. Chan has been a registered landscape architect under LARO and a fellow member of HKILA since September 1999 and November 2008, respectively. He has been a member of American Society of Landscape Architects since March 2004. He was accredited as the Outstanding Entrepreneur of the National Reconnaissance Design Industry (President) (全國勘察設計行業優秀企業家(院長)) by the China Exploration and Design Association (中國勘察設計協會) in November 2013.

Mr. Chan has not held any directorships in any listed public companies in the past three years.

Mr. Chan does not have any relationship with any Directors, senior management, substantial shareholders or controlling shareholder of the Company.

As at the date of this annual report, Mr. Chan held 34,722,177 Shares by himself. Under the SFO, Mr. Chan's total interest in the Company is 34,722,177 Shares, representing approximately 3.69% of the issued share capital of the Company.

Mr. Qiu Bin (仇斌), aged 54, is an executive Director since 31 July 2017. Mr. Qiu has been the director of Graphex Innovation and Technology Limited since August 2017; the business director of Earthasia Limited since October 2017. The aforementioned companies are principal subsidiaries, among others, of the Group in which Mr. Qiu acts as a director or senior executive for the purpose of overseeing the management of such businesses. He graduated from Beijing Union University with a bachelor degree in Business Administration. From 1992 to 2003, he was the department manager at the Bank of China Limited, Beijing Branch responsible for a wide range of banking and credit duties. From 2004 to 2008, he joined the Shanghai Pudong Development Bank, Beijing Branch and served as the business manager in charge of marketing and credit functions. From 2009 to 2012, Mr. Qiu became the deputy general manager and director of the finance department in Beijing Dong Fang Chengrui Investment Consultants, Ltd. ("Dong Fang"). He was responsible for the overall operation and strategic decisions of the foreign investment and financing businesses of Dong Fang. Mr. Qiu is well versed with Chinese domestic banking system, settlement, foreign exchange and credit areas. He also has extensive experience in the fields of financial management and securities investment. Mr. Qiu has been an executive director of the board of directors of Heng Xin China Holdings Limited (stock code: 8046, shares of which are listed on the GEM Board of the Stock Exchange and delisted on 2 July 2019) from 1 January 2013 to 2 June 2017.

Mr. Qiu has not held any directorships in any listed public companies in the past three years.

Mr. Qiu does not have any relationship with any Directors, senior management, substantial shareholders or controlling shareholder of the Company.

As at the date of this annual report, Mr. Qiu held 136,000 Shares by himself. Mr. Qiu's total interest in the Company is 136,000 Shares, representing approximately 0.01% of the issued share capital of the Company.

Mr. Zhao Aiyong (班爱勇), aged 52, obtained a professional certificate in marketing from Xuzhou University of Technology in 1994.

Mr. Zhao has over 24 years of experience in the electric vehicle industry. In 2007, Mr. Zhao founded Xuzhou Heping Electric Vehicle Manufacturing Co., Ltd. with business scope covering the manufacturing and sales of complete electric vehicles, as well as the sales of batteries, motors, and accessories for electric vehicles, Mr. Zhao currently is still the shareholder, legal representative and executive director and general counsel manager of this company. Later Mr. Zhao expanded his business and founded Xuzhou Huangpu Electric Vehicle Co., Ltd in 2012 and Xuzhou Aima Electric Vehicle Store in 2016.

Apart from his directorship at Tronche International New Energy Vehicles Co., Limited, a non-wholly owned subsidiary of the Company, Mr. Zhao has not held any directorships in any listed public companies in the past three years.

Mr. Zhao has obtained the legal advice pursuant to Rule 3.09D of the Listing Rules on 25 March 2026 and has confirmed his understanding of his obligations as a director.

Mr. Zhao does not have any relationship with any Directors, senior management, substantial shareholders or controlling shareholder of the Company.

As at the date of this annual report, Mr. Zhao does not have any interests or short positions in any share, underlying share or debenture of the Company or any of its associate corporations within the meaning of Part XV of the SFO.

BIOGRAPHIES OF DIRECTORS AND SENIOR MANAGEMENT

NON-EXECUTIVE DIRECTORS

Mr. Ma Lida (馬力達), aged 45, is a non-executive Director since 24 February 2014. He has over 19 years of experience in financial management. He was the deputy general manager and board secretary of Pubang Landscape Architecture Company Limited (廣州普邦園林股份有限公司) ("Pubang") since May 2010 responsible for the general secretarial affairs. From July 2003 to February 2008, he worked as a project manager for the provision of auditing services in various projects in GP Certified Public Accountants Co., Ltd. (廣東正中珠江會計師事務所有限公司), a PRC accounting firm.

Mr. Ma obtained his bachelor's degree in Economics from the School of Public Economics & Administration at Shanghai University of Finance and Economics (上海財經大學公共經濟與管理學院) in July 2003. He further obtained his master's degree in Business Administration from Sun Yat-sen University (中山大學) in June 2010.

Mr. Ma has not held any directorships in any listed public companies in the past three years.

Mr. Ma does not have any relationship with any Directors, senior management, substantial shareholders or controlling shareholder of the Company.

As at the date of this annual report, Mr. Ma does not have any interests or short positions in any share, underlying share or debenture of the Company or any of its associate corporations within the meaning of Part XV of the SFO.

INDEPENDENT NON-EXECUTIVE DIRECTORS

Mr. Liu Kwong Sang (廖廣生), aged 64, obtained his Bachelor's degree of Arts in Accountancy from The Hong Kong Polytechnic University in November 1997 and his Master's degree in Business Administration from the University of Lincoln in November 2002.

Mr. Liu has over 37 years of experience in the accounting industry and is currently practising as a certified public accountant in Hong Kong. He is a fellow member of the Institute of Chartered Accountants in England and Wales, the Chartered Association of Certified Accountants, the Institute of Financial Accountants, the United Kingdom, the Institute of Public Accountants, Australia, the Hong Kong Institute of Certified Public Accountants, the Taxation Institute of Hong Kong and the Society of Registered Financial Planners. He is also a chartered tax adviser.

Mr. Liu is currently an independent non-executive director of China National Culture Group Limited (stock code: 745), a company listed on the Main Board of the Stock Exchange. Mr. Liu was also previously an independent non-executive director of New Century Logistics (BVI) Limited (Nasdaq: NCEW), Armlogi Holding Corp. (Nasdaq: BTOC), ATIF Holdings Limited (Nasdaq: ZBAI), abc Multiactive Limited (stock code: 8131), which is a company listed on GEM of the Stock Exchange, Polytec Asset Holdings Limited (stock code: 208), which and was privatized in May 2021 and Pine Care Group Limited (stock code: 1989).

Save as disclosed above, Mr. Liu has not held any directorships in any listed public companies in the past three years.

Mr. Liu does not have any relationship with any Directors, senior management, substantial shareholders or controlling shareholders of the Company.

As at the date of this annual report, Mr. Liu does not have any interest or short positions in any share, underlying share or debenture of the Company or any of its associate corporations within the meaning of Part XV of the SFO.

Graphex Group Limited Annual Report 2025 25

Mr. Ren Chunyu (任春雨), aged 57, obtained his bachelor's degree in economics from Shanxi University of Finance and Economics in 1993 and his Master of Business Administration from University of Wales, United Kingdom in September 2006.

With extensive experience in corporate governance and capital markets, Mr. Ren began his career at Hainan Huaneng Hainan Power Generation Co., Ltd. from 1993 to 1995, serving in the securities department as the company supervisor. Mr. Ren has served various positions at Sundiro Holding Co., Ltd. (a company listed on the Shenzhen Stock Exchange, stock code: 000571.SZ) since 1995, including deputy head (presiding) of the securities department, deputy director of the board secretary office, securities affairs representative, supervisor and board secretary (vice president-level), where he has been responsible for corporate information disclosure, listed company governance and standardized operations, capital market financing, and full participation in overall corporate management.

Save as disclosed above, Mr. Ren has not held any directorships in any listed public companies in the past three years.

Mr. Ren has obtained the legal advice pursuant to Rule 3.09D of the Listing Rules on 25 March 2026 and has confirmed his understanding of the obligations as a director.

Mr. Ren does not have any relationship with any Directors, senior management, substantial shareholders or controlling shareholders of the Company.

As at the date of this annual report, Mr. Ren does not have any interest or short positions in any share, underlying share or debenture of the Company or any of its associate corporations within the meaning of Part XV of the SFO.

CHANGES IN INFORMATION OF DIRECTORS

Pursuant to Rule 13.51(B)(1) of the Listing Rules, the changes in information of Directors are set out below:

Directors	Details of Changes
Zhao Aiyong	Appointed as an Executive Director on 25 March 2026
Ren Chunyu	Appointed as an Independent non-executive Director on 25 March 2026
Wang Yuncai	Ceased to be an Independent non-executive Director since 5 February 2026
Tam Ip Fong Sin	Ceased to be an Independent non-executive Director since 10 January 2026
Tang Zhaodong	Ceased to be an Independent non-executive Director since 27 June 2025

In respect of the change in emoluments of Directors and chief executive of the Company, please refer to note 8 to the consolidated financial statements in this annual report.

SENIOR MANAGEMENT

Mr. Kwok Ka Hei (郭嘉熙), aged 44, is the company secretary of the Company. He has also been the chief financial officer of the Company since March 2014. He has over 20 years of experience in corporate finance and accounting profession. He joined the Group in December 2013 as the chief financial officer of Earthasia Limited, a subsidiary of the Company. Prior to joining the Group, Mr. Kwok served in GF Capital (Hong Kong) Limited in corporate finance department from October 2010 to December 2013. Prior to that, he served in KGI Capital Asia Limited in the investment banking department from December 2007 to October 2010. He also worked in PricewaterhouseCoopers Ltd. from September 2005 to November 2007. Mr. Kwok obtained his bachelor's degree of Arts with a major in Accountancy from the Hong Kong Polytechnic University in December 2005. He is a fellow member of the Hong Kong Institute of Certified Public Accountants, and Association of Chatered Certified Accountants. He is also a Financial Risk Manager of Global Association of Risk Professionals since April 2008.

CORPORATE GOVERNANCE REPORT

COMPLIANCE WITH CORPORATE GOVERNANCE CODE

The Company is committed to achieving high standards of corporate governance to safeguard the interests of shareholders and to enhance corporate value and accountability. The Company acknowledges the important role of its Board in providing effective leadership and direction to its business, and ensuring transparency and accountability of its operations. In the opinion of the Directors, save as disclosed herein, the Company has complied with the applicable code provisions as set out in the Corporate Governance Code (the "CG Code") contained in Appendix C1 to the Listing Rules during the reporting period ended 31 December 2025. The Company will continue to review and monitor its corporate governance practices to ensure compliance with the CG Code.

Following the passing away of Ms. Tam Ip Fong Sin on 10 January 2026 and resignation of Mr. Wang Yuncai as independent non-executive director ("INED") on 5 February 2026, the Company failed to meet the following requirements under the Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited (the "Listing Rules"):

(i) The requirement under Rule 3.10(1) of the Listing Rules which stipulates that the board must include at least three INEDs;

(ii) The requirement under Rule 3.10A of the Listing Rules which stipulates that the number of INEDs must represent at least one-third of the Board;

(iii) The requirement under Rule 3.21 of the Listing Rules which stipulates that the audit committee must comprise a minimum of three members;

(iv) The requirement under Rule 3.25 of the Listing Rules which stipulates the remuneration committee is chaired by an INED and comprising a majority of INEDs;

(v) The requirement under Rule 3.27A of the Listing Rules which stipulates the nomination committee is chaired by an INED and comprising a majority of INEDs;

(vi) The requirement under Rule 13.92(2) of the Listing Rules which stipulates that the board must have directors of different genders;

Following the appointment of Mr. Ren Chunyu as INED and a member of each of the audit committee, the remuneration committee and the nomination committee of the Board on 25 March 2026, the Company has fulfilled the requirements of the Listing Rules 3.25 and 3.27A.

The Board noted that the Company still does not meet the requirements of the Listing Rule 3.10(1), 3.10A, 3.21 and 13.92(2). Pursuant to Rules 3.11 and 3.23 of the Listing Rules, the Company is required to appoint sufficient number of INEDs and members of the audit committee within three months after failing to meet the requirements under Rules 3.10(1) and 3.21 of the Listing Rules. The Company will use its best endeavor to appoint suitable candidate to fill the vacancies in order to comply with the relevant requirements of the Listing Rules as soon as practicable.

On 16 April 2026, the Company has applied for, and the Stock Exchange has granted to the Company, a waiver to extend the grace period from 9 April 2026 to 30 June 2026 to appoint a female INED to re-comply with the requirements under Rules 3.10(1), 3.10A, 3.21 and 13.92(2) of the Listing Rules. Further announcement will be made as and when appropriate and in accordance with the Listing Rules.

CORPORATE GOVERNANCE REPORT

COMPLIANCE WITH MODEL CODE FOR SECURITIES TRANSACTIONS BY DIRECTORS

The Company has adopted the Model Code for Securities Transactions by Directors of Listed Issuers (the "Model Code") as set out in Appendix C3 of the Listing Rules as the code of conduct regarding securities transactions by the Directors of the Company. Having made specific enquiries to all Directors, all of them confirmed that they had complied with the required standards as set out in the Model Code during the year ended 31 December 2025.

CORPORATE STRATEGY

The primary objective of the Group is to generate long-term return for our shareholders. The Group's strategy is to place equal emphasis on achieving sustainable business model with recurring earnings and maintaining robust financial profile. The Chairman's Statement, Management Discussion and Analysis, and the Directors' Report throughout this annual report contain discussions and analysis of the Group's performance and the basis on which the Group generates or preserves value over the longer term, and the basis on which the Group will execute its strategy for delivering the Group's objectives.

DIVIDEND POLICY

The Company has adopted a dividend policy since 8 January 2019 (the "Dividend Policy") which allows the shareholders of the Company to share the profits of the Company whilst retaining adequate reserves for the Group's future growth. According to the Dividend Policy, in addition to the final dividends, the Company may declare interim dividends or special dividends from time to time.

Under the Dividend Policy, in deciding whether to propose a dividend and in determining the dividend amount, the Board shall take into account, among others, the Group's actual and expected financial performance, retained earnings and distributable reserves, working capital requirements, capital expenditure requirements and future expansion plans, liquidity position, shareholders' interests, general economic conditions, business cycle of the Group's business and other internal or external factors that may have an impact on the business or financial performance and position of the Group and other factors that the Board deems appropriate.

CORPORATE GOVERNANCE REPORT

The declaration and payment of dividends by the Company is also subject to any restrictions under the Companies Law of the Cayman Islands, the Listing Rules, the laws of Hong Kong and the Company's Memorandum and Articles of Association and any other applicable laws and regulations.

The Company does not have any pre-determined dividend distribution ratio. The Company's dividend distribution record in the past may not be used as a reference or basis to determine the level of dividends that may be declared or paid by the Company in the future.

The Dividend Policy shall in no way constitute a legally binding commitment by the Group in respect of its future dividend and/or in no way obligate the Group to declare a dividend at any time or from time to time.

The Board will continually review the Dividend Policy and reserves the right in its sole and absolute discretion to update, amend and modify the Dividend Policy at any time.

The board confirmed that all dividend decisions were made in accordance with the dividend policy.

The Board does not recommend the payment of final dividend for the year ended 31 December 2025, taking into consideration the need to reserve resources for future business development and potential investment opportunities. The Board believes that retaining funds within the Group will better support its long-term growth and enhance overall shareholder value.

BOARD DIVERSITY POLICY

The Group adopted a board diversity policy (the "Board Diversity Policy"). A summary of this policy, together with the measurable objectives set for implementing this policy, and the progress made towards achieving those objectives are disclosed as below.

Summary of board diversity policy

The Company recognizes and embraces the benefits of having a diverse board to the quality of its performance. The Board Diversity Policy aims to set out the approach to achieve diversity on the board. In designing the board's composition, board diversity has considered a number of measurable aspects including gender, age, ethnicity, knowledge and length of services, to achieve a balanced composition of Executive Directors, Non-executive Directors and Independent Non-executive Directors. All board appointments will be based on meritocracy, and candidates will be considered against objective criteria, having due regards for the benefits of diversity on the board.

Measurable objectives

Selection of candidates will be based on a range of diversity perspectives, including but not limited to gender, age, cultural and educational background, ethnicity, professional experience, skills, knowledge and length of services. Independent Non-executive Directors should be of sufficient calibre and stature for their views to carry weight. The ultimate decision will be based on merit and contribution that the selected candidates will bring to the board.

Implementation and monitoring

The Nomination Committee reviews the board's composition under diversified perspectives, and monitors the implementation of the Board Diversity Policy annually.

The Nomination Committee reviewed the Board Diversity Policy during the year and considered it effective. The committee considered that the board maintains an appropriate mix of skills, experience, knowledge, expertise, culture, independence and age in line with the Board Diversity Policy's requirements.

WORKFORCE DIVERSITY POLICY

The Group adopted a workforce diversity policy (the "Workforce Diversity Policy"), setting out the Company's approach and commitment to diversity in the workforce, including senior management of the Company.

Summary of workforce diversity policy

The Group maintains a workforce diversity policy aimed at fostering an inclusive workforce, encompassing senior management, by prioritizing a broad range of attributes such as gender, age, cultural and educational background, ethnicity, and professional experience to enhance decision-making and innovation. We are committed to achieving a 50:50 gender balance and aim to ensure that no gender is over-represented by more than 20% across the entire business, with exceptions for specific segments where gender diversity may be less relevant due to the nature of the work.

When considering new or replacement appointments for senior management, the Group seeks appropriate candidates to enhance gender diversity and strives to maintain at least one representative from each gender; a diverse senior management team with varied backgrounds, experience, and tenure helps ensure a resilient, adaptable, and sustainable organization.

For details on gender distribution, please refer to the separate ESG Report.

NOMINATION POLICY

The Group has adopted a nomination policy (the "Nomination Policy") since 31 December 2018. A summary of this policy is disclosed as below.

1. Objective

1.1 The Nomination Committee shall review the structure, size and composition (including the skills, knowledge and experience) of the Board at least annually and make recommendations on any proposed changes to the Board to complement the Company's corporate strategy.

CORPORATE GOVERNANCE REPORT

1.2 The Nomination Committee shall nominate suitable candidates to the Board for it to consider and make recommendations to shareholders of the Company for election as Director at general meetings or appoint him/her to fill casual vacancies.

1.3 The Nomination Policy helps the Nomination Committee and the Board to ensure that the Board has a balance of skills, experience and diversity of perspectives appropriate to the requirements of the Group's business.

2. Selection criteria

2.1 The factors listed below would be used as reference by the Nomination Committee in assessing the suitability of a proposed candidate.

(1) Reputation for integrity;
(2) Commitment in respect of available time and relevant interest; and
(3) Diversity in all its aspects, including but not limited to gender, age (18 years or above), cultural and educational background, ethnicity, professional experience, skills, knowledge and length of service.

These factors are for reference only, and not meant to be exhaustive and decisive. The Nomination Committee has the discretion to nominate any person, as it considers appropriate.

3. Nomination procedures

3.1 Appointment of Directors

(1) The Nomination Committee identifies individual(s) suitably qualified to become Board members, having due regard to the Nomination Policy and the Board Diversity Policy of the Company, and assesses the independence of the proposed independent non-executive Director(s) as appropriate.

(2) The Nomination Committee makes recommendation(s) to the Board.

(3) The Board considers the individual(s) recommended by the Nomination Committee, having due regard to the Nomination Policy and the Board Diversity Policy.

(4) The Board confirms the appointment of the individual(s) as Director(s) or recommends the individual(s) to stand for election at a general meeting. Individual(s) appointed by the Board to fill a casual vacancy will be subject to re-election by shareholders at the first general meeting after his/her appointment, and individual(s) appointed by the Board as an addition to the Board will be subject to re-election by shareholders at the next annual general meeting, in accordance with the Company's articles of association.

(5) The shareholders approve the election of individual(s), who stand(s) for election at general meeting, as Director(s).

CORPORATE GOVERNANCE REPORT

3.2 Re-appointment of Directors

(1) The Nomination Committee considers each retiring Director, having due regard to the Nomination Policy and the Board Diversity Policy, and assesses the independence of each retiring independent non-executive Director.

(2) The Nomination Committee makes recommendation(s) to the Board.

(3) The Board considers each retiring Director recommended by the Nomination Committee, having due regard to the Nomination Policy and the Board Diversity Policy.

(4) The Board recommends the retiring Directors to stand for re-election at the annual general meeting in accordance with the Company's articles of association.

(5) The shareholders approve the re-election of Directors at the annual general meeting.

3.3

The Board shall have the ultimate responsibility for all matters relating to the selection and appointment of Directors.

4. Review of the nomination policy

4.1 The Nomination Committee will review the Nomination Policy, as appropriate, to ensure the effectiveness of the Nomination Policy. The Nomination Committee will discuss any revisions that may be required, and recommend any such revisions to the Board for consideration and approval.

BOARD OF DIRECTORS

The Board currently consists of seven members, including four executive Directors, one non-executive Director and two independent non-executive Directors. Each executive Director and non-executive Director is suitably qualified for his/her position, and has sufficient experience and time to hold the position so as to carry out his/her duties effectively and efficiently. During the year ended 31 December 2025, the Company complied with the Listing Rules on INED requirements. However, following the passing away of Ms. Tam Ip Fong Sin on 10 January 2026 and the resignation of Mr. Wang Yuncai on 5 February 2026, the Company temporarily failed to comply with Rules 3.10(1), 3.10A, 3.21, 3.25, 3.27A and 13.92(2). After the appointment of Mr. Ren Chunyu as an INED on 25 March 2026, the Company has re-complied with Rules 3.25 and 3.27A, but remains non-compliant with Rules 3.10(1), 3.10A, 3.21 and 13.92(2). The Company is required under Rules 3.11 and 3.23 to fill the vacancies within three months and is actively identifying suitable candidates. On 16 April 2026, the Stock Exchange granted a waiver to the Company extending the compliance deadline to 30 June 2026. Further announcement will be made as appropriate.

Each of the independent non-executive Directors has confirmed by annual confirmation that he/she has complied with the independence criteria set out in Rule 3.13 of the Listing Rules. Throughout the year ended 31 December 2025, the Directors consider that all independent non-executive Directors are independent under these independence criteria and are capable to effectively exercise independent judgement. Amongst the independent non-executive Directors, Mr. Liu Kwong Sang has the appropriate professional qualifications on accounting or related financial management expertise required under Rule 3.10(2) of the Listing Rules.

The composition of the Board is as follows:

	Name	Appointed on	Length of Tenure
Executive Directors	Mr. Lau Hing Tat Patrick (Chairman)	25 November 2013	>12 years
	Mr. Chan Yick Yan Andross (Chief Executive Officer)	25 November 2013	>12 years
	Mr. Qiu Bin	31 July 2017	>8 years
	Mr. Zhao Aiyong	25 March 2026	<1 year
Non-executive Director	Mr. Ma Lida	24 February 2014	>11 years
Independent non-executive Directors	Mr. Liu Kwong Sang	15 June 2020	>5 years
	Mr. Ren Chunyu	25 March 2026	<1 year
	Mr. Wang Yuncai (resigned on 5 February 2026)	3 June 2014	>11 years
	Ms. Tam Ip Fong Sin (passed away on 10 January 2026)	3 June 2014	>11 years
	Mr. Tang Zhaodong (retired on 27 June 2025)	15 June 2020	>5 years

Notes:
1. Pursuant to Article 108(a), Mr. Chan Yick Yan Andross, Mr. Zhao Aiyong and Mr. Ren Chunyu will retire by rotation at the forthcoming AGM and, being eligible, offer themselves for re-election.
2. During their respective tenure, none of the Directors concurrently held more than 6 directorship of issuers listed on the Main Board or GEM.

The Board is responsible for developing the Group's strategy, monitoring the Group's operational and financial performance, and ensuring effective governance and sound internal control and risk management systems are in place. Through the Board committees, the Board leads and provides direction to management by laying down strategies and overseeing their implementation.

The management is delegated with the authority and responsibility by the Board for the management, execution and administration of the Group. Under the leadership of the Chief Executive Officer, the management is responsible for the day-to-day management of the Group's businesses and implementation of the strategies approved by the Board and reports to the Chief Executive Officer regularly. The Chief Executive Officer in turn reports to the Board on the progress of approved strategies, business performance and development of the Group.

The Board is responsible for the corporate governance functions under A.2.1 of the CG Code. The Board has reviewed and discussed the corporate governance policy of the Group and is satisfied with the effectiveness of the corporate governance policy.

to develop and review the Company's policies and practices on corporate governance;
to review and monitor the training and continuous professional development of Directors and senior management;
to review and monitor the Company's policies and practices on compliance with legal and regulatory requirements;
to develop, review and monitor the code of conduct and compliance manual applicable to employees and Directors;
to review the Company's compliance with the code and disclosure in the corporate governance report; and
to maintain an appropriate and effective internal control and risk management system.

All directors have full and timely access to all relevant information, including monthly updates from the management, regular reports from various Board committees and briefings on significant legal, regulatory or accounting issues affecting the Group. Directors may take independent professional advice, which will be paid for by the Company as appropriate.

The Board acknowledges its responsibility for the preparing the financial statements of the Group according to the statutory requirements and the applicable accounting standards which give true and fair view of the state of affairs, the results of operations and cash flows of the Group. The Board confirms that, to the best of their knowledge, the financial statements for the reporting year have been prepared on a going concern basis. The Board is not aware of material uncertainties relating to events or conditions that may cast significant doubt on the Company's ability to continue as a going concern. The responsibilities of the external auditors of the Company on the financial statements are set out in the Independent Auditor's Report of this annual report.

Graphex Group Limited Annual Report 2025 35

Biographies of the current Directors are set out on the section headed "Biographies of Directors and Senior Management" of this annual report.

The following is an analysis of the Board's current composition showing the diversity profile of the Board as at the date of this annual report:

The Company has established mechanism to ensure independent views and input are available to the Board, channels are in place through formal and informal means whereby Independent Non-executive Directors can express their views in an open and candid manner as well as in a confidential manner, should circumstances required; these include regular Board surveys and Board reviews, dedicated meeting sessions with the Chairman and interaction with management and other Board members including the Chairman outside the boardroom.

The Directors' and chief executive's remuneration and all other emoluments paid or payable to the Directors and chief executive during the year are set out on an individual and named basis in note 8 to the consolidated financial statements of this annual report.

To indemnify Directors and officers of the Company against all costs, charges, losses, expenses and liabilities incurred by them in the execution of and discharge of their duties or in relation thereto, the Company has arranged appropriate directors and officers liability insurance cover for this purpose.

BOARD MEETING

The Board is scheduled to meet regularly at least four times a year, and Directors will receive at least 14 days prior written notice of regular Board meetings in compliance with paragraph C.5.1 of the CG Code. Agendas and accompanying papers are sent not less than 3 days before the date of Board meetings to ensure that the Directors are given sufficient time to review the same. If necessary, ad-hoc meetings will also be convened to discuss the overall strategy as well as the operation and financial performance of the Group. Reasonable notices will be given to the Directors for ad-hoc board meetings. Directors may participate either in person or through electronic means of communications. The Chairman also met with the independent non-executive Directors at least annually without the presence of other Directors. All the Directors have been provided with sufficient resources to discharge their duties, and, upon reasonable request, the Directors will be able to seek independent professional advice in appropriate circumstances, at the Company's expenses. All Directors will have the opportunity to include matters in the agenda for Board meetings.

The Board held five meetings in 2025. The annual general meeting of the Company was held on 27 June 2025 with the attendance of the external auditor to answer questions.

The attendance of individual directors at the Board and its sub-committee meetings, and the shareholders' meeting held in 2025 is set out in the following table:

Directors	Board	Meetings attended in 2025^{1}
		Audit Committee	Nomination Committee	Remuneration Committee	General Meeting
Executive Directors
Mr. Lau Hing Tat Patrick (Chairman of the Board)	5/5	–	–	–	2/2
Mr. Chan Yick Yan Andross (Chief Executive Officer)	5/5	–	–	–	2/2
Mr. Qiu Bin	5/5	–	–	–	0/2
Mr. Zhao Aiyong (appointed on 25 March 2026)	N/A	N/A	N/A	N/A	N/A
Non-executive Director
Mr. Ma Lida	5/5	–	–	–	0/2
Independent non-executive Directors
Mr. Liu Kwong Sang (Chairman of the Audit Committee, Nomination Committee and Renumeration Committee)	5/5	3/3	–	–	2/2
Mr. Ren Chunyu (appointed on 25 March 2026)	N/A	N/A	N/A	N/A	N/A
Mr. Wang Yuncai (resigned on 5 February 2026)	5/5	3/3	1/1	1/1	0/2
Ms. Tam Ip Fong Sin (ex-Chairlady of the Nomination Committee and Remuneration Committee) (passed away on 10 January 2026)	5/5	3/3	1/1	1/1	0/2
Mr. Tang Zhaodong (retired on 27 June 2025)	0/3	–	–	–	0/2

Note:
1. Directors may attend meetings in person, by telephone or through other means of video conference or by their alternate directors in accordance with the Company's Articles.

APPOINTMENT, RE-ELECTION AND REMOVAL OF DIRECTORS

The current Articles provide that subject to the manner of retirement by rotation of directors as from time to time prescribed by the Listing Rules, at each annual general meeting, one-third of the directors for the time being shall retire from office by rotation and that every director shall be subject to retirement by rotation at least once every 3 years. Any Director appointed by the Board to fill a casual vacancy shall hold office only until the first general meeting of the Company after his appointment and be subject to re-election at such meeting. Any Director appointed by the Board as an addition to the existing Board shall hold office only until the next following annual general meeting of the Company and shall then be eligible for re-election.

Each executive Director, non-executive Director and independent non-executive Director is appointed for a specific term of one to three years subject to retirement by rotation and re-election in accordance with the Articles. Therefore, no director will remain in office for a term of more than three years. Each independent non-executive Director is required to inform the Company as soon as practicable if there is any change that may affect his independence and must provide an annual confirmation of his independency to the Company.

CHAIRMAN AND CHIEF EXECUTIVE OFFICER

C.2.1 of the CG Code requires the roles of the Chairman and the Chief Executive Officer should be separate and should not be performed by the same individual. The Chairman of the Company is Mr. Lau Hing Tat Patrick and the functions of Chief Executive Officer are performed by Mr. Chan Yick Yan Andross. The roles of the Chairman and the Chief Executive Officer are segregated and assumed by two separate individuals. The Chairman of the Board is responsible for the leadership and effective running of the Board, while the Chief Executive Officer is delegated with the authorities to manage the daily business of the Group in all aspects effectively.

DIRECTORS' CONTINUOUS PROFESSIONAL DEVELOPMENT

Directors are encouraged to participate in continuous professional development to develop and refresh their knowledge and skills. The Company continuously updates the Directors on the Group's business and the latest developments regarding the Listing Rules and other applicable regulatory requirements, to ensure compliance and enhance their awareness of good corporate governance practices.

Below is a summary of the training the Directors had received during the year under review:

Name of Director	Roles, functions and responsibilities of the board, committees, directors and board effectiveness			Listed issuers' obligations and directors' duties			Corporate governance and ESG matters			Risk management and internal controls			Industry developments, business trends and strategies			Total no. of hours
	Internal (Note 1)	External (Note 2)	Self (Note 3)	Internal (Note 1)	External (Note 2)	Self (Note 3)	Internal (Note 1)	External (Note 2)	Self (Note 3)	Internal (Note 1)	External (Note 2)	Self (Note 3)	Internal (Note 1)	External (Note 2)	Self (Note 3)
Mr. Lau Hing Tat Patrick (Chairman)	4	-	-	2	-	-	6	6	-	2	2	-	8	10	7	47
Mr. Chan Yick Yan Andross (Chief Executive Officer)	-	-	4	-	-	9	-	-	8	-	-	4	-	-	15	40
Mr. Qiu Bin	2	-	-	2	-	-	2	-	-	2	-	-	2	-	-	10
Mr. Zhao Aiyong^{4}	-	-	-	-	-	-	-	-	-	-	-	-	-	-	-	-
Mr. Ma Lida	-	-	6	-	-	6	-	-	6	-	-	6	-	-	6	30
Mr. Liu Kwong Sang	1	2	2	2	2	1	1	2	2	2	2	1	4	12	4	40
Mr. Ren Chunyu^{5}	-	-	-	-	-	-	-	-	-	-	-	-	-	-	-	-
Mr. Wang Yuncai^{3}	-	-	-	-	-	-	-	-	-	-	-	-	-	-	-	-
Ms. Tam Ip Fung Sin^{2}	-	-	-	-	-	-	-	-	-	-	-	-	-	-	-	-
Mr. Tang Zhaodong^{6}	-	-	-	-	-	-	-	-	-	-	-	-	-	-	-	-

Notes:
1. Internal training via business briefing by management
2. External training by consultants or legal professionals
3. Self-study via reading of guidance materials, newsletters, consultation papers, regulators' reports and press releases
4. Not applicable since Mr. Zhou Aiyong was appointed on 25 March 2026

Mr. Zhou is subject to Rule 3.09H of the Listing Rules, under which he is required to complete 24 hours of continuous professional development (CPD) within the first 18 months of his appointment.

Not applicable since Mr. Ren Chunyu was appointed on 25 March 2026

Mr. Ren is subject to Rule 3.09H of the Listing Rules, under which he is required to complete 12 hours of continuous professional development (CPD) within the first 18 months of his appointment.

Not applicable since Mr. Wang Yuncai resigned on 5 February 2026
Not applicable since Ms. Tam Ip Fung Sin passed away on 10 January 2026
Not applicable since Mr. Tang Zhaodong retired on 27 June 2025

BOARD'S PERFORMANCE EVALUATION

During the reporting period, no board performance evaluation was conducted pursuant to CG Code B.1.4. The Board will carry out such evaluation in due course.

BOARD COMMITTEES

The Board has established specific committees, namely the Audit Committee, the Remuneration Committee and the Nomination Committee, with written terms of reference which are available for viewing on the website of the Company and the Stock Exchange to assist them in the effective implementation of their functions. Specific responsibilities have been delegated to the above committees.

Audit Committee

The Company has established the Audit Committee on 3 June 2014 with written terms of reference in compliance with Rule 3.21 of the Listing Rules and the CG Code. As of 31 December 2025, the Audit Committee consists of three independent non-executive directors, namely Mr. Liu Kwong Sang (Chairman), Ms. Tam Ip Fong Sin and Mr. Wang Yuncai. Following the passing away of Ms. Tam Ip Fong Sin on 10 January 2026 and the resignation of Mr. Wang Yuncai on 5 February 2026, the composition of the Audit Committee did not meet the requirement of Rule 3.21 of the Listing Rules. The Board noted that the Company still does not meet the Rule 3.21 of the Listing Rules after the appointment of Mr. Ren Chunyu as a member of the Audit Committee on 25 March 2026. The Audit Committee currently comprises two independent non-executive directors, namely Mr. Liu Kwong Sang (Chairman) and Mr. Ren Chunyu.

The principal responsibilities of the Audit Committee are to review and supervise the financial reporting process and internal control system of the Group. These include reviewing the Group's interim and annual reports. They also make recommendations to the Board on the appointment and removal of external auditor, review the risks facing the Company and to oversee management in the design, implementation and monitoring of the risk management system.

During the year ended 31 December 2025, the Audit Committee held three meetings to, among others, review the audit plan and approve the audit fee for the year ended 31 December 2025, reviewed the Group's internal control, the final results and annual report of the Group for the year ended 31 December 2024 and the interim results and interim report of the Group for the six months ended 30 June 2025, as well as other reports prepared by the external auditor covering major findings in the course of its audit/review before submission to the Board for approval.

Remuneration Committee

The Company has established the Remuneration Committee on 3 June 2014 with written terms of reference in compliance with Rule 3.25 of the Listing Rules and the CG Code. As of 31 December 2025, the Remuneration Committee consists of two independent non-executive directors, namely Mr. Wang Yuncai and Ms. Tam Ip Fong Sin (ex-Chairlady). Following the passing away of Ms. Tam Ip Fong Sin on 10 January 2026 and the resignation of Mr. Wang Yuncai on 5 February 2026, the composition of the Remuneration Committee did not meet the requirement of Rule 3.25 of the Listing Rules. Such non-compliance was remedied after the appointment of Mr. Liu Kwong Sang as the chairman of the Remuneration Committee on 14 January 2026 and the appointment of Mr. Ren Chunyu as a member of the Remuneration Committee on 25 March 2026. The Remuneration Committee currently comprises two independent non-executive directors, namely Mr. Liu Kwong Sang (Chairman) and Mr. Ren Chunyu.

The principal responsibilities of the Remuneration Committee are to review and make recommendations to the Board on the overall remuneration structure and policy as well as the specific remuneration packages for the Directors and senior management and on the establishment of a formal and transparent process for developing such remuneration policy. No director will take part in any discussion on his own remuneration.

The Company's objective for its remuneration policy is to maintain fair and competitive packages based on business requirements and industry practice. In order to determine the level of remuneration and fees paid to members of the Board, market rates and factors such as each director's workload, performance, responsibility, job complexity and the Group's performance are taken into account.

During the year ended 31 December 2025, the Remuneration Committee held one meeting to, among others, discuss and approve for recommendation to the Board the salary adjustments of Directors and senior management for the year ended 31 December 2025.

Nomination Committee

The Company has established the Nomination Committee on 3 June 2014 with written terms of reference in compliance with the Rule 3.27A of the Listing Rules and CG Code. As of 31 December 2025, the Nomination Committee consists of two independent non-executive directors, namely Ms. Tam Ip Fong Sin (ex-Chairlady) and Mr. Wang Yuncai. Following the passing away of Ms. Tam Ip Fong Sin on 10 January 2026 and the resignation of Mr. Wang Yuncai on 5 February 2026, the composition of the Nomination Committee did not meet the requirement of Rule 3.27A of the Listing Rules. Such non-compliance was remedied after the appointment of Mr. Liu Kwong Sang as the chairman of the Nomination Committee on 14 January 2026 and the appointment of Mr. Ren Chunyu as a member of the Nomination Committee on 25 March 2026. The Nomination Committee currently comprises two independent non-executive directors, namely Mr. Liu Kwong Sang (Chairman) and Mr. Ren Chunyu.

The Nomination Committee is principally responsible for reviewing the structure, size and composition of the Board, identifying individuals suitably qualified to become Board members, assessing the independence of independent non-executive Directors and making recommendations to the Board on the appointment and re-appointment of Directors and succession planning for Directors.

The Company has adopted the Board Diversity Policy and recognizes and embraces the benefits of having Board diversity to enhance the quality of its performance in compliance with the CG Code. When identifying suitable candidates for directorship, the Nomination Committee will carry out the selection process by making reference to the skills, experience, education background, professional knowledge, personal integrity and time commitments of the proposed candidates, and also the Company's needs and other relevant statutory requirements and regulations. Qualified candidates will then be recommended to the Board for approval.

During the year ended 31 December 2025, one meeting was held by the Nomination Committee to recommend the appointment of the Directors, to review the size, structure, composition as well as diversity of the Board, to assess the independence of independent non-executive Directors and to consider the re-election of the Directors. The Nomination Committee has also reviewed the Board Diversity Policy to ensure its effectiveness and considered that the Group has achieved the objectives of the Board Diversity Policy during the year under review.

The Nomination Committee has also assessed each Director's time commitment and contribution to the Board during the year, as well as their ability to discharge their responsibilities effectively. In conducting the assessment, the Committee has taken into account each Director's professional qualifications and work experience, their existing directorships, and other significant external commitments, as well as other relevant factors including the Director's character, integrity, independence and experience. The Nomination Committee is satisfied that all Directors have devoted sufficient time to the Company's affairs and have properly discharged their duties.

Corporate governance function

All members of the Board are responsible for performing the corporate governance functions which is in compliance with paragraph A.2.1 of the CG code. The Board will review the policy of the corporate governance and the corporate governance report of the Company annually.

AUDITORS' REMUNERATION

The fees charged by the Group's external auditors in respect of the audit and non-audit services to the Group, as disclosed in note 6 to the financial statements, during the year is summarized as below:

Services rendered	Fees paid/payable
	2025	2024
	HK$'000	HK$'000
Audit services	2,485	3,932
Non-audit services (i.e. tax services, incorporation, certification, etc.)	299	905
Total	2,784	4,837

RISK MANAGEMENT AND INTERNAL CONTROL

The Directors acknowledge that they are responsible for the Group's risk management and internal controls systems. During the year, the Directors have reviewed and considered the Group has complied with D.2 of the CG Code by establishing appropriate and effective risk management and internal control systems. Management is responsible for the design, implementation and monitoring of such systems, while the Board oversees management in performing its duties on an ongoing basis. Main features of the risk management and internal control systems are described in the sections below:

Risk management system

The Group adopts a risk management system which manages the risk associated with its business and operations. The system comprises the following phases:

Identification: Identify ownership of risks, business objectives and risks that could affect the achievement of objectives.
Evaluation: Analyze the likelihood and impact of risks and evaluate the risk portfolio accordingly.
Management: Consider the risk responses, ensure effective communication to the Board and on-going monitor the residual risks.

Principal risks and uncertainties

The directors are aware that the Group is exposed to various risks, including some which are specific to the Group or the industries in which the Group operates as well as others that are common to most if not all other businesses. The directors have established a policy to ensure that significant risks which may adversely affect the Group's performance and ability to deliver on its strategies, as well as those which may present positive opportunities, are identified, reported, monitored, and managed on a continuous basis.

The following are key risks that are considered to be of most significance to the Group at this time. They have the potential to adversely and/or materially affect the Group's businesses, financial conditions, results of operations and growth prospects if they are not managed effectively. These key risks are by no means exhaustive or comprehensive, and there may be other risks, in addition to those shown below, which are not known to the Group or which may not be material now but could turn out to be material in the future.

Principal Risks	Risk Titles	Risk Descriptions	Risk Mitigations
Market risk	Market condition	The slowdown of real estate development in China would affect the demand for our landscape architecture design services.	The Group has to continue its business strategy to strengthen penetration of different geographical markets and thereby to reduce its dependency and further investment on the specific markets.
Business and strategic risk	Innovation and product development	If the Group fails to keep updated of important technological changes in the industry, the Group's business could be affected.	The Group has made continuous efforts on research and development and monitored technological innovations in the industry to keep up the Group's competitiveness in the Graphene business.
	Client management	In the event that the Group is unable to retain the clients or expand the client base, the overall business may be adversely affected.	Business development team and project team maintain business relationship with existing clients and keep the clients informed of the recent developments of the Group to strengthen the brand and reputation through quality service. Project directors conduct ongoing monitoring on every contract to ensure the deliverables are up to standard and timely followed.
Credit risk	Accounts receivables management	If the progress payments are not settled by the client on time and in full, the accounts receivables will be long outstanding. This situation may increase the Group's credit risk and liquidity risk.	Regular meetings are held to discuss client's payment status. For those long outstanding accounts receivables, written payment reminder will be issued to the client and legal advices will be sought.

Principal Risks	Risk Titles	Risk Descriptions	Risk Mitigations
Liquidity risk	Debt settlement	The risk of being unable to settle obligations as they fall due.	The Directors will closely monitor the liquidity and cash flow position of the Group to fulfill all the debt obligations of the Company.
Legal and compliance risk	Local and international law and regulatory requirements	The ordinary shares of the Company is listed in Hong Kong and its ADR listed in the United States, and operates in Hong Kong and the PRC. It may be exposed to different and changing government policies, political, social, legal and regulatory requirements.	The Group has internal procedures to monitor legal and compliance matters for daily operations and will seek internal and external legal advice as and where appropriate for new business initiatives.
Operational risk	Cost management	Business operations and financial positions may be affected if the cost is not controlled effectively.	Project plan is prepared by project team. Management will regularly monitor the project schedule and evaluate the reason of any excessive time cost spent on particular project. If gross profit margin is lower than required, meetings will be held to discuss the reasons behind.
	Sub-consultant management	If there is no proper sub-consultant selection procedure, an inappropriate sub-consultant would be selected in an unfair and untransparent manner.	A proper selection and quotation comparison procedure is formulated and implemented in the event that the service of sub-consultant is involved.
IT risk	Cyber security	The Group has diversified into different business segments across cities in Hong Kong and China. The increased application of information technology in the Group's businesses, the threats to IT systems including cyberattacks are imminent and present a real challenge to the Group's business operations.	Our Group has implemented a set of comprehensive IT security policies and procedures to address those threats and mitigate the potential loss of the Group's assets and operations, reduce the impact on our business and resume our business operations as soon as practicable.

Details about the Group's financial risk management are set out in note 44 to the consolidated financial statements in this annual report.

Internal control system

The Company has in place an internal control system which is compatible with the Committee of Sponsoring Organizations of the Treadway Commission ("COSO") 2013 framework. The framework enables the Group to achieve objectives regarding effectiveness and efficiency of operations, reliability of financial reporting and compliance with applicable laws and regulations. The components of the framework are shown as follow:

Control Environment: A set of standards, processes and structures that provide the basis for carrying out internal control across the Group.
Risk Assessment: A dynamic and iterative process for identifying and analyzing risks to achieve the Group's objectives, forming a basis for determining how risks should be managed.
Control Activities: Action established by policies and procedures to help ensure that management directives to mitigate risks to the achievement of objectives are carried out.
Information and Communication: Internal and external communication to provide the Group with the information needed to carry out day-to-day controls.
Monitoring: Ongoing and separate evaluations to ascertain whether each component of internal control is present and functioning.

In order to enhance the Group's system of handling inside information, and to ensure the truthfulness, accuracy, completeness and timeliness of its public disclosures, the Group also adopts and implements an inside information policy and procedures. Certain reasonable measures have been taken from time to time to ensure that proper safeguards exist to prevent a breach of a disclosure requirement in relation to the Group, which include:

The access of information is restricted to a limited number of employees on a need-to-know basis. Employees who are in possession of inside information are fully conversant with their obligations to preserve confidentiality.
Confidentiality agreements are in place when the Group enters into significant negotiations.
The executive Directors are designated persons who speak on behalf of the Company when communicating with external parties such as the media, analysts or investors.

During the year ended 31 December 2025, the Company engaged Motions Capital CPA & Co. ("Motions"), an independent party not related to the Group, to conduct an independent risk management and internal control review (the "Review") on the Company's certain internal systems and controls for the period form 1 January 2025 to 31 December 2025. Motions did not identify any material findings in the Review. Certain immaterial findings are summarized below:

Control procedures	Findings	Recommendation	Management response
Compliance with tax regulations	A timing difference between the tax invoice date and the actual dispatch date	It is recommended that the voucher should be reviewed by manager and approved by management with signature as evidence	The Company agreed with finding and will follow the recommendation
Credit Policy	Long-aged trade receivables	It is recommended that regularly generate and review an aging schedule of trade receivables to identify accounts that are past due. Contact customers with long-aged receivables via reminders	The Company agreed with finding and will follow the recommendation
Proper documentation is required from customers to confirm the delivery of goods	Goods delivered to customer and possible cannot obtain an official signed acknowledgement	It is recommended that the customers sign and stamp a receipt document with the company's official seal whenever possible	The Company agreed with finding and will follow the recommendation

Effectiveness of the risk management and internal control systems

The Board is responsible for the risk management and internal control systems of the Group and ensuring review of the effectiveness of these systems has been conducted annually. Several areas have been considered during the Board's review, which include but not limited to (i) the changes in the nature and extent of significant risks since the last annual review, and the Group's ability to respond to changes in its business and the external environment; (ii) the scope and quality of management's ongoing monitoring of risks and of the internal control systems.

The Board, through its review and the review made by internal audit function and Audit Committee, concluded that the processes for financial reporting, regulation compliance, risk management and internal control systems were effective and adequate. Such systems, however, are designed to manage rather than eliminate the risk of failure to achieve business objectives, and can only provide reasonable and not absolute assurance against material misstatement or loss. It is also considered that the resources, staff qualifications and experience of relevant staff were adequate and the training programs and budget provided were sufficient.

The Board concluded that no significant changes during the reporting period in the Company's assessment of risks (including ESG risks) and the risk management and internal control systems.

Internal auditors

The Group has an internal audit function, which is consisted of professional staff with relevant expertise. The internal audit function is independent of the Group's daily operation and carries out appraisal of the risk management and internal control systems by conducting interviews, walkthroughs and tests of operating effectiveness.

An internal audit plan has been approved by the Board. According to the established plan, review of the risk management and internal control systems is conducted annually and the results are reported to the Audit Committee and the Board afterwards.

COMPANY SECRETARY

The company secretary is a full-time employee of the Company. During the year under review, the company secretary has duly complied with the relevant professional training requirement under Rule 3.29 of the Listing Rules.

SHAREHOLDERS' RIGHTS

Procedures for directing shareholders' enquiries to the Board

Shareholders should direct their enquiries about their shareholdings to the Company's branch share registrar and transfer office in Hong Kong, Tricor Investor Services Limited at 17/F, Far East Finance Centre, 16 Harcourt Road, Hong Kong.

Other shareholders' enquiries can be directed in writing with contact details (including name, address, telephone number and/or email address) to the Company's principal place of business in Hong Kong at 11/F, COFCO Tower, 262 Gloucester Road, Causeway Bay, Hong Kong for the attention of the company secretary.

Procedures for convening an extraordinary general meeting by shareholders

Pursuant to Article 64 of the Company's Articles, any one or more shareholders holding at the date of deposit of the requisition not less than one-tenth of the paid up capital of the Company carrying the right of voting at general meetings of the Company shall at all times have the right, by written requisition to the Board or the Secretary of the Company, to require an extraordinary general meeting to be called by the Board for the transaction of any business specified in such requisition; and such meeting shall be held within two (2) months after the deposit of such requisition. If within twenty-one (21) days of such deposit the Board fails to proceed to convene such meeting the requisitionist(s) himself (themselves) may do so in the same manner, and all reasonable expenses incurred by the requisitionist(s) as a result of the failure of the Board shall be reimbursed to the requisitionist(s) by the Company.

Procedures for putting forward proposals at shareholders' meetings

Shareholders are requested to follow Article 64 of the Articles for including a resolution at an extraordinary general meeting. The requirements and procedures are set out above in the paragraph headed "Procedures for convening an extraordinary meeting by shareholders".

Pursuant to Article 113 of the Articles, no person (other than a retiring Director) shall be eligible for election to the office of Director at any general meeting unless a notice in writing of the intention to propose that person for election as a Director and notice in writing by that person of his willingness to be elected shall have been lodged at the Head Office or at the Registration Office no earlier than the day after the dispatch of the notice of the general meeting appointed for such election and end no later than 7 days prior to the date of such general meeting and the minimum length of the period during which such notices to the Company may be given will be at least 7 days.

Procedures for proposing a person for election as a director

If a shareholder wishes to propose a person for election as a director, a notice in writing of the intention to propose and notice in writing by that person of his willingness to be elected shall have been lodged at the head office or at the registration office.

INVESTOR RELATIONS, SHAREHOLDERS ENGAGEMENT AND COMMUNICATION

The Company is committed to promoting and maintaining effective communication with the shareholders (both individual and institutional) and other stakeholders. The Company encourages two-way communications with institutional and retail investors, as well as financial and industry analysts. Extensive information on the Company's activities is provided in the annual and interim reports and circulars which are sent to the shareholders and are also available on the websites of the Company and the Stock Exchange.

Shareholders are encouraged to attend the forthcoming annual general meeting of the Company for which at least 20 clear business days' notice is given. At the meeting, directors will be available to answer questions on the Group's business and external auditor will be available to answer questions about the conduct of the audit, the preparation and content of the auditor's reports, the accounting policies and the auditor independence.

Shareholder engagement and communications

Corporate communications
- The Company is committed to timely dissemination of corporate communications to enable shareholders and other stakeholders to keep well informed of the Group's business and developments.
- The Company's website serves as the designated platform for the publication of announcements, notices and other corporate communications.

Dividend information
- The Company's dividend policy is set out in the paragraph headed "Dividend Policy" in this Corporate Governance Report.

General meetings
- Procedures for shareholders to participate in the general meeting are set out in the paragraph headed "Shareholders' Rights" in this Corporate Governance Report.

Policies and guidelines
- The Company has policies to ensure shareholders and investors are provided with ready, equal, and timely access to information about the Company (including its financial performance, strategic goals and plans, material developments, governance and risk profile). The policy sets out various communication channels including, among others, the Company's website, the Company's email and the Company's social media account, through which shareholders may communicate with and provide feedback to the Company from time to time. The policy is regularly reviewed to ensure its effectiveness.

CONSTITUTIONAL DOCUMENTS

During the year, there is no significant change in the Company's constitutional documents. The Company's Amended and Restated Memorandum and Articles of Association are available on both the Company's and the Stock Exchange's websites.

REPORT OF THE DIRECTORS

The Directors are pleased to present to the Shareholders this annual report and the audited consolidated financial statements for the year ended 31 December 2025.

PRINCIPAL PLACE OF BUSINESS

The Company was incorporated in the Cayman Islands and has its registered office at Windward 3, Regatta Office Park, P.O. Box 1350, Grand Cayman, KY1-1108, Cayman Islands. The Group's principal place of business in Hong Kong is 11/F, COFCO Tower, 262 Gloucester Road, Causeway Bay, Hong Kong.

PRINCIPAL ACTIVITIES

The principal activities of the Group are development and processing of graphene products, in particular, graphite anode material for lithium-ion batteries used in electric vehicles and other applications. The Group is also engaged in landscape architecture design businesses.

BUSINESS REVIEW

A fair review of the business of the Group during the year and particulars of important events affecting the Group that have occurred since the end of the financial year 2025 as well as a discussion on the Group's future business development are provided in the "Chairman's Statement" and the "Management's Discussion and Analysis" throughout this annual report. An analysis of the Group's performance for the year by operating segment is set out in note 4 to the consolidated financial statements in this annual report. The aforementioned discussions form part of this Directors' report.

Description of the principal risks and uncertainties facing the Group can be found in the section headed "Principal Risks and Uncertainties" under the Corporate Governance Report in this annual report. Details about the Group's financial risk management are set out in note 43 to the consolidated financial statements in this annual report.

COMPLIANCE WITH THE RELEVANT LAWS AND REGULATIONS

The Group recognized the importance of compliance with regulatory requirements and the risk of non-compliance with the applicable rules and regulations. To the best knowledge of the Directors of the Company, the Group has complied in material respects with the relevant laws and regulations that have a significant impact on the business and operation of the Group during the year ended 31 December 2025.

Environmental policies and performance

The Group is committed to the long-term sustainability of the environment and communities in which it operates. As a responsible corporation, to the best knowledge of the Directors of the Company, the Group has complied with all relevant laws and regulations regarding environmental protection during the year ended 31 December 2025. Details are set out in the Environment, Social and Governance Report.

REPORT OF THE DIRECTORS

Key relationships with employees, customers and suppliers

Human resources are one of the most valuable assets of the Group. The Group also offers competitive remuneration packages to our employees. More details of the Group's employment and labour practices are set out in the section headed Human Resources and Employees' Remuneration, and the Environmental, Social and Governance Report of this annual report.

The Group treasured to maintain a good relationship with its clients. We are committed to offer a broad and diverse range of inspiring, value-for-money, good quality services and products to our clients.

The Group maintains a fair, safe and ethical approach in its day-to-day operation towards its numerous and diversified contractors and suppliers. To comply with the laws and regulations of its operating countries intensity, the Group has established stringent internal controls to procuring goods and services through fair and unbiased tender process. The selection of subcontractors and suppliers will be based on competitive pricing, specifications and standards, product and service quality as well as service support.

Particulars of important events affecting the Group that have occurred since the end of the financial year 2025, if any, is set out in the above sections and the notes to the consolidated financial statements in this annual report. The prospects of the Group's business is discussed throughout this annual report including in the "Chairman's Statement" of this annual report. Throughout 2025, there was no incidence of non-compliance with the relevant laws and regulations that have a significant impact on the Group's business.

SUBSIDIARIES

Details of the Company's principal subsidiaries as at 31 December 2025 are set out in note 1 to the consolidated financial statements in this annual report which, in the opinion of the Directors, materially contribute to the net income of the Group or hold a material portion of the assets or liabilities of the Group. Unless otherwise stated, the principal place of operation of each company is the same as its place of incorporation.

RESULTS AND APPROPRIATIONS

The results of the Group for the year ended 31 December 2025 are set out in the consolidated statement of profit and loss. The Board does not recommend the payment of final dividend for the year ended 31 December 2025. A summary of the published results and assets and liabilities of the Group for the last five financial years is set out on the last page of this annual report.

CLOSURE OF REGISTER OF MEMBERS FOR AGM

The register of members of the Company will be closed from Wednesday, 24 June 2026 to Monday, 29 June 2026, both days inclusive, for the purpose of determining the entitlement to attend and vote at the annual general meeting ("AGM") scheduled to be held on Monday, 29 June 2026. In order to be eligible to attend and vote at the AGM, all transfer forms accompanied by relevant share certificates must be lodged with the Company's Branch Share Registrar in Hong Kong, Tricor Investor Services Limited at 17/F, Far East Finance Centre, 16 Harcourt Road, Hong Kong ("Branch Share Registrar") not later than 4:30 p.m. on Tuesday, 23 June 2026.

REPORT OF THE DIRECTORS

SIGNIFICANT INVESTMENTS HELD, MATERIAL ACQUISITIONS AND DISPOSALS OF SUBSIDIARIES, AND FUTURE PLANS FOR MATERIAL INVESTMENTS OR CAPITAL ASSETS

Save for those disclosed in this annual report, there were no other significant investments held, nor were there material acquisitions or disposals of subsidiaries during the year under review. Apart from those disclosed in this annual report, there was no plan recognized by the Board for other material investments or additions of capital assets at the date of this annual report.

EQUITY-LINKED AGREEMENTS

Save as disclosed in this annual report under the paragraphs headed (i) "Issue of consideration shares" in the section of management discussion and analysis, (ii) "Share Option Scheme" and "2023 Share Award Scheme" in the section of Report of the Directors of this annual report, (iii) "Investments in Joint Ventures" in Note 16, (iv) "Convertible Notes" in Note 32; and (v) "Warrants" in Note 34 of the Financial Statements, no equity linked agreements that will or may result in the Company issuing shares or that require the Company to enter into any agreements that will or may result in the Company issuing shares were entered into by the Company during the year ended 31 December 2025 or subsisted at the end of the year ended 31 December 2025.

DONATIONS

During the year ended 31 December 2025, the Group made HK$10,000 charitable donations.

PROPERTY AND EQUIPMENT

Details of movements in the property and equipment of the Group during the year are set out in note 13 to the consolidated financial statements in this annual report.

BANK AND OTHER BORROWINGS

Details of interest-bearing borrowings of the Group as at 31 December 2025 are set out in note 30 to the consolidated financial statements in this annual report.

SHARE CAPITAL AND SHARE AWARD SCHEMES

Details of movements in the Company's share capital and share award schemes during the year are set out in note 34 to the consolidated financial statements in this annual report.

PRE-EMPTIVE RIGHTS

There are no provisions for pre-emptive rights under the Articles or the laws of the Cayman Islands, being the jurisdiction in which the Company was incorporated, which would oblige the Company to offer new shares on a pro-rata basis to existing shareholders of the Company unless otherwise required by the Stock Exchange.

PERMITTED INDEMNITY PROVISION

A permitted indemnity provision (as defined in section 469 of the Hong Kong Companies Ordinance) for the benefit of all the former and existing directors of the Company is currently in force and was in force throughout the year of 2025 and as of the date of this Directors' report.

PURCHASE, SALE OR REDEMPTION OF THE COMPANY'S LISTED SECURITIES

During the year ended 31 December 2025, neither the Company nor any of its subsidiaries purchased, sold or redeemed any of the Company's listed securities.

TAX RELIEF

The Company is not aware of any relief from taxation available to the Shareholders of the Company by reason of their holding of the shares of the Company.

RESERVES

At 31 December 2025, the Company had an accumulated deficit of HK$44 million and no reserves available for distribution in accordance with the Companies Law, Chapter 22 (as amended) of the Cayman Islands.

Details of movements in the reserves of the Company and the Group during the year are set out in note 45 to the consolidated financial statements and in the consolidated statement of changes in equity respectively in this annual report.

FIVE-YEAR FINANCIAL SUMMARY

A summary of the results and assets and liabilities of the Group for the past five financial years is set out on the last page of this annual report.

MAJOR CUSTOMERS AND SUPPLIERS

During the year ended 31 December 2025, the percentage of purchases attributable to the largest supplier and the 5 largest suppliers combined accounted for approximately 59% and 88% of the total purchases of the Group respectively. The percentage of revenue from sales of goods or rendering of services attributable to the largest customer and the 5 largest customers combined accounted for approximately 36% and 55% of the total revenue of the Group respectively.

None of the Directors, their close associates or any shareholders (which to the knowledge of the Directors own more than 5% of the Company's issued share capital) had interests in the Group's five largest customers or suppliers.

REPORT OF THE DIRECTORS

DIRECTORS

The Directors of the Company during the year and up to the date of this report were:

Executive Directors

Mr. Lau Hing Tat Patrick (Chairman)
Mr. Chan Yick Yan Andross (Chief Executive Officer)
Mr. Qiu Bin
Mr. Zhao Aiyong (appointed on 25 March 2026)

Non-executive Director

Mr. Ma Lida

Independent non-executive Directors

Mr. Liu Kwong Sang
Mr. Ren Chunyu (appointed on 25 March 2026)

Pursuant to Article 108(a), Mr. Chan Yick Yan Andross, Mr. Zhao Aiyong and Mr. Ren Chunyu will retire by rotation at the forthcoming AGM and, being eligible, offer themselves for re-election.

The Company has received from each of its independent non-executive Directors an annual confirmation of their independence from the Group. Based on such confirmations, the Company considers that each of such Directors to be independent from the Group.

The biographical details of current Directors and senior management are disclosed in the section headed "Biographies of Directors and Senior Management" of this annual report.

DIRECTORS' SERVICE CONTRACT

None of the Directors of the Company who are proposed for re-election at the forthcoming annual general meeting has a service contract with the Company not terminable by the Company within one year without payment of compensation (other than statutory compensation).

DIRECTORS' INTERESTS IN TRANSACTIONS, ARRANGEMENTS AND CONTRACTS OF SIGNIFICANCE

Details of connected transactions and continuing connected transactions are disclosed in this Directors' report, and related party transactions are set out in note 40 to the consolidated financial statements in this annual report.

Save for the above, there were no transactions, arrangements or contracts that are significant in relation to the businesses of the Company and its subsidiaries to which the Company or any of its subsidiary was a party and in which a Director or his/her connected entity had a material interest, whether directly or indirectly, subsisted at the end of the year or at any time during the year.

MANAGEMENT CONTRACTS

No contracts concerning the management and administration of the whole or any substantial part of the business of the Group (other than contracts of service with any Director or any person engaged in full time employment of the Group) were entered into or existed during the year.

DIRECTORS' INTERESTS IN COMPETING INTERESTS

The Directors were not aware of any business or interest of the Directors and their respective associates (as defined under the Listing Rules) that compete or may compete with the business of the Group and any other conflict of interest which any such person has or may have with the Group during the year ended 31 December 2025.

DEED OF NON-COMPETITION

Each of the controlling shareholders has confirmed to the Company of his/its compliance with the non-competition undertakings provided to the Company under the deed of non-competition (as defined in the prospectus of the Company dated 12 June 2014). The independent non-executive Directors have reviewed the status of compliance and confirmed that all the undertakings under the deed of non-competition have been complied with by the controlling shareholders.

DIRECTORS' REMUNERATION

Details of the Directors emoluments are set out in note 8 to the consolidated financial statements in this annual report. The Directors' remunerations are determined subject to the recommendations of the Remuneration Committee and the Board's approval with reference to Directors' duties, responsibilities and performance and the results of the Group.

DISCLOSURE OF INTERESTS

Directors' and chief executive's interests and short positions in shares, underlying shares and debentures of the Company and its associated corporations

As at 31 December 2025, the interests and short positions of the Directors and chief executive of the Company in the shares, underlying shares and debentures of the Company or any of the associated corporations (within the meaning of Part XV of the SFO) which (i) are required to be notified to the Company and the Stock Exchange pursuant to Divisions 7 and 8 of Part XV of the SFO (including interests and short positions which they are taken or deemed to have under such provisions of the SFO); or (ii) are required, pursuant to section 352 of the SFO, to be entered in the register as referred to therein; or (iii) are required, pursuant to the Model Code, to be notified to the Company and the Stock Exchange are as follows:

Long position in the shares and underlying shares

Name of Director	Capacity	Number of Shares				Number of underlying Shares held under the Share Option Scheme	Total	Approximate % of shareholding
		Personal interest	Family interest	Corporate interest	Other interest
Chan Yick Yan Andross	Beneficial owner, interest of controlled corporation	978,800	-	33,743,377^{1}	-	-	34,722,177	3.69%
Lau Hing Tat Patrick	Beneficial owner, interest of spouse, interest of controlled corporation	4,744,400	-	24,200,689^{2}	-	-	28,945,089	3.07%
Qiu Bin	Beneficial owner	136,000	-	-	-	-	136,000	0.01%

Notes:
1. Such interests were held by CYY Holdings Limited, a company incorporated in the British Virgin Islands, of which Mr. Chan Yick Yan Andross was interested in the entire issued share capital.
2. Such interests were held by LSBJ Holdings Limited, a company incorporated in the British Virgin Islands, of which Mr. Lau Hing Tat Patrick was interested in the entire issued share capital.

Long position in the shares of associated corporations of the Company

Name of Director	Name of associated corporation	Nature of interest	Number of shares and class of shares held
Chan Yick Yan Andross	Earthasia (International) Limited	Beneficial owner	50
(ordinary shares)	0.98%
Lau Hing Tat Patrick	Earthasia (International) Limited	Beneficial owner	50
(ordinary shares)	0.98%

Saved as disclosed above, as at 31 December 2025, none of the Directors and the chief executive of the Company had any interests or short positions in the shares, underlying shares or debentures of the Company or any of its associated corporations (within the meaning of Part XV of the SFO), which would have to be notified to the Company and the Stock Exchange pursuant to Divisions 7 and 8 of Part XV of the SFO (including interests or short positions which they have taken or deemed to have taken under such provisions of the SFO), or which were required, pursuant to Section 352 of the SFO, or which were required to be notified to the Company and the Stock Exchange pursuant to the Model Code.

Substantial shareholders’ interests and short positions in shares and underlying shares

As at 31 December 2025, so far as the Directors and chief executive of the Company are aware, other than the interests of the Directors and chief executive of the Company as disclosed in the section titled “Directors’ and chief executive’s interests and short positions in shares, underlying shares and debentures of the Company and its associated corporations”, the following persons had interests or short positions in the shares or underlying shares of the Company which would fall to be disclosed to the Company under the provisions of Divisions 2 and 3 of Part XV of the SFO, or which were recorded in the register required to be kept by the Company under Section 336 of the SFO, or as otherwise notified to the Company and the SEHK.

Long position in the shares

Name of shareholder	Capacity/nature of interest	Number of Shares	Approximate % of shareholding
Justin Yu	Beneficial owner	92,500,000	9.83%

SHARE OPTION SCHEME

A share option scheme (the "Share Option Scheme") was adopted by the Company on 3 June 2014 and became effective on 25 June 2014.

The Board has resolved to terminate the existing share option scheme on 9 January 2023.

All the options forfeited before expiry of the Share Option Scheme will be treated as lapsed options which will not be added back to the number of shares available to be issued under the Share Option Scheme.

The number of shares that may be issued in respect of the share options granted under the Share Option Scheme is 3,450,306 Shares, representing approximately 0.51% of the weighted average number of Shares issued and outstanding for the year ended 31 December 2025.

A summary of the movements of the outstanding share options during the year ended 31 December 2025 are as follows:

Grantees	Date of grant	Vesting date	Exercisable period	Exercise price (HK$)	Number of Share Options
					As at 1/1/2024	Granted	Exercised	Cancelled/ lapsed	Adjusted during the year	As at 31/12/2025
Employee(s)
Other employee(s)	28/1/2021	28/1/2021	28/1/2021 to 27/1/2026 (note 4)	1.82 (note 3)	9,677,692	-	-	-	(6,277,386) (note 3)	3,450,306

Notes:
1. The closing price of the Shares immediately before the date on which the options were granted was HK$0.6.
2. No share options were cancelled or lapsed during the year ended 31 December 2025.
3. As a result of the share consolidation and the completion of the rights issue, the exercise price was adjusted to HK$1.82 and the total number of shares which may be issued upon exercise of all outstanding share options has been adjusted to 3,450,306 shares, details please refer to the Company's announcement dated 24 March 2025 and circular dated 27 January 2025 and 21 May 2025.
4. The share options lapsed automatically upon the expiry of the exercise period on 27 January 2026.

Save as disclosed above, at no time during the period under review was the Company or its subsidiaries a party to any arrangement that enabled the Directors or any of their associates to acquire benefits by means of the acquisition of shares in, or debentures of, the Company or any other body corporate.

2023 SHARE AWARD SCHEME

On 9 January 2023, the Company terminated the existing Share Option Scheme and Share Award Scheme and adopted the 2023 Share Award Scheme with effective from 6 February 2023 in order to provide eligible participants with equity incentives.

Summary of the 2023 Share Award Scheme

Purposes
(i) to attract talents, suitable personnel and entities that are eligible participants; (ii) to award certain selected participants with awarded shares for accepting their appointments, employments or engagement by the Group and related entities; (iii) to recognize the contributions by certain selected participants and to provide them with incentives in order to retain them for the continual operation, development and growth of the Group and related entities; and (iv) to improve or create sense of connection and/or loyalty of certain selected participants to the Group and related entities
Qualifying participants
(i) Any director and employee of the Group or its subsidiaries; (ii) any director and employee of the related entities of the Group; and (iii) any person who provided services to the Group on a continuing or recurring basis
Maximum number of shares
Not exceeding 10% of the shares of the Company in issue as at the date of adoption of the 2023 Share Award Scheme (i.e. 68,349,307 shares)
Maximum entitlement of each participant
Not exceed 1% of the issued share capital of the Company from time to time
Vesting period
Subject to the terms and condition of the 2023 Share Award Scheme and the fulfillment of all vesting conditions to the vesting of the awarded Shares on such selected employee as specified in the grant notice and in accordance with the vesting schedule (if any) as set out therein
The amount payable on acceptance of the award
Nil
The remaining life of the scheme
It shall be valid and effect for a period of 10 years commencing on 6 February 2023

The Remuneration Committee has noted that the 2023 Share Award Scheme is intended to attract talents, suitable personnel and entities who will accept awarded shares as part of their remuneration, compensation or payment packages for the development and growth of the businesses of the Group; to award certain selected participants with award shares for accepting their appointments, employments or engagement by the Group; to provide certain participants with incentives in order to retain them for the continual operation, development and growth of the Group and to improve or create sense of connection and/or loyalty of certain selected participants to the Group. In recommending the grant of those share awards to the selected participants and determining the number of share awards and the relevant vesting periods for the share awards to be granted, the Remuneration Committee has considered factors such as (i) whether they were considered as talent and personnel that could contribute to the development and growth of the business of the Group that the Company would want to recruit with reference to their industry experience, tenure and roles with the Group; (ii) the remuneration of them including the grant of share awards as part of their remuneration packages as an incentive offered by the Group as compared with those offered by the industry peers in order to attract them in joining the Group; (iii) whether they would accept award shares as part of their remuneration or compensation package and as inducement for them to accept any offer for appointment; (iv) the business synergy and opportunities that might be brought by them to the Group; and (v) whether the share awards could further motivate their performances for the benefit of the businesses of the Group.

During the year ended 31 December 2025, there was no share awards granted under the 2023 Share Award Scheme.

During the year ended 31 December 2025, the number of unvested awards granted under the 2023 Share Award Scheme at the beginning and end of the reporting period was 500,000 and nil, respectively. No award granted under the 2023 Share Award Scheme was cancelled or lapsed in accordance with the terms of the 2023 Share Award Scheme during the reporting period.

During the year ended 31 December 2025, the equity-settled share-based compensation under the 2023 Share Award Scheme of HK$12,000 is included in employee benefit expenses.

Graphex Group Limited Annual Report 2025 59

REPORT OF THE DIRECTORS

Details of the 2023 Share Award Scheme are set out in the Company's announcement dated 9 January 2023, 12 June 2023, 24 July 2023 and 14 December 2023 and circular dated 12 January 2023.

The number of award shares available for grant under the 2023 Share Award Scheme at the beginning and end of the year ended 31 December 2025 were nil.

The number of shares that may be issued in respect of the share awards granted under the 2023 Share Award Scheme is 2,889,610 Shares, representing approximately 0.43% of the weighted average number of Shares issued and outstanding for the year ended 31 December 2025.

A summary of the movements of the share awards during the year ended 31 December 2025 are as follows:

Grantees	Date of Grant	Vesting date	Number of Unvested Awards					Actual issued/allotted
			As at 1/1/2025	Granted	Vested	Cancelled/lapsed	As at 31/12/2025	As at 31/12/2025
Employees^{(Note 2)}	12/6/2023	1/2/2024	500,000	-	500,000
(note 1)	-	-	-
			500,000	-	500,000	-	-	-

Notes:
1. The weighted average closing price of the shares immediately before the vesting date was HK$0.121 each share.
2. Employee Grantees refer to the employees of the Company or its subsidiaries.

EIL SHARE AWARD SCHEME

On 19 January 2021, Earthasia (International) Limited, an indirect wholly-owned subsidiary of the Company, also adopted a share award scheme (the "EIL Share Award Scheme"). Details of the EIL Share Award Scheme were set out in the announcements of the Company dated 19 January 2021. On 7 June 2023, the EIL Share Award Scheme was amended (the "Amendments"). Details of the Amendments were set out in the announcement of the Company dated 7 June 2023.

Summary of the EIL Share Award Scheme as amended

Purposes
to recognize the contributions made or to be made by certain participants and to provide them with incentives in order to retain them for the continual operation and development of EIL Group and to attract suitable personnel for further development of the EIL Group
Qualifying participants
(i) any individual being an employee (including without limitation any director) of any member of the EIL Group; (ii) any agent or consultant to the EIL Group; and (iii) any business or joint venture partner, contractor, any party providing advisory, consultancy, professional services to the EIL Group, or any other persons who have contributed or may contribute to the operation and development of the EIL Group
Maximum number of shares
Not exceeding 10% of the shares of EIL ("EIL Shares") in issue as at the date of adoption of the EIL Share Award Scheme (i.e. 500 EIL Shares). Pursuant to the Amendments, the EIL Share Award Scheme limit may be refreshed provided that the limit so refreshed must not exceed 10% of the number of shares in the issued share capital of EIL as at the date of approval of refreshment by the EIL Board.
Maximum entitlement of each participant
Pursuant to the Amendments, the maximum entitlement which may be awarded to a selected participant under the EIL Share Award Scheme, including (a) the EIL Shares issued and to be issued under the awards already granted or to be granted to such selected participant under the EIL Share Award Scheme (excluding any awards cancelled in accordance with the terms of the EIL Share Award Scheme); and (b) any EIL Shares issued and to be issued in respect of all other options and awards (if any) granted to such selected participant by EIL under any other share option and/or award scheme of EIL, in the 12-month period up to and including the date of such grant shall not exceed 1% of the number of shares in the issued share capital of EIL from time to time (the "1% EIL Individual Limit"). If required by the Listing Rules, any grant of awards by EIL that shall exceed the 1% EIL Individual Limit must be separately approved by an ordinary resolution in general meeting of EIL or the Company (as the Listing Rules may require) which such selected participant and his/her close associates (or associates if such selected participant is a connected person) abstaining from voting in compliance with the requirements of the Listing Rules (if any).

Vesting period
Subject to the terms and conditions of the EIL Share Award Scheme and the fulfillment of all vesting conditions to the vesting of the awarded EIL Shares on such participant as specified in the EIL Share Award Scheme and the grant notice.
The amount payable on acceptance of the award
Pursuant to the Amendments, the awarded EIL Shares shall be new EIL Shares to be allotted and issued by EIL to the selected participant at no consideration or at such other amount per awarded EIL Share and in such number and on and subject to such conditions (if any) as the EIL Board may in its absolute discretion determine.
The remaining life of the scheme
It shall be valid and effect for a period of 10 years commencing on 19 January 2021.

During the year ended 31 December 2025, no EIL share awards granted. No unvested EIL share awards were outstanding as at 31 December 2025.

During the year ended 31 December 2025, no equity-settled share-based compensation under the Scheme is included in employee benefit expenses.

The number of award EIL Shares available for grant under the EIL Share Award Scheme at the beginning and end of the year ended 31 December 2025 were 400 EIL Shares and 400 EIL Shares respectively.

During the year ended 31 December 2025, EIL was not a principal subsidiary of the Company within the meaning of Rule 17.14 of the Listing Rules.

CONNECTED TRANSACTIONS AND CONTINUING CONNECTED TRANSACTIONS

During the year ended 31 December 2025, the Group has not carried out any connected transactions that are not fully exempt from annual review and disclosure requirements under Chapter 14A of the Listing Rules.

RELATED PARTY TRANSACTIONS

Details of the related party transactions undertaken by the Group in its normal course of business are set out in note 40 to the consolidated financial statements in this annual report. The transactions do not fall under "Continuing Connected Transactions" in accordance with Chapter 14A of the Listing Rules. The Company confirmed that it has complied with the disclosure requirements in accordance with Chapter 14A of the Listing Rules.

SUFFICIENCY OF PUBLIC FLOAT

Based on the information that is publicly available to the Company and within the knowledge of the Directors, as at the date of this annual report, at least 25% of the Company's total issued share capital was held by public as required under the Listing Rules.

RePORT OF THE DIRECTORS

AUDITOR

The consolidated financial statements of the Company prepared in accordance with International Financial Reporting Standards for the year ended 31 December 2019 onwards have been audited by Crowe (HK) CPA Limited ("Crowe").

Crowe will retire and being eligible, offer themselves for re-election. A resolution for the reappointment of Crowe as auditor of the Company will be proposed at the forthcoming annual general meeting.

On behalf of the Board
Lau Hing Tat Patrick, JP
Chairman

Hong Kong, 31 March 2026

Graphex Group Limited Annual Report 2025 63

ENVIRONMENTAL, SOCIAL AND GOVERNANCE REPORT

1. ABOUT THIS REPORT

1.1. About the Group

Graphex Group Limited (“Graphex” or the “Company”) and its subsidiaries (collectively the “Group” or “we”, “our”) conduct graphene processing in the People’s Republic of China (“PRC”), as well as landscape architecture businesses in Hong Kong and PRC. Offices were established in Mainland China and Hong Kong for our professional landscape business. The Group has obtained dual qualifications in Category A of Specific Landscape Engineering Design Qualification in landscape architecture from the Ministry of Housing and Urban-Rural Development of the PRC through two subsidiaries respectively in January and April 2019; the qualification allows the Group to undertake any specific landscape engineering design without restriction over project type or scale. Graphex believes that landscape design is intricately connected to sustainability and will continue to support sustainability through professional environmental design.

1.2. About the Report

The seventh Environmental, Social and Governance (“ESG”) Report of the Company (the “Report”) continues to fulfil its ESG commitments by reporting the Group’s up-to-date policies, measures and performances to allow stakeholders to understand the Group’s direction of development. The Report is prepared in both the Chinese and English, and both versions of the Report have been uploaded to the websites of the Stock Exchange of Hong Kong (“SEHK”) and the Group: www.graphexgroup.com. Details regarding the Group’s corporate governance are provided in the Corporate Governance Report section of the Annual Report.

1.3. Reporting Boundary

The Report focuses on the Group’s ESG performance between 1 January 2025 and 31 December 2025 (the “reporting period”). The reporting boundary includes the operations of landscape architecture business in all offices of the Group in Hong Kong and Mainland China and all offices of the graphene business in Hong Kong and the main graphene manufacturing facility in Heilongjiang Province, PRC.

Business segment	Entities in reporting boundary
Graphene manufacturing	Hong Kong office, Heilongjiang facility
Landscape architecture	Hong Kong office, Shenzhen office, Guangzhou office, Shanghai office

ENVIRONMENTAL, SOCIAL AND GOVERNANCE REPORT

1.4. Reporting Standard

1.4.1. The Report adheres to the four Reporting Principles (i.e. Materiality, Quantitative, Balance and Consistency) stated in the Environmental, Social and Governance Reporting Guide (the "Guide"). On the basis of 'comply or explain' provisions, important 'recommended disclosures' in the Guide have also been selected into disclosure for enhanced reporting contents.

1.4.2. In preparation of this Report, due diligence has been taken to adhere to the Reporting Principles stipulated in the ESG Reporting Guide:

"Materiality" – The materiality assessment detailed on page 67 has ensured the Report addresses the most material ESG topics pertaining to our businesses.
"Quantitative" – The Report strives to disclose quantitative metrics and related targets whenever possible, to demonstrate our impact.
"Balance" – The Report presents an unbiased representation of our ESG management approach and performance. It avoids misleading omissions and presentation.
"Consistency" – Whenever deemed material, the Report details the standards, tools, assumptions and/or source of conversion factors used, as well as explanations of any inconsistencies to previous reports.

1.5. Confirmation and Approval

1.5.1. Information contained in this Report was sourced from official documents and statistical data of the Group, and from managerial and operational information aggregated in accordance with systems of the Group. The Report was approved by the Board of Directors (the "Board") on 31 March 2026.

1.6. Opinion and Feedback

The Group welcomes any comments or suggestions from stakeholders on its ESG performance. Please contact the Graphex Company Secretary via the channels below:

Address: 11/F, COFCO Tower, 262 Gloucester Road, Causeway Bay, Hong Kong
Phone: 2559 9438
Fax: 2559 9841

2. OUR ESG APPROACH

2.1. Governance Structure

The Board of Graphex is responsible for the development of the Group’s strategy, the supervision of its environmental and social performances and to ensure an effective and sound internal control and risk management system are in place. Through the director’s committees, the Board formulates the strategies, supervises the implementation and to lead and guide the management. The Board delegates the power and duties to the management to supervise the Group’s management, execution and administration. Under the leadership of the Chief Executive Officer (“CEO”), the management is responsible for the day-to-day operation, implementation of strategies approved by the Board and regular reporting to the CEO. The CEO then reports the progress of the approved strategies and the Group’s development to the Board.

2.2. Stakeholder Engagement

We have always valued stakeholder engagement. Stakeholders’ views and suggestions on the Group’s ESG performance have been sought through organising various events throughout the reporting period. The Group believes that stakeholder engagement can help the Group to better identify risks and opportunities of different ESG aspects, and lead to refined management policies and practices. Stakeholder communication during the reporting period included:

Internal stakeholders	External stakeholders
Employees	Investors and shareholders, suppliers, the general public and communities, professional associations, government departments and other public bodies
Means of stakeholder engagement:	Regular meetings, emails, shareholder meetings, public consultations, internship programmes, industry conferences, community events, etc.

ENVIRONMENTAL, SOCIAL AND GOVERNANCE REPORT

2.3. Materiality Assessment

2.3.1. In 2020, the Group commissioned an external consultant to conduct a materiality assessment to identify the top ESG-related topics material to our operations. The assessment consists of three stages:

Stage 1 “Identification” – Taking into account of the industry landscape, a total of 21 potential material ESG topics were identified based on the content of the ESG Reporting Guide.
Stage 2 “Ranking” – In order to rank the materiality of the ESG topics, an online survey was distributed to internal and external stakeholders that asked them to score the importance of the topics to the Group’s long-term business development.
Stage 3 “Disclosure” – The ranked topics identified were presented to the ESG Committee of the Company for validation and discussion, prior to approval by the Board. This report focuses on the disclosure of these ESG-related issues identified material by the stakeholders. This report discloses the corresponding management approach, initiatives and performance of each topic. The Group shall continue to further engage with the stakeholder groups, in order to gain a more comprehensive perspective on the materiality of the ESG-related issues.

2.3.2. Based on the survey results, the top three ESG-related topics in each category were as follows:

Category	ESG-related topics
Environmental	Responding to climate change risk
Energy management
Water management
Social	Employment practices
Safe and healthy working environment
Training and development
Governance	Anti-corruption
Protecting customer privacy
Protecting intellectual property rights

3. AWARDS & RECOGNITION

As a testament to our continuous strive towards operational excellence, we have received the following awards and honours during the reporting period:

Award name	Project	Award Issuer
HKILA Award 2025 – Special Award	TWGH’s E-Co Village	The Hong Kong Institute of Landscape Architects
ArchSD Annual Award 2025 – Special Award (Architectural Rejuvenation)	Facility Upgrading for Tai Po Civic Center	Architectural Services Department
Green Building Award 2025 – Grand Award	The Henderson	Hong Kong Green Building Council
Green Building Award 2025 – Finalist and Special Citation on United Nation Sustainable Development Goals	Belgravia Place Phase 1	Hong Kong Green Building Council
2025 Fujian Provincial Excellent Engineering Survey and Design Achievements 2025 – First Prize	Zhangzhou West Lake Ecological Garden Landscape Project (Core Area)	Fujian Exploration and Design Association
2025 Highest Quality Level Assessment for Municipal Projects	Jinxiu Lake Park	China Municipal Engineering Association
2025 Shanghai Excellent Prize for Landscape Architecture and Ecological Environment Design – Third Prize	Liuzhaogang River Channel Remediation Project (Zhou Dalu Road – S3), Shanghai	Shanghai Exploration And Design Trade Association
IFLA APR LA Awards 2025 – Honourable Mention	Beijing Qihu Hotel	International Federation of Landscape Architects: Asia-Pacific Region
The 15th China International Ecological Design and Engineering Innovation Competition 2025 – Gold Award	Poly Dongguan Nancheng CBD TanGim	The Great Wall Greening Promotion Association of China

Award name	Project	Award Issuer
The 15th China International Ecological Design and Engineering Innovation Competition 2025 – Gold Award	Jinan Dahua Park Jade	The Great Wall Greening Promotion Association of China
Yuan Ye Awards International Competition – Silver Award	China Railway Urban Investment Guoyue Riverside Residences (Plot F3, Wuchang Riverside Core Area)	Yuan Ye Award International Competition Organizing Committee
Top 10 Landscape Projects, Annual Social Impact Gold Winner and Annual Best Emerging Cultural – Tourism Landscape Gold Winner	Luogang Central Park, Hefei	ELA International Landscape Award Organizing Committee
3rd TTIA Award – Residential Demonstration Area Landscape Design – Platinum Award	Xian Dahua Jin Xiu Nian Hua	TTIA Tiantan International Award Organizing Committee
Annal Residential Landscape Gold Winner and Annual Demonstration Zone Landscape Gold Award	Dongguan Poly Shouzhu Luwan Tianji	ELA International Landscape Award Organizing Committee
Annual Demonstration Zone Landscape Gold Award	Foshan Poly Huoying Langyue	ELA International Landscape Award Organizing Committee

ENVIRONMENTAL, SOCIAL AND GOVERNANCE REPORT

4. RESPONSIBLE FOR OUR OPERATIONS

The Group is committed to business ethics and responsible service delivery. Through a sound operational system, the Group has therefore put in place a series of policies and measures on supply chain management, product responsibility and anti-corruption to safeguard the brand and market performance.

4.1. Product and Service Quality & Safety

4.1.1. Graphene segment

Graphene, a thin layer of pure carbon atoms, is the thinnest and hardest nanomaterial known at present. With high thermal and electrical conductivity and excellent light transmission, it has broad application potential in electronics, optics, magnetism, biomedicine, catalysis, energy storage and sensors, as well as many other fields. To manufacture this "Black Gold", spherical and micronized graphite is needed as input material. As a leader in the graphite processing industry in China, the Group's Heilongjiang facility is engaged in the deep processing of raw graphite material (flake graphite and semi-spherical graphite) to spherical and micronized graphite. The facility ensures product quality through systematic control measures throughout the processing stages, while the safety of workers is safeguarded through safety policies (See Section: Employee Health & Safety).

4.1.2. Landscape architecture segment

The Group's landscape architecture segment operates by the Quality Management Manual in accordance with ISO 9001:2015 to enhance the management of design or services. In order to ensure that the final design meets the requirements of various stakeholders, the Group holds project meetings occasionally to understand the needs and suggestions of all parties and strictly complies with national and regional legal requirements in the project design process. The Group's management also reviews the status of projects from time to time to ensure that workflow is in accordance with relevant regulations. In future, the Group will also collect customer feedback and suggestions through the customer satisfaction survey and carry out improvement work based on customers' feedback to improve the quality of projects and services.

4.1.3. All of the Group's landscape design work complies with relevant national or regional laws, regulations and guidelines (e.g. the Civil Engineering and Development Department's Guidelines on Safe Access for Slope Maintenance; the Architectural Services Department's Guidelines on Universal Accessibility for External Areas, Open Spaces and Green Spaces; and the GLTM Section's Proper Planting Practices and other latest relevant landscape and tree risk assessment guidelines) to ensure that the requirements on design safety and community health impacts are met.

ENVIRONMENTAL, SOCIAL AND GOVERNANCE REPORT

4.2. Supply Chain Management

4.2.1. The Group attaches importance to the management of environmental and social risks in the supply chain and encourages suppliers to be environmentally and socially responsible. The Group has developed the Office Handbook, the Code of Conduct and the ESG Policy to standardise the Group's supplier selection process.

4.2.2. Currently, the Group's suppliers are mainly suppliers of raw graphite material, travel agencies, professional services, and food suppliers. For office procurement matters, relevant staff should fill in the Purchase Requisition Form and submit it to the Administration Department for confirmation before the procurement. Additionally, the Group also assesses suppliers on an ad-hoc basis to ensure that they comply with the Group's environmental and social requirements. The landscape architecture segment strives to maximise the use of low-carbon and non-hazardous material in their designs. With regards to the management of social risks of its supply chain, the Group strictly prohibits any individuals or organisations that are related to the Group, including suppliers, to offer employees illegal benefits which can affect their business decision-making. Offenders should be disqualified from supplier list.

4.2.3. The number of suppliers by countries or regions is presented as follows:

	Hong Kong	Mainland China
Number of suppliers	10	50

4.3. Customer Privacy

4.3.1. The Group's Office Handbook stipulates that, all employees are prohibited from disclosing customers' information, including but are not limited to customers' names, contact numbers and addresses, to any third parties without the consent of the employer or the Group. The Company also protects the personal data of its employees as required by the code of practice obligations and has set out the Company's Privacy Policy in its Office Handbook.

4.4. Intellectual Property Rights

4.4.1. The Group undertakes to sign non-disclosure agreements with its clients in the course of cooperation to ensure the intellectual property rights of both parties are not infringed. For the time being, the Group's operations do not involve matters relating to product advertising, labels using and customer complaints. The Group will update the relevant policies in accordance with its business development in a timely manner.

ENVIRONMENTAL, SOCIAL AND GOVERNANCE REPORT

4.5. Anti-corruption

4.5.1. The Group understands anti-corruption is not only a social expectation towards corporations, but also an important way for corporations to undertake social responsibility. Through the formulation of the Code of Conduct, the Group is committed to fight against corruption.

4.5.2. As stated in the Code of Conduct, the Group strictly prohibits any bribery or corruption. All employees are forbidden to accept benefits from third parties individual or organisation. Under certain circumstances, employees can accept promotional gifts, souvenirs or holiday gifts (not exceeding HK$500). Should the employees violate the above rule, they may face prosecution or internal disciplinary action. The Group reviews the implementation of this policy statement periodically and ensures that it is being put into practices.

4.5.3. The Group holds activities related to the Code of Conduct regularly to increase directors and employee's knowledge of anti-corruption.

4.5.4. The Group established a whistleblowing policy and system for employees and those who deal with the issuer to raise concerns, in confidence and anonymity, with the audit committee or any designated committee comprising a majority of independent non-executive directors, about possible improprieties in any matter related to the Company.

4.6. Community Development

4.6.1. The Group understands that the development of a corporation cannot be achieved without the support from local communities. Through the formulation of the ESG Policy, the Group strives to offer more support to local communities in which it operates. The Group's vision on community development is to lead the new generation of integrated recreation, care community development in order to solve the severe problem of aging society; and provide inspirational children's play facilities and a family-oriented leisure ambience. We have already designed several recreation-care communities in the PRC which complements Graphex's vision and design concept.

4.6.2. In addition, the Group strongly support educational and community development. The Group organized several student visits to its office of landscape design segment in Hong Kong, strengthening their skills and business capacity in landscape design and helping them adapt to the needs of the community. Hosting students fosters industry engagement, education, and workforce development, reflecting the Group's commitment to social responsibility. By supporting underprivileged students and collaborating with educational institutions, the Group enhances equitable access to education and career opportunities. Furthermore, the Group's encouragement of mentorship programs through student visits demonstrates its leadership in shaping the next generation of landscape professionals. Below table is the summary of student visits in 2025:

Date	University/Institute/School	No. of students visiting
2 April 2025	Hong Kong University – Master of Landscape Architecture	36
11 April 2025	Ma On Shan St. Joseph’s Secondary School
Good Hope School
Munsang College (Hong Kong Island)
Po Leung Kuk Choi Kai Yau School	14
25 February 2026	Hong Kong University – Master of Landscape Architecture	5
5 March 2026	International College Hong Kong
Ma On Shan St. Joseph’s Secondary School
St Stephen’s College	8

5. CARE FOR OUR EMPLOYEE

Graphex believes that a good employment environment is one of the key steps in promoting the Group's sustainable development. The Group is committed to creating a safe and comfortable working environment for its employees, providing a sound career development system to ensure all employees are respected and motivated.

5.1. Employment Practices

5.1.1. A sound employment system is not only the key to attract talents, but also an important security for employee's rights and interests. The Group has formulated the ESG Policy, Office Handbook and the Staff Handbook adopted by all operational sites to improve the Group's regulations on remuneration and dismissal, recruitment and promotion, working hours, leave, equal opportunities and anti-discrimination, diversity and other benefits.

ENVIRONMENTAL, SOCIAL AND GOVERNANCE REPORT

Details of the above policies include:

Remuneration and dismissal	Recruitment and promotion	Working hours
The employment contract signed by each employee of the Group must clearly specify the remuneration package of the position and set out the termination procedures and conditions of dismissal (e.g. serious misconduct). Each site of operation also has its own Staff Handbook, which is updated in a timely manner. For example, the Staff Handbook states that the employee's wages include basic wages, position pay, and overtime pay; if a regular employee resigns, the resignation application should be filled out 30 days in advance and reported to all levels of management for approval.	The Group's management conducts an annual performance review of its staff and determines the promotion based on their performance. The review also includes climate-related KPI. In addition, the Staff Handbook states that recruitment is based on the principle of “open recruitment, merit-based selection”; promotion decisions are based on daily performance and are reviewed by the Human Resources Department and approved by the general manager.	The Group's normal working hours are 8 hours per day, 5 days per week, with a 1-hour lunch break.
Leave	Equal opportunities and anti-discrimination	Diversity
---	---	---
The Group strictly follows the relevant local laws and regulations in the respective sites of operation and makes reasonable arrangements for employees' holidays, such as annual leave and sick leave.	The Group is committed to providing fair employment opportunities for all employees and prohibits all forms of discrimination and harassment on the basis of race, skin colour, religion, sex, physical condition, marriage and family and national origin. The Company has equal opportunities clauses contained in the Office Handbook.	The Group is committed to creating an atmosphere of diversity in the workplace and encouraging the employment of staff from diverse backgrounds.

Other benefits	Prevention of child labour	Prohibition of forced labour
The Group has provided additional benefits to its employees, including medical insurance and overtime subsidies.	The Group is committed to prevent child labour in the workplace. Child workers should leave the workplace as soon as they are discovered, and their contracts should be terminated.	The Group ensures all employment relationships are voluntary and prohibits any forms of forced labour.

5.2. Employee Development and Training

5.2.1. It is important for employees to enhance their working skills for the development of their future career paths. The Group values the development of its employees and provides training opportunities in order to support them in gaining knowledge and skills on performing relevant jobs. Such trainings are managed through the ESG Policy.

Training activity	Performance review
During the reporting period, the Group’s employees received induction training and technical training on topics such as building information modelling.	The Group conducts an annual performance review to assess the performance of its employees and to serve as a basis for determining their future promotion and direction of training.

During the reporting period, the Group has achieved the following indicators of employee development and training:

Number and percentage of staff that received training	2025	2024
Number of staff that received training	55	57
Percentage of staff that received training	25%	25%
Number of staff that received training by employment category	2025	2024
---	---	---
Chief executive	0	0
Management	8	5
General staff	47	52
Number of staff that received training by gender	2025	2024
---	---	---
Male	31	36
Female	24	21

ENVIRONMENTAL, SOCIAL AND GOVERNANCE REPORT

5.3. Employee Health and Safety

5.3.1. The Group places the health and safety of its employees as top priority. At our graphene processing plant, our safety policy governs the mechanisms in place to ensure occupational risks are minimized. The following outlines major safety protocol and measure the plant implements:

Worker safety	Storage safety
All new workers at the processing plant is required to receive and pass the three-tier safety training. For personnel in charge of critical equipment and facilities, they are required to obtain operating certificates in accordance with relevant national regulations. To protect workers against dust hazards, the plant adopts the latest technology, such as a negative pressure system that ensures the effective delivery of fresh air. All personal protection equipment (PPE) provided to employees meet national or industry standards.	The input material required for operations are stored in special areas that meet relevant conditions, such as in terms of sun and moisture protection, ventilation, lightning protection, anti-static features etc.. The storage areas are equipped with fire-fighting equipment and communication and alarm devices.
Equipment safety	Accident prevention
The input, intermediate and output products used in the operation process generates graphite powder. Although there is no risk of dust explosion, it is able to penetrate surrounding electrical equipment and cause short circuits and electric shock accidents. Thus, all electrical equipment in the vicinity are inspected and cleaned frequently to prevent such damage. The mechanical equipment used during operations are mainly high-pressure centrifugal fans, shut-off fans, filter presses, automatic packaging machines, etc., which are all qualified products with safety protection devices.	The plant has established safety prevention mechanisms at all levels. Front-line workers have reporting channels available to report potential safety issues in a timely manner. Safety management personnel ensure the reported issues are addressed and rectified by the maintenance team. In addition, the safety team engages in regular safety risk assessments to identify and mitigate potential safety hazards. In the event of an accident, the emergency plan is immediately activated and each case is investigated thoroughly to identify the root causes to avert against similar cases in the future.

5.3.2. At our offices, the Staff Handbook gives guidance to employees on handling occupational safety matters. For example, if old, worn or loose wiring is spotted, the relevant personnel should immediately notify the department head or an electrician; if an accident occurs, the relevant personnel should immediately notify the general manager and personnel department and escort the injured to the hospital.

5.4. Pandemic Measures

5.4.1. In response to the potential outbreak of pandemics, we have taken a range of actions and measures to ensure business resilience, as well as ensure the safety of our employees and customers. The actions we implemented include but are not limited to:

We integrated pandemic risks into the enterprise risk management mechanism. We constantly explore diversified businesses to avoid concentration in few business sectors or regions. Moreover, we included pandemic-related reporting and management guidelines in business continuity plans.
We embraced new communications technologies to facilitate seamless communication for business continuity. During the reporting period, we have made extensive usage of the Zoom infrastructure.
We provided protective and disinfection products such as face masks, alcohol-based hand sanitisers, bleach, cleansers and gloves at the workplace.
We adopted special work arrangements, such as work-from-home policies and/or flexible working hours (to avoid peak hour travelling).

5.5. Staff Welfare Activities

5.5.1. Graphex holds activities for staff from time to time, to enhance employee well-being and sense of belonging in the company, we hold activities during festivity and birthday celebrations. The following lists some of the activities that were held this year:

Monthly staff birthday party
Halloween Party
2025 Asia Townscape Awards and Ceremony Events
Viewing of the Chinese Military Parade
Christmas party – a festive event with plenty of food and drinks, lucky draw, gift exchange and games

6. CONCERN ABOUT OUR ENVIRONMENT

The Group is dedicated to mitigating the negative environmental impacts associated with its operation. As a result, the Group places high importance on the environmental management of its operation, where the ESG policy sets out the Group’s management approach on use of resources, emission management, natural resources and climate change.

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6.1. Reasonable Use of Resources

6.1.1. The Group is committed to maximising resources use and conservation to the utmost. The following are the measures of resource conservation:

Resource type	Measures of conservation
Electricity	• Air-conditioning
o Set the air-conditioning temperature to 24 to 26 degrees Celsius;
o Regular maintenance of air-conditioning to ensure its efficient operation;
o Set the air-conditioning system to auto off mode after 6:30 p.m. each day.
• Computer
o Set the computer monitor to the appropriate brightness and automatically go into hibernation if it is unused for a long period of time.
• Light
o Turn off the light outside the lobby area after 6:30 p.m. each day; and
o Turn off the light of individual work area when leaving the office.
Gasoline	• Encourage staff to choose event venues nearby to reduce long distance travel.
Paper	• Use recycled paper or FSC-certified paper for office use;
• Encourage staff to use electronic communication tools for communication and reduce paper use; and
• Install a smart printing system to the two printers in Hong Kong office to reduce paper usage and encourage staff awareness of unnecessary paper consumption.
Water	• Install a water tap sensor to automatically control the switch; and
• Check the working condition of the faucet regularly, and report and repair in a timely manner if any problems were found.

6.1.2. To reduce energy consumption and raise awareness of energy conservation, we will continue to implement energy efficiency measures in our factories and offices. During the reporting period, the operations of our graphene and landscape architecture consumed an equivalent of 2,296.34 MWh of energy, with the graphene segment contributing 80% of total energy consumption. We will continue to evaluate effectiveness of our measures of conservation to further reduce energy use.

Energy consumption	Unit	Graphene		Landscape
		2025	2024	2025	2024
Direct energy	Gasoline	MWh	0	0	12.5	6.1
Indirect energy	Electricity	MWh	2,185.97	1,683.5	97.87	389.08
	Heat	MWh	0	0	0	0
Total energy consumption		MWh	2,185.97	1,683.5	110.37	395.18
Gross Floor Area (GFA)		m²	2,198.42	2,275.00	993.79	993.79
Energy intensity (per Gross Floor Area)		MWh/m²	0.99	0.74	0.11	0.4

6.1.3. During the reporting period, water consumption data for our landscape segment is not available as water charge is included in the property management fee. Regarding our graphene segment, no data is available as we withdraw groundwater from a local well, rather than from municipal supplies.

The coming year, the Group shall aim to set up systems to measure the groundwater withdrawal. The Group targets to identify the causes of high rates of water consumption and take remedial action to minimise the use of water.

Water consumption	Unit	Graphene		Landscape
		2025	2024	2025	2024
Total water consumption	m³	N/A	N/A	0	1,394
Water intensity (per Gross Floor Area)	m³/m²	N/A	N/A	0	1.4

6.2. Greenhouse Gas (GHG) Emissions

6.2.1. In support for the Paris Agreement goal of limiting global warming, the Group aims to reduce GHG emission intensity in the future.

6.2.2. Our carbon footprint has been quantified as below, with reference to the Guideline compiled by the Environmental Protection Department and Electrical and Mechanical Services Department of Hong Kong and the GHG Protocol.

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6.2.3. During the reporting period, the Group's total GHG emissions amounted to 1,253.36 tonnes of carbon dioxide equivalent (tCO₂e), with the Graphene segment contributing 93%. Scope 1 emissions contributed 0.28%, which includes fuel use from vehicles. Scope 2 emissions included indirect GHG emissions from electricity and heat purchased, which accounted for 97.06%. For Scope 3, the Group included indirect emissions from business travels of its employees, which accounted for 2.66%.

GHG emissions	Unit	Graphene		Landscape
		2025	2024	2025	2024
Scope 1	Stationary combustion	tCO₂e	0	0	0	0
	Mobile combustion	tCO₂e	0	0	3.45	1.7
Scope 2	Electricity	tCO₂e	1,160.24	904.01	56.28	216.95
	Heat	tCO₂e	0	0	0	0
Scope 3	Business travels	tCO₂e	0	0	33.39	45.57
Total GHG emissions		tCO₂e	1,160.24	904.01	93.12	264.22
GHG intensity (per Gross Floor Area)		tCO₂e/m²	0.53	0.4	0.09	0.27

6.3. Air Emissions

6.3.1. The major air pollutants that are released from the Group's operations includes nitrogen oxides ("NOₓ"), sulphur oxides ("SOₓ"), and respirable suspended particulates ("RSP") from the use of vehicles and natural gas. For the graphene factory, the major air pollutants generated are acid and vapour discharged from the reactor. The exhaust gas is collected by an acid mist absorption tower, where the acidic components are removed by spraying with alkaline solution.

Air emissions	Unit	Graphene		Landscape
		2025	2024	2025	2024
Nitrogen oxides (NOₓ)	kg	0	0	1.14	0.65
Sulphur oxides (SOₓ)	kg	0	0	0.02	0.01
Respirable suspended particulates (RSP)	kg	0	0	0	0.05

6.3.2. The Group is working towards improving our performance on reducing air emissions, the Group is actively including studying the feasibility in monitoring air quality and encouraging employees to use public transport and other low-carbon emission travel methods, we aim to lower the air emissions year by year. We have encouraged our staff especially the senior staff to take public transport, while special permission is required from director for staff who request to use the company car for field trip.

6.4. Waste

6.4.1. During the reporting period, the Group generated a total of 0 kg of hazardous waste, which was composed of waste chemicals and graphite residues from graphite processing, as well as waste batteries and electronic equipment. All hazardous waste are handled by authorised contractors according to local regulations, while graphite residues were resold to third-parties for re-use/recycling. With regard to non-hazardous waste, the Group generated a total of 2,298 kg that was composed of general waste and recycled metal, plastic and paper.

Waste generated	Unit	Graphene		Landscape
		2025	2024	2025	2024
Hazardous waste	kg	0	0	0	0
– Recycled	kg	0	0	0	0
Hazardous waste intensity (per Gross Floor Area)	kg/m²	0	0	0	0
Non-hazardous	kg	365	368	1,933	1,901
– General waste	kg	365	368	1,543	1,617
– Recycled	kg	0	0	390	284
Non-hazardous waste intensity (per Gross Floor Area)	kg/m²	0.17	0.16	1.95	1.91

6.4.2. In the graphite processing facility, another solid waste generated is sewage sludge separated after the neutralisation of the sewage. A sewage treatment station was built for the neutralisation treatment, where some of the treated wastewater is reused and some would be discharged. The sludge is collected and used for brick burning or road paving to avoid disposal and wastage.

6.4.3. The Group will continue to reduce hazardous waste and reuse and recycle non-hazardous waste on and off site in the forthcoming year.

6.4.4. In order to reduce non-hazardous waste from source and encourage recycling, the Group has placed recycling bins for waste recycling. Besides, HK office has installed a smart printing system to the two printers where access card is required for print out with restricted no. of printing quota. Printing request will be automatically cancelled if access card is not presented for more than 24 hours. This practice has successfully reduced paper waste production.

ENVIRONMENTAL, SOCIAL AND GOVERNANCE REPORT

6.5. Protecting the Environment and Natural Resources

6.5.1. Noise

Noise pollution is one environmental impact arising from the graphite processing facility. The major source of noise in the facility is the air compressor, which is installed in an isolated room. To mitigate the impact of noise, the facility selects advanced technology and equipment with low noise. Noise absorption and shock absorbing measures are also implemented. For example, the compressor outlet is equipped with a resistant muffler that reduces the noise level by around 30 dB.

6.5.2. Other natural resources

In all landscape design projects, the Group adheres to the principles of protecting natural habitats, and biodiversity conservation, in order to reduce the impact on natural resources and surrounding environment. In various projects with landscape builders, the Group also promotes the use of renewable energy in all possible circumstances. A complaint mechanism is also established to handle and respond to environmental-related comments and suggestions in a timely manner.

Graphex has been taking the leading role to promote biodiversity and blue-green infrastructure in both our landscape practices and research. In 2025, HK office is granted a funding from Professional Services Advancement Support Scheme of the HK government to conduct a research on HK Urban Landscape Series – Sustainable Urban Streetscapes with an aim to promote the concept of urban forestry, biodiversity and blue-green infrastructure for the industry and the public about the importance to build up a resilient city against climate change.

6.6. Case Study 1: The Henderson & The Henderson Art Garden

Project Overview

Project Name: The Henderson & The Henderson Art Garden
Address: Central Business District, adjacent to Chater Garden, Hong Kong
Client: Henderson Land Development Company Limited
Executive Landscape Architect: Earthasia Ltd.
Completion: 2025

Landscape Design Description

The Henderson:

Tower designed with Zaha Hadid Architects, featuring curved glass panels engineered for heat and typhoon resistance.
Landscape integrates movable planters, tropical species, and granite cobblestone paving to choreograph pedestrian and vehicular flows.
Elevated base creates shaded civic plazas, linking seamlessly with Chater Garden.

The Henderson Art Garden:

Redevelopment of Lambeth Walk Rest Garden into a public sculpture garden.
Features nature-inspired artworks by local and international artists.
Fluid design language mirrors The Henderson’s orchid-inspired architecture.

Environmental Benefits

Urban Greening: Reduces heat island effect in Central.
Microclimate Improvement: Shading and water features lower ambient temperatures.
Resilient Planting: Movable planters allow adaptive responses to climate variability.

Ecological Contributions

Native & Tropical Species: Supports pollinators and urban biodiversity.
Sustainable Sourcing: Trees cultivated by local farmers, reinforcing ecological stewardship.
Green Corridors: Strengthens connectivity with adjacent parks.

Social Impact

Public Accessibility: Art Garden is free and open to all.
Cultural Resonance: Sculpture garden integrates Hong Kong’s identity through orchid-inspired motifs.
Community Well-being: Provides restorative spaces for workers, residents, and visitors.

Graphex Group Limited Annual Report 2025 83

Governance & Policy Alignment

Environmental: Supports Hong Kong's greening and climate resilience policies.
Social: Advances Henderson Land's commitment to arts, culture, and inclusive public spaces.
Governance: Collaboration with the Leisure and Cultural Services Department ensures transparency and accountability.

Awards & Recognition

World's Best Property: International Property Awards 2025.
Green Building Award: The Henderson – Grand Award under New Buildings Category (Completed Projects – Commercial).
Global acclaim for sustainability, innovation, and architectural excellence.

6.7. Case Study 2: Suitability and Sustainability of Roadside Trees

Project Overview

Project Name: Suitability and Sustainability of Roadside Trees
Address: Territory-wide study, Hong Kong SAR
Client: Development Bureau
Lead Landscape Consultant: Earthasia Ltd.
Completion: 2025

Landscape Design & Research Description

Comprehensive study assessing the long-term suitability and sustainability of roadside tree species under Hong Kong's dense urban conditions.
Developed a scientific framework with scoring system for evaluating tree performance, resilience, and ecological value.
Guided by the principle of "Right Tree, Right Place, and for the People", ensuring that species selection balances ecological function, urban safety, and community benefit.
Recommendations integrated into government guidelines for roadside greening, setting a benchmark for sustainable urban forest in Hong Kong.

Environmental Benefits

Climate Resilience: Identified species tolerant to heat, drought, and typhoon conditions.
Carbon Sequestration: Promotes species with high carbon absorption potential.
Urban Cooling: Roadside greening reduces heat island effects and improves microclimate.

Ecological Contributions

Biodiversity Enhancement: Encourages native and ecologically functional species to support pollinators and urban wildlife.
Resilient Planting Strategy: Reduces reliance on exotic species prone to pests or diseases.
Green Infrastructure: Strengthens ecological corridors along Hong Kong's transport network.

Social Impact

Public Safety: Selection of structurally stable species minimizes risks of tree failure in storms.
Community Well-being: Roadside trees improve air quality, provide shade, and enhance walkability.
For the People: The principle ensures trees are not only ecologically suitable but also socially beneficial, creating healthier, more livable streetscapes.
Educational Value: Research findings shared with professionals and the public, raising awareness of sustainable urban forestry.

Governance & Policy Alignment

Environmental: Supports Hong Kong's Climate Action Plan and Greening Master Plans.
Social: Advances Development Bureau's commitment to safe, sustainable, and inclusive public spaces.
Governance: Transparent methodology, peer-reviewed findings, and alignment with international arboricultural standards.

Awards & Recognition

Merit Award – HKIUD 2025 for innovation in sustainable urban design and landscape consultancy.
Recognized as a benchmark study for integrating science, safety, sustainability, and the "Right Tree, Right Place, and for the People" principle into roadside tree management.

6.8. Student Visit

The Group organised several student visits (please refer to section 4.6.2 of this ESG Report) to its office of landscape design segment company in Hong Kong. The student visits serve as an educational initiative to promote sustainable landscape practices, biodiversity preservation, and green infrastructure, aligning with its commitment to environmental stewardship. By demonstrating the use of sustainable materials, native plants, and water-efficient designs, the Group reinforces its dedication to eco-conscious practices while inspiring future professionals to adopt environmentally responsible approaches in their work.

7. ADDRESSING CLIMATE CHANGE

7.1. Climate Change

We are committed to taking proactive steps to mitigate our environmental impact and enhance our climate resilience. By leveraging innovation, technology, and collaboration, we aim to contribute to a sustainable future while ensuring the long-term success and resilience of our operations. In alignment with the Environmental, Social and Governance (ESG) Reporting Guide issued by the HKEX, we have improved the climate risk management process, conducted evaluations of climate-related risks and opportunities, and improved the disclosure of climate change information in the four dimensions: governance, strategy, risk management, and metrics and targets. Additionally, we have explored effective carbon reduction measures and actively addressed the challenges posed by climate change.

7.2. Governance

Under the leadership of management, we established a climate change working group (the "Working Group"). The Working Group is responsible for coordinating the daily management of climate-related risks and opportunities, identifying and assessing these risks and opportunities, implementing mitigation strategies and responsive measures and report to management. For more information on the Group's governance structure, please refer to the subsection "Governance Structure" under the "Our ESG Approach" section of this ESG Report.

The Working Group and department heads hold meetings at least annually to discuss climate change-related risks, opportunities, and management strategies. These discussions aim to enhance the Working Group's understanding of climate-related issues, oversee the effectiveness of the Group's strategies, and ensure that climate considerations are fully integrated into risk management procedures and policies. The Working Group reports findings to management to support timely decision-making.

To advance our climate-related goals, the Group has set targets such as energy conservation and greenhouse gas emission reduction. The Working Group regularly reviews and evaluates progress toward these targets annually. In the future, we plan to incorporate climate-related key performance indicators (KPIs) into the team's performance appraisal system to incentivize proactive efforts in addressing climate change.

7.3. Strategy

Climate Risk Scenario Analysis

We use scenario analysis, as recommended by the TCFD, to identify the transition risks that the Company may face. The scenarios we use are based on climate scenarios published by Network for Greening the Financial System ("NGFS"), a voluntary global network of central banks and financial supervisors dedicated to integrating climate and environmental risks into financial systems, to assess the physical and transition risks that our business and assets may encounter in different scenarios.

Scenarios 1: Net Zero 2050 (1.5°C) limits global warming to 1.5°C through stringent climate policies and innovation, reaching global net zero CO₂ emissions around 2050.

Scenarios 2: Current Policies assumes that only currently implemented policies are preserved, leading to a 3°C warming by 2100 and high physical risks.

Climate Risk Identification and Management

Recognizing the importance of climate resilience, we have systematically embedded climate considerations into our strategic planning processes. Through a multi-faceted approach, we identify and assess climate-related risks and opportunities across corporate, business, and operational levels. This enables the Group to effectively position itself in the low-carbon transition while capturing emerging opportunities.

The following table outlines the risks and opportunities identified by the Group over the short term (1–3 years), medium term (4–5 years), and long term (beyond 5 years). While the Group has chosen not to apply a carbon price in decision-making, we remain committed to developing a robust climate strategy.

Type of risks	Time horizon	Description	Impact on financial position, financial performance and cash flows
Physical Risk – chronic
Extreme temperature	Long-term	• Increase frequency and intensity of temperature extremes and heatwaves	• Increase operating cost due to higher air-conditioning usage
• Increase in capital cost for additional cooling adaptation requirements and maintenance	• Downstream customers have more stringent requirements on our product/services in climate-related issues	• Improve the risk assessment and early warning system, and analyze the characteristics of climate change
Physical Risk – acute
Flooding and strong wind	Short and medium term	• Typhoon with intense winds and intense rainfall, resulting in infrastructure damage, potential flooding risks and threats to life	• Decrease in revenue due to temporary closures or reduced operational capacity during and immediately after acute events
• Increase repair and maintenance cost
• Increase in capital cost in climate adaptation measures
• Extreme weather conditions pose a risk to employee commuting, impacting the safety of the Group’s employees and indirectly affecting the Group’s offline operations	• Upstream suppliers located in the high-risk areas face the risk of business interruption, resulting in reduced demand from downstream customers in the Group’s business	• Future alterations or renovations to the office building/factory shall take into account extreme climate change
• Take measures such as flexible attendance and work from home arrangements based on the actual impact of extreme weather conditions such as typhoons on staff commuting

Type of risks	Time horizon	Description	Impact on financial position, financial performance and cash flows	Impact on business model and value chain	Strategy and decision-making
Transition Risk
Shifting preference in market	Short to Medium term	• Talent attraction and retention of staff interested in sustainable practices	• Increase in human resources cost and resources for recruitment and onboarding	• Downstream customers' frequent changes in their preferences for low- carbon environmental protection led to an increase in the Group's cost of developing new business	• Promote business transformation and timely launch products that meet market needs
		• Public perception of sustainability management performance can influence the reputation	• Increase in investment in marketing and operational adjustments to highlight green initiatives
		• Rising stakeholders' expectations and customer preferences in the transition to a lower-carbon economy	• Increase in direct legal cost related to legal fines, settlements, and rectifying public image
			• Increase in contingent liability and operating cost for potential carbon pricing mechanism, including taxes or offset requirement
			• Increase in operating cost from regulatory penalties in climate related regulation compliance

ENVIRONMENTAL, SOCIAL AND GOVERNANCE REPORT

Type of opportunities	Time horizon	Description	Impact on financial position, financial performance and cash flows	Impact on business model and value chain	Strategy and decision-making
Products and Services/Market	Short-term	• Develop sustainable products and services to enhance competitiveness amidst shifting consumer preferences	• Increase in revenues from new green products and services for clients	• The increasing concern of ESG from downstream customers has led to an increase in the Group’s operating income	• Promote business innovation and timely launch products and services that meet market needs to enhance its own competitive advantages
Resource efficiency	Medium-term	• Improve the efficiency of resource utilization and reduce the consumption of resources, including power, fuel oil and water resources, etc.	• Strengthen the Group’s energy management leads to lower energy demand and operating costs	• Reduce cost payable to upstream supplier as consumption of resources reduced	• We enhance energy efficiency through process optimization, facility and equipment upgrades, and technology optimization measures
• We reduce the use of water resources and packaging materials and enhance the recycling of resources
Energy Sources	Long-term	• Shift energy consumption to low emissions sources leading to potential savings on annual energy costs	• Decrease in operating cost due to utility bill reduction
• Initial premium over market rates on renewable energy procurement	• Reduce cost payable to upstream supplier as consumption of resources reduced	• Continuously monitor the use of various resources and take timely improvement measures to reduce greenhouse gas emissions

ENVIRONMENTAL, SOCIAL AND GOVERNANCE REPORT

7.4. Risk Management

We have implemented a systematic framework to identify, assess, and manage climate-related risks across our operations. Climate risks have been integrated into the Group's daily risk management systems, where we evaluate specific physical and transitional risks and optimize management measures accordingly. In addition to mitigating risks, we leverage our business strengths to explore new opportunities brought about by climate change.

The Group has established a comprehensive process for identifying, prioritizing, and monitoring climate-related risks and opportunities. Annual internal discussions and industry analysis allow us to identify material climate risks and prioritize them using risk assessment tools based on likelihood, business impact, and relevance to our operations. This approach ensures that the most significant risks and opportunities are addressed effectively.

Management plays a pivotal role in overseeing the assessment of climate-related risks and opportunities, ensuring the establishment of an effective ESG risk management framework. Management determines the Group's risk appetite, analyzes key risks, and formulates strategies to address climate-related challenges proactively.

7.5. Metrics and Targets

To ensure the effective implementation of our climate strategies, we closely monitor energy consumption and greenhouse gas emissions. Progress toward energy-saving targets is reviewed regularly.

Target indicator	Target	Progress
Energy saving	Using 2024 as the base year, reducing energy consumption intensity by 5% by 2030	On plan
Greenhouse gas emissions	Using 2024 as the base year, reducing greenhouse gas emission intensity by 5% by 2030	On plan

The table below provides key metrics that highlight the financial impacts of greenhouse gas emissions, energy efficiency, and our graphene product business on revenue, capital, financing, expenditures, and assets.

Financial Category	Climate-related Category	Metric	Unit of Measure	2023	2024	2025
Revenue	Risk Adaptation and Mitigation	Revenue contributed by graphene products business	HK$	194.9 million	118.0 million	75.1 million
Capital and Financing	Risk Adaptation and Mitigation	Proportion of debt to finance the graphene products business*	%	93%	92%	77%
Expenditures	Risk Adaptation and Mitigation	R&D expenses of graphene products business*	HK$	14.8 million	9.3 million	5.3 million
Expenditures	Energy/Fuel	Total energy consumption	MWh	1,686.8	2,078.7	2,296.3
Expenditures	Energy/Fuel	Building energy intensity by gross floor area	MWh/m²	0.36	0.52	0.72
Expenditures	Energy/Fuel	Carbon emissions (Scope 1 and 2)	tCO₂e	965.44	1,122.66	1,219.97
Expenditures	Energy/Fuel	Carbon emissions (Scope 3)	tCO₂e	71.16	45.57	33.39
Expenditures	Energy/Fuel	GHG intensity (per gross floor area)	tCO₂e/m²	0.22	0.29	0.39
Assets	Risk Adaptation and Mitigation	Proportion of property, plant and equipment in graphene products business*	%	82%	78%	87%

We consider our graphene products business is supporting climate change mitigation, particularly when its operations and products contribute directly to advancing renewable energy technologies and fostering a low-carbon economy.

ENVIRONMENTAL, SOCIAL AND GOVERNANCE REPORT

8. KPI SUMMARY

8.1. Environmental Performance

	Unit	2025	2024
Air emissions
NO_{x}	kg	1.14	0.65
SO_{x}	kg	0.02	0.01
RSP	kg	0	0.05
GHG emissions
Total GHG emissions	tCO_{2}e	1,253.36	1,168.23
GHG intensity	tCO_{2}e/m²	0.39	0.36
Hazardous waste
Total hazardous waste generated	kg	0	0
Hazardous waste recycled	kg	0	0
Hazardous waste generated intensity	kg/m²	0	0
Non-hazardous waste
Total non-hazardous waste generated	kg	2,298	2,269.15
Non-hazardous waste recycled	kg	390	284
Non-hazardous waste generated intensity	kg/m²	0.72	0.69
Energy consumption
Total energy consumption	MWh	2,296.34	2,078.68
Energy intensity	MWh/m²	0.72	0.64
Water consumption
Total water consumption	m³	N/A	1,394
Water intensity	m³/m²	N/A	0.43

8.2. Social Performances

		Unit	2025	2024
Number of employees
Overall		Persons	217	232
By gender	Male	Persons	139	152
	Female	Persons	78	80
By employment type	Full-time	Persons	206	221
	Part-time	Persons	11	11
By employment category	Chief executive	Persons	3	3
	Management	Persons	26	34
	General staff	Persons	188	195
By age group	30 or below	Persons	29	31
	31–40	Persons	57	69
	41–50	Persons	55	62
	51 or above	Persons	76	70
By geographical region	Hong Kong	Persons	55	53
	Mainland China	Persons	162	179
	United States of America	Persons	0	0
Turnover rate
Overall		%	11.1	27
By gender	Male	%	12.4	17.8
	Female	%	8.9	42.3
By age group	30 or below	%	16.7	55.1
	31–40	%	17.5	33.8
	41–50	%	13.7	11.5
	51 or above	%	1.4	12.4
By geographical region	Hong Kong	%	14.8	14.6
	Mainland China	%	10	28.7
	United States of America	%	0	100

ENVIRONMENTAL, SOCIAL AND GOVERNANCE REPORT

		Unit	2025	2024
Percentage of employees trained
Overall		%	25.3	24.6
By gender	Male	%	56.4	63.2
	Female	%	43.6	36.8
By employment category	Chief executive	%	0	0
	Management	%	14.5	8.8
	General staff	%	85.5	91.2
Average training hours
Overall		Hours/person	0.03	0.33
By gender	Male	Hours/person	0.01	0.3
	Female	Hours/person	0.05	0.4
By employment category	Chief executive	Hours/person	0	0
	Management	Hours/person	0	0.2
	General staff	Hours/person	0.03	0.4
Occupational safety
Number and rate of work-related fatality		Cases	0	0
Number and rate of work-related injuries		Cases	0	0
Number of days lost due to work injury		Cases	0	0
Number of suppliers
Hong Kong		Number	10	14
Mainland China		Number	50	63

9. COMPLIANCE PERFORMANCE

Aspect	Laws and regulations that may have a significant impact on the Group	Compliance performance
Emissions	Environmental Protection Laws of the PRC; The Law of the PRC on the Prevention and Control of Water Pollution; The Law of the PRC on the Prevention and Control of Atmospheric Pollution; Air Pollution Control Ordinance; Waste Disposal Ordinance; Water Pollution Control Ordinance	The Group did not identify any material non-compliance cases in 2025.
Employment	Production Safety Law of the PRC; Prevention and Treatment of Occupational Diseases Law of the PRC; Occupational Safety and Health Ordinance	The Group did not identify any non-compliance cases in 2025.
Health and Safety	Production Safety Law of the PRC; Prevention and Treatment of Occupational Diseases Law of the PRC; Fire Control Law of the PRC; Occupational Safety and Health Ordinance; Employees' Compensation Ordinance	The Group did not identify any material non-compliance cases in 2025.
Labour Standards	Labour Law of the PRC; The Law of the PRC on the Protection of Minors; Employment Ordinance; Occupational Safety and Health Ordinance	The Group did not identify any material non-compliance cases in 2025.
Product Responsibility	Product Quality Law of the PRC; Patent Law of the PRC; Trade Descriptions Ordinance	The Group did not identify any material non-compliance cases in 2025.
Anti-corruption	Anti-Unfair Competition Law of the PRC; Anti-Money Laundering Law of the PRC; Prevention of Bribery Ordinance; Anti-Money Laundering and Counter-Terrorist Financing Ordinance	The Group did not identify any cases of material non-compliance nor were there any concluded legal cases regarding corruption practices brought against it or its employees in 2025.

ENVIRONMENTAL, SOCIAL AND GOVERNANCE REPORT

10. ESG CONTENT INDEX

Aspects/KPI	Description	Section/statement	Page no.
A. Environment
Aspect A1: Emissions
General	Information on:
Disclosure	(a) the policies; and	Concern about Our Environment	77
	(b) compliance with relevant laws and regulations that have a significant impact on the issuer.	Compliance Performance	97
A1.1	Types of emissions and respective emissions data.	Air Emissions; KPI Summary	94
A1.2	Total hazardous waste production and intensity.	Waste; KPI Summary	94
A1.3	Total non-hazardous waste production and intensity.	Waste; KPI Summary	94
A1.4	Description of emission target(s) set and steps taken to achieve them.	Air Emissions; Greenhouse Gas (GHG) Emissions	79
A1.5	Description of how hazardous and non-hazardous wastes are handled, and a description of reduction target(s) set and steps taken to achieve them.	Waste	81
Aspect A2: Use of Resources
General	Policies on the efficient use of resources, including energy, water and other raw materials.	Concern about Our Environment	77
A2.1	Direct and/or indirect energy consumption by type in total and intensity.	Reasonable Use of Resources; KPI Summary	78
A2.2	Water consumption in total and intensity.	Reasonable Use of Resources; KPI Summary	78
A2.3	Description of energy use efficiency initiatives and results achieved.	Reasonable Use of Resources	78
A2.4	Description of whether there is any issue in sourcing water that is fit for purpose, water efficiency initiatives and results achieved.	Reasonable Use of Resources	78

Aspects/KPI	Description	Section/statement	Page no.
A2.5	Total packaging material used for finished products and, with reference to per unit produced.	As identified by our ESG materiality assessment, packaging is not a material issue to our operations. Thus, we do not disclose data in this reporting period.	N/A
Aspect A3: The Environment and Natural Resources
General Disclosure	Policies on minimising the issuer's significant impact on the environment and natural resources.	Promoting the Environment and Natural Resources	82
A3.1	Description of the significant impacts of activities on the environment and natural resources and the actions taken to manage them.	Promoting the Environment and Natural Resources	82
B. Social
Aspect B1: Employment
General Disclosure	Information on: (a) the policies; and (b) compliance with relevant laws and regulations that have a significant impact on the issuer.	Employment Practices	73
B1.1	Total workforce by gender, employment type, age group and geographical region.	KPI Summary	95
B1.2	Employee turnover rate by gender, age group and geographical region.	KPI Summary	95
Aspect B2: Health and Safety
General Disclosure	Information on: (a) the policies; and (b) compliance with relevant laws and regulations that have a significant impact on the issuer.	Employee Health & Safety	76
B2.1	Number and rate of work-related fatalities.	KPI Summary	96
B2.2	Number of lost days due to work injury.	KPI Summary	96
B2.3	Description of occupational health and safety measures adopted, how they are implemented and monitored.	Employee Health & Safety	76

100

ENVIRONMENTAL, SOCIAL AND GOVERNANCE REPORT

Aspects/KPI	Description	Section/statement	Page no.
Aspect B3: Development and Training
General Disclosure	Policies on improving employees' knowledge and skills for discharging duties at work. Description of training activities.	Employee Development & Training	75
B3.1	The percentage of employees trained by gender and employee category.	KPI Summary	96
B3.2	The average training hours completed per employee by gender and employee category.	KPI Summary	96
Aspect B4: Labour Standards
General Disclosure	Information on:
(a) the policies; and
(b) compliance with relevant laws and regulations that have a significant impact on the issuer.	Employment Practices	73
B4.1	Description of measures to review employment practices to avoid child and forced labour.	Employment Practices	74
B4.2	Description of steps taken to eliminate such practices when discovered.	Employment Practices	74
Aspect B5: Supply Chain Management
General Disclosure	Policies on managing environmental and social risks of the supply chain.	Supply Chain Management	71
B5.1	Number of suppliers by geographical region.	Supply Chain Management; KPI Summary	71
B5.2	Description of practices relating to engaging suppliers, number of suppliers where the practices are being implemented, how they are implemented and monitored.	Supply Chain Management	71
B5.3	Description of practices used to identify environmental and social risks along the supply chain, and how they are implemented and monitored.	Supply Chain Management	71
B5.4	Description of practices used to promote environmentally preferable products and services when selecting suppliers, and how they are implemented and monitored.	Supply Chain Management	71

Aspects/KPI	Description	Section/statement	Page no.
Aspect B6: Product Responsibility
General	Information on:
Disclosure	(a) the policies; and	Responsible for Our Operations	70
	(b) compliance with relevant laws and regulations that have a significant impact on the issuer.	Compliance Performance	97
B6.1	Percentage of total products sold or shipped subject to recalls for safety and health reasons.	There were no products sold or shipped subject to recalls for safety and health reasons during the reporting period.	N/A
B6.2	Number of product and service-related complaints received and how they are dealt with.	There were no products and service related complaints received during the reporting period.	N/A
B6.3	Description of practices relating to observing and protecting intellectual property rights.	Intellectual Property Rights	71
B6.4	Description of quality assurance process and recall procedures.	Product and Service Quality & Safety	70
B6.5	Description of consumer data protection and privacy policies, how they are implemented and monitored.	Customer Privacy	71

102

Aspects/KPI	Description	Section/statement	Page no.
Aspect B7: Anti-corruption
General	Information on:
Disclosure	(a) the policies; and	Anti-corruption	72
	(b) compliance with relevant laws and regulations that have a significant impact on the issuer.	Compliance Performance	97
B7.1	Number of concluded legal cases regarding corrupt practices brought against the issuer or its employees during the reporting period and the outcomes of the cases.	Compliance Performance	N/A
B7.2	Description of preventive measures and whistle-blowing procedures, how they are implemented and monitored.	Anti-corruption	72
B7.3	Description of anti-corruption training provided to directors and staff.	Anti-corruption	72
Aspect B8: Community Investment
General	Policies on community engagement to understand the needs of the communities where the issuer operates and to ensure its activities take into consideration the communities' interests.	Community Development	72
B8.1	Focus areas of contribution.	Community Development	72
B8.2	Resources contributed to the focus area.	Community Development	72

Graphex Group Limited Annual Report 2025 103

INDEPENDENT AUDITOR'S REPORT

CROWE

國富浩華（香港）會計師事務所有限公司
Crowe (HK) CPA Limited
香港銅鑼灣禮碩道77號禮碩中心9樓
9/F Leighton Centre,
77 Leighton Road,
Causeway Bay, Hong Kong

TO THE SHAREHOLDERS OF GRAPHEX GROUP LIMITED

(Incorporated in the Cayman Islands with limited liability)

OPINION

We have audited the consolidated financial statements of Graphex Group Limited (the "Company") and its subsidiaries (the "Group") set out on pages 109 to 234, which comprise the consolidated statement of financial position as at 31 December 2025, and the consolidated statement of profit or loss, the consolidated statement of comprehensive income, the consolidated statement of changes in equity and the consolidated statement of cash flows for the year then ended, and notes to the consolidated financial statements, including material accounting policy information.

In our opinion, the consolidated financial statements give a true and fair view of the consolidated financial position of the Group as at 31 December 2025, and of its consolidated financial performance and its consolidated cash flows for the year then ended in accordance with IFRS Accounting Standards as issued by the International Accounting Standards Board ("IASB") and have been properly prepared in compliance with the disclosure requirements of the Hong Kong Companies Ordinance.

BASIS FOR OPINION

We conducted our audit in accordance with Hong Kong Standards on Auditing ("HKSAs") issued by the Hong Kong Institute of Certified Public Accountants ("HKICPA"). Our responsibilities under those standards are further described in the Auditor's responsibilities for the audit of the consolidated financial statements section of our report. We are independent of the Group in accordance with the HKICPA's Code of Ethics for Professional Accountants (the "Code"), as applicable to audits of financial statements of public interest entities. We have also fulfilled our other ethical responsibilities in accordance with the Code. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.

MATERIAL UNCERTAINTY RELATED TO GOING CONCERN

During the year ended 31 December 2025, the Group incurred a loss attributable to owners of the parent of HK$364,644,000 and, as at 31 December 2025, the Group's current liabilities exceeded its current assets by HK$182,655,000. These conditions, along with other matters as set forth in note 2.1 to the consolidated financial statements, indicate the existence of a material uncertainty which may cast significant doubt on the Group's ability to continue as a going concern. Our opinion is not modified in this respect.

104

INDEPENDENT AUDITOR'S REPORT

KEY AUDIT MATTERS

Key audit matters are those matters that, in our professional judgement, were of most significance in our audit of the consolidated financial statements of the current period. These matters were addressed in the context of our audit of the consolidated financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters. For each matter below, our description of how our audit addressed the matter is provided in that context.

We have fulfilled the responsibilities described in the Auditor's responsibilities for the audit of the consolidated financial statements section of our report, including in relation to these matters. Accordingly, our audit included the performance of procedures designed to respond to our assessment of the risks of material misstatement of the consolidated financial statements. The results of our audit procedures, including the procedures performed to address the matters below, provide the basis for our audit opinion on the accompanying consolidated financial statements.

Key audit matters	How our audit addressed the key audit matters
Recoverability of trade and bills receivables and contract assets
As at 31 December 2025, trade and bills receivables and contract assets of the Group amounted to approximately HK$42,145,000 and HK$7,349,000, after net of provision for lifetime expected credit losses of approximately HK$138,835,000 and HK$79,401,000, respectively. Loss allowances for lifetime expected credit losses of trade and bills receivables and contract assets are based on management's estimates, taking into account the past bad debt loss experience, ageing of overdue trade receivables, customers' repayment history and customers' financial position and an assessment of both the current and forward looking information such as forecast general economic conditions, all of which involve significant degree of management judgement.	We performed the following procedures, among others:
	• assessed and tested the Group's processes and key controls relating to the monitoring of trade and bills receivables and contract assets and the granting of credit terms and contract terms relating to billing milestones;
	• tested the accuracy of ageing analyses and obtained direct confirmations on sample basis of customer receivable balances;
	• evaluated the adequacy of the Group's impairment of trade and bills receivables and contract assets by reference to the Group's historical default data, past payment history, the historical loss rates as adjusted for the current economic condition and forward-looking information and the actual losses recorded during the current financial year;
	• checked subsequent settlements received from the customers after the reporting period end; and
	• reviewed the adequacy of the disclosures made in the consolidated financial statements.

INDEPENDENT AUDITOR'S REPORT

KEY AUDIT MATTERS (Continued)

Key audit matters

How our audit addressed the key audit matters

Impairment assessment of goodwill, other intangible assets, property, plant and equipment (including right-of-use assets) – Graphene Products Business

As at 31 December 2025, in respect of graphene products business, the carrying amount of goodwill, other intangible assets, property, plant and equipment (including right-of-use assets) were HK$nil, HK$198,074,000, HK$18,395,000 (including right-of-use assets of HK$10,088,000), respectively, net of impairment losses.

At 31 December 2025, as disclosed in note 15 to the consolidated financial statements, indicators for impairment of customer relationships, trademarks and patents existed, and the Group engaged an independent professional valuer, International Valuation Limited (“IVL”), to determine the fair value of these other intangible assets at 31 December 2025, based on the income approach. Based on the assessment, the fair value of customer relationships, trademarks and patents were HK$nil, HK$111,714,000 and HK$86,360,000 and accordingly, impairment loss of HK$97,519,000, HK$17,833,000 and HK$58,903,000, respectively, were recognised and charged to the profit or loss for the year ended 31 December 2025.

In addition, as disclosed in note 14 to the consolidated financial statements, the graphene products business is identified as the cash-generating unit (the “CGU”) to which the goodwill, other intangible assets (customer relationships, trademarks and patents), property, plant and equipment and right-of-use assets are allocated, and the recoverable amount of the CGU is the higher of value in use and the fair value less costs for disposal. At 31 December 2025, the recoverable amount of the CGU has been determined based on the CGU’s fair value less costs for disposal, using income approach and cash flow projections specific to that CGU and applying the discount rate which reflects specific risks relating to that CGU, with the assistance from IVL. Based on the assessment at 31 December 2025, impairment on goodwill of HK$101,939,000 was recognised and charged to the consolidated profit or loss for the year ended 31 December 2025.

The impairment testing of goodwill, other intangible assets, property, plant and equipment and right-of-use assets required management to make certain estimates and assumptions that involve significant judgement and estimation uncertainties.

Relevant disclosures are included in notes 2.4, 3, 4, 6, 13, 14 and 15 to the consolidated financial statements.

We performed the following procedures, among others:

evaluated the key internal controls of management over impairment assessment of the Group’s goodwill, other intangible assets, property, plant and equipment (including right-of-use assets);
evaluated the independent external valuer’s competence, capabilities and objectivity;
evaluated management’s identification of the CGU, the allocation of assets to the CGU identified and the impairment assessment methodology adopted by management;
assessed the reasonableness of the valuation methodologies and key assumptions adopted by management for the discounted cashflow forecasts, the respective pre-tax discount rates, forecasted revenue, costs and expenses and gross profit ratio growth rate for the 5-years period and long term growth rate of the CGU by taking into consideration of current trends and future market development of the graphene products industry;
compared actual results for the year against the previous period forecasted results prepared by management of the CGU subject to impairment assessment; and
reviewed the adequacy of the disclosures made in the consolidated financial statements.

Graphex Group Limited Annual Report 2025 105

106

INFORMATION OTHER THAN THE CONSOLIDATED FINANCIAL STATEMENTS AND AUDITOR'S REPORT THERON

The directors of the Company are responsible for the other information. The other information comprises the information included in the Annual Report, other than the consolidated financial statements and our auditor's report thereon.

Our opinion on the consolidated financial statements does not cover the other information and we do not express any form of assurance conclusion thereon.

In connection with our audit of the consolidated financial statements, our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the consolidated financial statements or our knowledge obtained in the audit or otherwise appears to be materially misstated. If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to report that fact. We have nothing to report in this regard.

RESPONSIBILITIES OF THE DIRECTORS FOR THE CONSOLIDATED FINANCIAL STATEMENTS

The directors are responsible for the preparation of the consolidated financial statements that give a true and fair view in accordance with IFRS Accounting Standards as issued by the IASB and the disclosure requirements of the Hong Kong Companies Ordinance, and for such internal control as the directors determine is necessary to enable the preparation of consolidated financial statements that are free from material misstatement, whether due to fraud or error.

In preparing the consolidated financial statements, the directors are responsible for assessing the Group's ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the directors of the Company either intend to liquidate the Group or to cease operations or have no realistic alternative but to do so.

The directors of the Company are assisted by the Audit Committee in discharging their responsibilities for overseeing the Group's financial reporting process.

AUDITOR'S RESPONSIBILITIES FOR THE AUDIT OF THE CONSOLIDATED FINANCIAL STATEMENTS

Our objectives are to obtain reasonable assurance about whether the consolidated financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor's report that includes our opinion. Our report is made solely to you, as a body, and for no other purpose. We do not assume responsibility towards or accept liability to any other person for the contents of this report.

Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with HKSAs will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these consolidated financial statements.

INDEPENDENT AUDITOR'S REPORT

AUDITOR'S RESPONSIBILITIES FOR THE AUDIT OF THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)

As part of an audit in accordance with HKSAs, we exercise professional judgement and maintain professional skepticism throughout the audit. We also:

Identify and assess the risks of material misstatement of the consolidated financial statements, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.
Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Group's internal control.
Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by the directors.
Conclude on the appropriateness of the directors' use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Group's ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditor's report to the related disclosures in the consolidated financial statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditor's report. However, future events or conditions may cause the Group to cease to continue as a going concern.
Evaluate the overall presentation, structure and content of the consolidated financial statements, including the disclosures, and whether the consolidated financial statements represent the underlying transactions and events in a manner that achieves fair presentation.
Plan and perform the group audit to obtain sufficient appropriate audit evidence regarding the financial information of the entities or business units within the Group as a basis for forming an opinion on the group financial statements. We are responsible for the direction, supervision and review of the audit work performed for purposes of the group audit. We remain solely responsible for our audit opinion.

We communicate with the Audit Committee regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that we identify during our audit.

We also provide the Audit Committee with a statement that we have complied with relevant ethical requirements regarding independence and to communicate with them all relationships and other matters that may reasonably be thought to bear on our independence, and where applicable, actions taken to eliminate threats or safeguards applied.

108

AUDITOR'S RESPONSIBILITIES FOR THE AUDIT OF THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)

From the matters communicated with the Audit Committee, we determine those matters that were of most significance in the audit of the consolidated financial statements of the current period and are therefore the key audit matters. We describe these matters in our auditor's report unless law or regulation precludes public disclosure about the matter or when, in extremely rare circumstances, we determine that a matter should not be communicated in our report because the adverse consequences of doing so would reasonably be expected to outweigh the public interest benefits of such communication.

Crowe (HK) CPA Limited
Certified Public Accountants
Hong Kong, 31 March 2026

Leung Chun Wa
Practising Certificate Number P04963

CONSOLIDATED STATEMENT OF PROFIT OR LOSS

For the Year ended 31 December 2025

| | Notes | 2025
HK$'000 | 2024
HK$'000 |
| --- | --- | --- | --- |
| REVENUE | 5(a) | 137,561 | 187,850 |
| Cost of sales | 6 | (84,226) | (119,543) |
| GROSS PROFIT | | 53,335 | 68,307 |
| Other income and gains | 5(b) | 8,006 | 9,497 |
| Loss on promissory notes derecognised | 31 | (2,535) | (251) |
| Selling and marketing expenses | | (1,504) | (1,789) |
| Administrative expenses | | (107,219) | (134,456) |
| Research and development costs | 6 | (8,063) | (13,086) |
| Impairment of goodwill | 6 | (101,939) | – |
| Impairment of financial and contract assets, net | 6 | (37,932) | (27,729) |
| Impairment loss on property, plant and equipment and other intangible assets | 6 | (174,255) | (1,853) |
| Fair value gain on financial assets at fair value through profit or loss | | 9 | – |
| Finance costs | 7 | (15,490) | (17,011) |
| Share of results of associates | 17 | – | (797) |
| LOSS BEFORE TAX | 6 | (387,587) | (119,168) |
| Income tax credit | 10 | 22,943 | 7,783 |
| LOSS FOR THE YEAR | | (364,644) | (111,385) |
| Attributable to: | | | |
| Owners of the parent | | (364,644) | (111,435) |
| Non-controlling interests | | – | 50 |
| | | (364,644) | (111,385) |
| LOSS PER SHARE ATTRIBUTABLE TO ORDINARY EQUITY HOLDERS OF THE PARENT | 12 | | (Restated) |
| Basic | | | |
| – For loss for the year | | HK(54.6) cents | HK(32.2) cents |
| Diluted | | | (Restated) |
| – For loss for the year | | HK(54.6) cents | HK(32.2) cents |

Graphex Group Limited Annual Report 2025
109

110

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

For the Year ended 31 December 2025

| | 2025
HK$'000 | 2024
HK$'000 |
| --- | --- | --- |
| LOSS FOR THE YEAR | (364,644) | (111,385) |
| OTHER COMPREHENSIVE INCOME | | |
| Other comprehensive income that may be reclassified to profit or loss
in subsequent periods: | | |
| Exchange differences: | | |
| Exchange differences on translation of foreign operations | (263) | (9,875) |
| Release of exchange fluctuation reserve upon disposal of foreign subsidiaries | – | – |
| | (263) | (9,875) |
| Other comprehensive income that will not be reclassified to profit or loss in
subsequent periods: | | |
| Equity investments designated at fair value through other comprehensive income: | | |
| – Changes in fair value | 8 | 12 |
| – Income tax effect | – | – |
| | 8 | 12 |
| OTHER COMPREHENSIVE INCOME FOR THE YEAR, NET OF TAX | (255) | (9,863) |
| TOTAL COMPREHENSIVE LOSS FOR THE YEAR | (364,899) | (121,248) |
| Attributable to: | | |
| Owners of the parent | (364,891) | (121,298) |
| Non-controlling interests | (8) | 50 |
| | (364,899) | (121,248) |

CONSOLIDATED STATEMENT OF FINANCIAL POSITION

As at 31 December 2025

| | Notes | 2025
HK$'000 | 2024
HK$'000 |
| --- | --- | --- | --- |
| NON-CURRENT ASSETS | | | |
| Property, plant and equipment | 13 | 22,263 | 25,947 |
| Goodwill | 14 | – | 101,939 |
| Other intangible assets | 15 | 198,338 | 408,408 |
| Investments in joint ventures | 16 | – | – |
| Investments in associates | 17 | – | – |
| Equity investment designated at fair value through
other comprehensive income | 18 | 54 | 45 |
| Prepayments, deposits and other receivables | 21 | 46,860 | 5,054 |
| Deferred tax assets | 33 | 18,048 | 5,558 |
| Total non-current assets | | 285,563 | 546,951 |
| CURRENT ASSETS | | | |
| Inventories | 19 | 4,610 | 5,517 |
| Trade and bills receivables | 20 | 42,145 | 182,061 |
| Prepayments, deposits and other receivables | 21 | 174,599 | 41,702 |
| Financial assets at fair value through profit or loss | 22 | 33 | 23 |
| Contract assets | 23 | 7,349 | 17,115 |
| Restricted bank deposits | 24 | 533 | 101 |
| Cash and cash equivalents | 24 | 26,747 | 15,446 |
| | | 256,016 | 261,965 |
| Non-current assets held for sale | 25 | 356 | 432 |
| Total current assets | | 256,372 | 262,397 |
| CURRENT LIABILITIES | | | |
| Trade payables | 26 | 26,952 | 51,462 |
| Other payables and accruals | 27 | 128,190 | 103,182 |
| Contract liabilities | 28 | 35,850 | 43,862 |
| Lease liabilities | 29 | 4,332 | 4,442 |
| Interest-bearing borrowings | 30 | 174,377 | 126,992 |
| Promissory notes | 31 | 29,045 | – |
| Convertible notes | 32 | 3,798 | 3,798 |
| Tax payable | | 36,483 | 33,275 |
| Total current liabilities | | 439,027 | 367,013 |
| NET CURRENT LIABILITIES | | (182,655) | (104,616) |
| TOTAL ASSETS LESS CURRENT LIABILITIES | | 102,908 | 442,335 |

112

CONSOLIDATED STATEMENT OF FINANCIAL POSITION

As at 31 December 2025

| | Notes | 2025
HK$'000 | 2024
HK$'000 |
| --- | --- | --- | --- |
| NON-CURRENT LIABILITIES | | | |
| Lease liabilities | 29 | 12,092 | 15,087 |
| Interest-bearing borrowings | 30 | – | 23,952 |
| Promissory notes | 31 | – | 61,709 |
| Deferred tax liabilities | 33 | 49,518 | 61,227 |
| Total non-current liabilities | | 61,610 | 161,975 |
| NET ASSETS | | 41,298 | 280,360 |
| EQUITY | | | |
| Equity attributable to owners of the parent | | | |
| Share capital | | | |
| – ordinary shares | 34 | 47,066 | 11,738 |
| – preference shares | 34 | 3,236 | 3,236 |
| Other reserves | 37 | (18,797) | 265,385 |
| | | 31,505 | 280,359 |
| Non-controlling interests | | 9,793 | 1 |
| TOTAL EQUITY | | 41,298 | 280,360 |

Lau Hing Tat Patrick
Director

Chan Yick Yan Andross
Director

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

Attributable to owners of the parent

	Share capitalHK$'000( note 34)	Preference sharesHK$'000( note 34)	Share premium account*HK$'000( note 34)	Share-based payment reserve*HK$'000( note 34 and 35)	Conversion rights of convertible notes*HK$'000( note 32)	Warrant reserve*HK$'000( note 32)	Fair value reserve*HK$'000( note 32)	Capital reserve*HK$'000( note 37)	Statutory reserve fund*HK$'000( note 37)	Exchange fluctuation reserve*HK$'000( note 37)	Accumulated losses*HK$'000( 000)	TotalHK$'000( 000)	Non-controlling interestsHK$'000( 000)	Total equityHK$'000( 000)
At 1 January 2025	11,738	3,236	817,646	8,824	827	19,943	(2,594)	5	10,701	(26,295)	(563,672)	280,359	1	280,360
Loss for the year	-	-	-	-	-	-	-	-	-	-	(364,644)	(364,644)	-	(364,644)
Other comprehensive income for the year:
Exchange differences on translation of financial statements of foreign operations*	-	-	-	-	-	-	1	-	-	(256)	-	(255)	(8)	(263)
Change in fair value of equity instruments designated at fair value through other comprehensive income, net of tax	-	-	-	-	-	-	8	-	-	-	-	8	-	8
Total comprehensive loss for the year	-	-	-	-	-	-	9	-	-	(256)	(364,644)	(364,891)	(8)	(364,899)
Transfer upon expiry of conversion rights	-	-	-	-	(827)	-	-	-	-	-	827	-	-	-
Issue of shares under the share award scheme	117	-	2,467	(2,584)	-	-	-	-	-	-	-	-	-	-
Issue of ordinary shares under rights issue	35,211	-	80,814	-	-	-	-	-	-	-	-	116,025	-	116,025
Addition of non-controlling interest	-	-	-	-	-	-	-	-	-	-	-	-	9,800	9,800
Equity-settled share-based transactions	-	-	-	12	-	-	-	-	-	-	-	12	-	12
At 31 December 2025	47,066	3,236	900,927	6,252	-	19,943	(2,585)	5	10,701	(26,551)	(927,489)	31,505	9,793	41,298

Graphex Group Limited Annual Report 2025
113

114

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

	Attributable to owners of the parent
	Share capitalHK$'000(note 34)	Preference sharesHK$'000(note 34)	Share premium account*HK$'000(note 34)	Share-based payment reserve*HK$'000(note 34and 35)	Conversion rights of convertible notes*HK$'000(note 32)	Warrant reserve*HK$'000(note 32)	Fair value reserve*HK$'000(note 32)	Capital reserve*HK$'000(note 37)	Statutory reserve fund*HK$'000(note 37)	Exchange fluctuation reserve*HK$'000(note 37)	Accumulated losses*HK$'000	TotalHK$'000	Non-controlling interestsHK$'000	Total equityHK$'000
At 1 January 2024	8,980	3,236	782,438	14,764	883	19,943	(2,606)	5	10,701	(16,420)	(452,237)	369,687	(49)	369,638
Loss for the year	-	-	-	-	-	-	-	-	-	-	(111,435)	(111,435)	50	(111,385)
Other comprehensive income for the year:
Exchange differences on translation of financial statements of foreign operations*	-	-	-	-	-	-	-	-	-	(9,875)	-	(9,875)	-	(9,875)
Change in fair value of equity instruments designated at fair value through other comprehensive income, net of tax	-	-	-	-	-	-	12	-	-	-	-	12	-	12
Total comprehensive loss for the year	-	-	-	-	-	-	12	-	-	(9,875)	(111,435)	(121,298)	50	(121,248)
Issue of shares upon conversion of convertible notes	6	-	438	-	(56)	-	-	-	-	-	-	388	-	388
Issue of shares under the share award scheme	436	-	19,513	(19,949)	-	-	-	-	-	-	-	-	-	-
Issue of ordinary shares	461	-	4,870	-	-	-	-	-	-	-	-	5,331	-	5,331
Issue of ordinary shares under a placing agreement	1,855	-	10,387	-	-	-	-	-	-	-	-	12,242	-	12,242
Equity-settled share-based transactions	-	-	-	14,009	-	-	-	-	-	-	-	14,009	-	14,009
At 31 December 2024	11,738	3,236	817,646	8,824	827	19,943	(2,594)	5	10,701	(26,295)	(563,672)	280,359	1	280,360

These reserve accounts comprise the consolidated other deficits of HK$18,797,000 (2024: other reserves of HK$265,385,000) in the consolidated statement of financial position.
Included in exchange differences related to foreign operations for 2025 is an amount related to investment in joint ventures and associates of HK$nil in credit balance (2024: HK$4,000).

CONSOLIDATED STATEMENT OF CASH FLOWS

| | Notes | 2025
HK$'000 | 2024
HK$'000 |
| --- | --- | --- | --- |
| CASH FLOWS FROM OPERATING ACTIVITIES | | | |
| Loss before tax | | (387,587) | (119,168) |
| Adjustments for: | | | |
| Finance costs | 7 | 15,490 | 17,011 |
| Share of results of associates | 6 | – | 797 |
| Interest income | 5(b) | (983) | (1,016) |
| Dividend income from equity investments designated at fair value through other comprehensive income | 5(b) | (60) | (65) |
| Gain on disposal of property, plant and equipment, net | 6 | – | (179) |
| Fair value gain on financial assets at fair value through profit or loss | 22 | (9) | – |
| Amortisation and depreciation | 6 | 48,942 | 49,426 |
| Loss on trade receivables derecognised | 25 | – | 497 |
| Impairment of goodwill | 6 | 101,939 | – |
| Impairment of trade and bills receivables, net | 6 | 41,792 | 24,284 |
| (Reversal of impairment)/impairment of prepayments, other receivables and other assets, net | 6 | (4,118) | 4,791 |
| Impairment/(reversal of impairment) of contract assets, net | 6 | 258 | (1,346) |
| Impairment of property, plant and equipment | 6 | – | 1,735 |
| Impairment of intangible assets | 6 | 174,255 | 118 |
| Payables written off | 5(b) | (1,861) | – |
| Exchange gain | 5(b) | (1) | (1) |
| Equity-settled share-based payment expense | | 12 | 14,009 |
| Gain on waiver of other borrowing | 5(b) | – | (868) |
| Gain on waiver of interest on convertible notes | 5(b) | – | (32) |
| Gain on waiver of interest on corporate bonds | 5(b) | – | (269) |
| Gain on settlement of payables upon issue of ordinary shares | 34(e) | – | (560) |
| Loss on promissory notes derecognised | 31 | 2,535 | 251 |
| | | (9,396) | (10,585) |
| Decrease in inventories | | 1,032 | 8,029 |
| Decrease in contract assets | | 9,745 | 13,735 |
| Decrease/(increase) in trade and bills receivables | | 100,281 | (62,063) |
| Increase in prepayments, deposits and other receivables | | (105,869) | (7,771) |
| (Decrease)/increase in trade payables | | (25,439) | 29,221 |
| Increase in other payables and accruals | | 28,686 | 18,334 |
| (Decrease)/increase in contract liabilities | | (8,838) | 6,008 |
| CASH USED IN OPERATIONS | | (9,798) | (5,092) |
| Interest received | | 11 | 21 |
| Income tax paid | | – | (241) |
| NET CASH FLOWS USED IN OPERATING ACTIVITIES | | (9,787) | (5,312) |

Graphex Group Limited Annual Report 2025
115

116

CONSOLIDATED STATEMENT OF CASH FLOWS

| | Notes | 2025
HK$'000 | 2024
HK$'000 |
| --- | --- | --- | --- |
| CASH FLOWS FROM INVESTING ACTIVITIES | | | |
| Interest received | | 1,519 | 75 |
| Purchases of property, plant and equipment | | (74) | (152) |
| Payments of deposits for acquisition of property, plant and equipment | | (40,795) | – |
| Proceeds from disposal of property, plant and equipment | | – | 179 |
| Proceeds from disposal of non-current assets held for sale | | 437 | – |
| Repayment of loans from joint ventures | | 33,530 | 24,611 |
| Loan to a third party | | – | (7,067) |
| Loans to joint ventures | | (45,327) | (25,122) |
| Repayment of loans from an associate | | – | 1,216 |
| Dividend from equity instruments designated at fair value through
other comprehensive income | | 60 | 65 |
| Purchases of other intangible assets | | (323) | (318) |
| Placement of restricted bank deposits | | (425) | (103) |
| NET CASH FLOWS USED IN INVESTING ACTIVITIES | | (51,398) | (6,616) |
| CASH FLOWS FROM FINANCING ACTIVITIES | | | |
| Proceeds from issue of ordinary shares, net | 34 | 90,256 | 12,242 |
| Payment for costs of issuing ordinary shares | | (3,369) | (272) |
| Repayment of corporate bonds | 38 | (9,211) | (1,605) |
| Repayment of lease liabilities | 38 | (4,804) | (4,879) |
| Interest paid | 38 | (14,094) | (5,230) |
| Proceeds from bank borrowings | 38 | 33,532 | 13,859 |
| Repayment of bank borrowings | 38 | (15,663) | (10,973) |
| Proceeds from other borrowings | 38 | 1,092 | 9,587 |
| Repayment of other borrowings | 38 | (3,583) | (9,032) |
| Proceeds of loans from directors | 38 | 21,951 | – |
| Repayment of promissory notes | 38 | (15,830) | (3,300) |
| NET CASH FLOWS GENERATED FROM FINANCING ACTIVITIES | | 80,277 | 397 |
| NET DECREASE IN CASH AND CASH EQUIVALENTS | | 19,092 | (11,531) |
| Cash and cash equivalents at beginning of year | | 15,446 | 27,190 |
| Effect of foreign exchange rate changes, net | | (7,791) | (213) |
| CASH AND CASH EQUIVALENTS AT END OF YEAR | | 26,747 | 15,446 |
| ANALYSIS OF BALANCES OF CASH AND CASH EQUIVALENTS | | | |
| Cash and bank balances as stated in the consolidated statement
of financial position | 24 | 26,747 | 15,446 |
| CASH AND CASH EQUIVALENTS AS STATED IN THE
CONSOLIDATED STATEMENT OF CASH FLOWS | | 26,747 | 15,446 |

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

1. CORPORATE AND GROUP INFORMATION

Graphex Group Limited (the “Company”) was incorporated as an exempted company with limited liability in the Cayman Islands on 25 November 2013. The registered office address of the Company is Windward 3, Regatta Office Park, P.O. Box 1350, Grand Cayman KY1-1108, Cayman Islands.

The principal activities of the Company is investment holding and its subsidiaries (collectively referred to as the “Group”) are development and processing of graphene products, in particular, graphite anode material for lithium-ion batteries used in electric vehicles and other applications. The Group is also engaged in landscape architecture businesses.

Information about subsidiaries

Particulars of the Company’s principal subsidiaries are as follows:

Name	Place of incorporation or establishment/form of legal entity	Issued ordinary/ registered capital	Percentage of equity attributable to the Company
			Direct	Indirect	Principal activities
Earthasia Holdings Limited	British Virgin Islands/ limited liabilities company	US$100	100%	–	Investment holding
Earthasia (International) Limited (“EIL”)	Hong Kong/limited liabilities company	HK$69,199,400	–	100%	Landscape architecture
烯石創新科技有限公司(“Graphex Innovation and Technology Limited”)	Hong Kong/limited liabilities company	HK$623,837,138	–	100%	Investment holding
Think High Global Limited	British Virgin Islands/ limited liabilities company	US$1	–	100%	Investment holding
Graphex Technologies, LLC	USA/limited liabilities company	–	–	100%	Marketing of graphene products
泛亞景觀設計(上海)有限公司(“Earthasia (Shanghai) Co., Ltd.”)a	Mainland China/wholly foreign owned enterprise	US$10,000,000	–	100%	Landscape architecture
Earthasia Limited	Hong Kong/limited liabilities company	HK$10,000	–	100%	Landscape architecture
泛亞城市規劃設計(上海)有限公司(“Earthasia Design (Shanghai) Co., Ltd.”)a	Mainland China/wholly owned domestic enterprise	RMB21,000,000	–	100%	Landscape architecture

118

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

1. CORPORATE AND GROUP INFORMATION (Continued)

Information about subsidiaries (Continued)

Name	Place of incorporation or establishment/form of legal entity	Issued ordinary/ registered capital	Percentage of equity attributable to the Company Direct	Percent	Principal activities
泛亞國際環境設計(廈門)有限公司 ("Earthasia (Xiamen) Co., Ltd.")# ("EAXM")	Mainland China/wholly owned domestic enterprise	RMB1,000,000	–	100%	Landscape architecture
前海泛亞景觀設計(深圳)有限公司 ("Earthasia (Qianhai) Limited")# ("EA SZ")	Mainland China/wholly foreign owned enterprise	RMB5,000,000	–	100%	Interior design and landscape architecture
上海波奧新材料科技有限公司 ("Shanghai Tanao New Materials Technology Company Ltd.")# ("SH Tanao")	Mainland China/wholly foreign owned enterprise	HK$100,000,000	–	100%	Sale of graphene products
黑龍江省牡丹江農墾波奧石墨烯深加工有限公司 ("Heilongjiang Mudanjiang Nongken Tanao Graphene Deep Processing Company Limited")# ("Tanao")	Mainland China/wholly owned domestic enterprise	RMB50,000,000	–	100%	Manufacturing and sale of graphene products
上海泛艾景觀設計有限公司 ("Shanghai Fan Ai Co. Ltd.")#	Mainland China/wholly owned domestic enterprise	RMB17,650,000	–	100%	Dormant
烯石(安徽)新能源材料有限公司 ("Graphex (Anhui) New Energy Materials Co., Limited")# ("Graphex Anhui")	Mainland China/wholly foreign owned enterprise	HK$20,000,000	–	51%	Manufacturing and sale of graphene products
烯石(青島)新能源科技有限公司 (前稱烯石(山東)新能源科技有限公司) ("Graphex (Qingdao) New Energy Technologies Limited")# (formerly known as "Graphex (Shandong) New Energy Technologies Limited") ("Graphex Qingdao")	Mainland China/wholly foreign owned enterprise	HK$50,000,000	–	100%	Dormant

The English names of these companies represent the best effort made by the management of the Company to directly translate their Chinese names as these companies do not register any official English names.

Graphex Group Limited Annual Report 2025 119

1. CORPORATE AND GROUP INFORMATION (Continued)

Information about subsidiaries (Continued)

Earthasia (Shanghai) Co., Ltd., EA SZ, SH Tanao, Graphex Anhui and Graphex Qingdao are registered as wholly foreign-owned enterprises under the law of the People's Republic of China (the "PRC").

The above table lists the subsidiaries of the Company which, in the opinion of the directors, principally affected the results for the year or formed a substantial portion of the net assets of the Group. To give details of other subsidiaries would, in the opinion of the directors, result in particulars of excessive length.

2.1 BASIS OF PREPARATION

These financial statements have been prepared in accordance with IFRS Accounting Standards issued by the International Accounting Standards Board (the "IASB") and the disclosure requirements of the Hong Kong Companies Ordinance. These consolidated financial statements also comply with the applicable disclosure provisions of the Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited (the "Listing Rules"). They have been prepared under the historical cost convention, except for equity investments designated at fair value through other comprehensive income and financial assets at fair value through profit or loss which have been measured at fair value. These financial statements are presented in Hong Kong dollars ("HK$") and all values are rounded to the nearest thousand except when otherwise indicated.

Going concern basis

The Group recorded a loss attributable to owners of the parent of HK$364,644,000 for the year ended 31 December 2025 and net current liabilities of HK$182,655,000 as at 31 December 2025.

120

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

2.1 BASIS OF PREPARATION (Continued)

Going concern basis (Continued)

In view of such circumstances, the directors of the Company have given careful consideration to the future liquidity and performance of the Group and its available sources of financing in assessing whether the Group will have sufficient resources to continue as a going concern. The following plans and measures have been undertaken to mitigate the liquidity pressure and to improve the financial position of the Group:

(i) Subsequent to the reporting period end and up to the date of approval of the consolidated financial statements, the Group has obtained a loan facility of HK$80,000,000 for financing its working capital;

(ii) The Group is currently in serious discussions with potential investors for raising new capital by way of issuing new equity and/or debt securities for which the formal agreements have not yet been signed up to the date of approval of the consolidated financial statements;

(iii) Subsequent to the reporting period end and up to the date of approval of the consolidated financial statements, the Company has obtained extension letter from two directors and a creditor who is an independent third party to the Group, to extend the due dates of repayment of the debts, with a total principal amount of approximately HK$28,087,000, to 31 December 2027;

(iv) Subsequent to the reporting period end and up to the date of approval of the consolidated financial statements, the Company has obtained extension letter from the holder of promissory notes to extend the due date of repayment of the promissory notes with carrying amortised amount of approximately HK$29,045,000, to 5 August 2027; and

(v) As set out in the Company's circular dated 29 January 2026, a wholly-owned subsidiary and an independent third party buyer (listed in US OTCQB) entered into agreements for proposed disposal of a wholly-owned subsidiary incorporated in the US (to which certain patents have been licenced by the Group and which also owns certain other patents), and provision of design and support services at considerations comprising cash of US$3 million (approximately HK$23.4 million), which will be settled upon transfer of all issued capital of the US wholly-owned subsidiary, and 29 million shares of the buyer which are estimated to have a market value of approximately HK$6 million based on the closing of the buyer's share prices on 27 March 2026. The transaction was approved by the shareholders of the Company at the extraordinary general meeting held on 20 March 2026. The transaction has not yet been completed pending completion of approval procedures of the independent buyer.

The directors of the Company have reviewed the Group's cash flow projection prepared by management covering a period of 12 months from the date of approval of the consolidated financial statements and are of the opinion that, after taking into account the measures to be implemented and have been implemented, the Group will have sufficient working capital to finance its operations and to meet its financial obligations for at least the next twelve months from the date of approval of these consolidated financial statements. Accordingly, the directors of the Company believe it is appropriate to prepare the consolidated financial statements of the Group for the year ended 31 December 2025 on a going concern basis.

Graphex Group Limited Annual Report 2025 121

2.1 BASIS OF PREPARATION (Continued)

Going concern basis (Continued)

Should the going concern assumption be inappropriate, adjustments may have to be made to write down the values of assets to their recoverable amounts, to provide for further liabilities that might arise, and to reclassify non-current assets and non-current liabilities as current assets and current liabilities. The effects of these adjustments have not been reflected in these consolidated financial statements.

Basis of consolidation

The consolidated financial statements include the financial statements of the Group for the year ended 31 December 2025. A subsidiary is an entity (including a structured entity), directly or indirectly, controlled by the Company. Control is achieved when the Group is exposed, or has rights, to variable returns from its involvement with the investee and has the ability to affect those returns through its power over the investee (i.e. existing rights that give the Group the current ability to direct the relevant activities of the investee).

Generally, there is a presumption that a majority of voting rights results in control. When the Company has, directly or indirectly, less than a majority of the voting or similar rights of an investee, the Group considers all relevant facts and circumstances in assessing whether it has power over an investee, including:

the contractual arrangement with the other vote holders of the investee;
rights arising from other contractual arrangements; and
the Group's voting rights and potential voting rights.

The financial statements of the subsidiaries are prepared for the same reporting period as the Company, using consistent accounting policies. The results of subsidiaries are consolidated from the date on which the Group obtains control, and continue to be consolidated until the date that such control ceases.

Profit or loss and each component of other comprehensive income are attributed to the owners of the parent of the Group and to the non-controlling interests, even if this results in the non-controlling interests having a deficit balance. All intra-group assets and liabilities, equity, income, expenses and cash flows relating to transactions between members of the Group are eliminated in full on consolidation.

The Group reassesses whether or not it controls an investee if facts and circumstances indicate that there are changes to one or more of the three elements of control described above. A change in the ownership interest of a subsidiary, without a loss of control, is accounted for as an equity transaction.

If the Group loses control over a subsidiary, it derecognises (i) the assets (including goodwill) and liabilities of the subsidiary, (ii) the carrying amount of any non-controlling interests and (iii) the cumulative translation differences recorded in equity; and recognises (i) the fair value of the consideration received, (ii) the fair value of any investment retained and (iii) any resulting surplus or deficit in profit or loss. The Group's share of components previously recognised in other comprehensive income is reclassified to profit or loss or retained profits, as appropriate, on the same basis as would be required if the Group had directly disposed of the related assets or liabilities.

122

2.2 CHANGES IN ACCOUNTING POLICIES AND DISCLOSURES

In the current year, the Group has applied the following amendments to IFRS Accounting Standards issued by the International Accounting Standards Board for the first time, which are mandatorily effective for the Group’s annual period beginning on 1 January 2025 for the preparation of these consolidated financial statements:

Amendments to IAS 21

Lack of Exchangeability

The nature and the impact of the new and revised IFRSs that are applicable to the Group are described below:

Lack of exchangeability – Amendments to IAS 21

For annual reporting periods beginning on or after 1 January 2025, Lack of Exchangeability – Amendments to IAS 21 The Effects of Changes in Foreign Exchange Rates specifies how an entity should assess whether a currency is exchangeable and how it should determine a spot exchange rate when exchangeability is lacking. The amendments also require disclosure of information that enables users of its financial statements to understand how the currency not being exchangeable into the other currency affects, or is expected to affect, the entity's financial performance, financial position and cash flows. The amendments did not have a material impact on the Group’s financial statements.

2.3 ISSUED BUT NOT YET EFFECTIVE IFRS ACCOUNTING STANDARDS

The Group has not early applied the following new and amendments to IFRS Accounting Standards that have been issued but are not yet effective:

Amendments to IFRS 9 and IFRS 7

Annual Improvements to IFRS Accounting Standards – Volume 11

Amendments to IFRS 18

Amendments to IFRS 19

Amendments to IAS 21

Amendments to IFRS 10 and IAS 28

Amendments to the Classification and Measurement of Financial Instruments¹

Contracts Referencing Nature-dependent Electricity¹

Amendments to IFRS 1, IFRS 7, IFRS 9, IFRS 10 and IAS 7¹

Presentation and Disclosure in Financial Statements²

Subsidiaries without Public Accountability: Disclosures²

Translation to a Hyperinflationary Presentation Currency²

Sale or Contribution of Assets between an Investor and its Associate or Joint Venture³

¹ Effective for annual periods beginning on or after 1 January 2026

² Effective for annual periods beginning on or after 1 January 2027

³ Effective for annual periods beginning on or after a date to be determined

The Group is in the process of making an assessment of what the impact of these developments is expected to be in the period of initial application. So far it has concluded that the adoption of them is unlikely to have a significant impact on the consolidated financial statements.

Graphex Group Limited Annual Report 2025 123

2.4 MATERIAL ACCOUNTING POLICY INFORMATION

Investments in associates and joint ventures

An associate is an entity in which the Group has a long-term interest of generally not less than 20% of the equity voting rights and over which it is in a position to exercise significant influence. Significant influence is the power to participate in the financial and operating policy decisions of the investee, but is not control or joint control over those policies.

A joint venture is a type of joint arrangement whereby the parties that have joint control of the arrangement have rights to the net assets of the joint venture. Joint control is the contractually agreed sharing of control of an arrangement, which exists only when decisions about the relevant activities require the unanimous consent of the parties sharing control.

The Group's investments in associates and joint ventures are stated in the consolidated statement of financial position at the Group's share of net assets under the equity method of accounting, less any impairment loss.

Adjustments are made to bring into line any dissimilar accounting policies that may exist.

The Group's share of the post-acquisition results and other comprehensive income of associates and joint ventures is included in the consolidated statement of profit or loss and consolidated statement of comprehensive income, respectively. In addition, when there has been a change recognised directly in the equity of the associate or joint venture, the Group recognises its share of any changes, when applicable, in the consolidated statement of changes in equity. Unrealised gains and losses resulting from transactions between the Group and its associates or joint ventures are eliminated to the extent of the Group's investments in the associates or joint ventures, except where unrealised losses provide evidence of an impairment of the assets transferred. Goodwill arising from the acquisition of associates or joint ventures is included as part of the Group's investments in associates or joint ventures.

If an investment in an associate becomes an investment in a joint venture or vice versa, the retained interest is not remeasured. Instead, the investment continues to be accounted for under the equity method. In all other cases, upon loss of significant influence over the associate or joint control over the joint venture, the Group measures and recognises any retained investment at its fair value. Any difference between the carrying amount of the associate or joint venture upon loss of significant influence or joint control and the fair value of the retained investment and proceeds from disposal is recognised in profit or loss.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

2.4 MATERIAL ACCOUNTING POLICY INFORMATION (Continued)

Business combinations and goodwill

Business combinations are accounted for using the acquisition method. The consideration transferred is measured at the acquisition date fair value which is the sum of the acquisition date fair values of assets transferred by the Group, liabilities assumed by the Group to the former owners of the acquiree and the equity interests issued by the Group in exchange for control of the acquiree. For each business combination, the Group elects whether to measure the non-controlling interests in the acquiree that are present ownership interests and entitle their holders to a proportionate share of net assets in the event of liquidation at fair value or at the proportionate share of the acquiree's identifiable net assets. All other components of non-controlling interests are measured at fair value. Acquisition-related costs are expensed as incurred.

When the Group acquires a business, it assesses the financial assets and liabilities assumed for appropriate classification and designation in accordance with the contractual terms, economic circumstances and pertinent conditions as at the acquisition date. This includes the separation of embedded derivatives in host contracts of the acquiree.

If the business combination is achieved in stages, the previously held equity interest is remeasured at its acquisition date fair value and any resulting gain or loss is recognised in profit or loss.

Any contingent consideration to be transferred by the acquirer is recognised at fair value at the acquisition date. Contingent consideration classified as an asset or liability is measured at fair value with changes in fair value recognised in profit or loss. Contingent consideration that is classified as equity is not remeasured and subsequent settlement is accounted for within equity.

Goodwill is initially measured at cost, being the excess of the aggregate of the consideration transferred, the amount recognised for non-controlling interests and any fair value of the Group's previously held equity interests in the acquiree over the identifiable net assets acquired and liabilities assumed. If the sum of this consideration and other items is lower than the fair value of the net assets acquired, the difference is, after reassessment, recognised in profit or loss as a gain on bargain purchase.

After initial recognition, goodwill is measured at cost less any accumulated impairment loss. Goodwill is tested for impairment annually or more frequently if events or changes in circumstances indicate that the carrying value may be impaired. The Group performs its annual impairment test of goodwill as at the end of each reporting period. For the purpose of impairment testing, goodwill acquired in a business combination is, from the acquisition date, allocated to each of the Group's cash-generating units, or groups of cash-generating units, that are expected to benefit from the synergies of the combination, irrespective of whether other assets or liabilities of the Group are assigned to those units or groups of units.

Graphex Group Limited Annual Report 2025 125

2.4 MATERIAL ACCOUNTING POLICY INFORMATION (Continued)

Business combinations and goodwill (Continued)

Impairment is determined by assessing the recoverable amount of the cash-generating unit (group of cash-generating units) to which the goodwill relates. Where the recoverable amount of the cash-generating unit (group of cash-generating units) is less than the carrying amount, an impairment loss is recognised. An impairment loss recognised for goodwill is not reversed in a subsequent period.

Where goodwill has been allocated to a cash-generating unit (or group of cash-generating units) and part of the operation within that unit is disposed of, the goodwill associated with the operation disposed of is included in the carrying amount of the operation when determining the gain or loss on the disposal. Goodwill disposed of in these circumstances is measured based on the relative value of the operation disposed of and the portion of the cash-generating unit retained, unless the Group can demonstrate that some other method better reflects the goodwill associated with the operation disposed of.

Fair value measurement

The Group measures its derivative financial instruments and equity investments at fair value at the end of each reporting period. Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The fair value measurement is based on the presumption that the transaction to sell the asset or transfer the liability takes place either in the principal market for the asset or liability, or in the absence of a principal market, in the most advantageous market for the asset or liability. The principal or the most advantageous market must be accessible by the Group. The fair value of an asset or a liability is measured using the assumptions that market participants would use when pricing the asset or liability, assuming that market participants act in their economic best interest.

A fair value measurement of a non-financial asset takes into account a market participant's ability to generate economic benefits by using the asset in its highest and best use or by selling it to another market participant that would use the asset in its highest and best use.

The Group uses valuation techniques that are appropriate in the circumstances and for which sufficient data are available to measure fair value, maximising the use of relevant observable inputs and minimising the use of unobservable inputs.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

Fair value measurement (Continued)

All assets and liabilities for which fair value is measured or disclosed in the financial statements are categorised within the fair value hierarchy, described as follows, based on the lowest level input that is significant to the fair value measurement as a whole:

Level 1 – based on quoted prices (unadjusted) in active markets for identical assets or liabilities
Level 2 – based on valuation techniques for which the lowest level input that is significant to the fair value measurement is observable, either directly or indirectly
Level 3 – based on valuation techniques for which the lowest level input that is significant to the fair value measurement is unobservable

For assets and liabilities that are recognised in the financial statements on a recurring basis, the Group determines whether transfers have occurred between levels in the hierarchy by re-assessing categorisation (based on the lowest level input that is significant to the fair value measurement as a whole) at the end of each reporting period.

Impairment of non-financial assets

Where an indication of impairment exists, or when annual impairment testing for an asset is required (other than service contract assets, financial assets and deferred tax assets), the asset's recoverable amount is estimated. An asset's recoverable amount is the higher of the asset's or cash-generating unit's value in use and its fair value less costs of disposal, and is determined for an individual asset, unless the asset does not generate cash inflows that are largely independent of those from other assets or groups of assets, in which case the recoverable amount is determined for the cash-generating unit to which the asset belongs.

An impairment loss is recognised only if the carrying amount of an asset exceeds its recoverable amount. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset. An impairment loss is charged to the statement of profit or loss in the period in which it arises in those expense categories consistent with the function of the impaired asset.

An assessment is made at the end of each reporting period as to whether there is an indication that previously recognised impairment loss may no longer exist or may have decreased. If such an indication exists, the recoverable amount is estimated. A previously recognised impairment loss of an asset other than goodwill is reversed only if there has been a change in the estimates used to determine the recoverable amount of that asset, but not to an amount higher than the carrying amount that would have been determined (net of any depreciation/amortisation) had no impairment loss been recognised for the asset in prior years. A reversal of such an impairment loss is credited to the statement of profit or loss in the period in which it arises, unless the asset is carried at a revalued amount, in which case the reversal of the impairment loss is accounted for in accordance with the relevant accounting policy for that revalued asset.

Related parties

A party is considered to be related to the Group if:

(a) the party is a person or a close member of that person's family and that person

(i) has control or joint control over the Group;
(ii) has significant influence over the Group; or
(iii) is a member of the key management personnel of the Group or of a parent of the Group;

(b) the party is an entity where any of the following conditions applies:

(i) the entity and the Group are members of the same group;
(ii) one entity is an associate or joint venture of the other entity (or of a parent, subsidiary or fellow subsidiary of the other entity);
(iii) the entity and the Group are joint ventures of the same third party;
(iv) one entity is a joint venture of a third entity and the other entity is an associate of the third entity;
(v) the entity is a post-employment benefit plan for the benefit of employees of either the Group or an entity related to the Group;
(vi) the entity is controlled or jointly controlled by a person identified in (a);
(vii) a person identified in (a)(i) has significant influence over the entity or is a member of the key management personnel of the entity (or of a parent of the entity); and
(viii) the entity, or any member of a group of which it is a part, provides key management personnel services to the Group or to the parent of the Group.

Property, plant and equipment and depreciation

Property, plant and equipment, other than construction in progress and buildings, are stated at cost less accumulated depreciation and any impairment loss. The cost of an item of property, plant and equipment comprises its purchase price and any directly attributable costs of bringing the asset to its working condition and location for its intended use.

Expenditure incurred after items of property, plant and equipment have been put into operation, such as repairs and maintenance, is normally charged to the statement of profit or loss in the period in which it is incurred. In situations where the recognition criteria are satisfied, the expenditure for a major inspection is capitalised in the carrying amount of the asset as a replacement. Where significant parts of property, plant and equipment are required to be replaced at intervals, the Group recognises such parts as individual assets with specific useful lives and depreciates them accordingly.

Depreciation is calculated on the straight-line basis to write off the cost of each item of property, plant and equipment over its estimated useful life. The principal annual rates used for this purpose are as follows:

Right-of-use assets	Over the lease terms
Leasehold improvements	Over the shorter of the lease terms and 20%
Furniture and equipment	20%
Motor vehicles	20%
Plant and machinery	20%

Where parts of an item of property, plant and equipment have different useful lives, the cost of that item is allocated on a reasonable basis among the parts and each part is depreciated separately. Useful lives and the depreciation method are reviewed, and adjusted if appropriate, at least at each financial year end.

An item of property, plant and equipment and any significant part initially recognised is derecognised upon disposal or when no future economic benefits are expected from its use or disposal. Any gain or loss on disposal or retirement recognised in the statement of profit or loss in the year the asset is derecognised is the difference between the net sales proceeds and the carrying amount of the relevant asset.

Construction in progress represents a building under construction, which is stated at cost less accumulated impairment loss, and is not depreciated. Cost comprises the direct costs of construction and capitalised borrowing costs on related borrowed funds during the period of construction. Construction in progress is reclassification to the appropriate category of property, plant and equipment when completed and ready for use.

Non-current assets and disposal group held for sale

Non-current assets and disposal groups are classified as held for sale if their carrying amounts will be recovered through a sales transaction rather than through continuing use. For this to be the case, the asset or disposal group must be available for immediate sale in its present condition subject to only to terms that are usual and customary for the sale of such assets or disposal groups and its sale must be highly probable. All assets and liabilities of a subsidiary classified as a disposal group are reclassified as held for sale regardless of whether the Group retains a non-controlling interest in its former subsidiary after the sale.

Non-current assets and disposal groups (other than investment properties and financial assets) classified as held for sale are measured at the lower of their carrying amounts and fair value less costs to sell. Property, plant and equipment and intangible assets classified as held for sale are not depreciated or amortised.

Intangible assets (other than goodwill)

Intangible assets acquired separately are measured on initial recognition at cost. The cost of intangible assets acquired in a business combination is the fair value at the date of acquisition. The useful lives of intangible assets are assessed to be either finite or indefinite. Intangible assets with finite lives are subsequently amortised over the useful economic life and assessed for impairment whenever there is an indication that the intangible asset may be impaired. The amortisation period and the amortisation method for an intangible asset with a finite useful life are reviewed at least at each financial year end.

Intangible assets are amortised on the straight-line basis over the following useful economic lives:

Software	3–5 years
Backlog contract	20 years
Brand names	8–10 years
Patents	15 years
Trademarks	15 years
Customer relationship	15 years

Research and development costs

All research costs are charged to the statement of profit or loss as incurred.

Expenditure incurred on projects to develop new products is capitalised and deferred only when the Group can demonstrate the technical feasibility of completing the intangible asset so that it will be available for use or sale, its intention to complete and its ability to use or sell the asset, how the asset will generate future economic benefits, the availability of resources to complete the project and the ability to measure reliably the expenditure during the development. Product development expenditure which does not meet these criteria is expensed when incurred.

Leased assets

At inception of a contract, the Group assesses whether the contract is, or contains, a lease. A contract is, or contains, a lease of the contract conveys the right to control the use of an identified asset for a period of time in exchange for consideration. Control is conveyed where the customer has both the right to direct the use of the identified asset and to obtain substantially all of the economic benefits from that use.

As a lessee

Where the contract contains lease component(s) and non-lease component(s), the Group has elected not to separate non-lease components and accounts for each lease component and any associated non-lease components as a single lease component for all leases.

At the lease commencement date, the Group recognises a right-of-use asset and a lease liability, except for short-term leases that have a lease term of 12 months or less and leases of low-value assets. When the Group enters into a lease in respect of low-value asset, the Group decides whether to capitalize the lease on a lease-by-lease basis. The lease payments associated with those leases which are not capitalised are recognised as an expense on a systematic basis over the lease term.

Where the lease is capitalised, the lease liability is initially recognised at the present value of the lease payments payable over the lease term, discounted using the interest rate implicit in the lease or, if that rate cannot be readily determined, using a relevant incremental borrowing rate. After initial recognition, the lease liability is measured at amortised cost and interest expense is calculated using the effective interest method. Variable lease payments that do not depend on an index or rate are not included in the measurement of the lease liability and hence are charged to profit or loss in the accounting period in which they are incurred.

The right-of-use assets recognise when a lease is capitalised is initially measured at cost, which comprises the initial amount of the lease liability plus any lease payments made at or before the commencement date, and any initial direct costs incurred. Where applicable, the cost of the right-of-use assets also includes an estimate of costs to dismantle and remove the underlying asset or to restore the underlying asset or the site on which it is located, discounted to their present value, less any lease incentive received. The right-of-use asset is subsequently stated at cost less accumulated depreciation and impairment loss, except for the following types of right-of-use asset:

right-of-use assets that meet the definition of investment property are carried at fair value; and
right-of-use assets related to leasehold land and buildings where the Group is the registered owner of the leasehold interest are carried at cost.

Graphex Group Limited Annual Report 2025 131

Leased assets (Continued)

As a lessee (Continued)

The lease liability is remeasured when there is a change in future lease payments arising from a change in an index or rate, or there is a change in the Group's estimate of the amount expected to be payable under a residual value guarantee, or there is a change arising from the reassessment of whether the group will be reasonably certain to exercise a purchase, extension or termination option. When the lease liability is remeasured in this way, a corresponding adjustment is made to the carrying amount of the right-of-use asset, or is recorded in profit or loss if the carrying amount of the right-of-use asset has been reduced to zero.

The lease liability is also remeasured when there is a change in the scope of a lease or the consideration for a lease that is not originally provided for in the lease contract ("lease modification") that is not accounted for as a separate lease. In this case the lease liability is remeasured based on the revised lease payments and lease term using a revised discount rate at the effective date of the modification.

In the consolidated statement of financial position, the current portion of long-term lease liability is determined as the present value of contractual payments that are due to be settled within twelve months after the reporting period.

Financial instruments

(i) Financial assets

Initial recognition and measurement

Financial assets are classified, at initial recognition, as subsequently measured at amortised cost, fair value through other comprehensive income, and fair value through profit or loss.

The classification of financial assets at initial recognition depends on the financial asset's contractual cash flow characteristics and the Group's business model for managing them. With the exception of trade receivables that do not contain a significant financing component or for which the Group has applied the practical expedient of not adjusting the effect of a significant financing component, the Group initially measures a financial asset at its fair value, plus in the case of a financial asset not at fair value through profit or loss, transaction costs. Trade receivables that do not contain a significant financing component or for which the Group has applied the practical expedient are measured at the transaction price determined under IFRS 15 Revenue from Contracts with Customers.

132

Financial instruments (Continued)

(i) Financial assets (Continued)

Initial recognition and measurement (Continued)

In order for a financial asset to be classified and measured at amortised cost or fair value through other comprehensive income, it needs to give rise to cash flows that are solely payments of principal and interest ("SPPI") on the principal amount outstanding. This assessment is referred to as the solely payments of principal and interest test and is performed at an instrument level.

The Group's business model for managing financial assets refers to how it manages its financial assets in order to generate cash flows. The business model determines whether cash flows will result from collecting contractual cash flows, selling the financial assets, or both.

All regular way purchases and sales of financial assets are recognised on the trade date, that is, the date that the Group commits to purchase or sell the asset. Regular way purchases or sales are purchases or sales of financial assets that require delivery of assets within the period generally established by regulation or convention in the marketplace.

Subsequent measurement

The subsequent measurement of financial assets depends on their classification as follows:

Financial assets at amortised cost (debt instruments)

The Group measures financial assets at amortised cost if both of the following conditions are met:

The financial asset is held within a business model with the objective to hold financial assets in order to collect contractual cash flows.
The contractual terms of the financial asset give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding.

Financial assets at amortised cost are subsequently measured using the effective interest method and are subject to impairment. Gains and losses are recognised in the statement of profit or loss when the asset is derecognised, modified or impaired.

Graphex Group Limited Annual Report 2025 133

Financial instruments (Continued)

(i) Financial assets (Continued)

Subsequent measurement (Continued)

Financial assets designated at fair value through other comprehensive income (equity investments)

Upon initial recognition, the Group can elect to classify irrevocably its equity investments as equity investments designated at fair value through other comprehensive income when they meet the definition of equity under IAS 32 Financial Instruments: Presentation and are not held for trading. The classification is determined on an instrument-by-instrument basis.

Gains and losses on these financial assets are never recycled to profit or loss. Dividends are recognised as other income in the consolidated statement of profit or loss when the right of payment has been established, except when the Group benefits from such proceeds as a recovery of part of the cost of the financial asset, in which case, such gains are recorded in other comprehensive income. Equity investments designated at fair value through other comprehensive income are not subject to impairment assessment.

Financial assets at fair value through profit or loss include financial assets held for trading, financial assets designated upon initial recognition at fair value through profit or loss, or financial assets mandatorily required to be measured at fair value. Financial assets are classified as held for trading if they are acquired for the purpose of selling or repurchasing in the near term. Derivatives, including separated embedded derivatives, are also classified as held for trading unless they are designated as effective hedging instruments. Financial assets with cash flows that are not solely payments of principal and interest are classified and measured at fair value through profit or loss, irrespective of the business model. Notwithstanding the criteria for debt instruments to be classified at amortised cost or at fair value through other comprehensive income, as described above, debt instruments may be designated at fair value through profit or loss on initial recognition if doing so eliminates, or significantly reduces, an accounting mismatch.

Financial assets at fair value through profit or loss are carried in the statement of financial position at fair value with net changes in fair value recognised in the consolidated statement of profit or loss.

This category includes derivative instruments.

Financial instruments (Continued)

(i) Financial assets (Continued)

Subsequent measurement (Continued)

Financial assets designated at fair value through other comprehensive income (equity investments) (Continued)

A derivative embedded in a hybrid contract, with a financial liability or non-financial host, is separated from the host and accounted for as a separate derivative if the economic characteristics and risks are not closely related to the host; a separate instrument with the same terms as the embedded derivative would meet the definition of a derivative; and the hybrid contract is not measured at fair value through profit or loss. Embedded derivatives are measured at fair value with changes in fair value recognised in the statement of profit or loss. Reassessment only occurs if there is either a change in the terms of the contract that significantly modifies the cash flows that would otherwise be required or a reclassification of a financial asset out of the fair value through profit or loss category.

A derivative embedded within a hybrid contract containing a financial asset host is not accounted for separately. The financial asset host together with the embedded derivative is required to be classified in its entirety as a financial asset at fair value through profit or loss.

(ii) Financial liabilities

Initial recognition and measurement

Financial liabilities are classified, at initial recognition, as financial liabilities through profit or loss, lease liabilities, loans and borrowings and payables.

All financial liabilities are recognised initially at fair value and, in the case of loans and borrowings and payables, net of directly attributable transaction costs. The Group's financial liabilities include trade payables, other payables and accruals and interest-bearing borrowings.

Graphex Group Limited Annual Report 2025 135

(ii) Financial liabilities (Continued)

Subsequent measurement

The subsequent measurement of financial liabilities depends on the classification as follows:

Financial liabilities at fair value through profit or loss

Financial liabilities at fair value through profit or loss include financial liabilities held for trading and financial liabilities designated upon initial recognition as at fair value through profit or loss.

Financial liabilities are classified as held for trading if they are incurred for the purpose of repurchasing in the near term. This category also includes derivative financial instruments entered into by the Group that are not designated as hedging instruments in hedge relationships as defined by IFRS 9 Financial Instruments. Separated embedded derivatives are also classified as held for trading unless they are designated as effective hedging instruments. Gains or losses on liabilities held for trading are recognised in the consolidated statement of profit or loss.

Financial liabilities designated upon initial recognition as at fair value through profit or loss are designated at the initial date of recognition, and only if the criteria in IFRS 9 Financial Instruments are satisfied.

Loans and borrowings

After initial recognition, interest-bearing loans and borrowings are subsequently measured at amortised cost, using the effective interest rate method unless the effect of discounting would be immaterial, in which case they are stated at cost. Gains and losses are recognised in the statement of profit or loss when the liabilities are derecognised as well as through the effective interest rate amortisation process.

Amortised cost is calculated by taking into account any discount or premium on acquisition and fees or costs that are an integral part of the effective interest rate. The effective interest rate amortisation is included in finance costs in the statement of profit or loss.

Financial instruments (Continued)

(ii) Financial liabilities (Continued)

Subsequent measurement (Continued)

Convertible notes that contain an equity component

Convertible notes that can be converted into ordinary shares at the option of the holder, where a fixed number of shares are issued for a fixed number of cash or other financial assets, are accounted for as compound financial instruments, i.e. they contain both a liability component and an equity component.

An initial recognition the liability component of the convertible notes is measured at fair value based on the future interest and principal payments, discounted at the prevailing market rate of interest for similar non-convertible instruments. The equity component is the difference between the initial fair value of the convertible notes as a whole and the initial fair value of the liability component. Transaction costs that relate to the issue of a compound financial instrument are allocated to the liability and equity components in proportion to the allocation of proceeds.

The liability component is subsequently carried at amortised cost. Interest expense recognised in profit or loss on the liability component is calculated using the effective interest method. The equity component is not remeasured and is recognised in the capital reserve until the notes are converted.

If the notes are converted, the capital reserve, together with the carrying amount of the liability component at the time of conversion, is transferred to share capital and share premium as consideration for the shares issued.

Derecognition of financial assets and financial liabilities

(i) Financial assets

A financial asset (or, where applicable, a part of a financial asset or part of a group of similar financial assets) is primarily derecognised (i.e. removed from the Group’s consolidated statement of financial position) when:

the rights to receive cash flows from the asset have expired; or
the Group has transferred its rights to receive cash flows from the asset or has assumed an obligation to pay the received cash flows in full without material delay to a third party under a “pass-through” arrangement; and either (a) the Group has transferred substantially all the risks and rewards of the asset, or (b) the Group has neither transferred nor retained substantially all the risks and rewards of the asset, but has transferred control of the asset.

Graphex Group Limited Annual Report 2025 137

Derecognition of financial assets and financial liabilities (Continued)

(i) Financial assets (Continued)

When the Group has transferred its rights to receive cash flows from an asset or has entered into a pass-through arrangement, it evaluates, if and to what extent, it has retained the risk and rewards of ownership of the asset. When it has neither transferred nor retained substantially all the risks and rewards of the asset nor transferred control of the asset, the Group continues to recognise the transferred asset to the extent of the Group's continuing involvement. In that case, the Group also recognises an associated liability. The transferred asset and the associated liability are measured on a basis that reflects the rights and obligations that the Group has retained.

Continuing involvement that takes the form of a guarantee over the transferred asset is measured at the lower of the original carrying amount of the asset and the maximum amount of consideration that the Group could be required to repay.

(ii) Financial liabilities

A financial liability is derecognised when the obligation under the liability is discharged or cancelled, or expires. When an existing financial liability is replaced by another from the same lender on substantially different terms, or the terms of an existing liability are substantially modified, such an exchange or modification is treated as a derecognition of the original liability and a recognition of a new liability, and the difference between the respective carrying amounts is recognised in the statement of profit or loss.

(iii) Offsetting of financial instruments

Financial assets and financial liabilities are offset and the net amount is reported in the statement of financial position if there is a currently enforceable legal right to offset the recognised amounts and there is an intention to settle on a net basis, or to realise the assets and settle the liabilities simultaneously.

Impairment of financial assets

The Group recognises an allowance for expected credit losses ("ECLs") for all debt instruments not held at fair value through profit or loss. ECLs are based on the difference between the contractual cash flows due in accordance with the contract and all the cash flows that the Group expects to receive, discounted at an approximation of the original effective interest rate. The expected cash flows will include cash flows from the sale of collateral held or other credit enhancements that are integral to the contractual terms.

Impairment of financial assets (Continued)

General approach

ECLs are recognised in two stages. For credit exposures for which there has not been a significant increase in credit risk since initial recognition, ECLs are provided for credit losses that result from default events that are possible within the next 12-months (a 12-month ECL). For those credit exposures for which there has been a significant increase in credit risk since initial recognition, a loss allowance is required for credit losses expected over the remaining life of the exposure, irrespective of the timing of the default (a lifetime ECL).

At each reporting date, the Group assesses whether the credit risk on a financial instrument has increased significantly since initial recognition. When making the assessment, the Group compares the risk of a default occurring on the financial instrument as at the reporting date with the risk of a default occurring on the financial instrument as at the date of initial recognition and considers reasonable and supportable information that is available without undue cost or effort, including historical and forward-looking information.

Definition of default

The Group considers the following as constituting an event of default for internal credit risk management purposes as historical experience indicates that the Group may not receive the outstanding contractual amounts in full if the financial instrument that meets any of the following criteria.

(i) information developed internally or obtained from external sources indicates that the debtor is unlikely to pay its creditors, including the Group, in full (without taking into account any collaterals held by the Group); or
(ii) there is a breach of financial covenants by the counterparty.

Irrespective of the above analysis, the Group considers that default has occurred when a financial asset is more than 90 days past due unless the Group has reasonable and supportable information to demonstrate that a more lagging default criterion is more appropriate.

Assessment of significant increase in credit risk

In assessing whether the credit risk on a financial instrument has increased significantly since initial recognition, the Group compares the risk of a default occurring on the financial instrument as at the reporting date with the risk of a default occurring on the financial instrument as at the date of initial recognition.

In making this assessment, the Group considers both quantitative and qualitative information that is reasonable and supportable, including historical experience and forward-looking information that is available without undue cost or effort. In particular, the following information is taken into account in the assessment:

the debtor's failure to make payments of principal or interest on the due dates;
an actual or expected significant deterioration in the financial instrument's external or internal credit rating (if available);

Impairment of financial assets (Continued)

Assessment of significant increase in credit risk (Continued)

an actual or expected significant deterioration in the operating results of the debtor; and
actual or expected changes in the technological, market, economic or legal environment that have or may have a significant adverse effect on the debtor's ability to meet its obligation to the Group.

Irrespective of the outcome of the above assessment, the Group presumes that the credit risk on a financial instrument has increased significantly since initial recognition when contractual payments are more than 30 days past.

In certain cases, the Group may also consider a financial asset to be in default when internal or external information indicates that the Group is unlikely to receive the outstanding contractual amounts in full before taking into account any credit enhancements held by the Group. A financial asset is written off when there is no reasonable expectation of recovering the contractual cash flows.

Financial assets at amortised cost are subject to impairment under the general approach and they are classified within the following stages for measurement of ECLs except for trade receivables and contract assets which apply the simplified approach as detailed below.

Stage 1 – Financial instruments for which credit risk has not increased significantly since initial recognition and for which the loss allowance is measured at an amount equal to 12-month ECLs

Stage 2 – Financial instruments for which credit risk has increased significantly since initial recognition but that are not credit-impaired financial assets and for which the loss allowance is measured at an amount equal to lifetime ECLs

Stage 3 – Financial assets that are credit-impaired at the reporting date (but that are not purchased or originated credit-impaired) and for which the loss

Simplified approach

For trade and bills receivables and contract assets that do not contain a significant financing component or when the Group applies the practical expedient of not adjusting the effect of a significant financing component, the Group applies the simplified approach in calculating ECLs. Under the simplified approach, the Group does not track changes in credit risk, but instead recognises a loss allowance based on lifetime ECLs at each reporting date. The Group has established a provision matrix that is based on its historical credit loss experience, adjusted for forward-looking factors specific to the debtors and the economic environment.

Treasury shares

Own equity instruments which are reacquired and held by the Company or the Group (treasury shares) are recognised directly in equity at cost. No gain or loss is recognised in the statement of profit or loss on the purchase, sale, issue or cancellation of the Group's own equity instruments.

Inventories

Inventories are stated at the lower of cost and net realisable value. Cost is determined on the first-in, first-out basis and, in the case of work in progress and finished goods, comprises direct materials, direct labour and an appropriate proportion of overheads. Net realisable value is based on estimated selling prices less any estimated costs to be incurred to completion and disposal.

Cash and cash equivalents

For the purpose of the consolidated statement of cash flows, cash and cash equivalents comprise cash on hand and demand deposits, and short term highly liquid investments that are readily convertible into known amounts of cash, are subject to an insignificant risk of changes in value, and have a short maturity of generally within three months when acquired, less bank overdrafts which are repayable on demand and form an integral part of the Group's cash management.

For the purpose of the consolidated statement of financial position, cash and cash equivalents comprise cash on hand and at banks, including term deposits, which are not restricted as to use.

Provisions

A provision is recognised when a present obligation (legal or constructive) has arisen as a result of a past event and it is probable that a future outflow of resources will be required to settle the obligation, provided that a reliable estimate can be made of the amount of the obligation.

When the effect of discounting is material, the amount recognised for a provision is the present value at the end of each of the reporting period of the future expenditures expected to be required to settle the obligation. The increase in the discounted present value amount arising from the passage of time is included in finance costs in profit or loss.

A contingent liability recognised in a business combination is initially measured at its fair value. Subsequently, it is measured at the higher of (i) the amount that would be recognised in accordance with the general guidance for provisions above; and (ii) the amount initially recognised less, when appropriate, cumulative amortisation recognised in accordance with the guidance for revenue recognition.

Income tax

Income tax comprises current and deferred tax. Income tax relating to items recognised outside profit or loss is recognised outside profit or loss, either in other comprehensive income or directly in equity.

Current tax assets and liabilities are measured at the amount expected to be recovered from or paid to the taxation authorities, based on tax rates (and tax laws) that have been enacted or substantively enacted by the end of the reporting period, taking into consideration interpretations and practices prevailing in the countries/jurisdictions in which the Group operates.

Deferred tax is provided, using the liability method, on all temporary differences at the end of the reporting period between the tax bases of assets and liabilities and their carrying amounts for financial reporting purposes.

Deferred tax liabilities are recognised for all taxable temporary differences, except

when the deferred tax liability arises from the initial recognition of goodwill or an asset or liability in a transaction that is not a business combination and, at the time of the transaction, affects neither the accounting profit nor taxable profit or loss; and
in respect of taxable temporary differences associated with investments in subsidiaries, associates and joint ventures, when the timing of the reversal of the temporary differences can be controlled and it is probable that the temporary differences will not reverse in the foreseeable future.

Deferred tax assets are recognised for all deductible temporary differences, the carryforward of unused tax credits and any unused tax losses. Deferred tax assets are recognised to the extent that it is probable that taxable profit will be available against which the deductible temporary differences, the carryforward of unused tax credits and unused tax losses can be utilised, except:

when the deferred tax asset relating to the deductible temporary differences arises from the initial recognition of an asset or liability in a transaction that is not a business combination and, at the time of the transaction, affects neither the accounting profit nor taxable profit or loss; and
in respect of deductible temporary differences associated with investments in subsidiaries, associates and joint ventures, deferred tax assets are only recognised to the extent that it is probable that the temporary differences will reverse in the foreseeable future and taxable profit will be available against which the temporary differences can be utilised.

The carrying amount of deferred tax assets is reviewed at the end of each reporting period and reduced to the extent that it is no longer probable that sufficient taxable profit will be available to allow all or part of the deferred tax asset to be utilised. Unrecognised deferred tax assets are reassessed at the end of each reporting period and are recognised to the extent that it has become probable that sufficient taxable profit will be available to allow all or part of the deferred tax asset to be recovered.

Income tax (Continued)

Deferred tax assets and liabilities are measured at the tax rates that are expected to apply to the period when the asset is realised or the liability is settled, based on tax rates (and tax laws) that have been enacted or substantively enacted by the end of the each of the reporting period.

Deferred tax assets and deferred tax liabilities are offset if and only if the Group has a legally enforceable right to set off current tax assets and current tax liabilities and the deferred tax assets and deferred tax liabilities relate to income taxes levied by the same taxation authority on either the same taxable entity or different taxable entities which intend either to settle current tax liabilities and assets on a net basis, or to realise the assets and settle the liabilities simultaneously, in each future period in which significant amounts of deferred tax liabilities or assets are expected to be settled or recovered.

Government grants

Government grants are recognised at their fair value where there is reasonable assurance that the grant will be received and all attaching conditions will be complied with. When the grant relates to an expense item, it is recognised as income on a systematic basis over the periods that the costs, which it is intended to compensate, are expensed.

Where the grant relates to an asset, the fair value is credited to a deferred income account and is released to the statement of profit or loss over the expected useful life of the relevant asset by equal annual instalments or deducted from the carrying amount of the asset and released to the statement of profit or loss by way of a reduced depreciation charge.

Where the Group receives grants of non-monetary assets, the grants are recorded at the fair value of the non-monetary assets and released to the statement of profit or loss over the expected useful lives of the relevant assets by equal annual instalments.

Revenue and other income

Revenue from contracts with customers

Revenue from contracts with customers is recognised when control of goods or services is transferred to the customers at an amount that reflects the consideration to which the Group expects to be entitled in exchange for those goods or services.

When the consideration in a contract includes a variable amount, the amount of consideration is estimated to which the Group will be entitled in exchange for transferring the goods or services to the customer. The variable consideration is estimated at contract inception and constrained until it is highly probable that a significant revenue reversal in the amount of cumulative revenue recognised will not occur when the associated uncertainty with the variable consideration is subsequently resolved.

Revenue and other income (Continued)

Revenue from contracts with customers (Continued)

When the contract contains a financing component which provides the customer a significant benefit of financing the transfer of goods or services to the customer for more than one year, revenue is measured at the present value of the amount receivable, discounted using the discount rate that would be reflected in a separate financing transaction between the Group and the customer at contract inception. When the contract contains a financing component which provides the Group a significant financial benefit for more than one year, revenue recognised under the contract includes the interest expense accreted on the contract liability under the effective interest method. For a contract where the period between the payment by the customer and the transfer of the promised goods or services is one year or less, the transaction price is not adjusted for the effects of a significant financing component, using the practical expedient in IFRS 15 Revenue from Contracts with Customers.

(a) Sale of graphene products

Revenue from sale of graphene products is recognised at the point in time when control of the asset is transferred to the customer, generally on delivery of the graphene products.

(b) Landscape architecture design

Revenue from the provision of landscape architecture design is recognised over time, using an input method to measure progress towards complete satisfaction of the service, because the Group's performance creates or enhances an asset that the customer controls as the asset is created or enhanced. The input method recognises revenue based on the proportion of the actual costs incurred relative to the estimated total costs for satisfaction of the construction services.

Claims to customers are amounts that the Group seeks to collect from the customers as reimbursement of costs and margins for scope of works not included in the original landscape architecture business contract. Claims are accounted for as variable consideration and constrained until it is highly probable that a significant revenue reversal in the amount of cumulative revenue recognised will not occur when the associated uncertainty with the variable consideration is subsequently resolved. The Group uses the expected value method to estimate the amounts of claims because this method best predicts the amount of variable consideration to which the Group will be entitled.

Revenue from the provision of management services is recognised over the scheduled period on a straight-line basis because the customer simultaneously receives and consumes the benefits provided by the Group.

144

Revenue and other income (Continued)

Other income

Interest income is recognised on an accrual basis using the effective interest method by applying the rate that exactly discounts the estimated future cash receipts over the expected life of the financial instrument or a shorter period, when appropriate, to the net carrying amount of the financial asset.

Dividend income is recognised when the shareholders' right to receive payment has been established, it is probable that the economic benefits associated with the dividend will flow to the Group and the amount of the dividend can be measured reliably.

Contract assets

A contract asset is the right to consideration in exchange for goods or services transferred to the customer. If the Group performs by transferring goods or services to a customer before the customer pays consideration or before payment is due, a contract asset is recognised for the earned consideration that is conditional. Contract assets are subject to impairment assessment, details of which are included in the accounting policies for impairment for financial assets.

Contract liabilities

A contract liability is recognised when a payment is received or a payment is due (whichever is earlier) from a customer before the Group transfers the related goods or services. Contract liabilities are recognised as revenue when the Group performs under the contract (i.e. transfers control of the related goods or services).

Contract costs

Other than the costs which are capitalised as inventories, property, plant and equipment and intangible assets, costs incurred to fulfil a contract with a customer are capitalised as an asset if all of the following criteria are met:

(a) The costs relate directly to a contract or to an anticipated contract that the entity can specifically identify.

(b) The costs generate or enhance resources of the entity that will be used in satisfying (or in continuing to satisfy) performance obligations in the future.

The capitalised contract costs are amortised and charged to the statement of profit or loss on a systematic basis that is consistent with the pattern of the revenue to which the asset related is recognised. Other contract costs are expensed as incurred.

Share-based payments

The Company operates a share award scheme for the purpose of providing incentives and rewards to eligible participants who contribute to the success of the Group's operations. Employees (including directors) of the Group receive remuneration in the form of share-based payments, whereby employees render services as consideration for equity instruments ("equity-settled transactions").

The cost of equity-settled transactions with employees for grants after 7 November 2002 is measured by reference to the fair value at the date at which they are granted.

The cost of equity-settled transactions is recognised in employee benefit expense, together with a corresponding increase in equity, over the period in which the performance and/or service conditions are fulfilled. The cumulative expense recognised for equity-settled transactions at the end of each reporting period until the vesting date reflects the extent to which the vesting period has expired and the Group's best estimate of the number of equity instruments that will ultimately vest. The charge or credit to the statement of profit or loss for a period represents the movement in the cumulative expense recognised as at the beginning and end of that period.

Service and non-market performance conditions are not taken into account when determining the grant date fair value of awards, but the likelihood of the conditions being met is assessed as part of the Group's best estimate of the number of equity instruments that will ultimately vest. Market performance conditions are reflected within the grant date fair value. Any other conditions attached to an award, but without an associated service requirement, are considered to be non-vesting conditions. Non-vesting conditions are reflected in the fair value of an award and lead to an immediate expensing of an award unless there are also service and/or performance conditions.

Share-based payments (Continued)

For awards that do not ultimately vest because non-market performance and/or service conditions have not been met, no expense is recognised. Where awards include a market or non-vesting condition, the transactions are treated as vesting irrespective of whether the market or non-vesting condition is satisfied, provided that all other performance and/or service conditions are satisfied.

Where the terms of an equity-settled award are modified, as a minimum an expense is recognised as if the terms had not been modified, if the original terms of the award are met. In addition, an expense is recognised for any modification that increases the total fair value of the share-based payments, or is otherwise beneficial to the employee as measured at the date of modification.

Where an equity-settled award is cancelled, it is treated as if it had vested on the date of cancellation, and any expense not yet recognised for the award is recognised immediately. This includes any award where non-vesting conditions within the control of either the Group or the employee are not met. However, if a new award is substituted for the cancelled award, and is designated as a replacement award on the date that it is granted, the cancelled and new awards are treated as if they were a modification of the original award, as described in the previous paragraph.

The dilutive effect of outstanding options is reflected as additional share dilution in the computation of earnings per share.

The cost of cash-settled transactions is measured initially at fair value at the grant date. The fair value is expensed over the period until the vesting date with recognition of a corresponding liability. The cumulative expense recognised for cash-settled transactions at the end of each reporting period until the vesting date reflects the extent to which the vesting period has expired and the Group's best estimate of the number of awards that will ultimately vest. The liability is measured at the end of each reporting period up to and including the settlement date, with changes in fair value recognised in the consolidated statement of profit or loss.

Other employee benefits

Pension schemes

The Group operates a defined contribution Mandatory Provident Fund retirement benefit scheme (the "MPF Scheme") under the Mandatory Provident Fund Schemes Ordinance in Hong Kong for all of its employees. Contributions are made based on a percentage of the employees' basic salaries and are charged to the statement of profit or loss as they become payable in accordance with the rules of the MPF Scheme. The assets of the MPF Scheme are held separately from those of the Group in an independently administered fund. The Group's employer contributions vest fully with the employees when contributed into the MPF Scheme.

Graphex Group Limited Annual Report 2025 147

Other employee benefits (Continued)

Pension schemes (Continued)

Hong Kong employees that have been employed continuously for at least five years are entitled to long service payments in accordance with the Hong Kong Employment Ordinance under certain circumstances. These circumstances include where an employee is dismissed for reasons other than serious misconduct or redundancy, that employee resigns at the age of 65 or above, or the employment contract is of fixed term and expires without renewal. The amount of Long Service Payment ("LSP") payable is determined with reference to the employee's final salary (capped at HK$22,500) and the years of service, reduced by the amount of any accrued benefits derived from the Group's contributions to MPF scheme, with an overall cap of HK$390,000 per employee. Currently, the Group does not have any separate funding arrangement in place to meet its LSP obligation.

In June 2022, the Government gazetted the Amendment Ordinance, which will eventually abolish the statutory right of an employer to reduce its LSP payable to a Hong Kong employee by drawing on its mandatory contributions to the MPF scheme. The Government has subsequently announced that the Amendment Ordinance will come into effect from the Transition Date i.e. 1 May 2025. Separately, the Government has also introduced a subsidy scheme to assist employers after the abolition.

Among other things, once the abolition of the offsetting mechanism takes effect, an employer can no longer use any of the accrued benefits derived from its mandatory MPF contributions (irrespective of the contributions made before, on or after the Transition Date) to reduce the LSP in respect of an employee's service from the Transition Date. However, where an employee's employment commenced before the Transition Date, the employer can continue to use the above accrued benefits to reduce the LSP in respect of the employee's service up to that date; in addition, the LSP in respect of the service before the Transition Date will be calculated based on the employee's monthly salary immediately before the Transition Date and the years of service up to that date.

The Group has determined that the Amendment Ordinance has no material impact on the Group's LSP liability with respect to employees in Hong Kong.

The employees of the Group's subsidiaries which operate in Mainland China are required to participate in a central pension scheme operated by the local municipal government. These subsidiaries are required to contribute 14% to 20% of their payroll costs to the central pension scheme. The contributions are charged to the statement of profit or loss as they become payable in accordance with the rules of the central pension scheme.

Termination benefits

Termination benefits are recognised at the earlier of when the Group can no longer withdraw the offer of those benefits and when the Group recognises restructuring costs involving the payment of termination benefits.

Other employee benefits (Continued)

Defined benefit plan

The Group operates a defined benefit pension plan which requires contributions to be made to a separately administered fund. The benefits are unfunded. The cost of providing benefits under the defined benefit plan is determined using the projected unit credit actuarial valuation method.

Remeasurements arising from defined benefit pension plans, comprising actuarial gains and losses, the effect of the asset ceiling (excluding amounts included in net interest on the net defined benefit liability) and the return on plan assets (excluding amounts included in net interest on the net defined benefit liability), are recognised immediately in the consolidated statement of financial position with a corresponding debit or credit to retained profits through other comprehensive income in the period in which they occur. Remeasurements are not reclassified to profit or loss in subsequent periods.

Past service costs are recognised in profit or loss at the earlier of:
the date of the plan amendment or curtailment; and
the date that the Group recognises restructuring-related costs

Net interest is calculated by applying the discount rate to the net defined benefit liability or asset. The Group recognises the following changes in the net defined benefit obligation under "cost of sales" and "administrative expenses" in the consolidated statement of profit or loss by function:

service costs comprising current service costs, past-service costs, gains and losses on curtailments and non-routine settlements
net interest expense or income

Borrowing costs

Borrowing costs directly attributable to the acquisition, construction or production of qualifying assets, i.e., assets that necessarily take a substantial period of time to get ready for their intended use or sale, are capitalised as part of the cost of those assets. The capitalisation of such borrowing costs ceases when the assets are substantially ready for their intended use or sale. Investment income earned on the temporary investment of specific borrowings pending their expenditure on qualifying assets is deducted from the borrowing costs capitalised. All other borrowing costs are expensed in the period in which they are incurred. Borrowing costs consist of interest and other costs that an entity incurs in connection with the borrowing of funds.

Dividends

Final dividends are recognised as a liability when they are approved by the shareholders in a general meeting. Proposed final dividends are disclosed in the notes to the financial statements.

Interim dividends are simultaneously proposed and declared, because the Company's memorandum and articles of association grant the directors the authority to declare interim dividends. Consequently, interim dividends are recognised immediately as a liability when they are proposed and declared.

Graphex Group Limited Annual Report 2025 149

Foreign currencies

These financial statements are presented in Hong Kong dollars, which is the Company's functional currency. Each entity in the Group determines its own functional currency and items included in the financial statements of each entity are measured using that functional currency. Foreign currency transactions recorded by the entities in the Group are initially recorded using their respective functional currency rates prevailing at the dates of the transactions. Monetary assets and liabilities denominated in foreign currencies are translated at the functional currency rates of exchange ruling at the end of the reporting period. Differences arising on settlement or translation of monetary items are recognised in profit or loss.

Non-monetary items that are measured in terms of historical cost in a foreign currency are translated using the exchange rates at the dates of the initial transactions. Non-monetary items measured at fair value in a foreign currency are translated using the exchange rates at the date when the fair value was measured. The gain or loss arising on translation of a non-monetary item measured at fair value is treated in line with the recognition of the gain or loss on change in fair value of the item (i.e., translation difference on the item whose fair value gain or loss is recognised in other comprehensive income or profit or loss is also recognised in other comprehensive income or profit or loss, respectively).

In determining the exchange rate on initial recognition of the related asset, expense or income on the derecognition of a non-monetary asset or non-monetary liability relating to an advance consideration, the date of initial transaction is the date on which the Group initially recognises the non-monetary asset or non-monetary liability arising from the advance consideration. If there are multiple payments or receipts in advance, the Group determines the transaction date for each payment or receipt of the advance consideration.

The functional currencies of certain overseas subsidiaries, joint ventures and associates are currencies other than the Hong Kong dollar. As at the end of the reporting period, the assets and liabilities of these entities are translated into Hong Kong dollars at the exchange rates prevailing at the end of the reporting period and their statements of profit or loss are translated into Hong Kong dollars at the weighted average exchange rates for the year.

The resulting exchange differences are recognised in other comprehensive income and accumulated in the exchange fluctuation reserve. On disposal of a foreign operation, the component of other comprehensive income relating to that particular foreign operation is recognised in the statement of profit or loss.

Any goodwill arising on the acquisition of a foreign operation and any fair value adjustments to the carrying amounts of assets and liabilities arising on acquisition are treated as assets and liabilities of the foreign operation and translated at the closing rate.

For the purpose of the consolidated statement of cash flows, the cash flows of overseas subsidiaries are translated into Hong Kong dollars at the exchange rates ruling at the dates of the cash flows. Frequently recurring cash flows of overseas subsidiaries which arise throughout the year are translated into Hong Kong dollars at the weighted average exchange rates for the year.

Preference shares

Preference shares issued by the Group redeemable only at the Company's option and contain no contractual obligation to deliver cash or another financial asset. The Group classifies preference shares issued as an equity instrument. Fees, commissions and other transaction costs of preference share issuance are deducted from equity. The dividends on preference shares, if any, are recognised as profit distribution at the time of declaration.

3. SIGNIFICANT ACCOUNTING JUDGEMENTS AND ESTIMATES

Judgements

In the process of applying the Group's accounting policies, management has made the following judgements, apart from those involving estimations, which have the most significant effect on the amounts recognised in the consolidated financial statements:

The Group applied the following judgements that significantly affect the determination of the amount and timing of revenue from contracts with customers:

Revenue from contracts with customers

(i) Determining the method to estimate variable consideration and assessing the constraint for landscape architecture design

The Group seeks to collect claims from the customers as reimbursement of costs and margins for scope of works not included in the original landscape design contract, which give rise to variable consideration. The Group determined that the expected value method is the appropriate method to use in estimating the variable consideration for claims in landscape architecture design, given there is a wide range of possible outcomes which are subject to negotiations with third parties.

Before including any amount of variable consideration in the transaction price, the Group considers whether the amount of variable consideration is constrained. The Group determined that the estimates of variable consideration are not constrained based on its historical experience, current negotiations with customers, profitability of the head contracts of the customers and the current economic conditions.

The Group concluded that revenue for landscape architecture design is to be recognised over time because the customer simultaneously receives and consumes the benefits provided by the Group. The fact that another entity would not need to re-perform the landscape architecture design that the Group has provided to date demonstrates that the customer simultaneously receives and consumes the benefits of the Group's performance as it performs.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the Year ended 31 December 2025

3. SIGNIFICANT ACCOUNTING JUDGEMENTS AND ESTIMATES (Continued)

Judgements (Continued)

Revenue from contracts with customers (Continued)

(ii) Determining the timing of satisfaction of landscape architecture design and the recognition of revenue

The Group determined that the input method is the best method in measuring the progress of the landscape architecture design because there is a direct relationship between the Group’s effort (i.e., labour hours incurred) and the transfer of services to the customer. The Group recognises revenue on the basis of the cost expended relative to the total expected cost to complete the services. Since the duration of providing the design services is relatively long and may cover more than one accounting period, the Group will review the contracts, revise budgets and adjust the revenue accordingly as the contract progresses.

Estimation uncertainty

The key assumptions concerning the future and other key sources of estimation uncertainty at the end of the reporting period, that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year, are described below.

Estimated useful lives of property, plant and equipment and other intangible assets

The Group’s management determines the useful lives and related depreciation/amortisation charges for the Group’s property, plant and equipment, and other intangible assets. This estimate is based on the historical experience of the actual useful lives of property, plant and equipment, and other intangible assets of similar nature and functions. It could change significantly as a result of technical innovations and competitor actions in response to severe industry cycles. Management will increase the depreciation/amortisation charges where useful lives are less than previously estimated, or it will write off or write down technically obsolete or non-strategic assets that have been abandoned or sold. Actual economic lives may differ from estimated useful lives. Periodic review could result in a change in depreciable/amortisable lives and therefore depreciation/amortisation in the future periods.

Leases – Estimating the incremental borrowing rate

The Group cannot readily determine the interest rate implicit in the lease, therefore, it uses an incremental borrowing rate (“IBR”) to measure its lease liabilities. The IBR is the rate of interest that the Group would have to pay a borrower over a similar term, and with a similar security, the funds necessary to obtain an asset of a similar value to the right-of-use asset in a similar economic environment. The Group estimates the IBR using observable inputs, such as market interest rates when available and is required to make certain entity-specific estimates.

Impairment of goodwill

The Group determines whether goodwill is impaired at least on an annual basis. This requires an estimation of the recoverable amount being the higher of fair value less cost of disposal and value in use of the cash-generating units to which the goodwill is allocated. Estimating the fair value less cost of disposal or value in use requires the Group to make an estimate of the expected future cash flows from the cash-generating units and also to choose a suitable discount rate in order to calculate the present value of those cash flows. The carrying amount of goodwill at 31 December 2025 was HK$101,939,000, net of impairment loss. Further details refer to in note 14.

3. SIGNIFICANT ACCOUNTING JUDGEMENTS AND ESTIMATES (Continued)

Estimation uncertainty (Continued)

Provision for expected credit losses on trade and bills receivables and contract assets

The Group uses a provision matrix to calculate ECLs for trade and bills receivables and contract assets. The provision rates are based on days past due for groupings of various customer segments that have similar loss patterns (i.e., by geography, product type, customer type and rating, and coverage by letters of credit and other forms of credit insurance).

The provision matrix is initially based on the Group's historical observed default rates. The Group will calibrate the matrix to adjust the historical credit loss experience with forward-looking information. For instance, if forecast economic conditions (i.e., gross domestic products) are expected to deteriorate over the next year which can lead to an increased number of defaults in the manufacturing sector, the historical default rates are adjusted. At each reporting date, the historical observed default rates are updated and changes in the forward-looking estimates are analysed.

The assessment of the correlation among historical observed default rates, forecast economic conditions and ECLs is a significant estimate. The amount of ECLs is sensitive to changes in circumstances and forecast economic conditions. The Group's historical credit loss experience and forecast of economic conditions may also not be representative of customer's actual default in the future. The information about the ECLs on the Group's trade and bills receivables and contract assets is disclosed in note 20 and note 23 to the consolidated financial statements, respectively.

Impairment of non-financial assets (other than goodwill)

The Group assesses whether there are any indicators of impairment for all non-financial assets at the end of each reporting period. Non-financial assets are tested for impairment when there are indicators that the carrying amounts may not be recoverable. An impairment exists when the carrying value of an asset or a cash-generating unit exceeds its recoverable amount, which is the higher of its fair value less costs of disposal and its value in use. The calculation of the fair value less costs of disposal is based on available data from binding sales transactions in an arm's length transaction of similar assets or observable market prices less incremental costs for disposing of the asset. When income approach is adopted for the calculation of fair value less cost of disposal or value-in-use, management will estimate the expected future cash flows from the asset or cash-generating unit and choose a suitable discount rate in order to calculate the present value of those cash flows. Further details of impairment assessment on trademarks, customer relationships and patents refer to note 15.

Fair value of unlisted equity investments

The unlisted equity investments have been valued based on a market-based valuation technique as detailed in note 43 to the consolidated financial statements. The valuation requires the Group to determine the comparable public companies (peers) and select the price multiple. In addition, the Group makes estimates about the discount for illiquidity and size differences. The Group classifies the fair value measurement of these investments as Level 3. The fair value of the unlisted equity investments at 31 December 2025 was HK$54,000 (2024: HK$45,000). Further details are included in note 18 to the consolidated financial statements.

Graphex Group Limited Annual Report 2025 153

Estimation uncertainty (Continued)

Deferred tax assets

Deferred tax assets are recognised for deductible temporary differences to the extent that it is probable that taxable profit will be available against which the deductible temporary differences can be utilised. Significant management judgement is required to determine the amount of deferred tax assets that can be recognised, based upon the likely timing and level of future taxable profits and temporary differences. Where the actual or expected tax positions of the relevant companies of the Group in future are different from the original estimate, such differences will impact on the recognition of deferred tax assets and income tax charge in the period in which such estimate has been changed.

Development costs

The Group determines whether costs of research and development qualify for capitalisation, and has developed criteria in making that judgement. Therefore, the Group considers whether costs of research and development to be capitalised generates future cash flows, and whether the Group has the technical feasibility of completing the development so that the item under research and development will be available for use or sale and the Group has the intention to complete the development. The Group also considers the ability in measuring development expenditure during the development.

Fair value of liability component of convertible notes at issue date

The fair value of liability component of convertible notes at each of the issue dates was determined by reference to the estimated present value of the future cash flows discounted using a discount rate which reflect the market interest rates on similar credit rating financial instruments at the respective issue dates.

Going concern basis

Up to the date of approval of the consolidated financial statements, the Group has subsequently obtained a short-term loan facility of HK$80,000,000 for financing its working capital and reached agreements with two directors, a creditor and the holder of promissory notes to extend the repayment dates of their debts, totalling approximately HK$57,132,000, to August and 31 December 2027, respectively. In addition, the Group is currently in serious discussions with potential investors for raising new capital by way of issuing new equity and/or debt securities. The directors of the Company are of the opinion that the Group will be able to obtain necessary funds for its working capital requirements such that the Group will be able to meet its debts as and when they fall due and to continue as a going concern in the foreseeable future.

154

4. OPERATING SEGMENT INFORMATION

Information reported to the board of directors, being the chief operating decision maker (CODM), for the purposes of resources allocation and assessment of segment performance focuses on types of goods and services delivered and provided.

For management purpose, the Group has identified the following two major reportable segments. Certain segments have been aggregated to form the following reportable segments:

(a) Processing and sale of graphite and graphene related products ("Graphene Products Segment"); and
(b) Providing landscape architecture design ("Landscape Architecture Design Segment").

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, 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 finance costs, as well as head office and corporate income and expenses are excluded from such measurement.

Segment assets exclude deferred tax assets, cash and bank balances and other unallocated head office and corporate assets as these assets are managed on a group basis.

Segment liabilities exclude tax payable, deferred tax liabilities and other unallocated head office and corporate liabilities as these liabilities are managed on a group basis.

Intersegment revenue is eliminated on consolidation. Intersegment sales and transfers are transacted with reference to the service prices used for sales made to third parties at the then prevailing market prices.

Graphex Group Limited Annual Report 2025 155

4. OPERATING SEGMENT INFORMATION (Continued)

The following table present revenue, profit/loss and certain asset, liability and expenditure information for the Group's operating segments for the year.

Year ended 31 December 2025

| | Graphene products
HK$'000 | Landscape architecture design
HK$'000 | Total
HK$'000 |
| --- | --- | --- | --- |
| Segment revenue (note 5(a)) | | | |
| Sales to external customers | 75,125 | 62,436 | 137,561 |
| Elimination of intersegment sales | – | – | – |
| Segment results | (344,808) | (5,272) | (350,080) |
| Reconciliation | | | |
| Unallocated income and gains | | | 3,451 |
| Unallocated expenses | | | (27,095) |
| Unallocated finance costs | | | (13,291) |
| Unallocated depreciation and amortisation | | | (572) |
| Share of results of associates | | | – |
| Loss before tax | | | (387,587) |
| Segment EBITDA | (298,842) | (669) | (299,511) |
| Reconciliation | | | |
| Unallocated income and gains | | | 3,451 |
| Unallocated expenses | | | (27,095) |
| Share of results of associates | | | – |
| EBITDA (note (i)) | | | (323,155) |
| Adjusted segment EBITDA (note (i)) | 14,842 | (236) | 14,606 |
| Segment assets | 422,191 | 88,158 | 510,349 |
| Reconciliation | | | |
| Elimination of intersegment receivables | | | (23,618) |
| Unallocated assets | | | 55,204 |
| Total assets | | | 541,935 |

156

4. OPERATING SEGMENT INFORMATION (Continued)

Year ended 31 December 2025 (Continued)

	Graphene products HK$’000	Landscape architecture design HK$’000	Total HK$’000
Segment liabilities	89,826	115,311	205,137
Reconciliation
Elimination of intersegment payables			(23,618)
Unallocated liabilities			319,118
Total liabilities			500,637
Other segment information
Share of results of associates and joint ventures unallocated			–
Impairment recognised in the consolidated statement of profit or loss
– Goodwill	101,939	–	101,939
– Financial and contract assets, net	37,492	440	37,932
– Other intangible assets	174,255	–	174,255
Reconciliation
Unallocated			–
Total			314,126
Depreciation and amortisation	45,092	3,278	48,370
Reconciliation
Unallocated			572
Total			48,942
Income and gains allocated	7	4,548	4,555
Finance costs allocated	873	1,326	2,199
Investment in an associate unallocated			–
Capital expenditure (note (ii))	–	397	397
Reconciliation
Unallocated			–
Total			397
Property, plant and equipment (excluding right-of-use assets)	8,317	260	8,577
Right-of-use assets	11,147	2,539	13,686
Reconciliation
Unallocated			–
Total			22,263

4. OPERATING SEGMENT INFORMATION (Continued)

Year ended 31 December 2024

| | Graphene products
HK$'000 | Landscape architecture design
HK$'000 | Total
HK$'000 |
| --- | --- | --- | --- |
| Segment revenue (note 5(a)) | | | |
| Sales to external customers | 117,951 | 69,899 | 187,850 |
| Elimination of intersegment sales | – | – | – |
| Segment results | (49,438) | (9,977) | (59,415) |
| Reconciliation | | | |
| Unallocated income and gains | | | 2,569 |
| Unallocated expenses | | | (45,209) |
| Unallocated finance costs | | | (15,507) |
| Unallocated depreciation and amortisation | | | (809) |
| Share of results of associates | | | (797) |
| Loss before tax | | | (119,168) |
| Segment EBITDA | (3,218) | (6,076) | (9,294) |
| Reconciliation | | | |
| Unallocated income and gains | | | 2,569 |
| Unallocated expenses | | | (45,209) |
| Share of results of associates | | | (797) |
| EBITDA (note (i)) | | | (52,731) |
| Adjusted segment EBITDA (note (i)) | 17,734 | 2,375 | 20,109 |
| Segment assets | 724,798 | 85,191 | 809,989 |
| Reconciliation | | | |
| Elimination of intersegment receivables | | | (18,588) |
| Unallocated assets | | | 17,947 |
| Total assets | | | 809,348 |

158

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

Year ended 31 December 2024 (Continued)

	Graphene products HK$’000	Landscape architecture design HK$’000	Total HK$’000
Segment liabilities	113,678	82,808	196,486
Reconciliation
Elimination of intersegment payables			(18,588)
Unallocated liabilities			351,090
Total liabilities			528,988
Other segment information
Share of results of associates and joint ventures unallocated			797
Impairment recognised in the consolidated statement of profit or loss
– Financial and contract assets, net	20,951	6,778	27,729
– Property, plant and equipment	–	1,735	1,735
– Other intangible assets	–	118	118
Reconciliation
Unallocated			–
Total			29,582
Depreciation and amortisation	45,329	3,288	48,617
Reconciliation
Unallocated			809
Total			49,426
Income and gains allocated	10	6,918	6,928
Finance costs allocated	891	613	1,504
Investment in an associate unallocated			–
Capital expenditure (note (ii))	–	470	470
Reconciliation
Unallocated			–
Total			470
Property, plant and equipment (excluding right-of-use assets)	8,954	293	9,247
Right-of-use assets	11,285	5,415	16,700
Reconciliation
Unallocated			–
Total			25,947

4. OPERATING SEGMENT INFORMATION (Continued)

Notes:

(i) Adjusted segment EBITDA is defined as earnings before interest expense, taxation, depreciation and amortisation, and excludes fair value change on financial assets at fair value through profit or loss, write-off of goodwill, impairment losses of other intangible assets and property, plant and equipment, share of results of associates and joint ventures and impairment/(reversal of impairment) on financial and contract assets, loss on promissory notes derecognised, unallocated other income and gains and corporate expenses.

A reconciliation of adjusted segment EBITDA to consolidated loss before tax is provided as follows:

| | 2025
HK$'000 | 2024
HK$'000 |
| --- | --- | --- |
| Loss before tax | (387,587) | (119,168) |
| Add: | | |
| Finance costs | 15,490 | 17,011 |
| Amortisation and depreciation | | |
| - Property, plant and equipment | 960 | 1,017 |
| - Right-of-use assets | 4,644 | 4,783 |
| - Other intangible assets | 43,338 | 43,626 |
| EBITDA | (323,155) | (52,731) |
| Impairment of trade and bills receivables, net | 41,792 | 24,284 |
| Impairment/(reversal of impairment) of contract assets, net | 258 | (1,346) |
| (Reversal of impairment)/impairment of prepayments, other receivables and other assets, net | (4,118) | 4,791 |
| Impairment of property, plant and equipment | - | 1,735 |
| Impairment of other intangible assets | 174,255 | 118 |
| Impairment of goodwill | 101,939 | - |
| Gain on disposal of property, plant and equipment | - | (179) |
| Share of results of associates and joint ventures | - | 797 |
| Fair value change on financial assets of fair value through profit or loss | (9) | - |
| Unallocated corporate expenses | | |
| - Directors and corporate staff salaries | 15,879 | 26,312 |
| - Auditor's remuneration | 2,722 | 4,774 |
| - Legal and professional fees | 3,619 | 8,587 |
| - Publicity expenses | 376 | 765 |
| - Loss on promissory notes derecognised | 2,535 | 251 |
| - Bank charges | 1,198 | 1,476 |
| - Others | 766 | 3,044 |
| | 27,095 | 45,209 |
| Unallocated income and gains | | |
| - Dividend income from equity investments at fair value through other comprehensive income | (60) | (65) |
| - Interest income | (975) | (678) |
| - Gain on waiver of other borrowing | - | (868) |
| - Gain on waiver of interest on corporate bonds | - | (269) |
| - Gain on waiver of interest on convertible notes | - | (32) |
| - Payable written back | (1,861) | - |
| - Others | (555) | (657) |
| | (3,451) | (2,569) |
| Adjusted Segment EBITDA | 14,606 | 20,109 |

160

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

Notes: (Continued)

(ii) Capital expenditure consists of additions to property and equipment and other intangible assets except for right-of-use assets.

Geographical information

(a) Revenue from external customers

| | 2025
HK$'000 | 2024
HK$'000 |
| --- | --- | --- |
| Mainland China | 111,069 | 160,472 |
| Hong Kong | 23,332 | 24,842 |
| Macau | 3,160 | 2,536 |
| | 137,561 | 187,850 |

The revenue information above is based on the locations of the customers.

(b) Non-current assets

| | 2025
HK$'000 | 2024
HK$'000 |
| --- | --- | --- |
| Mainland China | 229,932 | 433,834 |
| Hong Kong | 37,583 | 5,620 |
| | 267,515 | 439,454 |

The above analysis of non-current assets is based on the locations of the non-current assets and excludes goodwill and deferred tax assets.

Information about major customers

Revenue from major customers, which individually amounted to 10% or more of the total revenue, is set out below:

| | 2025
HK$'000 | 2024
HK$'000 |
| --- | --- | --- |
| Customer A | 49,389 | 38,246 |
| Customer B | N/A | 19,467 |
| Customer C | N/A | 36,217 |
| Customer D | 19,396 | N/A |

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the Year ended 31 December 2025

5. REVENUE, OTHER INCOME AND GAINS

(a) Revenue for contract with customers

An analysis of revenue is as follows:

| | 2025
HK$'000 | 2024
HK$'000 |
| --- | --- | --- |
| Sale of graphene products | 75,125 | 117,951 |
| Landscape architecture design | 62,436 | 69,899 |
| | 137,561 | 187,850 |

(i) Disaggregated revenue information

For the year ended 31 December 2025

162

5. REVENUE, OTHER INCOME AND GAINS (Continued)

(a) Revenue for contract with customers (Continued)

(i) Disaggregated revenue information (Continued)

For the year ended 31 December 2024

The following table shows the amounts of revenue recognised in the current reporting period that were included in the contract liabilities at the beginning of the reporting period and recognised from performance obligations satisfied in previous periods:

| | 2025
HK$'000 | 2024
HK$'000 |
| --- | --- | --- |
| Revenue recognised that was included in contract liabilities
at the beginning of the reporting period: | | |
| Landscape architecture services | 18,120 | 13,627 |

5. REVENUE, OTHER INCOME AND GAINS (Continued)

(a) Revenue for contract with customers (Continued)

(ii) Performance obligations

Information about the Group’s performance obligations is summarised below:

Sale of graphene products

The performance obligation is satisfied upon delivery of the graphene products and payment is generally due within two months to four months from delivery, except for new customers, where payment in advance is normally required.

Landscape architecture design

The performance obligation is satisfied over time as services are rendered. A certain percentage of payment is retained by customers until the end of the retention period as the Group’s entitlement to the final payment is conditional on the satisfaction of the service quality by the customers over a certain period as stipulated in the contracts.

The transaction prices allocated to the remaining performance obligations (unsatisfied or partially unsatisfied) at end of reporting period are as follows:

| | 2025
HK$’000 | 2024
HK$’000 |
| --- | --- | --- |
| Within one year | 34,681 | 44,282 |
| More than one year | 152,393 | 178,253 |
| | 187,074 | 222,535 |

The remaining performance obligations expected to be recognised in more than one year are to be satisfied within five years. All the other remaining performance obligations are expected to be recognised within one year. The amounts disclosed above do not include variable consideration which is constrained.

164

5. REVENUE, OTHER INCOME AND GAINS (Continued)

(b) Analysis of other income and gains is as follows:

| | 2025
HK$'000 | 2024
HK$'000 |
| --- | --- | --- |
| Other income | | |
| Service income | 3,580 | 5,081 |
| Dividend income from equity investments at fair value through other comprehensive income | 60 | 65 |
| Interest income | 983 | 1,016 |
| Gain on waiver of other borrowing | – | 868 |
| Gain on waiver of interest on convertible notes | – | 32 |
| Gain on waiver of interest on corporate bonds | – | 269 |
| Government grants | 874 | 943 |
| Foreign exchange differences, net | 1 | 1 |
| | 5,498 | 8,275 |
| Other gains | | |
| Payables written back | 1,861 | – |
| Gain on disposal of property, plant and equipment, net | – | 179 |
| Gain on settlement of other payables upon issue of ordinary shares | – | 560 |
| Others | 647 | 483 |
| | 2,508 | 1,222 |
| | 8,006 | 9,497 |

Government grants were received from government departments and for promoting the Group's business in the local area. There are no unfulfilled conditions or contingencies relating to these grants.

6. LOSS BEFORE TAX

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

| | Notes | 2025
HK$'000 | 2024
HK$'000 |
| --- | --- | --- | --- |
| Cost of inventories sold | | 50,518 | 84,020 |
| Cost of services provided | | 33,708 | 35,523 |
| Cost of sales | (a) | 84,226 | 119,543 |
| Depreciation of property, plant and equipment | 13 | 960 | 1,017 |
| Depreciation of right-of-use assets | 13 | 4,644 | 4,783 |
| Amortisation of other intangible assets | 15 | 43,338 | 43,626 |
| | | 48,942 | 49,426 |
| Research and development costs | (c) | 8,063 | 13,086 |
| Share of results of associates | 17 | - | 797 |
| Lease payments for lease less than 12 months | 13 | 1,259 | 1,988 |
| Audit fees and other disbursements paid to: | | | |
| - HK auditors | | 1,848 | 1,848 |
| - US auditors | | - | 2,084 |
| - Other auditors | | 936 | 905 |
| | | 2,784 | 4,837 |
| Employee benefit expense (including directors' and chief executive's remuneration (note 8)): | | | |
| Wages and salaries | | 54,490 | 64,050 |
| Equity-settled share-based payment expense | 34 | 12 | 8,562 |
| Pension scheme contributions (defined contribution scheme) | (d) | 6,137 | 7,390 |
| Welfare and other benefits | | 223 | 244 |
| | | 60,862 | 80,246 |
| Professional expenses | | | |
| - Equity-settled share-based payment expense | 34 | - | 5,447 |
| Administrative expenses | (b) | 107,219 | 134,456 |
| Gain on disposal of property, plant and equipment, net | | - | (179) |
| Impairment of property, plant and equipment | | - | 1,735 |
| Impairment of other intangible assets | 15 | 174,255 | 118 |
| Impairment of goodwill | 14 | 101,939 | - |
| Impairment of financial and contract assets: | | | |
| Impairment of trade and bills receivables, net | 20 | 41,792 | 24,284 |
| Impairment/(reversal of impairment) of contract assets, net | 23 | 258 | (1,346) |
| (Reversal of impairment)/impairment of financial assets included in prepayments, other receivables and other assets, net | 21 | (4,118) | 4,791 |
| | | 37,932 | 27,729 |

166

6. LOSS BEFORE TAX (Continued)

Notes:

(a) Cost of sales includes HK$19,559,000 (2024: HK$20,819,000) and HK$50,518,000 (2024: HK$84,020,000) related to staff costs and raw material expenses, respectively.

(b) Administrative expenses of approximately HK$107,219,000 (2024: HK$134,456,000) comprise employee benefit expenses of approximately HK$40,358,000 (2024: HK$58,755,000), depreciation of property, plant and equipment (including right-of-use assets) of approximately HK$3,565,000 (2024: HK$3,751,000), amortisation of other intangible assets of approximately HK$43,338,000 (2024: HK$43,626,000), auditors' remuneration of approximately HK$2,784,000 (2024: HK$4,837,000), professional expenses related to equity-settled share-based payments of HK$nil (2024: HK$5,447,000) and rental expense for short-term leases of approximately HK$1,259,000 (2024: HK$1,988,000), of which their respective total amounts are disclosed above, and other related operating expenses of approximately HK$15,915,000 (2024: HK$16,052,000) for the year ended 31 December 2025.

(c) Research and development costs of approximately HK$8,063,000 (2024: HK$13,086,000) comprise employee benefit expenses of approximately HK$3,249,000 (2024: HK$2,289,000), depreciation of property, plant and equipment of approximately HK$846,000 (2024: HK$850,000) and raw material expenses of approximately HK$2,288,000 (2024: HK$7,938,000), of which their respective total amounts are disclosed above, and other related expenses of approximately HK$1,680,000 (2024: HK$2,009,000) for the year ended 31 December 2025.

(d) The Group had no forfeited contributions under the Mandatory Provident Fund Scheme (the "MPF Scheme") and the retirement benefits schemes in the PRC which may be used to reduce the existing level of contributions during the year ended 31 December 2025 (2024: nil). There were also no forfeited contributions available to reduce future contributions at the end of the reporting period (2024: nil).

7. FINANCE COSTS

An analysis of finance costs is as follows:

| | 2025
HK$'000 | 2024
HK$'000 |
| --- | --- | --- |
| Interest on interest-bearing borrowings | 9,792 | 9,346 |
| Interest on convertible notes | 1,029 | 1,447 |
| Interest on promissory notes | 3,616 | 5,154 |
| Interest on lease liabilities | 1,053 | 1,064 |
| | 15,490 | 17,011 |

8. DIRECTORS' AND CHIEF EXECUTIVE'S REMUNERATION

Directors' and chief executive's remuneration for the year, disclosed pursuant to the Rules Governing the Listing of Securities on the Stock Exchange of Hong Kong Limited (the "Listing Rules"), section 383(1)(a), (b), (c) and (f) of the Hong Kong Companies Ordinance and Part 2 of the Companies (Disclosure of Information about Benefits of Directors) Regulation, is as follows:

	Group
	2025
HK$'000	2024
HK$'000
Fees	448	526
Other emoluments:
Salaries, allowances and benefits in kind	10,997	13,234
Equity-settled share-based payment expense	–	525
Pension scheme contributions and other benefits	54	54
	11,051	13,813
	11,499	14,339

(a) Independent non-executive directors

The fees paid to independent non-executive directors during the year were as follows:

| | 2025
HK$'000 | 2024
HK$'000 |
| --- | --- | --- |
| Tam Ip Fong Sin | 120 | 120 |
| Wang Yuncai | 120 | 120 |
| Liu Kwong Sang | 144 | 144 |
| Tang Zhaodong | 64 | 120 |
| Chan Anthony Kaikwong | – | 22 |
| | 448 | 526 |

The emoluments payable to the independent non-executive directors as at 31 December 2025 was HK$996,000 (2024: HK$668,000).

168

8. DIRECTORS' AND CHIEF EXECUTIVE'S REMUNERATION (Continued)

(b) Executive directors, non-executive directors and the chief executive

2025

	Salaries, allowances and benefits in kind HK$’000	Equity-settled share-based payment expense HK$’000	Pension scheme contributions and other benefits HK$’000	Total HK$’000
Executive directors:
Lau Hing Tat Patrick	3,360	–	18	3,378
Qiu Bin	1,440	–	18	1,458
	4,800	–	36	4,836
Non-executive director:
Ma Lida	600	–	–	600
Chief executive:
Chan Yick Yan Andross	5,597	–	18	5,615
	10,997	–	54	11,051

2024

	Salaries, allowances and benefits in kind HK$’000	Equity-settled share-based payment expense HK$’000	Pension scheme contributions and other benefits HK$’000	Total HK$’000
Executive directors:
Lau Hing Tat Patrick	5,597	175	18	5,790
Qiu Bin	1,440	175	18	1,633
	7,037	350	36	7,423
Non-executive director:
Ma Lida	600	–	–	600
Chief executive:
Chan Yick Yan Andross	5,597	175	18	5,790
	13,234	525	54	13,813

8. DIRECTORS' AND CHIEF EXECUTIVE'S REMUNERATION (Continued)

(c) There was no arrangement under which a director or the chief executive waived or agreed to waive any remuneration during both years.

9. FIVE HIGHEST PAID EMPLOYEES

The five highest paid employees during the year included two directors and the chief executive (2024: two directors and the chief executive), details of whose remuneration are set out in note 8 above. Details of the remuneration for the year of the remaining two (2024: two) highest paid individuals who are neither a director nor a chief executive of the Company are as follows:

| | 2025
HK$'000 | 2024
HK$'000 |
| --- | --- | --- |
| Salaries, allowances and benefits in kind | 2,427 | 2,247 |
| Equity-settled share-based payment expense | – | 703 |
| Pension scheme contributions and other benefits | 36 | 36 |
| | 2,463 | 2,986 |

The emoluments of the two (2024: two) individuals with the highest emoluments fell within the following bands:

	Number of individuals
	2025	2024
Nil to HK$1,000,000	1	–
HK$1,000,001 to HK$1,500,000	1	1
HK$1,500,001 to HK$2,000,000	–	1
	2	2

170

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

10. INCOME TAX

Income tax (credit)/expense for the year:

| | 2025
HK$'000 | 2024
HK$'000 |
| --- | --- | --- |
| Current – Mainland China | 2,219 | 1,122 |
| Current – Hong Kong | 87 | – |
| Current income tax expense | 2,306 | 1,122 |
| Deferred tax (note 33) | | |
| – origination and reversal of temporary differences | (25,249) | (8,905) |
| Total tax credit for the year | (22,943) | (7,783) |

The provision for Hong Kong Profits Tax for 2025 is calculated at 16.5% (2024: 16.5%) of the estimated assessable profits for the year, except for one subsidiary of the Group, which is taxed at 8.25% on assessable profits on the first HK$2,000,000 of its assessable profit and less a special tax reduction capped at HK$3,000.

Earthasia (Shanghai) Co., Ltd. continued to be granted with the qualification of High and New Technology Enterprises on 15 November 2023 and is entitled to a preferential corporate income tax rate of 15% (2024: 15%) for a period of three years ended 31 December 2025.

EA SZ has been provided corporate income tax at the rate of 15% (2024: 15%) on the estimated assessable profits as its main principal activities, of engaging in interior design and landscape, are recognised as encouraged industries in Qianhai district, Shenzhen in Mainland China.

Tanao is qualified for High and New Technology Enterprises and was entitled to a preferential corporate income tax rate of 15% (2024: 15%) for a period of three years ended 31 December 2025. As Tanao did not obtain the renewal of qualification for High and New Technology Enterprises by 31 December 2025, and Tanao is subject to a corporate income tax standard rate of 25%.

Other subsidiaries located in Mainland China are subject to corporate income tax at the statutory rate of 25% (2024: 25%) for the year ended 31 December 2025 under the income tax rules and regulations in the PRC.

Graphex Technologies, LLC, a wholly-owned subsidiary of the Company, is incorporated in the USA and is subject to corporate income tax at 21% (2024: 21%) for the year ended 31 December 2025.

10. INCOME TAX (Continued)

A reconciliation of the tax expense/(credit) applicable to loss before tax at the statutory rates for the jurisdictions in which the Company and the majority of its subsidiaries are domiciled to the tax expense/(credit) at the effective tax rates, and a reconciliation of the applicable rates (i.e., the statutory tax rates) to the effective tax rates, are as follows:

	2025
	Hong Kong		Mainland China		Others		Total
	HK$'000	%	HK$'000	%	HK$'000	%	HK$'000	%
Loss before tax	(7,475)		(355,742)		(24,370)		(387,587)
Tax at the statutory tax rate	(1,233)	16.5	(88,935)	25.0	-	-	(90,168)	23.3
Lower tax rate for specific provinces or enacted by local authority	(93)	1.2	1,180	(0.3)	-	-	1,087	(0.3)
Tax effect of non-taxable income	(129)	1.7	(1,550)	0.4	-	-	(1,679)	0.4
Tax effect of non-deductible expenses	(18)	0.2	89,907	(25.3)	-	-	89,889	(23.3)
Temporary differences – not recognised	262	(3.5)	(26,787)	7.5	-	-	(26,525)	6.8
Tax effect of utilisation of tax losses	(196)	2.6	-	-	-	-	(196)	0.1
Tax losses not recognised	1,756	(23.4)	2,893	(0.8)	-	-	4,649	(1.1)
Tax expense at the Group's effective rate	349	(4.7)	(23,292)	6.5	-	-	(22,943)	5.9
	2024
---	---	---	---	---	---	---	---	---
	Hong Kong		Mainland China		Others		Total
	HK$'000	%	HK$'000	%	HK$'000	%	HK$'000	%
Loss before tax	(2,803)		(73,214)		(43,151)		(119,168)
Tax at the statutory tax rate	(462)	16.5	(18,304)	25.0	(263)	0.6	(19,029)	16.0
Lower tax rate for specific provinces or enacted by local authority	-	-	6,389	(8.7)	-	-	6,389	(5.4)
Tax effect of non-taxable income	(469)	16.7	(654)	0.9	-	-	(1,123)	0.9
Tax effect of non-deductible expenses	438	(15.6)	5,105	(7.0)	-	-	5,543	(4.7)
Temporary differences – not recognised	730	(26.0)	(4,866)	6.6	-	-	(4,136)	3.5
Tax effect of utilisation of tax losses	(790)	28.1	-	-	-	-	(790)	0.7
Tax losses not recognised	1,284	(45.8)	3,816	(5.2)	263	(0.6)	5,363	(4.5)
Tax expense at the Group's effective rate	731	(26.1)	(8,514)	11.6	-	-	(7,783)	6.5

172

11. DIVIDEND

The Board does not recommend the payment of any final dividend in respect for the years ended 31 December 2025 and 2024.

12. LOSS PER SHARE ATTRIBUTABLE TO ORDINARY EQUITY HOLDERS OF THE PARENT

The calculation of the basic loss per share amount is based on the loss for the year attributable to ordinary equity holders of the parent, and the weighted average number of ordinary shares of 667,804,270 (2024: 346,059,615), as adjusted for effects of share consolidation and rights issue in 2025 in issue during the year.

No adjustment has been made to the basic loss per share amount presented for the years ended 31 December 2025 and 2024 in respect of a dilution as the impact of the convertible notes, warrants and share options outstanding had an anti-dilutive effect on the basic loss per share amount presented.

The calculation of basic loss per share was based on:

| | 2025
HK$'000 | 2024
HK$'000 |
| --- | --- | --- |
| Loss | | |
| Loss attributable to ordinary equity holders of the parent | (364,644) | (111,435) |
| | Number of shares | |
| | 2025 | 2024
(Restated) |
| Shares | | |
| Weighted average number of ordinary shares in issue during the year
used in the basic loss per share calculation | 667,804,270 | 346,059,615 |

13. PROPERTY, PLANT AND EQUIPMENT

2025

	Right-of-use assets HK$’000	Leasehold improvements HK$’000	Furniture and equipment HK$’000	Motor vehicles HK$’000	Other plant and machinery HK$’000	Total HK$’000
At 31 December 2024 and 1 January 2025:
Cost	24,215	12,872	11,191	555	13,215	62,048
Accumulated depreciation	(7,160)	(12,458)	(10,215)	(372)	(4,276)	(34,481)
Accumulated impairment	(355)	(414)	(668)	(183)	–	(1,620)
Net carrying amount	16,700	–	308	–	8,939	25,947
At 1 January 2025, net of accumulated depreciation and impairment
Additions	1,362	–	74	–	–	1,436
Depreciation	(4,644)	–	(114)	–	(846)	(5,604)
Impairment	–	–	–	–	–	–
Exchange realignment	268	–	2	–	214	484
At 31 December 2025, net of accumulated depreciation and impairment
	13,686	–	270	–	8,307	22,263
At 31 December 2025:
Cost	23,613	13,133	11,438	569	13,549	62,302
Accumulated depreciation	(9,562)	(12,708)	(10,483)	(382)	(5,242)	(38,377)
Accumulated impairment	(365)	(425)	(685)	(187)	–	(1,662)
Net carrying amount	13,686	–	270	–	8,307	22,263

174

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

13. PROPERTY, PLANT AND EQUIPMENT (Continued)

2024

| | Right-of-use assets
HK$'000 | Leasehold improvements
HK$'000 | Furniture and equipment
HK$'000 | Motor vehicles
HK$'000 | Other plant and machinery
HK$'000 | Total
HK$'000 |
| --- | --- | --- | --- | --- | --- | --- |
| At 31 December 2023 and 1 January 2024: | | | | | | |
| Cost | 24,369 | 13,098 | 11,619 | 790 | 13,504 | 63,380 |
| Accumulated depreciation | (7,390) | (12,658) | (10,561) | (581) | (3,514) | (34,704) |
| Net carrying amount | 16,979 | 440 | 1,058 | 209 | 9,990 | 28,676 |
| At 1 January 2024, net of accumulated depreciation and impairment | | | | | | |
| Additions | 5,128 | – | 152 | – | – | 5,280 |
| Depreciation | (4,783) | (16) | (151) | – | (850) | (5,800) |
| Impairment | (361) | (422) | (744) | (208) | – | (1,735) |
| Exchange realignment | (263) | (2) | (7) | (1) | (201) | (474) |
| At 31 December 2024, net of accumulated depreciation and impairment | | | | | | |
| 16,700 | – | 308 | – | 8,939 | 25,947 | |
| At 31 December 2024: | | | | | | |
| Cost | 24,215 | 12,872 | 11,191 | 555 | 13,215 | 62,048 |
| Accumulated depreciation | (7,160) | (12,458) | (10,215) | (372) | (4,276) | (34,481) |
| Accumulated impairment | (355) | (414) | (668) | (183) | – | (1,620) |
| Net carrying amount | 16,700 | – | 308 | – | 8,939 | 25,947 |

13. PROPERTY, PLANT AND EQUIPMENT (Continued)

Right-of-use assets

The analysis of the net book value of right-of-use assets by class of underlying assets is as follows:

| | 2025
HK$'000 | 2024
HK$'000 |
| --- | --- | --- |
| Other properties leased for own use, carried at depreciated cost | 10,323 | 13,027 |
| Plant and machinery, carried at depreciated cost | 3,363 | 3,673 |
| | 13,686 | 16,700 |

Impairment test on right-of-use assets and other plant and equipment with a carrying amount of HK$10,088,000 (2024: HK$11,020,000) and HK$8,307,000 (2024: HK$8,939,000), respectively, related to Graphene Products Business was disclosed in note 14 below and no impairment on these right-of-use assets and the plant and equipment was recognised at 31 December 2025 and 2024.

The analysis of expense items in relation to leases recognised in profit or loss is follows:

| | 2025
HK$'000 | 2024
HK$'000 |
| --- | --- | --- |
| Depreciation expense of right-of-use assets | 4,644 | 4,783 |
| Interest expense on lease liabilities | 1,053 | 1,064 |
| Expense relating to short-term leases | 1,259 | 1,988 |
| | 6,956 | 7,835 |

The Group had total cash outflows for leases of HK$5,857,000 (2024: HK$5,943,000) for the year ended 31 December 2025.

No lease was terminated during the year ended 31 December 2025 and 2024.

During the year ended 31 December 2024, impairment loss of HK$361,000 and HK$1,374,000 were charged on the right-of-use assets and other property, plant and equipment of Landscape Agriculture Design segment in the PRC, respectively.

176

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

14. GOODWILL

| | 2025
HK$'000 | 2024
HK$'000 |
| --- | --- | --- |
| Cost | 101,939 | 101,939 |
| Less: impairment loss | (101,939) | – |
| | – | 101,939 |

The goodwill represented the expected future profitability of the existing Graphene Products Business that was acquired by the Group in the year ended 31 December 2019.

Impairment test of Graphene Products Business to which goodwill is allocated

For the impairment assessment of the Graphene Products Business identified as a cash generating unit (the "CGU") at 31 December 2025, the Group engaged International Valuation Limited ("IVL") (2024: IVL), an independent firm of qualified valuers not related to the Group and with qualifications and experiences in valuing similar assets.

As at 31 December 2025, goodwill, together with other intangible assets (note 15), property, plant and equipment (note 13) and rights-of-use assets (note 13) with carrying amounts of HK$198,074,000 (2024: HK$408,181,000), HK$8,307,000 (2024: HK$8,939,000) and HK$10,088,000 (2024: HK$11,020,000), respectively, are allocated to the CGU. The recoverable amount of the CGU is the higher of value in use and fair value less cost of disposal, based on the income approach using the discounting cash flow method. The key assumptions are the discount rates, growth rates and expected changes in selling price and direct costs of graphene during the projection period. The directors of the Company estimate discount rates using pre-tax rates that reflect current market assessments of the time value of money and the risks specific to the CGU. The growth rate is based on industry growth forecasts. Changes in selling prices and direct costs are based on past practices and expectations of future changes in the market.

Graphex Group Limited Annual Report 2025 177

14. GOODWILL (Continued)

Impairment test of Graphene Products Business to which goodwill is allocated (Continued)

178

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

15. OTHER INTANGIBLE ASSETS

| | Software
HK$'000 | Graphene Products Business | | | Total
HK$'000 |
| --- | --- | --- | --- | --- | --- |
| | | Patents
HK$'000 | Trademarks
HK$'000 | Customer relationships
HK$'000 | |
| 31 December 2025 | | | | | |
| Cost at 1 January 2025, net of accumulated amortisation and impairment | 227 | 159,110 | 141,355 | 107,716 | 408,408 |
| Additions | 323 | – | – | – | 323 |
| Amortisation provided for the year | (285) | (16,782) | (14,910) | (11,361) | (43,338) |
| Impairment | – | (58,903) | (17,833) | (97,519) | (174,255) |
| Exchange realignment | (1) | 2,935 | 3,102 | 1,164 | 7,200 |
| At 31 December 2025 | 264 | 86,360 | 111,714 | – | 198,338 |
| At 31 December 2025: | | | | | |
| Cost | 18,227 | 255,902 | 226,837 | 172,855 | 673,821 |
| Accumulated amortisation | (17,844) | (109,797) | (97,036) | (73,943) | (298,620) |
| Accumulated impairment | (119) | (59,745) | (18,087) | (98,912) | (176,863) |
| Net carrying amount | 264 | 86,360 | 111,714 | – | 198,338 |
| 31 December 2024 | | | | | |
| Cost at 1 January 2024, net of accumulated amortisation | 374 | 179,553 | 159,516 | 121,554 | 460,997 |
| Additions | 318 | – | – | – | 318 |
| Amortisation provided for the year | (346) | (16,871) | (14,988) | (11,421) | (43,626) |
| Impairment | (118) | – | – | – | (118) |
| Exchange realignment | (1) | (3,572) | (3,173) | (2,417) | (9,163) |
| At 31 December 2024 | 227 | 159,110 | 141,355 | 107,716 | 408,408 |
| At 31 December 2024: | | | | | |
| Cost | 17,570 | 249,601 | 221,252 | 168,599 | 657,022 |
| Accumulated amortisation | (17,228) | (90,491) | (79,897) | (60,883) | (248,499) |
| Accumulated impairment | (115) | – | – | – | (115) |
| Net carrying amount | 227 | 159,110 | 141,355 | 107,716 | 408,408 |

Graphex Group Limited Annual Report 2025 179

15. OTHER INTANGIBLE ASSETS (Continued)

Impairment test

Patents, trademarks and customer relationships related to the Graphene Products Business acquired during the year ended 31 December 2019.

For the impairment testing of other intangible assets-customer relationships, patents and trademarks, at 31 December 2025, the Group engaged IVL (2024: IVL), an independent firm of qualified valuers not related to the Group and with qualifications and experiences in valuing similar assets, to determine the fair value of the trademarks, customer relationships and patents.

The following valuation methods and pre-tax discount rates have been adopted for the valuations at 31 December 2025:

Trademarks: relief from royalty method, at a pre-tax discount rate of 18.2%;
Customer relationships: multi-period excess earning method, at a pre-tax discount rate of 18.85%;
Patents: multi-period excess earning method, at a pre-tax discount rate of 23.95%

180

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

15. OTHER INTANGIBLE ASSETS (Continued)

Impairment test (Continued)

The Multi-Period Excess Earnings Method is an income-based valuation technique used to estimate the fair value of customer relationships and patents by calculating the present value of future cash flows attributable to each of the customer relationships and patents. It isolates these earnings of each of customer relationships and patents by subtracting "contributory asset charges" – fair returns on supporting assets which are working capital, fixed assets, workforce and any other intangibles – from the total projected earnings.

At 31 December 2024, there was no impairment loss on each of trademarks, customer relationships and patents.

Details of impairment assessment test of the CGU to which trademarks, customer relationships and patents are allocated, refer to note 14.

16. INVESTMENTS IN JOINT VENTURES

| | 2025
HK$'000 | 2024
HK$'000 |
| --- | --- | --- |
| Share of net assets | - | - |

Particulars of the Group's joint ventures are as follows:

Name	Particulars of issued shares held/ paid-up capital	Place of registration and business	Percentage of			Principal activity
			Ownership interest	Voting power	Profit sharing
Trade More Global Limited ("Trade More") (note)	Issued ordinary shares US$1,100	British Virgin Islands	30	50	30	Investment Holding
Earthasia Worldwide Holdings Limited ("EA Trading") (note)	Issued ordinary shares HK$100	Hong Kong	30	50	30	Trading business
Earthasia International (Japan) Limited ("Japan Trading") (note)	Issued ordinary shares JPY50,000,000	Japan	30	50	30	Dormant
上海奕桂品牌管理有限公司 ("上海奕桂") (note)	Registered capital RMB1,000,000	Mainland China	30	50	30	Trading business
大連擴亞國際貿易有限公司 ("Dalian Pengya International Trade Co., Ltd") ("Dalian Trading") (note)	Registered capital RMB2,000,000	Mainland China	30	50	30	Trading business

a The English names of these companies represent the best effort made by the management of the Company to directly translate their Chinese names as these companies do not register any official English names.

Trade More and its wholly owned subsidiaries, EA Trading, Japan Trading, 上海奕桂 and Dalian Trading are indirectly held by the Company.

182

16. INVESTMENTS IN JOINT VENTURES (Continued)

Note: The following table illustrates the summarised financial information in respect of the joint venture, adjusted for any differences in accounting policies and reconciled to the carrying amount in the financial statements:

| | 2025
HK$'000 | 2024
HK$'000 |
| --- | --- | --- |
| Gross amounts of the joint ventures | | |
| Current assets | 5,158 | 18,499 |
| Non-current assets | – | – |
| Current liabilities | (58,904) | (61,132) |
| Non-current liabilities | (1,148) | (1,155) |
| Equity | (54,898) | (43,788) |
| Included in the above assets: | | |
| Cash and cash equivalents | 282 | 61 |
| Revenue | 23,486 | 24,482 |
| Loss for the year | (3,763) | (2,277) |
| Other comprehensive income | (311) | 271 |
| Total comprehensive loss for the year | (4,074) | (2,006) |
| Group's share of results | – | – |
| Included in the above loss: | | |
| Depreciation and amortisation | – | – |
| Interest expenses | (1,001) | (2,335) |
| Reconciliation to the Group's interest in the joint ventures: | | |
| Proportion of the Group's ownership | 30% | 30% |
| Group's share of net assets of the joint ventures | – | – |
| Carrying amount of the investment | – | – |

The Group has discontinued the recognition of its share of loss of a joint venture, EA Trading, because the share of loss of the joint venture exceeded the Group's interest in the joint venture and the Group has no obligation to take up further loss. The amount of the Group's unrecognised share of loss and other comprehensive income of EA Trading for the year and accumulated losses were HK$1,222,000 (2024: HK$602,000) and HK$14,216,000 (2024: HK$13,087,000), respectively.

At the reporting period end, there are no material commitments and contingent liabilities in the joint ventures that are attributable to the Group.

17. INVESTMENTS IN ASSOCIATES

| | 2025
HK$'000 | 2024
HK$'000 |
| --- | --- | --- |
| Share of net assets | - | - |

Particulars of the Group's associates are as follows:

Name	Particulars of issued shares held/ paid-up capital	Place of registration and business	Percentage of			Principal activity
			Ownership interest	Voting power	Profit sharing
上海泰迪朋友投資管理有限公司 (Shanghai Teddy Friends Investment Management Limited®) ("Teddy")	Registered capital of RMB27,000,000	Mainland China	20	20	20	Investment holding
蘇州蘇迪投資發展有限公司 (Suzhou Sudi Investment and Development Limited®) ("Sudi")	Registered capital of RMB35,000,000	Mainland China	10	10	10	Dormant

The English names of these companies represent the best effort made by the management of the Company to directly translate their Chinese names as these companies do not register any official English name.

184

17. INVESTMENTS IN ASSOCIATES (Continued)

The equity interests in Teddy and its 51% subsidiary, Sudi, are indirectly held by the Company.

Teddy and Sudi are considered as associates of the Group and are accounted for using the equity method.

The following table illustrates the summarised financial information in respect of Teddy, adjusted for any differences in accounting policies and reconciled to the carrying amount in the financial statements:

	Teddy
	2025
HK$’000	2024
HK$’000
Current assets	12,315	14,575
Non-current assets	63	270
Current liabilities	(12,829)	(12,789)
Non-controlling interests	(707)	(5,948)
Equity attributable to the owners of the parent	(1,158)	(3,892)
Reconciliation to the Group’s interest in the associate:
Proportion of the Group’s ownership	20%	20%
Group’s share of net assets of the associates	–	–
Balance with the Group	–	–
Carrying amount of the investment	–	–
Revenue	–	–
Loss for the year	(2,731)	(3,985)
Other comprehensive income	–	–
Total comprehensive loss for the year	(2,731)	(3,985)
Group’s share of results	–	(797)

During the year ended 31 December 2025, the Group has discontinued the recognition of its share of loss of the associates because the share of loss of associates exceeded the Group’s interest in the associates and the Group has no obligation to take up further loss. The share of the unrecognised share of loss of the associates was HK$546,000 for the year ended 31 December 2025.

Graphex Group Limited Annual Report 2025 185

18. EQUITY INVESTMENT DESIGNATED AT FAIR VALUE THROUGH OTHER COMPREHENSIVE INCOME

| | 2025
HK$'000 | 2024
HK$'000 |
| --- | --- | --- |
| Unlisted equity investment, at fair value | | |
| 深圳市前海邦你貸互聯網金融服務有限公司 (“Lendbang”) | | |
| At 1 January | 45 | 34 |
| Fair value loss through other comprehensive income | 8 | 12 |
| Exchange realignment | 1 | (1) |
| At 31 December | 54 | 45 |

The Group's 7.41% (2024: 7.41%) interest in the above equity investment was irrevocably designated at fair value through other comprehensive income as the Group considers the investment to be strategic in nature.

During the year ended 31 December 2025, the Group received dividends in the amount of HK$60,000 (2024: HK$65,000), from Lendbang.

19. INVENTORIES

| | 2025
HK$'000 | 2024
HK$'000 |
| --- | --- | --- |
| Raw materials | 4,556 | 216 |
| Finished goods | 54 | 5,301 |
| | 4,610 | 5,517 |

186

20. TRADE AND BILLS RECEIVABLES

| | 2025
HK$'000 | 2024
HK$'000 |
| --- | --- | --- |
| Trade and bills receivables | 180,980 | 276,606 |
| Allowance for impairment | (138,835) | (94,545) |
| | 42,145 | 182,061 |

The Group's trading terms with its customers are mainly on credit, except for new customers, where payment in advance is normally required. The credit period is two months, extending up to six months for major customers. Each customer has a maximum credit limit. The Group seeks to maintain strict control over its outstanding receivables 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 and bill 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 and bills receivables balances. Trade and bills receivables are non-interest-bearing.

An ageing analysis of the trade and bills receivables at the end of each reporting period, based on the invoice date and/or delivery date and net of loss allowance for lifetime expected credit losses, is as follows:

| | 2025
HK$'000 | 2024
HK$'000 |
| --- | --- | --- |
| Within 6 months | 33,855 | 71,681 |
| Over 6 months but within 1 year | 6,807 | 41,076 |
| Over 1 year but within 2 years | 1,483 | 69,304 |
| Over 2 years but within 3 years | - | - |
| Over 3 years | - | - |
| | 42,145 | 182,061 |

The movements in the loss allowance for lifetime expected credit losses of trade and bills receivables are as follows:

| | 2025
HK$'000 | 2024
HK$'000 |
| --- | --- | --- |
| At 1 January | 94,545 | 72,664 |
| Impairment loss, net (note 6) | 41,792 | 24,284 |
| Written-off | - | (482) |
| Exchange alignment | 2,498 | (1,921) |
| At 31 December | 138,835 | 94,545 |

20. TRADE AND BILLS RECEIVABLES (Continued)

Due to the unfavourable changes in global and domestic economic conditions, business environment and increasing market uncertainties caused by the international geo-political conflicts which have been intensified in 2025, sales orders for the Group’s graphene products decreased significantly and the financial abilities of the customers, especially those customers which were engaged in international trade were affected.

The management of the Group has assessed the recoverable amount of the outstanding trade receivables of the customers, taking into their financial performance, and considered reasonable and supportable information, including historical and forward-looking information, and accordingly, impairment loss of approximately HK$35,923,000 (2024: HK$20,951,000) and HK$5,869,000 (2024: HK$3,333,000) for Graphene Products Business and Landscape design architecture were recognised and charged to the consolidated profit or loss for the year ended 31 December 2025, respectively.

An impairment analysis is performed at each reporting date using a provision matrix to measure expected credit losses. The provision rates are based on invoice date for groupings of various customer segments with similar loss patterns (i.e., by geographical region, product type, customer type and rating, and coverage by letters of credit or other forms of credit insurance). The calculation reflects the probability-weighted outcome, the time value of money and reasonable and supportable information that is available at the reporting date about past events, current conditions and forecasts of future economic conditions, and settlement patterns and history of the customers as adjusted for subsequent settlements received by the Group up to the date of approval of the consolidated financial statements.

Set out below is the information about the credit risk exposure on the Group’s trade and bills receivables using a provision matrix:

For Landscape PRC Customers (HK$’000)

	Less than 6 months	6 to 12 months	1 to 2 years	2 to 3 years	Over 3 years	Credit impaired	Total
Expected credit loss rate	14.29%	36.98%	93.07%	100%	100%	100%	79.2%
Gross carrying amount	13,545	8,537	9,022	3,730	46,038	3,809	84,681
Expected credit losses	1,935	3,157	8,397	3,730	46,038	3,809	67,066

As at 31 December 2024

	Less than 6 months	6 to 12 months	1 to 2 years	2 to 3 years	Over 3 years	Credit impaired	Total
Expected credit loss rate	1.77%	26.34%	83.98%	100%	100%	100%	71.36%
Gross carrying amount	21,877	2,559	3,901	6,547	45,196	3,716	83,796
Expected credit losses	387	674	3,276	6,547	45,196	3,716	59,796

188

20. TRADE AND BILLS RECEIVABLES (Continued)

For Landscape HK Customers (HK$'000)

As at 31 December 2024

For Graphene Customers (HK$'000)

Included in the Group's trade receivables was an amount of HK$nil (2024: HK$111,000), with Pubang Landscape Architecture Company Limited ("Pubang"), being a shareholder of the Company which holds 1.6% (2024: 6.4%) equity interest of the Company, for services rendered by the Group, which carries similar terms are those other customers of the Group.

21. PREPAYMENTS, DEPOSITS AND OTHER RECEIVABLES

| | 2025
HK$'000 | 2024
HK$'000 |
| --- | --- | --- |
| Current: | | |
| Trade deposits paid for purchasing raw materials | 113,439 | 19,139 |
| Prepayments | 12,629 | 7,577 |
| Deposits and other receivables | 15,500 | 9,509 |
| Amount due from a non-controlling interest | 9,800 | – |
| Loan receivable from an independent third party | 7,130 | 6,955 |
| Loans to joint ventures (note 40(a)(iii) and (iv)) | 17,878 | 5,881 |
| Loans to an associate (note 40(a)(ii)) | 996 | 972 |
| Impairment allowance | (2,773) | (8,331) |
| | 174,599 | 41,702 |
| Non-current: | | |
| Prepayments for purchase of plant and equipment | 46,537 | 4,731 |
| Rental deposits paid | 323 | 323 |
| | 46,860 | 5,054 |
| Total | 221,459 | 46,756 |

The amount due from a non-controlling interest is unsecured, interest free and repayable on demand.

With the expectation of increasing price of the raw materials and in March 2025, the Group entered into an agreement with an independent third party, a major raw material supplier (the "Raw Materials Supplier") pursuant to which, during the relevant period from March 2025 to March 2028 (the "Relevant Period"), the Raw Materials Supplier shall supply the raw materials, which are used in the production of the Group's graphene products, to the Group at prices of 12% below prevailing market prices of the raw materials at the time when the Group has paid refundable deposits to the Raw Materials Supplier and at the end of the Relevant Period, any unused trade deposits shall be refunded to the Group by the Raw Material Supplier which shall be charged with interest at rate of 8% per annum for the period from the respective deposit payment dates to the end of the Relevant Period. The directors of the Company considered that the impairment exposure to these trade deposits paid to be remote at 31 December 2025, as the market prices at 31 December 2025 and date of approval of the consolidated financial statements exceeded the supply prices of the raw materials under the agreement.

Deposits and other receivables mainly represent rental deposits, deposits to service vendors and interest receivables.

Included in the Group's deposits and other receivables are an amount due from joint ventures of HK$754,000 (2024: HK$786,000) which have no fixed terms of repayment and are interest-free and unsecured.

190

21. PREPAYMENTS, DEPOSITS AND OTHER RECEIVABLES (Continued)

The loan to an independent third party is unsecured, bearing interest at the rate of 3% per annum (2024: 3%) and repayable on 31 December 2025.

The amount due from a non-controlling interest is unsecured, interest free and repayable on demand.

The movements in provision for impairment of prepayments, other receivables and other assets are as follows:

| | 2025
HK$'000 | 2024
HK$'000 |
| --- | --- | --- |
| At 1 January | 8,331 | 3,695 |
| Impairment | 1,569 | 5,733 |
| Reversal of impairment | (5,687) | (942) |
| Written-off | (1,569) | – |
| Exchange alignment | 129 | (155) |
| At 31 December | 2,773 | 8,331 |

22. FINANCIAL ASSETS AT FAIR VALUE THROUGH PROFIT OR LOSS

| | 2025
HK$'000 | 2024
HK$'000 |
| --- | --- | --- |
| Trading securities | | |
| – Equity securities listed outside Hong Kong | 33 | 23 |

23. CONTRACT ASSETS

| | 2025
HK$'000 | 2024
HK$'000 |
| --- | --- | --- |
| Contract assets arising from: | | |
| Landscape architecture design | 86,750 | 94,312 |
| Allowance for impairment | 86,750
(79,401) | 94,312
(77,197) |
| | 7,349 | 17,115 |
| Receivables from contracts with customers within the scope of IFRS 15, which are included in “Trade and bills receivables” (note 20) | 87,196 | 86,192 |

23. CONTRACT ASSETS (Continued)

Contract assets are initially recognised for revenue earned from landscape architecture design as the cumulative revenue recognised in consolidated profit or loss exceed the cumulative billings of services provided. The contract assets will be reclassified as receivables when the progress billings are issued and delivered as this is the point in time that the right to consideration is unconditional because only the passage of time is required before the payment is due. The contract asset will also be reclassified as receivables when the performance obligation of the contracts has been completed.

During the year ended 31 December 2025, HK$79,401,000 (2024: HK$77,197,000) was recognised as an allowance for expected credit losses on contract assets. The Group's trading terms and credit policy with customers are disclosed in note 20 to the consolidated financial statements.

The expected timing of recovery or settlement for contract assets as at 31 December 2025 and 2024 are as follows:

| | 2025
HK$'000 | 2024
HK$'000 |
| --- | --- | --- |
| Within one year | 7,349 | 17,115 |

Movements of the contract assets, before allowance for lifetime ECLs, during the years ended 31 December 2025 and 2024 are as follows:

| | 2025
HK$'000 | 2024
HK$'000 |
| --- | --- | --- |
| Beginning of the year | 94,312 | 110,623 |
| Entitlement to considerations for contract performance obligations
discharged for the year, comprising | | |
| - Revenue recognised | 62,436 | 69,899 |
| - Valued-added tax on revenue recognised | 2,843 | 2,503 |
| | 65,279 | 72,402 |
| Transferred to trade receivables when rights to payments
became unconditional | (54,957) | (72,995) |
| Transferred to and offset by contract liabilities (note 28) | (18,120) | (13,627) |
| Exchange alignment | 236 | (2,091) |
| End of the year | 86,750 | 94,312 |

192

23. CONTRACT ASSETS (Continued)

The movements in the loss allowance for impairment of contract assets are as follows:

| | 2025
HK$'000 | 2024
HK$'000 |
| --- | --- | --- |
| Beginning of the year | 77,197 | 80,717 |
| Impairment loss/(reversal of impairment loss), net (note 6) | 258 | (1,346) |
| Written off | – | (484) |
| Exchange alignment | 1,946 | (1,690) |
| End of the year | 79,401 | 77,197 |

An impairment analysis is performed at each reporting date using a provision matrix to measure expected credit losses. The provision rates for the measurement of the expected credit losses of the contract assets are based on those of the trade receivables as the contract assets and the trade receivables are from the same customer bases. The provision rates of contract assets are based on days past due of trade receivables for groupings of various customer segments with similar loss patterns (i.e., by geographical region, product type, customer type and rating, and coverage by letters of credit or other forms of credit insurance). The calculation reflects the probability-weighted outcome, the time value of money and reasonable and supportable information that is available at the reporting date about past events, current conditions and forecasts of future economic conditions.

Set out below is the information about the credit risk exposure on the Group's contract assets, in respect of landscape architecture designs for which the ageing analysis was based on the date of revenue recognition, using a provision matrix:

PRC Customers (HK$'000)

Graphex Group Limited Annual Report 2025 193

23. CONTRACT ASSETS (Continued)

HK Customers (HK$'000)

24. CASH AND CASH EQUIVALENTS AND RESTRICTED BANK DEPOSITS

| | 2025
HK$'000 | 2024
HK$'000 |
| --- | --- | --- |
| Cash and bank balances | 27,280 | 15,547 |
| Less: Restricted bank deposits (note) | (533) | (101) |
| Cash and cash equivalents in the consolidated statement of cash flows | 26,747 | 15,446 |

Note: As at 31 December 2025, bank deposits of HK$533,000 (2024: HK$101,000) are pledged to a bank for the issuance of guarantees by the bank to the customers in respect of the specific performance under certain service agreements.

194

24. CASH AND CASH EQUIVALENTS AND RESTRICTED BANK DEPOSITS (Continued)

The Group's cash and bank balances were denominated in HK$ at the end of the reporting period, except for the following:

	2025		2024
	Original currency in '000	HK$ equivalent in '000	Original currency in '000	HK$ equivalent in '000
Cash and bank balances:
Renminbi ("RMB")	23,624	26,156	11,204	12,099
US Dollar	43	336	146	1,140

The RMB is not freely convertible into other currencies, however, under Mainland China's Foreign Exchange Control Regulations and Administration of Settlement, Sale and Payment of Foreign Exchange Regulations, the Group is permitted to exchange RMB for other currencies through banks authorised to conduct foreign exchange business.

Cash at banks earns interest at floating rates based on daily bank deposit rates. Short-term time deposits are made for varying periods of between one day and three months depending on the immediate cash requirements of the Group and earn interest at the respective short-term time deposit rates. The bank balances and pledged deposit are deposited with creditworthy banks with no recent history of default.

25. NON-CURRENT ASSETS HELD FOR SALE

| | 2025
HK$'000 | 2024
HK$'000 |
| --- | --- | --- |
| Non-current assets held for sale | | |
| - Property | 356 | 432 |

During the year ended 31 December 2025, a customer settled an outstanding trade receivable balance by transferring a property to the Group. The fair value of the property is estimated to be approximately equal to, or slightly higher than, the carrying amount of the receivable of RMB321,000 (approximately HK$356,000). As at 31 December 2025, the carrying amount of the trade receivable was reclassified as a non-current asset held for sale in the consolidated statement of financial position. The property is expected to be disposed of in the subsequent financial period.

During the year ended 31 December 2024, a customer of the Group settled an outstanding trade receivable balance of RMB853,000 (approximately HK$936,000) by transferring ownership of a property located in the PRC to the Group. This settlement transaction was recorded at the fair value of the property on the date of settlement and a loss of RMB453,000 (approximately HK$497,000) was recognised in profit or loss. The property classified as non-current assets held for sale during the reporting period was measured at the lower of its carrying amount and fair value less costs to sell at the time of the reclassification. The property was successfully sold to an independent third party on 28 February 2025 for a total consideration of RMB400,000 (approximately HK$439,000).

Graphex Group Limited Annual Report 2025 195

26. TRADE PAYABLES

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

| | 2025
HK$'000 | 2024
HK$'000 |
| --- | --- | --- |
| Within 1 year | 24,736 | 49,364 |
| Over 1 year but within 2 years | 93 | 55 |
| Over 2 years but within 3 years | 29 | 19 |
| Over 3 years | 2,094 | 2,024 |
| | 26,952 | 51,462 |

The trade payables are non-interest-bearing and are normally settled within three months.

27. OTHER PAYABLES AND ACCRUALS

| | 2025
HK$'000 | 2024
HK$'000 |
| --- | --- | --- |
| Current: | | |
| Other payables | 79,094 | 63,403 |
| Interest payables | 34,134 | 35,557 |
| Amounts due to a related company (note 40(b)(iv)) | 2,000 | - |
| Amounts due to directors (note 40(b)(iv)) | 12,962 | 4,222 |
| Total | 128,190 | 103,182 |

Other payables are non-interest-bearing and have an average term of three months.

196

28. CONTRACT LIABILITIES

| | 2025
HK$'000 | 2024
HK$'000 |
| --- | --- | --- |
| Contract liabilities | 35,850 | 43,862 |

Contract liabilities include short-term advances received from customers. Details of contract liabilities as at 31 December 2025 and 2024 are as follows:

| | 2025
HK$'000 | 2024
HK$'000 |
| --- | --- | --- |
| Gross amount due to customers for construction work | 32,921 | 36,735 |
| Short-term advances received from customers | | |
| Graphene Products Business | 2,929 | 7,127 |
| Total contract liabilities | 35,850 | 43,862 |

The movements in contract liabilities are set out below:

| | 2025
HK$'000 | 2024
HK$'000 |
| --- | --- | --- |
| At the beginning of the year | 43,862 | 38,627 |
| Advance considerations received from customers | 9,258 | 19,635 |
| Transferred to and offset by contract assets (note 23) | (18,120) | (13,627) |
| Exchange alignment | 850 | (773) |
| At the end of the year | 35,850 | 43,862 |

29. LEASE LIABILITIES

As at 31 December 2025, the lease liabilities were payable as follows:

| | 2025
HK$'000 | 2024
HK$'000 |
| --- | --- | --- |
| Within 1 year | 4,332 | 4,442 |
| After 1 year but within 2 years | 1,756 | 3,853 |
| After 2 years but within 5 years | 4,453 | 3,993 |
| After 5 years | 5,883 | 7,241 |
| | 12,092 | 15,087 |
| | 16,424 | 19,529 |

30. INTEREST-BEARING BORROWINGS

31 December 2025

	Notes	Effective interest rate (%)	Maturity	HK$'000
Current
Bank borrowings – guaranteed	(a)	2.55 – 3.6	May 2026 to October 2028	32,108
Other borrowings – unsecured	(b)	5 – 14.4	On demand to December 2026	15,626
Current portion of corporate bonds:
– unsecured	(d)	6	On demand	92,056
– unsecured	(d)	6	February 2026	12,500
Loans from directors	(c)	3.75 – 6	January 2026	22,087
				174,377
Non-current				–
				–

198

30. INTEREST-BEARING BORROWINGS (Continued)

31 December 2024

	Notes	Effective interest rate (%)	Maturity	HK$'000
Current
Bank borrowings – guaranteed	(a)	2.95 – 3.75	May to December 2025	13,639
Other borrowings – unsecured	(b)	3.75 – 14.4	On demand	12,086
Current portion of corporate bonds:
– unsecured	(d)	6	30 June 2025	76,040
– unsecured	(d)	9.13 – 10.04	On demand	25,227
				126,992
Non-current
Other borrowing – unsecured	(b)	9	December 2026	6,000
Other borrowing – unsecured	(b)	3	1 September 2027	5,452
Corporate bonds – unsecured	(d)	6	1 February 2026	12,500
				23,952

Notes:

(a) The Group obtained aggregated bank borrowings of HK$32,108,000 (2024: HK$13,639,000) denominated in Renminbi, carried fixed interest rate at 2.55% to 3.6% (2024: 2.95% to 3.75%) per annum. The bank borrowings were secured by a guarantee provided by the Company.

	2025 HK$'000	2024 HK$'000
Current portion of bank borrowings due for repayment within one year	21,042	13,639
Non-current portion of bank borrowings subject to standard clause to demand for immediate repayment	11,066	–
	32,108	13,639

(b) Included in the Group's other borrowings, HK$1,052,000 (2024: HK$1,512,000) was denominated in Renminbi and repayable on demand, HK$12,000,000 (2024: HK$19,452,000) was denominated in Hong Kong dollars, and of which, HK$12,000,000 (2024: HK$8,000,000) and HK$nil (2024: HK$11,452,000) were included under current and non-current liabilities respectively, HK$2,574,000 (2024: HK$2,574,000) was denominated in US dollar and included in current liabilities.

(c) Included in the Group's loans from directors were, HK$9,687,000 (2024: HK$nil) and HK$12,400,000 (2024: HK$nil) which were unsecured, denominated in Renminbi and Hong Kong dollars and bearing interest at the rate of 3.75% and 6% per annum, respectively. Further details refer to Note 40(a)(v).

30. INTEREST-BEARING BORROWINGS (Continued)

Notes: (Continued)

(d) The movements of corporate bonds recognised and carried at amortised cost in the consolidated financial statements are as follows:

| | 2025
HK$'000 | 2024
HK$'000 |
| --- | --- | --- |
| Carrying amount as at 1 January | 113,767 | 115,372 |
| Repayment | (9,211) | (1,605) |
| Interest charged | 3,012 | 5,312 |
| Interest paid and interest payable included in other payables and accruals | (3,012) | (5,312) |
| Carrying amount as at 31 December | 104,556 | 113,767 |

The Group's corporate bonds were denominated in Hong Kong dollars, unsecured and bearing interest at the rate of 6% (2024: 6%) per annum.

31. PROMISSORY NOTES

| | 2025
HK$'000 | 2024
HK$'000 |
| --- | --- | --- |
| At the beginning of the years | 61,709 | 61,024 |
| Derecognition upon early repayment | (35,333) | (3,049) |
| Effective interest charged | 3,616 | 5,154 |
| Interest payable and included in other payables and accruals | (947) | (1,420) |
| At the end of the years | 29,045 | 61,709 |

On 8 November 2024, the Company early repaid to the holder of the promissory notes at the consideration of HK$3,300,000 with carrying amortised cost of HK$3,049,000, resulting in loss on derecognition of promissory notes of approximately HK$251,000 which as recognised in the consolidated profit of loss for the year ended 31 December 2024.

On 22 May 2025, the holders of the promissory notes subscribed for 171,400,000 unsubscribed rights shares under the compensatory arrangements of the rights issue at a subscription price of HK$0.17 per ordinary share, details of which are disclosed in note 34(f), at the total subscription consideration of HK$29,138,000 of which, HK$22,038,000 was settled by the note holders through the set-off against the outstanding principal of the promissory notes, which had a carrying amount of HK$20,470,000, and the remaining HK$7,100,000 was settled by the note holders through the set-off against the other borrowings payable by the Company of approximately HK$5,452,000 and other payables of approximately HK$1,648,000. As a result, a loss on derecognition of the promissory notes of approximately HK$1,568,000 was recognised in the consolidated profit or loss for the year ended 31 December 2025.

200

31. PROMISSORY NOTES (Continued)

On 26 June 2025, 7 July 2025 and 6 August 2025, the Company early repaid to the holder of the promissory notes, at the consideration of HK$4,000,000, HK$3,430,000 and HK$8,400,000 for promissory notes with carrying amortised costs of HK$3,752,000, HK$3,211,000 and HK$7,900,000, respectively, resulting in losses on derecognition of the promissory notes of approximately HK$248,000, HK$219,000 and HK$500,000, respectively, which were recognised in the consolidated profit or loss for the year ended 31 December 2025.

As at 31 December 2025, the holder of the promissory notes held 27,500,000 (2024: 200,000) ordinary shares of the Company, representing approximately 2.92% (2024: 0.02%) of the issued share capital of the Company.

Subsequent to the reporting period end and up to the date of approval of the consolidated financial statements, the Company has obtained extension letter from the holder of promissory notes to extend the due date of repayment of the promissory notes with carrying amount of HK$29,045,500 to 5 August 2027.

32. CONVERTIBLE NOTES

| | Liability component
HK$'000 | Conversion rights
(note 45)
HK$'000 |
| --- | --- | --- |
| At 1 January 2024 | 4,158 | 883 |
| Effective interest for the year | 28 | – |
| Conversion to ordinary shares | (388) | (56) |
| At 31 December 2024 | 3,798 | 827 |
| Transfer to accumulated losses due to expiry of conversion rights | – | (827) |
| Effective interest for the year | – | – |
| Conversion to ordinary shares | – | – |
| At 31 December 2025 | 3,798 | – |
| At 31 December 2025: | | |
| Under current liabilities | 3,798 | |
| At 31 December 2024: | | |
| Under current liabilities | 3,798 | |

Graphex Group Limited Annual Report 2025 201

32. CONVERTIBLE NOTES (Continued)

Pursuant to the subscription agreement entered into between the Company and Lexinter International Inc. ("Lexinter") on 19 January 2021 ("Subscription Agreement"), the financial obligations in each of the convertible notes are fixed in Hong Kong dollars at the fixed exchange rate of HK$7.75: US$1, for either cash settlement or for share conversion into ordinary shares of the Company. The conversion rights embedded with the convertible notes are exercisable into ordinary shares at the price of HK$0.65 per ordinary share and the convertible notes bear coupon interests at the coupon rate of 5.5% per annum and will be due for repayment on the second anniversary of their respective issue dates. The expiry date of convertible notes is two years from the date of issue.

The conversion rights embedded with the convertible notes are regarded as equity component as they meet with the fixed-for-fixed rule of IAS 32 i.e. fixed number of ordinary shares of the Company will be issued upon the exercise of each of the conversion rights or fixed amount of Hong Kong dollars for cash settlement, as stipulated in the Subscription Agreement.

At the time of issuance, the Company allocated the proceeds to liability component in respect of the conversion rights of the convertible notes as follows:

(i) Liability component of the convertible notes represents the present value of the contractually determined stream of future cash flows discounted at the prevailing market interest rates applicable to instruments of comparable credit status taken into account the business risk and financial risk of the Company at the issue date, and

(ii) Equity component in respect of conversion rights of convertible notes represent the excess of proceeds over liability component of the convertible notes as determined in (i) above.

During the year ended 31 December 2024, convertible notes with principal amount of US$50,000 (equivalent to HK$387,500 at the fixed exchange rate of HK$7.75:US$1, for either cash settlement or share conversion into ordinary shares of the Company as stipulated in the Subscription Agreement), were converted into 596,154 ordinary shares of the Company at HK$0.65 per ordinary share.

At 31 December 2025, there were outstanding convertible notes with conversion rights lapsed and aggregate principal value of US$490,000 (2024: US$490,000), which was equivalent to approximately HK$3,798,000 (2024: HK$3,798,000) at the fixed exchange rate of HK$7.75:US$1, for either cash settlement or share conversion into ordinary shares of the Company, as stipulated in the Subscription Agreement. The outstanding convertible notes (with conversion rights lapsed) were overdue and the holders of these outstanding convertible notes (with conversion rights lapsed) have not taken any legal action against the Company.

At 31 December 2025, the effective interest rate of the liabilities component of the convertible notes ranged from 18.84% to 22.04% (2024: 18.84% to 22.04%).

At 31 December 2025 and 2024, the entire issued capital of Think High Global Limited, which holds 100% of the Graphene Products Business, was charged in favour of Lexinter for the outstanding convertible notes and the warrants, as referred to note 34.

202

33. DEFERRED TAX

The movements in deferred tax assets and deferred tax liabilities during the year are as follows:

Deferred tax assets

| | 2025
HK$'000 | 2024
HK$'000 |
| --- | --- | --- |
| At 1 January | 5,558 | 3,240 |
| Credited to the consolidated statement of profit or loss
during the year | 12,181 | 2,413 |
| Exchange realignment | 309 | (95) |
| At 31 December | 18,048 | 5,558 |

Deferred tax liabilities

| | 2025
HK$'000 | 2024
HK$'000 |
| --- | --- | --- |
| At 1 January | 61,227 | 69,094 |
| Credited to the consolidated statement of profit or loss during the year | (13,068) | (6,492) |
| Exchange realignment | 1,359 | (1,375) |
| At 31 December | 49,518 | 61,227 |

| | Accumulated losses
HK$'000 | Other temporary differences
HK$'000 | Impairment of financial and contract assets
HK$'000 | Total
HK$'000 |
| --- | --- | --- | --- | --- |
| At 1 January 2024 | 986 | 58 | 2,196 | 3,240 |
| Credited/(charged) to the consolidated statement of profit or loss | (790) | (14) | 3,217 | 2,413 |
| Exchange realignment | – | – | (95) | (95) |
| At 31 December 2024 | 196 | 44 | 5,318 | 5,558 |
| At 1 January 2025 | 196 | 44 | 5,318 | 5,558 |
| Credited/(charged) to the consolidated statement of profit or loss | (196) | (16) | 12,393 | 12,181 |
| Exchange realignment | – | – | 309 | 309 |
| At 31 December 2025 | – | 28 | 18,020 | 18,048 |

Graphex Group Limited Annual Report 2025 203

33. DEFERRED TAX (Continued)

Deferred tax liabilities

	Fair value adjustments from business combination* HK$’000
At 1 January 2024	69,094
Credited to the consolidated statement of profit or loss	(6,492)
Exchange realignment	(1,375)
At 31 December 2024	61,227
At 1 January 2025	61,227
Credited to the consolidated statement of profit or loss	(13,068)
Exchange realignment	1,359
At 31 December 2025	49,518

The fair value adjustments related to the patents, trademarks and customer relationships for the Graphene Products Business acquired during the year ended 31 December 2019, as referred to note 15.

204

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

33. DEFERRED TAX (Continued)

Deferred tax liabilities (Continued)

Pursuant to the PRC Corporate Income Tax Law, a 10% withholding tax is levied on dividends declared to foreign investors from the foreign investment enterprises established in Mainland China. The requirement is effective from 1 January 2008 and applies to earnings after 31 December 2007. A lower withholding tax rate may be applied if there is a tax treaty between Mainland China and the jurisdiction of the foreign investors. The Group is liable for withholding taxes of 5% on dividends distributed by those subsidiaries established in Mainland China in respect of earnings generated from 1 January 2008.

There are no income tax consequences attaching to the payment of dividends by the Company to its shareholders.

Deferred tax assets have not been recognised in respect of the following items:

The Group has tax losses arising in Mainland China of RMB36,515,000 (2024: RMB32,392,000) that will expire in one to five years for offsetting against future taxable profits. Potential deferred tax assets have not been recognised in respect of these losses as it is uncertain that taxable profits will be available against which these tax losses can be utilised.

The Group has tax losses arising in Hong Kong of HK$1,194,000 (2024: HK$2,382,000) which are available for offsetting against future taxable profits indefinitely, potential deferred tax assets have not been recognised in respect of the remaining losses of HK$1,194,000 (2024: HK$1,194,000) as it is uncertain that taxable profits will be available against which the tax losses can be utilised in the foreseeable.

The Group has deductible temporary differences of HK$149,318,000 (2024: HK$145,168,000) for which in respect of provision for expected credit losses, potential deferred tax assets of approximately HK$36,863,000 (2024: HK$35,794,000) have not been recognised as it is uncertain that taxable profits will be available against which any of the tax losses arising from these deductible temporary differences can be utilised in the foreseeable.

34. SHARE CAPITAL

Ordinary shares

| | 2025
HK$'000 | 2024
HK$'000 |
| --- | --- | --- |
| Issued and fully paid 941,313,336 (2024: 1,173,806,762) ordinary shares of HK$0.05 (2024: HK$0.01) each | 47,066 | 11,738 |

34. SHARE CAPITAL (Continued)

Ordinary shares (Continued)

A summary of movements in the Company's ordinary shares are as follows:

	Number of issued and fully paid ordinary shares	Nominal value of ordinary shares HK$’000	Share premium account HK$’000
As at 1 January 2024	897,974,788	8,980	607,247
Issue of new ordinary shares upon conversion of convertible notes (note a)	596,153	6	438
Shares issued under share award scheme (note b)	43,666,438	436	19,513
Issue of new ordinary shares (note c)	46,089,383	461	4,870
Issue of new ordinary shares under a placing agreement (note d)	185,480,000	1,855	10,387
As at 31 December 2024 and 1 January 2025	1,173,806,762	11,738	642,455
Share consolidation (note e)	(939,045,410)	–	–
Shares issued under share award scheme (note b)	2,325,614	117	2,467
Issue of new ordinary shares under rights issue (note f)	704,226,370	35,211	80,814
As at 31 December 2025	941,313,336	47,066	725,736

Notes:

(a) Conversion of convertible notes

On 30 January 2024, convertible notes with principal amount of US$50,000 (fixed at the fixed exchange rate of HK$7.75:US$1) was converted into 596,153 ordinary shares at conversion price of HK$0.65 per ordinary shares. The closing market price of the Company's shares on the conversion date was HK$0.255 per share.

(b) On 20 June 2024, 6 August 2024, 2 September 2024, 15 November 2024 and 19 August 2025, the Company allotted and issued 26,476,438, 16,190,000, 500,000, 500,000 and 2,325,614 ordinary shares, respectively, under the Company's share award scheme. The closing market price of the Company's shares on the issue date was HK$0.121,HK$0.087, HK$0.07, HK$0.07 and HK$0.221, respectively, per share.

(c) On 8 May 2024 and 28 June 2024, the Company allotted and issued 2,400,000 and 43,689,383 new ordinary shares as consideration for settlement of other payables of approximately HK$429,600 and HK$5,461,000, respectively. The closing market price of the Company's shares on the issue date was HK$0.164 and HK$0.113, respectively, per share. Gain on settlement of other payables HK$560,100 were recognised in the profit or loss for the six months ended 30 June 2024.

(d) On 8 November 2024, the Company completed the placing of 185,480,000 ordinary shares at the price of HK$0.066 per share. The closing market price of the Company's shares on the issue date was HK$0.08 per share.

206

34. SHARE CAPITAL (Continued)

Ordinary shares (Continued)

(e) Pursuant to the extraordinary general meeting held on 24 March 2025, the shareholders approved the consolidation of the Company's share by 5 shares into 1 share. On 26 March 2025, the share consolidation had become effective. The authorised share capital of the Company became HK$90,000,000 divided into 1,800,000,000 consolidated Shares of HK$0.05 each, of which 234,761,352 consolidated shares (which were fully paid or credited as fully paid) were in issue.

(f) On 21 May 2025, the Company completed the rights issue on the basis of three rights shares for every one existing share (after the share consolidation became effective) held at the subscription price of HK$0.17 per right share. 704,226,370 shares were allotted and issued for net proceeds raised from the rights issue were approximately HK$86,887,000, net of set-off promissory notes at the consideration of HK$22,380,000, other borrowings of HK$5,452,000 and other payables of HK$1,648,000, and issuing costs of rights issue of HK$3,369,000. The closing market price of the Company's shares on the issue date was HK$0.214 per share.

Preference shares

| | 2025
HK$'000 | 2024
HK$'000 |
| --- | --- | --- |
| Issued and fully paid 323,657,534 (2024: 323,657,534) preference shares of HK$0.01 each | 3,236 | 3,236 |

A summary of movements in the Company's preference shares are as follows:

| | Number of issued and fully paid preference share | Nominal value of shares
HK$'000 | Shares premium account
HK$'000 |
| --- | --- | --- | --- |
| As at 1 January 2024, 31 December 2024, 1 January 2025 and 31 December 2025 (note a) | 323,657,534 | 3,236 | 175,191 |

Note:

(a) On 25 March 2022, the Company issued 323,657,534 preference shares of HK$0.01 each with a fair value of approximately HK$178,427,000.

The directors of the Company has discretion to pay any dividend on the preference shares which are non-redeemable and non-convertible. The holders of the preference shares have no participating right to attend the general meetings of the Company.

Graphex Group Limited Annual Report 2025 207

34. SHARE CAPITAL (Continued)

EIL share award scheme

On 7 June 2023, the board of directors of EIL ("EIL Board") as well as the Board resolved to amend to approve and adopt certain material amendments to the EIL Share Award Scheme (the "Amendments"). Details of the Amendments were set out in the announcement of the Company dated 7 June 2023.

During the year ended 31 December 2025, no EIL share awards granted. No unvested EIL share awards were outstanding as at 31 December 2025.

During the year ended 31 December 2025, no equity-settled share-based compensation under the Scheme is included in employee benefit expenses.

2023 Share award scheme

On 12 June 2023, the Board resolved to grant an aggregate of 35,231,235 shares, which represented approximately 4.53% of the Company's shares in issue at that date, to three employees and eight service providers. 3,754,797 of these shares were vested on 15 June 2023. The closing price of the shares immediately before the grant date was HK$0.425 each share. The fair value of the 35,231,235 shares awarded on the grant date was valued at HK$0.455 each share which was determined based on closing market price of the Company on the grant date.

On 24 July 2023, the Board resolved to grant an aggregate of 22,990,000 shares, which represented approximately 2.94% of the Company's shares in issue at that date, to three directors and thirteen employees. 6,800,000 of these shares were vested on 24 July 2023. The closing price of the shares immediately before the grant date was HK$0.47 each share. The fair value of the 22,990,000 shares awarded on the grant date was valued at HK$0.46 each share which was determined based on closing market price of the Company on the grant date.

On 14 December 2023, the Board resolved to grant an aggregate of 10,128,072 shares, which represented approximately 1.13% of the Company's shares in issue at that date, to twelve employees. The closing price of the shares immediately before the grant date was HK$0.375 each share. The fair value of the 10,128,072 shares awarded on the grant date was valued at HK$0.38 each share which was determined based on closing market price of the Company on the grant date.

208

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

For the Year ended 31 December 2025

2023 Share award scheme (Continued)

As disclosed above, a total of 68,349,307 shares awards were granted to certain Grantees under the 2023 Share Award Scheme, and among which a total of 15,094,797 shares awards were granted to the Directors and senior management. Out of the aforesaid 15,094,797 share awards were granted to the Directors and senior management, 10,554,797 shares awards were granted to 2 senior management with the vesting period less than 12 months from the date of grant.

There is no performance target attached with the shares awards granted under the 2023 Share Award Scheme which, however, are subject to general clawback mechanism that if a grantee ceases to be a participant on the grounds that he has committed any act of fraud or dishonesty or serious misconduct, or has been declared or adjudged to be bankrupt, or has been convicted of any criminal offence or has been convicted for any offence under any securities laws or regulations in Hong Kong, that relevant share awards made to such grantee shall automatically be cancelled.

The Remuneration Committee considered that for those share awards granted with the vesting period less than 12 months from the date of grant is appropriate and necessary to enable the Company to provide competitive terms and conditions to valuable talent for the development and growth of the Group's Graphene Products Business. It is necessary to enable the Company to offer competitive employment package to the grantees in order to retain valuable and loyal talent and to attract the talent and suitable personnel who will accept award shares as part of his/her remuneration, compensation or payment packages in accepting to stay on and continue his/her employment with the Group to further promote the development and growth of the Group's businesses, to improve or create sense of connection and/or loyalty of him/her to the Group and to provide incentive to him/her to continue to work for the success and improve the performance of the Group and thus it could align the interest of the grantees with the Company and its shareholders as a whole.

Graphex Group Limited Annual Report 2025 209

2023 Share award scheme (Continued)

Accordingly, having taken into account the factors above, the Remuneration Committee considered that notwithstanding the absence of performance targets, the shorter vesting period and the limited clawback mechanism, the share awards granted during the year ended 31 December 2023 can incentivize the grantees to strive for the future development of the Company which was in line with the purpose of 2023 Share Award Scheme.

During the year ended 31 December 2025, there was no share award granted under the 2023 Share Award Scheme.

During the year ended 31 December 2025, the vested benefits of awarded shares as equity-settled share-based compensation under the 2023 Share Award Scheme of HK$12,000 (2024: HK$14,009,000), of which, HK$12,000 (2024: HK$8,562,000) and HK$nil (2024: HK$5,447,000) are included in employee benefit expenses and professional expenses, respectively.

Details of the 2023 Share Award Scheme are set out in the Company's announcement dated 9 January 2023, 12 June 2023, 24 July 2023 and 14 December 2023 and circular dated 12 January 2023.

The number of award shares available for grant under the 2023 Share Award Scheme at the beginning and end of the year ended 31 December 2025 were nil.

The number of shares that may be issued in respect of the share awards granted under the 2023 Share Award Scheme is 2,889,610 Shares, representing approximately $1.51\%$ of the weighted average number of Shares issued and outstanding for the year ended 31 December 2025.

210

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

Warrants

As at 31 December 2025, the Company had 341,911,763 (2024: 341,911,763 as adjusted for effects of share consolidation and rights issue in 2025) warrants outstanding, after taking anti-dilution adjustment arising from share consolidation and rights issue in March 2025 and May 2025, respectively. Each warrant entitles the registered holder the rights to subscribe one ordinary share of the Company at the exercise price of HK$0.17 (2024: HK$0.17 as adjusted for effects of share consolidation and rights issue in 2025) per ordinary share, subject to anti-dilution adjustments of share consolidation and rights issue, as stipulated in the subscription agreement dated 19 January 2021, at any time commencing on the grant date up to warrant expiry dates. At 31 December 2025, 184,404,412 and 157,507,351 warrants will expire on 10 September 2026 and 10 January 2027, respectively.

Movements of the share warrants during the years ended and at 31 December 2025 and 2024 are as follows:

	Number of ordinary shares to be issued upon exercise of outstanding warrants	Weighted-average exercise Price HK$	Weighted-average remaining contractual life in years
As at 1 January 2024	89,423,076	0.65	2.5 years
Issue of warrants	-
As at 31 December 2024 and 1 January 2025 (before adjustments for share consolidation and rights issue in 2025)	89,423,076	0.65	1.5 years
Effect of share consolidation in March 2025	(71,538,461)
Effect of rights issue in May 2025	324,027,148
As at 31 December 2025	341,911,763	0.17	0.5 years

During the years ended 31 December 2025 and 2024, no warrant was exercised.

All these warrants meet with fixed-for-fixed rule of IAS 32 i.e. fixed number of ordinary shares of the Company upon exercise for each of warrant rights and the considerations for these warrants at issue date had been dealt with as part of equity.

35. SHARE OPTION SCHEME

A share option scheme (the "Share Option Scheme") was adopted by the Company on 3 June 2014 and became effective on 25 June 2014.

The Board has resolved to terminate the existing share option scheme on 9 January 2023.

The number of shares that may be issued in respect of the share options granted under the Share Option Scheme is 3,450,306 share options, representing approximately 1.00% of the weighted average number of Shares issued and outstanding for the year ended 31 December 2025.

The following share options were outstanding under the Share Option Scheme during the year:

	2025		2024
	Weighted average exercise price HK$ per share	Number of options	Weighted average exercise price HK$ per share	Number of options
At 1 January	0.65	9,677,692	0.65	9,677,692
Granted during the year	-	-	-	-
Exercised during the year	-	-	-	-
Effect of share consolidation and rights issue	-	(6,227,386)	-	-
At 31 December	1.82	3,450,306	0.65	9,677,692

The exercise prices and exercise periods of the share options outstanding as at the end of the reporting period are as follows:

Number of options	Exercise price* HK$ per share	Exercise period
3,450,306	1.82	28 January 2021 to 27 January 2026
(2024: 9,677,692)	(2024: 0.65)

The exercise price of the share options is subject to adjustment in the case of rights or bonus issues, or other similar changes in the Company's share capital.

212

36. EMPLOYEE RETIREMENT BENEFITS

(a) The Group operates a Mandatory Provident Fund Scheme (the "MPF Scheme") under the Hong Kong Mandatory Provident Fund Schemes Ordinance for employees employed under the jurisdiction of the Hong Kong Employment Ordinance. Under the MPF Scheme, the employer and its employees are each required to make contributions to the plan at 5% of the employees' relevant income, subject to a cap of monthly relevant income of HK$30,000. Contributions to the plan vest immediately.

The employees of the Group's subsidiaries in the PRC are members of a state-managed retirement benefit scheme operated by the government of the PRC. The subsidiaries are required to contribute a specified percentage of payroll costs to the retirement benefit scheme to fund the benefits. The only obligation of the Group with respect to the retirement benefit scheme is to make the specified contributions. Under the state-managed retirement benefit scheme, the contributions once made by the employer will vest fully with the employees, and no forfeiture could be made by the Group. Accordingly, there is no forfeited contribution available for the Group to reduce its existing level of contributions to the retirement benefit scheme in future years.

The total expense recognised in profit or loss of HK$6,137,000 (2024: HK$7,390,000) represented contributions payable to these plans by the Group at rates specified in the rules of the plans. The Group has no other material obligations for payments of retirement and other post-retirement benefits of employees other than the contributions described above.

(b) Hong Kong employees that have been employed continuously for at least five years are entitled to long service payments in accordance with the Hong Kong Employment Ordinance under certain circumstances. These circumstances include where an employee is dismissed for reasons other than serious misconduct or redundancy, that employee resigns at the age of 65 or above, or the employment contract is of fixed term and expires without renewal. The amount of LSP payable is determined with reference to the employee's final salary (capped at HK$22,500) and the years of service, reduced by the amount of any accrued benefits derived from the Group's contributions to MPF scheme, with an overall cap of HK$390,000 per employee. Currently, the Group does not have any separate funding arrangement in place to meet its LSP obligation.

Graphex Group Limited Annual Report 2025 213

36. EMPLOYEE RETIREMENT BENEFITS (Continued)

(b) (Continued)

The Group has determined that the Amendment Ordinance has no material impact on the Group's LSP liability with respect to employees in Hong Kong.

37. OTHER RESERVES

The amounts of the Group's reserves and the movements therein for the current and prior year are presented in the consolidated statement of changes in equity on pages 113 to 114 of the consolidated financial statements.

Statutory reserve fund

In accordance with the PRC Company Law and the PRC subsidiaries' articles of association, each of the subsidiaries registered in the PRC as a domestic company is required to appropriate 10% of its annual statutory net profit as determined under PRC Generally Accepted Accounting Principles (after offsetting any prior years' losses) to the statutory surplus reserve. When the balance of this statutory reserve fund reaches 50% of the entity's capital, any further appropriation is optional. The statutory reserve fund can be utilised to offset prior years' losses or to increase capital. However, the balance of the statutory surplus reserve must be maintained at a minimum of 25% of the capital after these usages.

214

38. NOTE TO THE CONSOLIDATED STATEMENT OF CASH FLOWS

Changes in liabilities arising from financing activities

2025

	Interest-bearing borrowings, promissory notes and convertible notes HK$’000	Interest payables HK$’000	Lease liabilities HK$’000
At 1 January 2025	216,451	35,557	19,529
Changes from financing cash flows:
- Proceeds from other borrowings	1,092	-	-
- Proceeds from bank borrowings	33,532	-	-
- Proceeds of borrowings from directors	21,951	-	-
- Repayment of other borrowings	(3,583)	-	-
- Repayment of bank borrowings	(15,663)	-	-
- Repayment of corporate bonds	(9,211)	-	-
- Repayment of promissory notes	(15,830)	-	-
- Repayment of lease liabilities	-	-	(4,804)
- Interest paid	-	(13,041)	(1,053)
Other non-cash changes
- Settlement of promissory notes by set-off with partial consideration of rights issue (note 31)	(22,038)	-	-
- Settlement of other borrowings by set-off with partial consideration of rights issue	(5,452)	-	-
- Additions of lease liabilities	-	-	1,362
- Loss on promissory notes derecognised (note 31)	2,535	-	-
- Interest expenses	14,437	-	1,053
- Reclassification	(11,768)	11,768	-
- Exchange realignment	767	(150)	337
At 31 December 2025	207,220	34,134	16,424

Other payables of approximately HK$1,648,000 (2024: HK$nil) was applied to set off with partial consideration of rights issue as referred to note 31.

38. NOTE TO THE CONSOLIDATED STATEMENT OF CASH FLOWS (Continued)

Changes in liabilities arising from financing activities (Continued)

2024

	Interest-bearing borrowings, promissory notes and convertible notes HK$’000	Interest payables HK$’000	Lease liabilities HK$’000
At 1 January 2024	213,564	27,746	19,601
Changes from financing cash flows:
– Proceeds from other borrowings	9,587	–	–
– Proceeds from bank borrowings	13,859	–	–
– Repayment of other borrowings	(9,032)	–	–
– Repayment of bank borrowings	(10,973)	–	–
– Repayment of corporate bonds	(1,605)	–	–
– Repayment of promissory notes	(3,300)	–	–
– Repayment of lease liabilities	–	–	(4,879)
– Interest paid	–	(4,166)	(1,064)
Other non-cash changes
– Additions of lease liabilities	–	–	5,128
– Transfer from other payables	1,936	–	–
– Waiver of other borrowings	(868)	–	–
– Waiver of interest on convertible notes	–	(32)	–
– Waiver of interest on corporate bonds	–	(269)	–
– Conversion of convertible note to ordinary shares	(388)	–	–
– Interest expenses	15,947	–	1,064
– Reclassification	(12,245)	12,245	–
– Exchange realignment	(31)	33	(321)
At 31 December 2024	216,451	35,557	19,529

216

39. COMMITMENTS

(a) Operating lease commitments – as lessee

At 31 December 2025 and 2024, the Group had total future minimum lease payments under non-cancellable operating leases falling due as follows:

| | 2025
HK$'000 | 2024
HK$'000 |
| --- | --- | --- |
| Within one year | 103 | 587 |

(b) Capital commitments

At 31 December 2025 and 2024, the Group had the following capital commitments at the end of the reporting period:

| | 2025
HK$'000 | 2024
HK$'000 |
| --- | --- | --- |
| Contracted, but not provided for: | | |
| Acquisition of property, plant and equipment | 51,381 | 5,637 |

On 11 November 2025, Graphex Anhui, an indirect non-wholly owned subsidiary of the Group, entered into an equipment purchase agreement with an independent third party. Pursuant to the agreement, Graphex Anhui has agreed to purchase, and the vendor has agreed to sell, equipment for a total consideration of RMB42,252,200 (equivalent to approximately HK$46,270,000 at an exchange rate of RMB1:HK$1.0951) for the Group's project in Anhui, the PRC. As at 31 December 2025, Graphex Anhui had paid approximately RMB7,214,000 (equivalent to approximately HK$7,987,000) and recognised the amount as non-current prepayments under the Group's consolidated statement of financial position.

Save as disclosed, the Group had no other material capital commitment as at 31 December 2025 and 2024.

40. RELATED PARTY TRANSACTIONS

(a) In addition to the transactions and balances detailed elsewhere in the financial statements, the Group had the following transactions with related parties during the year:

	Notes	2025	2024
		HK$'000	HK$'000
Contract revenue from Pubang	(a)(i)	-	165
Loans to
EA Trading	(a)(iii)	10,500	5,348
上海奕桂品牌管理有限公司	(a)(iv)	34,827	19,774
Repayment of loans from
Teddy	(a)(ii)	-	1,216
EA Trading	(a)(iii)	6,131	10,500
上海奕桂品牌管理有限公司	(a)(iv)	27,399	14,111
Interest income from
EA Trading	(a)(iii)	972	676
上海奕桂品牌管理有限公司	(a)(iv)	-	319
Service income
EA Trading		2,291	3,831
Loans from
Mr. Patrick Lau	(a)(v)	9,156	-
Mr. Andross Chan	(a)(v)	12,795	-
Interest expenses to
Mr. Patrick Lau	(a)(v)	549	-
Mr. Andross Chan	(a)(v)	522	-

Notes:
(i) The Group's contract revenue derived from Pubang for the year ended 31 December 2025 amounted to HK$nil (2024: HK$165,000). The Group's subcontracting and referral fees to Pubang for the years ended 31 December 2025 and 2024 were HK$nil.
Pubang, being a shareholder of the Company, holding 1.6% (2024: 6.4%) equity interest in the Company.
(ii) On 20 November 2018, the Group entered into a loan agreement of RMB2,500,000 with Teddy, an associate of the Group, to support its business operation with one year term which was unsecured and bearing interest at 8% per annum. As at 31 December 2025, the outstanding balance of the loan was HK$996,000 (2024: HK$972,000), against which, provision of impairment HK$996,000 (2024: HK$972,000) was made. A reversal of impairment of HK$nil (2024: HK$942,000) was recognised and credited to the profit or loss for the year ended 31 December 2025. The outstanding net balance of the loan, net of provision of impairment HK$996,000 (2024: HK$972,000), was HK$nil (2024: HK$nil) as at 31 December 2025.
(iii) The Group granted a revolving loan facility of HK$21,000,000 to EA Trading, a joint venture of the Group, to support its business operation with a one-year term which is renewable and unsecured and bearing interest at 12% per annum. During the year ended 31 December 2025, the Group granted a loan of HK$10,500,000 (2024: HK$5,348,000) to EA Trading and the outstanding balance of this loan receivable was HK$4,630,000 (2024: HK$309,000) as at 31 December 2025.

218

40. RELATED PARTY TRANSACTIONS (Continued)

(a) (Continued)

(iv) The Group granted short-term loans in aggregate of RMB31,905,000 (2024: RMB18,020,000) to 上海奕桂品牌管理有限公司, a joint venture of the Group during the year ended 31 December 2025. The outstanding aggregate balance of these loans are RMB11,965,000 (equivalent to HK$13,247,000) (2024: RMB5,160,000 (equivalent to HK$5,572,000)) at 31 December 2025, which are unsecured, bearing interest rate at 4% (2024: 4%) per annum and repayable within 1 year. Reversal of for impairment of RMB5,160,000 (equivalent to HK$5,633,000) (2024: provision of impairment of RMB5,160,000 (equivalent to HK$5,662,000)) was made and credited (2024: charged) to the profit or loss for the year ended 31 December 2025.

(v) On 2 January 2025, Mr. Lau Hing Tat Patrick ("Mr. Lau"), a director of the Company, entered into a loan agreement of HK$9,156,000 with the Company with one year term which is unsecured and bearing interest at 6% per annum. Interest expense of HK$549,000 was charged to the consolidated profit or loss for the year ended 31 December 2025. The outstanding balance of the loan was HK$9,156,000 and classified as current liabilities of the Company as at 31 December 2025.

On 2 January 2025, Mr. Chan Yick Yan Andross ("Mr Chan"), a director of the Company, entered into two loan agreements, for two loans of HK$3,244,000 and RMB8,750,000 (equivalent to HK$9,687,000), with the Company with one year term which are unsecured and bearing interest at 6% and 3.75% per annum, respectively. Interest expense of HK$164,000 and RMB328,000 were charged to the consolidated profit or loss for the year ended 31 December 2025. The outstanding balance of the loans were HK$3,244,000 and RMB8,750,000 (equivalent to HK$9,687,000) and classified as current liabilities of the Company as at 31 December 2025.

Subsequent to the reporting period end and up to the date of approval of these consolidated financial statements, the Company has obtained extension letters from Mr. Lau and Mr. Chan who have agreed to extend the due dates of repayment of the debts due by the Company, with a total principal amount of approximately HK$22,087,000, to 31 December 2027.

(b) Outstanding balances with related parties at the reporting period end:

(i) Details of the Group's trading balances of HK$nil (2024: HK$111,000) and of HK$nil (2024: HK$34,000), net of provision of HK$nil (2024: HK$8,099,000), receivable from the Company's shareholder, Pubang, are included in notes 20 and 23 to the financial statements, respectively.

(ii) Details of the Group's loan to an associate with net balance HK$nil (2024: HK$nil) after net of provision of HK$996,000 (2024: HK$972,000) are included in notes 21 and 40(a)(ii) to the financial statements.

(iii) Included in the Group's deposits and other receivables in note 21 were an amount due from joint ventures of HK$754,000 (2024: HK$786,000), which have no fixed terms of repayment and are interest-free and unsecured.

(iv) Included in the Group's other payables and accruals in note 27 were amounts due to directors, Mr. Patrick Lau of HK$549,000 (2024: HK$306,000), Mr. Qiu Bin of HK$12,962,000 (2024: HK$928,000), Mr. Andross Chan of HK$528,000 (2024: HK$2,988,000) and a related party of HK$2,000,000 (2024: HK$nil) which were interest-free, unsecured and repayable on demand.

40. RELATED PARTY TRANSACTIONS (Continued)

| | 2025
HK$'000 | 2024
HK$'000 |
| --- | --- | --- |
| Salaries, allowances and benefits in kind | 12,885 | 15,200 |
| Equity-settled share-based payment expense | – | 525 |
| Pension scheme contributions | 90 | 90 |
| Total compensation paid to key management personnel | 12,975 | 15,815 |

Further details of directors' and the chief executive's emoluments are included in note 8 to the financial statements.

41. REMUNERATION OF SENIOR MANAGEMENT

Remuneration of the senior management of the Group is as follows:

| | 2025
HK$'000 | 2024
HK$'000 |
| --- | --- | --- |
| Salaries, allowances and benefits in kind | 1,440 | 1,440 |
| Equity-settled share-based payment expense | – | – |
| Pension scheme contributions | 36 | 36 |
| Total compensation paid to senior management personnel | 1,476 | 1,476 |

Remunerations of the senior management of the Group are within the following bands:

	Number of employees
	2025	2024
Nil to HK$1,000,000	–	–
HK$1,000,001 to HK$1,500,000	1	1
	1	1

220

42. FINANCIAL INSTRUMENTS BY CATEGORY

The carrying amounts of each of the categories of financial instruments as at the end of the reporting period are as follows:

Financial assets

As at 31 December 2025

	Financial assets at fair value through profit or loss designated as such upon initial recognition HK$’000	Financial assets at amortised cost HK$’000	Financial assets at fair value through other comprehensive income HK$’000	Total HK$’000
Equity investments at fair value through other comprehensive income	–	–	54	54
Trade and bills receivables	–	42,145	–	42,145
Financial assets included in prepayments, other receivables and other assets	–	49,717	–	49,717
Financial assets at fair value through profit or loss	33	–	–	33
Restricted bank deposits	–	533	–	533
Cash and cash equivalents	–	26,747	–	26,747
	33	119,142	54	119,229

As at 31 December 2024

	Financial assets at fair value through profit or loss designated as such upon initial recognition HK$’000	Financial assets at amortised cost HK$’000	Financial assets at fair value through other comprehensive income HK$’000	Total HK$’000
Equity investments at fair value through other comprehensive income	–	–	45	45
Trade and bills receivables	–	182,061	–	182,061
Financial assets included in prepayments, other receivables and other assets	–	15,309	–	15,309
Financial assets at fair value through profit or loss	23	–	–	23
Restricted bank deposits	–	101	–	101
Cash and cash equivalents	–	15,446	–	15,446
	23	212,917	45	212,985

Graphex Group Limited Annual Report 2025 221

42. FINANCIAL INSTRUMENTS BY CATEGORY (Continued)

Financial liabilities

	Financial liabilities at amortised cost HK$’000
Trade payables	26,952
Financial liabilities included in other payables and accruals	128,190
Interest-bearing borrowings	174,377
Promissory notes	29,045
Lease liabilities	16,424
Convertible notes	3,798
	378,786

	Financial liabilities at amortised cost HK$’000
Trade payables	51,462
Financial liabilities included in other payables and accruals	103,182
Interest-bearing borrowings	150,944
Promissory notes	61,709
Lease liabilities	19,529
Convertible notes	3,798
	390,624

43. FAIR VALUE AND FAIR VALUE HIERARCHY 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
	2025 HK$’000	2024 HK$’000	2025 HK$’000	2024 HK$’000
Financial assets
Equity investments designated at fair value through other comprehensive income	54	45	54	45
Financial assets at fair value through profit or loss	33	23	33	23
	87	68	87	68

Management has assessed that the fair values of cash and cash equivalents, trade and bills receivables, trade payables, financial assets included in prepayments, other receivables and other assets, financial liabilities included in other payables and accruals, interest-bearing borrowings other than finance lease payables, approximate to their carrying amounts largely due to the short-term maturities of these instruments.

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. At each reporting date, the finance department analyses the movements in the values of financial instruments and determines the major inputs applied in the valuation. The valuation is reviewed and approved by the chief financial officer. The valuation process and results are discussed with the audit committee twice a year for interim and annual financial reporting.

The fair values of the financial assets and liabilities are included at the amount at which the instrument could be exchanged in a current transaction between willing parties, other than in a forced or liquidation sale. The following methods and assumptions were used to estimate the fair values:

The fair value of interest-bearing borrowings has been calculated by discounting the expected future cash flows using rates currently available for instruments with similar terms, credit risk and remaining maturities.

43. FAIR VALUE AND FAIR VALUE HIERARCHY OF FINANCIAL INSTRUMENTS (Continued)

The fair values of unlisted equity investments designated at fair value through other comprehensive income have been estimated using a market- based valuation technique based on assumptions that are not supported by observable market prices or rates. The valuation requires the directors to determine comparable public companies (peers) based on industry, size, leverage and strategy, and calculates an appropriate price multiple, such as enterprise value to earnings before interest, taxes, depreciation and amortisation ("EV/EBITDA") multiple and price to earnings ("P/E") multiple, for each comparable company identified. The multiple is calculated by dividing the enterprise value of the comparable company by an earnings measure. The trading multiple is then discounted for considerations such as illiquidity and size differences between the comparable companies based on company-specific facts and circumstances. The discounted multiple is applied to the corresponding earnings measure of the unlisted equity investments to measure the fair value.

The directors believe that the estimated fair values resulting from the valuation technique, which are recorded in the consolidated statement of financial position, and the related changes in fair values, which are recorded in other comprehensive income, are reasonable, and that they were the most appropriate values at the end of the reporting period.

Below is a summary of significant unobservable inputs to the valuation of unlisted equity investments together with a quantitative sensitivity analysis as at 31 December 2025 and 2024:

	Valuation technique	Significant unobservable input	Range	Sensitivity of fair value to the input
Unlisted equity investments	Valuation multiples	Average P/E multiple of peers	2025: 1.2 – 6.2 (2024: 1.7 – 7.2)	1% increase/(decrease) in multiple would have no material impact on the fair value
		Discount for lack of marketability	2025: 20% (2024: 20%)	1% increase/(decrease) in discount would have no material impact on the fair value

224

43. FAIR VALUE AND FAIR VALUE HIERARCHY OF FINANCIAL INSTRUMENTS (Continued)

The discount for lack of marketability represents the amounts of premiums and discounts determined by the Group that market participants would take into account when pricing the investments.

Fair value hierarchy

The following tables illustrate the fair value measurement hierarchy of the Group's financial instruments:

Assets measured at fair value:

	Fair value measurement using
	Quoted prices in active markets (Level 1) HK$’000	Significant observable inputs (Level 2) HK$’000	Significant unobservable inputs (Level 3) HK$’000	Total HK$’000
Equity investments designated at fair value through other comprehensive income	-	-	54	54
Financial assets at fair value through profit or loss	33	-	-	33
	33	-	54	87

	Fair value measurement using
	Quoted prices in active markets (Level 1) HK$’000	Significant observable inputs (Level 2) HK$’000	Significant unobservable inputs (Level 3) HK$’000	Total HK$’000
Equity investments designated at fair value through other comprehensive income	-	-	45	45
Financial assets at fair value through profit or loss	23	-	-	23
	23	-	45	68

43. FAIR VALUE AND FAIR VALUE HIERARCHY OF FINANCIAL INSTRUMENTS (Continued)

Fair value hierarchy (Continued)

The movements in fair value measurements within Level 3 during the year are as follows:

| | 2025
HK$'000 | 2024
HK$'000 |
| --- | --- | --- |
| Equity investments at fair value through other comprehensive income | | |
| At 1 January | 45 | 34 |
| Total losses recognised in other comprehensive income | 8 | 12 |
| Exchange realignment | 1 | (1) |
| At 31 December | 54 | 45 |

44. FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES

The Group's principal financial instruments consist mainly of equity investments designated at fair value through other comprehensive income, financial assets at fair value through profit or loss, cash and cash equivalents, dividends payable, lease liabilities, promissory notes, contingent liabilities and interest-bearing borrowings. The main purpose of these financial instruments was to raise finance for the Group's operations. The Group has various other financial assets and liabilities such as trade and bills receivables, other receivables, trade payables and other payables, which arise directly from its operations.

The main risks arising from the Group's financial instruments are interest rate risk, foreign currency risk, credit risk and liquidity risk. The Group does not have any written risk management policies and guidelines. Generally, the Group introduces conservative strategies on its risk management. The board of directors reviews and agrees policies for managing each of these risks and they are summarised below:

Interest rate risk

Since the interest-bearing borrowings have fixed interest rates, there was no significant interest rate risk as at the end of the reporting period.

44. FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES (Continued)

Foreign currency risk

The Group has transactional currency exposures. Such exposures arise from financial instruments such as trade and bills receivables and cash and cash equivalents by operating units in currencies other than the units' functional currencies.

The following table demonstrates the sensitivity at the end of the reporting period to a reasonably possible change in the RMB or USD exchange rate, with all other variables held constant, of the Group's loss before tax.

2025

	Increase/(decrease) in RMB and USD rate %	Increase/(decrease) in loss before tax HK$'000
If Hong Kong dollar weakens against RMB	5	8,968
If Hong Kong dollar strengthens against RMB	(5)	(8,968)
If RMB weakens against the USD	5	(16)
If RMB strengthens against the USD	(5)	16
If Hong Kong dollar weakens against the USD	5	(187)
If Hong Kong dollar strengthens against the USD	(5)	187

2024

	Increase/(decrease) in RMB and USD rate %	Increase/(decrease) in loss before tax HK$'000
If Hong Kong dollar weakens against RMB	5	9,073
If Hong Kong dollar strengthens against RMB	(5)	(9,073)
If RMB weakens against the USD	5	-
If RMB strengthens against the USD	(5)	-
If Hong Kong dollar weakens against the USD	5	(6)
If Hong Kong dollar strengthens against the USD	(5)	6

44. FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES (Continued)

Credit risk

The Group trades only with recognised and creditworthy third parties. It is the Group’s policy that all customers who wish to trade on credit terms are subject to credit verification procedures.

Maximum exposure and year-end staging

The table below shows the credit quality and the maximum exposure to credit risk based on the Group’s credit policy, which is mainly based on past due information unless other information is available without undue cost or effort, and year-end staging classification at the end of the reporting period. For listed debt investments, the Group also monitors them by using external credit ratings. The amounts presented are net carrying amounts after provision for ECLs for financial assets.

Maximum exposure and year-end staging as at 31 December 2025

	12-month ECLs				Total HK$’000
	Stage 1 HK$’000	Stage 2 HK$’000	Stage 3 HK$’000	Implified approach HK$’000
Contract assets*	–	–	–	7,349	7,349
Trade receivables*	–	–	–	42,145	42,145
Financial assets included in other receivables and deposits
– Normal**	49,717	–	–	–	49,717
– Doubtful**	–	–	–	–	–
Restricted bank deposits and cash and cash equivalents	27,280	–	–	–	27,280
	76,997	–	–	49,494	126,491

228

Credit risk (Continued)

Maximum exposure and year-end staging (Continued)

Maximum exposure and year-end staging as at 31 December 2024

	12-month ECLs			Simplified approach HK$’000	Total HK$’000
	Stage 1 HK$’000	Stage 2 HK$’000	Stage 3 HK$’000
Contract assets*	–	–	–	17,115	17,115
Trade receivables*	–	–	–	182,061	182,061
Financial assets included in other receivables and deposits
– Normal**	15,309	–	–	–	15,309
– Doubtful**	–	–	–	–	–
Restricted bank deposits and cash and cash equivalents	15,547	–	–	–	15,547
	30,856	–	–	199,176	230,032

For trade receivables and contract assets to which the Group applies the simplified approach for impairment, information based on the provision matrix is disclosed in notes 20 and 23 to the financial statements, respectively.
** The credit quality of the financial assets included in other receivables and deposits is considered to be “normal” when they are not past due and there is no information indicating that the financial assets had a significant increase in credit risk since initial recognition. Otherwise, the credit quality of the financial assets is considered to be “doubtful”.

Since the Group trades only with recognised and creditworthy third parties, there is no requirement for collateral. The Group’s exposure to credit risk is influenced mainly by the individual characteristics of each customer and the industries (mainly Landscape Architecture Design and Graphene Products Business) in which the customers operate and therefore significant concentrations of credit risk primarily arise when the Group has significant exposure to individual customers. At the end of the reporting period, 11.38% (2024: 10.05%) and 11.85% (2024: 60.11%) of the total trade receivables was due from the Group’s largest customer and the five largest customers, respectively.

The Group performs ongoing credit evaluations of its customers’ financial conditions. The allowance for doubtful debts is based upon a review of the expected collectability of all trade and bills receivables.

Further quantitative data in respect of the Group’s exposure to credit risk arising from trade and bills receivables and other receivables are disclosed in notes 20 and 21 to the financial statements, respectively.

Liquidity risk

The Group monitors its exposure to liquidity risk by monitoring the current ratio, which is calculated by comparing the current assets with the current liabilities.

The tables below summarise the maturity profile of the Group’s financial liabilities at the end of each reporting period based on contractual undiscounted payments.

Group

31 December 2025

| | On demand
HK$’000 | Less than 3 months
HK$’000 | 3 to 12 months
HK$’000 | 1 to 5 years
HK$’000 | Over 5 years
HK$’000 | Total
HK$’000 |
| --- | --- | --- | --- | --- | --- | --- |
| Trade payables | 26,952 | – | – | – | – | 26,952 |
| Other payables and accruals | 128,190 | – | – | – | – | 128,190 |
| Interest-bearing borrowings | 133,081 | 12,869 | 28,008 | 11,755 | – | 185,713 |
| Promissory notes | – | – | 30,500 | – | – | 30,500 |
| Lease liabilities | – | 1,394 | 3,803 | 8,432 | 6,524 | 20,153 |
| Convertible notes | 3,798 | – | – | – | – | 3,798 |
| | 292,021 | 14,263 | 62,311 | 20,187 | 6,524 | 395,306 |

31 December 2024

| | On demand
HK$’000 | Less than 3 months
HK$’000 | 3 to 12 months
HK$’000 | 1 to 5 years
HK$’000 | Over 5 years
HK$’000 | Total
HK$’000 |
| --- | --- | --- | --- | --- | --- | --- |
| Trade payables | 51,462 | – | – | – | – | 51,462 |
| Other payables and accruals | 103,182 | – | – | – | – | 103,182 |
| Interest-bearing borrowings | 37,313 | 1,600 | 92,090 | 24,829 | – | 155,832 |
| Promissory notes | – | – | 1,360 | 68,826 | – | 70,186 |
| Lease liabilities | – | 1,253 | 3,189 | 7,846 | 7,241 | 19,529 |
| Convertible notes | 3,798 | – | – | – | – | 3,798 |
| | 195,755 | 2,853 | 96,639 | 101,501 | 7,241 | 403,989 |

Graphex Group Limited Annual Report 2025 229

Capital management

The primary objectives of the Group’s capital management are to ensure that it maintains a strong credit profile and healthy capital ratios in order to support its business and maximise shareholders’ value.

The Group manages its capital structure and makes adjustments to it in light of changes in economic conditions. To maintain or adjust the capital structure, the Group may adjust the dividend payment to shareholders, return capital to shareholders or issue new shares. No changes were made in the objectives, policies or processes for managing capital during the years ended 31 December 2025 and 2024.

The Group monitors capital using a gearing ratio, which is interest-bearing borrowings representing the total debt divided by the total equity.

The gearing ratios as at the end of the reporting periods were as follows:

| | 2025
HK$'000 | 2024
HK$'000 |
| --- | --- | --- |
| Lease liabilities (note 29) | 16,424 | 19,529 |
| Interest-bearing borrowings (note 30) | 174,377 | 150,944 |
| Convertible notes (note 32) | 3,798 | 3,798 |
| Promissory notes (note 31) | 29,045 | 61,709 |
| | 223,644 | 235,980 |
| Total equity | 41,298 | 280,360 |
| Gearing ratio | 542% | 84% |

45. STATEMENT OF FINANCIAL POSITION OF THE COMPANY

Information about the statement of financial position of the Company at the end of the reporting period is as follows:

| | 2025
HK$'000 | 2024
HK$'000 |
| --- | --- | --- |
| NON-CURRENT ASSETS | | |
| Investments in subsidiaries | – | – |
| CURRENT ASSETS | | |
| Prepayments, other receivables and other assets | 8,466 | 1,226 |
| Amounts due from subsidiaries, net | 260,078 | 527,648 |
| Cash and bank balances | 150 | 504 |
| Total current assets | 268,694 | 529,378 |
| CURRENT LIABILITIES | | |
| Other payables and accruals | 69,565 | 53,617 |
| Interest-bearing borrowings | 126,520 | 110,281 |
| Promissory notes | 29,045 | – |
| Amount due to a subsidiary | 1,424 | 1,436 |
| Convertible notes | 3,798 | 3,798 |
| Total current liabilities | 230,352 | 169,132 |
| NET CURRENT ASSETS | 38,342 | 360,246 |
| TOTAL ASSETS LESS CURRENT LIABILITIES | 38,342 | 360,246 |
| NON-CURRENT LIABILITIES | | |
| Interest-bearing borrowings | – | 23,952 |
| Promissory note | – | 61,709 |
| Total non-current liabilities | – | 85,661 |
| NET ASSETS | 38,342 | 274,585 |
| EQUITY | | |
| Share capital – ordinary shares (note 34) | 47,066 | 11,738 |
| – preference shares (note 34) | 3,236 | 3,236 |
| Other reserves (note) | (11,960) | 259,611 |
| TOTAL EQUITY | 38,342 | 274,585 |

232

45. STATEMENT OF FINANCIAL POSITION OF THE COMPANY (Continued)

Note:

A summary of the Company's other reserves is as follows:

| | Share premium account
HK$’000
(note 34) | Share-based payment reserve
HK$’000 | Conversion rights of convertible notes
HK$’000
(note 32) | Warrant reserve
HK$’000
(note 32) | Capital reserve
HK$’000 | Accumulated losses
HK$’000 | Total
HK$’000 |
| --- | --- | --- | --- | --- | --- | --- | --- |
| At 1 January 2024 | 782,438 | 14,764 | 883 | 19,943 | 5,854 | (485,141) | 338,741 |
| Total comprehensive loss for the year | – | – | – | – | – | (108,342) | (108,342) |
| Issue of ordinary shares (note 34(f)) | 4,870 | – | – | – | – | – | 4,870 |
| Issue of ordinary shares under a placing agreement (note 34(g)) | 10,387 | – | – | – | – | – | 10,387 |
| Equity-settled share-based transactions (note 34) | – | 14,009 | – | – | – | – | 14,009 |
| Issue of ordinary shares under the share award scheme (note 34(e)) | 19,513 | (19,949) | – | – | – | – | (436) |
| Issue of ordinary shares upon conversion of convertible notes (note 34(a)) | 438 | – | (56) | – | – | – | 382 |
| At 31 December 2024 and 1 January 2025 | 817,646 | 8,824 | 827 | 19,943 | 5,854 | (593,483) | 259,611 |
| Total comprehensive loss for the year | – | – | – | – | – | (352,280) | (352,280) |
| Transfer upon expiry of conversion rights | – | – | (827) | – | – | 827 | – |
| Issue of ordinary shares under rights issue | 80,814 | – | – | – | – | – | 80,814 |
| Equity-settled share-based transactions (note 34) | – | 12 | – | – | – | – | 12 |
| Issue of ordinary shares under the share award scheme (note 34(e)) | 2,467 | (2,584) | – | – | – | – | (117) |
| At 31 December 2025 | 900,927 | 6,252 | – | 19,943 | 5,854 | (944,936) | (11,960) |

The Company's capital reserve represents the difference between the then share of net assets of EIL acquired over the par value of shares issued by the Company in consideration and in exchange for the entire share capital of EIL.

Graphex Group Limited Annual Report 2025
233

46. EVENTS AFTER THE REPORTING PERIOD

On 3 February 2026, Allied Apex Limited ("Allied Apex"), a non wholly-owned subsidiary of the Company, entered into a sale and purchase agreement with an independent third party that Allied Apex will acquire 40% of the issued share capital of Tronche International New Energy Vehicles Co., Limited ("Tronche") with a consideration of HK$1,500,000 in cash. Upon completion, Tronche will become an indirect non wholly-owned subsidiary of the Company, and accordingly Tronche and its subsidiaries will be consolidated into the Group's financial statements. For further details, please refer to the Company's announcement dated 24 October 2025 and 3 February 2026.
On 1 December 2025, the Vendor, a wholly-owned subsidiary of the Company, the Purchaser, an independent third party whose shares are listed and traded on the OTCQB market, and the Disposal Company, a wholly-owned subsidiary of the Company, entered into an option agreement (the "Agreement"). Pursuant to the Agreement, the Vendor conditionally agreed to grant, and the Purchaser conditionally agreed to acquire, an option (the "Option") at a consideration of US$500,000 (equivalent to approximately HK$3,900,000) in cash.

On 20 March 2026, resolutions related to the possible disposal was duly passed by the shareholders by way of poll at the extraordinary general meeting. For further details, please refer to the Company's announcement dated 2 December 2025, 22 December 2025 and 20 March 2026 and circular dated 29 January 2026.

47. COMPARATIVE FIGURES

Certain comparative figures have been reclassified to conform to current year's presentation.

48. APPROVAL OF THE CONSOLIDATED FINANCIAL STATEMENTS

The consolidated financial statements were approved and authorised for issue by the board of directors on 31 March 2026.

234

FIVE-YEAR FINANCIAL SUMMARY

	Year ended 31 December
	2025HK$'000	2024HK$'000	2023HK$'000	2022HK$'000	2021HK$'000
Revenue	137,561	187,850	291,929	341,241	391,035
Cost of sales	(84,226)	(119,543)	(195,108)	(221,279)	(242,690)
Gross profit	53,335	68,307	96,821	119,962	148,345
Other income and gains	8,006	9,497	12,912	33,686	72,478
Selling and marketing expenses	(1,504)	(1,789)	(5,194)	(5,375)	(10,159)
Administrative expenses	(117,817)	(147,793)	(173,368)	(155,546)	(187,304)
Impairment of goodwill	(101,939)	-	-	-	-
Impairment on financial and contract assets, net	(37,932)	(27,729)	(22,278)	(19,040)	(11,342)
Impairment of property, plant and equipment and other intangible assets	(174,255)	(1,853)	-	-	(1,726)
Fair value loss on financial assets at fair value through profit or loss	9	-	(8)	-	-
Finance costs	(15,490)	(17,011)	(23,748)	(45,409)	(59,710)
Share of results of joint ventures	-	-	-	-	-
Share of results of associates	-	(797)	582	(249)	(356)
Loss before tax	(387,587)	(119,168)	(114,281)	(71,971)	(49,774)
Income tax credit/(expense)	22,943	7,783	2,080	2,321	(1,253)
Loss for the year	(364,644)	(111,385)	(112,201)	(69,650)	(51,027)
Attributable to:
Owners of the Company	(364,644)	(111,435)	(113,168)	(69,663)	(53,546)
Non-controlling interests	-	50	967	13	2,519
Other comprehensive income	(255)	(9,863)	(8,726)	(59,923)	20,854
Total comprehensive loss for the year	(364,899)	(121,248)	(120,927)	(129,573)	(30,173)
Attributable to:
Owners of the Company	(364,891)	(121,298)	(121,878)	(129,741)	(33,088)
Non-controlling interests	(8)	50	951	168	2,915
ASSETS AND LIABILITIES
Non-current assets	285,563	546,951	600,844	659,557	790,417
Current assets	256,372	262,397	246,499	235,119	306,488
Total assets	541,935	809,348	847,343	894,676	1,096,905
Non-current liabilities	61,610	161,975	157,537	236,640	532,028
Current liabilities	439,027	367,013	320,168	288,194	373,865
Total liabilities	500,637	528,988	477,705	524,834	905,893
Net assets	41,298	280,360	369,638	369,842	191,012
Total equity attributable to owners of the Company	31,505	280,359	369,687	380,584	197,306

Graphex Group Limited

11/F COFCO Tower, 262 Gloucester Road, Causeway Bay, Hong Kong
www.graphexgroup.com

Tel : 852 - 2559 9438 Fax : 852 - 2559 9841
email : [email protected]

AI assistant

Graphex Group Limited — Annual Report 2025

50979_rns_2026-04-30_03cb4d15-a6de-433e-957c-ec1f4bfebfe9.pdf

GRAPHEX

CONTENTS

FINANCIAL HIGHLIGHTS

FINANCIAL HIGHLIGHTS

CORPORATE INFORMATION

BOARD OF DIRECTORS

Executive Directors

Non-executive Director

Independent non-executive Directors

COMPANY SECRETARY

REGISTERED OFFICE

HEADQUARTER, HEAD OFFICE AND PRINCIPAL PLACE OF BUSINESS IN HONG KONG

AUDIT COMMITTEE

REMUNERATION COMMITTEE

NOMINATION COMMITTEE

CORPORATE WEBSITE

AUTHORISED REPRESENTATIVES

ALTERNATES TO AUTHORISED REPRESENTATIVES

PRINCIPAL BANKERS

PRINCIPAL SHARE REGISTRAR OFFICE

HONG KONG SHARE REGISTRAR

ADR DEPOSITARY

INVESTOR RELATIONS

LEGAL ADVISER AS TO HONG KONG

AUDITOR

CHAIRMAN'S STATEMENT

CHAIRMAN'S STATEMENT

MANAGEMENT DISCUSSION AND ANALYSIS

MANAGEMENT DISCUSSION AND ANALYSIS

BUSINESS REVIEW

Graphene Products Business

Landscape Architecture Design Business

FINANCIAL REVIEW

Revenue

Cost of sales

Gross profit and gross profit margin

Selling, marketing and administrative expenses

Impairment of other intangible assets

MANAGEMENT DISCUSSION AND ANALYSIS

Impairment of goodwill allocated to Graphene Products Business

Impairment loss on financial and contract assets

Net loss

Liquidity, financial resources and gearing

Contingent liabilities

Pledge of assets

Capital commitments

Foreign exchange exposure

Human resources and employees' remuneration

USE OF RIGHTS ISSUE PROCEEDS

EVENTS AFTER THE REPORTING PERIOD

PROSPECTS

BIOGRAPHIES OF DIRECTORS AND SENIOR MANAGEMENT

EXECUTIVE DIRECTORS

BIOGRAPHIES OF DIRECTORS AND SENIOR MANAGEMENT

NON-EXECUTIVE DIRECTORS

INDEPENDENT NON-EXECUTIVE DIRECTORS

CHANGES IN INFORMATION OF DIRECTORS

SENIOR MANAGEMENT

CORPORATE GOVERNANCE REPORT

COMPLIANCE WITH CORPORATE GOVERNANCE CODE

CORPORATE GOVERNANCE REPORT

COMPLIANCE WITH MODEL CODE FOR SECURITIES TRANSACTIONS BY DIRECTORS

CORPORATE STRATEGY

DIVIDEND POLICY

BOARD DIVERSITY POLICY

Summary of board diversity policy

Measurable objectives

Implementation and monitoring

WORKFORCE DIVERSITY POLICY

Summary of workforce diversity policy

NOMINATION POLICY

1. Objective

2. Selection criteria

3. Nomination procedures

3.1 Appointment of Directors

CORPORATE GOVERNANCE REPORT

3.2 Re-appointment of Directors

Graphex Group Limited Annual Report 2025