However, our gross profit margin decreased from 41.3% to 30.3%, primarily due to the concurrent completion of certain loss-making projects in the Chinese Mainland, the accumulated costs of which were recognized as cost of sales upon delivery.
Summary · p. 2
We recorded negative gross margin of 5.1% in the three months ended March 31, 2026 for Chinese Mainland market, primarily attributable to certain loss-making projects from Chinese Mainland (primarily from customer B) were completed and delivered during the period, which incurred higher costs of sales than corresponding revenue, and our relatively small Chinese Mainland revenue base magnified the impact of such projects on the segment margin.
Financial Information · p. 220
Our impairment losses on financial assets, contract assets and contract costs, net increased by 57.1% from RMB8.8 million in 2024 to RMB13.8 million in 2025, primarily attributable to (i) an increase in impairment provision for contract costs of RMB3.2 million, recognized for certain project-based contracts mainly from Chinese Mainland, where the estimated delivery costs exceeded the expected revenue; and (ii) a provision for impairment losses on trade receivables of RMB1.4 million in 2025, as compared with a net reversal of RMB0.4 million in 2024, representing an unfavorable change of RMB1.8 million, primarily due to the slower collection pace of certain trade receivables during the year.
We have recorded 13 loss-making projects in total during the Track Record Period.
Business · p. 144
The losses on these projects were primarily attributable to cost overruns on certain legacy contracts entered into during the early stage of our transition towards innovative drug clinical development services, where subsequent increases in labor and delivery costs exceeded the original pricing assumptions.
Business · p. 144
In order to minimize future exposure to loss-making projects, we have adopted enhanced internal control mechanisms.
The total contract sum for these projects was approximately RMB58.9 million and the total net loss recorded for these projects was approximately RMB3.3 million during the Track Record Period.
Business · p. 141
The losses incurred in each of such projects were primarily attributable to the use of a batch of battery cells we procured in 2023 in anticipation of future demand when the market prices were relatively high.
Business · p. 141
As of the Latest Practicable Date, such batch of battery cells procured in 2023 had been fully utilized.
During the Track Record Period, there were nil, three, 14, 11, and five loss-making projects in 2023, 2024, and 2025 and for the five months ended May 31, 2025 and 2026, respectively.
Business · p. 170
Majority of the customers of the loss-making projects during the Track Record Period subsequently entered into new contracts with us.
Business · p. 170
Therefore, the occurrence of these loss-making projects did not have a material adverse effect on our overall business operations.
During the Track Record Period, there were 400 loss-making projects. The total losses resulting from these projects were RMB132.7 million during the Track Record Period. The revenue generated from these projects represented 4.0% of our aggregate revenue for the Track Record Period.
Business · p. 147
We incurred losses from these projects primarily because (i) we priced certain projects competitively to secure strategic clients, enter into new client industries, establish benchmark cases, or promote new products, and (ii) certain projects required more man-days or more senior personnel than originally budgeted due to higher-than-expected implementation complexity.
Business · p. 148
Therefore, the occurrence of these loss-making projects did not have a material adverse effect on our overall business operations.
During the Track Record Period, we had loss-making projects, which was primarily resulted from (i) business strategy to explore new types of business and customers with strategic value, with relatively low contract fee; and (ii) changes in customer requirements or their operation conditions during the project implementation process.
Business · p. 142
In particular, for 2025, we incurred loss of about RMB3.7 million for a project with Customer G being the first domestic PCB industry achieving IoT integrated CIM system.
Business · p. 142
During the year ended December 31, 2023, we had four project suspended due to the change in customers' requirements or their operation condition during the project implementation process.
In 2023, certain of our logistics projects incurred losses in an aggregate amount of approximately RMB407.0 thousands.
Business · p. 146
These projects were primarily undertaken as pilot demonstrations and for technical validation purposes during our early development stage, rather than for immediate profitability.
During the Track Record Period, we recorded a number of lossmaking smart intralogistics solution projects, with associated losses of RMB6.1 million, RMB22.2 million, and RMB74.2 million in 2023, 2024, and 2025, respectively.
Business · p. 117
In 2024, the number of lossmaking projects increased, driven mainly by: (i) revenue write-downs due to certain customers entering bankruptcy and liquidation proceedings; and (ii) low-margin, strategic contracts aimed at expanding into new markets such as fast-moving consumer goods and cold chain logistics. All such lossmaking projects are one-off in nature and do not indicate a structural deterioration in profitability.
Business · p. 117
In 2025, we incurred a loss of RMB57.4 million due to three projects, which further increased the overall loss of smart intralogistics solution projects.
During the Track Record Period, we incurred losses exceeding RMB1.0 million on four satellite and related services projects and four satellite-based solution projects, primarily because, during the ramp-up phase, we offered lower prices for certain projects to facilitate customer acquisition and project execution.
Business · p. 165
The decrease was primarily due to write-down of inventories in relation to one project where the contract value fell below our carrying cost.
For our intelligent energy operation and management projects, if the recoverable revenue over a project’s entire lifecycle is expected to be insufficient to cover both incurred and perspective costs, we will identify it as a loss-making project after conducting a comprehensive assessment.
Business · p. 116
During the Track Record Period, we identified three intelligent energy operation and management projects as loss-making and therefore we made sufficient impairment provisions.
Business · p. 116
The losses recognized for these projects are immaterial and do not have a material adverse impact on the overall operations, financial performance and profitability of our Group.
During the Track Record Period, we had five loss-making projects for our industry-class scenario, with aggregated gross loss of approximately RMB2.7 million.
Business · p. 154
Our Directors consider that the losses recognised as a result of these loss-making contracts were acceptable losses that may arise out of our ordinary course of business and such losses were insignificant to our operations, financial performance and profitability as a whole.
During the Track Record Period, we had three loss-making projects, with aggregated gross loss of RMB4.9 million.
Business · p. 134
Our Directors consider that the losses recognized as a result of these loss-making projects were acceptable losses that may arise out of our ordinary course of business and such losses were insignificant to our operations, financial performance and profitability as a whole.
During the Track Record Period, we had three major loss-making new energy investment and development projects.
Business · p. 172
During the Track Record Period, the total revenue and gross loss from these projects were RMB1,230.8 million and RMB81.0 million, respectively.
Business · p. 172
These losses were primarily due to (i) the relatively low project selling price, impacted by the declined market electricity prices; and (ii) the increased construction costs, resulting from project delays caused by the public health incidents.
For each year during the Track Record Period, we recorded seven, six and four loss-making projects, incurring a total loss of approximately RMB2.9 million, RMB16.4 million and RMB6.3 million for the corresponding year.
Business · p. 157
The losses incurred from the loss-making projects were primarily attributable to underestimation of project costs.
During the Track Record Period, we undertaken eight projects that were loss-making upon completion.
Business · p. 154
The loss-making outcomes were primarily attributable to: (i) initial equipment batches for new projects often incur higher upfront costs, which we view as necessary investments to facilitate future, high-margin replicable orders; and (ii) we proactively absorbed additional labor and customization costs arising from evolving customer requirements during delivery to maintain long-term relationships with KAs.
During the Track Record Period, we had recorded two loss-making projects.
Business · p. 143
In light of the above incidents leading to loss-making projects, we have strengthened our internal control measures over project execution and cost management.
The total losses generated from those loss-making projects amounted to RMB7.8 million, RMB3.0 million, RMB7.2 million and RMB0.8 million in 2022, 2023, 2024 and in the nine months ended September 30, 2025, respectively.
Business · p. 273
A small number of projects were terminated after contract signing but prior to customers' acceptance, primarily due to customers adjusting their project scope or technical specifications, or reallocating budgets in response to evolving business needs or financial considerations.
Business · p. 273
Despite the occurrence of these loss-making or terminated projects, these projects did not have any material adverse impact on our overall business operations.
During the Track Record Period, some of our contracts with our customers were material loss-making contracts, defined as contracts that incurred a gross loss of more than RMB50,000 as of a given date.
Business · p. 264
Such contracts are mainly related to our digital SMO business management service because such service lacked economies of scale when we offered it in the early stage and that some of the projects encountered unexpected delays which would increase the impact of inflation and rising costs on the eventual profitability of the projects.
Business · p. 264
In addition, there has been early termination of our contracts with customers during the same period related to substantially all of our solutions (excluding early terminations due to earlier-than-expected completion of contracts with customers).
During the Track Record Period, we recorded one, three and three loss-making contracts, with aggregate gross loss of approximately RMB0.5 million, RMB0.7 million and RMB0.1 million, for the years ended 31 December 2021, 2022 and 2023, respectively
Business · p. 154
In order to minimise the risk of loss-making contracts, the pricing and estimated cost of our products and contracts is overseen by our management team
In 2021, 2022 and 2023, we incurred losses on 30, 39 and 40 projects, respectively. The total losses from these projects amounted to RMB19.2 million, RMB15.3 million and RMB19.6 million, respectively.
Business · p. 195
As such, our Directors are of the view that we could gradually reduce the losses that we incurred from the Signature Projects in the future through additional cost-saving measures, such as further streamlining our labor management to lower our operational costs and standardizing our service procedures.
Business · p. 201
As of December 31, 2023, we had withdrawn from all resettlement housing projects.