Yinxi Technology: Response to Surge in Operating Cash Flow, Loss Compensation, Dividend Distribution, and Litigation Regarding Performance Compensation

Investor Q&A:

The company’s net operating cash flow surged by 50 times in 2025, far exceeding the rate of revenue growth. Is the surge mainly driven by non-recurring operating activities? Could you explain the specific reasons and whether it is sustainable? After using 300 million yuan of capital surplus to cover losses in this period, the company immediately paid dividends—was this mainly to meet the formal requirements for dividend distribution? Please explain the reasonableness of this decision and its impact on minority shareholders. For the 177 million yuan performance compensation lawsuit, the company has fully accrued bad debt—what is the progress on subsequent recovery? Thank you.

Reply from the Secretary of the Board of Directors (Yinxi Technology, SZ300221):

Dear investors, thank you for your attention to the company. The base for the net operating cash flow in 2024 was small. In 2025, net cash flow generated from operating activities was 206 million yuan. The main reason is that the company achieved a total profit of 117 million yuan during the reporting period, and within the total profit, depreciation and amortization expenses of 84 million yuan—items that do not require cash payment—were also deducted. Both of these increased compared with 2024. Another reason why net cash flow was higher than in 2024 is that, compared with the end of 2024, both the ending balances of accounts receivable and inventories decreased, and the working capital占用 was smaller at the end of the reporting period. The company’s deliberation on matters related to covering losses complied with the provisions of relevant laws and regulations, and it was also intended to give back to shareholders. There is no situation that would harm the interests of shareholders in general, especially minority shareholders. The progress of the performance compensation lawsuit is set out in the relevant sections of the annual report. Going forward, the company will continue to stay in contact with the performance compensation counterpart(s) and, through measures such as phone calls and property preservation, will continue to urge them to fulfill their performance compensation obligations.

View more Q&As from the Secretary of the Board of Directors>>

Disclaimer: This information has been excerpted by Sina Finance from publicly available information and does not constitute any investment advice. Sina Finance does not guarantee the accuracy of the data; the content is provided for reference only.