GCL NEWENERGY (00451) announced that the group expects to achieve gross profit of approximately RMB 70 million to RMB 80 million for the six months ending June 30, 2025 (the period), compared to gross profit of RMB 70 million for the six months ending June 30, 2024. The company also expects to record a net loss of approximately RMB 250 million for the period, compared to a net loss of RMB 74 million for the six months ending June 30, 2024.

The board believes that the main reason for the performance changes during the period is due to a one-time provision of approximately RMB 295 million for compensation to different buyers related to the sale and purchase agreements of previously sold solar power station projects. The compensation clauses in these sale and purchase agreements generally include, but are not limited to, defect rectification costs for solar power stations, tax compensation clauses, and other general compensation clauses typically listed in sale and purchase agreements.

Regarding defect rectification costs for solar power stations, if defects are discovered that require rectification, buyers may deduct the relevant rectification costs from the security deposits and remaining amounts payable to the group. Concerning tax compensation clauses, if buyers of the sold solar power stations receive tax notices from local tax authorities after completion of the sale, this will create potential compensation obligations.

However, since policies regarding farmland occupation tax and land use tax for solar power stations remain unclear, and taxation methods vary, the group needs time to negotiate with relevant local tax authorities to determine the scope and basis for tax settlement. There are also other general compensation provisions that depend on the individual circumstances of each solar power station sale project.