NaaS Technology Inc. American Depositary Receipt

Company Overview

Business Model: NaaS Technology Inc. operates as a new energy asset operation service provider, leveraging artificial intelligence (AI) technology to intelligently match electric vehicle (EV) charging supply and demand. The company aims to provide convenient, efficient, and smart charging services for EV owners while enhancing operational efficiency and profitability for charging station operators. Its core offerings include Charging Services (mobility connectivity via the partnered Kuaidian platform, full station operation, and Software-as-a-Service (SaaS) products), Energy Solutions (planning, deployment, and operational optimization of EV charging infrastructure, including site selection, hardware procurement, and Engineering, Procurement, and Construction (EPC) services), and New Initiatives (electricity procurement, virtual power plant solutions, and non-charging retail and ancillary services).

Market Position: The company operates in China's rapidly evolving EV charging and energy solution markets, characterized by high demand for public charging infrastructure. NaaS Technology Inc. competes based on the extensiveness of its charging network, the variety and quality of its EV charging services and products, the effectiveness of its offline service network, industry supply and value chain integration capabilities, and technology. The company emphasizes a first-mover advantage and market leadership in terms of charging station and facility coverage, driven by an asset-light business model. It anticipates increasing penetration of Direct Current Fast Chargers (DCFCs) in the Chinese market due to the need for reduced charging times.

Recent Strategic Developments:

• Acquisitions & Divestitures: In June 2023, NaaS Technology Inc. acquired 89.999% of Sinopower Holdings International Co. Limited, a rooftop solar energy developer in Hong Kong, for approximately US$6.1 million. This interest was subsequently sold to a wholly-owned subsidiary of NewLink in August 2024. An agreement to acquire Charge Amps AB for US$66.4 million was terminated in November 2023.
• Strategic Collaborations:
  • Hyundai Motor Group (China): Partnership to enhance charging infrastructure and mobility connectivity for Hyundai's PEV models (August 2023).
  • PICC Real Estate Investment: Collaboration to build a new energy charging service system, including integrated infrastructure, co-branded stations, online connectivity, and insurance services (August 2023).
  • CR Capital MGMT: Partnership to construct integrated energy ports, orchestrate new energy infrastructure projects, and securitize new energy assets, focusing on digital and intelligent applications (August 2023).
  • ZSY Financial Services and China Construction Bank: Collaboration to integrate financial services with the new energy sector (September 2023).
  • Hubei Provincial Communications Investment Industrial Development: Contribution to expressway service areas and energy supply infrastructure (September 2023).
  • People’s Government of Tengzhou City: Partnership to drive innovation and digitalized energy management for transportation energy transformation (September 2023).
  • Hong Kong S.A.R. Office for Attracting Strategic Enterprises (OASES): Partnership to establish an energy data analytics R&D center in Hong Kong Science Park by the end of 2023, providing algorithm support for global energy asset operations (October 2023).
• Major Projects: Secured a RMB67.18 million contract for the initial phase of the Anji Green and Low-carbon Supply Chain Construction Project in Anji County, Zhejiang Province, involving PV-storage-charging-swapping solutions, 458 DCFC chargers, a 4,205.4 kW distributed photovoltaic system, 36 energy storage and charging cabinets, and two heavy-duty truck battery swapping stations. The project was 90% complete and expected final acceptance in Q2 2024.
• Product Innovation: Released an autonomous charging robot prototype in 2023.
• Financing Activities:
  • Completed a registered direct offering of 4,761,905 ADSs and Investor Warrants in March 2024, raising approximately US$6 million.
  • Entered into an "at-the-market" offering agreement for up to US$20 million of ADSs in September 2024, with 700,000 ADSs sold for net proceeds of approximately US$1.53 million as of the filing date.
  • Issued a US$35 million convertible note (2024 New Note) to LMR Multi-Strategy Master Fund Limited in October 2024, replacing prior convertible notes.
  • Entered into two share subscription facility agreements in December 2024, with TopLiquidity Management Limited (up to 4,800,000 ADSs, 200,000 ADSs sold for US$0.28 million net proceeds) and other investors (up to US$15,000,000 ADSs, 9,792,998 ADSs sold for US$2.85 million net proceeds).
  • Approved a US$10 million share repurchase program in February 2025, effective through February 2026, with no repurchases as of the filing date.
  • Completed a registered direct offering of 3,000,000 ADSs and warrants to purchase up to 7,500,000 ADSs in March 2025, for net proceeds of US$1.98 million.

Geographic Footprint: NaaS Technology Inc. is a Cayman Islands holding company, with its primary operations conducted through its subsidiaries in mainland China. It also has subsidiaries in Hong Kong. The company is establishing an R&D center in the Hong Kong Science Park.

Cross-Border Operations: NaaS Technology Inc. operates through a holding company structure with PRC subsidiaries. Historically, its EV charging service business in China was conducted through NewLink's consolidated entities, including Kuaidian Power Beijing, which was temporarily a Variable Interest Entity (VIE) of Dada Auto. Following a restructuring in early 2022, the company no longer uses a VIE structure and conducts operations in China directly through its subsidiaries. Cash flows between the Cayman Islands holding company and its PRC subsidiaries are subject to internal approval and PRC regulations, including restrictions on dividend payments (only from retained earnings, after statutory reserve fund contributions) and foreign exchange controls. Loans and capital contributions to PRC subsidiaries require government registration and approval. Cash transfers from Hong Kong subsidiaries to the holding company are subject to Hong Kong tax obligations.

Financial Performance

Revenue Analysis

Profitability Metrics (2024):

• Gross Margin: 44.1%
• Operating Margin: -401.5%
• Net Margin: -455.0%

Investment in Growth:

• R&D Expenditure: $5.8 million (RMB42.1 million), representing 20.9% of revenue in 2024.
• Capital Expenditures: Nil in 2024, compared to RMB26.3 million in 2023.
• Strategic Investments: The company made various strategic investments and acquisitions, including the acquisition of Sinopower Holdings International Co. Limited in June 2023 (later divested), and significant project wins like the Anji Green and Low-carbon Supply Chain Construction Project (RMB67.18 million contract).

Currency Impact Analysis: The company's reporting currency is Renminbi (RMB). All translations to U.S. dollars (US$) in the filing are for convenience, using an exchange rate of RMB7.2993 to US$1.00 as of December 31, 2024. The company primarily operates in China, with most transactions settled in RMB. Management considers the business not exposed to significant foreign exchange risk as it has no significant assets or liabilities denominated in currencies other than the functional currencies of its relevant entities. RMB is not freely convertible, and its conversion into foreign currencies is subject to PRC government controls, which could impact the company's ability to convert funds for overseas payments or investments.

Business Segment Analysis

Charging Services

Financial Performance:

• Revenue: $23.2 million (RMB169.1 million) (+30.6% YoY)
• Key Growth Drivers: The increase in revenue was primarily driven by a RMB25.9 million increase from mobility connectivity solutions, attributed to an increase in service charge rate while orders transacted remained stable. Revenue from the full station operation model also increased by RMB13.8 million due to a higher number of operated charging stations. The company uses platform-based incentives (discounts and promotions) for end-users, with base incentives (up to commission fees) recorded as a revenue reduction (RMB400.7 million in 2024) and excess incentives (RMB63.6 million in 2024) included in selling and marketing expenses. The significant reduction in excess incentives in 2024 reflects improved management of platform-based incentives.

Product Portfolio:

• Major product lines and services within segment: Mobility connectivity services (via the partnered Kuaidian platform), full station operation services, and other online solutions (SaaS products for traffic support, marketing, payment, chargers management, order management, load management, and membership management).
• New product launches or major updates: Collaborations with EV OEMs to provide functions and applications within pre-installed EV software.

Market Dynamics:

• Competitive positioning within segment: Competition is based on network extensiveness, service variety/quality, offline service network, value chain integration, and technology. The company aims to maintain a competitive edge through continuous innovation.
• Key customer types and regional market trends: Primarily serves charging station operators and EV drivers (end-users) in China. The market is characterized by high demand for public charging infrastructure and a trend towards DCFCs.
• Regulatory environment by jurisdiction: Subject to evolving PRC laws and regulations concerning telecommunications, internet information services, and mobile internet applications.

Geographic Revenue Distribution: Revenue from charging services is primarily generated in mainland China.

Energy Solutions

Financial Performance:

• Revenue: $3.5 million (RMB25.5 million) (-74.6% YoY)
• Key Growth Drivers: The significant decrease in revenue was primarily attributable to a strategic shift away from low-margin and infrequent energy solution projects. In 2023, this segment saw substantial growth driven by the initial phase of the Anji Green and Low-carbon Supply Chain Construction Project (RMB57.2 million) and other EPC projects (RMB27.9 million).

Product Portfolio:

• Major product lines and services within segment: Site selection, hardware procurement, EPC (engineering, procurement, and construction) services, station maintenance and upgrade, and customer support.
• New product launches or major updates: Solutions to upgrade existing charging stations, including the integration of smart photovoltaics energy storage and power charging.

Market Dynamics:

• Competitive positioning within segment: The company's established EV charging network and industrial experience provide insights for tailored construction services.
• Key customer types and regional market trends: Serves energy asset owners, including EV charging stations and PV asset owners. The market faces uncertainties in forecasting and meeting shifts in demand.
• Regulatory environment by jurisdiction: Subject to general PRC business regulations.

Geographic Revenue Distribution: Revenue from energy solutions is primarily generated in mainland China.

New Initiatives

Financial Performance:

• Revenue: $0.9 million (RMB6.4 million) (+88.1% YoY)
• Key Growth Drivers: Continued expansion of new business offerings and strengthening market recognition.

Product Portfolio:

• Major product lines and services within segment: Electricity procurement services, cloud-based virtual power plant platform (facilitates trading transactions in the electricity market and responds to government peak shaving/load-filling demands), and non-charging services (retail, amenities like vending machines, massage chairs, car wash tunnels, station design, and decoration).
• New product launches or major updates: Autonomous charging robot prototype released in 2023.

Market Dynamics:

• Competitive positioning within segment: Pioneer in packaging non-charging retail and ancillary services into charging stations.
• Environmental Impact: In 2024, the company's operations helped reduce carbon emissions by approximately 3,224,900 tons, a slight decrease from 3,293,100 tons in 2023, but a 74.5% increase compared to 2022.

Geographic Revenue Distribution: Revenue from new initiatives is primarily generated in mainland China.

International Operations & Geographic Analysis

Revenue by Geography: The filing does not provide a detailed breakdown of revenue by specific geographic regions or countries beyond stating that primary operations are in China.

International Business Structure:

• Subsidiaries: NaaS Technology Inc. is a Cayman Islands exempted company. Its primary operations are conducted through its PRC subsidiaries. It also has subsidiaries in Hong Kong, including Cosmo Light HK Limited and Hill Matrix HK Limited.
• Joint Ventures: Not explicitly mentioned in the filing.

Cross-Border Trade: The filing does not provide specific details on export markets, import dependencies, or transfer pricing policies beyond general regulatory risks.

Capital Allocation Strategy

Shareholder Returns:

• Share Repurchases: The board of directors approved a share repurchase program in February 2025, authorizing repurchases of up to US$10 million of ADSs through February 2026. No repurchases had been made as of the filing date.
• Dividend Payments: The company has not paid cash dividends in the past and does not plan to pay any in the foreseeable future, intending to retain earnings for business operations and expansion.

Balance Sheet Position (as of December 31, 2024):

• Cash and Equivalents: $17.4 million (RMB126.7 million)
• Total Debt: $112.9 million (RMB824.0 million)
• Net Cash Position: -$95.5 million (RMB-697.3 million)
• Debt Maturity Profile (contractual undiscounted cash flows as of December 31, 2024):
  • Less than 1 year: RMB1,296.2 million
  • Between 1 and 2 years: RMB2.8 million
  • Between 2 and 5 years: RMB54.8 million

Cash Flow Generation:

• Operating Cash Flow: -$24.5 million (RMB-179.1 million) in 2024, a decrease in cash used from -$567.6 million in 2023. This improvement was mainly due to decreased cash used in energy storage equipment and charger procurement, and a strategic reduction in cash prepayment for charging services and energy solutions.
• Free Cash Flow: Not explicitly provided.

Currency Management:

• Cash holdings by major currencies: As of December 31, 2024, 97.5% of cash and cash equivalents were held in RMB.
• Hedging Strategies: The company does not consider itself exposed to significant foreign exchange risk and has not used derivative financial instruments to manage interest rate risk exposure. It monitors interest rate changes but does not currently implement hedging measures.

Operational Excellence

Production & Service Model: NaaS Technology Inc. operates as a new energy asset operation service provider, leveraging AI technology for intelligent matching of EV charging supply and demand. Its service delivery model includes mobility connectivity services through the partnered Kuaidian platform, full station operation where it takes full responsibility for station management, and SaaS products for digitalizing operations. For energy solutions, it provides one-stop construction services (site selection, design, EPC) by engaging third-party contractors and procures chargers from partner manufacturers. It also offers 24/7 offline operational and management services, including maintenance and repair.

Global Supply Chain Architecture: Key Suppliers & Partners:

• IT Data Management Services: Anji Datacom (provides IT data management services for the Kuaidian platform, including data collection, storage, processing, use, transaction reconciliation, and information verification). This relationship is critical, accounting for 10% of cost of sales in 2024 and 10% in 2023.
• Manufacturing Partners: Partner charger manufacturers (for hardware procurement).
• Construction/EPC Contractors: Third-party contractors (for EPC services).

Facility Network:

• Manufacturing: The company procures hardware from partners; direct manufacturing facilities are not explicitly detailed.
• Research & Development: The company has an R&D team focused on charging software, mobile charging devices, integrated photovoltaics-storage charging station solutions, intelligent order management, and real-time information management. It plans to establish an R&D center in the Hong Kong Science Park.
• Distribution: Not explicitly detailed, but implies a network for delivering hardware and services to charging stations across China.

Operational Metrics: The filing does not provide specific capacity utilization, efficiency measures, or quality indicators.

Market Access & Customer Relationships

Go-to-Market Strategy: Distribution Channels:

• Direct Sales: Utilizes an in-house business development team to identify and engage new charging station customers, monitoring and scouting for new infrastructure through online searches and offline site visits.
• Channel Partners: Engages in strategic cooperation with non-private entities in China, often large-scale energy asset owners.
• Digital Platforms: Leverages the partnered Kuaidian platform for mobility connectivity services, increasing visibility for charging stations and connecting them with end-users. It also offers a VIP membership program on Kuaidian to attract and retain end-users.

Customer Portfolio: Enterprise Customers:

• Tier 1 Clients: Major enterprise relationships include strategic collaborations with Hyundai Motor Group (China), PICC Real Estate Investment, CR Capital MGMT, ZSY Financial Services, China Construction Bank, Hubei Provincial Communications Investment Industrial Development, and the People’s Government of Tengzhou City.
• Customer Concentration: In 2024, no single customer contributed more than 10% of total revenues. In 2023, two customers each contributed 10% of total revenues.

Regional Market Penetration: The company's market penetration is primarily focused on the China market, with initiatives to expand its R&D presence in Hong Kong.

Competitive Intelligence

Global Market Structure & Dynamics

Industry Characteristics: The EV charging and energy solution markets are in an early stage and rapidly evolving, characterized by changing technologies, competitive pricing, evolving government regulations, and shifting consumer demands. In China, there is a high demand for public charging infrastructure, with an expected increase in DCFC penetration to reduce charging times and optimize user experience.

Competitive Positioning Matrix:

Direct Competitors

Primary Competitors:

• Other EV charging service providers: The public EV charging service market in China is highly competitive and still developing.
• Charging station customers: Some charging station customers are launching products and services that compete with NaaS Technology Inc.'s offerings and may seek to acquire end-users directly.
• EV OEMs: Certain EV OEMs are building their own supercharger networks across China, potentially reducing demand for third-party services.
• Third-party contractors: Can provide basic electric charging capabilities for on-premise and home charging.

Regional Competitive Dynamics: In late August 2023, three major charging station operators in China simultaneously terminated their collaboration with NaaS Technology Inc., resulting in the disconnection of a meaningful percentage of charging stations and ports on its network. This situation continued into 2024, with top operators enhancing their own user ecosystems, highlighting intense competitive pressure.

Risk Assessment Framework

Strategic & Market Risks

Global Market Dynamics: The company faces risks from a severe or prolonged downturn in the Chinese or global economy, U.S.-China trade tensions, and broader geopolitical conflicts (e.g., Russia-Ukraine, Hamas-Israel, Red Sea shipping attacks) that could impact trade, investments, and supply chains. Demand for EVs, and thus charging services, is highly dependent on consumer adoption, which can be affected by perceptions of EV features, costs, range, and competition from other vehicle types. Government incentives for EVs and charging stations are crucial, and any reduction or termination of these benefits could adversely affect demand. Technology Disruption: The EV charging and energy solution industries are rapidly evolving. Delays in developing new capabilities or adapting to technological changes (e.g., EV models, charging standards, battery chemistries) could harm market acceptance and competitive position. Significant R&D expenses may not always yield revenue.

Operational & Execution Risks

Global Supply Chain Vulnerabilities: The company faces inventory risk from hardware procurement (chargers) due to seasonality, rapid product cycles, and demand volatility. It relies significantly on Anji Datacom for IT data management services for the Kuaidian platform, and any interruption from this sole service provider could severely disrupt business. Construction projects for energy solutions are subject to risks of cost overruns, delays, and regulatory compliance (building codes, safety, environmental protection). Regional Disruptions: Operations are vulnerable to natural disasters, terrorist activities, political unrest, and other outbreaks (e.g., COVID-19), which could disrupt production, delivery, and overall operations. System failures, cyber-attacks, and data breaches pose risks to information systems and data integrity, potentially leading to operational disruptions, data corruption, or reputational damage.

Financial & Regulatory Risks

Currency & Financial Risks: NaaS Technology Inc. has a history of losses (RMB914.4 million net loss in 2024) and negative operating cash flows (RMB179.1 million in 2024), with accumulated losses of RMB8,251.7 million and a working capital deficit of RMB910.9 million as of December 31, 2024, raising substantial doubt about its ability to continue as a going concern. The company expects to incur significant expenses and continuing losses in the near term and will need additional funds, which may not be available on favorable terms. Future equity issuances (e.g., 2025 Warrants, LMR Warrant) could dilute existing shareholders. The trading price of ADSs is volatile. The company has long-term debt obligations with floating interest rates, exposing it to interest rate risk. Regulatory & Compliance Risks: Operations are primarily in China and subject to complex and evolving PRC laws and regulations, including those on cybersecurity, data privacy (e.g., 2022 Cybersecurity Review Measures, Data Security Law, Personal Information Protection Law), anti-monopoly, and foreign investment. The PRC government's significant oversight and control over overseas offerings and foreign investment in China-based issuers could limit the company's ability to offer securities or impact its operations. There is a risk of being deemed a PRC "resident enterprise" for tax purposes, subjecting global income to a 25% PRC enterprise income tax. Compliance with M&A rules, indirect transfer tax regulations, and employee benefit plan contributions also presents uncertainties and potential penalties. The Holding Foreign Companies Accountable Act (HFCAA) poses a delisting risk if the PCAOB is unable to inspect the company's auditor for two consecutive years.

Geopolitical & External Risks

Country-Specific Risks: Substantially all assets and operations are in China, making the business highly sensitive to changes in China's economic, political, or social conditions and government policies. The PRC legal system is rapidly evolving, leading to uncertainties in interpretation and enforcement. Economic Risk: The slowing Chinese economy and global macroeconomic challenges (e.g., rising interest rates, geopolitical conflicts) could adversely affect demand for services and financial performance. Regulatory Changes: Rapid evolution of PRC laws and regulations, often with short notice, could impose additional licensing requirements or regulatory procedures, potentially with retrospective effect, impacting business operations and financial condition.

Innovation & Technology Leadership

Research & Development Focus: Global R&D Network: NaaS Technology Inc. maintains a research and development team comprising specialized technicians and professionals. This team focuses on areas such as charging software, mobile charging devices, integrated photovoltaics-storage charging station solutions, intelligent order management, and real-time information management. The company plans to establish an R&D center in the Hong Kong Science Park, leveraging local R&D and academic resources for energy data analytics. Innovation Pipeline: Key innovations include the development of SaaS products to optimize charging station operations and energy efficiency, and the release of an autonomous charging robot prototype in 2023. The company continuously invests in R&D to adapt to evolving EV and energy solution technologies.

Intellectual Property Portfolio:

• Patent Strategy: As of December 31, 2024, NaaS Technology Inc. held 65 issued patents and 322 pending patent applications globally. These patents primarily cover charging services, mobile charging devices, and integrated photovoltaics-storage charging station solutions.
• IP Litigation: The company acknowledges the potential for costly intellectual property disputes or litigation to enforce its rights or defend against claims.

Technology Partnerships:

• Strategic Alliances: Collaborations include a partnership with Hyundai Motor Group (China) to enhance charging infrastructure and mobility connectivity for PEV models.
• Research Collaborations: A partnership with the Hong Kong S.A.R. Office for Attracting Strategic Enterprises (OASES) focuses on energy data analytics R&D and algorithm support for global energy asset operations.

Leadership & Governance

Executive Leadership Team

International Management Structure: The company's management team includes executives with international experience (e.g., Steven Sim). Regional leadership and reporting relationships are not explicitly detailed beyond the general structure of a Cayman Islands holding company with PRC subsidiaries.

Board Composition: The board of directors consists of five directors, including two independent directors (Mr. Guangming Ren and Mr. Xiaoli Liu). The board has established an audit committee, a compensation committee, and a corporate governance and nominating committee. Mr. Guangming Ren chairs the audit committee and is an "audit committee financial expert." Mr. Xiaoli Liu chairs the compensation committee. Mr. Zhen Dai chairs the corporate governance and nominating committee. As a foreign private issuer, the company follows home country practice for certain corporate governance matters, including the requirements for a majority of independent directors, independent director oversight of executive compensation, and the number of audit committee members.

Regulatory Environment & Compliance

Multi-Jurisdictional Regulatory Framework:

• Primary Regulatory Environments:
  • Cayman Islands: NaaS Technology Inc. is incorporated in the Cayman Islands, which levies no taxes on corporate profits, income, gains, or appreciation, and no withholding tax on dividends.
  • Hong Kong: Its Hong Kong subsidiaries are subject to Hong Kong Profits Tax (16.5% for profits over HKD2 million, 8.25% for profits below HKD2 million), with foreign-derived income exempted. No withholding tax on dividends paid to the parent company.
  • Mainland China: PRC subsidiaries are subject to a statutory Enterprise Income Tax (EIT) rate of 25%. Dividends declared to foreign investors from mainland China are subject to a 10% withholding tax, unless a tax treaty provides otherwise. The company is also subject to Value-Added Tax (VAT) at rates from 3% to 13% on services, plus surcharges.
• Key Regulations: The company's operations in China are governed by a complex and evolving framework, including the Foreign Investment Law, Telecommunications Regulations, Administrative Measures on Internet Information Services, Regulations on the Supervision and Administration of Non-Bank Payment Institutions, App Provisions, Consumer Protection Law, Advertising Law, Cybersecurity Law, Data Security Law, Personal Information Protection Law, and various regulations concerning foreign exchange, M&A, and overseas listings.

Cross-Border Compliance:

• Export Controls: The company acknowledges risks related to export controls and trade restrictions.
• Multi-Jurisdictional Compliance: The company faces challenges in complying with diverse and rapidly evolving PRC laws and regulations, particularly concerning cybersecurity and data privacy. It has implemented self-assessments and measures to improve compliance.
• Sanctions Compliance: Not explicitly mentioned.

International Tax Strategy:

• Transfer Pricing: The company acknowledges uncertainties regarding indirect transfers of equity interests in PRC resident enterprises by non-PRC holding companies, which may be subject to PRC enterprise income tax and withholding obligations.
• Tax Treaties: It is unclear whether non-PRC shareholders would be able to claim benefits of tax treaties between their tax residence and China if the company is treated as a PRC resident enterprise.
• PRC Resident Enterprise Status: There is uncertainty whether NaaS Technology Inc. could be considered a PRC "resident enterprise," which would subject its global income to a 25% PRC enterprise income tax.

Environmental & Social Impact

Global Sustainability Strategy: Environmental Commitments: NaaS Technology Inc. is committed to decarbonization and building a green and sustainable future. It facilitates the adoption of EVs through the deployment and operation of EV charging infrastructure, contributing to the reduction of greenhouse gas emissions. Renewable Energy: The company's initiatives include integrated PV-storage-charging-swapping solutions and the deployment of distributed photovoltaic systems. Regional Sustainability Initiatives: The Anji Green and Low-carbon Supply Chain Construction Project is a key initiative demonstrating the company's commitment to sustainable energy solutions. Carbon Emissions Reduction: In 2024, the company helped reduce carbon emissions by approximately 3,224,900 tons. While this is a slight decrease from 3,293,100 tons in 2023, it represents a 74.5% increase in reduction efforts compared to 2022.

Social Impact by Region:

• Labor Standards: The company participates in various government-sponsored employee benefit plans in China, including pension, unemployment, maternity, labor injury, medical insurance, and housing provident funds, making mandatory contributions based on employee salaries.

Currency Management & Financial Strategy

Multi-Currency Operations: Currency Exposure: NaaS Technology Inc. operates mainly in China, with most transactions settled in RMB. Its functional currency is U.S. dollars for the holding company and RMB for its PRC subsidiaries. The company considers its business not exposed to significant foreign exchange risk as it has no significant assets or liabilities denominated in currencies other than the respective functional currencies of its relevant entities. Cash holdings by major currencies: As of December 31, 2024, 97.5% of the company's cash and cash equivalents were held in RMB.

Hedging Strategies:

• Transaction Hedging: The company has not used derivative financial instruments to manage its interest rate risk exposure.
• Economic Hedging: NaaS Technology Inc. closely monitors the effects of changes in interest rates on its interest rate risk exposures but does not currently take measures to hedge interest rate risks.
• Functional Currency Considerations: The PRC government imposes controls over foreign currency reserves, directly regulating the conversion of RMB into foreign exchange, which can impact the company's ability to convert RMB to other currencies for overseas payments or investments.