Summary of Key Points Core Viewpoint - As of May 30, 2025, Shanjin International (000975) closed at 19.69 yuan, down 4.14% from the previous week, with a total market capitalization of 54.674 billion yuan, ranking 3rd in the precious metals sector and 246th in the A-share market [1]. Company Announcements - Shanjin International announced the adjustment of guarantee limits among its wholly-owned subsidiaries, with a total guarantee amount of 455.4 million yuan expected to be approved in board meetings on December 19, 2024, and January 15, 2025, valid until December 31, 2025 [1][4]. - The entire guarantee limit of 200 million yuan for Osino Gold Exploration and Mining (Pty) Ltd. has been transferred to Osino Mining Investments Limited, representing 15.41% of the company's latest audited net assets [1]. - A new guarantee of 21.5628 million yuan has been established for Sino Gold Tenya (HK) Limited, with a joint liability guarantee valid for two years from the contract signing date [1]. - After these adjustments, the total guarantee balance for the company and its subsidiaries is 62.9628 million yuan, accounting for 4.85% of the latest audited net assets, with no overdue guarantees or litigation-related guarantees reported [1].

金银价走高+克金成本下降，公司业绩顺利释放2024 年公司营收136 亿元，同比+68%；归母21.7 亿元， 同比+53%。其中： （1）矿产金收入44 亿元，同比+34%；毛利率74%，同比+13pct；产量8.04吨，同比+15%；销量8.05 吨，同比+10%；售价550 元/克，同比+22%；克金销售成本145 元/克，同比-18%。 （2）矿产银收入9.9 亿元，同比+10%；毛利率52%，同比+3pct；产量196吨，同比+1.6%；销量176 吨，同比-9.6%；库存33 吨，同比+156%；售价5.6 元/克（税后），同比+22%；克银销售成本2.67 元/ 克，同比+14%。 25Q1 公司营收43 亿元，同比+56%，环比+185%；归母6.9 亿元，同比+38%，环比+56%。其中： （1）矿产金收入13 亿元，同比+20%；毛利率78%，同比+10pct；产量1.8吨，同比-11%；销量2 吨，同 比-11%；售价659 元/克，同比+35%；克金销售成本148 元/克，同比-5%。 （2）矿产银收入1.5 亿元，同比+7%；毛利率62%，同比+23pct；产量22吨，同比+6%；销 ...

Financial Performance - The group reported a loss attributable to shareholders of HKD 125 million for the year ending December 31, 2024, compared to a loss of HKD 72 million in the previous year, marking an increase in loss of approximately 74%[19] - The group's consolidated post-tax loss amounted to HKD 116 million in 2024, compared to HKD 62 million in 2023[33] - The group did not recommend a final dividend due to the reported loss for the year[20] - The company reported a loss of HKD 72 million for the fiscal year ending December 31, 2023, compared to a profit of HKD 127 million in 2020[57] - The group's operating loss before tax was HKD 109 million for the year ended December 31, 2024, up from HKD 51 million in 2023[48] Sales and Revenue - Total sales revenue from self-operated products decreased by 10% to HKD 287 million, with a gross margin of only 31%[27] - The total sales amount from self-operated products, consignment counters, and licensed counters decreased by 12% to HKD 1,358 million[26] - Total sales revenue for self-operated products decreased to HKD 287 million in 2024 from HKD 319 million in 2023, representing a decline of 10%[28] - Commission income from consignment counters fell by 12% to HKD 308 million in 2024, down from HKD 351 million in 2023[28] - Unicorn's total sales increased by 4% to HKD 1,169 million in 2024, driven by an 8% rise in self-operated product sales to HKD 864 million[30] Operational Efficiency and Strategy - The company plans to enhance operational efficiency by reducing store sizes and opening pop-up stores for promotional events[25] - The group aims to improve synergy and efficiency by integrating the IT systems of Citistore and Unicorn after establishing a central distribution center[22] - The group plans to optimize store network performance and expand its membership loyalty program to enhance customer engagement[35] - The integration of information technology systems aims to better understand customer needs and adjust product offerings accordingly[35] Employee and Workforce Management - The total employee cost for the year ended December 31, 2024, was HKD 257 million, down from HKD 277 million in 2023[56] - The group has 866 full-time employees and 100 part-time employees as of December 31, 2024, compared to 962 full-time and 115 part-time employees in 2023[56] - The employee turnover rate was 45% for males and 78% for females, with 44% for employees under 30 years old[97] - The employee training program has achieved a participation rate of 89% for both male and female employees[104] Environmental and Sustainability Initiatives - The company aims to reduce carbon intensity per square foot of retail space by 15% by 2030 compared to the 2023 baseline[85] - The usage of plastic shopping bags in the company's stores decreased by 1.5% year-on-year during the reporting period, attributed to government initiatives and internal policies[86] - The company has set a target to phase out the use of plastic bags across its retail network by 2050[88] - The company has implemented energy efficiency measures, including setting indoor temperatures to 25 degrees Celsius and using LED lighting in new stores[83] - The company has not recorded any violations of environmental laws during the reporting period, demonstrating its commitment to regulatory compliance[80] Corporate Governance - The board of directors is responsible for managing the company, including formulating corporate strategies and overseeing financial reporting[125] - The company has a clear governance structure, ensuring that power and authority are not overly concentrated despite the dual role of the chairman and CEO[124] - The company has established policies to manage environmental and social risks in its supply chain[118] - The board consists of nine members, including three executive directors and six independent non-executive directors, ensuring a balanced composition for independent judgment[127] Customer Engagement and Satisfaction - The company engaged social media influencers to promote its "激拼購物日" shopping event, successfully increasing brand awareness among mainland customers[23] - The group actively pursues high customer satisfaction through regular feedback collection to continuously improve products and services[66] - The group emphasizes a "customer first" business philosophy, ensuring quality service, products, and overall customer experience[67] - The group has established a comprehensive complaint handling mechanism to ensure all customer complaints are properly addressed[68] Risk Management - The company has implemented a "three lines of defense" model for risk management, ensuring accountability and transparency in managing ESG-related risks[61] - The internal audit department assesses the adequacy and operation of the risk management and internal control systems for the fiscal year ending December 31, 2024[182] - The company emphasizes the importance of proactive risk management to ensure significant risks are identified, assessed, and effectively managed[178] Community Engagement and Social Responsibility - The company is committed to community engagement, focusing on areas such as education, environmental issues, labor needs, health, culture, and sports[121] - The company has been recognized for its corporate social responsibility efforts, receiving the "Caring Company" logo for five consecutive years[107] - The company donated HKD 29,000 to support the Green Action initiative and collected 817 kg of red packets for recycling[108] Financial Reporting and Compliance - The company confirmed that the financial statements for the year ending December 31, 2024, must fairly reflect the financial position and performance of the group, adhering to applicable accounting policies and legal requirements[159] - The auditor's fees for the year ending December 31, 2024, are approximately HKD 2,000,000 for audit services and HKD 600,000 for non-audit services, compared to HKD 2,000,000 and HKD 1,000,000 respectively in 2023[161] - The company has adopted a dividend policy that allows shareholders to share in profits while retaining sufficient reserves for future development[167]

Core Viewpoint - The company reported strong financial performance in Q1 2025, driven by rising gold prices and effective cost management, maintaining a "buy" rating. Financial Performance - In Q1 2025, the company achieved revenue of 4.321 billion yuan, a year-on-year increase of 55.84% - The net profit attributable to shareholders was 694 million yuan, up 37.91% year-on-year - The net profit excluding non-recurring items was 704 million yuan, reflecting a year-on-year growth of 40.87% [1] Production and Cost Analysis - The company's gold production and sales volumes were 1.77 tons and 2.03 tons respectively, showing a year-on-year decline of 10.6% and 11.0% - The sales cost (after consolidation) was 147.87 yuan per gram, down 5.4% from 156.32 yuan per gram in the same period last year - Despite the decline in production and sales, the decrease in costs and the rise in gold prices contributed positively to the overall performance [1] Strategic Development - The company has a clear production plan, aiming for a gold output of 12 tons by the end of the 14th Five-Year Plan, with gold resources and reserves reaching 240 tons - In January 2025, the company signed an agreement to acquire a 52.0709% stake in Yunnan Western Mining Co., which holds exploration rights for gold mines in Yunnan Province - The integration of the Mangshi mining area is expected to enhance the company's production capacity [2] Market Outlook - The current upward trend in gold prices is expected to continue, with recent tariffs impacting the dollar's stability and increasing the appeal of gold as an asset - The uncertainty in the global political and economic landscape is likely to boost demand for gold as a safe-haven asset [2] Earnings Forecast and Valuation - Due to the better-than-expected performance of gold prices, the company has revised its EPS forecasts for 2025-2027 to 1.19, 1.36, and 1.84 yuan respectively, reflecting increases of 4.4%, 5.4%, and 12.2% - The target price for the company is set at 25.53 yuan, based on a PE ratio of 21.45 for 2025, maintaining a "buy" rating [3]

Core Insights - The company reported a significant increase in revenue and net profit for 2024, with total revenue reaching 13.59 billion yuan, up 67.6% year-on-year, and net profit attributable to shareholders at 2.17 billion yuan, up 52.6% year-on-year [1] - The company achieved a notable increase in gold production and sales, with gold production and sales reaching 8.04 tons and 8.05 tons respectively, representing year-on-year increases of 14.7% and 9.7% [2] - The company successfully completed the acquisition of Osino, adding 127.2 tons of gold resources and expected annual production of 5 tons, enhancing its asset scale and profit potential [3] Financial Performance - In Q4 2024, the company reported revenue of 1.51 billion yuan, with a year-on-year increase of 50% but a quarter-on-quarter decrease of 72.8% [1] - The company's net profit for Q4 2024 was 450 million yuan, reflecting a year-on-year increase of 45.7% but a quarter-on-quarter decrease of 31.7% [1] - The cost of gold production decreased significantly to 145 yuan per gram, down 31 yuan per gram year-on-year, while the unit selling price increased to 550 yuan per gram, up 100 yuan per gram year-on-year [2] Production and Efficiency - The company reported an increase in silver production and sales, with silver production at 196 tons and sales at 176 tons, showing a year-on-year increase of 1.6% and a decrease of 9.6% respectively [2] - The company achieved significant cost reduction and efficiency improvements through comprehensive cost-cutting initiatives across all operations [2] - The company plans to maintain gold production at no less than 8 tons in 2025, with other metals expected to match or exceed 2024 production levels [2] Strategic Developments - The completion of the Osino acquisition marks a significant step in the company's internationalization strategy, enhancing its resource base and production capabilities [3] - The company has adjusted its profit forecasts upward due to rising gold prices, projecting net profits of 2.9 billion, 3.1 billion, and 4.3 billion yuan for 2025-2027 [3] - The company maintains a strong investment rating, reflecting confidence in its growth potential and market conditions [3]

Financial Performance - The company's net loss attributable to shareholders for the year ended December 31, 2024, was HKD 125 million, compared to a loss of HKD 72 million in the previous year, representing an increase in loss of approximately 74%[2] - The company reported a post-tax loss of HKD 96 million for the year ending December 31, 2024, compared to a loss of HKD 120 million in 2023[16] - The consolidated post-tax loss for the group was HKD 1.116 billion for the year ending December 31, 2024, up from HKD 620 million in 2023[17] - The company reported a basic and diluted loss per share of HKD 4.1 for the year ending December 31, 2024, compared to HKD 2.4 in 2023[25] - Pre-tax loss for the year was HKD 125 million, compared to a loss of HKD 72 million in 2023, indicating a deterioration in performance[54] Revenue and Sales - The total sales revenue for self-operated products decreased by 10% to HKD 287 million, with a gross margin of 31%, down from 34% in the previous year[10][11] - The total sales amount from consignment and franchised counters decreased by 12% to HKD 1,358 million, with commission income falling to HKD 308 million, also down 12% year-on-year[9][12] - Total revenue for the year 2024 was HKD 1,535 million, a decrease of 1% from HKD 1,551 million in 2023[50] - Sales revenue increased to HKD 1,151 million in 2024 from HKD 1,118 million in 2023, representing a growth of 3%[42] Assets and Liabilities - The company's net asset value as of December 31, 2024, was HKD 1.053 billion, or HKD 0.35 per share, compared to HKD 1.173 billion or HKD 0.38 per share in the previous year[2] - The total assets less current liabilities amounted to HKD 1.645 billion as of December 31, 2024, down from HKD 1.866 billion in 2023[29] - Total liabilities for lease obligations decreased to HKD 666 million in 2024 from HKD 924 million in 2023[79] - The group had no bank borrowings other than lease liabilities amounting to HKD 666,000,000 as of December 31, 2024, compared to HKD 924,000,000 in 2023[91] Operational Efficiency - The company is focusing on improving operational efficiency by consolidating the operations of Citistore and Unicorn[6] - The company plans to optimize its store network and expand its membership loyalty program to enhance customer engagement[20] Employee and Costs - The company’s employee costs, excluding director remuneration, decreased to HKD 256 million in 2024 from HKD 276 million in 2023[47] - The total employee cost for the year ending December 31, 2024, was HKD 257,000,000, down from HKD 277,000,000 in 2023[98] - The group had 866 full-time employees as of December 31, 2024, a decrease from 962 in 2023[98] Goodwill and Impairment - The goodwill for Citistore is valued at HKD 810 million, and for Unicorn at HKD 262 million, totaling HKD 1,072 million as of December 31, 2024[60] - The board assessed that there is no impairment loss for Citistore goodwill as of December 31, 2024, with recoverable amount exceeding the carrying value[64] - The board has determined that there is no impairment loss for Unicorn goodwill as of December 31, 2024[70] - Sensitivity analysis indicates potential impairment losses for Citistore goodwill could be HKD 19 million, HKD 82 million, and HKD 183 million under various scenarios[65] Compliance and Reporting - The company is committed to compliance with the Hong Kong Financial Reporting Standards and relevant regulations[32] - The company’s financial statements are prepared on a going concern basis, indicating confidence in its operational sustainability[34] - The company’s auditors issued unqualified opinions on the financial statements for both years, indicating no significant issues were raised[33] Dividends - The company did not recommend a final dividend for the year due to the recorded loss[3] - The company did not declare any interim or final dividends for the year 2024, consistent with 2023[53]

Financial Performance - The company reported a loss attributable to shareholders of HKD 69 million for the six months ended June 30, 2024, compared to a loss of HKD 18 million in the same period last year, primarily due to a decline in retail sales caused by outbound tourism and cross-border shopping trends [3]. - Total retail sales value in Hong Kong decreased by 6.6% year-on-year in the first half of 2024, impacting the company's performance [4]. - Unicorn reported a post-tax loss of HKD 53 million for the six months ended June 30, 2024, compared to a loss of HKD 54 million in 2023 [13]. - The group recorded a total post-tax loss of HKD 64 million from Citistore and Unicorn for the six months ended June 30, 2024, compared to a loss of HKD 13 million in 2023 [14]. - Operating loss for the period was HKD 61 million, significantly higher than the HKD 5 million loss reported in the same period last year [31]. - Loss before tax was HKD 82 million, compared to a loss of HKD 21 million in the previous year [31]. - The net loss attributable to shareholders for the period was HKD 69 million, compared to HKD 18 million in the same period of 2023 [31]. - The company reported a total comprehensive loss of HKD 14 million for the six months ended June 30, 2024, compared to a total comprehensive loss of HKD 18 million for the same period in 2023 [37]. - The company experienced a pre-tax loss of HKD 82 million for the six months ended June 30, 2024, compared to a loss of HKD 21 million for the same period in 2023 [40]. - The company recorded a pre-tax operating loss of HKD 83 million, compared to a loss of HKD 18 million in the same period last year, reflecting a significant increase in losses [54]. Revenue and Sales - Total revenue for the six months ended June 30, 2024, was HKD 772 million, a decrease of 3.0% from HKD 796 million in the same period of 2023 [31]. - Sales from self-operated products at Citistore decreased by 10% to HKD 146 million, with a gross margin of 31%, down from 33% in the previous year [6][8]. - Total sales from consignment and franchise counters at Citistore fell by 13% to HKD 155 million, with consignment sales contributing HKD 103 million and franchise sales contributing HKD 52 million [9]. - Unicorn's total sales remained stable at HKD 587 million, with self-operated product sales increasing by 5% to HKD 433 million, while consignment sales decreased by 11% to HKD 154 million [12]. - Revenue from consignment sales was HKD 690 million, a decrease of 13% compared to HKD 792 million in the same period last year [48]. - Commission income from consignment counters decreased to HKD 136 million, down 13% from HKD 156 million in the previous year [47]. - Commission income from franchise counters also saw a decline, falling to HKD 52 million from HKD 59 million [47]. - Sales revenue increased slightly to HKD 579 million, up from HKD 575 million year-on-year [47]. - Other income decreased to HKD 6 million from HKD 8 million, with sponsorship fees and miscellaneous income contributing to this decline [49]. Expenses and Liabilities - Direct costs increased to HKD 774 million from HKD 746 million, resulting in a gross loss of HKD 2 million compared to a gross profit of HKD 50 million in the previous year [31]. - The group recognized rental and related expenses totaling HKD 58 million for the six months ended June 30, 2024, compared to HKD 56 million in 2023 [20]. - Depreciation expenses related to right-of-use assets amounted to HKD 130 million for the six months ended June 30, 2024, up from HKD 114 million in 2023 [20]. - The total employee costs, including contributions to defined contribution retirement plans, were HKD 128.6 million, slightly down from HKD 133.6 million in the prior year [51]. - The company’s depreciation of fixed assets increased to HKD 31 million for the six months ended June 30, 2024, compared to HKD 30 million for the same period in 2023 [40]. - The company recognized contract liabilities of HKD 12 million as of December 31, 2023, which are expected to be recognized as revenue within one year [68]. Cash Flow and Financial Position - The group’s cash and bank balance reached HKD 73 million as of June 30, 2024, down from HKD 85 million as of December 31, 2023 [15]. - The company reported a net cash outflow from operating activities of HKD 45 million for the six months ended June 30, 2024, compared to an inflow of HKD 74 million for the same period in 2023 [40]. - The company’s cash and cash equivalents decreased by HKD 12 million, from HKD 260 million at the beginning of the period to HKD 73 million at the end of June 30, 2024 [40]. - Current liabilities decreased to HKD 599 million from HKD 669 million, with a notable reduction in accounts payable and other payables [35]. - Total equity decreased to HKD 1,106 million from HKD 1,173 million, reflecting the net loss for the period [35]. - As of June 30, 2024, the total equity of the company was HKD 1,106 million, a decrease from HKD 1,173 million as of January 1, 2024, reflecting a loss of HKD 69 million during the period [38]. - The company’s net current liabilities as of June 30, 2024, were HKD 358 million, compared to HKD 414 million as of December 31, 2023 [42]. - Trade payables decreased from HKD 281 million as of December 31, 2023, to HKD 238 million as of June 30, 2024, reflecting improved cash flow management [68]. - Total lease liabilities decreased from HKD 924 million as of December 31, 2023, to HKD 795 million as of June 30, 2024, indicating a reduction in financial obligations [72]. Strategic Initiatives - Citistore's membership program has seen a positive response, with membership numbers increasing to approximately 700,000 [5]. - The company is expanding its product offerings by introducing high-quality food items from Canada and mainland China at Citistore [5]. - Unicorn has expanded its procurement range to include products from Asia, Europe, and the United States, enhancing its product variety [11]. - The company is focusing on creative promotional activities, such as tuna cutting demonstrations, to enhance customer experience and engagement [11]. - The integration of the customer loyalty programs CU APP and H • COINS is anticipated to expand the member base and enhance customer engagement [16]. - The group expects to streamline its store network to improve performance and operational efficiency due to a challenging retail environment [16]. Shareholder Information - As of June 30, 2024, Dr. Li Ka-shing and Dr. Li Ka-kit each held 2,110,868,943 shares, representing 69.27% of the company [88]. - Major shareholder Li Ka-shing holds 2,110,868,943 shares, representing 69.27% of the total equity [90]. - Gainwise Investment Limited holds 217,250,000 shares, accounting for 7.13% of the total equity [90]. - The company has a total of 15,000,000 non-voting deferred shares, representing 30% equity held by certain directors [89]. - The company’s directors, including Li Ka-shing and Li Ka-jie, have significant holdings in both voting and non-voting shares [89]. - The company has received exemptions from strict compliance with certain disclosure requirements under the Listing Rules [89]. Governance and Compliance - The interim results for the six months ending June 30, 2024, were reviewed by the company's auditors, PwC, in accordance with Hong Kong's review standards [80]. - The company complied with the applicable corporate governance code provisions during the reporting period [83]. - The board confirmed that all directors fully complied with the trading code for securities transactions [84]. - The report contains forward-looking statements based on current beliefs and expectations, which may differ significantly due to various risks and uncertainties [85].

[Chairman's Report](index=1&type=section&id=Chairman%27s%20Report) The report details the group's interim financial performance, business segment reviews, and strategic outlook amidst challenging retail conditions [Interim Results and Dividends](index=1&type=section&id=Interim%20Results%20and%20Dividends) The Group recorded a loss attributable to shareholders of HKD 69 million in H1 2024, significantly wider than the HKD 18 million loss in the prior year, primarily due to reduced retail sales from outbound tourism and cross-border consumption, leading to no interim dividend declaration Key Performance Indicators for H1 2024 | Indicator | Six Months Ended June 30, 2024 | Six Months Ended June 30, 2023 | | :--- | :--- | :--- | | Loss Attributable to Shareholders (HKD Million) | 69 | 18 | | Loss Per Share (HKD Cents) | 2.3 | 0.6 | | Interim Dividend | None | None | - The primary reason for the loss was a decrease in the Group's retail sales due to the surge in outbound tourism and cross-border shopping[1](index=1&type=chunk) [Business Review](index=2&type=section&id=Business%20Review) Hong Kong's retail sector faced pressure in H1 2024, with a 6.6% year-on-year decline in total retail sales value, primarily due to increased outbound tourism and cross-border consumption, impacting both the Citistore and Unicorn (APITA/UNY) business segments - Hong Kong's retail sector faced pressure, with a **6.6% year-on-year decline** in total retail sales value in H1 2024, primarily due to increased outbound tourism and cross-border consumption[2](index=2&type=chunk) [Citistore](index=2&type=section&id=Citistore) Citistore's business was significantly impacted by unfavorable market conditions, with total sales declining by 13% year-on-year, self-operated goods sales revenue decreasing by 10%, and gross profit margin falling to 31%, resulting in a post-tax loss of HKD 11 million compared to a profit in the prior year Citistore Total Sales (Six Months Ended June 30) | Sales Type | 2024 (HKD Million) | 2023 (HKD Million) | Change | | :--- | :--- | :--- | :--- | | Self-operated Goods | 146 | 162 | -10% | | Consignment Counters | 347 | 394 | -12% | | Licensed Counters | 189 | 225 | -16% | | **Total** | **682** | **781** | **-13%** | Citistore Self-operated Goods Sales Performance | Indicator | H1 2024 | H1 2023 | | :--- | :--- | :--- | | Revenue (HKD Million) | 146 | 162 | | Gross Profit (HKD Million) | 45 | 54 | | Gross Profit Margin | 31% | 33% | - Citistore recorded a **post-tax loss of HKD 11 million** during the period, compared to a post-tax profit of HKD 41 million in the prior year[9](index=9&type=chunk) [Unicorn (APITA/UNY)](index=4&type=section&id=Unicorn%20%28APITA%2FUNY%29) Despite unfavorable market conditions, Unicorn's total sales remained largely flat at HKD 587 million, primarily due to a sales rebound at the renovated APITA Taikoo Shing store, with a 5% increase in self-operated goods sales offset by an 11% decline in consignment counter sales, resulting in a post-tax loss of HKD 53 million, similar to the prior year Unicorn Total Sales (Six Months Ended June 30) | Sales Type | 2024 (HKD Million) | 2023 (HKD Million) | Change | | :--- | :--- | :--- | :--- | | Self-operated Goods | 433 | 413 | +5% | | Consignment Counters | 154 | 173 | -11% | | **Total** | **587** | **586** | **Flat** | - The sales rebound at the APITA Taikoo Shing store, following its major renovation completed in late 2023, was the primary reason for Unicorn's stable total sales[11](index=11&type=chunk) - Unicorn recorded a **post-tax loss of HKD 53 million** during the period, comparable to the HKD 54 million loss in the prior year[13](index=13&type=chunk) [Consolidated Results and Group Financials](index=5&type=section&id=Consolidated%20Results%20and%20Group%20Financials) Overall, the Group's main revenues (self-operated goods sales and commissions) declined, with the combined post-tax loss for Citistore and Unicorn expanding to HKD 64 million, while the Group held HKD 73 million in net cash and bank balances with no bank borrowings as of June 30, 2024 Group's Major Revenue Components (Six Months Ended June 30) | Revenue Type | 2024 (HKD Million) | 2023 (HKD Million) | | :--- | :--- | :--- | | Sales Revenue from Self-operated Goods | 579 | 575 | | Commission Income from Consignment Counters | 136 | 156 | | Commission Income from Licensed Counters | 52 | 59 | - As of June 30, 2024, the Group had no bank borrowings and net cash and bank balances of **HKD 73 million** (end of 2023: HKD 85 million)[15](index=15&type=chunk) [Outlook](index=6&type=section&id=Outlook) The Hong Kong retail operating environment is expected to remain challenging, prompting the Group to review and streamline its store network for efficiency, and a key strategy involves integrating its CU APP membership program with the holding company's H•COINS by end-2024 to expand the member base and boost store turnover and footfall through enhanced reward programs - The Group is thoroughly reviewing store performance and plans to streamline its store network structure to enhance operational efficiency[16](index=16&type=chunk) - The Group plans to integrate its CU APP loyalty program with Henderson Land Development's H•COINS by the end of 2024 to expand its member base and promote consumption[16](index=16&type=chunk) [Financial Statements](index=7&type=section&id=Financial%20Statements) This section presents the Group's consolidated financial performance, including income and financial position, for the reporting period [Consolidated Statement of Profit or Loss](index=7&type=section&id=Consolidated%20Statement%20of%20Profit%20or%20Loss) For the six months ended June 30, 2024, the Group's revenue was HKD 772 million, a slight year-on-year decrease, with operating loss expanding from HKD 5 million to HKD 61 million due to increased direct costs and other expenses, resulting in a loss attributable to shareholders of HKD 69 million and a loss per share of HKD 2.3 cents Consolidated Statement of Profit or Loss Summary (Six Months Ended June 30) | Item | 2024 (HKD Million) | 2023 (HKD Million) | | :--- | :--- | :--- | | Revenue | 772 | 796 | | Operating Loss | (61) | (5) | | Loss Before Tax | (82) | (21) | | Loss Attributable to Shareholders | (69) | (18) | | Loss Per Share (HKD Cents) | (2.3) | (0.6) | [Consolidated Statement of Financial Position](index=9&type=section&id=Consolidated%20Statement%20of%20Financial%20Position) As of June 30, 2024, the Group's total assets were HKD 2,378 million, total liabilities HKD 1,272 million, and net assets HKD 1,106 million, a decrease from HKD 1,173 million at year-end 2023, with non-current assets primarily comprising goodwill (HKD 1,072 million) and right-of-use assets (HKD 756 million), and a net current liability of HKD 358 million Consolidated Statement of Financial Position Summary | Item | June 30, 2024 (HKD Million) | December 31, 2023 (HKD Million) | | :--- | :--- | :--- | | Non-current Assets | 2,137 | 2,280 | | Current Assets | 241 | 255 | | Current Liabilities | 599 | 669 | | Non-current Liabilities | 673 | 693 | | **Net Assets (Total Equity)** | **1,106** | **1,173** | - Goodwill (**HKD 1,072 million**) and right-of-use assets (**HKD 756 million**) constitute the majority of the Group's non-current assets[19](index=19&type=chunk) [Notes to the Financial Statements](index=11&type=section&id=Notes%20to%20the%20Financial%20Statements) This section provides detailed explanations and breakdowns of key financial statement items, including revenue recognition and goodwill valuation [Note 4 Revenue](index=15&type=section&id=Note%204%20Revenue) The Group's total revenue was HKD 772 million, primarily composed of sales revenue (HKD 579 million), consignment counter commission income (HKD 136 million), and licensed counter commission income (HKD 52 million), with all revenue types decreasing compared to the prior year Revenue Classification (Six Months Ended June 30) | Revenue Type | 2024 (HKD Million) | 2023 (HKD Million) | | :--- | :--- | :--- | | Sales Revenue | 579 | 575 | | Commission Income from Consignment Counters | 136 | 156 | | Commission Income from Licensed Counters | 52 | 59 | | Others | 5 | 6 | | **Total** | **772** | **796** | [Note 13 Goodwill](index=21&type=section&id=Note%2013%20Goodwill) As of June 30, 2024, the Group's goodwill carrying amount was HKD 1,072 million, comprising HKD 810 million for Citistore and HKD 262 million for Unicorn, with management concluding no impairment loss at the reporting date based on five-year cash flow forecasts and sensitivity analysis of key assumptions like sales growth, gross profit margin, and discount rates - The Group's total goodwill amounts to **HKD 1,072 million**, comprising **HKD 810 million** for Citistore and **HKD 262 million** for Unicorn[41](index=41&type=chunk) - Management's impairment test for Citistore assumes an average total sales revenue growth of **7.5%** over the next five years, using a post-tax discount rate of **12%**[42](index=42&type=chunk)[43](index=43&type=chunk) - Impairment testing for Unicorn indicates a potential impairment loss of approximately **HKD 10 million** if budgeted total sales revenue decreases by 3% annually over the next five years, and an estimated **HKD 85 million** loss if the budgeted gross profit margin decreases by 1.5% annually[48](index=48&type=chunk) [Financial Review](index=29&type=section&id=Financial%20Review) This section reviews the Group's operating results, financial resources, liquidity, and human capital management during the reporting period [Operating Performance and Lease Impact](index=29&type=section&id=Operating%20Performance%20and%20Lease%20Impact) The Group's loss attributable to shareholders for the first half was HKD 69 million, with significant lease impacts under HKFRS 16, including HKD 130 million in right-of-use asset depreciation and HKD 20 million in lease liability finance costs recognized, primarily within direct costs - In accordance with HKFRS 16, the Group recognized **HKD 130 million** in depreciation expense for right-of-use assets and **HKD 20 million** in finance costs on lease liabilities in the statement of profit or loss[60](index=60&type=chunk) [Financial Resources and Liquidity](index=30&type=section&id=Financial%20Resources%20and%20Liquidity) As of June 30, 2024, the Group had no bank borrowings but recognized lease liabilities of HKD 795 million under accounting standards, with cash and bank balances of HKD 73 million, and management believes the Group possesses sufficient financial resources for daily operations, considering operating cash flow, available credit facilities, and intercompany borrowings - At the end of the reporting period, the Group had no bank borrowings and cash and bank balances of **HKD 73 million**[62](index=62&type=chunk) - The Group possesses ample financial resources, including operating cash flow, available bank financing facilities, and unsecured, interest-free borrowings from fellow subsidiaries[62](index=62&type=chunk) [Employees and Remuneration Policy](index=31&type=section&id=Employees%20and%20Remuneration%20Policy) As of June 30, 2024, the Group had 905 full-time and 105 part-time employees, a decrease from year-end, with total staff costs for H1 at HKD 134 million, a year-on-year decrease, and remuneration policies linked to market levels, offering benefits like medical insurance and retirement plans Employee Statistics | Item | June 30, 2024 | December 31, 2023 | | :--- | :--- | :--- | | Full-time Employees | 905 | 962 | | Part-time Employees | 105 | 115 | - Total staff costs for the six months ended June 30, 2024, amounted to **HKD 134 million**, compared to HKD 139 million in the prior year[67](index=67&type=chunk) [Other Information](index=32&type=section&id=Other%20Information) This section provides additional disclosures, including details on the Group's adherence to corporate governance principles [Corporate Governance](index=32&type=section&id=Corporate%20Governance) The company complied with applicable Corporate Governance Code provisions during the reporting period, with one deviation: the roles of Chairman and Chief Executive Officer are not separated, both held by Dr. Lee Ka-kit, an arrangement the company believes is in its best interest, ensuring collective consultation on all major decisions and preventing excessive power concentration - The company has one deviation from the Corporate Governance Code, where the roles of Chairman and Chief Executive Officer are not separated, both held by Dr. Lee Ka-kit[71](index=71&type=chunk)

Financial Performance - The group reported a pre-tax operating loss of HKD 51 million for the year ended December 31, 2023, compared to a pre-tax operating profit of HKD 46 million in 2022[20]. - The company reported a net loss attributable to shareholders of HKD 72 million for the year ended December 31, 2023, compared to a profit of HKD 5 million in 2022[51]. - Total sales revenue for Unicorn decreased by 16% year-on-year to HKD 1,121 million in the fiscal year ending December 31, 2023, down from HKD 1,334 million in 2022[128]. - The total after-tax loss for Unicorn was HKD 120 million for the fiscal year ending December 31, 2023, compared to a loss of HKD 63 million in 2022[129]. - Total sales for the year ended December 31, 2023, remained flat at HKD 1.542 billion, with self-operated product sales decreasing by 11% to HKD 319 million[149]. Cash and Assets - Total cash and bank balances decreased by HKD 175 million or 67% to HKD 85 million as of December 31, 2023, primarily due to cash outflows from various activities[22]. - The group has no bank borrowings as of December 31, 2023, maintaining a lease liability of HKD 924 million[22]. - As of December 31, 2023, the group had no bank borrowings and a net cash balance of HKD 85 million, down from HKD 260 million in 2022[132]. Employee and Workforce - The total employee cost for the year was HKD 277 million, slightly up from HKD 274 million in 2022, with a total of 962 full-time employees and 115 part-time employees as of December 31, 2023[25]. - Total employees decreased from 1,298 in 2022 to 1,086 in 2023, a reduction of approximately 16.3%[160]. - Employee turnover rate increased significantly, with male turnover rising from 34% in 2022 to 50% in 2023, and female turnover increasing from 36% to 53%[160]. - The average training hours for male employees increased from 2.2 hours in 2022 to 3.5 hours in 2023, while female training hours remained relatively stable at 2.2 hours[162]. - The number of full-time employees decreased from 1,039 in 2022 to 971 in 2023, a decrease of approximately 6.5%[160]. Sustainability and Environmental Impact - The company aims to reduce carbon intensity by 15% per square foot of retail space by 2030 compared to the 2023 baseline[45]. - The total greenhouse gas emissions for the group decreased to 9,631 tons of CO2 equivalent in 2023 from 9,897 tons in 2022, representing a reduction of approximately 2.7%[124]. - The total waste generated by the group decreased to 250,678 kg in 2023 from 354,502 kg in 2022, a reduction of approximately 29.3%[124]. - The number of plastic shopping bags used decreased significantly to 1,341,159 in 2023 from 6,954,889 in 2022, reflecting a reduction of approximately 80.7%[124][125]. - The company is committed to improving energy and fuel efficiency throughout its operations to reduce its carbon footprint[42]. Customer Engagement and Satisfaction - The group aims to enhance customer satisfaction through regular feedback and improvements in products and services[35]. - The group plans to expand its membership base and enhance customer relationship management (CRM) to better understand customer needs and drive promotional activities[134]. - The CU APP membership program has grown to over 600,000 members, contributing significantly to the group's revenue[137]. Corporate Governance - The company emphasizes the importance of good corporate governance practices and procedures[200]. - As of December 31, 2023, the company has complied with the applicable code provisions of the Corporate Governance Code under the Hong Kong Stock Exchange Listing Rules[200]. - The company has not distinguished the roles of the Chairman and CEO, believing that Dr. Li Ka-shing's dual role serves the best interests of the company[200]. - All significant decisions are made after consulting board members with relevant knowledge and expertise, ensuring that power is not overly concentrated[200]. - The current governance arrangements are still subject to appropriate checks and balances despite the lack of role distinction[200]. Operational Improvements - The group completed the renovation of the APITA supermarket and department store in Taikoo City, Hong Kong, contributing to operational improvements[24]. - The renovation of APITA, covering over 40,000 square feet, was completed in Q4 2023, introducing a new supermarket and premium meat offerings, including certified Angus beef[199]. - The integration of Citistore and Unicorn's online shopping platforms into the "CU APP" has been completed, enhancing operational efficiency and customer experience for 600,000 members[176]. Risk Management and Compliance - The company conducts regular reviews of risk management plans related to typhoon impacts[43]. - The company has implemented measures to protect sensitive information and prevent cyber threats, including comprehensive training for all employees[70]. - The company has not violated any relevant environmental laws and regulations during the reporting period[73].

Financial Performance - Total sales for the year ending December 31, 2023, remained stable at HKD 1,542 million, compared to HKD 1,786 million in 2022, reflecting a decrease of approximately 13.6%[5][27] - Revenue from self-operated products was HKD 319 million, down from HKD 359 million in the previous year, representing a decline of 11.1%[6][27] - The company reported a net loss attributable to shareholders of HKD 72 million for the year ended December 31, 2023, compared to a profit of HKD 5 million in 2022[80] - Total revenue for the year was HKD 1,551 million, a decrease from HKD 1,786 million in the previous year, representing a decline of approximately 13.1%[182] - Sales revenue decreased to HKD 1,118 million in 2023 from HKD 1,359 million in 2022, representing a decline of 17.7%[195] - The group reported a post-tax loss of HKD 120 million for the year, compared to a loss of HKD 63 million in 2022[154] Operational Performance - The operating loss before tax for the year was HKD 81 million, compared to a profit of HKD 16 million in 2022, indicating a significant downturn in operational performance[27] - The company has optimized its product mix, focusing on travel goods, apparel, and cosmetics to meet changing market demands[5] - The company continues to enhance collaboration with suppliers and implement various promotional activities to improve overall operational performance[5] - The integration of Citistore and Unicorn's operations aims to enhance operational synergy and efficiency, with a unified online shopping platform launched[157] Cash Flow and Liquidity - Cash and bank balances decreased by HKD 175 million or 67% to HKD 85 million as of December 31, 2023, primarily due to cash outflows from various activities[103] - The company had no bank borrowings as of December 31, 2023, and had fully repaid its bank loans[82] - The total liabilities increased to HKD 1,362 million in 2023 from HKD 1,203 million in 2022, primarily due to an increase in lease liabilities[184] Employee and Cost Management - Employee costs (excluding directors' remuneration) increased slightly to HKD 264 million from HKD 261 million[24] - The group had a total of 962 full-time employees and 115 part-time employees as of December 31, 2023, with total employee costs amounting to HKD 277 million, reflecting a slight increase from HKD 274 million in the previous year[108] Impairment and Asset Valuation - The impairment assessment for Citistore was based on the use value of cash-generating units, with future net cash inflows projected for the next five budget years, ending December 31, 2028, reflecting a discount cash flow model[35] - If total sales revenue decreases by 3% or gross margin decreases by 1.5% over the next five budget years, potential impairment losses for Citistore goodwill could be estimated at HKD 33 million and HKD 156 million respectively[37] - The impairment assessment for Unicorn was similarly based on the use value of cash-generating units, with future net cash inflows projected for the same five-year period[39] - If total sales revenue decreases by 3% or gross margin decreases by 1.5% over the next five budget years, potential impairment losses for Unicorn goodwill could be estimated at HKD 25 million[41] Lease Liabilities and Financing Costs - Lease liabilities increased to HKD 924 million as of December 31, 2023, up from HKD 745 million in 2022, representing a growth of approximately 24%[66] - The financing cost of lease liabilities for the year was HKD 34 million, down from HKD 41 million in the previous year, reflecting a decrease of approximately 17%[66] - The company’s total liabilities related to leases due within one year increased to HKD 255 million in 2023 from HKD 228 million in 2022, a rise of about 12%[66] Market Conditions and Sales Trends - The overall retail market in Hong Kong showed a decline, with supermarket sales value dropping by 7.1% year-on-year, influenced by increased outbound travel and cross-border shopping[137] - Total sales for Unicorn, including self-operated goods and consignment counters, decreased by 16% year-on-year, with specific sales figures showing a decline in self-operated goods sales to HKD 799 million (down 20%) and consignment sales to HKD 322 million (down 4%) for the year ended December 31, 2023[120][133] Governance and Compliance - The group has complied with the corporate governance code as per the Hong Kong Stock Exchange Listing Rules, although there is no distinction between the roles of the chairman and CEO[114] - The company confirmed that all directors have fully complied with the standards set out in the code for securities trading by directors[117] - The group has no contingent liabilities as of December 31, 2023[107] Future Outlook - The company plans for an average annual sales revenue growth of 11% over the next five budget years[66] - The average gross margin is expected to increase by 0.6 percentage points annually over the next five budget years[66] - The company plans to expand its membership base and enhance customer relationship management (CRM) to better understand customer needs and increase spending[180]