Company Overview - China Shun Ke Long is a well-known supermarket chain operator primarily located in Guangdong Province, with a significant network in Foshan, one of the wealthiest cities in the region [4] - The company operates 84 retail stores, including 68 supermarkets and 16 hypermarkets across Guangdong and Macau [4] - The company aims to become one of the largest supermarket operators in Guangdong's third and fourth-tier cities and plans to expand its retail network through new store openings and an online supermarket [4][5] Financial Performance - As of December 31, 2024, China Shun Ke Long reported total revenue of 593 million yuan, a year-on-year decrease of 11.16% [2] - The company recorded a net profit attributable to shareholders of -67.976 million yuan, a significant decline of 154.08% year-on-year [2] - The gross profit margin stood at 12.12%, with a debt-to-asset ratio of 72.97% [2] Stock Performance - Over the past month, China Shun Ke Long's stock has increased by 37.5%, but it has a year-to-date decline of 17.2%, underperforming the Hang Seng Index by 14% [2] - The stock closed at 1.0 HKD per share on May 12, with a trading volume of 40,000 shares and a turnover of 37,900 HKD, reflecting a volatility of 25.97% [1] Industry Context - The average price-to-earnings (P/E) ratio for the professional retail industry is 5.53 times, while China Shun Ke Long's P/E ratio is -3.05 times, ranking it 64th in the industry [3] - The company faces competition from both domestic and international retail chains, as well as local supermarket operators in a fragmented market [5] Business Strategy - The company focuses on enhancing customer satisfaction through a customer-centric approach and adjusting its product mix [4] - It aims to leverage internet technology and supply chain management to improve the shopping experience and drive market transformation [5]

Financial Performance - For the fiscal year ending December 31, 2024, the company's revenue was approximately RMB 592.9 million, a decrease of about RMB 74.5 million compared to the fiscal year ending December 31, 2023[13]. - The net loss for the fiscal year 2024 was approximately RMB 68.2 million, an increase in loss of about RMB 41.5 million compared to the previous fiscal year[13]. - The decrease in revenue was primarily due to a reduction in collective procurement business and the closure of several retail stores[13]. - The company's gross profit margin decreased, leading to a reduction in overall gross profit, influenced by the operating environment and decreased supplier channel income[13]. - Retail store business revenue for fiscal year 2024 was approximately RMB 431.1 million, down by about RMB 101.3 million or 19.0% from fiscal year 2023[34]. - Wholesale distribution revenue increased to approximately RMB 161.8 million, an increase of about RMB 26.8 million or 19.9% compared to fiscal year 2023[34]. - The company's gross profit margin decreased to 12.1% in fiscal year 2024 from 13.7% in fiscal year 2023, primarily due to lower wholesale distribution margins[35]. - The net loss for fiscal year 2024 was approximately RMB 68.2 million, an increase in loss of about RMB 41.5 million or 155.6% compared to fiscal year 2023[42]. - Total comprehensive expenses for fiscal year 2024 are approximately RMB 68.1 million, an increase of RMB 41.7 million or 158.3% compared to fiscal year 2023[43]. - The company reported a loss before tax of RMB 68,487,000, compared to a loss of RMB 27,456,000 in 2023, indicating a significant increase in losses[197]. - Net loss for the year was RMB 68,198,000, which is a 156.5% increase from RMB 26,684,000 in the prior year[197]. - Basic and diluted loss per share for the year was RMB 0.23, compared to RMB 0.09 in 2023, reflecting a worsening financial position[197]. Business Strategy and Operations - The company is focusing on a multi-channel business model that includes retail, wholesale, online-offline integration, and community marketing to enhance customer satisfaction and brand value[12]. - The company aims to expand its business footprint beyond the Guangdong-Hong Kong-Macao Greater Bay Area to other regions in China[12]. - The company is focusing on transforming its business model by launching new formats such as "supply and marketing discount stores" and "24-hour AI smart unmanned stores" to adapt to market changes[24]. - The company aims to enhance its supply chain by reducing intermediaries through direct supply from manufacturers and nationwide joint procurement, which is expected to improve gross profit margins[24]. - The company plans to strengthen its e-commerce presence and community group buying initiatives, collaborating with third-party platforms like Meituan and JD Daojia to boost sales[24]. - The company aims to explore new business development opportunities outside Guangdong Province and in Hong Kong, leveraging favorable policies in Hainan Free Trade Port[25]. - The company is actively adjusting its business development direction to become a leading urban-rural circulation operator in China[25]. - The company aims to expand its business model by developing discount stores and collective procurement and distribution services[26]. - The company intends to leverage new media marketing and enhance its online platform scale, including its own e-commerce platform[26]. Market Environment - The retail industry in China is facing significant challenges due to economic pressures, changing consumer spending habits, and insufficient consumer demand[14]. - The overall consumer market in China is expected to show stable growth in 2024, despite ongoing challenges in the retail sector[14]. - The company faces risks from intense competition in the retail sector and changing customer preferences, which may impact future growth and profitability[29][30]. Corporate Governance - The company has adopted the corporate governance code as per the Hong Kong Stock Exchange's listing rules, ensuring high standards of corporate governance[70]. - The company has established a board diversity policy, considering various measurable aspects such as gender, age, and professional experience in its board composition[76]. - The roles of the chairman and the CEO are clearly defined to ensure a balance of power and authority within the company[79]. - The company has complied with all provisions of the corporate governance code as of December 31, 2024, following the appointment of a new independent non-executive director[72]. - The company has implemented a standard code for securities trading by directors, ensuring compliance among all board members[73]. - The nomination committee is responsible for monitoring the implementation of the board diversity policy and will review it periodically to ensure its effectiveness[76]. - The company is committed to fair treatment of employees from diverse backgrounds, ensuring the protection of their legal rights[78]. - The board of directors held four meetings during the year ending December 31, 2024, with individual attendance records documented[81]. - The audit committee conducted four meetings during the year, reviewing the group's interim and annual performance and discussing financial reports[94]. - The company has established appropriate directors and officers liability insurance to cover potential legal claims against its directors and senior management[86]. - All independent non-executive directors confirmed their independence according to the listing rules, with none serving for more than nine years[92]. - The company has three established board committees: the Audit Committee, the Remuneration Committee, and the Nomination Committee, each with specific written terms of reference[93]. - The company encourages continuous professional development for directors, with all participating in relevant training courses at the company's expense[89]. - The board retains decision-making authority on significant matters, including policy, strategy, budget, and major transactions[88]. - The company has implemented a system for independent professional advice for directors to fulfill their responsibilities, with costs covered by the company[87]. - The board's effective operation is supported by the diverse business experience and expertise of all directors, including independent and non-executive members[87]. Financial Position and Assets - As of December 31, 2024, the company has cash and cash equivalents of approximately RMB 21.2 million, down from RMB 48.7 million as of December 31, 2023[46]. - The total debt as of December 31, 2024, is approximately RMB 62.0 million, an increase from RMB 28.0 million as of December 31, 2023[49]. - The company's asset-liability ratio increased to 75.3% in fiscal year 2024 from 18.6% in fiscal year 2023[51]. - Accounts receivable turnover days increased to 22.0 days in fiscal year 2024 from 18.0 days in fiscal year 2023[51]. - Inventory turnover days decreased to 54.0 days in fiscal year 2024 from 60.1 days in fiscal year 2023[51]. - The return on equity for fiscal year 2024 is -83.6%, compared to -17.9% in fiscal year 2023[51]. - The company has no significant capital commitments or major investments planned for fiscal year 2024[45][47]. - There were no significant acquisitions or disposals of subsidiaries during fiscal year 2024[48]. - The company has sufficient retained earnings and distributable reserves to support its operations and shareholder interests[128]. - The company’s financing needs and expected capital expenditure requirements are aligned with its business expansion plans[128]. - The company has reallocated part of the unutilized net proceeds from opening new retail stores to renovating existing stores and repaying bank loans due to the slowdown in China's economic growth[131]. - The company’s total liabilities increased from RMB 170,265 thousand in 2023 to RMB 190,815 thousand in 2024, reflecting a rise of approximately 12.1%[198]. - Total non-current assets decreased from RMB 131,072 thousand in 2023 to RMB 93,494 thousand in 2024, a decline of approximately 28.7%[198]. - Current assets decreased from RMB 234,434 thousand in 2023 to RMB 211,206 thousand in 2024, a reduction of about 9.9%[198]. - Current liabilities increased from RMB 170,265 thousand in 2023 to RMB 190,815 thousand in 2024, an increase of approximately 12.1%[198]. - Net current assets decreased significantly from RMB 64,169 thousand in 2023 to RMB 20,391 thousand in 2024, a decline of about 68.3%[198]. - Total equity decreased from RMB 150,415 thousand in 2023 to RMB 82,358 thousand in 2024, a drop of approximately 45.3%[199]. - Cash and cash equivalents decreased from RMB 48,683 thousand in 2023 to RMB 21,152 thousand in 2024, a decline of about 56.5%[198]. - Trade payables decreased from RMB 78,384 thousand in 2023 to RMB 66,591 thousand in 2024, a reduction of approximately 15.0%[198]. - The company's reserves decreased from RMB 146,794 thousand in 2023 to RMB 78,959 thousand in 2024, a decline of about 46.3%[199]. Shareholder and Stock Information - The company has not declared any dividends for the fiscal years reported[9]. - The company has not declared any final dividends for the fiscal year ending December 31, 2024, as per its dividend policy[124]. - The company operates as an investment holding company, focusing on supermarket chain operations primarily in Guangdong Province, China[121]. - The company has a stock option plan that allows for the issuance of up to 28,647,700 shares, representing about 9.86% of the shares issued as of the report date[135]. - The total number of shares that can be issued under the stock option plan is capped at 10% of the total shares post-global offering, amounting to 28,647,700 shares, which is approximately 9.86% of the shares issued as of the report date[137]. - The total number of shares issued and to be issued under the stock option plan for each eligible participant cannot exceed 1% of the issued shares as of the grant date within any 12-month period[138]. - The exercise price for any specific stock option must be determined by the board but cannot be lower than the highest of the closing price on the grant date or the average closing price over the five trading days preceding the grant date[145]. - The stock option plan is effective for 10 years from the date of approval and can only be terminated early by shareholder resolution or board decision[143]. - Major shareholders hold a total of 204,558,317 shares, representing 70.42% of the company's equity[151]. - Infini Capital Management is a beneficial owner with 27,600,000 shares, accounting for 9.50% of the equity[151]. - As of December 31, 2024, the indirect controlling shareholder holds approximately 70.42% of the company's issued shares[149]. - The company has no other stock option plans apart from the one mentioned, and no options have been granted that exceed the 30% limit on total shares[137]. - The company has received no applications for stock options that would exceed the 1% limit without shareholder approval[139]. Compliance and Risk Management - The company has implemented a robust internal control and risk management system, with an independent consultant assessing its effectiveness during the year ending December 31, 2024[109]. - The board confirmed that the consolidated financial statements fairly reflect the group's financial position as of December 31, 2024, and its performance for the year[104]. - The company has established an insider information policy to manage and disclose insider information in compliance with relevant regulations[110]. - The company adopted an anti-corruption and bribery policy in 2022, ensuring effective risk management and internal control systems for the fiscal year ending December 31, 2024[111]. - The company maintained the required public float as per listing rules throughout the reporting period[172]. - There were no significant events requiring disclosure that occurred after December 31, 2024, up to the date of the report[174].

Financial Performance - Revenue for the year ended December 31, 2024, was RMB 592,941,000, a decrease of 11.2% compared to RMB 667,409,000 in 2023[2] - Gross profit decreased by 21.2% to RMB 71,880,000 from RMB 91,204,000 year-over-year[2] - Operating loss increased by 71.2% to RMB (38,328,000) compared to RMB (22,393,000) in the previous year[2] - Net loss for the year was RMB (68,198,000), a significant increase of 155.6% from RMB (26,684,000) in 2023[2] - Total revenue for the year ended December 31, 2024, was RMB 592,941 thousand, a decrease of 11.1% from RMB 667,409 thousand in 2023[18] - The reported loss before tax for the year ended December 31, 2024, was RMB 68,487 thousand, compared to a loss of RMB 27,456 thousand in 2023[19] - The company reported a loss attributable to shareholders of RMB 67,976,000 for the year ended December 31, 2024, compared to a loss of RMB 26,754,000 in 2023, resulting in a basic and diluted loss per share of RMB (0.23) compared to RMB (0.09) in the previous year[36] - The group's net loss for fiscal year 2024 was approximately RMB 68.2 million, an increase in loss of about RMB 41.5 million or 155.6% compared to fiscal year 2023, primarily due to decreased sales revenue and lower gross margin[71] Assets and Liabilities - Total assets decreased by 16.6% to RMB 304,700,000 from RMB 365,506,000 year-over-year[2] - Total liabilities increased by 3.4% to RMB 222,342,000 compared to RMB 215,091,000 in 2023[2] - Net asset value dropped by 45.2% to RMB 82,358,000 from RMB 150,415,000 in the previous year[2] - Current ratio decreased to 1.11 from 1.37 year-over-year[2] - Total non-current assets decreased from RMB 131,072 thousand in 2023 to RMB 93,494 thousand in 2024, a decline of approximately 28.7%[4] - Current assets decreased from RMB 234,434 thousand in 2023 to RMB 211,206 thousand in 2024, a decline of about 9.9%[4] - Total liabilities increased from RMB 170,265 thousand in 2023 to RMB 190,815 thousand in 2024, an increase of approximately 12.1%[4] - Net current assets decreased significantly from RMB 64,169 thousand in 2023 to RMB 20,391 thousand in 2024, a decline of about 68.3%[4] - Total equity decreased from RMB 150,415 thousand in 2023 to RMB 82,358 thousand in 2024, a decrease of approximately 45.3%[5] - Cash and cash equivalents dropped from RMB 48,683 thousand in 2023 to RMB 21,152 thousand in 2024, a decline of about 56.5%[4] Segment Performance - Retail segment revenue for the year ended December 31, 2024, was RMB 431,125 thousand, a decrease of 19.0% from RMB 532,389 thousand in 2023[18] - Wholesale distribution segment revenue for the year ended December 31, 2024, was RMB 161,816 thousand, an increase of 19.9% from RMB 135,020 thousand in 2023[18] - The retail segment reported a loss of RMB 59,925 thousand for the year ended December 31, 2024, compared to a loss of RMB 25,590 thousand in 2023[18] - The wholesale distribution segment reported a loss of RMB 4,333 thousand for the year ended December 31, 2024, compared to a profit of RMB 1,954 thousand in 2023[18] Operational Changes and Strategies - The company plans to apply new international financial reporting standards, which are not expected to have a significant impact on the group's performance and financial position[11] - The company plans to enhance revenue performance by launching "supply and marketing discount stores" and adjusting operations for loss-making stores[53] - The company aims to develop "24-hour AI smart unmanned stores," with 27 existing stores integrating cloud monitoring capabilities[53] - The company is expanding its online sales channels, including "Douyin Small Hour Delivery" and its own e-commerce platforms, to boost sales volume[54] - The company is committed to improving supply chain systems through direct sourcing and national joint procurement to enhance gross profit margins[54] - The company is exploring development opportunities outside Guangdong Province, including Hong Kong, leveraging favorable policies in Hainan Free Trade Port[55] - The company is focused on transforming its business model to integrate retail, wholesale, and online-offline fusion, aiming to become a leading supermarket enterprise in the Guangdong-Hong Kong-Macao Greater Bay Area[55] Governance and Compliance - The board is committed to high levels of corporate governance, which is essential for protecting shareholder interests and enhancing corporate value[92] - The company did not comply with Listing Rules 3.10(1), 3.21, 3.25, and 3.27A after the resignation of Mr. Wang Yilin as an independent non-executive director on October 26, 2023[93] - The company is actively seeking suitable candidates to fill vacancies and comply with listing regulations, expanding its search channels to various industry associations and individuals with diverse backgrounds and skills[94] - After Mr. Gao Jingyuan is appointed as an independent non-executive director on March 27, 2024, the number of independent non-executive directors will meet the minimum requirement of Listing Rule 3.10(1)[95] - The audit committee has reviewed the accounting standards and practices adopted by the group, and the financial statements for the year ending December 31, 2024, have been reviewed and deemed compliant with applicable accounting standards[97] Employee and Labor Relations - The group had a total of 784 employees, with 776 located in mainland China and 8 in Hong Kong[84] - The group maintains competitive salary levels for employees and conducts annual reviews based on relevant labor market and economic conditions[84] - There were no significant impacts on operations due to labor disputes during the fiscal year 2024[84]

[Company Information](index=2&type=section&id=Company%20Information) This section provides essential corporate details for China Shun Ke Long Holdings Company Limited, including board members, principal places of business, and stock code [Company Basic Information](index=2&type=section&id=Company%20Information) This chapter provides fundamental corporate information, including board members, principal business locations, and key identifiers, establishing context for the report - The company's principal place of business is located in Lecong Town, Shunde District, Foshan City, Guangdong Province, China, with its principal place of business in Hong Kong at 5/F, Lincoln House, 979 King's Road, Taikoo Place[9](index=9&type=chunk) - Executive Directors include Mr. Wang Rengang (Chairman) and Ms. Wang Hui (Chief Executive Officer)[9](index=9&type=chunk) - The company's stock code is **974**[9](index=9&type=chunk) [Condensed Consolidated Statement of Profit or Loss and Other Comprehensive Income](index=4&type=section&id=Condensed%20Consolidated%20Statement%20of%20Profit%20or%20Loss%20and%20Other%20Comprehensive%20Income) Report period revenue decreased by 4.6% year-on-year to RMB308,164 thousand, with gross profit falling to RMB38,783 thousand, and net loss attributable to owners of the company expanding to RMB18,596 thousand 2024 H1 Key Profit or Loss Data | Indicator | 2024 H1 (RMB thousands) | 2023 H1 (RMB thousands) | | :--- | :--- | :--- | | Revenue | 308,164 | 323,177 | | Cost of inventories sold | (269,381) | (277,113) | | Gross profit | 38,783 | 46,064 | | Other operating income | 8,589 | 13,360 | | Selling and distribution costs | (56,311) | (60,278) | | Administrative expenses | (6,891) | (9,406) | | Finance costs | (2,264) | (2,478) | | Loss before tax | (18,677) | (12,747) | | Loss for the period | (18,747) | (12,751) | | Loss for the period attributable to owners of the Company | (18,596) | (12,622) | | Loss per share – basic and diluted (RMB) | (0.06) | (0.04) | [Condensed Consolidated Statement of Financial Position](index=5&type=section&id=Condensed%20Consolidated%20Statement%20of%20Financial%20Position) As of June 30, 2024, total non-current assets were RMB122,128 thousand, total current assets were RMB206,080 thousand, and net current assets decreased to RMB46,843 thousand, reflecting a reduction in net assets and total equity Key Financial Position Data as of June 30, 2024 | Indicator | June 30, 2024 (RMB thousands) | December 31, 2023 (RMB thousands) | | :--- | :--- | :--- | | Non-current assets | 122,128 | 131,072 | | Current assets | 206,080 | 234,434 | | Total current liabilities | 159,237 | 170,265 | | Net current assets | 46,843 | 64,169 | | Total assets less current liabilities | 168,971 | 195,241 | | Non-current liabilities | 37,036 | 44,826 | | Net assets | 131,935 | 150,415 | | Total equity | 131,935 | 150,415 | [Condensed Consolidated Statement of Changes in Equity](index=7&type=section&id=Condensed%20Consolidated%20Statement%20of%20Changes%20in%20Equity) Total equity attributable to owners of the company decreased from approximately RMB149,181 thousand at the beginning of the period to RMB130,852 thousand at the end of June 30, 2024, primarily due to the loss and total comprehensive expense for the period Overview of Changes in Equity for 2024 H1 | Indicator | 2024 H1 (RMB thousands) | 2023 H1 (RMB thousands) | | :--- | :--- | :--- | | Equity attributable to owners of the Company at beginning of period | 149,181 (December 31, 2023) | 161,502 (December 31, 2022) | | Total comprehensive expense for the period | (18,329) | (12,321) | | Equity attributable to owners of the Company at end of period | 130,852 | 149,181 | - Consolidated reserves arose from reorganization, including deemed distributions upon acquisition of subsidiaries from the controlling shareholder[14](index=14&type=chunk) [Condensed Consolidated Statement of Cash Flows](index=8&type=section&id=Condensed%20Consolidated%20Statement%20of%20Cash%20Flows) For the six months ended June 30, 2024, cash flow from operating activities turned into a net outflow of RMB3,855 thousand, while cash and cash equivalents significantly decreased to RMB25,118 thousand at period-end Overview of Cash Flows for 2024 H1 | Indicator | 2024 H1 (RMB thousands) | 2023 H1 (RMB thousands) | | :--- | :--- | :--- | | Net cash (used in) generated from operating activities | (3,855) | 6,526 | | Net cash used in investing activities | (4,349) | (1,415) | | Net cash used in financing activities | (15,633) | (22,996) | | Net decrease in cash and cash equivalents | (23,837) | (17,885) | | Cash and cash equivalents at June 30 | 25,118 | 31,438 | [Notes to the Condensed Consolidated Interim Financial Statements](index=9&type=section&id=Notes%20to%20the%20Condensed%20Consolidated%20Interim%20Financial%20Statements) This section details the basis of preparation, accounting policies, segment information, revenue, expenses, asset and liability composition, and related party transactions, providing in-depth context for the financial statements [1. General Information and Basis of Preparation](index=9&type=section&id=1.%20General%20Information%20and%20Basis%20of%20Preparation) The company, incorporated in the Cayman Islands and listed in Hong Kong, primarily operates retail stores and wholesale distribution in China and Macau, with its ultimate controlling shareholder being the All China Federation of Supply and Marketing Cooperatives - The company primarily engages in retail store operations and management and wholesale distribution of goods in China and Macau[17](index=17&type=chunk) - The controlling shareholder is Supply and Marketing Grand Bazaar Group, with the ultimate controlling party being the All China Federation of Supply and Marketing Cooperatives[17](index=17&type=chunk) - The condensed consolidated financial statements are prepared in accordance with International Accounting Standard 34 and Appendix D2 of the Listing Rules of the Stock Exchange of Hong Kong[17](index=17&type=chunk) [2. Principal Accounting Policies](index=10&type=section&id=2.%20Principal%20Accounting%20Policies) The condensed consolidated financial statements are prepared on a historical cost basis, with certain financial instruments measured at fair value, and new IFRS standards had no significant impact - The financial statements are primarily prepared on a historical cost basis, with certain financial instruments measured at fair value[19](index=19&type=chunk) - The new and revised International Financial Reporting Standards applied in the current period had no significant impact on financial performance and position[20](index=20&type=chunk) [3. Operating Segment Information](index=10&type=section&id=3.%20Operating%20Segment%20Information) The Group has two reportable segments: retail store operations and wholesale distribution, with all external customer revenue derived from China - The Group has two reportable segments: retail store operations and wholesale distribution[21](index=21&type=chunk) Segment Revenue and Results (2024 H1 vs 2023 H1) | Segment | 2024 H1 Revenue (RMB thousands) | 2023 H1 Revenue (RMB thousands) | 2024 H1 Segment (Loss) Profit (RMB thousands) | 2023 H1 Segment Loss (RMB thousands) | | :--- | :--- | :--- | :--- | :--- | | Retail store operations | 231,307 | 255,292 | (16,839) | (10,829) | | Wholesale distribution | 76,857 | 67,885 | 25 | (38) | | Total | 308,164 | 323,177 | (16,814) | (10,867) | - All the Group's revenue from external customers is derived from China[26](index=26&type=chunk) [4. Revenue and Other Operating Income](index=13&type=section&id=4.%20Revenue%20and%20Other%20Operating%20Income) Total revenue for 2024 H1 was RMB308,164 thousand, with other operating income decreasing by 35.7% year-on-year, mainly due to reduced supplier promotion income and government grants Revenue Sources (2024 H1 vs 2023 H1) | Revenue Source | 2024 H1 (RMB thousands) | 2023 H1 (RMB thousands) | | :--- | :--- | :--- | | General retail sales under retail store operations | 135,950 | 158,856 | | Bulk sales under retail store operations | 84,856 | 94,088 | | Integrated wholesale under wholesale distribution | 76,857 | 62,561 | | Commission income from concessionaire sales under retail store operations | 6,292 | 2,374 | | Rental income from subleasing certain retail areas | 4,209 | 5,298 | | **Total Revenue** | **308,164** | **323,177** | Other Operating Income Sources (2024 H1 vs 2023 H1) | Other Operating Income Source | 2024 H1 (RMB thousands) | 2023 H1 (RMB thousands) | | :--- | :--- | :--- | | Gain on expiry of leases | 183 | 806 | | Gain on disposal of property, plant and equipment | 89 | 387 | | Government grants | 8 | 323 | | Interest income from bank deposits | 130 | 192 | | Promotion income from suppliers | 5,299 | 6,990 | | Net rental income from investment properties | 1,371 | 1,313 | | Others | 1,509 | 3,349 | | **Total** | **8,589** | **13,360** | - Other operating income decreased by **35.7%** year-on-year, primarily due to reduced supplier promotion income and government grants[30](index=30&type=chunk) [5. Loss Before Tax](index=14&type=section&id=5.%20Loss%20Before%20Tax) The Group's operating loss is primarily influenced by depreciation expenses for property, plant and equipment and right-of-use assets, as well as employee benefit expenses Key Operating Expenses (2024 H1 vs 2023 H1) | Expense Item | 2024 H1 (RMB thousands) | 2023 H1 (RMB thousands) | | :--- | :--- | :--- | | Depreciation of property, plant and equipment | 3,571 | 3,721 | | Depreciation of right-of-use assets | 14,303 | 16,019 | | Total employee benefit expenses | 29,846 | 31,947 | [6. Finance Costs](index=15&type=section&id=6.%20Finance%20Costs) Total finance costs for 2024 H1 amounted to RMB2,264 thousand, mainly comprising interest on bank borrowings and lease liabilities, showing a slight year-on-year decrease Composition of Finance Costs (2024 H1 vs 2023 H1) | Finance Cost Source | 2024 H1 (RMB thousands) | 2023 H1 (RMB thousands) | | :--- | :--- | :--- | | Interest on bank borrowings | 562 | 223 | | Interest on lease liabilities | 1,702 | 2,255 | | **Total** | **2,264** | **2,478** | [7. Income Tax Expense](index=15&type=section&id=7.%20Income%20Tax%20Expense) Income tax expense for 2024 H1 was RMB70 thousand, with certain Chinese subsidiaries, including Guangdong Shun Ke Long Commercial Chain Co., Ltd., enjoying preferential tax rates - Income tax expense for 2024 H1 was **RMB70 thousand**, a significant increase from RMB4 thousand in 2023 H1[10](index=10&type=chunk)[33](index=33&type=chunk) - Chinese subsidiaries are subject to a **25%** corporate income tax rate, with some small-profit enterprises and high-tech enterprises, such as Guangdong Shun Ke Long Commercial Chain Co., Ltd., enjoying preferential rates of **15%**[34](index=34&type=chunk) [8. Dividends](index=16&type=section&id=8.%20Dividends) For the six months ended June 30, 2024, the company neither paid nor proposed any dividends - No dividends were paid or proposed for 2024 H1 and 2023 H1[36](index=36&type=chunk) [9. Loss Per Share](index=16&type=section&id=9.%20Loss%20Per%20Share) Basic and diluted loss per share for 2024 H1 expanded to RMB0.06, consistent with diluted loss per share due to the absence of potential dilutive ordinary shares Loss Per Share (2024 H1 vs 2023 H1) | Indicator | 2024 H1 | 2023 H1 | | :--- | :--- | :--- | | Loss per share – basic and diluted (RMB) | (0.06) | (0.04) | | Weighted average number of ordinary shares | 290,457,000 | 290,457,000 | - Diluted loss per share is the same as basic loss per share as there were no outstanding potential dilutive ordinary shares for both periods[37](index=37&type=chunk) [10. Capital Expenditure](index=17&type=section&id=10.%20Capital%20Expenditure) In 2024 H1, the Group added RMB4,916 thousand in property, plant and equipment, with certain buildings and investment properties pledged to banks Changes in Carrying Amounts of Property, Plant and Equipment and Investment Properties (2024 H1) | Asset Category | Carrying Amount as of January 1, 2024 (RMB thousands) | Additions (RMB thousands) | Depreciation/Amortization (RMB thousands) | Carrying Amount as of June 30, 2024 (RMB thousands) | | :--- | :--- | :--- | :--- | :--- | | Property, plant and equipment | 28,095 | 4,916 | (3,571) | 29,092 | | Investment properties | 8,697 | – | (163) | 8,534 | - As of June 30, 2024, buildings with a carrying amount of approximately **RMB10,768 thousand** and investment properties of approximately **RMB8,533 thousand** were pledged to banks[39](index=39&type=chunk) [11. Leases](index=18&type=section&id=11.%20Leases) As of June 30, 2024, total right-of-use assets amounted to RMB77,628 thousand and total lease liabilities were RMB60,329 thousand, with new additions primarily for retail store, warehouse, and office property leases Overview of Lease Assets and Liabilities (June 30, 2024 vs December 31, 2023) | Lease Asset/Liability | June 30, 2024 (RMB thousands) | December 31, 2023 (RMB thousands) | | :--- | :--- | :--- | | Total right-of-use assets | 77,628 | 87,204 | | Total lease liabilities | 60,329 | 69,162 | | Current lease liabilities | 23,293 | 24,336 | | Non-current lease liabilities | 37,036 | 44,826 | - Additions to right-of-use assets amounted to **RMB11,364 thousand** in 2024 H1, mainly due to new leases and renewals of existing retail store, warehouse, and office property leases[40](index=40&type=chunk) - The Group recognized rental income of **RMB4,209 thousand** from subleasing right-of-use assets in 2024 H1[41](index=41&type=chunk) [12. Trade and Bills Receivables](index=20&type=section&id=12.%20Trade%20and%20Bills%20Receivables) As of June 30, 2024, total trade and bills receivables were RMB33,345 thousand, including an impairment allowance of RMB1,820 thousand for trade receivables, with an average credit period of 0 to 180 days Trade and Bills Receivables (June 30, 2024 vs December 31, 2023) | Indicator | June 30, 2024 (RMB thousands) | December 31, 2023 (RMB thousands) | | :--- | :--- | :--- | | Trade receivables | 35,163 | 37,975 | | Less: Impairment allowance for trade receivables | (1,820) | (1,237) | | Bills receivable | 2 | 233 | | **Total** | **33,345** | **36,971** | - The average credit period for trade receivables generally ranges from **0 to 180 days** from the invoice date[46](index=46&type=chunk) [13. Trade Payables](index=21&type=section&id=13.%20Trade%20Payables) As of June 30, 2024, total trade payables decreased to RMB69,544 thousand from RMB78,384 thousand at the end of 2023, with the Group generally obtaining credit terms of 0 to 360 days from suppliers Aging Analysis of Trade Payables (June 30, 2024 vs December 31, 2023) | Aging | June 30, 2024 (RMB thousands) | December 31, 2023 (RMB thousands) | | :--- | :--- | :--- | | Current to 30 days | 19,261 | 34,168 | | 31 to 60 days | 18,292 | 15,128 | | 61 to 180 days | 17,877 | 12,113 | | 181 to 365 days | 5,773 | 8,506 | | Over 1 year | 8,341 | 8,469 | | **Total** | **69,544** | **78,384** | - The Group generally obtains credit terms of **0 to 360 days** from its suppliers[47](index=47&type=chunk) [14. Amounts Due from Related Companies](index=22&type=section&id=14.%20Amounts%20Due%20from%20Related%20Companies) As of June 30, 2024, amounts due from related companies were trade-related, unsecured, interest-free, and repayable on demand, with a carrying amount including an accumulated impairment loss of RMB370 thousand - Amounts due from related companies are trade-related, unsecured, interest-free, and repayable on demand[48](index=48&type=chunk) - The carrying amount includes an accumulated impairment loss of **RMB370 thousand**[48](index=48&type=chunk) [15. Bank Borrowings](index=22&type=section&id=15.%20Bank%20Borrowings) As of June 30, 2024, bank borrowings totaled RMB28,000 thousand, bearing a fixed annual interest rate of 3.95% and secured by certain buildings, right-of-use assets, and investment properties, all repayable within one year Overview of Bank Borrowings (June 30, 2024 vs December 31, 2023) | Indicator | June 30, 2024 (RMB thousands) | December 31, 2023 (RMB thousands) | | :--- | :--- | :--- | | Secured bank borrowings | 28,000 | 28,000 | - Bank borrowings bear a fixed annual interest rate of **3.95%** and are secured by buildings, right-of-use assets, and investment properties[49](index=49&type=chunk) - All bank borrowings are repayable within one year[49](index=49&type=chunk) [16. Share Capital](index=23&type=section&id=16.%20Share%20Capital) As of June 30, 2024, authorized share capital comprised 2,000,000,000 ordinary shares of HK$0.01 each, with 290,457,000 issued and fully paid ordinary shares amounting to RMB2,387 thousand Share Capital Structure (June 30, 2024 vs December 31, 2023) | Share Capital Type | June 30, 2024 (RMB thousands) | December 31, 2023 (RMB thousands) | | :--- | :--- | :--- | | Authorised share capital | 15,826 | 15,826 | | Issued and fully paid share capital | 2,387 | 2,387 | - Issued and fully paid share capital consists of **290,457,000** ordinary shares of HK$0.01 each[50](index=50&type=chunk) [17. Operating Lease Arrangements](index=23&type=section&id=17.%20Operating%20Lease%20Arrangements) The Group acts as a lessor, subleasing internal retail store areas and leasing investment properties for terms ranging from 1 to 10 years, with RMB12,036 thousand in undiscounted lease payments receivable within one year Operating Lease Payments Receivable within One Year (June 30, 2024 vs December 31, 2023) | Lease Payment Term | June 30, 2024 (RMB thousands) | December 31, 2023 (RMB thousands) | | :--- | :--- | :--- | | Within one year | 12,036 | 15,767 | - The Group acts as a lessor, subleasing internal retail store areas and leasing investment properties, with lease terms ranging from **1 to 10 years**[51](index=51&type=chunk) [18. Major Non-Cash Transactions](index=23&type=section&id=18.%20Major%20Non-Cash%20Transactions) In 2024 H1, the Group experienced non-cash increases in right-of-use assets and lease liabilities of RMB11,364 thousand due to retail store lease arrangements, alongside non-cash decreases from early lease terminations - In 2024 H1, non-cash increases in right-of-use assets and lease liabilities of **RMB11,364 thousand** arose from retail store lease arrangements[52](index=52&type=chunk) - In 2024 H1, non-cash decreases in right-of-use assets of **RMB6,637 thousand** and lease liabilities of **RMB6,820 thousand** resulted from early lease terminations[52](index=52&type=chunk) [19. Related Party Transactions](index=24&type=section&id=19.%20Related%20Party%20Transactions) In 2024 H1, the Group engaged in sales of goods transactions of RMB4 thousand and purchases of goods transactions of RMB17 thousand with related companies, with key management personnel remuneration totaling RMB1,402 thousand Related Party Transactions (2024 H1 vs 2023 H1) | Transaction Nature | 2024 H1 (RMB thousands) | 2023 H1 (RMB thousands) | | :--- | :--- | :--- | | Sales of goods (Related companies) | 4 | 36 | | Purchases of goods (Related companies) | 17 | – | Key Management Personnel Remuneration (2024 H1 vs 2023 H1) | Key Management Personnel Remuneration | 2024 H1 (RMB thousands) | 2023 H1 (RMB thousands) | | :--- | :--- | :--- | | Salaries, allowances and benefits in kind | 1,305 | 1,205 | | Pension scheme contributions | 97 | 92 | | **Total** | **1,402** | **1,297** | [Management Discussion and Analysis](index=25&type=section&id=Management%20Discussion%20and%20Analysis) This section reviews the Group's business operations, retail and wholesale channels, and franchise performance in 2024 H1, outlining strategies for market challenges, future outlook, and detailed financial analysis of revenue, gross margin, costs, and net loss [Business Review](index=25&type=section&id=Business%20Review) The Group, a supermarket chain operator primarily in Guangdong, China, maintained its retail and wholesale distribution channels, adding 4 new retail stores and expanding its franchise network to 1,180 stores - The Group primarily operates supermarket chain stores in Guangdong Province, China, maintaining both retail and wholesale distribution channels[55](index=55&type=chunk) Changes in Number of Retail Stores (2024 H1 vs 2023) | Retail Store Count | June 30, 2024 | December 31, 2023 | | :--- | :--- | :--- | | Beginning of period/year | 61 | 67 | | Increase | 4 | 4 | | Decrease | (3) | (10) | | End of period/year | 62 | 61 | - As of June 30, 2024, the Group had a total of **62** retail stores, with **61** in Guangdong Province, China, and **1** in Macau[56](index=56&type=chunk) - The wholesale distribution business retains exclusive distribution rights for **24** brands and focuses more on attracting distributor clients[58](index=58&type=chunk) Changes in Number of Franchise Retail Stores (2024 H1 vs 2023) | Franchise Retail Store Count | June 30, 2024 | December 31, 2023 | | :--- | :--- | :--- | | Beginning of period/year | 1,008 | 823 | | Increase | 172 | 185 | | End of period/year | 1,180 | 1,008 | [Recent Developments and Outlook](index=26&type=section&id=Recent%20Developments%20and%20Outlook) Facing online competition and weak consumer confidence, the Group implemented measures like "Supply and Marketing Discount Stores" and "24-hour AI Smart Unattended Stores," focusing on supply chain reform, new media marketing, and exploring international business - Facing the impact of online channels and weak consumer confidence, the Group implemented various measures, including establishing "Supply and Marketing Discount Stores," optimizing stores, and expanding "Shun Ke Long Fresh Food Community" and "24-hour AI Smart Unattended Stores"[61](index=61&type=chunk) - Actively developing "Douyin Hourly Delivery" business and continuously expanding proprietary e-commerce platforms "Shun Ke Long Premium Selection" and "Yubanghang Mini Program" to achieve online-offline integration[61](index=61&type=chunk) - The future will continue to focus on the supermarket chain business, adhering to a "retail + wholesale + franchise operation + centralized procurement and distribution + online-offline integration + community marketing" sales model, and exploring international business[61](index=61&type=chunk) - Key tasks for the second half of the year include optimizing the supply chain, expanding AI smart unattended stores and fresh food communities, developing supply and marketing discount stores and centralized procurement and distribution businesses, upgrading old stores, new media marketing, and international business expansion[62](index=62&type=chunk) [Financial Review](index=28&type=section&id=Financial%20Review) In 2024 H1, the Group's revenue decreased by 4.6% to RMB308.2 million, gross margin fell by 1.7% to 12.6%, and net loss attributable to owners of the company increased by 47.6% to RMB18.6 million Key Financial Indicators Changes (2024 H1 vs 2023 H1) | Indicator | 2024 H1 (RMB millions) | 2023 H1 (RMB millions) | Year-on-Year Change (%) | | :--- | :--- | :--- | :--- | | Revenue | 308.2 | 323.2 | -4.6% | | Revenue from retail store operations | 231.3 | 255.3 | -9.4% | | Revenue from wholesale distribution business | 76.9 | 67.9 | +13.3% | | Gross profit margin | 12.6% | 14.3% | -1.7% | | Other operating income | 8.6 | 13.4 | -35.7% | | Selling and distribution costs | 56.3 | 60.3 | -6.6% | | Administrative expenses | 6.9 | 9.4 | -26.7% | | Finance costs | 2.3 | 2.5 | -8.6% | | Net loss attributable to owners of the Company | 18.6 | 12.6 | +47.6% | - The decrease in revenue was mainly due to reduced retail store sales and lower demand for group-buying business from some customers[63](index=63&type=chunk) - The increase in net loss was primarily due to reduced gross profit from lower sales, as well as decreased rental income, supplier promotion service fees, and government grants[69](index=69&type=chunk) [Capital Expenditure](index=29&type=section&id=Capital%20Expenditure) The Group's capital expenditure primarily focused on acquiring property, plant and equipment for new store openings and existing store renovations, with approximately RMB4.9 million spent during the period - Approximately **RMB4.9 million** was spent on property, plant and equipment during the period[71](index=71&type=chunk) [Use of Proceeds](index=29&type=section&id=Use%20of%20Proceeds) Net proceeds from the global offering were approximately RMB155.0 million, with RMB142.5 million utilized as of June 30, 2024, and the remaining RMB12.5 million reallocated for existing retail store renovations - Net proceeds from the global offering were approximately **RMB155.0 million**[72](index=72&type=chunk) - As of June 30, 2024, **RMB142.5 million** of the net proceeds had been utilized, with **RMB12.5 million** remaining[73](index=73&type=chunk) - The use of the remaining **RMB12.5 million** has been reallocated to "renovation of existing retail stores" and is expected to be utilized by December 31, 2026[73](index=73&type=chunk) [Liquidity and Financial Resources](index=30&type=section&id=Liquidity%20and%20Financial%20Resources) As of June 30, 2024, cash and cash equivalents were approximately RMB25.1 million, net current assets were RMB46.8 million, and unutilized bank facilities amounted to RMB62.0 million Overview of Liquidity and Financial Resources (June 30, 2024 vs December 31, 2023) | Indicator | June 30, 2024 (RMB millions) | December 31, 2023 (RMB millions) | | :--- | :--- | :--- | | Cash and cash equivalents | 25.1 | 48.7 | | Net current assets | 46.8 | 64.2 | | Net assets | 131.9 | 150.4 | - Unutilized bank facilities amounted to **RMB62.0 million**[74](index=74&type=chunk) - Total trade receivables and deposits paid, prepayments, and other receivables decreased by approximately **RMB3.4 million**, mainly due to the recovery of receivables from customer merchandise sales and a reduction in supplier prepayments[75](index=75&type=chunk) [Significant Investments](index=31&type=section&id=Significant%20Investments) The Group held no significant investments during the period - The Group held no significant investments during the period[76](index=76&type=chunk) [Material Acquisitions and Disposals](index=31&type=section&id=Material%20Acquisitions%20and%20Disposals) The Group did not undertake any material acquisitions or disposals of subsidiaries or associated companies during the period - The Group did not undertake any material acquisitions or disposals of subsidiaries or associated companies during the period[76](index=76&type=chunk) [Indebtedness and Charges on Assets](index=31&type=section&id=Indebtedness%20and%20Charges%20on%20Assets) As of June 30, 2024, the Group's bank borrowings of RMB28.0 million were secured by buildings, right-of-use assets, and investment properties with carrying amounts of approximately RMB10.8 million, RMB18.9 million, and RMB8.5 million, respectively - Bank borrowings of **RMB28.0 million** are secured by buildings, right-of-use assets, and investment properties[77](index=77&type=chunk) - All loans bear a fixed annual interest rate of **3.95%** and are repayable within one year[77](index=77&type=chunk) [Gearing Ratio](index=31&type=section&id=Gearing%20Ratio) As of June 30, 2024, the Group's gearing ratio was approximately 21.2%, an increase from 18.6% at the end of 2023 Gearing Ratio (June 30, 2024 vs December 31, 2023) | Indicator | June 30, 2024 | December 31, 2023 | | :--- | :--- | :--- | | Gearing ratio | 21.2% | 18.6% | [Foreign Exchange Risk](index=32&type=section&id=Foreign%20Exchange%20Risk) The Group's assets, liabilities, and cash flows are primarily denominated in RMB, and management believes exchange rate fluctuations will not significantly impact financial position or performance, with no current hedging intentions - The majority of the Group's assets, liabilities, and cash flows are denominated in **RMB**[80](index=80&type=chunk) - Management believes exchange rate fluctuations will not have a significant impact and currently has no intention to engage in hedging activities[80](index=80&type=chunk) [Contingent Liabilities](index=32&type=section&id=Contingent%20Liabilities) As of June 30, 2024, the Group had not provided any guarantees to third parties and had no significant contingent liabilities - The Group had not provided any guarantees to third parties and had no significant contingent liabilities[81](index=81&type=chunk) [Employees](index=32&type=section&id=Employees) As of June 30, 2024, the Group had 904 employees, with 895 in mainland China and 9 in Hong Kong, offering competitive salaries and internal training - As of June 30, 2024, the Group had a total of **904** employees, with **895** based in mainland China and **9** in Hong Kong[82](index=82&type=chunk) - Employee salaries are maintained at a competitive level, with internal training and bonuses provided[82](index=82&type=chunk) [Other Information](index=33&type=section&id=Other%20Information) This section covers interim dividend policy, trading of listed securities, directors' and major shareholders' interests, share option scheme, compliance with securities dealing code, public float, changes in directors' information, corporate governance, post-reporting period events, and the audit committee's composition and responsibilities [Interim Dividends](index=33&type=section&id=Interim%20Dividends) The Board has resolved not to declare any interim dividend for the period - The Board has resolved not to declare any interim dividend for the period[83](index=83&type=chunk) [Purchase, Sale or Redemption of the Company's Listed Securities](index=33&type=section&id=Purchase,%20Sale%20or%20Redemption%20of%20the%20Company's%20Listed%20Securities) During the period, neither the company nor any of its subsidiaries purchased, sold, or redeemed any of the company's listed securities - During the period, neither the company nor any of its subsidiaries purchased, sold, or redeemed any of the company's listed securities[83](index=83&type=chunk) [Directors' and Chief Executive's Interests and Short Positions in Shares, Underlying Shares and Debentures](index=33&type=section&id=Directors'%20and%20Chief%20Executive's%20Interests%20and%20Short%20Positions%20in%20Shares,%20Underlying%20Shares%20and%20Debentures) As of June 30, 2024, Executive Director Ms. Wang Hui and Non-executive Director Ms. Du Jing held minor long positions in ordinary shares of associated corporation Supply and Marketing Grand Bazaar Group Co., Ltd Directors' Long Positions in Ordinary Shares of Associated Corporations (June 30, 2024) | Director's Name | Name of Associated Corporation | Capacity/Nature of Interest | Number of Shares Held | Approximate Percentage of Total Issued Shares | | :--- | :--- | :--- | :--- | :--- | | Ms. Wang Hui | Supply and Marketing Grand Bazaar Group Co., Ltd. | Beneficial owner | 215,812 | 0.00% | | Ms. Du Jing | Supply and Marketing Grand Bazaar Group Co., Ltd. | Beneficial owner | 99,100 | 0.00% | - Save as disclosed above, no director or chief executive had any disclosable interests in shares[84](index=84&type=chunk) [Substantial Shareholders' Interests and Short Positions in Shares and Underlying Shares](index=34&type=section&id=Substantial%20Shareholders'%20Interests%20and%20Short%20Positions%20in%20Shares%20and%20Underlying%20Shares) As of June 30, 2024, Supply and Marketing Grand Bazaar International Holdings Co., Ltd. held 70.42% of the company's shares as beneficial owner, with the All China Federation of Supply and Marketing Cooperatives indirectly holding the same percentage Substantial Shareholders' Interests in Shares and Underlying Shares (June 30, 2024) | Name of Substantial Shareholder | Capacity | Number of Shares (Long Position) | Approximate Percentage of Shareholding | | :--- | :--- | :--- | :--- | | All China Federation of Supply and Marketing Cooperatives | Interest in controlled corporation | 204,558,317 | 70.42% | | Supply and Marketing Grand Bazaar International Holdings Co., Ltd. | Beneficial owner | 204,558,317 | 70.42% | | Infini Capital Management | Beneficial owner | 27,600,000 | 9.50% | - The All China Federation of Supply and Marketing Cooperatives indirectly holds **70.42%** of the company's shares through multiple layers of equity control[85](index=85&type=chunk)[86](index=86&type=chunk)[87](index=87&type=chunk) [Share Option Scheme](index=35&type=section&id=Share%20Option%20Scheme) The company's share option scheme, approved on August 19, 2015, has a limit of 28,647,700 shares, representing approximately 9.86% of issued shares, with no options granted during the period - The share option scheme has a limit of **28,647,700** shares, representing approximately **9.86%** of the issued shares[88](index=88&type=chunk) - No share options were granted before the end of the period[88](index=88&type=chunk) [Directors' Securities Transactions](index=35&type=section&id=Directors'%20Securities%20Transactions) The company has adopted the Model Code, and all directors confirmed compliance with its required standards during the period - All directors confirmed compliance with the required standards set out in the Model Code during the period[89](index=89&type=chunk) [Sufficiency of Public Float](index=35&type=section&id=Sufficiency%20of%20Public%20Float) The directors confirmed that the company maintained the public float required by the Listing Rules throughout the period and up to the date of this interim report - The directors confirmed that the company maintained the public float required by the Listing Rules throughout the period and up to the date of this interim report[89](index=89&type=chunk) [Changes in Directors' Information](index=35&type=section&id=Changes%20in%20Directors'%20Information) Executive Director and CEO Ms. Wang Hui will no longer receive annual remuneration for her executive directorship from June 1, 2024, while Mr. Wang Rengang, Ms. Wang Hui, and Ms. Du Jing were appointed as Party Committee members or secretaries of Supply and Marketing Grand Bazaar from April 2024 - Executive Director and Chief Executive Officer Ms. Wang Hui will no longer receive annual remuneration for her executive directorship from June 1, 2024[90](index=90&type=chunk) - Mr. Wang Rengang, Ms. Wang Hui, and Ms. Du Jing were appointed as Party Committee members or secretaries of Supply and Marketing Grand Bazaar from April 2024[90](index=90&type=chunk) [Corporate Governance Practices](index=36&type=section&id=Corporate%20Governance%20Practices) The company's corporate governance practices are based on the Corporate Governance Code set out in Appendix C1 of the Listing Rules - The company's corporate governance practices are based on the Corporate Governance Code set out in Appendix C1 of the Listing Rules[92](index=92&type=chunk) [Matters of Non-Compliance with Listing Rules 3.10(1), 3.21, 3.25 and 3.27A](index=36&type=section&id=Matters%20of%20Non-Compliance%20with%20Listing%20Rules%203.10(1),%203.21,%203.25%20and%203.27A) Following Mr. Wang Yilin's resignation as an independent non-executive director, the company temporarily non-complied with Listing Rules regarding independent non-executive directors and committee compositions, but regained compliance upon Mr. Gao Jingyuan's appointment on March 27, 2024 - Following Mr. Wang Yilin's resignation, the company temporarily non-complied with Listing Rules **3.10(1), 3.21, 3.25, and 3.27A**[93](index=93&type=chunk) - With the appointment of Mr. Gao Jingyuan as an independent non-executive director on March 27, 2024, the company has regained compliance[93](index=93&type=chunk) [Events After Reporting Period](index=36&type=section&id=Events%20After%20Reporting%20Period) The Board is unaware of any disclosable material events occurring after June 30, 2024, and up to the date of this interim report - The Board is unaware of any disclosable material events occurring after June 30, 2024, and up to the date of this interim report[93](index=93&type=chunk) [Audit Committee](index=36&type=section&id=Audit%20Committee) The Audit Committee, established in compliance with Listing Rules, provides independent opinions on financial reporting, internal controls, and risk management, and has reviewed the unaudited condensed consolidated financial statements for the period - The Audit Committee was established in compliance with the Listing Rules, with primary responsibilities to provide independent opinions on financial reporting procedures, internal control procedures, and risk management systems[94](index=94&type=chunk) - The condensed consolidated financial statements for the period are unaudited but have been reviewed by the Audit Committee[94](index=94&type=chunk) - The Audit Committee members include Mr. Zheng Xueqi (Chairman), Mr. Gao Jingyuan, and Mr. Wu Kai, all of whom are independent non-executive directors[95](index=95&type=chunk)

[Company Information and Financial Highlights](index=1&type=section&id=Company%20Information%20and%20Financial%20Highlights) [Company Overview](index=1&type=section&id=Company%20Overview) China Shun Ke Long Holdings Limited (Stock Code: 974) operates retail and wholesale businesses in China and Macau, reporting H1 2024 unaudited interim results - The company's principal businesses are retail store operation and management and merchandise wholesale, primarily in **China and Macau**[1](index=1&type=chunk) - This interim results announcement covers the unaudited condensed consolidated results for the six months ended **June 30, 2024**[1](index=1&type=chunk) [Financial Highlights](index=1&type=section&id=Financial%20Highlights) H1 2024 revenue decreased 4.6% to RMB 308,164 thousands, and loss expanded 47.0% to RMB (18,747) thousands Financial Highlights for the Six Months Ended June 30 | Metric | 2024 (RMB thousands) | 2023 (RMB thousands) | Change (%) | | :------- | :------------------ | :------------------ | :--------- | | Revenue | 308,164 | 323,177 | -4.6% | | Gross Profit | 38,783 | 46,064 | -15.8% | | Loss for the Period | (18,747) | (12,751) | 47.0% | Financial Highlights at Period End | Metric | June 30, 2024 (RMB thousands) | December 31, 2023 (RMB thousands) | Change (%) | | :------- | :------------------------- | :-------------------------- | :--------- | | Total Assets | 328,208 | 365,506 | -10.2% | | Total Liabilities | 196,273 | 215,091 | -8.7% | [Condensed Consolidated Financial Statements](index=2&type=section&id=Condensed%20Consolidated%20Financial%20Statements) [Condensed Consolidated Statement of Profit or Loss and Other Comprehensive Income](index=2&type=section&id=Condensed%20Consolidated%20Statement%20of%20Profit%20or%20Loss%20and%20Other%20Comprehensive%20Income) For H1 2024, the company reported revenue of RMB 308,164 thousands and gross profit of RMB 38,783 thousands, with loss expanding to RMB 18,747 thousands and basic and diluted loss per share of RMB 0.06 Key Data from Condensed Consolidated Statement of Profit or Loss and Other Comprehensive Income | Metric | 2024 (RMB thousands) | 2023 (RMB thousands) | | :----------- | :------------------ | :------------------ | | Revenue | 308,164 | 323,177 | | Cost of Inventories Sold | (269,381) | (277,113) | | Gross Profit | 38,783 | 46,064 | | Other Operating Income | 8,589 | 13,360 | | Selling and Distribution Costs | (56,311) | (60,278) | | Administrative Expenses | (6,891) | (9,406) | | Loss Before Tax | (18,677) | (12,747) | | Income Tax Expense | (70) | (4) | | Loss for the Period | (18,747) | (12,751) | | Loss Per Share | (0.06) | (0.04) | [Condensed Consolidated Statement of Financial Position](index=3&type=section&id=Condensed%20Consolidated%20Statement%20of%20Financial%20Position) As of June 30, 2024, total non-current assets were RMB 122,128 thousands, total current assets RMB 206,080 thousands, total current liabilities RMB 159,237 thousands, and net current assets RMB 46,843 thousands, with net assets decreasing to RMB 131,935 thousands Key Data from Condensed Consolidated Statement of Financial Position | Metric | June 30, 2024 (RMB thousands) | December 31, 2023 (RMB thousands) | | :------------- | :------------------------- | :-------------------------- | | Total Non-current Assets | 122,128 | 131,072 | | Total Current Assets | 206,080 | 234,434 | | Total Current Liabilities | 159,237 | 170,265 | | Net Current Assets | 46,843 | 64,169 | | Total Assets Less Current Liabilities | 168,971 | 195,241 | | Non-current Liabilities | 37,036 | 44,826 | | Net Assets | 131,935 | 150,415 | [Condensed Consolidated Statement of Changes in Equity](index=5&type=section&id=Condensed%20Consolidated%20Statement%20of%20Changes%20in%20Equity) For H1 2024, total equity attributable to owners decreased from RMB 149,181 thousands to RMB 130,852 thousands, mainly due to a loss of RMB 18,596 thousands Changes in Equity Attributable to Owners of the Company | Metric | January 1, 2024 (RMB thousands) | June 30, 2024 (RMB thousands) | | :--------------- | :------------------------ | :------------------------ | | Equity Attributable to Owners of the Company | 149,181 | 130,852 | | Non-controlling Interests | 1,234 | 1,083 | | Total Equity | 150,415 | 131,935 | - The **loss for the period of RMB 18,596 thousands** was the primary reason for the decrease in equity attributable to owners of the company[6](index=6&type=chunk) [Condensed Consolidated Statement of Cash Flows](index=6&type=section&id=Condensed%20Consolidated%20Statement%20of%20Cash%20Flows) For H1 2024, net cash used in operating, investing, and financing activities led to a net decrease in cash and cash equivalents of RMB (23,837) thousands Key Data from Condensed Consolidated Statement of Cash Flows | Metric | 2024 (RMB thousands) | 2023 (RMB thousands) | | :------------------- | :------------------ | :------------------ | | Net Cash (Used in) from Operating Activities | (3,855) | 6,526 | | Net Cash Used in Investing Activities | (4,349) | (1,415) | | Net Cash Used in Financing Activities | (15,633) | (22,996) | | Net Decrease in Cash and Cash Equivalents | (23,837) | (17,885) | | Cash and Cash Equivalents at End of Period | 25,118 | 31,438 | [Notes to the Condensed Consolidated Financial Information](index=7&type=section&id=Notes%20to%20the%20Condensed%20Consolidated%20Financial%20Information) [General Information and Basis of Preparation](index=7&type=section&id=General%20Information%20and%20Basis%20of%20Preparation) The company, incorporated in the Cayman Islands and listed on HKEX, primarily operates retail and wholesale businesses in China and Macau, with financial statements presented in RMB under IAS 34 and Listing Rules Appendix D2 - The company is incorporated in the Cayman Islands, with principal operations in **China and Macau**, its controlling shareholder is GONGXIAO DAJI Group, and the ultimate controlling party is the All China Federation of Supply and Marketing Cooperatives[9](index=9&type=chunk) - The condensed consolidated financial statements are presented in **RMB** and comply with International Accounting Standard 34 and the disclosure requirements of Appendix D2 to the Listing Rules of the Stock Exchange of Hong Kong Limited[10](index=10&type=chunk) [Principal Accounting Policies](index=7&type=section&id=Principal%20Accounting%20Policies) Financial statements are prepared on a historical cost basis, with certain financial instruments at fair value, and new IFRS amendments had no significant impact on financial performance or position - The financial statements are primarily prepared on a **historical cost basis**, with certain financial instruments measured at fair value[11](index=11&type=chunk) - The IFRS amendments first applied in this period (including amendments to IFRS 16, IAS 1, IAS 7, and IFRS 7) had **no significant impact** on the Group's financial performance and position[13](index=13&type=chunk) [Application of New and Revised International Financial Reporting Standards](index=8&type=section&id=Application%20of%20New%20and%20Revised%20International%20Financial%20Reporting%20Standards) Several IFRS amendments, including those to IFRS 16, IAS 1, IAS 7, and IFRS 7, were first applied during this interim period, but they had no significant impact on the Group's financial performance, position, or disclosures - New IFRS amendments applied in this period include IFRS 16 (lease liabilities in a sale and leaseback), IAS 1 (classification of liabilities as current or non-current, non-current liabilities with covenants), and IAS 7 and IFRS 7 (supplier finance arrangements)[13](index=13&type=chunk) - The application of these new standards and amendments had **no significant impact** on the Group's financial performance, position, or disclosures[13](index=13&type=chunk) [Operating Segment Information](index=8&type=section&id=Operating%20Segment%20Information) The Group operates two reportable segments: retail store operations and wholesale distribution, with retail store operations incurring a loss of RMB 16,839 thousands and wholesale distribution achieving a profit of RMB 25 thousands for H1 2024 - The Group's principal operating segments are **retail store operations** (selling fresh food, groceries, and household products) and **wholesale distribution** (selling fast-moving consumer goods and groceries)[14](index=14&type=chunk) Segment Revenue and Results | Segment | 2024 Revenue (RMB thousands) | 2023 Revenue (RMB thousands) | 2024 Segment (Loss)/Profit (RMB thousands) | 2023 Segment Loss (RMB thousands) | | :----------- | :---------------------- | :---------------------- | :--------------------------------- | :-------------------------- | | Retail store operations | 231,307 | 255,292 | (16,839) | (10,829) | | Wholesale distribution | 76,857 | 67,885 | 25 | (38) | | Total | 308,164 | 323,177 | (16,814) | (10,867) | [Segment Revenue and Results](index=8&type=section&id=Segment%20Revenue%20and%20Results) For H1 2024, external customer revenue from retail store operations was RMB 231,307 thousands and from wholesale distribution was RMB 76,857 thousands, with the retail store operations segment incurring a loss of RMB 16,839 thousands and the wholesale distribution segment achieving a profit of RMB 25 thousands Revenue from External Customers | Segment | 2024 (RMB thousands) | 2023 (RMB thousands) | | :--------- | :------------------ | :------------------ | | Retail store operations | 231,307 | 255,292 | | Wholesale distribution | 76,857 | 67,885 | | Total | 308,164 | 323,177 | - The retail store operations segment incurred a **loss of RMB 16,839 thousands**, while the wholesale distribution segment achieved a **profit of RMB 25 thousands**[15](index=15&type=chunk) [Geographical Information](index=9&type=section&id=Geographical%20Information) All of the Group's revenue from external customers is derived from China, where its non-current assets are primarily located, with no single customer contributing 10% or more of revenue Geographical Revenue and Non-current Assets | Region | 2024 Revenue (RMB thousands) | 2023 Revenue (RMB thousands) | June 30, 2024 Non-current Assets (RMB thousands) | December 31, 2023 Non-current Assets (RMB thousands) | | :--------- | :---------------------- | :---------------------- | :----------------------------------- | :------------------------------------ | | China | 308,164 | 323,177 | 115,174 | 123,818 | | Hong Kong | – | – | 80 | 148 | | Total | 308,164 | 323,177 | 115,254 | 123,966 | - All of the Group's revenue from external customers is derived from **China**, and no single customer contributed **10% or more** of revenue[18](index=18&type=chunk) [Revenue and Other Operating Income](index=10&type=section&id=Revenue%20and%20Other%20Operating%20Income) Revenue for the period, totaling RMB 308,164 thousands, primarily stemmed from merchandise sales through retail store operations and wholesale distribution, while other operating income of RMB 8,589 thousands mainly comprised promotional income from suppliers and investment property rental income Revenue Composition | Revenue Source | 2024 (RMB thousands) | 2023 (RMB thousands) | | :------------------- | :------------------ | :------------------ | | General retail sales from retail store operations | 135,950 | 158,856 | | Bulk sales from retail store operations | 84,856 | 94,088 | | Integrated wholesale from wholesale distribution | 76,857 | 62,561 | | Franchise sales commission from retail store operations | 6,292 | 2,374 | | Rental income from sub-leased retail areas | 4,209 | 5,298 | | Total Revenue | 308,164 | 323,177 | Other Operating Income Composition | Other Operating Income Source | 2024 (RMB thousands) | 2023 (RMB thousands) | | :--------------- | :------------------ | :------------------ | | Gain on lease termination | 183 | 806 | | Gain on disposal of property, plant and equipment | 89 | 387 | | Government grants | 8 | 323 | | Interest income from bank deposits | 130 | 192 | | Promotional income from suppliers | 5,299 | 6,990 | | Net rental income from investment properties | 1,371 | 1,313 | | Others | 1,509 | 3,349 | | Total Other Operating Income | 8,589 | 13,360 | [Revenue](index=10&type=section&id=Revenue) Revenue for the period, totaling RMB 308,164 thousands and representing a 4.6% year-on-year decrease, primarily derived from merchandise sales, including general retail sales, bulk sales from retail store operations, and integrated wholesale from wholesale distribution Revenue Disaggregation by Source and Timing of Recognition | Revenue Source/Timing of Recognition | 2024 (RMB thousands) | 2023 (RMB thousands) | | :---------------- | :------------------ | :------------------ | | Total sales of goods | 303,955 | 317,879 | | Rental income | 4,209 | 5,298 | | Total Revenue | 308,164 | 323,177 | | Timing of revenue recognition: At a point in time | 303,955 | 317,879 | [Other Operating Income](index=11&type=section&id=Other%20Operating%20Income) Other operating income for the period amounted to RMB 8,589 thousands, a 35.7% decrease from the prior year, primarily due to reduced promotional income from suppliers and government grants Details of Other Operating Income | Income Item | 2024 (RMB thousands) | 2023 (RMB thousands) | | :----------------- | :------------------ | :------------------ | | Gain on lease termination | 183 | 806 | | Gain on disposal of property, plant and equipment | 89 | 387 | | Government grants | 8 | 323 | | Interest income from bank deposits | 130 | 192 | | Promotional income from suppliers | 5,299 | 6,990 | | Net rental income from investment properties | 1,371 | 1,313 | | Others | 1,509 | 3,349 | | Total | 8,589 | 13,360 | - The net difference in **gain on lease termination** was **RMB 183 thousands** in 2024, primarily involving a decrease in right-of-use assets and lease liabilities[21](index=21&type=chunk) [Loss Before Tax](index=11&type=section&id=Loss%20Before%20Tax) The Group's loss before tax was RMB 18,677 thousands, primarily driven by factors such as depreciation, employee benefit expenses, and finance costs Components of Loss Before Tax | Expense Item | 2024 (RMB thousands) | 2023 (RMB thousands) | | :----------------- | :------------------ | :------------------ | | Depreciation of property, plant and equipment | 3,571 | 3,721 | | Depreciation of investment properties | 163 | 163 | | Depreciation of right-of-use assets | 14,303 | 16,019 | | Total employee benefit expenses | 29,846 | 31,947 | [Finance Costs](index=12&type=section&id=Finance%20Costs) Finance costs for the period amounted to RMB 2,264 thousands, primarily comprising interest on bank borrowings and lease liabilities, representing a decrease from the prior year Details of Finance Costs | Finance Cost Item | 2024 (RMB thousands) | 2023 (RMB thousands) | | :----------- | :------------------ | :------------------ | | Interest on bank borrowings | 562 | 223 | | Interest on lease liabilities | 1,702 | 2,255 | | Total | 2,264 | 2,478 | [Income Tax Expense](index=12&type=section&id=Income%20Tax%20Expense) Income tax expense for the period was RMB 70 thousands, primarily from a Chinese subsidiary that was reclassified as not being a small-profit enterprise, leading to a tax top-up, while Hong Kong and Macau subsidiaries had no taxable profits - Income tax expense for the period was **RMB 70 thousands**, an increase of **RMB 66 thousands** compared to the same period last year[24](index=24&type=chunk) - The increase in income tax was primarily due to a Chinese subsidiary being reclassified by the local tax authority as **not a small-profit enterprise** for 2020, requiring a top-up payment for previously enjoyed tax benefits[24](index=24&type=chunk) - The Group's Chinese subsidiaries generally pay enterprise income tax at a rate of **25%**, but high-tech enterprises may enjoy a preferential tax rate of **15%**[24](index=24&type=chunk) [Dividends](index=12&type=section&id=Dividends) No dividends were paid or proposed by the company for the six months ended June 30, 2024 - The company has **neither paid nor proposed** any dividends during the period or since the end of the reporting period[25](index=25&type=chunk) [Loss Per Share](index=13&type=section&id=Loss%20Per%20Share) For H1 2024, the basic and diluted loss per share attributable to owners of the company expanded to RMB (0.06) from RMB (0.04) in the prior year Loss Per Share Calculation Data | Metric | 2024 (RMB thousands) | 2023 (RMB thousands) | | :--------------- | :------------------ | :------------------ | | Loss for the period attributable to owners of the company | (18,596) | (12,622) | | Weighted average number of ordinary shares | 290,457,000 | 290,457,000 | | Basic and diluted loss per share | (0.06) | (0.04) | - As there were no outstanding potential dilutive ordinary shares for both periods, the **diluted loss per share was the same as the basic loss per share**[26](index=26&type=chunk) [Capital Expenditure](index=13&type=section&id=Capital%20Expenditure) During the period, the Group acquired property, plant and equipment totaling RMB 4,916 thousands, and as of June 30, 2024, certain buildings and investment properties were pledged to banks for financing Changes in Carrying Amount of Property, Plant and Equipment and Investment Properties | Item | January 1, 2024 (RMB thousands) | Additions (RMB thousands) | Disposals (RMB thousands) | Depreciation/Amortisation (RMB thousands) | June 30, 2024 (RMB thousands) | | :--------------- | :------------------------ | :---------------- | :---------------- | :--------------------- | :------------------------ | | Property, plant and equipment | 28,095 | 4,916 | (348) | (3,571) | 29,092 | | Investment properties | 8,697 | – | – | (163) | 8,534 | - As of June 30, 2024, buildings with a carrying amount of **RMB 10,768 thousands** and investment properties with a carrying amount of **RMB 8,533 thousands** were pledged to banks[28](index=28&type=chunk) [Leases](index=14&type=section&id=Leases) As of June 30, 2024, total right-of-use assets amounted to RMB 77,628 thousands and total lease liabilities were RMB 60,329 thousands, with new right-of-use assets of RMB 11,364 thousands recognized and a gain on lease termination of RMB 183 thousands during the period Lease-Related Assets and Liabilities | Item | June 30, 2024 (RMB thousands) | December 31, 2023 (RMB thousands) | | :------------- | :------------------------- | :-------------------------- | | Total right-of-use assets | 77,628 | 87,204 | | Total lease liabilities | 60,329 | 69,162 | - Additions to right-of-use assets during the period amounted to **RMB 11,364 thousands**, primarily due to new leases and renewals of existing leases[30](index=30&type=chunk) - Total cash outflow for leases during the period was **RMB 17,295 thousands**[35](index=35&type=chunk) [Right-of-Use Assets](index=14&type=section&id=Right-of-Use%20Assets) As of June 30, 2024, total right-of-use assets were RMB 77,628 thousands, including RMB 20,696 thousands for land use rights in China, with RMB 11,364 thousands in new additions during the period and certain leased land ownership interests pledged to banks Composition of Right-of-Use Assets | Item | June 30, 2024 (RMB thousands) | December 31, 2023 (RMB thousands) | | :--------------- | :------------------------- | :-------------------------- | | Other leased properties held for own use | 56,932 | 66,072 | | Ownership interests in leased land | 20,696 | 21,132 | | Total | 77,628 | 87,204 | - As of June 30, 2024, ownership interests in leased land with a carrying amount of approximately **RMB 18,859 thousands** were pledged to banks[30](index=30&type=chunk) - Rental income of **RMB 4,209 thousands** was recognized from sub-leasing right-of-use assets during the period[31](index=31&type=chunk) [Lease Liabilities](index=14&type=section&id=Lease%20Liabilities) As of June 30, 2024, total lease liabilities amounted to RMB 60,329 thousands, comprising RMB 23,293 thousands in current liabilities and RMB 37,036 thousands in non-current liabilities, with new lease liabilities of RMB 11,364 thousands recognized during the period Details of Lease Liabilities | Item | June 30, 2024 (RMB thousands) | December 31, 2023 (RMB thousands) | | :------- | :------------------------- | :-------------------------- | | Current | 23,293 | 24,336 | | Non-current | 37,036 | 44,826 | | Total | 60,329 | 69,162 | - The entering into of new retail store leases and renewal of existing leases during the period resulted in an increase in lease liabilities of **RMB 11,364 thousands**[33](index=33&type=chunk) [Amounts Recognized in Profit or Loss](index=15&type=section&id=Amounts%20Recognized%20in%20Profit%20or%20Loss) During the period, depreciation of right-of-use assets recognized in profit or loss was RMB 14,303 thousands, interest expense on lease liabilities was RMB 1,702 thousands, and expenses related to short-term leases amounted to RMB 2,216 thousands Lease-Related Amounts Recognized in Profit or Loss | Item | 2024 (RMB thousands) | 2023 (RMB thousands) | | :----------------- | :------------------ | :------------------ | | Total depreciation of right-of-use assets | 14,303 | 31,267 | | Gain on lease termination | 183 | 1,174 | | Interest expense on lease liabilities | 1,702 | 3,955 | | Expenses relating to short-term leases | 2,216 | 4,982 | [Other Lease Information](index=15&type=section&id=Other%20Lease%20Information) Total cash outflow for leases for the six months ended June 30, 2024, was RMB 17,295 thousands, a decrease from the prior year - Total cash outflow for leases during the period was **RMB 17,295 thousands**, compared to **RMB 23,096 thousands** in the prior period[35](index=35&type=chunk) [Trade and Bills Receivables](index=15&type=section&id=Trade%20and%20Bills%20Receivables) As of June 30, 2024, total trade and bills receivables amounted to RMB 33,345 thousands, a decrease from the end of 2023, with an average credit period ranging from 0 to 180 days Details of Trade and Bills Receivables | Item | June 30, 2024 (RMB thousands) | December 31, 2023 (RMB thousands) | | :--------------- | :------------------------- | :-------------------------- | | Trade receivables | 35,163 | 37,975 | | Less: Impairment allowance | (1,820) | (1,237) | | Net trade receivables | 33,343 | 36,738 | | Bills receivables | 2 | 233 | | Total | 33,345 | 36,971 | Ageing Analysis of Trade Receivables | Ageing | June 30, 2024 (RMB thousands) | December 31, 2023 (RMB thousands) | | :----------- | :------------------------- | :-------------------------- | | Within 30 days | 11,794 | 17,833 | | 31 to 60 days | 6,182 | 8,086 | | 61 to 180 days | 7,547 | 1,575 | | 181 to 365 days | 5,487 | 8,503 | | Over 1 year | 2,333 | 741 | | Total | 33,343 | 36,738 | [Trade Payables](index=16&type=section&id=Trade%20Payables) As of June 30, 2024, total trade payables amounted to RMB 69,544 thousands, a decrease from the end of 2023, with the Group generally obtaining credit periods of 0 to 360 days from suppliers Ageing Analysis of Trade Payables | Ageing | June 30, 2024 (RMB thousands) | December 31, 2023 (RMB thousands) | | :----------- | :------------------------- | :-------------------------- | | Current to 30 days | 19,261 | 34,168 | | 31 to 60 days | 18,292 | 15,128 | | 61 to 180 days | 17,877 | 12,113 | | 181 to 365 days | 5,773 | 8,506 | | Over 1 year | 8,341 | 8,469 | | Total | 69,544 | 78,384 | [Amounts Due from Related Companies](index=16&type=section&id=Amounts%20Due%20from%20Related%20Companies) As of June 30, 2024, amounts due from related companies were trade-related, unsecured, interest-free, and repayable on demand, with the carrying amount including an accumulated impairment loss of RMB 370 thousands - Amounts due from related companies are **trade-related, unsecured, interest-free, and repayable on demand**[39](index=39&type=chunk) - As of June 30, 2024, the carrying amount of amounts due from related companies includes an accumulated impairment loss of **RMB 370 thousands**[39](index=39&type=chunk) [Bank Borrowings](index=17&type=section&id=Bank%20Borrowings) As of June 30, 2024, bank borrowings amounted to RMB 28,000 thousands, bearing a fixed annual interest rate of 3.95%, and were secured by certain buildings, right-of-use assets, and investment properties Bank Borrowings Information | Item | June 30, 2024 (RMB thousands) | December 31, 2023 (RMB thousands) | | :----------- | :------------------------- | :-------------------------- | | Total bank borrowings | 28,000 | 28,000 | | Interest rate | 3.95% | 3.95% | - Bank borrowings are secured by buildings with a carrying amount of approximately **RMB 10,768 thousands**, right-of-use assets of **RMB 18,859 thousands**, and investment properties of **RMB 8,533 thousands**[41](index=41&type=chunk) [Share Capital](index=17&type=section&id=Share%20Capital) As of June 30, 2024, the authorized share capital consisted of 2,000,000,000 ordinary shares of HKD 0.01 each, with 290,457,000 issued and fully paid ordinary shares of HKD 0.01 each, equivalent to RMB 2,387 thousands Share Capital Information | Item | June 30, 2024 (RMB thousands) | December 31, 2023 (RMB thousands) | | :----------- | :------------------------- | :-------------------------- | | Authorized share capital | 15,826 | 15,826 | | Issued and fully paid share capital | 2,387 | 2,387 | - The issued and fully paid share capital consists of **290,457,000 ordinary shares of HKD 0.01 each**[42](index=42&type=chunk) [Operating Lease Arrangements (as Lessor)](index=17&type=section&id=Operating%20Lease%20Arrangements%20(as%20Lessor)) The Group, acting as a lessor, sub-leases internal retail store areas and leases out investment properties with lease terms ranging from 1 to 10 years, and as of June 30, 2024, irrevocable operating lease payments receivable within one year amounted to RMB 12,036 thousands - The Group sub-leases internal retail store areas and leases out investment properties, with lease terms ranging from **1 to 10 years**, excluding contingent rents[43](index=43&type=chunk) Irrevocable Operating Lease Payments Receivable in Future Periods | Period | June 30, 2024 (RMB thousands) | December 31, 2023 (RMB thousands) | | :----- | :------------------------- | :-------------------------- | | Within one year | 12,036 | 15,767 | [Major Non-Cash Transactions](index=18&type=section&id=Major%20Non-Cash%20Transactions) During the period, the Group experienced a non-cash increase of RMB 11,364 thousands in right-of-use assets and lease liabilities due to retail store lease arrangements, and non-cash decreases due to early lease terminations - During the period, right-of-use assets and lease liabilities increased by **RMB 11,364 thousands** on a non-cash basis due to retail store lease arrangements[44](index=44&type=chunk) - Due to early lease terminations, right-of-use assets decreased by **RMB 6,637 thousands** on a non-cash basis, and lease liabilities decreased by **RMB 6,820 thousands** on a non-cash basis[44](index=44&type=chunk) [Related Party Transactions](index=18&type=section&id=Related%20Party%20Transactions) During the period, the Group engaged in merchandise sales and purchases with related companies, totaling RMB 4 thousands in sales and RMB 17 thousands in purchases, with key management personnel compensation amounting to RMB 1,402 thousands Related Party Transactions | Nature of Transaction | 2024 (RMB thousands) | 2023 (RMB thousands) | | :------- | :------------------ | :------------------ | | Sales of goods | 4 | 36 | | Purchases of goods | 17 | – | Key Management Personnel Compensation | Compensation Item | 2024 (RMB thousands) | 2023 (RMB thousands) | | :------------- | :------------------ | :------------------ | | Salaries, allowances and benefits in kind | 1,305 | 1,205 | | Pension scheme contributions | 97 | 92 | | Total | 1,402 | 1,297 | [Management Discussion and Analysis](index=19&type=section&id=Management%20Discussion%20and%20Analysis) [Business Review](index=19&type=section&id=Business%20Review) The Group maintained its retail and wholesale distribution channels during the reporting period, increasing its retail store count to 62, primarily in Foshan, Guangdong, while focusing on retaining exclusive distribution rights and attracting more distributors for its wholesale business, and expanding its franchised retail stores to 1,180 - The Group added **four new retail stores** and closed or converted three to franchised stores during the reporting period, increasing the total number of retail stores to **62**[47](index=47&type=chunk) - The Group retains **exclusive distribution rights for 24 brands** and focuses on attracting more distributors as customers[48](index=48&type=chunk) - The number of franchised retail stores increased from **1,008** at the beginning of the period to **1,180** at the end of the period[49](index=49&type=chunk) [Retail Stores](index=19&type=section&id=Retail%20Stores) As of June 30, 2024, the Group operated 62 retail stores, with 61 located in Guangdong Province, China, and 1 in Macau, and the highest concentration of 52 stores in the Foshan area Changes in Number of Retail Stores | Period/Year | June 30, 2024 | December 31, 2023 | | :-------- | :------------ | :------------- | | Beginning of period/year | 61 | 67 | | Additions | 4 | 4 | | Reductions | (3) | (10) | | End of period/year | 62 | 61 | Geographical Distribution of Retail Stores | Location | June 30, 2024 | December 31, 2023 | | :------- | :------------ | :------------- | | Foshan | 52 | 49 | | Zhaoqing | 5 | 6 | | Zhuhai | 2 | 3 | | Guangzhou | 1 | 1 | | Shenzhen | 1 | 1 | | Macau | 1 | 1 | | Total | 62 | 61 | [Integrated Wholesale](index=20&type=section&id=Integrated%20Wholesale) The Group maintains exclusive distribution rights for 24 brands in Foshan, Jiangmen, and Zhaoqing, and is increasingly focused on attracting more distributors rather than retailers as customers to expand its integrated wholesale business - The Group retains **exclusive distribution rights for 24 brands** in Foshan, Jiangmen, and Zhaoqing[48](index=48&type=chunk) - The Group is more focused on attracting **more distributors than retailers** as customers to expand its wholesale business scale[48](index=48&type=chunk) [Franchise Operations](index=20&type=section&id=Franchise%20Operations) The Group's franchise program continued to grow, with the number of franchised retail stores increasing to 1,180 as of June 30, 2024, an increase of 172 from the beginning of the year Changes in Number of Franchised Retail Stores | Period/Year | June 30, 2024 | December 31, 2023 | | :-------- | :------------ | :------------- | | Beginning of period/year | 1,008 | 823 | | Additions | 172 | 185 | | End of period/year | 1,180 | 1,008 | - Revenue from sales of goods to franchisees constitutes part of its **wholesale distribution revenue**[49](index=49&type=chunk) [Recent Developments and Outlook](index=20&type=section&id=Recent%20Developments%20and%20Outlook) Facing a weak consumer market, the Group implemented strategies including launching "Gongxiao Discount Stores," closing loss-making stores, expanding "Shun Kelong Fresh Community" and "24-hour AI Smart Unattended Stores," developing new media marketing, broadening brand agency business regions, and optimizing supply chain and operations, with future plans to focus on supermarket chain business, expand regional networks, explore opportunities outside Guangdong and in Hong Kong, and leverage resources from the All China Federation of Supply and Marketing Cooperatives for centralized procurement and distribution - The Group launched its first **"Gongxiao Discount Store"** and implemented measures to close loss-making stores to stop losses[50](index=50&type=chunk) - The Group is expanding **"Shun Kelong Fresh Community" stores** and **"24-hour AI Smart Unattended Stores,"** integrating cloud-based monitoring to maximize operating hours[50](index=50&type=chunk)[51](index=51&type=chunk) - The Group is developing **"Douyin Hour Delivery" business** and its own e-commerce platforms, **"Shun Kelong Premium Selection"** and **"Yubanghang Mini Program,"** to achieve integrated online and offline sales[51](index=51&type=chunk) - In the future, the Group will continue to optimize its supply chain system, reduce merchandise costs, and explore international business expansion, leveraging the advantages of the **Hainan Free Trade Port** and the **Guangdong-Hong Kong-Macao Greater Bay Area**[52](index=52&type=chunk) [Financial Review](index=22&type=section&id=Financial%20Review) During the period, revenue decreased by 4.6% to RMB 308.2 millions, primarily due to reduced retail store sales and lower demand for group-buying business, leading to a 1.7% decline in gross profit margin to 12.6%, while other operating income, selling and distribution costs, administrative expenses, and finance costs all decreased, but income tax expense increased, resulting in a 47.6% expansion of net loss attributable to owners of the company to RMB 18.6 millions Financial Performance Overview | Metric | 2024 (RMB millions) | 2023 (RMB millions) | Year-on-year Change (%) | | :------------- | :-------------------- | :-------------------- | :------------- | | Revenue | 308.2 | 323.2 | -4.6% | | Gross profit margin | 12.6% | 14.3% | -1.7% | | Other operating income | 8.6 | 13.4 | -35.7% | | Selling and distribution costs | 56.3 | 60.3 | -6.6% | | Administrative expenses | 6.9 | 9.4 | -26.7% | | Finance costs | 2.3 | 2.5 | -8.6% | | Income tax expense | 0.07 | 0.004 | Increase | | Net loss | (18.6) | (12.6) | 47.6% | | Total comprehensive expense | (18.3) | (12.3) | 48.8% | [Revenue](index=22&type=section&id=Revenue) Total revenue for the period was approximately RMB 308.2 millions, a 4.6% year-on-year decrease, with retail store business revenue declining by 9.4% and wholesale distribution business revenue increasing by 13.3% - The decrease in total revenue was mainly due to reduced retail store sales influenced by market conditions and decreased demand for group-buying business from some customers[53](index=53&type=chunk) - Revenue from retail store business was approximately **RMB 231.3 millions**, a year-on-year decrease of **9.4%**[53](index=53&type=chunk) - Revenue from wholesale distribution business was approximately **RMB 76.9 millions**, a year-on-year increase of **13.3%**, mainly due to increased market influence and sales of some distributed brands[53](index=53&type=chunk) [Gross Profit Margin](index=22&type=section&id=Gross%20Profit%20Margin) The gross profit margin for the period was 12.6%, a 1.7% decrease from 14.3% in the prior year - The gross profit margin for the period was **12.6%**, a decrease of **1.7%** from **14.3%** in the prior year[54](index=54&type=chunk) [Other Operating Income](index=22&type=section&id=Other%20Operating%20Income) Other operating income for the period was approximately RMB 8.6 millions, a 35.7% year-on-year decrease, primarily due to reduced promotional service fees from suppliers and government grants - Other operating income was approximately **RMB 8.6 millions**, a year-on-year decrease of **35.7%**[55](index=55&type=chunk) - The decrease was mainly due to reduced promotional service fees from suppliers and decreased government grants[55](index=55&type=chunk) [Selling and Distribution Costs](index=22&type=section&id=Selling%20and%20Distribution%20Costs) Selling and distribution costs for the period were approximately RMB 56.3 millions, a 6.6% year-on-year decrease, mainly attributable to reduced labor costs from personnel optimization and lower rental expenses due to store closures or relocations - Selling and distribution costs were approximately **RMB 56.3 millions**, a year-on-year decrease of **6.6%**[56](index=56&type=chunk) - The decrease was mainly due to reduced labor costs from personnel optimization and lower rental expenses from store closures or relocations[56](index=56&type=chunk) [Administrative Expenses](index=22&type=section&id=Administrative%20Expenses) Administrative expenses for the period were approximately RMB 6.9 millions, a 26.7% year-on-year decrease, primarily due to reduced labor costs for management personnel and lower bank charges - Administrative expenses were approximately **RMB 6.9 millions**, a year-on-year decrease of **26.7%**[57](index=57&type=chunk) - The decrease was mainly due to reduced labor costs for management personnel and lower bank charges[57](index=57&type=chunk) [Finance Costs](index=23&type=section&id=Finance%20Costs) Finance costs for the period were approximately RMB 2.3 millions, an 8.6% year-on-year decrease, primarily due to a reduction in unrecognized finance charges on lease liabilities - Finance costs were approximately **RMB 2.3 millions**, a year-on-year decrease of **8.6%**[58](index=58&type=chunk) - The decrease was mainly due to a reduction in unrecognized finance charges on lease liabilities[58](index=58&type=chunk) [Income Tax Expense](index=23&type=section&id=Income%20Tax%20Expense) Income tax expense for the period was approximately RMB 70 thousands, an increase of RMB 66 thousands year-on-year, primarily because a subsidiary was reclassified as not being a small-profit enterprise, requiring a tax top-up - Income tax expense was approximately **RMB 70 thousands**, a year-on-year increase of **RMB 66 thousands**[59](index=59&type=chunk) - The increase was due to a subsidiary being reclassified as **not a small-profit enterprise**, requiring a top-up payment for previously enjoyed tax benefits[59](index=59&type=chunk) [Net Loss](index=23&type=section&id=Net%20Loss) Net loss attributable to owners of the company expanded by 47.6% to approximately RMB 18.6 millions, primarily due to reduced gross profit from lower sales and decreased rental income, promotional service fees from suppliers, and government grants - Net loss attributable to owners of the company was approximately **RMB 18.6 millions**, an increase in loss of **47.6%** year-on-year[60](index=60&type=chunk) - The increase in loss was mainly due to reduced gross profit from lower sales, and decreased income from various sources (rental, promotional service fees, government grants)[60](index=60&type=chunk) [Total Comprehensive Expense](index=23&type=section&id=Total%20Comprehensive%20Expense) Total comprehensive expense attributable to owners of the Group increased by 48.8% to approximately RMB 18.3 millions, for reasons similar to the increase in net loss - Total comprehensive expense attributable to owners of the Group was approximately **RMB 18.3 millions**, a year-on-year increase of **48.8%**[61](index=61&type=chunk) - The increase was due to the same reasons as the increase in net loss, namely reduced gross profit from lower sales and decreased income from various sources[61](index=61&type=chunk) [Capital Expenditure](index=23&type=section&id=Capital%20Expenditure) During the period, the Group incurred approximately RMB 4.9 millions in capital expenditure for property, plant and equipment, primarily for opening new retail stores and renovating existing ones - The Group incurred approximately **RMB 4.9 millions** in expenditure on property, plant and equipment during the period[62](index=62&type=chunk) - Capital expenditure was primarily used for **opening new retail stores and renovating existing ones**[62](index=62&type=chunk) [Use of Proceeds](index=23&type=section&id=Use%20of%20Proceeds) The net proceeds from the company's global offering were approximately RMB 155.0 millions, of which RMB 142.5 millions had been utilized as of June 30, 2024, with the remaining RMB 12.5 millions reallocated on June 19, 2024, from "renovation and expansion of two existing distribution centers" to "renovation of existing retail stores," expected to be utilized by December 31, 2026 - The net proceeds from the global offering were approximately **RMB 155.0 millions**, of which **RMB 142.5 millions** had been utilized as of June 30, 2024[63](index=63&type=chunk)[64](index=64&type=chunk) - The use of the remaining **RMB 12.5 millions** has been changed to **"renovation of existing retail stores"** and is expected to be utilized by December 31, 2026[64](index=64&type=chunk) Analysis of Use of Net Proceeds | Purpose | Revised Allocation (RMB millions) | Utilized as of June 30, 2024 (RMB millions) | Balance of Net Proceeds as of June 30, 2024 (RMB millions) | | :------------------- | :------------------------ | :--------------------------------------- | :------------------------------------------- | | Opening new retail stores | 74.4 | 74.4 | – | | Renovation of existing retail stores | 27.1 | 14.6 | 12.5 | | Repayment of bank borrowings | 27.9 | 27.9 | – | | Information system upgrade | 11.2 | 11.2 | – | | Renovation and expansion of two existing distribution centers | 0.8 | 0.8 | – | | General working capital | 13.6 | 13.6 | – | | Total | 155.0 | 142.5 | 12.5 | [Liquidity and Financial Resources](index=25&type=section&id=Liquidity%20and%20Financial%20Resources) As of June 30, 2024, the Group's cash and cash equivalents were approximately RMB 25.1 millions, net current assets were approximately RMB 46.8 millions, net assets were approximately RMB 131.9 millions, and unutilized bank facilities amounted to RMB 62.0 millions, with a RMB 3.4 millions decrease in trade and other receivables primarily due to collection of customer receivables and reduced supplier prepayments Overview of Liquidity and Financial Resources | Metric | June 30, 2024 (RMB millions) | December 31, 2023 (RMB millions) | | :--------------- | :--------------------------- | :---------------------------- | | Cash and cash equivalents | 25.1 | 48.7 | | Net current assets | 46.8 | 64.2 | | Net assets | 131.9 | 150.4 | | Unutilized bank facilities | 62.0 | 62.0 | - Total trade receivables and deposits paid, prepayments and other receivables decreased by approximately **RMB 3.4 millions or 3.2%**, mainly due to the collection of customer receivables from merchandise sales and reduced prepayments to suppliers[65](index=65&type=chunk) [Material Investments](index=25&type=section&id=Material%20Investments) The Group held no material investments during the period - The Group held **no material investments** during the period[66](index=66&type=chunk) [Material Acquisitions and Disposals](index=25&type=section&id=Material%20Acquisitions%20and%20Disposals) The Group did not undertake any material acquisitions or disposals of subsidiaries or associates during the period - The Group did **not undertake any material acquisitions or disposals** of subsidiaries or associates during the period[67](index=67&type=chunk) [Indebtedness and Pledge of Assets](index=25&type=section&id=Indebtedness%20and%20Pledge%20of%20Assets) As of June 30, 2024, the Group's bank borrowings amounted to RMB 28.0 millions, bearing a fixed annual interest rate of 3.95%, secured by certain buildings, right-of-use assets, and investment properties, with all borrowings repayable within one year - The Group's bank borrowings amounted to **RMB 28.0 millions**, bearing a fixed annual interest rate of **3.95%**[68](index=68&type=chunk)[69](index=69&type=chunk) - The borrowings are secured by buildings with a carrying amount of approximately **RMB 10.8 millions**, right-of-use assets of **RMB 18.9 millions**, and investment properties of **RMB 8.5 millions**[68](index=68&type=chunk) - All bank borrowings are **repayable within one year**[69](index=69&type=chunk) [Gearing Ratio](index=26&type=section&id=Gearing%20Ratio) As of June 30, 2024, the Group's gearing ratio was approximately 21.2%, an increase from 18.6% at the end of 2023 - As of June 30, 2024, the gearing ratio was approximately **21.2%**, an increase from **18.6%** at the end of 2023[70](index=70&type=chunk) [Foreign Exchange Risk](index=26&type=section&id=Foreign%20Exchange%20Risk) As most of the Group's assets, liabilities, and cash flows are denominated in RMB, management believes that exchange rate fluctuations between RMB and foreign currencies will not significantly impact its financial position and performance, and no hedging activities were undertaken or are intended in the short term - Most of the Group's assets, liabilities, and cash flows are denominated in **RMB**, and foreign exchange rate fluctuations are **not expected to have a significant impact**[71](index=71&type=chunk) - No hedging activities were undertaken during the period, nor are they intended in the short term[71](index=71&type=chunk) [Contingent Liabilities](index=26&type=section&id=Contingent%20Liabilities) As of June 30, 2024, the Group had not provided any guarantees to third parties and had no material contingent liabilities - As of June 30, 2024, the Group had **no material contingent liabilities**[72](index=72&type=chunk) [Employees](index=26&type=section&id=Employees) As of June 30, 2024, the Group had 904 employees, with 895 based in mainland China, and maintained good employee relations through competitive salaries and internal training, with no significant labor disputes during the period - As of June 30, 2024, the Group had a total of **904 employees**, with **895 based in mainland China** and **9 in Hong Kong**[73](index=73&type=chunk) - The company provides **competitive salaries, internal training, and bonuses**, maintains good relationships with employees, and had **no significant labor disputes** during the period[73](index=73&type=chunk) [Other Information](index=26&type=section&id=Other%20Information) [Interim Dividend](index=26&type=section&id=Interim%20Dividend) The Board of Directors resolved not to declare any interim dividend for the period - The Board of Directors has resolved **not to declare any interim dividend** for the period[74](index=74&type=chunk) [Purchase, Sale or Redemption of the Company's Listed Securities](index=26&type=section&id=Purchase%2C%20Sale%20or%20Redemption%20of%20the%20Company's%20Listed%20Securities) Neither the company nor any of its subsidiaries purchased, sold, or redeemed any of the company's listed securities during the period - Neither the company nor any of its subsidiaries purchased, sold, or redeemed any of the company's listed securities during the period[74](index=74&type=chunk) [Directors' Securities Transactions](index=27&type=section&id=Directors'%20Securities%20Transactions) The company adopted the Model Code set out in Appendix C3 of the Listing Rules, and all directors confirmed compliance with its required standards throughout the period - The company has adopted the **Model Code** set out in Appendix C3 of the Listing Rules as the standard for directors' securities transactions[75](index=75&type=chunk) - All directors confirmed compliance with the required standards set out in the Model Code during the period[75](index=75&type=chunk) [Sufficiency of Public Float](index=27&type=section&id=Sufficiency%20of%20Public%20Float) The directors confirmed that the company maintained the public float required by the Listing Rules throughout the period and up to the date of this announcement - The directors confirmed that the company maintained the **public float required by the Listing Rules** throughout the period and up to the date of this announcement[76](index=76&type=chunk) [Corporate Governance Practices](index=27&type=section&id=Corporate%20Governance%20Practices) The company's corporate governance practices are based on the Corporate Governance Code in Appendix C1 of the Listing Rules, and the Board believes that, except for disclosed non-compliance, the company complied with all code provisions during the period - The company's corporate governance practices are based on the **Corporate Governance Code** set out in Appendix C1 of the Listing Rules[77](index=77&type=chunk) [Matters of Non-Compliance with Listing Rules 3.10(1), 3.21, 3.25 and 3.27A](index=27&type=section&id=Matters%20of%20Non-Compliance%20with%20Listing%20Rules%203.10(1)%2C%203.21%2C%203.25%20and%203.27A) Following Mr. Wang Yilin's resignation as an independent non-executive director, the company temporarily failed to comply with Listing Rules regarding the number of independent non-executive directors and the composition of the audit, remuneration, and nomination committees, but all relevant requirements were met upon Mr. Gao Jingyuan's appointment on March 27, 2024 - Following Mr. Wang Yilin's resignation as an independent non-executive director, the company temporarily **failed to comply with Listing Rules 3.10(1), 3.21, 3.25, and 3.27A**[78](index=78&type=chunk) - All relevant Listing Rules requirements were complied with after Mr. Gao Jingyuan was appointed as an independent non-executive director on **March 27, 2024**[78](index=78&type=chunk) [Events After Reporting Period](index=28&type=section&id=Events%20After%20Reporting%20Period) The Board of Directors is not aware of any disclosable material events that occurred after June 30, 2024, and up to the date of this announcement - The Board of Directors is **not aware of any disclosable material events** that occurred after June 30, 2024, and up to the date of this announcement[80](index=80&type=chunk) [Audit Committee](index=28&type=section&id=Audit%20Committee) The company has established an Audit Committee, whose primary responsibilities include providing independent opinions on financial reporting processes, internal controls, and risk management systems, and which has reviewed the condensed consolidated financial statements for the period, with all current members being independent non-executive directors, and Mr. Zheng Xueqi serving as Chairman - The primary responsibilities of the Audit Committee are to provide independent opinions on **financial reporting processes, internal control procedures, and risk management systems** to the Board[81](index=81&type=chunk) - The condensed consolidated financial statements for the period, though unaudited, have been **reviewed by the Audit Committee**[81](index=81&type=chunk) - The Audit Committee members include **Mr. Zheng Xueqi (Chairman), Mr. Gao Jingyuan, and Mr. Wu Kai**, all of whom are independent non-executive directors[81](index=81&type=chunk) [Board of Directors](index=28&type=section&id=Board%20of%20Directors) As of the date of this announcement, the Board of Directors comprises executive directors Mr. Wang Rengang and Ms. Wang Hui, non-executive director Ms. Du Jing, and independent non-executive directors Mr. Zheng Xueqi, Mr. Gao Jingyuan, and Mr. Wu Kai - The Board of Directors includes executive directors **Mr. Wang Rengang and Ms. Wang Hui**[82](index=82&type=chunk) - The non-executive director is **Ms. Du Jing**[82](index=82&type=chunk) - The independent non-executive directors are **Mr. Zheng Xueqi, Mr. Gao Jingyuan, and Mr. Wu Kai**[82](index=82&type=chunk)

Investment and Stakeholding - The company holds a 14.67% stake in Supply and Marketing Group Co., Ltd. through 11 wholly-owned subsidiaries[1] - An investment agreement was signed on January 3, 2024, for the purchase of 2.6 billion shares of Supply and Marketing Group[11] Financial Performance - Revenue for 2023 reached RMB 667,409 thousand, an increase of 4.3% compared to RMB 638,761 thousand in 2022[26] - Gross profit decreased to RMB 91,204 thousand, down 10.8% from RMB 102,207 thousand in the previous year[26] - The company reported a net loss of RMB 26,684 thousand for 2023, compared to a net loss of RMB 24,933 thousand in 2022, reflecting an increase in losses[26] - Operating cash flow before changes in working capital was RMB 15,922 thousand, a decrease of 39.2% from RMB 26,372 thousand in 2022[30] - The company reported a total comprehensive income of RMB 150,415,000 as of December 31, 2023, after accounting for a loss of RMB 26,754,000 during the year[46] Cash Flow and Liquidity - Total cash and cash equivalents at the end of 2023 were RMB 48,683 thousand, a decrease from RMB 48,972 thousand at the end of 2022[31] - The financing activities resulted in a net cash outflow of RMB 12,944 thousand, significantly reduced from RMB 94,708 thousand in 2022[31] - The company repaid bank loans amounting to RMB 8,000 thousand in 2023, a significant decrease from RMB 60,000 thousand in 2022[31] Inventory and Assets - The wholesale cash-generating unit has a carrying amount of RMB 1,467,000 as of December 31, 2023[19] - The retail cash-generating unit has a carrying amount of RMB 85,614,000 as of December 31, 2023[19] - The company experienced a decrease in inventory by RMB 33,347 thousand, compared to an increase of RMB 4,729 thousand in the previous year[30] - The company has not recognized any impairment losses for the wholesale cash-generating unit as of December 31, 2023[19] Revenue Recognition - The company recognizes revenue based on the transfer of control of goods or services to customers, reflecting the expected consideration for those goods or services[61] - The company operates retail and wholesale distribution, confirming revenue at the point of sale when control is transferred to retail customers[65] - The company recognizes revenue from sales to wholesalers or franchisees upon the transfer of product control, typically at the time of delivery[66] - The company earns commission income from sales made by counter suppliers in retail stores, with total amounts collected being transferred to suppliers after deducting commissions and expenses[67] - The group recognizes revenue from retail sales to customers when the ownership of goods is transferred, typically upon delivery, with payment terms ranging from 0 to 180 days[102] Financial Reporting and Standards - The financial statements are prepared in accordance with historical cost conventions, with amounts rounded to the nearest thousand RMB[56] - The company has adopted new international financial reporting standards, which may impact future financial reporting[54] - The company’s financial statements are presented in RMB, reflecting the primary economic environment of its major subsidiaries in China[51] - The board approved the financial statements on March 27, 2024, indicating a timely review and authorization process[45] Risk Management and Audit - The company has identified risks related to fraud and errors that could lead to significant misstatements in the financial statements[41] - The company has communicated its independence and any relationships that could affect its independence to the audit committee[42] - The audit report emphasizes the importance of management's judgments in determining the recoverable amounts of cash-generating units[18] Lease and Asset Management - Lease liabilities are measured at the present value of unpaid lease payments, discounted using the implicit interest rate or incremental borrowing rate if the implicit rate is not readily determinable[69] - The group applies International Financial Reporting Standard 16 for leases, recognizing right-of-use assets and corresponding lease liabilities for all leases except short-term leases and low-value asset leases[104] - The group assesses impairment of right-of-use assets according to International Accounting Standard 36, recognizing any identified impairment losses[109] Taxation and Deferred Tax - Current tax liabilities are calculated based on taxable profits for the year, differing from pre-tax losses due to other taxable or deductible items[121] - Deferred tax assets and liabilities are measured based on applicable tax rates expected to apply when the liabilities are settled or the assets are realized[122] - The group recognizes deferred tax assets and liabilities based on temporary differences between the carrying amounts of assets and liabilities and their tax bases[145] Credit Risk and Impairment - The group recognizes expected credit losses for trade receivables, lease receivables, and receivables from related companies based on historical loss experience and adjustments for specific debtor factors and economic conditions[157] - The assessment of significant increases in credit risk considers quantitative and qualitative data, including past experience and forward-looking information related to the debtor's industry[159] - Evidence of credit impairment includes contract violations, potential bankruptcy, or severe financial difficulties of the debtor[179] Franchise and Business Operations - The group has established a franchise program allowing interested parties to apply for franchise retail stores, contributing to wholesale distribution revenue[197] - The success of the business is heavily dependent on accurately predicting and timely adjusting the product mix to meet changing customer preferences influenced by various factors[189]

Financial Performance - For the year ended December 31, 2023, the company reported revenue of RMB 667,409 thousand, an increase of 4.5% from RMB 638,761 thousand in 2022[3]. - The gross profit for the same period was RMB 91,204 thousand, down 10.8% from RMB 102,207 thousand in 2022[3]. - The company recorded an operating loss of RMB 22,393 thousand, compared to an operating profit of RMB 4,500 thousand in the previous year[3]. - The company reported a basic and diluted loss per share of RMB (0.09), unchanged from the previous year[10]. - The company reported a total revenue of RMB 638,761 thousand for the year ended December 31, 2023, with a pre-tax loss of RMB (24,904) thousand[47]. - The group’s pre-tax loss for the year was RMB 27,456,000, compared to a loss of RMB 24,904,000 in the previous year, an increase of 10.2%[77]. - The group reported a comprehensive loss attributable to equity shareholders of approximately RMB 26.4 million, an increase in loss of about RMB 2.3 million or 9.5% compared to fiscal year 2022[122]. - The group incurred a net loss attributable to equity shareholders of approximately RMB 26.8 million, an increase in loss of about RMB 1.8 million or 7% compared to the previous fiscal year[170]. Assets and Liabilities - The total assets as of December 31, 2023, were RMB 365,506 thousand, a decrease of 6.2% from RMB 389,819 thousand in 2022[3]. - The total liabilities amounted to RMB 215,091 thousand, which is a slight increase of 1.0% from RMB 213,059 thousand in 2022[3]. - The net asset value decreased by 14.9% to RMB 150,415 thousand from RMB 176,760 thousand in 2022[3]. - The group’s total assets were RMB 375,477 thousand, which includes other corporate assets of RMB 14,342 thousand[33]. - The total equity decreased to RMB 150.4 million in 2023 from RMB 176.8 million in 2022, resulting in a debt-to-equity ratio of 18.6%, up from 4.5%[179]. Revenue Segmentation - The reported revenue from the wholesale distribution segment was RMB 667,409 thousand, with external customer revenue of RMB 532,389 thousand[31]. - The reported loss for the wholesale distribution segment was RMB (25,590) thousand, while the overall group reported a pre-tax loss of RMB (27,456) thousand[31]. - Retail sales under general retail operations amounted to RMB 510,824,000, slightly up from RMB 504,123,000 in the previous year[50]. - Wholesale distribution revenue increased significantly to RMB 135,020,000 from RMB 107,056,000, marking a growth of 26.1%[50]. - In the fiscal year 2023, the group's retail business generated revenue of approximately RMB 532.4 million, an increase of about RMB 0.7 million or 0.1% compared to fiscal year 2022, primarily due to the addition of new procurement and distribution business[135]. Operational Strategies - The company plans to enhance its operational strategies based on segment performance evaluations, focusing on resource allocation and performance assessment[44]. - The company aims to expand its "Shun Ke Long Fresh Community" stores and enhance profitability through the introduction of 24-hour AI smart unmanned stores[109]. - The company plans to utilize its supply chain and brand advantages to increase the number of franchise stores while managing risks effectively[109]. - The group aims to expand its retail network and enhance its influence in the Guangdong-Hong Kong-Macao Greater Bay Area through a multi-channel sales model combining retail, wholesale, and online-offline integration[128]. - The group plans to expand its business in the Guangdong-Hong Kong-Macao Greater Bay Area and develop 24-hour AI intelligent unmanned stores[111]. Employee and Governance - The group reported a total of RMB 62,002,000 in employee benefits expenses, up from RMB 60,177,000, an increase of 3.0%[72]. - The company has maintained a competitive salary level for employees and has not faced significant difficulties in hiring senior staff[182]. - The company has actively sought suitable candidates to fill vacancies and comply with listing rules, expanding its search channels[161]. - The company did not comply with several listing rules regarding the composition of the board and committees after the resignation of Mr. Wang Yilin as an independent non-executive director on October 26, 2023[197]. - The company has adhered to all corporate governance code provisions for the fiscal year ending December 31, 2023, except for the aforementioned issues[198]. Financial Guidance and Future Outlook - The company has not provided specific guidance for future performance or new product developments in the conference call[3]. - There were no mentions of market expansion or acquisitions in the earnings call summary[3]. - The company has not anticipated any significant impact on its performance and financial position from the application of the revised International Financial Reporting Standards[40]. - The company has not made any significant investments or acquisitions during the fiscal year 2023[175]. Cash Flow and Financing - As of December 31, 2023, the group had cash and cash equivalents of approximately RMB 48.7 million, compared to approximately RMB 49.0 million as of December 31, 2022[146]. - The company's bank loans classified as current liabilities increased significantly to RMB 28,000 thousand in 2023 from RMB 8,000 thousand in 2022[34]. - The group’s financing costs were approximately RMB 4.4 million, a decrease of about RMB 0.2 million or 5.1% from the previous year, primarily due to reduced interest expenses on short-term borrowings[168]. - The company plans to utilize part of the unallocated proceeds from the global offering for renovating existing retail stores to enhance competitiveness in Guangdong Province[185]. Market Conditions and Risks - The group identified risks related to intense competition in the retail sector and the ability to expand its business network in the Greater Bay Area[112]. - The group is facing intense competition from other supermarket operators and online retailers, which has compressed profit margins due to rising operating costs[132]. - The group has adopted a "new retail" approach, focusing on online and offline sales channels to stabilize revenue and expand innovative business[128].

Financial Performance - Revenue for the six months ended June 30, 2023, was RMB 323,177 thousand, an increase of 3.4% compared to RMB 313,064 thousand for the same period in 2022[16] - Gross profit for the same period was RMB 46,064 thousand, down 7.3% from RMB 49,706 thousand in 2022[16] - The company reported a loss before tax of RMB 12,747 thousand, an improvement from a loss of RMB 14,276 thousand in the previous year[16] - The total comprehensive income for the period was RMB 164,310,000, compared to RMB 200,848,000 for the same period in 2022, representing a decline of 18.1%[32] - The company reported a total revenue of RMB 175,506,000 for the period, down from RMB 199,751,000 in the previous year, marking a 12.1% decrease[32] - The group reported a pre-tax loss of RMB (12,747) thousand for the period[40] - The net loss attributable to the owners of the group was approximately RMB 12.6 million, a decrease of about RMB 1.7 million compared to the same period last year, primarily due to reduced sales and distribution costs, administrative expenses, and financing costs[119] - The group reported a net loss attributable to owners of approximately RMB 12.6 million, a reduction in loss of RMB 1.7 million or 11.7% compared to the same period in 2022[168] Assets and Liabilities - Total assets decreased to RMB 216,873 thousand as of June 30, 2023, compared to RMB 257,233 thousand at the end of 2022[17] - Current liabilities decreased to RMB 148,120 thousand from RMB 172,976 thousand in the previous year[17] - The net asset value as of June 30, 2023, was RMB 164,310 thousand, down from RMB 176,760 thousand at the end of 2022[18] - The company’s cash and cash equivalents were RMB 31,438 thousand, a decrease from RMB 48,972 thousand at the end of 2022[17] - The carrying value of investment properties pledged to banks was RMB 8,861,000 as of June 30, 2023, down from RMB 9,024,000 as of December 31, 2022[97] - The group had current assets of approximately RMB 68.8 million, down from RMB 84.3 million as of December 31, 2022[173] - The group's bank borrowings amounted to RMB 8.0 million as of June 30, 2023, with a collateral value of approximately RMB 8.9 million for certain investment properties[191] Cash Flow - For the six months ended June 30, 2023, the net cash flow from operating activities was RMB 6,526,000, a decrease of 76.7% compared to RMB 27,981,000 for the same period in 2022[32] - The net cash used in investing activities was RMB 1,415,000, compared to RMB 1,994,000 in the previous year, indicating a reduction of 29.1%[32] - The net cash used in financing activities was RMB 22,996,000, significantly lower than RMB 79,784,000 in the prior year, reflecting a decrease of 71.2%[32] - As of June 30, 2023, cash and cash equivalents decreased to RMB 31,438,000 from RMB 50,401,000 at the end of June 2022, a reduction of 37.6%[32] Operational Efficiency and Strategy - The company plans to enhance its product offerings and expand its market presence in the coming quarters[1] - The management is focused on improving operational efficiency and reducing costs to mitigate losses[1] - The company plans to continue its market expansion strategy, focusing on enhancing its service offerings and operational efficiency[21] - The company is actively pursuing new product development initiatives to drive future growth and innovation[21] - The group plans to expand its franchise store numbers through brand and product output, and management output, leveraging supply chain and brand advantages[120] - The group aims to continue upgrading stores and optimizing the shopping experience, as well as simplifying and upgrading the ordering system to enhance operational efficiency[120] - The group will actively develop its own e-commerce platform "Shun Ke Long You Xuan" and expand its online presence through live streaming on platforms like Douyin[120] Employee and Operational Metrics - Employee benefits expenses totaled RMB 31,947,000 for the six months ended June 30, 2023, compared to RMB 35,570,000 in 2022, reflecting a reduction of 10.5%[67] - The number of retail stores decreased from 67 as of December 31, 2022, to 63 as of June 30, 2023, representing a decline of approximately 6.0%[115] - The group had a total of 1,020 employees as of June 30, 2023, with 1,010 located in mainland China and 10 in Hong Kong and Macau[194] Revenue Segmentation - Total revenue for the retail segment reached RMB 255,292 thousand, while wholesale distribution generated RMB 67,885 thousand, leading to a total of RMB 323,177 thousand[40] - Revenue from external customers for the retail segment was RMB 265,676 thousand, and wholesale distribution contributed RMB 47,388 thousand, totaling RMB 313,064 thousand[41] - Revenue from general retail sales under the retail segment was RMB 158,856 thousand, while bulk sales generated RMB 94,088 thousand[45] - The retail store business generated revenue of approximately RMB 255.3 million, a decrease of about RMB 10.4 million or 3.9% compared to the same period last year, mainly due to the closure of one store and the conversion of five long-term loss-making stores to franchise operations[141] - The group's wholesale distribution revenue for the period was approximately RMB 67.9 million, an increase of RMB 20.5 million or 43.3% compared to the same period in 2022[161] Other Financial Metrics - Interest expenses for bank loans were RMB 223 thousand, and for lease liabilities, they were RMB 2,255 thousand, totaling RMB 2,478 thousand[49] - The gross profit margin for the period was approximately 14.3%, a decrease of about 1.6% from 15.9% in the same period last year[162] - Other operating income for the period was approximately RMB 13.4 million, a decrease of RMB 2.3 million or 14.4% compared to the same period in 2022[163] - Sales and distribution costs were approximately RMB 60.3 million, a decrease of RMB 6.7 million or 10% compared to the same period in 2022[164] - Administrative expenses for the period were approximately RMB 9.4 million, a decrease of RMB 0.4 million or 4.3% compared to the same period in 2022[165] Shareholder Information - Major shareholders hold a total of 204,558,317 shares, representing 70.42% equity interest[198] - The company has full ownership of Hainan Supply and Marketing Group Holdings Co., Ltd., which in turn fully owns Hainan Supply and Marketing Chain Network Technology Co., Ltd.[199] - Hainan Supply and Marketing Chain Network Technology Co., Ltd. fully owns Green Industry (Hong Kong) Co., Ltd.[199] - Green Industry (Hong Kong) Co., Ltd. fully owns Supply and Marketing International Holdings Limited[199] - The special service trust holds all shares of Hainan HNA No. 2 Trust Management Co., Ltd.[198]

香港交易及結算所有限公司及香港聯合交易所有限公司對本公告的內容概不 負責，對其準確性或完整性亦不發表任何聲明，並明確表示，概不對因本公告 全部或任何部分內容而產生或因倚賴該等內容而引致的任何損失承擔任何責 任。 CHINA SHUN KE LONG HOLDINGS LIMITED 中國順客隆控股有限公司 （於開曼群島註冊成立的有限公司） 974 （股份代號： ） 截 至 二 零 二 三 年 六 月 三 十 日 止 六 個 月 之 中 期 業 績 公 告 中國順客隆控股有限公司（「本公司」）董事會（「董事會」，及董事會成員「董事」） 欣然公佈本公司及其附屬公司（統稱「本集團」）截至二零二三年六月三十日止 六個月之未經審核簡明綜合中期業績。該未經審核綜合業績已經本公司審核 委員會（「審核委員會」）審閱。 財務摘要 截至六月三十日止六個月 二零二三年 二零二二年 % 人民幣千元 人民幣千元 323,177 313,064 3.2% 收益 46,064 49,706 -7.3% ...

Financial Performance - The company's revenue for the fiscal year 2022 was approximately RMB 638.8 million, a decrease of about RMB 102.9 million or 13.9% compared to the previous year[73]. - The net loss attributable to equity shareholders for the fiscal year 2022 was approximately RMB 25.0 million, a reduction in loss of about RMB 13.0 million compared to the previous year[73]. - The group's revenue for the fiscal year ending December 31, 2022, was approximately RMB 638.8 million, a decrease of about RMB 102.9 million or 13.9% compared to the fiscal year ending December 31, 2021[88]. - The net loss attributable to equity shareholders for the fiscal year 2022 was approximately RMB 25.0 million, a reduction in loss of about RMB 13.0 million compared to the previous fiscal year, primarily due to decreased management and distribution costs[88]. - The company reported non-current assets of RMB 132.586 million in 2022, down from RMB 170.933 million in 2021[185]. - Current assets totaled RMB 257.233 million in 2022, compared to RMB 310.652 million in 2021[185]. - The company's cash and cash equivalents decreased to RMB 48.972 million in 2022 from RMB 103.343 million in 2021[185]. - The company’s total liabilities decreased from RMB 224.702 million in 2021 to RMB 172.976 million in 2022[185]. - The company’s net asset value was RMB 176.760 million in 2022, down from RMB 200.848 million in 2021[185]. Corporate Governance - The company has established a compensation committee consisting of three members, including the chairman, Mr. Wang Yilin, and two independent non-executive directors[22]. - The company has adopted a nomination policy that includes transparent and formal standards for selecting directors, focusing on academic background, professional qualifications, and industry experience[25]. - The company has implemented a standard code of conduct for directors regarding securities trading, ensuring compliance with regulations[11]. - The company has arranged appropriate liability insurance for directors and senior personnel against potential legal claims arising from company activities[14]. - The company encourages directors and senior management to participate in relevant training courses to enhance their knowledge and skills[17]. - The company’s board of directors is required to rotate every three years, with new directors subject to re-election at the next shareholders' meeting[18]. - The audit committee is responsible for providing independent opinions on the effectiveness of financial reporting procedures, internal controls, and risk management systems[20]. - The company has appointed Mr. Zhao Xiaofei as the Chief Financial Officer since February 2022, bringing extensive experience in financial management[9]. - The company has a total of three executive directors, with Ms. Wang Hui appointed as an executive director in February 2022[12]. - The board of directors has reviewed the structure, composition, and diversity of the board, assessing the independence of non-executive directors[28]. - The company has received confirmations of independence from all independent non-executive directors as per listing rules[106]. - The company’s independent non-executive directors have confirmed their independence according to the relevant listing rules[106]. - The audit committee reviewed the financial statements and discussed accounting policies and risk management with senior management[141]. - The company maintained the public float required by listing rules as of December 31, 2022[140]. - There were no significant events requiring disclosure after December 31, 2022, up to the date of the report[142]. - The annual general meeting is scheduled for June 6, 2023, with a suspension of share transfer registration from June 1 to June 6, 2023[143]. Business Strategy and Operations - The company operates supermarket chains primarily in Guangdong Province, China, focusing on both retail and wholesale distribution channels[57]. - The company has faced increased competition from the rise of online retail platforms, which has affected its retail store expansion plans[54]. - The company plans to repurpose part of the funds originally allocated for opening new retail stores to renovate existing stores, enhancing competitiveness in Guangdong Province[62]. - The company has decided to slow down the pace of opening new retail stores due to the recent slowdown in China's economic growth[62]. - Management has noted that the retail industry is experiencing significant changes in consumer habits and business models post-COVID-19, necessitating a shift towards online platforms and enhanced in-store experiences[73]. - The group aims to develop its own e-commerce platform "Shun Ke Long You Xuan" and enhance online sales through continuous live streaming on platforms like Douyin[76]. - The company is committed to upgrading stores and optimizing the shopping experience through category structure adjustments[76]. - The group has implemented cost control measures, significantly reducing expenses related to rent, labor, bank loan interest, and utilities[75]. - The company is focusing on the Guangdong-Hong Kong-Macao Greater Bay Area to become a leading supermarket enterprise in the region[76]. - The group is actively exploring and expanding its international wholesale trade business, leveraging policies from the Hainan Free Trade Port and the Greater Bay Area[76]. - The company has successfully adopted new sales methods such as live streaming to align with consumer habits and enhance online sales[75]. - The group has opened 12 "Shun Ke Long Fresh Community" stores, highlighting growth in fresh product sales[75]. - The company plans to expand its franchise store count by leveraging its supply chain and brand advantages, focusing on brand output and management output[76]. - The group has exclusive distribution rights for 21 brands in Foshan, Jiangmen, and Zhaoqing, collaborating with over 483 suppliers[93]. - The group aims to achieve a balanced budget amidst a challenging retail environment, focusing on the successful model of the "Shun Ke Long Fresh Community"[93]. - The group plans to enhance its online platform and community marketing through its self-operated platform "Shun Ke Long You Xuan" and partnerships with major e-commerce platforms[93]. - The group has set annual caps for the goods procurement agreement with Gongxiao Daji Group at RMB 60 million, RMB 80 million, and RMB 100 million for the next three years[101]. - The group emphasizes the importance of supply chain management in the fresh produce sector, viewing it as a key competitive advantage[93]. - The group will maintain a high level of risk awareness to respond to any unexpected events following the COVID-19 pandemic[91]. - The group is committed to expanding its geographical sales channels across China to meet the growing demand for its products[101]. - The company is expanding its sales channels to online platforms as part of its growth strategy[124]. Challenges and Risks - The company faced a fine of RMB 700,000 due to non-disclosure of certain non-operating related transactions and guarantees in financial reports from 2017 to 2020[4]. - The company is facing challenges due to high employee turnover rates, particularly among younger workers, which may adversely affect business operations and expansion plans[114]. - The company is facing intense competition in the retail sector, which may impact future growth and profitability[182]. - The company’s ability to expand its retail network in the Greater Bay Area is contingent on various risks, including finding suitable locations and securing government approvals[182]. - Changes in customer preferences in China are rapid and influenced by multiple factors, which may affect the company's operational performance if not addressed[183]. Shareholder Information - The company has a significant indirect shareholding of approximately 70.42% held by the controlling shareholder through Supply Chain International Holdings Limited[118]. - The major shareholder, Supply and Marketing Group Co., Ltd., holds approximately 70.42% of the company's issued shares[127]. - The main shareholders include Everbright Xinglong Trust Co., Ltd. and CITIC Trust Co., Ltd., each holding 204,558,317 shares, representing 70.42%[129]. - Infini Capital Management holds 27,600,000 shares, accounting for 9.50% of the total equity[129]. - Golden Prime Holdings Limited owns 25,988,000 shares, which is 8.95% of the total equity[129]. - Hainan HNA No. 2 Trust holds a 14.67% stake in Supply and Marketing Group Co., Ltd. through 11 wholly-owned subsidiaries[130]. - The company confirms that there were no significant transactions or contracts with directors or related entities as of December 31, 2022[132]. Audit and Compliance - The company has not established an internal audit function but has engaged an independent consultant to assess its internal controls and risk management systems[32]. - The company has adopted a share option scheme as a long-term incentive plan for employees[157]. - The audit firm has been engaged since December 29, 2017, and will be proposed for reappointment at the upcoming annual general meeting[160]. - There were no transactions under the product sales agreement for the fiscal year 2022, which requires annual review by independent non-executive directors and auditors[122]. - The pricing for products sold to the supply chain group will be based on a cost-plus model, with markup rates typically ranging from 2% to 5%[121]. - The procurement amount from the largest supplier accounted for 9.13% of total purchases, while the top five suppliers accounted for 22.84%[161]. - The revenue contribution from the top five customers was 4.87% for the year ended December 31, 2022[161]. - The impairment assessment of cash-generating units is identified as a key audit matter due to significant management judgment involved[170]. - As of December 31, 2022, the wholesale cash-generating unit has a carrying value of RMB 2,343,000, with an impairment loss recognized of RMB 403,000[147]. - The retail cash-generating unit has a carrying value of RMB 79,670,000, with no impairment loss recognized for the year ended December 31, 2022[147]. - Trade receivables amounted to RMB 28,660,000 as of December 31, 2022, after deducting cumulative impairment losses of RMB 608,000[171].