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，並明確表示概不就因本公告全部或任何部份內容而 產生或因倚賴該等內容而引致之任何損失承擔任何責任。 董事長兼董事總經理、執行董事、 提名委員會主席和成員的變更 及 授權代表的變更 董事會謹宣佈，以下的董事變更由 2025 年 10 月 1 日起生效： 南粵控股有限公司（「本公司」）董事會宣佈，由 2025 年 10 月 1 日起， 蔡炳龍先生獲委任為本公司執行董事，並將出任本公司董事長兼董事總經理， 以及提名委員會主席和成員等職務；及周昊先生將不再出任本公司執行董事、 董事長兼董事總經理，以及提名委員會主席和成員。蔡炳龍先生將代替周昊先 生出任本公司根據《香港聯合交易所有限公司證券上市規則》（「《上市規則》」） 第 3.05 條所規定本公司的授權代表。 NAMYUE HOLDINGS LIMITED 南粵控股有限公司 ( 於香港註冊成立之有限公司) (股份代號: 01058) 周昊先生已確認並沒有任何有關彼退任本公司執行董事、董事長兼董事總經 理，以及提名委員會主席和成員等職務而須讓本公司股東知悉的事宜 ...

Financial Performance - For the six months ended June 30, 2025, the company reported an unaudited consolidated loss attributable to shareholders of HKD 6,064,000, an increase of HKD 65,000 or 1.1% compared to the same period last year [5]. - The consolidated revenue for the period was HKD 34,606,000, a decrease of HKD 7,512,000 or 17.8% compared to the same period last year [9]. - Revenue for the six months ended June 30, 2025, was HKD 34,606,000, down 17.9% from HKD 42,118,000 in 2024 [27]. - Gross profit decreased significantly to HKD 469,000, a decline of 91.3% from HKD 5,362,000 in the previous year [27]. - The group reported a pre-tax loss of approximately HKD 6,064,000 for the six months ended June 30, 2025, compared to a loss of HKD 5,999,000 for the same period in 2024 [59]. Assets and Liabilities - The company's unaudited net asset value as of June 30, 2025, was HKD 14,064,000, a decrease of HKD 4,997,000 from December 31, 2024, and a decrease of HKD 33,232,000 from June 30, 2024 [5]. - The company's net current liabilities increased to HKD 28,727,000 as of June 30, 2025, compared to HKD 23,987,000 at the end of 2024 [29]. - Total assets less current liabilities decreased to HKD 18,577,000 from HKD 23,564,000 at the end of 2024 [29]. - As of June 30, 2025, the group's cash and cash equivalents were HKD 3,043,000, a decrease of HKD 376,000 or 11.0% from HKD 3,419,000 on December 31, 2024 [14]. - The group's interest-bearing loan liabilities to equity ratio was 38.4% as of June 30, 2025, compared to 31.2% on December 31, 2024 [15]. Inventory and Procurement - As of June 30, 2025, the group's consolidated inventory was HKD 18,686,000, a decrease of HKD 5,362,000 or 22.3% from HKD 24,048,000 on December 31, 2024 [12]. - The total procurement amount for auxiliary raw materials was HKD 12,382,000, a decrease of 2.7% compared to the same period last year, reflecting effective cost control measures [11]. - The company reported a significant inventory provision reversal of HKD 5,101,000 for the first half of 2025, compared to HKD 10,451,000 in 2024 [31]. Revenue Streams - The external processing business produced 14,325,000 square feet, an increase of 8,013,000 square feet or 127.0% compared to the same period last year [8]. - The total sales volume of cowhide leather was 1,537,000 square feet, a decrease of 1,261,000 square feet or 45.1% compared to the same period last year [9]. - Revenue from leather processing sales was HKD 13,435,000, down 53.0% from HKD 28,606,000 in 2024, while subcontracted leather processing revenue increased to HKD 21,171,000 from HKD 13,512,000 [52]. Cost Management and Efficiency - The company implemented energy-saving measures, including a photovoltaic project that reduced production costs and improved water efficiency, recognized as an advanced industrial enterprise in Jiangsu Province [8]. - The group aims to reduce costs through strict energy-saving measures and improved material management [20]. - The total remuneration paid to key management personnel for the six months ended June 30, 2025, was HKD 458,000, up from HKD 448,000 in the same period of 2024 [74]. Future Plans and Strategies - The group plans to expand its external processing business and optimize raw leather procurement to enhance production capacity utilization [20]. - The group will focus on developing high value-added products to meet market demand for quality leather, enhancing competitiveness [20]. - The company is actively seeking new business opportunities to achieve profitability and enhance operational cash flow [41]. Shareholder Information - Major shareholders include Guangdong Nanyue Group Limited, holding 52% of the shares, and Guangdong Yuehai Holdings Group Limited, holding 19.34% [78]. - The issued and fully paid share capital remained unchanged at HKD 75,032,000, with 538,019,000 ordinary shares as of both June 30, 2025, and December 31, 2024 [66].

FF301 第 1 頁 共 10 頁 v 1.1.1 股份發行人及根據《上市規則》第十九B章上市的香港預託證券發行人的證券變動月報表 | 截至月份: | 2025年8月31日 | 狀態: 新提交 | | --- | --- | --- | | 致：香港交易及結算所有限公司 | | | | 公司名稱: | 南粵控股有限公司 | | | 呈交日期: | 2025年9月1日 | | | I. 法定/註冊股本變動 | 不適用 | | FF301 II. 已發行股份及/或庫存股份變動 | 1. 股份分類 | 普通股 | 股份類別 | 不適用 | | 於香港聯交所上市 (註1) | 是 | | | --- | --- | --- | --- | --- | --- | --- | --- | | 證券代號 (如上市) | 01058 | 說明 | | | | | | | | | 已發行股份（不包括庫存股份）數目 | | 庫存股份數目 | | 已發行股份總數 | | | 上月底結存 | | | 538,019,000 | | 0 | | 538,019,000 | | 增加 / 減少 (-) | | | | | | | | ...

Group 1 - The company reported a revenue of HKD 34.606 million for the six months ending June 30, 2025, representing a year-on-year decrease of 17.8% [1] - The loss attributable to shareholders was HKD 6.064 million, which has widened by 1.08% compared to the previous year [1] - The loss per share was HKD 0.0113 [1]

Group 1 - The company reported a revenue of HKD 34.606 million for the six months ending June 30, 2025, representing a year-on-year decrease of 17.8% [1] - The loss attributable to shareholders was HKD 6.064 million, which widened by 1.08% compared to the previous year [1] - The loss per share was HKD 0.0113 [1]

Core Viewpoint - Nanyue Holdings (01058) announced the appointment of non-executive director Ms. Li Jieyu as a member of the company's nomination committee, effective from August 22, 2025 [1] Group 1 - The appointment of Ms. Li Jieyu is a strategic move to enhance the governance structure of the company [1] - The nomination committee plays a crucial role in overseeing the selection and appointment of directors, which is vital for the company's leadership [1]

Core Viewpoint - Nanyue Holdings (01058.HK) reported a decline in revenue and an increase in shareholder losses for the six months ending June 30, 2025, indicating ongoing financial challenges [1] Financial Performance - Revenue for the period was HKD 34.606 million, a decrease of 17.8% year-on-year [1] - Gross profit was HKD 0.469 million, down from HKD 5.362 million in the same period last year [1] - Shareholder loss amounted to HKD 6.064 million, slightly higher than the loss of HKD 5.999 million reported in the previous year [1] - Basic loss per share was HKD 0.0113 [1]

Group 1 - The core point of the article is the appointment of Ms. Li Jieyu as a member of the nomination committee of Nanyue Holdings, effective from August 22, 2025 [1]

Group 1 - The core point of the article is the appointment of Li Jieyu as a member of the nomination committee of Nanyue Holdings, effective from August 22, 2025 [1]

Interim Results Summary [Condensed Financial Highlights](index=1&type=section&id=Condensed%20Financial%20Highlights) This section provides a high-level overview of the company's unaudited financial performance for the six months ended June 30, 2025, showing decreased revenue and a slight increase in loss attributable to shareholders Condensed Financial Highlights | Indicator | 2025 (Thousand HKD) | 2024 (Thousand HKD) | Change (%) | | :--- | :--- | :--- | :--- | | Revenue | 34,606 | 42,118 | -17.8 | | Loss attributable to shareholders | (6,064) | (5,999) | -1.08 | | Loss per share - Basic (HK cents) | (1.13) | (1.12) | -0.89 | Condensed Consolidated Financial Information [Condensed Consolidated Statement of Profit or Loss](index=2&type=section&id=Condensed%20Consolidated%20Statement%20of%20Profit%20or%20Loss) This statement details the company's revenue, costs, and expenses for the six months ended June 30, 2025, resulting in a loss of **HKD 6,064 thousand** for the period Condensed Consolidated Statement of Profit or Loss | Indicator | 2025 (Thousand HKD) | 2024 (Thousand HKD) | | :--- | :--- | :--- | | Revenue | 34,606 | 42,118 | | Cost of sales | (34,137) | (36,756) | | Gross profit | 469 | 5,362 | | Other income and losses, net | 1,721 | 534 | | Selling and distribution expenses | (333) | (446) | | Administrative expenses | (9,872) | (10,533) | | Impairment of property, plant and equipment | (1,089) | (396) | | Other operating income/(expenses), net | 3,036 | (417) | | Finance costs | (209) | (295) | | Loss before tax | (6,277) | (6,191) | | Income tax credit | 213 | 192 | | Loss for the period | (6,064) | (5,999) | | Basic loss per share (HK cents) | (1.13) | (1.12) | [Condensed Consolidated Statement of Profit or Loss and Other Comprehensive Income](index=3&type=section&id=Condensed%20Consolidated%20Statement%20of%20Profit%20or%20Loss%20and%20Other%20Comprehensive%20Income) This statement presents the total comprehensive expense for the period, including the loss for the period and other comprehensive income/expenses like revaluation surplus on buildings Condensed Consolidated Statement of Profit or Loss and Other Comprehensive Income | Indicator | 2025 (Thousand HKD) | 2024 (Thousand HKD) | | :--- | :--- | :--- | | Loss for the period | (6,064) | (5,999) | | Revaluation surplus on buildings (net of tax) | 681 | 807 | | Exchange differences on translating foreign operations | 386 | (423) | | Other comprehensive income for the period, net of tax | 1,067 | 384 | | Total comprehensive expense for the period | (4,997) | (5,615) | [Condensed Consolidated Statement of Financial Position](index=4&type=section&id=Condensed%20Consolidated%20Statement%20of%20Financial%20Position) This statement provides a snapshot of the company's assets, liabilities, and equity as of June 30, 2025, showing decreased net assets and increased net current liabilities Condensed Consolidated Statement of Financial Position | Indicator | June 30, 2025 (Thousand HKD) | December 31, 2024 (Thousand HKD) | | :--- | :--- | :--- | | **Non-current assets** | | | | Property, plant and equipment | 37,019 | 37,277 | | Right-of-use assets | 10,285 | 10,274 | | **Current assets** | | | | Inventories | 18,686 | 24,048 | | Trade and other receivables, prepayments and deposits | 21,234 | 20,839 | | Pledged bank balances | 3,469 | 1,297 | | Cash and bank balances | 3,043 | 3,419 | | **Current liabilities** | | | | Trade and other payables | 34,926 | 36,759 | | Other payables, accrued charges and provisions | 30,329 | 27,061 | | Interest-bearing bank loans | 8,773 | 8,639 | | Amount due to a PRC joint venture partner | 1,131 | 1,131 | | **Net assets** | 14,064 | 19,061 | | **Total equity** | 14,064 | 19,061 | - As of June 30, 2025, the Group's net current liabilities were approximately **HKD 28,727,000**, an increase from **HKD 23,987,000** as of December 31, 2024[7](index=7&type=chunk)[10](index=10&type=chunk) Notes to the Financial Statements [Basis of Preparation and Going Concern](index=5&type=section&id=Basis%20of%20Preparation%20and%20Going%20Concern) This section explains the accounting standards for interim financial information, outlines significant going concern uncertainties, and details management's mitigation measures [Basis of Preparation](index=5&type=section&id=Basis%20of%20Preparation) This subsection outlines the accounting standards and policies adopted for the preparation of the interim condensed consolidated financial information - The interim condensed consolidated financial information is prepared in accordance with **Hong Kong Accounting Standard 34 'Interim Financial Reporting'** issued by the Hong Kong Institute of Certified Public Accountants and the applicable disclosure requirements of the **Hong Kong Stock Exchange Listing Rules**[8](index=8&type=chunk) - The accounting policies and basis of preparation adopted are consistent with those used for the annual consolidated financial statements for the year ended December 31, 2024[8](index=8&type=chunk) [Going Concern](index=5&type=section&id=Going%20Concern) This subsection addresses the Group's going concern status, highlighting financial uncertainties and the management's strategies to ensure continued operations - For the six months ended June 30, 2025, the Group incurred a loss of approximately **HKD 6,064,000** and had net current liabilities of approximately **HKD 28,727,000** as of June 30, 2025, indicating significant uncertainties[10](index=10&type=chunk) - Mitigation measures include renewing a secured bank financing facility of **RMB 35,000,000** with Nanjing Bank until April 2027 and securing a bank loan of **RMB 8,000,000** with China Everbright Bank until July 2026[11](index=11&type=chunk) - The Directors concluded that the Group will have sufficient working capital to fund its operations and meet its financial obligations in the foreseeable future, thus deeming the preparation of consolidated financial statements on a going concern basis appropriate[12](index=12&type=chunk) [Segment Information and Revenue Analysis](index=6&type=section&id=Segment%20Information%20and%20Revenue%20Analysis) This section clarifies the absence of separate operating segment information due to business concentration in Mainland China and details revenue analysis by product type [Segment Information](index=6&type=section&id=Segment%20Information) This subsection explains the Group's single operating segment, primarily focused on leather processing and sales in Mainland China - Single operating segment: Over **90%** of the Group's revenue, results, and assets are related to the processing and sale of semi-finished and finished leather products and subcontracted leather processing in China, hence no separate segment information analysis is presented[13](index=13&type=chunk) - Major customers: For the six months ended June 30, 2025, revenue from customers A, B, and C each accounted for over **10%** of the Group's consolidated revenue[14](index=14&type=chunk) [Revenue](index=6&type=section&id=Revenue) This subsection provides a detailed breakdown of the Group's revenue by product type and outlines the revenue recognition policy Revenue by Source | Revenue Source | 2025 (Thousand HKD) | 2024 (Thousand HKD) | | :--- | :--- | :--- | | Sale of processed leather | 13,435 | 28,606 | | Subcontracted leather processing | 21,171 | 13,512 | | **Total Revenue** | **34,606** | **42,118** | - Revenue recognition: Revenue is recognized when goods are transferred to customers[14](index=14&type=chunk) [Other Income and Expenses](index=7&type=section&id=Other%20Income%20and%20Expenses) This section details other income and losses, other operating income/expenses, and finance costs, which collectively impact the Group's profitability [Other Income and Losses, Net](index=7&type=section&id=Other%20Income%20and%20Losses%2C%20Net) This subsection presents a breakdown of the Group's other income and losses, including financial income, scrap sales, and gains from asset disposals Other Income and Losses, Net | Indicator | 2025 (Thousand HKD) | 2024 (Thousand HKD) | | :--- | :--- | :--- | | Financial income | 8 | 6 | | Sale of scrap in Mainland China | 1,023 | 900 | | Government grants | 1 | - | | Gain on disposal of property, plant and equipment | 527 | 124 | | Net exchange loss | (11) | (69) | | Others | 173 | (427) | | **Total** | **1,721** | **534** | [Other Operating Income/(Expenses), Net](index=7&type=section&id=Other%20Operating%20Income%2F%28Expenses%29%2C%20Net) This subsection details the Group's other operating income and expenses, primarily driven by impairment reversals and provisions Other Operating Income/(Expenses), Net | Indicator | 2025 (Thousand HKD) | 2024 (Thousand HKD) | | :--- | :--- | :--- | | Reversal of impairment/(impairment) of receivables | 1,738 | (417) | | Reversal of accrued charges and payables | 1,298 | - | | **Total** | **3,036** | **(417)** | [Finance Costs](index=7&type=section&id=Finance%20Costs) This subsection outlines the Group's finance costs, primarily consisting of interest on bank loans and lease liabilities Finance Costs | Indicator | 2025 (Thousand HKD) | 2024 (Thousand HKD) | | :--- | :--- | :--- | | Bank loans and bills receivable discounted with banks | 207 | 292 | | Lease liabilities | 2 | 3 | | **Total** | **209** | **295** | [Loss Before Tax and Income Tax](index=8&type=section&id=Loss%20Before%20Tax%20and%20Income%20Tax) This section details the components contributing to the Group's loss before tax and the income tax credit recognized for the period [Loss Before Tax](index=8&type=section&id=Loss%20Before%20Tax) This subsection presents key expense items contributing to the Group's loss before tax, including cost of sales and depreciation Loss Before Tax Components | Indicator | 2025 (Thousand HKD) | 2024 (Thousand HKD) | | :--- | :--- | :--- | | Cost of inventories sold | 39,238 | 47,207 | | Depreciation of property, plant and equipment | 1,759 | 1,650 | | Depreciation of right-of-use assets | 146 | 148 | | Impairment of property, plant and equipment | 1,089 | 396 | | Reversal of inventories provision | (5,101) | (10,451) | [Income Tax Credit](index=8&type=section&id=Income%20Tax%20Credit) This subsection details the Group's income tax credit, including provisions for Mainland China tax and deferred tax adjustments - Hong Kong profits tax: The Group had no assessable profits arising in Hong Kong for the six months ended June 30, 2025, and thus no provision for Hong Kong profits tax was made[19](index=19&type=chunk) - Mainland China tax: Tax on assessable profits in Mainland China is calculated at the prevailing tax rates in Mainland China where the Group operates[19](index=19&type=chunk) Income Tax Credit | Indicator | 2025 (Thousand HKD) | 2024 (Thousand HKD) | | :--- | :--- | :--- | | Provision for the period (Mainland China) | 2 | - | | Deferred tax | (215) | (192) | | **Total** | **(213)** | **(192)** | [Loss Per Share and Dividends](index=8&type=section&id=Loss%20Per%20Share%20and%20Dividends) This section provides details on the calculation of basic loss per share and confirms the Board's decision not to declare an interim dividend [Loss Per Share](index=8&type=section&id=Loss%20Per%20Share) This subsection details the calculation of basic and diluted loss per share for the period - Basic loss per share: Calculated based on a loss for the period of **HKD 6,064,000** and a weighted average of **538,019,000** ordinary shares outstanding, resulting in **(1.13) HK cents**[21](index=21&type=chunk) - Diluted loss per share: As there were no dilutive events during the period, diluted loss per share is the same as basic loss per share[21](index=21&type=chunk) [Dividends](index=8&type=section&id=Dividends) This subsection confirms the Board's decision regarding the interim dividend for the reporting period - No interim dividend: The Board resolved not to declare an interim dividend for the six months ended June 30, 2025[22](index=22&type=chunk) [Trade and Other Receivables, Prepayments and Deposits](index=9&type=section&id=Trade%20and%20Other%20Receivables%2C%20Prepayments%20and%20Deposits) This section details the composition and aging analysis of the Group's trade and other receivables, emphasizing credit risk management and reduced total receivables before impairment Trade and Other Receivables, Prepayments and Deposits | Indicator | June 30, 2025 (Thousand HKD) | December 31, 2024 (Thousand HKD) | | :--- | :--- | :--- | | Trade receivables | 19,185 | 16,230 | | Bills receivable | 675 | 2,973 | | Prepayments, deposits and other receivables | 1,222 | 1,472 | | Amount due from a director | 152 | 164 | | **Total** | **21,234** | **20,839** | - Payment terms: Invoices are generally payable within **30 days** from the invoice date, with payment terms extended to **150 days** for certain major customers[23](index=23&type=chunk) - Credit risk management: The Group strictly controls outstanding trade receivables to minimize credit risk, with overdue balances regularly reviewed by senior management[23](index=23&type=chunk) Aging Analysis of Trade and Bills Receivables | Aging | June 30, 2025 (Thousand HKD) | December 31, 2024 (Thousand HKD) | | :--- | :--- | :--- | | Within 3 months | 14,803 | 16,621 | | 3 to 6 months | 4,557 | 1,883 | | 6 to 12 months | 878 | 3,284 | | 1 to 2 years | 6,028 | 5,453 | | 2 to 3 years | 1,171 | 2,294 | | Over 3 years | 1,158 | - | | **Total (before impairment)** | **28,595** | **29,535** | | Impairment | (8,735) | (10,332) | | **Net** | **19,860** | **19,203** | [Trade and Other Payables](index=10&type=section&id=Trade%20and%20Other%20Payables) This section provides an aging analysis of the Group's trade payables, showing a decrease in total trade and bills payables Aging Analysis of Trade Payables | Aging | June 30, 2025 (Thousand HKD) | December 31, 2024 (Thousand HKD) | | :--- | :--- | :--- | | Within 3 months | 5,738 | 7,573 | | 3 to 6 months | 4,001 | 6,765 | | Over 6 months | 16,024 | 18,196 | | **Trade payables** | **25,763** | **32,534** | | Bills payable | 9,163 | 4,225 | | **Total** | **34,926** | **36,759** | - Payment terms: Trade payables are interest-free and generally payable within **90 days**[25](index=25&type=chunk) Management Discussion and Analysis [Performance Overview](index=11&type=section&id=Performance%20Overview) For the first half of 2025, the Group's unaudited consolidated loss attributable to shareholders slightly increased by **1.1%** to **HKD 6,064 thousand**, with net assets decreasing by **HKD 4,997 thousand** - Loss attributable to shareholders: For the six months ended June 30, 2025, the Group's consolidated loss attributable to shareholders was **HKD 6,064,000**, an increase of **1.1%** compared to the same period last year[26](index=26&type=chunk) - Net assets: As of June 30, 2025, unaudited net assets were **HKD 14,064,000**, a decrease of **HKD 4,997,000** compared to December 31, 2024[26](index=26&type=chunk) - Dividends: The Board resolved not to declare an interim dividend for the six months ended June 30, 2025[26](index=26&type=chunk) [Business Review](index=11&type=section&id=Business%20Review) Despite a complex economic environment, the Group maintained stable operations, with gross profit margin and operating loss similar to the prior year, by focusing on 'turning losses into profits, improving quality and efficiency' [Macroeconomic Environment and Operating Strategies](index=11&type=section&id=Macroeconomic%20Environment%20and%20Operating%20Strategies) This subsection discusses the challenging macroeconomic environment and the Group's strategic initiatives to enhance management, reduce costs, and stabilize operations - Economic environment challenges: In the first half of 2025, the domestic and international economic environment was complex and volatile, with insufficient domestic consumer confidence and challenges from international trade policies (e.g., US tariffs)[27](index=27&type=chunk) - Operating方針: The Group firmly adhered to the 'turning losses into profits, improving quality and efficiency' work policy, pragmatically advancing various tasks, strengthening management, reducing costs, maintaining stable production and operations, and effectively promoting the transformation to subcontracted processing[27](index=27&type=chunk) - Operational efficiency improvement: Measures such as optimizing inventory management, expanding subcontracted processing business, strictly controlling administrative expenses, and strengthening receivables management effectively improved operational efficiency and reduced operating costs[27](index=27&type=chunk) [Production and Sales Performance](index=12&type=section&id=Production%20and%20Sales%20Performance) This subsection presents a quantitative analysis of the Group's production and sales volumes, highlighting shifts in business segments Production Volume Changes | Product | 2025 (Sq. ft./Tons) | 2024 (Sq. ft./Tons) | Change (%) | | :--- | :--- | :--- | :--- | | Subcontracted processing business | 14,325,000 | 6,312,000 | +127.0 | | Cowhide | 738,000 | 1,679,000 | -56.0 | | Grey leather | 0 | 384 Tons | -100.0 | Sales Volume Changes | Product | 2025 (Sq. ft./Tons) | 2024 (Sq. ft./Tons) | Change (%) | | :--- | :--- | :--- | :--- | | Subcontracted processing business | 14,325,000 | 6,312,000 | +127.0 | | Cowhide | 1,537,000 | 2,798,000 | -45.1 | | Grey leather | 0 | 384 Tons | -100.0 | Revenue by Business Segment | Business | 2025 (Thousand HKD) | 2024 (Thousand HKD) | Change (%) | | :--- | :--- | :--- | :--- | | Subcontracted processing business | 21,171 | 13,512 | +56.7 | | Cowhide sales | 13,435 | 26,467 | -49.2 | | Grey leather sales | 0 | 2,139 | -100.0 | | **Consolidated Turnover** | **34,606** | **42,118** | **-17.8** | [Operational Efficiency and Cost Control](index=13&type=section&id=Operational%20Efficiency%20and%20Cost%20Control) This subsection highlights the Group's initiatives to enhance operational efficiency, reduce costs, and manage inventory through strategic transformations and energy-saving measures - Subcontracted processing business transformation: Successfully stabilized customer numbers, achieved smooth operation of the entire production process, with production growth reaching **127.0%**, effectively spreading unit fixed manufacturing costs, and enhancing operational stability[30](index=30&type=chunk) - Energy-saving and consumption reduction measures: Introduced photovoltaic power generation projects, replaced factory roof sandwich panels, aligned with off-peak electricity preferential policies, and used clean energy to reduce production costs[28](index=28&type=chunk) - Cost control: Implemented transparent procurement through platforms like 'Yue Cai Yi' and 'JD.com', reducing total procurement by **2.7%** to **HKD 12,382,000**[31](index=31&type=chunk) - Inventory management: Consolidated inventory decreased by **22.3%** to **HKD 18,686,000**, achieving destocking through promoting finished goods to customers, integration and rectification, effective order-based production, and product innovation[32](index=32&type=chunk) - Impairment of property, plant and equipment: In view of operating losses, an impairment loss of **HKD 1,089,000** (2024: **HKD 396,000**) was recognized for property, plant and equipment[33](index=33&type=chunk) [Financial Review](index=14&type=section&id=Financial%20Review) This section reviews the Group's liquidity, financial resources, capital expenditure, pledged assets, and exchange rate risk exposure [Liquidity and Financial Resources](index=14&type=section&id=Liquidity%20and%20Financial%20Resources) This subsection analyzes the Group's cash position, cash flows from operating, investing, and financing activities, and its debt-to-equity ratio - Cash and cash equivalents: As of June 30, 2025, amounted to **HKD 3,043,000**, a decrease of **11.0%** compared to December 31, 2024[34](index=34&type=chunk) - Cash flow: Net cash inflow from operating activities was **HKD 2,327,000** (primarily due to a decrease in inventories), net cash outflow from investing activities was **HKD 2,717,000**, and net cash outflow from financing activities was **HKD 40,000** during the period[34](index=34&type=chunk) - Gearing ratio: The ratio of interest-bearing loan liabilities to shareholders' equity plus interest-bearing loan liabilities increased to **38.4%** (December 31, 2024: **31.2%**)[35](index=35&type=chunk) - Bank credit: Total bank credit facilities amounted to **HKD 38,381,000**, all unused, indicating the Group has sufficient financial resources for its daily operations[35](index=35&type=chunk) [Capital Expenditure](index=15&type=section&id=Capital%20Expenditure) This subsection details the Group's capital expenditure for the period, primarily for renovations and equipment to support production needs - Net non-current assets: As of June 30, 2025, amounted to **HKD 47,304,000**, a decrease of **0.7%** compared to December 31, 2024[36](index=36&type=chunk) - Capital expenditure: Total capital expenditure for the period was **HKD 1,114,000**, primarily for renovations and equipment purchases to meet production needs[36](index=36&type=chunk) [Pledged Assets](index=15&type=section&id=Pledged%20Assets) This subsection identifies the Group's assets pledged to banks to secure general banking facilities - Pledged assets: As of June 30, 2025, bank deposits of **HKD 3,469,000**, buildings of **HKD 32,613,000**, and right-of-use assets of **HKD 10,285,000** were pledged to banks to secure general banking facilities[37](index=37&type=chunk) [Exchange Rate Risk](index=15&type=section&id=Exchange%20Rate%20Risk) This subsection describes the Group's primary foreign currency exposure and its approach to hedging exchange rate fluctuations - Primary foreign currency risk: Primarily arises from purchases imported from overseas suppliers, with the main currencies being USD against RMB[38](index=38&type=chunk) - Hedging strategy: The Group did not hedge against risks arising from exchange rate fluctuations during the period but may use forward or hedging contracts in the future to mitigate such risks[38](index=38&type=chunk) [Employee Remuneration Policy](index=15&type=section&id=Employee%20Remuneration%20Policy) As of June 30, 2025, the Group had **232** employees, with a performance-based remuneration policy linking rewards to operating results and individual performance, alongside social and pension schemes - Number of employees: As of June 30, 2025, the Group had **232** employees (December 31, 2024: **261** employees)[39](index=39&type=chunk) - Remuneration policy: Determined by operating results and employee performance, implementing quantitative employee performance assessments and establishing an operating assessment mechanism centered on 'integration of responsibilities and performance linkage'[39](index=39&type=chunk) - Benefits: Employees in different regions participate in social and medical insurance as well as pension schemes[39](index=39&type=chunk) [Outlook](index=16&type=section&id=Outlook) The Group will continue to implement its core strategy of 'increasing revenue, reducing expenditure, and improving efficiency to reduce losses', focusing on expanding subcontracted processing, optimizing procurement, and enhancing production capacity for long-term growth - Core strategy: Continue with the core strategy of 'increasing revenue, reducing expenditure, and improving efficiency to reduce losses', actively responding to market changes and seizing opportunities from the growing demand for natural leather in the casual sports shoe sector[40](index=40&type=chunk) - Business development: Further expand subcontracted processing business, optimize raw hide procurement pace, strengthen long-term cooperation with quality customers, and improve capacity utilization[40](index=40&type=chunk) - Cost control: Strictly implement energy-saving and consumption reduction measures, strengthen material management, reduce waste and unnecessary expenses; continuously advance inventory reduction and receivables collection, optimize asset-liability structure, and improve cash flow[40](index=40&type=chunk) - Future goals: While consolidating traditional leather business, actively explore new business opportunities, achieve revenue diversification, enhance long-term growth potential, and strive for further loss reduction in the second half of 2025[40](index=40&type=chunk) Corporate Governance and Other Information [Corporate Governance Code](index=17&type=section&id=Corporate%20Governance%20Code) The company generally complies with the Corporate Governance Code, with one deviation where Mr. Zhou Hao serves as both Chairman and Managing Director - Compliance: The Company has complied with the code provisions of the **Corporate Governance Code** as set out in **Listing Rules Appendix C1** for the six months ended June 30, 2025[41](index=41&type=chunk) - Deviation: **Mr. Zhou Hao** serves concurrently as the Chairman and Managing Director of the Company, deviating from code provision **C.2.1** which stipulates that the roles of chairman and chief executive should be separate and performed by different individuals[41](index=41&type=chunk) [Directors' Securities Transactions](index=17&type=section&id=Directors%27%20Securities%20Transactions) All Directors confirmed compliance with the Model Code for Securities Transactions by Directors of Listed Issuers during the period - Compliance with Model Code: All Directors confirmed that they complied with the required standards of dealing as set out in the **Model Code for Securities Transactions by Directors of Listed Issuers** for the six months ended June 30, 2025[42](index=42&type=chunk) [Review of Interim Results](index=17&type=section&id=Review%20of%20Interim%20Results) The company's Audit Committee and independent auditor Zhonghui Anda CPA Limited have reviewed the unaudited interim results for the six months ended June 30, 2025 - Reviewing bodies: The Company's **Audit Committee** and independent auditor **Zhonghui Anda CPA Limited** have reviewed the Group's unaudited interim results for the six months ended June 30, 2025[43](index=43&type=chunk) [Purchase, Sale or Redemption of the Company's Listed Securities](index=17&type=section&id=Purchase%2C%20Sale%20or%20Redemption%20of%20the%20Company%27s%20Listed%20Securities) During the period, neither the company nor any of its subsidiaries purchased, sold, or redeemed any of its listed securities on the Stock Exchange - No securities transactions: For the six months ended June 30, 2025, neither the Company nor any of its subsidiaries purchased, sold, or redeemed any of the Company's listed securities on the Stock Exchange[44](index=44&type=chunk) [Publication of Interim Results and Interim Report](index=18&type=section&id=Publication%20of%20Interim%20Results%20and%20Interim%20Report) The interim results announcement has been published on the company's and Hong Kong Stock Exchange websites, with the interim report to be dispatched to shareholders around September 24, 2025 - Announcement publication: The interim results announcement has been published on the Company's website and the Stock Exchange's website[45](index=45&type=chunk) - Interim report: The interim report for the six months ended June 30, 2025, will be dispatched to the Company's shareholders and available for download on the aforementioned websites around **September 24, 2025**[45](index=45&type=chunk)