開達集團有限公司 ( 於百慕達註冊成立之有限公司 ) 二零二五年中期報告 ( 股份代號 : 180) (Stock Code : 180) (Incorporated in Bermuda with limited liability) KADER HOLDINGS COMPANY LIMITED INTERIM REPORT 2025 截至二零二五年六月三十日止六個月中期業績 綜合損益表 截至二零二五年六月三十日止六個月－未經審核 | | | 截至六月三十日止六個月 | | | --- | --- | --- | --- | | | | 二零二五年 | 二零二四年 | | | 附註 | 港幣千元 | 港幣千元 | | 收入 | 5及6 | 134,184 | 142,960 | | 其他收入及其他收益淨額 | | 31,138 | 6,520 | | 成品及半製品存貨的變動 | | 6,475 | 20,190 | | 成品的採購成本 | | (24,969) | (10,819) | | 耗用原料及物料 | | (8,501) | (23,456) | | 員工成本 | | (72,174) | (76, ...

| | | | | | 簡明綜合損益表 22 1 二零二五年中期報告 二零二五年中期報告 概 要 3 主席報告 4 管理層討論與分析 7 獨立核數師就簡明中期財務報告之審閱報告 21 簡明綜合損益及其他全面收入表 23 簡明綜合財務狀況表 24 簡明綜合權益變動表 25 簡明綜合現金流量表 27 未經審核簡明中期財務報告附註 28 其他資料 52 公司資料 董事會 執行董事 張鐵偉先生 （主席） 李斌先生 （行政總裁） 戴菁女士 徐凱英先生 龐浩泉先生 獨立非執行董事 曾鴻基先生 區天旂先生 周小江先生 董事委員會 審核委員會 曾鴻基先生 （主席） 區天旂先生 周小江先生 薪酬委員會 周小江先生 （主席） 張鐵偉先生 曾鴻基先生 提名委員會 富睿瑪澤會計師事務所有限公司 執業會計師 香港灣仔 港灣道18號 中環廣場42樓 註冊辦事處 Fourth Floor, One Capital Place P.O. Box 847, Grand Cayman KY1-1103 Cayman Islands 根據公司條例第16部登記的香港主要營業地點 香 港 灣仔皇后大道東28號 金鐘滙中心 6 樓 604室 開曼群島股 ...

目 錄 | 公 | 司 | 資 | 料 | | | | | | | 2 | | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | | 業 | 務 | 亮 | 點 | | | | | | | 4 | | 業 | 務 | 回 | 顧 | | | | | | | 5 | | 管 | 理 | 層 | 討 | 論 | 及 | 分 | 析 | | | 7 | | 簡 | 明 | 綜 | 合 | 全 | 面 | 收 | 益 | 表 | | 1 6 | | 簡 | 明 | 綜 | 合 | 財 | 務 | 狀 | 況 | 表 | | 1 7 | | 簡 | 明 | 綜 | 合 | 權 | 益 | 變 | 動 | 表 | | 1 9 | | 簡 | 明 | 綜 | 合 | 現 | 金 | 流 | 量 | 表 | | 2 0 | | 簡 | 明 | 綜 | 合 | 財 | 務 | 報 | 表 | 附 | 註 | 2 1 | | 其 | 他 | 資 | 料 | | | | | | | 3 9 | 公司資料 董事會 執行董事： 施煒先生 （董事長） 楊為 ...

Financial Performance - The Group's revenue for the first half of 2025 was HK$694,821,000, reflecting a year-on-year growth of 5.5% from HK$658,345,000 in the same period of 2024[4] - Gross profit for the first half of 2025 was HK$360,053,000, an increase of 2.7% compared to HK$350,595,000 in the first half of 2024, despite a decrease in gross profit margin to 51.8%[6] - Net profit attributable to the owners of the Company for the first half of 2025 was HK$67,185,000, a 7.5% increase from HK$62,478,000 in the same period of 2024[14] - Profit for the period decreased to HK$50,546,000 from HK$54,869,000, reflecting a decline of 7.9% year-over-year[144] - Basic and diluted earnings per share increased to HK$11.41 from HK$10.61, marking a growth of 7.5%[144] - Total comprehensive income for the period was HK$288,956,000, compared to a loss of HK$327,563,000 in the previous year, showing a significant recovery[147] Expenses and Costs - R&D expenses increased by 88.6% to HK$159,756,000 in the first half of 2025, representing 23.0% of the corresponding revenue, up from 12.9% in the previous year[9] - Selling and distribution expenses decreased by 11.4% to HK$152,579,000, with the selling expenses to revenue ratio declining to 22.0%[10] - Administrative expenses totaled HK$101,600,000, representing a 4.7% increase compared to HK$97,054,000 in the same period of the previous year[13] - Other losses (net) amounted to HK$12,594,000 in the first half of 2025, compared to other gains (net) of HK$2,217,000 in the first half of 2024, primarily due to foreign exchange differences and asset write-offs[45] Product and Market Development - Licensed-in products contributed approximately 39.0% of the Group's revenue, while proprietary and generic products accounted for 61.0%[5] - The Group's strategic transition towards a more diversified product portfolio is reflected in the growth of lower margin generic products under national reimbursement schemes[6] - The Group's oncology pipeline includes 6 innovative assets and 4 generics, developed through internal R&D and licensing agreements, with a focus on immuno-oncology[23] - In July 2025, Socazolimab Injection received NMPA approval for a new indication in combination with chemotherapy for extensive-stage small-cell lung cancer, marking its second approved indication[28] - A total of 10 products are currently listed in the updated National Reimbursement Drug List (NRDL), reflecting the Group's commitment to expanding market access and improving patient affordability[38] Production and Capacity - The Hefei site introduced a new pre-filled production line, enhancing capacity for VBP products, including Fondaparinux Sodium Injection and Nadroparin Calcium Injection[16] - The Nansha site focused on scaling up production of Azilsartan Tablets and advanced validation batch production for Fentanyl aerosol inhalation[17] - The Group has significantly enhanced production capacity and efficiency at its manufacturing facilities, particularly at the Hefei base with a new automated pre-filling production line, improving the output of key products like Sulfadiazine Sodium Injection and Nadroparin Calcium Injection[19] Financial Position and Liquidity - The total balance of other payables and accruals as of June 30, 2025, was HK$547,210,000, an increase of HK$76,273,000 from HK$470,937,000 at the end of 2024[55] - The Group's current ratio improved to 1.07 as of June 30, 2025, compared to 1.02 at the end of 2024, indicating better liquidity[56] - The net cash position increased significantly to HK$73,338,000 as of June 30, 2025, from HK$2,980,000 at the end of 2024[58] - Cash and cash equivalents at June 30, 2025, totaled HK$303,576,000, up from HK$190,794,000 in 2024, indicating a growth of about 59%[158] Share Options and Compensation - The Company adopted the 2022 Share Option Scheme on May 19, 2022, following the expiration of the 2012 Share Option Scheme[71] - The exercise price for options granted to directors ranges from HK$5.754 to HK$11.216[74] - A total of 1,476,000 options were granted during the reporting period[75] - The company has a structured approach to stock option grants, ensuring alignment with performance[77] - The total number of options available for exercise as of June 30, 2025, is 1,476,000[75] Governance and Compliance - The company has complied with the Corporate Governance Code throughout the six months ended June 30, 2025[125] - No purchases, sales, or redemptions of listed securities occurred during the six months ended June 30, 2025[122] - The company has confirmed that all directors complied with the Model Code regarding securities transactions throughout the accounting period[119] Risk Management - The Group's activities expose it to various financial risks, including market risk, credit risk, and liquidity risk[173] - There have been no significant changes in the Group's risk management policies since the year-end[177] - Actual results may differ from estimates made in the preparation of the unaudited condensed consolidated financial statements[172]

[Corporate Information](index=3&type=section&id=CORPORATE%20INFORMATION) This section details the company's board structure, authorized representatives, principal business locations, and professional advisors [Board of Directors](index=3&type=section&id=BOARD%20OF%20DIRECTORS) This section lists the company's executive and independent non-executive directors, along with the composition of the audit, remuneration, and nomination committees - Executive Directors include Ms. Shen Genlian (Chairperson), Mr. Zhou Jun (CEO), Mr. Xie Zongguo, and Ms. Yuan Aomei[6](index=6&type=chunk) - Independent Non-executive Directors are Mr. Ye Yunkai, Mr. Zhang Shenjin, and Mr. Wang Yunchen[6](index=6&type=chunk) - Mr. Wang Yunchen chairs the Audit Committee, Mr. Ye Yunkai chairs the Remuneration Committee, and Ms. Shen Genlian chairs the Nomination Committee[6](index=6&type=chunk) [Authorized Representatives and Joint Company Secretaries](index=3&type=section&id=AUTHORISED%20REPRESENTATIVES%20AND%20JOINT%20COMPANY%20SECRETARIES) This section updates changes in the company's authorized representatives and joint company secretaries, with Mr. Yan Luojun resigning and Ms. Ip Chui Mei and Ms. Liu Jinping being appointed - Mr. Yan Luojun resigned as authorized representative and joint company secretary on June 20, 2025[7](index=7&type=chunk)[8](index=8&type=chunk) - Ms. Ip Chui Mei was appointed as authorized representative and joint company secretary on June 20, 2025[7](index=7&type=chunk)[8](index=8&type=chunk) - Ms. Liu Jinping was appointed as joint company secretary on June 20, 2025[8](index=8&type=chunk) [Registered Office and Principal Places of Business](index=4&type=section&id=REGISTERED%20OFFICE%20AND%20PRINCIPAL%20PLACES%20OF%20BUSINESS) The company maintains its registered office in the Cayman Islands and principal places of business in Chengdu, Sichuan Province, China, and Hong Kong - The registered office is located at Cricket Square, Cayman Islands[10](index=10&type=chunk)[11](index=11&type=chunk) - The principal place of business in China is located in Haixia Liang'an Science and Technology Industrial Development Park, Wenjiang District, Chengdu, Sichuan Province[10](index=10&type=chunk)[11](index=11&type=chunk) - The principal place of business in Hong Kong is located at Dah Sing Financial Centre, Queen's Road East, Wan Chai[10](index=10&type=chunk)[11](index=11&type=chunk) [Professional Advisors and Share Registrar](index=4&type=section&id=PROFESSIONAL%20ADVISORS%20AND%20SHARE%20REGISTRAR) This section lists the company's auditor, legal counsel, principal share registrar, Hong Kong share registrar, stock code, and company website - The auditor is Grant Thornton Hong Kong Limited[11](index=11&type=chunk) - The legal counsel for Hong Kong law is Loong & Yeung, Solicitors[12](index=12&type=chunk) - The Hong Kong share registrar is Computershare Hong Kong Investor Services Limited[14](index=14&type=chunk) - The company's stock code is 2260, and its official website is www.vanov.cn[14](index=14&type=chunk) [Main Products](index=6&type=section&id=MAIN%20PRODUCTS) This section describes the company's various papermaking felt series for packaging, specialty, household, printing, and pulp board applications [Packaging Papermaking Felts Series](index=6&type=section&id=Packaging%20Papermaking%20Felts) This product series is suitable for various high-speed paper machines, producing 40-300 gram packaging paper with excellent machine adaptability, high compression resistance, and low steam consumption - Applicable to high-speed paper machines with polyurethane blind-drilled grooved press rolls, rubber blind-drilled press rolls, vacuum presses, large-diameter presses, shoe presses, and super-forming[18](index=18&type=chunk) - Features include good machine adaptability, fast speed-up, high compression resistance, continuous stable operation, high press dryness, and low steam consumption[18](index=18&type=chunk) - Suitable for operating speeds of 550–1,500 meters per minute, producing 40–300 grams of various packaging paper grades[18](index=18&type=chunk) [Specialty Papermaking Felts Series](index=7&type=section&id=Specialty%20Papermaking%20Felts) This series is designed for the press section of specialty paper machines and the dryer section of machines requiring high paper surface quality, meeting customer demands for ultra-fine paper surfaces with high air permeability, flatness, and delicacy - Applicable to the press section of various specialty paper machines and the dryer section of machines requiring high paper surface quality[20](index=20&type=chunk) - Capable of meeting high surface performance requirements for different specialty papers according to customer demands[20](index=20&type=chunk) - Coarse monofilament seamed/seamless dryer felts and composite seamed/seamless dryer felts feature high air permeability, flatness, and delicacy[20](index=20&type=chunk) [Household Papermaking Felts Series](index=7&type=section&id=Household%20Papermaking%20Felts) This series is suitable for vacuum former and crescent former paper machines, characterized by delicate paper sheets, fast speed-up, low steam consumption, and long service life - Applicable to various vacuum former and crescent former paper machines[20](index=20&type=chunk) - Product features include delicate paper sheets, fast speed-up, low steam consumption, and long service life[20](index=20&type=chunk) [Printing Papermaking Felts Series](index=8&type=section&id=Printing%20Papermaking%20Felts) This series is suitable for various compound press and shoe press paper machines, producing 30-180 gram cultural paper with smooth and delicate paper surfaces, quick start-up, and continuous stable operation - Applicable to various compound press and shoe press paper machines[25](index=25&type=chunk) - Features include smooth and delicate paper surfaces, quick start-up, and continuous stable operation[25](index=25&type=chunk) - Suitable for operating speeds of 450-2,000 meters per minute, producing 30–80 grams of various cultural paper grades[25](index=25&type=chunk) [Pulp Board Papermaking Felts Series](index=8&type=section&id=Pulp%20Board%20Felts) This series is suitable for various large-roll press and compound press machine types, designed to meet the production and operational efficiency for all pulps and full-grammage pulp boards - Applicable to various large-roll press and compound press machine types[25](index=25&type=chunk) - Capable of meeting the production and operational efficiency for all pulps and full-grammage pulp boards[25](index=25&type=chunk) [Management Discussion and Analysis](index=9&type=section&id=MANAGEMENT%20DISCUSSION%20AND%20ANALYSIS) This section provides an overview of the company's business and financial performance, including market trends, strategic initiatives, and key financial metrics [Business Review](index=9&type=section&id=BUSINESS%20REVIEW) During the reporting period, China's papermaking industry achieved steady growth under the "dual circulation" policy, while Huanlong Holdings steadfastly implemented its "new equipment, new model, new system, new value" strategy, achieving significant international market revenue growth and solidifying its ESG sustainable development foundation through photovoltaic power generation and green high-performance TPU felt R&D - In the first half of 2025, China's machine-made paper and paperboard output was approximately **79.332 million tons**, a year-on-year increase of **3.2%**[26](index=26&type=chunk)[28](index=28&type=chunk) - The cumulative export value of China's paper and paper products industry was approximately **RMB 38.78 billion**, a year-on-year increase of **2.6%**[26](index=26&type=chunk)[28](index=28&type=chunk) - Group revenue increased by **6.3%** year-on-year, with high-speed product revenue growing by **23.5%** and international market revenue by **100.1%** year-on-year[27](index=27&type=chunk)[29](index=29&type=chunk) - Sichuan Huanlong Technical Textiles Co., Ltd.'s "Photovoltaic Power Generation Project" is fully operational, showing initial benefits in energy saving and consumption reduction[30](index=30&type=chunk)[32](index=32&type=chunk) - The independently developed project "Research and Application of Key Technologies for Green High-Performance TPU Papermaking Felts" has been recognized as "internationally advanced"[30](index=30&type=chunk)[32](index=32&type=chunk) - In the future, the Group will focus on green and intelligent transformation, driving industry upgrades through technological innovation and accelerating international expansion[31](index=31&type=chunk)[33](index=33&type=chunk) [Financial Review](index=11&type=section&id=FINANCIAL%20REVIEW) The Group's revenue increased by 6.3% to RMB 102.6 million in the first half of 2025, but gross profit and gross margin declined due to increased depreciation from the new high-end production line. Profit for the period and EBITDA both decreased, primarily affected by cost pressures, reduced government subsidies, and increased R&D investment. Liquidity remained sufficient, though the net gearing ratio slightly increased Key Financial Indicators for H1 2025 | Indicator | H1 2025 (RMB'000) | H1 2024 (RMB'000) | Year-on-Year Change (%) | | :--- | :--- | :--- | :--- | | Revenue | 102,579 | 96,537 | +6.3% | | Gross Profit | 42,745 | 47,490 | -10.0% | | Gross Margin | 41.7% | 49.2% | -7.5 percentage points | | EBITDA | 32,400 | 38,176 | -15.1% | | Profit for the Period | 6,727 | 18,631 | -63.9% | - Revenue growth was primarily attributable to the increased proportion of high-end market sales and higher average product prices following the commissioning of Shanghai Jin Xiong Papermaking Felt Co., Ltd.'s **14.5-meter high-end production line**[34](index=34&type=chunk)[37](index=37&type=chunk) - The decrease in gross margin was mainly due to increased depreciation resulting from the commissioning of the **14.5-meter high-end production line**[35](index=35&type=chunk)[38](index=38&type=chunk) Changes in Other Income and Expenses for H1 2025 | Indicator | H1 2025 (RMB'000) | H1 2024 (RMB'000) | Year-on-Year Change (RMB'000) | | :--- | :--- | :--- | :--- | | Other Income | 4,537 | 8,105 | -3,568 | | Sales and Distribution Expenses | 11,231 | 11,482 | -251 | | Administrative and Other Operating Expenses | 21,917 | 17,242 | +4,675 | | Finance Costs | 6,824 | 6,565 | +259 | | Income Tax Expense | 671 | 1,704 | -1,033 | - The decrease in other income was mainly due to reduced government subsidies and VAT super deduction[43](index=43&type=chunk)[45](index=45&type=chunk) - The increase in administrative and other operating expenses was primarily due to increased R&D investment and depreciation[48](index=48&type=chunk)[53](index=53&type=chunk) - The increase in finance costs was mainly due to the cessation of interest capitalization for project loans and increased financing for discounted bills after the completion of the **14.5-meter high-end production line** construction[49](index=49&type=chunk)[54](index=54&type=chunk) - The decrease in income tax expense was mainly due to lower profit before tax[50](index=50&type=chunk)[55](index=55&type=chunk) Assets, Liabilities, and Turnover Period for H1 2025 | Indicator | As at June 30, 2025 (RMB'000) | As at December 31, 2024 (RMB'000) | Change (RMB'000) | | :--- | :--- | :--- | :--- | | Trade and Other Receivables | 189,428 | 215,218 | -25,790 | | Inventory Turnover Period (days) | 103.0 | 90.1 | +12.9 | | Trade Payables Turnover Period (days) | 107.4 | 102.6 | +4.8 | | Net Assets | 392,678 | 399,728 | -7,050 | | Current Assets | 322,033 | 336,121 | -14,088 | | Current Liabilities | 250,121 | 265,300 | -15,179 | | Current Ratio | 128.8% | 126.7% | +2.1 percentage points | | Net Gearing Ratio | 82.4% | 81.0% | +1.4 percentage points | | Gearing Ratio | 94.5% | 92.2% | +2.3 percentage points | | Total Pledged Assets | 158,714 | 178,495 | -19,781 | - The Board resolved not to declare an interim dividend for the six months ended June 30, 2025[58](index=58&type=chunk)[63](index=63&type=chunk) - The Group primarily funds its operations with cash generated from operating activities and bank borrowings, possessing ample cash and available bank facilities[60](index=60&type=chunk)[61](index=61&type=chunk)[65](index=65&type=chunk)[66](index=66&type=chunk) - The Group's primary currency is RMB, but it holds some bank balances and trade receivables denominated in USD and HKD, exposing it to foreign exchange risk, with no foreign exchange hedging policy in place[62](index=62&type=chunk)[70](index=70&type=chunk)[75](index=75&type=chunk) - As at June 30, 2025, the Group had no significant contingent liabilities[71](index=71&type=chunk)[76](index=76&type=chunk) [Other Operational Information](index=16&type=section&id=OTHER%20OPERATIONAL%20INFORMATION) During the reporting period, the company held no significant investments and made no material acquisitions or disposals of subsidiaries. Employee numbers slightly increased, leading to higher staff costs. The company changed the use of a portion of its unutilized net proceeds from the listing, reallocating funds to upgrade production facilities and enhance R&D capabilities - For the six months ended June 30, 2025, there were no major investments held, nor any material acquisitions or disposals of subsidiaries, associates, and joint ventures[77](index=77&type=chunk)[81](index=81&type=chunk) Employee Numbers and Costs | Indicator | As at June 30, 2025 | As at June 30, 2024 | Change | | :--- | :--- | :--- | :--- | | Number of Employees | 407 persons | 396 persons | +11 persons | | Total Staff Costs (RMB'000) | 20,700 | 19,100 | +1,600 | - The company determines remuneration based on employee qualifications, experience, position, and seniority, and provides regular on-the-job training and annual performance reviews[79](index=79&type=chunk)[82](index=82&type=chunk) - On March 10, 2025, the company announced a change in the use of the remaining unutilized net proceeds from the listing of **HK$9.7 million**, reallocating funds from seeking strategic acquisitions to purchasing machinery for production base upgrades and enhancing R&D capabilities[85](index=85&type=chunk)[87](index=87&type=chunk) Use of Net Proceeds from Listing (As at June 30, 2025) | Allocated Use | Original Allocation Ratio | Original Allocated Amount (HK$ million) | Utilized as at December 31, 2024 (HK$ million) | Revised Allocated Amount per Announcement (HK$ million) | Utilized as at June 30, 2025 (HK$ million) | Unutilized Balance as at June 30, 2025 (HK$ million) | Proposed Timeline | | :--- | :--- | :--- | :--- | :--- | :--- | :--- | :--- | | Purchase machinery to upgrade production base | 40% | 38.8 | 38.8 | 5.0 | 1.8 | 3.2 | On or before December 31, 2025 | | Enhance R&D capabilities | 20% | 19.4 | 19.4 | 4.7 | 4.5 | 0.2 | On or before December 31, 2025 | | Seek strategic acquisitions | 10% | 9.7 | — | — | — | — | — | | Reduce debt | 20% | 19.4 | 19.4 | — | — | — | — | | For working capital and other general corporate purposes | 10% | 9.7 | 9.7 | — | — | — | — | | **Total** | **100%** | **97.0** | **87.3** | **9.7** | **6.3** | **3.4** | | [Other Information](index=19&type=section&id=OTHER%20INFORMATION) This section covers directors' and substantial shareholders' interests, securities transactions, share option and award schemes, post-reporting events, corporate governance, and public float [Directors' Interests and Short Positions in Shares, Underlying Shares and Debentures](index=19&type=section&id=DIRECTORS'%20INTERESTS%20AND%20SHORT%20POSITIONS%20IN%20SHARES,%20UNDERLYING%20SHARES%20AND%20DEBENTURES) As at June 30, 2025, company directors Ms. Shen Genlian and Mr. Zhou Jun (as a couple) are deemed to jointly hold a **74.46% long position** in the company's shares, primarily through discretionary trusts holding shares in Perfect Angle Limited and Wonderful Advisor Limited Directors' Long Positions in Shares (As at June 30, 2025) | Name of Director | Capacity/Nature of Interest | Number of Shares Held/Interested | Approximate Percentage of Interest in the Company | | :--- | :--- | :--- | :--- | | Ms. Shen Genlian | Founder of discretionary trust; Spouse's interest | 359,947,200 | 74.46% | | Mr. Zhou Jun | Founder of discretionary trust; Spouse's interest | 359,947,200 | 74.46% | - Ms. Shen Genlian and Mr. Zhou Jun indirectly hold shares in Perfect Angle Limited and Wonderful Advisor Limited through Vistra Trust as trustee for SGL Trust and ZJ Trust, and are thus deemed to jointly own the company's shares[96](index=96&type=chunk)[97](index=97&type=chunk) - Ms. Shen Genlian and Mr. Zhou Jun are also deemed to have interests in the shares of associated corporations Perfect Angle Limited and Chengdu Huanlong Lixin Technology Co., Ltd[99](index=99&type=chunk)[100](index=100&type=chunk)[101](index=101&type=chunk)[102](index=102&type=chunk) [Interests and Short Positions of Substantial Shareholders in Shares and Underlying Shares of the Company](index=22&type=section&id=INTERESTS%20AND%20SHORT%20POSITIONS%20OF%20THE%20SUBSTANTIAL%20SHAREHOLDERS%20IN%20SHARES%20AND%20UNDERLYING%20SHARES%20OF%20THE%20COMPANY) As at June 30, 2025, substantial shareholders Perfect Angle Limited and Wonderful Advisor Limited held **55.84%** and **18.61%** of the company's shares, respectively, with Vistra Trust, as trustee, deemed to have an interest in all shares held by both Substantial Shareholders' Interests in Shares (As at June 30, 2025) | Name | Capacity/Nature of Interest | Number of Shares Held/Interested | Approximate Percentage of Interest | | :--- | :--- | :--- | :--- | | Perfect Angle | Beneficial owner | 269,960,400 | 55.84% | | Wonderful Advisor | Beneficial owner | 89,986,800 | 18.61% | | Vistra Trust | Trustee | 359,947,200 | 74.46% | - Vistra Trust, as trustee for SGL Trust and ZJ Trust, holds **100%** of the issued share capital of Perfect Angle and Wonderful Advisor, and is therefore deemed to have an interest in all shares held by them[105](index=105&type=chunk)[106](index=106&type=chunk) [Securities Transactions by Directors](index=23&type=section&id=SECURITIES%20TRANSACTIONS%20BY%20DIRECTORS) The company has adopted the Model Code set out in Appendix C3 of the Listing Rules, and all directors confirmed compliance with the code for the six months ended June 30, 2025 - The company has adopted the Model Code set out in Appendix C3 of the Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited as the code of conduct for directors' securities transactions[107](index=107&type=chunk)[110](index=110&type=chunk) - All directors confirmed compliance with the Model Code for the six months ended June 30, 2025[107](index=107&type=chunk)[110](index=110&type=chunk) [Share Option Scheme](index=23&type=section&id=SHARE%20OPTION%20SCHEME) The company adopted a share option scheme on December 9, 2021, to incentivize Group members, but as at June 30, 2025, no share options were granted, exercised, cancelled, or lapsed, with **48,000,000 share options** remaining available for grant - The share option scheme was adopted on December 9, 2021, to incentivize directors, employees, consultants, substantial shareholders, and others[108](index=108&type=chunk)[111](index=111&type=chunk) - As at June 30, 2025, no share options were granted, exercised, cancelled, or lapsed, and there were no outstanding share options[108](index=108&type=chunk)[111](index=111&type=chunk) - As at June 30, 2025, the number of share options available for grant remained at **48,000,000**[109](index=109&type=chunk)[111](index=111&type=chunk) [Share Award Scheme](index=24&type=section&id=SHARE%20AWARD%20SCHEME) The company adopted a share award scheme on May 9, 2024, to recognize and reward eligible participants for their contributions to the Group and provide incentives. The scheme has a 10-year validity, with a maximum of **30,000,000 award shares**, but as at June 30, 2025, no award shares had been granted - The share award scheme was adopted on May 9, 2024, to recognize and reward eligible participants for their contributions to the Group and provide incentives[112](index=112&type=chunk)[115](index=115&type=chunk) - The scheme has a 10-year validity, with a maximum of **30,000,000 award shares**, representing approximately **6.21%** of the issued share capital as at the adoption date[112](index=112&type=chunk)[115](index=115&type=chunk) - As at June 30, 2025, no award shares had been granted[112](index=112&type=chunk)[115](index=115&type=chunk) [Events After the Reporting Period](index=24&type=section&id=EVENTS%20AFTER%20THE%20REPORTING%20PERIOD) Except as disclosed in this interim report, as at the date of this report, no significant events after June 30, 2025, have occurred for the Group - As at the date of this report, no significant events after June 30, 2025, have occurred for the Group[113](index=113&type=chunk)[116](index=116&type=chunk) [Corporate Governance](index=24&type=section&id=CORPORATE%20GOVERNANCE) For the six months ended June 30, 2025, the company adopted and complied with the principles and code provisions of the Corporate Governance Code set out in Appendix C1 of the Listing Rules - The company has adopted and complied with the principles and code provisions of the Corporate Governance Code set out in Appendix C1 of the Listing Rules[114](index=114&type=chunk)[117](index=117&type=chunk) [Purchase, Sale or Redemption of the Company's Listed Securities](index=25&type=section&id=PURCHASE,%20SALE%20OR%20REDEMPTION%20OF%20THE%20LISTED%20SECURITIES%20OF%20THE%20COMPANY) 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, nor held any treasury shares - 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[118](index=118&type=chunk)[123](index=123&type=chunk) - As at June 30, 2025, neither the company nor its subsidiaries held any treasury shares[118](index=118&type=chunk)[123](index=123&type=chunk) [Arrangement to Purchase Shares or Debentures](index=25&type=section&id=ARRANGEMENT%20TO%20PURCHASE%20SHARES%20OR%20DEBENTURES) Save for the share option scheme and share award scheme, for the six months ended June 30, 2025, neither the company nor any of its associated corporations was a party to any arrangement enabling directors to acquire benefits by means of acquiring shares in or debentures of the company or any other body corporate - Save for the share option scheme and share award scheme, neither the company nor any of its associated corporations was a party to any arrangement enabling directors to acquire benefits by means of acquiring shares in or debentures of the company or any other body corporate[119](index=119&type=chunk)[124](index=124&type=chunk) [Audit Committee](index=25&type=section&id=AUDIT%20COMMITTEE) The Audit Committee has reviewed the Group's unaudited interim results for the six months ended June 30, 2025, and considers their preparation to be in compliance with applicable accounting standards and the Listing Rules, with adequate disclosures made - The Audit Committee has reviewed the Group's unaudited interim results for the six months ended June 30, 2025[120](index=120&type=chunk)[125](index=125&type=chunk) - The Audit Committee considers the results to have been prepared in compliance with applicable accounting standards, requirements, and the Listing Rules, with adequate disclosures made[120](index=120&type=chunk)[125](index=125&type=chunk) [Sufficiency of Public Float](index=25&type=section&id=SUFFICIENCY%20OF%20PUBLIC%20FLOAT) Based on public information and to the best of the directors' knowledge, the company has maintained sufficient public float in compliance with the Listing Rules throughout the six months ended June 30, 2025 - For the six months ended June 30, 2025, the company has maintained sufficient public float in compliance with the Listing Rules at all times[121](index=121&type=chunk)[126](index=126&type=chunk) [Changes in Directors' and Chief Executive's Information](index=25&type=section&id=CHANGES%20IN%20DIRECTORS'%20AND%20CHIEF%20EXECUTIVE'S%20INFORMATION) There have been no changes in directors' information requiring disclosure under the Listing Rules from the date of the last annual report to the date of this report - There have been no changes in directors' information requiring disclosure under Rules 13.51(2)(a) to (e) and (g) of the Listing Rules from the date of the last annual report to the date of this report[122](index=122&type=chunk)[127](index=127&type=chunk) [Condensed Consolidated Statement of Profit or Loss and Other Comprehensive Income](index=26&type=section&id=CONDENSED%20CONSOLIDATED%20STATEMENT%20OF%20PROFIT%20OR%20LOSS%20AND%20OTHER%20COMPREHENSIVE%20INCOME) For the six months ended June 30, 2025, the Group's revenue increased by **6.3%** to **RMB 102.6 million**, but due to increased cost of sales and a decline in gross margin, profit and total comprehensive income for the period significantly decreased by **63.9%** to **RMB 6.7 million** Summary of Condensed Consolidated Statement of Profit or Loss and Other Comprehensive Income | Indicator | H1 2025 (RMB'000) | H1 2024 (RMB'000) | | :--- | :--- | :--- | | Revenue | 102,579 | 96,537 | | Cost of Sales | (59,834) | (49,047) | | Gross Profit | 42,745 | 47,490 | | Other Income | 4,537 | 8,105 | | Sales and Distribution Expenses | (11,231) | (11,482) | | Administrative and Other Operating Expenses | (21,917) | (17,242) | | Finance Costs | (6,824) | (6,565) | | Profit Before Income Tax | 7,398 | 20,335 | | Income Tax Expense | (671) | (1,704) | | Profit and Total Comprehensive Income for the Period | 6,727 | 18,631 | | Earnings Per Share Attributable to Owners of the Company (RMB cents) | 1.46 | 3.84 | - Profit and total comprehensive income for the period decreased by **63.9%** year-on-year, primarily affected by increased cost of sales, decreased other income, and increased administrative and other operating expenses[129](index=129&type=chunk) [Condensed Consolidated Statement of Financial Position](index=27&type=section&id=CONDENSED%20CONSOLIDATED%20STATEMENT%20OF%20FINANCIAL%20POSITION) As at June 30, 2025, the Group's total assets slightly increased, but net assets slightly decreased. Net current assets remained stable, with a current ratio of **128.8%**, indicating healthy short-term solvency Summary of Condensed Consolidated Statement of Financial Position | Indicator | As at June 30, 2025 (RMB'000) | As at December 31, 2024 (RMB'000) | | :--- | :--- | :--- | | Non-current Assets | 527,826 | 527,228 | | Current Assets | 322,033 | 336,121 | | Current Liabilities | 250,121 | 265,300 | | Net Current Assets | 71,912 | 70,821 | | Non-current Liabilities | 207,060 | 198,321 | | Net Assets | 392,678 | 399,728 | | Total Equity | 392,678 | 399,728 | - The current ratio increased from **126.7%** as at December 31, 2024, to **128.8%** as at June 30, 2025[59](index=59&type=chunk)[64](index=64&type=chunk) - Trade and other receivables decreased, while inventories increased[130](index=130&type=chunk) - Bank borrowings and discounted bill financing decreased, but other borrowings increased[130](index=130&type=chunk) [Condensed Consolidated Statement of Changes in Equity](index=29&type=section&id=CONDENSED%20CONSOLIDATED%20STATEMENT%20OF%20CHANGES%20IN%20EQUITY) For the six months ended June 30, 2025, equity attributable to owners of the company decreased from **RMB 396.1 million** at the beginning of the period to **RMB 389.1 million**, primarily due to the combined effect of profit for the period, transfer to statutory reserves, and dividend distribution Summary of Condensed Consolidated Statement of Changes in Equity | Indicator | As at January 1, 2025 (RMB'000) | Profit and Total Comprehensive Income for the Period (RMB'000) | Transfer to Statutory Reserves (RMB'000) | Dividends (RMB'000) | As at June 30, 2025 (RMB'000) | | :--- | :--- | :--- | :--- | :--- | :--- | | Equity Attributable to Owners of the Company | 396,065 | 6,645 | — | (13,639) | 389,071 | | Non-controlling Interests | 3,663 | 82 | — | (138) | 3,607 | | **Total Equity** | **399,728** | **6,727** | **—** | **(13,777)** | **392,678** | - Profit for the period was **RMB 6,727 thousand**, of which **RMB 6,645 thousand** was attributable to owners of the company[133](index=133&type=chunk) - A transfer of **RMB 962 thousand** was made to statutory reserves, and dividends of **RMB 13,639 thousand** were distributed[133](index=133&type=chunk) [Condensed Consolidated Statement of Cash Flows](index=30&type=section&id=CONDENSED%20CONSOLIDATED%20STATEMENT%20OF%20CASH%20FLOWS) For the six months ended June 30, 2025, the Group generated **RMB 54.7 million** net cash from operating activities, had a net outflow of **RMB 44.6 million** from investing activities (including a loan to a shareholder), and a net outflow of **RMB 6.2 million** from financing activities, resulting in a net increase of **RMB 3.9 million** in cash and cash equivalents Summary of Condensed Consolidated Statement of Cash Flows | Type of Activity | H1 2025 (RMB'000) | H1 2024 (RMB'000) | | :--- | :--- | :--- | | Net Cash Generated from Operating Activities | 54,712 | 39,507 | | Net Cash Used in Investing Activities | (44,634) | (24,861) | | Net Cash Used in Financing Activities | (6,172) | (49,842) | | Net Increase/(Decrease) in Cash and Cash Equivalents | 3,906 | (35,196) | | Cash and Cash Equivalents at End of Period | 50,846 | 43,413 | - Net cash generated from operating activities increased year-on-year, primarily due to an increase in net working capital changes[136](index=136&type=chunk) - Net cash used in investing activities increased, mainly including the acquisition of property, plant and equipment, intangible assets, and a loan of **RMB 25.8 million** to a shareholder[136](index=136&type=chunk)[142](index=142&type=chunk)[201](index=201&type=chunk)[202](index=202&type=chunk) - Net cash used in financing activities significantly decreased, mainly due to increased proceeds from bank borrowings and reduced repayment of bank borrowings, as well as expenditure for purchasing shares for the share award scheme in 2024[136](index=136&type=chunk) [Notes to the Condensed Consolidated Financial Statements](index=32&type=section&id=NOTES%20TO%20THE%20CONDENSED%20CONSOLIDATED%20FINANCIAL%20STATEMENTS) This section provides detailed notes on the preparation basis, critical accounting estimates, adoption of new accounting standards, revenue, expenses, assets, liabilities, and other financial commitments [1. General Information and Basis of Preparation](index=32&type=section&id=1.%20GENERAL%20INFORMATION%20AND%20BASIS%20OF%20PREPARATION) This note outlines Huanlong Holdings Limited's incorporation background, principal business (design, manufacture, and sale of papermaking felts), controlling shareholders, listing status, and the basis of preparation for the condensed consolidated financial statements, which is HKAS 34 - The company was incorporated in the Cayman Islands on **November 5, 2018**, primarily engaged in the design, manufacture, and sale of papermaking felts[138](index=138&type=chunk)[139](index=139&type=chunk)[142](index=142&type=chunk)[143](index=143&type=chunk) - The ultimate controlling parties are Ms. Shen Genlian and her spouse, Mr. Zhou Jun[139](index=139&type=chunk)[143](index=143&type=chunk) - Shares were listed on the Main Board of The Stock Exchange of Hong Kong Limited on **January 11, 2022**[140](index=140&type=chunk)[144](index=144&type=chunk) - The financial statements are prepared in accordance with HKAS 34 "Interim Financial Reporting" and presented in RMB[140](index=140&type=chunk)[141](index=141&type=chunk)[144](index=144&type=chunk)[145](index=145&type=chunk) [2. Critical Accounting Estimates and Judgements](index=33&type=section&id=2.%20CRITICAL%20ACCOUNTING%20ESTIMATES%20AND%20JUDGEMENTS) This note states that the critical accounting estimates and judgments used in preparing the condensed consolidated interim financial statements are consistent with those used for the annual financial statements for the year ended December 31, 2024 - Significant judgments made by management in applying accounting policies and estimates of uncertainty are the same as those applied in the annual financial statements for the year ended December 31, 2024[149](index=149&type=chunk)[152](index=152&type=chunk) [3. Adoption of Amended HKFRS Accounting Standards](index=34&type=section&id=3.%20ADOPTION%20OF%20AMENDED%20HKFRS%20ACCOUNTING%20STANDARDS) The Group has adopted HKAS 21 (Amendment) "Lack of Exchangeability" effective January 1, 2025, which had no material impact on the results and financial position for the current and prior periods - HKAS 21 (Amendment) "Lack of Exchangeability" effective **January 1, 2025**, has been adopted[153](index=153&type=chunk)[157](index=157&type=chunk) - The adoption of the amended standard had no material impact on the Group's results and financial position for the current and prior periods[154](index=154&type=chunk)[158](index=158&type=chunk) - Other new and amended HKFRS accounting standards issued but not yet effective are not expected to have a significant impact on the condensed consolidated financial statements[155](index=155&type=chunk)[159](index=159&type=chunk) [4. Revenue and Segment Reporting](index=35&type=section&id=4.%20REVENUE%20AND%20SEGMENT%20REPORTING) The Group's revenue primarily derives from the design, manufacture, and sale of papermaking felts, with packaging papermaking felts being the largest contributor. The Chinese market remains the main revenue source, but overseas market revenue doubled, and all non-current assets are located in China Revenue by Product Category (For the six months ended June 30, 2025) | Product Category | 2025 (RMB'000) | 2024 (RMB'000) | | :--- | :--- | :--- | | Packaging Papermaking Felts | 65,516 | 59,584 | | Specialty Papermaking Felts | 19,389 | 20,089 | | Printing Papermaking Felts | 5,761 | 7,391 | | Household Papermaking Felts | 4,769 | 3,533 | | Pulp Board Papermaking Felts | 7,144 | 5,940 | | **Total Revenue** | **102,579** | **96,537** | Revenue by Geographical Location (For the six months ended June 30, 2025) | Geographical Region | 2025 (RMB'000) | 2024 (RMB'000) | | :--- | :--- | :--- | | China | 86,581 | 88,543 | | Overseas | 15,998 | 7,994 | | **Total Revenue** | **102,579** | **96,537** | - Overseas market revenue increased by **100.1%** year-on-year, demonstrating significant effectiveness of the internationalization strategy[27](index=27&type=chunk)[29](index=29&type=chunk)[165](index=165&type=chunk) - As at June 30, 2025, all of the Group's non-current assets are located in China[165](index=165&type=chunk) - Customer A is a major customer, contributing **RMB 10,631 thousand** in revenue[165](index=165&type=chunk) [5. Other Income](index=37&type=section&id=5.%20OTHER%20INCOME) The Group's other income for the six months ended June 30, 2025, was approximately **RMB 4.5 million**, a decrease from **RMB 8.1 million** in the prior period, mainly due to reduced government subsidies and VAT super deduction Details of Other Income (For the six months ended June 30, 2025) | Item | 2025 (RMB'000) | 2024 (RMB'000) | | :--- | :--- | :--- | | Bank Interest Income | 998 | 1,742 | | Sales of Scraps | 1,063 | 1,052 | | Government Subsidies | 506 | 1,048 | | Rental Income | 1,441 | 1,399 | | Net Exchange Gain | 102 | 114 | | VAT Super Deduction | 255 | 2,160 | | Miscellaneous Income | 172 | 590 | | **Total** | **4,537** | **8,105** | - Government subsidies decreased by **RMB 542 thousand**, and VAT super deduction decreased by **RMB 1,905 thousand**[167](index=167&type=chunk) [6. Finance Costs](index=38&type=section&id=6.%20FINANCE%20COSTS) The Group's finance costs for the six months ended June 30, 2025, were **RMB 6.8 million**, a slight increase from the prior period, mainly due to a decrease in the amount of borrowing costs capitalized for qualifying assets Details of Finance Costs (For the six months ended June 30, 2025) | Item | 2025 (RMB'000) | 2024 (RMB'000) | | :--- | :--- | :--- | | Interest Expense on Discounted Bills Financing | 1,081 | 302 | | Interest Expense on Bank Borrowings | 5,088 | 6,482 | | Interest Expense on Other Borrowings | 597 | 2,145 | | Interest Expense on Lease Liabilities | 58 | 159 | | **Total Borrowing Costs** | **6,824** | **9,088** | | Less: Amount of Borrowing Costs Capitalized for Qualifying Assets | — | (2,523) | | **Total Finance Costs** | **6,824** | **6,565** | - No borrowing costs were capitalized for qualifying assets in H1 2025, compared to **RMB 2,523 thousand** capitalized in H1 2024, leading to an increase in total finance costs[170](index=170&type=chunk) [7. Profit Before Income Tax](index=39&type=section&id=7.%20PROFIT%20BEFORE%20INCOME%20TAX) This note details the various expenses and income affecting profit before income tax, where depreciation, maintenance provisions, and R&D costs significantly increased, leading to a decrease in profit before tax Expenses/Income Affecting Profit Before Income Tax (For the six months ended June 30, 2025) | Item | 2025 (RMB'000) | 2024 (RMB'000) | | :--- | :--- | :--- | | Amortization of Intangible Assets | 3,786 | 2,826 | | Depreciation of Land Lease Prepayments | 169 | 169 | | Depreciation of Owned Assets | 11,568 | 6,371 | | Depreciation of Right-of-Use Assets | 2,634 | 2,634 | | Depreciation of Investment Property | 1,019 | 1,018 | | Cost of Inventories Recognized as Expense | 23,136 | 22,515 | | Provision for Maintenance | 5,179 | 2,598 | | Research and Development Costs | 4,599 | 3,086 | | Total Staff Costs | 20,686 | 19,105 | - Depreciation of owned assets significantly increased from **RMB 6,371 thousand** to **RMB 11,568 thousand**[173](index=173&type=chunk) - Maintenance provisions nearly doubled year-on-year, and R&D costs also significantly increased[173](index=173&type=chunk) [8. Income Tax Expense](index=40&type=section&id=8.%20INCOME%20TAX%20EXPENSE) The Group's income tax expense for the six months ended June 30, 2025, was **RMB 0.7 million**, a decrease from **RMB 1.7 million** in the prior period, mainly due to lower profit before tax Details of Income Tax Expense (For the six months ended June 30, 2025) | Item | 2025 (RMB'000) | 2024 (RMB'000) | | :--- | :--- | :--- | | China Corporate Income Tax | 346 | 1,424 | | Deferred Tax (Current Year) | 325 | 280 | | **Total Income Tax Expense** | **671** | **1,704** | - The decrease in income tax expense was primarily attributable to lower profit before income tax[50](index=50&type=chunk)[55](index=55&type=chunk) [9. Earnings Per Share](index=40&type=section&id=9.%20EARNINGS%20PER%20SHARE) For the six months ended June 30, 2025, basic earnings per share attributable to owners of the company significantly decreased to **RMB 1.46 cents** from **RMB 3.84 cents** in the prior period, with no potential dilutive ordinary shares Earnings Per Share (For the six months ended June 30, 2025) | Indicator | 2025 | 2024 | | :--- | :--- | :--- | | Profit for the Period Attributable to Owners of the Company (RMB'000) | 6,645 | 18,441 | | Weighted Average Number of Ordinary Shares for Basic EPS Calculation | 456,626,000 | 480,129,454 | | **Earnings Per Share (RMB cents)** | **1.46** | **3.84** | - As there were no potential dilutive ordinary shares during the period, diluted earnings per share were consistent with basic earnings per share[180](index=180&type=chunk)[181](index=181&type=chunk) [10. Dividend](index=41&type=section&id=10.%20DIVIDEND) The Board does not recommend an interim dividend for the six months ended June 30, 2025. However, the final dividend for the year ended December 31, 2024, has been approved and included in dividends payable - The Board does not recommend an interim dividend for the six months ended June 30, 2025[183](index=183&type=chunk)[186](index=186&type=chunk) - The final dividend of **HK 3 cents per ordinary share** (approximately **RMB 13,639 thousand**) for the year ended December 31, 2024, was approved on **June 20, 2025**, and included in "dividends payable"[184](index=184&type=chunk)[186](index=186&type=chunk) [11. Property, Plant and Equipment and Investment Property](index=41&type=section&id=11.%20PROPERTY,%20PLANT%20AND%20EQUIPMENT%20AND%20INVESTMENT%20PROPERTY) As at June 30, 2025, the Group's property, plant and equipment had a carrying value of **RMB 352.6 million**, and investment property was **RMB 35.3 million**. Additions to property, plant and equipment during the period amounted to **RMB 11.3 million**. A total of **RMB 111.9 million** in property, plant and machinery has been pledged to secure bank and other borrowings Carrying Value of Property, Plant and Equipment and Investment Property (As at June 30, 2025) | Item | As at June 30, 2025 (RMB'000) | As at December 31, 2024 (RMB'000) | | :--- | :--- | :--- | | Property, Plant and Equipment | 352,630 | 356,089 | | Investment Property | 35,336 | 36,262 | - For the six months ended June 30, 2025, additions to property, plant and equipment amounted to **RMB 11,319 thousand**, and additions to investment property were **RMB 93 thousand**[189](index=189&type=chunk) - As at June 30, 2025, property, plant and machinery with a total net carrying value of **RMB 111,878 thousand** has been pledged to secure bank and other borrowings[191](index=191&type=chunk)[193](index=193&type=chunk) [12. Land Lease Prepayment](index=42&type=section&id=12.%20LAND%20LEASE%20PREPAYMENT) As at June 30, 2025, the Group's land lease prepayments had a carrying value of **RMB 4.3 million**, primarily located in China and pledged to secure bank borrowings Land Lease Prepayment (As at June 30, 2025) | Item | As at June 30, 2025 (RMB'000) | As at December 31, 2024 (RMB'000) | | :--- | :--- | :--- | | Land Lease Prepayments | 4,336 | 4,505 | | Depreciation for the Period/Year | (169) | (338) | - The leased land is located in China, held under medium-term leases, and pledged to secure bank borrowings[196](index=196&type=chunk) [13. Intangible Assets](index=43&type=section&id=13.%20INTANGIBLE%20ASSETS) As at June 30, 2025, the Group's intangible assets had a carrying value of **RMB 94.2 million**, primarily comprising trademarks, computer software, and capitalized development costs, with new intangible assets added during the period Carrying Value of Intangible Assets (As at June 30, 2025) | Item | As at June 30, 2025 (RMB'000) | As at December 31, 2024 (RMB'000) | | :--- | :--- | :--- | | Trademarks | 32,586 | 32,595 | | Computer Software | 3,620 | 4,067 | | Capitalized Development Costs | 46,242 | 49,568 | | Construction in Progress | 11,770 | 1,424 | | **Total** | **94,218** | **87,654** | - For the six months ended June 30, 2025, intangible assets recognized from acquisitions and internal development were **RMB 4 thousand** and **RMB 10,346 thousand**, respectively[199](index=199&type=chunk) [14. Trade and Other Receivables](index=44&type=section&id=14.%20TRADE%20AND%20OTHER%20RECEIVABLES) As at June 30, 2025, the Group's total trade and other receivables amounted to **RMB 189.4 million**, a decrease from the end of 2024. Both trade receivables and bills receivable decreased, but a loan of **RMB 26.1 million** was made to a shareholder Details of Trade and Other Receivables (As at June 30, 2025) | Item | As at June 30, 2025 (RMB'000) | As at December 31, 2024 (RMB'000) | | :--- | :--- | :--- | | Trade Receivables (Net) | 143,718 | 168,374 | | Bills Receivable (Net) | 8,891 | 38,781 | | Prepayments | 3,147 | 2,579 | | Other Tax Receivables | 1,278 | 63 | | Loan to a Shareholder | 26,136 | — | | Other Receivables | 6,258 | 5,421 | | **Total** | **189,428** | **215,218** | - The loan to a shareholder is unsecured, bears interest at **4% per annum**, and is repayable in February and March 2026[201](index=201&type=chunk)[202](index=202&type=chunk) Ageing Analysis of Trade Receivables (As at June 30, 2025) | Ageing | As at June 30, 2025 (RMB'000) | As at December 31, 2024 (RMB'000) | | :--- | :--- | :--- | | 0 – 90 days | 77,415 | 118,791 | | 91 – 180 days | 8,252 | 14,294 | | 181 – 365 days | 42,658 | 16,215 | | Over 365 days | 23,834 | 27,377 | | **Total** | **152,159** | **176,677** | - The proportion of trade receivables aged **181-365 days** significantly increased[205](index=205&type=chunk) [15. Trade and Other Payables](index=46&type=section&id=15.%20TRADE%20AND%20OTHER%20PAYABLES) As at June 30, 2025, the Group's total trade and other payables amounted to **RMB 50.5 million**, a decrease from **RMB 69.9 million** at the end of 2024. The credit period for trade payables is **30 to 90 days** Details of Trade and Other Payables (As at June 30, 2025) | Item | As at June 30, 2025 (RMB'000) | As at December 31, 2024 (RMB'000) | | :--- | :--- | :--- | | Trade Payables | 31,998 | 39,004 | | Other Payables | 3,171 | 4,204 | | Payables for Construction Work | 3,883 | 6,364 | | Accrued Wages | 3,881 | 7,931 | | Provision for Maintenance | 5,649 | 5,519 | | Other Tax Payables | 498 | 4,254 | | **Total** | **50,480** | **69,876** | - The credit period for trade payables is **30 to 90 days**[208](index=208&type=chunk) Ageing Analysis of Trade Payables (As at June 30, 2025) | Ageing | As at June 30, 2025 (RMB'000) | As at December 31, 2024 (RMB'000) | | :--- | :--- | :--- | | 0 – 30 days | 7,212 | 6,904 | | 31 – 60 days | 7,413 | 10,404 | | 61 – 90 days | 6,706 | 8,694 | | 91 – 180 days | 6,533 | 10,253 | | 181 – 365 days | 3,793 | 2,126 | | Over 365 days | 341 | 623 | | **Total** | **31,998** | **39,004** | [16. Bank Borrowings](index=47&type=section&id=16.%20BANK%20BORROWINGS) As at June 30, 2025, the Group's total bank borrowings amounted to **RMB 321.7 million**, a decrease from the end of 2024. These borrowings are secured by property, plant and equipment, land lease prepayments, and pledged and restricted bank balances Repayment Schedule of Bank Borrowings (As at June 30, 2025) | Repayment Period | As at June 30, 2025 (RMB'000) | As at December 31, 2024 (RMB'000) | | :--- | :--- | :--- | | Within one year | 148,500 | 155,000 | | In the second to fifth years (inclusive) | 163,200 | 158,700 | | After five years | 10,000 | 20,000 | | **Total** | **321,700** | **333,700** | - Bank borrowings are secured by assets with carrying values of **RMB 11,400 thousand** (property, plant and equipment), **RMB 4,336 thousand** (land lease prepayments), and **RMB 42,500 thousand** (pledged and restricted bank balances), respectively[213](index=213&type=chunk) [17. Other Borrowings](index=48&type=section&id=17.%20OTHER%20BORROWINGS) As at June 30, 2025, the Group's total other borrowings amounted to **RMB 49.6 million**, a significant increase from the end of 2024. During the period, the Group entered into sale and leaseback arrangements with a leasing company to acquire machinery and equipment Repayment Schedule of Other Borrowings (As at June 30, 2025) | Repayment Period | As at June 30, 2025 (RMB'000) | As at December 31, 2024 (RMB'000) | | :--- | :--- | :--- | | Within one year | 23,755 | 17,564 | | In the second to fifth years (inclusive) | 25,818 | 11,935 | | **Total** | **49,573** | **29,499** | - For the six months ended June 30, 2025, the Group entered into sale and leaseback arrangements with a leasing company for **RMB 30,000 thousand** to acquire machinery and equipment[217](index=217&type=chunk)[218](index=218&type=chunk) - Sale and leaseback liabilities are secured by the Group's assets with carrying values of **zero** (construction in progress) and **RMB 94,100 thousand** (plant and equipment), respectively[218](index=218&type=chunk) [18. Share Capital](index=49&type=section&id=18.%20SHARE%20CAPITAL) As at June 30, 2025, the company's authorized share capital was **2,000,000,000 ordinary shares** of **HK$0.01 each**, with **483,442,000 shares** issued and fully paid, including **26,816,000 shares** issued and held under the share award scheme Share Capital Structure (As at June 30, 2025) | Item | Number of Shares | RMB'000 | | :--- | :--- | :--- | | Authorized Share Capital (Ordinary shares of HK$0.01 each) | 2,000,000,000 | 24,355 | | Issued and Fully Paid Share Capital | 483,442,000 | 3,949 | - The total number of issued shares includes **26,816,000 shares** issued and held under the share award scheme[220](index=220&type=chunk)[221](index=221&type=chunk) [19. Lease Commitments](index=50&type=section&id=19.%20LEASE%20COMMITMENTS) As a lessor, the Group's total minimum lease payments under non-cancellable operating leases for the next year amounted to **RMB 2.2 million** as at June 30, 2025. As a lessee, short-term lease commitments were **RMB 0.2 million** Lease Commitments as Lessor (As at June 30, 2025) | Period | As at June 30, 2025 (RMB'000) | As at December 31, 2024 (RMB'000) | | :--- | :--- | :--- | | Within one year | 2,225 | 2,924 | | After one year but within two years | — | 742 | | **Total** | **2,225** | **3,666** | - As a lessee, short-term lease commitments amounted to **RMB 191 thousand** as at June 30, 2025[225](index=225&type=chunk)[226](index=226&type=chunk) [20. Capital Commitments](index=51&type=section&id=20.%20CAPITAL%20COMMITMENTS) As at June 30, 2025, the Group's contracted but unprovided capital commitments primarily related to property, plant and equipment, amounting to **RMB 9.7 million** Capital Commitments (As at June 30, 2025) | Item | As at June 30, 2025 (RMB'000) | As at December 31, 2024 (RMB'000) | | :--- | :--- | :--- | | Property, Plant and Equipment | 9,739 | 12,689 | [21. Related Party Transactions](index=51&type=section&id=21.%20RELATED%20PARTY%20TRANSACTIONS) The Group has sales transactions with related parties, primarily including sales to Sichuan Huanlong New Material Co., Ltd. and Sichuan Huanlong Household Products Co., Ltd. Total key management personnel compensation amounted to **RMB 1.9 million** Significant Transactions with Related Parties (For the six months ended June 30, 2025) | Name of Related Party | Nature | 2025 (RMB'000) | 2024 (RMB'000) | | :--- | :--- | :--- | :--- | | Sichuan Huanlong New Material Co., Ltd. | Sales | 367 | 1,898 | | Sichuan Huanlong Household Products Co., Ltd. | Sales | 918 | 359 | Key Management Personnel Compensation (For the six months ended June 30, 2025) | Item | 2025 (RMB'000) | 2024 (RMB'000) | | :--- | :--- | :--- | | Salaries, Allowances and Benefits | 1,675 | 1,754 | | Contributions to Defined Contribution Retirement Plans | 252 | 225 | | **Total** | **1,927** | **1,979** | Amounts Due from Related Parties (As at June 30, 2025) | Name of Related Party | As at June 30, 2025 (RMB'000) | As at December 31, 2024 (RMB'000) | | :--- | :--- | :--- | | Sichuan Huanlong New Material Co., Ltd. (Trade) | 3,074 | 3,762 | | Sichuan Huanlong Household Products Co., Ltd. (Trade) | 1,208 | 527 | | **Total** | **4,282** | **4,289** | [22. Pledge of Assets](index=53&type=section&id=22.%20PLEDGE%20OF%20ASSETS) As at June 30, 2025, the Group's total carrying value of pledged assets was approximately **RMB 158.7 million**, primarily comprising property, plant and equipment, land lease prepayments, and pledged and restricted bank balances, to secure bank financing and borrowings Total Carrying Value of Pledged Assets (As at June 30, 2025) | Item | As at June 30, 2025 (RMB'000) | As at December 31, 2024 (RMB'000) | | :--- | :--- | :--- | | Property, Plant and Equipment | 111,878 | 131,490 | | Land Lease Prepayments | 4,336 | 4,505 | | Pledged and Restricted Bank Balances | 42,500 | 42,500 | | **Total** | **158,714** | **178,495** | - The total pledged assets decreased by approximately **RMB 19.8 million** from the end of 2024[238](index=238&type=chunk)

Company Information [Board of Directors and Committees](index=3&type=section&id=Board%20of%20Directors%20and%20Committees) This section lists the executive, non-executive, and independent non-executive directors of Herbs Group Holdings Limited and their roles in key committees - Ms. Kwok Chi Yan serves as Chairperson and Chief Executive Officer, with Mr. Li Yat Sing and Ms. Yeung Yuen Pik as Executive Directors[5](index=5&type=chunk) - The composition and chairpersons of the Audit, Remuneration, and Nomination Committees are clearly defined[5](index=5&type=chunk) [Company Structure and Advisors](index=3&type=section&id=Company%20Structure%20and%20Advisors) This section provides key information on the company's principal bankers, registered office, Hong Kong business location, legal advisors, auditors, and compliance advisors - Principal bankers include Industrial and Commercial Bank of China (Asia) Limited and Hang Seng Bank Limited[5](index=5&type=chunk) - KPMG is the company's auditor, and Deacons is the Hong Kong legal advisor[5](index=5&type=chunk) - The company's stock code is **2593**, and its website is www.herbs.hk[7](index=7&type=chunk) Financial Highlights [Performance Overview](index=5&type=section&id=Performance%20Overview) For H1 2025, the Group's revenue slightly decreased by 0.4%, gross profit fell by 5.5%, shifting from profit to a HK$7.5 million net loss, with 5.65 HK cents loss per share Six Months Ended June 30 Performance | Indicator | 2025 (HK$'000) | 2024 (HK$'000) | | :--- | :--- | :--- | | Revenue | 117,292 | 117,811 | | Gross Profit | 82,643 | 87,426 | | Operating (Loss) / Profit | (8,503) | 11,173 | | (Loss) / Profit and Total Comprehensive Income for the Period | (7,535) | 7,483 | | (Loss) / Earnings Per Share | (5.65) HK cents | 7.48 HK cents | - Revenue slightly decreased by **0.4%**, gross profit decreased by **5.5%**, and the period saw a shift from profit to a net loss of approximately **HK$7.5 million**[8](index=8&type=chunk) [Financial Position Overview](index=5&type=section&id=Financial%20Position%20Overview) As of June 30, 2025, the Group's non-current and current assets decreased, with net assets falling from HK$187.2 million to HK$159.6 million Financial Position Overview | Indicator | June 30, 2025 (HK$'000) | December 31, 2024 (HK$'000) | | :--- | :--- | :--- | | Non-current Assets | 34,412 | 44,529 | | Current Assets | 174,650 | 197,470 | | Non-current Liabilities | 11,574 | 17,275 | | Current Liabilities | 37,840 | 37,541 | | Net Assets | 159,648 | 187,183 | - Net assets decreased from **HK$187.2 million** as of December 31, 2024, to **HK$159.6 million** as of June 30, 2025[9](index=9&type=chunk) Management Discussion and Analysis [Business Review and Outlook](index=6&type=section&id=Business%20Review%20and%20Outlook) Facing H1 2025 Hong Kong retail market challenges, the Group, a health and beauty product supplier, saw revenue decline, gross profit decrease, and recorded a loss, responding with increased promotions and new product development - The Group operates **nine proprietary brands**, including "Herbs" and "ZINO," selling products through retail, wholesale, and consignment models[10](index=10&type=chunk) - The Hong Kong retail market experienced a **3.3% year-on-year decline** in total sales in H1 2025, adversely impacting the Group's business[11](index=11&type=chunk) - The Group recorded a slight revenue decrease of **0.4%**, a **5.5% reduction in gross profit**, and a shift from net profit to a net loss of approximately **HK$7.5 million**, primarily due to increased promotional activities, higher advertising and promotion expenses, and increased staff costs[11](index=11&type=chunk) - The Group actively developed new products like "Herbs Tiger Milk Mushroom Cough & Asthma Relief" and new brand "MedHerbs," planning continued innovation in H2 2025 to mitigate losses[11](index=11&type=chunk) [Financial Review](index=6&type=section&id=Financial%20Review) H1 2025 revenue slightly decreased by 0.4% to HK$117.3 million, with retail growth offset by wholesale/consignment declines, and increased costs and reduced gross margin led to a period loss Revenue Breakdown by Sales Channel | Sales Channel | 2025 (HK$'000) | 2025 (%) | 2024 (HK$'000) | 2024 (%) | | :--- | :--- | :--- | :--- | :--- | | Retail Business | 71,484 | 60.9 | 69,035 | 58.6 | | Wholesale Business | 43,831 | 37.4 | 45,555 | 38.7 | | Consignment Arrangements | 1,977 | 1.7 | 3,221 | 2.7 | | **Total** | **117,292** | **100.0** | **117,811** | **100.0** | - Retail business revenue increased by **3.5%** to **HK$71.5 million**, primarily due to an increase in the number of self-operated retail stores from **23 to 33**[15](index=15&type=chunk) - Wholesale business revenue decreased by **3.8%** to **HK$43.8 million**, and consignment arrangement revenue decreased by **38.6%** to **HK$2.0 million**, both impacted by the overall decline in Hong Kong retail sales[16](index=16&type=chunk)[17](index=17&type=chunk) - Cost of sales increased by **14.0%** to **HK$34.6 million**, gross profit decreased by **5.5%** to **HK$82.6 million**, and the overall gross profit margin decreased by **3.7 percentage points** to **70.5%**, mainly due to increased promotional activities[18](index=18&type=chunk) - Other income increased by **HK$0.8 million**, primarily from bank interest income generated from unutilized proceeds of the global offering[19](index=19&type=chunk) - Selling and distribution costs increased by **35.3%** to **HK$66.5 million**, mainly due to increased advertising and promotion expenses and higher staff costs from retail store expansion[20](index=20&type=chunk) - Administrative and other operating expenses increased by **43.8%** to **HK$26.8 million**, primarily due to increased staff costs, depreciation of leased properties, and post-listing compliance expenses[21](index=21&type=chunk) - Finance costs increased by **21.7%** to **HK$0.58 million**, mainly due to increased interest expenses on lease liabilities from a higher average number of self-operated retail stores[23](index=23&type=chunk) - A net loss of approximately **HK$7.5 million** was recorded for the period, compared to a net profit of approximately **HK$7.5 million** in the prior period, primarily attributable to decreased gross profit, increased advertising and promotion expenses, and higher staff costs[26](index=26&type=chunk) [Liquidity and Capital Resources](index=9&type=section&id=Liquidity%20and%20Capital%20Resources) As of June 30, 2025, the Group held HK$89.8 million in cash, maintained sufficient liquidity without bank borrowings, and saw significantly reduced capital expenditure - As of June 30, 2025, the Group's cash and cash equivalents were approximately **HK$89.8 million**[28](index=28&type=chunk) - As the Group has no bank borrowings (excluding lease liabilities), the capital gearing ratio and net debt to equity ratio are not applicable[29](index=29&type=chunk)[30](index=30&type=chunk) - Capital expenditure in H1 2025 was approximately **HK$0.2 million**, a significant decrease from **HK$3.2 million** in H1 2024, primarily for the acquisition of property, plant, and equipment[32](index=32&type=chunk) - Future capital expenditure is expected to increase with business growth, funded by cash flow from operating activities and net proceeds from the global offering[32](index=32&type=chunk) [Risk Management and Operational Matters](index=10&type=section&id=Risk%20Management%20and%20Operational%20Matters) The Group manages foreign exchange risk from non-HKD operating expenses, reported no significant contingent liabilities or post-period events, and had 238 employees as of June 30, 2025 - The Group faces foreign exchange fluctuation risk primarily from operating expenses denominated in currencies other than HKD, managed by monitoring exchange rate movements[33](index=33&type=chunk) - As of June 30, 2025, the Group had **238 employees**, with remuneration determined based on performance, experience, Group results, and market conditions[38](index=38&type=chunk) - During the reporting period, there were no significant contingent liabilities, off-balance sheet commitments (except for advertising and promotion commitments), post-reporting period events, significant investments, acquisitions or disposals of subsidiaries, or asset pledges[35](index=35&type=chunk)[36](index=36&type=chunk)[37](index=37&type=chunk)[39](index=39&type=chunk)[40](index=40&type=chunk)[42](index=42&type=chunk) [Corporate Governance and Equity Matters](index=11&type=section&id=Corporate%20Governance%20and%20Equity%20Matters) The Board did not recommend H1 2025 interim dividend, maintained corporate governance (with combined Chairperson/CEO roles), and utilized HK$18.3 million of global offering proceeds for marketing and working capital - The Board does not recommend an interim dividend for the six months ended June 30, 2025 (HK$30 million for the same period in 2024)[44](index=44&type=chunk) - The Company complies with the Corporate Governance Code, except for the combined roles of Chairperson and Chief Executive Officer held by Ms. Kwok Chi Yan, which the Board believes is in the Group's best interest[45](index=45&type=chunk)[46](index=46&type=chunk) - The share award scheme became effective on December 19, 2024, but no share awards were granted as of June 30, 2025[49](index=49&type=chunk) Use of Net Proceeds from Global Offering | Intended Use | Planned Allocation (HK$ million) | Amount Utilized During Period (HK$ million) | Unutilized Amount as of June 30, 2025 (HK$ million) | | :--- | :--- | :--- | :--- | | Strategic marketing and promotion activities | 33.7 | 9.1 | 24.6 | | Expand, improve, and optimize sales network | 35.7 | 0.3 | 35.4 | | Expand and enrich product portfolio | 4.4 | – | 4.4 | | Recruit talent | 11.7 | – | 11.7 | | General working capital | 8.9 | 8.9 | – | | **Total** | **94.4** | **18.3** | **76.1** | - Net proceeds from the global offering were approximately **HK$94.4 million**, of which **HK$18.3 million** was utilized during the reporting period, primarily for strategic marketing and general working capital[50](index=50&type=chunk)[51](index=51&type=chunk) Review Report to the Board of Directors [Review Conclusion](index=13&type=section&id=Review%20Conclusion) KPMG reviewed this interim financial report under HKSRS 2410, finding no material non-compliance with HKAS 34 - KPMG has reviewed this interim financial report and found no material non-compliance with Hong Kong Accounting Standard 34[57](index=57&type=chunk) - The scope of a review is substantially less than an audit, thus no audit opinion is expressed[56](index=56&type=chunk) Consolidated Financial Statements [Consolidated Statement of Profit or Loss and Other Comprehensive Income](index=14&type=section&id=Consolidated%20Statement%20of%20Profit%20or%20Loss%20and%20Other%20Comprehensive%20Income) This statement shows H1 2025 consolidated profit or loss, reflecting a shift from profit to loss due to decreased revenue, higher cost of sales, and increased operating expenses Summary of Consolidated Statement of Profit or Loss and Other Comprehensive Income | Indicator | 2025 (HK$'000) | 2024 (HK$'000) | | :--- | :--- | :--- | | Revenue | 117,292 | 117,811 | | Cost of Sales | (34,649) | (30,385) | | Gross Profit | 82,643 | 87,426 | | Other Income | 2,062 | 1,310 | | Selling and Distribution Costs | (66,458) | (49,104) | | Administrative and Other Operating Expenses | (26,750) | (18,604) | | Listing Expenses | – | (9,855) | | Operating (Loss) / Profit | (8,503) | 11,173 | | Finance Costs | (583) | (479) | | (Loss) / Profit Before Tax | (9,086) | 10,694 | | Income Tax Credit / (Expense) | 1,551 | (3,211) | | (Loss) / Profit and Total Comprehensive Income for the Period | (7,535) | 7,483 | | Basic and Diluted (Loss) / Earnings Per Share | (5.65) HK cents | 7.48 HK cents | [Consolidated Statement of Financial Position](index=15&type=section&id=Consolidated%20Statement%20of%20Financial%20Position) This statement presents the consolidated financial position as of June 30, 2025, showing decreased total assets, net assets, and net current assets Summary of Consolidated Statement of Financial Position | Indicator | June 30, 2025 (HK$'000) | December 31, 2024 (HK$'000) | | :--- | :--- | :--- | | Non-current Assets | 34,412 | 44,529 | | Current Assets | 174,650 | 197,470 | | Current Liabilities | 37,840 | 37,541 | | Net Current Assets | 136,810 | 159,929 | | Total Assets Less Current Liabilities | 171,222 | 204,458 | | Non-current Liabilities | 11,574 | 17,275 | | Net Assets | 159,648 | 187,183 | | Total Equity | 159,648 | 187,183 | [Consolidated Statement of Changes in Equity](index=17&type=section&id=Consolidated%20Statement%20of%20Changes%20in%20Equity) This statement reflects H1 2025 equity changes, showing a decrease in total equity due to period loss and dividends paid Summary of Consolidated Statement of Changes in Equity | Item | Share Capital (HK$'000) | Share Premium (HK$'000) | Capital Reserve (HK$'000) | Retained Profits (HK$'000) | Total (HK$'000) | | :--- | :--- | :--- | :--- | :--- | :--- | | Balance as at January 1, 2025 | 1,333 | 112,251 | 1,510 | 72,089 | 187,183 | | Loss and Total Comprehensive Income for the Period | – | – | – | (7,535) | (7,535) | | Dividends Approved for Prior Year | – | – | – | (20,000) | (20,000) | | Balance as at June 30, 2025 | 1,333 | 112,251 | 1,510 | 44,554 | 159,648 | - A loss of **HK$7.535 million** for the period and dividends of **HK$20 million** approved for the prior year led to a decrease in total equity[64](index=64&type=chunk) - The Group underwent a reorganization in 2024, with the Company becoming the holding company for the listed business, and consolidated financial statements prepared as a continuation of Herbs International[65](index=65&type=chunk)[66](index=66&type=chunk) [Condensed Consolidated Statement of Cash Flows](index=19&type=section&id=Condensed%20Consolidated%20Statement%20of%20Cash%20Flows) This statement summarizes H1 2025 cash flows, showing a shift to net cash outflow from operations, increased financing outflow, and a significant decrease in period-end cash Summary of Condensed Consolidated Statement of Cash Flows | Activity Type | 2025 (HK$'000) | 2024 (HK$'000) | | :--- | :--- | :--- | | Net Cash (Used in) / From Operating Activities | (1,349) | 23,564 | | Net Cash From / (Used in) Investing Activities | 952 | (2,036) | | Net Cash Used in Financing Activities | (29,063) | (17,464) | | Net (Decrease) / Increase in Cash and Cash Equivalents | (29,460) | 4,064 | | Cash and Cash Equivalents at End of Period | 89,755 | 26,546 | - Net cash from operating activities shifted from an inflow of **HK$23.6 million** in H1 2024 to a net outflow of **HK$1.3 million** in H1 2025[69](index=69&type=chunk) - Net cash outflow from financing activities increased to **HK$29.1 million**, primarily due to dividends paid and the capital portion of lease rentals[69](index=69&type=chunk) - Cash and cash equivalents at period-end decreased by **HK$29.5 million** to **HK$89.8 million**[69](index=69&type=chunk) Notes to the Financial Information [Basis of Preparation and Changes in Accounting Policies](index=20&type=section&id=Basis%20of%20Preparation%20and%20Changes%20in%20Accounting%20Policies) This interim financial report, reviewed by KPMG, is prepared under HKEX Listing Rules and HKAS 34, with HKAS 21 (Amendment) having no significant impact - This interim financial report is prepared in accordance with **Hong Kong Accounting Standard 34** and has been reviewed by KPMG[72](index=72&type=chunk)[73](index=73&type=chunk) - HKAS 21 (Amendment) "The Effects of Changes in Foreign Exchange Rates – Lack of Exchangeability" was applied in this accounting period but had no significant impact on this interim report[74](index=74&type=chunk) [Revenue and Segment Reporting](index=21&type=section&id=Revenue%20and%20Segment%20Reporting) The Group develops and sells health and beauty products, recognizing revenue upon customer acceptance, with one reportable segment primarily in Hong Kong Classification of Revenue from Contracts with Customers by Major Sales Channel | Sales Channel | 2025 (HK$'000) | 2024 (HK$'000) | | :--- | :--- | :--- | | Retail Business | 71,484 | 69,035 | | Wholesale Business | 43,831 | 45,555 | | Consignment Arrangements | 1,977 | 3,221 | | **Total** | **117,292** | **117,811** | - The Group has **one reportable segment**, which is the development and sale of health and beauty products[79](index=79&type=chunk) - Transactions with Customer A exceeded **10%** of the Group's revenue, totaling **HK$43.5 million** in H1 2025[78](index=78&type=chunk) [Other Income and Expense Analysis](index=22&type=section&id=Other%20Income%20and%20Expense%20Analysis) Other income, mainly bank interest and government grants, increased, while loss before tax was driven by higher staff costs, depreciation, impairment, and auditor fees Other Income Details | Item | 2025 (HK$'000) | 2024 (HK$'000) | | :--- | :--- | :--- | | Bank Interest Income | 1,120 | 109 | | Government Grants | 818 | 1,080 | | Others | 124 | 121 | | **Total** | **2,062** | **1,310** | Staff Costs Details | Item | 2025 (HK$'000) | 2024 (HK$'000) | | :--- | :--- | :--- | | Salaries, Wages, and Other Benefits | 41,926 | 33,386 | | Contributions to Defined Contribution Retirement Plans | 1,580 | 1,401 | | **Total** | **43,506** | **34,787** | - Depreciation expense increased to **HK$10.8 million**, and an impairment loss of **HK$1.036 million** on property, plant and equipment was recognized[83](index=83&type=chunk)[88](index=88&type=chunk) - Auditor's remuneration increased to **HK$1.12 million**[83](index=83&type=chunk) [Taxation and Earnings Per Share](index=24&type=section&id=Taxation%20and%20Earnings%20Per%20Share) The Group recorded a HK$1.551 million income tax credit in H1 2025 due to deferred tax from period loss, resulting in 5.65 HK cents basic and diluted loss per share Taxation in Consolidated Statement of Profit or Loss and Other Comprehensive Income | Item | 2025 (HK$'000) | 2024 (HK$'000) | | :--- | :--- | :--- | | Current Tax – Hong Kong Profits Tax | – | 3,355 | | Deferred Tax | (1,551) | (144) | | **Total** | **(1,551)** | **3,211** | - Basic and diluted loss per share was **5.65 HK cents**, compared to earnings of **7.48 HK cents** in the prior period[85](index=85&type=chunk) [Notes to the Statement of Financial Position](index=25&type=section&id=Notes%20to%20the%20Statement%20of%20Financial%20Position) This section details changes in PPE, inventories, receivables, and payables, noting impairment on PPE due to underperforming stores, and increases in inventories and trade payables - The Group recognized an increase in right-of-use assets of **HK$3.585 million**, primarily for retail store and office leases[86](index=86&type=chunk) - An impairment loss of **HK$1.036 million** was recognized on property, plant and equipment and right-of-use assets due to underperforming retail stores[88](index=88&type=chunk) Inventory Details | Item | June 30, 2025 (HK$'000) | December 31, 2024 (HK$'000) | | :--- | :--- | :--- | | Health and Beauty Products | 33,883 | 22,992 | | Packaging Materials and Consumables | 4,123 | 3,677 | | Provision for Obsolete Inventories | (59) | (126) | | **Total** | **37,947** | **26,543** | Trade and Other Receivables Details | Item | June 30, 2025 (HK$'000) | December 31, 2024 (HK$'000) | | :--- | :--- | :--- | | Trade Receivables, Net of Loss Allowance | 25,242 | 26,293 | | Prepayments, Deposits, and Other Receivables | 20,309 | 25,419 | | **Total** | **45,551** | **51,712** | Trade and Other Payables Details | Item | June 30, 2025 (HK$'000) | December 31, 2024 (HK$'000) | | :--- | :--- | :--- | | Trade Payables | 4,677 | 3,782 | | Other Payables and Accrued Expenses | 14,041 | 13,473 | | **Total** | **18,718** | **17,255** | [Capital, Reserves, and Dividends](index=28&type=section&id=Capital,%20Reserves,%20and%20Dividends) This section details dividend policy, share capital structure, and changes, noting no H1 2025 interim dividend but a HK$20 million prior-year final dividend paid, and share capital increase from IPO - No interim dividend was declared for H1 2025, compared to **HK$30 million** declared in H1 2024[95](index=95&type=chunk) - A final dividend of **HK$20 million** for the prior financial year was approved and paid in H1 2025[96](index=96&type=chunk) Changes in Share Capital | Item | Number of Shares | Amount (HK$'000) | | :--- | :--- | :--- | | Issued and fully paid ordinary shares as at December 31, 2024, January 1, 2025, and June 30, 2025 | 133,333,600 | 1,333 | - Share capital changes primarily resulted from a capitalization issue of **99,999,990 shares** and an initial public offering of **33,333,600 new shares**[99](index=99&type=chunk) [Significant Related Party Transactions](index=29&type=section&id=Significant%20Related%20Party%20Transactions) This section discloses significant related party transactions, including key management compensation, director endorsement fees, sales to directors/shareholders, and lease arrangements Key Management Personnel Compensation | Item | 2025 (HK$'000) | 2024 (HK$'000) | | :--- | :--- | :--- | | Salaries, Wages, and Other Benefits | 1,758 | 1,650 | | Contributions to Defined Contribution Retirement Plans | 27 | 27 | | **Total** | **1,785** | **1,677** | Transactions with Related Parties | Transaction Type | Related Party | 2025 (HK$'000) | 2024 (HK$'000) | | :--- | :--- | :--- | :--- | | Endorsement Fees Paid | Mr. Kwok | 320 | 320 | | Sales of Goods | Ms. Yeung | 15 | – | | Sales of Goods | Ms. Kwok | 2 | – | - Lease arrangements with related parties resulted in lease liabilities of **HK$2.478 million**, involving office rental from Bomi Art Creation Limited[101](index=101&type=chunk) Other Information [Directors' and Major Shareholders' Interests](index=31&type=section&id=Directors'%20and%20Major%20Shareholders'%20Interests) This section discloses directors' and major shareholders' interests in the Company's shares, with Ms. Kwok Chi Yan and Mr. Li Yat Sing holding significant stakes via controlled corporations and spousal interests Directors' Interests in the Company's Shares | Director Name | Nature of Interest | Number of Shares | Approximate Percentage | | :--- | :--- | :--- | :--- | | Ms. Kwok | Interest in controlled corporation | 90,000,000 (L) | 67.50% | | Ms. Kwok | Spouse's interest | 10,000,000 (L) | 7.50% | | Mr. Li Yat Sing | Interest in controlled corporation | 10,000,000 (L) | 7.50% | | Mr. Li Yat Sing | Spouse's interest | 90,000,000 (L) | 67.50% | Major Shareholders' Interests in Shares and Related Shares | Shareholder Name | Nature of Interest | Number of Shares | Approximate Percentage | | :--- | :--- | :--- | :--- | | Joy & Love | Beneficial owner | 90,000,000 (L) | 67.50% | | Joy & Faith | Beneficial owner | 10,000,000 (L) | 7.50% | [Company Securities and Audit Committee](index=33&type=section&id=Company%20Securities%20and%20Audit%20Committee) During the period, no company securities were purchased, sold, or redeemed, and the Audit Committee reviewed the interim report, confirming compliance with accounting principles and disclosure - During the reporting period, neither the Company nor any of its subsidiaries purchased, sold, or redeemed any of the Company's securities[106](index=106&type=chunk) - The Audit Committee, comprising three independent non-executive directors, reviewed this interim report and the unaudited condensed consolidated financial statements, confirming compliance with all applicable accounting principles and disclosure requirements[107](index=107&type=chunk)

[Company Profile](index=3&type=section&id=Company%20Profile) This section provides an overview of Beiqing Media Co., Ltd., detailing its core businesses, listing status, and key stock information [Company Overview](index=3&type=section&id=Company%20Overview) Beiqing Media, a leading Chinese media company listed on HKEX, specializes in multi-platform advertising, youth education, new media, and printing - Beiqing Media is a leading Chinese media company, with core businesses including multi-platform media advertising sales, youth study tours, new media operations, printing, and related material trade[5](index=5&type=chunk) Company Stock Information (As of June 30, 2025) | Indicator | Value | | :--- | :--- | | Stock Code | 1000 | | Shares per Lot | 500 shares | | Shares Issued | 197,310,000 shares | | Market Capitalization | HKD 118.386 million | | Fiscal Year End | December 31 | | Bloomberg Ticker | 1000HKEquity | | Reuters Ticker | 1000.HK | [Company Information](index=4&type=section&id=Company%20Information) This section details the company's board of directors, corporate governance structure, and key administrative information as of June 30, 2025 [Board of Directors and Corporate Governance](index=4&type=section&id=Board%20of%20Directors%20and%20Corporate%20Governance) This section lists the company's board members, joint company secretaries, committees, registered office, and key advisors as of June 30, 2025 - The company's board of directors completed its re-election on June 13, 2025, with Ms. Sun Baojie appointed as the Chairman of the Ninth Board and Mr. Li Xiaowei appointed as a Non-executive Director[12](index=12&type=chunk) [Chairman's Report](index=5&type=section&id=Chairman%27s%20Report) This report reviews the group's business performance, financial results, and strategic initiatives for the first half of 2025, outlining future plans [Group Business Review](index=5&type=section&id=Group%20Business%20Review) In H1 2025, Beiqing Media's total revenue decreased by 32.63% to RMB 65.985 million, with net loss attributable to shareholders increasing by 102.20% to RMB 19.047 million, driven by traditional business contraction and increased expenses Group's Key Financial Indicators for H1 2025 | Indicator | H1 2025 (RMB thousand) | H1 2024 (RMB thousand) | YoY Change (%) | | :--- | :--- | :--- | :--- | | Total Operating Revenue | 65,985 | 97,937 | -32.63% | | Operating Costs | 72,388 | 93,066 | -22.22% | | Net Loss Attributable to Shareholders | 19,047 | 9,420 | +102.20% | - The increase in net loss was primarily due to decreased operating revenue, higher administrative expenses from new business development and transformation, and increased credit impairment losses affected by accounts receivable collection[16](index=16&type=chunk) - The company continues to expand its outdoor advertising and Beijing City Cultural Annual Pass businesses, driving revenue growth to counter declining traditional business revenues (e.g., printing and related material trade, community media, innovative culture)[16](index=16&type=chunk) - The company enhances operational efficiency by completing board re-election, advancing the "15th Five-Year Plan" strategic planning, building a risk management system, and optimizing the OA office system[19](index=19&type=chunk) - The company accelerates advertising business transformation, completing media upgrades at Beijing Metro Line 4 Xidan Station, developing "Metro Station" creative interactive scene advertising projects, and deepening its proprietary media matrix operations[20](index=20&type=chunk) - Actively integrating capital's cultural and tourism resources, the company expands cultural, sports, and tourism integration businesses, including organizing the 2025 KOD World Street Dance Competition, strategic cooperation with "The Color Run," and strengthening Beijing City Cultural Annual Pass product development and channel expansion, having partnered with over 40 central and state-owned enterprises[20](index=20&type=chunk) - Focusing on youth quality education, the company completed 16 group camp reception projects in H1, serving a cumulative **10,421 person-days**, and developed 24 high-quality study tour courses[22](index=22&type=chunk) - Focusing on new media operations and government event businesses, the company innovatively incubated the "Beijing Community Culture Festival" brand, promoted commercial operation of community spaces, and launched 15 "Beiqing Community HUI" projects[22](index=22&type=chunk) - Optimizing asset structure, the company achieved **RMB 2,320 thousand** in fair value change gains from entrusted idle fund management with Shouyao Securities, **RMB 2,246 thousand** in rental income from idle properties, and accelerated the cleanup of inefficient assets and inventory paper sales[23](index=23&type=chunk) [Advertising Business](index=8&type=section&id=Advertising%20Business) In H1 2025, China's advertising market continued to grow, with digital advertising increasing its share and outdoor advertising undergoing structural adjustments, while Beiqing Media's advertising revenue decreased by 11.14% to RMB 46.038 million - China's advertising market continues to grow, with digital advertising increasing its share, and the outdoor advertising market undergoing structural adjustments, with digital media advertising spending like subway electronic screens growing against the trend[26](index=26&type=chunk) Advertising Business Revenue Comparison | Indicator | H1 2025 (RMB thousand) | H1 2024 (RMB thousand) | YoY Change (%) | | :--- | :--- | :--- | :--- | | Advertising Revenue | 46,038 | 51,808 | -11.14% | | Outdoor Advertising Business Revenue | 13,482 | - | +12.56% (compared to H1 2024) | | New Annual Pass Business Revenue | 3,256 | - | New | - Advertising revenue decline was primarily due to Beiqing Community Media being affected by tighter client budgets and increased market competition[27](index=27&type=chunk) - The company completed media upgrades at Beijing Metro Line 4 Xidan Station, introducing super-large lightboxes and high-definition LED electronic screens, and developed "Metro Station" creative interactive scene advertising projects[29](index=29&type=chunk) - The company meticulously built its proprietary media matrix, incorporating short videos and live streaming, achieving **RMB 2,955 thousand** in account operation revenue in H1, with a focus on operating vertical accounts like "Qingche Tan," "Yanglao Xinyixian," and "Yujie Jianfang"[30](index=30&type=chunk) - The new annual pass business strengthened channel expansion, partnering with over 40 central and state-owned enterprises, and advanced the annual pass mini-program upgrade to improve operational efficiency and user experience[32](index=32&type=chunk) [Performance of Major Group Subsidiaries](index=10&type=section&id=Performance%20of%20Major%20Group%20Subsidiaries) This section reviews the H1 2025 performance of Beiqing Innovative Culture, Beiqing Community Media, and Jingjian Media, highlighting their progress in youth cultural activities, media transformation, and new media business expansion - Beiqing Innovative Culture completed 16 study tour, social practice, and enterprise training group reception projects in H1, serving a cumulative **10,421 person-days**, and developed 24 high-quality study tour courses[33](index=33&type=chunk) - Beiqing Community Media has transformed from traditional newspaper business to a government integrated media service model, covering nine districts in Beijing, operating nearly 50 new media accounts, and launching 15 "Beiqing Community HUI" projects[35](index=35&type=chunk)[36](index=36&type=chunk) - Jingjian Media optimized its business structure, expanding into new media video and online/offline event businesses, successfully acquiring 8 new clients, and achieving commercial monetization through its self-media video account "Qingcheng 0819"[40](index=40&type=chunk) [Outlook and Future Plans](index=12&type=section&id=Outlook%20and%20Future%20Plans) For H2 2025, Beiqing Media will focus on transformation and development, prioritizing foundational and growth-oriented core businesses to enhance operational efficiency - In H2 2025, the group will adopt a transformation and development strategy, accelerating business layout adjustments and focusing on foundational and growth-oriented core businesses[41](index=41&type=chunk) - Advertising business will strengthen innovation in subway outdoor advertising, promote media resource integration, solidify comprehensive advertising service capabilities, and accelerate the development and commercialization of proprietary new media products[41](index=41&type=chunk) - The cultural, sports, and tourism integration sector will focus on implementing high-quality cultural and sports event IPs (e.g., KOD World Street Dance Competition) and continuously expanding Beijing City Cultural Annual Pass channel resources and product models[41](index=41&type=chunk) - The company will explore new business models such as "video + government affairs" and "culture & tourism + consumption," strengthen the commercial operation of community cultural spaces, and build a distinctive brand for youth study tours[41](index=41&type=chunk) - The company will continue to deepen management, focusing on asset structure optimization and internal risk control, optimizing organizational and talent structures, and comprehensively strengthening institutional and information technology development[43](index=43&type=chunk) [Management Discussion and Analysis](index=13&type=section&id=Management%20Discussion%20and%20Analysis) This section provides a detailed analysis of the group's financial performance, operational results, and key financial indicators for the first half of 2025 [Financial Position and Operating Results](index=14&type=section&id=Financial%20Position%20and%20Operating%20Results) In H1 2025, the group's total operating revenue decreased by 32.63% to RMB 65.985 million, primarily due to the contraction of printing and related material trade and reduced revenue from Beiqing Community Media and Beiqing Innovative Culture, resulting in a net loss of RMB 19.047 million H1 2025 Total Operating Revenue Details | Revenue Category | H1 2025 (RMB thousand) | H1 2024 (RMB thousand) | YoY Change (%) | | :--- | :--- | :--- | :--- | | Total Operating Revenue | 65,985 | 97,937 | -32.63% | | Advertising Revenue (incl. new media operations) | 46,038 | 51,808 | -11.14% | | Printing Revenue | 0 | 2 | -100.00% | | Printing Related Material Trade Revenue | 8,654 | 29,905 | -71.06% | | Other Revenue (incl. study tours) | 11,293 | 16,222 | -30.38% | H1 2025 Operating Costs and Expenses Details | Cost/Expense Category | H1 2025 (RMB thousand) | H1 2024 (RMB thousand) | YoY Change (%) | | :--- | :--- | :--- | :--- | | Operating Costs | 72,388 | 93,066 | -22.22% | | Advertising Costs (incl. new media operations) | 54,105 | 52,021 | +4.01% | | Selling Expenses | 3,724 | 6,908 | -46.09% | | Administrative Expenses | 19,822 | 17,323 | +14.43% | | Finance Costs | -493 | -658 | -25.08% (absolute value decrease) | | Operating Profit | -20,736 | -11,260 | +84.16% (loss increase) | | Net Loss Attributable to Shareholders | 19,047 | 9,420 | +102.20% (loss increase) | - Selling expenses decreased year-on-year primarily due to adjustments in Beiqing Community Media's sales personnel structure[52](index=52&type=chunk) - Administrative expenses increased year-on-year mainly due to personnel structure adjustments, employee benefits, and intermediary fees resulting from new business development and business transformation[53](index=53&type=chunk) - As of June 30, 2025, the group's current assets totaled **RMB 269,225 thousand**, non-current assets totaled **RMB 452,410 thousand**; current liabilities totaled **RMB 65,712 thousand**, and non-current liabilities totaled **RMB 706 thousand**, with a capital to liability ratio of **10.14%**[60](index=60&type=chunk)[62](index=62&type=chunk) [Share Capital Structure](index=17&type=section&id=Share%20Capital%20Structure) As of June 30, 2025, Beiqing Media's total share capital was 197,310,000 shares, with domestic shares accounting for 72.18% and H-shares for 27.82%, and Beijing Youth Daily Agency being the largest domestic shareholder Share Capital Structure (As of June 30, 2025) | Shareholder Category | Number of Shares | Percentage of Total Share Capital (%) | | :--- | :--- | :--- | | Domestic Shares (Subtotal) | 142,409,000 | 72.18 | | H-shares | 54,901,000 | 27.82 | | **Total Share Capital** | **197,310,000** | **100.00** | | Beijing Youth Daily Agency (Domestic Shares) | 124,839,974 | 63.27 | | LeTV Information Technology (Beijing) Co., Ltd. (H-shares) | 19,533,000 | 9.90 | [Interests of Major Shareholders in Shares and Related Shares](index=18&type=section&id=Interests%20of%20Major%20Shareholders%20in%20Shares%20and%20Related%20Shares) This section discloses the interests of major shareholders in the company's shares and related shares as of June 30, 2025, including Beijing Youth Daily Agency and LeTV Information Technology (Beijing) Co., Ltd - Beijing Capital Group Co., Ltd. has taken over the company since May 20, 2021, exercising the rights of investor/shareholder, and holds interests in the 124,839,974 domestic shares held by Beijing Youth Daily Agency[70](index=70&type=chunk) - LeTV Information Technology (Beijing) Co., Ltd. holds 19,533,000 H-shares of the company, representing **9.90%** of the total share capital[70](index=70&type=chunk) [Capital Expenditures](index=20&type=section&id=Capital%20Expenditures) In H1 2025, the group's capital expenditures increased significantly to RMB 2,124 thousand from RMB 650 thousand in H1 2024, with H2 expenditures expected to focus on office equipment and intangible assets Capital Expenditures Comparison | Period | Amount (RMB thousand) | | :--- | :--- | | H1 2025 | 2,124 | | H1 2024 | 650 | - Expected capital expenditures for H2 2025 primarily include office equipment and intangible asset expenditures consistent with business strategy[73](index=73&type=chunk) [Contingent Liabilities and Pledged Assets](index=20&type=section&id=Contingent%20Liabilities%20and%20Pledged%20Assets) As of June 30, 2025, the group had no contingent liabilities or pledged assets - As of June 30, 2025, the group had no contingent liabilities or pledged assets[74](index=74&type=chunk) [Foreign Exchange Risk](index=20&type=section&id=Foreign%20Exchange%20Risk) The group's functional currency is RMB, with domestic business primarily settled in RMB, and while some payables are in foreign currencies, exchange rate fluctuations have a limited impact on cash flow or liquidity - The group's functional currency is RMB, with domestic business primarily settled in RMB[75](index=75&type=chunk) - Certain payables are settled in foreign currencies (USD and HKD), but exchange rate fluctuations have a limited impact on cash flow or liquidity[75](index=75&type=chunk) [Employees](index=20&type=section&id=Employees) As of June 30, 2025, the group had 346 employees, an increase from the previous year, mainly due to new subsidiaries and business needs, with total employee compensation of approximately RMB 41.055 million and active employee training programs Employee Count and Compensation Comparison | Indicator | June 30, 2025 | June 30, 2024 | | :--- | :--- | :--- | | Number of Employees | 346 | 310 | | Total Employee Compensation (RMB thousand) | 41,055 | - | - The increase in employee count was primarily due to the addition of a new subsidiary and personnel structure adjustments driven by normal business needs[76](index=76&type=chunk) - The group actively encourages employee self-development, conducting training in financial management, related party transactions, legal compliance, archives management, outdoor advertising operations, and information technology[76](index=76&type=chunk) [Interests and Short Positions of Directors and Chief Executive in Shares, Underlying Shares or Debentures of the Company or its Associated Corporations](index=21&type=section&id=Directors%20and%20Chief%20Executive%20Interests) As of June 30, 2025, no directors or chief executive of the company held any disclosable interests or short positions in the shares, underlying shares, or debentures of the company or its associated corporations - As of June 30, 2025, no directors or chief executive of the company held any disclosable interests or short positions in the shares, underlying shares, or debentures of the company or its associated corporations[77](index=77&type=chunk) [Purchase, Sale or Redemption of the Company's Listed Securities](index=21&type=section&id=Purchase%2C%20Sale%20or%20Redemption%20of%20the%20Company%27s%20Listed%20Securities) During the reporting period, neither the company nor its subsidiaries purchased, sold, or redeemed any of the company's listed securities, and as of June 30, 2025, the company held no treasury shares - During the reporting period, neither the company nor its subsidiaries purchased, sold, or redeemed any of the company's listed securities[78](index=78&type=chunk) - As of June 30, 2025, the company held no treasury shares[78](index=78&type=chunk) [Significant Investments](index=21&type=section&id=Significant%20Investments) The company entered into a single asset management contract with Shouyao Securities and Bank of Communications on April 19, 2022, to manage idle funds, which has been extended to June 16, 2026, with this investment and others in companies like Beiyang Media and Keyin Media exceeding 5% of the group's total assets - The company entrusted Shouyao Securities with idle fund management, and this single asset management plan has been extended for three years to June 16, 2026; as of June 30, 2025, this investment accounted for over **5%** of the group's total assets[79](index=79&type=chunk) - As of June 30, 2025, the company's investments in Beiyang Publishing & Media Co., Ltd. and Beijing Keyin Media Culture Co., Ltd. accounted for over **5%** of the group's total assets[79](index=79&type=chunk) - Except as disclosed in this report, as of June 30, 2025, the group had no other significant investments or plans to acquire assets[79](index=79&type=chunk) [Significant Acquisitions and Disposals of Assets](index=22&type=section&id=Significant%20Acquisitions%20and%20Disposals%20of%20Assets) During the reporting period, the group had no significant acquisitions or disposals of subsidiaries, associates, or joint ventures - During the reporting period, the group had no significant acquisitions or disposals of subsidiaries, associates, or joint ventures[82](index=82&type=chunk) [Changes in Group Performance After December 31, 2024](index=22&type=section&id=Changes%20in%20Group%20Performance%20After%20December%2031%2C%202024) Except as disclosed in this report, there have been no significant changes in the company's current information compared to the most recently published annual report - Except as disclosed in this report, there have been no significant changes in the company's current information compared to the most recently published annual report[83](index=83&type=chunk) [Compliance with Laws and Regulations and the Corporate Governance Code](index=22&type=section&id=Compliance%20with%20Laws%20and%20Regulations%20and%20the%20Corporate%20Governance%20Code) During the reporting period, the company complied with laws and regulations materially affecting the group and the code provisions set out in Appendix C1 of the Listing Rules, "Corporate Governance Code" - During the reporting period, the company complied with laws and regulations materially affecting the group and the code provisions set out in Appendix C1 of the Listing Rules, "Corporate Governance Code"[84](index=84&type=chunk) [Compliance with Model Code](index=22&type=section&id=Compliance%20with%20Model%20Code) The company has adopted the Model Code set out in Appendix C3 of the Listing Rules as the code of conduct for directors and supervisors in securities transactions, and all directors and supervisors confirmed compliance during the reporting period - The company has adopted the Model Code set out in Appendix C3 of the Listing Rules, and all directors and supervisors confirmed compliance with the Model Code during the reporting period[85](index=85&type=chunk) [Audit Committee](index=22&type=section&id=Audit%20Committee) The company established an Audit Committee in accordance with the Listing Rules, responsible for reviewing, supervising, and adjusting the group's financial reporting process and internal controls, and has reviewed the unaudited interim results for the six months ended June 30, 2025, without objection - The Audit Committee has reviewed the group's unaudited interim results for the six months ended June 30, 2025, and has no objection thereto[86](index=86&type=chunk) [Distributable Reserves](index=22&type=section&id=Distributable%20Reserves) As of June 30, 2025, the company's accumulated losses were RMB 708,276 thousand, and surplus reserves were RMB 130,931 thousand, with surplus reserves available to offset losses upon shareholder approval Distributable Reserves (As of June 30, 2025) | Item | Amount (RMB thousand) | | :--- | :--- | | Accumulated Losses | (708,276) | | Surplus Reserves | 130,931 | - According to the company's articles of association, surplus reserves may be used to offset the company's losses upon approval by the general meeting of shareholders[88](index=88&type=chunk) [Interim Dividend](index=23&type=section&id=Interim%20Dividend) The Board of Directors does not recommend the distribution of any interim dividend for the six months ended June 30, 2025 - The Board of Directors does not recommend the distribution of any interim dividend for the six months ended June 30, 2025[89](index=89&type=chunk) [Changes in Directors, Supervisors and Senior Management and Their Information](index=23&type=section&id=Changes%20in%20Directors%2C%20Supervisors%20and%20Senior%20Management%20and%20Their%20Information) Following approval at the Annual General Meeting on June 13, 2025, the company completed the election of the Ninth Board of Directors, with Mr. Li Xiaowei appointed as a Non-executive Director and Mr. Zhang Lei retiring, while the Supervisory Committee was abolished - On June 13, 2025, the company completed the election of the Ninth Board of Directors, with Mr. Li Xiaowei appointed as a Non-executive Director and Mr. Zhang Lei retiring[90](index=90&type=chunk) - The company abolished the Supervisory Committee, and the supervisors of the Eighth Supervisory Committee retired upon expiration of their terms[90](index=90&type=chunk) - Ms. Sun Baojie and Mr. Kong Weiping no longer held certain external positions during the reporting period and up to the report date[91](index=91&type=chunk) [Consolidated Balance Sheet (Unaudited)](index=23&type=section&id=Consolidated%20Balance%20Sheet%20(Unaudited)) This section presents the group's consolidated balance sheet, providing a snapshot of its financial position as of June 30, 2025 [Balance Sheet Overview](index=23&type=section&id=Balance%20Sheet%20Overview) As of June 30, 2025, Beiqing Media Group's total assets were RMB 721,635 thousand, a slight increase from December 31, 2024, with total liabilities of RMB 66,418 thousand and total shareholders' equity of RMB 655,217 thousand Consolidated Balance Sheet Key Data (As of June 30, 2025) | Item | June 30, 2025 (RMB thousand) | December 31, 2024 (RMB thousand) | | :--- | :--- | :--- | | Total Current Assets | 269,225 | 294,314 | | Total Non-current Assets | 452,410 | 418,439 | | **Total Assets** | **721,635** | **712,753** | | Total Current Liabilities | 65,712 | 63,118 | | Total Non-current Liabilities | 706 | 706 | | **Total Liabilities** | **66,418** | **63,824** | | Total Equity Attributable to Shareholders of the Company | 653,049 | 637,736 | | Non-controlling Interests | 2,168 | 11,193 | | **Total Shareholders' Equity** | **655,217** | **648,929** | - Cash and cash equivalents decreased from **RMB 81,523 thousand** at year-end 2024 to **RMB 41,463 thousand** as of June 30, 2025, while financial assets held for trading increased from **RMB 114,270 thousand** to **RMB 127,388 thousand**[94](index=94&type=chunk) - Investment properties significantly increased from **RMB 53,633 thousand** at year-end 2024 to **RMB 95,743 thousand**[94](index=94&type=chunk) [Consolidated Income Statement (Unaudited)](index=25&type=section&id=Consolidated%20Income%20Statement%20(Unaudited)) This section presents the group's consolidated income statement, detailing its revenues, expenses, and net profit or loss for the six months ended June 30, 2025 [Income and Cash Flow Overview](index=25&type=section&id=Income%20and%20Cash%20Flow%20Overview) In H1 2025, the group's total operating revenue was RMB 65,985 thousand, a 32.63% year-on-year decrease, resulting in a net loss of RMB 20,275 thousand, an expansion from the RMB 11,300 thousand loss in the prior year, with basic loss per share of RMB 0.10 Consolidated Income Statement Key Data (For the Six Months Ended June 30, 2025) | Item | 2025 (RMB thousand) | 2024 (RMB thousand) | | :--- | :--- | :--- | | Total Operating Revenue | 65,985 | 97,937 | | Total Operating Costs | 96,287 | 117,668 | | Operating Profit | (20,736) | (11,260) | | Net Profit | (20,275) | (11,300) | | Net Profit Attributable to Shareholders of the Company | (19,047) | (9,420) | | Basic Earnings Per Share (RMB) | (0.10) | (0.05) | - Net amount of other comprehensive income after tax was **RMB 34,248 thousand**, primarily from changes in fair value of investment properties[100](index=100&type=chunk) [Consolidated Cash Flow Statement (Unaudited)](index=27&type=section&id=Consolidated%20Cash%20Flow%20Statement%20(Unaudited)) This section presents the group's consolidated cash flow statement, outlining cash flows from operating, investing, and financing activities for the six months ended June 30, 2025 [Cash Flow Overview](index=27&type=section&id=Cash%20Flow%20Overview) In H1 2025, the group's net cash flow from operating activities was negative RMB 34,008 thousand, an improvement from negative RMB 55,636 thousand in the prior year, while net cash flow from investing activities was negative RMB 4,659 thousand, and net cash flow from financing activities was negative RMB 7,441 thousand, with cash and cash equivalents at period-end totaling RMB 33,705 thousand Consolidated Cash Flow Statement Key Data (For the Six Months Ended June 30, 2025) | Item | 2025 (RMB thousand) | 2024 (RMB thousand) | | :--- | :--- | :--- | | Net Cash Flow from Operating Activities | (34,008) | (55,636) | | Net Cash Flow from Investing Activities | (4,659) | 37,221 | | Net Cash Flow from Financing Activities | (7,441) | (404) | | Net Increase in Cash and Cash Equivalents | (46,090) | (18,819) | | Cash and Cash Equivalents at Period-End | 33,705 | 41,495 | - Cash outflow from investing activities increased, primarily due to cash paid for investments rising from **RMB 0 thousand** in H1 2024 to **RMB 27,000 thousand** in H1 2025[101](index=101&type=chunk) - Cash outflow from financing activities significantly increased, mainly due to cash paid for other financing-related activities rising from **RMB 404 thousand** in H1 2024 to **RMB 7,441 thousand** in H1 2025[103](index=103&type=chunk) [Consolidated Statement of Changes in Equity (Unaudited)](index=29&type=section&id=Consolidated%20Statement%20of%20Changes%20in%20Equity%20(Unaudited)) This section presents the group's consolidated statement of changes in equity, detailing the movements in various equity components for the six months ended June 30, 2025 [Equity Changes Overview](index=29&type=section&id=Equity%20Changes%20Overview) As of June 30, 2025, the group's total shareholders' equity was RMB 655,217 thousand, an increase from RMB 648,929 thousand on December 31, 2024, with a net loss of RMB 19,047 thousand offset by a RMB 34,222 thousand increase in other comprehensive income, mainly from investment property fair value changes Consolidated Statement of Changes in Equity Key Data (As of June 30, 2025) | Item | June 30, 2025 (RMB thousand) | December 31, 2024 (RMB thousand) | | :--- | :--- | :--- | | Share Capital | 197,310 | 197,310 | | Capital Reserve | 919,114 | 918,976 | | Other Comprehensive Income | 265,460 | 231,238 | | Surplus Reserve | 130,931 | 130,931 | | Retained Earnings | (859,766) | (840,719) | | Total Equity Attributable to Parent Company Shareholders | 653,049 | 637,736 | | Non-controlling Interests | 2,168 | 11,193 | | **Total Shareholders' Equity** | **655,217** | **648,929** | - Net profit for the period was negative **RMB 19,047 thousand**, but other comprehensive income increased by **RMB 34,222 thousand**, primarily from changes in fair value of investment properties[104](index=104&type=chunk) [Notes to Financial Statements](index=30&type=section&id=Notes%20to%20Financial%20Statements) This section provides detailed explanations and supplementary information for the figures presented in the consolidated financial statements, enhancing transparency and understanding of the group's financial position and performance [I. General Information](index=31&type=section&id=I.%20General%20Information) This section introduces Beiqing Media Co., Ltd.'s basic information, including its incorporation date, listing location, parent company, ultimate controlling party, and primary business scope - Beiqing Media was incorporated in China on May 28, 2001, and listed on the main board of the Hong Kong Stock Exchange[106](index=106&type=chunk) - The company's parent company is Beijing Youth Daily Agency, and its ultimate controlling party is Beijing Capital Group Co., Ltd[106](index=106&type=chunk) - The group's main businesses are providing newspaper, magazine, and outdoor advertising services, printing, and engaging in printing-related material trade in China[106](index=106&type=chunk) [II. Scope of Consolidated Financial Statements](index=31&type=section&id=II.%20Scope%20of%20Consolidated%20Financial%20Statements) This section lists the subsidiaries included in the group's consolidated financial statements as of June 30, 2025, such as Beijing Beiqing Outdoor Advertising Co., Ltd., Beiqing Network Culture Communication Co., Ltd., and Beiqing Community Media Technology (Beijing) Co., Ltd - As of June 30, 2025, the group's consolidation scope includes subsidiaries such as Beijing Beiqing Outdoor Advertising, Beiqing Network Culture Communication, Beiqing Logistics, Beiqing Community Media, Chongqing Youth Media, Chongqing Youth America, Beiqing Innovative Culture, and Jingjian (Beijing) Culture Media[107](index=107&type=chunk) [III. Basis of Preparation of Financial Statements](index=32&type=section&id=III.%20Basis%20of%20Preparation%20of%20Financial%20Statements) The group's financial statements are prepared in accordance with Chinese Enterprise Accounting Standards, CSRC Disclosure Rules No. 15, and HKEX Listing Rules, presented on a going concern basis - The financial statements are prepared in accordance with Chinese Enterprise Accounting Standards, CSRC Disclosure Rules No. 15 for Companies Issuing Securities to the Public, and the Hong Kong Stock Exchange Listing Rules[110](index=110&type=chunk) - The group evaluated its ability to continue as a going concern for 12 months from June 30, 2025, and found no significant doubts[111](index=111&type=chunk) [IV. Statement of Compliance with Enterprise Accounting Standards](index=32&type=section&id=IV.%20Statement%20of%20Compliance%20with%20Enterprise%20Accounting%20Standards) The group's financial statements comply with Enterprise Accounting Standards, accurately and completely reflecting the consolidated financial position and operating results as of June 30, 2025 - The group's financial statements comply with the requirements of Enterprise Accounting Standards, truly, accurately, and completely reflecting the consolidated financial position, operating results, cash flows, and other information as of June 30, 2025[113](index=113&type=chunk) [V. Significant Accounting Policies and Estimates](index=32&type=section&id=V.%20Significant%20Accounting%20Policies%20and%20Estimates) This section details the group's significant accounting policies and estimates, covering accounting period, functional currency, measurement bases, business combinations, financial instruments, expected credit losses, inventories, long-term equity investments, investment properties, fixed assets, intangible assets, impairment, employee benefits, revenue recognition, government grants, deferred income tax, leases, and segment information - The group uses RMB as its functional currency, with accounting based on the accrual basis, and all items measured at historical cost except for specific financial assets and investment properties measured at fair value[117](index=117&type=chunk)[118](index=118&type=chunk) - Financial instruments are classified based on business model and contractual cash flow characteristics as measured at amortized cost, fair value through other comprehensive income, or fair value through profit or loss[141](index=141&type=chunk) - Expected credit losses are measured using a three-stage model or simplified approach, with impairment provisions recognized for accounts receivable and lease receivables[161](index=161&type=chunk)[164](index=164&type=chunk) - Revenue recognition principles are based on when the customer obtains control of the goods, primarily including advertising space sales, printing, leasing, and group camp project revenue[198](index=198&type=chunk)[200](index=200&type=chunk) - Investment properties are subsequently measured using the fair value model, with changes in fair value recognized in profit or loss for the current period[177](index=177&type=chunk) - Significant accounting estimates involve depreciation of property, plant and equipment, fair value of investment properties, impairment provisions for accounts receivable and other receivables, impairment of interests in joint ventures and associates, and inventory impairment losses[238](index=238&type=chunk)[239](index=239&type=chunk)[240](index=240&type=chunk)[242](index=242&type=chunk)[243](index=243&type=chunk) [VI. Changes in Significant Accounting Policies and Estimates](index=67&type=section&id=VI.%20Changes%20in%20Significant%20Accounting%20Policies%20and%20Estimates) The group had no changes in accounting policies or accounting estimates during the current period - The group had no changes in accounting policies during the current period[245](index=245&type=chunk) - The group had no changes in accounting estimates during the current period[246](index=246&type=chunk) [VII. Taxation](index=67&type=section&id=VII.%20Taxation) This section lists the group's main tax types and rates, including VAT, cultural construction tax, urban maintenance and construction tax, education surcharges, and corporate income tax, along with tax incentives for small low-profit enterprises and converted cultural institutions Main Tax Types and Rates | Tax Type | Rate | | :--- | :--- | | Value-Added Tax | 13%, 9%, 6% | | Cultural Undertaking Construction Tax | 3% | | Urban Maintenance and Construction Tax | 7% | | Education Surcharge | 3% | | Local Education Surcharge | 2% | | Corporate Income Tax | 25% | - Small low-profit enterprises are subject to a **20%** corporate income tax rate on the portion of annual taxable income not exceeding **RMB 3 million**, calculated at **25%** of the taxable income, effective until December 31, 2027[249](index=249&type=chunk) - Operating cultural institutions converted into enterprises are exempt from corporate income tax from the date of conversion registration until December 31, 2027[249](index=249&type=chunk) [VIII. Notes to Major Items of Financial Statements](index=69&type=section&id=VIII.%20Notes%20to%20Major%20Items%20of%20Financial%20Statements) This section provides detailed notes on major items in the group's financial statements, including period-end balances, changes, and aging analysis for various assets, liabilities, revenues, costs, and expenses [1. Financial Assets Held for Trading](index=69&type=section&id=1.%20Financial%20Assets%20Held%20for%20Trading) As of June 30, 2025, the group's financial assets held for trading totaled RMB 127,388 thousand, all consisting of broker asset management products, an increase from RMB 114,270 thousand on December 31, 2024 Financial Assets Held for Trading | Item | June 30, 2025 (RMB thousand) | December 31, 2024 (RMB thousand) | | :--- | :--- | :--- | | Wealth Management Products | 127,388 | 114,270 | | Of which: Broker Asset Management Products | 127,388 | 114,270 | [2. Accounts Receivable](index=69&type=section&id=2.%20Accounts%20Receivable) As of June 30, 2025, the group's net accounts receivable were RMB 39,897 thousand, an increase from RMB 28,235 thousand on December 31, 2024, with bad debt provisions of RMB 330,005 thousand, and the top five units accounting for 49.84% of total accounts receivable Net Accounts Receivable and Bad Debt Provisions | Item | June 30, 2025 (RMB thousand) | December 31, 2024 (RMB thousand) | | :--- | :--- | :--- | | Accounts Receivable | 369,902 | 361,354 | | Less: Bad Debt Provisions | 330,005 | 333,119 | | Net Accounts Receivable | 39,897 | 28,235 | Accounts Receivable Aging Analysis (After deducting bad debt provisions) | Item | June 30, 2025 (RMB thousand) | December 31, 2024 (RMB thousand) | | :--- | :--- | :--- | | 0–90 days | 22,468 | 19,995 | | 91–180 days | 5,963 | 1,241 | | 181–365 days | 6,932 | 1,499 | | 1–2 years | 2,624 | 3,325 | | Over 2 years | 1,910 | 2,175 | | Total | 39,897 | 28,235 | - As of June 30, 2025, the top five units by accounts receivable amount accounted for **49.84%** of the total accounts receivable[254](index=254&type=chunk) [3. Prepayments](index=70&type=section&id=3.%20Prepayments) As of June 30, 2025, the group's net prepayments were RMB 9,390 thousand, an increase from RMB 6,061 thousand on December 31, 2024, with prepayments within one year totaling RMB 8,389 thousand Net Prepayments | Item | June 30, 2025 (RMB thousand) | December 31, 2024 (RMB thousand) | | :--- | :--- | :--- | | Prepayments | 9,390 | 6,061 | | Less: Bad Debt Provisions | — | — | | Net Prepayments | 9,390 | 6,061 | Prepayments Aging Analysis | Item | June 30, 2025 (RMB thousand) | December 31, 2024 (RMB thousand) | | :--- | :--- | :--- | | Within 1 year | 8,389 | 5,978 | | Over 1 year | 1,001 | 83 | | Total | 9,390 | 6,061 | - As of June 30, 2025, the top five units by prepayment amount accounted for **72.95%** of the total prepayments[257](index=257&type=chunk) [4. Other Receivables](index=71&type=section&id=4.%20Other%20Receivables) As of June 30, 2025, the group's net other receivables were RMB 22,366 thousand, a decrease from RMB 28,712 thousand on December 31, 2024, comprising net dividends receivable of RMB 8,792 thousand and net other receivables of RMB 13,574 thousand Net Other Receivables | Item | June 30, 2025 (RMB thousand) | December 31, 2024 (RMB thousand) | | :--- | :--- | :--- | | Dividends Receivable | 8,842 | 8,196 | | Other Receivables | 207,222 | 221,806 | | Less: Bad Debt Provisions | 193,698 | 201,290 | | Net Other Receivables | 22,366 | 28,712 | Other Receivables Aging Analysis (After deducting bad debt provisions) | Item | June 30, 2025 (RMB thousand) | December 31, 2024 (RMB thousand) | | :--- | :--- | :--- | | Within 1 year | 3,787 | 15,005 | | 1–2 years | 9,341 | 5,189 | | 2–3 years | 25 | 304 | | 3–4 years | 298 | 148 | | Over 4 years | 123 | 5 | | Total | 13,574 | 20,651 | Other Receivables by Nature | Nature of Amount | June 30, 2025 (RMB thousand) | December 31, 2024 (RMB thousand) | | :--- | :--- | :--- | | Related Party Balances | 3,664 | 2,473 | | External Unit Balances | 190,285 | 205,446 | | Deposits and Guarantees | 10,153 | 9,635 | | Petty Cash | 1,915 | 1,580 | | Other | 1,205 | 2,672 | | Total | 207,222 | 221,806 | [5. Other Current Assets](index=73&type=section&id=5.%20Other%20Current%20Assets) As of June 30, 2025, the group's other current assets totaled RMB 28,669 thousand, primarily comprising deductible VAT and prepaid income tax, a slight decrease from RMB 29,595 thousand on December 31, 2024 Other Current Assets | Item | June 30, 2025 (RMB thousand) | December 31, 2024 (RMB thousand) | | :--- | :--- | :--- | | Deductible VAT | 26,901 | 29,595 | | Prepaid Income Tax | 1,768 | — | | Total | 28,669 | 29,595 | [6. Long-term Equity Investments](index=74&type=section&id=6.%20Long-term%20Equity%20Investments) As of June 30, 2025, the group's long-term equity investments were zero, primarily because investments in associates had been written down to zero using the equity method Long-term Equity Investments | Type | June 30, 2025 (RMB thousand) | December 31, 2024 (RMB thousand) | | :--- | :--- | :--- | | Investments in Associates — Accounted for using equity method | — | — | | Less: Impairment Provisions for Investments in Associates | — | — | | Total | — | — | - Investments in associates such as Beijing Leisure Fashion Advertising Co., Ltd. and Beijing Shengyi Automobile Technology Service Co., Ltd. have been written down to zero using the equity method[268](index=268&type=chunk) [7. Investments in Other Equity Instruments](index=75&type=section&id=7.%20Investments%20in%20Other%20Equity%20Instruments) As of June 30, 2025, the group's investments in other equity instruments totaled RMB 341,253 thousand, primarily including investments in Beiyang Publishing & Media Co., Ltd., Beijing Keyin Media Culture Co., Ltd., and Beijing International Advertising Media Group Co., Ltd Investments in Other Equity Instruments | Item | Investment Cost (RMB thousand) | June 30, 2025 (RMB thousand) | December 31, 2024 (RMB thousand) | Dividend Income Recognized in Current Period (RMB thousand) | | :--- | :--- | :--- | :--- | :--- | | Beijing Youth Daily New Media Co., Ltd. | 500 | 3,577 | 3,577 | — | | Beijing International Advertising Media Group Co., Ltd. | 33,119 | 36,853 | 36,853 | — | | Beiyang Publishing & Media Co., Ltd. | 103,000 | 264,379 | 264,379 | 8,842 | | Beijing Keyin Media Culture Co., Ltd. | 6,560 | 36,444 | 36,444 | — | | Total | 143,179 | 341,253 | 341,253 | 8,842 | - Dividend income recognized in the current period primarily came from Beiyang Publishing & Media Co., Ltd., totaling **RMB 8,842 thousand**[271](index=271&type=chunk) [8. Investment Properties](index=76&type=section&id=8.%20Investment%20Properties) As of June 30, 2025, the group's investment properties measured at fair value significantly increased to RMB 95,743 thousand from RMB 53,633 thousand on December 31, 2024, mainly due to the conversion of some self-owned properties to investment properties, resulting in an appraisal increment of RMB 34,183 thousand Investment Properties (Measured at fair value) | Type | June 30, 2025 (RMB thousand) | December 31, 2024 (RMB thousand) | | :--- | :--- | :--- | | Buildings | 95,743 | 53,633 | | Total | 95,743 | 53,633 | - The company converted some self-owned properties into investment properties, resulting in an appraisal increment of **RMB 34,183 thousand**[277](index=277&type=chunk) - As of June 30, 2025, the book value of the group's investment properties for which formal title deeds have not yet been obtained was approximately **RMB 4,099 thousand**, which the directors believe does not affect their value[275](index=275&type=chunk) [9. Property, Plant and Equipment](index=77&type=section&id=9.%20Property%2C%20Plant%20and%20Equipment) For the six months ended June 30, 2025, the group's property, plant and equipment increased by RMB 153 thousand, and depreciation expense of RMB 366 thousand was recognized Property, Plant and Equipment Movement | Item | H1 2025 (RMB thousand) | H1 2024 (RMB thousand) | | :--- | :--- | :--- | | Increase in Property, Plant and Equipment | 153 | 785 | | Depreciation of Property, Plant and Equipment | 366 | 256 | [10. Intangible Assets](index=77&type=section&id=10.%20Intangible%20Assets) For the six months ended June 30, 2025, the group's intangible assets increased by RMB 8 thousand, and amortization expense of RMB 234 thousand was recognized Intangible Assets Movement | Item | H1 2025 (RMB thousand) | H1 2024 (RMB thousand) | | :--- | :--- | :--- | | Increase in Intangible Assets | 8 | 99 | | Amortization of Intangible Assets | 234 | 447 | [11. Other Non-current Assets](index=78&type=section&id=11.%20Other%20Non-current%20Assets) As of June 30, 2025, the group's other non-current assets were zero, primarily due to a full impairment provision of RMB 24,000 thousand for film and television project prepayments Other Non-current Assets | Item | June 30, 2025 (RMB thousand) | December 31, 2024 (RMB thousand) | | :--- | :--- | :--- | | Film and Television Project Prepayments | 24,000 | 24,000 | | Less: Impairment Provisions | 24,000 | 24,000 | | Total | — | — | - Film and television project prepayments relate to the company's participation in the film and television project "Oriental Football King," which has not yet been released[281](index=281&type=chunk) [12. Details of Asset Impairment Provisions](index=78&type=section&id=12.%20Details%20of%20Asset%20Impairment%20Provisions) As of June 30, 2025, the group's total asset impairment provisions were RMB 556,218 thousand, with bad debt provisions of RMB 1,783 thousand recognized in the current period and inventory depreciation provisions decreasing by RMB 1,324 thousand Details of Asset Impairment Provisions (As of June 30, 2025) | Item | January 1, 2025 (RMB thousand) | Increase in Current Period (Provision) (RMB thousand) | Decrease in Current Period (Reversal) (RMB thousand) | June 30, 2025 (RMB thousand) | | :--- | :--- | :--- | :--- | :--- | | Bad Debt Provisions | 534,409 | 1,783 | 13,560 | 523,703 | | Inventory Depreciation Provisions | 1,379 | — | 1,324 | 55 | | Intangible Asset Impairment Provisions | 8,460 | — | — | 8,460 | | Other Non-current Asset Impairment Provisions | 24,000 | — | — | 24,000 | | Total | 568,248 | 1,783 | 14,884 | 556,218 | [13. Accounts Payable](index=79&type=section&id=13.%20Accounts%20Payable) As of June 30, 2025, the group's total accounts payable were RMB 17,125 thousand, a decrease from RMB 21,184 thousand on December 31, 2024, with accounts payable aged 0-90 days totaling RMB 8,293 thousand Accounts Payable | Item | June 30, 2025 (RMB thousand) | December 31, 2024 (RMB thousand) | | :--- | :--- | :--- | | Accounts Payable | 17,125 | 21,184 | | Total | 17,125 | 21,184 | Accounts Payable Aging Analysis | Item | June 30, 2025 (RMB thousand) | December 31, 2024 (RMB thousand) | | :--- | :--- | :--- | | 0–90 days | 8,293 | 7,180 | | 91–180 days | 859 | 8,954 | | 181–365 days | 2,937 | 10 | | Over 1 year | 5,036 | 5,040 | | Total | 17,125 | 21,184 | [14. Other Payables](index=79&type=section&id=14.%20Other%20Payables) As of June 30, 2025, the group's total other payables were RMB 17,469 thousand, a slight decrease from RMB 18,006 thousand on December 31, 2024, primarily including intercompany balances, deposits, and guarantees Other Payables by Nature | Nature of Amount | June 30, 2025 (RMB thousand) | December 31, 2024 (RMB thousand) | | :--- | :--- | :--- | | Intercompany Balances | 13,156 | 15,789 | | Deposits and Guarantees | 889 | 1,200 | | Amounts Collected/Paid on Behalf of Others | 648 | 383 | | Other | 2,776 | 634 | | Total | 17,469 | 18,006 | [15. Other Comprehensive Income](index=80&type=section&id=15.%20Other%20Comprehensive%20Income) As of June 30, 2025, the group's total other comprehensive income was RMB 265,460 thousand, an increase of RMB 34,222 thousand from January 1, 2025, primarily due to changes in the fair value of investment properties Other Comprehensive Income Movement (As of June 30, 2025) | Item | January 1, 2025 (RMB thousand) | Amount Incurred Before Tax in Current Year (RMB thousand) | Attributable to Parent Company After Tax (RMB thousand) | June 30, 2025 (RMB thousand) | | :--- | :--- | :--- | :--- | :--- | | I. Other Comprehensive Income Not to be Reclassified to Profit or Loss | 230,487 | — | — | 230,487 | | Of which: Fair Value Changes of Investments in Other Equity Instruments | 230,487 | — | — | 230,487 | | II. Other Comprehensive Income to be Reclassified to Profit or Loss | 751 | 34,248 | 34,222 | 34,973 | | Of which: Fair Value Changes of Investment Properties | — | 34,183 | 34,183 | 34,183 | | Exchange Differences on Translation of Foreign Currency Financial Statements | 201 | 65 | 39 | 240 | | **Total Other Comprehensive Income** | **231,238** | **34,248** | **34,222** | **265,460** | - The increase in other comprehensive income in the current period primarily came from changes in the fair value of investment properties, totaling **RMB 34,183 thousand**[287](index=287&type=chunk) [16. Total Operating Revenue and Operating Costs](index=81&type=section&id=16.%20Total%20Operating%20Revenue%20and%20Operating%20Costs) In H1 2025, the group's total operating revenue was RMB 65,985 thousand, a 32.63% year-on-year decrease, while operating costs were RMB 72,388 thousand, a 22.22% year-on-year decrease, resulting in a gross loss of RMB 6,403 thousand, compared to a gross profit of RMB 4,871 thousand in the prior year Total Operating Revenue, Operating Costs, and Gross Profit (For the Six Months Ended June 30, 2025) | Item | 2025 (RMB thousand) | 2024 (RMB thousand) | | :--- | :--- | :--- | | Total Operating Revenue | 65,985 | 97,937 | | Total Operating Costs | 72,388 | 93,066 | | Gross Profit | (6,403) | 4,871 | Main Business Revenue and Costs (By Business Category) | Item | 2025 Operating Revenue (RMB thousand) | 2025 Operating Costs (RMB thousand) | 2024 Operating Revenue (RMB thousand) | 2024 Operating Costs (RMB thousand) | | :--- | :--- | :--- | :--- | :--- | | Advertising | 46,038 | 54,105 | 51,808 | 52,021 | | Printing | — | — | 2 | 1 | | Printing Related Material Trade | 8,654 | 9,745 | 29,905 | 28,711 | | Other | 7,915 | 8,533 | 11,728 | 12,192 | | Total | 62,607 | 72,383 | 93,443 | 92,925 | - Operating revenue from the top five customers totaled **RMB 18,536 thousand**, accounting for **28.09%** of H1 2025 business revenue[291](index=291&type=chunk) [17. Taxes and Surcharges](index=83&type=section&id=17.%20Taxes%20and%20Surcharges) In H1 2025, the group's total taxes and surcharges were RMB 846 thousand, a decrease from RMB 1,029 thousand in H1 2024, primarily including property tax, cultural undertaking construction fees, and urban construction tax Taxes and Surcharges (For the Six Months Ended June 30, 2025) | Item | 2025 (RMB thousand) | 2024 (RMB thousand) | | :--- | :--- | :--- | | Property Tax | 512 | 633 | | Cultural Undertaking Construction Fee | 211 | 245 | | Urban Construction Tax | 52 | 58 | | Education Surcharge | 30 | 24 | | Local Education Surcharge | 20 | 17 | | Other | 21 | 52 | | Total | 846 | 1,029 | [18. Finance Costs](index=83&type=section&id=18.%20Finance%20Costs) In H1 2025, the group's finance costs were negative RMB 493 thousand, an increase (absolute value decrease) from negative RMB 658 thousand in H1 2024, primarily due to reduced interest income Finance Costs (For the Six Months Ended June 30, 2025) | Item | 2025 (RMB thousand) | 2024 (RMB thousand) | | :--- | :--- | :--- | | Interest Expense | 64 | 90 | | Less: Interest Income | 573 | 785 | | Exchange Gains/(Losses) | (2) | — | | Plus: Handling Fees and Other Expenses | 18 | 37 | | Total | (493) | (658) | [19. Investment Income](index=84&type=section&id=19.%20Investment%20Income) In H1 2025, the group's investment income was RMB 8,989 thousand, a decrease from RMB 11,103 thousand in H1 2024, primarily from investment income during the holding period of other equity instrument investments Investment Income (For the Six Months Ended June 30, 2025) | Item | 2025 (RMB thousand) | 2024 (RMB thousand) | | :--- | :--- | :--- | | Share of Profit of Associates | — | (1,377) | | Investment Income from Disposal of Financial Assets Measured at Fair Value Through Profit or Loss | (131) | 12,441 | | Investment Income from Holding Other Equity Instruments | 8,842 | 39 | | Other Investment Income | 278 | — | | Total | 8,989 | 11,103 | [20. Gains from Changes in Fair Value](index=84&type=section&id=20.%20Gains%20from%20Changes%20in%20Fair%20Value) In H1 2025, the group's gains from changes in fair value were RMB 2,320 thousand, a turnaround from a loss of RMB 5,563 thousand in H1 2024, primarily due to fair value changes in financial assets held for trading Gains from Changes in Fair Value (For the Six Months Ended June 30, 2025) | Item | 2025 (RMB thousand) | 2024 (RMB thousand) | | :--- | :--- | :--- | | Fair Value Changes of Financial Assets Held for Trading | 2,320 | (5,563) | | Total | 2,320 | (5,563) | [21. Credit Impairment Losses](index=84&type=section&id=21.%20Credit%20Impairment%20Losses) In H1 2025, the group's credit impairment losses were negative RMB 1,783 thousand, compared to positive RMB 2,893 thousand in H1 2024, indicating an increase in credit impairment losses for the current period Credit Impairment Losses (For the Six Months Ended June 30, 2025) | Item | 2025 (RMB thousand) | 2024 (RMB thousand) | | :--- | :--- | :--- | | Bad Debt Losses | (1,783) | 2,893 | | Total | (1,783) | 2,893 | [22. Non-operating Income](index=85&type=section&id=22.%20Non-operating%20Income) In H1 2025, the group's non-operating income was RMB 380 thousand, a significant increase from RMB 13 thousand in H1 2024 Non-operating Income (For the Six Months Ended June 30, 2025) | Item | 2025 (RMB thousand) | 2024 (RMB thousand) | | :--- | :--- | :--- | | Gains on Disposal of Property, Plant and Equipment | — | 5 | | Other | 380 | 8 | | Total | 380 | 13 | [23. Non-operating Expenses](index=85&type=section&id=23.%20Non-operating%20Expenses) In H1 2025, the group's non-operating expenses were RMB 4 thousand, a decrease from RMB 38 thousand in H1 2024 Non-operating Expenses (For the Six Months Ended June 30, 2025) | Item | 2025 (RMB thousand) | 2024 (RMB thousand) | | :--- | :--- | :--- | | Other | 4 | 38 | | Total | 4 | 38 | [24. Income Tax Expense](index=86&type=section&id=24.%20Income%20Tax%20Expense) In H1 2025, the group's income tax expense was negative RMB 85 thousand, a significant decrease from RMB 15 thousand in H1 2024, primarily due to a reversal by subsidiary Jingjian Media based on income tax reconciliation results Income Tax Expense (For the Six Months Ended June 30, 2025) | Item | 2025 (RMB thousand) | 2024 (RMB thousand) | | :--- | :--- | :--- | | Current Income Tax Expense | (85) | 15 | | Total | (85) | 15 | - The income tax expense for the current period was negative, primarily due to a reversal by the company's subsidiary Jingjian Media based on the income tax reconciliation results[58](index=58&type=chunk) - The group was not required to provide for Hong Kong profits tax during the current period as no profits were derived from Hong Kong[307](index=307&type=chunk) [25. Dividends](index=86&type=section&id=25.%20Dividends) The Board of Directors does not recommend the payment of any interim dividend for the six months ended June 30, 2025 - The Board of Directors does not recommend the payment of any interim dividend for the six months ended June 30, 2025[308](index=308&type=chunk) [26. Cash and Cash Equivalents](index=87&type=section&id=26.%20Cash%20and%20Cash%20Equivalents) As of June 30, 2025, the group's cash and cash equivalents balance at period-end was RMB 33,705 thousand, a significant decrease from RMB 79,795 thousand on December 31, 2024 Cash and Cash Equivalents | Item | June 30, 2025 (RMB thousand) | December 31, 2024 (RMB thousand) | | :--- | :--- | :--- | | Bank Balances and Cash | 41,463 | 81,523 | | Less: Restricted Bank Deposits | 7,758 | 1,728 | | Cash and Cash Equivalents at Period-End | 33,705 | 79,795 | [IX. Changes in Consolidation Scope](index=87&type=section&id=IX.%20Changes%20in%20Consolidation%20Scope) This section explains changes in the group's consolidation scope, including the consolidation of Jingjian Media in December 2024, which led to restatement of prior period financial data, and the deconsolidation of Beiqing Longteng Investment Management (Beijing) Co., Ltd. due to compulsory liquidation in January 2025 - The consolidation of Jingjian Media, an enterprise under common control, was completed in December 2024, leading to the restatement of prior period financial data[311](index=311&type=chunk) - On January 10, 2025, Beiqing Longteng Investment Management (Beijing) Co., Ltd. was no longer included in the group's consolidation scope due to compulsory liquidation[313](index=313&type=chunk) - The group had no changes in consolidation scope due to the disposal of subsidiaries[312](index=312&type=chunk) [X. Interests in Other Entities](index=88&type=section&id=X.%20Interests%20in%20Other%20Entities) This section details the group's interests in subsidiaries, associates, other equity instrument investments, and financial assets held for trading, including their composition, shareholding percentages, key financial information, and investment strategies [1. Interests in Subsidiaries](index=88&type=section&id=1.%20Interests%20in%20Subsidiaries) The group owns several subsidiaries, including Beijing Youth Daily Modern Logistics Co., Ltd. and Beiqing Community Media Technology (Beijing) Co., Ltd., which are significant non-wholly owned subsidiaries Key Financial Information of Significant Non-wholly Owned Subsidiaries (As of June 30, 2025) | Subsidiary Name | Non-controlling Interest Shareholding (%) | Profit/(Loss) Attributable to Non-controlling Interests in Current Period (RMB thousand) | Non-controlling Interests Balance (RMB thousand) | | :--- | :--- | :--- | :--- | | Beijing Youth Daily Modern Logistics Co., Ltd. | 7.16 | (227) | (899) | | Beiqing Community Media Technology (Beijing) Co., Ltd. | 24.18 | (854) | 6,611 | Operating Performance of Significant Non-wholly Owned Subsidiaries (For the Six Months Ended June 30, 2025) | Subsidiary Name | Operating Revenue (RMB thousand) | Net Profit/(Loss) (RMB thousand) | Net Cash Flow from Operating Activities (RMB thousand) | | :--- | :--- | :--- | :--- | | Beijing Youth Daily Modern Logistics Co., Ltd. | 11,248 | (3,171) | (3,887) | | Beiqing Community Media Technology (Beijing) Co., Ltd. | 12,278 | (2,757) | (3,041) | [2. Interests in Associates](index=90&type=section&id=2.%20Interests%20in%20Associates) The group accounts for its investments in several associates, including Beijing Leisure Fashion Advertising Co., Ltd. and Beijing Shengyi Automobile Technology Service Co., Ltd., using the equity method, with the total book value of investments in associates being zero as of June 30, 2025, due to write-downs Key Financial Information of Associates (For the Six Months Ended June 30, 2025) | Item | 2025 (RMB thousand) | 2024 (RMB thousand) | | :--- | :--- | :--- | | Total Book Value of Investments | — | 1,664 | | Net Profit/(Loss) | — | (1,423) | | Total Comprehensive Income | — | (1,423) | - As of the reporting date, some associates had not yet provided their financial statements for January to June 2025, and their accumulated unrecognized losses continued to exist[325](index=325&type=chunk) [3. Interests in Investments in Other Equity Instruments](index=92&type=section&id=3.%20Interests%20in%20Investments%20in%20Other%20Equity%20Instruments) The group holds interests in other equity instrument investments, including Beiyang Publishing & Media Co., Ltd., Beijing Keyin Media Culture Co., Ltd., and Beijing International Advertising Media Group Co., Ltd., which represent a significant portion of the group's total assets, primarily based on favorable operating conditions and investment returns Basic Information of Companies Related to Investments in Other Equity Instruments (As of June 30, 2025) | Company Name | Shareholding (%) | Fair Value (RMB thousand) | Percentage of Total Assets (%) | | :--- | :--- | :--- | :--- | | Beijing Youth Daily New Media Co., Ltd. | 5.00 | 3,577 | 0.50 | | Beijing International Advertising Media Group Co., Ltd. | 11.44 | 36,853 | 5.11 | | Beiyang Publishing & Media Co., Ltd. | 2.43 | 264,379 | 36.64 | | Beijing Keyin Media Culture Co., Ltd. | 16.00 | 36,444 | 5.05 | - The investment in Beiyang Media is primarily based on its favorable operating conditions and capital operation plans, aiming for better investment returns[331](index=331&type=chunk) - The investment in Jingguang Media aims to achieve investment returns, and in conjunction with the business transformation strategy, the company may consider gradually advancing its exit plan[332](index=332&type=chunk) [4. Interests in Financial Assets Held for Trading](index=94&type=section&id=4.%20Interests%20in%20Financial%20Assets%20Held%20for%20Trading) The company manages idle funds through a single asset management contract with Shouyao Securities, with the fair value of this fixed-income wealth management product totaling RMB 127,388 thousand as of June 30, 2025, representing 17.65% of total assets Basic Information of Financial Assets Held for Trading (As of June 30, 2025) | Counterparty Name | Product Type | Investment Cost (RMB thousand) | Fair Value (RMB thousand) | Percentage of Total Assets (%) | | :--- | :--- | :--- | :--- | :--- | | Shouyao Securities | Fixed-Income Wealth Management Product | 118,390 | 127,388 | 17.65 | - The company will continue to entrust Shouyao Securities with the management of idle funds, provided it does not affect daily operational liquidity and is authorized by the shareholders' meeting[335](index=335&type=chunk) [XI. Fair Value Disclosures](index=95&type=section&id=XI.%20Fair%20Value%20Disclosures) This section discloses the amounts and measurement levels of assets and liabilities measured at fair value as of June 30, 2025, with total assets continuously measured at fair value amounting to RMB 564,384 thousand, primarily comprising financial assets held for trading, investments in other equity instruments, and investment properties Period-End Assets Measured at Fair Value and Fair Value Measurement Levels (As of June 30, 2025) | Item | Level 2 Fair Value Measurement (RMB thousand) | Level 3 Fair Value Measurement (RMB thousand) | Total (RMB thousand) | | :--- | :--- | :--- | :--- | | Financial Assets Held for Trading | 127,388 | — | 127,388 | | Investments in Other Equity Instruments | — | 341,253 | 341,253 | | Investment Properties | 95,743 | — | 95,743 | | **Total Assets Continuously Measured at Fair Value** | **223,131** | **341,253** | **564,384** | [XII. Related Parties and Related Party Transactions](index=96&type=section&id=XII.%20Related%20Parties%20and%20Related%20Party%20Transactions) This section details the group's related party relationships, parent company, ultimate controlling party, and various related party transactions in H1 2025, including purchases, sales, asset management, leasing, and key management personnel compensation, along with related party balances [1. Related Party Relationships](index=96&type=section&id=1.%20Related%20Party%20Relationships) The group's related parties include its parent company Beijing Youth Daily Agency and its subsidiaries, the ultimate controlling party Beijing Capital Group Co., Ltd. and its subsidiaries, the company's associates, and other related parties - The group's related parties include its parent company Beijing Youth Daily Agency and its subsidiaries, the ultimate controlling party Beijing Capital Group Co., Ltd. and its subsidiaries, the company's associates, and other related parties[339](index=339&type=chunk)[341](index=341&type=chunk) [2. Parent Company and Ultimate Controlling Party](index=98&type=section&id=2.%20Parent%20Company%20and%20Ultimate%20Controlling%20Party) The company's parent company is Beijing Youth Daily Agency, and its ultimate controlling party is Beijing Capital Group Co., Ltd., with Beijing Youth Daily Agency holding 124,840 thousand shares, representing 63.27% of the company's share capital as of June 30, 2025 Parent Company and Ultimate Controlling Party Information | Item | Parent Company Name | Ultimate Controlling Party Name | | :--- | :--- | :--- | | Enterprise Type | State-owned Enterprise | State-owned Enterprise | | Registered Address | Beijing | Beijing | | Busin

[Corporate Profile](index=2&type=section&id=CORPORATE%20PROFILE) COFCO Group's exclusive Hong Kong-listed beverage platform operates Coca-Cola products across 19 provinces, offering 10 major product categories - The company is COFCO Group's sole professional beverage business platform, listed on the Hong Kong Stock Exchange[3](index=3&type=chunk)[5](index=5&type=chunk) - Primarily operates Coca-Cola series products in **19 provincial administrative regions** in China through COFCO Coca-Cola, a joint venture with The Coca-Cola Company[4](index=4&type=chunk)[5](index=5&type=chunk) - Products cover **10 major categories** and **25 brands**, including sparkling drinks, juices, water, dairy beverages, energy drinks, tea, coffee, functional nutrient drinks, sports drinks, and plant-based protein drinks[4](index=4&type=chunk)[5](index=5&type=chunk) [Corporate Information](index=4&type=section&id=CORPORATE%20INFORMATION) The company's board comprises key directors and committees, with specified secretaries, auditors, and major banking relationships - Board members include Mr. Qing Lijun (Chairman and Non-executive Director, re-designated on **January 6, 2025**), Mr. Zhan Zaizhong (Executive Director and Managing Director, appointed on **January 6, 2025**), and other directors[8](index=8&type=chunk)[10](index=10&type=chunk) - The company has an Audit Committee, Remuneration Committee, Nomination Committee, Environmental, Social and Governance Committee, and Executive Committee, with specified chairmen and members for each[9](index=9&type=chunk)[10](index=10&type=chunk)[11](index=11&type=chunk)[13](index=13&type=chunk) - The Company Secretary is Mr. Lo Wing Hay, the auditor is BDO Limited, and major banks include Bank of China (Hong Kong) Limited and China CITIC Bank Corporation Limited[12](index=12&type=chunk)[13](index=13&type=chunk) [Management Discussion and Analysis](index=7&type=section&id=MANAGEMENT%20DISCUSSION%20AND%20ANALYSIS) This section outlines China Foods Limited's H1 2025 operations, strategies, industry environment, performance, financial review, and future outlook [Current Business Status](index=7&type=section&id=CURRENT%20STATUS) In H1 2025, Coca-Cola product sales grew, revenue accelerated, and smart retail expanded rapidly, reinforcing market leadership - In the first half, Coca-Cola series product sales maintained growth, revenue significantly accelerated, and market leadership was further consolidated[17](index=17&type=chunk)[19](index=19&type=chunk) - Smart retail business equipment scale rapidly expanded, firmly ranking **first in the industry**[17](index=17&type=chunk)[19](index=19&type=chunk) - COFCO Yuexiang Club focused on product price increases and non-Coca-Cola product business development, with year-on-year revenue growth[17](index=17&type=chunk)[19](index=19&type=chunk) [Development Strategy](index=7&type=section&id=DEVELOPMENT%20STRATEGY) The company's 2025 'Reshaping' strategy aims to optimize customer experience, operational efficiency, and profitability through comprehensive transformation - The core strategy for 2025 is **'Reshaping,'** encompassing product brands, marketing networks, value chain, supply system, organizational structure, and execution culture to optimize customer experience, enhance efficiency, and profitability[18](index=18&type=chunk)[20](index=20&type=chunk) - Firmly implements the business philosophy of 'Quality Improvement, Efficiency Enhancement, Innovation, Systematization, Openness, and Green Development,' promoting synergistic development of all-category beverage and innovative businesses[18](index=18&type=chunk)[20](index=20&type=chunk) - 'Quality Improvement' strategy includes promoting sales of core and high-margin products, optimizing channel structure (new retail, catering, tourism), and enhancing supply chain management efficiency; 'Efficiency Enhancement' deepens supply chain integration and expands centralized procurement; 'Innovation' focuses on digital upgrades[18](index=18&type=chunk)[20](index=20&type=chunk)[25](index=25&type=chunk) - 'Systematization' adheres to legal governance, improves compliance, optimizes organizational structure and compensation incentives; 'Openness' promotes ecosystem building, sharing resources with upstream and downstream partners; 'Green Development' insists on sustainable development, reducing energy consumption and emissions[25](index=25&type=chunk) [Industry Environment](index=8&type=section&id=INDUSTRY%20ENVIRONMENT) In H1 2025, China's economy grew stably (GDP +5.3%, per capita consumption +5.3%), supporting stable sales in the non-alcoholic ready-to-drink sector - In the first half of 2025, China's GDP grew by **5.3%** year-on-year, with the secondary industry value-added increasing by **5.3%**[23](index=23&type=chunk)[24](index=24&type=chunk) - National per capita consumption expenditure, after adjusting for price factors, increased by **5.3%** year-on-year, supporting overall stable sales in the non-alcoholic ready-to-drink industry[23](index=23&type=chunk)[24](index=24&type=chunk) [Review of Results](index=9&type=section&id=REVIEW%20OF%20RESULTS) China Foods achieved synergistic sales and revenue growth in H1 2025 by optimizing pricing, product structure, and channels, improving gross margin from lower raw material costs [Overall Performance](index=9&type=section&id=Overall%20Performance) In H1 2025, sales and revenue grew by 5.5% and 8.3% respectively, with gross margin up 3.5 percentage points, driven by economic growth and lower raw material prices 2025 First Half Performance Summary | Metric | June 30, 2025 (RMB million) | June 30, 2024 (RMB million) | Change Rate | | :--- | :--- | :--- | :--- | | Revenue | 12,278.1 | 11,335.1 | +8.3% | | Sales Volume | - | - | +5.5% | | Gross Profit Margin | - | - | +3.5 percentage points | - Sales volume and revenue increased by **5.5%** and **8.3%** year-on-year, respectively, with revenue growth primarily driven by increases in both sales volume and average product price[27](index=27&type=chunk)[69](index=69&type=chunk)[72](index=72&type=chunk) - Gross profit margin improved year-on-year, mainly benefiting from lower procurement prices for most raw materials, partially offsetting cost pressure from high aluminum prices[28](index=28&type=chunk)[30](index=30&type=chunk)[73](index=73&type=chunk)[78](index=78&type=chunk) - The company strengthened capital expenditure control and refined management of operating cash flow, optimizing resource allocation efficiency to ensure financial resilience[28](index=28&type=chunk)[30](index=30&type=chunk) [Steadily Optimizing Product Structure](index=9&type=section&id=Steadily%20optimising%20product%20structure) The company optimizes product structure, with strong category performance including double-digit growth in sugar-free sparkling drinks, revenue growth in juices, and over 20% sales growth in water [Sparkling Drinks Category](index=9&type=section&id=Sparkling%20drinks) Sparkling drinks achieved above-market growth, driven by double-digit sugar-free beverage growth, securing over 50% market share with 9% revenue growth - Sugar-free category drove sparkling drinks to surpass market growth with **double-digit high growth** in both volume and revenue, achieving over **50% market share**[29](index=29&type=chunk)[31](index=31&type=chunk) - Sparkling drinks category sales volume saw considerable year-on-year growth, revenue increased by **9%** year-on-year, and gross profit margin improved concurrently[29](index=29&type=chunk)[31](index=31&type=chunk) - New product 'Sprite Zero Sugar Ice Lemon Cool Berry' launched, and Coca-Cola sharing bottles returned with upgraded features, closely aligning with young consumer demands[32](index=32&type=chunk)[33](index=33&type=chunk)[36](index=36&type=chunk)[37](index=37&type=chunk) [Juice Category](index=10&type=section&id=Juices) Despite low-concentration juice market challenges, the juice category achieved 1% revenue growth through price adjustments, with 'Qoo' relaunching as a new growth driver - Affected by consumption upgrades, the low-concentration juice market faced challenges, but the overall juice category revenue grew against the trend by **1%**, thanks to product price increase strategies[34](index=34&type=chunk)[38](index=38&type=chunk) - Core orange-flavored products maintained stable growth, and 'Qoo' relaunched, gaining favor with its unique packaging design and becoming a new revenue growth engine for the category[35](index=35&type=chunk)[38](index=38&type=chunk) - Non-orange flavors underwent specification upgrades (420ml converted to 450ml with increased volume at no extra cost) and introduced four new small flavors like 'Zhizhi Taotao' to enrich the flavor matrix[39](index=39&type=chunk)[40](index=40&type=chunk) - Focused on developing profitable packaging, with a key promotion of **1.25L large-size family packs** to increase market share and strongly support the improvement of category profitability[42](index=42&type=chunk)[43](index=43&type=chunk) [Water Category](index=12&type=section&id=Water) Water category strategy adjustments led to significant growth for 'Ice Dew' (sales +20%, high single-digit revenue), while 'Yuehuo' natural soda water differentiated itself with 'no additives' and brand upgrades - 'Ice Dew' distribution network expanded rapidly, with water category sales volume increasing by over **20%** year-on-year, driving high single-digit revenue growth[44](index=44&type=chunk)[48](index=48&type=chunk) - 'Yuehuo' natural soda water differentiated itself with 'no additives,' upgraded its brand logo and bottle design, launched exclusive products with JD.com, and deepened category education through sports marketing and social media[45](index=45&type=chunk)[48](index=48&type=chunk) - Future focus will remain on high-quality development of the water category, actively exploring high-end water products, leveraging 'Ice Dew' channel advantages, seizing the healthy trend of soda water, expanding product portfolio, and improving profitability[46](index=46&type=chunk)[49](index=49&type=chunk) [Ready-to-Drink Coffee](index=13&type=section&id=Ready-to-drink%20coffee) The company launched 'COSTA Light & Refreshing Black Coffee' targeting health-conscious consumers, planning to boost sales through convenience store penetration and summer promotions - Launched new product 'COSTA Light & Refreshing Black Coffee,' attracting health-conscious and weight-loss consumers with the same coffee beans as COSTA stores, **0 fat**, and a balanced fruit flavor[51](index=51&type=chunk)[56](index=56&type=chunk) - Future plans include deep cultivation of convenience stores and traditional channels, seizing the summer window, and rapidly increasing coffee sales through freezing and promotional activities[52](index=52&type=chunk)[57](index=57&type=chunk) [Functional Drinks](index=13&type=section&id=Functional%20drink) Core brand 'Monster' achieved nearly 50% sales growth, leading its segment in mainland China, while 'Hunter Beast' targets a broader audience with its vitamin energy drink positioning - Core brand 'Monster' sales recorded nearly **50% growth** year-on-year, continuously leading its brand agents in mainland China[54](index=54&type=chunk)[58](index=58&type=chunk) - 'Hunter Beast' is positioned as a vitamin energy drink, emphasizing functionality, targeting a broader consumer base including migrant workers and blue-collar individuals, and focusing on highway service areas and industrial/mining channels[54](index=54&type=chunk)[58](index=58&type=chunk) [New Retail Business – COFCO Yuexiang Club](index=14&type=section&id=New%20Retail%20Business%20%E2%80%93%20COFCO%20Yuexiang%20Club) COFCO Yuexiang Club achieved double-digit revenue growth in online beverage and food sales nationwide by optimizing channels, increasing core product prices, and expanding non-Coca-Cola offerings - COFCO Yuexiang Club engages in online sales of beverages and food, with business covering the entire country, avoiding price competition through channel optimization and core product price increases[59](index=59&type=chunk)[63](index=63&type=chunk) - Vigorously developed non-Coca-Cola product business, collaborating with **18 new brands** to effectively increase market share of non-Coca-Cola products[59](index=59&type=chunk)[63](index=63&type=chunk) - Established a member database through the 'Happy Club' mini-program and D2C platform, achieving precise marketing and **double-digit year-on-year sales revenue growth**[60](index=60&type=chunk)[64](index=64&type=chunk) [Smart Retail Business – COFCO Zhishang](index=14&type=section&id=Smart%20Retail%20Business%20%E2%80%93%20COFCO%20Zhishang) COFCO Zhishang's smart retail business rapidly expanded its equipment scale, leading the industry and driving significant revenue growth across 31 provinces and over 350 cities - COFCO Zhishang's smart retail business equipment scale rapidly expanded, firmly ranking **first in the industry**, covering **31 provinces** and over **350 cities** nationwide, driving significant revenue growth[61](index=61&type=chunk)[65](index=65&type=chunk) - In addition to physical products, vending machines opened new revenue streams by optimizing post-payment advertisements, integrating monetization channels like 'WeChat Reading,' and launching virtual product sales models[62](index=62&type=chunk)[65](index=65&type=chunk) - Future plans include leveraging the 'Lan Jing Ling' core system to expand smart devices beyond vending machines, creating an integrated smart suite platform solution to enhance profitability[66](index=66&type=chunk)[70](index=70&type=chunk) [Outlook](index=15&type=section&id=Outlook) The company anticipates stable economic growth and an active consumer market in China for H2 2025, with stable raw material prices (potential trade war risks), and will optimize product structure and business portfolio to improve profitability - China's economy is expected to maintain stable growth in the second half of 2025, with the consumer market continuing its positive development trend driven by policies[67](index=67&type=chunk)[71](index=71&type=chunk) - Major raw material prices are expected to remain stable, but trade wars may adversely affect raw material supply, leading to increased main material costs[68](index=68&type=chunk)[71](index=71&type=chunk) - Management will continue to implement strategies such as product structure upgrades and business portfolio optimization to improve gross profit margin, and enhance profitability and adaptability to future market conditions through 'Reshaping' efforts[68](index=68&type=chunk)[71](index=71&type=chunk) [Financial Review](index=15&type=section&id=FINANCIAL%20REVIEW) This section reviews the company's key financial indicators for H1 2025, showing revenue and gross profit margin growth while maintaining a sound financial position [Revenue](index=15&type=section&id=REVENUE) In H1 2025, the company's revenue increased by 8.3% year-on-year, primarily driven by higher sales volume and average product prices Year-on-Year Revenue Change | Metric | 2025 First Half (RMB million) | 2024 First Half (RMB million) | Change Rate | | :--- | :--- | :--- | :--- | | Revenue | 12,278.1 | 11,335.1 | +8.3% | | Sales Volume | - | - | +5.5% | - The increase in revenue was primarily due to increases in both sales volume and average product price[69](index=69&type=chunk)[72](index=72&type=chunk) [Gross Profit Margin](index=16&type=section&id=GROSS%20PROFIT%20MARGIN) Gross profit margin improved year-on-year, mainly due to favorable raw material procurement prices, partially offsetting cost pressure from high aluminum prices - Gross profit margin improved year-on-year, benefiting from a year-on-year decrease in procurement prices for most raw materials, partially offsetting cost pressure from persistently high aluminum prices[73](index=73&type=chunk)[78](index=78&type=chunk) [Other Income and Gains](index=16&type=section&id=OTHER%20INCOME%20AND%20GAINS) Other income and gains, primarily comprising interest income and government subsidies, showed no significant year-on-year change - Other income and gains primarily include interest income and government subsidies, with no significant year-on-year change[74](index=74&type=chunk)[79](index=79&type=chunk) [Distribution and Selling Expenses Ratio / Administrative Expenses Ratio](index=16&type=section&id=DISTRIBUTION%20AND%20SELLING%20EXPENSES%20RATIO%2FADMINISTRATIVE%20EXPENSES%20RATIO) Distribution and selling expenses ratio increased due to intense market competition and higher marketing spending, while administrative expenses ratio remained stable year-on-year - Due to intense market competition and increased marketing spending, the distribution and selling expenses ratio increased[75](index=75&type=chunk)[80](index=80&type=chunk) - The administrative expenses ratio showed no significant year-on-year change[75](index=75&type=chunk)[80](index=80&type=chunk) [Finance Costs](index=16&type=section&id=FINANCE%20COSTS) Finance costs, primarily interest on lease liabilities, showed no significant year-on-year change - Finance costs primarily consist of interest on lease liabilities, with no significant year-on-year change[76](index=76&type=chunk)[81](index=81&type=chunk) [Income Tax Expense](index=16&type=section&id=INCOME%20TAX%20EXPENSE) Income tax expense increased by 24.9% to **RMB 379 million**, with certain subsidiaries having repaid income tax from 2021 to 2023 Income Tax Expense Change | Metric | 2025 First Half (RMB thousand) | 2024 First Half (RMB thousand) | Change Rate | | :--- | :--- | :--- | :--- | | Income Tax Expense | 379,261 | 303,757 | +24.9% | - Certain subsidiaries repaid a total of approximately **RMB 23,481,000** in income tax for the period from 2021 to 2023[77](index=77&type=chunk)[82](index=82&type=chunk) [Liquidity and Financial Resources](index=16&type=section&id=LIQUIDITY%20AND%20FINANCIAL%20RESOURCES) The company's treasury department centrally manages financial resources, reporting approximately **RMB 5.047 billion** in unpledged cash and cash equivalents and **RMB 36 million** in net current assets as of June 30, 2025 - The treasury department centrally manages financial resources, including reallocation, fundraising, managing financial risks (interest rates and exchange rates), and enhancing income opportunities[83](index=83&type=chunk)[90](index=90&type=chunk) - A cash pool is used in mainland China to more effectively utilize cash, and financial risk management processes are established[84](index=84&type=chunk)[90](index=90&type=chunk) Liquidity Status | Metric | June 30, 2025 (RMB million) | December 31, 2024 (RMB million) | | :--- | :--- | :--- | | Unpledged cash and cash equivalents | 5,047 | 4,014 | | Net current assets | 36 | 236 | [Capital Structure](index=17&type=section&id=CAPITAL%20STRUCTURE) As of June 30, 2025, issued shares remained unchanged at **2,797,223,396**, with no interest-bearing bank borrowings, net cash of approximately **RMB 5.047 billion**, and zero gearing ratio - As of June 30, 2025, the total number of issued shares remained unchanged at **2,797,223,396 shares**[86](index=86&type=chunk)[91](index=91&type=chunk) - The Group had no interest-bearing bank borrowings, with net cash of approximately **RMB 5.047 billion** (December 31, 2024: approximately **RMB 4.014 billion**), and a gearing ratio of zero[86](index=86&type=chunk)[87](index=87&type=chunk)[91](index=91&type=chunk) - Net assets attributable to owners of the parent company were approximately **RMB 6.612 billion** (December 31, 2024: approximately **RMB 6.462 billion**)[87](index=87&type=chunk)[91](index=91&type=chunk) [Contingent Liabilities and Pledged Assets](index=17&type=section&id=CONTINGENT%20LIABILITIES%20AND%20ASSETS%20PLEDGED) As of June 30, 2025, the Group had no significant contingent liabilities or pledged assets, except for certain bills payable - As of June 30, 2025, and December 31, 2024, the Group had no significant contingent liabilities or pledged assets (except for certain bills payable)[88](index=88&type=chunk)[92](index=92&type=chunk) [Foreign Exchange Management](index=17&type=section&id=FOREIGN%20EXCHANGE%20MANAGEMENT) The Group's monetary assets, liabilities, and transactions are primarily RMB-denominated, resulting in insignificant foreign exchange risk, actively monitored but not hedged - The Group's monetary assets, liabilities, and transactions are primarily denominated in RMB, and foreign exchange risk is not significant[89](index=89&type=chunk)[93](index=93&type=chunk) - The treasury department actively monitors exchange rate risks but does not use financial instruments for hedging[89](index=89&type=chunk)[93](index=93&type=chunk) [Human Resources](index=18&type=section&id=HUMAN%20RESOURCES) As of June 30, 2025, the Group employed **17,675 staff** in mainland China and Hong Kong, with total staff costs increasing by approximately **6.5%**, adhering to a contributor-focused talent development philosophy Human Resources Overview | Metric | June 30, 2025 | December 31, 2024 | Change | | :--- | :--- | :--- | :--- | | Number of Employees | 17,675 | 17,533 | +142 | | Total Staff Costs (RMB million) | 1,094 | 1,027 | +6.5% | - The Group adheres to a 'contributor-oriented' talent development philosophy, providing a good career development platform and a comprehensive training system, ensuring basic employee rights, and strictly prohibiting child labor and forced labor[96](index=96&type=chunk)[97](index=97&type=chunk)[99](index=99&type=chunk) [Corporate Governance Highlights and Other Information](index=19&type=section&id=CORPORATE%20GOVERNANCE%20HIGHLIGHTS%20AND%20OTHER%20INFORMATION) This section summarizes China Foods Limited's H1 2025 corporate governance, covering director and major shareholder interests, share option schemes, securities transactions, governance compliance, director updates, interim results review, dividend policy, and significant investments [Directors' Interests and Short Positions in Shares and Underlying Shares](index=19&type=section&id=DIRECTORS%27%20INTERESTS%20AND%20SHORT%20POSITIONS%20IN%20SHARES%20AND%20UNDERLYING%20SHARES) As of June 30, 2025, no directors or chief executives held any disclosable interests or short positions in the company's shares, underlying shares, or debentures under the SFO - As of June 30, 2025, none of the Company's directors or chief executives held any disclosable interests or short positions in the shares, underlying shares, and debentures of the Company or any of its associated corporations[101](index=101&type=chunk)[102](index=102&type=chunk) [Substantial Shareholders' and Other Persons' Interests and Short Positions in Shares and Underlying Shares](index=19&type=section&id=SUBSTANTIAL%20SHAREHOLDERS%27%20AND%20OTHER%20PERSONS%27%20INTERESTS%20AND%20SHORT%20POSITIONS%20IN%20SHARES%20AND%20UNDERLYING%20SHARES) As of June 30, 2025, China Foods (Holdings) Limited, COFCO Group (Hong Kong) Limited, and COFCO Group were substantial shareholders, each holding **2,072,688,331 shares**, representing **74.10%** of issued shares Substantial Shareholders' Shareholdings (As of June 30, 2025) | Name of Substantial Shareholder | Number of Shares Held (Long Position) | Approximate Percentage of Issued Shares | | :--- | :--- | :--- | | China Foods (Holdings) Limited | 2,072,688,331 | 74.10% | | COFCO Group (Hong Kong) Limited | 2,072,688,331 | 74.10% | | COFCO | 2,072,688,331 | 74.10% | - COFCO Group (Hong Kong) Limited is deemed to have an interest in the shares held by China Foods (Holdings) Limited, and COFCO is deemed to have an interest in the shares held by China Foods (Holdings) Limited and COFCO Hong Kong[105](index=105&type=chunk) [Share Option Scheme](index=21&type=section&id=SHARE%20OPTION%20SCHEME) The company and its subsidiaries do not have any share option schemes or share award schemes - The Company and its subsidiaries do not have any share option schemes or share award schemes[108](index=108&type=chunk)[113](index=113&type=chunk) [Purchase, Sale or Redemption of the Company's Listed Securities](index=21&type=section&id=PURCHASE%2C%20SALE%20OR%20REDEMPTION%20OF%20THE%20COMPANY%27S%20LISTED%20SECURITIES) For the six months ended June 30, 2025, neither the company nor its subsidiaries purchased, sold, or redeemed any of the company's listed securities - 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[109](index=109&type=chunk)[114](index=114&type=chunk) [Corporate Governance Practices](index=21&type=section&id=CORPORATE%20GOVERNANCE%20PRACTICES) The company complied with the Corporate Governance Code for H1 2025, except for code provision C.2.1, which was fully complied with after January 6, 2025, when Chairman and CEO roles were separated - For the six months ended June 30, 2025, the company complied with the Corporate Governance Code, except for code provision C.2.1 (the roles of Chairman and Chief Executive should not be performed by the same individual)[110](index=110&type=chunk)[115](index=115&type=chunk) - Prior to **January 6, 2025**, Mr. Qing Lijun served concurrently as Chairman and Managing Director; since Mr. Zhan Zaizhong's appointment as Executive Director and Managing Director on **January 6, 2025**, the roles of Chairman and Chief Executive have been separated, and the company has complied with code provision C.2.1[112](index=112&type=chunk)[115](index=115&type=chunk)[116](index=116&type=chunk)[121](index=121&type=chunk) [Securities Transactions by Directors](index=22&type=section&id=SECURITIES%20TRANSACTIONS%20BY%20DIRECTORS) All directors confirmed compliance with the required standards for securities transactions by directors of listed issuers throughout H1 2025 - All directors of the Company confirmed that they have complied with the required standards set out in the Model Code for Securities Transactions by Directors of Listed Issuers throughout the six months ended June 30, 2025[117](index=117&type=chunk)[122](index=122&type=chunk) [Updates on Directors' Information](index=22&type=section&id=UPDATES%20ON%20DIRECTORS%27%20INFORMATION) The board experienced several changes, including Mr. Qing Lijun's re-designation, Mr. Zhan Zaizhong's appointment as Executive Director and Managing Director, Mr. Shen Xinwen's resignation, and Mr. Song Liang and Mr. Tang Qiang's appointments to various roles - Mr. Qing Lijun resigned as Managing Director and was re-designated from Executive Director to Non-executive Director on **January 6, 2025**[118](index=118&type=chunk)[123](index=123&type=chunk) - Mr. Zhan Zaizhong was appointed as Executive Director and Managing Director and Chairman of the Executive Committee on **January 6, 2025**[118](index=118&type=chunk)[123](index=123&type=chunk) - Mr. Shen Xinwen resigned as Executive Director, member and Chairman of the Environmental, Social and Governance Committee, and member of the Executive Committee on **August 26, 2025**[120](index=120&type=chunk)[123](index=123&type=chunk) - Mr. Song Liang was appointed as Non-executive Director on **August 26, 2025**, and Mr. Tang Qiang was appointed as Executive Director, member and Chairman of the Environmental, Social and Governance Committee, and member of the Executive Committee on **August 30, 2025**[120](index=120&type=chunk)[123](index=123&type=chunk) [Review of Interim Results](index=23&type=section&id=REVIEW%20OF%20INTERIM%20RESULTS) The Group's unaudited condensed consolidated interim financial information for H1 2025 has been reviewed by the Board's Audit Committee - The Group's unaudited condensed consolidated interim financial information for the six months ended June 30, 2025, has been reviewed by the Audit Committee under the Board[124](index=124&type=chunk)[129](index=129&type=chunk) [Interim Dividend](index=23&type=section&id=INTERIM%20DIVIDEND) The Board resolved not to declare any interim dividend for the six months ended June 30, 2025 - The Board resolved not to declare any interim dividend for the six months ended June 30, 2025 (June 30, 2024: nil)[125](index=125&type=chunk)[130](index=130&type=chunk) [Significant Investments, Material Acquisitions and Disposals](index=23&type=section&id=SIGNIFICANT%20INVESTMENTS%2C%20MATERIAL%20ACQUISITIONS%20AND%20DISPOSALS) As of June 30, 2025, the Group held no significant investments and had no material acquisitions or disposals of subsidiaries, associates, or joint ventures - As of June 30, 2025, the Group held no significant investments and had no material acquisitions or disposals concerning subsidiaries, associates, or joint ventures[126](index=126&type=chunk)[131](index=131&type=chunk) [Future Plans for Material Investments or Capital Assets](index=23&type=section&id=FUTURE%20PLANS%20FOR%20MATERIAL%20INVESTMENTS%20OR%20CAPITAL%20ASSETS) As of the report date, the Group currently has no other future plans for material investments or capital assets - As of the date of this report, the Group currently has no other future plans for material investments or capital assets[127](index=127&type=chunk)[132](index=132&type=chunk) [Continuing Disclosure Obligations Pursuant to the Listing Rules](index=23&type=section&id=CONTINUING%20DISCLOSURE%20OBLIGATIONS%20PURSUANT%20TO%20THE%20LISTING%20RULES) From the company's listing date to the end of this interim period, there were no other disclosure obligations under Listing Rules 13.20, 13.21, and 13.22 - From the Company's listing date to the end of this interim period, the Company had no other disclosure obligations to fulfill pursuant to Listing Rules 13.20, 13.21, and 13.22[128](index=128&type=chunk)[133](index=133&type=chunk) [Report on Review of Condensed Consolidated Financial Statements](index=24&type=section&id=REPORT%20ON%20REVIEW%20OF%20CONDENSED%20CONSOLIDATED%20FINANCIAL%20STATEMENTS) This section presents the independent auditor's review report by BDO Limited on China Foods Limited's condensed consolidated financial statements for H1 2025, confirming compliance with HKAS 34 [Introduction](index=24&type=section&id=INTRODUCTION) This report by BDO Limited reviews China Foods Limited's H1 2025 condensed consolidated financial statements, prepared according to HKAS 34 and Listing Rules - BDO Limited reviewed the condensed consolidated financial statements of China Foods Limited and its subsidiaries for the six months ended June 30, 2025[135](index=135&type=chunk)[136](index=136&type=chunk) - The financial statements were prepared in accordance with Hong Kong Accounting Standard 34 'Interim Financial Reporting' and relevant requirements of the Listing Rules[135](index=135&type=chunk)[136](index=136&type=chunk) [Scope of Review](index=25&type=section&id=SCOPE%20OF%20REVIEW) The review was conducted under HK Standard on Review Engagements 2410, involving inquiries and analytical procedures, less extensive than an audit, thus no audit opinion is expressed - The review was conducted in accordance with Hong Kong Standard on Review Engagements 2410 'Review of Interim Financial Information Performed by the Independent Auditor of the Entity'[138](index=138&type=chunk)[140](index=140&type=chunk) - The scope of the review primarily involved making inquiries of persons responsible for financial and accounting matters and applying analytical and other review procedures, which is substantially less in scope than an audit, and therefore no audit opinion is expressed[138](index=138&type=chunk)[140](index=140&type=chunk) [Conclusion](index=25&type=section&id=CONCLUSION) Based on the review, the auditor found no matters suggesting the condensed consolidated financial statements were not prepared in all material respects in accordance with HKAS 34 - Based on the review, the auditor found no matters that caused them to believe that the condensed consolidated financial statements were not prepared in all material respects in accordance with Hong Kong Accounting Standard 34[139](index=139&type=chunk)[141](index=141&type=chunk) [Condensed Consolidated Financial Statements](index=26&type=section&id=CONDENSED%20CONSOLIDATED%20FINANCIAL%20STATEMENTS) This section contains China Foods Limited's H1 2025 condensed consolidated financial statements, including the statement of profit or loss, financial position, changes in equity, cash flows, and notes [Condensed Consolidated Statement of Profit or Loss and Other Comprehensive Income](index=26&type=section&id=Condensed%20Consolidated%20Statement%20of%20Profit%20or%20Loss%20and%20Other%20Comprehensive%20Income) For H1 2025, the company reported revenue of **RMB 12,278,061 thousand**, gross profit of **RMB 4,675,673 thousand**, operating profit of **RMB 1,356,442 thousand**, and total profit and comprehensive income of **RMB 978,090 thousand** Summary of Condensed Consolidated Statement of Profit or Loss and Other Comprehensive Income (For the six months ended June 30) | Metric | 2025 (RMB thousand) | 2024 (RMB thousand) | | :--- | :--- | :--- | | Revenue | 12,278,061 | 11,335,111 | | Cost of sales | (7,602,388) | (7,417,286) | | Gross profit | 4,675,673 | 3,917,825 | | Operating profit | 1,356,442 | 1,268,945 | | Profit before tax | 1,357,351 | 1,269,297 | | Income tax expense | (379,261) | (303,757) | | Profit and total comprehensive income for the period | 978,090 | 965,540 | | Profit attributable to owners of the Company | 577,845 | 565,232 | | Profit attributable to non-controlling interests | 400,245 | 400,308 | | Basic and diluted earnings per share (RMB cents) | 20.66 | 20.21 | [Condensed Consolidated Statement of Financial Position](index=27&type=section&id=Condensed%20Consolidated%20Statement%20of%20Financial%20Position) As of June 30, 2025, the Group's total non-current assets were **RMB 10,489,701 thousand**, total current assets **RMB 8,259,505 thousand**, total current liabilities **RMB 8,223,245 thousand**, and net assets **RMB 10,149,928 thousand** Summary of Condensed Consolidated Statement of Financial Position (As of June 30) | Metric | June 30, 2025 (RMB thousand) | December 31, 2024 (RMB thousand) | | :--- | :--- | :--- | | **ASSETS** | | | | Total non-current assets | 10,489,701 | 10,325,141 | | Total current assets | 8,259,505 | 7,273,226 | | **LIABILITIES** | | | | Total current liabilities | 8,223,245 | 7,036,960 | | Total non-current liabilities | 376,033 | 363,191 | | **EQUITY** | | | | Net assets | 10,149,928 | 10,198,216 | | Equity attributable to owners of the Company | 6,611,848 | 6,461,978 | | Non-controlling interests | 3,538,080 | 3,736,238 | [Condensed Consolidated Statement of Changes in Equity](index=29&type=section&id=Condensed%20Consolidated%20Statement%20of%20Changes%20in%20Equity) For H1 2025, profit and total comprehensive income attributable to owners of the company was **RMB 577,845 thousand**, with dividends recognized as distribution totaling **RMB 427,975 thousand** Summary of Condensed Consolidated Statement of Changes in Equity (For the six months ended June 30) | Item | 2025 (RMB thousand) | 2024 (RMB thousand) | | :--- | :--- | :--- | | Balance at January 1 | 10,198,216 | 9,686,956 | | Profit and total comprehensive income for the period | 978,090 | 965,540 | | Dividends recognized as distribution | (427,975) | (413,989) | | Dividends paid to non-controlling interests | (598,403) | (35,482) | | Balance at June 30 | 10,149,928 | 10,203,025 | [Condensed Consolidated Statement of Cash Flows](index=30&type=section&id=Condensed%20Consolidated%20Statement%20of%20Cash%20Flows) For H1 2025, net cash from operating activities was **RMB 1,881,448 thousand**, net cash used in investing activities **RMB 273,642 thousand**, and net cash used in financing activities **RMB 575,335 thousand** Summary of Condensed Consolidated Statement of Cash Flows (For the six months ended June 30) | Activity Type | 2025 (RMB thousand) | 2024 (RMB thousand) | | :--- | :--- | :--- | | Net cash from operating activities | 1,881,448 | 1,639,722 | | Net cash used in investing activities | (273,642) | (211,619) | | Net cash used in financing activities | (575,335) | (59,536) | | Net increase in cash and cash equivalents | 1,032,471 | 1,368,567 | | Cash and cash equivalents at end of period | 5,046,875 | 3,661,582 | [Notes to the Condensed Consolidated Financial Statements](index=32&type=section&id=Notes%20to%20the%20Condensed%20Consolidated%20Financial%20Statements) These notes provide detailed explanations and supplementary information for the condensed consolidated financial statements, covering general information, basis of preparation, accounting policies, revenue, expenses, taxes, dividends, earnings per share, asset changes, payables, share capital, capital commitments, related party transactions, and fair value measurements of financial instruments [General Information](index=32&type=section&id=GENERAL%20INFORMATION) China Foods Limited, a Bermuda-incorporated company and COFCO Group subsidiary, primarily processes, bottles, and distributes sparkling and non-carbonated beverages, with financial statements presented in RMB - China Foods Limited is a limited liability company incorporated in Bermuda, with COFCO Group Limited as its ultimate holding company[159](index=159&type=chunk)[160](index=160&type=chunk)[165](index=165&type=chunk) - The Group is principally engaged in the processing, bottling, and distribution of sparkling and non-carbonated beverage products[161](index=161&type=chunk)[165](index=165&type=chunk) - The condensed consolidated financial statements are presented in RMB, which is also the Company's functional currency[161](index=161&type=chunk)[165](index=165&type=chunk) [Basis of Preparation](index=32&type=section&id=BASIS%20OF%20PREPARATION) The condensed consolidated financial statements were prepared in accordance with HKAS 34 'Interim Financial Reporting' and applicable HKEX Listing Rules disclosure requirements - The condensed consolidated financial statements have been prepared in accordance with Hong Kong Accounting Standard 34 'Interim Financial Reporting' and the applicable disclosure requirements of the Listing Rules[162](index=162&type=chunk)[166](index=166&type=chunk) [Material Accounting Policy Information](index=32&type=section&id=MATERIAL%20ACCOUNTING%20POLICY%20INFORMATION) The condensed consolidated financial statements are prepared on a historical cost basis, with certain financial instruments measured at fair value, and new HKFRS amendments had no material impact - The condensed consolidated financial statements are prepared on a historical cost basis, except for certain financial instruments measured at fair value[163](index=163&type=chunk)[167](index=167&type=chunk) - The Hong Kong Financial Reporting Standards (Amendments) issued by the Hong Kong Institute of Certified Public Accountants were first applied in this interim period, but had no material impact on the Group's financial position and performance[164](index=164&type=chunk)[167](index=167&type=chunk)[169](index=169&type=chunk)[170](index=170&type=chunk) [Revenue and Segment Information](index=33&type=section&id=REVENUE%20AND%20SEGMENT%20INFORMATION) The Group's revenue and comprehensive results are primarily from processing, bottling, and distributing sparkling and non-carbonated beverages, considered a single reportable segment, with all revenue from mainland China customers Revenue from Contracts with Customers by Type (For the six months ended June 30) | Type of Goods | 2025 (RMB thousand) | 2024 (RMB thousand) | | :--- | :--- | :--- | | Sparkling drinks | 9,384,629 | 8,577,161 | | Juices | 1,674,604 | 1,661,095 | | Water category | 576,189 | 532,392 | | Others | 642,639 | 564,463 | | Total | 12,278,061 | 11,335,111 | - The Group's revenue and comprehensive results are primarily derived from the processing, bottling, and distribution of sparkling and non-carbonated beverages, which is considered a single reportable segment[174](index=174&type=chunk)[177](index=177&type=chunk) - All revenue is derived from customers in mainland China, and non-current assets are primarily located in mainland China, thus no geographical information is presented; no single customer's revenue reached **10% or more** of the Group's revenue during the period[175](index=175&type=chunk)[176](index=176&type=chunk)[178](index=178&type=chunk)[179](index=179&type=chunk) [Other Income, Gains and Losses, Net](index=35&type=section&id=OTHER%20INCOME%2C%20GAINS%20AND%20LOSSES%2C%20NET) For H1 2025, net other income, gains, and losses totaled **RMB 127,007 thousand**, primarily including government grants, net income from by-product sales, interest income, and losses on asset disposal Other Income, Gains and Losses, Net (For the six months ended June 30) | Item | 2025 (RMB thousand) | 2024 (RMB thousand) | | :--- | :--- | :--- | | Other income | 146,757 | 134,846 | | Other gains and losses | (19,750) | (9,347) | | **Total** | **127,007** | **125,499** | - Government grants amounted to **RMB 62,720 thousand** (2024: **RMB 73,993 thousand**), and interest income was **RMB 16,402 thousand** (2024: **RMB 17,281 thousand**)[181](index=181&type=chunk) - Loss on disposal of property, plant and equipment was **RMB 24,559 thousand** (2024: **RMB 3,760 thousand**)[181](index=181&type=chunk) [Finance Costs](index=36&type=section&id=FINANCE%20COSTS) For H1 2025, finance costs primarily consisted of interest on lease liabilities, amounting to **RMB 1,822 thousand** Finance Costs (For the six months ended June 30) | Item | 2025 (RMB thousand) | 2024 (RMB thousand) | | :--- | :--- | :--- | | Interest on lease liabilities | 1,822 | 2,572 | [Profit Before Tax](index=36&type=section&id=PROFIT%20BEFORE%20TAX) For H1 2025, profit before tax was **RMB 1,357,351 thousand**, after deducting or including various expenses such as depreciation, amortization, and staff costs Key Adjustments to Profit Before Tax (For the six months ended June 30) | Item | 2025 (RMB thousand) | 2024 (RMB thousand) | | :--- | :--- | :--- | | Amortization of intangible assets | 10,641 | 8,136 | | Cost of inventories recognized as expense | 7,606,431 | 7,423,252 | | Depreciation of property, plant and equipment | 386,106 | 368,539 | | Depreciation of right-of-use assets | 31,484 | 33,932 | | Wages, salaries and benefits | 1,094,248 | 1,027,389 | - Impairment loss (reversal) / recognized on trade and other receivables was **RMB (170) thousand** (2024: **RMB 960 thousand**)[184](index=184&type=chunk) [Income Tax Expense](index=37&type=section&id=INCOME%20TAX%20EXPENSE) For H1 2025, income tax expense was **RMB 379,261 thousand**, an increase of **24.9%** year-on-year, primarily comprising China corporate income tax and deferred tax, with certain Chinese entities enjoying preferential tax rates Composition of Income Tax Expense (For the six months ended June 30) | Item | 2025 (RMB thousand) | 2024 (RMB thousand) | | :--- | :--- | :--- | | China corporate income tax (current tax) | 323,585 | 357,167 | | China corporate income tax (under-provision in prior years) | 23,481 | – | | Deferred tax | 32,195 | (53,410) | | **Total income tax expense** | **379,261** | **303,757** | - China corporate income tax provision is based on the statutory tax rate of **25%**, except for certain Chinese entities that pay tax at preferential rates of **15%** and **9%**[187](index=187&type=chunk)[190](index=190&type=chunk) - No Hong Kong tax provision was made as no income was generated or derived in Hong Kong[187](index=187&type=chunk)[190](index=190&type=chunk) [Dividends](index=37&type=section&id=DIVIDENDS) During this interim period, a final dividend of **HKD 16.6 cents per share**, totaling **RMB 427,975,000**, was declared for FY2024, but directors resolved not to declare any dividend for this interim period - During this interim period, a final dividend of **HKD 16.6 cents per share**, totaling **RMB 427,975,000**, was declared for the year ended December 31, 2024[188](index=188&type=chunk)[191](index=191&type=chunk) - The directors resolved not to declare any dividend for this interim period[189](index=189&type=chunk)[191](index=191&type=chunk) [Earnings Per Share](index=38&type=section&id=EARNINGS%20PER%20SHARE) For H1 2025, basic earnings per share was **RMB 20.66 cents**, with diluted earnings per share being the same due to the absence of dilutive instruments Earnings Per Share (For the six months ended June 30) | Metric | 2025 (RMB cents) | 2024 (RMB cents) | | :--- | :--- | :--- | | Basic and diluted earnings per share | 20.66 | 20.21 | - Basic earnings per share is calculated based on profit attributable to owners of the Company of **RMB 577,845,000** and the weighted average number of ordinary shares in issue of **2,797,223,396 shares**[192](index=192&type=chunk)[196](index=196&type=chunk) - Diluted earnings per share is the same as basic earnings per share as the Group has no dilutive instruments[193](index=193&type=chunk)[197](index=197&type=chunk) [Property, Plant and Equipment and Right-of-Use Assets](index=38&type=section&id=PROPERTY%2C%20PLANT%20AND%20EQUIPMENT%20AND%20RIGHT-OF-USE%20ASSETS) For H1 2025, the Group acquired property, plant, and equipment totaling **RMB 625,995 thousand**, recognized **RMB 9,039 thousand** in right-of-use assets, and incurred a loss of **RMB 24,559 thousand** from disposals Changes in Property, Plant and Equipment (For the six months ended June 30) | Item | 2025 (RMB thousand) | 2024 (RMB thousand) | | :--- | :--- | :--- | | Total cost of additions to property, plant and equipment | 625,995 | 309,124 | | Loss on disposal of property, plant and equipment | 24,559 | 3,760 | | Right-of-use assets recognized | 9,039 | 88,606 | [Trade Receivables](index=39&type=section&id=TRADE%20RECEIVABLES) As of June 30, 2025, total trade receivables were **RMB 649,713 thousand**, with credit terms of **7 to 90 days** for key customers and most receivables aged within 6 months Trade Receivables (As of June 30) | Item | June 30, 2025 (RMB thousand) | December 31, 2024 (RMB thousand) | | :--- | :--- | :--- | | Trade receivables | 671,821 | 361,976 | | Less: Provision for credit losses | (22,108) | (22,566) | | **Total** | **649,713** | **339,410** | - The Group's sales to key customers are based on credit terms of **7 to 90 days** after delivery, and receivables are strictly controlled to minimize credit risk[201](index=201&type=chunk) Ageing Analysis of Trade Receivables (As of June 30) | Ageing | June 30, 2025 (RMB thousand) | December 31, 2024 (RMB thousand) | | :--- | :--- | :--- | | Within 6 months | 649,700 | 338,566 | | 6 to 12 months | 13 | 844 | | Over 1 year | – | – | [Trade and Bills Payables](index=40&type=section&id=TRADE%20AND%20BILLS%20PAYABLES) As of June 30, 2025, total trade and bills payables were **RMB 1,312,778 thousand**, with most aged within 3 months, and certain bills payable secured by bank deposits Trade and Bills Payables (As of June 30) | Item | June 30, 2025 (RMB thousand) | December 31, 2024 (RMB thousand) | | :--- | :--- | :--- | | Trade payables | 1,311,257 | 802,896 | | Bills payable | 1,521 | 1,351 | | **Total** | **1,312,778** | **804,247** | Ageing Analysis of Trade and Bills Payables (As of June 30) | Ageing | June 30, 2025 (RMB thousand) | December 31, 2024 (RMB thousand) | | :--- | :--- | :--- | | Within 3 months | 1,248,657 | 774,157 | | 3 to 12 months | 59,715 | 27,096 | | Over 1 year | 4,406 | 2,994 | - Certain bills payable are secured by bank deposits amounting to **RMB 4,184,000** (December 31, 2024: **RMB 4,133,000**)[207](index=207&type=chunk) [Other Payables and Accruals](index=41&type=section&id=OTHER%20PAYABLES%20AND%20ACCRUALS) As of June 30, 2025, total other payables and accruals were **RMB 5,725,337 thousand**, primarily including accrued marketing and promotion expenses, sales discounts, accrued wages, refrigerator deposits, and dividends payable Key Components of Other Payables and Accruals (As of June 30) | Item | June 30, 2025 (RMB thousand) | December 31, 2024 (RMB thousand) | | :--- | :--- | :--- | | Accrued marketing and promotion expenses | 1,887,692 | 1,519,188 | | Sales discounts | 143,989 | 267,311 | | Accrued wages | 672,131 | 660,595 | | Refrigerator deposits | 615,099 | 588,227 | | Dividends payable to owners of the Company | 427,975 | – | | Dividends payable to non-controlling interests | 561,222 | 511,980 | [Share Capital](index=42&type=section&id=SHARE%20CAPITAL) As of June 30, 2025, the company's authorized share capital was **4,000,000,000 ordinary shares** of **HKD 0.10 each**, with issued and fully paid share capital remaining unchanged at **2,797,223,396 ordinary shares** Share Capital Structure (As of June 30) | Item | Number of Shares | Share Capital (RMB thousand) | | :--- | :--- | :--- | | Authorized share capital (ordinary shares of HKD 0.10 each) | 4,000,000,000 | 400,000 (HKD) | | Issued and fully paid share capital (ordinary shares of HKD 0.10 each) | 2,797,223,396 | 293,201 | - Issued and fully paid share capital has remained unchanged since January 1, 2024[212](index=212&type=chunk) [Capital Commitments](index=42&type=section&id=CAPITAL%20COMMITMENTS) As of June 30, 2025, capital commitments contracted for but not yet provided for the purchase of property, plant, and equipment amounted to **RMB 168,928 thousand** Capital Commitments (As of June 30) | Item | June 30, 2025 (RMB thousand) | December 31, 2024 (RMB thousand) | | :--- | :--- | :--- | | Capital commitments contracted for but not yet provided for the purchase of property, plant and equipment | 168,928 | 64,735 | [Related Party Transactions](index=43&type=section&id=RELATED%20PARTY%20TRANSACTIONS) The Group engaged in various related party transactions with companies under common control and non-controlling shareholders of subsidiaries, including sales, purchases, rent, service fees, and interest income, with total key management personnel compensation of **RMB 8,153 thousand** Key Related Party Transactions (For the six months ended June 30) | Type of Transaction | 2025 (RMB thousand) | 2024 (RMB thousand) | | :--- | :--- | :--- | | Transactions with companies under common control: | | | | Sales of goods | 490 | 556 | | Purchases of goods | 849,381 | 855,400 | | Rental expenses | 7,321 | 7,912 | | Service fees expenses | 19,478 | 13,883 | | Interest income | 4,412 | 5,909 | | Transactions with non-controlling shareholders of subsidiaries: | | | | Purchases of goods | 2,482,900 | 2,295,980 | - All related party transactions constitute continuing connected transactions under the Listing Rules and are conducted on terms and conditions mutually agreed upon by the parties involved[216](index=216&type=chunk) Total Key Management Personnel Compensation (For the six months ended June 30) | Item | 2025 (RMB thousand) | 2024 (RMB thousand) | | :--- | :--- | :--- | | Short-term employee benefits | 4,282 | 4,043 | | Contributions to retirement plans | 477 | 535 | | Discretionary bonuses | 3,394 | 3,845 | | **Total compensation** | **8,153** | **8,423** | - Transactions between the Group and other state-owned enterprises are conducted in the ordinary course of business, on terms similar to those with non-state-owned enterprises, and without significant or undue influence[220](index=220&type=chunk) [Fair Value Measurements of Financial Instruments](index=45&type=section&id=FAIR%20VALUE%20MEASUREMENTS%20OF%20FINANCIAL%20INSTRUMENTS) Certain financial assets are measured at fair value using discounted cash flow methods, with all fair value measurements classified as Level 2, and no Level 1 or Level 3 instruments - Certain financial assets of the Group are measured at fair value at each reporting period end, primarily using the discounted cash flow method, with market interest rates as key inputs[225](index=225&type=chunk)[226](index=226&type=chunk)[227](index=227&type=chunk) Financial Assets Measured at Fair Value Through Other Comprehensive Income (As of June 30) | Item | June 30, 2025 (RMB thousand) | December 31, 2024 (RMB thousand) | Fair Value Level | | :--- | :--- | :--- | :--- | | Financial assets measured at fair value through other comprehensive income | 18,058 | 6,581 | Level 2 | - The Group has no Level 1 and Level 3 financial instruments, and there were no transfers between Level 1, 2, and 3 for the six months ended June 30, 2025[228](index=228&type=chunk)

Financial Performance - Total revenue for the six months ended June 30, 2025, was RMB 67.3 million, a decrease of 18.2% from RMB 82.3 million for the same period in 2024[6]. - Gross profit for the same period was RMB 35.8 million, down 28.0% from RMB 49.7 million in 2024[6]. - Operating loss increased to RMB 51.3 million, compared to RMB 48.8 million in the previous year, reflecting a 5.1% rise[6]. - Loss attributable to equity holders of the parent rose to RMB 46.1 million, an increase of 8.7% from RMB 42.4 million in 2024[6]. - Basic loss per share was RMB 1.34, up 3.9% from RMB 1.29 in the previous year[6]. - The company's gross margin decreased to 53.2%, down 7.2 percentage points from 60.4% in 2024[6]. - The company reported a loss before tax of RMB 46.2 million, compared to RMB 42.7 million for the same period in 2024, indicating a worsening financial position[23]. - The net loss for the period was RMB 46,125,000, compared to RMB 42,680,000 in the previous year, representing an increase of 8.5%[74]. - The group reported a pre-tax loss of RMB 46,063,000 for the six months ended June 30, 2025, compared to a loss of RMB 42,396,000 for the same period in 2024, reflecting a 15.8% increase in losses[110][113]. Revenue Breakdown - Revenue from self-operated retail points decreased by 19.9% to RMB 53.2 million, accounting for approximately 79.0% of total revenue[10]. - Revenue from third-party retailers increased by 37.5% to RMB 5.5 million, representing about 8.2% of total revenue[10]. - Online sales revenue fell by 27.7% to RMB 8.6 million, making up approximately 12.8% of total revenue[11]. - Revenue from self-operated retail sales was RMB 53.2 million, accounting for 79.0% of total revenue, down from RMB 66.4 million (80.7%) in the previous year[12]. - Revenue from external customers in mainland China was RMB 65,368,000 for the six months ended June 30, 2025, down from RMB 80,817,000 in the same period of 2024, reflecting a decline of approximately 19.2%[95]. - Revenue from customer contracts for the six months ended June 30, 2025, was RMB 67,316,000, a decrease of 18.2% compared to RMB 82,264,000 for the same period in 2024[99][100]. Expenses and Costs - Other income and gains fell by 22.4% to RMB 11.1 million, primarily due to a decrease in licensing income from RMB 4.9 million to RMB 1.9 million[17]. - Selling and distribution expenses slightly decreased by 3.2% to RMB 66.5 million from RMB 68.7 million in the previous period[18]. - Administrative expenses decreased by 13.0% to RMB 24.0 million, mainly due to a reduction in equity-settled share-based payment expenses[20]. - The cost of goods sold for the six months ended June 30, 2025, was RMB 17,414,000, compared to RMB 15,461,000 in the same period of 2024, indicating an increase of 12.6%[104]. Cash Flow and Liquidity - The net cash flow from operating activities decreased from a cash inflow of RMB 1.2 million for the six months ended June 30, 2024, to a cash outflow of RMB 3.0 million for the corresponding period in 2025, a decline of RMB 4.2 million[30]. - The net cash flow from investing activities amounted to RMB 74.8 million, up from RMB 62.4 million in the previous year, primarily due to cash received from the sale of equity investments[29][31]. - The net cash flow used in financing activities was RMB 0.9 million, an improvement from RMB 5.2 million in the prior year[29]. - As of June 30, 2025, the company's cash and cash equivalents totaled approximately RMB 385.7 million, an increase from RMB 333.4 million as of December 31, 2024[29]. - The company's current ratio was 3.9, a slight decrease from 4.0 in the previous period[6]. - Cash and cash equivalents increased significantly from RMB 97,945,000 as of December 31, 2024, to RMB 176,311,000 as of June 30, 2025, marking a growth of 80.5%[131]. Assets and Liabilities - Total assets as of June 30, 2025, were RMB 1,646,019,000, a decrease from RMB 1,661,591,000 as of December 31, 2024[76]. - The company's non-current assets decreased to RMB 388,497,000 from RMB 433,591,000, indicating a reduction of 10.4%[76]. - The total equity attributable to the owners of the parent company was RMB 943,100,000, down from RMB 971,060,000, reflecting a decrease of 2.9%[77]. - The company's total liabilities as of June 30, 2025, were RMB 202,477,000, with the property development segment accounting for RMB 279,711,000[91]. - Trade receivables amount to RMB 18,292,000 as of June 30, 2025, down from RMB 28,182,000 as of December 31, 2024, indicating a decline of 35.2%[125]. - The total accounts payable as of June 30, 2025, was RMB 13,393,000, up from RMB 9,249,000 on December 31, 2024, indicating a year-over-year increase of 45.5%[132]. Corporate Governance and Management - The board believes that high levels of corporate governance are crucial for protecting shareholder interests and enhancing corporate value[63]. - The company has complied with all corporate governance code provisions except for the separation of the roles of Chairman and CEO[63]. - The audit committee has discussed risk management and internal control systems with management for the preparation of the interim financial statements[66]. - The company has not identified any significant issues that would lead to a belief that the interim financial data is not prepared in accordance with International Accounting Standard 34[72]. Future Outlook and Initiatives - Key initiatives for the second half of 2025 include optimizing cash flow, enhancing digital marketing through AI-generated content, and expanding online sales channels[55]. - The board does not recommend declaring any interim dividends for the period[54]. - The company has established a digital marketing department and launched an AI-generated content initiative to enhance digital marketing efficiency[40].

Company Information [Board of Directors and Committees](index=3&type=section&id=Board%20of%20Directors%20and%20Committees) This section details the company's board composition, including executive, non-executive, and independent non-executive directors, and board committees - The Board of Directors comprises executive directors (including Chairman Dr. Wu Yongqian), non-executive directors, and independent non-executive directors[4](index=4&type=chunk) - Board committees, including audit, remuneration and appraisal, nomination, and strategy, are established, each with a designated chairman[4](index=4&type=chunk) [Company Contact and Legal Information](index=3&type=section&id=Company%20Contact%20and%20Legal%20Information) This section provides key contact and legal information, including the registered office, headquarters, principal banks, legal advisors, auditors, and compliance advisors - The company's registered office and headquarters are located in Building 9, 3rd Floor, Phase II, Biomedical Valley Accelerator, Jiangbei New Area, Nanjing, Jiangsu Province, China[4](index=4&type=chunk) - Principal banks are Bank of China and Bank of Nanjing[5](index=5&type=chunk) - Legal advisors include O'Melveny & Myers LLP (Hong Kong and US law) and Jingtian & Gongcheng (PRC law), with Ernst & Young as auditors[5](index=5&type=chunk) Independent Review Report [Introduction](index=5&type=section&id=Introduction) The introduction to the independent review report states that the interim financial information for the six months ended June 30, 2025, prepared under IAS 34, has been reviewed - The review scope covers the interim financial information for the six months ended June 30, 2025[6](index=6&type=chunk) - The interim financial information is prepared in accordance with International Accounting Standard 34 "Interim Financial Reporting"[6](index=6&type=chunk) - The reviewer only provides a conclusion based on the review, not an audit opinion[6](index=6&type=chunk) [Scope of Review](index=5&type=section&id=Scope%20of%20Review) The review was conducted in accordance with Hong Kong Standard on Review Engagements 2410, involving inquiries and analytical procedures, and does not constitute an audit - The review was conducted in accordance with Hong Kong Standard on Review Engagements 2410 issued by the Hong Kong Institute of Certified Public Accountants[7](index=7&type=chunk) - The scope of a review is substantially less than an audit, thus no audit opinion is expressed[7](index=7&type=chunk) [Conclusion](index=5&type=section&id=Conclusion) Based on the review, no matters were found to indicate that the interim financial information was not prepared in all material respects in accordance with IAS 34 - The review concludes that the interim financial information is prepared in all material respects in accordance with IAS 34[8](index=8&type=chunk) - The report was issued by Ernst & Young on August 25, 2025[8](index=8&type=chunk) Interim Condensed Consolidated Financial Information [Interim Condensed Consolidated Statement of Profit or Loss](index=6&type=section&id=Interim%20Condensed%20Consolidated%20Statement%20of%20Profit%20or%20Loss) For the six months ended June 30, 2025, the company recorded a loss of **RMB 122.87 million**, a reduction from **RMB 160.39 million** in the prior year, primarily due to a significant decrease in research and development costs Interim Condensed Consolidated Statement of Profit or Loss Key Data | Indicator | 2025 (RMB thousands) | 2024 (RMB thousands) | Change | | :--- | :--- | :--- | :--- | | Revenue | – | – | 0 | | Other income | 986 | 4,197 | -76.5% | | Other gains | 2,652 | 6,221 | -57.4% | | Research and development costs | (98,432) | (142,494) | -30.9% | | Administrative expenses | (27,471) | (28,080) | -2.2% | | Loss before tax | (122,866) | (160,387) | -23.4% | | Loss for the period | (122,866) | (160,387) | -23.4% | | Loss per share (RMB) | (0.32) | (0.42) | -23.8% | [Interim Condensed Consolidated Statement of Comprehensive Income](index=7&type=section&id=Interim%20Condensed%20Consolidated%20Statement%20of%20Comprehensive%20Income) For the six months ended June 30, 2025, the company reported a total comprehensive loss of **RMB 122.89 million**, a decrease from **RMB 160.34 million** in the prior year, reflecting the narrowed loss for the period Interim Condensed Consolidated Statement of Comprehensive Income Key Data | Indicator | 2025 (RMB thousands) | 2024 (RMB thousands) | Change | | :--- | :--- | :--- | :--- | | Loss for the period | (122,866) | (160,387) | -23.4% | | Exchange differences on translation of foreign operations | (28) | 48 | N/A | | Total comprehensive loss for the period | (122,894) | (160,339) | -23.4% | [Interim Condensed Consolidated Statement of Financial Position](index=8&type=section&id=Interim%20Condensed%20Consolidated%20Statement%20of%20Financial%20Position) As of June 30, 2025, the company's total assets increased, driven by a significant rise in financial assets at fair value through profit or loss, while net assets rose due to new share issuance from the IPO Interim Condensed Consolidated Statement of Financial Position Key Data | Indicator | June 30, 2025 (RMB thousands) | December 31, 2024 (RMB thousands) | Change | | :--- | :--- | :--- | :--- | | Total non-current assets | 43,768 | 44,350 | -1.3% | | Total current assets | 649,092 | 585,251 | +10.9% | | Total current liabilities | 110,248 | 103,361 | +6.7% | | Net current assets | 538,844 | 481,890 | +11.8% | | Total assets less current liabilities | 582,612 | 526,240 | +10.7% | | Total non-current liabilities | 411 | 1,207 | -65.9% | | Net assets | 582,201 | 525,033 | +10.9% | | Total equity | 582,201 | 525,033 | +10.9% | - Financial assets at fair value through profit or loss significantly increased from **RMB 3.03 million** to **RMB 186.79 million**[13](index=13&type=chunk) - Cash and cash equivalents decreased from **RMB 569.51 million** to **RMB 449.07 million**[13](index=13&type=chunk) - Total equity increased due to the issuance of shares from the initial public offering[15](index=15&type=chunk) [Interim Condensed Consolidated Statement of Changes in Equity](index=10&type=section&id=Interim%20Condensed%20Consolidated%20Statement%20of%20Changes%20in%20Equity) As of June 30, 2025, total equity increased from **RMB 525.03 million** at the beginning of the year to **RMB 582.20 million**, primarily driven by share issuance from the IPO, despite a loss for the period Interim Condensed Consolidated Statement of Changes in Equity Key Data | Indicator | January 1, 2025 (RMB thousands) | June 30, 2025 (RMB thousands) | Change | | :--- | :--- | :--- | :--- | | Share capital | 381,617 | 396,898 | +4.0% | | Other reserves | 1,542,595 | 1,707,376 | +10.7% | | Accumulated losses | (1,399,251) | (1,522,117) | -8.8% | | Total equity | 525,033 | 582,201 | +10.9% | - Issuance of shares from the initial public offering contributed **RMB 172.53 million** to equity[16](index=16&type=chunk) - Equity-settled share-based payment transactions increased by **RMB 7.53 million**[16](index=16&type=chunk) [Interim Condensed Consolidated Statement of Cash Flows](index=12&type=section&id=Interim%20Condensed%20Consolidated%20Statement%20of%20Cash%20Flows) For the six months ended June 30, 2025, net cash used in operating activities decreased, while net cash used in investing activities significantly increased due to financial asset purchases, and financing activities generated substantial cash inflows from share issuance Interim Condensed Consolidated Statement of Cash Flows Key Data | Indicator | 2025 (RMB thousands) | 2024 (RMB thousands) | Change | | :--- | :--- | :--- | :--- | | Net cash used in operating activities | (108,716) | (123,018) | -11.6% | | Net cash used in investing activities | (181,199) | (15,620) | +1060.0% | | Net cash from/(used in) financing activities | 170,626 | (2,163) | N/A | | Net increase/(decrease) in cash and cash equivalents | (119,289) | (140,801) | -15.3% | |