股份代號 : 3677 （於中華人民共和國註冊成立的股份有限公司） 江蘇正力新能電池技術股份有限公司 Jiangsu Zenergy Battery Technologies Group Co., Ltd. 2025 中期報告 江蘇正力新能電池技術股份有限公司 Jiangsu Zenergy Battery Technologies Group Co., Ltd. 2025 中期報告 02 公司信息 董事會 執行董事 曹芳女士 （董事長兼執行董事） 陳繼程先生 于哲勛先生 非執行董事 張力先生 獨立非執行董事 目錄 02 公司信息 04 財務概要 05 管理層討論與分析 17 企業管治及其他資料 24 中期簡明綜合損益及其他全面收益表 25 中期簡明綜合財務狀況表 27 中期簡明綜合權益變動表 28 中期簡明綜合現金流量表 30 中期簡明綜合財務資料附註 40 定義 許志明先生 龔正良先生 肖瑉女士 審核委員會 龔正良先生 （主席） 肖瑉女士 張力先生 提名委員會 曹芳女士 （主席） 陳繼程先生 許志明先生 龔正良先生 肖瑉女士 薪酬與考核委員會 許志明先生 （主席） 曹芳女士 陳繼程先生 龔正良先生 肖瑉女 ...

[Corporate Information](index=3&type=section&id=Corporate%20Information) The company's corporate information includes its board of directors, committee compositions, and fundamental company details [Board of Directors](index=3&type=section&id=Board%20of%20Directors) The Board of Directors comprises three executive directors and three independent non-executive directors, with Dr. Wang Yongquan appointed as Nomination Committee Chairman from June 25, 2025 - Board members include **three executive directors** (Hu Yiping, Tang Junjie, Zheng Peng) and **three independent non-executive directors** (Rui Meng, Yang Xi, Dr. Wang Yongquan)[4](index=4&type=chunk)[5](index=5&type=chunk) - Dr. Wang Yongquan assumed the role of Chairman of the Nomination Committee from **June 25, 2025**, with Mr. Hu Yiping ceasing to hold this position on the same date[4](index=4&type=chunk)[5](index=5&type=chunk) [Committees](index=3&type=section&id=Committees) The Audit Committee is chaired by Rui Meng, the Remuneration Committee by Dr. Wang Yongquan, and the Nomination Committee by Dr. Wang Yongquan - The Audit Committee is chaired by Rui Meng, the Remuneration Committee by Dr. Wang Yongquan, and the Nomination Committee by **Dr. Wang Yongquan**[4](index=4&type=chunk)[5](index=5&type=chunk) [Company Details](index=4&type=section&id=Company%20Details) The company is registered in the Cayman Islands with its China headquarters in Hangzhou, listed on the Stock Exchange with stock code 2215 since July 15, 2021 - The company's registered office is in the Cayman Islands, with its China headquarters located in Yuhang District, Hangzhou, Zhejiang Province[7](index=7&type=chunk)[8](index=8&type=chunk) - The company's stock code is **2215**, and it was listed on the Stock Exchange on **July 15, 2021**[10](index=10&type=chunk) - The auditor is Zhonghui Anda Certified Public Accountants Limited[9](index=9&type=chunk) [Financial Highlights](index=6&type=section&id=Financial%20Highlights) The financial highlights cover key financial data, ratios, and property management metrics for the period ended June 30, 2025 [Key Financial Information](index=6&type=section&id=Key%20Financial%20Information) For the six months ended June 30, 2025, revenue decreased by 6.4% to RMB 443.0 million, and profit for the period decreased by 18.6% to RMB 34.6 million 2025 H1 Key Financial Data | Indicator | June 2025 (RMB '000) | June 2024 (RMB '000) | Change (%) | | :--- | :--- | :--- | :--- | | Revenue | 442,992 | 473,228 | -6.4% | | Gross Profit | 94,413 | 101,531 | -7.0% | | Profit for the Period | 34,644 | 42,484 | -18.6% | | Profit for the Period Attributable to Owners of the Company | 34,138 | 42,169 | -19.0% | | Total Assets (End of Period) | 1,388,250 | 1,341,107 | 3.5% | | Total Liabilities (End of Period) | 663,483 | 650,874 | 1.9% | | Cash and Bank Balances (End of Period) | 169,603 | 202,181 | -16.1% | | Total Equity (End of Period) | 724,767 | 690,233 | 4.9% | [Key Financial Ratios](index=6&type=section&id=Key%20Financial%20Ratios) For the six months ended June 30, 2025, gross profit margin slightly decreased to 21.3%, and net profit margin fell to 7.8% 2025 H1 Key Financial Ratios | Indicator | June 2025 | June 2024 | | :--- | :--- | :--- | | Gross Profit Margin | 21.3% | 21.5% | | Net Profit Margin | 7.8% | 9.0% | | Net Profit Margin Attributable to Owners of the Company | 7.7% | 8.9% | | Basic and Diluted Earnings Per Share (RMB) | 0.039 | 0.045 | [Property Management Metrics](index=6&type=section&id=Property%20Management%20Metrics) As of June 30, 2025, total contracted GFA for property management was 41,417 thousand sq.m., and total GFA under management was 38,291 thousand sq.m., both decreasing year-on-year 2025 H1 Property Management Area | Indicator | June 2025 (Thousand sq.m.) | June 2024 (Thousand sq.m.) | | :--- | :--- | :--- | | Total Contracted GFA for Property Management | 41,417 | 44,851 | | Total GFA Under Management for Property Management | 38,291 | 39,563 | [Chairman's Statement](index=7&type=section&id=Chairman's%20Statement) The Chairman's Statement reviews industry trends, company performance, strategic expansion, service quality, internal management, and future outlook [Industry Overview and Company Performance](index=7&type=section&id=Industry%20Overview%20and%20Company%20Performance) In H1 2025, the property industry entered a new phase of "quality and efficiency restructuring," with Dexin Services maintaining resilience and ranking 19th among China's Top 100 Property Service Enterprises - The property industry accelerated into a new phase of **"quality and efficiency restructuring"** in H1 2025, characterized by cooling M&A, project exits, and residential fee reductions[14](index=14&type=chunk)[16](index=16&type=chunk) - Dexin Services was recognized as one of **"China's Top 100 Property Service Enterprises"** for 12 consecutive years, rising to **19th place**, and also received honors such as "Top 100 Comprehensive Strength Property Enterprises in China" and "Top 30 Property Enterprises in East China"[14](index=14&type=chunk)[16](index=16&type=chunk) [Strategic Expansion and Diversification](index=7&type=section&id=Strategic%20Expansion%20and%20Diversification) The company focuses on regional market penetration, expanding second-hand residential projects and achieving breakthroughs in non-residential sectors, while deepening cooperation with state-owned enterprises - The Group is committed to expanding **high-quality second-hand residential projects**, forming a virtuous cycle of "management benchmark demonstration—local reputation building—market-based competition in existing stock," and successfully winning the bid for the Ningbo Cixi Wangyue Mansion project[15](index=15&type=chunk)[17](index=17&type=chunk) - The non-residential sector is a key focus for diversification, with the company winning the bid for the **Hangzhou Xiaoshan District Youth Palace project** and customizing smart operation and management solutions[19](index=19&type=chunk)[22](index=22&type=chunk) - Deepening joint ventures and cooperation with state-owned enterprises like Quzhou Jiaotou to expand management formats such as **transportation hubs and group catering**[20](index=20&type=chunk)[22](index=22&type=chunk) - Professional service brand Shengjie Environment won bids for multiple landscaping maintenance projects, including **Hangzhou Fuyang Sports Center** and **Hangzhou Canal Wealth Town**[21](index=21&type=chunk)[23](index=23&type=chunk) [Service Quality and Innovation](index=9&type=section&id=Service%20Quality%20and%20Innovation) The company completed 1,929 community upgrade projects, launched a high-end commercial office service brand, and implemented smart service scenarios and a rooftop photovoltaic renovation project - The Group adheres to the philosophy of "good houses, good communities, good living," completing **1,929 community upgrade projects** nationwide through a customer visit mechanism and the "Zhi Ji Song Chun Feng" quality improvement initiative[24](index=24&type=chunk)[27](index=27&type=chunk) - Launched **"Shipu Lianhang,"** a high-end commercial office service brand, focusing on full lifecycle asset operation and management for buildings[25](index=25&type=chunk)[27](index=27&type=chunk) - Applied technology in commercial office buildings and industrial park IFM integrated facility management services, deploying smart service scenarios such as **cleaning robots and smart delivery robots**[26](index=26&type=chunk)[28](index=28&type=chunk) - Completed the **Dexin Center rooftop photovoltaic renovation project**, expected to generate **700,000 kWh of electricity annually** and reduce carbon emissions by **700 tons**, providing a "green renovation" model for high-energy-consuming complexes[26](index=26&type=chunk)[28](index=28&type=chunk) [Internal Management and Digitalization](index=10&type=section&id=Internal%20Management%20and%20Digitalization) The company prioritizes employee development, implements organizational reforms for cost reduction and efficiency, and advances digitalization to transition from experience-driven to data-driven management - The Group values employees as precious resources, aiding injured staff through the **"Blue Ribbon" fund** and emphasizing employee development rights via star butler certification and cultural salons[29](index=29&type=chunk)[32](index=32&type=chunk) - Management implemented organizational reforms focused on **"lean headquarters, strong frontline"** to compress hierarchies and accelerate decision-making, while piloting **"project cloud warehouses"** to enhance efficiency and reduce costs[30](index=30&type=chunk)[32](index=32&type=chunk) - Continued digital transformation, integrating an employee digital portal, utilizing data dashboards for management insights, and implementing **dynamic budgeting and full-lifecycle cash flow monitoring** to ensure stable operations and financial health[31](index=31&type=chunk)[33](index=33&type=chunk) [Future Prospects](index=11&type=section&id=Future%20Prospects) Facing industry reforms and intense competition, the company will maintain strategic focus, cultivate core strengths, refine products, and embrace AI technology to transform into a value creator - Facing supply-side reforms and intense competition, the company will maintain strategic focus, cultivate core strengths, drive development through practical efforts, refine products, and reasonably **reduce costs and enhance efficiency**[35](index=35&type=chunk)[37](index=37&type=chunk) - Actively respond to the disruptive changes in service scenarios brought by the **AI technology revolution**, seizing opportunities to break through growth bottlenecks and achieve leapfrog development[35](index=35&type=chunk)[37](index=37&type=chunk) [Management Discussion and Analysis](index=12&type=section&id=Management%20Discussion%20and%20Analysis) This section provides an overview of the company's business, a detailed financial review, and insights into liquidity, risk management, investments, and employee policies - Total revenue was **RMB 443.0 million**, a **6.4% decrease** from the same period in 2024, primarily due to reduced revenue from value-added services to non-property owners and community value-added services[42](index=42&type=chunk)[44](index=44&type=chunk) - Profit for the period was **RMB 34.6 million**, a **18.6% year-on-year decrease**; net profit margin was **7.8%**, down 1.2% from the same period in 2024[101](index=101&type=chunk)[106](index=106&type=chunk) - Impairment losses on trade and other receivables increased from **RMB 11.0 million to RMB 13.2 million**, reflecting changes in credit risk due to the downturn in the real estate industry[92](index=92&type=chunk)[98](index=98&type=chunk) - Net finance income significantly decreased from **RMB 9.1 million to RMB 0.4 million**, mainly due to no interest income from loans to third parties in the current period[93](index=93&type=chunk)[99](index=99&type=chunk) [Business Overview](index=12&type=section&id=Business%20Overview) Dexin Services, a leading integrated property management service provider in Zhejiang Province, maintained stable operations in H1 2025, improving efficiency and ranking TOP19 among China's Top 100 Property Service Enterprises - Dexin Services is a leading integrated property management service provider in Zhejiang Province, maintaining stable operations and steadily improving efficiency and quality in H1 2025[41](index=41&type=chunk)[43](index=43&type=chunk) - The company was recognized by China Index Academy as a **TOP19** enterprise among **China's Top 100 Property Service Enterprises in 2025**[41](index=41&type=chunk)[43](index=43&type=chunk) - Its main businesses include property management services, value-added services to non-property owners, and community value-added services, comprehensively covering the property management value chain[41](index=41&type=chunk)[43](index=43&type=chunk) [Financial Review](index=12&type=section&id=Financial%20Review) In H1 2025, the Group's total revenue decreased by 6.4% to RMB 443.0 million, and profit for the period fell by 18.6% to RMB 34.6 million, with net profit margin at 7.8% [Revenue Breakdown](index=12&type=section&id=Revenue%20Breakdown) Property management services revenue increased its proportion to 92.2%, while value-added services to non-property owners and community value-added services both saw their proportions decrease Revenue Breakdown by Business Line | Business Line | June 30, 2025 (RMB '000) | Proportion (%) | June 30, 2024 (RMB '000) | Proportion (%) | | :--- | :--- | :--- | :--- | :--- | | Property Management Services | 408,417 | 92.2% | 413,438 | 87.4% | | Value-added Services to Non-property Owners | 13,813 | 3.1% | 19,835 | 4.2% | | Community Value-added Services | 20,762 | 4.7% | 39,955 | 8.4% | | **Total** | **442,992** | **100.0%** | **473,228** | **100.0%** | [Property Management Services Performance](index=13&type=section&id=Property%20Management%20Services%20Performance) Property management services revenue slightly decreased by 1.2% to RMB 408.4 million, with GFA under management reducing by 3.2% due to project portfolio optimization - Property management services revenue was approximately **RMB 408.4 million**, a **1.2% decrease** compared to the same period in 2024[47](index=47&type=chunk)[48](index=48&type=chunk) - As of June 30, 2025, total GFA under management was approximately **38.3 million sq.m.**, a **3.2% decrease** from the same period in 2024, primarily due to the company optimizing its project portfolio[47](index=47&type=chunk)[48](index=48&type=chunk) GFA Under Management by Developer Type | Developer Type | June 30, 2025 (Thousand sq.m.) | Revenue (RMB '000) | Proportion (%) | | :--- | :--- | :--- | :--- | | Properties Developed by Dexin Group | 13,638 | 151,948 | 37.2% | | Jointly Developed Properties | 4,383 | 60,058 | 14.7% | | Independent Third-party Properties | 20,270 | 196,411 | 48.1% | | **Total** | **38,291** | **408,417** | **100.0%** | GFA Under Management by Region | Region | June 30, 2025 (Thousand sq.m.) | Revenue (RMB '000) | Proportion (%) | | :--- | :--- | :--- | :--- | | Zhejiang Province | 26,170 | 295,602 | 72.4% | | Yangtze River Delta Region (excluding Zhejiang Province) | 7,169 | 69,881 | 17.1% | | Other Regions | 4,952 | 42,934 | 10.5% | | **Total** | **38,291** | **408,417** | **100.0%** | GFA Under Management by Property Type | Property Type | June 30, 2025 (Thousand sq.m.) | Revenue (RMB '000) | Proportion (%) | | :--- | :--- | :--- | :--- | | Residential Properties | 31,139 | 300,403 | 73.6% | | Non-residential Properties | 7,152 | 108,014 | 26.4% | | **Total** | **38,291** | **408,417** | **100.0%** | [Value-added Services to Non-property Owners](index=16&type=section&id=Value-added%20Services%20to%20Non-property%20Owners) Revenue from value-added services to non-property owners decreased by 30.4% to RMB 13.8 million, primarily due to the ongoing downturn in the real estate industry - Revenue from value-added services to non-property owners was approximately **RMB 13.8 million**, a **30.4% decrease** compared to the same period in 2024, mainly due to reduced service demand from the ongoing downturn in the real estate industry[64](index=64&type=chunk)[65](index=65&type=chunk) Revenue Breakdown of Value-added Services to Non-property Owners | Service Type | June 30, 2025 (RMB '000) | Proportion (%) | June 30, 2024 (RMB '000) | Proportion (%) | | :--- | :--- | :--- | :--- | :--- | | On-site Services | 3,720 | 26.9% | 13,147 | 66.3% | | Pre-delivery Services | 6,934 | 50.2% | 4,735 | 23.9% | | Property Inspection and Repair Services | 1,121 | 8.1% | 1,623 | 8.1% | | Commercial Consulting Services | 2,038 | 14.8% | 330 | 1.7% | | **Total** | **13,813** | **100.0%** | **19,835** | **100.0%** | [Community Value-added Services](index=17&type=section&id=Community%20Value-added%20Services) Community value-added services revenue significantly decreased by 48.0% to RMB 20.8 million, impacted by fewer property deliveries, intense market competition, and strategic adjustments - Community value-added services revenue was approximately **RMB 20.8 million**, a **48.0% decrease** compared to the same period in 2024[67](index=67&type=chunk)[68](index=68&type=chunk) - Revenue from smart community solutions decreased by **RMB 7.6 million**, mainly due to a significant decline in property delivery projects and a corresponding drop in demand[69](index=69&type=chunk)[70](index=70&type=chunk) - Home improvement services revenue decreased by **RMB 1.2 million**, primarily due to the continued downturn in the real estate market and a significant reduction in delivered projects[73](index=73&type=chunk)[76](index=76&type=chunk) - Community retail and home services revenue decreased by **RMB 10.1 million**, mainly due to the company's strategic positioning, insufficient resource allocation, and intense market competition[74](index=74&type=chunk)[77](index=77&type=chunk) Revenue Breakdown of Community Value-added Services | Service Type | June 30, 2025 (RMB '000) | Proportion (%) | June 30, 2024 (RMB '000) | Proportion (%) | | :--- | :--- | :--- | :--- | :--- | | Smart Community Solutions | 1,792 | 8.6% | 9,380 | 23.5% | | Property Sales and Co-sales Services | 366 | 1.8% | 507 | 1.3% | | Community Resource Value-added Services | 13,556 | 65.2% | 13,892 | 34.8% | | Clubhouse Services | 957 | 4.6% | 815 | 2.0% | | Home Improvement Services | 342 | 1.7% | 1,482 | 3.7% | | Community Retail and Home Services | 3,749 | 18.1% | 13,879 | 34.7% | | **Total** | **20,762** | **100.0%** | **39,955** | **100.0%** | [Cost of Sales and Gross Profit](index=18&type=section&id=Cost%20of%20Sales%20and%20Gross%20Profit) Cost of sales decreased by RMB 23.1 million to RMB 348.6 million, while gross profit decreased by RMB 7.1 million to RMB 94.4 million, with gross profit margin slightly down to 21.3% - Cost of sales was **RMB 348.6 million**, a decrease of **RMB 23.1 million** from the same period in 2024, primarily due to a corresponding decline in business service revenue[75](index=75&type=chunk)[78](index=78&type=chunk) - Gross profit was **RMB 94.4 million**, a decrease of **RMB 7.1 million** from the same period in 2024; gross profit margin decreased from 21.5% to **21.3%**[79](index=79&type=chunk)[80](index=80&type=chunk) - Gross profit margin for value-added services to non-property owners increased from 19.2% to **26.4%**, and for community value-added services from 44.0% to **62.3%**, mainly due to personnel structure adjustments and reduced labor costs[83](index=83&type=chunk)[86](index=86&type=chunk) Gross Profit Margin by Business Segment | Business Segment | June 2025 (%) | June 2024 (%) | Change (%) | | :--- | :--- | :--- | :--- | | Property Management Services | 19.1% | 19.4% | -0.3% | | Value-added Services to Non-property Owners | 26.4% | 19.2% | 7.2% | | Community Value-added Services | 62.3% | 44.0% | 18.3% | | **Total** | **21.3%** | **21.5%** | **-0.2%** | [Expenses and Profitability](index=19&type=section&id=Expenses%20and%20Profitability) Other income decreased, net other losses increased, while selling and marketing expenses and administrative expenses significantly declined due to business scaling down and organizational optimization - Other income decreased from **RMB 1.4 million to RMB 0.8 million**, primarily due to reduced government subsidies[84](index=84&type=chunk)[87](index=87&type=chunk) - Recorded **net other losses of RMB 1.2 million** (2024 H1: net gains of RMB 0.7 million), mainly due to losses from derecognition of subsidiaries and associates[89](index=89&type=chunk)[95](index=95&type=chunk) - Selling and marketing expenses decreased by **63.5% to RMB 2.2 million**, primarily due to the scaling down of value-added services to non-property owners and community value-added services[90](index=90&type=chunk)[96](index=96&type=chunk) - Administrative expenses decreased by **RMB 8.0 million to RMB 31.7 million**, mainly due to organizational framework adjustments and optimized personnel allocation[91](index=91&type=chunk)[97](index=97&type=chunk) - Basic and diluted earnings per share were **RMB 0.039 per share**[101](index=101&type=chunk)[107](index=107&type=chunk) [Balance Sheet Items](index=21&type=section&id=Balance%20Sheet%20Items) Total trade and other receivables and prepayments decreased by RMB 161.2 million to RMB 916.2 million, while trade and other payables slightly increased by 2.0% to RMB 417.3 million - As of June 30, 2025, trade and other receivables and prepayments totaled **RMB 916.2 million**, a decrease of **RMB 161.2 million** from December 31, 2024[102](index=102&type=chunk)[108](index=108&type=chunk) - Trade receivables increased by **RMB 76.3 million to RMB 506.4 million**, and other receivables increased by **RMB 10.9 million to RMB 360.5 million**, primarily due to the economic environment impacting residents' willingness to pay[103](index=103&type=chunk)[108](index=108&type=chunk) - Trade and other payables were **RMB 417.3 million**, an increase of **2.0%** from December 31, 2024[104](index=104&type=chunk)[109](index=109&type=chunk) [Liquidity and Capital Resources](index=21&type=section&id=Liquidity%20and%20Capital%20Resources) The Group's liquidity primarily stems from operations; as of June 30, 2025, cash and bank balances were RMB 169.6 million, with a current ratio of 1.9 times and a capital gearing ratio of 0.01 - As of June 30, 2025, cash and cash equivalents were **RMB 169.6 million**, a **16.1% decrease** from December 31, 2024[112](index=112&type=chunk)[117](index=117&type=chunk) - The current ratio was **1.9 times** (December 31, 2024: 2.0 times)[112](index=112&type=chunk)[118](index=118&type=chunk) - Total borrowings were **RMB 10.0 million** (December 31, 2024: RMB 17.0 million), and the capital gearing ratio was **0.01** (December 31, 2024: 0.02)[113](index=113&type=chunk)[118](index=118&type=chunk) [Risk Management and Commitments](index=22&type=section&id=Risk%20Management%20and%20Commitments) The Group's income and expenses are primarily denominated in RMB, with no foreign exchange hedging, and no significant capital commitments or contingent liabilities as of June 30, 2025 - The vast majority of the Group's income and expenses are denominated in RMB, and no hedging transactions were entered into as of June 30, 2025[114](index=114&type=chunk)[119](index=119&type=chunk) - As of June 30, 2025, the Group had **no significant capital commitments** contracted but not provided for[115](index=115&type=chunk)[120](index=120&type=chunk) - As of June 30, 2025, the company, its subsidiaries, and associates had **no financial guarantees, loan guarantees, or mortgages**, nor any other significant contingent liabilities[116](index=116&type=chunk)[121](index=121&type=chunk) [Significant Investments and Events](index=22&type=section&id=Significant%20Investments%20and%20Events) Dexin Shengquan Property Services Co., Ltd. received RMB 0.52 million from the liquidation of a joint venture, and the company plans to acquire 100% equity of Deqing Moganshan Ruijing Real Estate Co., Ltd. for RMB 78.0 million - Dexin Shengquan Property Services Co., Ltd.'s investment in Shandong Land Group (Heze) Dexin Asset Operation Co., Ltd. was dissolved and liquidated, with Dexin Shengquan receiving an allocation of **RMB 0.52 million**[122](index=122&type=chunk)[123](index=123&type=chunk)[126](index=126&type=chunk) - The Group intends to use part of the net proceeds from the listing to acquire or invest in other property management companies to expand its business scale and market share[124](index=124&type=chunk)[127](index=127&type=chunk) - On July 31, 2025, the company signed an equity transfer agreement to acquire **100% equity of Deqing Moganshan Ruijing Real Estate Co., Ltd.** for a total consideration of **RMB 78.0 million**, whose main asset is the Moganshan Yungude Dexin Kaiyuan Mingting Hotel[125](index=125&type=chunk)[128](index=128&type=chunk) - This acquisition will be partially funded by **HK$82.4 million** (approximately **RMB 75.0 million**) from the unutilized net proceeds and the company's internal resources[125](index=125&type=chunk)[128](index=128&type=chunk) [Employee and Remuneration Policy](index=24&type=section&id=Employee%20and%20Remuneration%20Policy) As of June 30, 2025, the Group had 2,770 employees with total staff costs of RMB 124.8 million, implementing organizational adjustments and a competitive remuneration and training system - As of June 30, 2025, the Group had a total of **2,770 employees**, with total staff costs for the first half of the year amounting to **RMB 124.8 million**[131](index=131&type=chunk)[136](index=136&type=chunk) - The Group underwent organizational reform, merging the original Jiangsu, Shanghai, and Anhui city companies into the **"Su-Hu-Wan Regional Company"** and establishing a new **Zhengzhou City Company** to optimize organizational structure and operational efficiency[132](index=132&type=chunk)[136](index=136&type=chunk) - The remuneration system considers local salaries, industry trends, company performance, and employee performance, offering **competitive salaries and comprehensive social security benefits**[133](index=133&type=chunk)[136](index=136&type=chunk) - Established a comprehensive training system covering the entire employee career cycle, including executive team visits to benchmark enterprises, "Reserve Project Manager Training Program," "New Torchbearer Management Trainee Program," and "Star Butler Certification" system[138](index=138&type=chunk)[139](index=139&type=chunk)[140](index=140&type=chunk)[141](index=141&type=chunk)[143](index=143&type=chunk) - Conducted semi-annual **"talent inventory"** to systematically evaluate employee capabilities and potential, used for training needs analysis, development plan formulation, and promotion pathway design[142](index=142&type=chunk)[144](index=144&type=chunk) [Share Option Scheme and Interim Dividend](index=26&type=section&id=Share%20Option%20Scheme%20and%20Interim%20Dividend) The company adopted a share option scheme on June 21, 2021, with a maximum issuance of 100 million shares, but no options were granted or exercised during the period, and no interim dividend is recommended - The company adopted a share option scheme on **June 21, 2021**, aimed at recognizing employee contributions, incentivizing performance, and attracting and retaining talent[146](index=146&type=chunk)[150](index=150&type=chunk) - The total number of shares that may be issued under the share option scheme shall not exceed **100 million shares**, representing **10%** of the issued shares on the listing date[147](index=147&type=chunk)[150](index=150&type=chunk) - During the reporting period and up to the date of this report, **no share options were granted, exercised, cancelled, or lapsed**, and there were no outstanding share options[153](index=153&type=chunk)[156](index=156&type=chunk) - The Board does not recommend the payment of an interim dividend for the first half of 2025[154](index=154&type=chunk)[158](index=158&type=chunk) [Corporate Governance and Other Information](index=28&type=section&id=Corporate%20Governance%20and%20Other%20Information) This section details the use of global offering proceeds, directors' and substantial shareholders' interests, public float, share repurchases, and corporate governance compliance [Use of Proceeds from Global Offering](index=28&type=section&id=Use%20of%20Proceeds%20from%20Global%20Offering) The net proceeds from the global offering were HK$763.5 million, with HK$138.0 million unutilized as of December 31, 2024, and the expected timeline for utilizing all proceeds extended to June 2026 - The net proceeds from the global offering amounted to **HK$763.5 million**[159](index=159&type=chunk)[160](index=160&type=chunk) - As of December 31, 2024, approximately **HK$138.0 million** of the net proceeds remained unutilized, with **HK$82.4 million** intended for expanding business scale and market share, and **HK$55.6 million** for investing in information technology and internal management systems[166](index=166&type=chunk)[168](index=168&type=chunk) - The company previously provided loans up to **RMB 315 million** to third parties and, upon borrower default, enforced **1,400 parking spaces** as collateral to offset part of the outstanding loans[161](index=161&type=chunk)[162](index=162&type=chunk)[164](index=164&type=chunk) - The company has agreed to acquire the right to use additional assets (**783 underground parking spaces**) to offset the remaining outstanding loan of **RMB 99,040,000** on an equivalent basis[165](index=165&type=chunk)[179](index=179&type=chunk) - The acquisition of Deqing Moganshan Ruijing Real Estate Co., Ltd. in 2025 will be partially funded by **HK$82.4 million** from the aforementioned unutilized net proceeds[170](index=170&type=chunk)[172](index=172&type=chunk) - The expected timeline for utilizing all unutilized net proceeds has been extended to **on or before June 2026**[171](index=171&type=chunk)[172](index=172&type=chunk) Use of Net Proceeds and Revised Status (As of June 30, 2025) | Purpose | Planned Use in Prospectus (HK$ million) | Unutilized as of Jan 1, 2025 (HK$ million) | Utilized During Reporting Period (HK$ million) | Unutilized as of June 30, 2025 (HK$ million) | Expected Timeline | | :--- | :--- | :--- | :--- | :--- | :--- | | Expand business scale and increase market share | 496 | 82.4 | 0 | 82.4 | Before June 2026 | | Diversify and expand service offerings | 76.4 | 0 | 0 | 0 | N/A | | Invest in information technology and internal management systems | 76.4 | 55.6 | 0.6 | 55.0 | Before June 2026 | | Improve human resource management and enhance corporate culture | 38.3 | 0 | 0 | 0 | N/A | | Working capital and other general corporate purposes | 76.4 | 0 | 0 | 0 | N/A | | Loans to borrowers | N/A | 0 | 0 | 0 | N/A | | **Total** | **763.5** | **138.0** | **0.6** | **137.4** | | [Directors' and Substantial Shareholders' Interests](index=33&type=section&id=Directors'%20and%20Substantial%20Shareholders'%20Interests) As of June 30, 2025, Executive Director Mr. Hu Yiping and his spouse held 57.65% of the company's shares through Shengfu International, with other substantial shareholders also noted Directors' Interests in the Company's Shares (As of June 30, 2025) | Director Name | Nature of Interest | Number of Shares Held (L) | Approximate Percentage of Interest (%) | | :--- | :--- | :--- | :--- | | Mr. Hu Yiping | Interest in controlled corporation/Spouse's interest | 529,202,279 | 57.65% | | Mr. Tang Junjie | Beneficial owner | 14,265,741 | 1.55% | Substantial Shareholders' Interests in the Company's Shares (As of June 30, 2025) | Company Name/Person Name | Nature of Interest | Number of Shares Held (L) | Approximate Percentage of Interest (%) | | :--- | :--- | :--- | :--- | | Shengfu International | Beneficial owner | 529,202,279 | 57.65% | | Mr. Hu Yiping | Interest in controlled corporation | 529,202,279 | 57.65% | | Ms. Wei Peifen | Spouse's interest | 529,202,279 | 57.65% | | Kaibang International Limited | Beneficial owner | 115,363,889 | 12.57% | | Hong Kong Meilun International Limited | Beneficial owner | 53,418,803 | 5.82% | | Ms. Shen Yuehua | Interest in controlled corporation | 53,418,803 | 5.82% | | Mr. Jin Liang | Spouse's interest | 53,418,803 | 5.82% | [Public Float and Share Repurchase](index=36&type=section&id=Public%20Float%20and%20Share%20Repurchase) The company maintained the required public float and repurchased 270,000 shares for HK$205,200 during the six months ended June 30, 2025, with 35,588,000 shares pending cancellation - The company has maintained the public float required by the Listing Rules[199](index=199&type=chunk)[200](index=200&type=chunk)[203](index=203&type=chunk) - For the six months ended June 30, 2025, the company repurchased a total of **270,000 shares** on the Stock Exchange for a total consideration of **HK$205,200**[201](index=201&type=chunk)[204](index=204&type=chunk)[205](index=205&type=chunk) - As of the reporting date, **35,588,000 shares** were intended for cancellation but had not yet been cancelled[201](index=201&type=chunk)[204](index=204&type=chunk) [Corporate Governance Compliance](index=37&type=section&id=Corporate%20Governance%20Compliance) The company is committed to high corporate governance standards, complying with all applicable code provisions of the Corporate Governance Code and confirming directors' compliance with securities trading standards - The company has complied with all applicable code provisions of the Corporate Governance Code as set out in Appendix C1 to the Listing Rules[207](index=207&type=chunk)[208](index=208&type=chunk)[212](index=212&type=chunk)[213](index=213&type=chunk) - All directors have confirmed compliance with the Model Code for Securities Transactions by Directors of Listed Issuers during the reporting period[209](index=209&type=chunk)[210](index=210&type=chunk)[214](index=214&type=chunk) - The Audit Committee has reviewed the Group's unaudited condensed consolidated interim results and interim report, confirming compliance with all applicable accounting principles, standards, and requirements[211](index=211&type=chunk)[215](index=215&type=chunk) [Condensed Consolidated Statement of Profit or Loss and Other Comprehensive Income](index=38&type=section&id=Condensed%20Consolidated%20Statement%20of%20Profit%20or%20Loss%20and%20Other%20Comprehensive%20Income) This statement presents the Group's financial performance, including revenue, gross profit, and profit for the period, for the six months ended June 30, 2025 [Profit or Loss Summary](index=38&type=section&id=Profit%20or%20Loss%20Summary) For the six months ended June 30, 2025, the company reported revenue of RMB 442,992 thousand, gross profit of RMB 94,413 thousand, and total profit and comprehensive income of RMB 34,644 thousand Condensed Consolidated Statement of Profit or Loss and Other Comprehensive Income (For the six months ended June 30, 2025) | Indicator | 2025 (RMB '000) | 2024 (RMB '000) | | :--- | :--- | :--- | | Revenue | 442,992 | 473,228 | | Cost of sales | (348,579) | (371,697) | | Gross profit | 94,413 | 101,531 | | Other income | 818 | 1,354 | | Other (losses)/gains, net | (1,190) | 667 | | Selling and marketing expenses | (2,158) | (5,908) | | Administrative expenses | (31,698) | (39,748) | | Impairment losses on trade and other receivables | (13,239) | (10,964) | | Operating profit | 47,122 | 46,783 | | Net finance income | 401 | 9,056 | | Profit before tax | 47,523 | 55,839 | | Income tax expense | (12,879) | (13,355) | | Profit and total comprehensive income for the period | 34,644 | 42,484 | | Profit for the period attributable to owners of the Company | 34,138 | 42,169 | | Basic and diluted earnings per share (RMB) | 0.039 | 0.045 | [Condensed Consolidated Statement of Financial Position](index=39&type=section&id=Condensed%20Consolidated%20Statement%20of%20Financial%20Position) This statement provides a snapshot of the Group's assets, liabilities, and equity as of June 30, 2025, highlighting total assets of RMB 1,388,250 thousand and total equity of RMB 724,767 thousand [Financial Position Summary](index=39&type=section&id=Financial%20Position%20Summary) As of June 30, 2025, total assets were RMB 1,388,250 thousand, with current assets at RMB 1,210,915 thousand, and total liabilities and equity amounting to RMB 663,483 thousand and RMB 724,767 thousand, respectively Condensed Consolidated Statement of Financial Position (As of June 30, 2025) | Indicator | June 30, 2025 (RMB '000) | December 31, 2024 (RMB '000) | | :--- | :--- | :--- | | **Non-current assets** | | | | Property, plant and equipment and right-of-use assets | 6,184 | 7,501 | | Investment properties | 135,574 | — | | Intangible assets | 2,659 | 2,790 | | Deferred income tax assets | 31,920 | 28,610 | | Investments in associates | — | 353 | | Investment in a joint venture | 998 | 493 | | **Total non-current assets** | **177,335** | **39,747** | | **Current assets** | | | | Financial assets at fair value through profit or loss | 2,007 | — | | Inventories | 123,097 | 21,734 | | Trade and other receivables and prepayments | 916,208 | 1,077,445 | | Cash and cash equivalents | 169,603 | 202,181 | | **Total current assets** | **1,210,915** | **1,301,360** | | **Current liabilities** | | | | Trade and other payables | 417,335 | 409,237 | | Contract liabilities | 156,387 | 148,442 | | Borrowings | — | 7,000 | | Lease liabilities | 235 | 175 | | Current income tax liabilities | 79,391 | 76,020 | | **Total current liabilities** | **653,348** | **640,874** | | **Net current assets** | **557,567** | **660,486** | | **Total assets less current liabilities** | **734,902** | **700,233** | | **Non-current liabilities** | | | | Borrowings | 10,000 | 10,000 | | Lease liabilities | 135 | — | | **Total non-current liabilities** | **10,135** | **10,000** | | **Net assets** | **724,767** | **690,233** | | **Total equity** | **724,767** | **690,233** | [Condensed Consolidated Statement of Changes in Equity](index=40&type=section&id=Condensed%20Consolidated%20Statement%20of%20Changes%20in%20Equity) This statement outlines the changes in the Group's equity for the period, including profit for the period, share repurchases, and non-controlling interest contributions [Equity Changes Summary](index=40&type=section&id=Equity%20Changes%20Summary) As of June 30, 2025, equity attributable to owners of the company was RMB 714,858 thousand, reflecting profit for the period, non-controlling interest contributions, and a reduction from share repurchases Condensed Consolidated Statement of Changes in Equity (As of June 30, 2025) | Item | Share Capital (RMB '000) | Share Premium (RMB '000) | Capital Reserve (RMB '000) | Statutory Reserve (RMB '000) | Retained Profits (RMB '000) | Total Attributable to Owners of the Company (RMB '000) | Non-controlling Interests (RMB '000) | Total Equity (RMB '000) | | :--- | :--- | :--- | :--- | :--- | :--- | :--- | :--- | :--- | | At January 1, 2025 (Audited) | 7,564 | 415,272 | (105,591) | 25,900 | 337,785 | 680,930 | 9,303 | 690,233 | | Profit and total comprehensive income for the period (Unaudited) | — | — | — | — | 34,138 | 34,138 | 506 | 34,644 | | Repurchase and cancellation of shares (Unaudited) | — | — | (210) | — | — | (210) | — | (210) | | Contribution from non-controlling interests (Unaudited) | — | — | — | — | — | — | 100 | 100 | | Transfer from statutory reserve (Unaudited) | — | — | — | (1,757) | 1,757 | — | — | — | | At June 30, 2025 (Unaudited) | 7,564 | 415,272 | (105,801) | 24,143 | 373,680 | 714,858 | 9,909 | 724,767 | [Condensed Consolidated Statement of Cash Flows](index=41&type=section&id=Condensed%20Consolidated%20Statement%20of%20Cash%20Flows) This statement summarizes the Group's cash flows from operating, investing, and financing activities for the six months ended June 30, 2025 [Cash Flow Summary](index=41&type=section&id=Cash%20Flow%20Summary) For the six months ended June 30, 2025, net cash used in operating activities was RMB 25,608 thousand, net cash from investing activities was RMB 780 thousand, and net cash used in financing activities was RMB 7,750 thousand Condensed Consolidated Statement of Cash Flows (For the six months ended June 30, 2025) | Item | 2025 (RMB '000) | 2024 (RMB '000) | | :--- | :--- | :--- | | Net cash used in operating activities | (25,608) | (12,788) | | Net cash from investing activities | 780 | 23,804 | | Net cash used in financing activities | (7,750) | (38,646) | | Net decrease in cash and cash equivalents | (32,578) | (27,630) | | Cash and cash equivalents at beginning of period | 202,181 | 229,728 | | Cash and cash equivalents at end of period | 169,603 | 202,098 | [Notes to the Condensed Consolidated Financial Statements](index=42&type=section&id=Notes%20to%20the%20Condensed%20Consolidated%20Financial%20Statements) These notes provide additional information and details regarding the Group's accounting policies, revenue recognition, segment information, and other financial disclosures [General Information](index=42&type=section&id=General%20Information) Dexin Services Group Limited, incorporated in the Cayman Islands, primarily provides property management services in China, with Mr. Hu Yiping as the ultimate controlling shareholder - The company was incorporated in the Cayman Islands on **October 22, 2020**, and its shares were listed on the Main Board of the Hong Kong Stock Exchange on **July 15, 2021**[223](index=223&type=chunk)[228](index=228&type=chunk) - The Group is principally engaged in providing property management services, value-added services to non-property owners, and community value-added services in China[224](index=224&type=chunk)[228](index=228&type=chunk) - The ultimate controlling shareholder is **Mr. Hu Yiping**[224](index=224&type=chunk)[228](index=228&type=chunk) - The condensed consolidated financial statements are presented in RMB and prepared in accordance with **Hong Kong Accounting Standard 34 "Interim Financial Reporting"**[225](index=225&type=chunk)[226](index=226&type=chunk)[229](index=229&type=chunk) [Adoption of New and Revised HKFRS Accounting Standards](index=43&type=section&id=Adoption%20of%20New%20and%20Revised%20HKFRS%20Accounting%20Standards) The Group adopted all new and revised HKFRS accounting standards effective January 1, 2025, with no significant changes to accounting policies or financial statement presentation - The Group has adopted all new and revised HKFRS accounting standards relevant to its operations and effective on **January 1, 2025**[230](index=230&type=chunk)[233](index=233&type=chunk) - The adoption of these standards did not result in significant changes to the Group's accounting policies, the presentation of its consolidated financial statements, or the reported amounts[230](index=230&type=chunk)[233](index=233&type=chunk) [Revenue Recognition](index=43&type=section&id=Revenue%20Recognition) Group revenue primarily derives from property management, non-owner value-added, and community value-added services, with RMB 438,676 thousand recognized over time and RMB 4,316 thousand at a point in time - Revenue refers to income from property management services, value-added services to non-property owners, and community value-added services[232](index=232&type=chunk)[234](index=234&type=chunk) Revenue Recognition Timing | Revenue Recognition Timing | 2025 (RMB '000) | 2024 (RMB '000) | | :--- | :--- | :--- | | Over time | 438,676 | 452,535 | | At a point in time | 4,316 | 20,693 | | **Total** | **442,992** | **473,228** | - All of the Group's revenue is derived from China[237](index=237&type=chunk)[244](index=244&type=chunk) [Segment Information](index=44&type=section&id=Segment%20Information) Management reviews business operating results as a single operating segment for resource allocation, with all revenue and non-current assets located in China - Management reviews business operating results as a single operating segment to determine resource allocation, thus the chief operating decision-maker considers only one segment for strategic decisions[240](index=240&type=chunk)[241](index=241&type=chunk)[243](index=243&type=chunk) - As of June 30, 2025, all of the Group's revenue and non-current assets were located in China[242](index=242&type=chunk)[243](index=243&type=chunk) [Other Income and Losses](index=45&type=section&id=Other%20Income%20and%20Losses) Other income, primarily government grants and VAT deductions, decreased to RMB 818 thousand, while net other losses of RMB 1,190 thousand were recorded, mainly due to derecognition losses of subsidiaries and associates Other Income Breakdown | Item | 2025 (RMB '000) | 2024 (RMB '000) | | :--- | :--- | :--- | | Government grants | 721 | 1,141 | | VAT deductions | 97 | 213 | | **Total** | **818** | **1,354** | Other (Losses)/Gains, Net Breakdown | Item | 2025 (RMB '000) | 2024 (RMB '000) | | :--- | :--- | :--- | | Exchange losses | (33) | (894) | | Loss on derecognition of a subsidiary | (651) | — | | Loss on derecognition of an associate | (524) | — | | Others | 18 | 1,561 | | **Total** | **(1,190)** | **667** | [Finance Income and Costs](index=46&type=section&id=Finance%20Income%20and%20Costs) For the six months ended June 30, 2025, net finance income significantly decreased to RMB 401 thousand, primarily due to reduced interest income from loans Net Finance Income Breakdown | Item | 2025 (RMB '000) | 2024 (RMB '000) | | :--- | :--- | :--- | | **Finance income** | | | | Interest income from bank deposits | 119 | 251 | | Interest income from loans | 711 | 9,378 | | **Finance costs** | | | | Interest expense on borrowings | (419) | (473) | | Interest expense on lease liabilities | (10) | (100) | | **Net finance income** | **401** | **9,056** | [Income Tax Expenses](index=46&type=section&id=Income%20Tax%20Expenses) Income tax expense for the six months ended June 30, 2025, was RMB 12,879 thousand, with a general corporate income tax rate of 25% in China, and no withholding tax accrued on undistributed earnings Income Tax Expense Breakdown | Item | 2025 (RMB '000) | 2024 (RMB '000) | | :--- | :--- | :--- | | Current tax — China corporate income tax | 16,189 | 16,096 | | Deferred tax | (3,310) | (2,741) | | **Total** | **12,879** | **13,355** | - The general corporate income tax rate in China is **25%**, but Hangzhou Xier Technology Co., Ltd., as a high-tech enterprise, enjoys a preferential income tax rate of **15%**[256](index=256&type=chunk)[258](index=258&type=chunk) - The company has not accrued any withholding income tax on the undistributed earnings of its PRC subsidiaries, as there are no plans to distribute such earnings[257](index=257&type=chunk)[258](index=258&type=chunk) [Profit and Earnings Per Share](index=48&type=section&id=Profit%20and%20Earnings%20Per%20Share) For the six months ended June 30, 2025, profit attributable to owners of the company was approximately RMB 34,138 thousand, with basic and diluted earnings per share at RMB 0.039 - Profit for the period attributable to owners of the company was approximately **RMB 34,138 thousand**[263](index=263&type=chunk)[265](index=265&type=chunk) - Basic and diluted earnings per share were **RMB 0.039 per share**[263](index=263&type=chunk)[265](index=265&type=chunk) Profit for the Period Deductions | Item | 2025 (RMB '000) | 2024 (RMB '000) | | :--- | :--- | :--- | | Directors' emoluments | 1,113 | 1,797 | | Depreciation of property, plant and equipment and right-of-use assets | 2,027 | 5,394 | | Depreciation of investment properties | 3,476 | — | | Amortisation of intangible assets | 327 | 291 | | Loss on disposal/write-off of property, plant and equipment | 383 | 60 | [Property, Plant and Equipment and Investment Properties](index=49&type=section&id=Property%2C%20Plant%20and%20Equipment%20and%20Investment%20Properties) As of June 30, 2025, total property, plant and equipment and right-of-use assets were RMB 6,184 thousand, with new investment properties of RMB 135,574 thousand primarily from enforcing collateral Property, Plant and Equipment, Right-of-Use Assets (As of June 30, 2025) | Item | June 30, 2025 (RMB '000) | December 31, 2024 (RMB '000) | | :--- | :--- | :--- | | Property, plant and equipment | 5,813 | 7,011 | | Right-of-use assets | 371 | 490 | | **Total** | **6,184** | **7,501** | - During the period, acquisitions of property, plant and equipment amounted to approximately **RMB 711 thousand**, and right-of-use assets to approximately **RMB 406 thousand**[267](index=267&type=chunk)[269](index=269&type=chunk) - As of June 30, 2025, investment properties amounted to **RMB 135,574 thousand**, primarily from enforcing **1,400 parking spaces** as collateral to offset part of the outstanding loans[268](index=268&type=chunk)[270](index=270&type=chunk)[271](index=271&type=chunk) [Inventories](index=49&type=section&id=Inventories) As of June 30, 2025, total inventories significantly increased to RMB 123,097 thousand, mainly due to an increase in properties held for sale Inventories Breakdown (As of June 30, 2025) | Item | June 30, 2025 (RMB '000) | December 31, 2024 (RMB '000) | | :--- | :--- | :--- | | Raw materials | 2,083 | 2,087 | | Finished goods | 2,810 | 3,276 | | Properties held for sale | 118,204 | 16,371 | | **Total** | **123,097** | **21,734** | [Trade and Other Receivables and Prepayments](index=50&type=section&id=Trade%20and%20Other%20Receivables%20and%20Prepayments) As of June 30, 2025, total trade and other receivables and prepayments were RMB 916,208 thousand, with trade receivables at RMB 506,357 thousand and other receivables at RMB 360,464 thousand Trade and Other Receivables and Prepayments (As of June 30, 2025) | Item | June 30, 2025 (RMB '000) | December 31, 2024 (RMB '000) | | :--- | :--- | :--- | | Trade receivables (net) | 506,357 | 430,135 | | Other receivables (net) | 360,464 | 349,574 | | Prepayments | 43,999 | 50,918 | | Loans receivable (net) | 5,388 | 246,818 | | **Total** | **916,208** | **1,077,445** | Ageing Analysis of Trade Receivables (As of June 30, 2025) | Ageing | June 30, 2025 (RMB '000) | December 31, 2024 (RMB '000) | | :--- | :--- | :--- | | 0 to 180 days | 230,020 | 223,164 | | 181 to 365 days | 173,042 | 61,410 | | 1 to 2 years | 77,631 | 120,911 | | 2 to 3 years | 48,726 | 78,685 | | 3 to 4 years | 51,875 | 14,025 | | Over 4 years | 18,142 | 8,081 | | **Total** | **599,436** | **506,276** | - As of June 30, 2025, loans to third parties with a principal amount of approximately **RMB 5,388 thousand** were unsecured, bore interest at **10% per annum**, and were repayable within one year[278](index=278&type=chunk)[280](index=280&type=chunk) - During the period, the company exercised its right to realize collateral assets of **1,400 parking spaces** valued at **RMB 139,050 thousand** to offset part of the outstanding loans receivable[279](index=279&type=chunk)[280](index=280&type=chunk) [Trade and Other Payables](index=52&type=section&id=Trade%20and%20Other%20Payables) As of June 30, 2025, total trade and other payables were RMB 417,335 thousand, comprising trade payables of RMB 192,992 thousand and other payables of RMB 224,343 thousand Trade and Other Payables (As of June 30, 2025) | Item | June 30, 2025 (RMB '000) | December 31, 2024 (RMB '000) | | :--- | :--- | :--- | | Trade payables | 192,992 | 195,442 | | Other payables | 224,343 | 213,795 | | **Total** | **417,335** | **409,237** | Ageing Analysis of Trade Payables (As of June 30, 2025) | Ageing | June 30, 2025 (RMB '000) | December 31, 2024 (RMB '000) | | :--- | :--- | :--- | | Within 1 year | 177,727 | 185,353 | | After 1 year but within 2 years | 10,471 | 4,378 | | After 2 years but within 3 years | 350 | 3,504 | | Over 3 years | 4,444 | 2,207 | | **Total** | **192,992** | **195,442** | [Share Capital](index=53&type=section&id=Share%20Capital) As of June 30, 2025, issued and fully paid share capital comprised 917,881,000 shares with a par value of RMB 7,564 thousand, following the repurchase of 270,000 ordinary shares Share Capital Movement (As of June 30, 2025) | Item | Number of Ordinary Shares | Equivalent Amount (RMB '000) | | :--- | :--- | :--- | | At January 1, 2025 | 917,881,000 | 7,564 | | Repurchase and cancellation of shares | — | — | | At June 30, 2025 | 917,881,000 | 7,564 | - During the period ended June 30, 2025, the Group repurchased a total of **270,000 ordinary shares** listed on the Stock Exchange for a total consideration of approximately **RMB 210 thousand**[287](index=287&type=chunk) [Capital Commitments and Contingent Liabilities](index=54&type=section&id=Capital%20Commitments%20and%20Contingent%20Liabilities) As of June 30, 2025, the Group had no significant capital commitments or contingent liabilities - As of June 30, 2025, the Group had **no significant capital commitments**[288](index=288&type=chunk)[291](index=291&type=chunk) - As of June 30, 2025, the Group had **no significant contingent liabilities**[289](index=289&type=chunk)[292](index=292&type=chunk) [Related Party Transactions](index=54&type=section&id=Related%20Party%20Transactions) The Group engages in various transactions with related parties, including Dexin China Group and entities controlled by Mr. Hu Yiping, with key management personnel remuneration totaling RMB 1,953 thousand - Key management personnel remuneration (including amounts paid to the company's directors and other key management personnel) amounted to **RMB 1,953 thousand**[296](index=296&type=chunk)[297](index=297&type=chunk) Significant Related Party Transactions (For the six months ended June 30, 2025) | Transaction Type | Related Party | 2025 (RMB '000) | 2024 (RMB '000) | | :--- | :--- | :--- | :--- | | Provision of services | Dexin China Group and its joint ventures and associates | 19,659 | 17,184 | | Provision of services | Other entities controlled by Mr. Hu | — | 10,077 | | Lease expenses | Dexin China Group and its joint ventures and associates | — | 33 | Balances with Related Parties (As of June 30, 2025) | Item | Related Party | June 30, 2025 (RMB '000) | December 31, 2024 (RMB '000) | | :--- | :--- | :--- | :--- | | Trade receivables | Dexin China Group and its joint ventures and associates | 114,992 | 105,500 | | Trade receivables | Other entities controlled by Mr. Hu | 4,691 | 5,514 | | Other receivables | Dexin China Group and its joint ventures and associates | 1,815 | 1,514 | | Other receivables | Other entities controlled by Mr. Hu | 13,597 | 13,867 | | Trade payables | Dexin China Group and its joint ventures and associates | 1,041 | 381 | | Other payables | Dexin China Group and its joint ventures and associates | 1,972 | 2,165 | | Other payables | Other entities controlled by Mr. Hu | 25 | 28 | | Contract liabilities | Dexin China Group and its joint ventures and associates | 567 | 835 | | Deposits paid for parking space rental and sales agency services | Dexin China Group and its joint ventures and associates | 250,000 | 250,000 | [Events After the Reporting Period](index=57&type=section&id=Events%20After%20the%20Reporting%20Period) On July 31, 2025, the Group's indirect wholly-owned subsidiary signed an equity transfer agreement to acquire 100% equity of Deqing Moganshan Ruijing Real Estate Co., Ltd. for RMB 78,000 thousand - On **July 31, 2025**, Dexin Shengquan Property Services Co., Ltd. and Shanghai Xiquan Commercial and Trading Co., Ltd. signed an equity transfer agreement to conditionally acquire **95% and 5% equity** of Deqing Moganshan Ruijing Real Estate Co., Ltd. for considerations of **RMB 74,100 thousand and RMB 3,900 thousand**, respectively[304](index=304&type=chunk)[306](index=306&type=chunk) - Deqing Moganshan Ruijing Real Estate Co., Ltd. is primarily engaged in **hotel operation and management** and providing catering services[304](index=304&type=chunk)[306](index=306&type=chunk)

[Company Overview](index=3&type=section&id=Company%20Overview) Yonghe Medical Group is China's leading one-stop hair medical service provider, expanding its market presence and enhancing core competitiveness through strategic acquisitions and R&D collaborations - Yonghe Medical Group is China's leading hair medical service provider, offering one-stop services including hair transplantation, medical hair care, routine maintenance, and other related services[5](index=5&type=chunk)[7](index=7&type=chunk) - The Group expanded its business footprint beyond mainland China by acquiring Svenson's mainland China business and Prominent Hair Transplant's Hong Kong business[5](index=5&type=chunk)[8](index=8&type=chunk) - Established a joint hair laboratory with Peking University People's Hospital to promote standardized diagnosis and treatment research for hair loss diseases, fostering industry-academia-research development[5](index=5&type=chunk)[8](index=8&type=chunk) - The Group effectively controls costs, improves efficiency, and enhances profitability through its standardized, highly scalable business model and industry-leading operational capabilities[6](index=6&type=chunk)[9](index=9&type=chunk) - Actively promotes new technologies such as data application and analysis, AI services, and online services to improve medical services and accelerate business development[6](index=6&type=chunk)[9](index=9&type=chunk) [Company Information](index=4&type=section&id=Company%20Information) This section provides detailed company information for Yonghe Medical Group, including board members, committee compositions, registered office, headquarters, auditors, legal counsel, stock code, and listing date - Board members include Executive Directors Zhang Yu (Chairman and CEO), Zhang Hui, Han Zhimei, Non-executive Director Geng Jiaqi, and Independent Non-executive Directors Liang Jihong, Chen Bingjun, Li Xiaopei[11](index=11&type=chunk) - The Audit Committee Chairman is Mr. Chen Bingjun, Remuneration Committee Chairman is Mr. Chen Bingjun, and Nomination Committee Chairman is Mr. Zhang Yu[11](index=11&type=chunk)[12](index=12&type=chunk) - The company's registered office is in the Cayman Islands, its principal place of business in Hong Kong is in Lee Garden One, Causeway Bay, and its headquarters are in Chaoyang District, Beijing, China[13](index=13&type=chunk)[14](index=14&type=chunk) - Auditor is PricewaterhouseCoopers, and legal advisors include Stephenson Harwood (Hong Kong law), Jingtian & Gongcheng (PRC law), and Campbells (Cayman Islands law)[15](index=15&type=chunk)[17](index=17&type=chunk)[18](index=18&type=chunk) - Stock code is **02279**, and the listing date is **December 13, 2021**[18](index=18&type=chunk) [Financial Highlights](index=7&type=section&id=Financial%20Highlights) For the six months ended June 30, 2025, Yonghe Medical Group achieved RMB 861.6 million in revenue, RMB 550.3 million in gross profit, a 3.9% year-on-year increase, and a gross margin of 63.9%, successfully turning a profit of RMB 27.9 million with a net profit margin of 3.2%, while cash and cash equivalents increased to RMB 555.9 million For the Six Months Ended June 30, 2025 Financial Highlights | Indicator | 2025 (RMB thousand) | 2024 (RMB thousand) | Year-on-year Change | | :--- | :--- | :--- | :--- | | Revenue from contracts with customers | 861,550 | 900,203 | -4.3% | | Gross profit | 550,323 | 529,437 | +3.9% | | Profit/(Loss) before income tax | 37,809 | (146,699) | Turned to profit | | Profit/(Loss) for the period | 27,855 | (138,648) | Turned to profit | | Gross profit margin | 63.9% | 58.8% | +5.1 percentage points | | Net profit/(loss) margin | 3.2% | -15.4% | +18.6 percentage points | **Financial Position (as at period end):** | Indicator | June 30, 2025 (RMB thousand) | December 31, 2024 (RMB thousand) | | :--- | :--- | :--- | | Total assets | 1,614,463 | 1,726,180 | | Total equity | 741,638 | 713,805 | | Total liabilities | 872,825 | 1,012,375 | | Cash and cash equivalents | 555,885 | 487,842 | [Management Discussion and Analysis](index=8&type=section&id=Management%20Discussion%20and%20Analysis) This section details Yonghe Medical Group's business performance, operational strategies, financial position, and future outlook for the reporting period, highlighting a successful turnaround driven by improved efficiency, cost control, and refined marketing [Business Review](index=8&type=section&id=Business%20Review) Yonghe Medical Group, China's leading hair medical service provider, has built a comprehensive brand matrix covering hair transplantation, medical hair care, and routine maintenance, serving 64,845 consumers across 63 hair transplant clinics and 6 Svenson hair care centers in 61 cities, achieving a turnaround and improved gross margin through optimized operations - The Group has built a full-chain brand matrix with "Yonghe Medical" at its core, including "Yonghe Hair Transplant", "Svenson", "Yonghe Fazhichu", and "Hafada"[21](index=21&type=chunk)[22](index=22&type=chunk) - As of June 30, 2025, the Group operates **63 hair transplant medical institutions** in **61 cities** nationwide and **6 Svenson hair care centers** in Shenzhen, Shanghai, and Guangzhou, making it China's largest and most widely covered chain hair medical group[21](index=21&type=chunk)[22](index=22&type=chunk) - During the reporting period, the total number of consumers served reached **64,845**[21](index=21&type=chunk)[22](index=22&type=chunk) - Through optimizing its clinic network layout and upgrading its independently developed chain medical management system "Hefan", the Group achieved refined management, leading to improved efficiency, quality control, and cost reduction[28](index=28&type=chunk)[29](index=29&type=chunk) Key Financial Indicators for the Reporting Period | Indicator | 2025 (RMB million) | 2024 (RMB million) | Year-on-year Change | | :--- | :--- | :--- | :--- | | Revenue | 861.6 | 900.2 | -4.3% | | Gross profit | 550.3 | 529.4 | +3.9% | | Gross profit margin | 63.9% | 58.8% | +5.1 percentage points | Number of Yonghe Hair Transplant Medical Institutions (by City Tier) | City Tier | As of June 30, 2025 | As of December 31, 2024 | | :--- | :--- | :--- | | Tier 1 Cities | 5 | 6 | | New Tier 1 Cities | 17 | 17 | | Tier 2 Cities | 26 | 29 | | Tier 3 Cities | 14 | 13 | | Hong Kong | 1 | 1 | | **Subtotal** | **63** | **66** | | Svenson Independent Stores (Shenzhen, Guangzhou, Shanghai) | 6 | 8 | | **Total** | **69** | **74** | [Hair Transplant Services](index=11&type=section&id=Hair%20Transplant%20Services) During the reporting period, hair transplant services generated RMB 662.1 million in revenue, accounting for 76.8% of total revenue; despite a decrease in average spending, the number of consumers receiving hair transplant procedures significantly increased by 14.5% to 33,504, with the Group focusing on aesthetic design and female client needs Hair Transplant Services Revenue and Proportion | Indicator | 2025 (RMB thousand) | % of Total Revenue | 2024 (RMB thousand) | % of Total Revenue | | :--- | :--- | :--- | :--- | :--- | | Hair transplant medical services revenue | 662,061 | 76.8% | 672,885 | 74.8% | - Hair transplant services revenue was **RMB 662.1 million**, accounting for **76.8%** of total revenue[32](index=32&type=chunk)[33](index=33&type=chunk) - Implemented a "Good Doctor" multi-level service system and integrated aesthetic design to meet female clients' demand for aesthetic-oriented hair transplant solutions[32](index=32&type=chunk)[33](index=33&type=chunk) Key Operating Data for Hair Transplant Medical Services | Indicator | 2025 | 2024 | Year-on-year Change | | :--- | :--- | :--- | :--- | | Number of consumers receiving hair transplant medical services | 33,504 | 29,272 | +14.5% | | Average spending per hair transplant consumer (RMB) | 19,761 | 22,987 | -14.0% | **Number of Consumers by Service Level and Proportion:** | Service Category | 2025 Number of Consumers | 2025 Proportion | 2024 Number of Consumers | 2024 Proportion | | :--- | :--- | :--- | :--- | :--- | | Business Director Service | 24,293 | 72.5% | 19,637 | 67.1% | | Business President Service | 7,458 | 22.3% | 7,935 | 27.1% | | "Yongxiang" Service | 1,753 | 5.2% | 1,700 | 5.8% | [Medical Hair Care Services](index=13&type=section&id=Medical%20Hair%20Care%20Services) During the reporting period, medical hair care services generated RMB 187.9 million in revenue, representing 21.8% of total revenue; despite a decrease in consumer numbers, the Group strategically upgraded its product structure, transitioning hair care services towards high-value medical-grade packages to optimize resource allocation and enhance service added value Medical Hair Care Services Revenue and Proportion | Indicator | 2025 (RMB thousand) | % of Total Revenue | 2024 (RMB thousand) | % of Total Revenue | | :--- | :--- | :--- | :--- | :--- | | Medical hair care services revenue | 187,891 | 21.8% | 215,176 | 23.9% | - Medical hair care services revenue was **RMB 187.9 million**, accounting for **21.8%** of total revenue[38](index=38&type=chunk)[39](index=39&type=chunk) - The Group established "Svenson Medical Hair Care Centers" as a "store-within-a-store" model in each hair transplant medical institution, offering professional diagnosis and customized treatment services[38](index=38&type=chunk)[39](index=39&type=chunk) - Strategically upgraded product structure, promoting the transformation of hair care services towards high-value medical-grade packages to improve resource utilization efficiency and service added value[38](index=38&type=chunk)[39](index=39&type=chunk) Key Operating Data for Medical Hair Care Services | Indicator | 2025 | 2024 | Year-on-year Change | | :--- | :--- | :--- | :--- | | Number of consumers receiving medical hair care services | 44,912 | 49,683 | -9.6% | | Average spending per medical hair care consumer (RMB) | 4,184 | 4,311 | -3.0% | | Repurchase rate | 29.9% | 29.0% | +0.9 percentage points | [Business Progress](index=14&type=section&id=Business%20Progress) The Group significantly improved operational efficiency and service quality by enhancing supply chain synergy, optimizing medical service processes, and iterating technology, reducing per-surgery resource consumption; it also focused on the female hair health market with specialized clinics and VIP services, strengthening customer loyalty - Continuously promoted supply chain synergy and optimization of full-chain medical service processes, significantly improving operational efficiency and medical service quality[44](index=44&type=chunk)[45](index=45&type=chunk) - Significantly reduced per-surgery resource consumption through technological iteration, consumable upgrades, and lean processes[44](index=44&type=chunk)[45](index=45&type=chunk) - Focused on the female market by establishing independent clinics and launching specialized technical services, leading to a significant increase in customer satisfaction[44](index=44&type=chunk)[46](index=46&type=chunk) - Enhanced private domain customer loyalty and repurchase performance through a VIP service system and membership ecosystem development[44](index=44&type=chunk)[46](index=46&type=chunk) Number of Hair Transplant Medical Institutions by Development Stage | Development Stage | As of June 30, 2025 | As of December 31, 2024 | | :--- | :--- | :--- | | Mature Clinics | 52 | 52 | | Developing Clinics | 11 | 13 | | New Clinics | – | 1 | | **Total** | **63** | **66** | [Strengthening Medical Foundation and Upholding Medical Essence](index=16&type=section&id=Strengthening%20Medical%20Foundation%20and%20Upholding%20Medical%20Essence) The Group adheres to a medical-centric service philosophy, continuously enhancing its professional medical talent system and service quality through systematic talent development, comprehensive diagnostic skill training, a tiered hair transplant doctor system, and strengthened post-operative management, supported by a team of 1,320 medical professionals and collaborations with industry partners and renowned medical schools - Newly recruited doctors must complete standardized training and pass strict quality assessments to ensure consistency and safety of medical services[51](index=51&type=chunk) - Built a comprehensive diagnostic skill training system covering aesthetic design capabilities to fully enhance service levels[51](index=51&type=chunk) - Implemented a tiered hair transplant doctor system, refined to **24 surgical quality assessment dimensions**, continuously improving doctors' technical skills and surgical quality[51](index=51&type=chunk) - Strengthened post-operative management and full-cycle services, providing comprehensive hair health services to enhance core competitiveness[51](index=51&type=chunk) Professional Medical Team Composition (As of June 30, 2025) | Team Category | Number of People | | :--- | :--- | | Total Professional Team | 1,320 | | – Doctors | 226 | | – Nurses | 1,008 | | – Other Medical Professionals | 86 | - Actively collaborates with excellent upstream and downstream pharmaceutical companies in the hair industry to deepen cooperation in hair loss prevention and hair transplantation, promoting industry innovation and upgrading[53](index=53&type=chunk)[54](index=54&type=chunk) - Continuously strengthens cooperation with renowned medical schools and top-tier hospitals, driving development in the hair medical field through academic seminars and joint research projects[53](index=53&type=chunk)[54](index=54&type=chunk) [Full-Chain Synergy and Refined Marketing Strategies](index=18&type=section&id=Full-Chain%20Synergy%20and%20Refined%20Marketing%20Strategies) The Group enhances full-process efficiency from lead generation to customer conversion through refined marketing strategies, strengthening private domain ecosystem development and intelligent tool application, optimizing media placement, and deepening brand-content-traffic synergy to precisely convert high-intent audiences, while innovating a "linkage complex" model to dynamically allocate resources to high-conversion channels and strategically target female and out-of-town markets for structural cost optimization - Promoted refined marketing strategies, strengthening private domain ecosystem development and intelligent tool application to enhance full-process efficiency from lead generation to customer conversion[56](index=56&type=chunk)[58](index=58&type=chunk) - Significantly improved user loyalty and conversion efficiency through customer segmentation management and optimized membership benefits; built standardized service processes based on AI detection technology[56](index=56&type=chunk)[58](index=58&type=chunk) - Optimized media placement structure, deepened brand-content-traffic synergy, and promoted precise conversion of high-intent audiences by co-building audience models on core content platforms[56](index=56&type=chunk)[59](index=59&type=chunk) - Built a full-domain KOS matrix covering the entire user decision-making cycle, establishing a professional trust barrier with in-depth content and implementing a tiered operational strategy[56](index=56&type=chunk)[60](index=60&type=chunk) - Innovatively created a "linkage complex" model, deploying diverse touchpoints at the front end to lower decision thresholds, and enhancing conversion efficiency at the back end through digital tools[57](index=57&type=chunk)[61](index=61&type=chunk) - Strategically targeted female and out-of-town markets to achieve structural cost optimization, enhancing the resilience of the marketing system and sustained conversion capabilities[57](index=57&type=chunk)[61](index=61&type=chunk) [Technology-Driven Digital Transformation](index=19&type=section&id=Technology-Driven%20Digital%20Transformation) The Group is firmly advancing its "digitalization and intelligence" strategy, focusing on AI technology to enhance operational management efficiency and customer service experience, integrating an AI knowledge base engine into its "Hefan" system, building a "one item, one code" material traceability system, launching a mobile clinic business system, and promoting new-generation scalp detection equipment and intelligent scalp recognition technology for smart diagnosis and treatment, while refining its membership growth system and upgrading intelligent quality inspection mechanisms to ensure data security - Firmly advancing the "digitalization and intelligence" strategy, focusing on systematic construction with AI technology at its core to improve operational management efficiency and customer service experience[62](index=62&type=chunk)[64](index=64&type=chunk) - The independently developed chain medical management system "Hefan" integrates an AI knowledge base engine, applied in core processes such as user tagging and intent recognition, significantly improving business link identification efficiency and per capita productivity[62](index=62&type=chunk)[65](index=65&type=chunk) - Built a "one item, one code" material traceability system to strengthen medical safety, and launched a mobile clinic business system to enhance terminal operational responsiveness[62](index=62&type=chunk)[65](index=65&type=chunk) - Promoted new-generation scalp detection equipment, combining image recognition with large medical models to create a visualized diagnosis and treatment system, driving hair medical care towards precision medicine[62](index=62&type=chunk)[66](index=66&type=chunk) - Improved the private domain ecosystem's membership growth system, enhancing in-store conversion and repurchase rates through benefit design and referral mechanisms[63](index=63&type=chunk)[67](index=67&type=chunk) - Upgraded the intelligent quality inspection protection mechanism, establishing a dynamic monitoring system covering the entire data lifecycle to ensure enterprise and customer data security[63](index=63&type=chunk)[67](index=67&type=chunk) [Future Outlook](index=20&type=section&id=Future%20Outlook) China's hair health market is projected to reach RMB 116.54 billion by 2028, and the Group plans to capitalize on this growth by refining operations, solidifying central functions, and strengthening AI empowerment, including enhancing single-store growth, optimizing female clinics, launching early hair loss products, improving remuneration, strengthening internet hospital functions, integrating online sales, establishing a three-tier product system, and deepening AI integration in medical scenarios [Refining Operations for Business Growth Momentum](index=20&type=section&id=Refining%20Operations%20for%20Business%20Growth%20Momentum) The Group will focus on enhancing single-store growth capabilities of existing mature clinics, optimizing cost structures, and accelerating refined operational layouts for multi-department and appropriately sized clinics, while solidifying its leading position in high-tier cities and strategically expanding with light-asset smaller clinics in lower-tier cities, optimizing female clinics, launching early hair loss medical care products, and improving remuneration systems to attract and motivate talent - China's hair health market is expected to reach **RMB 116.54 billion** by **2028**, and the Group will seize market opportunities[69](index=69&type=chunk)[71](index=71&type=chunk) - Will focus on enhancing the single-store growth capabilities of existing mature clinics, optimizing cost structures, and accelerating the refined operational layout of multi-department and appropriately sized clinics[70](index=70&type=chunk)[72](index=72&type=chunk)[73](index=73&type=chunk) - Will solidify its leading position in high-tier cities and mature clinics, and strategically deploy light-asset smaller clinics in lower-tier cities to expand market share[70](index=70&type=chunk)[73](index=73&type=chunk) - Further optimize female clinic construction, increasing the penetration rate of female aesthetic design and non-shaving hair transplant procedures to meet segmented market demands[74](index=74&type=chunk)[75](index=75&type=chunk) - Launch medical hair care products targeting early-stage hair loss, mild hair loss, and young clients unsuitable for hair transplantation, shortening treatment cycles and enhancing customer experience[74](index=74&type=chunk)[76](index=76&type=chunk) - Continuously optimize remuneration, performance appraisal, and internal development systems to attract outstanding talent, motivate employees, and promote a flatter management structure[74](index=74&type=chunk)[77](index=77&type=chunk) [Solidifying Central Functions and Building an Ecosystem Loop](index=21&type=section&id=Solidifying%20Central%20Functions%20and%20Building%20an%20Ecosystem%20Loop) The Group will continuously strengthen the central function of its internet hospital, building a full-scenario online diagnosis and treatment matrix to achieve a closed-loop for user full-cycle health management, integrating online sales processes, connecting private domain e-commerce, internet hospitals, and core CRM systems for order synergy, establishing a three-tier product system from home self-testing to in-clinic deep examination, and upgrading its hair health membership system to enhance customer loyalty - Continuously strengthen the central function of the internet hospital, building a full-scenario online diagnosis and treatment matrix that integrates intelligent consultation, cloud-based testing, and digital service modules to achieve a closed-loop for user full-cycle health management[80](index=80&type=chunk)[81](index=81&type=chunk) - Promote the online integration of sales processes, connecting private domain e-commerce, internet hospitals, and core CRM systems for order synergy, achieving closed-loop management of online product ordering and offline service fulfillment[82](index=82&type=chunk)[83](index=83&type=chunk) - Establish a three-tier product system covering home self-testing to in-clinic deep examination, meeting diverse hair loss management needs and extending the service chain for home-based and light medical solutions[82](index=82&type=chunk)[84](index=84&type=chunk) - Upgrade the hair health membership system, enhancing customer loyalty through medical points benefits and customized health content, and optimizing service synergy between private domains and offline clinics[82](index=82&type=chunk)[84](index=84&type=chunk) [Adhering to Technology Orientation and Strengthening AI Empowerment](index=23&type=section&id=Adhering%20to%20Technology%20Orientation%20and%20Strengthening%20AI%20Empowerment) The Group will continue to promote the integration and application of Artificial Intelligence (AI) technology in hair medical scenarios, building a technology ecosystem centered on intelligent diagnosis and treatment systems, upgrading AI medical models to enhance precision and professionalism across the entire diagnosis and treatment process, strengthening intelligent service capabilities in the private domain ecosystem, advancing the application of smart hardware, and continuously developing an intelligent quality inspection system for quality control and risk prevention - Continuously deepen the integration and application of AI technology in medical scenarios, building a technology ecosystem centered on intelligent diagnosis and treatment systems to enhance the precision and professionalism of the entire hair medical process[85](index=85&type=chunk)[86](index=86&type=chunk) - Strengthen the intelligent service capabilities of the private domain ecosystem, deeply integrating AI technology into the customer operation chain to improve service response efficiency and personalization[85](index=85&type=chunk)[86](index=86&type=chunk) - Promote the application of smart hardware, achieving digital management of medical records through innovative equipment, providing technical support for precise diagnosis and treatment[85](index=85&type=chunk)[86](index=86&type=chunk) - Continuously advance the construction of an intelligent quality inspection system, relying on AI technology to achieve quality control management and risk prevention throughout the diagnosis and treatment process, building a dynamic quality inspection capability system covering the entire business chain[85](index=85&type=chunk)[86](index=86&type=chunk) [Financial Review](index=24&type=section&id=Financial%20Review) During the reporting period, the Group's revenue decreased by 4.3% year-on-year to RMB 861.6 million, but gross profit increased by 3.9% to RMB 550.3 million, with gross margin rising to 63.9%; selling and service costs, general and administrative expenses, and selling and marketing expenses all decreased due to clinic consolidation, team optimization, and refined marketing strategies, resulting in a successful turnaround with a net profit of RMB 27.9 million and a significant 226.7% increase in EBITDA, alongside stable cash flow and a substantially reduced gearing ratio [Revenue](index=24&type=section&id=Revenue) For the six months ended June 30, 2025, the Group's total revenue was RMB 861.6 million, a 4.3% year-on-year decrease; hair transplant medical services revenue was RMB 662.1 million, down 1.6% primarily due to lower average spending, while medical hair care services revenue was RMB 187.9 million, down 12.7% mainly due to fewer patients Revenue Breakdown by Business Line | Business Line | 2025 (RMB thousand) | Proportion | 2024 (RMB thousand) | Proportion | | :--- | :--- | :--- | :--- | :--- | | Hair transplant medical services | 662,061 | 76.8% | 672,885 | 74.8% | | Medical hair care services | 187,891 | 21.8% | 215,176 | 23.9% | | Others | 11,598 | 1.4% | 12,142 | 1.3% | | **Total** | **861,550** | **100%** | **900,203** | **100%** | - Hair transplant medical services revenue decreased by **1.6%** year-on-year, primarily due to a **14.0%** decrease in average spending per hair transplant patient to **RMB 19,761**, despite a **14.5%** increase in patient numbers to **33,504**[92](index=92&type=chunk)[93](index=93&type=chunk) - Medical hair care services revenue decreased by **12.7%** year-on-year, mainly due to a **9.6%** decrease in patient numbers to **44,912**[94](index=94&type=chunk)[95](index=95&type=chunk) - Other services revenue decreased by **4.5%** year-on-year to **RMB 11.6 million**[96](index=96&type=chunk)[99](index=99&type=chunk) [Costs](index=25&type=section&id=Costs) During the reporting period, selling and service costs were RMB 311.2 million, a 16.1% year-on-year decrease, with both staff costs and amortization and depreciation expenses declining, primarily due to clinic consolidation, optimization of the professional medical team structure, and the strategy of closing and integrating inefficient clinics Selling and Service Costs Breakdown (by Nature) | Cost Category | 2025 (RMB thousand) | Proportion | 2024 (RMB thousand) | Proportion | | :--- | :--- | :--- | :--- | :--- | | Staff costs | 125,701 | 40.4% | 142,032 | 38.3% | | Amortization and depreciation expenses | 112,318 | 36.1% | 152,677 | 41.2% | | Inventory and consumable costs | 52,518 | 16.9% | 50,549 | 13.6% | | Operating-related expenses | 14,391 | 4.6% | 19,596 | 5.3% | | Other expenses | 6,299 | 2.0% | 5,912 | 1.6% | | **Total** | **311,227** | **100%** | **370,766** | **100%** | - Total costs were **RMB 311.2 million**, a **16.1%** decrease compared to **RMB 370.8 million** in the same period of 2024[102](index=102&type=chunk)[105](index=105&type=chunk) - The decrease in staff costs was mainly due to clinic consolidation and optimization of the professional medical team structure[102](index=102&type=chunk)[105](index=105&type=chunk) - The decrease in amortization and depreciation expenses was mainly due to the strategy of closing and integrating inefficient clinics[102](index=102&type=chunk)[105](index=105&type=chunk) [Gross Profit and Gross Margin](index=26&type=section&id=Gross%20Profit%20and%20Gross%20Margin) For the six months ended June 30, 2025, the Group's gross profit was RMB 550.3 million, a 3.9% year-on-year increase, with gross margin significantly improving by 5.1 percentage points to 63.9% Gross Profit and Gross Margin | Indicator | 2025 (RMB million) | 2024 (RMB million) | Year-on-year Change | | :--- | :--- | :--- | :--- | | Gross profit | 550.3 | 529.4 | +3.9% | | Gross profit margin | 63.9% | 58.8% | +5.1 percentage points | [Other Income](index=26&type=section&id=Other%20Income) During the reporting period, the Group's other income, primarily from government grants and VAT super deduction, totaled RMB 0.7 million, remaining largely consistent with the prior year Other Income | Indicator | 2025 (RMB million) | 2024 (RMB million) | | :--- | :--- | :--- | | Other income | 0.7 | 0.8 | [General and Administrative Expenses](index=26&type=section&id=General%20and%20Administrative%20Expenses) For the six months ended June 30, 2025, general and administrative expenses were RMB 112.1 million, a 20.4% year-on-year decrease, primarily attributable to improved management efficiency and a streamlined Group organizational structure General and Administrative Expenses Breakdown (by Nature) | Expense Category | 2025 (RMB thousand) | Proportion | 2024 (RMB thousand) | Proportion | | :--- | :--- | :--- | :--- | :--- | | Staff costs | 78,648 | 70.2% | 97,483 | 69.1% | | Amortization and depreciation expenses | 7,017 | 6.3% | 9,441 | 6.7% | | Operating-related expenses | 6,965 | 6.2% | 9,096 | 6.5% | | Professional and consulting service fees | 6,126 | 5.5% | 6,757 | 4.8% | | Travel and entertainment expenses | 4,723 | 4.2% | 4,952 | 3.5% | | Others | 8,613 | 7.6% | 13,241 | 9.4% | | **Total** | **112,092** | **100%** | **140,970** | **100%** | - General and administrative expenses decreased by **20.4%** year-on-year, mainly due to improved management efficiency and a streamlined Group organizational structure[110](index=110&type=chunk) [Selling and Marketing Expenses](index=27&type=section&id=Selling%20and%20Marketing%20Expenses) During the reporting period, selling and marketing expenses were RMB 381.4 million, a 17.5% year-on-year decrease, primarily due to the Group's optimized resource allocation and refined marketing strategies, leading to reduced marketing and promotion expenses Selling and Marketing Expenses Breakdown (by Nature) | Expense Category | 2025 (RMB thousand) | Proportion | 2024 (RMB thousand) | Proportion | | :--- | :--- | :--- | :--- | :--- | | Marketing and promotion expenses | 254,047 | 66.6% | 322,749 | 69.7% | | Staff costs | 109,966 | 28.8% | 119,716 | 25.9% | | Amortization and depreciation expenses | 5,817 | 1.5% | 6,457 | 1.4% | | Travel expenses | 4,967 | 1.3% | 5,892 | 1.3% | | Operating-related expenses | 2,417 | 0.6% | 3,101 | 0.7% | | Others | 4,194 | 1.2% | 4,658 | 1.0% | | **Total** | **381,408** | **100%** | **462,573** | **100%** | - Selling and marketing expenses decreased by **17.5%** year-on-year, with marketing and promotion expenses decreasing mainly due to optimized resource allocation and refined marketing strategies[114](index=114&type=chunk) [Earnings Before Interest, Tax, Depreciation and Amortization (EBITDA)](index=28&type=section&id=Earnings%20Before%20Interest%2C%20Tax%2C%20Depreciation%20and%20Amortization%20(EBITDA)) For the six months ended June 30, 2025, the Group's EBITDA was RMB 169.8 million, a significant 226.7% increase from RMB 52.0 million in the prior year, indicating substantial improvement in operating efficiency EBITDA and Reconciliation Items | Indicator | 2025 (RMB thousand) | 2024 (RMB thousand) | Year-on-year Change | | :--- | :--- | :--- | :--- | | Profit/(Loss) | 27,855 | (138,648) | Turned to profit | | Income tax expense/(credit) | 9,954 | (8,051) | | | Finance income | (5,882) | (5,524) | | | Finance costs | 12,768 | 21,574 | | | Depreciation of right-of-use assets | 62,687 | 81,302 | | | Depreciation of property, plant and equipment | 60,137 | 85,862 | | | Impairment loss on property, plant and equipment | – | 14,064 | | | Amortization of intangible assets | 2,328 | 1,411 | | | **Earnings Before Interest, Tax, Depreciation and Amortization** | **169,847** | **51,990** | **+226.7%** | [Income Tax Expense / (Credit)](index=29&type=section&id=Income%20Tax%20Expense%20%2F%20(Credit)) For the six months ended June 30, 2025, the Group's income tax expense was RMB 10.0 million, compared to an income tax credit of RMB 8.1 million in the prior year, primarily due to the turnaround from loss to profit in the current period Income Tax Expense / (Credit) | Indicator | 2025 (RMB million) | 2024 (RMB million) | | :--- | :--- | :--- | | Income tax expense/(credit) | 10.0 | (8.1) | - The increase in income tax expense is mainly due to the turnaround from loss to profit in the current period[119](index=119&type=chunk)[122](index=122&type=chunk) [Net Profit / (Loss) and Net Profit / (Loss) Margin](index=29&type=section&id=Net%20Profit%20%2F%20(Loss)%20and%20Net%20Profit%20%2F%20(Loss)%20Margin) For the six months ended June 30, 2025, the Group achieved a net profit of RMB 27.9 million, successfully reversing a net loss of RMB 138.6 million in the prior year, with the net profit margin significantly improving to 3.2% from a net loss margin of 15.4% Net Profit / (Loss) and Net Profit / (Loss) Margin | Indicator | 2025 (RMB million) | 2024 (RMB million) | Year-on-year Change | | :--- | :--- | :--- | :--- | | Net profit/(loss) | 27.9 | (138.6) | Turned to profit | | Net profit/(loss) margin | 3.2% | -15.4% | +18.6 percentage points | - The turnaround is mainly attributed to increased gross profit margin driven by improved operational efficiency, and cost savings from optimized marketing and human resources[120](index=120&type=chunk)[123](index=123&type=chunk) [Cash and Cash Equivalents](index=29&type=section&id=Cash%20and%20Cash%20Equivalents) As of June 30, 2025, the Group's cash and cash equivalents increased to RMB 555.9 million from RMB 487.8 million at the end of 2024, indicating robust cash flow Cash and Cash Equivalents | Indicator | June 30, 2025 (RMB million) | December 31, 2024 (RMB million) | | :--- | :--- | :--- | | Cash and cash equivalents | 555.9 | 487.8 | - The Group maintains robust cash flow, sufficient to meet daily working capital needs and future clinic expansion plans[121](index=121&type=chunk)[124](index=124&type=chunk) [Cash Flows](index=30&type=section&id=Cash%20Flows) For the six months ended June 30, 2025, net cash from operating activities significantly increased to RMB 208.5 million, while net cash used in investing and financing activities both decreased, with cash and cash equivalents increasing to RMB 555.9 million at period-end Selected Data from Consolidated Cash Flow Statement | Indicator | 2025 (RMB thousand) | 2024 (RMB thousand) | | :--- | :--- | :--- | | Net cash from operating activities | 208,484 | 73,974 | | Net cash used in investing activities | (8,294) | (18,282) | | Net cash used in financing activities | (132,105) | (125,169) | | Cash and cash equivalents at beginning of period | 487,842 | 603,215 | | Cash and cash equivalents at end of period | 555,885 | 533,780 | [Liquidity and Capital Resources](index=30&type=section&id=Liquidity%20and%20Capital%20Resources) As of June 30, 2025, the Group's cash and cash equivalents were RMB 555.9 million, with bank borrowings of RMB 5.0 million, indicating ample liquidity Liquidity Position | Indicator | June 30, 2025 (RMB million) | December 31, 2024 (RMB million) | | :--- | :--- | :--- | | Cash and cash equivalents | 555.9 | 487.8 | | Bank borrowings | 5.0 | 50.1 | [Capital Expenditures](index=30&type=section&id=Capital%20Expenditures) For the six months ended June 30, 2025, the Group's capital expenditures were RMB 8.5 million, primarily for purchasing property, plant and equipment and intangible assets, a decrease from RMB 18.4 million in the prior year Capital Expenditures Breakdown | Category | 2025 (RMB thousand) | 2024 (RMB thousand) | | :--- | :--- | :--- | | Payments for property, plant and equipment | 7,712 | 13,966 | | Payments for intangible assets | 800 | 4,398 | | **Total** | **8,512** | **18,364** | - Capital expenditures decreased by **53.7%** year-on-year, reflecting a slowdown in the Group's investments in fixed assets and intangible assets[133](index=133&type=chunk) [Indebtedness](index=31&type=section&id=Indebtedness) As of June 30, 2025, the Group's total indebtedness significantly decreased to RMB 521.0 million from RMB 667.1 million at the end of 2024, with bank borrowings falling from RMB 50.1 million to RMB 5.0 million and lease liabilities also reducing Indebtedness Breakdown | Category | June 30, 2025 (RMB thousand) | December 31, 2024 (RMB thousand) | | :--- | :--- | :--- | | **Current** | | | | Bank borrowings | 5,004 | 50,051 | | Lease liabilities | 129,291 | 150,551 | | **Non-current** | | | | Lease liabilities | 386,693 | 466,531 | | **Total** | **520,988** | **667,133** | - Bank borrowings significantly decreased by **90.0%**, from **RMB 50.1 million** to **RMB 5.0 million**, with annual interest rates ranging from **2.8% to 3.2%**[138](index=138&type=chunk)[142](index=142&type=chunk) - Total lease liabilities were **RMB 516.0 million**, a decrease from **RMB 617.1 million** at the end of 2024[139](index=139&type=chunk)[143](index=143&type=chunk) [Material Acquisitions and Disposals](index=31&type=section&id=Material%20Acquisitions%20and%20Disposals) For the six months ended June 30, 2025, the Group did not undertake any material acquisitions or disposals of subsidiaries, associates, or joint ventures, nor did it hold any material investments - During the reporting period, the Group had no material acquisitions or disposals of any subsidiaries, associates, or joint ventures[140](index=140&type=chunk)[144](index=144&type=chunk) - As of June 30, 2025, the Group held no material investments[140](index=140&type=chunk)[144](index=144&type=chunk) [Plans for Material Investments or Capital Asset Purchases](index=31&type=section&id=Plans%20for%20Material%20Investments%20or%20Capital%20Asset%20Purchases) As of June 30, 2025, the Group had no plans for material investments or capital asset purchases, other than those disclosed in the prospectus - As of June 30, 2025, the Group had no plans for material investments or capital asset purchases, other than those disclosed in the prospectus[141](index=141&type=chunk)[145](index=145&type=chunk) [Pledge of Assets](index=32&type=section&id=Pledge%20of%20Assets) As of June 30, 2025, the Group had no pledge of assets - As of June 30, 2025, the Group had no pledge of assets[147](index=147&type=chunk)[152](index=152&type=chunk) [Gearing Ratio](index=32&type=section&id=Gearing%20Ratio) As of June 30, 2025, the Group's gearing ratio was 0.7%, a significant decrease from 7.0% at the end of 2024, indicating a substantial reduction in financial leverage Gearing Ratio | Indicator | June 30, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Gearing ratio | 0.7% | 7.0% | [Exchange Rates and Any Related Hedges](index=32&type=section&id=Exchange%20Rates%20and%20Any%20Related%20Hedges) The Group has no significant foreign currency risk as its operations, assets, and liabilities are primarily denominated in RMB; as of June 30, 2025, foreign currency-denominated cash and cash equivalents amounted to RMB 6.0 million, and the Group will monitor foreign exchange risk and consider hedging when necessary - The Group has no significant foreign currency risk as its operations, assets, and liabilities are primarily denominated in RMB[149](index=149&type=chunk)[154](index=154&type=chunk) - As of June 30, 2025, foreign currency (primarily USD) denominated cash and cash equivalents amounted to **RMB 6.0 million**[149](index=149&type=chunk)[154](index=154&type=chunk) [Contingent Liabilities](index=32&type=section&id=Contingent%20Liabilities) As of June 30, 2025, the Group had no material contingent liabilities - As of June 30, 2025, the Group had no material contingent liabilities[150](index=150&type=chunk)[155](index=155&type=chunk) [Employees and Remuneration Policy](index=32&type=section&id=Employees%20and%20Remuneration%20Policy) As of June 30, 2025, the Group had 3,228 employees, including 1,320 professional medical team members, with staff costs of RMB 323.1 million during the reporting period; the Group offers competitive remuneration, promotion opportunities, training, and participates in social security schemes for its employees Employees and Remuneration Policy | Indicator | June 30, 2025 | June 30, 2024 | | :--- | :--- | :--- | | Total number of employees | 3,228 | - | | Number of professional medical team members | 1,320 | - | | Staff costs (RMB million) | 323.1 | 371.3 | - The Group provides competitive remuneration packages, promotion opportunities, diverse training programs, and a professional working environment[151](index=151&type=chunk)[157](index=157&type=chunk) - Remuneration packages primarily include basic salary, performance bonuses and/or discretionary bonuses, and employees participate in various social security schemes[151](index=151&type=chunk)[157](index=157&type=chunk) [Corporate Governance and Other Information](index=33&type=section&id=Corporate%20Governance%20and%20Other%20Information) This section outlines Yonghe Medical Group's corporate governance practices, including compliance with the Corporate Governance Code and Model Code for Securities Transactions, Audit Committee responsibilities, and the use of global offering proceeds, along with disclosures on changes in directors' information, equity interests of directors and substantial shareholders, and updates on contractual arrangements, share incentive schemes, and share repurchases, confirming no material non-compliance and no interim dividend declared [Compliance with Corporate Governance Code](index=33&type=section&id=Compliance%20with%20Corporate%20Governance%20Code) The Company is committed to high standards of corporate governance and has applied the Corporate Governance Code, with a deviation from Code Provision C.2.1 (separation of Chairman and CEO roles), as the Board believes the current arrangement benefits management and maintains a highly independent board composition - The Company has applied all applicable principles and code provisions of the Corporate Governance Code, with a deviation from Code Provision C.2.1 (separation of Chairman and CEO roles)[158](index=158&type=chunk)[162](index=162&type=chunk) - Mr. Zhang Yu serves as both Chairman and Chief Executive Officer, responsible for the Group's overall strategic planning, business direction, and operational management[158](index=158&type=chunk)[162](index=162&type=chunk)[163](index=163&type=chunk) - The Board believes the dual role benefits the Group's management, and the Board's composition of three executive directors, one non-executive director, and three independent non-executive directors ensures high independence[158](index=158&type=chunk)[162](index=162&type=chunk) [Compliance with Model Code for Securities Transactions](index=33&type=section&id=Compliance%20with%20Model%20Code%20for%20Securities%20Transactions) The Company has adopted the Model Code for Securities Transactions as set out in Appendix C3 of the Listing Rules, and all Directors confirmed compliance with the Code during the reporting period - The Company has adopted the Model Code for Securities Transactions as set out in Appendix C3 of the Listing Rules for Directors' dealings in the Company's securities[160](index=160&type=chunk)[164](index=164&type=chunk) - All Directors confirmed compliance with the Model Code for the six months ended June 30, 2025[160](index=160&type=chunk)[164](index=164&type=chunk) [Audit Committee](index=34&type=section&id=Audit%20Committee) The Audit Committee, comprising two independent non-executive directors and one non-executive director, chaired by Mr. Chen Bingjun, assists the Board in reviewing financial information, risk management, internal control systems, internal audit functions, and the appointment of external auditors - The Audit Committee comprises Mr. Chen Bingjun (Chairman), Mr. Li Xiaopei (Independent Non-executive Director), and Mr. Geng Jiaqi (Non-executive Director)[166](index=166&type=chunk)[169](index=169&type=chunk) - Its primary responsibilities include reviewing financial information and reporting procedures, risk management and internal control systems, the effectiveness of the internal audit function, audit scope, and the appointment of external auditors[166](index=166&type=chunk)[170](index=170&type=chunk) [Review of Interim Results and Interim Report](index=34&type=section&id=Review%20of%20Interim%20Results%20and%20Interim%20Report) The Audit Committee, in conjunction with management and the independent auditor, reviewed the Company's adopted accounting principles and policies, and discussed internal controls and financial reporting matters, including the unaudited condensed consolidated interim financial information for the six months ended June 30, 2025 - The Audit Committee, in conjunction with management and the independent auditor, reviewed the Company's adopted accounting principles and policies, and discussed internal controls and financial reporting matters[167](index=167&type=chunk)[171](index=171&type=chunk) - The unaudited condensed consolidated interim financial information for the six months ended June 30, 2025, has been reviewed by the independent auditor in accordance with Hong Kong Standard on Review Engagements 2410[167](index=167&type=chunk)[171](index=171&type=chunk) [Use of Proceeds from Global Offering and Changes in Use of Proceeds](index=34&type=section&id=Use%20of%20Proceeds%20from%20Global%20Offering%20and%20Changes%20in%20Use%20of%20Proceeds) The Company's global offering generated net proceeds of approximately HKD 1,526.2 million; the Board resolved on March 30, 2023, and August 22, 2024, to change the use of unutilized net proceeds, with HKD 159.0 million actually used for product and service innovation, R&D investment, and integrating industry resources to enhance brand awareness for the six months ended June 30, 2025 - Net proceeds from the global offering amounted to approximately **HKD 1,526.2 million**[172](index=172&type=chunk) - The Board resolved on **March 30, 2023**, and **August 22, 2024**, to change the use of unutilized net proceeds[173](index=173&type=chunk) Actual Use of Proceeds for the Six Months Ended June 30, 2025 | Use of Proceeds | Planned Application Amount (HKD million) | Unutilized Funds as of December 31, 2024 (HKD million) | Actual Use During Period (HKD million) | Unutilized Funds as of June 30, 2025 (HKD million) | Expected Full Utilization Timeline | | :--- | :--- | :--- | :--- | :--- | :--- | | Expansion and upgrading of existing hair transplant medical institutions | – | – | – | – | Not applicable | | Product and service innovation | 88.6 | 78.3 | 20.3 | 58.0 | Before December 2025 | | Investment in R&D, enhancing service system | 38.2 | 30.2 | 8.6 | 21.6 | Before December 2025 | | Integration of industry resources to enhance brand awareness | 122.3 | 112.4 | 41.7 | 70.7 | Before December 2025 | | Settlement of acquisition consideration for Prominent Hair Transplant | – | – | – | – | Not applicable | | Working capital and general corporate purposes | 251.0 | 88.4 | 88.4 | – | Not applicable | | **Total** | **500.1** | **309.3** | **159.0** | **150.3** | | [Compliance with Relevant Laws and Regulations](index=36&type=section&id=Compliance%20with%20Relevant%20Laws%20and%20Regulations) The Group complied with all material aspects of relevant laws and regulations significantly affecting its business and operations during the reporting period, with no material non-compliance; it implemented internal control policies and procedures to promote compliance, continuously rectifying non-compliance issues, ensuring all operating medical institutions hold practice licenses, actively addressing fire safety and drainage permits, and obtaining local health department approvals for all medical advertisements - The Group complied with all material aspects of relevant laws and regulations significantly affecting its business and operations during the reporting period, with no material non-compliance[178](index=178&type=chunk)[179](index=179&type=chunk) - A series of internal control policies, measures, and procedures have been adopted and implemented, and are regularly reviewed and improved to strengthen corporate governance practices and the effectiveness of internal control procedures[178](index=178&type=chunk)[180](index=180&type=chunk) - As of now, all operating medical institutions hold practice licenses[181](index=181&type=chunk) - Some medical institutions in Quanzhou and Lanzhou are actively applying for fire safety control procedures and drainage permits, while others have been properly completed[181](index=181&type=chunk) - All medical institutions obtained approval certificates for medical advertisements from local health authorities when publishing relevant advertisements[181](index=181&type=chunk) - Strict standards are applied to the review of leased properties, ensuring no title defects for new properties; **42 leased properties** have been registered, with the remainder undergoing filing and registration[187](index=187&type=chunk) - During the reporting period, all surgeries performed in medical institutions were conducted by or under the supervision of doctors holding medical aesthetic principal qualifications[187](index=187&type=chunk) [Changes in Directors' Information](index=37&type=section&id=Changes%20in%20Directors'%20Information) As of the report date, Non-executive Director Mr. Geng Jiaqi resigned as a non-executive director of Beauty Farm Medical and Health Industry Inc. effective August 18, 2025; no other changes in directors' information requiring disclosure occurred during the reporting period - Non-executive Director Mr. Geng Jiaqi resigned as a non-executive director of Beauty Farm Medical and Health Industry Inc. effective **August 18, 2025**[183](index=183&type=chunk)[184](index=184&type=chunk) - Save for the above disclosure, there were no other changes in Directors' information required to be disclosed under Rule 13.51B(1) of the Listing Rules during the reporting period and up to the date of this interim report[183](index=183&type=chunk)[185](index=185&type=chunk) [Directors' and Chief Executive's Interests and Short Positions in Shares, Underlying Shares and Debentures of the Company or its Associated Corporations](index=37&type=section&id=Directors'%20and%20Chief%20Executive's%20Interests%20and%20Short%20Positions%20in%20Shares%2C%20Underlying%20Shares%20and%20Debentures%20of%20the%20Company%20or%20its%20Associated%20Corporations) As of June 30, 2025, Directors and the Chief Executive held interests in the Company's shares, with Mr. Zhang Yu holding 30.74% and 3.81% through a discretionary trust and controlled corporation, Mr. Zhang Hui holding 4.57% and 0.05% through a discretionary trust and as beneficial owner, Mr. Geng Jiaqi holding 0.13% through a controlled corporation, and Ms. Han Zhimei beneficially owning 0.07% Directors' and Chief Executive's Share Interests (As of June 30, 2025) | Director Name | Capacity/Nature of Interest | Number of Issued Shares Held | Approximate % of Issued Share Capital | | :--- | :--- | :--- | :--- | | Mr. Zhang Yu | Founder of a discretionary trust | 161,531,916 (L) | 30.74% | | | Interest in a controlled corporation | 20,000,000 (L) | 3.81% | | Mr. Zhang Hui | Founder of a discretionary trust | 24,000,000 (L) | 4.57% | | | Beneficial owner | 285,766 (L) | 0.05% | | Mr. Geng Jiaqi | Interest in a controlled corporation | 658,668 (L) | 0.13% | | Ms. Han Zhimei | Beneficial owner | 362,564 (L) | 0.07% | - Shareholding percentages are calculated based on the total number of **525,472,416 shares** issued by the Company as of **June 30, 2025**[191](index=191&type=chunk) [Substantial Shareholders' Interests and Short Positions in Shares and Underlying Shares](index=39&type=section&id=Substantial%20Shareholders'%20Interests%20and%20Short%20Positions%20in%20Shares%20and%20Underlying%20Shares) As of June 30, 2025, substantial shareholders held interests in the Company's shares, with ZY Investment Capital Ltd and its affiliates holding 30.74%, Yonghe Hair Service Holdings Limited and its affiliates holding 17.48%, Panmao (Shanghai) Investment Center (Limited Partnership) and its affiliates holding 34.97%, CITIC Securities Company Limited and its affiliates holding 35.09% long position and 0.12% short position, and Frandor Limited and its affiliates holding 35.31% Substantial Shareholders' Share Interests (As of June 30, 2025) | Substantial Shareholder Name | Capacity/Nature of Interest | Number of Issued Shares Held | Approximate % of Issued Share Capital | | :--- | :--- | :--- | :--- | | ZY Investment Capital Ltd | Beneficial owner | 161,531,916 (L) | 30.74% | | ZY Ventures Ltd | Interest in a controlled corporation | 161,531,916 (L) | 30.74% | | Yonghe Hair Service Holdings Limited | Beneficial owner; jointly interested with another person | 91,866,668 (L) | 17.48% | | Panmao (Shanghai) Investment Center (Limited Partnership) | Interest in a controlled corporation | 183,733,336 (L) | 34.97% | | Shanghai Pan Nuo Enterprise Management Service Co., Ltd. | Interest in a controlled corporation | 183,733,336 (L) | 34.97% | | CITIC Private Equity Funds Management Co., Ltd. | Interest in a controlled corporation | 183,733,336 (L) | 34.97% | | CYH Cosmetic Medical Holdings Limited | Beneficial owner; jointly interested with another person | 91,866,668 (L) | 17.48% | | CYH Cosmetic Medical Investment Limited | Interest in a controlled corporation | 183,733,336 (L) | 34.97% | | CPEChina Fund II, L.P. | Interest in a controlled corporation; jointly interested with another person | 183,733,336 (L) | 34.97% | | CPEChina Fund IIA, L.P. | Interest in a controlled corporation; jointly interested with another person | 183,733,336 (L) | 34.97% | | Citron PE Associates II, L.P. | Interest in a controlled corporation | 183,733,336 (L) | 34.97% | | Citron PE Funds II Limited | Interest in a controlled corporation | 183,733,336 (L) | 34.97% | | Citron PE Holdings Limited | Interest in a controlled corporation | 183,733,336 (L) | 34.97% | | CITIC Securities Company Limited | Interest in a controlled corporation | 184,388,336 (L) | 35.09% | | | | 655,000 (S) | 0.12% | | Frandor Limited | Interest in a controlled corporation | 185,531,916 (L) | 35.31% | | Trident Trust Company (Singapore) Pte Limited | Interest in a controlled corporation | 185,531,916 (L) | 35.31% | - Shareholding percentages are calculated based on the total number of **525,472,416 shares** issued by the Company as of **June 30, 2025**[199](index=199&type=chunk) [Contractual Arrangements](index=42&type=section&id=Contractual%20Arrangements) Due to foreign investment equity restrictions in Chinese medical institutions, the Group effectively controls the operations and receives economic benefits from its Variable Interest Entities (VIE Entities) through a series of contractual arrangements with Beijing Xunyii and its registered shareholders; the Board confirmed no material changes to these arrangements or their adoption status, and no termination events - The Group primarily engages in hair transplant medical services and medical hair care services, which fall under the "Restricted Category" of China's "Special Administrative Measures for Foreign Investment Access (Negative List) (2021 Edition)"[202](index=202&type=chunk)[204](index=204&type=chunk) - As a foreign entity, the Company's equity in medical institutions in Sichuan Province may not exceed **90%**, and in other provinces, it may not exceed **70%**[202](index=202&type=chunk)[205](index=205&type=chunk) - The Group effectively controls the operations and receives economic benefits from its Variable Interest Entities (VIE Entities) through a series of contractual arrangements with Beijing Xunyii and its registered shareholders[202](index=202&type=chunk)[205](index=205&type=chunk) - The Board confirmed no material changes to the contractual arrangements and/or their adoption status and impact on the Group, nor any termination of the contractual arrangements[207](index=207&type=chunk)[210](index=210&type=chunk)[211](index=211&type=chunk) [Share Incentive Schemes](index=43&type=section&id=Share%20Incentive%20Schemes) The Company established the "8% Employee Share Scheme" and "6% Employee Share Scheme" on March 31, 2020; under the 8% scheme, shares awarded to Mr. Zhang Yu have fully vested, while those for eligible employees will vest upon completion of service, with no shares granted, cancelled, or lapsed during the reporting period; under the 6% scheme, shares issued to ZY Investment Capital Ltd have fully vested - The "8% Employee Share Scheme" and "6% Employee Share Scheme" were established on **March 31, 2020**[208](index=208&type=chunk)[212](index=212&type=chunk) - Under the 8% Employee Share Scheme, Mr. Zhang Yu and eligible employees were granted **5,000,000 shares** and **3,000,000 shares**, respectively[208](index=208&type=chunk)[213](index=213&type=chunk) - Shares granted to Mr. Zhang Yu fully vested in **May 2021**, while shares for eligible employees will vest upon completion of their service period[208](index=208&type=chunk)[213](index=213&type=chunk) - During the reporting period, no shares were granted, cancelled, or lapsed under the 8% Employee Share Scheme[214](index=214&type=chunk) - Under the 6% Employee Share Scheme, the Company issued **6,382,979 shares** to ZY Investment Capital Ltd on **April 26, 2021**, which have fully vested[214](index=214&type=chunk) [2022 Restricted Share Unit Scheme](index=44&type=section&id=2022%20Restricted%20Share%20Unit%20Scheme) The Board approved and adopted the 2022 Restricted Share Unit Scheme on July 26, 2022, to incentivize and retain contributors to the Group's development; the scheme has a ten-year validity, with total shares that can be granted not exceeding 10% of the Company's issued share capital, and no restricted share units had been granted as of June 30, 2025 - The Board approved and adopted the 2022 Restricted Share Unit Scheme on **July 26, 2022**, aiming to incentivize and retain transferees who contribute to the Group's development[215](index=215&type=chunk)[217](index=217&type=chunk) - The scheme is valid for **ten (10) years** from the adoption date[215](index=215&type=chunk)[217](index=217&type=chunk) - The total number of shares that can be granted under the scheme does not exceed **10%** (**52,551,941 shares**) of the Company's issued share capital[215](index=215&type=chunk)[217](index=217&type=chunk) - As of **June 30, 2025**, no restricted share units had been granted by the Group[215](index=215&type=chunk)[217](index=217&type=chunk) [Repurchase, Sale or Redemption of the Company's Listed Securities](index=44&type=section&id=Repurchase%2C%20Sale%20or%20Redemption%20of%20the%20Company's%20Listed%20Securities) For the six months ended June 30, 2025, the Company repurchased a total of 100,000 shares on the Stock Exchange, representing 0.019% of total share capital, for approximately HKD 90,125, which the Board believes demonstrates confidence in business development; 47,000 shares were cancelled on June 5, 2025, reducing issued shares, while 248,000 repurchased shares remained uncancelled and held as treasury shares with no intention of use - For the six months ended June 30, 2025, the Company repurchased a total of **100,000 shares** on the Stock Exchange, representing **0.019%** of the total share capital[216](index=216&type=chunk)[218](index=218&type=chunk) Monthly Share Repurchase Report (April 2025) | Repurchase Month | Number of Shares Repurchased | Highest Price Per Share (HKD) | Lowest Price Per Share (HKD) | Total Amount (HKD) | | :--- | :--- | :--- | :--- | :--- | | April 2025 | 100,000 | 0.91 | 0.90 | 90,125 | - The Board believes that the share repurchases demonstrate the Company's confidence in its business development and prospects, aligning with the overall interests of the Company and its shareholders[221](index=221&type=chunk)[224](index=224&type=chunk) - On **June 5, 2025**, the Company cancelled **47,000 shares**, reducing the number of issued shares to **525,472,416**[221](index=221&type=chunk)[225](index=225&type=chunk) - As of June 30, 2025, **248,000 repurchased shares** remained uncancelled, held by the Company as treasury shares, with no intention of use[221](index=221&type=chunk)[225](index=225&type=chunk) - During the reporting period, neither the Group nor any of its subsidiaries repurchased, sold, or redeemed any of the Company's listed securities (including the sale of treasury shares)[226](index=226&type=chunk) [Interim Dividend](index=45&type=section&id=Interim%20Dividend) The Board resolved not to declare an interim dividend for the six months ended June 30, 2025 - The Board resolved not to declare an interim dividend for the six months ended June 30, 2025[222](index=222&type=chunk)[227](index=227&type=chunk) [Events After Reporting Period](index=45&type=section&id=Events%20After%20Reporting%20Period) Save for those disclosed in this report, there were no material events after the reporting period that could affect the Group - Save for those disclosed in this report, there were no material events after the reporting period that could affect the Group[223](index=223&type=chunk)[228](index=228&type=chunk) [Review Report on Interim Financial Information](index=46&type=section&id=Review%20Report%20on%20Interim%20Financial%20Information) PricewaterhouseCoopers reviewed Yonghe Medical Group's interim financial information for the six months ended June 30, 2025, in accordance with Hong Kong Standard on Review Engagements 2410; the review scope is less than an audit, thus no audit opinion is expressed, and no matters were found to suggest the interim financial information was not prepared in all material respects in accordance with Hong Kong Accounting Standard 34 "Interim Financial Reporting" - PricewaterhouseCoopers reviewed Yonghe Medical Group's interim financial information for the six months ended June 30, 2025[230](index=230&type=chunk)[233](index=233&type=chunk) - 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", with a scope less than an audit, thus no audit opinion is expressed[231](index=231&type=chunk)[234](index=234&type=chunk) - The auditor found no matters that would lead them to believe the interim financial information was not prepared in all material respects in accordance with Hong Kong Accounting Standard 34 "Interim Financial Reporting"[232](index=232&type=chunk)[235](index=235&type=chunk) [Interim Condensed Consolidated Statement of Comprehensive Income](index=47&type=section&id=Interim%20Condensed%20Consolidated%20Statement%20of%20Comprehensive%20Income) For the six months ended June 30, 2025, Yonghe Medical Group achieved RMB 861.6 million in revenue and RMB 550.3 million in gross profit, successfully turning a profit of RMB 27.9 million for the period, compared to a loss of RMB 138.6 million in the prior year, with basic and diluted earnings per share both at RMB 0.06 Summary of Interim Condensed Consolidated Statement of Comprehensive Income | Indicator | 2025 (RMB thousand) | 2024 (RMB thousand) | | :--- | :--- | :--- | | Revenue from contracts with customers | 861,550 | 900,203 | | Cost of sales and services | (311,227) | (370,766) | | Gross profit | 550,323 | 529,437 | | Selling and marketing expenses | (381,408) | (462,573) | | General and administrative expenses | (112,092) | (140,970) | | Research and development expenses | (9,053) | (12,425) | | Operating profit/(loss) | 44,695 | (130,649) | | Profit/(Loss) before income tax | 37,809 | (146,699) | | Profit/(Loss) for the period | 27,855 | (138,648) | | Basic earnings/(loss) per share attributable to equity holders of the Company (RMB) | 0.06 | (0.28) | | Diluted earnings/(loss) per share attributable to equity holders of the Company (RMB) | 0.06 | (0.28) | [Interim Condensed Consolidated Statement of Financial Position](index=48&type=section&id=Interim%20Condensed%20Consolidated%20Statement%20of%20Financial%20Position) As of June 30, 2025, Yonghe Medical Group's total assets were RMB 1,614.5 million, total equity RMB 741.6 million, and total liabilities RMB 872.8 million; cash and cash equivalents increased to RMB 555.9 million, while non-c

Corporate Information [Board of Directors and Committees](index=3&type=section&id=Board%20of%20Directors%20and%20Committees) This section discloses the company's board members, their committee roles, and updates on resignations and appointments - Mr. Du Yingyou resigned as an executive director on **March 17, 2025**[3](index=3&type=chunk) - Mr. Chen Guanyong resigned as an independent non-executive director and exited the audit, remuneration, and nomination committees on **May 22, 2025**[3](index=3&type=chunk)[4](index=4&type=chunk)[5](index=5&type=chunk) - Mr. Zhang Yao was appointed as a member of the audit and remuneration committees, and the nomination committee on **May 22, 2025**[3](index=3&type=chunk)[4](index=4&type=chunk)[5](index=5&type=chunk) - Ms. Liu Ping and Dr. Wang Yi were appointed as members of the nomination committee on **June 19, 2025**[4](index=4&type=chunk)[5](index=5&type=chunk) [Company Details and Contact Information](index=4&type=section&id=Company%20Details%20and%20Contact%20Information) This section provides the company's basic registration information, headquarters, Hong Kong principal place of business, share registrar, principal bankers, stock exchange code, and website - The company secretary is Mr. Chen Zengwu[6](index=6&type=chunk) - The company's headquarters are located at CITIC Plaza, Tianhe North Road, Guangzhou, China[6](index=6&type=chunk)[7](index=7&type=chunk) - The company's shares are listed on the Main Board of The Stock Exchange of Hong Kong Limited, stock code **1529**[7](index=7&type=chunk)[8](index=8&type=chunk) Financial Statements [Condensed Consolidated Statement of Profit or Loss](index=5&type=section&id=Condensed%20Consolidated%20Statement%20of%20Profit%20or%20Loss) For the six months ended June 30, 2025, revenue significantly increased by **96.1%** to **RMB 185.7 million**, while loss for the period narrowed to **RMB 3.5 million**, driven by cost control and strong growth in transportation services Condensed Consolidated Statement of Profit or Loss Key Data | Indicator | Six Months Ended June 30, 2025 (RMB thousand) | Six Months Ended June 30, 2024 (RMB thousand) | | :--- | :--- | :--- | | Revenue | 185,656 | 94,701 | | Other income and net gains | 2,983 | 3,895 | | Loss on disposal of subsidiaries | (2,075) | – | | Employee benefits expenses | (26,848) | (36,793) | | Sub-contracting expenses | (137,789) | (48,070) | | Finance costs | (523) | (2,145) | | Other expenses | (17,962) | (21,498) | | Loss before tax | (1,282) | (13,463) | | Loss for the period | (3,454) | (13,224) | | Basic loss per share (RMB cents) | (0.5445) | (7.6560) | [Condensed Consolidated Statement of Comprehensive Income](index=6&type=section&id=Condensed%20Consolidated%20Statement%20of%20Comprehensive%20Income) For the six months ended June 30, 2025, total comprehensive expense significantly decreased to **RMB 2.9 million**, a notable improvement from **RMB 14.8 million** in the prior period, primarily due to a narrower loss and positive exchange differences Condensed Consolidated Statement of Comprehensive Income Key Data | Indicator | Six Months Ended June 30, 2025 (RMB thousand) | Six Months Ended June 30, 2024 (RMB thousand) | | :--- | :--- | :--- | | Loss for the period | (3,454) | (13,224) | | Exchange differences arising from translation of overseas operations | 598 | (1,604) | | Total comprehensive expense for the period | (2,856) | (14,828) | | Attributable to owners of the Company | (1,714) | (12,192) | | Attributable to non-controlling interests | (1,142) | (2,636) | [Condensed Consolidated Statement of Financial Position](index=7&type=section&id=Condensed%20Consolidated%20Statement%20of%20Financial%20Position) As of June 30, 2025, total assets increased to **RMB 276.1 million**, total equity significantly grew to **RMB 190.0 million** mainly due to rights issue proceeds, while non-current liabilities substantially decreased Condensed Consolidated Statement of Financial Position Key Data | Indicator | June 30, 2025 (RMB thousand) | December 31, 2024 (RMB thousand) | | :--- | :--- | :--- | | Total non-current assets | 33,349 | 85,722 | | Total current assets | 242,719 | 171,105 | | Total assets | 276,068 | 256,827 | | Total equity | 190,023 | 133,418 | | Total non-current liabilities | 723 | 12,696 | | Total current liabilities | 85,322 | 110,713 | | Total liabilities | 86,045 | 123,409 | [Condensed Consolidated Statement of Changes in Equity](index=9&type=section&id=Condensed%20Consolidated%20Statement%20of%20Changes%20in%20Equity) For the six months ended June 30, 2025, total equity increased to **RMB 190.0 million**, primarily driven by **RMB 59.8 million** from rights issue proceeds, despite a loss for the period Condensed Consolidated Statement of Changes in Equity Key Data | Indicator | June 30, 2025 (RMB thousand) | January 1, 2024 (RMB thousand) | | :--- | :--- | :--- | | Total equity at beginning of period | 133,418 | 143,808 | | Loss for the period | (3,454) | (13,224) | | Exchange differences arising from translation of overseas operations | 598 | (1,604) | | Proceeds from rights issue | 59,759 | N/A | | Reversal of non-controlling interests on disposal of subsidiaries | (298) | N/A | | Total equity at end of period | 190,023 | 145,454 | [Condensed Consolidated Statement of Cash Flows](index=10&type=section&id=Condensed%20Consolidated%20Statement%20of%20Cash%20Flows) For the six months ended June 30, 2025, net cash from operating activities turned into a net inflow of **RMB 20.3 million**, cash flow from financing activities significantly increased, and cash and cash equivalents at period-end rose to **RMB 123.7 million** Condensed Consolidated Statement of Cash Flows Key Data | Indicator | Six Months Ended June 30, 2025 (RMB thousand) | Six Months Ended June 30, 2024 (RMB thousand) | | :--- | :--- | :--- | | Net cash generated from/(used in) operating activities | 20,345 | (25,694) | | Net cash (used in)/generated from investing activities | (664) | 25,450 | | Net cash generated from financing activities | 53,662 | 6,447 | | Net increase in cash and cash equivalents | 73,343 | 6,203 | | Cash and cash equivalents at end of period | 123,664 | 82,796 | Notes to the Condensed Consolidated Financial Statements [1. GENERAL INFORMATION](index=11&type=section&id=1.%20GENERAL%20INFORMATION) This section outlines Le Shi International Holdings Group Limited's registration, principal places of business, business scope (transportation, warehousing, logistics, customized services, and goat milk powder sales), and its listing on the Hong Kong Stock Exchange Main Board - The company is incorporated in the Cayman Islands, with its headquarters in Guangzhou, China, and a principal place of business in Hong Kong[17](index=17&type=chunk)[20](index=20&type=chunk) - Its principal activities include transportation, warehousing, in-plant logistics, customized services, and the sale of goat milk powder and other products[18](index=18&type=chunk)[20](index=20&type=chunk) - The condensed consolidated financial statements for the six months ended June 30, 2025, are unaudited but have been reviewed by the audit committee[19](index=19&type=chunk)[20](index=20&type=chunk) [2. BASIS OF PREPARATION AND ACCOUNTING POLICIES](index=12&type=section&id=2.%20BASIS%20OF%20PREPARATION%20AND%20ACCOUNTING%20POLICIES) This section explains that the condensed consolidated financial statements are prepared in accordance with HKFRSs, adopting all newly revised HKFRSs, which have no material impact on the current period's financial information - The financial statements are prepared in accordance with Hong Kong Financial Reporting Standards (HKFRSs) and adopt all new and revised standards effective January 1, 2025[21](index=21&type=chunk)[22](index=22&type=chunk)[24](index=24&type=chunk) - The accounting policies applied in this period are consistent with the consolidated financial statements for the year ended December 31, 2024, with no material impact from new standards[23](index=23&type=chunk)[24](index=24&type=chunk) [3. REVENUE](index=13&type=section&id=3.%20REVENUE) This section details the company's revenue from customer contracts, including transportation, warehousing, in-plant logistics, customized services, and goat milk powder sales, explaining performance obligations and revenue recognition timing for each service type Revenue by Service Type | Service Type | Six Months Ended June 30, 2025 (RMB thousand) | Six Months Ended June 30, 2024 (RMB thousand) | | :--- | :--- | :--- | | Transportation services | 148,780 | 48,746 | | Warehousing services | 7,440 | 17,509 | | In-plant logistics services | 26,757 | 27,617 | | Customized services | 740 | 829 | | Sales of goat milk powder and other products | 1,939 | – | | **Total** | **185,656** | **94,701** | - Revenue from transportation, warehousing, and in-plant logistics services is recognized over time, while customized services and goat milk powder sales revenue are recognized at a point in time[30](index=30&type=chunk)[31](index=31&type=chunk) - Transportation services primarily cover various regions in China, warehousing services are provided in China's warehouses, and in-plant logistics services are offered at customer production facilities[29](index=29&type=chunk) - Customized services include labeling and packaging, and goat milk powder sales primarily involve dairy product sales[32](index=32&type=chunk) [4. SEGMENT INFORMATION](index=16&type=section&id=4.%20SEGMENT%20INFORMATION) This section discloses operating segment revenue and results by service type, based on internal reports reviewed by the chief operating decision maker, and provides non-current asset information by geographical location, indicating the group primarily operates in China Segment Revenue and Results for the Six Months Ended June 30, 2025 | Segment | Revenue (RMB thousand) | Segment Results (RMB thousand) | | :--- | :--- | :--- | | Transportation services | 148,780 | 12,485 | | Warehousing services | 7,440 | (1,019) | | In-plant logistics services | 26,757 | 3,668 | | Customized services | 740 | 477 | | Sales of goat milk powder and other products | 1,939 | 48 | | **Total** | **185,656** | **15,659** | Segment Revenue and Results for the Six Months Ended June 30, 2024 | Segment | Revenue (RMB thousand) | Segment Results (RMB thousand) | | :--- | :--- | :--- | | Transportation services | 48,746 | 3,305 | | Warehousing services | 17,509 | (55) | | In-plant logistics services | 27,617 | 3,249 | | Customized services | 829 | 182 | | **Total** | **94,701** | **6,681** | - For the six months ended June 30, 2025, approximately **100%** of external customer revenue was derived from China (2024: approximately **96%**)[42](index=42&type=chunk)[44](index=44&type=chunk) Non-current Assets by Geographical Location | Region | June 30, 2025 (RMB thousand) | December 31, 2024 (RMB thousand) | | :--- | :--- | :--- | | China | 19,373 | 63,175 | | Hong Kong | 188 | 306 | | **Total** | **19,561** | **63,481** | [5. OTHER INCOME AND NET GAINS](index=19&type=section&id=5.%20OTHER%20INCOME%20AND%20NET%20GAINS) For the six months ended June 30, 2025, other income and net gains amounted to **RMB 3.0 million**, a decrease from **RMB 3.9 million** in the prior period, primarily due to reduced interest income from loans receivable Other Income and Net Gains | Item | Six Months Ended June 30, 2025 (RMB thousand) | Six Months Ended June 30, 2024 (RMB thousand) | | :--- | :--- | :--- | | Interest income from bank deposits | 205 | 313 | | Interest income from loans receivable | 1,055 | 1,676 | | Interest income from rental deposits | – | 17 | | Net exchange gains | 1,751 | 1,730 | | Others | (28) | 159 | | **Total** | **2,983** | **3,895** | [6. FINANCE COSTS](index=19&type=section&id=6.%20FINANCE%20COSTS) For the six months ended June 30, 2025, finance costs significantly decreased by **75.6%** to **RMB 0.5 million**, primarily attributable to reduced bank loan interest following the disposal of Haihui Group Finance Costs | Item | Six Months Ended June 30, 2025 (RMB thousand) | Six Months Ended June 30, 2024 (RMB thousand) | | :--- | :--- | :--- | | Interest on bank borrowings | 260 | 1,470 | | Interest on lease liabilities | 263 | 675 | | **Total** | **523** | **2,145** | [7. OTHER EXPENSES](index=20&type=section&id=7.%20OTHER%20EXPENSES) For the six months ended June 30, 2025, total other expenses were **RMB 18.0 million**, a decrease from **RMB 21.5 million** in the prior period, mainly due to optimization of various operating expenses Other Expenses Details | Item | Six Months Ended June 30, 2025 (RMB thousand) | Six Months Ended June 30, 2024 (RMB thousand) | | :--- | :--- | :--- | | Auditor's remuneration | 380 | 1,364 | | Cost of inventories | 1,891 | – | | Entertainment expenses | 641 | 1,030 | | Lease payments relating to short-term leases | 2,009 | 2,861 | | Fleet operating expenses | 1,825 | 289 | | Insurance expenses | 315 | 301 | | Legal and professional fees | 2,139 | 1,357 | | Other taxes and surcharges | 269 | 156 | | Outsourcing labor costs | 5,658 | 4,426 | | Repair and maintenance expenses | 224 | 899 | | Telephone and telecommunication expenses | 177 | 185 | | Travel expenses | 435 | 714 | | Utility expenses | 292 | 251 | | Other operating expenses | 1,707 | 7,665 | | **Total** | **17,962** | **21,498** | [8. INCOME TAX (EXPENSE)/CREDIT](index=21&type=section&id=8.%20INCOME%20TAX%20%28EXPENSE%29%2FCREDIT) For the six months ended June 30, 2025, the company recorded an income tax expense of **RMB 2.2 million**, compared to an income tax credit of **RMB 0.2 million** in the prior period, primarily due to current period China corporate income tax Income Tax (Expense)/Credit | Item | Six Months Ended June 30, 2025 (RMB thousand) | Six Months Ended June 30, 2024 (RMB thousand) | | :--- | :--- | :--- | | China corporate income tax — Current period | (2,172) | – | | China corporate income tax — Over-provision | – | 29 | | Other jurisdictions — Current period | – | (575) | | Deferred tax — Current period | – | 785 | | **Income tax (expense)/credit** | **(2,172)** | **239** | - Hong Kong profits tax is calculated at **16.5%**, but no provision was made as no income arose in Hong Kong[51](index=51&type=chunk)[54](index=54&type=chunk) - China corporate income tax is calculated at **25%**, but some subsidiaries enjoy a **15%** preferential tax rate due to high-tech enterprise status, and no provision was made due to tax losses[52](index=52&type=chunk)[54](index=54&type=chunk) [9. LOSS PER SHARE](index=22&type=section&id=9.%20LOSS%20PER%20SHARE) For the six months ended June 30, 2025, basic and diluted loss per share was **RMB 0.5445 cents**, a significant reduction from **RMB 7.6560 cents** in the prior period, mainly due to a decrease in loss and the impact of share consolidation and rights issue Loss Per Share Calculation Data | Indicator | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 (Restated) | | :--- | :--- | :--- | | Loss for the period attributable to owners of the Company (RMB thousand) | (2,312) | (10,588) | | Weighted average number of ordinary shares for basic loss per share | 424,599,431 | 138,297,073 | | Basic loss per share (RMB cents) | (0.5445) | (7.6560) | | Diluted loss per share (RMB cents) | (0.5445) | (7.6560) | - Basic loss per share for **2025** and **2024** has been adjusted to reflect the bonus element in the rights issue completed in May **2025**[58](index=58&type=chunk)[59](index=59&type=chunk) - The weighted average number of shares for basic and diluted loss per share for **2024** has also been retrospectively adjusted to reflect the impact of the share consolidation completed in November **2024**[58](index=58&type=chunk)[59](index=59&type=chunk) - For the six months ended June 30, 2025, no share options were exercised, lapsed, cancelled, or forfeited, and there were no potential ordinary shares arising from share options[58](index=58&type=chunk)[59](index=59&type=chunk) [10. TRADE AND OTHER RECEIVABLES](index=23&type=section&id=10.%20TRADE%20AND%20OTHER%20RECEIVABLES) As of June 30, 2025, current trade and other receivables increased to **RMB 107.0 million**, primarily due to higher trade receivables from customer contracts, with detailed disclosures on loans receivable and rental deposits Trade and Other Receivables | Item | June 30, 2025 (RMB thousand) | December 31, 2024 (RMB thousand) | | :--- | :--- | :--- | | Trade receivables from contracts with customers | 81,365 | 67,832 | | Prepayments | 15,301 | 8,439 | | Other receivables | 2,854 | 3,279 | | Rental deposits | 2,781 | 3,602 | | Loans receivable | 18,218 | 18,635 | | Less: Non-current portion | (13,511) | (20,563) | | **Current portion** | **107,008** | **81,224** | Ageing Analysis of Trade Receivables (Net of Impairment) | Ageing | June 30, 2025 (RMB thousand) | December 31, 2024 (RMB thousand) | | :--- | :--- | :--- | | Within 30 days | 75,362 | 63,292 | | 31 to 90 days | 2,883 | 3,141 | | 91 to 180 days | 894 | 206 | | Over 180 days | 2,226 | 1,193 | | **Total** | **81,365** | **67,832** | - As of June 30, 2025, total loans receivable amounted to approximately **RMB 24.8 million**, comprising **3** corporate loans and **1** individual loan, with annual interest rates ranging from approximately **6%** to **12%**, all unsecured[66](index=66&type=chunk)[67](index=67&type=chunk) [11. TRADE AND OTHER PAYABLES](index=26&type=section&id=11.%20TRADE%20AND%20OTHER%20PAYABLES) As of June 30, 2025, total trade and other payables increased to **RMB 75.8 million**, primarily due to a significant rise in trade payables, with supplier credit terms mainly ranging from **30** to **90** days Trade and Other Payables | Item | June 30, 2025 (RMB thousand) | December 31, 2024 (RMB thousand) | | :--- | :--- | :--- | | Trade payables | 71,659 | 38,695 | | Accrued employee benefits | 780 | 5,252 | | Other accrued expenses and other taxes payable | 489 | 1,829 | | Other payables | 2,902 | 2,518 | | **Total** | **75,830** | **48,294** | Ageing Analysis of Trade Payables | Ageing | June 30, 2025 (RMB thousand) | December 31, 2024 (RMB thousand) | | :--- | :--- | :--- | | 1 to 30 days | 40,785 | 28,757 | | 31 to 60 days | 11,558 | 4,012 | | 61 to 90 days | 17,890 | 1,616 | | Over 90 days | 1,426 | 4,310 | | **Total** | **71,659** | **38,695** | [12. SHARE CAPITAL](index=27&type=section&id=12.%20SHARE%20CAPITAL) As of June 30, 2025, the company's issued share capital increased to **667,080,000** shares with a par value of **HKD 0.1**, primarily due to the rights issue completed in May **2025**, raising net proceeds of approximately **HKD 67.6 million** Share Capital Movement | Item | Number of Shares | Share Capital (HKD) | | :--- | :--- | :--- | | Authorized share capital at January 1, 2024 | 10,000,000,000 | 100,000,000 | | Share consolidation (effective November 8, 2024) | (9,000,000,000) | – | | Authorized share capital at June 30, 2025 | 1,000,000,000 | 100,000,000 | | Issued and fully paid share capital at January 1, 2024 | 1,141,280,000 | 11,412,800 | | Shares issued through placing | 192,880,000 | 1,928,800 | | Share consolidation | (1,200,744,000) | – | | Issued and fully paid share capital at January 1, 2025 | 133,416,000 | 13,341,600 | | Shares to be issued under rights issue (May 16, 2025) | 533,664,000 | 53,366,400 | | Issued and fully paid share capital at June 30, 2025 | 667,080,000 | 66,708,000 | - On November 8, 2024, the company completed a share consolidation, where every **ten** shares of **HKD 0.01** par value were consolidated into **one** share of **HKD 0.10** par value[74](index=74&type=chunk) - On May 16, 2025, the company completed a rights issue, issuing **533,664,000** rights shares on a "one-for-four" basis, raising net proceeds of approximately **HKD 67.6 million**[74](index=74&type=chunk)[75](index=75&type=chunk) [13. DISPOSAL OF SUBSIDIARIES](index=29&type=section&id=13.%20DISPOSAL%20OF%20SUBSIDIARIES) This section discloses the company's disposal of a **60%** equity interest in Zhongshan Haihui Keqi Logistics (Group) Co., Ltd. for **RMB 1** and the transfer of a shareholder loan for **RMB 7 million** in January **2025**, resulting in a recognized disposal loss of approximately **RMB 2.1 million** for the period - On December 20, 2024, the company entered into an agreement to dispose of a **60%** equity interest in Zhongshan Haihui Keqi Logistics (Group) Co., Ltd. for a consideration of **RMB 1**[76](index=76&type=chunk)[80](index=80&type=chunk) - On the same day, the company entered into a loan transfer agreement with the buyer to transfer a shareholder loan for **RMB 7 million**[77](index=77&type=chunk)[80](index=80&type=chunk) - The disposal was approved at an extraordinary general meeting held on January 27, 2025, and the consideration was received before June 30, 2025[79](index=79&type=chunk)[80](index=80&type=chunk) - A loss on disposal of approximately **RMB 2.1 million** was recognized for the period ended June 30, 2025[11](index=11&type=chunk) [14. DIVIDEND](index=30&type=section&id=14.%20DIVIDEND) The Board does not recommend the payment of an interim dividend for the six months ended June 30, 2025 (2024: nil) - The Board does not recommend the payment of an interim dividend for the six months ended June 30, 2025[82](index=82&type=chunk)[84](index=84&type=chunk) [15. EVENTS AFTER THE REPORTING PERIOD](index=30&type=section&id=15.%20EVENTS%20AFTER%20THE%20REPORTING%20PERIOD) Subsequent to the reporting period, on July 8, 2025, the company acquired a **100%** equity interest in Bozhou Lelaohao Pharmaceutical Co., Ltd. for **RMB 0.9 million** to expand its pharmaceutical wholesale and distribution business and diversify operations - On July 8, 2025, the Group acquired a **100%** equity interest in Bozhou Lelaohao Pharmaceutical Co., Ltd. for a total consideration of **RMB 0.9 million**[83](index=83&type=chunk)[85](index=85&type=chunk) - The target company primarily engages in the wholesale and distribution of pharmaceuticals, sales of Class I and Class II medical devices, and wholesale of protective medical supplies for healthcare personnel[83](index=83&type=chunk)[85](index=85&type=chunk) - Upon completion of the acquisition, the target company became an indirect wholly-owned subsidiary of the Company, and its financial results are consolidated into the Group's financial statements[83](index=83&type=chunk)[85](index=85&type=chunk) Management Discussion and Analysis [BUSINESS REVIEW](index=31&type=section&id=BUSINESS%20REVIEW) This section outlines the Group's logistics services in China, including transportation, warehousing, in-plant logistics, customized services, and goat milk powder sales, noting a **96.1%** revenue increase in H1 2025 despite challenges like slowing manufacturing investment and rising outsourcing costs - The Group provides diversified logistics services including transportation, warehousing, in-plant logistics, customized services, and goat milk powder sales[87](index=87&type=chunk)[90](index=90&type=chunk) - In H1 2025, China's total social logistics volume grew by **5.6%**, and the Group's revenue significantly increased year-on-year, confirming successful strategic transformation[89](index=89&type=chunk)[91](index=91&type=chunk) - The Group faces challenges such as weakened manufacturing investment, insufficient market momentum leading to decreased warehouse utilization and transport volumes, and rising outsourcing costs and diesel prices[92](index=92&type=chunk)[94](index=94&type=chunk) - Through strict cost control, optimized organizational efficiency, digital approval implementation, and centralized procurement, the Group successfully narrowed its net loss in H1 2025[93](index=93&type=chunk)[94](index=94&type=chunk) [OUTLOOK](index=33&type=section&id=OUTLOOK) Looking ahead to H2 2025, China's logistics and warehousing sector will continue its transformation, with opportunities in intelligent upgrades, urban-rural network optimization, and emerging logistics (cold chain, pharmaceutical), as the Group pursues innovation-driven, efficiency-centric strategies - China's logistics and warehousing sector is expected to continue structural growth driven by government policies and market demand, with opportunities in intelligent upgrades and urban-rural network optimization[95](index=95&type=chunk)[97](index=97&type=chunk) - Emerging sectors like cold chain and pharmaceutical logistics will accelerate development, digital technologies (IoT, AI) will be deeply integrated, and green, low-carbon measures will become core competitive advantages[95](index=95&type=chunk)[97](index=97&type=chunk) - The industry faces challenges including regional supply-demand imbalance in warehousing facilities, energy price volatility, labor shortages, and accelerating market consolidation[96](index=96&type=chunk)[98](index=98&type=chunk) - The Group will implement an innovation-driven, efficiency-centric strategy, optimizing its warehousing network, introducing smart equipment, and expanding its Inner Mongolia goat milk product business and Fuzhou traditional Chinese medicine logistics facilities[99](index=99&type=chunk)[100](index=100&type=chunk) [FINANCIAL REVIEW](index=35&type=section&id=FINANCIAL%20REVIEW) This section provides a detailed review of the financial performance for the six months ended June 30, 2025, covering revenue, other income and net gains, loss on disposal of subsidiaries, various expenses, loss for the period, total comprehensive expense, liquidity, funding and treasury policies, gearing ratio, and capital structure [Revenue Analysis](index=35&type=section&id=Revenue%20Analysis) For the six months ended June 30, 2025, Group revenue surged by **96.1%** to **RMB 185.7 million**, primarily driven by a **205.5%** increase in transportation services revenue and expansion into new regions like Hangzhou and Inner Mongolia, while warehousing and in-plant logistics revenues declined, and goat milk powder business contributed **RMB 1.9 million** - For the six months ended June 30, 2025, revenue increased by **96.1%** year-on-year to **RMB 185.7 million**[101](index=101&type=chunk)[104](index=104&type=chunk) - Transportation services revenue grew by **205.5%** to **RMB 148.8 million**, benefiting from domestic demand recovery, government policy support, and business expansion into Hangzhou and Inner Mongolia[101](index=101&type=chunk)[104](index=104&type=chunk) - Warehousing services revenue decreased by **57.7%** to **RMB 7.4 million**, mainly due to reduced demand and the disposal of Haihui Group[102](index=102&type=chunk)[104](index=104&type=chunk) - Sales of goat milk powder and other products commenced in H1 2025, contributing **RMB 1.9 million** in revenue, representing a strategic move towards business diversification[107](index=107&type=chunk)[110](index=110&type=chunk) [Other income and net gains analysis](index=36&type=section&id=Other%20income%20and%20net%20gains%20analysis) For the six months ended June 30, 2025, other income and net gains amounted to **RMB 3.0 million**, a decrease from **RMB 3.9 million** in the prior period, primarily due to a decline of approximately **RMB 0.6 million** in interest income from loans receivable - Other income and net gains amounted to **RMB 3.0 million** (2024: **RMB 3.9 million**)[108](index=108&type=chunk)[111](index=111&type=chunk) - The primary reason for the decrease was a reduction of approximately **RMB 0.6 million** in interest income from loans receivable[108](index=108&type=chunk)[111](index=111&type=chunk) [Loss on disposal of subsidiaries](index=36&type=section&id=Loss%20on%20disposal%20of%20subsidiaries) Due to the disposal of a **60%** equity interest in Zhongshan Haihui Keqi Logistics (Group) Co., Ltd. in January **2025**, the Group recognized a disposal loss of approximately **RMB 2.1 million**, and its financial results are no longer consolidated - The disposal of a **60%** equity interest in Zhongshan Haihui Keqi Logistics (Group) Co., Ltd. in January **2025** resulted in a recognized disposal loss of approximately **RMB 2.1 million**[109](index=109&type=chunk)[112](index=112&type=chunk) [Employee benefits expenses](index=37&type=section&id=Employee%20benefits%20expenses) For the six months ended June 30, 2025, employee benefits expenses decreased by **27.0%** to **RMB 26.8 million**, primarily due to stringent cost control measures and reduced labor costs following the disposal of Haihui Group - Employee benefits expenses decreased from **RMB 36.8 million** to **RMB 26.8 million**[113](index=113&type=chunk)[115](index=115&type=chunk) - The decrease was due to stringent cost control and reduced labor costs after the disposal of Haihui Group[113](index=113&type=chunk)[115](index=115&type=chunk) [Sub-contracting expenses](index=37&type=section&id=Sub-contracting%20expenses) For the six months ended June 30, 2025, sub-contracting expenses significantly increased to **RMB 137.8 million**, primarily due to higher revenue during the period, particularly from growth in domestic transportation services and international freight forwarding orders - Sub-contracting expenses significantly increased from **RMB 48.1 million** to **RMB 137.8 million**[114](index=114&type=chunk)[116](index=116&type=chunk) - The increase was primarily attributable to higher revenue during the period, especially from domestic transportation services and international freight forwarding orders[114](index=114&type=chunk)[116](index=116&type=chunk) [Depreciation of right-of-use assets](index=38&type=section&id=Depreciation%20of%20right-of-use%20assets) For the six months ended June 30, 2025, depreciation of right-of-use assets was approximately **RMB 3.0 million**, slightly lower than **RMB 3.2 million** in the prior period, mainly related to leases of warehouses, office properties, and plant and machinery - Depreciation of right-of-use assets was approximately **RMB 3.0 million** (2024: **RMB 3.2 million**)[117](index=117&type=chunk)[120](index=120&type=chunk) - Depreciated assets include warehouses, office properties, temporary staff dormitories, and plant and machinery such as forklifts[117](index=117&type=chunk)[120](index=120&type=chunk) [Finance costs analysis](index=38&type=section&id=Finance%20costs%20analysis) For the six months ended June 30, 2025, finance costs significantly decreased from **RMB 2.1 million** to **RMB 0.5 million**, primarily due to reduced bank loan interest following the disposal of Haihui Group - Finance costs decreased from **RMB 2.1 million** to **RMB 0.5 million**[118](index=118&type=chunk)[121](index=121&type=chunk) - This was primarily attributable to reduced bank loan interest following the disposal of Haihui Group[118](index=118&type=chunk)[121](index=121&type=chunk) [Other expenses analysis](index=38&type=section&id=Other%20expenses%20analysis) For the six months ended June 30, 2025, total other expenses amounted to **RMB 18.0 million**, a decrease from **RMB 21.5 million** in the prior period, primarily comprising outsourcing labor costs, short-term lease payments, and legal and professional fees - Total other expenses amounted to **RMB 18.0 million** (2024: **RMB 21.5 million**)[119](index=119&type=chunk)[122](index=122&type=chunk) - Key components include outsourcing labor costs, short-term lease payments, auditor's remuneration, legal and professional fees, fleet operating expenses, and cost of inventories[119](index=119&type=chunk)[122](index=122&type=chunk) [Loss and total comprehensive expense for the period](index=39&type=section&id=Loss%20and%20total%20comprehensive%20expense%20for%20the%20period) For the six months ended June 30, 2025, the Group recorded a loss for the period of approximately **RMB 3.5 million** and total comprehensive expense of approximately **RMB 2.9 million**, significantly narrowed from **RMB 13.2 million** and **RMB 14.8 million** respectively in the prior period - Loss for the period was approximately **RMB 3.5 million** (2024: **RMB 13.2 million**)[123](index=123&type=chunk)[126](index=126&type=chunk) - Total comprehensive expense was approximately **RMB 2.9 million** (2024: **RMB 14.8 million**)[123](index=123&type=chunk)[126](index=126&type=chunk) [LIQUIDITY AND FINANCIAL RESOURCES](index=39&type=section&id=LIQUIDITY%20AND%20FINANCIAL%20RESOURCES) As of June 30, 2025, the Group's net current assets were approximately **RMB 157.4 million**, with cash and cash equivalents of approximately **RMB 123.7 million**, and the directors confirm sufficient financial resources to meet future obligations - As of June 30, 2025, net current assets were approximately **RMB 157.4 million** (December 31, 2024: **RMB 60.4 million**)[124](index=124&type=chunk)[127](index=127&type=chunk) - Cash and cash equivalents were approximately **RMB 123.7 million** (December 31, 2024: **RMB 49.7 million**), primarily denominated in HKD and RMB[124](index=124&type=chunk)[127](index=127&type=chunk) - The directors confirm that the Group will have sufficient financial resources to meet its obligations as they fall due in the foreseeable future[124](index=124&type=chunk)[127](index=127&type=chunk) [FUNDING AND TREASURY POLICIES](index=39&type=section&id=FUNDING%20AND%20TREASURY%20POLICIES) The Group's funding and treasury policies aim to ensure adequate financial resources for business and investment activities, prudently manage interest rate and foreign exchange risks, and maintain a robust balance sheet with ample liquidity - The policy objective is to ensure adequate financial resources for business and investment support, and prudent management of financial risks[125](index=125&type=chunk)[128](index=128&type=chunk) - Interest rate and foreign exchange risks are managed through a diversified funding base and financial instruments[125](index=125&type=chunk)[128](index=128&type=chunk) - The Group is committed to maintaining a robust balance sheet and ample liquidity to enhance financial flexibility and resilience[125](index=125&type=chunk)[128](index=128&type=chunk) [GEARING RATIO](index=40&type=section&id=GEARING%20RATIO) As of June 30, 2025, the Group was in a net cash position, with time deposits and cash equivalents exceeding bank and other borrowings and lease liabilities, thus the gearing ratio was not applicable (December 31, 2024: **4.9%**) - As of June 30, 2025, the Group was in a **net cash position**, and the gearing ratio was not applicable[130](index=130&type=chunk)[134](index=134&type=chunk) - The gearing ratio as of December 31, 2024, was **4.9%**[130](index=130&type=chunk)[134](index=134&type=chunk) [CAPITAL STRUCTURE](index=40&type=section&id=CAPITAL%20STRUCTURE) The Group's capital structure comprises issued share capital and reserves, which the Board regularly reviews and balances through dividends, new share issues, share repurchases, and debt management; a rights issue completed in May **2025** issued **533,664,000** new shares, raising net proceeds of approximately **HKD 67.6 million** - The capital structure consists of issued share capital and reserves, which the Board regularly reviews[131](index=131&type=chunk)[135](index=135&type=chunk) - On February 14, 2025, the company announced a rights issue to issue up to **533,664,000** rights shares on a "one-for-four" basis at a subscription price of **HKD 0.13** per share[133](index=133&type=chunk)[135](index=135&type=chunk) - The rights issue was completed on May 16, 2025, raising net proceeds of approximately **HKD 67.6 million** and issuing **533,664,000** rights shares[136](index=136&type=chunk)[142](index=142&type=chunk) - As of June 30, 2025, the company had **667,080,000** shares of **HKD 0.1** par value in issue[137](index=137&type=chunk)[142](index=142&type=chunk) [FOREIGN CURRENCY EXPOSURE](index=41&type=section&id=FOREIGN%20CURRENCY%20EXPOSURE) The Group's operations are primarily RMB-denominated in China, with some subsidiaries having foreign currency sales and purchases, exposing them to foreign exchange risk; currently, there is no hedging policy, but the Board will continue to monitor and consider hedging significant exposures - The Group's operations are primarily RMB-denominated in China, with some subsidiaries engaging in foreign currency transactions, leading to foreign exchange risk[138](index=138&type=chunk)[143](index=143&type=chunk) - Currently, there is no foreign currency hedging policy, but the Board will continue to monitor and consider hedging significant foreign exchange exposures[138](index=138&type=chunk)[143](index=143&type=chunk) [CHARGE ON THE GROUP'S ASSETS](index=41&type=section&id=CHARGE%20ON%20THE%20GROUP%27S%20ASSETS) As of June 30, 2025, the Group had no charges on its assets, except as disclosed in the report (December 31, 2024: nil) - As of June 30, 2025, the Group had no charges on its assets[139](index=139&type=chunk)[144](index=144&type=chunk) [CONTINGENT LIABILITIES](index=41&type=section&id=CONTINGENT%20LIABILITIES) As of June 30, 2025, the Group had no significant contingent liabilities, except as disclosed in the report (December 31, 2024: nil) - As of June 30, 2025, the Group had no significant contingent liabilities[140](index=140&type=chunk)[145](index=145&type=chunk) [CAPITAL COMMITMENTS](index=41&type=section&id=CAPITAL%20COMMITMENTS) As of June 30, 2025, the Group had no significant capital commitments (December 31, 2024: nil) - As of June 30, 2025, the Group had no significant capital commitments[141](index=141&type=chunk)[146](index=146&type=chunk) [SIGNIFICANT INVESTMENTS, MATERIAL ACQUISITIONS AND DISPOSALS OF SUBSIDIARIES AND AFFILIATED COMPANIES](index=42&type=section&id=SIGNIFICANT%20INVESTMENTS%2C%20MATERIAL%20ACQUISITIONS%20AND%20DISPOSALS%20OF%20SUBSIDIARIES%20AND%20AFFILIATED%20COMPANIES) For the six months ended June 30, 2025, the Group had no significant investments, material acquisitions, or disposals of subsidiaries and affiliated companies, except as disclosed in the report - For the six months ended June 30, 2025, the Group had no significant investments, material acquisitions, or disposals of subsidiaries and affiliated companies, except as disclosed in the report[147](index=147&type=chunk)[150](index=150&type=chunk) [EMPLOYEES AND REMUNERATION POLICIES](index=42&type=section&id=EMPLOYEES%20AND%20REMUNERATION%20POLICIES) As of June 30, 2025, the Group employed **574** full-time employees, with remuneration determined by qualifications, responsibilities, contributions, market conditions, and company policies, offering retirement scheme contributions, share options, and training - As of June 30, 2025, the Group employed **574** full-time employees (June 30, 2024: **640** employees)[148](index=148&type=chunk)[151](index=151&type=chunk) - Employee remuneration is determined based on qualifications, responsibilities, contributions, work experience, market conditions, and company policies[148](index=148&type=chunk)[151](index=151&type=chunk) - Employee benefits include retirement scheme contributions and share options, with both on-the-job training and external training sponsorships provided[148](index=148&type=chunk)[151](index=151&type=chunk) [FUTURE PLANS FOR MATERIAL INVESTMENTS OR CAPITAL ASSETS](index=42&type=section&id=FUTURE%20PLANS%20FOR%20MATERIAL%20INVESTMENTS%20OR%20CAPITAL%20ASSETS) As of June 30, 2025, the Group had no specific future plans for material investments or capital assets, except as disclosed in the report - As of June 30, 2025, the Group had no specific plans for material investments or capital assets, except as disclosed in the report[149](index=149&type=chunk)[152](index=152&type=chunk) [USE OF PROCEEDS](index=43&type=section&id=USE%20OF%20PROCEEDS) This section details the planned and actual use of proceeds from the **2023** Placing, **2024** Placing, and **2025** Rights Issue, covering smart logistics development, infrastructure investment, general working capital, Inner Mongolia goat milk product business, and Jiangxi traditional Chinese medicine logistics park warehouse construction [Use of proceeds from placing of new shares (2023 Placing)](index=43&type=section&id=Use%20of%20proceeds%20from%20placing%20of%20new%20shares%20%282023%20Placing%29) Net proceeds from the **2023** Placing were approximately **HKD 34.2 million**, of which **HKD 30.0 million** remained unutilized as of June 30, 2025, originally planned for smart logistics services, but the Board decided on July 25, 2025, to reallocate it to traditional Chinese medicine business development and general working capital - Net proceeds from the **2023** Placing were approximately **HKD 34.2 million**[153](index=153&type=chunk)[154](index=154&type=chunk) 2023 Placing Net Proceeds Utilization Analysis | Intended Use | Unutilized as of December 31, 2024 (HKD million) | Actually Utilized in Current Period (HKD million) | Unutilized as of June 30, 2025 (HKD million) | | :--- | :--- | :--- | :--- | | Development of smart logistics services business | 30.0 | – | 30.0 | - On July 25, 2025, the Board resolved to change the use of unutilized proceeds from "development of smart logistics services business" to "development of traditional Chinese medicine business" and "general working capital"[156](index=156&type=chunk) [Use of proceeds from placing of new shares (2024 Placing)](index=44&type=section&id=Use%20of%20proceeds%20from%20placing%20of%20new%20shares%20%282024%20Placing%29) Net proceeds from the **2024** Placing were approximately **HKD 18.5 million**, of which **HKD 7.7 million** remained unutilized as of June 30, 2025, planned for investment in logistics business infrastructure, expected to be utilized by the end of **2026** - Net proceeds from the **2024** Placing were approximately **HKD 18.5 million**[157](index=157&type=chunk)[158](index=158&type=chunk) 2024 Placing Net Proceeds Utilization Analysis | Intended Use | Unutilized as of December 31, 2024 (HKD million) | Actually Utilized in Current Period (HKD million) | Unutilized as of June 30, 2025 (HKD million) | | :--- | :--- | :--- | :--- | | Investment in logistics business infrastructure | 7.7 | – | 7.7 | - The remaining proceeds are expected to be utilized by or before the year ending December 31, 2026[160](index=160&type=chunk) [Use of proceeds from Rights Issue](index=45&type=section&id=Use%20of%20proceeds%20from%20Rights%20Issue) The **2025** Rights Issue raised net proceeds of approximately **HKD 67.6 million**, allocated for general working capital, Inner Mongolia goat milk product business development, and warehouse construction in Jiangxi's traditional Chinese medicine logistics industrial park; most funds remained unutilized as of June 30, 2025, and will be used as planned over the next one to two years - The Rights Issue raised net proceeds of approximately **HKD 67.6 million**[167](index=167&type=chunk)[169](index=169&type=chunk) Rights Issue Net Proceeds Utilization Analysis | Intended Use | Actually Utilized in Current Period (HKD million) | Unutilized as of June 30, 2025 (HKD million) | | :--- | :--- | :--- | | General working capital | 0.9 | 26.7 | | Development of goat milk product business in Inner Mongolia Autonomous Region | 4.7 | 15.3 | | Construction of warehouses and/or other logistics-related facilities in the Traditional Chinese Medicine Logistics Industrial Park in Jiangxi Province, China | – | 20.0 | - The remaining proceeds for general working capital and Jiangxi traditional Chinese medicine logistics facilities are expected to be utilized by the end of **2026**, while those for the goat milk product business are expected to be utilized by the end of **2025**[172](index=172&type=chunk) Corporate Governance and other Information [SHARE OPTION SCHEME](index=48&type=section&id=SHARE%20OPTION%20SCHEME) The company adopted a new share option scheme on November 23, 2023, replacing the previous one; as of June 30, 2025, no share options have been granted under the new scheme, with **11,412,800** options available for grant - The company adopted a new share option scheme on November 23, 2023, which became effective on November 29, 2023[173](index=173&type=chunk)[177](index=177&type=chunk) - The new scheme allows the Board to invite employees, directors, consultants, etc., to subscribe for shares, up to **10%** of the issued shares on the listing date[174](index=174&type=chunk)[177](index=177&type=chunk) - As of June 30, 2025, no share options have been granted, exercised, cancelled, or lapsed under the new share option scheme, and no outstanding share options exist[179](index=179&type=chunk)[181](index=181&type=chunk) - As of June 30, 2025, the number of share options available for grant under the scheme was **11,412,800**[176](index=176&type=chunk)[178](index=178&type=chunk) [DIRECTORS' AND CHIEF EXECUTIVE'S INTERESTS AND SHORT POSITIONS IN SHARES, UNDERLYING SHARES AND DEBENTURES](index=49&type=section&id=DIRECTORS%27%20AND%20CHIEF%20EXECUTIVE%27S%20INTERESTS%20AND%20SHORT%20POSITIONS%20IN%20SHARES%2C%20UNDERLYING%20SHARES%20AND%20DEBENTURES) As of June 30, 2025, no directors, chief executive, or their associates held any interests or short positions in the shares, underlying shares, or debentures of the company or any associated corporation that are required to be disclosed under the Securities and Futures Ordinance - As of June 30, 2025, no directors, chief executive, or their associates held any disclosable interests or short positions in the company's shares, underlying shares, or debentures[180](index=180&type=chunk)[182](index=182&type=chunk) [SUBSTANTIAL SHAREHOLDERS' INTERESTS AND SHORT POSITIONS IN SHARES AND UNDERLYING SHARES](index=50&type=section&id=SUBSTANTIAL%20SHAREHOLDERS%27%20INTERESTS%20AND%20SHORT%20POSITIONS%20IN%20SHARES%20AND%20UNDERLYING%20SHARES) As of June 30, 2025, to the best knowledge of the directors, no person other than a director or chief executive held any interests or short positions in the company's shares or underlying shares that are required to be disclosed under the Securities and Futures Ordinance - As of June 30, 2025, to the best knowledge of the directors, no person other than a director or chief executive held any disclosable interests or short positions in the company's shares or underlying shares[183](index=183&type=chunk)[186](index=186&type=chunk) [DIRECTORS' RIGHTS TO ACQUIRE SHARES OR DEBENTURES](index=50&type=section&id=DIRECTORS%27%20RIGHTS%20TO%20ACQUIRE%20SHARES%20OR%20DEBENTURES) For the six months ended June 30, 2025, except for the share option scheme, neither the company nor any of its subsidiaries was a party to any arrangement that would enable directors to acquire benefits by acquiring shares or debentures of the company or any other body corporate - For the six months ended June 30, 2025, except for the share option scheme, the company had no arrangements enabling directors to acquire benefits by acquiring shares or debentures[184](index=184&type=chunk)[187](index=187&type=chunk) [PURCHASE, SALE OR REDEMPTION OF THE COMPANY'S LISTED SECURITIES](index=50&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 any of its subsidiaries purchased, sold, or redeemed any of the company's listed securities, and the company held no treasury shares - For the six months ended June 30, 2025, neither the company nor its subsidiaries purchased, sold, or redeemed any listed securities[185](index=185&type=chunk)[188](index=188&type=chunk) - As of June 30, 2025, the company held no treasury shares[185](index=185&type=chunk)[188](index=188&type=chunk) [CORPORATE GOVERNANCE](index=51&type=section&id=CORPORATE%20GOVERNANCE) The Board is committed to maintaining high standards of corporate governance, has adopted the principles and provisions of the Corporate Governance Code set out in Appendix C1 of the Listing Rules, and complied with the relevant code during the six months ended June 30, 2025 - The Board is committed to maintaining high standards of corporate governance and has adopted the Corporate Governance Code in Appendix C1 of the Listing Rules[189](index=189&type=chunk)[193](index=193&type=chunk) - For the six months ended June 30, 2025, the company complied with the provisions of the Corporate Governance Code[190](index=190&type=chunk)[193](index=193&type=chunk) [COMPETING INTERESTS](index=51&type=section&id=COMPETING%20INTERESTS) For the six months ended June 30, 2025, to the best knowledge of the directors, no director, substantial shareholder, or their associates had any business or interest that competes directly or indirectly with the Group's business, nor any other conflicts of interest - For the six months ended June 30, 2025, no directors, substantial shareholders, or their associates had competing interests or conflicts of interest with the Group's business[191](index=191&type=chunk)[194](index=194&type=chunk) [DIRECTORS' SECURITIES TRANSACTIONS](index=51&type=section&id=DIRECTORS%27%20SECURITIES%20TRANSACTIONS) The company has adopted the Model Code for Securities Transactions by Directors of Listed Issuers as set out in Appendix C3 of the Listing Rules; all directors confirmed full compliance with this code during the six months ended June 30, 2025, with no non-compliance incidents - The company has adopted the Model Code for Securities Transactions by Directors of Listed Issuers as its code of conduct for directors' securities transactions[192](index=192&type=chunk)[195](index=195&type=chunk) - All directors confirmed full compliance with the code during the reporting period, with no non-compliance incidents[192](index=192&type=chunk)[195](index=195&type=chunk) [AUDIT COMMITTEE](index=52&type=section&id=AUDIT%20COMMITTEE) The Audit Committee, comprising three independent non-executive directors, is responsible for recommending external auditors, reviewing financial statements, and overseeing internal controls and risk management; the committee has reviewed the unaudited consolidated financial statements for the six months ended June 30, 2025, deeming them compliant with applicable accounting standards and adequately disclosed - The Audit Committee comprises three independent non-executive directors: Mr. Liu Weibiao (Chairman), Dr. Wang Yi, and Mr. Zhang Yao[196](index=196&type=chunk)[199](index=199&type=chunk) - Its primary responsibilities include recommending external auditors, reviewing financial statements, and overseeing internal controls and risk management[196](index=196&type=chunk)[199](index=199&type=chunk) - The committee has reviewed the unaudited consolidated financial statements for the six months ended June 30, 2025, and considers them compliant with accounting standards and adequately disclosed[196](index=196&type=chunk)[199](index=199&type=chunk) [RESIGNATION OF DIRECTORS](index=52&type=section&id=RESIGNATION%20OF%20DIRECTORS) During the reporting period, Mr. Du Yingyou resigned as an executive director on March 17, 2025, and Mr. Chen Guanyong resigned as an independent non-executive director and exited all committees on May 22, 2025 - Mr. Du Yingyou resigned as an executive director on **March 17, 2025**[197](index=197&type=chunk)[200](index=200&type=chunk) - Mr. Chen Guanyong resigned as an independent non-executive director on **May 22, 2025**, and ceased to be a member of the audit, remuneration, and nomination committees[197](index=197&type=chunk)[200](index=200&type=chunk) [UPDATE ON DIRECTORS' INFORMATION UNDER RULE 13.51B(1) OF THE LISTING RULES](index=52&type=section&id=UPDATE%20ON%20DIRECTORS%27%20INFORMATION%20UNDER%20RULE%2013.51B%281%29%20OF%20THE%20LISTING%20RULES) During the reporting period, no other information was required to be disclosed under Rule 13.51B(1) of the Listing Rules - During the reporting period, no director information updates were required to be disclosed under Rule 13.51B(1) of the Listing Rules[198](index=198&type=chunk)[201](index=201&type=chunk) [EVENTS AFTER THE REPORTING PERIOD](index=53&type=section&id=EVENTS%20AFTER%20THE%20REPORTING%20PERIOD) No significant events occurred after the reporting period, other than those already disclosed in this report - No significant events occurred after the reporting period, other than those already disclosed in this report[202](index=202&type=chunk)[204](index=204&type=chunk)

Financial Performance - For the six months ending June 30, 2025, the company's revenue was approximately HKD 1,834,814,000, an increase of about HKD 132,983,000 or 7.8% compared to HKD 1,701,831,000 for the same period in 2024[12] - The gross profit margin for the same period was approximately 54.8%, up from 53.7% in the previous year, with gross profit increasing by about HKD 91,485,000 or 10.0% to HKD 1,005,476,000[12] - EBITDA for the six months ending June 30, 2025, was approximately HKD 456,711,000, representing an increase of about HKD 81,140,000 or 21.6% compared to HKD 375,571,000 in 2024[12] - Net profit for the same period was approximately HKD 288,650,000, an increase of about HKD 74,295,000 or 34.7% from HKD 214,355,000 in 2024[12] - The company declared an interim dividend of HKD 0.107 per share, compared to HKD 0.08 per share in the previous year, reflecting a strong performance[12] Market Performance - Revenue from the European market was HKD 920,255,000, a 10.9% increase from HKD 822,914,000 in 2024, while North American revenue decreased by 5.1% to HKD 365,680,000[14] - The Greater China market revenue was HKD 293,176,000, reflecting a decrease of approximately 9.8% compared to the previous period[36] - Revenue from the Australian market was approximately HKD 137,858,000, an increase of about HKD 9,956,000 compared to the previous six months, maintaining a share of about 7.5% of total revenue[42] Product Revenue Breakdown - Fixed dental equipment revenue reached approximately HKD 1,098,288,000, an increase of about HKD 52,901,000 compared to the previous period, accounting for approximately 63.6% of total customized product revenue[22] - Removable dental equipment revenue was approximately HKD 447,394,000, an increase of about HKD 53,848,000, representing approximately 25.9% of total customized product revenue[23] - Other customized equipment revenue amounted to approximately HKD 181,639,000, an increase of about HKD 38,017,000, making up approximately 10.5% of total customized product revenue[24] Acquisitions and Investments - The company completed the acquisition of Hexa Ceram, Thailand's largest dental laboratory, in January 2025, contributing approximately HKD 88.7 million to revenue for the six months ending June 30, 2025[15] - The company has made significant acquisitions, including the recent acquisition of Hexa Ceram, enhancing its distribution and sales network in Southeast Asia[45] - The acquisition of Hexa Ceram contributed to revenue growth, although it was offset by intense price competition in Greater China and weak demand in North America due to tariff pressures[47] Operational Efficiency - The company’s core business profit margin improved to 16.1%, up from 13.5% in the previous year, indicating enhanced operational efficiency[13] - Operating expenses for sales and distribution increased by approximately 3.1% to HKD 238,044,000, accounting for about 13.0% of total revenue, down from 13.6% in 2024[50] - Administrative expenses rose by approximately 10.2% to HKD 417,636,000, representing about 22.8% of total revenue, compared to 22.3% in 2024[51] Cash Flow and Financial Position - For the six months ended June 30, 2025, the net cash flow from operating activities was approximately HKD 289,742,000, an increase of 37% compared to HKD 210,840,000 for the same period in 2024[63] - The net cash outflow from investing activities for the six months ended June 30, 2025, was approximately HKD 246,137,000, significantly higher than HKD 93,477,000 for the same period in 2024, primarily due to acquisitions[64] - The net cash outflow from financing activities for the six months ended June 30, 2025, was approximately HKD 326,777,000, compared to HKD 119,413,000 for the same period in 2024, driven by debt repayments and dividend payments[65] Employee and Shareholder Information - The company has a total of 8,594 full-time employees as of June 30, 2025, an increase from 7,106 employees as of December 31, 2024[96] - Employee costs for the six months ended June 30, 2025, amounted to approximately HKD 824,628,000, compared to HKD 786,274,000 for the same period in 2024[96] - The board declared an interim dividend of HKD 0.107 per ordinary share for the six months ended June 30, 2025, up from HKD 0.080 for the same period in 2024[93] Corporate Governance and Compliance - The company has complied with the corporate governance code as per the Stock Exchange Listing Rules during the six months ending June 30, 2025[117] - The board believes that having the same individual serve as both Chairman and CEO is beneficial for the company's strategic direction and decision-making efficiency[118] Risks and Challenges - The company faces various market risks, including global economic fluctuations and geopolitical risks, which may impact financial performance[86] - The company has not entered into any interest rate agreements or derivative transactions to hedge against interest rate fluctuations[89] Share Repurchase and Capital Management - The company repurchased 5,427,000 shares at a total cost of approximately HKD 22,440,000, with an average price per share ranging from HKD 3.73 to HKD 4.28[112] - The company aims to enhance shareholder value by increasing net asset value per share and earnings per share through share repurchases[113]

Company Information [Board of Directors and Company Secretary](index=3&type=section&id=Board%20of%20Directors%20and%20Company%20Secretary) The company's board comprises executive, non-executive, and independent non-executive directors, with Ms. Yin Juehui serving as Chairperson and CEO, and Mr. Huang Junying appointed as Joint Company Secretary on August 18, 2025 - Ms. Yin Juehui serves as Chairperson and Chief Executive Officer, responsible for the Group's overall management, operations, and strategy[6](index=6&type=chunk) - Mr. Huang Junying was appointed Joint Company Secretary and authorized representative on August 18, 2025, with Ms. Wu Xiowei resigning on the same day[6](index=6&type=chunk) [Committee Composition](index=3&type=section&id=Committee%20Composition) The Audit Committee is chaired by Mr. Zhu Lin, the Remuneration Committee by Dr. Yang Bo, and the Nomination Committee by Ms. Yin Juehui - The Audit Committee is chaired by Mr. Zhu Lin, the Remuneration Committee by Dr. Yang Bo, and the Nomination Committee by Ms. Yin Juehui[6](index=6&type=chunk) [Registered and Business Locations](index=4&type=section&id=Registered%20and%20Business%20Locations) The company's registered office is in the Cayman Islands, with primary business locations in Shanghai, Huzhou (Zhejiang), and Causeway Bay (Hong Kong) - The company is registered in the Cayman Islands, with primary business locations in Shanghai and Huzhou, Zhejiang, and Hong Kong's primary business location in Causeway Bay[9](index=9&type=chunk) [Listing Information](index=4&type=section&id=Listing%20Information) The company's stock code is 0917, and it was listed on the Stock Exchange on May 27, 2024 - The company's stock code is **0917**, with a listing date of **May 27, 2024**[9](index=9&type=chunk) Financial Highlights Quzhi Group's H1 2025 revenue grew 31.3% to RMB 676.2 million, achieving a RMB 128.4 million profit, reversing prior-year loss 2025 H1 Interim Results Summary | Metric | 2025 (RMB '000) | 2024 (RMB '000) | YoY Change (%) | | :--- | :--- | :--- | :--- | | Revenue | 676,189 | 515,117 | 31.3 | | - Marketing Services | 568,020 | 411,759 | 37.9 | | - Merchandise Sales | 83,219 | 78,449 | 6.1 | | - Other Services | 24,950 | 24,909 | 0.2 | | Gross Profit | 385,511 | 281,424 | 37.0 | | Profit/(Loss) for the Period | 128,363 | (1,846,245) | 107.0 | | EBITDA | 175,751 | (1,805,098) | 109.7 | - Profit for the period reversed from a loss of **RMB 1,846.2 million** in H1 2024 to a profit of **RMB 128.4 million** in H1 2025, primarily due to a non-cash, one-off fair value loss of **RMB 1,899.4 million** related to convertible redeemable preference shares in H1 2024[13](index=13&type=chunk) Management Discussion and Analysis This section provides a detailed analysis of the company's operational performance, business segment results, strategic outlook, and comprehensive financial overview for the reporting period [Performance Review](index=6&type=section&id=Performance%20Review) In H1 2025, China's economy grew steadily, driving strong marketing demand in food and beverage, new energy vehicles, and home appliances, leading to significant revenue and gross profit growth for Quzhi Group - China's economy experienced steady growth, with GDP increasing by **5.3% year-on-year**, and the new energy vehicle and home appliance sectors benefited from intelligent upgrades and "trade-in" policies, leading to robust marketing demand[12](index=12&type=chunk) - The Group's revenue increased by **31.3%** to **RMB 676.2 million**, and gross profit grew by **37.0%** to **RMB 385.5 million** year-on-year[12](index=12&type=chunk) - The core strategy was fully upgraded to "AI+Consumption Scenarios," with R&D investment significantly increasing by **107.7%** to **RMB 77.8 million**, achieving key technological breakthroughs in the independently developed AI-OMNI engine[12](index=12&type=chunk)[13](index=13&type=chunk) [Business Segment Performance](index=7&type=section&id=Business%20Segment%20Performance) The Group's business segments performed well, with significant growth in marketing services revenue and gross profit, modest growth in merchandise sales, and stable other services revenue, driven by increased AI R&D and new product launches [Marketing Services](index=7&type=section&id=Marketing%20Services) Marketing services revenue grew 37.9% to RMB 568.0 million, with gross profit up 43.8% to RMB 353.3 million, driven by expanded service scenarios, optimized AI interactive marketing products, and enhanced data strategy services Marketing Services Segment Performance | Metric | 2025 H1 (RMB million) | YoY Growth (%) | | :--- | :--- | :--- | | Revenue | 568.0 | 37.9 | | Gross Profit | 353.3 | 43.8 | | Standardized Marketing Services Revenue | 483.2 | 34.3 | | Value-added Marketing Services Revenue | 84.9 | 63.1 | - Average revenue per key account increased to **RMB 16.2 million**, a **52.2%** year-on-year growth[16](index=16&type=chunk) - Launched or optimized AI digital human guides, AI holographic marketing cabinets, a marketing selling point database for beverages and snacks, and pre-scoring services, while enhancing the flexible combination capabilities of service modules[17](index=17&type=chunk)[18](index=18&type=chunk) - During the reporting period, registered software copyrights in China increased to **159**, with **34** new patent applications submitted[18](index=18&type=chunk) [Merchandise Sales](index=9&type=section&id=Merchandise%20Sales) Merchandise sales revenue increased by 6.1% to RMB 83.2 million, primarily due to terminal network expansion in high-potential cities and more cost-effective pricing strategies Merchandise Sales Segment Performance | Metric | 2025 H1 (RMB million) | YoY Growth (%) | | :--- | :--- | :--- | | Revenue | 83.2 | 6.1 | | Gross Profit | Decreased | Decreased | - Revenue growth was primarily attributed to the expansion of the terminal network in high-potential cities like Hangzhou, Chengdu, and Chongqing, and the adoption of more cost-effective merchandise pricing strategies[21](index=21&type=chunk) [Lifestyle and Innovation Business](index=9&type=section&id=Lifestyle%20and%20Innovation%20Business) The Group is strategically focusing on "AI+Entertainment" new scenarios, aiming to build a global leading AI indoor entertainment space, with the Middle East market as the initial expansion target - The Group is strategically focusing on "AI+Entertainment" new scenarios, aiming to build a global leading AI indoor entertainment space, with the Middle East market selected as the first stop for business expansion[22](index=22&type=chunk) - An overseas entertainment business division has been established, completing organizational structure setup, initial venue preparations, and obtaining local licenses[22](index=22&type=chunk) [Other Services](index=9&type=section&id=Other%20Services) Other services revenue increased by 0.2% to RMB 25.0 million, with a decrease in gross profit, as the Group reduced non-core projects to focus on its primary business Other Services Segment Performance | Metric | 2025 H1 (RMB million) | YoY Growth (%) | | :--- | :--- | :--- | | Revenue | 25.0 | 0.2 | | Gross Profit | Decreased | Decreased | - Other services represent an auxiliary business segment, and the Group reduced its undertaking of non-core projects to focus on its core business[23](index=23&type=chunk) [Long-term Strategy and Outlook](index=10&type=section&id=Long-term%20Strategy%20and%20Outlook) For H2 2025, the Group will continue its "AI+Consumption Scenarios" strategy, deepening investments in "AI+Marketing" and "AI+Entertainment," while exploring strategic M&A for business expansion - The Group will continue to advance its "AI+Consumption Scenarios" core strategy, committed to reshaping more consumption scenarios with AIoT to bring more interesting new lifestyle experiences to young demographics[24](index=24&type=chunk) - In the "AI+Marketing" sector, the Group will continue to increase AI interaction investment, providing more innovative and efficient one-stop marketing solutions[24](index=24&type=chunk) - In the "AI+Entertainment" sector, the Group will focus on building global leading AI indoor entertainment spaces and drive global expansion after validating the Middle East project[24](index=24&type=chunk) - The Group plans to systematically expand its business boundaries and value chain depth through strategic business mergers and acquisitions and ecological synergy integration, achieving high-quality scaled growth[25](index=25&type=chunk) [Financial Overview](index=11&type=section&id=Financial%20Overview) This chapter details the Group's H1 2025 financial performance, including revenue, costs, profits, expenses, and balance sheet, highlighting revenue growth, improved gross margin, increased R&D, and a return to profitability [Revenue](index=11&type=section&id=Revenue) The Group's H1 2025 revenue increased by 31.3% to RMB 676.2 million, driven by China's economic growth, consumer market support, strong brand client partnerships, and optimized AI interactive marketing products Revenue Overview | Metric | 2025 H1 (RMB million) | 2024 H1 (RMB million) | YoY Growth (%) | | :--- | :--- | :--- | :--- | | Revenue | 676.2 | 515.1 | 31.3 | - Revenue growth was primarily attributed to China's steady economic growth, supportive consumer market policies, strong partnerships with brand clients, optimization of AI interactive marketing products and service models, and continuous improvement in the efficiency of the AI interactive terminal network[27](index=27&type=chunk) [Revenue by Business Segment](index=11&type=section&id=Revenue%20by%20Business%20Segment) Marketing services revenue grew 37.9%, with standardized marketing services up 34.3% and value-added marketing services up 63.1%, driven by enhanced service capabilities and AI interactive marketing product innovation, while merchandise sales revenue increased 6.1% and other services revenue remained stable Revenue and Gross Margin by Business Segment | Segment | 2025 H1 Revenue (RMB '000) | 2025 H1 Gross Margin (%) | 2024 H1 Revenue (RMB '000) | 2024 H1 Gross Margin (%) | | :--- | :--- | :--- | :--- | :--- | | Marketing Services | 568,020 | 62.2 | 411,759 | 59.7 | | - Standardized Marketing Services | 483,157 | 57.2 | 359,712 | 55.8 | | - Value-added Marketing Services | 84,863 | 90.9 | 52,047 | 86.2 | | Merchandise Sales | 83,219 | 25.6 | 78,449 | 30.7 | | Other Services | 24,950 | 43.4 | 24,909 | 46.7 | | **Total** | **676,189** | **57.0** | **515,117** | **54.6** | - Average revenue per key account for standardized marketing services increased from **RMB 9.3 million** to **RMB 13.7 million**; for value-added marketing services, it increased from **RMB 2.5 million** to **RMB 4.6 million**[29](index=29&type=chunk)[30](index=30&type=chunk) [Cost of Sales](index=13&type=section&id=Cost%20of%20Sales) Cost of sales increased by 24.4% to RMB 290.7 million, primarily due to higher information technology service fees from increased marketing services and increased cost of inventories sold from higher merchandise sales, but grew slower than revenue, supporting gross margin improvement Cost of Sales Composition | Item | 2025 H1 (RMB million) | 2024 H1 (RMB million) | YoY Growth (%) | | :--- | :--- | :--- | :--- | | Total Cost of Sales | 290.7 | 233.7 | 24.4 | | Information Technology Service Fees | 193.9 | 139.8 | 38.7 | | Cost of Inventories Sold | 60.7 | 53.6 | 13.2 | - The growth rate of cost of sales was lower than that of revenue, reflecting efficient cost control measures that contributed to continuous gross margin improvement[34](index=34&type=chunk) [Gross Profit and Gross Margin](index=13&type=section&id=Gross%20Profit%20and%20Gross%20Margin) Gross profit increased by 37.0% to RMB 385.5 million, with gross margin improving from 54.6% in H1 2024 to 57.0% in H1 2025, driven by revenue growth and efficient cost control Gross Profit and Gross Margin | Metric | 2025 H1 (RMB million) | 2024 H1 (RMB million) | YoY Change (%) | | :--- | :--- | :--- | :--- | | Gross Profit | 385.5 | 281.4 | 37.0 | | Gross Margin | 57.0% | 54.6% | 2.4 percentage points increase | - Gross margin improvement was primarily due to stable revenue growth and efficient cost control[35](index=35&type=chunk) [Other Income and Gains](index=14&type=section&id=Other%20Income%20and%20Gains) Other income and gains decreased by 17.2% to RMB 3.5 million, mainly due to a reduction in government grants related to the listing Other Income and Gains | Metric | 2025 H1 (RMB million) | 2024 H1 (RMB million) | YoY Change (%) | | :--- | :--- | :--- | :--- | | Other Income and Gains | 3.5 | 4.3 | -17.2 | - The decrease was primarily due to reduced government grants related to the listing completed in 2024[36](index=36&type=chunk) [Selling and Distribution Expenses](index=14&type=section&id=Selling%20and%20Distribution%20Expenses) Selling and distribution expenses increased by 21.7% to RMB 172.7 million, with marketing and promotion expenses rising 28.5% to enhance brand awareness and expand the customer base Selling and Distribution Expenses | Item | 2025 H1 (RMB million) | 2024 H1 (RMB million) | YoY Growth (%) | | :--- | :--- | :--- | :--- | | Total Selling and Distribution Expenses | 172.7 | 141.9 | 21.7 | | Marketing and Promotion Expenses | 129.1 | 100.5 | 28.5 | - The increase in marketing and promotion expenses was primarily due to increased online and offline multi-channel synergistic marketing activities aimed at enhancing brand awareness and expanding potential customer reach[37](index=37&type=chunk) [Administrative Expenses](index=14&type=section&id=Administrative%20Expenses) Administrative expenses decreased by 31.3% to RMB 24.9 million, mainly due to expenses incurred and paid for the completion of the global offering in H1 2024 Administrative Expenses | Metric | 2025 H1 (RMB million) | 2024 H1 (RMB million) | YoY Change (%) | | :--- | :--- | :--- | :--- | | Administrative Expenses | 24.9 | 36.3 | -31.3 | - The decrease was primarily due to expenses incurred and paid for the completion of the global offering in H1 2024[38](index=38&type=chunk) [Finance Costs](index=14&type=section&id=Finance%20Costs) Finance costs increased by RMB 5.5 million to RMB 9.5 million, primarily due to domestic loans to supplement onshore business operational needs for optimizing capital allocation efficiency Finance Costs | Metric | 2025 H1 (RMB million) | 2024 H1 (RMB million) | YoY Change (RMB million) | | :--- | :--- | :--- | :--- | | Finance Costs | 9.5 | 4.0 | +5.5 | - The increase was primarily due to domestic loans to supplement onshore business operational needs, optimizing capital allocation efficiency in consideration of domestic and international market interest rate environments and expected investment returns[39](index=39&type=chunk) [Research and Development Expenses](index=15&type=section&id=Research%20and%20Development%20Expenses) R&D expenses significantly increased by 107.7% to RMB 77.8 million, reflecting the Group's intensified investment in AI interactive marketing and data product development, yielding substantial technological achievements and product commercialization Research and Development Expenses | Metric | 2025 H1 (RMB million) | 2024 H1 (RMB million) | YoY Growth (%) | | :--- | :--- | :--- | :--- | | R&D Expenses | 77.8 | 37.5 | 107.7 | - The significant increase in R&D expenses was primarily due to the Group's intensified efforts in developing AI interactive marketing and data products, including optimization of AI digital human guides, AI holographic marketing cabinets, marketing selling point databases, and enhanced service module combination capabilities[40](index=40&type=chunk) [Other Expenses](index=15&type=section&id=Other%20Expenses) Other expenses for H1 2025 amounted to RMB 3.8 million, primarily comprising exchange losses from currency fluctuations Other Expenses | Metric | 2025 H1 (RMB million) | | :--- | :--- | | Other Expenses | 3.8 | - Other expenses primarily consisted of exchange losses arising from currency fluctuations[41](index=41&type=chunk) [Income Tax Expense](index=15&type=section&id=Income%20Tax%20Expense) Income tax expense increased to RMB 11.2 million, primarily due to higher profit before tax, with an effective tax rate of 8.7% in H1 2025 Income Tax Expense | Metric | 2025 H1 (RMB million) | 2024 H1 (RMB million) | | :--- | :--- | :--- | | Income Tax Expense | 11.2 | 9.2 | | Effective Tax Rate | 8.7% | - | - The increase in income tax expense was primarily due to higher profit before tax[42](index=42&type=chunk) [Profit/(Loss) for the Period](index=15&type=section&id=Profit%2F%28Loss%29%20for%20the%20Period) The Group achieved a profit of RMB 128.4 million in H1 2025, reversing a loss of RMB 1,846.2 million in H1 2024, primarily due to a non-cash fair value loss related to convertible redeemable preference shares in the prior year Profit/(Loss) for the Period | Metric | 2025 H1 (RMB million) | 2024 H1 (RMB million) | | :--- | :--- | :--- | | Profit/(Loss) for the Period | 128.4 | (1,846.2) | - The turnaround to profit was primarily due to a non-cash, one-off fair value loss of **RMB 1,899.4 million** related to convertible redeemable preference shares in H1 2024[43](index=43&type=chunk) [Inventories](index=16&type=section&id=Inventories) Inventory balance slightly increased to RMB 12.0 million, while inventory turnover days decreased from 65.3 days to 46.2 days, reflecting improved lean inventory management Inventory Metrics | Metric | June 30, 2025 (RMB million) | December 31, 2024 (RMB million) | | :--- | :--- | :--- | | Inventory Balance | 12.0 | 11.8 | | Inventory Turnover Days | 46.2 | 65.3 | - The decrease in inventory turnover days was primarily due to further refinement of lean inventory management[44](index=44&type=chunk) [Trade Receivables](index=16&type=section&id=Trade%20Receivables) Trade receivables slightly increased to RMB 514.1 million, mainly due to expanded business scale, with accounts receivable turnover days remaining stable at 172.3 days Trade Receivables Metrics | Metric | June 30, 2025 (RMB million) | December 31, 2024 (RMB million) | | :--- | :--- | :--- | | Trade Receivables | 514.1 | 510.0 | | Accounts Receivable Turnover Days | 172.3 | 172.3 | - The increase in trade receivables was primarily due to expanded business scale[45](index=45&type=chunk) [Trade Payables](index=16&type=section&id=Trade%20Payables) Trade payables significantly increased to RMB 57.0 million, primarily due to expanded business scale, increased merchandise transaction volume, and higher R&D investment Trade Payables | Metric | June 30, 2025 (RMB million) | December 31, 2024 (RMB million) | | :--- | :--- | :--- | | Trade Payables | 57.0 | 19.0 | - The increase was primarily due to expanded business scale, increased merchandise transaction volume during the reporting period, and higher R&D investment[46](index=46&type=chunk) [Prepayments, Deposits and Other Receivables - Current](index=16&type=section&id=Prepayments%2C%20Deposits%20and%20Other%20Receivables%20-%20Current) Prepayments, deposits, and other receivables decreased from RMB 218.1 million to RMB 178.3 million Prepayments, Deposits and Other Receivables - Current | Metric | June 30, 2025 (RMB million) | December 31, 2024 (RMB million) | | :--- | :--- | :--- | | Prepayments, Deposits and Other Receivables | 178.3 | 218.1 | [Capital Expenditures](index=17&type=section&id=Capital%20Expenditures) Property, plant and equipment decreased to RMB 113.1 million, mainly due to the disposal of AI interactive terminals and depreciation offsetting new purchases, while right-of-use assets increased to RMB 6.9 million due to new lease agreements Capital Expenditures Composition | Item | June 30, 2025 (RMB million) | December 31, 2024 (RMB million) | | :--- | :--- | :--- | | Property, Plant and Equipment | 113.1 | 134.6 | | Right-of-Use Assets | 6.9 | 4.7 | - The decrease in property, plant and equipment was primarily due to the disposal of AI interactive terminals at the end of their useful lives and depreciation offsetting new purchases of AI interactive terminals amounting to **RMB 4.0 million** during the reporting period[49](index=49&type=chunk) - The increase in right-of-use assets was primarily due to new lease agreements for office properties and warehouses[49](index=49&type=chunk) [Financial Position](index=17&type=section&id=Financial%20Position) Cash and cash equivalents increased to RMB 1,141.2 million, and bank borrowings increased to RMB 544.7 million, reflecting increased cash from operating activities and bank borrowings, indicating ample liquidity Key Financial Position Metrics | Metric | June 30, 2025 (RMB million) | December 31, 2024 (RMB million) | | :--- | :--- | :--- | | Cash and Cash Equivalents | 1,141.2 | 892.0 | | Bank Borrowings | 544.7 | 426.8 | - The increase in cash and cash equivalents was primarily attributable to cash generated from operating activities and increased bank borrowings[50](index=50&type=chunk) [Gearing Ratio](index=17&type=section&id=Gearing%20Ratio) The gearing ratio increased from 25.7% as of December 31, 2024, to 29.4% as of June 30, 2025 Gearing Ratio | Metric | June 30, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Gearing Ratio | 29.4% | 25.7% | [Pledge of Assets](index=18&type=section&id=Pledge%20of%20Assets) As of June 30, 2025, the Group had no pledge of assets - As of June 30, 2025, the Group had no pledge of assets[52](index=52&type=chunk) [Contingent Liabilities](index=18&type=section&id=Contingent%20Liabilities) As of June 30, 2025, the Group had no material contingent liabilities - As of June 30, 2025, the Group had no material contingent liabilities[53](index=53&type=chunk) [Foreign Exchange Risk](index=18&type=section&id=Foreign%20Exchange%20Risk) The Group primarily operates in China, with transactions settled in RMB, and management believes there is no significant foreign exchange risk exposure, nor has it hedged against currency fluctuations - The Group primarily conducts its business in China, with transactions mainly settled in RMB, and management believes there is no significant foreign exchange risk exposure in its operations[54](index=54&type=chunk) - As of June 30, 2025, the Group had not hedged against foreign exchange fluctuations[54](index=54&type=chunk) [Credit Risk](index=18&type=section&id=Credit%20Risk) The Group transacts only with recognized and reputable third parties, managing credit risk through credit verification procedures and regular monitoring of receivables, with no significant bad debt risk - The Group transacts only with recognized and reputable third parties, managing credit risk through credit verification procedures and continuous monitoring of receivables balances[55](index=55&type=chunk) - The risk of bad debts is not significant[55](index=55&type=chunk) [Material Acquisitions and Disposals](index=18&type=section&id=Material%20Acquisitions%20and%20Disposals) During the reporting period, the Group did not undertake any material acquisitions or disposals of subsidiaries, associates, or joint ventures - During the reporting period, the Group did not undertake any material acquisitions or disposals of subsidiaries, associates, or joint ventures[56](index=56&type=chunk) [Material Investments Held and Prospects](index=18&type=section&id=Material%20Investments%20Held%20and%20Prospects) As of June 30, 2025, the Group held no material investments and had no future plans for significant investments - As of June 30, 2025, the Group held no single investment accounting for **5%** or more of its total assets, thus holding no material investments[57](index=57&type=chunk) - As of June 30, 2025, the Group had no future plans for material investments[57](index=57&type=chunk) [Future Plans for Material Acquisitions and Investments](index=18&type=section&id=Future%20Plans%20for%20Material%20Acquisitions%20and%20Investments) During the reporting period, the Group did not undertake any material investments, acquisitions, or disposals, and has no other significant investment or acquisition plans beyond those disclosed in the prospectus - During the reporting period, the Group did not undertake any material investments, acquisitions, or disposals[58](index=58&type=chunk) - Except for the expansion plans disclosed in the prospectus, the Group has not entered into any definitive agreements for material investments or acquisitions of significant capital assets or other businesses[58](index=58&type=chunk) [Employees and Remuneration Policy](index=19&type=section&id=Employees%20and%20Remuneration%20Policy) As of June 30, 2025, the Group had 195 employees with total staff costs of RMB 22.3 million, offering competitive remuneration and share incentive schemes, alongside continuous education and training programs Employees and Remuneration | Metric | June 30, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Total Employees | 195 | 186 | | Total Staff Costs (RMB million) | 22.3 | 19.7 (2024 H1) | - The Group provides competitive remuneration packages to employees, including salaries, benefits, bonuses, and incentives, and implements a share incentive scheme[59](index=59&type=chunk) - Continuous internal and external education and training programs are provided to employees to enhance their technical, professional, or management skills[59](index=59&type=chunk) [Events After Reporting Period](index=19&type=section&id=Events%20After%20Reporting%20Period) No other significant events impacting the Group occurred after the reporting period, except for the placement of new shares under general mandate, which was completed on July 23, 2025 - Except for the placement of new shares under general mandate (the completion of which was disclosed in the Company's announcement dated July 23, 2025), no other events with a material impact on the Group occurred after the reporting period as of the date of this report[60](index=60&type=chunk) Other Information [Corporate Governance](index=20&type=section&id=Corporate%20Governance) The company is committed to high corporate governance standards and has adopted the Corporate Governance Code; despite the combined roles of Chairperson and CEO, the board believes this arrangement ensures consistent leadership with adequate checks and balances - The Company has adopted the Corporate Governance Code and complied with all applicable code provisions during the reporting period[61](index=61&type=chunk) - The roles of Chairperson and Chief Executive Officer are combined and held by Ms. Yin Juehui, an arrangement the Board believes ensures consistent leadership and more efficient strategic planning, with adequate checks and balances in place[62](index=62&type=chunk) [Standard Securities Dealing Code](index=20&type=section&id=Standard%20Securities%20Dealing%20Code) The company has adopted the Standard Code for directors' securities dealings and its own code for employees, with all directors confirming compliance during the reporting period - The Company has adopted the Standard Code as the code of conduct for directors' securities dealings and its own code of conduct for employees' securities dealings[64](index=64&type=chunk) - Each director has confirmed compliance with the required standards set out in the Standard Code during the reporting period[64](index=64&type=chunk) [Interim Dividend](index=21&type=section&id=Interim%20Dividend) The Board of Directors resolved not to declare any interim dividend for the six months ended June 30, 2025 - The Board of Directors resolved not to declare any interim dividend for the six months ended June 30, 2025[66](index=66&type=chunk) [Audit Committee](index=21&type=section&id=Audit%20Committee) The Audit Committee has reviewed the Group's unaudited condensed consolidated financial statements for the reporting period, confirming compliance with applicable accounting standards, laws, and regulations, and appropriate disclosures - The Audit Committee has reviewed the Group's unaudited condensed consolidated financial statements for the reporting period, deeming them compliant with applicable accounting standards and Listing Rules, with sufficient disclosures made[67](index=67&type=chunk) [Use of Proceeds from Global Offering](index=21&type=section&id=Use%20of%20Proceeds%20from%20Global%20Offering) The net proceeds from the global offering were approximately HKD 420.51 million, with HKD 201.03 million utilized as of June 30, 2025, primarily for expanding the terminal network, optimizing marketing services, and enhancing R&D Summary of Use of Proceeds from Global Offering (As of June 30, 2025) | Planned Use | Percentage of Total Net Proceeds | Net Proceeds from Global Offering (HKD million) | Actual Net Proceeds Used (HKD million) | Unused Amount (HKD million) | Expected Timeline for Full Utilization of Remaining Net Proceeds | | :--- | :--- | :--- | :--- | :--- | :--- | | Expanding terminal network and increasing market penetration | 32.0% | 134.56 | 76.38 | 58.18 | December 31, 2027 | | Optimizing marketing services | 13.0% | 54.67 | 19.20 | 35.47 | December 31, 2027 | | Expanding the Group's brand client base by enhancing brand awareness | 15.0% | 63.08 | 32.46 | 30.62 | December 31, 2026 | | Strengthening the Group's technological capabilities and R&D efforts | 20.0% | 84.10 | 39.41 | 44.69 | December 31, 2027 | | Seeking strategic alliances and acquisitions | 10.0% | 42.05 | 22.03 | 20.02 | December 31, 2027 | | For general working capital and general corporate purposes | 10.0% | 42.05 | 11.55 | 30.50 | Not Applicable | | **Total** | **100.0%** | **420.51** | **201.03** | **219.48** | | - There were no changes to the proposed use of net proceeds and the expected timeline[69](index=69&type=chunk) [Directors' and Chief Executive's Interests and Short Positions in Shares, Underlying Shares and Debentures of the Company or any Associated Corporation](index=24&type=section&id=Directors%27%20and%20Chief%20Executive%27s%20Interests%20and%20Short%20Positions%20in%20Shares%2C%20Underlying%20Shares%20and%20Debentures%20of%20the%20Company%20or%20any%20Associated%20Corporation) As of June 30, 2025, directors and chief executives, including Ms. Yin Juehui, Mr. Cao Liwen, and Mr. Huang Aihua, held interests in the company's shares and underlying shares, primarily through trusts, controlled corporations, and share options under the share incentive scheme Directors' and Chief Executive's Shareholding Overview (As of June 30, 2025) | Director Name | Nature of Interest | Number of Shares Held | Approximate Percentage of Interest | | :--- | :--- | :--- | :--- | | Ms. Yin Juehui | Founder/Beneficiary of Trust | 72,294,252 | 27.52% | | | Jointly held interest with another person | 30,867,144 | 11.75% | | | Beneficial Owner (Share Options) | 2,500,000 | 0.95% | | Mr. Cao Liwen | Founder/Beneficiary of Trust | 8,819,184 | 3.36% | | | Jointly held interest with another person | 94,342,212 | 35.91% | | | Beneficial Owner (Share Options) | 2,500,000 | 0.95% | | Mr. Huang Aihua | Interest in Controlled Corporation | 4,409,592 | 1.68% | | | Jointly held interest with another person | 98,751,804 | 37.59% | | | Beneficial Owner (Share Options) | 4,000,000 | 1.52% | - All disclosed interests are long positions, and percentages are calculated based on the total number of 262,705,446 issued shares as of June 30, 2025[73](index=73&type=chunk)[74](index=74&type=chunk) [Share Incentive Scheme](index=25&type=section&id=Share%20Incentive%20Scheme) The company adopted a share incentive scheme on September 22, 2021, to attract and retain talent, with 39,318,824 shares available for issuance as of June 30, 2025, and RMB 7,542,000 in share-based expenses recognized during the period - The Share Incentive Scheme was adopted on September 22, 2021, to attract and retain talent and promote the successful operation of the company's business[77](index=77&type=chunk)[79](index=79&type=chunk) - As of the date of this report, the total number of shares available for issuance under the Share Incentive Scheme is **39,318,824** shares, representing approximately **14.8%** of the issued shares[77](index=77&type=chunk) Share Incentive Scheme Related Expenses | Metric | 2025 H1 (RMB '000) | 2024 H1 (RMB '000) | | :--- | :--- | :--- | | Share-based Expenses | 7,542 | 8,814 | [Directors' Rights to Acquire Shares or Debentures](index=28&type=section&id=Directors%27%20Rights%20to%20Acquire%20Shares%20or%20Debentures) Except as otherwise disclosed in this report, neither the company nor any of its subsidiaries entered into any arrangements during the reporting period that would enable any director, their spouse, or children under 18 to benefit from acquiring shares or debentures of the company or any other body corporate - Except as otherwise disclosed in this report, neither the Company nor any of its subsidiaries entered into any arrangements during the reporting period that would enable any director, their spouse, or children under 18 to benefit from acquiring shares or debentures of the Company or any other body corporate[88](index=88&type=chunk) [Substantial Shareholders' Interests and Short Positions in Shares and Underlying Shares of the Company](index=29&type=section&id=Substantial%20Shareholders%27%20Interests%20and%20Short%20Positions%20in%20Shares%20and%20Underlying%20Shares%20of%20the%20Company) As of June 30, 2025, several entities and individuals were listed as substantial shareholders, holding interests in the company's shares or underlying shares, primarily through trusts, controlled corporations, and acting-in-concert agreements Substantial Shareholders' Shareholding Overview (As of June 30, 2025) | Shareholder Name/Individual | Capacity/Nature of Interest | Number of Shares Held | Approximate Percentage of Interest | | :--- | :--- | :--- | :--- | | Beyond Branding | Beneficial Owner | 72,294,252 | 27.52% | | Jovie Holding Limited | Interest in Controlled Corporation | 72,294,252 | 27.52% | | Q-robot Holding Limited | Beneficial Owner | 8,819,184 | 3.36% | | Helenatest Holding Limited | Interest in Controlled Corporation | 8,819,184 | 3.36% | | Ms. Yin Juehui | Founder/Beneficiary of Trust | 8,819,184 | 3.36% | | Kiosk Joy | Beneficial Owner | 8,819,184 | 3.36% | | Iwan Holding Limited | Interest in Controlled Corporation | 8,819,184 | 3.36% | | INSIGMA Limited | Beneficial Owner | 4,409,592 | 1.68% | | Mr. Wu Wenhong | Interest in Controlled Corporation | 4,409,592 | 1.68% | | NeoBox | Beneficial Owner | 4,409,592 | 1.68% | | NeoWay Holding Limited | Interest in Controlled Corporation | 4,409,592 | 1.68% | | Q-robot shop Limited | Beneficial Owner | 4,409,592 | 1.68% | | Mr. Qian Jun | Interest in Controlled Corporation | 4,409,592 | 1.68% | | Hengtai Trust | Trustee | 72,294,252 | 27.52% | | Shanghai Yuanjizhi Enterprise Management Partnership (Limited Partnership) | Beneficial Owner | 4,000,020 | 1.52% | | Shanghai Junna Enterprise Management Partnership (Limited Partnership) | Beneficial Owner | 21,999,948 | 8.37% | | Xiamen C&D Emerging Industry Equity Investment No. 1 Partnership (Limited Partnership) | Beneficial Owner | 18,000,036 | 6.85% | - Several directors and substantial shareholders are deemed to have interests in each other's shares through acting-in-concert agreements[78](index=78&type=chunk)[91](index=91&type=chunk)[101](index=101&type=chunk)[102](index=102&type=chunk)[104](index=104&type=chunk) [Purchase, Sale or Redemption of the Company's Listed Securities](index=37&type=section&id=Purchase%2C%20Sale%20or%20Redemption%20of%20the%20Company%27s%20Listed%20Securities) Neither the company nor any of its subsidiaries purchased, sold, or redeemed any of the company's listed securities during the reporting period, and the company held no treasury shares as of June 30, 2025 - Neither the Company nor any of its subsidiaries purchased, sold, or redeemed any of the Company's listed securities during the reporting period[106](index=106&type=chunk) - As of June 30, 2025, the Company held no treasury shares[106](index=106&type=chunk) [Changes in Information of Directors and Chief Executive](index=37&type=section&id=Changes%20in%20Information%20of%20Directors%20and%20Chief%20Executive) Mr. Chen Rui resigned as a non-executive director of Renrui Human Resources Technology Holdings Limited, a company listed on the Stock Exchange, in July 2025; no other changes in directors' and chief executive's information require disclosure since the publication of the 2024 annual report - Mr. Chen Rui resigned as a non-executive director of Renrui Human Resources Technology Holdings Limited, a company listed on the Stock Exchange, in July 2025[107](index=107&type=chunk) - Except for the aforementioned disclosure, no other changes in directors' and chief executive's information requiring disclosure have occurred since the publication of the 2024 annual report up to the date of this report[107](index=107&type=chunk) [Continuing Disclosure Obligations under Listing Rules](index=37&type=section&id=Continuing%20Disclosure%20Obligations%20under%20Listing%20Rules) Except as disclosed in this report, the company had no other disclosure obligations under Listing Rules 13.20, 13.21, and 13.22 as of June 30, 2025 - Except as disclosed in this report, as of June 30, 2025, the Company had no other disclosure obligations under Listing Rules 13.20, 13.21, and 13.22[108](index=108&type=chunk) Interim Unaudited Condensed Consolidated Statement of Profit or Loss and Other Comprehensive Income This statement presents the Group's consolidated profit or loss and other comprehensive income for the six months ended June 30, 2025, showing revenue of RMB 676.2 million and a profit of RMB 128.4 million Consolidated Statement of Profit or Loss and Other Comprehensive Income Summary (For the six months ended June 30) | Metric | 2025 (RMB '000) | 2024 (RMB '000) | | :--- | :--- | :--- | | Revenue | 676,189 | 515,117 | | Cost of Sales | (290,678) | (233,693) | | Gross Profit | 385,511 | 281,424 | | Other Income and Gains | 3,531 | 4,266 | | Selling and Distribution Expenses | (172,737) | (141,948) | | Administrative Expenses | (24,947) | (36,315) | | Research and Development Expenses | (77,837) | (37,484) | | Fair Value Loss on Financial Liabilities at Fair Value Through Profit or Loss | – | (1,899,415) | | Fair Value Gain on Financial Assets at Fair Value Through Profit or Loss | 40,816 | 2,273 | | Other Expenses and Losses | (3,754) | (7) | | Impairment Losses under Expected Credit Loss Model (Net of Reversals) | (1,513) | (5,880) | | Finance Costs | (9,520) | (3,998) | | Profit/(Loss) Before Tax | 139,550 | (1,837,084) | | Income Tax Expense | (11,187) | (9,161) | | **Profit/(Loss) for the Period** | **128,363** | **(1,846,245)** | | Basic Profit/(Loss) Per Share Attributable to Owners of the Parent (RMB) | 0.47 | (13.71) | | Diluted Profit/(Loss) Per Share Attributable to Owners of the Parent (RMB) | 0.41 | (13.71) | - Profit for the period reversed from a loss to a profit, primarily due to a non-cash, one-off fair value loss related to convertible redeemable preference shares in the prior year[110](index=110&type=chunk) Interim Unaudited Condensed Consolidated Statement of Financial Position This statement outlines the Group's consolidated financial position as of June 30, 2025, detailing assets, liabilities, and equity, with total assets less current liabilities at RMB 1,705.9 million Consolidated Statement of Financial Position Summary (As of June 30, 2025) | Item | June 30, 2025 (RMB '000) | December 31, 2024 (RMB '000) | | :--- | :--- | :--- | | **Non-current Assets** | | | | Property, Plant and Equipment | 113,063 | 134,579 | | Right-of-Use Assets | 6,867 | 4,731 | | Total Non-current Assets | 178,128 | 201,978 | | **Current Assets** | | | | Inventories | 12,044 | 11,764 | | Trade Receivables | 514,088 | 510,008 | | Cash and Bank Balances | 1,141,177 | 891,987 | | Total Current Assets | 2,232,191 | 1,904,368 | | **Current Liabilities** | | | | Trade Payables | 56,982 | 19,002 | | Interest-bearing Bank Borrowings | 544,690 | 426,840 | | Total Current Liabilities | 704,461 | 538,624 | | **Net Current Assets** | **1,527,730** | **1,365,744** | | **Total Assets Less Current Liabilities** | **1,705,858** | **1,567,722** | | **Net Assets** | **1,701,573** | **1,565,668** | | **Total Equity** | **1,701,573** | **1,565,668** | - Cash and bank balances increased from **RMB 892.0 million** as of December 31, 2024, to **RMB 1,141.2 million** as of June 30, 2025, reflecting financial stability and ample liquidity[14](index=14&type=chunk) Interim Unaudited Condensed Consolidated Statement of Changes in Equity This statement details the changes in the Group's consolidated equity for the six months ended June 30, 2025, reflecting an increase in equity attributable to owners of the parent Consolidated Statement of Changes in Equity Summary (For the six months ended June 30) | Item | January 1, 2025 (RMB '000) | Profit for the Period (RMB '000) | Equity-settled Share Award Scheme (RMB '000) | June 30, 2025 (RMB '000) | | :--- | :--- | :--- | :--- | :--- | | Equity Attributable to Owners of the Parent | 1,536,358 | 123,391 | 7,542 | 1,667,291 | | Non-controlling Interests | 29,310 | 4,972 | – | 34,282 | | **Total Equity** | **1,565,668** | **128,363** | **7,542** | **1,701,573** | - Equity attributable to owners of the parent increased primarily due to profit for the period and the equity-settled share award scheme[115](index=115&type=chunk) Interim Unaudited Condensed Consolidated Statement of Cash Flows This statement presents the Group's consolidated cash flows for the six months ended June 30, 2025, showing net cash from operating activities of RMB 216.4 million and increased cash and cash equivalents Consolidated Statement of Cash Flows Summary (For the six months ended June 30) | Item | 2025 (RMB '000) | 2024 (RMB '000) | | :--- | :--- | :--- | | Net Cash Flows from Operating Activities | 216,443 | 79,373 | | Net Cash Flows Used in Investing Activities | (73,500) | (120,378) | | Net Cash Flows from Financing Activities | 106,715 | 629,603 | | Net Increase in Cash and Cash Equivalents | 249,658 | 588,598 | | Cash and Cash Equivalents at Beginning of Period | 891,987 | 299,018 | | **Cash and Cash Equivalents at End of Period** | **1,141,177** | **887,616** | - Net cash flows from operating activities significantly increased from **RMB 79.4 million** in H1 2024 to **RMB 216.4 million** in H1 2025[117](index=117&type=chunk) - Cash and cash equivalents at the end of the period reached **RMB 1,141.2 million**, reflecting the company's ample liquidity[117](index=117&type=chunk) Notes to the Interim Unaudited Condensed Consolidated Financial Information [General Information](index=43&type=section&id=General%20Information) Quzhi Group was incorporated in the Cayman Islands on June 15, 2021, and its shares were listed on the Main Board of the Stock Exchange on May 27, 2024, with its principal business being marketing services, merchandise sales, and other services in China - The Company was incorporated in the Cayman Islands on June 15, 2021, and its shares have been listed on the Main Board of The Stock Exchange of Hong Kong Limited since May 27, 2024[118](index=118&type=chunk) - The Group's principal activities are marketing services, merchandise sales, and other services in the People's Republic of China[118](index=118&type=chunk) [Basis of Preparation](index=43&type=section&id=Basis%20of%20Preparation) The interim unaudited condensed consolidated financial information has been prepared in accordance with International Accounting Standard 34 Interim Financial Reporting and should be read in conjunction with the annual consolidated financial statements for the year ended December 31, 2024 - The interim unaudited condensed consolidated financial information has been prepared in accordance with International Accounting Standard 34 Interim Financial Reporting[119](index=119&type=chunk) - It should be read in conjunction with the Group's annual consolidated financial statements for the year ended December 31, 2024[119](index=119&type=chunk) [Significant Accounting Policies](index=43&type=section&id=Significant%20Accounting%20Policies) The Group is evaluating the impact of new and revised International Financial Reporting Standards, which are not expected to have a material effect on financial performance and position - The Group is evaluating the impact of new and revised International Financial Reporting Standards upon their initial application, which are not expected to have a material impact on the Group's financial performance and financial position[120](index=120&type=chunk) [Operating Segment Information](index=44&type=section&id=Operating%20Segment%20Information) The Group primarily engages in marketing services, merchandise sales, and other related services, which are considered a single reportable segment, with all revenue derived from mainland China - The Group primarily engages in marketing services, merchandise sales, and other related services, which are considered a single reportable segment[122](index=122&type=chunk) - All revenue from external customers is derived from mainland China[123](index=123&type=chunk) [Revenue, Other Income and Gains](index=45&type=section&id=Revenue%2C%20Other%20Income%20and%20Gains) The Group's revenue primarily stems from marketing services (provided over time), merchandise sales (transferred at a point in time), and other related services (provided at a point in time) Revenue Recognition Timing | Revenue Type | 2025 (RMB '000) | 2024 (RMB '000) | Revenue Recognition Timing | | :--- | :--- | :--- | :--- | | Marketing Services Revenue | 568,020 | 411,759 | Services provided over time | | Merchandise Sales Revenue | 83,219 | 78,449 | Goods transferred at a point in time | | Other Related Services Revenue | 24,950 | 24,909 | Services provided at a point in time | - Performance obligations for marketing services are satisfied over the period services are provided, with payment typically due within **180 days** from the service completion and client acceptance date[127](index=127&type=chunk) - Performance obligations for merchandise sales are satisfied when control of goods is transferred to customers via vending machines, typically requiring cash on delivery[128](index=128&type=chunk) [Profit/(Loss) Before Tax](index=47&type=section&id=Profit%2F%28Loss%29%20Before%20Tax) The Group's profit before tax was RMB 139.6 million, a significant improvement from the prior year's loss, primarily influenced by cost of sales, depreciation, R&D expenses, share incentive scheme expenses, and the fair value loss on financial liabilities at fair value through profit or loss in H1 2024 Profit/(Loss) Before Tax Composition (For the six months ended June 30) | Item | 2025 (RMB '000) | 2024 (RMB '000) | | :--- | :--- | :--- | | Cost of Inventories Sold | 60,651 | 53,572 | | Depreciation of Property, Plant and Equipment | 25,250 | 26,500 | | Research and Development Expenses | 77,837 | 37,484 | | Total Employee Benefit Expenses | 29,814 | 28,538 | | Fair Value Loss on Financial Liabilities at Fair Value Through Profit or Loss | – | 1,899,415 | | Fair Value Gain on Financial Assets at Fair Value Through Profit or Loss | (40,816) | (2,273) | | Profit/(Loss) Before Tax | 139,550 | (1,837,084) | - The loss before tax in H1 2024 was primarily impacted by a fair value loss of **RMB 1,899.4 million** on financial liabilities at fair value through profit or loss[130](index=130&type=chunk) [Income Tax](index=47&type=section&id=Income%20Tax) The Group's income tax expense was RMB 11.2 million, with an effective tax rate of 8.7%; its mainland China subsidiary, Shanghai Quzhi Network Technology Co., Ltd., enjoys a preferential 15% corporate income tax rate as a "High and New Technology Enterprise" Income Tax Expense Analysis (For the six months ended June 30) | Item | 2025 (RMB '000) | 2024 (RMB '000) | | :--- | :--- | :--- | | Current Income Tax | 11,240 | 10,212 | | Deferred Income Tax | (53) | (1,051) | | **Total Tax Expense for the Period** | **11,187** | **9,161** | | Effective Tax Rate | 8.7% | - | - Shanghai Quzhi Network Technology Co., Ltd. is recognized as a "High and New Technology Enterprise" and enjoys a preferential income tax rate of **15%** for the three-year period from December 2022 to December 2025[134](index=134&type=chunk) [Dividends](index=48&type=section&id=Dividends) The Board of Directors did not recommend the payment of any dividends during the reporting period - The Board of Directors did not recommend the payment of any dividends during the reporting period[136](index=136&type=chunk) [Earnings/(Loss) Per Share Attributable to Ordinary Equity Holders of the Parent](index=49&type=section&id=Earnings%2F%28Loss%29%20Per%20Share%20Attributable%20to%20Ordinary%20Equity%20Holders%20of%20the%20Parent) For the six months ended June 30, 2025, basic earnings per share attributable to ordinary equity holders of the parent was RMB 0.47, and diluted earnings per share was RMB 0.41, with the diluted impact primarily from share options granted under the share incentive scheme Earnings/(Loss) Per Share (For the six months ended June 30) | Metric | 2025 (RMB) | 2024 (RMB) | | :--- | :--- | :--- | | Basic Earnings/(Loss) Per Share | 0.47 | (13.71) | | Diluted Earnings/(Loss) Per Share | 0.41 | (13.71) | - The calculation of diluted profit per share for H1 2025 considered the dilutive effect of **38,130,318** shares related to share options granted under the share incentive scheme[137](index=137&type=chunk) - No diluted adjustment was made to basic loss per share for H1 2024, as unexercised share options had an anti-dilutive effect[137](index=137&type=chunk) [Property, Plant and Equipment](index=50&type=section&id=Property%2C%20Plant%20and%20Equipment) As of June 30, 2025, the net book value of property, plant and equipment was RMB 113.1 million, primarily comprising experiential vending machines, with RMB 4.0 million in additions and RMB 25.3 million in depreciation during the reporting period Net Book Value of Property, Plant and Equipment (As of June 30, 2025) | Item | Net Book Value (RMB '000) | | :--- | :--- | | Experiential Vending Machines | 112,572 | | Transportation Equipment | 491 | | **Total** | **113,063** | - Additions to property, plant and equipment amounted to **RMB 4.0 million**, and depreciation charged was **RMB 25.3 million** during the reporting period[140](index=140&type=chunk) - No impairment was recognized for property, plant and equipment during the reporting period[141](index=141&type=chunk) [Prepayments, Deposits and Other Receivables](index=52&type=section&id=Prepayments%2C%20Deposits%20and%20Other%20Receivables) As of June 30, 2025, current prepayments, deposits, and other receivables totaled RMB 178.3 million, and non-current totaled RMB 37.5 million, with the current portion mainly comprising prepayments and deposits and other receivables Prepayments, Deposits and Other Receivables (As of June 30, 2025) | Item | June 30, 2025 (RMB '000) | December 31, 2024 (RMB '000) | | :--- | :--- | :--- | | **Current** | | | | Prepayments | 126,695 | 187,347 | | Deposits and Other Receivables | 53,668 | 33,430 | | Provision for Expected Credit Losses | (2,064) | (3,563) | | **Total Current** | **178,299** | **218,085** | | **Non-current** | | | | Prepayments for Property, Plant and Equipment | 25,500 | 30,023 | | Deposits and Other Receivables | 12,000 | 12,000 | | **Total Non-current** | **37,500** | **42,023** | [Trade Receivables](index=52&type=section&id=Trade%20Receivables) As of June 30, 2025, net trade receivables were RMB 514.1 million, with credit terms generally ranging from three to six months, and the largest portion of receivables falling within six months Trade Receivables and Aging Analysis (As of June 30, 2025) | Item | June 30, 2025 (RMB '000) | December 31, 2024 (RMB '000) | | :--- | :--- | :--- | | Gross Trade Receivables | 571,096 | 564,004 | | Impairment | (57,008) | (53,996) | | **Net** | **514,088** | **510,008** | | **Aging Analysis (Net of Loss Allowance)** | | | | Within 6 months | 289,602 | 293,963 | | 6 to 12 months | 145,299 | 145,775 | | 1 to 2 years | 71,459 | 70,270 | | 2 to 3 years | 7,728 | – | - The Group's transaction terms with customers are primarily on credit, with credit periods generally ranging from three to six months[143](index=143&type=chunk) [Trade Payables](index=53&type=section&id=Trade%20Payables) As of June 30, 2025, trade payables amounted to RMB 57.0 million, with settlement terms typically between 30 and 60 days Trade Payables (As of June 30, 2025) | Item | June 30, 2025 (RMB '000) | December 31, 2024 (RMB '000) | | :--- | :--- | :--- | | Within 1 year | 56,982 | 19,002 | - Trade payables are non-interest-bearing, with settlement terms typically between **30 and 60 days**[145](index=145&type=chunk) [Share Capital](index=54&type=section&id=Share%20Capital) The company's authorized share capital is USD 50,000, divided into 5,000,000,000 ordinary shares of USD 0.00001 each, with 262,705,446 issued and fully paid ordinary shares amounting to RMB 18 thousand as of June 30, 2025 - The Company's authorized share capital is **USD 50,000**, divided into **5,000,000,000** ordinary shares of **USD 0.00001** each[146](index=146&type=chunk) - On May 27, 2024, the Company issued **19,704,000** new shares and listed them, with all preference shares automatically converted into **138,640,077** ordinary shares[147](index=147&type=chunk) Issued and Fully Paid Ordinary Shares (As of June 30, 2025) | Item | Number of Ordinary Shares | Share Capital (RMB '000) | | :--- | :--- | :--- | | Ordinary Shares of USD 0.00001 each | 262,705,446 | 18 | [Commitments](index=54&type=section&id=Commitments) As of June 30, 2025, the Group had capital commitments contracted but not provided for, amounting to RMB 15.0 million, primarily for the purchase of property, plant and equipment Capital Commitments (As of June 30, 2025) | Item | June 30, 2025 (RMB '000) | December 31, 2024 (RMB '000) | | :--- | :--- | :--- | | Purchase of Property, Plant and Equipment | 15,000 | 15,000 | | **Total** | **15,000** | **15,000** | [Related Party Transactions](index=54&type=section&id=Related%20Party%20Transactions) For the six months ended June 30, 2025, neither the Group nor the Company had any outstanding balances with related parties - For the six months ended June 30, 2025, neither the Group nor the Company had any outstanding balances with related parties[150](index=150&type=chunk) [Financial Instruments by Category](index=55&type=section&id=Financial%20Instruments%20by%20Category) As of June 30, 2025, the Group's total financial assets were RMB 2,109.5 million, with RMB 1,879.2 million measured at amortized cost and RMB 230.2 million at fair value through profit or loss; total financial liabilities were RMB 633.5 million, all measured at amortized cost Financial Assets (As of June 30, 2025) | Item | Financial Assets at Fair Value Through Profit or Loss (RMB '000) | Financial Assets at Amortized Cost (RMB '000) | Total (RMB '000) | | :--- | :--- | :--- | :--- | | Trade Receivables | – | 514,088 | 514,088 | | Cash and Bank Balances | – | 1,141,177 | 1,141,177 | | Financial Assets at Amortized Cost | – | 160,343 | 160,343 | | Financial Assets at Fair Value Through Profit or Loss | 230,240 | – | 230,240 | | **Total** | **230,240** | **1,879,212** | **2,109,452** | Financial Liabilities (As of June 30, 2025) | Item | Financial Liabilities at Amortized Cost (RMB '000) | | :--- | :--- | | Trade Payables | 56,982 | | Financial Liabilities Included in Other Payables and Accruals | 31,820 | | Interest-bearing Bank Borrowings | 544,690 | | **Total** | **633,492** | [Fair Value and Fair Value Hierarchy of Financial Instruments](index=57&type=section&id=Fair%20Value%20and%20Fair%20Value%20Hierarchy%20of%20Financial%20Instruments) Management assesses that the fair value of most current financial instruments approximates their carrying amounts, with assets measured at fair value primarily including listed investments (Level 1) and unlisted investments (Level 3), totaling RMB 230.2 million as of June 30, 2025 - Management assesses that the fair value of current portions of cash and cash equivalents, trade receivables, trade payables, and other similar financial instruments approximates their carrying amounts[153](index=153&type=chunk) Assets Measured at Fair Value (As of June 30, 2025) | Item | Level 1 (RMB '000) | Level 2 (RMB '000) | Level 3 (RMB '000) | Total (RMB '000) | | :--- | :--- | :--- | :--- | :--- | | Unlisted Investments | – | – | 4,000 | 4,000 | | Listed Investments | 226,240 | – | – | 226,240 | | **Total** | **226,240** | **–** | **4,000** | **230,240** | - As of June 30, 2025, there were no convertible redeemable preference shares, as they were automatically converted into ordinary shares upon listing[158](index=158&type=chunk) [Events After Reporting Period](index=59&type=section&id=Events%20After%20Reporting%20Period) The company completed the placement of 3,000,000 new shares at HKD 106.60 per share on July 23, 2025; no other significant post-reporting period events occurred after June 30, 2025 - The Company completed the placement of **3,000,000** new shares at a placement price of **HKD 106.60** per placement share on July 23, 2025[160](index=160&type=chunk) - No other significant post-reporting period events occurred after June 30, 2025[160](index=160&type=chunk) Definitions This chapter provides definitions for key terms and abbreviations used throughout the report, ensuring clarity and consistent understanding of the content

（ 於開曼群島註冊成立之有限公司 ） 股份代號 : 2116 中期報告 2025 目錄 | 釋義 | 2 | | --- | --- | | 公司資料 | 4 | | 管理層討論及分析 | 6 | | 其他資料 | 21 | | 綜合損益表 | 26 | | 綜合損益及其他收入表 | 27 | | 綜合財務狀況表 | 28 | | 綜合權益變動表 | 30 | | 簡明綜合現金流量表 | 32 | | 未經審核中期財務報表附註 | 33 | 釋義 在本中期報告中，除文義另有所指外，以下詞語具有以下涵義： 「《企業管治守則》」 上市規則附錄C1所載的企業管治守則 「歐元」 歐盟成員國法定貨幣歐元 「本集團」、「我們」或「我們的」 本公司及其附屬公司 「香港會計準則」 香港會計準則 「港元」 香港法定貨幣港元 「香港」 中華人民共和國香港特別行政區 「上市日期」 二零一八年三月二十八日，即首次在主板上進行股份買賣的日期 ANNUAL REPORT 2024 2 中期報告2025 「審核委員會」 本公司審核委員會 「董事會」 董事會 「中國」、「中國大陸」或 「中華人民共和國」 中華人民共和國，為本中期報告僅供地理 ...

股份代號 : 9600 *僅供識別 2025 2025REPORT 中期 *For identification purpose only INTERIM 報告 NEWLINK TECHNOLOGY INC. 新紐科技有限公司* Stock Code : 9600 (Incorporated in the Cayman Islands with limited liability) NEWLINK TECHNOLOGY INC. 新紐科技有限公司* NEWLINK TECHNOLOGY INC. 新 紐 科 技 有 釋義 限 公 司* INTERIM REPORT 2025 中期報告 目錄 | 釋義 | 02 | | --- | --- | | 公司資料 | 04 | | 財務概要 | 06 | | 管理層討論與分析 | 07 | | 其他資料 | 19 | | 中期簡明綜合財務資料審閱報告 | 27 | | 中期簡明綜合損益及其他全面收益表 | 28 | | 中期簡明綜合財務狀況表 | 30 | | 中期簡明綜合權益變動表 | 32 | | 中期簡明綜合現金流量表 | 33 | | 中期簡明綜合財務資料附註 ...

Company Information The company's governance structure, registration, operating locations, and professional advisory relationships are detailed in this section [Board of Directors and Committees](index=3&type=section&id=Board%20of%20Directors%20and%20Committees) The company's Board of Directors comprises executive, non-executive, and independent non-executive directors, supported by audit, remuneration, and nomination committees to ensure robust corporate governance - The Board members include **Wang Shugao** (Chairman and General Manager), Li Daoqing, Tian Chunyong, Zhou Bin, Wang Weifang, Tao Xu'an as executive directors, **Zhu Xuejing** (newly appointed) and Luo Yongxiang (resigned) as non-executive directors, and Qian Mingxing, Zhu Nanjun, Zeng Xiaosong, Fang Xuan as independent non-executive directors[7](index=7&type=chunk) - The company has an Audit Committee (Chairman: Zhu Nanjun), a Remuneration Committee (Chairman: Fang Xuan), and a Nomination Committee (Chairman: Wang Shugao)[7](index=7&type=chunk) [Registered and Operating Locations](index=3&type=section&id=Registered%20and%20Operating%20Locations) The company is registered in the Cayman Islands, with its principal operating location in Tongling City, Anhui Province, China, and a principal place of business in Hong Kong - The company's registered office is in the Cayman Islands, its principal office and place of business in China are in Tongling City, Anhui Province, and its principal place of business in Hong Kong is in Lee Garden Two, Causeway Bay[8](index=8&type=chunk)[9](index=9&type=chunk) [Professional Advisors and Auditor](index=4&type=section&id=Professional%20Advisors%20and%20Auditor) The company has engaged Linklaters, Tian Yuan Law Firm, and Harney Westwood & Riegels as legal advisors, Ascent Partners Corporate Finance Limited as compliance advisor, and KPMG as auditor - The company's legal advisors include Linklaters (Hong Kong law), Tian Yuan Law Firm (PRC law), and Harney Westwood & Riegels (Cayman Islands law)[9](index=9&type=chunk) - The compliance advisor is Ascent Partners Corporate Finance Limited, and the auditor is KPMG[9](index=9&type=chunk) Financial Highlights This section provides a concise overview of the company's financial performance and position for the reporting period [Performance Overview](index=5&type=section&id=Performance%20Overview) For the six months ended June 30, 2025, the company's revenue increased by **6.5%** year-on-year to **RMB 2.714 billion**, profit before tax surged by **42.4%** to **RMB 542 million**, profit for the period grew by **35.7%** to **RMB 382 million**, and both basic and diluted earnings per share increased by **22.2%** to **RMB 0.33** Performance Highlights for the Six Months Ended June 30 | Indicator | 2025 (RMB thousand) | 2024 (RMB thousand) | Change (%) | | :--- | :--- | :--- | :--- | | Revenue | 2,713,666 | 2,547,463 | 6.5% | | Profit before tax | 542,313 | 380,860 | 42.4% | | Income tax | (159,916) | (98,981) | 61.6% | | Profit for the period | 382,397 | 281,879 | 35.7% | | Basic EPS (RMB) | 0.33 | 0.27 | 22.2% | | Diluted EPS (RMB) | 0.33 | 0.27 | 22.2% | [Assets and Liabilities](index=5&type=section&id=Assets%20and%20Liabilities) As of June 30, 2025, the company's total assets increased by **3.0%** to **RMB 3.695 billion**, total liabilities grew by **8.2%** to **RMB 1.323 billion**, and net assets slightly increased by **0.3%** to **RMB 2.373 billion** Summary of Assets and Liabilities | Indicator | June 30, 2025 (RMB thousand) | December 31, 2024 (RMB thousand) | Change (%) | | :--- | :--- | :--- | | Total assets | 3,695,449 | 3,587,900 | 3.0% | | Total liabilities | 1,322,895 | 1,222,485 | 8.2% | | Net assets | 2,372,554 | 2,365,415 | 0.3% | Management Discussion and Analysis This section provides a comprehensive review of the company's operational performance, financial condition, and future strategies within the context of the broader industry landscape [Industry Review](index=6&type=section&id=Industry%20Review) Changes in China's economic and social development, including stable growth in urban per capita disposable income, rising urbanization rates, and demographic shifts, collectively drive the mass-market Chinese catering sector, benefiting the company's strategy to expand beyond its current RMB 50-100 average spending market - Stable growth in China's urban per capita disposable income, rising urbanization rates, and demographic shifts are favorable for the mass-market catering sector's development[13](index=13&type=chunk) - The company's "Xiaocaiyuan" brand is deeply rooted in the mass-market Chinese catering segment with an average spending of **RMB 50 to RMB 100**, and plans to steadily expand into the market with an average spending below **RMB 50**[13](index=13&type=chunk) [Business Review](index=6&type=section&id=Business%20Review) As a renowned mass-market Chinese catering chain, the company continuously optimizes operational efficiency and cost management, establishing "Xiaocaiyuan" as a recognized "family kitchen," with revenue primarily from dine-in and significantly growing takeaway businesses, despite expanding store count, same-store sales and average customer spending declined - Since its establishment in 2013, the company has been committed to offering home-style dishes at affordable prices with attentive service, building "Xiaocaiyuan" into a "family kitchen" for Chinese consumers[14](index=14&type=chunk) - The company continuously optimizes operational efficiency, rigorously manages costs and expenses, deepens refined management, and steadily enhances operating performance[14](index=14&type=chunk) [Revenue Composition and Growth](index=6&type=section&id=Revenue%20Composition%20and%20Growth) For the six months ended June 30, 2025, total revenue increased by **6.5%** year-on-year to **RMB 2.714 billion**, with dine-in revenue growing **2.2%** to **RMB 1.647 billion** due to increased store count, and takeaway revenue rising **13.7%** to **RMB 1.057 billion** driven by more orders and enhanced online platform appeal Revenue Breakdown by Business Line | Business Line | 2025 (RMB thousand) | 2025 (%) | 2024 (RMB thousand) | 2024 (%) | | :--- | :--- | :--- | :--- | :--- | | Dine-in business | 1,647,139 | 60.7 | 1,611,603 | 63.3 | | Takeaway business | 1,057,411 | 39.0 | 929,709 | 36.5 | | Others | 9,116 | 0.3 | 6,151 | 0.2 | | Total | 2,713,666 | 100.0 | 2,547,463 | 100.0 | - Dine-in business revenue increased by **2.2%**, primarily due to the number of operating stores increasing from **617** as of June 30, 2024, to **672** as of June 30, 2025[17](index=17&type=chunk) - Takeaway business revenue increased by **13.7%**, mainly due to the number of takeaway orders rising from **12.8 million** to **16.8 million**, attributed to more stores offering takeaway services and enhanced appeal of online takeaway platforms[18](index=18&type=chunk) [Key Performance Indicators](index=7&type=section&id=Key%20Performance%20Indicators) As of June 30, 2025, the company's total store count reached **672**, while the overall average spending per dine-in customer decreased from **RMB 60.4** to **RMB 57.1**, and the overall table turnover rate remained at **3.1 times/day**, with same-store sales, average daily same-store sales, and same-store table turnover rate all slightly declining "Xiaocaiyuan" Store Count and Revenue Distribution (by City Tier) | City Tier | 2025 Store Count | 2025 Total Revenue (RMB thousand) | 2025 Revenue Share (%) | 2024 Store Count | 2024 Total Revenue (RMB thousand) | 2024 Revenue Share (%) | | :--- | :--- | :--- | :--- | :--- | :--- | :--- | | Tier 1 Cities | 109 | 480,298.6 | 17.8 | 93 | 448,977.0 | 17.8 | | New Tier 1 Cities | 192 | 793,823.7 | 29.5 | 176 | 733,145.9 | 29.1 | | Tier 2 Cities | 80 | 330,310.9 | 12.3 | 76 | 307,893.6 | 12.2 | | Tier 3 and Below Cities | 291 | 1,086,906.3 | 40.4 | 272 | 1,030,830.8 | 40.9 | | Total | 672 | 2,691,339.5 | 100.0 | 617 | 2,520,847.3 | 100.0 | "Xiaocaiyuan" Key Store Performance Indicators | Indicator | 2025 | 2024 | | :--- | :--- | :--- | | Average spending per dine-in customer (RMB) | 57.1 | 60.4 | | Table turnover rate (times/day) | 3.1 | 3.1 | "Xiaocaiyuan" Same-Store Performance Indicators | Indicator | 2025 | 2024 | | :--- | :--- | :--- | | Same-store count | 522 | - | | Same-store sales (RMB thousand) | 2,157,229.8 | 2,323,798.5 | | Average daily same-store sales (RMB) | 22,854.4 | 24,641.0 | | Same-store table turnover rate (times/day) | 3.0 | 3.1 | - For the six months ended June 30, 2025, the overall table turnover rate remained at **3.1 times/day**, with a slight increase in Tier 2 cities' turnover rate primarily due to improved per-square-meter efficiency from optimized store formats[21](index=21&type=chunk) [Cost and Expense Analysis](index=10&type=section&id=Cost%20and%20Expense%20Analysis) During the reporting period, the company effectively controlled raw material and staff costs, both decreasing as a percentage of revenue, indicating improved management efficiency and supply chain management, while advertising and promotion expenses and takeaway service expenses significantly increased due to business expansion and market investment, and income tax rose sharply due to increased PRC dividend withholding tax - Other income decreased by **33.5%** to **RMB 15.2 million**, primarily due to lower bank deposit interest income[27](index=27&type=chunk) - Raw materials and consumables used decreased by **2.2%** to **RMB 801.7 million**, with its percentage of revenue falling from **32.2%** to **29.5%**, mainly benefiting from centralized procurement and improved supply chain management efficiency[28](index=28&type=chunk) - Staff costs decreased by **8.2%** to **RMB 666.4 million**, with its percentage of revenue falling from **28.5%** to **24.6%**, primarily due to improved store management efficiency and labor productivity[29](index=29&type=chunk) - Advertising and promotion expenses significantly increased by **71.1%** to **RMB 53.3 million**, mainly due to increased investment in offline advertising and marketing activities[36](index=36&type=chunk) - Takeaway service expenses increased by **11.4%** to **RMB 181.9 million**, consistent with the growth in takeaway business revenue, with its percentage of total revenue rising from **6.4%** to **6.7%**[37](index=37&type=chunk) - Income tax increased by **61.6%** to **RMB 159.9 million**, with the effective tax rate rising from **26.0%** to **29.5%**, primarily due to increased PRC dividend withholding tax[41](index=41&type=chunk) [Non-IFRS Measures](index=12&type=section&id=Non-IFRS%20Measures) The company uses adjusted net profit and adjusted EBITDA as non-IFRS measures to provide a clearer perspective on operating performance, with adjusted net profit at **RMB 382 million** and adjusted EBITDA at **RMB 647 million** for the six months ended June 30, 2025, both showing significant year-on-year growth - Adjusted net profit is defined as net profit plus fair value changes of convertible bonds and derivative financial instruments, changes in carrying amount of redemption liabilities, and listing expenses[45](index=45&type=chunk) - Adjusted EBITDA adds back income tax, net finance costs, and depreciation and amortization of other assets to adjusted net profit[45](index=45&type=chunk) Reconciliation of Net Profit to Adjusted Net Profit and Adjusted EBITDA | Indicator | 2025 (RMB thousand) | 2024 (RMB thousand) | | :--- | :--- | :--- | | Net profit | 382,397 | 281,879 | | Adjusted net profit (Non-IFRS measure) | 382,397 | 264,365 | | Adjusted EBITDA (Non-IFRS measure) | 646,966 | 454,139 | [Balance Sheet Item Analysis](index=13&type=section&id=Balance%20Sheet%20Item%20Analysis) The company optimized inventory and trade and other receivables through improved supply chain management efficiency, leading to a decrease in these balances, while trade and other payables increased, primarily due to accelerated year-end settlement processes - Right-of-use assets decreased by **8.7%** to **RMB 720.4 million**, primarily attributable to increased depreciation of right-of-use assets[46](index=46&type=chunk) - Inventories decreased to **RMB 74.1 million**, and inventory turnover days decreased from **23.6 days** to **20.7 days**, mainly due to improved supply chain management efficiency[47](index=47&type=chunk)[48](index=48&type=chunk) - Trade and other receivables decreased by **22.5%** to **RMB 233.9 million**, primarily due to optimized prepayment levels[49](index=49&type=chunk) - Trade and other payables increased to **RMB 270.8 million**, mainly due to accelerated year-end settlement processes with suppliers[50](index=50&type=chunk) [Liquidity and Capital Resources](index=14&type=section&id=Liquidity%20and%20Capital%20Resources) The company maintains ample liquidity with a significant increase in net cash from operating activities, and during the reporting period, new bank loans of **RMB 100 million** led to a rise in the capital-to-debt ratio from **0%** to **4.2%**, with no assets pledged or contingent liabilities - As of June 30, 2025, cash and cash equivalents amounted to **RMB 638.8 million**, and net cash generated from operating activities was **RMB 764.8 million**, a significant increase from **RMB 455.0 million** in the prior period[51](index=51&type=chunk) - As of June 30, 2025, bank loans totaled **RMB 100 million**, primarily for letter of credit borrowings to purchase ingredients, at an interest rate of **1.75%**[53](index=53&type=chunk) - The capital-to-debt ratio increased from **0%** as of December 31, 2024, to **4.2%** as of June 30, 2025, primarily due to increased bank loans[56](index=56&type=chunk) - The Group has not pledged any assets and has no contingent liabilities[54](index=54&type=chunk)[55](index=55&type=chunk) [Employees and Remuneration Policy](index=15&type=section&id=Employees%20and%20Remuneration%20Policy) As of June 30, 2025, the company had a total of **12,498** employees, with total staff costs amounting to **RMB 666.4 million**, implementing diverse remuneration and incentive mechanisms, and providing regular training to enhance operational skills and management capabilities - As of June 30, 2025, the Group had a total of **12,498** employees, with total staff costs amounting to **RMB 666.4 million**[58](index=58&type=chunk) - The company's remuneration policy includes basic salaries, overtime pay, performance-based incentive bonuses, and discretionary bonuses for store managers, head chefs, and key employees in new stores[58](index=58&type=chunk)[59](index=59&type=chunk) - The company conducts monthly training courses aimed at enhancing employees' operational skills, developing management capabilities, and reinforcing company values[59](index=59&type=chunk) [Material Investments and Future Plans](index=16&type=section&id=Material%20Investments%20and%20Future%20Plans) There were no material acquisitions or disposals during the reporting period, and the company invested working capital in wealth management products to enhance returns, with future plans including continuous store network expansion, supply chain enhancement, digital system upgrades, and active exploration of Chinese community catering business - There were no material acquisitions or disposals of subsidiaries, associates, or joint ventures during the reporting period[60](index=60&type=chunk) - The company invested working capital in non-principal-protected floating-rate wealth management products issued by Agricultural Bank of China Limited, with a fair value of **RMB 200.8 million** as of June 30, 2025, accounting for **5.42%** of total assets[61](index=61&type=chunk) - Future outlook includes consolidating its leading position in the mass-market Chinese catering sector, continuously enhancing the dining experience at operating stores, optimizing the supply chain management system, strategically expanding the store network, and exploring Chinese community catering business[64](index=64&type=chunk) Corporate Governance and Other Information This section details the company's corporate governance practices, shareholding structure, use of global offering proceeds, and other relevant disclosures [Interim Dividend](index=18&type=section&id=Interim%20Dividend) The Board has resolved to declare an interim dividend of **RMB 0.2119** per share for the six months ended June 30, 2025, totaling approximately **RMB 250 million**, which was paid on September 16, 2025 - The Board resolved to declare an interim dividend of **RMB 0.2119** per share, totaling approximately **RMB 250 million**, which was paid on September 16, 2025[65](index=65&type=chunk) [Listed Securities Transactions](index=18&type=section&id=Listed%20Securities%20Transactions) During the reporting period, neither the company nor its subsidiaries purchased, sold, or redeemed any listed securities, and no treasury shares were held - During the reporting period, neither the company nor any of its subsidiaries purchased, sold, or redeemed any of the company's securities[66](index=66&type=chunk) - As of June 30, 2025, the company did not hold any treasury shares[67](index=67&type=chunk) [Compliance with Corporate Governance Code](index=18&type=section&id=Compliance%20with%20Corporate%20Code) The company has complied with all applicable provisions of the Corporate Governance Code, except for the deviation where Mr. Wang Shugao holds both Chairman and General Manager roles, which the Board believes provides strong leadership with sufficient checks and balances - The company has complied with all applicable code provisions of the Corporate Governance Code, except for a deviation from code provision C.2.1 (roles of Chairman and Chief Executive should be separate)[68](index=68&type=chunk)[69](index=69&type=chunk) - Mr. Wang Shugao serves as both Chairman and General Manager, an arrangement the Board believes provides strong and consistent leadership for the Group, with adequate checks and balances in place[69](index=69&type=chunk) [Changes in Directors and Senior Management](index=19&type=section&id=Changes%20in%20Directors%20and%20Senior%20Management) Mr. Luo Yongxiang resigned as a non-executive director on March 7, 2025, and Ms. Zhu Xuejing was appointed as a non-executive director on the same day, bringing extensive experience in capital markets and private equity investment - Mr. Luo Yongxiang resigned as a non-executive director due to other work commitments, effective March 7, 2025[72](index=72&type=chunk) - Ms. Zhu Xuejing was appointed as a non-executive director effective March 7, 2025, possessing **12 years** of experience in business operations, risk control, and compliance for capital market and private equity investment institutions[73](index=73&type=chunk) [Directors' and Major Shareholders' Interests](index=20&type=section&id=Directors'%20and%20Major%20Shareholders'%20Interests) As of June 30, 2025, Mr. Wang Shugao, as the largest shareholder, held **85.00%** of the company's shares through controlled corporations, while several directors and other individual shareholders collectively held interests in XCY Yongqing Limited through a concert party agreement, indirectly owning company shares, and Harvest Delicacy held **5.97%** of shares Interests of Directors and Chief Executive in the Company's Shares | Name of Director or Chief Executive | Nature of Interest | Number of Shares Interested | Approximate Percentage of Interest in the Company | | :--- | :--- | :--- | :--- | | Mr. Wang Shugao | Interest in controlled corporation | 1,000,000,000 | 85.00% | | Mr. Li Daoqing | Jointly held interest with other parties | 429,714,000 | 36.52% | | Mr. Tian Chunyong | Jointly held interest with other parties | 429,714,000 | 36.52% | | Mr. Zhou Bin | Jointly held interest with other parties | 429,714,000 | 36.52% | | Ms. Wang Weifang | Jointly held interest with other parties | 429,714,000 | 36.52% | | Mr. Tao Xu'an | Jointly held interest with other parties | 429,714,000 | 36.52% | Interests of Major Shareholders in the Company's Shares | Shareholder Name | Capacity/Nature of Interest | Number of Shares Held | Approximate Percentage of Interest in the Company | | :--- | :--- | :--- | :--- | | XCY Yongqing Limited | Beneficial owner | 429,714,000 | 36.52% | | XCY Xuyuan Limited | Beneficial owner | 275,429,000 | 23.41% | | XCY Zhiyuan Limited | Beneficial owner | 69,714,000 | 5.93% | | XCY Huiming Limited | Beneficial owner | 56,000,000 | 4.76% | | XCY Weiyuan Limited | Beneficial owner | 26,857,000 | 2.28% | | XCY Liyuan Limited | Beneficial owner | 20,571,000 | 1.75% | | XCY Future Limited | Beneficial owner | 121,715,000 | 10.35% | | Mr. Ye Hongli | Jointly held interest with other parties | 429,714,000 | 36.52% | | Mr. Fang Zhiguo | Jointly held interest with other parties | 429,714,000 | 36.52% | | Mr. Chen Haiyan | Jointly held interest with other parties | 429,714,000 | 36.52% | | Harvest Delicacy | Beneficial owner | 70,283,600 | 5.97% | - Mr. Wang Shugao is the sole director of each British Virgin Islands entity and is therefore deemed to be interested in **85.00%** of the company's shares[75](index=75&type=chunk) - Mr. Wang Shugao and other individual shareholders (including Li Daoqing, Tian Chunyong, Zhou Bin, Tao Xu'an, Ye Hongli, Fang Zhiguo, Wang Weifang, and Chen Haiyan) have entered into a concert party agreement to jointly hold interests in XCY Yongqing Limited[77](index=77&type=chunk)[80](index=80&type=chunk) [Use of Proceeds from Global Offering](index=22&type=section&id=Use%20of%20Proceeds%20from%20Global%20Offering) The company listed in December 2024, with net proceeds from the global offering of approximately **HKD 794.8 million**, of which **HKD 140 million** had been used as of June 30, 2025, primarily for enhancing supply chain capabilities and expanding the store network, with the intended use of proceeds unchanged and remaining funds held in short-term interest-bearing accounts - The net proceeds from the global offering were approximately **HKD 794.8 million**, with **HKD 140.0 million** cumulatively utilized as of June 30, 2025[82](index=82&type=chunk) Use of Proceeds from Global Offering and Application Status | Use of Proceeds | Percentage of Proceeds | Net Proceeds (HKD million) | Unused Amount as of Dec 31, 2024 (HKD million) | Amount Used for Six Months Ended Jun 30, 2025 (HKD million) | Cumulative Amount Used as of Jun 30, 2025 (HKD million) | Unused Amount as of Jun 30, 2025 (HKD million) | Expected Timeline for Full Utilization of Unused Proceeds | | :--- | :--- | :--- | :--- | :--- | :--- | :--- | :--- | | Continuous expansion of our store network | 40.0% | 317.9 | 317.9 | 57.9 | 57.9 | 260.0 | December 31, 2026 | | Enhancement of supply chain capabilities | 37.0% | 294.1 | 294.1 | 77.6 | 77.6 | 216.5 | December 31, 2026 | | Upgrade of our smart equipment and digitalization systems | 13.0% | 103.3 | 103.3 | 4.5 | 4.5 | 98.8 | December 31, 2026 | | Working capital and general corporate purposes | 10.0% | 79.5 | 79.5 | 0 | 0 | 79.5 | December 31, 2026 | | Total | 100% | 794.8 | 794.8 | 140.0 | 140.0 | 654.8 | | - The unutilized net proceeds are deposited in short-term interest-bearing accounts opened with licensed commercial banks and/or other authorized financial institutions[82](index=82&type=chunk) [Other Corporate Governance Matters](index=23&type=section&id=Other%20Corporate%20Governance%20Matters) The company has not adopted any share schemes, no material events occurred after the reporting period, and the Audit Committee has reviewed the interim results, with the interim report published on the Stock Exchange and the company's website - The company has not adopted any share schemes[83](index=83&type=chunk) - No material events affecting the Group have occurred from June 30, 2025, up to the latest practicable date[84](index=84&type=chunk) - The Audit Committee has reviewed the Group's unaudited condensed consolidated interim results and interim report for the six months ended June 30, 2025[85](index=85&type=chunk) Independent Auditor's Report This section presents the independent auditor's review report on the company's interim financial information [Introduction](index=25&type=section&id=Introduction) KPMG has reviewed Xiaocaiyuan International Holdings Limited's interim financial report for the six months ended June 30, 2025, prepared in accordance with the Hong Kong Stock Exchange Listing Rules and IAS 34, with the Board responsible for its preparation and the auditor's responsibility to conclude based on the review - KPMG has reviewed the company's interim financial report for the six months ended June 30, 2025[88](index=88&type=chunk) - The interim financial report was prepared in accordance with the Hong Kong Stock Exchange Listing Rules and IAS 34, with directors responsible for its preparation and presentation[88](index=88&type=chunk) [Scope of Review and Conclusion](index=25&type=section&id=Scope%20of%20Review%20and%20Conclusion) The review was conducted in accordance with Hong Kong Standard on Review Engagements 2410, which is less in scope than an audit, thus no audit opinion is expressed, and based on the review, the auditor found no matters indicating that the interim financial report was not prepared in accordance with IAS 34 - The review was conducted in accordance with Hong Kong Standard on Review Engagements 2410 issued by the HKICPA, which is less in scope than an audit, and therefore no audit opinion is expressed[89](index=89&type=chunk) - Based on the review, the auditor did not note any matters that caused them to believe the interim financial report was not prepared in all material respects in accordance with IAS 34[90](index=90&type=chunk) Consolidated Financial Statements This section presents the company's consolidated financial statements, including the statements of profit or loss, comprehensive income, financial position, changes in equity, and cash flows [Consolidated Statement of Profit or Loss](index=27&type=section&id=Consolidated%20Statement%20of%20Profit%20or%20Loss) For the six months ended June 30, 2025, the company reported revenue of **RMB 2.714 billion**, profit for the period of **RMB 382 million**, and basic and diluted earnings per share of **RMB 0.33** Summary of Consolidated Statement of Profit or Loss | Indicator | 2025 (RMB thousand) | 2024 (RMB thousand) | | :--- | :--- | :--- | | Revenue | 2,713,666 | 2,547,463 | | Profit before tax | 542,313 | 380,860 | | Profit for the period | 382,397 | 281,879 | | Basic EPS (RMB) | 0.33 | 0.27 | | Diluted EPS (RMB) | 0.33 | 0.27 | [Consolidated Statement of Profit or Loss and Other Comprehensive Income](index=28&type=section&id=Consolidated%20Statement%20of%20Profit%20or%20Loss%20and%20Other%20Comprehensive%20Income) For the six months ended June 30, 2025, the company's profit for the period was **RMB 382 million**, with other comprehensive income of **RMB (258) thousand**, resulting in a total comprehensive income for the period of **RMB 382 million** Summary of Consolidated Statement of Profit or Loss and Other Comprehensive Income | Indicator | 2025 (RMB thousand) | 2024 (RMB thousand) | | :--- | :--- | :--- | | Profit for the period | 382,397 | 281,879 | | Other comprehensive income for the period | (258) | 584 | | Total comprehensive income for the period | 382,139 | 282,463 | [Consolidated Statement of Financial Position](index=29&type=section&id=Consolidated%20Statement%20of%20Financial%20Position) As of June 30, 2025, the company's total assets were **RMB 3.695 billion**, with current assets at **RMB 2.213 billion**, total liabilities at **RMB 1.323 billion**, current liabilities at **RMB 737 million**, and net assets at **RMB 2.373 billion** Summary of Consolidated Statement of Financial Position | Indicator | June 30, 2025 (RMB thousand) | December 31, 2024 (RMB thousand) | | :--- | :--- | :--- | | Non-current assets | 1,481,987 | 1,548,174 | | Current assets | 2,213,462 | 2,039,726 | | Current liabilities | 736,939 | 606,688 | | Non-current liabilities | 585,956 | 615,797 | | Net assets | 2,372,554 | 2,365,415 | | Total equity | 2,372,554 | 2,365,415 | [Consolidated Statement of Changes in Equity](index=31&type=section&id=Consolidated%20Statement%20of%20Changes%20in%20Equity) For the six months ended June 30, 2025, the company's total equity increased from **RMB 2.365 billion** at the beginning of the year to **RMB 2.373 billion**, primarily influenced by a profit for the period of **RMB 382 million** and a dividend payment of **RMB 375 million** Summary of Consolidated Statement of Changes in Equity | Indicator | Balance as of Jan 1, 2025 (RMB thousand) | Profit for the period (RMB thousand) | Dividends declared (RMB thousand) | Balance as of Jun 30, 2025 (RMB thousand) | | :--- | :--- | :--- | :--- | :--- | | Total | 2,365,415 | 382,397 | (375,000) | 2,372,554 | [Condensed Consolidated Statement of Cash Flows](index=33&type=section&id=Condensed%20Consolidated%20Statement%20of%20Cash%20Flows) For the six months ended June 30, 2025, net cash generated from operating activities was **RMB 765 million**, net cash used in investing activities was **RMB 327 million**, and net cash used in financing activities was **RMB 415 million**, resulting in a net increase in cash and cash equivalents of **RMB 22.3 million** Summary of Condensed Consolidated Statement of Cash Flows | Activity | 2025 (RMB thousand) | 2024 (RMB thousand) | | :--- | :--- | :--- | | Net cash generated from operating activities | 764,750 | 454,967 | | Net cash used in investing activities | (326,953) | (410,382) | | Net cash used in financing activities | (415,468) | (229,293) | | Net increase/(decrease) in cash and cash equivalents | 22,329 | (184,708) | | Cash and cash equivalents at June 30 | 638,829 | 436,033 | Notes to the Unaudited Interim Financial Report This section provides detailed notes to the unaudited interim financial report, covering accounting policies, revenue breakdown, expense analysis, and other financial disclosures [Basis of Preparation and Changes in Accounting Policies](index=35&type=section&id=Basis%20of%20Preparation%20and%20Changes%20in%20Accounting%20Policies) This interim financial report is prepared in accordance with IAS 34 and has been reviewed by KPMG, with the IAS 21 amendment applied during this period having no material impact on the Group - This interim financial report is prepared in accordance with the Hong Kong Stock Exchange Listing Rules and IAS 34, and has been reviewed by KPMG[107](index=107&type=chunk)[108](index=108&type=chunk) - The Group has applied the IAS 21 amendment "The Effects of Changes in Foreign Exchange Rates – Lack of Exchangeability" for this accounting period, with no material impact[109](index=109&type=chunk) [Revenue and Other Income](index=36&type=section&id=Revenue%20and%20Other%20Income) The company's revenue primarily derives from dine-in and takeaway businesses, both recognized at a point in time, while other income, mainly comprising bank deposit interest, wealth management product investment gains, and government grants, decreased in total this period Disaggregation of Revenue from Contracts with Customers by Major Product or Service Line | Business Line | 2025 (RMB thousand) | 2024 (RMB thousand) | | :--- | :--- | :--- | | Dine-in business | 1,647,139 | 1,611,603 | | Takeaway business | 1,057,411 | 929,709 | | Others | 9,116 | 6,151 | | Total | 2,713,666 | 2,547,463 | Details of Other Income | Item | 2025 (RMB thousand) | 2024 (RMB thousand) | | :--- | :--- | :--- | | Bank deposit interest income | 4,313 | 10,860 | | Investment income from wealth management products | 3,282 | 1,290 | | Government grants | 6,542 | 9,596 | | Total | 15,156 | 22,784 | [Components of Profit Before Tax](index=38&type=section&id=Components%20of%20Profit%20Before%20Tax) Profit before tax is influenced by finance costs, staff costs, other expenses, and other net income, with staff costs and some other expenses decreasing, finance costs remaining stable, and other net income significantly declining due to reduced fair value gains Details of Finance Costs | Item | 2025 (RMB thousand) | 2024 (RMB thousand) | | :--- | :--- | :--- | | Interest on bank loans | 615 | 354 | | Interest on lease liabilities | 18,832 | 18,970 | | Interest on provisions | 708 | 675 | | Total | 20,155 | 19,999 | Details of Staff Costs | Item | 2025 (RMB thousand) | 2024 (RMB thousand) | | :--- | :--- | :--- | | Salaries, wages and other benefits | 650,792 | 709,753 | | Contributions to defined contribution retirement plans | 15,604 | 16,520 | | Total | 666,396 | 726,273 | Details of Other Expenses | Item | 2025 (RMB thousand) | 2024 (RMB thousand) | | :--- | :--- | :--- | | Property management expenses | 68,631 | 65,089 | | Transportation and related expenses | 15,469 | 14,476 | | Administrative expenses | 2,090 | 6,094 | | Professional service expenses | 2,904 | 3,937 | | Listing expenses | – | 9,419 | | Cleaning fees | 6,930 | 7,024 | | Taxes and surcharges | 8,283 | 6,061 | | Business development expenses | 3,442 | 3,179 | | Impairment loss on property, plant and equipment and right-of-use assets | – | 471 | | Others | 8,030 | 5,747 | | Total | 115,779 | 121,497 | Details of Other Net Income | Item | 2025 (RMB thousand) | 2024 (RMB thousand) | | :--- | :--- | :--- | | Net loss on disposal of property, plant and equipment and right-of-use assets | 8,358 | 6,144 | | Change in carrying amount of redemption liabilities | – | 19,504 | | Fair value change of convertible bonds and derivative financial instruments | – | (46,437) | | Fair value change of financial assets at fair value through profit or loss | (15,659) | – | | Exchange loss/(gain) | 1,910 | (430) | | Other losses/(income) | 2,611 | (6,194) | | Total | (2,780) | (27,413) | [Income Tax and Earnings Per Share](index=40&type=section&id=Income%20Tax%20and%20Earnings%20Per%20Share) Income tax expense significantly increased due to higher PRC dividend withholding tax, with both basic and diluted earnings per share at **RMB 0.33**, showing growth compared to the prior period Details of Income Tax | Item | 2025 (RMB thousand) | 2024 (RMB thousand) | | :--- | :--- | :--- | | Current tax | 133,270 | 93,912 | | Deferred tax | 26,646 | 5,069 | | Total | 159,916 | 98,981 | - Certain subsidiaries qualify for preferential income tax rates for small and micro enterprises in China, with taxable income up to **RMB 3 million** taxed at a **5%** rate[118](index=118&type=chunk) - Basic earnings per share are calculated based on profit attributable to ordinary equity shareholders of **RMB 382,397,000** and a weighted average of **1,176,519,000** ordinary shares outstanding[121](index=121&type=chunk) - For the six months ended June 30, 2025, diluted earnings per share were the same as basic earnings per share, as there were no potentially dilutive ordinary shares[122](index=122&type=chunk) [Property, Plant and Equipment and Right-of-Use Assets](index=42&type=section&id=Property,%20Plant%20and%20Equipment%20and%20Right-of-Use%20Assets) The cost of property, plant and equipment acquired this period was **RMB 96.5 million**, while right-of-use assets increased by **RMB 60.2 million** due to multiple lease agreements, and no impairment loss was recognized this period, compared to **RMB 471 thousand** in the prior period - For the six months ended June 30, 2025, the Group's cost of acquiring property, plant and equipment items was **RMB 96,514,000**[123](index=123&type=chunk) - Right-of-use assets increased by **RMB 60,233,000**, primarily due to the signing of multiple restaurant and warehouse lease agreements[124](index=124&type=chunk) - For the six months ended June 30, 2025, no impairment loss was recognized (prior period: **RMB 471,000**)[125](index=125&type=chunk) [Details of Current Assets and Liabilities](index=43&type=section&id=Details%20of%20Current%20Assets%20and%20Liabilities) Inventories and trade and other receivables both decreased, reflecting improved supply chain management efficiency, while financial assets at fair value through profit or loss significantly increased, primarily due to wealth management product investments, and trade and other payables and contract liabilities also changed Inventory Composition | Item | June 30, 2025 (RMB thousand) | December 31, 2024 (RMB thousand) | | :--- | :--- | :--- | | Food ingredients | 52,453 | 82,738 | | Seasonings | 9,947 | 13,375 | | Beverages | 3,990 | 3,507 | | Others | 7,724 | 9,946 | | Total | 74,114 | 109,566 | Ageing Analysis of Trade and Other Receivables | Ageing | June 30, 2025 (RMB thousand) | December 31, 2024 (RMB thousand) | | :--- | :--- | :--- | | Within 1 month | 27,827 | 28,116 | | 1 to 3 months | 1,993 | 1,832 | | 3 to 6 months | 998 | 367 | | Over 6 months but within 1 year | 532 | 415 | | Trade receivables | 31,350 | 30,730 | | Other receivables and deposits | 69,089 | 84,678 | | Prepayments | 118,096 | 173,715 | | Deductible VAT | 15,341 | 12,740 | | Total | 233,876 | 301,863 | - Financial assets at fair value through profit or loss increased to **RMB 1.191 billion**, primarily investments in funds and bank wealth management products, including net unrealized gains of **RMB 15,659,000**[129](index=129&type=chunk) Cash and Cash Equivalents | Item | June 30, 2025 (RMB thousand) | December 31, 2024 (RMB thousand) | | :--- | :--- | :--- | | Cash on hand | 4 | 10 | | Cash at bank | 714,825 | 840,007 | | Less: Time deposits | (76,000) | (223,356) | | Total | 638,829 | 616,661 | Bank Loans and Other Borrowings | Item | June 30, 2025 (RMB thousand) | December 31, 2024 (RMB thousand) | | :--- | :--- | :--- | | Within one year or on demand | 100,000 | – | Ageing Analysis of Trade and Other Payables | Item | June 30, 2025 (RMB thousand) | December 31, 2024 (RMB thousand) | | :--- | :--- | :--- | | Trade payables (within one year) | 86,463 | 56,932 | | Accrued staff costs | 108,411 | 96,992 | | Other taxes payable | 10,886 | 11,142 | | Other payables and accrued expenses | 65,088 | 63,434 | | Total | 270,848 | 228,500 | Contract Liabilities | Item | June 30, 2025 (RMB thousand) | December 31, 2024 (RMB thousand) | | :--- | :--- | :--- | | Contract liabilities related to prepaid cards | 70,797 | 74,122 | | Contract liabilities related to customer loyalty programs | 1,599 | 3,212 | | Total | 72,396 | 77,334 | [Capital, Reserves and Dividends](index=47&type=section&id=Capital,%20Reserves%20and%20Dividends) The Board has approved an interim dividend of **RMB 0.2119** per share, and the company's share capital structure underwent changes in 2024, including a share split, initial public offering, and conversion of convertible preference shares into ordinary shares - The Board has approved an interim dividend of **RMB 0.2119** per ordinary share, totaling **RMB 250,000 thousand**, to be paid after the interim period[135](index=135&type=chunk) - On December 2, 2024, the company's shares with a par value of **USD 1** per share were subdivided into **100,000** shares with a par value of **USD 0.00001** per share[137](index=137&type=chunk) - On December 20, 2024, the company issued **101,181,000** ordinary shares through its listing, with net proceeds of approximately **RMB 776,579,000**[137](index=137&type=chunk) - Upon completion of the listing, **753.38** preference shares were converted into **75,338,000** ordinary shares[137](index=137&type=chunk) [Fair Value Measurement of Financial Instruments](index=49&type=section&id=Fair%20Value%20Measurement%20of%20Financial%20Instruments) The Group's financial instruments are measured at fair value, primarily financial assets at fair value through profit or loss, classified as Level 2 valuations, with their fair values determined by recent comparable market transaction prices - The Group's financial instruments' fair value measurements are categorized into three levels: Level 1 (quoted prices in active markets), Level 2 (observable inputs other than quoted prices in active markets), and Level 3 (significant unobservable inputs)[139](index=139&type=chunk) Fair Value Measurement of Financial Assets at Fair Value Through Profit or Loss | Item | Fair Value as of Jun 30, 2025 (RMB thousand) | Level 1 (RMB thousand) | Level 2 (RMB thousand) | Level 3 (RMB thousand) | | :--- | :--- | :--- | :--- | :--- | | Financial assets at fair value through profit or loss | 1,190,643 | – | 1,190,643 | – | - The fair value of Level 2 wealth management products is determined by recent comparable market transaction prices[142](index=142&type=chunk) [Commitments and Related Party Transactions](index=51&type=section&id=Commitments%20and%20Related%20Party%20Transactions) As of June 30, 2025, the company's contracted commitments for property, plant and equipment acquisitions amounted to **RMB 190 million**, and total key management personnel compensation was **RMB 4.318 million** Unfulfilled Commitments | Item | June 30, 2025 (RMB thousand) | December 31, 2024 (RMB thousand) | | :--- | :--- | :--- | | Contracted for acquisition of property, plant and equipment | 189,967 | 128,424 | Key Management Personnel Compensation | Item | 2025 (RMB thousand) | 2024 (RMB thousand) | | :--- | :--- | :--- | | Short-term employee benefits | 4,133 | 2,015 | | Contributions to defined contribution retirement plans | 185 | 80 | | Total | 4,318 | 2,095 | [Non-Adjusting Events After the Reporting Period](index=51&type=section&id=Non-Adjusting%20Events%20After%20the%20Reporting%20Period) Subsequent to the reporting period, the directors resolved to declare an interim dividend, with details disclosed in Note 16(a) - Subsequent to the end of the reporting period, the directors resolved to declare an interim dividend[145](index=145&type=chunk) Definitions This section provides definitions for key terms and abbreviations used throughout the report to ensure consistent understanding [Definition of Terms](index=51&type=section&id=Definition%20of%20Terms) This section provides definitions for key terms and abbreviations used in the report, including company names, geographical areas, legal entities, financial reporting standards, and regulatory bodies, to ensure consistent understanding of the report's content - This section defines key terms used in the report, such as "the Company" (Xiaocaiyuan International Holdings Limited), "the Group" (the Company and its subsidiaries), and "PRC" (the People's Republic of China)[146](index=146&type=chunk)[148](index=148&type=chunk)[149](index=149&type=chunk)[151](index=151&type=chunk) - It covers definitions related to corporate governance, securities transactions, financial reporting standards (such as IFRS), and major shareholders[146](index=146&type=chunk)[148](index=148&type=chunk)[149](index=149&type=chunk)[151](index=151&type=chunk)

[CORPORATE INFORMATION](index=2&type=section&id=CORPORATE%20INFORMATION) [Board of Directors and Committees Composition](index=3&type=section&id=Board%20of%20Directors%20and%20Committees) This section details the company's board members, their committee roles, and essential corporate information - The Board of Directors includes Chairman Dong Xiaojie, Executive Directors Liu Xihe and Xi Jianpeng, and three Independent Non-executive Directors Huang Kejie, Lu Jiaming, and Peng Fan[5](index=5&type=chunk)[6](index=6&type=chunk) - The Audit Committee is chaired by Lu Jiaming, the Remuneration Committee by Huang Kejie, and the Nomination Committee by Dong Xiaojie[5](index=5&type=chunk)[6](index=6&type=chunk)[7](index=7&type=chunk)[8](index=8&type=chunk) - The company's stock code is **2339**, and its official website is www.bwi-intl.com.hk[8](index=8&type=chunk) [REPORT ON REVIEW OF INTERIM FINANCIAL INFORMATION](index=4&type=section&id=REPORT%20ON%20REVIEW%20OF%20INTERIM%20FINANCIAL%20INFORMATION) [Introduction and Scope of Review](index=5&type=section&id=Introduction%20and%20Scope%20of%20Review) PricewaterhouseCoopers reviewed the interim financial information for the six months ended June 30, 2025, noting the scope is less than an audit, thus no audit opinion is expressed - The auditor reviewed the interim financial information for the six months ended June 30, 2025, covering the consolidated statement of profit or loss, comprehensive income, financial position, changes in equity, and cash flows[9](index=9&type=chunk)[10](index=10&type=chunk) - The review was conducted in accordance with Hong Kong Standard on Review Engagements 2410, with a scope less than an audit, thus no audit opinion is expressed[12](index=12&type=chunk)[14](index=14&type=chunk) [Conclusion of Review](index=6&type=section&id=Conclusion%20of%20Review) The auditor found no matters indicating the Group's interim financial information is not prepared in all material respects under HKAS 34 - The auditor believes the Group's interim financial information is prepared in all material respects in accordance with Hong Kong Accounting Standard 34 'Interim Financial Reporting'[13](index=13&type=chunk)[15](index=15&type=chunk) [INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS](index=7&type=section&id=INTERIM%20CONDENSED%20CONSOLIDATED%20FINANCIAL%20STATEMENTS) [Interim Condensed Consolidated Statement of Profit or Loss](index=7&type=section&id=INTERIM%20CONDENSED%20CONSOLIDATED%20STATEMENT%20OF%20PROFIT%20OR%20LOSS) For the six months ended June 30, 2025, revenue grew, but gross profit and margin declined, leading to a narrowed loss of **3.45 HK cents** per share Key Financial Data from Statement of Profit or Loss (For the six months ended June 30) | Metric | 2025 (HK$ '000) | 2024 (HK$ '000) | Change | Change Rate | Notes | | :--- | :--- | :--- | :--- | :--- | :--- | | Revenue | 1,627,054 | 1,447,238 | 179,816 | 12.42% | Increase | | Cost of sales | (1,478,401) | (1,225,498) | (252,903) | 20.64% | Increase | | Gross profit | 148,653 | 221,740 | (73,087) | -32.96% | Decrease | | Selling and distribution expenses | (11,515) | (11,517) | 2 | -0.02% | Largely stable | | Administrative expenses | (86,533) | (83,647) | (2,886) | 3.45% | Increase | | Research and development expenses | (90,828) | (177,369) | 86,541 | -48.79% | Significant decrease | | Operating loss | (13,646) | (35,937) | 22,291 | -62.03% | Loss narrowed | | Loss before tax | (20,331) | (42,431) | 22,100 | -52.08% | Loss narrowed | | Loss for the period | (29,709) | (51,594) | 21,885 | -42.42% | Loss narrowed | | Basic and diluted loss per share (HK cents) | (3.45) | (8.98) | 5.53 | -61.58% | Loss narrowed | [Interim Condensed Consolidated Statement of Comprehensive Income](index=8&type=section&id=INTERIM%20CONDENSED%20CONSOLIDATED%20STATEMENT%20OF%20COMPREHENSIVE%20INCOME) For the six months ended June 30, 2025, a HK$29.7 million loss was offset by **HK$69.0 million** in foreign exchange differences, yielding **HK$35.8 million** in total comprehensive income Key Data from Statement of Comprehensive Income (For the six months ended June 30) | Metric | 2025 (HK$ '000) | 2024 (HK$ '000) | Change | Change Rate | | :--- | :--- | :--- | :--- | :--- | | Loss for the period | (29,709) | (51,594) | 21,885 | -42.42% | | Exchange differences on translation of overseas operations | 69,013 | (21,158) | 90,171 | -426.18% | | Remeasurement loss on defined benefit plans (net of income tax) | (3,491) | (1,408) | (2,083) | 147.94% | | Other comprehensive income/(loss) for the period, net of income tax | 65,522 | (22,566) | 88,088 | -390.36% | | Total comprehensive income/(loss) for the period | 35,813 | (74,160) | 109,973 | -148.29% | - In the first half of 2025, exchange differences on translation of overseas operations shifted from a **HK$21.2 million** loss in the prior year to a **HK$69.0 million** gain, primarily driving the positive total comprehensive income[21](index=21&type=chunk) [Interim Condensed Consolidated Statement of Financial Position](index=9&type=section&id=INTERIM%20CONDENSED%20CONSOLIDATED%20STATEMENT%20OF%20FINANCIAL%20POSITION) As of June 30, 2025, total assets and net assets increased, with non-current assets slightly down, while current assets and liabilities rose, and total liabilities increased marginally Key Data from Statement of Financial Position (As of June 30) | Metric | June 30, 2025 (HK$ '000) | December 31, 2024 (HK$ '000) | Change | Change Rate | | :--- | :--- | :--- | :--- | :--- | | Total non-current assets | 946,946 | 976,782 | (29,836) | -3.05% | | Total current assets | 1,149,920 | 1,055,853 | 94,067 | 8.91% | | Total assets | 2,096,866 | 2,032,635 | 64,231 | 3.16% | | Total current liabilities | 923,061 | 903,687 | 19,374 | 2.14% | | Total non-current liabilities | 388,170 | 379,126 | 9,044 | 2.38% | | Total liabilities | 1,311,231 | 1,282,813 | 28,418 | 2.21% | | Net assets | 785,635 | 749,822 | 35,813 | 4.78% | | Total equity | 785,635 | 749,822 | 35,813 | 4.78% | - Property, plant and equipment increased from **HK$434.9 million** to **HK$498.8 million**, and trade receivables (third parties) increased from **HK$286.7 million** to **HK$475.8 million**[24](index=24&type=chunk) - Trade payables (third parties) increased from **HK$389.3 million** to **HK$498.1 million**, while trade payables (related parties) decreased from **HK$294.9 million** to **HK$155.8 million**[24](index=24&type=chunk) [Interim Condensed Consolidated Statement of Changes in Equity](index=11&type=section&id=INTERIM%20CONDENSED%20CONSOLIDATED%20STATEMENT%20OF%20CHANGES%20IN%20EQUITY) For the six months ended June 30, 2025, total equity grew from **HK$749.8 million** to **HK$785.6 million**, mainly driven by increased exchange reserves despite a period loss Key Data from Statement of Changes in Equity (For the six months ended June 30) | Equity Item | December 31, 2024 (HK$ '000) | Loss for the period (HK$ '000) | Other comprehensive income/(loss) (HK$ '000) | June 30, 2025 (HK$ '000) | | :--- | :--- | :--- | :--- | :--- | | Issued capital | 86,151 | – | – | 86,151 | | Share premium account | 1,055,448 | – | – | 1,055,448 | | Merger reserve | (772,332) | – | – | (772,332) | | Defined benefit plan reserve | (28,666) | – | (3,491) | (32,157) | | Exchange reserve | (158,473) | – | 69,013 | (89,460) | | Capital reserve | 44,132 | – | – | 44,132 | | Retained profits | 523,562 | (29,709) | – | 493,853 | | **Total equity** | **749,822** | **(29,709)** | **65,522** | **785,635** | - Exchange reserve improved from a negative **HK$158.5 million** at the beginning of the period to a negative **HK$89.5 million**, primarily due to a **HK$69.0 million** gain from exchange differences on translation of overseas operations[29](index=29&type=chunk) - Retained profits decreased due to a **HK$29.7 million** loss for the period[29](index=29&type=chunk) [Interim Condensed Consolidated Statement of Cash Flows](index=13&type=section&id=INTERIM%20CONDENSED%20CONSOLIDATED%20STATEMENT%20OF%20CASH%20FLOWS) For the six months ended June 30, 2025, operating cash flow shifted to net outflow, investment outflow decreased, and financing outflow slightly increased, resulting in a net decrease in cash and cash equivalents Key Data from Statement of Cash Flows (For the six months ended June 30) | Cash Flow Type | 2025 (HK$ '000) | 2024 (HK$ '000) | Change | Change Rate | | :--- | :--- | :--- | :--- | :--- | | Net cash (used in)/generated from operating activities | (2,883) | 77,133 | (80,016) | -103.74% | | Net cash used in investing activities | (24,401) | (89,955) | 65,554 | -72.87% | | Net cash used in financing activities | (15,163) | (10,778) | (4,385) | 40.68% | | Net decrease in cash and cash equivalents | (42,447) | (23,600) | (18,847) | 79.86% | | Cash and cash equivalents at end of period | 96,302 | 109,478 | (13,176) | -12.03% | - Net cash flow from operating activities shifted from a **HK$77.1 million** inflow in the prior year to a **HK$2.9 million** outflow in 2025, primarily due to provisions and losses related to the Czech plant closure[34](index=34&type=chunk)[237](index=237&type=chunk) - Net cash outflow from investing activities decreased, mainly as expenditures for property, plant and equipment purchases fell from **HK$93.1 million** to **HK$37.7 million**[36](index=36&type=chunk) [NOTES TO THE INTERIM CONDENSED CONSOLIDATED FINANCIAL INFORMATION](index=14&type=section&id=NOTES%20TO%20THE%20INTERIM%20CONDENSED%20CONSOLIDATED%20FINANCIAL%20INFORMATION) [1. General Information](index=15&type=section&id=1.%20GENERAL%20INFORMATION) This section covers the company's registration, core business, and key events, notably the Czech plant closure and its anticipated one-off costs and impairment losses - The company primarily engages in the manufacturing, sales, and trading of automotive parts and components, and provides technical services[39](index=39&type=chunk)[41](index=41&type=chunk) - The Board approved a phased closure plan for the Cheb plant in the Czech Republic on **June 20, 2025**, to enhance future overall operational efficiency[42](index=42&type=chunk)[45](index=45&type=chunk) - The Czech plant closure is expected to incur approximately **HK$80.4 million** in one-off costs and impairment losses, including lease termination fees, employee severance, property, plant and equipment impairment, and income tax incentive clawbacks[43](index=43&type=chunk)[45](index=45&type=chunk)[46](index=46&type=chunk)[48](index=48&type=chunk) [2. Basis of Preparation and Summary of Accounting Policies](index=18&type=section&id=2.%20BASIS%20OF%20PREPARATION%20AND%20SUMMARY%20OF%20ACCOUNTING%20POLICIES) This section outlines the interim financial information's preparation under HKAS 34, confirms consistent accounting policies, and lists new and revised standards adopted or pending adoption - The interim financial information is prepared in accordance with Hong Kong Accounting Standard 34 'Interim Financial Reporting' and should be read in conjunction with the company's consolidated financial statements for the year ended December 31, 2024[50](index=50&type=chunk)[51](index=51&type=chunk)[53](index=53&type=chunk) - The Group first applied HKAS 21 (Amendment) 'Lack of Exchangeability' from **January 1, 2025**, with no significant impact expected[55](index=55&type=chunk)[57](index=57&type=chunk) - Hong Kong Financial Reporting Standard 18 'Presentation and Disclosure in Financial Statements' is expected to have a pervasive impact on the Group's consolidated financial statements presentation and disclosure but has not yet been adopted[59](index=59&type=chunk)[62](index=62&type=chunk)[64](index=64&type=chunk) [3. Revenue and Segment Information](index=21&type=section&id=3.%20REVENUE%20AND%20SEGMENT%20INFORMATION) The Group, a single segment, generated **HK$1,627.1 million** revenue from industrial product sales and technical services, with Germany, UK, and US as key revenue sources, and Poland and Czech Republic as main non-current asset locations - The Group is identified as having a single reportable segment, primarily engaged in the manufacturing, sales, and trading of automotive parts and components, and providing technical services[67](index=67&type=chunk)[70](index=70&type=chunk) Revenue by Product and Service (For the six months ended June 30) | Product and Service | 2025 (HK$ '000) | 2024 (HK$ '000) | Change | Change Rate | | :--- | :--- | :--- | :--- | :--- | | Sales of industrial products and others | 1,527,434 | 1,336,116 | 191,318 | 14.32% | | Technical service income | 99,620 | 111,122 | (11,502) | -10.35% | | **Total revenue** | **1,627,054** | **1,447,238** | **179,816** | **12.42%** | Revenue by Customer Location (For the six months ended June 30) | Region | 2025 (HK$ '000) | 2024 (HK$ '000) | Change | Change Rate | | :--- | :--- | :--- | :--- | :--- | | Germany | 455,294 | 472,751 | (17,457) | -3.69% | | United Kingdom | 366,093 | 239,277 | 126,816 | 53.00% | | United States | 327,707 | 338,790 | (11,083) | -3.27% | | Mainland China | 114,960 | 77,813 | 37,147 | 47.74% | | Other countries | 363,000 | 318,607 | 44,400 | 13.94% | | **Total** | **1,627,054** | **1,447,238** | **179,816** | **12.42%** | Non-current Assets by Asset Location (As of June 30) | Region | 2025 (HK$ '000) | 2024 (HK$ '000) | Change | Change Rate | | :--- | :--- | :--- | :--- | :--- | | Poland | 789,554 | 671,121 | 118,433 | 17.65% | | Czech Republic | 101,849 | 222,768 | (120,919) | -54.28% | | Other countries | 47,658 | 78,205 | (30,547) | -39.06% | | **Total** | **939,061** | **972,094** | **(33,033)** | **-3.40%** | Major Customer Revenue Contribution (For the six months ended June 30) | Customer | 2025 (HK$ '000) | 2024 (HK$ '000) | | :--- | :--- | :--- | | Customer A | 284,160 | 231,058 | | Customer B | 238,350 | 142,814* | | **Total** | **522,510** | **373,872** | [4. Expenses by Nature](index=27&type=section&id=4.%20EXPENSES%20BY%20NATURE) For the six months ended June 30, 2025, total expenses were **HK$1,667.3 million**, dominated by raw materials and employee benefits, including **HK$73.6 million** in provisions for the Czech plant closure Expenses by Nature (For the six months ended June 30) | Expense Category | 2025 (HK$ '000) | 2024 (HK$ '000) | Change | Change Rate | | :--- | :--- | :--- | :--- | :--- | | Cost of raw materials sold and consumed | 950,732 | 893,963 | 56,769 | 6.35% | | Employee benefit expenses | 392,276 | 289,307 | 102,969 | 35.60% | | Provisions and losses arising from planned closure of Czech plant | 73,636 | – | 73,636 | N/A | | Utility expenses | 56,909 | 68,039 | (11,130) | -16.36% | | Depreciation and amortisation expenses | 54,502 | 46,089 | 8,413 | 18.25% | | Freight charges | 30,574 | 33,383 | (2,809) | -8.41% | | Research and development costs | 30,168 | 49,972 | (19,804) | -39.63% | | Research and development and testing expenses | 22,852 | 41,214 | (18,362) | -44.55% | | Taxes and surcharges | 8,284 | 6,188 | 2,096 | 33.87% | | Travel and business entertainment expenses | 8,106 | 7,015 | 1,091 | 15.55% | | Warranty expenses | 5,025 | 2,026 | 2,999 | 148.02% | | Others | 34,213 | 60,835 | (26,622) | -43.76% | | **Total** | **1,667,277** | **1,498,031** | **169,277** | **11.30%** | - Employee benefit expenses significantly increased by **35.60%** to **HK$392.3 million**[91](index=91&type=chunk) - Research and development costs and research and development and testing expenses both significantly decreased by **39.63%** and **44.55%**, respectively[91](index=91&type=chunk) [5. Other Income and Other Gains – Net](index=28&type=section&id=5.%20OTHER%20INCOME%20AND%20OTHER%20GAINS%20%E2%80%93%20NET) For the six months ended June 30, 2025, other income and net gains increased, mainly due to higher profits from scrap sales and net exchange gains Other Income (For the six months ended June 30) | Income Category | 2025 (HK$ '000) | 2024 (HK$ '000) | Change | Change Rate | | :--- | :--- | :--- | :--- | :--- | | Profit from sales of scrap, prototypes and samples | 15,696 | 12,298 | 3,398 | 27.63% | | Bank interest income | 172 | 283 | (111) | -39.22% | | Others | 5,741 | 3,725 | 2,016 | 54.12% | | **Total** | **21,609** | **16,306** | **5,303** | **32.52%** | Other Gains – Net (For the six months ended June 30) | Gain Category | 2025 (HK$ '000) | 2024 (HK$ '000) | Change | Change Rate | | :--- | :--- | :--- | :--- | :--- | | Net exchange differences | 12,254 | 2,409 | 9,845 | 408.67% | | Net (loss)/gain on disposal of property, plant and equipment | (848) | 1,086 | (1,934) | -178.08% | | **Total** | **11,406** | **3,495** | **7,911** | **226.35%** | [6. Finance Costs](index=29&type=section&id=6.%20FINANCE%20COSTS) For the six months ended June 30, 2025, finance costs slightly increased, mainly from interest on defined benefit plans and lease liabilities Finance Costs (For the six months ended June 30) | Cost Category | 2025 (HK$ '000) | 2024 (HK$ '000) | Change | Change Rate | | :--- | :--- | :--- | :--- | :--- | | Interest on defined benefit plans | 2,400 | 2,100 | 300 | 14.29% | | Interest on lease liabilities | 4,285 | 4,098 | 187 | 4.56% | | Others | – | 296 | (296) | -100.00% | | **Total** | **6,685** | **6,494** | **191** | **2.94%** | [7. Income Tax](index=30&type=section&id=7.%20INCOME%20TAX) For the six months ended June 30, 2025, total income tax expense was **HK$9.4 million**, including **HK$6.8 million** from Czech plant closure tax incentive clawback; no Pillar Two top-up tax is expected for FY2025 Income Tax Expense (For the six months ended June 30) | Tax Category | 2025 (HK$ '000) | 2024 (HK$ '000) | Change | Change Rate | | :--- | :--- | :--- | :--- | :--- | | Current income tax expense | 12,560 | 36,681 | (24,121) | -65.76% | | Deferred tax | (3,182) | (27,518) | 24,336 | -88.44% | | **Total tax expense for the period** | **9,378** | **9,163** | **215** | **2.35%** | - Current income tax expense for the first half of 2025 includes approximately **HK$6.8 million** in income tax incentives to be clawed back due to the closure of the Czech plant[107](index=107&type=chunk) - The Group has preliminarily assessed the potential risks of Pillar Two income tax and expects no top-up tax related to Pillar Two for the financial year ending **December 2025**[106](index=106&type=chunk) [8. Losses Per Share](index=32&type=section&id=8.%20LOSSES%20PER%20SHARE) For the six months ended June 30, 2025, basic and diluted loss per share was **3.45 HK cents**, narrower than **8.98 HK cents** last year, with both being identical due to no potential dilutive ordinary shares Losses Per Share (For the six months ended June 30) | Metric | 2025 (HK cents) | 2024 (HK cents) | Change | Change Rate | | :--- | :--- | :--- | :--- | :--- | | Basic and diluted loss per share | (3.45) | (8.98) | 5.53 | -61.58% | - Basic loss per share is calculated based on a **HK$29.7 million** loss for the period and **861,508,602** weighted average ordinary shares[108](index=108&type=chunk) - Diluted loss per share is identical to basic loss per share as the Group had no potential dilutive ordinary shares during the reporting period[109](index=109&type=chunk)[110](index=110&type=chunk) [9. Property, Plant and Equipment](index=33&type=section&id=9.%20PROPERTY,%20PLANT%20AND%20EQUIPMENT) As of June 30, 2025, property, plant and equipment net book value rose to **HK$498.8 million**, with **HK$57.7 million** in additions and **HK$4.8 million** impairment loss from the Czech plant closure Changes in Net Book Value of Property, Plant and Equipment (For the six months ended June 30) | Item | December 31, 2024 (HK$ '000) | Additions (HK$ '000) | Depreciation provision (HK$ '000) | Disposals (HK$ '000) | Transfers (HK$ '000) | Impairment (HK$ '000) | Exchange adjustments (HK$ '000) | June 30, 2025 (HK$ '000) | | :--- | :--- | :--- | :--- | :--- | :--- | :--- | :--- | :--- | | Buildings | 48,610 | – | (1,407) | – | 2,452 | – | 6,202 | 55,857 | | Machinery and equipment | 294,417 | 682 | (22,079) | (4,403) | 58,018 | – | 40,083 | 366,718 | | Motor vehicles | 3,932 | 422 | (610) | (301) | – | – | 463 | 3,906 | | Special tools | 37,931 | 3,332 | (7,004) | – | 3,270 | – | 2,691 | 40,220 | | Computer equipment and others | 27,288 | 9,736 | (5,830) | (9,416) | 1,671 | (4,839) | 3,805 | 22,415 | | Construction in progress | 22,758 | 43,557 | – | – | (65,411) | – | 8,749 | 9,653 | | **Total** | **434,936** | **57,729** | **(36,930)** | **(14,120)** | **–** | **(4,839)** | **61,993** | **498,769** | - Due to the closure of the Czech plant, an impairment loss of **HK$4.8 million** was recognized for property, plant and equipment, and **HK$17.5 million** for right-of-use assets[114](index=114&type=chunk)[116](index=116&type=chunk) [10. Other Non-Current Assets](index=34&type=section&id=10.%20OTHER%20NON-CURRENT%20ASSETS) As of June 30, 2025, other non-current assets decreased to **HK$183.5 million** from **HK$293.0 million**, primarily due to a reduction in the non-current portion of contract fulfillment costs Other Non-Current Assets (As of June 30) | Asset Category | 2025 (HK$ '000) | 2024 (HK$ '000) | Change | Change Rate | | :--- | :--- | :--- | :--- | :--- | | Performance deposits paid to customers, non-refundable | 71,806 | 66,513 | 5,293 | 7.96% | | Contract fulfillment costs | 145,105 | 256,420 | (111,315) | -43.41% | | Less: Current portion of contract fulfillment costs | (33,416) | (29,968) | (3,448) | 11.50% | | **Total** | **183,495** | **292,965** | **(109,470)** | **-37.37%** | - Contract fulfillment costs refer to pre-production costs directly attributable to customer contracts or anticipated customer contracts, amortized on a systematic basis[119](index=119&type=chunk)[121](index=121&type=chunk) [11. Inventories](index=35&type=section&id=11.%20INVENTORIES) As of June 30, 2025, total inventories increased to **HK$207.1 million**, with growth in raw materials and finished goods, alongside an increase in impairment provisions Inventory Composition (As of June 30) | Inventory Category | 2025 (HK$ '000) | 2024 (HK$ '000) | Change | Change Rate | | :--- | :--- | :--- | :--- | :--- | | Raw materials | 148,346 | 137,908 | 10,438 | 7.57% | | Work in progress | 27,610 | 26,196 | 1,414 | 5.40% | | Finished goods | 55,856 | 47,237 | 8,619 | 18.25% | | Impairment provision | (24,755) | (20,707) | (4,048) | 19.55% | | **Total** | **207,057** | **190,634** | **16,423** | **8.61%** | - Inventory impairment provision is recognized for the amount by which the carrying amount of inventories exceeds their net realizable value, and is charged to 'Cost of sales' in the statement of profit or loss[124](index=124&type=chunk) [12. Trade Receivables](index=36&type=section&id=12.%20TRADE%20RECEIVABLES) As of June 30, 2025, third-party trade receivables significantly increased, while related-party trade receivables decreased; strict control is maintained over overdue balances Trade Receivables – Third Parties (As of June 30) | Item | 2025 (HK$ '000) | 2024 (HK$ '000) | Change | Change Rate | | :--- | :--- | :--- | :--- | :--- | | Trade receivables | 483,460 | 291,826 | 191,634 | 65.67% | | Less: Provision for impairment losses | (7,681) | (5,144) | (2,537) | 49.32% | | **Net** | **475,779** | **286,682** | **189,097** | **65.96%** | Trade Receivables – Related Parties (As of June 30) | Item | 2025 (HK$ '000) | 2024 (HK$ '000) | Change | Change Rate | | :--- | :--- | :--- | :--- | :--- | | Amounts due from fellow subsidiaries | 201,637 | 276,904 | (75,267) | -27.18% | | Amounts due from direct holding and intermediate holding companies | 24,909 | 56,877 | (31,968) | -56.20% | | Less: Provision for impairment losses | (1,047) | (1,661) | 614 | -36.97% | | **Net** | **225,499** | **332,120** | **(106,621)** | **-32.10%** | - The credit period for third-party trade receivables is generally one to three months, and the Group maintains strict control over outstanding receivables[127](index=127&type=chunk)[128](index=128&type=chunk) - The impairment provision for related-party trade receivables was reversed during the period, decreasing from **HK$1.7 million** at the beginning of the period to **HK$1.0 million** at the end of the period[140](index=140&type=chunk) [13. Prepayments, Other Receivables and Other Assets](index=41&type=section&id=13.%20PREPAYMENTS,%20OTHER%20RECEIVABLES%20AND%20OTHER%20ASSETS) As of June 30, 2025, prepayments, other receivables, and other assets increased to **HK$126.4 million**, mainly driven by growth in input VAT and prepayments Prepayments, Other Receivables and Other Assets (As of June 30) | Item | 2025 (HK$ '000) | 2024 (HK$ '000) | Change | Change Rate | | :--- | :--- | :--- | :--- | :--- | | Input VAT | 61,405 | 39,075 | 22,330 | 57.15% | | Prepayments | 19,027 | 12,755 | 6,272 | 49.17% | | Contract fulfillment costs – current | 33,416 | 29,968 | 3,448 | 11.50% | | Deposits, other receivables and others | 12,566 | 7,295 | 5,271 | 72.26% | | **Total** | **126,414** | **89,093** | **37,321** | **41.90%** | [14. Trade Payables](index=42&type=section&id=14.%20TRADE%20PAYABLES) As of June 30, 2025, third-party trade payables significantly increased, while related-party trade payables substantially decreased; they are typically interest-free and settled within 30-90 days Trade Payables – Third Parties (As of June 30) | Aging | 2025 (HK$ '000) | 2024 (HK$ '000) | Change | Change Rate | | :--- | :--- | :--- | :--- | :--- | | Within 3 months | 489,527 | 387,834 | 101,693 | 26.22% | | 3 months to 1 year | 8,160 | 1,233 | 6,927 | 561.80% | | Over 1 year | 399 | 238 | 161 | 67.65% | | **Total** | **498,086** | **389,305** | **108,781** | **27.94%** | Trade Payables – Related Parties (As of June 30) | Aging | 2025 (HK$ '000) | 2024 (HK$ '000) | Change | Change Rate | | :--- | :--- | :--- | :--- | :--- | | Within 1 year | 86,691 | 237,311 | (150,620) | -63.47% | | Over 1 year | 69,103 | 57,635 | 11,468 | 19.90% | | **Total** | **155,794** | **294,946** | **(139,462)** | **-47.28%** | [15. Contract Liabilities, Other Payables and Accruals](index=44&type=section&id=15.%20CONTRACT%20LIABILITIES,%20OTHER%20PAYABLES%20AND%20ACCRUALS) As of June 30, 2025, contract liabilities, other payables, and accruals increased to **HK$172.1 million**, mainly due to a significant rise in accrued salaries, wages, severance, and benefits Contract Liabilities, Other Payables and Accruals (As of June 30) | Item | 2025 (HK$ '000) | 2024 (HK$ '000) | Change | Change Rate | | :--- | :--- | :--- | :--- | :--- | | Contract liabilities | 24,456 | 58,913 | (34,457) | -58.49% | | Other payables and accruals | 59,752 | 60,314 | (562) | -0.93% | | Other taxes payable | 10,031 | 7,255 | 2,776 | 38.26% | | Accrued salaries, wages, severance and benefits | 79,313 | 49,687 | 29,626 | 59.63% | | Accrued price discounts | 19,455 | 13,261 | 6,194 | 46.71% | | **Total current portion** | **172,066** | **136,810** | **35,206** | **25.73%** | - Contract liabilities include short-term and long-term advances received before providing technical services[156](index=156&type=chunk)[159](index=159&type=chunk) - Of the contract liabilities balance at the beginning of the period, **HK$2.5 million** in revenue was recognized during the six months ended June 30, 2025[157](index=157&type=chunk) [16. Defined Benefit Obligations](index=46&type=section&id=16.%20DEFINED%20BENEFIT%20OBLIGATIONS) As of June 30, 2025, defined benefit obligations rose to **HK$124.1 million**, covering employees in Poland, France, and Germany; net benefit expense was **HK$4.5 million**, with remeasurement losses recognized Defined Benefit Obligations (As of June 30) | Item | 2025 (HK$ '000) | 2024 (HK$ '000) | Change | Change Rate | | :--- | :--- | :--- | :--- | :--- | | Present value of unfunded obligations | 124,114 | 104,398 | 19,716 | 18.89% | | Portion classified as current liabilities | (5,695) | (4,503) | (1,192) | 26.47% | | **Non-current portion** | **118,419** | **99,895** | **18,524** | **18.54%** | Changes in Defined Benefit Obligations (For the six months ended June 30) | Item | 2025 (HK$ '000) | 2024 (HK$ '000) | Change | Change Rate | | :--- | :--- | :--- | :--- | :--- | | Beginning of period | 104,398 | 103,384 | 1,014 | 0.98% | | Current service cost | 2,080 | 1,521 | 559 | 36.75% | | Interest cost on defined benefit obligations | 2,400 | 2,100 | 300 | 14.29% | | Benefits paid during the period | (2,266) | (2,608) | 342 | -13.11% | | Remeasurement loss recognized in other comprehensive income | 4,079 | 1,740 | 2,339 | 134.43% | | Exchange adjustments | 13,423 | (2,649) | 16,072 | -606.72% | | **End of period** | **124,114** | **103,488** | **20,626** | **19.93%** | Net Benefit Expense Recognized in Profit or Loss (For the six months ended June 30) | Item | 2025 (HK$ '000) | 2024 (HK$ '000) | Change | Change Rate | | :--- | :--- | :--- | :--- | :--- | | Current service cost | 2,080 | 1,521 | 559 | 36.75% | | Interest cost on defined benefit obligations | 2,400 | 2,100 | 300 | 14.29% | | **Net benefit expense** | **4,480** | **3,621** | **859** | **23.72%** | [17. Issued Capital](index=49&type=section&id=17.%20ISSUED%20CAPITAL) As of June 30, 2025, issued capital was **HK$86.2 million**, comprising **861,508,602** ordinary shares of **HK$0.10** each, unchanged from the prior year Issued Capital (As of June 30) | Item | 2025 (HK$ '000) | 2024 (HK$ '000) | | :--- | :--- | :--- | | Authorised share capital (2,000,000,000 ordinary shares of HK$0.10 each) | 200,000 | 200,000 | | Issued and fully paid share capital (861,508,602 ordinary shares of HK$0.10 each) | 86,151 | 86,151 | - There were no changes in the company's issued capital for the six months ended **June 30, 2025**, and **2024**[176](index=176&type=chunk) [18. Contingent Liabilities](index=50&type=section&id=18.%20CONTINGENT%20LIABILITIES) As of June 30, 2025, and December 31, 2024, the Group had no significant contingent liabilities - The Group had no significant contingent liabilities as of **June 30, 2025**, and **December 31, 2024**[177](index=177&type=chunk)[178](index=178&type=chunk) [19. Commitments](index=50&type=section&id=19.%20COMMITMENTS) As of June 30, 2025, capital commitments for contracted but unprovided plant and machinery totaled **HK$106.8 million**, a decrease from December 31, 2024 Capital Commitments (As of June 30) | Item | 2025 (HK$ '000) | 2024 (HK$ '000) | Change | Change Rate | | :--- | :--- | :--- | :--- | :--- | | Contracted but not provided for: Plant and machinery | 106,789 | 115,842 | (9,053) | -7.81% | [20. Related Party Disclosures](index=51&type=section&id=20.%20RELATED%20PARTY%20DISCLOSURES) This section discloses significant transactions and balances with related parties, including sales of goods, provision and purchase of technical services, and management services - The Group's related parties include BWI (Hong Kong), BWI (Beijing), BWI Group, and several fellow subsidiaries[181](index=181&type=chunk)[183](index=183&type=chunk) Sales of Goods to Related Parties (For the six months ended June 30) | Related Party | 2025 (HK$ '000) | 2024 (HK$ '000) | | :--- | :--- | :--- | | BWI North America Inc. | 34,583 | 17,554 | | BWI Indiana Inc. | 32,848 | 115,675 | | BWI (Beijing) | 1,075 | 7,403 | | **Total** | **69,296** | **140,632** | Provision of Technical Services to Related Parties (For the six months ended June 30) | Related Party | 2025 (HK$ '000) | 2024 (HK$ '000) | | :--- | :--- | :--- | | BWI (Shanghai) Co., Ltd. | 56,081 | 34,535 | | BWI (Beijing) | 11,486 | 13,458 | | BWI North America Inc. | 10,357 | 34,263 | | **Total** | **93,260** | **86,979** | Amounts Due from Related Parties (As of June 30) | Item | 2025 (HK$ '000) | 2024 (HK$ '000) | | :--- | :--- | :--- | | Amounts due from fellow subsidiaries | 201,637 | 276,904 | | Amounts due from intermediate holding companies | 24,409 | 56,377 | | Amounts due from direct holding company | 500 | 500 | | **Total** | **226,546** | **333,781** | Amounts Due to Related Parties (As of June 30) | Item | 2025 (HK$ '000) | 2024 (HK$ '000) | | :--- | :--- | :--- | | Amounts due to fellow subsidiaries | 78,982 | 229,091 | | Amounts due to an intermediate holding company | 75,160 | 59,667 | | Amounts due to direct holding company | 1,652 | 6,188 | | **Total** | **155,794** | **294,946** | - Amounts due from and to related parties are unsecured, interest-free, and have no fixed repayment terms[199](index=199&type=chunk)[200](index=200&type=chunk) [21. Fair Value of Financial Instruments](index=57&type=section&id=21.%20FAIR%20VALUE%20OF%20FINANCIAL%20INSTRUMENTS) This section discloses financial asset and liability carrying amounts, noting short-term instruments' fair values approximate carrying amounts, while long-term instruments' fair values are discounted future cash flows Carrying Amounts of Financial Instruments (As of June 30) | Item | 2025 (HK$ '000) | 2024 (HK$ '000) | | :--- | :--- | :--- | | **Financial Assets** | | | | Trade receivables – Third parties | 475,779 | 286,682 | | Trade receivables – Related parties | 225,499 | 332,120 | | Financial assets included in prepayments, other receivables and other assets | 12,566 | 7,295 | | Cash and cash equivalents | 96,302 | 134,051 | | **Total financial assets** | **810,146** | **760,148** | | **Financial Liabilities** | | | | Lease liabilities | (289,748) | (259,733) | | Trade payables – Third parties | (498,086) | (389,305) | | Trade payables – Related parties | (155,794) | (294,946) | | Financial liabilities included in contract liabilities, other payables and accruals | (59,752) | (60,314) | | **Total financial liabilities** | **(1,003,380)** | **(1,004,298)** | - Management assesses that the fair values of short-term financial instruments approximate their carrying amounts, primarily due to their short-term maturity[204](index=204&type=chunk)[208](index=208&type=chunk) [22. Approval of the Interim Financial Information](index=58&type=section&id=22.%20APPROVAL%20OF%20THE%20INTERIM%20FINANCIAL%20INFORMATION) This interim financial information was approved and authorized for issue by the company's Board of Directors on **August 28, 2025** - The interim financial information was approved and authorized for issue by the company's Board of Directors on **August 28, 2025**[206](index=206&type=chunk)[209](index=209&type=chunk) [MANAGEMENT DISCUSSION AND ANALYSIS](index=58&type=section&id=MANAGEMENT%20DISCUSSION%20AND%20ANALYSIS) [Operational Review](index=59&type=section&id=OPERATIONAL%20REVIEW) The Group manufactures and services automotive suspension products in Europe, with plants in Poland and Czech Republic, maintaining strong ties with European automakers and sourcing from European suppliers - The Group's core products are suspension systems, primarily for high-end passenger vehicles, manufactured in European plants[210](index=210&type=chunk)[211](index=211&type=chunk)[214](index=214&type=chunk) - The Group operates two major plants in Poland and the Czech Republic, manufacturing and assembling suspension products for customers[211](index=211&type=chunk)[214](index=214&type=chunk) - The Group has established strong relationships with major European automotive manufacturers and primarily sources raw materials and components from European suppliers[212](index=212&type=chunk)[213](index=213&type=chunk)[214](index=214&type=chunk) [Financial Review](index=60&type=section&id=FINANCIAL%20REVIEW) For the six months ended June 30, 2025, revenue grew **12.4%** to **HK$1,627.1 million**, but gross profit and margin declined due to Czech plant issues; R&D expenses decreased, other income and gains increased, narrowing the loss to **HK$29.7 million** Key Financial Review Data (For the six months ended June 30) | Metric | 2025 (HK$ Million) | 2024 (HK$ Million) | Change | Change Rate | | :--- | :--- | :--- | :--- | :--- | | Revenue | 1,627.1 | 1,447.2 | 179.9 | 12.4% | | Gross profit | 148.7 | 221.7 | (73.0) | -32.9% | | Gross profit margin | 9.1% | 15.3% | -6.2% | -40.5% | | Selling and distribution expenses | 11.5 | 11.5 | 0.0 | 0.0% | | Administrative expenses | 86.5 | 83.6 | 2.9 | 3.5% | | Research and development expenses | 90.8 | 177.4 | (86.6) | -48.8% | | Other income | 21.6 | 16.3 | 5.3 | 32.5% | | Other gains – net | 11.4 | 3.5 | 7.9 | 225.7% | | Finance costs | 6.7 | 6.5 | 0.2 | 3.1% | | Loss for the period attributable to owners of the company | 29.7 | 51.6 | (21.9) | -42.4% | - Revenue increased primarily due to higher order volumes from the Polish plant, while the Czech plant's revenue decreased due to its planned closure[215](index=215&type=chunk)[218](index=218&type=chunk) - Gross profit and gross profit margin declined mainly due to lower-than-expected utilization of the Czech plant and provisions and losses related to its closure[217](index=217&type=chunk)[219](index=219&type=chunk) - Research and development expenses significantly decreased by **48.8%**, primarily due to enhanced cost control and reduced R&D expenditures on new projects[223](index=223&type=chunk)[227](index=227&type=chunk) [Liquidity and Financial Resources](index=63&type=section&id=LIQUIDITY%20AND%20FINANCIAL%20RESOURCES) For the six months ended June 30, 2025, operating activities resulted in a **HK$2.9 million** net cash outflow, with period-end cash and cash equivalents at **HK$96.3 million**, a decrease from the start of the period - The Group's operations require substantial working capital, primarily for raw material procurement, employee compensation, capital expenditures, and research and development[236](index=236&type=chunk) - For the period ended **June 30, 2025**, net cash outflow from operating activities was **HK$2.9 million**, compared to a net cash inflow of **HK$77.1 million** in the prior corresponding period[237](index=237&type=chunk)[239](index=239&type=chunk) - As of **June 30, 2025**, cash and cash equivalents totaled **HK$96.3 million**, a decrease from **HK$134.1 million** as of **December 31, 2024**[237](index=237&type=chunk)[239](index=239&type=chunk) [Indebtedness](index=63&type=section&id=INDEBTEDNESS) As of June 30, 2025, and December 31, 2024, the Group had no bank or other borrowings, resulting in a **0%** debt-to-equity ratio - The Group had no bank or other borrowing balances as of **June 30, 2025**, and **December 31, 2024**[238](index=238&type=chunk)[240](index=240&type=chunk) - As of **June 30, 2025**, the Group's debt-to-equity ratio was **0%**[238](index=238&type=chunk)[240](index=240&type=chunk) [Pledge of Assets](index=64&type=section&id=PLEDGE%20OF%20ASSETS) As of June 30, 2025, and December 31, 2024, the Group had not pledged any assets - The Group had not pledged any assets as of **June 30, 2025**, and **December 31, 2024**[241](index=241&type=chunk)[245](index=245&type=chunk) [Foreign Exchange Exposure](index=64&type=section&id=FOREIGN%20EXCHANGE%20EXPOSURE) The Group's transactions are mainly in EUR, USD, PLN, CZK, and GBP; it will monitor the FX market and implement measures to mitigate exchange rate risks - The Group's transactions are primarily denominated in Euros, US Dollars, Polish Zloty, Czech Koruna, and British Pounds, among other local currencies[242](index=242&type=chunk)[246](index=246&type=chunk) - The Group will closely monitor the foreign exchange market and implement reasonable and effective measures to eliminate the negative impact of exchange rate risks as much as possible[242](index=242&type=chunk)[246](index=246&type=chunk) [Capital and Other Commitments](index=64&type=section&id=CAPITAL%20AND%20OTHER%20COMMITMENTS) Except as disclosed in Note 19, the Group and company had no other commitments as of June 30, 2025, and December 31, 2024 - The Group and the company had no other commitments as of **June 30, 2025**, and **December 31, 2024**, with details provided in Note 19[243](index=243&type=chunk)[247](index=247&type=chunk) [Contingent Liabilities](index=64&type=section&id=CONTINGENT%20LIABILITIES_MDA) As of June 30, 2025, and December 31, 2024, the Group and the company had no significant contingent liabilities - The Group and the company had no significant contingent liabilities as of **June 30, 2025**, and **December 31, 2024**[244](index=244&type=chunk)[248](index=248&type=chunk) [Use of Proceeds from the Rights Issue](index=65&type=section&id=USE%20OF%20PROCEEDS%20FROM%20THE%20RIGHTS%20ISSUE) The company completed a rights issue in **October 2024**, raising **HK$46.4 million** net; by June 30, 2025, most funds were used for working capital in Polish and French technical centers, with some remaining for Hong Kong headquarters - The company completed a rights issue on **October 21, 2024**, raising net proceeds of approximately **HK$46.4 million**[249](index=249&type=chunk)[251](index=251&type=chunk) Use of Proceeds from Rights Issue (As of June 30) | Intended Use | Intended use of proceeds from rights issue (HK$ Million) | Actual use of net proceeds as of December 31, 2024 (HK$ Million) | Unutilized net proceeds as of December 31, 2024 (HK$ Million) | Actual use of net proceeds as of June 30, 2025 (HK$ Million) | Unutilized net proceeds as of June 30, 2025 (HK$ Million) | | :--- | :--- | :--- | :--- | :--- | :--- | | Working capital for production plants in Poland and Czech Republic | 25.5 | 25.3 | 0.2 | – | 0.2 | | Working capital for Hong Kong headquarters | 11.6 | – | 11.6 | 5.4 | 6.2 | | Working capital for technical centers in Poland and France | 9.3 | 9.3 | – | – | – | | **Total** | **46.4** | **34.6** | **11.8** | **5.4** | **6.4** | [Other Information](index=66&type=section&id=OTHER%20INFORMATION) The Group is committed to environmental, health, and safety, adhering to regulations, providing occupational training, and offering diverse employee development opportunities - The Group has adopted hazardous substance control plans and chemical substance assessment procedures, and obtained all necessary environmental permits[254](index=254&type=chunk)[255](index=255&type=chunk)[258](index=258&type=chunk) - The Group prioritizes employee health and safety, providing occupational health and safety training and implementing various measures to reduce accidents[256](index=256&type=chunk)[258](index=258&type=chunk) - The Group provides diverse training and development opportunities to all employees, helping them fully realize their potential[257](index=257&type=chunk)[259](index=259&type=chunk) [Prospects](index=67&type=section&id=PROSPECTS) The Group anticipates global uncertainties but expects stable business from European auto recovery. The Czech plant closure aims to enhance resource integration and capacity. Continuous R&D investment and automaker collaboration will maintain competitiveness and sustainable development - Geopolitical tensions and uncertainties in US interest rate policy will impact the future global political and economic landscape[261](index=261&type=chunk)[263](index=263&type=chunk) - European passenger car production in **2024** increased by **4.4%** compared to **2023**, but remains below pre-pandemic levels, indicating recovery potential; the IMF forecasts **1.5%** Eurozone GDP growth in **2025**, supporting business stability[262](index=262&type=chunk)[263](index=263&type=chunk) - The plan to close the Cheb plant in the Czech Republic is progressing smoothly, with most production lines expected to transfer to Krosno, Poland, by year-end, and the plant to be returned to the landlord by the end of the first quarter next year[265](index=265&type=chunk)[267](index=267&type=chunk) - Management believes the Czech plant closure will more effectively integrate resources, reduce manufacturing costs, and improve capacity utilization, benefiting future operations[265](index=265&type=chunk)[267](index=267&type=chunk) - The Group will continue to invest in R&D and engineering activities, collaborating closely with automotive manufacturers to develop innovative solutions, maintaining industry leadership and enhancing competitiveness[266](index=266&type=chunk)[267](index=267&type=chunk)[269](index=269&type=chunk)[271](index=271&type=chunk) [Employees and Remuneration Policy](index=70&type=section&id=EMPLOYEES%20AND%20REMUNERATION%20POLICY) As of June 30, 2025, the Group had **2,013** employees, with total costs of **HK$392.3 million**, offering competitive compensation, retirement plans, and benefits, including defined benefit pension plans and an MPF scheme - As of **June 30, 2025**, the Group had approximately **2,013** employees, a decrease from **2,360** as of **June 30, 2024**[273](index=273&type=chunk)[274](index=274&type=chunk) - For the period ended **June 30, 2025**, total employee costs were **HK$392.3 million**, an increase from **HK$289.3 million** in the prior corresponding period[273](index=273&type=chunk)[274](index=274&type=chunk) - Remuneration is determined based on employee qualifications, experience, market conditions, and individual performance, offering comprehensive and competitive compensation, retirement plans, and benefits[273](index=273&type=chunk)[274](index=274&type=chunk) - The Group operates defined benefit pension plans in Poland, France, and Germany, and has adopted a Mandatory Provident Fund scheme for its Hong Kong employees[273](index=273&type=chunk)[274](index=274&type=chunk) [CORPORATE GOVERNANCE AND OTHER INFORMATION](index=70&type=section&id=CORPORATE%20GOVERNANCE%20AND%20OTHER%20INFORMATION) [Compliance with Corporate Governance Code](index=71&type=section&id=COMPLIANCE%20WITH%20CORPORATE%20GOVERNANCE%20CODE) The company complied with the Corporate Governance Code's code provisions in Appendix C1 of the Listing Rules for the six months ended June 30, 2025 - The company has complied with the code provisions of the Corporate Governance Code as set out in Appendix C1 of the Listing Rules[275](index=275&type=chunk)[278](index=278&type=chunk) [Compliance with Model Code for Securities Transactions by Directors](index=71&type=section&id=COMPLIANCE%20WITH%20MODEL%20CODE%20FOR%20SECURITIES%20TRANSACTIONS%20BY%20DIRECTORS) The company adopted the Model Code for Securities Transactions by Directors as its code of conduct, and all directors complied with it for the six months ended June 30, 2025 - The company has adopted the Model Code as its code of conduct for directors' securities transactions[276](index=276&type=chunk)[279](index=279&type=chunk) - All directors complied with the standards set out in the Model Code and the company's code of conduct for the six months ended **June 30, 2025**[276](index=276&type=chunk)[279](index=279&type=chunk) [Audit Committee](index=71&type=section&id=AUDIT%20COMMITTEE) The Audit Committee met on **August 26, 2025**, with the auditor and management to review the Group's interim results for the six months ended June 30, 2025 - The Audit Committee met with the auditor and management on **August 26, 2025**, to review the Group's interim results for **2025**[277](index=277&type=chunk)[280](index=280&type=chunk) [Disclosure of Directors' Information Under Rule 13.51B(1) of the Listing Rules](index=72&type=section&id=DISCLOSURE%20OF%20DIRECTORS'%20INFORMATION%20UNDER%20RULE%2013.51B(1)%20OF%20THE%20LISTING%20RULES) This section discloses changes in Directors Mr. Dong Xiaojie and Mr. Liu Xihe's positions since the 2024 annual report, including new appointments and terminations - Mr. Dong Xiaojie was appointed as a director of a company controlled by the company's substantial shareholder and ceased to be the President of Zhangjiakou Industrial Investment Holding Group Co., Ltd[282](index=282&type=chunk)[283](index=283&type=chunk) - Mr. Liu Xihe was appointed as a director of BWI (Beijing) Automotive Electronics Technology Co., Ltd. and Zhangjiakou BWI Technology Group Co., Ltd., both substantial shareholders of the company[282](index=282&type=chunk)[283](index=283&type=chunk) [Interim Dividend](index=73&type=section&id=INTERIM%20DIVIDEND) The company's Board of Directors does not declare an interim dividend for the six months ended June 30, 2025 - The company's Board of Directors does not declare an interim dividend for the six months ended **June 30, 2025**[284](index=284&type=chunk)[286](index=286&type=chunk) [Directors' and Chief Executives' Interests and Short Positions in Shares, Underlying Shares and Debentures](index=73&type=section&id=DIRECTORS'%20AND%20CHIEF%20EXECUTIVES'%20INTERESTS%20AND%20SHORT%20POSITIONS%20IN%20SHARES,%20UNDERLYING%20SHARES%20AND%20DEBENTURES) As of June 30, 2025, Director Mr. Dong Xiaojie held **9,371,907** shares, representing **1.09%** of the company's issued share capital Directors' Interests in Shares (As of June 30) | Name of Director | Capacity in which interests are held | Number of Shares | Percentage of interest in the company's issued share capital | | :--- | :--- | :--- | :--- | | Dong Xiaojie | Beneficial owner | 9,371,907 | 1.09% | [Interests and Short Positions of Shareholders Discloseable Under the SFO](index=74&type=section&id=INTERESTS%20AND%20SHORT%20POSITIONS%20OF%20SHAREHOLDERS%20DISCLOSEABLE%20UNDER%20THE%20SFO) As of June 30, 2025, BWI (Hong Kong) Limited and its multi-layered holding companies held a **61.75%** long position in the company's shares Substantial Shareholders' Long Positions in Shares (As of June 30) | Name of Shareholder | Capacity in which interests are held | Number of Shares | Percentage of interest in the company's issued share capital | | :--- | :--- | :--- | :--- | | BWI (Hong Kong) Limited | Beneficial owner | 532,001,553 | 61.75% | | BWI (Beijing) Automotive Electronics Technology Co., Ltd. | Interest in controlled corporation | 532,001,553 | 61.75% | | Zhangjiakou BWI Technology Group Co., Ltd. | Interest in controlled corporation | 532,001,553 | 61.75% | | Zhangjiakou Industrial Investment Holding Group Co., Ltd. | Interest in controlled corporation | 532,001,553 | 61.75% | | Zhangjiakou State-owned Assets Management Group Co., Ltd. | Interest in controlled corporation | 532,001,553 | 61.75% | - BWI (Hong Kong) is a wholly-owned subsidiary of BWI (Beijing), BWI Group holds over one-third of BWI (Beijing)'s issued voting shares, Zhangjiakou Industrial Investment Holding Group Co., Ltd. holds over one-third of BWI Group's issued voting shares, and Zhangjiakou State-owned Assets Management Group Co., Ltd. holds over one-third of Zhangjiakou Industrial Investment Holding Group Co., Ltd.'s issued voting shares; thus, these companies are deemed to hold the same block of shares[295](index=295&type=chunk) [Share Options Scheme](index=76&type=section&id=SHARE%20OPTIONS%20SCHEME) The old share option scheme terminated in **May 2024**, and a new one adopted in **May 2024** became effective in **May 2025**; no outstanding share options existed under either scheme as of June 30, 2025 - The old share option scheme, adopted in **June 2014** with a ten-year validity, was terminated by shareholder resolution on **May 28, 2024**[296](index=296&type=chunk)[297](index=297&type=chunk)[300](index=300&type=chunk) - The new share option scheme was adopted on **May 28, 2024**, with a ten-year validity, and became effective on **May 30, 2025**[298](index=298&type=chunk)[300](index=300&type=chunk) - As of **June 30, 2025**, there were no outstanding share options under either the old or new schemes[297](index=297&type=chunk)[299](index=299&type=chunk)[301](index=301&type=chunk) [Purchase, Sale or Redemption of the Company's Listed Securities](index=77&type=section&id=PURCHASE,%20SALE%20OR%20REDEMPTION%20OF%20THE%20COMPANY'S%20LISTED%20SECURITIES) During the review period, neither the company nor its subsidiaries purchased, sold, or redeemed any of the company's listed securities - During the review period, neither the company nor any of its subsidiaries purchased, sold, or redeemed any of the company's listed securities[302](index=302&type=chunk)[304](index=304&type=chunk) [Appreciation](index=77&type=section&id=APPRECIATION) The Board Chairman extends sincere gratitude to clients, suppliers, shareholders, and all management and employees - Board Chairman Dong Xiaojie, on behalf of the Board, extends sincere gratitude to clients, suppliers, shareholders, and all management and employees[303](index=303&type=chunk)[305](index=305&type=chunk)[306](index=306&type=chunk)