Financial Performance - For the first half of 2025, the group's revenue was HKD 379,673,000, a decrease of 3.11% compared to HKD 391,842,000 for the same period in 2024[10] - Shareholders' profit attributable to the company was HKD 77,383,000, down 23.88% from HKD 101,660,000 in the previous year[10] - Basic and diluted earnings per share were both HKD 0.0833, compared to HKD 0.1095 for the same period last year[10] - The company's gross profit for the same period was HKD 103,257,000, reflecting a decline of 29.62% from HKD 146,705,000 in 2024[26] - The EBITDA for the six months ended June 30, 2025, was HKD 261,020,000, down 13.89% from HKD 303,138,000 in 2024, with an EBITDA margin of 68.7%[26] - Operating profit for the period was HKD 103,429,000, a decline of 28.5% from HKD 144,544,000 in the previous year[46] - Net profit for the period was HKD 77,812,000, representing a decrease of 23.4% compared to HKD 101,660,000 in 2024[47] - Total comprehensive income for the period was HKD 91,429,000, an increase of 8.7% from HKD 83,951,000 in the previous year[47] Dividends - The board declared an interim dividend of HKD 0.025 per share, down from HKD 0.045 per share in the previous year[11] - The company plans to declare an interim dividend of 2.50 HKD per share, which is a reduction from the previous interim dividend of 4.50 HKD per share in 2024[69] - Total interim dividend declared after the reporting period amounted to HKD 23,214,000[95] Revenue Sources - Revenue from satellite transponder capacity for the six months ended June 30, 2025, was HKD 323,371,000, a decline of 5.8% from HKD 343,652,000 in 2024[63] - Revenue from satellite broadcasting and telecommunications services was HKD 1,917,000, down from HKD 2,096,000 in the previous year[63] - Revenue from other satellite-related services increased to HKD 54,385,000, up 17.5% from HKD 46,094,000 in 2024[63] - The company reported that approximately 90% of its revenue is derived from satellite transponder capacity and related services[59] - Major customer contributed HKD 124,372,000 in revenue, representing over 10% of total revenue for the period[59] Market Conditions - The company is facing a challenging market environment with a continued oversupply in the satellite transponder market, leading to a decline in rental prices[20] - The decrease in revenue was primarily attributed to a reduction in satellite transponder capacity income during the period[10] - The company achieved a positive growth in business volume in the mainland China and Southeast Asia markets despite the tough market conditions[20] Financial Position - The company reported a total cash and bank balance of HKD 2,511,187,000 as of June 30, 2025, an increase of 2.56% from HKD 2,448,394,000 at the end of 2024[26] - The total liabilities decreased by 3.64% to HKD 845,473,000 as of June 30, 2025, compared to HKD 877,443,000 in 2024[26] - The company continues to maintain a strong financial position and is exploring new satellite project investments and business expansions[22] - As of June 30, 2025, total liabilities decreased to HKD 845,473,000, a reduction of HKD 31,970,000 from December 31, 2024, resulting in a debt-to-asset ratio of 12.1%[36] Operational Efficiency - The group continues to maintain good operational status of its satellites and ground control systems, ensuring reliable service delivery[12] - The company continues to maintain a strong financial position and is exploring new satellite project investments and business expansions[22] - The company plans to expand its traditional satellite resource leasing business while leveraging high-throughput satellites to provide quality broadband services[22] Audit and Compliance - The interim results have been reviewed by the audit and risk management committee and independent auditors[9] - The company has prepared the interim financial statements in accordance with International Accounting Standards (IAS) 34 and Hong Kong Accounting Standards (HKAS) 34[107] - The review of the interim financial statements was conducted under the guidelines of the Hong Kong Institute of Certified Public Accountants, focusing on inquiries and analytical procedures[109] - No significant issues were noted that would lead to a belief that the interim financial statements were not prepared in accordance with IAS 34 or HKAS 34[110] Employee and Workforce Development - The number of employees increased to 118 as of June 30, 2025, from 113 as of June 30, 2024, indicating a focus on workforce development[45]

[Company Business Structure](index=3&type=section&id=%E5%85%AC%E5%8F%B8%E6%A5%AD%E5%8B%99%E6%9E%B6%E6%A7%8B) China State Construction International Holdings Limited's business structure primarily comprises construction engineering and operation management businesses - China State Construction International Holdings Limited's business structure primarily comprises construction engineering and operation management businesses[4](index=4&type=chunk) [Board of Directors and Committees](index=4&type=section&id=%E8%91%A3%E4%BA%8B%E5%B1%80%E5%8F%8A%E5%A7%94%E5%93%A1%E6%9C%83) The report lists Board members, including Chairman, Executive Directors, Non-executive Directors, and Independent Non-executive Directors, along with their roles in audit, remuneration, nomination, and sustainability committees - The report lists Board members, including Chairman, Executive Directors, Non-executive Directors, and Independent Non-executive Directors, along with their roles in audit, remuneration, nomination, and sustainability committees[5](index=5&type=chunk) - The Board Chairman is **Wang Xiaoguang** (Non-executive Director), and the CEO and Executive Director is **Zhu Haiming**[5](index=5&type=chunk) - The company has an Audit Committee, Remuneration Committee, Nomination Committee, and Sustainability Committee, all with Independent Non-executive Directors participating[5](index=5&type=chunk) [Company Information](index=5&type=section&id=%E5%85%AC%E5%8F%B8%E8%B3%87%E6%96%99) This section provides essential company details, including authorized representatives, company secretary, registered and head offices, auditor, principal bankers, stock code, website, and key financial dates - Essential company information is provided, including authorized representatives, company secretary, registered and head offices, auditor, principal bankers, stock code, website, and key financial dates[6](index=6&type=chunk) - The company's stock code is **00830**, and its website is **www.cscd.com.hk**[6](index=6&type=chunk) - The **2025** interim results announcement date is **August 19**, the ex-dividend date is **September 16**, and the interim dividend payment date is **October 24**[6](index=6&type=chunk) [Chairman's Statement](index=6&type=section&id=%E8%91%A3%E4%BA%8B%E5%B1%80%E4%B8%BB%E5%B8%AD%E5%A0%B1%E5%91%8A%E6%9B%B8) The Chairman's report reviews the Group's H1 2025 performance, emphasizing its focus on the curtain wall business, outlining operating strategies in Hong Kong, Macau, mainland China, and overseas markets, and discussing new business developments like BIPV, while also looking ahead to H2 market opportunities and strategic directions including brand strengthening, technological innovation, digital transformation, and sustainable development [Performance Review](index=6&type=section&id=%E6%A5%AD%E7%B8%BE%E5%9B%9E%E9%A1%A7) This section details the Group's H1 2025 performance and key achievements in curtain wall business across Hong Kong, Macau, mainland China, Singapore, and Belt and Road markets, as well as BIPV new business, general contracting, and operation management businesses Key Metrics | Metric | H1 2025 | | :--- | :--- | | Main Business Revenue | HKD 3.338 billion | | Profit Attributable to Shareholders | HKD 386 million | | Earnings Per Share | HKD 17.12 cents | | Interim Dividend | HKD 5.0 cents per share | - The Group continues to focus on its core curtain wall business, with a strategy of 'deepening roots in Hong Kong and Macau, consolidating mainland China, and focusing on key overseas markets'[7](index=7&type=chunk) - Actively responding to market downturn pressures by empowering with innovative technologies and enhancing efficiency through refined management and cost reduction[7](index=7&type=chunk) - The global economy may slow due to trade policy uncertainties, while China's economy maintains a stable and improving trend[8](index=8&type=chunk) - Curtain wall business in Hong Kong and Macau maintains market leadership, securing multiple medium-to-large projects and expanding into curtain wall inspection, repair, and upgrade services[9](index=9&type=chunk) - The Macau Galaxy Phase 4 project successfully completed its Phase 1 objectives, maintaining close cooperation with major clients like Sands, MGM, and Galaxy[10](index=10&type=chunk) - The mainland China curtain wall market adheres to a differentiated competition strategy, securing landmark projects such as Guangzhou Taikoo Poly Long Bay and Shenzhen Huawei Baicaoyuan[10](index=10&type=chunk) - Accelerating expansion into the Singapore market, securing the Changi Airport Terminal 2 Hotel project, with market share expected to steadily increase[10](index=10&type=chunk) - BIPV, a key new business development, has overcome critical technologies, achieved product commercialization, signed a **HKD 10 billion** framework agreement with Kunshan Municipal Government, and secured the Shenzhen Qianhai Huafa Ice and Snow World project[12](index=12&type=chunk) - General contracting business developed steadily, securing the Tsim Sha Tsui Observatory Headquarters project[13](index=13&type=chunk) - Operation management business (**CSCI Supervision**) is transforming into a 'technology + supervision + consulting + project management' full industry chain, while Huanggu Thermal Power actively expands its heating market and achieves energy saving and consumption reduction[14](index=14&type=chunk)[15](index=15&type=chunk) [Future Outlook](index=9&type=section&id=%E6%9C%AA%E4%BE%86%E5%B1%95%E6%9C%9B) Looking ahead to H2, the Group anticipates continued global economic downside risks but stable growth in China and Hong Kong/Macau, presenting numerous project opportunities, while focusing on its core curtain wall business, strengthening BIPV as a new growth driver, expanding curtain wall industry chain services, and deepening ESG practices for high-quality sustainable development - China's economy is expected to maintain steady progress in H2, with Hong Kong and Macau integrating into national development, and the Northern Metropolis, major Macau projects, and the 'Belt and Road' initiative presenting numerous market opportunities[16](index=16&type=chunk) - The curtain wall business will continue to 'target high-end markets and provide high-quality services,' optimizing its global layout, strengthening brand promotion and market development, and enhancing digitalization[16](index=16&type=chunk) - BIPV is a new growth point for the future curtain wall business, with plans to create demonstration projects in high-tier cities, promote near-zero energy buildings, and strengthen communication with national ministries to advance BIPV policies and standards[17](index=17&type=chunk) - Actively expanding into curtain wall industry chain services, developing the market for inspection, repair, and renovation of old curtain walls, and exploring the 'high-altitude robot' niche[17](index=17&type=chunk) - Adhering to high-quality and sustainable development strategies, integrating ESG considerations into business, deepening climate risk management, and promoting supply chain carbon data collection and reduction[18](index=18&type=chunk) [Management Discussion and Analysis](index=11&type=section&id=%E7%AE%A1%E7%90%86%E5%B1%A4%E8%A8%8E%E8%AB%96%E5%8F%8A%E5%88%86%E6%9E%90) This section details the Group's H1 2025 financial performance, including declines in total turnover and profit attributable to shareholders, with segment analysis for curtain wall and contracting, operation management, administrative expenses, and finance costs, also disclosing new contracts, liquidity, financial resources, treasury policy, foreign exchange risk, and employee remuneration policy [Overall Performance](index=11&type=section&id=%E6%95%B4%E9%AB%94%E8%A1%A8%E7%8F%BE) In H1 2025, the Group's total turnover decreased by **29.3%** to **HKD 3.338 billion**, profit attributable to shareholders decreased by **29.8%** to **HKD 386 million**, and basic earnings per share decreased by **29.9%** to **HKD 17.12 cents** year-on-year Overall Financial Performance | Metric | H1 2025 | H1 2024 | Y-o-Y Change | | :--- | :--- | :--- | :--- | | Total Turnover | HKD 3.338 billion | HKD 4.722 billion | -29.3% | | Profit Attributable to Shareholders | HKD 386 million | HKD 550 million | -29.8% | | Basic and Diluted EPS (HKD cents) | 17.12 | 24.41 | -29.9% | [Segment Analysis](index=11&type=section&id=%E5%88%86%E9%83%A8%E5%88%86%E6%9E%90) Curtain wall and contracting business revenue decreased by **32.4%** to **HKD 2.849 billion** due to large project completions, with operating profit down **31.4%**; operation management revenue declined due to RMB depreciation but operating profit increased through cost control; administrative, selling, and other operating expenses and finance costs both decreased, reflecting effective cost control and strategic financing allocation Segmental Revenue and Operating Profit | Segment | H1 2025 Revenue (HKD billion) | H1 2024 Revenue (HKD billion) | Y-o-Y Change | H1 2025 Operating Profit (HKD billion) | H1 2024 Operating Profit (HKD billion) | Y-o-Y Change | | :--- | :--- | :--- | :--- | :--- | :--- | :--- | | Curtain Wall and Contracting Business | 2.849 | 4.214 | -32.4% | 0.436 | 0.636 | -31.4% | | Operation Management Business | 0.489 | 0.508 | -3.7% | 0.079 | 0.065 | +21.5% | - Administrative, selling, and other operating expenses decreased to **HKD 128 million** (2024: HKD 132 million), primarily due to stringent cost control[23](index=23&type=chunk) - Finance costs decreased to **HKD 31 million** (2024: HKD 35 million), with significant strategic financing allocation effectiveness achieved through bank loan replacement and early refinancing[24](index=24&type=chunk) [New Contracts Awarded](index=12&type=section&id=%E6%96%B0%E6%89%BF%E6%8E%A5%E5%B7%A5%E7%A8%8B) For the six months ended June 30, 2025, the Group recorded cumulative new contract awards of **HKD 4.711 billion** - Cumulative new contract awards for H1 **2025** amounted to **HKD 4.711 billion**[25](index=25&type=chunk) [Liquidity and Financial Resources](index=12&type=section&id=%E6%B5%81%E5%8B%95%E8%B3%87%E9%87%91%E5%8F%8A%E8%B2%A1%E5%8B%99%E8%B3%87%E6%BA%90) The Group primarily finances through internal cash flow and bank credit; as of June 30, 2025, cash and bank balances were **HKD 824 million**, total bank borrowings were **HKD 1.763 billion**, and the net gearing ratio was approximately **31.9%**, with ample financial resources including **HKD 7.439 billion** in unutilized bank facilities Key Metrics | Metric | June 30, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Bank Balances and Cash | HKD 824 million | HKD 982 million | | Total Bank Borrowings | HKD 1.763 billion | HKD 1.581 billion | | Net Gearing Ratio (%) | 31.9% | 23.4% | | Unutilized Bank Facilities | HKD 7.439 billion | N/A | - The Group possesses sufficient financial resources to support business development and expansion[26](index=26&type=chunk) Bank Borrowings Maturity Profile | Maturity Profile | Six Months Ended June 30, 2025 (HKD thousand) | Six Months Ended June 30, 2024 (HKD thousand) | | :--- | :--- | :--- | | Repayable on demand or within one year | 667,653 | 583,341 | | More than one year but not exceeding two years | 1,959 | - | | More than two years but not exceeding five years | 1,093,057 | 997,607 | | **Total** | **1,762,669** | **1,580,948** | Currency Breakdown of Borrowings | Currency | Share (%) | | :--- | :--- | | RMB | 56 | | HKD | 33 | | USD | 1 | | MOP | 1 | | Others | 9 | - Equity attributable to the Company's shareholders was **HKD 3.062 billion** (December 31, 2024: HKD 2.674 billion)[28](index=28&type=chunk) - Share repurchases conducted during the period contributed to enhancing shareholder value[29](index=29&type=chunk) [Treasury Policy](index=13&type=section&id=%E5%BA%AB%E5%8B%99%E6%94%BF%E7%AD%96) The Group adopts a prudent treasury policy, centrally managing risks and reducing funding costs, with most cash held in short-term HKD or RMB deposits, and regularly reviews liquidity needs to maintain an appropriate asset-liability level - The Group adopts a prudent treasury policy, centralizing treasury matters to effectively manage risks and reduce funding costs[30](index=30&type=chunk) - Most cash is held in short-term HKD or RMB deposits, with liquidity and financial requirements regularly reviewed[30](index=30&type=chunk) [Foreign Exchange Fluctuation Risk](index=13&type=section&id=%E5%A4%96%E5%8C%AF%E6%B3%A2%E5%8B%95%E9%A2%A8%E9%9A%AA) The Group's foreign currency risk primarily arises from sales or purchases denominated in non-functional currencies; currently, there is no formal foreign currency hedging policy, but exchange rate movements are closely monitored, and natural hedging strategies are employed - Foreign currency risk primarily arises from sales or purchases denominated in USD, RMB, AUD, CAD, GBP, and MOP[31](index=31&type=chunk) - Currently, there is no formal foreign currency hedging policy, but exchange rate movements are closely monitored, and natural hedging strategies are employed[31](index=31&type=chunk) [Employees and Remuneration Policy](index=14&type=section&id=%E5%83%B1%E5%93%A1%E5%8F%8A%E8%96%AA%E9%85%AC%E6%94%BF%E7%AD%96) As of June 30, 2025, the Group employed **3,834** staff, implementing an effective management incentive policy and competitive remuneration, including basic salary, allowances, benefits, and discretionary bonuses, which are regularly reviewed based on market conditions and employee performance Employee Headcount | Date | Number of Employees | | :--- | :--- | | June 30, 2025 | 3,834 | | December 31, 2024 | 4,006 | - The Group has an effective management incentive policy and competitive remuneration, including basic salary, allowances, fringe benefits, and discretionary bonuses[32](index=32&type=chunk) [Unaudited Condensed Consolidated Statement of Profit or Loss](index=15&type=section&id=%E6%9C%AA%E7%B6%93%E5%AF%A9%E6%A0%B8%E4%B9%8B%E7%B0%A1%E6%98%8E%E7%B6%9C%E5%90%88%E6%94%B6%E7%9B%8A%E8%A1%A8) The Group's H1 2025 turnover was **HKD 3.338 billion**, gross profit **HKD 588 million**, profit for the period **HKD 385 million**, profit attributable to Company shareholders **HKD 386 million**, and basic and diluted earnings per share **HKD 17.12 cents**, with all indicators showing a decrease compared to the same period last year Revenue and Profit Metrics | Metric | Six Months Ended June 30, 2025 (HKD thousand) | Six Months Ended June 30, 2024 (HKD thousand) | | :--- | :--- | :--- | | Turnover (HKD thousand) | 3,338,064 | 4,722,048 | | Gross Profit (HKD thousand) | 588,035 | 760,634 | | Profit for the Period (HKD thousand) | 384,665 | 545,668 | | Profit Attributable to Company Shareholders (HKD thousand) | 386,159 | 550,470 | | Basic and Diluted EPS (HKD cents) | 17.12 | 24.41 | [Unaudited Condensed Consolidated Statement of Comprehensive Income](index=16&type=section&id=%E6%9C%AA%E7%B6%93%E5%AF%A9%E6%A0%B8%E4%B9%8B%E7%B0%A1%E6%98%8E%E7%B6%9C%E5%90%88%E5%85%A8%E9%9D%A2%E6%94%B6%E7%9B%8A%E8%A1%A8) The Group's H1 2025 profit for the period was **HKD 385 million**, with other comprehensive income primarily from exchange differences on translation of foreign operations (**HKD 65.77 million**), resulting in a total comprehensive income for the period of **HKD 451 million** Comprehensive Income Summary | Metric | Six Months Ended June 30, 2025 (HKD thousand) | Six Months Ended June 30, 2024 (HKD thousand) | | :--- | :--- | :--- | | Profit for the Period (HKD thousand) | 384,665 | 545,668 | | Exchange Differences on Translation of Foreign Operations (HKD thousand) | 65,765 | (69,756) | | Total Comprehensive Income for the Period (HKD thousand) | 450,952 | 476,513 | | Total Comprehensive Income Attributable to Company Shareholders (HKD thousand) | 451,200 | 482,170 | [Unaudited Condensed Consolidated Statement of Financial Position](index=17&type=section&id=%E6%9C%AA%E7%B6%93%E5%AF%A9%E6%A0%B8%E4%B9%8B%E7%B0%A1%E6%98%8E%E7%B6%9C%E5%90%88%E8%B2%A1%E5%8B%99%E7%8B%80%E6%B3%81%E8%A1%A8) As of June 30, 2025, the Group's total assets increased to **HKD 11.918 billion** from **HKD 11.502 billion** at year-end 2024; non-current assets remained stable, while contract assets within current assets significantly increased; total equity was **HKD 2.947 billion**, with equity attributable to Company shareholders at **HKD 3.062 billion** Financial Position Summary | Metric | June 30, 2025 (HKD thousand) | December 31, 2024 (HKD thousand) | | :--- | :--- | :--- | | Total Non-current Assets (HKD thousand) | 1,943,202 | 1,928,607 | | Total Current Assets (HKD thousand) | 9,974,343 | 9,573,764 | | **Total Assets (HKD thousand)** | **11,917,545** | **11,502,371** | | Total Current Liabilities (HKD thousand) | 7,300,795 | 7,343,772 | | Total Non-current Liabilities (HKD thousand) | 1,669,512 | 1,598,411 | | **Total Equity (HKD thousand)** | **2,947,238** | **2,560,188** | | Equity Attributable to Company Shareholders (HKD thousand) | 3,062,010 | 2,674,712 | - Contract assets increased from **HKD 5.411 billion** at year-end **2024** to **HKD 6.129 billion** as of **June 30, 2025**[35](index=35&type=chunk) - Contract liabilities decreased from **HKD 797 million** at year-end **2024** to **HKD 302 million** as of **June 30, 2025**[35](index=35&type=chunk) [Unaudited Condensed Consolidated Statement of Changes in Equity](index=19&type=section&id=%E6%9C%AA%E7%B6%93%E5%AF%A9%E6%A0%B8%E4%B9%8B%E7%B0%A1%E6%98%8E%E7%B6%9C%E5%90%88%E6%AC%8A%E7%9B%8A%E8%AE%8A%E5%8B%95%E8%A1%A8) As of June 30, 2025, equity attributable to Company shareholders increased to **HKD 3.062 billion** (year-end 2024: HKD 2.675 billion), primarily influenced by profit for the period and changes in foreign currency translation reserves, with share repurchases and the 2024 final dividend distribution also occurring during the period Changes in Equity Summary | Metric | Six Months Ended June 30, 2025 (HKD thousand) | January 1, 2024 (HKD thousand) | | :--- | :--- | :--- | | Total Equity Attributable to Company Shareholders (HKD thousand) | 3,062,010 | 2,401,822 | | Profit for the Period (HKD thousand) | 386,159 | 550,470 | | Exchange Differences on Translation of Foreign Operations (HKD thousand) | 64,519 | (68,901) | | Share Repurchase (HKD thousand) | (747) | - | | 2024 Final Dividend (HKD thousand) | (63,155) | (72,177) | [Unaudited Condensed Consolidated Statement of Cash Flows](index=20&type=section&id=%E6%9C%AA%E7%B6%93%E5%AF%A9%E6%A0%B8%E4%B9%8B%E7%B0%A1%E6%98%8E%E7%B6%9C%E5%90%88%E7%8F%BE%E9%87%91%E6%B5%81%E9%87%8F%E8%A1%A8) In H1 2025, the Group reported net cash outflow from operating activities of **HKD 259 million**, net cash outflow from investing activities of **HKD 63 million**, and net cash inflow from financing activities of **HKD 168 million**, resulting in a decrease in cash and cash equivalents to **HKD 817 million** at period-end Cash Flow Summary | Metric | Six Months Ended June 30, 2025 (HKD thousand) | Six Months Ended June 30, 2024 (HKD thousand) | | :--- | :--- | :--- | | Net Cash Used in Operating Activities (HKD thousand) | (259,059) | (258,844) | | Net Cash From Investing Activities (HKD thousand) | (62,926) | 17,449 | | Net Cash From Financing Activities (HKD thousand) | 167,780 | 224,154 | | Decrease in Cash and Cash Equivalents (HKD thousand) | (154,205) | (17,241) | | Cash and Cash Equivalents at Period-End (HKD thousand) | 816,869 | 666,175 | - Cash outflow for the acquisition of property, plant, and equipment significantly increased from **HKD 19.05 million** in H1 **2024** to **HKD 65.43 million** in H1 **2025**[38](index=38&type=chunk) [Notes to the Unaudited Condensed Consolidated Financial Statements](index=21&type=section&id=%E6%9C%AA%E7%B6%93%E5%AF%A9%E6%A0%B8%E4%B9%8B%E7%B0%A1%E6%98%8E%E7%B6%9C%E5%90%88%E8%B2%A1%E5%8B%99%E5%A0%B1%E8%A1%A8%E9%99%84%E6%B3%A8) The notes to the financial statements detail the basis of preparation, changes in accounting policies, critical estimates, segment information, other income, finance costs, profit before tax, income tax, dividends, earnings per share, property, plant and equipment, infrastructure project investments, trade and other receivables, bank borrowings, trade and other payables, share capital, commitments, and related party transactions [Basis of Preparation](index=21&type=section&id=%E7%B7%A8%E8%A3%BD%E5%9F%BA%E6%BA%96) The condensed consolidated financial statements are prepared in accordance with Appendix D2 of the HKEX Listing Rules and HKAS 34 'Interim Financial Reporting' issued by the HKICPA, using the historical cost convention and presented in HKD - The financial statements are prepared in accordance with Appendix D2 of the HKEX Listing Rules and HKAS 34 'Interim Financial Reporting' issued by the HKICPA[39](index=39&type=chunk) - The historical cost convention is adopted, except for investment properties measured at fair value, and presented in HKD[39](index=39&type=chunk) [Changes in Accounting Policies and Disclosures](index=21&type=section&id=%E6%9C%83%E8%A8%88%E6%94%BF%E7%AD%96%E5%92%8C%E6%8A%AB%E9%9C%B2%E4%B9%8B%E6%94%B9%E8%AE%8A) This period's financial statements first apply HKAS 21 (Amendment) 'Lack of Exchangeability,' which has no material impact on the Group's performance or financial position - HKAS 21 (Amendment) 'Lack of Exchangeability' is applied for the first time in this period[41](index=41&type=chunk) - The aforementioned amendment has no material impact on the Group's performance or financial position[41](index=41&type=chunk) [Estimates](index=22&type=section&id=%E4%BC%B0%E8%A8%88) The preparation of financial statements involves management judgments, estimates, and assumptions, with the primary sources of estimation uncertainty being the same as those used in the 2024 annual consolidated

Sihuan Pharmaceutical Holdings Group Ltd. 四環醫藥控股集團有限公司 (incorporated in Bermuda with limited liability) （於百慕達註冊成立之有限公司） Stock Code 股份代號：0460 INTERIM REPORT 中期報告 公司簡介 CORPORATE PROFILE 四環醫藥控股集團有限公司（「四環醫藥」或「本 公司」，連同其附屬公司為「本集團」）（股份代號： 00460.HK）創立於二零零一年，二零一零年於 香港聯合交易所有限公司主板上市，是一家以 創新為引領，堅持創新驅動，擁有獨立領先的 自主生產、研究與開發（「研發」）技術平台，具 備豐富的全球化產品管線和成熟卓越銷售體系 的國際化醫美及生物製藥企業。四環醫藥聚焦 醫美、腫瘤、代謝、糖尿病、心腦血管、現代 中藥及工業大麻等高增長治療領域，一直秉承 「堅持全速推進四環醫美及生物製藥雙輪驅動 戰略」的整體戰略目標來打造中國領先的醫美 及生物製藥企業。 Founded in 2001 and listed on the Main Board of The Sto ...

[Management Discussion and Analysis](index=2&type=section&id=Management%20Discussion%20and%20Analysis) This section provides an overview of the Group's business performance, financial health, future outlook, investment activities, and human resources during the reporting period [Business Review](index=4&type=section&id=Business%20Review) The Group's consolidated revenue slightly decreased by 2% and turned to loss, primarily impacted by US tariffs, increased operating costs, and rising bank borrowing interest, with significant growth in the optical lens segment Key Financial Performance for the Six Months Ended June 30, 2025 | Metric | 2025 (HK$ Thousand) | 2024 (HK$ Thousand) | Change (%) | | :--- | :--- | :--- | :--- | | Consolidated Revenue | 594,900 | 606,400 | -2% | | (Loss) / Profit Attributable to Owners of the Company | (15,000) | 2,500 | Turned from profit to loss | | (Loss) / Earnings Per Share | (3.89) HK cents | 0.64 HK cents | Turned from profit to loss | - The loss attributable to owners of the Company was primarily due to US tariff policies disrupting trade and global supply chains, leading to increased operating costs from new production facilities in Vietnam and Malaysia; significant increases in staff costs, promotion, and exhibition expenses due to the development of eyewear frame distribution and optical lens businesses in China and Southeast Asian markets; and a substantial increase in bank borrowing interest by **HK$2,900,000**[6](index=6&type=chunk)[7](index=7&type=chunk) Revenue Performance by Segment | Segment | 2025 Revenue (HK$ Thousand) | 2024 Revenue (HK$ Thousand) | Share of Consolidated Revenue (2025) | Change (%) | | :--- | :--- | :--- | :--- | :--- | | Original Design Manufacturing (ODM) Segment | 379,200 | 419,000 | 64% | -9% | | Distribution Segment | 144,200 | 140,300 | 24% | +3% | | Optical Lens Segment | 71,500 | 47,100 | 12% | +52% | - ODM segment sales to the US significantly decreased by **17%**, primarily due to a substantial increase in US tariffs on China in April 2025, leading most US customers to request a suspension of shipments[6](index=6&type=chunk) - Optical lens segment sales significantly increased by **52%**, mainly due to the Group's further investment in expanding its optical lens production facilities in China and Malaysia during the second half of 2024[10](index=10&type=chunk) [Financial Position and Liquidity](index=5&type=section&id=Financial%20Position%20and%20Liquidity) The Group experienced net cash outflow from operations and a deteriorated net cash position due to high capital expenditure and increased inventory, while maintaining a stable current ratio and normal capital structure Cash Flow and Capital Expenditure | Metric | 2025 (HK$ Thousand) | 2024 (HK$ Thousand) | Change | | :--- | :--- | :--- | :--- | | Net Cash from Operating Activities | (3,100) (Outflow) | 28,200 (Inflow) | Turned from inflow to outflow | | Capital Expenditure | 31,400 | 73,200 | Decrease | | Net Cash Position (Negative Balance) | (61,300) | (13,800) (December 31, 2024) | Deteriorated | | Decrease Amount | 47,500 | - | - | - Inventory balance increased by **18%** from **HK$220,500,000** as of December 31, 2024, to **HK$260,400,000** as of June 30, 2025, primarily due to most US customers suspending shipments since April 2025[12](index=12&type=chunk) Working Capital Metrics | Metric | June 30, 2025 | June 30, 2024 | Change | | :--- | :--- | :--- | :--- | | Inventory Turnover Period | 113 days | 71 days | Increase | | Receivables Turnover Period | 94 days | 91 days | Slight increase | | Current Ratio | 1.2 | 1.2 (December 31, 2024) | Stable | | Debt-to-Equity Ratio | 28% | 27% (December 31, 2024) | Slight increase | Net Assets | Metric | June 30, 2025 | December 31, 2024 | Change | | :--- | :--- | :--- | :--- | | Equity Attributable to Owners of the Company | HK$532,700,000 | HK$520,000,000 | Increase | | Net Assets Per Share | HK$1.38 | HK$1.35 | Increase | - The Group had no significant contingent liabilities as of **June 30, 2025**[15](index=15&type=chunk) - The Group's bank borrowings amounted to **HK$134,700,000**, collateralized by investment properties, leasehold land and buildings, and construction in progress[17](index=17&type=chunk) - The Group primarily faces risks from fluctuations in the **RMB against the USD and HKD**, managing foreign exchange risk by closely monitoring currency rate movements[18](index=18&type=chunk) - The Group's total shareholders' funds were **HK$628,000,000**, current assets were **HK$773,800,000**, and current liabilities were **HK$671,100,000**, with operations primarily financed through internally generated cash flows and bank credit[19](index=19&type=chunk) [Outlook](index=8&type=section&id=Outlook) Facing a volatile trade environment due to US tariffs, the Group will optimize production and costs, strategically focusing on the optical lens segment and smart eyewear for sustainable value creation - The global economy is affected by **US tariff measures**, leading to a volatile trade environment, prompting the Group to adopt a forward-looking strategy of establishing overseas production bases[20](index=20&type=chunk) - The Group will leverage its integrated global production network across **China, Vietnam, and Malaysia** to flexibly allocate production capacity, regularly review operating costs, and implement targeted cost optimization measures[20](index=20&type=chunk) - The **optical lens segment** and **smart eyewear** are strategically important for the Group's long-term development blueprint, with continuous strategic resource allocation to capture growth potential and business opportunities[20](index=20&type=chunk) [Material Investments](index=8&type=section&id=Material%20Investments) The Group did not make or hold any material investments during the reporting period - The Group did not make or hold any material investments during the reporting period, including any investments in investee companies whose value accounted for **5% or more** of the Company's total assets as of **June 30, 2025**[21](index=21&type=chunk) [Future Plans for Material Investments and Capital Expenditures](index=8&type=section&id=Future%20Plans%20for%20Material%20Investments%20and%20Capital%20Expenditures) As of June 30, 2025, the Group's capital commitments totaled HK$219,000,000, with no other material investment or capital expenditure plans Capital Commitments | Metric | June 30, 2025 (HK$ Thousand) | | :--- | :--- | | Total Capital Commitments | 219,000 | - Except for those disclosed under capital commitments, the Group had no material investment and capital expenditure plans as of the date of this report[22](index=22&type=chunk) [Material Acquisitions and Disposals](index=9&type=section&id=Material%20Acquisitions%20and%20Disposals) The Group did not undertake any material acquisitions or disposals of subsidiaries, associates, or joint ventures during the reporting period - During the reporting period, the Group held no material investments and made no material acquisitions or disposals of subsidiaries, associates, and joint ventures[24](index=24&type=chunk) [Employees and Remuneration Policy](index=9&type=section&id=Employees%20and%20Remuneration%20Policy) As of June 30, 2025, the Group employed approximately 3,400 full-time employees, with remuneration based on performance, experience, qualifications, and market rates, alongside various benefits Number of Employees | Date | Number of Full-time Employees | | :--- | :--- | | June 30, 2025 | Approximately 3,400 | | December 31, 2024 | 3,600 | - The Group determines remuneration based on employee performance, experience, qualifications, and current market salary levels, with discretionary performance bonuses[25](index=25&type=chunk) - Other employee benefits include insurance and medical coverage, subsidized education and training courses, and provident fund schemes[25](index=25&type=chunk) [Material Events After the End of the Financial Period](index=9&type=section&id=Material%20Events%20After%20the%20End%20of%20the%20Financial%20Period) No material events impacting the Group occurred after the financial period end and up to the report date, other than those disclosed herein - Except as disclosed in this report, no events with a material impact on the Group have occurred after the end of the financial period and up to the date of this report[26](index=26&type=chunk) [Condensed Consolidated Statement of Profit or Loss and Other Comprehensive Income](index=10&type=section&id=Condensed%20Consolidated%20Statement%20of%20Profit%20or%20Loss%20and%20Other%20Comprehensive%20Income) [Condensed Consolidated Statement of Profit or Loss and Other Comprehensive Income](index=10&type=section&id=Condensed%20Consolidated%20Statement%20of%20Profit%20or%20Loss%20and%20Other%20Comprehensive%20Income) For the six months ended June 30, 2025, the Group's consolidated revenue slightly decreased, turning from profit to loss, driven by operating losses and increased financing costs, but total comprehensive income turned positive due to foreign exchange differences Summary of Condensed Consolidated Statement of Profit or Loss and Other Comprehensive Income | Metric | 2025 (HK$ Thousand) | 2024 (HK$ Thousand) | Change | | :--- | :--- | :--- | :--- | | Revenue | 594,939 | 606,394 | -2% | | Gross Profit | 175,140 | 172,039 | +1.8% | | Operating (Loss) / Profit | (4,247) | 7,953 | Turned from profit to loss | | Financing Costs | (5,085) | (989) | Significantly increased | | Share of Profit of Associates | 7,820 | 4,158 | Increase | | (Loss) / Profit Before Tax | (1,560) | 11,091 | Turned from profit to loss | | (Loss) / Profit for the Period | (9,950) | 5,534 | Turned from profit to loss | | Total Comprehensive Income / (Expense) for the Period | 20,801 | (3,041) | Turned from expense to income | | (Loss) / Profit for the Period Attributable to Owners of the Company | (15,035) | 2,460 | Turned from profit to loss | | Basic (Loss) / Earnings Per Share | (3.89) HK cents | 0.64 HK cents | Turned from profit to loss | - Exchange differences arising from translating overseas operations turned from **HK$(6,223) thousand** in 2024 to **HK$20,620 thousand** in 2025, being the primary reason for the positive shift in total comprehensive income for the period[28](index=28&type=chunk) [Condensed Consolidated Statement of Financial Position](index=12&type=section&id=Condensed%20Consolidated%20Statement%20of%20Financial%20Position) [Condensed Consolidated Statement of Financial Position](index=12&type=section&id=Condensed%20Consolidated%20Statement%20of%20Financial%20Position) As of June 30, 2025, the Group saw increased non-current assets and total equity, but net current assets decreased, while both current and non-current liabilities, particularly bank borrowings, rose Summary of Condensed Consolidated Statement of Financial Position | Metric | June 30, 2025 (HK$ Thousand) | December 31, 2024 (HK$ Thousand) | Change | | :--- | :--- | :--- | :--- | | Total Non-current Assets | 675,227 | 622,664 | Increase | | Property, Plant and Equipment | 446,839 | 410,311 | Increase | | Inventories | 260,428 | 220,462 | Increase | | Trade and Other Receivables, Deposits and Prepayments | 358,260 | 399,977 | Decrease | | Bank Balances and Cash | 154,840 | 152,354 | Increase | | Total Current Assets | 773,769 | 773,149 | Slight increase | | Total Current Liabilities | 671,101 | 649,102 | Increase | | Net Current Assets | 102,668 | 124,047 | Decrease | | Total Assets Less Current Liabilities | 777,895 | 746,711 | Increase | | Total Non-current Liabilities | 149,897 | 141,716 | Increase | | Bank Borrowings (Non-current) | 102,265 | 96,442 | Increase | | Equity Attributable to Owners of the Company | 532,672 | 520,021 | Increase | | Total Equity | 627,998 | 604,995 | Increase | - Increased inventory balances and decreased trade and other receivables, deposits, and prepayments reflect changes in the **working capital structure**[31](index=31&type=chunk) - Bank borrowings within current liabilities significantly increased from **HK$69,714 thousand** to **HK$113,889 thousand**, indicating increased short-term borrowing pressure[31](index=31&type=chunk) [Condensed Consolidated Statement of Changes in Equity](index=14&type=section&id=Condensed%20Consolidated%20Statement%20of%20Changes%20in%20Equity) [Condensed Consolidated Statement of Changes in Equity](index=14&type=section&id=Condensed%20Consolidated%20Statement%20of%20Changes%20in%20Equity) For the six months ended June 30, 2025, equity attributable to owners of the Company increased due to total comprehensive income, despite reduced retained earnings, while non-controlling interests also grew from capital contributions Summary of Condensed Consolidated Statement of Changes in Equity | Metric | June 30, 2025 (HK$ Thousand) | January 1, 2025 (HK$ Thousand) | Change | | :--- | :--- | :--- | :--- | | Equity Attributable to Owners of the Company | 532,672 | 520,021 | Increase | | Non-controlling Interests | 95,326 | 84,974 | Increase | | Total Equity | 627,998 | 604,995 | Increase | | Total Comprehensive Income / (Expense) for the Period (Attributable to Owners of the Company) | 13,968 | (5,369) (2024 prior period) | Turned from expense to income | | Retained Earnings (End of Period) | 275,055 | 290,090 (Beginning of Period) | Decrease | | Capital Contribution from Non-controlling Shareholders for Capital Increase in a Subsidiary | 2,922 | – | New | - Exchange reserve significantly increased from **HK$35,244 thousand** as of January 1, 2025, to **HK$64,247 thousand** as of June 30, 2025, being the main contributor to total comprehensive income attributable to owners of the Company[34](index=34&type=chunk) - Total comprehensive income for the period (unaudited) was **HK$20,801 thousand**, with **HK$13,968 thousand** attributable to owners of the Company and **HK$6,833 thousand** attributable to non-controlling interests[34](index=34&type=chunk) [Condensed Consolidated Statement of Cash Flows](index=15&type=section&id=Condensed%20Consolidated%20Statement%20of%20Cash%20Flows) [Condensed Consolidated Statement of Cash Flows](index=15&type=section&id=Condensed%20Consolidated%20Statement%20of%20Cash%20Flows) For the six months ended June 30, 2025, the Group experienced a shift to net cash outflow from operations, reduced cash used in investing, and a significant increase in cash from financing activities, leading to a slight increase in period-end cash and cash equivalents Summary of Condensed Consolidated Statement of Cash Flows | Metric | 2025 (HK$ Thousand) | 2024 (HK$ Thousand) | Change | | :--- | :--- | :--- | :--- | | Net Cash (Used in) / From Operating Activities | (3,066) (Used) | 28,223 (From) | Turned from inflow to outflow | | Purchase of Property, Plant and Equipment | (31,362) | (73,243) | Decrease | | Net Cash Used in Investing Activities | (40,720) | (66,243) | Decrease | | New Bank Borrowings | 53,588 | 61,715 | Decrease | | Interest Paid on Bank Borrowings | (3,662) | (760) | Increase | | Net Cash From Financing Activities | 44,037 | 13,039 | Significantly increased | | Net Increase / (Decrease) in Cash and Cash Equivalents | 251 (Increase) | (24,981) (Decrease) | Turned from decrease to increase | | Cash and Cash Equivalents at End of Period | 154,840 | 123,530 | Increase | - Net cash from financing activities significantly increased, primarily due to new bank borrowings of **HK$53,588 thousand** and capital contributions from non-controlling shareholders for a subsidiary's capital increase of **HK$2,922 thousand**[36](index=36&type=chunk) - Exchange rate changes had a positive impact of **HK$2,235 thousand** on cash and cash equivalents, compared to a negative impact in the prior period[36](index=36&type=chunk) [Notes to the Condensed Consolidated Financial Statements](index=16&type=section&id=Notes%20to%20the%20Condensed%20Consolidated%20Financial%20Statements) [Basis of Preparation](index=16&type=section&id=Basis%20of%20Preparation) The condensed consolidated financial statements are prepared under HKAS 34 and HKEX Listing Rules, adopting consistent accounting policies and methods as the 2024 annual financial statements - The condensed consolidated financial statements have been prepared in accordance with **Hong Kong Accounting Standard 34 'Interim Financial Reporting'** issued by the Hong Kong Institute of Certified Public Accountants and the applicable disclosure requirements of the Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited[37](index=37&type=chunk) - The accounting policies and methods of computation adopted in the preparation of the condensed consolidated financial statements are consistent with those used in the annual financial statements for the year ended **December 31, 2024**[37](index=37&type=chunk) [New and Revised Hong Kong Financial Reporting Standards](index=16&type=section&id=New%20and%20Revised%20Hong%20Kong%20Financial%20Reporting%20Standards) The Group applied HKAS 21 amendments from January 1, 2025, with no policy changes; HKFRS 18, effective 2027, is expected to significantly impact financial statement presentation, while financial instrument amendments are not material - The Group first applied the amendments to **Hong Kong Accounting Standard 21 'Lack of Exchangeability'** from **January 1, 2025**, and did not change its accounting policies or make retrospective adjustments due to the adoption of these revised standards[38](index=38&type=chunk) - **Hong Kong Financial Reporting Standard 18 'Presentation and Disclosure in Financial Statements'** will be effective for annual reporting periods beginning on or after **January 1, 2027**, introducing significant changes to the presentation of financial statements, and management is currently assessing its impact[39](index=39&type=chunk) - Amendments to **Hong Kong Financial Reporting Standard 9** and **Hong Kong Financial Reporting Standard 7** regarding the classification and measurement of financial instruments are not expected to have a material impact on the Group's financial position and performance[40](index=40&type=chunk) [Fair Value Measurement](index=17&type=section&id=Fair%20Value%20Measurement) The Group's financial assets and liabilities' carrying amounts approximate fair values, with unlisted equity securities and investment properties classified as Level 3, whose fair value decreased due to valuation inputs like reversionary yield and illiquidity discount - The carrying amounts of the Group's financial assets and financial liabilities reflected in the condensed consolidated statement of financial position approximate their respective fair values[41](index=41&type=chunk) - Fair value measurements use **Level 1, Level 2, and Level 3** input data, with the Group's unlisted equity securities and investment properties classified as **Level 3** fair value measurements[43](index=43&type=chunk)[44](index=44&type=chunk) Level 3 Fair Value Measured Assets | Description | June 30, 2025 (HK$ Thousand) | December 31, 2024 (HK$ Thousand) | | :--- | :--- | :--- | | Unlisted Equity Securities | 7,355 | 7,355 | | Investment Properties (Commercial Units - Hong Kong) | 49,600 | 50,700 | | Total | 56,955 | 58,055 | - The fair value of investment properties decreased by **HK$1,100 thousand** and was recognized in profit or loss[48](index=48&type=chunk) - Key unobservable input data used for **Level 3** fair value measurements include reversionary yield, market monthly rent, and illiquidity discount[53](index=53&type=chunk)[55](index=55&type=chunk) [Revenue and Segment Information](index=24&type=section&id=Revenue%20and%20Segment%20Information) The Group is segmented by geographical markets (Europe, US, Asia, other regions); during the period, ODM revenue decreased, distribution and optical lens revenues increased, with a notable decline in US market revenue and growth in Asia - The Group is currently divided into four segments based on the sale of optical products to customers located in **Europe, the US, Asia, and other regions**[56](index=56&type=chunk) Revenue Analysis by Operating and Reportable Segment (For the Six Months Ended June 30, 2025) | Segment | Europe (HK$ Thousand) | US (HK$ Thousand) | Asia (HK$ Thousand) | Other Regions (HK$ Thousand) | Total (HK$ Thousand) | | :--- | :--- | :--- | :--- | :--- | :--- | | Original Design Manufacturing (ODM) Segment | 184,777 | 87,659 | 106,439 | 392 | 379,267 | | Distribution Segment | 95,502 | 10,906 | 21,078 | 16,685 | 144,171 | | Optical Lens Segment | 266 | – | 71,074 | 161 | 71,501 | | Total Revenue from External Customers | 280,545 | 98,565 | 198,591 | 17,238 | 594,939 | Revenue Analysis by Operating and Reportable Segment (For the Six Months Ended June 30, 2024) | Segment | Europe (HK$ Thousand) | US (HK$ Thousand) | Asia (HK$ Thousand) | Other Regions (HK$ Thousand) | Total (HK$ Thousand) | | :--- | :--- | :--- | :--- | :--- | :--- | | Original Design Manufacturing (ODM) Segment | 205,629 | 105,401 | 105,307 | 2,682 | 419,019 | | Distribution Segment | 90,310 | 14,952 | 18,134 | 16,866 | 140,262 | | Optical Lens Segment | 59 | – | 47,054 | – | 47,113 | | Total Revenue from External Customers | 295,998 | 120,353 | 170,495 | 19,548 | 606,394 | - External customer revenue in the **US market** decreased from **HK$120,353 thousand** to **HK$98,565 thousand**, while external customer revenue in the **Asian market** increased from **HK$170,495 thousand** to **HK$198,591 thousand**[58](index=58&type=chunk)[59](index=59&type=chunk) [Financing Costs](index=27&type=section&id=Financing%20Costs) For the six months ended June 30, 2025, the Group's financing costs significantly increased, mainly due to substantial growth in interest on bank borrowings and lease liabilities Breakdown of Financing Costs | Item | 2025 (HK$ Thousand) | 2024 (HK$ Thousand) | Change | | :--- | :--- | :--- | :--- | | Interest on bank borrowings | 3,662 | 760 | Significantly increased | | Interest on lease liabilities | 1,423 | 229 | Significantly increased | | Total | 5,085 | 989 | Significantly increased | [Income Tax Expense](index=27&type=section&id=Income%20Tax%20Expense) For the six months ended June 30, 2025, the Group's income tax expense increased due to deferred tax growth and prior period under-provision for China corporate income tax, with rates calculated per local regulations Breakdown of Income Tax Expense | Item | 2025 (HK$ Thousand) | 2024 (HK$ Thousand) | Change | | :--- | :--- | :--- | :--- | | Current period income tax | 7,854 | 5,531 | Increase | | Under-provision in prior periods | 536 | 26 | Increase | | Total | 8,390 | 5,557 | Increase | - Deferred tax increased from **HK$2,174 thousand** in 2024 to **HK$4,185 thousand** in 2025[62](index=62&type=chunk) - The **Hong Kong Profits Tax two-tiered rates** of **8.25% and 16.5%** apply to qualifying entities. The **China Corporate Income Tax rate is 25%**, the **UK corporate tax rate is 25%**, the **South Africa corporate tax rate is 27%**, and the **Italy corporate tax rate is 27.9%**[63](index=63&type=chunk)[64](index=64&type=chunk) [(Loss) / Profit for the Period](index=29&type=section&id=(Loss)%20%2F%20Profit%20for%20the%20Period) For the six months ended June 30, 2025, the Group's loss was influenced by reduced intangible asset amortization, trade receivables impairment reversal, increased PPE depreciation, decreased investment property fair value, and higher net inventory provision Items Affecting (Loss) / Profit for the Period | Item | 2025 (HK$ Thousand) | 2024 (HK$ Thousand) | Change | | :--- | :--- | :--- | :--- | | Amortisation of intangible assets | 1,346 | 2,231 | Decrease | | Net (reversal of impairment loss) / impairment loss recognised on trade receivables | (761) (Reversal) | 73 (Provision) | Turned from provision to reversal | | Cost of inventories recognised as expense | 409,691 | 438,376 | Decrease | | Depreciation of property, plant and equipment | 23,701 | 16,138 | Increase | | Decrease in fair value of investment properties | 1,100 | 4,000 | Decrease | | Net provision for / (reversal of provision for) inventories | 10,108 (Provision) | (4,021) (Reversal) | Turned from reversal to provision | | Net foreign exchange losses | 1,577 | 1,002 | Increase | - For the six months ended **June 30, 2024**, the reversal of inventory provision was due to changes in market conditions and the sale of certain products previously written down to net realisable value in prior years, leading to an increase in the estimated net realisable value of those products[66](index=66&type=chunk) [Dividends](index=30&type=section&id=Dividends) The Board resolved not to declare any interim dividends for the six months ended June 30, 2025 and 2024; a final dividend of HK5.0 cents per share for 2023 was paid in 2024 - The Board resolved not to declare any interim dividends for the six months ended **June 30, 2025**, and **June 30, 2024**[67](index=67&type=chunk) - For the six months ended **June 30, 2024**, a final dividend of **HK5.0 cents per share** for 2023, totaling **HK$19,313,000**, was paid[67](index=67&type=chunk) [(Loss) / Earnings Per Share](index=30&type=section&id=(Loss)%20%2F%20Earnings%20Per%20Share) For the six months ended June 30, 2025, the Group reported a basic loss per share of HK3.89 cents, compared to earnings of HK0.64 cents in the prior period, with no diluted EPS presented due to absence of potential ordinary shares Basic (Loss) / Earnings Per Share | Metric | 2025 | 2024 | | :--- | :--- | :--- | | (Loss) / Profit for the Period Attributable to Owners of the Company (HK$ Thousand) | (15,035) | 2,460 | | Basic (Loss) / Earnings Per Share | (3.89) HK cents | 0.64 HK cents | | Weighted average number of shares used for calculating basic (loss) / earnings per share | 386,263,374 | 386,263,374 | - Diluted (loss) / earnings per share are not presented as there were no outstanding potential ordinary shares in either period[70](index=70&type=chunk) [Investment Properties](index=31&type=section&id=Investment%20Properties) The Group's investment properties decreased at period-end, with fair value reductions recognized in profit or loss; all are measured at fair value by independent valuers using the income capitalization approach Changes in Investment Properties | Metric | June 30, 2025 (HK$ Thousand) | December 31, 2024 (HK$ Thousand) | | :--- | :--- | :--- | | At end of period | 49,600 | 50,700 | | Decrease in fair value recognised in profit or loss | (1,100) | (4,900) | - All property interests held by the Group under operating leases to earn rental income are measured using the **fair value model** and classified and accounted for as investment properties[71](index=71&type=chunk) - Investment properties are valued by **Vigers Appraisal and Consulting Limited**, an independent professional valuer, using the **income capitalization approach**, referencing market rents and reversionary yields[72](index=72&type=chunk) [Property, Plant and Equipment](index=32&type=section&id=Property%2C%20Plant%20and%20Equipment) For the six months ended June 30, 2025, the Group acquired approximately HK$51,440,000 in property, plant, and equipment, and recognized new right-of-use assets and lease liabilities from two new lease agreements Acquisition of Property, Plant and Equipment | Period | Acquisition Amount (HK$ Thousand) | | :--- | :--- | | For the six months ended June 30, 2025 | 51,440 | | For the six months ended June 30, 2024 | 56,034 | - The Group entered into two new lease agreements for the use of plant and offices for a term of **two years**, recognizing new right-of-use assets and lease liabilities of **HK$3,877,000** respectively[74](index=74&type=chunk) [Investment in an Associate](index=33&type=section&id=Investment%20in%20an%20Associate) As of June 30, 2025, the Group completed its investment in an associate by fully paying for a 7.5% equity stake in Trenti Industria Occhiali S.p.A. under a share purchase agreement - As of **June 30, 2025**, the Group fully paid the vendor **EUR787,500** (equivalent to approximately **HK$6,975,000**) as consideration for the acquisition, completing the additional purchase of a **7.5%** equity stake in Trenti Industria Occhiali S.p.A[75](index=75&type=chunk) [Trade and Other Receivables, Deposits and Prepayments](index=33&type=section&id=Trade%20and%20Other%20Receivables%2C%20Deposits%20and%20Prepayments) The Group's trade receivables decreased, with credit terms of 30-150 days, though overdue amounts over 180 days increased; an impairment provision of HK$761,000 was reversed, and trade receivables from associates also decreased Aging Analysis of Trade Receivables | Aging | June 30, 2025 (HK$ Thousand) | December 31, 2024 (HK$ Thousand) | | :--- | :--- | :--- | | 0 – 90 days | 195,722 | 245,483 | | 91 – 180 days | 93,184 | 99,562 | | Over 180 days | 16,726 | 9,421 | | Total | 305,632 | 354,466 | - For the six months ended **June 30, 2025**, the Group reversed an impairment provision of **HK$761,000** (for the six months ended June 30, 2024: impairment provision of HK$73,000 was made)[77](index=77&type=chunk) - Trade receivables from an associate amounted to **HK$53,285,000** (net of credit loss provision of HK$593,000), a decrease compared to **December 31, 2024**[78](index=78&type=chunk) [Trade and Other Payables and Accruals](index=34&type=section&id=Trade%20and%20Other%20Payables%20and%20Accruals) The Group's total trade and other payables and accruals decreased, with a significant reduction in 61-120 day trade payables but an increase in those over 120 days, while trade payables to associates slightly rose Total Trade and Other Payables and Accruals | Item | June 30, 2025 (HK$ Thousand) | December 31, 2024 (HK$ Thousand) | | :--- | :--- | :--- | | Total | 509,513 | 544,780 | Aging Analysis of Trade Payables | Aging | June 30, 2025 (HK$ Thousand) | December 31, 2024 (HK$ Thousand) | | :--- | :--- | :--- | | 0 – 60 days | 121,422 | 132,589 | | 61 – 120 days | 7,159 | 36,308 | | Over 120 days | 8,234 | 4,593 | | Total | 136,815 | 173,490 | - Trade payables to an associate amounted to **HK$242,000**, an increase from **HK$194,000** as of December 31, 2024, and were not overdue at the end of the reporting period[82](index=82&type=chunk) [Bank Borrowings](index=35&type=section&id=Bank%20Borrowings) The Group's total secured bank borrowings increased, with fair value approximating carrying amounts; some are collateralized by investment properties and land, and the Group complied with financial covenants during the period Secured Bank Borrowings | Date | Amount (HK$ Thousand) | | :--- | :--- | | June 30, 2025 | 216,154 | | December 31, 2024 | 166,156 | Borrowing Repayment Schedule | Term | June 30, 2025 (HK$ Thousand) | December 31, 2024 (HK$ Thousand) | | :--- | :--- | :--- | | Within one year | 113,889 | 69,714 | | After one year but within two years | 22,371 | 14,116 | | After two years but within five years | 66,426 | 68,538 | | After five years | 13,468 | 13,788 | | Total | 216,154 | 166,156 | - Bank borrowings of **HK$134,669,000** are collateralized by the Group's investment properties, land and buildings, and construction in progress[84](index=84&type=chunk) - The Group complied with its financial covenants for borrowing facilities for the six months ended **June 30, 2025**[85](index=85&type=chunk) [Share Capital](index=37&type=section&id=Share%20Capital) The Company's authorized and issued and fully paid share capital remained unchanged at period-end, with a par value of HK$0.1 per share Share Capital Details | Item | June 30, 2025 (Number of Shares) | December 31, 2024 (Number of Shares) | June 30, 2025 (HK$ Thousand) | December 31, 2024 (HK$ Thousand) | | :--- | :--- | :--- | :--- | :--- | | Authorised share capital (HK$0.1 par value per share) | 1,000,000,000 | 1,000,000,000 | 100,000 | 100,000 | | Issued and fully paid share capital (HK$0.1 par value per share) | 386,263,374 | 386,263,374 | 38,626 | 38,626 | [Capital Commitments](index=37&type=section&id=Capital%20Commitments) As of June 30, 2025, the Group's total capital commitments significantly increased, mainly for subsidiary investment establishment costs, leasehold land and buildings, and machinery and plant capital expenditures Breakdown of Capital Commitments | Item | June 30, 2025 (HK$ Thousand) | December 31, 2024 (HK$ Thousand) | | :--- | :--- | :--- | | Establishment costs of investments in subsidiaries | 144,240 | 120,518 | | Buildings under construction | 1,671 | 3,345 | | Leasehold land and buildings | 39,529 | 20,170 | | Machinery and plant | 32,745 | 4,857 | | Leasehold improvements | 670 | 105 | | Furniture, fixtures and office equipment | 131 | 50 | | Total | 218,986 | 149,045 | [Related Party Transactions](index=38&type=section&id=Related%20Party%20Transactions) During the reporting period, the Group conducted various transactions with associates, including sales, procurement, and lease liability repayments, while remuneration for directors and key management personnel decreased Transactions with Associates | Type of Transaction | 2025 (HK$ Thousand) | 2024 (HK$ Thousand) | | :--- | :--- | :--- | | Sales of optical frames and sunglasses to an associate | 53,177 | 59,435 | | Purchases of optical frames, sunglasses and raw materials from an associate | 48 | 91 | | Repayment of lease liabilities to an associate | 1,317 | – | - The Directors consider that the above transactions with associates were conducted in the ordinary course of business[88](index=88&type=chunk) Key Management Personnel Remuneration | Item | 2025 (HK$ Thousand) | 2024 (HK$ Thousand) | | :--- | :--- | :--- | | Short-term benefits | 5,906 | 7,222 | | Post-employment benefits | 346 | 331 | | Total | 6,252 | 7,553 | [Approval of Financial Statements](index=39&type=section&id=Approval%20of%20Financial%20Statements) The interim financial statements were approved and authorized for issue by the Board of Directors on August 28, 2025 - The interim financial statements were approved and authorized for issue by the Board of Directors on **August 28, 2025**[92](index=92&type=chunk) [Additional Information](index=40&type=section&id=Additional%20Information) [Dividends](index=40&type=section&id=Dividends) The Company's Board of Directors resolved not to declare any interim dividends for the six months ended June 30, 2025 - The Company's Board of Directors resolved not to declare any interim dividends for the six months ended **June 30, 2025** (2024: nil)[94](index=94&type=chunk) [Standard Code for Securities Transactions by Directors](index=40&type=section&id=Standard%20Code%20for%20Securities%20Transactions%20by%20Directors) The Company adopted the Model Code for Securities Transactions by Directors of Listed Issuers from HKEX Listing Rules Appendix C3, with all Directors confirming compliance during the reporting period - The Company has adopted the **Model Code for Securities Transactions by Directors of Listed Issuers** as set out in **Appendix C3** of the Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited[95](index=95&type=chunk) - All Directors have confirmed that they have complied with the required standards set out in the Model Code throughout the reporting period[95](index=95&type=chunk) [Purchase, Sale or Redemption of the Company's Listed Shares](index=40&type=section&id=Purchase%2C%20Sale%20or%20Redemption%20of%20the%20Company's%20Listed%20Shares) During the reporting period, neither the Company nor its subsidiaries purchased, sold, or redeemed any listed securities, and no treasury shares were held as of June 30, 2025 - During the reporting period, neither the Company nor any of its subsidiaries purchased, sold, or redeemed any of the Company's listed securities[96](index=96&type=chunk) - As of **June 30, 2025**, the Company did not hold any treasury shares[96](index=96&type=chunk) [Issue of Equity Securities](index=40&type=section&id=Issue%20of%20Equity%20Securities) The Company did not issue equity securities for cash or sell treasury shares for cash during the reporting period - The Company did not issue equity securities for cash or sell treasury shares for cash during the reporting period[97](index=97&type=chunk) [Directors' and Chief Executive's Interests and Short Positions in Shares, Underlying Shares and Debentures](index=41&type=section&id=Directors'%20and%20Chief%20Executive's%20Interests%20and%20Short%20Positions%20in%20Shares%2C%20Underlying%20Shares%20and%20Debentures) As of June 30, 2025, several Directors and the Chief Executive held long positions in the Company's shares, with Mr. Ng Hoi Ying and Ms. Ng Chi Hung holding significant interests Directors' and Chief Executive's Long Positions in the Company's Shares | Name of Director / Chief Executive | Personal Interests (shares) | Family Interests (shares) | Other Interests (shares) | Total (shares) | Approximate % of the Company's issued share capital | | :--- | :--- | :--- | :--- | :--- | :--- | | Ng Hoi Ying | 2,856,000 | 62,833,347 | 153,600,000 | 219,289,347 | 56.77% | | Ng Yat Shan | 3,766,000 | – | – | 3,766,000 | 0.97% | | Ng Kim Ying | 21,703,000 | – | – | 21,703,000 | 5.62% | | Ng Chi Hung | 62,833,347 | 156,456,000 | – | 219,289,347 | 56.77% | - Mr. Ng Hoi Ying's **153,600,000 shares** are held by Ratagan International Company Limited, which is wholly owned by HSBC International Trustee Limited as trustee of a discretionary trust[100](index=100&type=chunk) - Ms. Ng Chi Hung, spouse of Mr. Ng Hoi Ying, is deemed to be interested in all shares held/owned by Mr. Ng Hoi Ying pursuant to **Part XV of the Securities and Futures Ordinance**[100](index=100&type=chunk) [Substantial Shareholders' Interests and Short Positions](index=42&type=section&id=Substantial%20Shareholders'%20Interests%20and%20Short%20Positions) As of June 30, 2025, substantial shareholders, including HSBC International Trustee Limited, Maritime Overseas Assets Limited, Ratagan International Company Limited, and David Michael Webb and Karen Anne Webb and their controlled entities, held significant interests in the Company's issued share capital Substantial Shareholders' Long Positions in the Company's Shares | Name of Shareholder | Capacity | Number of issued ordinary shares held | Approximate % of the Company's issued share capital | | :--- | :--- | :--- | :--- | | HSBC International Trustee Limited | Trustee | 153,600,000 | 39.77% | | Maritime Overseas Assets Limited | Interest of controlled corporation | 153,600,000 | 39.77% | | Ratagan International Company Limited | Beneficial owner | 153,600,000 | 39.77% | | David Michael Webb and Karen Anne Webb | Interest of controlled corporation | 39,720,000 | 10.28% | | Preferable Situation Assets Limited | Beneficial owner | 23,168,600 | 6.00% | - HSBC International Trustee Limited is the trustee of **The Arts 2007 Trust**, of which Mr. Ng Hoi Ying is the settlor and a beneficiary[101](index=101&type=chunk) - Mr. David Michael Webb and Ms. Karen Anne Webb are deemed to be interested in **39,720,000 shares** of the Company held by Preferable Situation Assets Limited and Member One Limited[101](index=101&type=chunk) [Corporate Governance](index=43&type=section&id=Corporate%20Governance) The Company complied with the Corporate Governance Code in Listing Rules Appendix C1 Part 2, with Audit, Remuneration, and Nomination Committees, comprising independent non-executive directors, ensuring effective corporate governance - The Company has complied with all applicable code provisions set out in the **Corporate Governance Code** contained in **Appendix C1 Part 2** of the Listing Rules throughout the reporting period[104](index=104&type=chunk) - The Audit Committee has reviewed the Group's interim report for the reporting period and is of the opinion that it has been prepared in accordance with applicable accounting standards and requirements, and that adequate disclosures have been made[104](index=104&type=chunk) - The Remuneration Committee is responsible for determining the remuneration of executive directors, independent non-executive directors, and senior management, while the Nomination Committee is responsible for reviewing the Board structure, assessing independence, and making recommendations for director appointments[104](index=104&type=chunk)[105](index=105&type=chunk) [Company Information](index=44&type=section&id=Company%20Information) [Company Information](index=44&type=section&id=Company%20Information) This chapter provides basic information for Arts Optical International Holdings Limited, including Board members, company secretary, auditor, legal advisors, registered office, principal place of business, share registrars, principal bankers, and company website - Board members include executive directors such as Chairman **Ng Hoi Ying** and Chief Executive Officer **Ng Yat Shan**, as well as independent non-executive directors such as **Wong Chung Wai, Chung Hiu Lam, Lam Yu Lung, and Fong Kin Kiu**[106](index=106&type=chunk) - The Company Secretary is **Choi Pui Yiu**, the Auditor is **RSM Hong Kong**, and the Legal Advisors are **Stephenson Harwood** and **Conyers Dill & Pearman**[106](index=106&type=chunk) - The Company's Registered Office is in **Bermuda**, and its Hong Kong Head Office and Principal Place of Business are located at **Units A-G, 32/F, Kings Wing Plaza 1, 55 King Yip Street, Kwun Tong, Kowloon, Hong Kong**[106](index=106&type=chunk) - Principal Bankers include **Bank of China (Hong Kong) Limited** and **Hang Seng Bank Limited**[106](index=106&type=chunk)

Financial Performance - Net interest income for the six months ended June 30, 2025, increased by 9.4% to HK$2,776,458,000 compared to HK$2,538,695,000 in 2024[5] - Net fee and commission income rose by 20.4% to HK$726,763,000 from HK$603,386,000 year-on-year[5] - Operating profit before impairment losses grew by 23.4% to HK$2,088,521,000, up from HK$1,691,892,000 in the previous year[5] - Profit attributable to shareholders increased by 13.1% to HK$1,578,850,000 compared to HK$1,396,074,000 in 2024[5] - The bank's operating income for the period was HK$3,795,596,000, reflecting a 15.5% increase from HK$3,286,757,000 in 2024[5] - The profit for the period ended June 30, 2025, was HK$1,578,850,000, representing an increase from HK$1,396,074,000 for the same period in 2024, which is a growth of approximately 13%[10] - Basic earnings per share for the six months ended June 30, 2025, were HK$1,578,850,000, up from HK$1,396,074,000 in 2024, indicating a growth of 13.0%[64] - Profit before taxation for the six months ended June 30, 2025, was HK$1,819,057, compared to HK$1,579,921 in 2024, indicating an increase of about 15.2%[198] Assets and Liabilities - Total assets as of June 30, 2025, amounted to HK$260,683,805,000, a rise from HK$256,339,081,000 at the end of 2024[8] - Customer deposits reached HK$203,954,890,000, up from HK$201,568,051,000 in the previous period[8] - Total equity increased to HK$35,140,583,000 from HK$33,823,372,000 year-on-year[8] - The bank's cash and balances with banks stood at HK$14,896,976,000, compared to HK$14,131,725,000 at the end of 2024[8] - Total liabilities were reported at HK$225,543,222, with a notable increase in subordinated notes to HK$4,273,505[160] - The total amount of trading securities listed in Hong Kong was HK$4,899,000 as of June 30, 2025, down from HK$9,790,000 at the end of 2024[69] - The total gross loans and advances amounted to HK$139,489,360, an increase from HK$138,374,285 as of December 31, 2024[84] Income and Expenses - Total operating expenses amounted to HK$1,707,075,000 in 2025, compared to HK$1,594,865,000 in 2024, reflecting an increase of 7.0%[48] - Employee compensation and benefit expenses rose to HK$1,227,675,000 in 2025, up from HK$1,113,239,000 in 2024, an increase of 10.3%[48] - The operating expenses for the six months ended June 30, 2025, totaled HK$1,707,075, compared to HK$1,594,865 in 2024, representing an increase of approximately 7.0%[194] Credit and Impairment - Credit impairment losses rose by 33.8% to HK$728,082,000 from HK$544,007,000 in the previous year[5] - New credit impairment allowances net of releases increased to HK$779,270,000 in 2025 from HK$582,402,000 in 2024, reflecting a rise of 33.8%[50] - The total impairment allowances increased to HK$1,917,097 as of June 30, 2025, compared to HK$1,532,345 as of December 31, 2024[84] - Credit-impaired loans and advances decreased to HK$4,350,004 as of June 30, 2025, from HK$4,437,683 as of December 31, 2024, representing 3.12% of total loans[84] Dividends and Shareholder Returns - The company paid a final dividend of HK$548,243,000 for 2024, which is a decrease from HK$688,818,000 for 2023, indicating a reduction of about 20%[13] - Retained earnings increased to HK$25,889,548,000 as of June 30, 2025, compared to HK$24,876,838,000 as of December 31, 2024, reflecting a growth of about 4.1%[140] Cash Flow and Liquidity - Cash flows from operating activities for the six months ended June 30, 2025, were HK$2,016,466,000, compared to a cash outflow of HK$1,958,962,000 in 2024, indicating a significant turnaround[13] - The net cash used in investing activities was HK$69,267,000 for the first half of 2025, compared to HK$140,599,000 in the same period of 2024, showing an improvement in cash management[13] - The net liquidity gap was reported at HK$35,140,583, indicating a strong liquidity position[160] Market and Investment Performance - The other comprehensive income for the period was HK$304,501,000, a significant increase compared to HK$54,118,000 in the same period of the previous year[10] - Net gain from foreign currency trading increased significantly to HK$242,992,000 in 2025 from HK$89,746,000 in 2024, representing a growth of 170%[44] - The company reported a total of HK$46,733,586 in financial assets at fair value through other comprehensive income, reflecting strong investment performance[160] Regulatory and Compliance - The Group does not expect the amendments to accounting standards effective from January 1, 2025, to have a material impact on its operations or financial statements[24] - The Group's management is currently assessing the implications of the new HKFRS 18, which will replace HKAS 1 and is expected to enhance comparability and transparency in financial reporting[30]

INTERIM REPORT 中期報告 2025 CONTENTS 目錄 | CORPORATE INFORMATION | 公司資料 | 2 | | --- | --- | --- | | FINANCIAL HIGHLIGHTS | 財務摘要 | 4 | | REPORT ON REVIEW OF INTERIM FINANCIAL | 中期財務資料審閱報告 | 6 | | INFORMATION | | | | CONDENSED CONSOLIDATED STATEMENT OF PROFIT | 簡明綜合損益及其他全面收益表 | 9 | | OR LOSS AND OTHER COMPREHENSIVE INCOME | | | | CONDENSED CONSOLIDATED STATEMENT OF | 簡明綜合財務狀況表 | 11 | | FINANCIAL POSITION | | | | CONDENSED CONSOLIDATED STATEMENT OF | 簡明綜合權益變動表 | 13 | | CHANGES IN EQUITY | | | | CONDENSED CONSOLIDA ...

[Company Information](index=3&type=section&id=Company%20Information) This section provides detailed information on DataMargin Technology Holdings Limited and its subsidiaries, including basic registration, board members, senior management, committee structures, auditors, legal advisors, registered office, principal place of business, share registrar, principal bankers, company website, and stock code - The company was incorporated in the Cayman Islands on December 6, 2018, primarily engaging in data solutions, integrated services for software and hardware, IT maintenance and support, and commodity trading[108](index=108&type=chunk) - The Board of Directors comprises executive, non-executive, and independent non-executive directors, with Mr. Xue Shouguang serving as both Chairman and CEO[6](index=6&type=chunk) - The company's stock code is **3680**, and its website is www.datamargin.com[7](index=7&type=chunk) [Financial Highlights](index=5&type=section&id=Financial%20Highlights) During the reporting period, the Group's revenue decreased by 33.5% year-on-year due to strategic business adjustments, with significant reductions in data solutions, integrated services, and IT maintenance revenue; despite lower gross profit, net profit was achieved, turning losses into gains, driven by fair value gains on financial assets and cost-efficiency measures 2025 First Half Financial Highlights | Indicator | 2025 First Half (RMB Thousand) | 2024 First Half (RMB Thousand) | Year-on-Year Change (%) | | :--- | :--- | :--- | :--- | | Revenue | 120,392 | 181,011 | -33.5% | | Gross Profit | 9,111 | 14,577 | -37.5% | | Net Profit/(Loss) | 41,098 | (38,635) | Turned profitable | | Basic Earnings/(Loss) Per Share | 6.28 cents | (5.48) cents | Turned profitable | - Revenue decline was primarily due to a **54.4% decrease** in data solutions business revenue, a **39.1% decrease** in integrated services revenue, and an **88.9% decrease** in IT maintenance and support services revenue[8](index=8&type=chunk) - Key drivers for achieving net profit include a fair value gain of approximately **RMB 63,015,000** from shares held in Tokyo Chuo Auction Holdings Limited, alongside aggressive cost-efficiency measures reducing R&D, administrative, financing, and selling expenses[9](index=9&type=chunk)[10](index=10&type=chunk) [Management Discussion and Analysis](index=6&type=section&id=Management%20Discussion%20and%20Analysis) This section details the company's business performance, industry background, future strategy, and financial position for the first half of 2025, highlighting its continued focus on fintech, new market expansion, and optimized financial structure through cost control and equity financing, leading to a significant profit turnaround driven by investment gains and cost management [Business Review](index=6&type=section&id=Business%20Review) In the first half of 2025, the Group strengthened its core competitiveness in data intelligence and marketing technology, benefiting from China's stable economic growth and digital economy, particularly policies promoting digital transformation in the financial sector, while actively exploring new business models and financing channels [Industry Background Analysis](index=6&type=section&id=Industry%20Background%20Analysis) In the first half of 2025, China's GDP grew by 5.3% year-on-year, with the digital economy and transformation driving growth, particularly in information transmission, software, and IT services which saw an 11.1% increase; financial regulators mandated banks to raise IT investment to over 3% of revenue, focusing on AI, big data, and blockchain to accelerate digital transformation - China's GDP grew by **5.3% year-on-year** in the first half of 2025, with the information transmission, software, and IT services sector growing by **11.1%**[11](index=11&type=chunk) - Financial regulators issued the "Implementation Guidelines for Digital Transformation in the Banking Industry," requiring commercial banks to increase technology investment to **over 3% of operating revenue**, focusing on core technologies like AI, big data, and blockchain[11](index=11&type=chunk) China Banking IT Solutions Market Size | Year | Market Size (RMB Billion) | Year-on-Year Growth Rate (%) | | :--- | :--- | :--- | | 2024 | 71.305 | 2.9% | | 2029 (Forecast) | 103.939 | 7.8% | - IDC predicts that by the end of 2025, **65% of financial institutions** will leverage AI large model platforms/tools to enhance their digital intelligence capabilities[13](index=13&type=chunk) - China's big data industry is reshaping the digital economy landscape with an average annual growth rate of **20%**, projected to exceed **RMB 2.8 trillion** by 2025 and **RMB 6.5 trillion** by 2030[15](index=15&type=chunk) [Performance Review](index=7&type=section&id=Performance%20Review) During the reporting period, the Group deepened its engagement with banking, securities, and manufacturing clients, securing multiple cooperation projects with major state-owned and commercial banks, thereby solidifying its market influence in data intelligence and marketing technology; concurrently, it actively expanded into new areas such as data assets and financial AI large models, while broadening financing channels through equity investments and share placements - The Group continued to sign cooperation projects with the head office and Shenzhen and Macau branches of a major state-owned bank, covering data warehouse application migration, credit corporate cards, basic platform upgrades, precision marketing, Xinchuang transformation, payroll systems, and operation and maintenance[17](index=17&type=chunk) - Awarded the "Model Development" project for a state-owned commercial bank in Southeast China, enhancing its operational decision-making accuracy, marketing management efficiency, and risk early warning timeliness, and also secured "Database" and "Business System Xinchuang Transformation" projects for the same bank[18](index=18&type=chunk) - Collaborated with Quanzhou Data Group Co., Ltd. to operate the "Quanxinrong Platform," exploring innovative cooperation models and leveraging big data analytics to provide convenient and efficient financial services to small and medium-sized enterprises in Quanzhou[21](index=21&type=chunk) - On April 25, 2025, acquired **15,000,000 ordinary shares (3%)** of Tokyo Chuo Auction Holdings Limited for **HKD 6.6 million**, recognizing a fair value gain of approximately **HKD 67.65 million**, marking a step into diversified development[22](index=22&type=chunk) - Completed the placement of **130,000,000 shares** on May 21, 2025, raising net proceeds of approximately **HKD 38.6 million**, with **80%** used to repay borrowings and **20%** for general working capital[25](index=25&type=chunk) [Future Outlook](index=10&type=section&id=Future%20Outlook) The Group will continue to deepen its presence in the fintech sector, focusing on data intelligence and marketing technology, optimizing its client base, and expanding nationwide; concurrently, it will actively explore emerging areas such as digital assets, Web3.0, cryptocurrency assets, Xinchuang localization, and IT software/hardware integration, fostering a second growth curve through diversified cooperation and an "investment empowerment" strategy [Continued Deepening in Data Intelligence and Marketing Technology](index=10&type=section&id=Continued%20Deepening%20in%20Data%20Intelligence%20and%20Marketing%20Technology) The Group will continue to focus on the fintech sector, serving financial clients as its core, optimizing its client base, and actively expanding its national market footprint; by continuously upgrading product quality and solution service efficiency, it aims to enhance client satisfaction and market influence, and replicate its service model from financial institutions to broader industries, exploring niche markets within the financial sector - The future strategy involves continued deep cultivation in the fintech sector, with serving financial clients as the core, optimizing client base composition, and actively expanding the national market footprint[27](index=27&type=chunk) - The service model will be replicated from financial institutions to broader industries, promoting cross-industry technology transfer and opening up new growth opportunities[27](index=27&type=chunk) - The focus remains firmly on data intelligence and marketing technology, specializing and refining capabilities, leveraging end-to-end full-chain data advantages to provide mature, stable, and forward-looking product systems and service solutions[28](index=28&type=chunk) [Actively Expanding Business Boundaries and Innovating Diversified Cooperation Models](index=11&type=section&id=Actively%20Expanding%20Business%20Boundaries%20and%20Innovating%20Diversified%20Cooperation%20Models) The Group will drive business expansion through diversified cooperation models such as industrial investment, joint operations, and business integration, extending service scenarios to government and enterprise digital transformation across all industries; concurrently, it will actively plan for Web3.0 and cryptocurrency assets, and intends to collaborate with domestic GPU hardware manufacturers to build integrated "hardware + software + industry solutions" capabilities, fostering cutting-edge technology applications in AI, blockchain, software-hardware integration, and digital asset trading - Actively exploring new strategic tracks, driving business expansion through diversified cooperation models such as industrial investment, joint operations, and business integration, to cultivate a second growth curve[30](index=30&type=chunk) - Actively planning for Web3.0 and cryptocurrency assets, with a key focus on accelerating the on-chain transformation of traditional financial services through digital asset investments and fostering on-chain financial resources[30](index=30&type=chunk) - Plans are in place to collaborate with domestic GPU hardware manufacturers to jointly build integrated "hardware + software + industry solutions" capabilities centered on domestic GPUs, establishing an innovation business unit to foster cutting-edge technology applications in AI, blockchain, software-hardware integration, and digital asset trading[31](index=31&type=chunk) - Deepening the "investment empowerment" model, integrating investment into a new growth paradigm, and achieving synergistic innovation and value enhancement through post-investment deep empowerment of enterprise development[31](index=31&type=chunk) [Financial Review](index=12&type=section&id=Financial%20Review) During the reporting period, the Group experienced a significant decline in revenue but achieved substantial net profit growth through stringent cost control and successful investment strategies; liquidity improved, and the debt-to-asset ratio significantly decreased, indicating an optimized financial structure, further supported by an equity placement for debt repayment and working capital [Revenue](index=12&type=section&id=Revenue) During the reporting period, the Group's revenue was approximately RMB 120,392,000, a decrease of about 33.5% compared to the first half of 2024, primarily due to strategic adjustments in business composition, leading to significant declines in data solutions, integrated services, and IT maintenance service revenue Changes in Revenue Composition | Business Category | 2025 First Half (RMB Thousand) | 2024 First Half (RMB Thousand) | Change Amount (RMB Thousand) | Change Rate (%) | | :--- | :--- | :--- | :--- | :--- | | Data Solutions | 31,240 | 68,491 | (37,251) | -54.4% | | Integrated Services for Sale of Software and Hardware and Related Services | 28,592 | 46,968 | (18,376) | -39.1% | | IT Maintenance and Support Services | 426 | 3,832 | (3,406) | -88.9% | | Commodity Trading | 60,134 | 61,720 | (1,586) | -2.6% | | **Total** | **120,392** | **181,011** | **(60,619)** | **-33.5%** | [Gross Profit and Gross Profit Margin](index=12&type=section&id=Gross%20Profit%20and%20Gross%20Profit%20Margin) During the reporting period, the Group's gross profit was approximately RMB 9,111,000, a decrease of about 37.5% compared to the first half of 2024; the gross profit margin was approximately 7.6%, down from 8.1% in the prior year, primarily due to a shift in revenue structure with an increased proportion of commodity trading Changes in Gross Profit and Gross Profit Margin | Indicator | 2025 First Half | 2024 First Half | Change Amount (RMB Thousand) | Change Rate (%) | | :--- | :--- | :--- | :--- | :--- | | Gross Profit (RMB Thousand) | 9,111 | 14,577 | (5,466) | -37.5% | | Gross Profit Margin | 7.6% | 8.1% | -0.5 percentage points | - | - The primary reason for the decline in gross profit and gross profit margin was the adjustment in revenue structure in the first half of 2025, with an **increased proportion of commodity trading**[34](index=34&type=chunk) [Selling Expenses](index=13&type=section&id=Selling%20Expenses) During the reporting period, selling expenses were approximately RMB 2,586,000, a decrease of about 53.2% compared to the first half of 2024, with the proportion of revenue falling from 3.1% to 2.1%, primarily due to the Group's effective reduction in selling expenses through organizational restructuring and optimized compensation incentive mechanisms Changes in Selling Expenses | Indicator | 2025 First Half (RMB Thousand) | 2024 First Half (RMB Thousand) | Change Amount (RMB Thousand) | Change Rate (%) | | :--- | :--- | :--- | :--- | :--- | | Selling Expenses | 2,586 | 5,528 | (2,942) | -53.2% | | As % of Revenue | 2.1% | 3.1% | -1.0 percentage points | - | - The primary reason for the reduction in selling expenses was the Group's adjustment of its organizational structure and optimization of compensation incentive mechanisms[36](index=36&type=chunk) [Research and Development Expenses](index=13&type=section&id=Research%20and%20Development%20Expenses) During the reporting period, R&D expenses were approximately RMB 7,385,000, a significant decrease of about 62% compared to the first half of 2024, with the proportion of revenue falling from 10.7% to 6.1%; this reduction is mainly attributed to the maturity of previously developed products, shifting the current focus to product promotion, application, and refinement Changes in Research and Development Expenses | Indicator | 2025 First Half (RMB Thousand) | 2024 First Half (RMB Thousand) | Change Amount (RMB Thousand) | Change Rate (%) | | :--- | :--- | :--- | :--- | :--- | | R&D Expenses | 7,385 | 19,449 | (12,064) | -62.0% | | As % of Revenue | 6.1% | 10.7% | -4.6 percentage points | - | - The primary reason for the reduction in R&D expenses is the increasing maturity of the Group's previously developed products, with the current focus shifting to product promotion and application, and continuous refinement during use[37](index=37&type=chunk) [Administrative Expenses](index=13&type=section&id=Administrative%20Expenses) During the reporting period, administrative expenses were approximately RMB 20,983,000, a decrease of about 12.8% compared to the first half of 2024, primarily due to the optimization of the administrative management team, leading to an approximate 17.8% reduction in labor costs and a 63.2% decrease in office expenses Changes in Administrative Expenses | Indicator | 2025 First Half (RMB Thousand) | 2024 First Half (RMB Thousand) | Change Amount (RMB Thousand) | Change Rate (%) | | :--- | :--- | :--- | :--- | :--- | | Administrative Expenses | 20,983 | 24,053 | (3,070) | -12.8% | - The primary reasons for the decrease in administrative expenses were the optimization of the administrative management team, leading to an approximate **17.8% reduction** in related labor costs, and a **63.2% decrease** in office expenses[38](index=38&type=chunk) [Income Tax Credit](index=13&type=section&id=Income%20Tax%20Credit) During the reporting period, income tax credit was approximately RMB 167,000, a decrease from RMB 473,000 in the first half of 2024, primarily due to a reduction in deferred income tax credit Changes in Income Tax Credit | Indicator | 2025 First Half (RMB Thousand) | 2024 First Half (RMB Thousand) | Change Amount (RMB Thousand) | | :--- | :--- | :--- | | Income Tax Credit | 167 | 473 | (306) | - The primary reason for the decrease in income tax credit was a reduction in deferred income tax credit during the reporting period[39](index=39&type=chunk) [Profit for the Period](index=14&type=section&id=Profit%20for%20the%20Period) During the reporting period, the Group achieved a net profit of approximately RMB 41,098,000, successfully reversing the net loss of approximately RMB 38,635,000 in the first half of 2024, primarily due to the recognition of fair value gains on financial assets and the implementation of cost-efficiency measures Changes in Profit/(Loss) for the Period | Indicator | 2025 First Half (RMB Thousand) | 2024 First Half (RMB Thousand) | Change Amount (RMB Thousand) | | :--- | :--- | :--- | | Net Profit/(Loss) | 41,098 | (38,635) | 79,733 | - Key reasons for achieving profit include the recognition of a fair value gain of approximately **RMB 63,015,000** from shares in Tokyo Chuo Auction Holdings Limited, and reductions in R&D expenses, administrative expenses, financing costs, and selling expenses compared to the prior year[10](index=10&type=chunk)[44](index=44&type=chunk) [Profit for the Period Attributable to Owners of the Company](index=14&type=section&id=Profit%20for%20the%20Period%20Attributable%20to%20Owners%20of%20the%20Company) During the reporting period, profit attributable to owners of the Company was approximately RMB 43,186,000, representing a significant turnaround from the loss of approximately RMB 36,040,000 in the first half of 2024, primarily due to the increase in net profit for the period Changes in Profit/(Loss) for the Period Attributable to Owners of the Company | Indicator | 2025 First Half (RMB Thousand) | 2024 First Half (RMB Thousand) | Change Amount (RMB Thousand) | | :--- | :--- | :--- | | Profit/(Loss) Attributable to Owners of the Company | 43,186 | (36,040) | 79,226 | - These changes were primarily due to the increase in net profit during the reporting period[40](index=40&type=chunk) [Earnings Per Share](index=14&type=section&id=Earnings%20Per%20Share) During the reporting period, the company's basic and diluted earnings per share were approximately RMB 6.28 cents, successfully reversing the basic and diluted loss per share of approximately RMB 5.48 cents in the first half of 2024 Changes in Earnings/(Loss) Per Share | Indicator | 2025 First Half (RMB cents) | 2024 First Half (RMB cents) | | :--- | :--- | :--- | | Basic Earnings/(Loss) Per Share | 6.28 | (5.48) | | Diluted Earnings/(Loss) Per Share | 6.28 | (5.48) | [Liquidity and Financial Resources](index=14&type=section&id=Liquidity%20and%20Financial%20Resources) During the reporting period, the Group's net cash outflow from operating activities decreased, net cash outflow from investing activities increased primarily due to share acquisition, while net cash inflow from financing activities significantly increased, mainly driven by proceeds from share issuance, substantially improving the company's liquidity position Changes in Cash Flow | Cash Flow Category | 2025 First Half (RMB Thousand) | 2024 First Half (RMB Thousand) | Change Amount (RMB Thousand) | | :--- | :--- | :--- | | Net cash from/(used in) operating activities | (30,650) | (32,104) | 1,454 | | Net cash from/(used in) investing activities | (6,796) | (5,308) | (1,488) | | Net cash from/(used in) financing activities | 47,079 | (7,228) | 54,307 | - Net cash used in operating activities decreased by approximately **RMB 1,454,000**, primarily due to reduced project procurement, staff costs, and other miscellaneous expenses[43](index=43&type=chunk) - Net cash used in investing activities increased by approximately **RMB 1,488,000**, mainly due to the acquisition of shares in Tokyo Chuo Auction Holdings Limited, resulting in a cash outflow of approximately **RMB 6,197,000**[46](index=46&type=chunk) - Net cash generated from financing activities increased by approximately **RMB 54,307,000**, primarily due to proceeds from share issuance of approximately **RMB 36,086,000** during the reporting period[47](index=47&type=chunk) [Capital Structure](index=15&type=section&id=Capital%20Structure) As of June 30, 2025, the Group's short-term bank borrowings were approximately RMB 42,960,000, and other borrowings were approximately RMB 84,489,000; the debt-to-asset ratio significantly decreased to approximately 110.9% (December 31, 2024: approximately 277.9%), primarily due to an increase in total equity of approximately RMB 74,753,000 during the reporting period, indicating a substantial improvement in capital structure Borrowing Status | Borrowing Category | June 30, 2025 (RMB Thousand) | | :--- | :--- | | Short-term Bank Borrowings | 42,960 | | Other Borrowings | 84,489 | - The Group had no debt securities or other contingent liabilities at the end of the reporting period, other than those disclosed in Note 24[49](index=49&type=chunk)[50](index=50&type=chunk) Changes in Debt-to-Asset Ratio | Indicator | June 30, 2025 | December 31, 2024 | Change | | :--- | :--- | :--- | :--- | | Debt-to-Asset Ratio | 110.9% | 277.9% | Significant decrease | - The primary reason for the decrease in the debt-to-asset ratio was an increase in total equity of approximately **RMB 74,753,000** during the reporting period compared to the beginning of the period[52](index=52&type=chunk) [Pledge of Assets](index=16&type=section&id=Pledge%20of%20Assets) As of June 30, 2025, the Group's bank borrowings were secured by guarantees from independent third-party enterprises, pledged bank deposits, certain trade receivables, and personal guarantees from legal representatives of two subsidiaries; other borrowings were secured by certain shares in the company held by a major shareholder, a director, and a former director, as well as a personal guarantee from a former director - Bank borrowings were guaranteed by independent third-party enterprises for approximately **RMB 6,500,000** (December 31, 2024: RMB 9,500,000)[58](index=58&type=chunk) - Pledged bank deposits amounted to approximately **RMB 632,000** (December 31, 2024: approximately RMB 329,000)[58](index=58&type=chunk) - Trade receivables from certain customers, amounting to approximately **RMB 21,978,000** (December 31, 2024: approximately RMB 22,501,000), were pledged as collateral[58](index=58&type=chunk) - Other borrowings were secured by certain shares in the company held by a major shareholder, a director, and a former director, as well as a personal guarantee from a former director[58](index=58&type=chunk) [Significant Investments Held](index=16&type=section&id=Significant%20Investments%20Held) On April 25, 2025, the Group acquired 15,000,000 ordinary shares (3%) of Tokyo Chuo Auction Holdings Limited for HKD 6.6 million; as of June 30, 2025, the carrying amount of this investment, classified as financial assets at fair value through profit or loss, was approximately RMB 67.7 million - On April 25, 2025, the Company acquired **15,000,000 ordinary shares**, representing **3%** of Tokyo Chuo Auction Holdings Limited's issued ordinary shares, for a consideration of **HKD 6.6 million**[53](index=53&type=chunk) - As of June 30, 2025, the carrying amount of this investment, classified as financial assets at fair value through profit or loss, was approximately **RMB 67.7 million**[53](index=53&type=chunk) [Capital Commitments](index=16&type=section&id=Capital%20Commitments) As of June 30, 2025, the Group had no capital commitments - As of June 30, 2025, the Group had no capital commitments[54](index=54&type=chunk) [Significant Investments, Acquisitions, and Disposals of Subsidiaries, Associates, and Joint Ventures](index=16&type=section&id=Significant%20Investments%2C%20Acquisitions%2C%20and%20Disposals%20of%20Subsidiaries%2C%20Associates%2C%20and%20Joint%20Ventures) During the reporting period, the Group held no significant investments in, nor made any other acquisitions or disposals of, subsidiaries, associates, or joint ventures - During the reporting period, the Group held no significant investments in, nor made any other acquisitions or disposals of, subsidiaries, associates, or joint ventures[55](index=55&type=chunk) [Foreign Exchange Exposure](index=16&type=section&id=Foreign%20Exchange%20Exposure) The Group faces foreign currency risks as most business transactions, assets, and liabilities are denominated in the functional currency of each group entity; the Group implements effective management policies to closely monitor exchange rate fluctuations, regularly review foreign exchange risks, and will consider hedging significant foreign currency exposures when necessary - The Group faces certain foreign currency risks as most business transactions, assets, and liabilities are primarily denominated in the functional currency of each group entity[56](index=56&type=chunk) - The Group implements effective management policies to closely monitor foreign exchange rate fluctuations, regularly review foreign exchange risks, and will consider hedging significant foreign currency exposures when necessary[56](index=56&type=chunk) [Future Major Investment or Capital Asset Plans](index=16&type=section&id=Future%20Major%20Investment%20or%20Capital%20Asset%20Plans) The Group currently has no other major investment or capital asset plans - The Group currently has no other major investment or capital asset plans[57](index=57&type=chunk) [Corporate Governance and Other Information](index=17&type=section&id=Corporate%20Governance%20and%20Other%20Information) This section discloses directors' and major shareholders' equity interests, remuneration policies, employee benefits, and share incentive schemes; it also reports on compliance with corporate governance codes and standard codes, changes in board members, interim dividend policy, public float, significant litigation, audit committee review, and post-reporting period events and interim report publication [Directors' and Chief Executive's Interests and Short Positions in Shares, Underlying Shares, and Debentures of the Company or its Associated Corporations](index=17&type=section&id=Directors'%20and%20Chief%20Executive's%20Interests%20and%20Short%20Positions%20in%20Shares%2C%20Underlying%20Shares%2C%20and%20Debentures%20of%20the%20Company%20or%20its%20Associated%20Corporations) As of June 30, 2025, the Company's directors and chief executive held interests in the company's shares, with Mr. Xue Shouguang holding approximately 16.75% through controlled corporations and beneficial interests, Mr. Wu Xiaohua holding approximately 3.73% through controlled corporations, Dr. Wu Fushi beneficially holding approximately 1.45%, and Mr. Xue Xindi beneficially holding approximately 0.11% Directors' and Chief Executive's Shareholding Profile | Director/Chief Executive Name | Capacity/Nature of Interest | Number of Shares | Approximate % of Shareholding | Long/Short Position | | :--- | :--- | :--- | :--- | :--- | | Mr. Xue Shouguang | Interest in controlled corporation | 104,000,000 | 13.15 | Long Position | | | Beneficial interest | 28,495,000 | 3.60 | Long Position | | Mr. Xue Xindi | Beneficial interest | 846,000 | 0.11 | Long Position | | Mr. Wu Xiaohua | Interest in controlled corporation | 29,490,000 | 3.73 | Long Position | | Dr. Wu Fushi | Beneficial interest | 11,450,000 | 1.45 | Long Position | - Mr. Xue Shouguang, through his 100% equity interest in Baoshu Asia Holdings Limited, is deemed to have an interest in the **104,000,000 shares** held by it[61](index=61&type=chunk) - Mr. Wu Xiaohua, through his 100% equity interest in Zhibao Holdings Limited, is deemed to have an interest in the **29,490,000 shares** held by it[61](index=61&type=chunk) [Substantial Shareholders' Interests and Short Positions in Shares and Underlying Shares](index=18&type=section&id=Substantial%20Shareholders'%20Interests%20and%20Short%20Positions%20in%20Shares%20and%20Underlying%20Shares) As of June 30, 2025, the Company's substantial shareholders, including Baoshu Asia Holdings Limited, Ms. Chen Weiping (spouse of Mr. Xue Shouguang), Mr. Gu Yi and his controlled entities Mindas Touch Global Limited and Jiaying Management Limited, Hong Kong Hesheng Investment Co., Ltd., and Mr. Chen Zhenping and his spouse Ms. Wu Xinlan, held various forms of interests in the company's shares Substantial Shareholders' Shareholding Profile | Shareholder Name | Capacity/Nature of Interest | Number of Shares Interested | Percentage (%) | Long/Short Position | | :--- | :--- | :--- | :--- | :--- | | Baoshu Asia Holdings Limited | Beneficial interest | 104,000,000 | 13.15 | Long Position | | Ms. Chen Weiping | Spouse's interest | 132,495,000 | 16.75 | Long Position | | Mr. Gu Yi | Interest in controlled corporation | 70,003,840 | 8.85 | Long Position | | Jiaying Management Limited | Interest in controlled corporation | 70,003,840 | 8.85 | Long Position | | Mindas Touch Global Limited | Beneficial interest | 70,003,840 | 8.85 | Long Position | | Hong Kong Hesheng Investment Co., Ltd. | Share charge interest holder | 66,080,000 | 8.36 | Long Position | | Mr. Chen Zhenping | Beneficial interest | 42,980,000 | 5.43 | Long Position | | Ms. Wu Xinlan | Spouse's interest | 42,980,000 | 5.43 | Long Position | - Ms. Chen Weiping, spouse of Mr. Xue Shouguang, is deemed to have an interest in the **132,495,000 shares** in which Mr. Xue Shouguang has an interest[66](index=66&type=chunk) - Mr. Gu Yi and Jiaying Management Limited hold interests in shares through Mindas Touch Global Limited[66](index=66&type=chunk) [Remuneration Policy and Employee Benefits](index=19&type=section&id=Remuneration%20Policy%20and%20Employee%20Benefits) As of June 30, 2025, the Group employed 183 staff in mainland China and Hong Kong, offering competitive remuneration, retirement plans, and benefits, with discretionary bonuses based on performance; director and senior management remuneration packages are designed to retain and incentivize talent, linking compensation to company objective achievement, with no labor disputes or recruitment difficulties reported during the period - As of June 30, 2025, the Group had a total of **183 employees** in mainland China and Hong Kong[65](index=65&type=chunk) - The Group provides comprehensive and competitive remuneration, retirement plans, and benefits to its employees, with discretionary bonuses based on employee performance[65](index=65&type=chunk) - The remuneration packages for directors and senior management are designed to retain and incentivize them, linking compensation to performance in achieving company objectives[65](index=65&type=chunk) - During the reporting period, the Group did not experience any serious issues with employees due to labor disputes or operational disruptions, nor did it encounter any difficulties in recruiting and retaining experienced staff[65](index=65&type=chunk) [Share Incentive Schemes](index=20&type=section&id=Share%20Incentive%20Schemes) The Group has a Share Option Scheme and a Share Award Scheme designed to recognize and incentivize contributions from eligible participants, aiding in employee retention and recruitment; the Share Option Scheme has an authorized limit of 10% of total issued shares, while the Share Award Scheme is limited to 5% of total issued shares, both incorporating vesting periods and performance conditions to align incentives with company and individual performance [Share Option Scheme](index=20&type=section&id=Share%20Option%20Scheme) The Share Option Scheme, adopted by shareholders on June 8, 2020, authorizes the Board to grant options to participants over ten years, with a limit of 10% of total issued shares (40,000,000 shares); as of June 30, 2025, 39,384,562 options were available for grant, with vesting periods and exercise prices determined by offer and performance conditions - The Share Option Scheme was adopted by shareholders on June 8, 2020, aiming to recognize and incentivize contributions from eligible participants, provide incentives, and assist the Group in retaining existing employees and recruiting additional staff[67](index=67&type=chunk) - The authorized limit of the Share Option Scheme shall not exceed **10% of the total issued shares** as of June 8, 2020, which is **40,000,000 shares**[68](index=68&type=chunk) Share Option Scheme Overview | Indicator | January 1, 2025 | June 30, 2025 | | :--- | :--- | :--- | | Number of Share Options Authorized for Grant | 39,370,621 | 39,384,562 | | Total Outstanding Share Options | 629,379 | 615,438 | - The vesting period for share options is from the grant date until the commencement of the exercise period, subject to the terms and conditions of the Share Option Scheme and/or the offer, and may include Group financial performance targets and individual key performance indicators[69](index=69&type=chunk) [Share Award Scheme](index=22&type=section&id=Share%20Award%20Scheme) The Share Award Scheme, adopted by shareholders on June 8, 2020, authorizes the Board to grant restricted shares to participants over ten years, with a limit of 5% of total issued shares (20,000,000 shares); as of June 30, 2025, 13,289,099 restricted shares were available for grant, with vesting periods and performance conditions varying by grantee to incentivize employees - The Share Award Scheme was adopted by shareholders on June 8, 2020, empowering the Board to grant restricted shares to participants at any time during a ten-year period[73](index=73&type=chunk) - The limit of the Share Award Scheme shall not exceed **5% of the total issued shares** as of June 8, 2020 (i.e., **20,000,000 shares**)[74](index=74&type=chunk) Share Award Scheme Overview | Indicator | January 1, 2025 | June 30, 2025 | | :--- | :--- | :--- | | Number of Restricted Shares Authorized for Grant | 13,289,099 | 13,289,099 | | Total Unvested Restricted Shares | 213,725 | 40,348 | - The vesting period for restricted shares may vary among grantees, and vesting is subject to the terms and conditions of the Share Award Scheme and/or the grant, potentially including Group financial performance targets and individual key performance indicators[75](index=75&type=chunk) [Purchase, Sale or Redemption of the Company's Listed Securities](index=24&type=section&id=Purchase%2C%20Sale%20or%20Redemption%20of%20the%20Company's%20Listed%20Securities) During the reporting period, neither the Company nor any of its subsidiaries purchased, sold, or redeemed any of the Company's listed securities; as of June 30, 2025, the Company held no treasury shares - During the reporting period, neither the Company nor any of its subsidiaries purchased, sold, or redeemed any of the Company's listed securities[79](index=79&type=chunk) - As of June 30, 2025, the Company held no treasury shares[80](index=80&type=chunk) [Use of Net Proceeds from Share Offer](index=24&type=section&id=Use%20of%20Net%20Proceeds%20from%20Share%20Offer) On May 21, 2025, the Company completed the placement of 130,000,000 shares, raising net proceeds of approximately HKD 38.6 million; 80% (approximately HKD 30.9 million) was allocated to repay Group borrowings, with HKD 29.6 million utilized, and the remaining 20% (approximately HKD 7.7 million) for general working capital, which has been fully utilized - On May 21, 2025, the Company completed the placement of **130,000,000 shares**, raising net proceeds of approximately **HKD 38.6 million**[81](index=81&type=chunk) Use of Net Proceeds from Share Offer | Purpose | Allocation Ratio (%) | Allocated Amount (HKD Million) | Amount Utilized (HKD Million) | Unutilized Amount (HKD Million) | | :--- | :--- | :--- | :--- | :--- | | Repayment of Group Borrowings | 80% | 30.9 | 29.6 | 1.3 | | Replenishment of General Working Capital | 20% | 7.7 | 7.7 | – | | **Total** | **100%** | **38.6** | **37.3** | **1.3** | [Compliance with Corporate Governance Code](index=24&type=section&id=Compliance%20with%20Corporate%20Governance%20Code) The Company has adopted and complied with all code provisions of the Corporate Governance Code during the reporting period, except for the combined roles of Chairman and CEO held by Mr. Xue Shouguang, which the Board believes ensures consistent leadership and effective strategy implementation, and will be regularly reviewed; the Company previously failed to comply with Listing Rules due to insufficient independent non-executive directors but regained compliance upon Ms. Chu Jijun's appointment on March 14, 2025 - The Company has adopted the principles and code provisions of the Corporate Governance Code as set out in Appendix C1 to the Listing Rules[83](index=83&type=chunk) - Mr. Xue Shouguang serves as both the Chairman of the Board and Chief Executive Officer, a structure the Board believes ensures consistent leadership and the ability to effectively formulate and implement the Company's overall strategy[83](index=83&type=chunk) - The Company previously failed to comply with Listing Rules due to an insufficient number of independent non-executive directors and the absence of independent non-executive directors with the required qualifications, leading to the Audit Committee not meeting minimum membership and composition requirements[85](index=85&type=chunk) - Following the appointment of Ms. Chu Jijun as an independent non-executive director and a member of the Audit Committee on March 14, 2025, the Company has regained compliance with the relevant Listing Rules[86](index=86&type=chunk) [Compliance with Model Code](index=25&type=section&id=Compliance%20with%20Model%20Code) The Company has adopted the Model Code as the code of conduct for directors' dealings in company securities, with all directors confirming compliance during the reporting period; the Model Code is also applied to relevant employees who may possess inside information, with no breaches identified during the period - The Company has adopted the Model Code as the code of conduct for directors' dealings in the Company's securities, and all directors confirmed compliance with the Model Code throughout the reporting period[87](index=87&type=chunk) - The Company has also adopted the Model Code as the standard for relevant employees who may possess inside information regarding the Company and/or its securities to deal in the Company's securities, and no breaches of the Model Code by any employee were identified during the reporting period[87](index=87&type=chunk) [Board of Directors](index=26&type=section&id=Board%20of%20Directors) The Company's Board of Directors is responsible for overseeing the Group's business, strategic decisions, and performance, ensuring objective decision-making in the Company's best interests; as of the interim report date, the Board comprises three executive directors, three non-executive directors, and four independent non-executive directors - The Company is led by an effective Board of Directors responsible for overseeing the Group's business, strategic decisions, and performance, making objective decisions in the Company's best interests[88](index=88&type=chunk) - As of the date of this interim report, the Board of Directors includes three executive directors: Mr. Xue Shouguang, Mr. Sun Dexin, and Mr. Xue Xindi; three non-executive directors: Dr. Wu Fushi, Mr. Wu Xiaohua, and Mr. Fei Xiang; and four independent non-executive directors: Dr. Tian Yu, Mr. Wei Junheng, Ms. Chu Jijun, and Mr. Yang Huan[88](index=88&type=chunk) [Interim Dividend](index=26&type=section&id=Interim%20Dividend) The Board of Directors does not recommend the payment of an interim dividend for the reporting period (first half of 2024: nil) - The Board of Directors does not recommend the payment of an interim dividend for the reporting period (first half of 2024: nil)[89](index=89&type=chunk) [Sufficient Public Float](index=26&type=section&id=Sufficient%20Public%20Float) Based on publicly available information, the Company has maintained a sufficient public float of its issued shares as required by the Listing Rules (i.e., at least 25% of the issued shares held by the public) - The Company has maintained a sufficient public float of its issued shares as required by the Listing Rules (i.e., at least **25% of the issued shares** held by the public)[90](index=90&type=chunk) [Significant Litigation](index=26&type=section&id=Significant%20Litigation) During the reporting period, the Company was not involved in any significant litigation or arbitration, and the directors were unaware of any pending or threatened significant litigation or claims against the Company - During the reporting period, the Company was not involved in any significant litigation or arbitration, and the directors were unaware of any pending or threatened significant litigation or claims against the Company during the reporting period[91](index=91&type=chunk) [Audit Committee and Review of Financial Information](index=26&type=section&id=Audit%20Committee%20and%20Review%20of%20Financial%20Information) The Audit Committee has reviewed the Group's unaudited interim condensed consolidated financial information for the reporting period, discussing accounting policies and internal controls with senior management, and confirmed that the unaudited interim condensed consolidated financial statements were prepared in accordance with applicable accounting standards and fairly presented the financial position and results - The Audit Committee has reviewed the Group's unaudited interim condensed consolidated financial information for the reporting period and discussed matters concerning the accounting policies and practices adopted by the Company and internal controls with members of senior management[92](index=92&type=chunk) - The Audit Committee is satisfied that the Group's unaudited interim condensed consolidated financial statements were prepared in accordance with applicable accounting standards and fairly presented the Group's financial position and results for the reporting period[92](index=92&type=chunk) - The Group's interim condensed consolidated financial information for the reporting period has not been audited by the Company's auditors[93](index=93&type=chunk) [Disclosure of Changes in Directors' Information](index=27&type=section&id=Disclosure%20of%20Changes%20in%20Directors'%20Information) During the reporting period, the Company's Board of Directors underwent several changes, including the resignations of Mr. Chen Zhenping, Mr. Yang Haifeng, and Dr. Jin Yong; Mr. Fei Xiang's re-designation as a non-executive director; the appointments of Mr. Sun Dexin and Mr. Xue Xindi as executive directors; and the appointments of Mr. Wei Junheng, Ms. Chu Jijun, and Mr. Yang Huan as independent non-executive directors, with adjustments to Dr. Tian Yu's committee roles - Mr. Chen Zhenping, Mr. Yang Haifeng, Dr. Jin Yong, and Ms. Zhao Yiqing resigned from their directorships[95](index=95&type=chunk) - Mr. Fei Xiang was re-designated from an executive director to a non-executive director[95](index=95&type=chunk) - Mr. Sun Dexin and Mr. Xue Xindi were appointed as executive directors[95](index=95&type=chunk) - Mr. Wei Junheng, Ms. Chu Jijun, and Mr. Yang Huan were appointed as independent non-executive directors, serving on the Audit Committee, Remuneration Committee, and Nomination Committee[95](index=95&type=chunk) [Compliance with Relevant Laws and Regulations](index=27&type=section&id=Compliance%20with%20Relevant%20Laws%20and%20Regulations) Except for disclosures in the "Compliance with Corporate Governance Code" section, the Group found no significant non-compliance with any relevant laws and regulations that would materially affect its business and operations during the reporting period - Except for what is disclosed in the "Compliance with Corporate Governance Code" section, the Group found no significant non-compliance with any relevant laws and regulations that would materially affect its business and operations during the reporting period[96](index=96&type=chunk) [Events After the Reporting Period](index=27&type=section&id=Events%20After%20the%20Reporting%20Period) No other significant events affecting the Group occurred from the end of the reporting period up to the date of this interim report - No other significant events that could affect the Group occurred from the end of the reporting period up to the date of this interim report[97](index=97&type=chunk) [Publication of Interim Report](index=27&type=section&id=Publication%20of%20Interim%20Report) The Company's interim report for the reporting period, containing all information required by the Listing Rules, has been published on the HKEXnews website (www.hkexnews.hk) and the Company's website (www.datamargin.com) - The Company's interim report for the reporting period, containing all information required by the Listing Rules, has been published on the HKEXnews website (www.hkexnews.hk) and the Company's website (www.datamargin.com)[98](index=98&type=chunk) [Interim Condensed Consolidated Statement of Comprehensive Income](index=28&type=section&id=Interim%20Condensed%20Consolidated%20Statement%20of%20Comprehensive%20Income) This statement presents the Group's consolidated comprehensive income for the six months ended June 30, 2025, showing a net profit of RMB 41,098 thousand, a significant turnaround from the net loss of RMB 38,635 thousand in the prior year, primarily driven by fair value gains on financial assets at fair value through profit or loss Summary of Interim Condensed Consolidated Statement of Comprehensive Income | Indicator | 2025 First Half (RMB Thousand) | 2024 First Half (RMB Thousand) | | :--- | :--- | :--- | | Revenue | 120,392 | 181,011 | | Cost of sales | (111,281) | (166,434) | | Gross profit | 9,111 | 14,577 | | Operating loss | (18,170) | (32,320) | | Fair value gain on financial assets at fair value through profit or loss | 63,015 | – | | Profit/(Loss) for the period | 41,098 | (38,635) | | Profit/(Loss) for the period attributable to owners of the Company | 43,186 | (36,040) | | Basic earnings/(loss) per share (RMB cents) | 6.28 | (5.48) | - During the reporting period, the fair value gain on financial assets at fair value through profit or loss was **RMB 63,015 thousand**, a significant factor in achieving profit for the period[99](index=99&type=chunk) - Operating loss narrowed from **RMB 32,320 thousand** to **RMB 18,170 thousand**, indicating effective cost control measures[99](index=99&type=chunk) [Interim Condensed Consolidated Statement of Financial Position](index=29&type=section&id=Interim%20Condensed%20Consolidated%20Statement%20of%20Financial%20Position) This statement presents the Group's consolidated financial position as of June 30, 2025, showing total assets increased to RMB 343,872 thousand, and total equity significantly rose to RMB 117,634 thousand, primarily due to increased share capital and reduced accumulated losses, with an improved net current liabilities position indicating a healthier financial structure Summary of Interim Condensed Consolidated Statement of Financial Position | Indicator | June 30, 2025 (RMB Thousand) | December 31, 2024 (RMB Thousand) | | :--- | :--- | :--- | | Total assets | 343,872 | 298,852 | | Non-current assets | 163,982 | 105,900 | | Current assets | 179,890 | 192,952 | | Total equity | 117,634 | 42,881 | | Total liabilities | 226,238 | 255,971 | | Net current liabilities | (45,765) | (50,851) | - Non-current assets significantly increased, primarily due to the addition of financial assets at fair value through profit or loss of **RMB 67,700 thousand**[101](index=101&type=chunk) - Total equity significantly increased by approximately **RMB 74,753 thousand**, primarily due to an increase in share capital and a reduction in accumulated losses[101](index=101&type=chunk) - Net current liabilities decreased from **RMB 50,851 thousand** to **RMB 45,765 thousand**, indicating improved liquidity[102](index=102&type=chunk) [Interim Condensed Consolidated Statement of Changes in Equity](index=31&type=section&id=Interim%20Condensed%20Consolidated%20Statement%20of%20Changes%20in%20Equity) This statement presents the Group's consolidated equity changes for the six months ended June 30, 2025, showing equity attributable to owners of the Company increased from RMB 20,459 thousand at the beginning of the period to RMB 97,300 thousand at the end, primarily driven by profit for the period and new share issuance Summary of Interim Condensed Consolidated Statement of Changes in Equity | Equity Item | Balance at January 1, 2025 (RMB Thousand) | Profit/(Loss) for the period (RMB Thousand) | Exchange differences (RMB Thousand) | Issue of new shares (RMB Thousand) | Share-based payments (RMB Thousand) | Balance at June 30, 2025 (RMB Thousand) | | :--- | :--- | :--- | :--- | :--- | :--- | :--- | | Subtotal of equity attributable to owners of the Company | 20,459 | 43,186 | (1,827) | 35,641 | (159) | 97,300 | | Non-controlling interests | 22,422 | (2,088) | – | – | – | 20,334 | | **Total equity** | **42,881** | **41,098** | **(1,827)** | **35,641** | **(159)** | **117,634** | - Profit for the period attributable to owners of the Company was **RMB 43,186 thousand**, significantly improving the equity position[105](index=105&type=chunk) - The issuance of new shares resulted in an equity increase of **RMB 35,641 thousand**, further strengthening the capital base[105](index=105&type=chunk) [Interim Condensed Consolidated Statement of Cash Flows](index=32&type=section&id=Interim%20Condensed%20Consolidated%20Statement%20of%20Cash%20Flows) This statement presents the Group's consolidated cash flows for the six months ended June 30, 2025, showing a decrease in net cash outflow from operating activities, an increase in net cash outflow from investing activities, and a significant increase in net cash inflow from financing activities, leading to a substantial increase in cash and cash equivalents at period-end and improved liquidity Summary of Interim Condensed Consolidated Statement of Cash Flows | Cash Flow Category | 2025 First Half (RMB Thousand) | 2024 First Half (RMB Thousand) | | :--- | :--- | :--- | | Net cash used in operating activities | (30,650) | (32,104) | | Net cash used in investing activities | (6,796) | (5,308) | | Net cash from/(used in) financing activities | 47,079 | (7,228) | | Net increase/(decrease) in cash and cash equivalents | 9,633 | (44,640) | | Cash and cash equivalents at end of period | 25,723 | 70,232 | - Net cash generated from financing activities significantly increased, primarily due to proceeds from share issuance of **RMB 36,086 thousand**[107](index=107&type=chunk) - Cash and cash equivalents at the end of the period increased from **RMB 16,399 thousand** at the beginning of the period to **RMB 25,723 thousand**, indicating improved liquidity[107](index=107&type=chunk) [Notes to the Interim Condensed Consolidated Financial Statements](index=33&type=section&id=Notes%20to%20the%20Interim%20Condensed%20Consolidated%20Financial%20Statements) This section provides detailed notes to the interim condensed consolidated financial statements, covering company information, basis of preparation, application of accounting standards, estimates, financial risk management, revenue and segment information, specific analyses of expenses, assets, and liabilities, as well as related party transactions, dividends, and contingent liabilities, offering essential context and details for understanding the financial statements [General Information](index=33&type=section&id=General%20Information) DataMargin Technology Holdings Limited, incorporated in the Cayman Islands on December 6, 2018, is an investment holding company; the Group primarily provides data solutions, integrated services for software and hardware, IT maintenance and support, and commodity trading, with interim condensed consolidated financial information presented in RMB, rounded to the nearest thousand - The Company was incorporated in the Cayman Islands on **December 6, 2018**, as an investment holding company[108](index=108&type=chunk) - The Group is engaged in providing data solutions, integrated services for the sale of software and hardware and related services, IT maintenance and support services, and commodity trading[108](index=108&type=chunk) - The interim condensed consolidated financial information is presented in RMB, with all values rounded to the nearest thousand[109](index=109&type=chunk) [Basis of Preparation](index=33&type=section&id=Basis%20of%20Preparation) The interim condensed financial information for the six months ended June 30, 2025, has been prepared in accordance with International Accounting Standard 34 "Interim Financial Reporting" and should be read in conjunction with the financial statements for the year ended December 31, 2024 - The interim condensed financial information has been prepared in accordance with International Accounting Standard 34 "Interim Financial Reporting"[110](index=110&type=chunk) - This interim condensed consolidated financial information should be read in conjunction with the financial statements for the year ended December 31, 2024, prepared in accordance with International Financial Reporting Standards[110](index=110&type=chunk) [Application of New and Revised International Financial Reporting Standards](index=33&type=section&id=Application%20of%20New%20and%20Revised%20International%20Financial%20Reporting%20Standards) During the period, the Group adopted all new and revised International Financial Reporting Standards issued by the IASB effective for the accounting year beginning January 1, 2025; the adoption of these new standards did not result in any significant impact on the Group's accounting policies, presentation of financial information, or reported amounts - The Group adopted all new and revised International Financial Reporting Standards issued by the International Accounting Standards Board that are relevant to its operations and effective for the accounting year beginning January 1, 2025[111](index=111&type=chunk) - The adoption of these new and revised International Financial Reporting Standards did not result in any significant impact on the Group's accounting policies, the presentation of the Group's interim condensed consolidated financial information, or the amounts reported for the current and prior periods[111](index=111&type=chunk) [Estimates](index=34&type=section&id=Estimates) The preparation of interim condensed consolidated financial information requires management to make judgments, estimates, and assumptions that affect the application of accounting policies and the reported amounts of assets, liabilities, income, and expenses, with actual results potentially differing from these estimates; the significant judgments and key sources of estimation uncertainty made by management in preparing the interim condensed consolidated financial information are consistent with those applied in the financial statements for the year ended December 31, 2024 - The preparation of interim condensed consolidated financial information requires management to make judgments, estimates, and assumptions that affect the application of accounting policies and the reported amounts of assets, liabilities, income, and expenses[112](index=112&type=chunk) - The significant judgments made by management in applying the Group's accounting policies and the key sources of estimation uncertainty in preparing the interim condensed consolidated financial information are consistent with those applied in the financial statements for the year ended December 31, 2024[112](index=112&type=chunk) [Financial Risk Management](index=34&type=section&id=Financial%20Risk%20Management) The Group is exposed to market risks (including foreign exchange and cash flow interest rate risks), credit risk, and liquidity risk; the Group's risk management approach aims to minimize the potential adverse impact of these risks on financial performance, with risk management policies remaining unchanged since the year ended December 31, 2024, and detailed management of credit and liquidity risks [Financial Risk Factors](index=34&type=section&id=Financial%20Risk%20Factors) The Group's operations expose it to various financial risks, including market risks (foreign exchange and cash flow interest rate risks), credit risk, and liquidity risk; the overall risk management approach focuses on the unpredictability of financial markets and aims to minimize potential adverse effects on the Group's financial performance, with risk management policies remaining unchanged since the year ended December 31, 2024 - The Group's operations expose it to various financial risks, including market risks (comprising foreign exchange risk and cash flow interest rate risk), credit risk, and liquidity risk[113](index=113&type=chunk) - The Group's overall risk management approach focuses on the unpredictability of financial markets and aims to minimize their potential adverse effects on the Group's financial performance[113](index=113&type=chunk) - There have been no changes in risk management policies since the year ended December 31, 2024[114](index=114&type=chunk) [Credit Risk](index=34&type=section&id=Credit%20Risk) The Group's credit risk primarily arises from bank cash, pledged and restricted bank deposits, trade receivables, contract assets, and other receivables; to manage these risks, the Group only transacts with reputable financial institutions, conducts ongoing credit assessments of counterparties, establishes policies to ensure appropriate credit terms, and estimates expected credit losses considering past default experience and future prospects - The Group's credit risk primarily arises from bank cash, pledged and restricted bank deposits, trade receivables, contract assets, and other receivables[115](index=115&type=chunk) - To manage bank cash and deposit risks, the Group only transacts with state-owned or reputable financial institutions within China and reputable international financial institutions outside China[115](index=115&type=chunk) - To manage trade receivables and contract asset risks, the Group has established policies to ensure credit terms are entered into with counterparties having appropriate credit records and that management conducts ongoing credit assessments of counterparties[115](index=115&type=chunk) - For other receivables, the Group considers past default experience, future industry prospects, and/or external actual and forecast economic data when estimating the probability of default and loss given default[116](index=116&type=chunk) [Liquidity Risk](index=35&type=section&id=Liquidity%20Risk) Liquidity risk refers to the risk of encountering difficulties in meeting financial liabilities; the Group's management, responsible for financial functions, aims to maintain funding flexibility through retaining sufficient cash and committed bank facilities, thereby prudently managing liquidity risk - Liquidity risk refers to the risk that an enterprise will encounter difficulty in meeting obligations associated with financial liabilities that are settled by delivering cash or another financial asset[117](index=117&type=chunk) - The Group's management, responsible for financial functions, aims to maintain funding flexibility by retaining sufficient cash and committed bank facilities[117](index=117&type=chunk) [Fair Value Measurement](index=35&type=section&id=Fair%20Value%20Measurement) The carrying amounts of the Group's financial assets and liabilities approximate their fair values; fair value measurements are categorized into a three-level hierarchy: Level 1 (quoted prices in active markets), Level 2 (observable inputs), and Level 3 (unobservable inputs); as of June 30, 2025, financial assets at fair value through profit or loss (Hong Kong listed equity securities) amounted to RMB 67,700 thousand, classified as Level 1, while financial assets at fair value through other comprehensive income were RMB 1,950 thousand, classified as Level 3 - The carrying amounts of the Group's financial assets and financial liabilities approximate their respective fair values[118](index=118&type=chunk) - Fair value measurements use a three-level hierarchy: Level 1 (quoted prices in active markets), Level 2 (observable inputs), and Level 3 (unobservable inputs)[118](index=118&type=chunk) Fair Value Hierarchy Disclosure (June 30, 2025) | Description | Level 1 (RMB Thousand) | Level 2 (RMB Thousand) | Level 3 (RMB Thousand) | Total (RMB Thousand) | | :--- | :--- | :--- | :--- | :--- | | Financial assets at fair value through other comprehensive income | – | – | 1,950 | 1,950 | | Financial assets at fair value through profit or loss | 67,700 | – | – | 67,700 | | **Total** | **67,700** | **–** | **1,950** | **69,650** | - For the six months ended June 30, 2025 and 2024, there were no transfers between Level 1 and Level 2, nor any transfers into or out of Level 3 for financial instruments[120](index=120&type=chunk) - Level 3 fair value measurements typically involve external valuation experts with recognized professional qualifications and recent experience, with the Chief Financial Officer reporting directly to the Board of Directors[122](index=122&type=chunk) [Revenue and Segment Information](index=38&type=section&id=Revenue%20and%20Segment%20Information) The Group's revenue primarily derives from integrated data technology services (including data solutions, integrated software/hardware services, and IT maintenance/support) and commodity trading; for the reporting period, total revenue was RMB 120,392 thousand, with integrated data technology services contributing RMB 60,258 thousand and commodity trading RMB 60,134 thousand, all generated from mainland China Summary of Revenue and Segment Information | Revenue Category | 2025 First Half (RMB Thousand) | 2024 First Half (RMB Thousand) | | :--- | :--- | :--- | | Integrated data technology services | 60,258 | 119,291 | | - Data solutions | 31,240 | 68,491 | | - Integrated services for sale of software and hardware and related services | 28,592 | 46,968 | | - IT maintenance and support services | 426 | 3,832 | | Commodity trading | 60,134 | 61,720 | | **Total revenue** | **120,392** | **181,011** | - In terms of revenue recognition timing, revenue recognized at a point in time was **RMB 88,726 thousand**, and revenue recognized over time was **RMB 31,666 thousand**[125](index=125&type=chunk) - All of the Group's revenue and non-current assets are primarily located in mainland China[129](index=129&type=chunk) - Segment profit or loss excludes share of profits of associates, finance income, corporate administrative expenses, and income tax expenses generated by the Company[126](index=126&type=chunk) [Other Income and Other Net Gains](index=40&type=section&id=Other%20Income%20and%20Other%20Net%20Gains) During the reporting period, the Group's other income primarily consisted of government grants, approximately RMB 237 thousand, a significant decrease from RMB 2,890 thousand in the prior year; other net gains amounted to RMB 309 thousand, mainly including net gains from disposal of property and equipment and other gains Summary of Other Income and Other Net Gains | Item | 2025 First Half (RMB Thousand) | 2024 First Half (RMB Thousand) | | :--- | :--- | :--- | | Government grants | 237 | 2,890 | | Net gain on disposal of property and equipment | 16 | – | | Loss on write-off of property, plant and equipment | (8) | (18) | | Gain on lease termination | – | 818 | | Others | 301 | (157) | | **Other net gains** | **309** | **643** | - Government grants primarily relate to unconditional government grants received by the Group from relevant government authorities, aimed at encouraging enterprises to engage in R&D activities and refunding "Value-Added Tax" under the "collect-and-refund VAT" policy[131](index=131&type=chunk) [Profit/(Loss) Before Income Tax](index=41&type=section&id=Profit%2F%28Loss%29%20Before%20Income%20Tax) The Group's profit/(loss) before income tax is net of various expenses and gains; during the reporting period, employee benefit expenses, amortization of intangible assets, and depreciation all decreased, while a fair value gain of RMB 63,015 thousand on financial assets at fair value through profit or loss was recognized, along with a reversal of expected credit losses for trade receivables, contract assets, and other receivables Components of Profit/(Loss) Before Income Tax | Item | 2025 First Half (RMB Th

Stock Code ٰ΅˾: 00081 董事局及委員會 執行董事 庄勇 （主席） 楊林 （行政總裁） 周漢成 （副總裁、首席合規官 兼總法律顧問） 2025 INTERIM REPORT ɚཧɚʞϋʕಂజѓ 7mm | 目錄 | 目錄 | Contents Contents | | | --- | --- | --- | --- | | 2 2 | 董事局及委員會 董事局及委員會 | 69 67 | BOARD OF DIRECTORS AND COMMITTEES BOARD OF DIRECTORS AND COMMITTEES | | 3 3 | 公司及股東資料 公司及股東資料 | 70 68 | CORPORATE AND SHAREHOLDERS' INFORMATION CORPORATE AND SHAREHOLDERS' INFORMATION | | 5 5 | 主席報告書 主席報告書 | 72 70 | CHAIRMAN'S STATEMENT CHAIRMAN'S STATEMENT | | 13 管理層討論及分析 | 13 管理層討論及分析 | 80 78 | MANAGEMENT ...

2025 2025 石四藥集團有限公司 二零二五年中期報告 Interim Report 2025 中期報告 ai17570373607_2005_SSY Group IR25_CR_9mm_OP.pdf 1 5/9/2025 上午9:56 石四藥集團有限公司 二零二五年中期報告 公司資料 股份代號 2005 執行董事 曲繼廣先生 （主席） 蘇學軍先生 孟國先生 周興揚先生 曲婉蓉女士 註冊辦事處 Cricket Square, Hutchins Drive P.O. Box 2681, Grand Cayman KY1-1111, Cayman Islands 總辦事處及香港主要營業地點 非執行董事 劉文軍先生 獨立非執行董事 王亦兵先生 周國偉先生 姜廣策先生 公司秘書 周興揚先生 香港灣仔 港灣道18號中環廣場 49樓4902-03室 授權代表 孟國先生 周興揚先生 審核委員會 周國偉先生 （主席） 王亦兵先生 姜廣策先生 薪酬委員會 姜廣策先生 （主席） 王亦兵先生 周國偉先生 提名委員會 王亦兵先生 （主席） 周國偉先生 姜廣策先生 曲婉蓉女士 （於二零二五年六月二十日獲委任） 主要股份過戶登記處 ...

[Glossary](index=4&type=section&id=Glossary) This chapter defines key terms and technical vocabulary used in the report, covering 5G, AI, network technology, data processing, energy, and terminals, to aid reader comprehension - The report includes multiple 5G-related technical terms, such as AAU (Active Antenna Unit), NTN (Non-Terrestrial Network), and AgentGuard (a business assurance solution based on 5G-A base station native intelligence)[8](index=8&type=chunk)[9](index=9&type=chunk) - AI-related terms include AI-UPF (User Plane Function optimized with AI technology), AI Agent (Artificial Intelligence Agent), large models, and multimodal AI, indicating the company's emphasis on AI technology[8](index=8&type=chunk)[11](index=11&type=chunk) - Data center and network infrastructure terms such as DPU (Data Processing Unit), CDN (Content Delivery Network), and OTN (Optical Transport Network) reflect the company's extensive layout in the ICT field[8](index=8&type=chunk)[9](index=9&type=chunk) [Chapter 1 Company Profile and Summary of Key Financial Data](index=8&type=section&id=Chapter%201%20Company%20Profile%20and%20Summary%20of%20Key%20Financial%20Data) This chapter outlines ZTE Corporation's basic information, industry, and main businesses, providing a summary of key financial data for H1 2025, including operating revenue, net profit, asset-liability status, and per-share metrics, while explaining the impact of accounting standard changes - The company belongs to the telecommunications equipment manufacturing industry, offering complete end-to-end products and solutions in the ICT sector, integrating "design, development, production, sales, and service," focusing on "carrier networks, government and enterprise businesses, and consumer businesses" with no significant changes in main operations during the reporting period[12](index=12&type=chunk) [1.1 Company Profile](index=8&type=section&id=1.1%20Company%20Profile) This section details ZTE Corporation's basic company information, including legal name, registered address, industry, main businesses, A/H share listing information, contact details, and information disclosure channels, highlighting the company's comprehensive layout in the ICT industry - ZTE Corporation is registered in Shenzhen, China, with shares listed on the Shenzhen Stock Exchange Main Board (A-share code: 000063) and the Hong Kong Stock Exchange Main Board (H-share code: 00763)[5](index=5&type=chunk)[12](index=12&type=chunk) - The company's legal representative is Xu Ziyang, and its headquarters and office address are located in ZTE Building, Keji South Road, High-tech Industrial Park, Nanshan District, Shenzhen, Guangdong Province, China[12](index=12&type=chunk) [1.2 Summary of Key Financial Data](index=9&type=section&id=1.2%20Summary%20of%20Key%20Financial%20Data) This section presents ZTE Corporation's key financial data and indicators for H1 2025, showing a 14.51% year-on-year increase in operating revenue, but a decrease in net profit attributable to ordinary shareholders and non-recurring net profit, and a significant reduction in net cash flow from operating activities, also explaining the retrospective adjustment of H1 2024 data due to accounting policy changes - The company prepares financial reports in accordance with Chinese Enterprise Accounting Standards and retrospectively adjusted "Operating Costs" and "Selling Expenses" for H1 2024 to comply with the provisions of "Interpretation No. 18 of Enterprise Accounting Standards"[14](index=14&type=chunk)[15](index=15&type=chunk) 2025 H1 Key Financial Data and Indicators (Unit: Thousand Yuan) | Item | 2025 Jan–Jun | 2024 Jan–Jun | Year-on-year Change | | :--- | :--- | :--- | :--- | | Operating Revenue | 71,552,734 | 62,487,098 | 14.51% | | Net Profit Attributable to Ordinary Shareholders of the Listed Company | 5,057,571 | 5,732,446 | (11.77%) | | Net Profit Attributable to Ordinary Shareholders of the Listed Company After Deducting Non-recurring Gains and Losses | 4,103,900 | 4,963,643 | (17.32%) | | Net Cash Flow from Operating Activities | 1,299,408 | 7,000,399 | (81.44%) | | Total Assets (2025.6.30 vs 2024.12.31) | 216,310,325 | 207,323,230 | 4.33% | | Total Liabilities (2025.6.30 vs 2024.12.31) | 141,200,521 | 134,212,948 | 5.21% | | Owners' Equity Attributable to Ordinary Shareholders of the Listed Company (2025.6.30 vs 2024.12.31) | 74,838,209 | 72,808,483 | 2.79% | 2025 H1 Per-Share Metrics and Financial Ratios (Unit: Yuan/share, %) | Item | 2025 Jan–Jun | 2024 Jan–Jun | Year-on-year Change | | :--- | :--- | :--- | :--- | | Basic Earnings Per Share | 1.06 | 1.20 | (11.67%) | | Diluted Earnings Per Share | 1.06 | 1.20 | (11.67%) | | Basic Earnings Per Share After Deducting Non-recurring Gains and Losses | 0.86 | 1.04 | (17.31%) | | Net Cash Flow from Operating Activities Per Share | 0.27 | 1.46 | (81.51%) | | Net Assets Per Share Attributable to Ordinary Shareholders of the Listed Company (2025.6.30 vs 2024.12.31) | 15.64 | 14.72 | 6.25% | | Weighted Average Return on Net Assets | 6.85% | 8.28% | Decreased by 1.43 percentage points | | Weighted Average Return on Net Assets After Deducting Non-recurring Gains and Losses | 5.56% | 7.17% | Decreased by 1.61 percentage points | | Asset-Liability Ratio (2025.6.30 vs 2024.12.31) | 65.28% | 64.74% | Increased by 0.54 percentage points | 2025 H1 Non-recurring Gains and Losses and Amounts (Unit: Thousand Yuan) | Item | 2025 Jan–Jun | 2024 Jan–Jun | | :--- | :--- | :--- | | Gains on Disposal of Non-current Assets | 3,846 | 67,365 | | Investment Income from Disposal of Long-term Equity Investments | 75,791 | 1,000 | | Gains and Losses from Changes in Fair Value of Financial Assets and Liabilities Held, and Gains and Losses from Disposal of Financial Assets and Liabilities | 385,680 | (141,560) | | Gains from Changes in Fair Value of Investment Properties | — | (145,522) | | Other Income (excluding specific tax refunds) | 106,543 | 185,922 | | Reversal of Impairment Provision for Individually Significant Accounts Receivable for Which Impairment Provisions Were Made Individually | 702 | 2,241 | | Net Other Non-operating Income and Expenses | 45,949 | (333) | | Other Profit and Loss Items That Meet the Definition of Non-recurring Gains and Losses | 502,469 | 935,935 | | Less: Income Tax Impact | 168,147 | 135,757 | | Impact on Minority Interests (after tax) | (838) | 488 | | Total | 953,671 | 768,803 | - Software product VAT refund income (**1.63 billion Yuan**) and personal income tax withholding service fee refund income (**34.0 million Yuan**) are classified as recurring operating items and do not belong to non-recurring gains and losses[22](index=22&type=chunk)[161](index=161&type=chunk) [Chapter 2 Board of Directors' Report](index=11&type=section&id=Chapter%202%20Board%20of%20Directors'%20Report) This chapter details ZTE Corporation's core technological innovations, operational review for H1 2025, and business outlook and operating risks for H2, emphasizing R&D investment, strengthening network connectivity, and embracing AI to become a leader in network connectivity and intelligent computing, despite increased revenue but decreased net profit - The company's strategy has upgraded from "connectivity" to "connectivity + computing power," aiming to become a leader in network connectivity and intelligent computing[24](index=24&type=chunk)[26](index=26&type=chunk)[71](index=71&type=chunk) - In H1 2025, the company's operating revenue increased by **14.51%** year-on-year, but net profit attributable to ordinary shareholders of the listed company decreased by **11.77%** year-on-year[71](index=71&type=chunk) [2.1 Core Technological Innovations in H1 2025](index=11&type=section&id=2.1%20Core%20Technological%20Innovations%20in%20H1%202025) This section highlights ZTE Corporation's technological innovations in H1 2025 across underlying core technologies like chips, databases, and operating systems, as well as high-speed networks, computing infrastructure, digital energy, and terminal products, actively embracing AI large models and generative AI to build full-stack, full-scenario intelligent computing solutions and extensively participating in standard setting and patent reserves - Based on forty years of technological accumulation in the DICT field, the company actively seizes opportunities in the digital wave, positioning itself as a "leader in network connectivity and intelligent computing power"[25](index=25&type=chunk)[26](index=26&type=chunk) - In the field of artificial intelligence, the company provides full-stack, full-scenario intelligent computing solutions from infrastructure to applications, with accumulated expertise in high-speed interconnection, in-network computing, computing power native, seamless migration, data processing, and algorithm optimization[26](index=26&type=chunk) [2.1.1 Sustained Long-term Investment, Mastering Underlying Core Technologies](index=12&type=section&id=2.1.1%20Sustained%20Long-term%20Investment,%20Mastering%20Underlying%20Core%20Technologies) ZTE Corporation continuously invests in three underlying core technologies: chips, databases, and operating systems, possessing industry-leading full-process chip design capabilities, with its self-developed GoldenDB database ranking first in the financial and carrier industries, and its operating system achieving leading levels in real-time performance, reliability, and security, widely applied across multiple industries - The company began chip R&D in 1996, possessing industry-leading chip full-process design capabilities, building a full-stack computing network foundation around "data, computing power, and network"[28](index=28&type=chunk) - Its self-developed GoldenDB database ranks first in the financial and carrier industries in the transactional database field, as published in the "China Database Industry Map (2025)" by the China Academy of Information and Communications Technology[29](index=29&type=chunk) - The company began independent R&D of operating systems in 2001, forming a full series of solutions covering embedded, server, desktop, and terminal device types, and has obtained multiple domestic and international certifications and awards[30](index=30&type=chunk) [2.1.2 Technology Innovation Leading, Continuously Enhancing Product Competitiveness](index=12&type=section&id=2.1.2%20Technology%20Innovation%20Leading,%20Continuously%20Enhancing%20Product%20Competitiveness) This section details ZTE Corporation's technological innovations and product competitiveness enhancements in high-speed networks (wireless, core network, wireline, AI integration, 5G-A evolution), computing infrastructure (servers and storage, switches, data centers, training and inference platforms), digital energy (communication energy, new energy), and terminals (smart home, mobile terminals, cloud PC), achieving leading positions in multiple niche markets and actively promoting the commercialization of cutting-edge technologies like AI and 5G-A - In wireless access, the company launched Super-N 2.0 power amplifier technology, ultra-high integration RF modules, and is accelerating the application of innovative technologies such as ultra-dual 10-gigabit networks, integrated sensing and communication, and integrated space-air-ground in 5G-A evolution[31](index=31&type=chunk)[34](index=34&type=chunk) - It launched the first AI-native core network, AIR Core, deeply integrating large language models, communication large models, and digital twin technologies to achieve "AI + cloud-native" evolution from cloud-native[32](index=32&type=chunk) - In fixed network access, it released the industry's first third-generation time-division 50G-PON and launched the "AI 10-Gigabit All-Optical Campus" solution[33](index=33&type=chunk) - In the computing infrastructure domain, it strengthened R&D of intelligent computing-related products, providing end-to-end, full-stack, full-scenario intelligent computing solutions, and ranked first globally for four consecutive quarters in OTN 800G pluggable port shipments[36](index=36&type=chunk)[39](index=39&type=chunk) - In digital energy, it provides full-product, full-scenario, full-lifecycle end-to-end power supply solutions and achieved breakthroughs in new energy, signing a large order for a **128MW** solar power plant with Turk Telekom[45](index=45&type=chunk) - In terminal products, PON CPE and IP set-top box shipments ranked first globally, 5G FWA & MBB market share ranked first globally for four consecutive years, and cloud PC ranked first in the Chinese desktop cloud terminal market[46](index=46&type=chunk)[50](index=50&type=chunk)[52](index=52&type=chunk) [2.1.3 Building Intelligent Platforms, Converging Core Capabilities to Empower Internally and Externally](index=18&type=section&id=2.1.3%20Building%20Intelligent%20Platforms,%20Converging%20Core%20Capabilities%20to%20Empower%20Internally%20and%20Externally) This section describes how ZTE Corporation builds intelligent platforms and converges core capabilities to empower internal and external digital and intelligent transformation through its Digital Nebula 4.0 platform, self-developed ZTE Nebula large models, XR metaverse engine, and trusted data space solution "Digital Matrix," achieving multiple leading positions in large model evaluations and implementing applications in various industries - Launched Digital Nebula 4.0, enabling assembly-based development capabilities, providing rich corpus management tools, and creating an intelligent agent factory to help industry users build AI applications in "minutes"[54](index=54&type=chunk) - Self-developed ZTE Nebula large models include foundational large models, R&D large models, communication large models, and industry large models, with the R&D large model ranking first in inference and second overall in domestic authoritative third-party evaluations[55](index=55&type=chunk) - The XR metaverse engine's core capabilities continue to evolve, launching AI content generation algorithms, being rated as a five-star metaverse supplier in China, and implementing projects in digital cultural tourism and educational research[56](index=56&type=chunk) - Released the trusted data space solution "Digital Matrix" and AI application firewall, actively participating in data standard construction and trusted data space pilot projects, strengthening data security[57](index=57&type=chunk) [2.1.4 Empowering Industrial Transformation, Creating Value Together with Industries](index=18&type=section&id=2.1.4%20Empowering%20Industrial%20Transformation,%20Creating%20Value%20Together%20with%20Industries) ZTE Corporation focuses on high-value scenarios, leveraging the Digital Nebula 4.0 platform to create over 100 industry digital and intelligent innovation solutions, implementing benchmark projects in industrial, metallurgical steel, mining, power, transportation, and government sectors, assisting industrial transformation and upgrading, and earning multiple industry honors - Nanjing Binjiang Intelligent Manufacturing Base was evaluated by the China Academy of Information and Communications Technology's CAICT Certification Center and awarded the first five-star 5G factory in China[59](index=59&type=chunk) - Partnered with Hegang Group to establish the Northern Joint Innovation Center, releasing an intelligent computing integrated machine for the steel industry and building a steel full-process large model[60](index=60&type=chunk) - In the mining sector, partnered with over **60** partners and more than **40** leading customers, implementing over **500** intelligent mining projects nationwide[61](index=61&type=chunk) - In the power sector, launched a digital power station solution and implemented 5G+AI smart power plant projects in Liaoning, Hunan, Yunnan, and other regions[61](index=61&type=chunk) - In the transportation sector, participated in the "Qingdao Metro Artificial Intelligence Joint Innovation Consortium," assisting in the release of the first artificial intelligence large model in China's urban rail transit industry[62](index=62&type=chunk) - In the government sector, provided the industry's only public-private integrated space-air-ground drone emergency rescue platform solution and served digital society construction[63](index=63&type=chunk) [2.1.5 Extensive Participation in Standard Work, Reserving Rich Value Patents](index=19&type=section&id=2.1.5%20Extensive%20Participation%20in%20Standard%20Work,%20Reserving%20Rich%20Value%20Patents) ZTE Corporation ranks among the top tier in global patent布局 and is a major contributor to global 5G technology research and standard setting; as of June 30, 2025, the company holds approximately 94,000 global patent applications, with over 50,000 cumulative authorized patents, and a large number of patents in chips and AI, actively participating in over 200 international standardization organizations and industry alliances - As of June 30, 2025, the Group holds approximately **94,000** global patent applications and over **50,000** cumulative global authorized patents[64](index=64&type=chunk) - In the chip domain, it holds approximately **5,700** patent applications and over **3,700** cumulative authorized patents; in the AI domain, it holds nearly **5,500** patent applications, with nearly half already authorized[64](index=64&type=chunk) - The Group is a member of over **200** international standardization organizations, industry alliances, scientific associations, and open-source communities such as ITU, 3GPP, and ETSI, and holds board memberships or important positions in multiple organizations[65](index=65&type=chunk) [2.2 Operational Review for H1 2025](index=20&type=section&id=2.2%20Operational%20Review%20for%20H1%202025) This section reviews the development of domestic and international ICT markets in H1 2025 and analyzes ZTE Corporation's business and financial performance, showing a 14.51% year-on-year increase in operating revenue but a decrease in net profit, with government and enterprise business revenue doubling in the domestic market and mobile product revenue growing by double digits in the international market, also detailing expenses, R&D investment, cash flow, assets and liabilities, and investment status - In H1 2025, facing a complex environment of slowing global economic growth, the Chinese ICT market demonstrated strong development resilience, with accelerated construction of computing infrastructure, and artificial intelligence transforming from a "new driving force" to a "core engine" leading industry development[66](index=66&type=chunk) - International telecom operators' capital expenditures are showing signs of recovery, with deepening connectivity capabilities of 5G and optical fiber networks, and the expansion of digital and intelligent businesses such as AI large models and computing power, jointly driving industry development[68](index=68&type=chunk)[70](index=70&type=chunk) - In H1 2025, the Group achieved operating revenue of **71.55 billion Yuan**, a year-on-year increase of **14.51%**; net profit attributable to ordinary shareholders of the listed company was **5.06 billion Yuan**, a year-on-year decrease of **11.77%**[71](index=71&type=chunk) [2.2.1 Industry Development Overview](index=20&type=section&id=2.2.1%20Industry%20Development%20Overview) This section analyzes the development trends of domestic and international ICT markets in H1 2025, noting stable basic communication services and accelerated computing infrastructure construction in the domestic market, with AI technology driving applications towards "user-friendly and practical" stages and smart terminals entering an era of scenario innovation; in the international market, telecom operator capital expenditures are recovering, 5G deployment is evolving differentially, and the popularization of generative AI is boosting data traffic, driving the expansion of the fixed network market, with green computing power becoming key for sustainable industry development - In H1, telecom business revenue reached **905.5 billion Yuan**, a year-on-year increase of **1%**, with fixed broadband and mobile phone users totaling **684 million** and **1.81 billion**, respectively[66](index=66&type=chunk) - Breakthroughs in large model technologies represented by DeepSeek have greatly propelled AI applications beyond the "usable" threshold into a new stage of "user-friendly and practical" solutions[67](index=67&type=chunk) - Global 5G deployment shows differentiated evolution characteristics, with developed markets shifting strategic focus to 5G SA mode, while emerging markets in Asia-Pacific and Latin America concentrate on expanding basic 5G coverage[68](index=68&type=chunk) - The popularization of generative AI is becoming a catalyst for boosting data traffic and driving the continuous expansion of the fixed network market, with comprehensive modernization of backbone networks towards 400G and higher speeds[70](index=70&type=chunk) [2.2.2 Business and Financial Analysis of the Group](index=21&type=section&id=2.2.2%20Business%20and%20Financial%20Analysis%20of%20the%20Group) This section provides an in-depth analysis of ZTE Corporation's business and financial performance in H1 2025, with operating revenue increasing by 14.51% year-on-year but net profit decreasing, government and enterprise business revenue doubling in the domestic market, and mobile product revenue growing by double digits in the international market, detailing revenue, costs, gross margin, expenses, R&D investment, cash flow, assets and liabilities, and investment status for each business segment, and explaining the issuance of H-share convertible bonds - In H1 2025, the Group achieved operating revenue of **71.55 billion Yuan**, a year-on-year increase of **14.51%**; net profit attributable to ordinary shareholders of the listed company was **5.06 billion Yuan**, a year-on-year decrease of **11.77%**[71](index=71&type=chunk) - Government and enterprise business revenue increased by **109.93%** year-on-year, becoming the core engine and driving force for the company's overall revenue growth[73](index=73&type=chunk)[79](index=79&type=chunk) - The company announced on July 29, 2025, its intention to issue **3.584 billion Yuan** zero-coupon USD-settled H-share convertible bonds due 2030 under a general mandate[116](index=116&type=chunk) [2.2.2.1 Operating Revenue, Costs, and Gross Margin](index=21&type=section&id=2.2.2.1%20Operating%20Revenue,%20Costs,%20and%20Gross%20Margin) This section details ZTE Corporation's operating revenue, costs, and gross margin for H1 2025, segmented by industry, business, and region; total operating revenue increased by 14.51% year-on-year, but gross margin decreased by 7.99 percentage points; domestic market revenue grew by 17.55%, with government and enterprise business revenue doubling, while international market revenue grew by 7.77%; carrier network revenue decreased, while government and enterprise business and consumer business revenues increased 2025 H1 Operating Revenue, Costs, and Gross Margin (Unit: Thousand Yuan, %) | Operating Revenue Composition | Operating Revenue | Percentage of Operating Revenue | Operating Costs | Gross Margin | Year-on-year Change in Operating Revenue | Year-on-year Change in Operating Costs | Change in Gross Margin (percentage points) | | :--- | :--- | :--- | :--- | :--- | :--- | :--- | :--- | | **I. By Industry** | | | | | | | | | Telecommunications Equipment Manufacturing Industry | 71,552,734 | 100% | 48,333,217 | 32.45% | 14.51% | 29.86% | (7.99) | | **II. By Business Segment** | | | | | | | | | Carrier Networks | 35,063,905 | 49.00% | 16,500,879 | 52.94% | (5.99%) | (3.15%) | (1.38) | | Government and Enterprise Business | 19,254,243 | 26.91% | 17,661,629 | 8.27% | 109.93% | 146.17% | (13.50) | | Consumer Business | 17,234,586 | 24.09% | 14,170,709 | 17.78% | 7.59% | 8.95% | (1.03) | | **III. By Region** | | | | | | | | | China | 50,616,777 | 70.74% | 33,562,004 | 33.69% | 17.55% | 35.39% | (8.74) | | Asia (excluding China) | 8,063,704 | 11.27% | 5,819,537 | 27.83% | 6.99% | 20.00% | (7.83) | | Africa | 3,258,886 | 4.55% | 2,015,922 | 38.14% | 8.78% | 35.76% | (12.29) | | Europe, Americas, and Oceania | 9,613,367 | 13.44% | 6,935,754 | 27.85% | 8.10% | 13.79% | (3.61) | - Domestic market operating revenue was **50.62 billion Yuan**, a year-on-year increase of **17.55%**, accounting for **70.74%** of total operating revenue; gross margin was **33.69%**, a year-on-year decrease of **8.74** percentage points[74](index=74&type=chunk) - International market operating revenue was **20.94 billion Yuan**, a year-on-year increase of **7.77%**, accounting for **29.26%** of total operating revenue; gross margin was **29.45%**, a year-on-year decrease of **6.57** percentage points[75](index=75&type=chunk) - Carrier network operating revenue was **35.06 billion Yuan**, a year-on-year decrease of **5.99%**, mainly due to a decline in wireless access product revenue; government and enterprise business operating revenue was **19.25 billion Yuan**, a year-on-year increase of **109.93%**, mainly due to growth in server and storage revenue; consumer business operating revenue was **17.23 billion Yuan**, a year-on-year increase of **7.59%**, mainly due to growth in mobile phone products and cloud PC revenue[76](index=76&type=chunk)[79](index=79&type=chunk)[80](index=80&type=chunk) [2.2.2.2 Expenses](index=24&type=section&id=2.2.2.2%20Expenses) This section discloses ZTE Corporation's expenses for H1 2025; R&D expenses were largely flat year-on-year, selling expenses increased due to higher market promotion investment, administrative expenses decreased due to improved management efficiency, financial expenses significantly decreased due to increased net interest income and exchange gains, and income tax expense increased due to higher subsidiary income tax expenses 2025 H1 Expenses (Unit: Thousand Yuan) | Item | 2025 Jan–Jun | 2024 Jan–Jun Note | Year-on-year Change | | :--- | :--- | :--- | :--- | | R&D Expenses | 12,664,812 | 12,725,895 | (0.48%) | | Selling Expenses | 4,383,807 | 4,166,612 | 5.21% | | Administrative Expenses | 2,130,082 | 2,236,650 | (4.76%) | | Financial Expenses | (444,697) | 46,305 | (1,060.36%) | | Income Tax Expense | 607,723 | 566,793 | 7.22% | - The Group's financial expenses for H1 2025 were **-444.70 million Yuan**, a year-on-year decrease of **1,060.36%**, mainly due to increased net interest income and exchange gains from exchange rate fluctuations in the current period, compared to a loss in the prior period[83](index=83&type=chunk) [2.2.2.3 R&D Investment](index=24&type=section&id=2.2.2.3%20R%26D%20Investment) This section discloses ZTE Corporation's R&D investment for H1 2025; total R&D investment increased slightly year-on-year, with a significant increase in capitalized amounts and a slight decrease in expensed amounts, while R&D investment as a percentage of operating revenue decreased 2025 H1 R&D Investment (Unit: Thousand Yuan) | Item | 2025 Jan–Jun | 2024 Jan–Jun | Year-on-year Change | | :--- | :--- | :--- | :--- | | Total R&D Investment | 13,540,820 | 13,428,930 | 0.83% | | Of which: Expensed R&D | 12,664,812 | 12,725,895 | (0.48%) | | Capitalized R&D | 876,008 | 703,035 | 24.60% | | R&D Investment as a Percentage of Operating Revenue | 18.92% | 21.49% | Decreased by 2.57 percentage points | | Capitalized R&D Investment as a Percentage of Total R&D Investment | 6.47% | 5.24% | Increased by 1.23 percentage points | [2.2.2.4 Other Items in Profit Composition](index=24&type=section&id=2.2.2.4%20Other%20Items%20in%20Profit%20Composition) This section lists other items in ZTE Corporation's profit composition for H1 2025 and their changes; investment income and fair value change gains both turned from loss to gain, non-operating income significantly increased, while asset impairment losses significantly decreased, and gains on disposal of assets substantially declined 2025 H1 Other Items in Profit Composition (Unit: Thousand Yuan) | Item | 2025 Jan–Jun | 2024 Jan–Jun | Year-on-year Change | | :--- | :--- | :--- | :--- | | Other Income | 1,792,903 | 1,800,310 | (0.41%) | | Investment Income | 150,909 | (183,125) | 182.41% | | Gains from Changes in Fair Value | 159,402 | (416,539) | 138.27% | | Credit Impairment Losses (losses presented as negative) | (114,916) | 74,715 | 253.81% | | Asset Impairment Losses (losses presented as negative) | (285,227) | (600,582) | (52.51%) | | Gains on Disposal of Assets | 3,846 | 67,365 | (94.29%) | | Non-operating Income | 97,087 | 35,078 | 176.77% | | Non-operating Expenses | 51,138 | 35,411 | 44.41% | - The Group's investment income for H1 2025 was **150.91 million Yuan**, a year-on-year increase of **182.41%**, mainly due to increased income from structured deposits and increased profits from joint ventures and associates in the current period[88](index=88&type=chunk) - The Group's asset impairment losses for H1 2025 were **285.23 million Yuan**, a year-on-year decrease of **52.51%**, mainly due to a decrease in inventory write-downs in the current period[88](index=88&type=chunk) [2.2.2.5 Cash Flow](index=25&type=section&id=2.2.2.5%20Cash%20Flow) This section analyzes ZTE Corporation's cash flow for H1 2025; net cash flow from operating activities significantly decreased year-on-year, mainly due to increased cash payments for goods purchased and services received; net cash flow from investing activities increased year-on-year, mainly due to a decrease in purchases of time deposit products; net cash flow from financing activities significantly increased year-on-year, mainly due to increased net borrowings 2025 H1 Cash Flow (Unit: Thousand Yuan) | Item | 2025 Jan–Jun | 2024 Jan–Jun | Year-on-year Change | | :--- | :--- | :--- | :--- | | Subtotal of Cash Inflows from Operating Activities | 78,227,584 | 73,969,283 | 5.76% | | Subtotal of Cash Outflows from Operating Activities | 76,928,176 | 66,968,884 | 14.87% | | Net Cash Flow from Operating Activities | 1,299,408 | 7,000,399 | (81.44%) | | Subtotal of Cash Inflows from Investing Activities | 64,708,107 | 26,301,631 | 146.02% | | Subtotal of Cash Outflows from Investing Activities | 72,375,836 | 37,685,028 | 92.05% | | Net Cash Flow from Investing Activities | (7,667,729) | (11,383,397) | 32.64% | | Subtotal of Cash Inflows from Financing Activities | 58,957,973 | 130,449,669 | (54.80%) | | Subtotal of Cash Outflows from Financing Activities | 54,875,251 | 129,412,462 | (57.60%) | | Net Cash Flow from Financing Activities | 4,082,722 | 1,037,207 | 293.63% | | Net Increase in Cash and Cash Equivalents | (2,285,056) | (3,281,292) | 30.36% | - The Group's net cash flow from operating activities for H1 2025 decreased year-on-year, mainly due to increased cash payments for goods purchased and services received in the current period[90](index=90&type=chunk) - The Group's net cash flow from financing activities for H1 2025 increased year-on-year, mainly due to increased net borrowings in the current period[92](index=92&type=chunk) [2.2.2.6 Assets and Liabilities](index=26&type=section&id=2.2.2.6%20Assets%20and%20Liabilities) This section discloses changes in ZTE Corporation's major asset and liability items as of June 30, 2025; accounts receivable, other current assets, and non-current liabilities due within one year all showed significant growth; the book value of fixed assets slightly decreased, and investment properties are measured at fair value; the company also disclosed asset pledges and contingent liabilities 2025 June 30 Major Asset and Liability Item Changes (Unit: Thousand Yuan, %) | Item | Amount as of 2025 June 30 | Percentage of Total Assets | Amount as of 2024 Dec 31 | Percentage of Total Assets | Year-on-year Change (percentage points) | | :--- | :--- | :--- | :--- | :--- | :--- | | Total Assets | 216,310,325 | 100.00% | 207,323,230 | 100.00% | — | | Cash and Cash Equivalents | 39,470,343 | 18.25% | 43,885,348 | 21.17% | (2.92) | | Accounts Receivable | 29,201,211 | 13.50% | 21,288,393 | 10.27% | 3.23 | | Inventories | 42,056,940 | 19.44% | 41,257,657 | 19.90% | (0.46) | | Other Current Assets | 12,199,180 | 5.64% | 8,899,348 | 4.29% | 1.35 | | Short-term Borrowings | 8,577,542 | 3.97% | 7,027,070 | 3.39% | 0.58 | | Accounts Payable | 23,400,704 | 10.82% | 22,371,792 | 10.79% | 0.03 | | Contract Liabilities | 10,745,743 | 4.97% | 12,859,416 | 6.20% | (1.23) | | Non-current Liabilities Due Within One Year | 7,965,830 | 3.68% | 5,592,740 | 2.70% | 0.98 | | Long-term Borrowings | 46,358,614 | 21.43% | 44,058,915 | 21.25% | 0.18 | - As of June 30, 2025, the Group's accounts receivable were **29.20 billion Yuan**, an increase of **37.17%** from the end of the previous year, mainly due to an increase in domestic short-term accounts receivable in the current period[94](index=94&type=chunk) - As of June 30, 2025, the Group's non-current liabilities due within one year were **7.97 billion Yuan**, an increase of **42.43%** from the end of the previous year, mainly due to an increase in long-term borrowings due within one year in the current period[95](index=95&type=chunk) - As of June 30, 2025, the book value of assets pledged by the Group was **552.22 million Yuan**, primarily used to obtain bank loans[99](index=99&type=chunk) [2.2.2.7 Liquidity and Capital Structure](index=27&type=section&id=2.2.2.7%20Liquidity%20and%20Capital%20Structure) This section analyzes ZTE Corporation's liquidity and capital structure; the company has sufficient funds for debt repayment and operations, with healthy current and quick ratios; the asset-liability ratio increased; debt primarily consists of short-term and long-term bank loans, ultra-short-term financing bonds, and medium-term notes, with no significant seasonal demand; the company also disclosed capital expenditures and capital commitments - The Group's current ratio for H1 2025 was **1.75**, and quick ratio was **1.24**, indicating sufficient funds for repaying maturing debts, capital expenditures, and normal production and operations[101](index=101&type=chunk) - As of June 30, 2025, the Group's asset-liability ratio was **47.4%**, an increase of **3.1** percentage points from **44.3%** as of December 31, 2024[102](index=102&type=chunk) 2025 June 30 Bank Loans and Medium-Term Notes by Short-term and Long-term (Unit: Thousand Yuan) | Item | 2025 June 30 | 2024 Dec 31 | | :--- | :--- | :--- | | Short-term Bank Loans | 15,411,629 | 11,475,033 | | Long-term Bank Loans | 46,358,614 | 44,058,915 | | Medium-term Notes | 4,377,055 | 1,004,880 | | Total | 66,147,298 | 56,538,828 | - The Group's capital expenditure for H1 2025 was **2.09 billion Yuan**, mainly for purchasing equipment assets, capitalizing R&D investments, and constructing self-use office buildings[111](index=111&type=chunk) 2025 June 30 Capital Commitments (Unit: Thousand Yuan) | Item | 2025 June 30 | 2024 Dec 31 | | :--- | :--- | :--- | | Contracted but not yet provided for capital expenditure commitments | 3,206,440 | 2,457,110 | | Investment commitments | 463,320 | 463,320 | | Total | 3,669,760 | 2,920,430 | [2.2.2.8 Share-related Matters](index=29&type=section&id=2.2.2.8%20Share-related%20Matters) This section discloses ZTE Corporation's share capital as of June 30, 2025, with no changes in total share capital; during the reporting period, the company and its subsidiaries did not repurchase, sell, or redeem any listed securities, nor did they hold any treasury shares - As of June 30, 2025, the company's total issued share capital was **4,783,534,887** shares (of which A-shares were **4,028,032,353** shares and H-shares were **755,502,534** shares), unchanged from the end of the previous year[115](index=115&type=chunk) - During the reporting period, the company and its subsidiaries did not repurchase, sell, or redeem any of the company's listed securities; the company held no treasury shares[115](index=115&type=chunk) [2.2.2.9 Post-reporting Period Events](index=29&type=section&id=2.2.2.9%20Post-reporting%20Period%20Events) This section discloses significant events that occurred after ZTE Corporation's reporting period, specifically the company's completion of H-share convertible bond issuance in July 2025 to optimize capital structure and broaden financing channels - The company announced on July 29, 2025, its intention to issue **3.584 billion Yuan** zero-coupon USD-settled H-share convertible bonds due 2030 under a general mandate[116](index=116&type=chunk) [2.2.3 Group Investment Status](index=29&type=section&id=2.2.3%20Group%20Investment%20Status) This section details ZTE Corporation's investment status for H1 2025, including equity investments, major controlled subsidiaries and associates, securities investments, derivative transactions, and entrusted wealth management; long-term equity investments slightly increased, but other external equity investments decreased; the company uses its own funds for entrusted wealth management and conducts hedging derivative transactions to manage exchange rate risks - As of June 30, 2025, the Group's long-term equity investments were **2.34 billion Yuan**, a **0.27%** increase from **2.33 billion Yuan** at the end of the previous year; other external equity investments were **786.93 million Yuan**, a **4.48%** decrease from **823.88 million Yuan** at the end of the previous year[117](index=117&type=chunk) - Shenzhen ZTE Software Co., Ltd.'s net profit accounted for over **10%** of the Group's consolidated net profit[118](index=118&type=chunk) - In H1 2025, the Group's derivative contracts for hedging incurred a loss of **137 million Yuan**, while the hedged items generated exchange gains of **282 million Yuan**, resulting in a net gain of **145 million Yuan**; the Group's derivative transactions were all for hedging purposes, largely achieving the expected risk management objectives[126](index=126&type=chunk) - As of June 30, 2025, the Group's outstanding balance of wealth management products purchased was **16.75 billion Yuan**, accounting for **7.74%** of the Group's total assets[132](index=132&type=chunk) [2.2.4 Other Disclosure Matters](index=33&type=section&id=2.2.4%20Other%20Disclosure%20Matters) This section states that, apart from the content already disclosed in this chapter, there are no other significant changes or matters required to be disclosed in ZTE Corporation's H1 2025 report according to Appendix D2 of the Hong Kong Stock Exchange Listing Rules, compared to the company's 2024 annual report - Apart from the content already disclosed in this chapter, other content required to be disclosed in the semi-annual report by Appendix D2 of the Hong Kong Stock Exchange Listing Rules has no significant changes compared to the company's 2024 annual report, and there are no other matters requiring disclosure in this report[135](index=135&type=chunk) [2.3 Business Outlook and Operating Risks for H2 2025](index=33&type=section&id=2.3%20Business%20Outlook%20and%20Operating%20Risks%20for%20H2%202025) This section outlines ZTE Corporation's business outlook for H2 2025, expressing confidence in returning to revenue growth and detailing development strategies for carrier networks, government and enterprise businesses, and consumer businesses, while also identifying and analyzing operating risks such as country-specific risks, AI technology risks, intellectual property risks, exchange rate risks, interest rate risks, and customer credit risks - The company expects revenue to return to a growth trajectory in H2 2025, achieving stable operations by solidifying its first-curve businesses (wireless, wireline products) and accelerating the expansion of its second-curve businesses (computing power, mobile phones)[136](index=136&type=chunk)[139](index=139&type=chunk) - The company faces operating risks including country-specific risks, AI technology risks, intellectual property risks, exchange rate risks, interest rate risks, and customer credit risks[140](index=140&type=chunk)[141](index=141&type=chunk)[142](index=142&type=chunk)[143](index=143&type=chunk)[144](index=144&type=chunk)[145](index=145&type=chunk) [2.3.1 Business Outlook for H2 2025](index=33&type=section&id=2.3.1%20Business%20Outlook%20for%20H2%202025) This section outlines ZTE Corporation's business outlook for H2 2025, with the company confident in returning to full-year revenue growth by maintaining a "steady progress, upholding integrity, and embracing innovation" operating philosophy, consolidating market share in first-curve businesses (wireless, wireline products), and accelerating the expansion of second-curve businesses (computing power, mobile phones) - The company is confident that its full-year revenue for 2025 will return to a growth trajectory, achieving stable operations by solidifying its first-curve and developing its second-curve businesses[136](index=136&type=chunk)[139](index=139&type=chunk) - In the carrier network domain, the company will continue to tap the potential of traditional carrier network products, promote 5G-A and 50G PON access upgrades, and deepen cooperation with carriers in computing networks, cloud-network convergence, and intelligent networks[137](index=137&type=chunk) - In the government and enterprise business domain, the company will deepen strategic cooperation with leading internet and financial industry customers, promoting the scaled application of general computing, intelligent computing, and Xinchuang servers[138](index=138&type=chunk) - In the consumer business domain, the company adopts "AI for All" as its core strategy, leveraging an innovative product matrix including AI home, AI mobile phones, mobile internet products, and cloud PCs[139](index=139&type=chunk) [2.3.2 Operating Risks Faced](index=34&type=section&id=2.3.2%20Operating%20Risks%20Faced) This section identifies and analyzes six major operating risks faced by ZTE Corporation: country-specific risks, AI technology risks, intellectual property risks, exchange rate risks, interest rate risks, and customer credit risks; the company has implemented corresponding measures, such as establishing a compliance management system, strengthening ethical AI review, enhancing intellectual property protection, and using financial instruments to hedge risks, to identify, assess, and manage these risks - The company faces country-specific risks, committed to identifying and complying with the laws, regulations, trade, and tax policies of its operating countries by establishing a complete compliance management system[140](index=140&type=chunk) - AI technology risks include deviations between AI model effects and expectations, and issues of authenticity and security of AI-generated content; the company adheres to principles of responsible innovation and AI for good, strengthening technology integration and risk prevention and control[141](index=141&type=chunk) - Intellectual property risks may lead to disputes with other telecom equipment manufacturers, patent licensing companies, and cooperating carriers; the company adopts various forms of protection, such as applying for patent rights or copyright registration[142](index=142&type=chunk) - Exchange rate risks primarily arise from foreign currency exposures from sales, purchases, and financing settled in non-RMB; the company mitigates exchange rate risks through business strategies, internal settlement management, financing structure design, and foreign exchange derivative hedging[143](index=143&type=chunk) - Interest rate risks primarily arise from interest-bearing debt; the company mainly uses total interest-bearing debt control and structured management to reduce interest rate risks, supplemented by derivative financial instruments such as interest rate swaps[144](index=144&type=chunk) - Customer credit risk is identified and managed through internal credit management measures such as customer credit investigations, credit ratings and granting, credit limit management, and overall risk control[145](index=145&type=chunk) [Chapter 3 Corporate Governance, Environmental Performance, and Social Responsibility](index=36&type=section&id=Chapter%203%20Corporate%20Governance,%20Environmental%20Performance,%20and%20Social%20Responsibility) This chapter describes ZTE Corporation's practices in corporate governance, environmental performance, and social responsibility, including continuously improving governance structure, complying with regulatory requirements, actively implementing the "Quality and Return Dual Enhancement" action plan, promoting green enterprise operations and supply chain, building a green digital intelligence foundation, and engaging in public welfare services such as education, medical assistance, low-carbon environmental protection, and rural revitalization through the ZTE Foundation - The company continuously improves its corporate governance structure by regularly reviewing its governance system in accordance with regulatory requirements such as the "Company Law of the People's Republic of China," "Guidelines for Corporate Governance of Listed Companies," and the Listing Rules of the Shenzhen and Hong Kong Stock Exchanges[147](index=147&type=chunk) - The company actively implements the "Quality and Return Dual Enhancement" action plan, adhering to R&D innovation, accelerating expansion from "connectivity" to "connectivity + computing power," and driving the company's revenue back to a growth trajectory[188](index=188&type=chunk) - The company lays a "digital green path" through four dimensions: green enterprise operations, green supply chain, green digital intelligence foundation, and green industry empowerment, achieving a year-on-year decrease of over **10%** in electricity consumption per unit output in H1 2025[189](index=189&type=chunk) [3.1 Corporate Governance Overview](index=36&type=section&id=3.1%20Corporate%20Governance%20Overview) This section outlines ZTE Corporation's corporate governance structure, including the general meeting of shareholders, board of directors, and management, and details shareholder information, share changes, profit distribution, board composition, changes in directors and senior management and their shareholdings, employee information, and the implementation of the "Quality and Return Dual Enhancement" action plan; the company has abolished the supervisory board, with its functions now exercised by the audit committee - The company's "Articles of Association" revision, abolishing the supervisory board and transferring its functions to the audit committee, and establishing one employee director, was approved at the first extraordinary general meeting of shareholders on April 24, 2025[147](index=147&type=chunk) - As of June 30, 2025, the company had a total of **499,891** shareholders, including **499,598** A-share shareholders and **293** H-share shareholders[150](index=150&type=chunk) - The company's 2024 annual profit distribution plan was approved at the 2024 annual general meeting of shareholders, with a total profit distribution of approximately **2.95 billion Yuan** (tax inclusive), and the company completed dividend distribution in April 2025[166](index=166&type=chunk) - As of June 30, 2025, the Group had a total of **66,790** employees; the Group's total employee compensation for the reporting period was approximately **16.9 billion Yuan**[184](index=184&type=chunk) [3.2 Environmental Performance](index=44&type=section&id=3.2%20Environmental%20Performance) This section describes ZTE Corporation's environmental protection efforts, promoting sustainable development through four dimensions: green enterprise operations, green supply chain, green digital intelligence foundation, and green industry empowerment; the company achieved a year-on-year decrease of over 10% in electricity consumption per unit output in H1 2025 and actively collaborates with upstream and downstream supply chain partners to accelerate green transformation - In green enterprise operations, the company reduces operational emissions within its organizational boundaries and operating locations by practicing ecological priority green operations, achieving a year-on-year decrease of over **10%** in electricity consumption per unit output in H1 2025[189](index=189&type=chunk) - In green supply chain, the company collaborates with partners to build ZTE Corporation's green supply chain through key initiatives such as organizing supplier energy-saving and carbon reduction training camps and creating green material demonstration sites[189](index=189&type=chunk) - ZTE Communications (Nanjing) Co., Ltd. was included in the list of enterprises required to disclose environmental information by law[191](index=191&type=chunk) [3.3 Social Responsibility](index=45&type=section&id=3.3%20Social%20Responsibility) This section details ZTE Corporation's social responsibility practices, primarily through the ZTE Foundation, which provides public welfare services such as education assistance, medical aid, low-carbon environmental protection, and rural revitalization; the company achieved positive results in multiple areas and encourages employee participation in volunteer services - The ZTE Foundation, upholding the vision of "let kindness reach every corner," actively carries out services such as education assistance, medical aid, low-carbon environmental protection, and rural revitalization[192](index=192&type=chunk) - In H1 2025, it supported **1,107** disadvantaged high school students in Gansu, Qinghai, Hunan, Shaanxi, Anhui, and other regions, and organized **31** lectures on topics such as communication and psychology, along with **9** student discussion sessions[192](index=192&type=chunk) - In supporting low-carbon environmental protection, it collaborated with volunteer teams to carry out afforestation in Xiaobazi Township, Fengning, Hebei, and Baihuahe Forest Farm, Yichun, Heilongjiang, planting a cumulative total of **19,830** Scots pines and Korean pines, greening **435.54 mu** of land[193](index=193&type=chunk) - As of the end of June 2025, employee volunteers reached **18,682** individuals, with cumulative on-site service hours of **48,290.5**; in H1 2025, a total of **244** various volunteer services were carried out, with **4,244** participants[193](index=193&type=chunk) [Chapter 4 Significant Matters](index=46&type=section&id=Chapter%204%20Significant%20Matters) This chapter discloses ZTE Corporation's significant matters in H1 2025, including major lawsuits and arbitrations, significant related party transactions, major contracts and their performance, fulfillment of commitments, non-operating fund occupation, integrity status, and penalties and rectification; the company had no major lawsuits but disclosed one non-major lawsuit; related party transactions were primarily for daily operations, and the company's controlling shareholder committed to avoiding horizontal competition - In H1 2025, the Group had no major lawsuits or arbitrations as defined by the Listing Rules of the Shenzhen Stock Exchange and the Hong Kong Stock Exchange[194](index=194&type=chunk) - One non-major lawsuit was disclosed: Hengyang Jinliuyuan Real Estate Development Co., Ltd. sued Hunan ZTE Netcom Technology Co., Ltd. on July 7, 2025, requesting termination of the project cooperation development agreement and return of cooperation funds, payment for infrastructure construction investment and losses, and expected interest losses, totaling approximately **300 million Yuan**[194](index=194&type=chunk) - In H1 2025, the Group had no significant related party transactions with any single related party where the cumulative transaction amount exceeded **30 million Yuan** and accounted for more than **5%** of the net assets in the latest audited period[196](index=196&type=chunk) [4.1 Major Lawsuits and Arbitrations](index=46&type=section&id=4.1%20Major%20Lawsuits%20and%20Arbitrations) This section discloses that ZTE Corporation had no major lawsuits or arbitrations in H1 2025, but one non-major lawsuit was disclosed, involving a real estate cooperation development contract dispute with Hunan ZTE Netcom Technology Co., Ltd., with a case amount of approximately 300 million Yuan - In H1 2025, the Group had no major lawsuits or arbitrations as defined by the Listing Rules of the Shenzhen Stock Exchange and the Hong Kong Stock Exchange[194](index=194&type=chunk) - On July 7, 2025, Hengyang Jinliuyuan Real Estate Development Co., Ltd. filed a lawsuit requesting the termination of the "Project Cooperation Development Agreement" and "Supplementary Agreement" with Hunan ZTE Netcom Technology Co., Ltd., and requesting a judgment for Hunan Netcom to return cooperation cash, pay for infrastructure construction investment and losses, and expected interest losses, totaling approximately **300 million Yuan**[194](index=194&type=chunk) [4.2 Significant Related Party Transactions](index=46&type=section&id=4.2%20Significant%20Related%20Party%20Transactions) This section discloses ZTE Corporation's related party transactions related to daily operations in H1 2025; the company engaged in transactions such as raw material procurement, labor services, and product sales with its controlling shareholder and its subsidiaries, companies where related natural persons hold positions and their subsidiaries, and joint ventures and associates, with transaction prices based on market rates - In H1 2025, the Group had no significant related party transactions with any single related party where the cumulative transaction amount exceeded **30 million Yuan** and accounted for more than **5%** of the net assets in the latest audited period[196](index=196&type=chunk) 2025 H1 Procurement of Raw Materials and Services from Related Parties (Unit: Ten Thousand Yuan) | Related Party | Transaction Content | Actual Transaction Amount in 2025 H1 | Percentage of Similar Transactions | | :--- | :--- | :--- | :--- | | ZTE New and its subsidiaries, companies with 30% or more equity interest | Procurement of raw materials | 12,339.0 | 0.27% | | Huatong Technology Co., Ltd. | Personnel leasing and project outsourcing services | 3,128.4 | 17.56% | | Nanchang Zhongzhan Digital Intelligence Technology Co., Ltd. | Personnel leasing and project outsourcing services | 3,349.0 | 18.80% | - The Group sold government and enterprise full-line products to related parties, with Aerospace Ouhua Information Technology Co., Ltd. having an actual transaction amount of **113.38 million Yuan**, accounting for **0.59%** of similar transactions[198](index=198&type=chunk) [4.3 Major Contracts and Their Performance](index=47&type=section&id=4.3%20Major%20Contracts%20and%20Their%20Performance) This section discloses ZTE Corporation's external guarantees in H1 2025; as of June 30, 2025, the Group's actual external guarantee balance was approximately 2.70 billion Yuan (converted to RMB), accounting for 3.60% of net assets attributable to ordinary shareholders of the listed company, primarily consisting of company guarantees to subsidiaries - In H1 2025, the Group had no significant entrustment, contracting, or leasing matters, no entrusted loans, no loans provided to external third parties, and no financial assistance or guarantees provided to joint ventures or associates[201](index=201&type=chunk) 2025 H1 Overall External Guarantee Status (Unit: Ten Thousand Yuan) | Item | Approved External Guarantee Limit During Reporting Period | Actual External Guarantee Amount Incurred During Reporting Period | Approved External Guarantee Limit at End of Reporting Period | Actual External Guarantee Balance at End of Reporting Period | | :--- | :--- | :--- | :--- | :--- | | Guarantees to third parties outside the Group | — | — | — | — | | Company guarantees to subsidiaries | 1,863,836.00 | 205,917.17 | 2,349,052.59 | 252,615.76 | | Subsidiary guarantees to subsidiaries | 89,607.50 | 17,052.31 | 89,607.50 | 17,052.31 | | Total | 1,953,443.50 | 222,969.48 | 2,438,660.09 | 269,668.07 | - As of June 30, 2025, the Group's actual external guarantee balance was approximately **2.70 billion Yuan** (converted to RMB), accounting for **3.60%** of net assets attributable to ordinary shareholders of the listed company as of June 30, 2025[201](index=201&type=chunk) [4.4 Fulfillment of Commitments](index=48&type=section&id=4.4%20Fulfillment%20of%20Commitments) This section discloses the fulfillment of commitments by ZTE Corporation's controlling shareholder, including commitments to avoid horizontal competition and commitments regarding shareholding reduction; during the reporting period, these commitments were all normally fulfilled, with no overdue unfulfilled situations - ZTE New and the company signed an "Agreement on Avoiding Horizontal Competition" on November 19, 2004, where ZTE New committed to avoiding any form of horizontal competition with the company; this commitment was normally fulfilled in H1 2025[205](index=205&type=chunk)[206](index=206&type=chunk) - ZTE New committed on December 10, 2007, that if it plans to sell its unlisted tradable shares of the company through the securities trading system in the future, and the reduction amount reaches more than **5%** within six months from the first reduction, it will disclose a pre-announcement of sale through the company within two trading days before the first reduction; this commitment was normally fulfilled in H1 2025[207](index=207&type=chunk)[208](index=208&type=chunk) [4.5 Non-operating Fund Occupation, Integrity Status](index=48&type=section&id=4.5%20Non-operating%20Fund%20Occupation,%20Integrity%20Status) This section states that ZTE Corporation had no non-operating occupation of company funds by controlling shareholders or other related parties in H1 2025, nor did it fail to fulfill obligations determined by effective legal documents from courts - In H1 2025, there was no non-operating occupation of company funds by controlling shareholders or other related parties[209](index=209&type=chunk) - The company and its controlling shareholder had no situations where they failed to fulfill obligations determined by effective legal documents from courts or had large outstanding debts that were due and unpaid[209](index=209&type=chunk) [4.6 Penalties and Rectification Status](index=49&type=section&id=4.6%20Penalties%20and%20Rectification%20Status) This section states that in H1 2025, ZTE Corporation and its directors, supervisors, senior management, and controlling shareholder were not subject to criminal penalties or significant administrative penalties, nor were they subjected to compulsory measures or investigations - In H1 2025, the company and its directors, supervisors, senior management, and controlling shareholder were not suspected of crimes and subjected to compulsory measures according to law; were not subject to criminal penalties, suspected of violations and investigated by the China Securities Regulatory Commission, or subject to administrative penalties by the China Securities Regulatory Commission, or subject to significant administrative penalties by other competent authorities[211](index=211&type=chunk) [4.7 Other Significant Matters](index=49&type=section&id=4.7%20Other%20Significant%20Matters) This section states that ZTE Corporation's H1 2025 financial report is unaudited, and the company did not dismiss or change its accounting firm, had no bankruptcy reorganization related situations, and no other significant matters that should have been disclosed but were not - The Group's 2024 annual financial report was audited by Ernst & Young Hua Ming LLP and received a standard unqualified audit opinion; the H1 2025 financial report is unaudited, thus the Board of Directors does not need to provide explanations regarding "non-standard audit reports"[212](index=212&type=chunk) - In H1 2025, the company did not dismiss or change its accounting firm; the company had no bankruptcy reorganization related situations; apart from the matters disclosed in this report, the company and its controlled subsidiaries had no other significant matters that should have been disclosed but were not, or significant social security issues[212](index=212&type=chunk) [Chapter 5 Bond-Related Information](index=50&type=section&id=Chapter%205%20Bond-Related%20Information) This chapter details ZTE Corporation's bond-related information, including the issuance and maturity of non-financial enterprise debt financing instruments and H-share convertible bonds, as well as key accounting data and financial indicators for the past two years; the company has issued multiple tranches of medium-term notes and ultra-short-term financing bonds, and issued H-share convertible bonds after the reporting period - The company has independently issued ultra-short-term financing bonds and medium-term notes within the registration validity period; all **21** tranches of ultra-short-term financing bonds issued in H1 2025 have matured and been repaid, totaling **26.5 billion Yuan**[213](index=213&type=chunk) - The company announced on July 29, 2025, its intention to issue **3.584 billion Yuan** zero-coupon USD-settled H-share convertible bonds due 2030 under a general mandate[217](index=217&type=chunk) [5.1 Non-financial Enterprise Debt Financing Instruments](index=50&type=section&id=5.1%20Non-financial%20Enterprise%20Debt%20Financing%20Instruments) This section discloses ZTE Corporation's issued non-financial enterprise debt financing instruments; the company has independently issued ultra-short-term financing bonds and medium-term notes within the registration validity period, with all 21 tranches of ultra-short-term financing bonds issued in H1 2025 having matured and been repaid, and 4 tranches of medium-term notes not yet due - The company has independently issued ultra-short-term financing bonds and medium-term notes within the registration validity period; all **21** tranches of ultra-short-term financing bonds issued in H1 2025 have matured and been repaid, with a total issuance amount of **26.5 billion Yuan**[213](index=213&type=chunk) Information on Ultra-short-term Financing Bonds and Medium-term Notes Issued and Not Yet Due as of Report Disclosure Date in 2025 (Unit: 100 Million Yuan) | Bond Name | Bond Abbreviation | Bond Code | Issue Date | Accrual Date | Maturity Date | Bond Balance | Interest Rate | | :--- | :--- | :--- | :--- | :--- | :--- | :--- | :--- | | 2024 First Tranche Medium-term Note | 24 ZTE MTN001 (Sci-Tech Innovation Bond) | 102483530 | 2024-08-14 | 2024-08-16 | 2029-08-16 | 5 | 2.25% | | 2024 Second Tranche Medium-term Note | 24 ZTE MTN002 (Sci-Tech Innovation Bond) | 102485311 | 2024-12-05 | 2024-12-09 | 2029-12-09 | 5 | 2.18% | | 2025 First Tranche Medium-term Note | 25 ZTE MTN001 (Sci-Tech Innovation Bond) | 102580635 | 2025-02-18 | 2025-02-19 | 2030-02-19 | 10 | 1.93% | | 2025 Second Tranche Medium-term Note | 25 ZTE MTN002 (Sci-Tech Innovation Bond) | 102581654 | 2025-04-16 | 2025-04-17 | 2030-04-17 | 10 | 1.98% | | 2025 Third Tranche Medium-term Note | 25 ZTE MTN003 (Sci-Tech Bond) | 102582645 | 2025-06-25 | 2025-06-26 | 2030-06-26 | 10 | 1.79% | | 2025 Fourth Tranche Medium-term Note | 25 ZTE MTN004 (Sci-Tech Bond) | 102582670 | 2025-06-26 | 2025-06-27 | 2030-06-27 | 3.5 | 1.90% | | 2025 Twenty-second Tranche Ultra-short-term Financing Bond | 25 ZTE SCP022 | 012581690 | 2025-07-16 | 2025-07-17 | 2025-09-26 | 5 | 1.45% | | 2025 Twenty-third Tranche Ultra-short-term Financing Bond | 25 ZTE SCP023 | 012581693 | 2025-07-16 | 2025-07-17 | 2025-09-26 | 10 | 1.45% | | Total | — | — | — | — | — | 58.5 | — | [5.2 H-share Convertible Bonds](index=50&type=section&id=5.2%20H-share%20Convertible%20Bonds) This section discloses ZTE Corporation's issuance of H-share convertible bonds after the reporting period; the company completed the issuance of RMB 3.584 billion zero-coupon USD-settled H-share convertible bonds due 2030 in July 2025, which were listed on the Hong Kong Stock Exchange in August 2025, aiming to optimize capital structure and broaden financing channels - On July 28, 2025, the company signed a subscription agreement with the lead manager for the issuance of **3.584 billion Yuan** zero-coupon USD-settled H-share convertible bonds due 2030[217](index=217&type=chunk) - The initial conversion price of the convertible bonds was **HKD 30.25** per H-share (adjustable); the convertible bonds were issued on August 5, 2025, and began trading on the Hong Kong Stock Exchange on August 6, 2025[217](index=217&type=chunk) [5.3 Key Accounting Data and Financial Indicators of the Group in the Past Two Years](index=51&type=section&id=5.3%20Key%20Accounting%20Data%20and%20Financial%20Indicators%20of%20the%20Group%20in%20the%20Past%20Two%20Years) This section presents ZTE Corporation's key accounting data and financial ind