Company Information [Board of Directors and Committees](index=3&type=section&id=Board%20of%20Directors%20and%20Committees) The company's board comprises executive, non-executive, and independent non-executive directors, supported by audit, remuneration, and nomination committees to ensure robust corporate governance - Board members include executive directors such as **Dr. Qian Xueming** (CEO and Chairman), non-executive directors like Dr. Xu Li, and independent non-executive directors such as Mr. Tang Jiasong[5](index=5&type=chunk) - The Audit Committee is chaired by Mr. Tang Jiasong, the Remuneration Committee by Dr. Kumar Srinivasan, and the Nomination Committee by Mr. Zhang Zhihua[5](index=5&type=chunk) [Key Contact Information](index=3&type=section&id=Key%20Contact%20Information) The company disclosed key contact information including its registered office, headquarters, Hong Kong principal place of business, legal advisors, auditors, compliance advisor, share registrar, and principal bankers - The company's registered office is in the Cayman Islands, headquarters in Suzhou, China, and principal place of business in Hong Kong is at Lee Garden One, Causeway Bay[5](index=5&type=chunk)[6](index=6&type=chunk) - The auditor is Deloitte Touche Tohmatsu, and legal advisors include Skadden, Arps, Slate, Meagher & Flom (Hong Kong and U.S. law) and Zhong Lun Law Firm (PRC law)[5](index=5&type=chunk)[6](index=6&type=chunk) - Principal bankers are The Hongkong and Shanghai Banking Corporation Limited and China Construction Bank, Suzhou Branch[7](index=7&type=chunk) Financial Summary [IFRS Measures](index=5&type=section&id=IFRS%20Measures) For the six months ended June 30, 2025, revenue decreased due to reduced CDMO services, while other income rose from increased government grants, leading to a significant narrowing of loss and total comprehensive expense for the period 2025 H1 Key Financial Indicators (IFRS) | Indicator | 2025 H1 (RMB million) | 2024 H1 (RMB million) | Change (RMB million) | Reason for Change | | :--- | :--- | :--- | :--- | :--- | | Revenue | 2.7 | 4.6 | (1.9) | Decrease in CDMO services | | Other Income | 11.4 | 9.6 | 1.8 | Increase in government grants | | Other Gains and Losses | (1.2) (Loss) | 1.0 (Gain) | (2.2) | Difference in net exchange gains | | Research and Development Expenses | 76.7 | 103.0 | (26.3) | Pipeline advancement and resource prioritization | | Administrative and Selling Expenses | 28.3 | 31.4 | (3.1) | Decrease in share-based compensation | | Loss and Total Comprehensive Expense for the Period | 108.8 | 135.2 | (26.4) | Decrease in R&D investment | [Non-IFRS Measures](index=5&type=section&id=Non-IFRS%20Measures) Excluding share-based compensation expenses, the company's adjusted loss and total comprehensive expense also significantly decreased, primarily due to optimized R&D investment and reduced labor costs 2025 H1 Adjusted Financial Indicators (Non-IFRS) | Indicator | 2025 H1 (RMB million) | 2024 H1 (RMB million) | Change (RMB million) | Reason for Change | | :--- | :--- | :--- | :--- | :--- | | Revenue | 2.7 | 4.6 | (1.9) | Decrease in CDMO services | | Other Income | 11.4 | 9.6 | 1.8 | Increase in government grants | | R&D Expenses (excluding share-based payments) | 70.8 | 95.5 | (24.7) | Reduced pipeline investment and resource optimization | | Administrative and Selling Expenses (excluding share-based payments) | 24.9 | 26.1 | (1.2) | Decrease in labor costs and professional services | | Adjusted Loss and Total Comprehensive Expense for the Period | 99.4 | 122.4 | (23.0) | Decrease in pipeline advancement related R&D investment | Business Summary [Clinical Program Achievements](index=6&type=section&id=Clinical%20Program%20Achievements) The company achieved significant clinical progress in both oncology and non-oncology pipelines, with Osemitamab (TST001) showing encouraging Phase II data in gastric cancer and securing multi-country regulatory approvals and patents for global Phase III trials, while early-stage oncology pipelines TST105 and TST013, and non-oncology pipelines TST801 and TST808 also advanced - Osemitamab (TST001) demonstrated a median progression-free survival (mPFS) of **16.6 months** and a median overall survival (mOS) of **21.7 months** in a Phase II trial for first-line treatment of advanced gastric or gastroesophageal junction adenocarcinoma[12](index=12&type=chunk)[18](index=18&type=chunk) - Osemitamab (TST001) has received regulatory approvals from the **US FDA**, **China CDE**, and **Korea MFDS**, and patents in China, Russia, and Hong Kong, supporting the global Phase III trial (TranStar301)[12](index=12&type=chunk)[18](index=18&type=chunk) - TST105 (anti-FGFR2b ADC) showed significantly higher tumor regression activity than MMAE-based ADCs in preclinical gastric and colorectal cancer models[13](index=13&type=chunk)[19](index=19&type=chunk) - TST013 (anti-LIV-1 ADC) demonstrated significantly improved anti-tumor activity and good tolerability in animal models, initiating preparatory studies to support IND filing[20](index=20&type=chunk) - TST801 (bispecific antibody) exhibited best-in-class properties in a humanized lupus nephritis mouse model, holding promise for treating various autoimmune diseases[21](index=21&type=chunk) - TST808 (humanized antibody) has improved properties in blocking B cell proliferation and signaling, with an extended half-life, potentially treating various autoimmune kidney diseases like IgAN[22](index=22&type=chunk) [Business Development Achievements](index=9&type=section&id=Business%20Development%20Achievements) The company actively advanced clinical trial collaborations with BMS and Agilent, sought partners for global development and commercialization of Osemitamab (TST001) and other pipeline assets, made progress in technology transfer and strategic alliances, and expanded its CDMO services - Continued collaboration with BMS on the China TranStar102 trial and US TranStar101 trial for Osemitamab (TST001) in combination with checkpoint inhibitors and chemotherapy[24](index=24&type=chunk) - Advanced collaboration with Agilent to develop a Claudin18.2-specific immunohistochemistry CDx assay kit to support the global Phase III pivotal trial of Osemitamab (TST001)[24](index=24&type=chunk) - Actively engaged potential partners for global and regional development and commercialization of Osemitamab (TST001), having received multiple term sheets[24](index=24&type=chunk) - Signed a non-binding term sheet with an independent third-party licensee for the licensing and technology transfer of proprietary HiCB platform technology and intellectual property[24](index=24&type=chunk) - Strengthened alliance with siRNA API synthesis companies to provide CDMO services for siRNA drug preparation and filling processes[24](index=24&type=chunk) [CMC and CDMO Progress](index=10&type=section&id=CMC%20and%20CDMO%20Progress) The company made progress in CMC (Chemistry, Manufacturing, and Control), successfully held an FDA Type C meeting, and continuously upgraded its cell line expression system and media products, while expanding its CDMO service scope - Successfully held an FDA Type C meeting, reaching agreement on comparability strategies and plans for the integrated hybrid continuous downstream process for commercial supply production of Osemitamab (TST001)[25](index=25&type=chunk) - Continuously upgraded internal cell line expression systems and established perfusion, basal, and feed media for commercialization readiness[27](index=27&type=chunk) - Expanded siRNA drug development service scope and increased international market exposure; expanded services to clients requiring lyophilized drug products[27](index=27&type=chunk) Management Discussion and Analysis [Overview](index=11&type=section&id=Overview) The company is a clinical-stage biopharmaceutical firm with integrated discovery, research, development, and manufacturing capabilities, focusing on oncology, osteoporosis, nephrology, and autoimmune diseases, implementing a multi-regional development strategy and leveraging proprietary platforms and CMC capabilities to generate revenue through CDMO services - The company has received approvals from the **US FDA**, **China CDE**, and **Korea MFDS** to initiate a global Phase III trial for Osemitamab (TST001) in combination with checkpoint inhibitors and chemotherapy as a first-line treatment for Claudin18.2-expressing locally advanced or metastatic gastric or gastroesophageal junction adenocarcinoma patients[29](index=29&type=chunk) - The company possesses proprietary antibody discovery platforms, comprehensive CMC capabilities, advanced translational science platforms, and HiCB manufacturing platform technology, supporting drug development and providing CDMO services[30](index=30&type=chunk) - The company pursues a global strategy, establishing partnerships with domestic and international biopharmaceutical companies and academic institutions, and exploring innovative transaction structures like forming new companies to accelerate market entry and maximize asset value[30](index=30&type=chunk) [Product Pipeline](index=12&type=section&id=Product%20Pipeline) The company has established a diverse and differentiated pipeline of 16 molecules covering multiple therapeutic areas including oncology, bone disorders, and nephrology, with most developed in-house and including best-in-class or first-in-class drugs Company Product Pipeline Overview | Area | Candidate Drug | Target | Modality | Indication | Clinical Stage | Rights | Partner | | :--- | :--- | :--- | :--- | :--- | :--- | :--- | :--- | | Oncology | Osemitamab (TST001) | Claudin18.2 | mAb | G/GEJC 1st line | Pivotal Phase III | Global | In-house | | Oncology | TST003 | Gremlin-1 (FIC) | mAb | Solid Tumors | Phase I | Global | In-house | | Oncology | TST786 | PD1-VEGF & Gremlin-1 (FIC) | Trispecific Antibody | Solid Tumors | Preclinical | Global | In-house | | Oncology | TST105 | FGFR2b Bi-Specific | ADC | Solid Tumors | Preclinical | Global | In-house | | Oncology | TST013 | LIV-1 | ADC | Solid Tumors | Preclinical | Global | In-house | | Non-Oncology | Blosozumab (TST002) | Sclerostin | mAb | Osteoporosis | Phase II (US completed) | Greater China | Eli Lilly | | Non-Oncology | TST801 | BAFF/APRIL (FIC) | BsP | Autoimmune Diseases | Preclinical | Global | In-house | | Non-Oncology | TST808 | Anti-APRIL | mAb | IgAN | Preclinical | Global | In-house | - The pipeline includes **five best-in-class molecules** (TST001, TST002, TST004, TST801, and TST808) and **three first-in-class molecules** (TST003, TST786, and TST008)[33](index=33&type=chunk) [Business Review](index=13&type=section&id=Business%20Review) The company achieved significant progress in both oncology and non-oncology pipeline assets, with multiple clinical and preclinical projects reaching milestones, notably Osemitamab (TST001) performing well in gastric cancer treatment, and actively advancing other innovative drug developments [Oncology Programs](index=13&type=section&id=Oncology%20Programs) The company's oncology pipeline encompasses various innovative biomolecules aimed at addressing significant unmet medical needs, with Osemitamab (TST001) as a key project showing potential superiority over competing molecules in Claudin18.2-positive gastric cancer treatment and having received multi-country approvals for global Phase III trials, while other projects like MSB0254, TST003, TST786, TST012, TST105, and TST013 also made preclinical or early clinical progress - Osemitamab (TST001) is a potentially best-in-class antibody targeting Claudin18.2, approved by the **US FDA**, **China CDE**, and **Korea MFDS** to initiate a global Phase III registration trial (TranStar301)[34](index=34&type=chunk) - Osemitamab (TST001) exhibits higher affinity and stronger ADCC compared to competing molecules, with preliminary clinical data suggesting its potential to benefit a broader patient population (approximately **55%** of gastric or gastroesophageal junction adenocarcinoma patients)[36](index=36&type=chunk) - TST105 (FGFR2b-targeting bispecific ADC) presented preclinical study results at the AACR annual meeting, demonstrating significantly enhanced anti-tumor activity[19](index=19&type=chunk)[47](index=47&type=chunk) - TST013 (LIV-1-targeting ADC) showed encouraging anti-tumor activity data in animal models and initiated preparatory studies for IND filing[20](index=20&type=chunk)[48](index=48&type=chunk) [Non-Oncology Programs](index=16&type=section&id=Non-Oncology%20Programs) The company's non-oncology pipeline focuses on bone and kidney diseases, including blosozumab (TST002), TST004, TST008, TST801, and TST808, with blosozumab (TST002) showing positive bone mineral density increase in a China Phase II trial, and TST801 and TST808 demonstrating best-in-class potential in autoimmune diseases and entering preclinical stages - Blosozumab (TST002) showed an average increase in lumbar spine BMD of **3.52% to 6.20%** and total hip BMD of **1.30% to 2.24%** after a single dose in Chinese subjects, consistent with US patient clinical data[50](index=50&type=chunk) - TST801 (first-in-class bifunctional antibody fusion protein) demonstrated best-in-class properties in a humanized lupus nephritis mouse model, reducing memory B cells, dsDNA, IgA, IgM, and IgG, as well as lowering proteinuria and renal damage scores[54](index=54&type=chunk) - TST808 (humanized antibody) has improved properties in blocking B cell proliferation and signaling, with an extended half-life, holding potential for treating various autoimmune kidney diseases like IgAN[55](index=55&type=chunk) [Strategic Collaborations to Advance Pipeline](index=18&type=section&id=Strategic%20Collaborations%20to%20Advance%20Pipeline) The company actively advances pipeline development and commercialization through clinical trial collaborations with BMS, Eli Lilly, and Livzon Pharmaceutical, as well as research collaborations with academic institutions and technology platform companies, and is seeking global and regional partners for multiple core assets - Established a global clinical trial collaboration with Bristol Myers Squibb (BMS) to evaluate the efficacy of Osemitamab (TST001) in combination with Opdivo® (nivolumab) for Claudin18.2-expressing gastric or gastroesophageal junction adenocarcinoma[59](index=59&type=chunk) - Entered into an exclusive license agreement with Eli Lilly for the development and commercialization of blosozumab (TST002) in Greater China[62](index=62&type=chunk) - Formed a joint venture with Shanghai Livzon Pharmaceutical Technology Co., Ltd. to conduct preclinical and clinical trials for TST004 in Greater China[65](index=65&type=chunk) - Actively exploring collaboration opportunities with potential partners for pipeline assets including Osemitamab (TST001), blosozumab (TST002), TST003, TST004, TST801, TST808, TST008, TST105, and TST013[61](index=61&type=chunk)[64](index=64&type=chunk)[66](index=66&type=chunk)[67](index=67&type=chunk)[68](index=68&type=chunk)[69](index=69&type=chunk)[70](index=70&type=chunk)[71](index=71&type=chunk) - Established multiple translational research collaborations with renowned academic institutions such as Dana-Farber Cancer Institute at Harvard Medical School, Johns Hopkins University, and Peking University Cancer Hospital[72](index=72&type=chunk) [Technology Collaborations and Progress](index=20&type=section&id=Technology%20Collaborations%20and%20Progress) The company achieved significant progress in CMC delivery, platform and technology development, and CDMO business, successfully reaching an agreement with the FDA on the commercial supply production process for Osemitamab (TST001), and actively promoting the out-licensing of proprietary technology platforms and commercialization of cell culture media - Successfully held an FDA Type C meeting, reaching agreement on comparability strategies and plans for the integrated hybrid continuous downstream process for commercial supply production of Osemitamab (TST001)[74](index=74&type=chunk) - Entered into a non-binding term sheet with an independent third-party licensee to grant a non-exclusive license for proprietary HiCB platform technology and intellectual property[76](index=76&type=chunk) - Internal cell culture medium ExcelPro CHO is undergoing evaluation by multiple external partners, offering opportunities for potential global commercialization collaborations[76](index=76&type=chunk) - Continuously improved internal cell line expression systems and established media for perfusion and fed-batch processes, ready for commercialization[77](index=77&type=chunk) - Expanded siRNA drug development service scope and lyophilized drug product services, actively attracting new clients[84](index=84&type=chunk) [Future Outlook](index=21&type=section&id=Future%20Outlook) The company anticipates advancing multiple key investigational molecules and continuing to seek collaborations to support its global development strategy, with a future focus on strengthening products and technology platforms, improving efficiency, and reducing expenses to achieve sustainable value growth - Plans to continue advancing the global pivotal trial (TranStar301) for Osemitamab (TST001) and submit applications to regulatory agencies in regions such as the EMA and Japan[85](index=85&type=chunk) - Collaborations with potential partners are expected to drive Osemitamab (TST001) into global Phase III trials for first-line CLDN18.2-positive gastric or gastroesophageal junction adenocarcinoma[87](index=87&type=chunk) - Will continue to explore collaborations for blosozumab (TST002), TST003, TST004, and preclinical assets (e.g., TST105, TST012, TST013, TST008, TST801, and TST808) to maximize asset value[87](index=87&type=chunk) - Committed to strengthening marketing initiatives for the HiCB continuous technology platform, cell culture media products, and development services, and enhancing and expanding CDMO business development activities globally[87](index=87&type=chunk) [Financial Review](index=23&type=section&id=Financial%20Review) For the six months ended June 30, 2025, the company's revenue decreased, but losses narrowed, primarily due to reduced R&D and administrative expenses; net current liabilities increased, and the debt-to-asset ratio rose, indicating increased liquidity pressure, while the company continued to monitor foreign exchange risks and manage funds through bank borrowings Condensed Consolidated Income Statement Excerpts (Six Months Ended June 30) | Indicator | 2025 (RMB thousand) | 2024 (RMB thousand) | | :--- | :--- | :--- | | Revenue | 2,711 | 4,564 | | Gross Profit | 791 | 1,524 | | Other Income | 11,366 | 9,570 | | Research and Development Expenses | (76,731) | (102,965) | | Administrative and Selling Expenses | (28,291) | (31,440) | | Loss for the Period | (109,785) | (133,722) | | Total Comprehensive Expense for the Period | (108,784) | (135,185) | | Adjusted Loss and Total Comprehensive Expense for the Period | (99,445) | (122,361) | Financial Position Statement Excerpts | Indicator | June 30, 2025 (RMB thousand) | December 31, 2024 (RMB thousand) | | :--- | :--- | :--- | | Total Assets | 1,038,700 | 1,200,277 | | Total Liabilities | 386,566 | 448,641 | | Net Current Liabilities | (146,480) | (63,013) | Revenue Breakdown (Six Months Ended June 30) | Service Category | 2025 (RMB thousand) | 2024 (RMB thousand) | | :--- | :--- | :--- | | CDMO Services | 2,167 | 4,564 | | R&D Services | 544 | – | | Total | 2,711 | 4,564 | - Other income increased by **RMB 1.8 million** to **RMB 11.4 million**, primarily due to increased government grants[94](index=94&type=chunk) - Research and development expenses decreased by **RMB 26.3 million** to **RMB 76.7 million**, mainly due to reduced investment in advancing key pipelines and optimized resource reallocation[96](index=96&type=chunk) - Administrative and selling expenses decreased by **RMB 3.1 million** to **RMB 28.3 million**, primarily due to reduced labor costs and professional services[99](index=99&type=chunk) - Bank balances and cash decreased from **RMB 227.4 million** as of December 31, 2024, to **RMB 101.1 million** as of June 30, 2025, mainly due to operating cash outflows[108](index=108&type=chunk) - The debt-to-asset ratio increased from **0.76%** as of December 31, 2024, to **14.24%** as of June 30, 2025[110](index=110&type=chunk) [Going Concern Issues and Mitigation Plans](index=30&type=section&id=Going%20Concern%20Issues%20and%20Mitigation%20Plans) The independent auditor issued a disclaimer of opinion on the condensed consolidated financial statements, primarily based on the company's loss, operating cash outflow, and net current liabilities for the six months ended June 30, 2025; management and the board have assessed and formulated multiple mitigation plans, including seeking external collaborations, financing, technology licensing, and optimizing resource allocation, to address significant going concern doubts - For the six months ended June 30, 2025, the company incurred a net loss of **RMB 109,785,000**, net operating cash outflow of **RMB 75,705,000**, and net current liabilities of approximately **RMB 146,480,000**, raising significant doubts about its ability to continue as a going concern[133](index=133&type=chunk)[207](index=207&type=chunk) - The company is actively negotiating with third parties to advance the global development and commercialization of key pipelines through "out-licensing" and/or "co-development programs," and has received multiple term sheets[124](index=124&type=chunk)[207](index=207&type=chunk) - The company has engaged in discussions and negotiations with various parties for capital financing, including new share issuance, PIPE, or convertible bond issuance, and plans to arrange and execute these within the year[126](index=126&type=chunk)[207](index=207&type=chunk) - The company has secured bank financing and established strategic collaborations with several banks, obtaining credit facilities exceeding **RMB 100 million** to support daily operations and new drug development[129](index=129&type=chunk)[207](index=207&type=chunk) - The Audit Committee reviewed and concurred with the Board's assessment regarding the adoption of the going concern assumption, believing that the mitigation plans (if effectively executed) will help address liquidity burdens[132](index=132&type=chunk) Other Information [Directors' and Chief Executive's Interests](index=33&type=section&id=Directors'%20and%20Chief%20Executive's%20Interests) As of June 30, 2025, the company's directors and chief executive held interests in the company's shares and related shares, with Dr. Qian Xueming holding approximately 8.67% and Dr. Xu Li holding approximately 1.02% Directors' and Chief Executive's Interests in Shares (As of June 30, 2025) | Director Name | Capacity/Nature of Interest | Number of Ordinary Shares | Approximate Percentage of Shareholding | | :--- | :--- | :--- | :--- | | Dr. Qian Xueming | Beneficial owner, founder and beneficiary of discretionary trust, interest in controlled corporation | 37,926,000 | 8.67% | | Dr. Xu Li | Beneficial owner | 4,461,501 | 1.02% | | Mr. Tang Jiasong | Beneficial owner | 60,000 | 0.01% | | Mr. Zhang Zhihua | Beneficial owner | 60,000 | 0.01% | | Dr. Kumar Srinivasan | Beneficial owner | 30,000 | 0.01% | | Ms. Chen Wei | Beneficial owner | 30,000 | 0.01% | [Major Shareholders' Interests](index=36&type=section&id=Major%20Shareholders'%20Interests) As of June 30, 2025, the company's major shareholders included HSBC Trust Company (Delaware) National Association, Yi Shi and entities controlled by him, Temasek Holdings (Private) Limited and entities controlled by it, and China Structural Reform Fund Corporation Limited, holding significant interests in the company's shares or related shares Major Shareholders' Interests in Shares (As of June 30, 2025) | Shareholder Name/Name | Capacity/Nature of Interest | Number of Ordinary Shares | Approximate Percentage of Shareholding | | :--- | :--- | :--- | :--- | | Dr. Qian Xueming | Beneficial owner; founder and beneficiary of discretionary trust; interest in controlled corporation | 37,926,000 | 8.67% | | HSBC Trust Company (Delaware) National Association | Trustee of discretionary trust | 45,653,530 | 10.44% | | Yi Shi | Interest in controlled corporation | 70,536,703 | 16.13% | | LAV Asset Management (Hong Kong) Limited | Investment manager | 70,536,703 | 16.13% | | LAV Corporate GP, Ltd. | Interest in controlled corporation | 50,566,136 | 11.56% | | LAV GP III, L.P. | Interest in controlled corporation | 50,566,136 | 11.56% | | LAV Biosciences Fund III, L.P. | Beneficial owner; interest in controlled corporation | 33,710,963 | 7.71% | | LAV Vitality Limited | Beneficial owner | 22,388,232 | 5.12% | | Temasek Holdings (Private) Limited | Interest in controlled corporation | 28,086,380 | 6.42% | | Fullerton Management Pte Ltd | Interest in controlled corporation | 26,021,880 | 5.95% | | Temasek Life Sciences Private Limited | Interest in controlled corporation | 26,021,880 | 5.95% | | TLS Beta Pte. Ltd. | Beneficial owner | 26,021,880 | 5.95% | | China Structural Reform Fund Corporation Limited | Beneficial owner; interest in controlled corporation | 39,421,012 | 9.01% | | Xiaohong Shi | Beneficial owner | 22,411,376 | 5.12% | [Equity Incentive Plans](index=38&type=section&id=Equity%20Incentive%20Plans) The company has a Pre-IPO Share Incentive Scheme (terminated but unexercised portions remain valid) and a Share Incentive Scheme, designed to incentivize employees, directors, senior management, and consultants; as of June 30, 2025, a significant number of share options and restricted share units under both schemes remained unexercised or unvested - The Pre-IPO Share Incentive Scheme was terminated on May 31, 2023, but unexercised share options and granted restricted share units remain valid[151](index=151&type=chunk) Pre-IPO Share Option Movements (As of June 30, 2025) | Category | Unexercised as of January 1, 2025 | Exercised during the Period | Lapsed during the Period | Unexercised as of June 30, 2025 | | :--- | :--- | :--- | :--- | :--- | | Directors (Dr. Xu Li) | 2,200,000 | – | – | 2,200,000 | | Other Employee Participants | 8,349,260 | 49,500 | 5,000 | 8,294,760 | | Service Providers | 680,000 | – | – | 680,000 | | **Total** | **11,229,260** | **49,500** | **5,000** | **11,174,760** | Pre-IPO Restricted Share Unit Movements (As of June 30, 2025) | Category | Unvested as of January 1, 2025 | Vested during the Period | Lapsed during the Period | Unvested as of June 30, 2025 | | :--- | :--- | :--- | :--- | :--- | | Employee Participant (1) | 1,850,000 | 354,166 | 1,495,834 | – | | Employee Participants (17) | 630,000 | 132,500 | – | 497,500 | | **Total** | **2,480,000** | **486,666** | **1,495,834** | **497,500** | - The Share Incentive Scheme limit is **44,551,933 shares**, with **3,897,844 awards or share options** available for future grants as of June 30, 2025[163](index=163&type=chunk) Share Incentive Scheme Share Option Movements (As of June 30, 2025) | Category | Unexercised as of January 1, 2025 | Granted during the Period | Lapsed during the Period | Unexercised as of June 30, 2025 | | :--- | :--- | :--- | :--- | :--- | | Directors, Chief Executive, or Major Shareholders | 4,933,000 | – | – | 4,933,000 | | Other Employee Participants | 13,364,330 | – | – | 13,364,330 | | Service Providers | – | 2,000,000 | – | 2,000,000 | | **Total** | **18,297,330** | **2,000,000** | **0** | **20,297,330** | Share Incentive Scheme Award Movements (As of June 30, 2025) | Category | Unvested as of January 1, 2025 | Granted during the Period | Vested during the Period | Lapsed during the Period | Unvested as of June 30, 2025 | | :--- | :--- | :--- | :--- | :--- | :--- | | Directors, Chief Executive, or Major Shareholders | 4,928,828 | 90,000 | 160,000 | – | 4,858,828 | | Senior Management | 3,405,620 | – | – | 3,905,620 | – | | Other Employee Participants | 6,367,360 | 676,000 | 3,557,210 | 374,440 | 3,111,710 | | **Total** | **14,701,794** | **766,000** | **3,717,210** | **4,280,060** | **7,470,524** | [Purchases, Sales or Redemptions of the Company's Listed Securities](index=46&type=section&id=Purchases%2C%20Sales%20or%20Redemptions%20of%20the%20Company's%20Listed%20Securities) During the reporting period, the company repurchased **166,500 ordinary shares** for a total consideration of approximately **HKD 99,959.45**, aiming to enhance share value; the repurchased shares are held as treasury shares, available for share grants, resale, or other permitted uses Share Repurchase Details (January 2025) | Month of Repurchase | Number of Shares Repurchased | Highest Price Paid Per Share (HKD) | Lowest Price Paid Per Share (HKD) | Total Consideration (HKD) | | :--- | :--- | :--- | :--- | :--- | | January 2025 | 166,500 | 0.6100 | 0.5800 | 99,959.45 | | **Total** | **166,500** | **–** | **–** | **99,959.45** | - As of June 30, 2025, the company held **2,516,500 treasury shares**, available for share grants, resale to raise funds, and other permitted uses[174](index=174&type=chunk) [Material Litigation and Future Plans](index=47&type=section&id=Material%20Litigation%20and%20Future%20Plans) During the reporting period, the company was not involved in any material litigation or arbitration, nor did it have any other future plans for significant investments or capital assets - During the reporting period, the company was not involved in any material litigation or arbitration, nor were there any pending or threatened material litigations or claims[177](index=177&type=chunk) - As of the date of this report, the Group had no other plans regarding significant investments and capital assets[178](index=178&type=chunk) [Use of Net Proceeds](index=47&type=section&id=Use%20of%20Net%20Proceeds) The company has repeatedly adjusted the use of net proceeds from its global offering to prioritize the development of Osemitamab (TST001) and other urgent project needs, aiming to optimize financial resource allocation, maximize potential return on investment, and expects to fully utilize the remaining funds by the end of 2025 - The Board resolved to reallocate approximately **HKD 28.8 million** of unutilized net proceeds to fund the development of Osemitamab (TST001) and other in-house pipeline products requiring support[182](index=182&type=chunk) Updated Allocation of Net Proceeds After Changes (As of June 30, 2025) | Use of Net Proceeds | Amount Utilized as of June 30, 2025 (HKD million) | Proposed Allocation of Remaining Net Proceeds After Changes (HKD million) | Approximate Percentage of Remaining Unutilized Net Proceeds | Expected Timeline for Full Utilization of Unutilized Net Proceeds | | :--- | :--- | :--- | :--- | :--- | | R&D, clinical and preclinical trials, registration filings, and commercialization-related activities for pipeline drug candidates | 467.3 | 30.8 | 100% | On or before December 31, 2025 | | (i) Clinical trials, registration filings, and preparations for potential commercial launch of key product Osemitamab (TST001) | 349.5 | 25.6 | 83.1% | On or before December 31, 2025 | | (ii) Clinical trials, registration filings, and preparations for potential commercial launch of key product TST005 | 12.3 | 2.0 | 6.5% | On or before December 31, 2025 | | (iii) Clinical trials, registration filings, and preparations for potential commercial launch of key product TST002 | 31.1 | – | – | On or before December 31, 2025 | | (iv) Preclinical trials and preparations for registration filings of key products and other pipeline products (TST004, MSB0254, TST003, TST006, and TST008) | 74.5 | 3.2 | 10.4% | On or before December 31, 2025 | | Business development (pipeline expansion and technology development) | – | – | – | On or before December 31, 2025 | | General working capital and general operating expenses | 55.3 | – | – | Not applicable | | **Total** | **522.7** | **30.8** | **100%** | **Not applicable** | - The changes in the use of net proceeds aim to optimize financial resource allocation to adapt to evolving market conditions and business development priorities, and to maximize the potential return on investment[188](index=188&type=chunk) - The company expects to fully utilize the remaining unutilized net proceeds by the end of 2025[189](index=189&type=chunk) [Corporate Governance and Other Information](index=53&type=section&id=Corporate%20Governance%20and%20Other%20Information) The company is committed to maintaining stringent corporate governance standards, with established audit, nomination, and remuneration committees; despite the Chairman and CEO roles being held by the same individual, the company believes this arrangement fosters leadership consistency; during the reporting period, the company complied with the Corporate Governance Code and disclosed changes in its Chief Medical Officer - The Audit Committee reviewed the Group's unaudited consolidated financial statements for the six months ended June 30, 2025, and discussed them with the independent auditor and senior management[192](index=192&type=chunk) - The Board recommended not to declare an interim dividend for the six months ended June 30, 2025[194](index=194&type=chunk) - The company complied with all applicable provisions of the Corporate Governance Code, except for the roles of Chairman and Chief Executive Officer being combined and held by Dr. Qian Xueming, which the company believes promotes leadership consistency[198](index=198&type=chunk) - Following Dr. Caroline Germa's resignation as Chief Medical Officer, Dr. Qi Chuan has assumed the responsibilities of Head of Global Clinical Development, with a scope of duties and seniority comparable to that of a Chief Medical Officer[203](index=203&type=chunk) Review Report on Condensed Consolidated Financial Statements [Basis for Disclaimer of Opinion](index=56&type=section&id=Basis%20for%20Disclaimer%20of%20Opinion) Independent auditor Deloitte Touche Tohmatsu issued a disclaimer of opinion on the company's condensed consolidated financial statements, primarily due to the company's loss, operating cash outflow, and net current liabilities for the six months ended June 30, 2025, and the validity of the going concern assumption depending on several ongoing plans and measures lacking written contractual agreements or sufficient supporting documentation - For the six months ended June 30, 2025, the company incurred a net loss of **RMB 109,785,000**, net operating cash outflow of **RMB 75,705,000**, and net current liabilities of approximately **RMB 146,480,000**, which raise significant doubts about its ability to continue as a going concern[207](index=207&type=chunk) - The validity of the going concern assumption depends on the company's successful implementation of various plans and measures, including advancing global development of key pipelines, seeking out-licensing or fundraising, securing new bank financing, extending existing bank borrowing terms, and extending repayment dates for overdue payables[207](index=207&type=chunk) - As the company's plans and measures are ongoing and lack written contractual agreements or other sufficient supporting documentation from relevant counterparties, the auditor was unable to obtain sufficient appropriate audit evidence to assess the likelihood of successful execution of these plans and the appropriateness of the going concern accounting basis[209](index=209&type=chunk) - Should the company fail to achieve the combination of these plans and measures, it may be unable to continue operating as a going concern, potentially requiring adjustments to the carrying amounts of assets, which are not reflected in the condensed consolidated financial statements[209](index=209&type=chunk) [Disclaimer of Opinion](index=57&type=section&id=Disclaimer%20of%20Opinion) Given the significance of the matters described in the "Basis for Disclaimer of Opinion" section, the independent auditor was unable to obtain sufficient and appropriate evidence, and therefore does not express an opinion on the company's condensed consolidated financial statements - The independent auditor does not express an opinion on the company's condensed consolidated financial statements due to the inability to obtain sufficient appropriate evidence to assess the appropriateness of the directors' use of the going concern basis and the adequacy of related disclosures[211](index=211&type=chunk) Condensed Consolidated Statement of Profit or Loss and Other Comprehensive Income [Overview of Profit or Loss and Comprehensive Income](index=58&type=section&id=Overview%20of%20Profit%20or%20Loss%20and%20Comprehensive%20Income) For the six months ended June 30, 2025, the company's revenue was **RMB 2,711 thousand**, with a loss for the period of **RMB 109,785 thousand**, a narrowing from **RMB 133,722 thousand** in the prior year, and basic and diluted loss per share was **RMB 0.27** Condensed Consolidated Statement of Profit or Loss and Other Comprehensive Income (Six Months Ended June 30) | Indicator | 2025 (RMB thousand) | 2024 (RMB thousand) | | :--- | :--- | :--- | | Revenue | 2,711 | 4,564 | | Gross Profit | 791 | 1,524 | | Other Income | 11,366 | 9,570 | | Research and Development Expenses | (76,731) | (102,965) | | Administrative and Selling Expenses | (28,291) | (31,440) | | Loss Before Tax | (109,907) | (133,847) | | Loss for the Period | (109,785) | (133,722) | | Total Comprehensive Expense for the Period | (108,784) | (135,185) | | Basic and Diluted Loss Per Share (RMB) | (0.27) | (0.33) | Condensed Consolidated Statement of Financial Position [Overview of Statement of Financial Position](index=59&type=section&id=Overview%20of%20Statement%20of%20Financial%20Position) As of June 30, 2025, the company's total assets were **RMB 1,038,700 thousand**, a decrease from December 31, 2024; net current liabilities expanded to **RMB 146,480 thousand**, indicating increased liquidity pressure, and net assets stood at **RMB 652,134 thousand** Condensed Consolidated Statement of Financial Position (As of June 30, 2025) | Indicator | June 30, 2025 (RMB thousand) | December 31, 2024 (RMB thousand) | | :--- | :--- | :--- | | Non-current Assets | 897,238 | 920,783 | | Current Assets | 141,462 | 279,494 | | **Total Assets** | **1,038,700** | **1,200,277** | | Current Liabilities | 287,942 | 342,507 | | Non-current Liabilities | 98,624 | 106,134 | | **Total Liabilities** | **386,566** | **448,641** | | Net Current Liabilities | (146,480) | (63,013) | | Net Assets | 652,134 | 751,636 | Condensed Consolidated Statement of Changes in Equity [Overview of Statement of Changes in Equity](index=61&type=section&id=Overview%20of%20Statement%20of%20Changes%20in%20Equity) For the six months ended June 30, 2025, the company's total equity decreased from **RMB 751,636 thousand** as of January 1, 2025, to **RMB 652,134 thousand**, primarily due to total comprehensive expense for the period and share repurchases, partially offset by share-based payments Condensed Consolidated Statement of Changes in Equity (Six Months Ended June 30) | Item | January 1, 2025 (RMB thousand) | Total Comprehensive (Expense) Income for the Period (RMB thousand) | Repurchase of Shares (RMB thousand) | Equity-settled Share-based Payments Recognized (RMB thousand) | Exercise of Share Options/Vesting of Restricted Share Units (RMB thousand) | June 30, 2025 (RMB thousand) | | :--- | :--- | :--- | :--- | :--- | :--- | :--- | | Share Capital | 284 | – | – | – | 1 | 285 | | Share Premium | 4,654,387 | – | – | – | 336 | 4,654,723 | | Treasury Shares | (2,371) | – | (93) | – | 3 | (2,462) | | Accumulated Losses | (3,799,411) | (109,785) | – | – | – | (3,909,196) | | Exchange Reserve | (12,990) | 1,001 | – | – | – | (11,989) | | **Total Equity** | **751,636** | **(108,784)** | **(93)** | **9,339** | **36** | **652,134** | Condensed Consolidated Statement of Cash Flows [Overview of Statement of Cash Flows](index=62&type=section&id=Overview%20of%20Statement%20of%20Cash%20Flows) For the six months ended June 30, 2025, the company's net cash used in operating activities was **RMB 75,705 thousand**, and net cash used in financing activities was **RMB 44,568 thousand**, resulting in a net decrease in cash and cash equivalents of **RMB 123,493 thousand** Condensed Consolidated Statement of Cash Flows (Six Months Ended June 30) | Category of Activity | 2025 (RMB thousand) | 2024 (RMB thousand) | | :--- | :--- | :--- | | Net Cash Used in Operating Activities | (75,705) | (119,462) | | Net Cash (Used in) Generated from Investing Activities | (3,220) | 2,828 | | Net Cash Used in Financing Activities | (44,568) | (64,878) | | **Net Decrease in Cash and Cash Equivalents** | **(123,493)** | **(181,512)** | | Cash and Cash Equivalents at End of Period | 45,810 | 365,009 | Notes to the Condensed Consolidated Financial Statements [Basis of Preparation and Going Concern Assessment](index=63&type=section&id=Basis%20of%20Preparation%20and%20Going%20Concern%20Assessment) The condensed consolidated financial statements are prepared in accordance with IAS 34; the company faces significant going concern doubts due to its losses, operating cash outflows, and net current liabilities; the Board has formulated multiple mitigation plans and believes the company has sufficient financial resources to continue as a going concern, but the auditor issued a disclaimer of opinion due to a lack of sufficient supporting documentation - As of June 30, 2025, the company incurred a net loss of **RMB 109,785,000**, net operating cash outflow of **RMB 75,705,000**, and net current liabilities of approximately **RMB 146,480,000**, posing significant doubts about its ability to continue as a going concern[222](index=222&type=chunk) - The company has adopted several mitigation measures, including seeking out-licensing, co-development, capital financing, renewal of bank borrowings, extension of repayment dates for payables, attracting new CDMO clients, and optimizing resource allocation[222](index=222&type=chunk) - The Board believes that, considering the aforementioned plans and measures, the company has sufficient financial resources to continue operating in the foreseeable future and has prepared the financial statements on a going concern basis[223](index=223&type=chunk) - The auditor noted that due to the ongoing nature of the plans and measures and the lack of written contractual agreements or other sufficient supporting documentation, there is significant uncertainty, preventing a conclusion on the appropriateness of the going concern assumption[224](index=224&type=chunk) [Accounting Policies and Segment Information](index=65&type=section&id=Accounting%20Policies%20and%20Segment%20Information) The company's condensed consolidated financial statements are prepared on a historical cost basis and first-time application of amendments to IFRS; the chief operating decision maker views the group as a single operating segment, with all external customer revenue and non-current assets located in China - The accounting policies and calculation methods used in the company's condensed consolidated financial statements are consistent with those in the annual consolidated financial statements for the year ended December 31, 2024, with the first-time application of IAS 21 (amended) "Lack of Exchangeability"[226](index=226&type=chunk)[227](index=227&type=chunk) - The company is primarily engaged in the discovery, development, manufacturing, and commercialization of innovative drugs, and the chief operating decision maker views the Group as a single operating segment[231](index=231&type=chunk) - All external customer revenue is derived from China, and all non-current assets are located in China[233](index=233&type=chunk) Major Customer Revenue (Six Months Ended June 30) | Customer | 2025 (RMB thousand) | 2024 (RMB thousand) | | :--- | :--- | :--- | | Customer A | 1,226 | Not applicable | | Customer B | 373 | – | | Customer C | 308 | Not applicable | | Customer D | – | 1,763 | | Customer E | – | 607 | [Other Income and Gains](index=67&type=section&id=Other%20Income%20and%20Gains) For the six months ended June 30, 2025, the company's other income increased, primarily due to higher government grants, while net other gains and losses shifted from a gain to a loss, mainly impacted by exchange differences Other Income (Six Months Ended June 30) | Item | 2025 (RMB thousand) | 2024 (RMB thousand) | | :--- | :--- | :--- | | Bank Interest Income | 992 | 2,132 | | Government Grants | 9,295 | 7,438 | | Sales of Raw Materials | 1,079 | – | | **Total** | **11,366** | **9,570** | Net Other Gains and Losses (Six Months Ended June 30) | Item | 2025 (RMB thousand) | 2024 (RMB thousand) | | :--- | :--- | :--- | | Net Exchange (Loss) Gain | (938) | 1,407 | | Others | (254) | (369) | | **Total** | **(1,192)** | **1,038** | [Loss Before Tax and Loss Per Share](index=68&type=section&id=Loss%20Before%20Tax%20and%20Loss%20Per%20Share) For the six months ended June 30, 2025, the company's loss before tax was **RMB 109,907 thousand**, a narrowing from **RMB 133,847 thousand** in the prior year, with basic and diluted loss per share at **RMB 0.27**, and no dividends were paid during the period Components of Loss Before Tax (Six Months Ended June 30) | Item | 2025 (RMB thousand) | 2024 (RMB thousand) | | :--- | :--- | :--- | | Depreciation of Property, Plant and Equipment | 22,913 | 23,911 | | Amortization of Intangible Assets | 44 | 74 | | Depreciation of Right-of-Use Assets | 1,554 | 2,853 | | Auditor's Remuneration | 1,562 | 1,354 | | Directors' Emoluments | 3,589 | 2,743 | | Other Staff Costs | 49,668 | 69,407 | Loss Per Share Calculation (Six Months Ended June 30) | Indicator | 2025 | 2024 | | :--- | :--- | :--- | | Loss for the Period Attributable to Owners of the Company Used for Basic and Diluted Loss Per Share Calculation (RMB thousand) | (109,785) | (133,722) | | Weighted Average Number of Ordinary Shares Used for Basic and Diluted Loss Per Share Calculation | 406,939,951 | 405,633,640 | | Basic and Diluted Loss Per Share (RMB) | (0.27) | (0.33) | - The company did not pay, declare, or propose any dividends during this interim period[239](index=239&type=chunk) [Impairment Assessment of Assets](index=70&type=section&id=Impairment%20Assessment%20of%20Assets) The company conducted an impairment assessment of goodwill and intangible assets, and given the deferral of R&D expenses, management identified indicators of impairment; the assessment concluded that the estimated recoverable amount of the cash-generating unit exceeded its carrying amount, thus no impairment was recognized, and sensitivity analysis showed that reasonable changes in key assumptions would not cause the total carrying amount to exceed the recoverable amount - As of June 30, 2025, the carrying amount of goodwill was **RMB 471,901 thousand**, and intangible assets was **RMB 95,708 thousand**[242](index=242&type=chunk)[247](index=247&type=chunk) - Goodwill impairment assessment was based on cash flow forecasts, using a pre-tax discount rate of **17.5%**, expected annual growth rates of **0.5%-278.2%**, expected market penetration rates of **0.48%-20.4%**, and expected commercialization success rates of **33.0%-38.0%**[244](index=244&type=chunk)[245](index=245&type=chunk) - Intangible asset impairment assessment used a pre-tax discount rate of **18.0%**, expected annual growth rates of **1.4%-174.6%**, expected market penetration rates of **1.5%-9.0%**, and expected commercialization success rate of **38%**[248](index=248&type=chunk)[249](index=249&type=chunk) - Impairment test results for goodwill and intangible assets indicated that the estimated recoverable amount of the cash-generating unit exceeded its carrying amount, thus no impairment was recognized[245](index=245&type=chunk)[250](index=250&type=chunk) - Sensitivity tests showed that even with a **1% increase** in discount rate or a **1% decrease** in revenue compound growth rate, there was sufficient headroom in the recoverable amount of goodwill and intangible assets, not causing the total carrying amount to exceed the recoverable amount[246](index=246&type=chunk)[251](index=251&type=chunk) [Trade and Other Receivables](index=75&type=section&id=Trade%20and%20Other%20Receivables) As of June 30, 2025, the company's trade and other receivables totaled **RMB 20,735 thousand**, a decrease from **RMB 31,561 thousand** as of December 31, 2024; trade receivables (net of credit loss allowance) were **RMB 8,727 thousand**, with the largest portion aged over 365 days Trade and Other Receivables Details (As of June 30, 2025) | Item | June 30, 2025 (RMB thousand) | December 31, 2024 (RMB thousand) | | :--- | :--- | :--- | | Trade Receivables (net of credit loss allowance) | 8,727 | 18,345 | | Interest Receivable | 4,771 | 3,949 | | Prepayments | 6,486 | 7,528 | | Other Receivables (net of credit loss allowance) | 751 | 1,739 | | **Total** | **20,735** | **31,561** | Ageing Analysis of Trade Receivables (As of June 30, 2025) | Ageing | June 30, 2025 (RMB thousand) | December 31, 2024 (RMB thousand) | | :--- | :--- | :--- | | Within 30 days | 330 | 621 | | 31 to 60 days | – | 223 | | 61 to 90 days | 53 | 186 | | 91 to 120 days | 823 | 32 | | 121 to 365 days | 294 | 212 | | Over 365 days | 7,227 | 17,071 | | **Total** | **8,727** | **18,345** | [Trade and Other Payables](index=77&type=section&id=Trade%20and%20Other%20Payables) As of June 30, 2025, the company's trade and other payables totaled **RMB 96,287 thousand**, a decrease from **RMB 113,929 thousand** as of December 31, 2024; trade payables were **RMB 66,863 thousand**, with the largest portion aged over 365 days Trade and Other Payables Details (As of June 30, 2025) | Item | June 30, 2025 (RMB thousand) | December 31, 2024 (RMB thousand) | | :--- | :--- | :--- | | Trade Payables | 66,863 | 83,143 | | Accrued R&D Expenses | 14,892 | 11,558 | | Other Payables | 9,557 | 13,538 | | Interest Payable | 142 | 187 | | Other Taxes Payable | 657 | 1,418 | | Accrued Staff Costs and Benefits | 4,176 | 4,085 | | **Total** | **96,287** | **113,929** | Ageing Analysis of Trade Payables (As of June 30, 2025) | Ageing | June 30, 2025 (RMB thousand) | December 31, 2024 (RMB thousand) | | :--- | :--- | :--- | | 0 to 30 days | 13,374 | 9,699 | | 31 to 60 days | 795 | 988 | | 61 to 90 days | 1,022 | 1,106 | | 91 to 120 days | 815 | 1,273 | | 121 to 365 days | 23,933 | 34,267 | | Over 365 days | 26,924 | 35,810 | | **Total** | **66,863** | **83,143** | [Borrowings and Deferred Income](index=78&type=section&id=Borrowings%20and%20Deferred%20Income) As of June 30, 2025, the company incurred new borrowings of **RMB 157,980 thousand** and repaid borrowings of **RMB 197,174 thousand**; total deferred income was **RMB 54,700 thousand**, primarily comprising conditional government grants and asset-related grants - For the six months ended June 30, 2025, the company incurred new borrowings of **RMB 157,980 thousand** and repaid borrowings of **RMB 197,174 thousand**[257](index=257&type=chunk) - Borrowings bear interest at fixed and floating market rates (ranging from **2.90% to 3.80%**) and are repayable in installments over a period of **1 to 16 months**[257](index=257&type=chunk) Deferred Income (As of June 30, 2025) | Item | June 30, 2025 (RMB thousand) | December 31, 2024 (RMB thousand) | | :--- | :--- | :--- | | Government Grants (Conditional) | 50,700 | 50,700 | | Asset-Related Grants | 4,000 | 8,000 | | **Total** | **54,700** | **58,700** | | Less: Current Portion | (4,400) | (8,400) | | Non-current Portion | 50,300 | 50,300 | [Share Capital and Treasury Shares](index=79&type=section&id=Share%20Capital%20and%20Treasury%20Shares) As of June 30, 2025, the company's total issued ordinary shares were **437,381,945**, with a share capital of **RMB 285 thousand**; during the period, **166,500 shares** were repurchased for a total consideration of **RMB 93 thousand** and held as treasury shares, bringing the total treasury shares to **27,291,758** at period-end Share Capital Details (As of June 30, 2025) | Item | Number of Shares | Amount (RMB thousand) | | :--- | :--- | :--- | | Issued and Fully Paid as of January 1, 2025 | 436,432,445 | 284 | | Ordinary Shares Issued upon Exercise of Share Options | 49,500 | –* | | Shares Issued and Held in Trust | 900,000 | 1 | | **Issued and Fully Paid as of June 30, 2025** | **437,381,945** | **285** | Treasury Shares Details (As of June 30, 2025) | Item | Number of Shares | Amount (RMB thousand) | | :--- | :--- | :--- | | As of January 1, 2025 | 30,429,134 | 2,371 | | Shares Repurchased | 166,500 | 93 | | Vesting of Restricted Share Units | (4,203,876) | (3) | | Shares Issued and Held in Trust | 900,000 | 1 | | **As of June 30, 2025** | **27,291,758** | **2,462** | - For the six months ended June 30, 2025, the company repurchased **166,500 shares** at an average price of **RMB 0.56**, totaling **RMB 93,000**, and held them as treasury shares[261](index=261&type=chunk) [Share-based Payment Transactions](index=81&type=section&id=Share-based%20Payment%20Transactions) The company operates a Pre-IPO Share Incentive Scheme and a Post-IPO Share Award Scheme (Share Incentive Scheme) to incentivize employees; as of June 30, 2025, a significant number of share options and restricted share units under both schemes remained unexercised or unvested, and share-based payment expenses of **RMB 9,339 thousand** were recognized during the period Pre-IPO Share Incentive Scheme Movements (As of June 30, 2025) | Category | Unexercised as of January 1, 2025 (thousand shares) | Forfeited during the Period (thousand shares) | Exercised/Vested during the Period (thousand shares) | Unexercised as of June 30, 2025 (thousand shares) | | :--- | :--- | :--- | :--- | :--- | | Directors and Senior Management of the Company | 4,950 | (1,496) | (375) | 3,079 | | Consultants | 705 | – | – | 705 | | Employees | 10,724 | (5) | (161) | 10,558 | | **Total** | **16,379** | **(1,501)** | **(536)** | **14,342** | Post-IPO Share Award Scheme Movements (As of June 30, 2025) | Category | Unexercised as of January 1, 2025 (thousand shares) | Granted during the Period (thousand shares) | Forfeited during the Period (thousand shares) | Exercised/Vested during the Period (thousand shares) | Unexercised as of June 30, 2025 (thousand shares) | | :--- | :--- | :--- | :--- | :--- | :--- | | Directors and Senior Management of the Company | 24,474 | 90 | (4,156) | (567) | 19,841 | | Consultants | – | 2,000 | – | – | 2,000 | | Employees | 8,524 | 676 | (123) | (3,150) | 5,927 | | **Total** | **32,998** | **2,766** | **(4,279)** | **(3,717)** | **27,768** | - During this interim period, the company granted **2,766,000 restricted share units/share options**, with fair values ranging from **USD 0.0974 to USD 0.1933**[269](index=269&type=chunk) - For the six months ended June 30, 2025, the company recognized share-based payment expenses of **RMB 9,339 thousand**[270](index=270&type=chunk) [Related Party Transactions and Capital Commitments](index=84&type=section&id=Related%20Party%20Transactions%20and%20Capital%20Commitments) As of June 30, 2025, the company had a related party balance of trade receivables of **RMB 4,720 thousand** with a joint venture; total remuneration for key management personnel was **RMB 7,559 thousand**; regarding capital commitments, contracted but unprovided capital expenditure for property, plant, and equipment amounted to **RMB 5,002 thousand** Related Party Balances (As of June 30, 2025) | Relationship | Nature of Balance | June 30, 2025 (RMB thousand) | December 31, 2024 (RMB thousand) | | :--- | :--- | :--- | :--- | | A Joint Venture | Trade Receivables | 4,720 | 4,720 | Key Management Personnel Remuneration (Six Months Ended June 30) | Item | 2025 (RMB thousand) | 2024 (RMB thousand) | | :--- | :--- | :--- | | Short-term Benefits | 4,868 | 5,250 | | Post-employment Benefits | 537 | 749 | | Share-based Payments | 2,154 | 4,267 | | Discretionary Bonuses | – | 18 | | **Total** | **7,559** | **10,284** | Capital Commitments (As of June 30, 2025) | Item | June 30, 2025 (RMB thousand) | December 31, 2024 (RMB thousand) | | :--- | :--- | :--- | | Capital Expenditure Contracted but Not Provided for in the Condensed Consolidated Financial Statements – Property, Plant and Equipment | 5,002 | 6,217 | Definitions [Definitions of Terms](index=84&type=section&id=Definitions%20of%20Terms) This section provides definitions for key terms and abbreviations used in the report, covering professional vocabulary related to corporate governance, finance, business operations, and regulation, to ensure clear understanding of the report content - Defined key terms such as "associate," "Articles of Association," "Audit Committee," "CDMO," "CG Code," "China," "CMC," "Company," "Directors," "Dr. Qian," "Eli Lilly," "FDA," "GMP," "Group," "Hong Kong," "HK$," "IFRS," "IND," "Listing," "Listing Date," "Listing Rules," "Main Board," "Model Code," "NMPA," "Option," "Pre-IPO Share Incentive Scheme," "Prospectus," "R&D," "Reporting Period," "RMB," "Restricted Share Unit," "SFO," "Share Incentive Scheme," "Share(s)," "Shareholder(s)," "Stock Exchange," "subsidiary," "substantial shareholder," "Success Link," "US," and "US$"[275](index=275&type=chunk)[276](index=276&type=chunk)[277](index=277&type=chunk)[278](index=278&type=chunk)[279](index=279&type=chunk)[281](index=281&type=chunk)

[Interim Results and Dividends](index=3&type=section&id=1%20Interim%20Results%20and%20Dividends) The company reported a 19% decrease in basic profit but a 36% increase in profit attributable to shareholders and EPS, maintaining an interim dividend | Indicator | Six Months Ended June 30, 2025 (HKD) | Six Months Ended June 30, 2024 (HKD) | Change (%) | | :--- | :--- | :--- | :--- | | Basic Profit | 69,000,000 | 85,000,000 | -19% | | Profit Attributable to Shareholders | 122,000,000 | 89,705,882 | +36% | | EPS | 0.34 | 0.25 | +36% | | Interim Dividend Per Share | 0.10 | 0.10 | 0% | [Management Discussion and Analysis](index=3&type=section&id=1%20Management%20Discussion%20and%20Analysis) Management discusses business performance across property, ferry, and healthcare segments, along with market outlook and corporate governance [Business Review](index=3&type=section&id=1%20Business%20Review) The Group's operating profit is primarily from property rental income, bank interest, and revaluation gains, with property rental slightly down but new projects and healthcare services expanding - The Group's operating profit primarily derives from **shop and mall rental income**, **bank deposit interest income**, and **revaluation gains on investment properties**, with **no borrowings**[5](index=5&type=chunk) Property Development and Investment Business Overview | Indicator | Six Months Ended June 30, 2025 (HKD) | Change | | :--- | :--- | :--- | | Gross Rental Income from Shops and Malls | 60,000,000 | Decreased by 5% compared to the same period last year | | "The Avenue" Shop Occupancy Rate | 100% | | | "The Apex" Shop Occupancy Rate | 95% | | | "The Reach" Shop Occupancy Rate | 91% | | | "Green Code Plaza" Occupancy Rate | 87% | | | "Metro Harbour Plaza" Occupancy Rate | 80% | | - The Group will adjust and optimize its leasing strategy, introducing new brands and operators to maintain gross rental income and occupancy rates[6](index=6&type=chunk) - The "Grand Montara" joint venture development project has delivered **1,748 residential units** to buyers, with some units arranged for rental to increase recurring income[7](index=7&type=chunk) - The residential portion of "The Horizon" redevelopment project has been approved for conversion to a youth hostel, operated by Tung Wah Group of Hospitals, and began collecting market rent at the end of June this year[8](index=8&type=chunk) Acquisition of "Grandland Centre (Tsuen Wan)" Shops | Indicator | Details | | :--- | :--- | | Acquisition Consideration | HKD 260 million | | Gross Floor Area | Approximately 12,720 sq ft | | Monthly Rental and License Fee Income (August 2025) | Approximately HKD 1.22 million | | Annualized Gross Rental Yield | Approximately 5.6% | | Intended Use | Investment | | Completion Date | Expected on or before September 30, 2025 | Ferry, Shipyard, and Related Business Performance | Indicator | Six Months Ended June 30, 2025 (HKD) | Same Period Last Year (HKD) | Change | | :--- | :--- | :--- | | Loss Recorded | 12,500,000 | 3,000,000 | Loss increased by 9,500,000 | | Main Reason for Increased Loss | Reduced revenue from "Bauhinia Victoria Harbour Cruise" due to a ferry engine replacement | | Improvement Measures | North Point to Kwun Tong dangerous goods vehicle ferry service has been approved for a price increase, with new fares effective April 12, 2025, expected to reduce losses in H2 | - Medical, healthcare, and beauty services offering specialized services at H Zentre in Tsim Sha Tsui showed **steady performance** and continued to record profits[12](index=12&type=chunk) - The Group's spinal and pain centers at "Mira Place" and "Metro Harbour Plaza" are gaining traction, with a physiotherapy center to be established at H Zentre, expected to operate within Q3 this year[12](index=12&type=chunk) AMOUR Medical Beauty Center Performance | Indicator | Six Months Ended June 30, 2025 (HKD) | Same Period Last Year (HKD) | Change | | :--- | :--- | :--- | | Revenue | 22,000,000 | 17,460,317 | Increased by 26% | | Prepaid Package Fees Received (not yet recognized in P&L) | 15,000,000 | | | - AMOUR Medical Beauty Center has **expanded its leased area** to provide an upgraded experience and accommodate increased client volume[13](index=13&type=chunk) - While healthcare and beauty businesses did not record net profit, **EBITDA was positive** overall[13](index=13&type=chunk) - The Group will continue to seek cooperation opportunities to expand its medical, healthcare, and beauty businesses[13](index=13&type=chunk) [Prospects](index=6&type=section&id=4%20Prospects) Global supply chains face US tariff impacts, but Hong Kong's trade hub status is mildly affected; property rental market is robust due to talent policies, and government initiatives are expected to drive economic growth - US tariff policies pose a significant impact on global supply chains, with Hong Kong's impact currently mild[14](index=14&type=chunk) Hong Kong Real Estate Market Index Changes | Indicator | As of End of June 2025 vs. End of December 2024 | | :--- | :--- | | Private Residential Property Price Index | Decreased by approximately 0.9% | | Private Residential Rental Index | Increased by approximately 1.6% | - Hong Kong government introduced various property market relaxation policies, but market recovery still needs time; private residential rental market benefits from talent policies and international education hub development, with strong demand[14](index=14&type=chunk) - Key government strategies include advancing the Northern Metropolis plan, developing the Hetao Shenzhen-Hong Kong Innovation and Technology Park, expanding the professional "Talent List," and simplifying talent admission scheme approval procedures[15](index=15&type=chunk) - The Hong Kong government continues to deepen its "Mega Event Economy" strategy, promoting large-scale international events, fireworks and drone shows, and carnivals to attract tourists and boost local retail, hotel, and catering sectors[15](index=15&type=chunk) - For the second half, the Group expects revenue primarily from **property rental and bank deposit interest income**, and will adjust leasing strategies, optimize tenant mix, and monitor the property market for investment opportunities[15](index=15&type=chunk) [Acknowledgement](index=7&type=section&id=5%20Acknowledgement) Mr. Lau Yam Chuen retired as a non-executive director on May 30, 2025, and the Board expressed gratitude for his 37 years of service - Mr. Lau Yam Chuen retired as a non-executive director of the Company on **May 30, 2025**[17](index=17&type=chunk) - The Board expressed its sincere gratitude to Mr. Lau for his contributions to the Company over the past **thirty-seven years**[17](index=17&type=chunk) [Financial Review](index=7&type=section&id=5%20Financial%20Review) The Group's revenue decreased by 5% due to reduced ferry business, but net profit after tax increased by 39%, with a stable capital structure and increased shareholder equity Group Financial Performance Overview | Indicator | Six Months Ended June 30, 2025 (HKD) | Same Period Last Year (HKD) | Change | | :--- | :--- | :--- | | Revenue | 199,000,000 | 210,000,000 | Decreased by approximately 5% | | Consolidated Net Profit After Tax | 121,000,000 | 87,000,000 | Increased by approximately 39% | - The decrease in revenue was primarily due to reduced income from the ferry, shipyard, and related businesses[18](index=18&type=chunk) Liquidity, Financial Resources, and Capital Structure | Indicator | June 30, 2025 (HKD) | December 31, 2024 (HKD) | Change | | :--- | :--- | :--- | | Shareholders' Equity | 7,100,000,000 | 7,029,702,970 | Increased by approximately 1% | | Current Assets | 2,332,000,000 | 3,866,733,000 | | | Current Liabilities | 395,000,000 | 228,010,000 | | | Current Ratio | 5.9 times | 16.96 times | Decreased | | Capital Structure | No change | No change | | | Bank Borrowings | None | None | | - The increase in shareholders' equity was mainly due to **profit from property leasing and revaluation gains on investment properties**, net of dividends paid[19](index=19&type=chunk) - The decrease in the current ratio was primarily due to a **reduction in inventories**[20](index=20&type=chunk) Staff and Remuneration Policy | Indicator | Details | | :--- | :--- | | Number of Employees (June 30, 2025) | Approximately 318 | | Remuneration Determination | Based on market trends and industry salary levels | | Year-end Bonus | Discretionary, based on individual employee performance | | Other Benefits | Medical insurance, retirement protection schemes, employee training, and education allowances | [Other Information](index=8&type=section&id=6%20Other%20Information) This section covers administrative matters, securities transactions, corporate governance, and director information changes [Closure of Register of Members](index=8&type=section&id=%E6%9A%AB%E5%81%9C%E8%BE%A6%E7%90%86%E8%82%A1%E4%BB%BD%E9%81%8E%E6%88%B6%E7%99%BB%E8%A8%98) The company will close its register of members on September 11 and 12, 2025, to determine eligibility for the interim dividend for the six months ended June 30, 2025 - The register of members will be closed on **Thursday, September 11, 2025, and Friday, September 12, 2025**[24](index=24&type=chunk) - All share transfer documents must be lodged with the share registrar by **4:30 p.m. on Wednesday, September 10, 2025**[24](index=24&type=chunk) [Purchase, Sale or Redemption of the Company's Listed Securities](index=8&type=section&id=%E8%B3%BC%E8%B2%B7%E3%80%81%E5%87%BA%E5%94%AE%E6%88%96%E8%B4%96%E5%9B%9E%E6%9C%AC%E5%85%AC%E5%8F%B8%E4%B9%8B%E4%B8%8A%E5%B8%82%E8%AD%89%E5%88%B8) During the review period, neither the company nor its subsidiaries purchased, sold, or redeemed any of its listed securities - Neither the Company nor any of its subsidiaries purchased, sold, or redeemed any of the Company's listed securities[25](index=25&type=chunk) [Arrangements to Purchase Shares, Warrants, Options or Debentures](index=8&type=section&id=%E8%B3%BC%E8%B2%B7%E8%82%A1%E4%BB%BD%E3%80%81%E8%AA%8D%E8%82%A1%E6%AC%8A%E8%AD%89%E3%80%81%E8%B3%BC%E8%82%A1%E6%AC%8A%E6%88%96%E5%82%B5%E5%88%B8%E4%B9%8B%E5%AE%89%E6%8E%92) No arrangements existed during the period for directors, chief executives, or their associates to benefit from purchasing the company's or other entities' securities - Neither the Company nor any of its subsidiaries participated in any arrangements during the period that would enable directors, chief executives, or their spouses/children under 18 to benefit from purchasing shares, options, debentures, or warrants of the Company or any other body corporate[26](index=26&type=chunk) [Corporate Governance](index=8&type=section&id=%E4%BC%81%E6%A5%AD%E7%AE%A1%E6%B2%BB) The company maintains high corporate governance standards and has complied with the Corporate Governance Code in Appendix C1 of the Listing Rules - The Company has complied with the code provisions of the Corporate Governance Code set out in Appendix C1 to the Listing Rules[27](index=27&type=chunk) [Directors' Securities Transactions](index=8&type=section&id=%E8%91%A3%E4%BA%8B%E8%AD%89%E5%88%B8%E4%BA%A4%E6%98%93) All directors complied with the Model Code for Securities Transactions by Directors of Listed Issuers during the period, and the company adopted similar guidelines for employees - All directors of the Company complied with the required standards set out in the Model Code for Securities Transactions by Directors of Listed Issuers for the six months ended June 30, 2025[28](index=28&type=chunk) - The Company has also adopted written guidelines for relevant employees that are no less exacting than those set out in the Model Code[28](index=28&type=chunk) [Audit Committee](index=9&type=section&id=%E5%AF%A9%E6%A0%B8%E5%A7%94%E5%93%A1%E6%9C%83) The Audit Committee reviewed the Group's accounting principles, internal controls, and financial reporting, and had no disagreements with the unaudited interim financial report, which was reviewed by KPMG - The Audit Committee met in August 2025 to review the Group's accounting principles and practices, internal controls, and financial reporting matters[30](index=30&type=chunk) - The unaudited interim financial report for the six months ended June 30, 2025, was reviewed by the Audit Committee, with no disagreements[30](index=30&type=chunk) - The interim financial report was reviewed by KPMG in accordance with Hong Kong Standard on Review Engagements 2410[30](index=30&type=chunk) [Remuneration Committee](index=9&type=section&id=%E8%96%AA%E9%85%AC%E5%A7%94%E5%93%A1%E6%9C%83) The Remuneration Committee met in May 2025 and is composed of three independent non-executive directors and two executive directors - The Remuneration Committee met in **May 2025**[31](index=31&type=chunk) - The Remuneration Committee currently comprises **three independent non-executive directors and two executive directors**[31](index=31&type=chunk) [Forward-Looking Statements](index=9&type=section&id=%E5%89%8D%E7%9E%BB%E6%80%A7%E9%99%B3%E8%BF%B0) This interim report contains forward-looking statements based on current beliefs and expectations, but actual results may differ significantly due to uncontrollable risks and uncertainties - This interim report contains certain forward-looking statements based on the current beliefs, assumptions, and expectations of the Company's Board of Directors regarding the industry and markets in which it operates[32](index=32&type=chunk) - Actual results may differ materially from those expressed or implied by such forward-looking statements due to risks, uncertainties, and other factors beyond the Company's control[32](index=32&type=chunk) [Changes in Directors' Information](index=9&type=section&id=%E8%91%A3%E4%BA%8B%E8%B3%87%E6%96%99%E4%B9%8B%E8%AE%8A%E5%8B%95) Dr. Lee Ka Yan was awarded the Gold Bauhinia Star (GBS) by the HKSAR Government on July 1, 2025 - Dr. Lee Ka Yan was awarded the **Gold Bauhinia Star (GBS)** by the Government of the Hong Kong Special Administrative Region on **July 1, 2025**[33](index=33&type=chunk) [Disclosure of Interests](index=10&type=section&id=8%20Disclosure%20of%20Interests) This section details the interests and short positions of directors and substantial shareholders in the company's shares and related corporations as of June 30, 2025, in compliance with relevant regulations [Directors' Interests in Shares](index=10&type=section&id=%E8%91%A3%E4%BA%8B%E6%96%BC%E8%82%A1%E4%BB%BD%E4%B9%8B%E6%AC%8A%E7%9B%8A) This sub-section details the long positions of the company's directors in its shares as of June 30, 2025 Directors' Interests in the Company's Shares (Long Positions) | Director's Name | Personal Interests (Number of Shares) | Corporate Interests (Number of Shares) | Family Interests (Number of Shares) | Total Interests (Number of Shares) | Approximate Percentage of Total Issued Shares | | :--- | :--- | :--- | :--- | :--- | :--- | | Dr. Lee Ka Yan | 150,000 | – | – | 150,000 | 0.04% | | Mr. Lee Ning | – | – | 119,017,090 | 119,017,090 | 33.41% | | Mr. Lee Ka Ho | 180,000 | – | – | 180,000 | 0.05% | | Mr. Au Siu Kee | – | – | – | – | 0.00% | | Mr. Ho Hau Cheung | 3,313,950 | – | – | 3,313,950 | 0.93% | | Ms. Wong Yu Pui | – | – | – | – | 0.00% | | Mr. Wu King Cheong | – | – | – | – | 0.00% | | Mr. Chan Wai Yan | – | – | – | – | 0.00% | - Mr. Lee Ning is deemed to be interested in **119,017,090 shares** as his spouse is one of the discretionary beneficiaries of two discretionary trusts[34](index=34&type=chunk)[40](index=40&type=chunk) - Mr. Lee Ning is also deemed to be interested in **5 shares (50%) of 2OK Company Limited** and **70 shares (70%) of Wai Hung Company Limited**[35](index=35&type=chunk)[36](index=36&type=chunk)[40](index=40&type=chunk) [Substantial Shareholders and Others](index=12&type=section&id=%E4%B8%BB%E8%A6%81%E8%82%A1%E6%9D%B1%E5%8F%8A%E5%85%B6%E4%BB%96) This sub-section lists the interests of substantial shareholders in the company's shares as of June 30, 2025 Substantial Shareholders' Interests in the Company's Shares | Substantial Shareholder | Number of Shares Held | Approximate Percentage of Total Issued Shares | | :--- | :--- | :--- | | Henderson Land Development Company Limited | 119,017,090 | 33.41% | | Pataca Enterprises Limited | 119,017,090 | 33.41% | | Wiselin Investment Limited | 48,817,090 | 13.70% | | Henderson Investment Limited | 119,017,090 | 33.41% | | Hopkins (Cayman) Limited | 119,017,090 | 33.41% | | Rimmer (Cayman) Limited | 119,017,090 | 33.41% | | Riddick (Cayman) Limited | 119,017,090 | 33.41% | | Graf Investment Limited | 23,400,000 | 6.57% | | Mount Sherpa Limited | 23,400,000 | 6.57% | | Paillard Investment Limited | 23,400,000 | 6.57% | - The aforementioned interests are primarily held through **Henderson Land Development Company Limited and its subsidiaries**, **Henderson Investment Limited and its subsidiaries**, and related trusts[40](index=40&type=chunk) [Interim Financial Report](index=14&type=section&id=12%20Interim%20Financial%20Report) This section presents the unaudited interim financial statements, including the consolidated statement of profit or loss, comprehensive income, financial position, changes in equity, and cash flows, along with detailed notes [Consolidated Statement of Profit or Loss](index=14&type=section&id=12%20Consolidated%20Statement%20of%20Profit%20or%20Loss) For the six months ended June 30, 2025, the Group's revenue slightly decreased, but profit for the period and profit attributable to shareholders significantly increased due to substantial investment property revaluation gains Key Data from Consolidated Statement of Profit or Loss | Indicator | Six Months Ended June 30, 2025 (HKD '000) | Six Months Ended June 30, 2024 (HKD '000) | Change (%) | | :--- | :--- | :--- | :--- | | Revenue | 199,158 | 210,743 | -5.5% | | Direct costs | (120,811) | (130,787) | -7.6% | | Other income | 28,154 | 34,824 | -19.2% | | Other net income | 14,734 | 6,318 | +133.2% | | Valuation gains on investment properties | 51,912 | 2,020 | +2479.8% | | Operating profit | 113,085 | 72,436 | +56.1% | | Profit before tax | 121,846 | 95,617 | +27.4% | | Taxation | (532) | (8,137) | -93.5% | | Profit for the period | 121,314 | 87,480 | +38.7% | | Profit attributable to equity holders of the Company | 121,860 | 89,596 | +36.0% | | Earnings per share (basic and diluted) | 0.34 | 0.25 | +36.0% | [Consolidated Statement of Profit or Loss and Other Comprehensive Income](index=15&type=section&id=13%20Consolidated%20Statement%20of%20Profit%20or%20Loss%20and%20Other%20Comprehensive%20Income) For the six months ended June 30, 2025, the Group's total comprehensive income significantly increased, primarily driven by profit for the period and net changes in financial asset revaluation reserves Key Data from Consolidated Statement of Profit or Loss and Other Comprehensive Income | Indicator | Six Months Ended June 30, 2025 (HKD '000) | Six Months Ended June 30, 2024 (HKD '000) | | :--- | :--- | :--- | | Profit for the period | 121,314 | 87,480 | | Net change in revaluation reserve for securities | 10,749 | 10,270 | | Total comprehensive income for the period | 132,063 | 97,750 | | Total comprehensive income attributable to equity holders of the Company | 132,609 | 99,866 | [Consolidated Statement of Financial Position](index=16&type=section&id=14%20Consolidated%20Statement%20of%20Financial%20Position) As of June 30, 2025, the Group's total assets significantly increased due to substantial growth in investment properties, while inventory decreased sharply due to reclassification, and shareholders' equity saw moderate growth Key Data from Consolidated Statement of Financial Position | Indicator | June 30, 2025 (HKD '000) | December 31, 2024 (HKD '000) | Change (%) | | :--- | :--- | :--- | :--- | | **Assets** | | | | | Investment properties | 4,285,490 | 2,495,790 | +71.7% | | Other property, plant and equipment | 77,958 | 60,015 | +29.9% | | Interests in associates | 5,574 | 5,430 | +2.6% | | Interests in joint ventures | 666,250 | 691,388 | -3.6% | | Other financial assets | 154,983 | 132,965 | +16.6% | | Inventories | 75,381 | 1,803,089 | -95.8% | | Trade and other receivables | 179,235 | 186,214 | -3.7% | | Cash and bank balances | 2,077,414 | 1,876,592 | +10.7% | | **Liabilities** | | | | | Trade and other payables | (368,852) | (206,577) | +78.5% | | Tax payable | (17,075) | (16,179) | +5.5% | | Deferred tax liabilities | (91,973) | (87,756) | +4.8% | | **Equity** | | | | | Total equity attributable to equity holders of the Company | 7,141,887 | 7,062,719 | +1.1% | | Total equity | 7,131,905 | 7,053,283 | +1.1% | - The significant increase in investment properties was primarily due to the reclassification of the residential portion of "The Horizon" to investment properties for youth hostel use, at a cost of **HKD 1.728 billion**[75](index=75&type=chunk) - The substantial decrease in inventories was mainly due to the reclassification of "completed properties held for sale" to investment properties[81](index=81&type=chunk) [Consolidated Statement of Changes in Equity](index=18&type=section&id=16%20Consolidated%20Statement%20of%20Changes%20in%20Equity) For the six months ended June 30, 2025, total equity attributable to equity holders of the Company increased to HKD 7.142 billion, driven by profit for the period and other comprehensive income, partially offset by dividends paid Key Data from Consolidated Statement of Changes in Equity (Attributable to Equity Holders of the Company) | Indicator | June 30, 2025 (HKD '000) | December 31, 2024 (HKD '000) | Change (HKD '000) | | :--- | :--- | :--- | :--- | | Balance at beginning/end of period | 7,062,719 | 6,970,577 | +92,142 | | Profit for the period | 121,860 | 89,596 | +32,264 | | Other comprehensive income | 10,749 | 10,270 | +479 | | Dividends approved in respect of prior financial year | (53,441) | (53,441) | 0 | | Balance at end of period/year | 7,141,887 | 7,062,719 | +79,168 | [Condensed Consolidated Cash Flow Statement](index=19&type=section&id=17%20Condensed%20Consolidated%20Cash%20Flow%20Statement) For the six months ended June 30, 2025, the Group generated significant net cash from investing activities, primarily from joint venture repayments and advances, and a decrease in bank deposits over three months, with positive operating cash flow and financing activities mainly for dividend payments Key Data from Condensed Consolidated Cash Flow Statement | Indicator | Six Months Ended June 30, 2025 (HKD '000) | Six Months Ended June 30, 2024 (HKD '000) | | :--- | :--- | :--- | | Net cash generated from/(used in) operating activities | 8,894 | (8,246) | | Net cash generated from investing activities | 980,705 | 54,118 | | Net cash used in financing activities | (57,640) | (57,435) | | Net increase/(decrease) in cash and cash equivalents | 931,959 | (11,563) | | Cash and cash equivalents at June 30 | 1,427,357 | 89,493 | - Net cash from investing activities primarily resulted from **repayment of loans from joint ventures (HKD 34 million)**, **advances received from joint ventures (HKD 180 million)**, and a **decrease in bank deposits with maturities over three months (HKD 731 million)**[49](index=49&type=chunk) [Notes to the Unaudited Interim Financial Report](index=20&type=section&id=18%20Notes%20to%20the%20Unaudited%20Interim%20Financial%20Report) These notes provide detailed explanations for the unaudited interim financial report, covering accounting policies, segment reporting, property valuations, and related party transactions [Basis of Preparation](index=20&type=section&id=1.%20%E7%B7%A8%E8%A3%BD%E5%9F%BA%E7%A4%8E) The interim financial report is prepared in accordance with HKAS 34 and Listing Rules, using consistent accounting policies, and has been reviewed by KPMG - This interim financial report is prepared in accordance with the **Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited** and **Hong Kong Accounting Standard 34** issued by the Hong Kong Institute of Certified Public Accountants[50](index=50&type=chunk) - The accounting policies adopted are consistent with those used in the 2024 annual financial statements, except for changes described in Note 2[50](index=50&type=chunk) - This interim financial report is unaudited but has been reviewed by KPMG in accordance with Hong Kong Standard on Review Engagements 2410[51](index=51&type=chunk) [Changes in Accounting Policies](index=21&type=section&id=2.%20%E6%9C%83%E8%A8%88%E6%94%BF%E7%AD%96%E8%AE%8A%E5%8B%95) The Group applied HKAS 21 (Revised) regarding foreign exchange rates, which had no significant impact on the current or prior period's financial results - The Group has applied **HKAS 21 (Revised), *The Effects of Changes in Foreign Exchange Rates: Lack of Exchangeability*** to the interim financial report for the current accounting period[54](index=54&type=chunk) - This amendment did not have a significant impact on how the Group's results and financial position for the current or prior accounting periods are prepared or presented in the interim financial report[54](index=54&type=chunk) [Segment Reporting](index=21&type=section&id=3.%20%E5%88%86%E9%83%A8%E5%A0%B1%E5%91%8A) The Group reports across five segments: property development, property investment, ferry/shipyard, medical/healthcare/beauty, and securities investment, with most revenue and profit from Hong Kong - The Group presents **five reportable segments**: property development, property investment, ferry, shipyard and related businesses, medical, healthcare and beauty services, and securities investment[57](index=57&type=chunk) - The vast majority of the Group's revenue and operating profit are derived from Hong Kong, thus no geographical segment information is provided[56](index=56&type=chunk) Segment Revenue (from External Customers, HKD '000) | Segment | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :--- | :--- | :--- | | Property Investment | 82,195 | 87,045 | | Ferry, Shipyard and Related Businesses | 73,871 | 88,923 | | Medical, Healthcare and Beauty Services | 25,477 | 18,954 | | Securities Investment | 5,695 | 4,185 | | Others | 40,074 | 46,460 | | **Total** | **227,312** | **245,567** | Revenue Classification (HKD '000) | Service Item | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :--- | :--- | :--- | | Ferry business revenue | 47,633 | 51,031 | | Shipyard business revenue | 23,064 | 32,248 | | Medical, healthcare and beauty services | 25,401 | 17,475 | | Property investment | 60,301 | 63,224 | | Securities investment | 4,343 | 1,329 | | Others | 38,416 | 45,436 | | **Total** | **199,158** | **210,743** | Segment Profit/(Loss) (HKD '000) | Segment | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :--- | :--- | :--- | | Property Development | (6,039) | (2,966) | | Property Investment | 83,585 | 45,416 | | Ferry, Shipyard and Related Businesses | (12,510) | (2,975) | | Medical, Healthcare and Beauty Services | (3,785) | (17,087) | | Securities Investment | 15,374 | 4,500 | | Others | 36,460 | 45,548 | | **Total** | **113,085** | **72,436** | - Segment results for "Property Investment" include **valuation gains on investment properties of HKD 51,912,000** (2024: HKD 2,020,000)[68](index=68&type=chunk) [Other Net Income](index=25&type=section&id=4.%20%E5%85%B6%E4%BB%96%E6%B7%A8%E6%94%B6%E5%85%A5) Other net income significantly increased, primarily driven by fair value changes of other financial assets designated at fair value through profit or loss Other Net Income Details (HKD '000) | Item | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :--- | :--- | :--- | | Fair value changes of other financial assets designated at fair value through profit or loss | 11,269 | 3,394 | | Miscellaneous income | 2,892 | 2,632 | | Income from sale of parts | 487 | 296 | | Net exchange gains/(losses) | 15 | (4) | | **Total** | **14,734** | **6,318** | [Profit Before Tax](index=26&type=section&id=5.%20%E9%99%A4%E7%A8%85%E5%89%8D%E6%BA%A2%E5%88%A9) This section details the components deducted from or included in the calculation of profit before tax, such as amortization, inventory costs, depreciation, and interest income Items Deducted From/(Included In) Profit Before Tax (HKD '000) | Item | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :--- | :--- | :--- | | Amortisation of land lease premiums | 685 | 685 | | Cost of inventories | 7,471 | 10,287 | | Depreciation – owned property, plant and equipment | 5,165 | 5,463 | | Depreciation – right-of-use assets | 3,722 | 3,474 | | Dividend income from listed investments | (4,343) | (1,329) | | Interest income | (39,957) | (48,418) | [Taxation](index=26&type=section&id=6.%20%E7%A8%85%E9%A0%85) The Group's tax expense significantly decreased, primarily due to a reduction in deferred tax and current tax Taxation Details (HKD '000) | Item | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :--- | :--- | :--- | | Current tax – Hong Kong Profits Tax | 1,520 | 3,427 | | Deferred tax | (988) | 4,710 | | **Total** | **532** | **8,137** | - Hong Kong Profits Tax provision is calculated at an estimated annual effective tax rate of **16.5%**, with eligible subsidiaries applying a **two-tiered tax rate** (8.25% for the first HKD 2 million, 16.5% thereafter)[70](index=70&type=chunk) [Dividends](index=27&type=section&id=7.%20%E8%82%A1%E6%81%AF) The interim dividend of HKD 0.10 per ordinary share was declared post-period end, while a final dividend of HKD 0.15 per share for the prior financial year was approved and paid during the interim period - An interim dividend of **HKD 0.10 per ordinary share** (totaling HKD 35,627,000) declared and paid after the period end was not recognized as a liability at the reporting date[72](index=72&type=chunk) - A final dividend of **HKD 0.15 per ordinary share** (totaling HKD 53,441,000) in respect of the prior financial year was approved and paid during the interim period[73](index=73&type=chunk) [Earnings Per Share](index=28&type=section&id=8.%20%E6%AF%8F%E8%82%A1%E7%87%9F%E5%88%A9) Basic and diluted earnings per share were HKD 0.34, calculated based on profit attributable to equity holders and issued shares, with no dilutive potential ordinary shares - Basic and diluted earnings per share were **HKD 0.34**, calculated based on profit attributable to equity holders of the Company of **HKD 121,860,000** and **356,273,883 issued shares**[74](index=74&type=chunk) - There were **no potentially dilutive ordinary shares** for the six months ended June 30, 2025, and 2024[74](index=74&type=chunk) [Investment Properties and Other Property, Plant and Equipment](index=28&type=section&id=9.%20%E7%89%A9%E6%A5%AD%E6%8A%95%E8%B3%87%E5%8F%8A%E5%85%B6%E4%BB%96%E7%89%A9%E6%A5%AD%E3%80%81%E5%BB%A0%E6%88%BF%E5%8F%8A%E6%A9%9F%E5%99%A8) The residential portion of "The Horizon" was reclassified to investment properties for youth hostel use, and all investment properties were revalued, resulting in a net gain - The residential portion of "The Horizon" has been approved by the Urban Renewal Authority for conversion to a youth hostel, and the related balance of **HKD 1.728 billion** has been reclassified to "Investment Properties"[75](index=75&type=chunk) - All investment properties were revalued as of June 30, 2025, with a **net gain of HKD 51,912,000** recognized during the period[76](index=76&type=chunk) - For the six months ended June 30, 2025, the Group recognized an increase in **right-of-use assets of HKD 21,713,000**[77](index=77&type=chunk) [Interests in Associates](index=29&type=section&id=10.%20%E8%81%AF%E7%87%9F%E5%85%AC%E5%8F%B8%E6%AC%8A%E7%9B%8A) This section details the Group's interests in associates, including its share of net assets and receivables Interests in Associates Details (HKD '000) | Item | June 30, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Share of net assets | 376 | 973 | | Amounts due from associates | 12,423 | 11,634 | | Share of net liabilities | (431) | (383) | | Less: Impairment loss | (6,794) | (6,794) | | **Total** | **5,574** | **5,430** | [Interests in Joint Ventures](index=29&type=section&id=11.%20%E5%90%88%E7%87%9F%E4%BC%81%E6%A5%AD%E6%AC%8A%E7%9B%8A) This section outlines the Group's interests in joint ventures, including its share of net assets and advances Interests in Joint Ventures Details (HKD '000) | Item | June 30, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Share of net assets | 547,900 | 539,035 | | Share of net liabilities | (150) | (147) | | Advances to joint ventures | 118,500 | 152,500 | | **Total** | **666,250** | **691,388** | - During the six months ended June 30, 2025, **HKD 34,000,000** was recovered from joint ventures[80](index=80&type=chunk) [Inventories](index=30&type=section&id=12.%20%E5%AD%98%E8%B2%A8) Inventories significantly decreased due to the reclassification of completed properties held for sale to investment properties Inventories Details (HKD '000) | Item | June 30, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Properties under development for sale | 6,933 | 6,933 | | Completed properties held for sale | 61,076 | 1,788,719 | | Other operations | 7,372 | 7,437 | | **Total** | **75,381** | **1,803,089** | - The significant decrease in completed properties held for sale was primarily due to the reclassification as described in Note 9(a)[81](index=81&type=chunk) [Trade and Other Receivables](index=30&type=section&id=13.%20%E8%B2%BF%E6%98%93%E5%8F%8A%E5%85%B6%E4%BB%96%E6%87%89%E6%94%B6%E8%B3%A6%E6%AC%BE) This section provides a breakdown of non-current and current trade and other receivables, including an aging analysis of trade receivables Non-Current Trade and Other Receivables (HKD '000) | Item | June 30, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Instalment receivables | 69,771 | 83,304 | | Other receivables and prepayments | 2,869 | – | | **Total** | **72,640** | **83,304** | Current Trade and Other Receivables (HKD '000) | Item | June 30, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Trade receivables (net of loss allowance) | 72,428 | 72,956 | | Other receivables and prepayments | 71,428 | 79,285 | | Amounts due from joint ventures | 35,379 | 33,973 | | **Total** | **179,235** | **186,214** | Aging Analysis of Trade Receivables (HKD '000) | Aging | June 30, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Current | 33,303 | 32,465 | | Overdue 1 to 3 months | 33,001 | 30,805 | | Overdue over 3 months but less than 12 months | 5,740 | 9,503 | | Overdue over 12 months | 384 | 183 | | **Total** | **72,428** | **72,956** | [Cash and Bank Balances](index=33&type=section&id=14.%20%E7%8F%BE%E9%87%91%E5%8F%8A%E9%8A%80%E8%A1%8C%E7%B5%90%E9%A4%98) This section details the components of cash and bank balances, distinguishing between those in the consolidated statement of financial position and cash and cash equivalents in the cash flow statement Cash and Bank Balances Details (HKD '000) | Item | June 30, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Deposits with banks and other financial institutions | 2,007,042 | 1,799,001 | | Bank balances and cash | 70,372 | 77,591 | | **Cash and bank balances in the consolidated statement of financial position** | **2,077,414** | **1,876,592** | | Less: Bank deposits with maturities over three months | (650,057) | (1,381,194) | | **Cash and cash equivalents in the condensed consolidated cash flow statement** | **1,427,357** | **495,398** | [Trade and Other Payables](index=34&type=section&id=15.%20%E8%B2%BF%E6%98%93%E5%8F%8A%E5%85%B6%E4%BB%96%E6%87%89%E4%BB%98%E8%B3%A6%E6%AC%BE) Total trade and other payables increased, including an unsecured, interest-free, and repayable-on-demand amount from a joint venture - Total trade and other payables amounted to **HKD 368,852,000** (December 31, 2024: HKD 206,577,000)[46](index=46&type=chunk)[89](index=89&type=chunk) - An amount of **HKD 180,000,000** was received from a joint venture, which is unsecured, interest-free, and repayable on demand[89](index=89&type=chunk) Aging Analysis of Trade Payables (HKD '000) | Aging | June 30, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Current or due within one month | 99,910 | 118,912 | | Due after one month but within three months | 931 | 1,256 | | Due after three months but within twelve months | 4 | – | | Due over twelve months | 17 | 2 | | **Total** | **100,862** | **120,170** | [Share Capital](index=34&type=section&id=16.%20%E8%82%A1%E6%9C%AC) The issued and fully paid ordinary share capital remained unchanged during the period Issued and Fully Paid Ordinary Shares | Item | June 30, 2025 ('000 shares) | June 30, 2025 (HKD '000) | December 31, 2024 ('000 shares) | December 31, 2024 (HKD '000) | | :--- | :--- | :--- | :--- | :--- | | At beginning/end of period/year | 356,274 | 1,754,801 | 356,274 | 1,754,801 | [Fair Value Measurement of Financial Instruments](index=35&type=section&id=17.%20%E9%87%91%E8%9E%8D%E5%B7%A5%E5%85%B7%E7%9A%84%E5%85%AC%E5%85%81%E5%83%B9%E5%80%BC%E8%A8%88%E9%87%8F) The Group's other financial assets are classified as Level 1 fair value measurements, with no significant differences between carrying amounts and fair values - The fair value measurements of the Group's other financial assets are classified as **Level 1**[93](index=93&type=chunk) - For the six months ended June 30, 2025, there were **no transfers between Level 1 and Level 2** or transfers into or out of Level 3[93](index=93&type=chunk) - There are **no significant differences** between the carrying amounts of the Group's financial instruments, stated at cost or amortized cost, and their fair values[94](index=94&type=chunk) [Contingent Liabilities](index=35&type=section&id=18.%20%E6%88%96%E7%84%B6%E8%B2%A0%E5%82%B5) The company has provided guarantees for credit arrangements to its wholly-owned subsidiaries, with a maximum liability of HKD 65,000, but directors do not expect any claims - The Company has issued guarantees to certain suppliers for credit arrangements granted to or by its wholly-owned subsidiaries[95](index=95&type=chunk) - At the reporting date, the maximum liability under guarantees issued by the Company for amounts owed by its wholly-owned subsidiaries to relevant parties was **HKD 65,000** (December 31, 2024: HKD 57,000)[95](index=95&type=chunk) - The directors do not believe that any claims will be made against the Company under these guarantees[95](index=95&type=chunk) [Significant Related Parties and Related Party Transactions](index=36&type=section&id=19.%20%E9%87%8D%E5%A4%A7%E4%B9%8B%E9%97%9C%E9%80%A3%E4%BA%BA%E5%A3%AB%E5%8F%8A%E9%97%9C%E9%80%A3%E4%BA%A4%E6%98%93) This section details significant related party transactions, including development agreements, leasing arrangements, and management fees with Henderson Land Development and its associates, all compliant with Listing Rules - The Group entered into a development agreement with **Henderson Land Development Company Limited ("Henderson Land") and its subsidiaries** to share sales proceeds and development expenses for the residential portion of "Metro Harbour Plaza"[96](index=96&type=chunk) - The Group engaged a wholly-owned subsidiary of Henderson Land as the leasing and promotion agent for "Metro Harbour Plaza," incurring **remuneration expenses of HKD 1,378,000** during the period[96](index=96&type=chunk) - The Group entered into an agreement with a subsidiary of Henderson Land to lease a shop in "Mira Place Tower One" for the sale of "Tong Chau Street Property," with **no agency fees collected** during the period[98](index=98&type=chunk)[99](index=99&type=chunk) - A subsidiary of the Company entered into new lease agreements with a subsidiary of Miramar Hotel and Investment Company, Limited (an associate of Henderson Land) to lease "Property Two" and "Property Three," recognizing **right-of-use assets of approximately HKD 20,954,000**[104](index=104&type=chunk)[105](index=105&type=chunk)[106](index=106&type=chunk) - The total management and air-conditioning fees payable under the new lease agreements (excluding government rates) are capped at **HKD 1,100,000 annually** for the period from June 10, 2025, to December 31, 2025[107](index=107&type=chunk) - For the period ended June 30, 2025, the landlord charged the Group total management and air-conditioning fees of **HKD 770,000**[107](index=107&type=chunk) - Henderson Land is a substantial shareholder of the Company, with an interest in approximately **33.41% of the Company's total issued shares**[109](index=109&type=chunk) - All related party transactions complied with the requirements of **Chapter 14A of the Listing Rules**[109](index=109&type=chunk)[110](index=110&type=chunk) [Non-Adjusting Events After the Reporting Period](index=41&type=section&id=20.%20%E5%A0%B1%E5%91%8A%E6%9C%9F%E6%9C%AB%E5%BE%8C%E9%9D%9E%E8%AA%BF%E6%95%B4%E4%BA%8B%E9%A0%85) Post-period events include the declaration of an interim dividend and the acquisition of an investment property in Tsuen Wan for HKD 260 million - The directors declared an interim dividend after the reporting period (details in Note 7(a))[111](index=111&type=chunk) - On August 19, 2025, a wholly-owned subsidiary of the Group entered into a provisional agreement with an independent third-party vendor to acquire a property in Tsuen Wan for **HKD 260 million** for investment purposes[111](index=111&type=chunk) [Review Report of the Independent Auditor](index=42&type=section&id=40%20Review%20Report%20of%20the%20Independent%20Auditor) KPMG reviewed the interim financial report, which is less extensive than an audit, and found no material non-compliance with HKAS 34 - KPMG has reviewed the Company's interim financial report[112](index=112&type=chunk) - A review is substantially less in scope than an audit conducted in accordance with Hong Kong Standards on Auditing, and consequently, **no audit opinion is expressed**[113](index=113&type=chunk) - Based on the review, nothing has come to the auditor's attention that causes them to believe the interim financial report is not prepared, in all material respects, in accordance with Hong Kong Accounting Standard 34[114](index=114&type=chunk)

59 國家及地區 59 國家及地區 18,000+ 全球員工 18,000+ 全球員工 5,600 平方呎佔地及設施 萬 5,600 平方呎佔地及設施 萬 2,300+ 自置營運車輛 2,300+ 自置營運車輛 附註：截至二零二五年六月三十日數據 附註：截至二零二五年六月三十日數據 目錄 目錄 資料概覽 資料概覽 02 公司資料及重要日期 02 公司資料及重要日期 03 財務摘要 03 財務摘要 06 業績概覽 06 業績概覽 07 管理層討論及分析 07 管理層討論及分析 07 業務回顧 07 業務回顧 12 財務回顧 12 財務回顧 12 員工及薪酬政策 12 員工及薪酬政策 13 企業管治及其他資料 13 企業管治及其他資料 20 獨立核數師審閱報告 20 獨立核數師審閱報告 22 中期財務報表 22 中期財務報表 49 釋義 49 釋義 公司資料及 重要日期 董事會 王衞先生（主席、非執行董事） 郭孔華先生（副主席、非執行董事） 執行董事 張炳銓先生（行政總裁） 鄭志偉先生 何捷先生 非執行董事 陳穎珊女士 OOI Bee Ti女士 獨立非執行董事 張惠民博士 黎壽昌先生 陳傳仁先生 黃汝璞女士 審核 ...

Financial Performance - Revenue for the six months ended June 30, 2025, reached RMB 905.0 million, an increase of 20.0% compared to RMB 754.2 million in the same period of 2024[14]. - Profit for the same period surged to RMB 127.8 million, reflecting an increase of 898.4% from RMB 12.8 million in 2024[15]. - Earnings per share attributable to ordinary equity holders increased to RMB 0.19, up 850.0% from RMB 0.02 in 2024[18]. - Revenue from cross-border logistics services rose by 25.0% from RMB 689.0 million to RMB 861.2 million, driven by an increase in service volume from 140,355 TEUs to 197,195 TEUs[29]. - Gross profit increased by approximately 21.0% from RMB 68.1 million to RMB 82.4 million, with a stable gross margin of 9.0% and 9.1% for the respective periods[31][32]. - Other income surged by approximately 1,722.0% from RMB 5.0 million to RMB 91.1 million, primarily due to asset optimization strategies[33]. - The company's net profit increased by approximately 898.4% from RMB 12.8 million to RMB 127.8 million for the current period[42]. - Total revenue for the six months ended June 30, 2025, was RMB 904,984,000, representing a 19.9% increase from RMB 754,238,000 in the same period of 2024[104]. - Gross profit for the same period was RMB 82,397 thousand, up 20.98% from RMB 68,104 thousand in 2024[87]. - Net profit for the period was RMB 127,813 thousand, a significant increase of 895.73% compared to RMB 12,806 thousand in 2024[89]. Operational Highlights - The container transportation volume for cross-border logistics services rose to 197,195 TEUs, a 40.5% increase from 140,355 TEUs in 2024[19]. - The self-operated cross-border shipping service volume was 50,733 billable tons, with an average price of RMB 836.5 per billable ton[23]. - The company generated RMB 43.8 million in revenue from leasing three vessels, with an average daily charter rate of RMB 101,262.7, an increase from RMB 81,865.7 in 2024[25]. - Revenue from customer contracts was RMB 861,156,000, up 20.7% from RMB 713,895,000 in the prior year[107]. - Cross-border logistics services generated RMB 786,826,000, an increase of 16.5% compared to RMB 675,633,000 in 2024[108]. Strategic Initiatives - The company plans to focus on three major opportunities: developing infrastructure projects along the Belt and Road Initiative, expanding cross-border e-commerce, and accelerating overseas warehouse layout[26]. - The company aims to maintain steady growth in revenue and profitability in the second half of 2025 through strategic initiatives in cross-border e-commerce and engineering logistics[26]. - The company will continue to innovate its business model to strengthen its industry position and provide long-term stable returns to shareholders[26]. Financial Position - As of June 30, 2025, the company's cash and bank balances were RMB 572.0 million, down from RMB 779.6 million as of December 31, 2024[46]. - Total borrowings decreased from RMB 84.7 million as of December 31, 2024, to RMB 68.1 million as of June 30, 2025[47]. - The company's total equity as of June 30, 2025, was RMB 1,557,897 thousand, slightly up from RMB 1,551,635 thousand in 2024[92]. - Current liabilities rose to RMB 393,101 thousand, compared to RMB 293,083 thousand at the end of 2024[90]. - The company’s cash and cash equivalents at the end of June 30, 2025, were RMB 560,424,000, down from RMB 766,105,000 at the beginning of the period[96]. Governance and Compliance - The company has adopted a corporate governance code to enhance shareholder value and accountability[71]. - The company maintains a balanced power structure with an executive board and independent non-executive directors[71]. - The company has confirmed compliance with all applicable provisions of the corporate governance code during the reporting period[72]. - The audit committee, consisting of three independent non-executive directors, reviewed the unaudited interim results for the six months ending June 30, 2025[85]. Shareholder Information - The board does not recommend the payment of an interim dividend for the six months ending June 30, 2025[83]. - The company implemented a share split effective July 28, 2025, changing the par value of shares from USD 0.0001 to USD 0.00005[67]. - As of June 30, 2025, the company has issued 286,269,156 shares, with Xu Xin and Li Yan holding 158,553,294 shares each, representing 55.39% ownership[77]. - Grand Sailing Limited and Lecang Altitude Limited each hold 75,896,322 shares, accounting for 26.51% of the total shares[78]. Cash Flow and Investments - The company's operating cash flow for the six months ended June 30, 2025, was RMB 25,051,000, a recovery from a negative cash flow of RMB 8,093,000 in the prior year[95]. - The company incurred a net cash outflow from investing activities of RMB 214,837,000 for the six months ended June 30, 2025, compared to a positive cash inflow of RMB 5,637,000 in 2024[96]. - The group acquired assets at a cost of RMB 86,980,000 for the six months ended June 30, 2025, up from RMB 26,494,000 in 2024[120]. Employee and Management Costs - The group employed 367 full-time employees as of June 30, 2025, with employee costs recognized as RMB 34.6 million during the period[66]. - The total remuneration for key management personnel increased to RMB 4,043,000 for the six months ended June 30, 2025, compared to RMB 2,935,000 in 2024, reflecting a 37.9% increase[129].

Corporate Information [The Board of Directors](index=3&type=section&id=THE%20BOARD%20OF%20DIRECTORS) The board comprises executive, non-executive, and independent non-executive directors, along with members of key committees - The Board of Directors includes executive directors **Wu Zhixiang** (Co-Chairman) and **Ma Heping** (CEO), non-executive directors **Liang Jianzhang** (Co-Chairman), **Jiang Hao**, **Xie Qinghua**, **Brent Richard Irvin**, and independent non-executive directors **Yang Jiahong**, **Dai Xiaojing**, and **Han Yuling**[5](index=5&type=chunk)[6](index=6&type=chunk) - The Audit Committee is chaired by **Yang Jiahong**, the Remuneration Committee by **Han Yuling**, the Nomination Committee by **Wu Zhixiang**, and the Environmental, Social and Governance Committee by **Yang Jiahong**[5](index=5&type=chunk)[6](index=6&type=chunk) [Company Secretary and Authorized Representatives](index=4&type=section&id=COMPANY%20SECRETARY%20AND%20AUTHORIZED%20REPRESENTATIVES) This section provides the company secretary and authorized representatives' names, and addresses for the registered office, headquarters, and principal place of business in Hong Kong - The Company Secretary and Authorized Representative is **Ms. Ma Li**, and **Mr. Ma Heping** is also an Authorized Representative[8](index=8&type=chunk)[9](index=9&type=chunk) - The company's headquarters is located at Tongcheng Travel Building, 66 Yunhui Road, Suzhou Industrial Park, Jiangsu Province, China[8](index=8&type=chunk)[9](index=9&type=chunk) [Legal Advisers and Auditor](index=5&type=section&id=LEGAL%20ADVISERS%20AND%20AUDITOR) This section lists the company's legal advisors in Hong Kong, US, China, and Cayman Islands, along with its auditor and principal bankers - Legal advisers include **Davis Polk & Wardwell** (Hong Kong and US law), **Zhong Lun Law Firm** (Chinese law), and **Conyers Dill & Pearman** (Cayman Islands law)[10](index=10&type=chunk)[11](index=11&type=chunk) - The company's auditor is **PricewaterhouseCoopers**[12](index=12&type=chunk)[13](index=13&type=chunk) - Principal bankers include **China Merchants Bank Beijing East Third Ring Branch** and **Bank of China Suzhou Industrial Park Branch**[12](index=12&type=chunk)[13](index=13&type=chunk) Key Highlights [1. Key Financial Metrics for the Three Months Ended June 30, 2025](index=7&type=section&id=1.%20KEY%20FINANCIAL%20METRICS%20FOR%20THE%20THREE%20MONTHS%20ENDED%20JUNE%2030,%202025) The company achieved significant financial growth in Q2 2025, with total revenue up 10.0%, adjusted EBITDA up 29.7%, and adjusted net profit up 18.0% Q2 2025 Key Financial Metrics | Indicator | Q2 2025 (RMB thousands) | Q2 2024 (RMB thousands) | YoY Change | | :--- | :--- | :--- | :--- | | Revenue | 4,669,431 | 4,245,357 | 10.0% | | Profit before income tax | 785,745 | 539,128 | 45.7% | | Profit for the period | 642,105 | 429,330 | 49.6% | | Adjusted EBITDA for the period | 1,185,177 | 913,465 | 29.7% | | Adjusted net profit for the period | 775,103 | 656,690 | 18.0% | | Adjusted EBITDA margin | 25.4% | 21.5% | 3.9 percentage points | | Adjusted net profit margin | 16.6% | 15.5% | 1.1 percentage points | [2. Financial Information by Segment (Three months ended June 30, 2025)](index=9&type=section&id=2.%20FINANCIAL%20INFORMATION%20BY%20SEGMENT%20(Three%20months%20ended%20June%2030,%202025)) Core online travel platform revenue grew 13.7% in Q2 2025, driven by accommodation and transportation, while resort revenue declined 8.0% due to Southeast Asia safety concerns Q2 2025 Segment Revenue and Operating Profit | Segment | Q2 2025 Revenue (RMB thousands) | Q2 2024 Revenue (RMB thousands) | YoY Change | Q2 2025 Operating Profit (RMB thousands) | Q2 2024 Operating Profit (RMB thousands) | | :--- | :--- | :--- | :--- | :--- | :--- | | Accommodation booking | 1,371,367 | 1,190,879 | 15.2% | - | - | | Transportation ticketing | 1,881,010 | 1,742,736 | 7.9% | - | - | | Other | 1,417,054 | 1,311,742 | 8.0% | - | - | | **Total Core Online Travel Platform Revenue** | **4,007,775** | **3,525,959** | **13.7%** | **1,070,334** | **858,389** | | **Total Resort Revenue** | **661,656** | **719,398** | **(8.0)%** | **4,427** | **673** | | **Total** | **4,669,431** | **4,245,357** | **10.0%** | **809,316** | **517,025** | - Unallocated items primarily include share-based compensation expenses, depreciation and amortization from acquisitions, fair value changes of financial investments, net other income/gains/losses, and certain corporate administrative expenses[21](index=21&type=chunk)[22](index=22&type=chunk) [3. Operating Metrics for the Three Months Ended June 30, 2025](index=10&type=section&id=3.%20OPERATING%20METRICS%20FOR%20THE%20THREE%20MONTHS%20ENDED%20JUNE%2030,%202025) Average monthly paying users (MPUs) grew 9.2% to 46.4 million in Q2 2025, indicating a continuously expanding user base Q2 2025 Operating Metrics | Indicator | Q2 2025 (million people) | Q2 2024 (million people) | YoY Change | | :--- | :--- | :--- | :--- | | Average Monthly Paying Users | 46.4 | 42.5 | 9.2% | [4. Key Financial Metrics for the Six Months Ended June 30, 2025](index=10&type=section&id=4.%20KEY%20FINANCIAL%20METRICS%20FOR%20THE%20SIX%20MONTHS%20ENDED%20JUNE%2030,%202025) For the six months ended June 30, 2025, the company showed strong financial performance, with total revenue up 11.5%, adjusted EBITDA up 35.2%, and adjusted net profit up 28.6% Key Financial Metrics for the Six Months Ended June 30, 2025 | Indicator | H1 2025 (RMB thousands) | H1 2024 (RMB thousands) | YoY Change | | :--- | :--- | :--- | :--- | | Revenue | 9,046,863 | 8,111,635 | 11.5% | | Profit before income tax | 1,590,807 | 991,458 | 60.5% | | Profit for the period | 1,320,606 | 829,586 | 59.2% | | Adjusted EBITDA for the period | 2,344,561 | 1,733,693 | 35.2% | | Adjusted net profit for the period | 1,563,271 | 1,215,178 | 28.6% | | Adjusted EBITDA margin | 25.9% | 21.4% | 4.5 percentage points | | Adjusted net profit margin | 17.3% | 15.0% | 2.3 percentage points | [5. Financial Information by Segment (Six months ended June 30, 2025)](index=12&type=section&id=5.%20FINANCIAL%20INFORMATION%20BY%20SEGMENT%20(Six%20months%20ended%20June%2030,%202025)) For the six months ended June 30, 2025, core online travel platform revenue grew 15.9%, driven by accommodation and transportation, while resort revenue declined 9.8% Six Months Ended June 30, 2025 Segment Revenue and Operating Profit | Segment | H1 2025 Revenue (RMB thousands) | H1 2024 Revenue (RMB thousands) | YoY Change | H1 2025 Operating Profit (RMB thousands) | H1 2024 Operating Profit (RMB thousands) | | :--- | :--- | :--- | :--- | :--- | :--- | | Accommodation booking | 2,561,009 | 2,155,562 | 18.8% | - | - | | Transportation ticketing | 3,881,221 | 3,479,240 | 11.5% | - | - | | Other | 2,604,633 | 2,476,833 | 5.1% | - | - | | **Total Core Online Travel Platform Revenue

[Company Overview and Contact Information](index=4&type=section&id=Company%20Overview%20and%20Contact%20Information) This section provides key corporate governance and contact details, including board members, committees, management, auditors, legal advisors, banks, and registered offices - The Company Overview section details key corporate governance and contact information, including board members, committee composition, key management personnel, auditors, legal advisors, principal bankers, registered office, head office, and principal place of business in Hong Kong[6](index=6&type=chunk) - The Company's shares have been listed on the Main Board of The Stock Exchange of Hong Kong Limited since 1988, with stock short name **'Union Asia Group'** and stock code **'458'**[7](index=7&type=chunk) [Condensed Consolidated Interim Financial Statements](index=5&type=section&id=Condensed%20Consolidated%20Interim%20Financial%20Statements) This section presents the unaudited condensed consolidated interim financial statements, including the income statement, comprehensive income statement, statement of financial position, statement of changes in equity, and cash flow statement, along with their explanatory notes - These unaudited condensed consolidated interim financial statements are presented in Hong Kong Dollars and were approved for publication by the Board of Directors on August 21, 2025[17](index=17&type=chunk) - These condensed consolidated interim financial statements have not been audited or reviewed by external auditors[18](index=18&type=chunk) [Condensed Consolidated Interim Income Statement](index=5&type=section&id=Condensed%20Consolidated%20Interim%20Income%20Statement) For the six months ended June 30, 2025, the company's revenue decreased by **13%** year-on-year to **HK$1.676 billion**, with profit for the period significantly reduced to **HK$3.5 million**, a **94.5%** decrease from HK$63.9 million in the prior year, and basic earnings per share fell from HK$0.23 to HK$0.006 Condensed Consolidated Interim Income Statement Key Data (For the six months ended June 30) | Metric | 2025 (HK$ Thousand) | 2024 (HK$ Thousand) | Y-o-Y Change | | :--- | :--- | :--- | :--- | | Revenue | 1,676,431 | 1,926,401 | -13.0% | | Cost of sales | (989,531) | (1,131,468) | -12.5% | | Gross profit | 686,900 | 794,933 | -13.6% | | Operating profit | 47,394 | 125,387 | -62.2% | | Profit before tax | 23,687 | 97,141 | -75.6% | | Profit for the period | 3,546 | 63,903 | -94.5% | | Profit attributable to equity holders of the Company | 1,675 | 62,532 | -97.3% | | Basic earnings per share | HK$0.006 | HK$0.23 | -97.4% | [Condensed Consolidated Interim Statement of Comprehensive Income](index=5&type=section&id=Condensed%20Consolidated%20Interim%20Statement%20of%20Comprehensive%20Income) For the six months ended June 30, 2025, the company's total comprehensive income was **HK$98.9 million**, a significant increase from HK$25.98 million in the prior year, primarily due to a reversal from loss to gain in exchange differences arising from the translation of financial statements of overseas subsidiaries Condensed Consolidated Interim Statement of Comprehensive Income Key Data (For the six months ended June 30) | Metric | 2025 (HK$ Thousand) | 2024 (HK$ Thousand) | Y-o-Y Change | | :--- | :--- | :--- | :--- | | Profit for the period | 3,546 | 63,903 | -94.5% | | Exchange differences arising from translation of financial statements of overseas subsidiaries | 94,405 | (36,347) | From loss to gain | | Other comprehensive income for the period | 95,354 | (37,925) | From loss to gain | | Total comprehensive income for the period | 98,900 | 25,978 | +280.7% | [Condensed Consolidated Interim Statement of Financial Position](index=6&type=section&id=Condensed%20Consolidated%20Interim%20Statement%20of%20Financial%20Position) As of June 30, 2025, the company's total assets less current liabilities increased to **HK$2.061 billion**, and net assets rose to **HK$1.307 billion**, with growth in both non-current and current assets, including inventories and trade and bills receivables, while cash and bank balances decreased Condensed Consolidated Interim Statement of Financial Position Key Data (As of June 30) | Metric | June 30, 2025 (HK$ Thousand) | December 31, 2024 (HK$ Thousand) | Change | | :--- | :--- | :--- | :--- | | Non-current assets | 1,252,253 | 1,191,504 | +5.1% | | Current assets | 1,824,305 | 1,784,754 | +2.2% | | Current liabilities | 1,015,536 | 976,980 | +3.9% | | Net current assets | 808,769 | 807,774 | +0.1% | | Total assets less current liabilities | 2,061,022 | 1,999,278 | +3.1% | | Net assets | 1,306,873 | 1,255,923 | +4.1% | | Cash and bank balances | 348,043 | 466,554 | -25.4% | | Inventories | 854,938 | 781,202 | +9.4% | | Trade and bills receivables | 540,900 | 453,045 | +19.4% | [Condensed Consolidated Interim Statement of Changes in Equity](index=7&type=section&id=Condensed%20Consolidated%20Interim%20Statement%20of%20Changes%20in%20Equity) For the six months ended June 30, 2025, the company's total equity increased to **HK$1.307 billion**, driven by **HK$98.9 million** in total comprehensive income for the period and **HK$0.764 million** from shares issued under the share option scheme, partially offset by dividends paid Condensed Consolidated Interim Statement of Changes in Equity Key Data (For the six months ended June 30) | Metric | 2025 (HK$ Thousand) | 2024 (HK$ Thousand) | Change | | :--- | :--- | :--- | :--- | | Total equity at beginning of period | 1,255,923 | 1,205,058 | +4.2% | | Total comprehensive income for the period | 98,900 | 25,978 | +280.7% | | Shares issued under share option scheme | 764 | 716 | +6.7% | | Approved final dividend for the year | (46,491) | (51,794) | -10.3% | | Total equity at end of period | 1,306,873 | 1,177,650 | +11.0% | [Condensed Consolidated Interim Cash Flow Statement](index=8&type=section&id=Condensed%20Consolidated%20Interim%20Cash%20Flow%20Statement) For the six months ended June 30, 2025, net cash used in operating activities significantly decreased to **HK$109 million**, net cash used in investing activities increased, and financing activities shifted from net cash used to a net inflow of **HK$8.48 million**, with cash and cash equivalents at period-end decreasing to **HK$336 million** Condensed Consolidated Interim Cash Flow Statement Key Data (For the six months ended June 30) | Metric | 2025 (HK$ Thousand) | 2024 (HK$ Thousand) | Change | | :--- | :--- | :--- | :--- | | Net cash used in operating activities | (108,636) | (212,768) | 48.9% decrease in usage | | Net cash used in investing activities | (39,264) | (27,007) | 45.4% increase in usage | | Net cash from/(used in) financing activities | 8,478 | (38,517) | From usage to inflow | | Cash and cash equivalents at end of period | 336,010 | 172,032 | +95.3% | [Notes to the Condensed Consolidated Interim Financial Statements](index=9&type=section&id=Notes%20to%20the%20Condensed%20Consolidated%20Interim%20Financial%20Statements) This section details the basis of preparation, accounting policies, segment information, specific components and changes of various assets, liabilities, and profit and loss items, as well as information on related party transactions and fair value measurement of financial instruments, providing essential context and details for understanding the financial data [Note 1. General Information](index=9&type=section&id=Note%201.%20General%20Information) This note outlines the Group's principal activities, which include garment manufacturing and brand operations, and confirms the company's listing on the Hong Kong Stock Exchange since 1988 - The Group's principal activities are (i) garment manufacturing and (ii) brand operations[17](index=17&type=chunk) - The Company's shares have been listed on the Main Board of The Stock Exchange of Hong Kong Limited since 1988[17](index=17&type=chunk) [Note 2. Basis of Preparation and Accounting Policies](index=9&type=section&id=Note%202.%20Basis%20of%20Preparation%20and%20Accounting%20Policies) This note confirms that the interim financial statements are prepared in accordance with HKAS 34 and the applicable disclosure provisions of the Listing Rules, using the same accounting policies as the 2024 annual financial statements - These interim financial statements are prepared in accordance with the applicable disclosure provisions of the Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited and Hong Kong Accounting Standard 34 issued by the Hong Kong Institute of Certified Public Accountants, and are prepared using the same accounting policies as those adopted in the 2024 annual financial statements[19](index=19&type=chunk) [Note 3. Changes in Accounting Policies](index=9&type=section&id=Note%203.%20Changes%20in%20Accounting%20Policies) This note states that the Group has applied amendments to HKAS 21 during the period, but these amendments have no material impact on the interim financial statements as no foreign currency transactions involved non-exchangeable currencies - The Group has applied the amendments to Hong Kong Accounting Standard 21 during the current accounting period, but these amendments have no material impact on these interim financial statements as no foreign currency transactions involved foreign currencies that are not exchangeable into other currencies[20](index=20&type=chunk) [Note 4. Estimates](index=9&type=section&id=Note%204.%20Estimates) This note highlights that management must make judgments, estimates, and assumptions in preparing these interim financial statements in compliance with HKAS 34, and actual results may differ from these estimates - In preparing these interim financial statements in compliance with Hong Kong Accounting Standard 34, management is required to make judgments, estimates, and assumptions, and actual results may differ from these estimates[21](index=21&type=chunk) [Note 5. Segment Information](index=9&type=section&id=Note%205.%20Segment%20Information) This note identifies two reportable segments, garment manufacturing and brand operations, with performance assessed and resources allocated based on reported profit or loss before tax by the chief operating decision maker - The Group has identified two reportable segments, namely (i) garment manufacturing and (ii) brand operations, with segment performance assessed and resources allocated by the chief operating decision maker based on reported profit or loss before tax[22](index=22&type=chunk) Segment Revenue and Profit/(Loss) Before Tax (For the six months ended June 30) | Metric | 2025 Garment (HK$ Thousand) | 2024 Garment (HK$ Thousand) | 2025 Brand Operations (HK$ Thousand) | 2024 Brand Operations (HK$ Thousand) | | :--- | :--- | :--- | :--- | :--- | | Revenue | 796,690 | 973,595 | 879,741 | 952,806 | | Profit/(Loss) before tax | 66,333 | 122,085 | (40,003) | (61,448) | Revenue by Customer Location (For the six months ended June 30) | Region | 2025 (HK$ Thousand) | 2024 (HK$ Thousand) | | :--- | :--- | :--- | | China | 483,648 | 580,312 | | United Kingdom | 340,460 | 430,296 | | Canada | 248,396 | 286,443 | | Italy | 183,000 | 204,151 | | Singapore | 73,276 | 72,064 | | Other countries | 347,651 | 353,135 | | **Total** | **1,676,431** | **1,926,401** | [Note 6. Seasonality of Operations](index=12&type=section&id=Note%206.%20Seasonality%20of%20Operations) This note explains that the Group typically records higher sales revenue in the second half of the year due to seasonal influences from increased shipments of garment and brand products for the autumn/winter and holiday seasons - The Group tends to record higher sales revenue in the second half of the year compared to the first half, primarily due to the seasonal impact of increased shipments of garment products and brand business products for the autumn/winter and holiday seasons[30](index=30&type=chunk) [Note 7. Other Net Income](index=12&type=section&id=Note%207.%20Other%20Net%20Income) This note details the components of other net income, including government grants, impairment losses on property, plant and equipment, net loss/gain on disposal of property, plant and equipment, and net gain on derecognition of right-of-use assets and lease liabilities Other Net Income (For the six months ended June 30) | Metric | 2025 (HK$ Thousand) | 2024 (HK$ Thousand) | | :--- | :--- | :--- | | Government grants | 3,078 | 323 | | Impairment loss on property, plant and equipment | (4,999) | – | | Net (loss)/gain on disposal of property, plant and equipment | (1,205) | 19,465 | | Net gain on derecognition of right-of-use assets and lease liabilities | 1,666 | 855 | | Miscellaneous income | 2,226 | 2,334 | | **Total** | **766** | **22,977** | - The net gain on disposal of property, plant and equipment for the six months ended June 30, 2024, included a gain of **HK$20.923 million** from the disposal of certain unused leasehold land use rights and ancillary buildings in Mainland China[34](index=34&type=chunk) [Note 8. Operating Profit](index=12&type=section&id=Note%208.%20Operating%20Profit) This note provides a breakdown of items adjusted in operating profit, including amortization of intangible assets, depreciation expenses for owned property, plant and equipment, right-of-use assets, and employee costs and staff welfare expenses Operating Profit Adjustments (For the six months ended June 30) | Metric | 2025 (HK$ Thousand) | 2024 (HK$ Thousand) | | :--- | :--- | :--- | | Amortisation of intangible assets | 26,057 | 28,620 | | Depreciation expense – owned property, plant and equipment | 30,832 | 43,206 | | Depreciation expense – right-of-use assets | 54,892 | 63,057 | | Employee costs and staff welfare expenses | 378,438 | 373,354 | [Note 9. Finance Income and Finance Costs](index=12&type=section&id=Note%209.%20Finance%20Income%20and%20Finance%20Costs) This note details the Group's finance income, primarily interest income from bank deposits, and finance costs, mainly interest on franchise fees payable, for the reporting periods Finance Income and Finance Costs (For the six months ended June 30) | Metric | 2025 (HK$ Thousand) | 2024 (HK$ Thousand) | | :--- | :--- | :--- | | Finance income | 3,969 | 2,137 | | Interest income from bank deposits | 3,545 | 1,783 | | Finance costs | 27,676 | 30,383 | | Interest on franchise fees payable | 22,602 | 24,361 | [Note 10. Income Tax Expense](index=12&type=section&id=Note%2010.%20Income%20Tax%20Expense) This note presents the breakdown of income tax expense, including current income tax (Hong Kong profits tax and non-Hong Kong tax) and deferred income tax, for the reporting periods Income Tax Expense (For the six months ended June 30) | Metric | 2025 (HK$ Thousand) | 2024 (HK$ Thousand) | | :--- | :--- | :--- | | Current income tax | 15,506 | 31,351 | | Hong Kong profits tax | 5,564 | 16,204 | | Non-Hong Kong tax | 9,942 | 15,147 | | Deferred income tax | 1,722 | 1,987 | | **Total** | **20,141** | **33,238** | - Hong Kong profits tax provision is calculated at an estimated annual effective tax rate of **16.5%** applicable for the six months ended June 30, 2025[34](index=34&type=chunk) [Note 11. Earnings Per Share](index=12&type=section&id=Note%2011.%20Earnings%20Per%20Share) This note provides the calculation of basic and diluted earnings per share, based on profit attributable to equity holders and the weighted average number of ordinary shares outstanding Earnings Per Share (For the six months ended June 30) | Metric | 2025 | 2024 | | :--- | :--- | :--- | | Profit attributable to equity holders of the Company (HK$ Thousand) | 1,675 | 62,532 | | Weighted average number of ordinary shares outstanding | 272,775,684 | 271,776,561 | | Basic earnings per share | HK$0.006 | HK$0.23 | | Diluted earnings per share | HK$0.006 | HK$0.23 | [Note 12. Dividends](index=13&type=section&id=Note%2012.%20Dividends) This note states that the Board of Directors resolved not to declare an interim dividend for the six months ended June 30, 2025, and details the final dividend approved and paid for the year ended December 31, 2024 - The Board of Directors resolved not to declare an interim dividend for the six months ended June 30, 2025 (2024: **HK$0.06** per share, totaling **HK$16.356 million**)[36](index=36&type=chunk) - The final dividend of **HK$0.17** per share for the year ended December 31, 2024, was approved by shareholders on June 24, 2025, and paid on July 17, 2025[37](index=37&type=chunk) [Note 13. Property, Plant and Equipment](index=13&type=section&id=Note%2013.%20Property,%20Plant%20and%20Equipment) This note details the Group's additions to right-of-use assets, primarily for leased offices and retail stores, and reports on the acquisition of plant and equipment items and the loss on disposal of property, plant and equipment - During the six months ended June 30, 2025, the Group recognized additions to right-of-use assets of **HK$30.16 million**, primarily for leased offices and retail stores[38](index=38&type=chunk) Total Retail Store Rent (For the six months ended June 30) | Region | 2025 Fixed Rent (HK$ Thousand) | 2025 Variable Rent (HK$ Thousand) | 2025 Total Rent (HK$ Thousand) | 2024 Total Rent (HK$ Thousand) | | :--- | :--- | :--- | :--- | :--- | | Mainland China | 41,819 | 7,064 | 48,883 | 49,185 | | Hong Kong | 1,434 | 407 | 1,841 | 2,430 | | Europe | 8,172 | – | 8,172 | 6,570 | - The Group acquired plant and equipment items at a cost of **HK$42.192 million** and recorded a loss on disposal of property, plant and equipment items of **HK$1.205 million**[40](index=40&type=chunk) [Note 14. Intangible Assets](index=13&type=section&id=Note%2014.%20Intangible%20Assets) This note provides a breakdown of intangible assets, including franchise rights and trademarks, and highlights that the 'C.P. Company' trademark has an indefinite useful life with no expected diminution in value from use Intangible Assets Composition (As of June 30) | Metric | June 30, 2025 (HK$ Thousand) | December 31, 2024 (HK$ Thousand) | | :--- | :--- | :--- | | Franchise rights | 392,419 | 417,436 | | Trademarks | 181,775 | 158,022 | | **Total Intangible Assets** | **574,194** | **575,458** | - Trademarks refer to the **'C.P. Company'** trademark, which is considered to have an indefinite useful life, and its value is not expected to diminish from use[43](index=43&type=chunk) - During the year ended December 31, 2024, the Group entered into a 10-year franchise agreement for the use of certain trademarks and domain names related to the **MASSIMO OSTI** brand[42](index=42&type=chunk) [Note 15. Inventories](index=14&type=section&id=Note%2015.%20Inventories) This note details the composition of inventories, including raw materials, work-in-progress, finished goods, and goods in transit, with increases in raw materials and work-in-progress reflecting seasonal demand for second-half shipments Inventories Composition (As of June 30) | Metric | June 30, 2025 (HK$ Thousand) | December 31, 2024 (HK$ Thousand) | | :--- | :--- | :--- | | Raw materials | 141,922 | 74,862 | | Work-in-progress | 213,994 | 159,291 | | Finished goods | 475,307 | 517,785 | | Goods in transit | 23,715 | 29,264 | | **Total** | **854,938** | **781,202** | - The increase in raw materials and work-in-progress reflects the seasonal demand for second-half shipments in the garment manufacturing segment[44](index=44&type=chunk) [Note 16. Trade and Bills Receivables](index=14&type=section&id=Note%2016.%20Trade%20and%20Bills%20Receivables) This note provides the breakdown and aging analysis of trade and bills receivables, including those measured at amortized cost and those for sale measured at fair value through other comprehensive income, and explains the Group's credit terms and cash flow management practices Trade and Bills Receivables (As of June 30) | Metric | June 30, 2025 (HK$ Thousand) | December 31, 2024 (HK$ Thousand) | | :--- | :--- | :--- | | Trade receivables measured at amortised cost | 375,893 | 330,538 | | Trade receivables for sale measured at fair value through other comprehensive income (revolving) | 165,007 | 122,507 | | **Total** | **540,900** | **453,045** | Aging Analysis of Trade and Bills Receivables (As of June 30) | Aging | June 30, 2025 (HK$ Thousand) | December 31, 2024 (HK$ Thousand) | | :--- | :--- | :--- | | Less than 3 months | 499,553 | 412,595 | | 3 months to 6 months | 33,694 | 36,551 | | Over 6 months | 19,544 | 14,046 | - The Group grants credit terms to its customers mainly ranging from **45 to 90 days** and sells a portion of its trade receivables to financial institutions before their due date under customer supplier financing programs to manage cash flow[45](index=45&type=chunk)[47](index=47&type=chunk) [Note 17. Cash and Bank Balances](index=15&type=section&id=Note%2017.%20Cash%20and%20Bank%20Balances) This note details the composition of cash and bank balances, including short-term bank deposits, cash at bank and in hand, and pledged bank deposits, and clarifies the use of pledged deposits as collateral for bank facilities Cash and Bank Balances Composition (As of June 30) | Metric | June 30, 2025 (HK$ Thousand) | December 31, 2024 (HK$ Thousand) | | :--- | :--- | :--- | | Short-term bank deposits | 105,246 | 159,114 | | Cash at bank and in hand | 230,764 | 296,804 | | Pledged bank deposits | 12,033 | 10,636 | | **Cash and bank balances in consolidated statement of financial position** | **348,043** | **466,554** | - As of June 30, 2025, the Group pledged bank deposits of **HK$12.033 million** as collateral for bank facilities granted to the Group[48](index=48&type=chunk) [Note 18. Trade and Bills Payables](index=15&type=section&id=Note%2018.%20Trade%20and%20Bills%20Payables) This note provides an aging analysis of trade and bills payables, indicating that most supplier payment terms are within 60 days and all payables are expected to be settled within one year or on demand Aging Analysis of Trade and Bills Payables (As of June 30) | Aging | June 30, 2025 (HK$ Thousand) | December 31, 2024 (HK$ Thousand) | | :--- | :--- | :--- | | Less than 3 months | 267,182 | 289,622 | | 3 months to 6 months | 8,970 | 19,757 | | Over 6 months | 24,476 | 19,633 | | **Total** | **300,628** | **329,012** | - Supplier payment terms are mostly within **60 days**, and all trade and bills payables are expected to be settled within one year or on demand[49](index=49&type=chunk) [Note 19. Accruals and Other Payables and Contract Liabilities](index=15&type=section&id=Note%2019.%20Accruals%20and%20Other%20Payables%20and%20Contract%20Liabilities) This note clarifies that accruals and other payables primarily include employee benefits, current portion of franchise fees payable, and deposits received, while contract liabilities represent prepayments from customers for goods to be delivered - Accruals and other payables primarily include employee benefits expenses payable, current portion of franchise fees payable, deposits received, and other operating expenses payable[51](index=51&type=chunk) - Contract liabilities primarily represent prepayments received by the Group before goods are delivered, amounting to **HK$27.456 million** as of June 30, 2025, and are expected to be settled within one year[52](index=52&type=chunk) [Note 20. Bank Loans](index=15&type=section&id=Note%2020.%20Bank%20Loans) This note states that as of June 30, 2025, bank loans amounted to **HK$77 million**, denominated in HKD and repayable within one year, with their carrying amount approximating fair value - As of June 30, 2025, bank loans amounted to **HK$77 million**, denominated in Hong Kong Dollars and repayable within one year, and the carrying amount of bank loans approximated their fair value[53](index=53&type=chunk) [Note 21. Share Capital](index=15&type=section&id=Note%2021.%20Share%20Capital) This note details the changes in share capital, including the number of shares and their value, resulting from shares issued under the share option scheme during the reporting periods Share Capital Movement (As of June 30) | Metric | Number of Shares as of June 30, 2025 | HK$ Thousand as of June 30, 2025 | Number of Shares as of December 31, 2024 | HK$ Thousand as of December 31, 2024 | | :--- | :--- | :--- | :--- | :--- | | At January 1 | 272,601,253 | 27,260 | 271,607,253 | 27,161 | | Shares issued under share option scheme | 877,000 | 88 | 994,000 | 99 | | **At June 30/December 31** | **273,478,253** | **27,348** | **272,601,253** | **27,260** | [Note 22. Capital Commitments](index=15&type=section&id=Note%2022.%20Capital%20Commitments) This note discloses capital commitments, primarily for contracted but unprovided property, plant and equipment, including a construction contract for a new logistics facility in Hefei Industrial Park Capital Commitments (As of June 30) | Metric | June 30, 2025 (HK$ Thousand) | December 31, 2024 (HK$ Thousand) | | :--- | :--- | :--- | | Contracted but not provided for property, plant and equipment | 38,670 | – | - Capital commitments as of June 30, 2025, primarily include commitments related to a construction contract entered into on April 2, 2025, by a wholly-owned subsidiary of the Group with a contractor for the construction of a new three-story logistics facility in the subsidiary's Hefei Industrial Park, with a contract sum of **RMB45,139,583.50**[55](index=55&type=chunk) [Note 23. Related Party Transactions](index=16&type=section&id=Note%2023.%20Related%20Party%20Transactions) This note details transactions with related parties, including a new lease agreement with TDB Company Limited for factory, storage, and office premises, and compensation paid to key management personnel - The Group entered into a new lease agreement with TDB Company Limited, a related company, to lease certain properties for factory, storage, and ancillary office purposes at a monthly rent of **HK$320,000** for a term of two years[56](index=56&type=chunk)[60](index=60&type=chunk) Key Management Personnel Compensation (For the six months ended June 30) | Metric | 2025 (HK$ Thousand) | 2024 (HK$ Thousand) | | :--- | :--- | :--- | | Salaries, allowances and bonuses | 10,276 | 10,118 | | Defined contribution plans | 312 | 305 | | Share-based compensation expense – share options granted | 351 | 325 | | **Total** | **10,939** | **10,748** | [Note 24. Fair Value of Financial Instruments](index=16&type=section&id=Note%2024.%20Fair%20Value%20of%20Financial%20Instruments) This note explains that forward foreign exchange contracts, share options to acquire equity in a company, and trade receivables measured at fair value through other comprehensive income are all measured at fair value and classified as Level 2 valuations - Forward foreign exchange contracts, share options to acquire equity in a company, and trade receivables measured at fair value through other comprehensive income are all measured at fair value and classified as Level 2 valuations as of June 30, 2025, and December 31, 2024[58](index=58&type=chunk)[59](index=59&type=chunk) - The fair value of trade receivables measured at fair value through other comprehensive income is determined using risk-adjusted annual rates ranging from **5.27% to 6.69%** as quoted by correspondent banks as of June 30, 2025[59](index=59&type=chunk) [Management Discussion and Analysis](index=17&type=section&id=Management%20Discussion%20and%20Analysis) This section provides an overview of the Group's performance, business segment results, financial summary, and outlook, highlighting the challenges faced and strategic responses - The Group recorded profit attributable to equity holders of **HK$2 million** for the six months ended June 30, 2025, compared to HK$63 million for the six months ended June 30, 2024, primarily due to challenging and competitive market conditions, coupled with continued global trade uncertainties, leading to reduced demand from certain customers and a decline in revenue and profit for the garment manufacturing business[63](index=63&type=chunk) - The Group anticipates the remainder of 2025 to remain challenging and will continue to adopt a cautious and focused approach to its businesses, expecting robust performance from its own brand **C.P. Company** and garment manufacturing business, while striving to improve the performance of its licensed brands in Mainland China[85](index=85&type=chunk) [Overview](index=17&type=section&id=Overview) For the six months ended June 30, 2025, profit attributable to equity holders significantly decreased to **HK$2 million**, mainly due to market challenges, global trade uncertainties impacting garment business demand and profit, and the absence of a **HK$21 million** one-off disposal gain recorded in the prior year Profit Attributable to Equity Holders (For the six months ended June 30) | Metric | 2025 (HK$ Million) | 2024 (HK$ Million) | Change | | :--- | :--- | :--- | :--- | | Profit attributable to equity holders | 2 | 63 | -96.8% | - The decrease in profit attributable to equity holders was primarily due to challenging and competitive market conditions, coupled with continued global trade uncertainties, leading to reduced demand from certain customers and a decline in revenue and profit for the garment manufacturing business[63](index=63&type=chunk) - The Group recognized a **HK$21 million** one-off gain in the first half of 2024 from the disposal of certain leasehold land use rights and ancillary buildings in Mainland China, but no such gain was recorded in the first half of 2025[63](index=63&type=chunk) [Business Segment Performance](index=17&type=section&id=Business%20Segment%20Performance) The Group's business segment performance is mixed, with own brand **C.P. Company** maintaining profit growth despite a soft market and high double-digit retail channel revenue growth, while licensed brands **Nautica** and **Spyder** saw revenue decline and increased losses, **Reebok** revenue decreased but operating loss narrowed, and the garment manufacturing business faced challenges with declining revenue and profit [Own Brands](index=17&type=section&id=Own%20Brands) Despite a soft market, **C.P. Company** recorded profit performance and stable sales revenue, increasing **1%** at actual exchange rates, with high double-digit growth in retail channel revenue, while **Cissonne** plans to shift its sales model to an online-platform-based pull-driven operation in the second half - Despite soft market conditions, **C.P. Company** recorded profit performance and maintained stable sales revenue in the first half of 2025, increasing by **1%** at actual exchange rates, with retail channel revenue achieving high double-digit growth[64](index=64&type=chunk) - **C.P. Company** operates twelve directly managed retail stores and outlet stores globally, with outlet stores continuing to perform well[64](index=64&type=chunk) - **Cissonne** will change its sales model in the second half of the year, adopting a pull-driven operating model based on its own brand and online platforms as sales channels[65](index=65&type=chunk) [Licensed Brands](index=17&type=section&id=Licensed%20Brands) Licensed brands **Nautica** and **Spyder** experienced revenue declines and increased losses, while **Reebok** saw reduced revenue but a narrowed operating loss, as the Group strategically reviewed its portfolio and adjusted store combinations Licensed Brands Revenue Change (For the six months ended June 30) | Brand | Y-o-Y Revenue Change | Loss Change | | :--- | :--- | :--- | | Nautica | -8% | Increased loss | | Spyder | -26% | Increased loss | | Reebok | -21% | Operating loss decreased | - The Group further closed underperforming stores and adjusted its store portfolio during the period to establish a solid store base for **Nautica** and **Spyder**[66](index=66&type=chunk) - The Group has conducted a strategic review of its licensed brand portfolio to optimize resource allocation, which may include changing existing franchise arrangements or shortening the franchise term for **Reebok**[67](index=67&type=chunk) [Garment Manufacturing](index=17&type=section&id=Garment%20Manufacturing) The garment manufacturing business experienced declines in both revenue and profit in the first half due to challenging and competitive market conditions, coupled with global trade uncertainties leading to reduced customer demand, despite ongoing efforts to enhance production efficiency through automation and streamlined operations - In the first half of the year, due to challenging and competitive market conditions, coupled with continued global trade uncertainties, demand from certain customers decreased, leading to a decline in both revenue and profit for the garment manufacturing business[68](index=68&type=chunk) - Revenue from high-end craftsmanship factories decreased by **24%** compared to the prior year, and revenue from advanced craftsmanship factories also decreased by **4%** compared to the first half of 2024[70](index=70&type=chunk) - The Group continues to enhance production efficiency and competitiveness by implementing automation and streamlining operational measures[68](index=68&type=chunk) [Financial Summary](index=18&type=section&id=Financial%20Summary) This financial summary provides key operating results, segment performance, and cash flow data for the six months ended June 30, 2025, showing decreased revenue and gross profit, reduced EBITDA, and a significant drop in profit attributable to equity holders, with the garment segment's performance declining and brand operations' loss narrowing Operating Results Summary (For the six months ended June 30) | Metric | 2025 (HK$ Million) | 2024 (HK$ Million) | | :--- | :--- | :--- | | Revenue | 1,676 | 1,926 | | Gross profit | 687 | 795 | | EBITDA | 164 | 260 | | Profit attributable to equity holders | 2 | 63 | Segment Results Summary (For the six months ended June 30) | Segment | 2025 Profit Before Tax (HK$ Million) | 2024 Profit Before Tax (HK$ Million) | | :--- | :--- | :--- | | Garment manufacturing segment | 66 | 122 | | Brand operations segment | (40) | (61) | Cash Flow Summary (For the six months ended June 30) | Metric | 2025 (HK$ Million) | 2024 (HK$ Million) | | :--- | :--- | :--- | | Cash used in operations | (82) | (183) | [Financial Review](index=18&type=section&id=Financial%20Review) The Group's total revenue decreased by **13%** year-on-year to **HK$1.676 billion**, with declines in both garment manufacturing and licensed brand revenue, while **C.P. Company** revenue slightly increased; gross margin remained stable but gross profit decreased due to lower revenue, other net income significantly reduced due to the absence of prior year's one-off gain, and selling and distribution expenses and income tax expense decreased, while general and administrative expenses increased [Revenue](index=18&type=section&id=Revenue) Total revenue decreased by **13%** to **HK$1.676 billion**, with garment manufacturing revenue down **18.3%** and brand operations revenue down **7.7%**, though **C.P. Company** saw a **1%** increase at actual exchange rates, reflecting the Group's seasonal business pattern with higher revenue in the second half Total Revenue and Segment Revenue Change (For the six months ended June 30) | Metric | 2025 (HK$ Million) | 2024 (HK$ Million) | Y-o-Y Change | | :--- | :--- | :--- | :--- | | Total revenue | 1,676 | 1,926 | -13% | | Garment manufacturing revenue | 796 | 974 | -18.3% | | Brand operations revenue | 880 | 953 | -7.7% | - **C.P. Company's** revenue increased by **1%** at actual exchange rates[72](index=72&type=chunk) - The Group's business is seasonally skewed towards the second half of the year, primarily due to increased shipments of garment and brand business products for the autumn/winter and holiday seasons[70](index=70&type=chunk) [Gross Profit](index=19&type=section&id=Gross%20Profit) Gross profit decreased due to lower revenue, although the overall gross margin for brand operations slightly increased compared to the prior year, mainly driven by an improved gross margin for **C.P. Company** Gross Profit and Gross Margin (For the six months ended June 30) | Metric | 2025 (HK$ Million) | 2024 (HK$ Million) | Gross Margin 2025 | Gross Margin 2024 | | :--- | :--- | :--- | :--- | :--- | | Gross profit | 687 | 795 | 41.0% | 41.3% | - The decrease in gross profit was primarily due to reduced revenue, while the overall gross margin for brand operations slightly increased compared to the prior year, mainly due to an improved gross margin for **C.P. Company**[73](index=73&type=chunk) [Other Net Income](index=19&type=section&id=Other%20Net%20Income) Other net income in the first half of 2024 included a **HK$21 million** gain from the disposal of certain unused leasehold land use rights and ancillary buildings in Mainland China, with no such one-off items recorded in the current reporting period - In the first half of 2024, other net income included a gain of **HK$21 million** from the disposal of certain unused leasehold land use rights and ancillary buildings in Mainland China; no such one-off items were recorded in the current reporting period[74](index=74&type=chunk) [Selling and Distribution Expenses](index=19&type=section&id=Selling%20and%20Distribution%20Expenses) Selling and distribution expenses decreased compared to the prior year, mainly due to reduced retail partner commissions and store expenses for licensed brands, as well as lower advertising and promotion expenses and e-commerce and agency commissions for **C.P. Company** - Selling and distribution expenses decreased compared to the prior year, primarily due to reduced retail partner commissions and store expenses for licensed brands, coupled with lower advertising and promotion expenses and e-commerce and agency commissions for **C.P. Company**[75](index=75&type=chunk) [General and Administrative Expenses](index=19&type=section&id=General%20and%20Administrative%20Expenses) General and administrative expenses reported for the current period increased compared to the prior year, primarily due to higher exchange gains recorded in the first half of 2024 - General and administrative expenses reported for the current period increased compared to the prior year, primarily due to higher exchange gains recorded in the first half of 2024[76](index=76&type=chunk) [Income Tax Expense](index=19&type=section&id=Income%20Tax%20Expense) Income tax expense decreased compared to the prior year, primarily due to reduced profit in the garment manufacturing business during the first half - Income tax expense decreased compared to the prior year, primarily due to reduced profit in the garment manufacturing business during the first half[77](index=77&type=chunk) [Segment Results](index=19&type=section&id=Segment%20Results) Garment manufacturing business recorded a profit decline due to reduced revenue, while the overall loss for brand operations narrowed, with **C.P. Company** showing increased profit, and operating losses for licensed brands **Nautica** and **Spyder** increased, while **Reebok's** decreased - Garment manufacturing business recorded a profit decline due to reduced revenue; the overall loss for brand operations narrowed compared to the prior year; **C.P. Company** recorded an increase in profit; among licensed brands, operating losses for **Nautica** and **Spyder** increased, while **Reebok's** decreased[78](index=78&type=chunk) [Financial Resources and Liquidity](index=19&type=section&id=Financial%20Resources%20and%20Liquidity) Shareholders' equity increased as of June 30, 2025, compared to December 31, 2024, mainly due to exchange gains from the translation of overseas subsidiaries' financial statements, particularly from the significant appreciation of the Euro against the Hong Kong Dollar since April of the current year, with the Group utilizing forward foreign exchange contracts to manage related risks Financial Position (As of June 30) | Metric | June 30, 2025 (HK$ Million) | December 31, 2024 (HK$ Million) | | :--- | :--- | :--- | | Cash and bank balances | 348 | 467 | | Bank loans | 77 | – | | Total equity | 1,307 | 1,256 | - Shareholders' equity as of June 30, 2025, increased compared to December 31, 2024, primarily due to exchange gains arising from the translation of overseas subsidiaries' financial statements (mainly from the significant appreciation of the Euro against the Hong Kong Dollar since April of the current year)[80](index=80&type=chunk) - The Group enters into forward foreign exchange contracts to manage related foreign exchange risks[80](index=80&type=chunk) [Contingent Liabilities and Capital Commitments](index=19&type=section&id=Contingent%20Liabilities%20and%20Capital%20Commitments) Capital commitments as of June 30, 2025, primarily include a construction contract for a new three-story logistics facility in Hefei Industrial Park, which upon completion will create synergies with existing facilities and serve as the Group's distribution center for its China brand operations - Capital commitments as of June 30, 2025, primarily include commitments related to a construction contract entered into on April 2, 2025, by Hefei Union Asia Garment Co Ltd, a wholly-owned subsidiary of the Group established in China, with a selected contractor for the construction of a new three-story logistics facility on land owned by Hefei Union Asia in its Hefei Economic and Technological Development Zone Industrial Park, with a contract sum of **RMB45,139,583.50**[81](index=81&type=chunk) - Upon completion, this logistics facility will create synergies with existing facilities in the Hefei Industrial Park and will serve as the Group's distribution center for its China brand operations[81](index=81&type=chunk) [Human Resources](index=20&type=section&id=Human%20Resources) As of June 30, 2025, the Group's total headcount was approximately **6,220 employees**, who are provided with competitive remuneration and benefits, with discretionary bonuses and share options awarded to high-performing staff Employee Headcount (As of June 30) | Metric | June 30, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Total employees | 6,220 | 6,530 | - Employees are provided with reasonable and competitive remuneration and benefits, and high-performing employees are awarded discretionary bonuses and share options[82](index=82&type=chunk) [Outlook](index=20&type=section&id=Outlook) The Group anticipates the second half of 2025 to remain challenging, with **C.P. Company** focusing on data-driven direct-to-consumer strategies to counter wholesale declines, licensed brands investing in online channels and digital operations, and garment manufacturing continuing operational streamlining and efficiency improvements, all while strictly controlling costs and focusing on operational effectiveness, brand innovation, and product optimization for long-term growth - **C.P. Company** will address the decline in wholesale business by implementing a targeted and highly productive direct-to-consumer strategy, focusing on maximizing the performance of its existing physical and online stores[83](index=83&type=chunk) - For licensed brands, the second half of the year will see increased investment in online channels to drive growth and enhanced resource allocation for digital operations[84](index=84&type=chunk) - The garment manufacturing business will continue to streamline operations and enhance efficiency to maintain competitiveness and flexibility[85](index=85&type=chunk) - The Group will strictly control operating costs, continue to focus on enhancing operational effectiveness, brand innovation, and product optimization to strengthen its competitiveness and drive long-term value creation and sustainable growth[85](index=85&type=chunk) [Shareholder Information and Corporate Governance](index=21&type=section&id=Shareholder%20Information%20and%20Corporate%20Governance) This section covers disclosures of interests by directors and major shareholders, details of the share option scheme, compliance with the Corporate Governance Code, and other corporate governance matters [Disclosure of Interests](index=21&type=section&id=Disclosure%20of%20Interests) This section discloses the interests of directors and major shareholders in the company's shares, noting that Mr. Wang Jianzhong holds **66.76%** of the company's shares through controlled corporations, and his spouse, Ms. Sun Lin, is deemed to have the same interests [Directors' Interests in Securities](index=21&type=section&id=Directors'%20Interests%20in%20Securities) This note details the long positions held by directors in the company's shares through controlled corporations, including Mr. Wang Jianzhong's **66.76%** stake Directors' Interests in the Company's Shares (As of June 30, 2025) | Director's Name | Long/Short Position | Number of Shares Held (Through Controlled Corporations) | Approximate Percentage of Issued Share Capital | | :--- | :--- | :--- | :--- | | Mr. Wang Jianzhong | Long | 182,577,000 | 66.76% | Directors' Interests in Associated Corporation Huatai Ordinary Shares (As of June 30, 2025) | Director's Name | Long/Short Position | Number of Ordinary Shares Held (Through Spouse) | Approximate Percentage of Issued Share Capital | | :--- | :--- | :--- | :--- | | Ms. Wang Ku Yi Chun | Long | 2,500 | 0.03% | [Major Shareholders](index=21&type=section&id=Major%20Shareholders) This note identifies major shareholders and their interests in the company's shares, clarifying the ultimate beneficial ownership and deemed interests of Mr. Wang Jianzhong and his spouse, Ms. Sun Lin Major Shareholders' Interests in the Company's Shares (As of June 30, 2025) | Shareholder Name | Long/Short Position | Number of Shares Held | Approximate Percentage of Issued Share Capital | | :--- | :--- | :--- | :--- | | New Perfect Global Limited | Long | 182,577,000 | 66.76% | | Silver Tree Holdings Inc. | Long | 182,577,000 | 66.76% | | Sun Lin | Long | 182,577,000 | 66.76% | - Silver Tree Holdings Inc. is **100%** controlled by New Perfect Global Limited, which is wholly owned by Mr. Wang Jianzhong; Ms. Sun Lin, Mr. Wang Jianzhong's spouse, is deemed to have an interest in the same batch of shares in which Mr. Wang Jianzhong holds an interest through his controlled corporations[94](index=94&type=chunk) [Share Options](index=22&type=section&id=Share%20Options) The 2016 Share Option Scheme aims to grant share options to eligible persons; for the six months ended June 30, 2025, **832,000** options were granted, **877,000** exercised, **1,951,000** lapsed/cancelled, leaving **6,118,000** unexercised options at period-end - The Company's share option scheme (the **'2016 Share Option Scheme'**) was adopted by shareholders at the Company's annual general meeting held on June 6, 2016, to grant share options to eligible persons to subscribe for shares of the Company[92](index=92&type=chunk) Summary of Share Option Movements (For the six months ended June 30, 2025) | Metric | Number of Share Options | | :--- | :--- | | At January 1, 2025 | 8,114,000 | | Granted during the period | 832,000 | | Exercised during the period | (877,000) | | Lapsed/Cancelled | (1,951,000) | | At June 30, 2025 | 6,118,000 | - The total fair value of share options granted during the period was approximately **HK$635,000** and will be recognized as employee benefits expense over the vesting period[96](index=96&type=chunk) [Compliance with the Corporate Governance Code](index=24&type=section&id=Compliance%20with%20the%20Corporate%20Governance%20Code) The company has complied with all code provisions of Appendix C1 to the Listing Rules, the Corporate Governance Code, during the reporting period, except for a deviation from code provision C.2.1 where the roles of Chairman and Chief Executive Officer are combined and held by Mr. Wang Jianzhong, an arrangement the Board believes is in the Group's best interest - For the six months ended June 30, 2025, the Company has applied the principles and complied with all code provisions of Appendix C1 to the Listing Rules, the Corporate Governance Code, except for a deviation from code provision C.2.1, which stipulates that the roles of Chairman and Chief Executive Officer should be separate and not performed by the same individual[99](index=99&type=chunk) - The Board believes that Mr. Wang Jianzhong's dual role as Chairman of the Board and Chief Executive Officer is in the best interest of the Group, as it benefits the Board by having a Chairman who is familiar with the Group's business and can lead discussions and report on important matters and developments to the Board in a timely manner[99](index=99&type=chunk) [Purchase, Sale or Redemption of Listed Securities](index=24&type=section&id=Purchase,%20Sale%20or%20Redemption%20of%20Listed%20Securities) During the six months ended June 30, 2025, neither the Company nor any of its subsidiaries purchased, sold, or redeemed any of the Company's listed securities - During the six months ended June 30, 2025, neither the Company nor any of its subsidiaries purchased, sold, or redeemed any of the Company's listed securities[100](index=100&type=chunk) [Securities Transactions by Directors and Relevant Employees](index=24&type=section&id=Securities%20Transactions%20by%20Directors%20and%20Relevant%20Employees) All directors confirmed compliance with the Model Code for Securities Transactions by Directors of Listed Issuers during the reporting period, and the Board has adopted the Model Code as written guidelines for employees' dealings in the company's securities - Following specific enquiries made by the Company to each Director, all Directors have confirmed that they have complied with the required standards set out in the Model Code for Securities Transactions by Directors of Listed Issuers throughout the six months ended June 30, 2025[101](index=101&type=chunk) - The Board has adopted the Model Code as written guidelines for employees' dealings in the Company's securities[101](index=101&type=chunk) [Changes in Directors' Information](index=24&type=section&id=Changes%20in%20Directors'%20Information) During the reporting period, Professor Lin Chen was appointed as a member of the Nomination Committee, and Ms. Wang Ku Yi Chun retired as a Non-executive Director and Honorary Chairman of Johnson Electric Holdings Limited - Professor Lin Chen was appointed as a member of the Company's Nomination Committee on June 24, 2025[102](index=102&type=chunk) - Ms. Wang Ku Yi Chun retired as a Non-executive Director of Johnson Electric Holdings Limited (a company listed on the Stock Exchange) on July 17, 2025, and ceased to be its Honorary Chairman from the same date[103](index=103&type=chunk) [Interim Dividend](index=24&type=section&id=Interim%20Dividend) The Board of Directors resolved not to declare an interim dividend for the six months ended June 30, 2025 (2024: **HK$0.06** per share) - The Board of Directors resolved not to declare an interim dividend for the six months ended June 30, 2025 (2024: **HK$0.06** per share)[104](index=104&type=chunk) [Review of Financial Statements by Audit Committee](index=24&type=section&id=Review%20of%20Financial%20Statements%20by%20Audit%20Committee) The unaudited condensed consolidated interim financial statements and interim report for the six months ended June 30, 2025, have been reviewed by the Company's Audit Committee in conjunction with Group management - The Company's unaudited condensed consolidated interim financial statements and interim report for the six months ended June 30, 2025, have been reviewed by the Company's Audit Committee in conjunction with Group management[105](index=105&type=chunk)

Sales Performance - The company sold a total of 8,307 passenger cars in the six months ended June 30, 2025, a decrease of approximately 9.1% compared to 9,141 units sold in the same period of 2024[13]. - Revenue from automobile sales during the period was approximately RMB 3,158.8 million, representing a decline of about 14.0% year-on-year, accounting for approximately 82.9% of the total revenue[13]. - Revenue from after-sales services was approximately RMB 653.8 million, an increase of about 7.8% compared to the previous year, making up approximately 17.1% of the total revenue[13]. Financial Performance - Revenue decreased by approximately RMB 467.6 million or about 10.9% to approximately RMB 3,812.6 million compared to RMB 4,280.2 million in the same period of 2024[15]. - Automotive sales revenue fell by approximately RMB 514.9 million or about 14.0% to approximately RMB 3,158.8 million, accounting for about 82.9% of total revenue[15]. - Gross profit dropped by approximately 93.6% to about RMB 13.0 million, with a gross margin declining from approximately 4.8% to about 0.3%[17]. - Net profit attributable to shareholders decreased by approximately 79.1% to about RMB 7.1 million[25]. - For the six months ended June 30, 2025, the company reported a net profit of RMB 7,132,000, compared to a net profit of RMB 33,878,000 for the same period in 2024, representing a decrease of approximately 78.9%[81]. Operational Efficiency - The company has implemented a standardized central management system across its extensive 4S dealership network, enhancing operational efficiency and service quality[11]. - The company has developed a smart business platform covering "users - scenarios - data," integrating online transaction systems and customer data to improve operational efficiency[11]. - The company is committed to continuous improvement in customer satisfaction and operational efficiency through technology and data integration[11]. Customer Engagement - The company emphasizes customer retention as a key performance indicator, leveraging digital systems to enhance customer engagement and satisfaction[13]. - The company has established a "butler-style service" model to provide customized services throughout the car purchasing process, enhancing customer interaction and loyalty[12]. - The company aims to become a one-stop supplier of automotive products and services, focusing on comprehensive, professional, and high-quality service in the luxury car market[11]. Assets and Liabilities - As of June 30, 2025, total equity was approximately RMB 2,733.7 million, with current assets of approximately RMB 2,405.3 million and current liabilities of approximately RMB 1,761.4 million[27]. - Total assets as of June 30, 2025, were RMB 5,363,796, an increase from RMB 4,863,840 as of December 31, 2024[74]. - Current liabilities rose to RMB 1,761,436, compared to RMB 1,577,808 as of December 31, 2024[74]. Cash Flow and Investments - The company’s operating cash flow for the six months ended June 30, 2025, was RMB 309,388,000, down from RMB 379,779,000 in the same period of 2024, indicating a decline of about 18.5%[81]. - Total cash used in investing activities for the six months ended June 30, 2025, was RMB 654,882,000, compared to cash generated of RMB 21,948,000 in the same period of 2024[81]. - The company raised RMB 1,346,057,000 from bank and other borrowings during the six months ended June 30, 2025, an increase from RMB 954,323,000 in the same period of 2024[83]. Shareholder Information - Major shareholders include Chou Dynasty, holding 450 million shares, representing 72.29% of the issued share capital as of June 30, 2025[40]. - The board proposed no interim dividend for the six months ended June 30, 2025, compared to RMB 0.03 per share for the same period in 2024[55]. - The company approved a final dividend of RMB 0.02 per share for the previous fiscal year, totaling RMB 12,326,000[129]. Employee and Management - The workforce increased to 1,756 employees as of June 30, 2025, compared to 1,450 employees as of December 31, 2024[35]. - Employee costs rose to RMB 164,247,000, compared to RMB 143,252,000 in the previous year, reflecting an increase of 14.7%[96]. - Short-term employee benefits for key management personnel increased to RMB 2,634,000 for the six months ended June 30, 2025, from RMB 2,295,000 in 2024[142]. Debt and Financing - The company has pledged assets totaling approximately RMB 366.9 million in inventory, RMB 377.9 million in deposits, and RMB 161.8 million in properties as collateral for bank borrowings as of June 30, 2025[34]. - The company has a bank loan of RMB 350,000,000 as of June 30, 2025, secured by properties owned by a related party[140]. - The total interest-bearing bank and other borrowings increased to RMB 847,866,000 as of June 30, 2025, compared to RMB 438,445,000 as of December 31, 2024, indicating a significant increase of approximately 93.5%[116]. Corporate Governance - The company has complied with all corporate governance codes as per the listing rules during the period[49]. - The audit committee reviewed the unaudited interim financial report for the six months ended June 30, 2025, on August 26, 2025[54].

INTERIM REPORT 中期業績報告 2025 精美的化工企業發展平台 Leading Development Platform for Chemical Businesses To Enrich LIVES 為人民生活添加活力 目錄CONTENTS ONTENTS | 概要 | 2 | 重大投資 | 23 | | --- | --- | --- | --- | | Highlights | | Significant Investments | | | 主席報告－回顧及展望 | 3 | 企業管治 | 24 | | Chairman's Statement – | | Corporate Governance | | | Review and Outlook | | 審核委員會 | | | 行政總裁報告 | 6 | Audit Committee | 25 | | Report of the Chief Executive Officer | | | | | | | 上市公司董事進行證券交易的標準守則 | 25 | | 流動資金及財務資源 | 12 | Model Code for Securities ...

[Corporate Information](index=3&type=section&id=Corporate%20Information) This section details the company's governance structure, registered and business offices, committee compositions, and key financial partners [Board of Directors and Key Personnel](index=3&type=section&id=Board%20of%20Directors%20and%20Key%20Personnel) The Board of Directors comprises executive, non-executive, and independent non-executive directors, with Tan Sri Cheng Heng Jem as Chairman and Executive Director, and Zhou Jia as CEO - As of the reporting date, the Board members include Tan Sri Cheng Heng Jem (Chairman and Executive Director), Ms. Cheng San San (Executive Director), Dato' Sri Ho Kok Chung (Non-executive Director), and Dato' Foo Ah Hiang (Lead Independent Non-executive Director), Mr. Khoo Ming Kian, and Dato' Kong Ling Long[5](index=5&type=chunk)[6](index=6&type=chunk) - The Chief Executive Officer is Zhou Jia, and the Company Secretary is Yuan Yingxin[6](index=6&type=chunk)[7](index=7&type=chunk) [Registered and Business Offices](index=3&type=section&id=Registered%20and%20Business%20Offices) The company maintains its registered office in the Cayman Islands, with its head office and principal place of business in Shanghai, China, and a principal place of business in Hong Kong - The registered office is located at Vistra (Cayman) Limited, Cayman Islands[5](index=5&type=chunk)[6](index=6&type=chunk) - The head office and principal place of business are located at 5th Floor, Changfang International Plaza, 555 Loushanguan Road, Changning District, Shanghai, China[6](index=6&type=chunk)[7](index=7&type=chunk) - The principal place of business in Hong Kong is located at Unit 1010, 10th Floor, Harcourt House, 39 Gloucester Road, Wanchai, Hong Kong[6](index=6&type=chunk)[7](index=7&type=chunk) [Committees and Registrars](index=4&type=section&id=Committees%20and%20Registrars) The company has an Audit Committee, Remuneration Committee, and Nomination Committee, along with its principal share registrar and Hong Kong branch share registrar - The Chairman of the Audit Committee is Dato' Foo Ah Hiang[9](index=9&type=chunk)[10](index=10&type=chunk) - The Chairman of the Remuneration Committee is Mr. Khoo Ming Kian[9](index=9&type=chunk)[10](index=10&type=chunk) - The Chairman of the Nomination Committee is Tan Sri Cheng Heng Jem[9](index=9&type=chunk)[10](index=10&type=chunk) - The Hong Kong branch share registrar is Tricor Investor Services Limited[9](index=9&type=chunk)[10](index=10&type=chunk) [Bankers and Auditor](index=5&type=section&id=Bankers%20and%20Auditor) The company lists its main bankers in China and Hong Kong, along with its auditor information - Major bankers in China include Shanghai Pudong Development Bank, Zheshang Bank, Bank of China, Agricultural Bank of China, Industrial and Commercial Bank of China, China Construction Bank, China Merchants Bank, and Bank of Communications[11](index=11&type=chunk)[12](index=12&type=chunk) - Major bankers in Hong Kong include BNP Paribas Hong Kong Branch, The Hongkong and Shanghai Banking Corporation Limited, Bank of China (Hong Kong), and Bank of Communications (Hong Kong) Limited[11](index=11&type=chunk)[12](index=12&type=chunk) - The auditor is Grant Thornton Hong Kong Limited[11](index=11&type=chunk)[12](index=12&type=chunk) [Financial Highlights](index=6&type=section&id=Financial%20Highlights) The Group's total operating revenue for the six months ended June 30, 2025, increased slightly by 0.9% to **RMB 1,962.8 million**, with significant growth in operating profit and profit attributable to owners despite declines in same-store sales and gross sales proceeds, and an interim dividend declared 2025 Half-Year Financial Highlights | Indicator | 2025 Half-Year (RMB million) | 2024 Half-Year (RMB million) | Year-on-Year Change (%) | | :--- | :--- | :--- | :--- | | Total Operating Revenue | 1,962.8 | 1,944.7 | +0.9% | | Same-Store Sales (SSS) | - | - | -18.4% | | Gross Sales Proceeds (GSP) | 4,155.3 | 4,695.3 | -11.5% | | Operating Profit | 257.6 | 193.8 | +32.9% | | Profit/(Loss) Attributable to Owners of the Company | 22.5 | (18.6) | Turnaround to Profit | | Interim Dividend (per share) | RMB 0.02 | RMB 0.02 | 0% | [Independent Review Report](index=7&type=section&id=Independent%20Review%20Report) Grant Thornton Hong Kong Limited reviewed Parkson Retail Group Limited's interim financial information for the six months ended June 30, 2025, concluding no material non-compliance with IAS 34 - The review was conducted in accordance with Hong Kong Standard on Review Engagements 2410, issued by the Hong Kong Institute of Certified Public Accountants, and does not express an audit opinion due to its limited scope[25](index=25&type=chunk)[27](index=27&type=chunk) - The review concluded that nothing has come to the attention of the reviewers that causes them to believe the interim financial information is not prepared, in all material respects, in accordance with International Accounting Standard 34[26](index=26&type=chunk)[28](index=28&type=chunk) [Interim Condensed Consolidated Statement of Profit or Loss](index=9&type=section&id=Interim%20Condensed%20Consolidated%20Statement%20of%20Profit%20or%20Loss) The Group's profit or loss statement for the six months ended June 30, 2025, shows a slight increase in total operating revenue, a successful turnaround from a loss to a profit attributable to owners of **RMB 22.5 million**, driven by controlled operating expenses and reduced finance costs Interim Condensed Consolidated Statement of Profit or Loss Key Data (Six Months Ended June 30) | Indicator | 2025 (RMB thousand) | 2024 (RMB thousand) | Change (RMB thousand) | | :--- | :--- | :--- | :--- | | Revenue | 1,615,743 | 1,719,784 | (104,041) | | Other Operating Revenues | 347,087 | 224,942 | 122,145 | | **Total Operating Revenues** | **1,962,830** | **1,944,726** | **18,104** | | Total Operating Expenses | (1,705,191) | (1,750,947) | 45,756 | | **Operating Profit** | **257,639** | **193,779** | **63,860** | | Finance Income | 12,696 | 22,816 | (10,120) | | Finance Costs | (219,588) | (243,220) | 23,632 | | Share of Profit from Associates | 9,421 | 8,862 | 559 | | **Profit/(Loss) Before Tax** | **60,168** | **(17,763)** | **77,931** | | Income Tax Expense/(Credit) | (39,218) | 534 | (39,752) | | **Profit/(Loss) for the Period** | **20,950** | **(17,229)** | **38,179** | | Profit/(Loss) Attributable to Owners of the Company | 22,468 | (18,641) | 41,109 | | Profit/(Loss) Attributable to Non-controlling Interests | (1,518) | 1,412 | (2,930) | | Basic and Diluted Earnings/(Loss) Per Share | RMB 0.009 | (RMB 0.007) | Turnaround to Profit | [Interim Condensed Consolidated Statement of Comprehensive Income](index=10&type=section&id=Interim%20Condensed%20Consolidated%20Statement%20of%20Comprehensive%20Income) The Group's comprehensive income statement for the six months ended June 30, 2025, shows a profit for the period of **RMB 20.95 million**, with total comprehensive income of **RMB 52.795 million** after accounting for exchange differences from translating overseas operations, a significant improvement from the prior year's total comprehensive expense Interim Condensed Consolidated Statement of Comprehensive Income Key Data (Six Months Ended June 30) | Indicator | 2025 (RMB thousand) | 2024 (RMB thousand) | | :--- | :--- | :--- | | Profit/(Loss) for the Period | 20,950 | (17,229) | | Exchange Differences Arising from Translation of Overseas Operations | 31,845 | (27,315) | | Exchange Differences Arising from Translation of the Company | – | (3,409) | | Other Comprehensive Income/(Expense) for the Period, Net of Tax | 31,845 | (30,724) | | **Total Comprehensive Income/(Expense) for the Period** | **52,795** | **(47,953)** | | Attributable to Owners of the Company | 54,313 | (49,365) | | Attributable to Non-controlling Interests | (1,518) | 1,412 | [Interim Condensed Consolidated Statement of Financial Position](index=11&type=section&id=Interim%20Condensed%20Consolidated%20Statement%20of%20Financial%20Position) As of June 30, 2025, the Group's statement of financial position shows a slight decrease in total assets but an improvement in financial structure with reduced current liabilities, leading to an increase in both net current assets and net assets Interim Condensed Consolidated Statement of Financial Position Key Data (As of June 30) | Indicator | 2025 (RMB thousand) | 2024 December 31 (RMB thousand) | Change (RMB thousand) | | :--- | :--- | :--- | :--- | | **Non-current Assets** | **8,305,641** | **8,500,259** | **(194,618)** | | Property, Plant and Equipment | 2,585,708 | 2,653,648 | (67,940) | | Right-of-use Assets | 2,524,934 | 2,697,334 | (172,400) | | **Current Assets** | **2,730,932** | **2,881,762** | **(150,830)** | | Inventories | 301,289 | 378,761 | (77,472) | | Cash and Bank Balances | 1,355,715 | 1,466,508 | (110,793) | | **Current Liabilities** | **2,402,667** | **2,538,884** | **(136,217)** | | Trade Payables | 423,656 | 586,181 | (162,525) | | **Net Current Assets** | **328,265** | **342,878** | **(14,613)** | | **Non-current Liabilities** | **5,494,017** | **5,756,043** | **(262,026)** | | Interest-bearing Bank Loans | 2,619,292 | 2,590,421 | 28,871 | | Lease Liabilities | 2,697,319 | 2,988,839 | (291,520) | | **Net Assets** | **3,139,889** | **3,087,094** | **52,795** | | **Total Equity** | **3,139,889** | **3,087,094** | **52,795** | [Interim Condensed Consolidated Statement of Changes in Equity](index=13&type=section&id=Interim%20Condensed%20Consolidated%20Statement%20of%20Changes%20in%20Equity) The Group's statement of changes in equity for the six months ended June 30, 2025, shows an increase in total equity attributable to owners from **RMB 3,015.374 million** to **RMB 3,069.687 million**, driven by profit for the period and an increase in exchange reserves Interim Condensed Consolidated Statement of Changes in Equity Key Data (Six Months Ended June 30) | Indicator | 2025 January 1 (RMB thousand) | Profit/(Loss) for the Period (RMB thousand) | Other Comprehensive Income for the Period (RMB thousand) | Transfer to PRC Statutory Reserve (RMB thousand) | 2025 June 30 (RMB thousand) | | :--- | :--- | :--- | :--- | :--- | :--- | | Issued Capital | 55,477 | – | – | – | 55,477 | | PRC Statutory Reserve | 282,937 | – | – | 5,347 | 288,284 | | Exchange Reserve | (554,375) | – | 31,845 | – | (522,530) | | Asset Revaluation Reserve | 251,412 | – | – | – | 251,412 | | Retained Earnings | 2,979,923 | 22,468 | – | (5,347) | 2,997,044 | | **Total Attributable to Owners of the Company** | **3,015,374** | **22,468** | **31,845** | **(5,347)** | **3,069,687** | | Non-controlling Interests | 71,720 | (1,518) | – | – | 70,202 | | **Total Equity** | **3,087,094** | **20,950** | **31,845** | **(5,347)** | **3,139,889** | [Interim Condensed Consolidated Statement of Cash Flows](index=14&type=section&id=Interim%20Condensed%20Consolidated%20Statement%20of%20Cash%20Flows) The Group's cash flow statement for the six months ended June 30, 2025, shows net cash generated from operating activities of **RMB 149.295 million**, net cash from investing activities of **RMB 3.955 million**, and net cash used in financing activities of **RMB 301.749 million**, resulting in a net decrease in cash and cash equivalents of **RMB 148.499 million** Interim Condensed Consolidated Statement of Cash Flows Key Data (Six Months Ended June 30) | Activity Type | 2025 (RMB thousand) | 2024 (RMB thousand) | Change (RMB thousand) | | :--- | :--- | :--- | :--- | | Net Cash Flows from Operating Activities | 149,295 | 213,218 | (63,923) | | Net Cash Flows from Investing Activities | 3,955 | 24,738 | (20,783) | | Net Cash Flows Used in Financing Activities | (301,749) | (342,963) | 41,214 | | Net Decrease in Cash and Cash Equivalents | (148,499) | (105,007) | (43,492) | | Cash and Cash Equivalents at End of Period | 1,384,129 | 1,576,341 | (192,212) | [Notes to the Interim Condensed Consolidated Financial Information](index=17&type=section&id=Notes%20to%20the%20Interim%20Condensed%20Consolidated%20Financial%20Information) These notes provide detailed explanations and supplementary information for the interim condensed consolidated financial statements, covering company overview, accounting policies, revenue breakdown, operating expenses, asset and liability details, lease arrangements, related party transactions, and fair value measurement of financial instruments, offering deeper insights into the Group's financial performance and position [1. Corporate Information](index=17&type=section&id=1.%20Corporate%20Information) The company is an investment holding company primarily operating department stores, shopping malls, outlets, and supermarket networks in China, and providing credit services in Malaysia, with Parkson Holdings Berhad as its ultimate holding company - The Company was incorporated in the Cayman Islands on August 3, 2005, as an investment holding company[44](index=44&type=chunk)[49](index=49&type=chunk) - The Group's principal activities are operating department stores, shopping malls, outlets, and supermarket networks in China, and providing credit services in Malaysia[45](index=45&type=chunk)[49](index=49&type=chunk) - The ultimate holding company is Parkson Holdings Berhad (PHB), a company incorporated and listed in Malaysia[46](index=46&type=chunk)[49](index=49&type=chunk) [2.1 Basis of Preparation](index=17&type=section&id=2.1%20BASIS%20OF%20PREPARATION) The interim financial information is prepared in accordance with IAS 34 "Interim Financial Reporting" and should be read with the Group's annual consolidated financial statements for the year ended December 31, 2024; the company's functional currency changed from USD to RMB effective January 1, 2025, reflecting its primary financing and investing activities - The interim financial information has been prepared in accordance with International Accounting Standard 34 "Interim Financial Reporting"[47](index=47&type=chunk)[50](index=50&type=chunk) - Effective January 1, 2025, the Company's functional currency changed from USD to RMB, as its largest liability, a syndicated loan, is denominated in RMB, and future financing and investing activities will primarily be in RMB[48](index=48&type=chunk)[51](index=51&type=chunk) [2.2 Adoption of Amended IFRS Accounting Standards](index=18&type=section&id=2.2%20ADOPTION%20OF%20AMENDED%20IFRS%20ACCOUNTING%20STANDARDS) The adoption of amendments to IAS 21 "Lack of Exchangeability" in the current period had no material impact on the Group's performance or financial position for current and prior periods - Amendments to IAS 21 "Lack of Exchangeability" effective January 1, 2025, have been adopted[54](index=54&type=chunk)[56](index=56&type=chunk) - These amendments had no material impact on the Group's performance and financial position for the current and prior periods[55](index=55&type=chunk)[56](index=56&type=chunk) [3. Revenues, Other Operating Revenues and Segment Information](index=18&type=section&id=3.%20REVENUES,%20OTHER%20OPERATING%20REVENUES%20AND%20SEGMENT%20INFORMATION) The Group's revenue primarily derives from customer contracts (self-operated sales, concessionaire sales commissions, consulting and management service fees) and other sources (gross rental income, credit services); despite a decrease in customer contract revenue, a significant increase in other operating revenues, particularly from lease modifications and terminations, led to a slight rise in total operating revenues, with the "Retail" segment being the main operating segment and most revenue and assets located in China Revenue Analysis (Six Months Ended June 30) | Revenue Source | 2025 (RMB thousand) | 2024 (RMB thousand) | Change (RMB thousand) | | :--- | :--- | :--- | :--- | | **Revenue from Contracts with Customers** | **1,181,179** | **1,348,418** | **(167,239)** | | Self-operated Sales | 884,586 | 995,320 | (110,734) | | Concessionaire Sales Commissions | 293,836 | 347,495 | (53,659) | | Consulting and Management Service Fees | 2,757 | 5,603 | (2,846) | | **Revenue from Other Sources** | **434,564** | **371,366** | **63,198** | | Gross Rental Income | 326,772 | 304,601 | 22,171 | | Credit Services | 107,792 | 66,765 | 41,027 | | **Total Revenue** | **1,615,743** | **1,719,784** | **(104,041)** | Other Operating Revenues (Six Months Ended June 30) | Other Operating Revenue Item | 2025 (RMB thousand) | 2024 (RMB thousand) | Change (RMB thousand) | | :--- | :--- | :--- | :--- | | Credit Card Handling Fees | 10,151 | 12,173 | (2,022) | | Promotional Income | 23,473 | 24,927 | (1,454) | | Electricity and Water Charges | 64,957 | 63,681 | 1,276 | | Administrative Fees | 79,235 | 77,891 | 1,344 | | Rental Income from Exhibition Venues and Equipment | 27,852 | 29,346 | (1,494) | | Service Fees | 9,620 | 10,707 | (1,087) | | Government Grants | 3,135 | 1,555 | 1,580 | | Other Income from Net Investment in Subleases | 8,394 | – | 8,394 | | Other Income from Lease Modifications and Terminations | 111,610 | 1,176 | 110,434 | | Other Income | 8,660 | 3,486 | 5,174 | | **Total** | **347,087** | **224,942** | **122,145** | - The Group's main operating segment is "Retail," primarily operating department stores, shopping malls, outlets, and supermarkets in China, and consumer finance business in Malaysia[67](index=67&type=chunk)[70](index=70&type=chunk) [4. Profit/(Loss) Before Tax](index=22&type=section&id=4.%20PROFIT%2F%28LOSS%29%20BEFORE%20TAX) The Group's profit before tax turned from a loss to a profit compared to the prior year, primarily due to adjustments in operating expenses, including changes in depreciation and amortization, impairment of trade receivables, and impairment of goodwill Profit/(Loss) Before Tax Adjustment Items (Six Months Ended June 30) | Adjustment Item | 2025 (RMB thousand) | 2024 (RMB thousand) | | :--- | :--- | :--- | | Total Staff Costs | 252,821 | 239,663 | | Rental Expenses for Leased Properties | 37,505 | 44,105 | | Gross Rental Income from Investment Properties | (103,727) | (98,907) | | Rental Income from Subleases of Properties under Operating Leases | (223,045) | (205,694) | | Cost of Inventories Recognized as Expense | 773,476 | 864,486 | | Depreciation and Amortization | 241,078 | 255,900 | | Impairment of Trade Receivables | 46,056 | 12,198 | | Impairment of Prepayments, Other Receivables and Other Assets | 1,711 | 21,029 | | Impairment of Property, Plant and Equipment | 9,347 | 81 | | Impairment of Goodwill | 24,400 | 8,258 | | Net Loss on Disposal of Property, Plant and Equipment | 1,053 | 492 | | Net Exchange Differences | 4,465 | 52,635 | | Auditor's Remuneration | 650 | 600 | | Direct Operating Expenses from Earning Rental Income from Investment Properties | 10,588 | 10,588 | - Goodwill impairment was primarily recognized for underperforming cash-generating units of Jiangxi Parkson Zhongshan City Department Store Co, Ltd[80](index=80&type=chunk) [5. Finance Income/(Costs)](index=23&type=section&id=5.%20FINANCE%20INCOME%2F%28COSTS%29) The Group's finance income primarily consists of bank interest and finance income from net investment in subleases, while finance costs mainly include interest on lease liabilities and interest on interest-bearing bank loans, resulting in a decrease in net finance costs for the period Finance Income/(Costs) Analysis (Six Months Ended June 30) | Item | 2025 (RMB thousand) | 2024 (RMB thousand) | | :--- | :--- | :--- | | **Finance Income** | **12,696** | **22,816** | | Bank Interest Income | 6,591 | 12,821 | | Gain on Redemption of Financial Assets at Fair Value Through Profit or Loss | 285 | – | | Fair Value Change of Financial Assets at Fair Value Through Profit or Loss | 467 | 704 | | Finance Income from Net Investment in Subleases | 5,353 | 9,291 | | **Finance Costs** | **(219,588)** | **(243,220)** | | Interest on Lease Liabilities | (147,527) | (133,229) | | Interest on Interest-bearing Bank Loans and Other Borrowings | (72,061) | (109,991) | [6. Income Tax Expense/(Credit)](index=24&type=section&id=6.%20INCOME%20TAX%20EXPENSE%2F%28CREDIT%29) The Group pays income tax in various jurisdictions, including China and Malaysia, with Chinese companies generally subject to a 25% corporate income tax rate, though some entities enjoy a preferential 15% rate; the current period saw an income tax expense of **RMB 39.218 million**, compared to an income tax credit in the prior period - The Group's PRC companies are subject to a corporate income tax rate of **25%**, with three entities approved to enjoy a preferential tax rate of **15%**[83](index=83&type=chunk)[85](index=85&type=chunk) - Malaysian income tax is provided at a rate of **24%**[84](index=84&type=chunk)[85](index=85&type=chunk) Income Tax Expense/(Credit) Analysis (Six Months Ended June 30) | Item | 2025 (RMB thousand) | 2024 (RMB thousand) | | :--- | :--- | :--- | | Current Income Tax | 39,188 | 40,036 | | Deferred Tax | 30 | (40,570) | | **Total** | **39,218** | **(534)** | [7. Earnings/(Loss) Per Share Attributable to Ordinary Equity Holders of the Company](index=25&type=section&id=7.%20EARNINGS%2F%28LOSS%29%20PER%20SHARE%20ATTRIBUTABLE%20TO%20ORDINARY%20EQUITY%20HOLDERS%20OF%20THE%20COMPANY) The company's basic and diluted earnings per share for the six months ended June 30, 2025, was **RMB 0.009**, a turnaround from a loss per share of **RMB 0.007** in the prior year, primarily due to increased profit attributable to owners of the company Earnings/(Loss) Per Share Calculation (Six Months Ended June 30) | Indicator | 2025 | 2024 | | :--- | :--- | :--- | | Profit/(Loss) Attributable to Ordinary Equity Holders of the Company (RMB thousand) | 22,468 | (18,641) | | Weighted Average Number of Ordinary Shares Outstanding for the Period (thousand shares) | 2,634,532 | 2,634,532 | | **Basic and Diluted Earnings/(Loss) Per Share** | **RMB 0.009** | **(RMB 0.007)** | - The Group had no potentially dilutive ordinary shares outstanding for the six months ended June 30, 2025, and 2024[88](index=88&type=chunk)[89](index=89&type=chunk) [8. Interim Dividend](index=26&type=section&id=8.%20INTERIM%20DIVIDEND) The Board of Directors recommended an interim dividend of **RMB 0.02** per share, totaling **RMB 52.691 million**, consistent with the prior year Interim Dividend (Six Months Ended June 30) | Item | 2025 (RMB thousand) | 2024 (RMB thousand) | | :--- | :--- | :--- | | Proposed Interim Dividend (RMB 0.02 per ordinary share) | 52,691 | 52,691 | [9. Property, Plant and Equipment](index=26&type=section&id=9.%20PROPERTY,%20PLANT%20AND%20EQUIPMENT) The Group acquired assets totaling **RMB 14.636 million** and disposed of assets with a net book value of **RMB 1.053 million**, incurring a net loss on disposal, for the six months ended June 30, 2025, with certain buildings pledged as collateral for bank loans - Asset acquisitions for the period amounted to **RMB 14,636,000**, compared to **RMB 13,910,000** in the prior period[94](index=94&type=chunk)[97](index=97&type=chunk) - Assets with a net book value of **RMB 1,053,000** were disposed of during the period, resulting in a net loss on disposal of **RMB 1,053,000**[94](index=94&type=chunk)[97](index=97&type=chunk) - As of June 30, 2025, buildings with a net book value of approximately **RMB 1,303,954,000** were pledged as collateral for the Group's bank loans[95](index=95&type=chunk)[97](index=97&type=chunk) [10. Leases](index=26&type=section&id=10.%20LEASES) As a lessee, the Group holds right-of-use assets for leased properties and other equipment, recognizing corresponding lease liabilities; as a lessor, the Group leases out investment properties and right-of-use assets through operating and finance leases, generating rental income and net investment in subleases Right-of-Use Assets Movement (Six Months Ended June 30) | Item | 2025 (RMB thousand) | 2024 (RMB thousand) | | :--- | :--- | :--- | | At January 1 | 2,697,334 | 2,081,520 | | Additions from New Leases | 56,956 | 7,515 | | Depreciation Expense for the Period | (158,313) | (162,060) | | Increase from Lease Modification | 63,537 | 348,649 | | Decrease from Lease Termination | (127,119) | – | | Decrease from Subleases | (7,461) | (11,391) | | **At June 30** | **2,524,934** | **2,264,233** | Lease Liabilities Movement (Six Months Ended June 30) | Item | 2025 (RMB thousand) | 2024 (RMB thousand) | | :--- | :--- | :--- | | At January 1 | 3,490,394 | 3,017,563 | | Additions from New Leases | 56,956 | 7,515 | | Interest Accrued During the Period | 147,527 | 133,229 | | Payments | (331,450) | (400,836) | | Increase from Lease Modification | 2,924 | 333,669 | | Decrease from Lease Termination | (178,115) | – | | Exchange Adjustments | 90 | 162 | | **At June 30** | **3,188,326** | **3,091,302** | | Current Portion | 491,007 | 587,871 | | Non-current Portion | 2,697,319 | 2,503,431 | - As of June 30, 2025, leasehold land with a net book value of approximately **RMB 299,222,000** was pledged as collateral for the Group's bank loans[101](index=101&type=chunk) - The Group recognized rental income from operating leases of **RMB 326,772,000** for the six months ended June 30, 2025[108](index=108&type=chunk)[109](index=109&type=chunk) Net Investment in Subleases Movement (Six Months Ended June 30) | Item | 2025 (RMB thousand) | 2024 (RMB thousand) | | :--- | :--- | :--- | | At January 1 | 146,755 | 241,266 | | Additions from New Leases | 17,058 | 9,745 | | Interest Accrued During the Period | 5,353 | 9,291 | | Decrease from Lease Modification | (1,109) | (112) | | Decrease from Lease Termination | (12,119) | (20,549) | | Proceeds from Subleases | (45,180) | (52,685) | | **At June 30** | **110,758** | **186,956** | | Current Portion | 84,165 | 94,326 | | Non-current Portion | 26,593 | 92,630 | [11. Other Assets](index=32&type=section&id=11.%20OTHER%20ASSETS) Other assets primarily comprise the non-current portion of net investment in subleases, totaling **RMB 26.593 million** as of June 30, 2025, a decrease from December 31, 2024 Other Assets (As of June 30) | Item | 2025 (RMB thousand) | 2024 December 31 (RMB thousand) | | :--- | :--- | :--- | | Net Investment in Subleases | 26,593 | 55,369 | [12. Inventories](index=32&type=section&id=12.%20INVENTORIES) The Group's inventories, primarily consisting of merchandise and consumables, totaled **RMB 301.289 million** as of June 30, 2025, a decrease from December 31, 2024 Inventory Composition (As of June 30) | Item | 2025 (RMB thousand) | 2024 December 31 (RMB thousand) | | :--- | :--- | :--- | | Merchandise | 298,562 | 375,889 | | Consumables | 2,894 | 3,039 | | Less: Impairment | (167) | (167) | | **Total** | **301,289** | **378,761** | [13. Trade Receivables](index=33&type=section&id=13.%20TRADE%20RECEIVABLES) Trade receivables primarily arise from credit card consumption and credit services, with a typical credit period of one month; as of June 30, 2025, the total amounted to **RMB 1,188.461 million**, with Parkson Credit's trade receivables and unbilled receivables pledged as collateral for bank loans Trade Receivables (As of June 30) | Item | 2025 (RMB thousand) | 2024 December 31 (RMB thousand) | | :--- | :--- | :--- | | **Current** | **398,437** | **366,390** | | Third Parties | 409,426 | 373,982 | | Less: Impairment Allowance | (10,989) | (7,592) | | **Non-current** | **790,024** | **677,133** | | Third Parties | 814,131 | 687,137 | | Less: Impairment Allowance | (24,107) | (10,004) | | **Total** | **1,188,461** | **1,043,523** | - The credit period for trade receivables is generally **one month**, and the Group strictly controls credit risk through its credit monitoring department[125](index=125&type=chunk) - As of June 30, 2025, Parkson Credit's trade receivables of **RMB 529,087,000** and unbilled receivables of **RMB 132,450,000** were pledged as collateral for its bank loans[127](index=127&type=chunk)[128](index=128&type=chunk) [14. Prepayments and Other Receivables](index=35&type=section&id=14.%20PREPAYMENTS%20AND%20OTHER%20RECEIVABLES) Prepayments and other receivables include rental deposits, operating lease receivables, and the current portion of net investment in subleases, totaling **RMB 532.576 million** as of June 30, 2025, slightly higher than December 31, 2024 Prepayments and Other Receivables (As of June 30) | Item | 2025 (RMB thousand) | 2024 December 31 (RMB thousand) | | :--- | :--- | :--- | | Prepaid Rent for Variable Lease Payments | 27,847 | 11,230 | | Rental Deposits | 186,710 | 195,130 | | Prepayments to Suppliers | 13,405 | 25,202 | | Operating Lease Receivables | 169,751 | 149,516 | | Prepaid Taxes | 18,166 | 5,122 | | Accrued Interest | 720 | 1,790 | | Other Prepayments | 24,991 | 40,658 | | Net Investment in Subleases | 84,165 | 91,386 | | Other Receivables | 62,554 | 64,232 | | **Total** | **588,309** | **584,266** | | Less: Impairment Allowance | (55,733) | (54,022) | | **Net Amount** | **532,576** | **530,244** | [15. Financial Assets at Fair Value Through Profit or Loss](index=35&type=section&id=15.%20FINANCIAL%20ASSETS%20AT%20FAIR%20VALUE%20THROUGH%20PROFIT%20OR%20LOSS) The Group's financial assets at fair value through profit or loss primarily consist of wealth management products managed by licensed financial institutions in China, investing in bonds and trusts, with a fair value of **RMB 73.745 million** as of June 30, 2025 Financial Assets at Fair Value Through Profit or Loss (As of June 30) | Item | 2025 (RMB thousand) | 2024 December 31 (RMB thousand) | | :--- | :--- | :--- | | Wealth Management Products | 73,745 | 66,685 | - These wealth management products are managed by licensed financial institutions in China, primarily investing in bonds, trusts, cash funds, bond funds, or unlisted equity investments[134](index=134&type=chunk) [16. Cash and Cash Equivalents and Time Deposits](index=36&type=section&id=16.%20CASH%20AND%20CASH%20EQUIVALENTS%20AND%20TIME%20DEPOSITS) The Group's cash and cash equivalents, primarily denominated in RMB, totaled **RMB 1,384.129 million** as of June 30, 2025, with restricted cash and time deposits, some of which are pledged as performance guarantees Cash and Cash Equivalents and Time Deposits (As of June 30) | Item | 2025 (RMB thousand) | 2024 December 31 (RMB thousand) | | :--- | :--- | :--- | | Cash and Bank Balances | 1,355,715 | 1,466,508 | | Restricted Cash | 28,414 | 63,999 | | Short-term Deposits (over three months but less than one year) | 40,756 | 9,175 | | Long-term Deposits | 26,202 | 26,202 | | **Total** | **1,451,087** | **1,565,884** | | Less: Pledged Deposits and Unsecured Short-term Time Deposits | (67,958) | (36,377) | | **Cash and Cash Equivalents** | **1,384,129** | **1,530,507** | - As of June 30, 2025, the Group's cash and bank balances, restricted cash, and time deposits denominated in RMB amounted to **RMB 1,249,736,000**[137](index=137&type=chunk)[139](index=139&type=chunk) - The Group holds pledged deposits of **RMB 27,202,000** in designated bank accounts as performance guarantees[138](index=138&type=chunk)[139](index=139&type=chunk) [17. Trade Payables](index=37&type=section&id=17.%20TRADE%20PAYABLES) The Group's trade payables significantly decreased to **RMB 423.656 million** as of June 30, 2025, from **RMB 586.181 million** on December 31, 2024, with most balances falling within three months Trade Payables Aging Analysis (As of June 30) | Aging | 2025 (RMB thousand) | 2024 December 31 (RMB thousand) | | :--- | :--- | :--- | | Within Three Months | 391,161 | 562,875 | | Four to Twelve Months | 13,276 | 3,430 | | Over One Year | 19,219 | 19,876 | | **Total** | **423,656** | **586,181** | [18. Other Payables and Accruals](index=37&type=section&id=18.%20OTHER%20PAYABLES%20AND%20ACCRUALS) Other payables and accruals primarily include rental payables, supplier deposits, accrued salaries and bonuses, and other accrued operating expenses, totaling **RMB 605.383 million** as of June 30, 2025, largely consistent with December 31, 2024 Other Payables and Accruals (As of June 30) | Item | 2025 (RMB thousand) | 2024 December 31 (RMB thousand) | | :--- | :--- | :--- | | Rental Payables | 17,794 | 23,108 | | Other Taxes Payable | 3,465 | 7,389 | | Supplier Deposits | 167,968 | 158,508 | | Construction Payables | 29,997 | 39,776 | | Accrued Salaries and Bonuses | 32,372 | 43,174 | | Accrued Interest | 3,983 | 2,885 | | Other Payables and Accruals | 349,804 | 330,416 | | **Total** | **605,383** | **605,256** | - Other payables and accruals primarily include accrued operating expenses, deposits, and tenant prepaid rent[145](index=145&type=chunk) [19. Contract Liabilities](index=38&type=section&id=19.%20CONTRACT%20LIABILITIES) Contract liabilities primarily arise from customer prepayments received and loyalty points program provisions, totaling **RMB 554.375 million** as of June 30, 2025, a decrease from December 31, 2024 Contract Liabilities (As of June 30) | Item | 2025 (RMB thousand) | 2024 December 31 (RMB thousand) | | :--- | :--- | :--- | | Contract Liabilities from Customer Prepayments Received | 541,867 | 591,111 | | Loyalty Points Program Provision | 12,508 | 13,197 | | **Total** | **554,375** | **604,308** | [20. Interest-Bearing Bank Loans](index=38&type=section&id=20.%20INTEREST-BEARING%20BANK%20LOANS) The Group's interest-bearing bank loans, comprising current and non-current portions, are primarily denominated in RMB and MYR, totaling **RMB 2,923.618 million** as of June 30, 2025, an increase from December 31, 2024, and secured by various pledged assets Interest-Bearing Bank Loans (As of June 30) | Item | 2025 (RMB thousand) | 2024 December 31 (RMB thousand) | | :--- | :--- | :--- | | **Current** | **304,326** | **220,075** | | Secured Bank Loans Denominated in MYR | 204,326 | 120,075 | | Secured Bank Loans Denominated in RMB | 100,000 | 100,000 | | **Non-current** | **2,619,292** | **2,590,421** | | Secured Bank Loans Denominated in RMB | 2,270,000 | 2,320,000 | | Secured Bank Loans Denominated in MYR | 349,292 | 270,421 | | **Total** | **2,923,618** | **2,810,496** | - Bank loans are secured by pledges of investment properties, buildings, leasehold land, and assignments of trade receivables and unbilled receivables[152](index=152&type=chunk) - As of June 30, 2025, bank credit facilities of **RMB 17,510,000** remained unutilized[152](index=152&type=chunk) [21. Issued Capital](index=40&type=section&id=21.%20ISSUED%20CAPITAL) As of June 30, 2025, the company's issued and fully paid share capital consisted of **2,634,532 thousand** ordinary shares with a par value of **RMB 55.477 million**, remaining unchanged during the period Issued Capital (As of June 30) | Item | Number of Ordinary Shares ('000) | Par Value (RMB thousand) | | :--- | :--- | :--- | | Authorized: Ordinary Shares of HKD 0.02 each | 7,500,000 | 156,000 | | Issued and Fully Paid: As of June 30, 2025 | 2,634,532 | 55,477 | - There were no transactions in the Company's issued share capital for the six months ended June 30, 2025, and for the year ended December 31, 2024[155](index=155&type=chunk)[156](index=156&type=chunk) [22. Commitments](index=40&type=section&id=22.%20COMMITMENTS) The Group has contracted but unprovided capital commitments at the end of the reporting period, primarily for construction in progress and renovation of leased properties, in addition to an uncommenced lease contract involving future lease payments Capital Commitments (As of June 30) | Item | 2025 (RMB thousand) | 2024 December 31 (RMB thousand) | | :--- | :--- | :--- | | Contracted, but not provided for: Construction in Progress and Renovation of Leased Properties | 4,386 | 46 | - As of June 30, 2025, the Group had an uncommenced lease contract with total future lease payments of **RMB 421,395,000** (of which **RMB 68,136,000** is for years 2 to 5, and **RMB 353,259,000** is for after five years)[158](index=158&type=chunk) [23. Related Party Transactions](index=41&type=section&id=23.%20RELATED%20PARTY%20TRANSACTIONS) The Group engaged in various related party transactions, including interest income, property management expenses, consulting income, and franchise expenses, with franchise expenses paid to a fellow subsidiary constituting a continuing connected transaction exempted from disclosure due to its small amount Related Party Transactions (Six Months Ended June 30) | Transaction Type | 2025 (RMB thousand) | 2024 (RMB thousand) | | :--- | :--- | :--- | | Interest Income | 3,208 | 5,444 | | Property Management Expenses | – | 4,788 | | Consulting Income | 660 | 660 | | Franchise Expenses | 613 | 855 | - Franchise expenses paid to fellow subsidiary Parkson Services Pte Ltd for the use of the "Parkson" trademark in China constitute a continuing connected transaction, but are exempted from Listing Rules disclosure requirements as the relevant percentage ratios are below **0.1%**[162](index=162&type=chunk)[164](index=164&type=chunk) Key Management Personnel Remuneration (Six Months Ended June 30) | Remuneration Item | 2025 (RMB thousand) | 2024 (RMB thousand) | | :--- | :--- | :--- | | Fees | 663 | 654 | | Salaries, Allowances, Bonuses and Other Benefits | 4,883 | 4,656 | | **Total** | **5,546** | **5,310** | [24. Fair Value and Fair Value Hierarchy of Financial Instruments](index=43&type=section&id=24.%20FAIR%20VALUE%20AND%20FAIR%20VALUE%20HIERARCHY%20OF%20FINANCIAL%20INSTRUMENTS) The fair value measurement of the Group's financial instruments is managed by the finance department and reviewed by the Audit Committee, with unlisted wealth management products measured using a discounted cash flow valuation model, classified as Level 3 in the fair value hierarchy, with an expected return rate of **1.7%** - Policies and procedures for fair value measurement of financial instruments are managed by the finance department, led by the directors, and reviewed by the Audit Committee twice a year[169](index=169&type=chunk)[174](index=174&type=chunk) - Unlisted wealth management products are valued using a discounted cash flow valuation model to estimate fair value, classified as Level 3 in the fair value hierarchy[171](index=171&type=chunk)[173](index=173&type=chunk)[175](index=175&type=chunk) Financial Assets at Fair Value Through Profit or Loss (As of June 30) | Item | 2025 (RMB thousand) | 2024 December 31 (RMB thousand) | Valuation Technique and Key Inputs | Significant Unobservable Inputs | Weighted Average Expected Return Rate | | :--- | :--- | :--- | :--- | :--- | :--- | | Wealth Management Products | 73,745 | 66,685 | Discounted Cash Flow | Expected Return Rate | 1.7% (2024 December 31: 2.0%) | [25. Approval of the Interim Financial Information](index=44&type=section&id=25.%20APPROVAL%20OF%20THE%20INTERIM%20FINANCIAL%20INFORMATION) The interim financial information was approved and authorized for issue by the Board of Directors on August 21, 2025 - The interim financial information was approved and authorized for issue by the Board of Directors on **August 21, 2025**[180](index=180&type=chunk) [Management Discussion and Analysis](index=45&type=section&id=Management%20Discussion%20and%20Analysis) This section outlines the Group's performance amidst a complex global and Chinese economic environment, achieving significant operating profit growth through operational innovation, store transformation, and strategic expansion despite consumer market challenges, with plans for further business development in the second half of the year [Global and PRC Economic Environment](index=45&type=section&id=Global%20and%20PRC%20Economic%20Environment) During the review period, the global economy faced a "low growth, high volatility" new normal, while the Chinese consumer market experienced a moderate but increasingly differentiated recovery, with the Group actively leveraging government fiscal incentives and industry support policies - The global economic environment remains under pressure, with increasing uncertainty, entering a new normal of "low growth, high volatility"[182](index=182&type=chunk)[186](index=186&type=chunk) - The Chinese consumer market is experiencing a moderate recovery with increasing differentiation[182](index=182&type=chunk)[186](index=186&type=chunk) - The Chinese government has implemented targeted stimulus measures, including fiscal incentives and specific industry support policies, to boost economic activity[183](index=183&type=chunk)[186](index=186&type=chunk) [Financial Results Overview](index=45&type=section&id=Financial%20Results%20Overview) The Group's gross sales proceeds decreased by **11.5%** and same-store sales by **18.4%**, primarily due to cautious consumer spending, yet operating profit increased by **RMB 63.8 million** year-on-year to **RMB 257.6 million**; as of June 30, 2025, the Group operated **43 Parkson stores** and **2 Parkson Newcore City Malls** in China and Laos Financial Results Overview (Six Months Ended June 30) | Indicator | 2025 Half-Year (RMB million) | 2024 Half-Year (RMB million) | Year-on-Year Change (%) | | :--- | :--- | :--- | :--- | | Gross Sales Proceeds (GSP, including VAT) | 4,155.3 | 4,695.3 | -11.5% | | Same-Store Sales (SSS) | - | - | -18.4% | | Operating Profit | 257.6 | 193.8 | +32.9% | - The decline in sales was primarily due to increased external uncertainty and weakened income growth expectations leading to more cautious consumer spending behavior[184](index=184&type=chunk)[187](index=187&type=chunk) - As of June 30, 2025, the Group and its associates operated and managed **43 Parkson stores** and **2 Parkson Newcore City Malls** across **26 cities** in China and Laos[185](index=185&type=chunk)[187](index=187&type=chunk) [Operational Review](index=46&type=section&id=Operational%20Review) The Group actively responds to changing Chinese consumer behavior by transforming its stores from "merchandise sales markets" into "lifestyle innovation centers," successfully converting Hefei Parkson into an anime-themed commercial complex and opening Datong Parkson Outlet to enhance the urban commercial ecosystem through differentiated positioning - Chinese consumer spending behavior continues to shift, with a greater focus on value for money, quality, brand recognition, service, and emotional and experiential aspects[189](index=189&type=chunk)[194](index=194&type=chunk) - The Group is committed to becoming an excellent innovator of commercial spaces, transforming stores into "dynamic lifestyle innovation centers" by optimizing brand portfolios, curating merchandise categories, and designing experiential space layouts[190](index=190&type=chunk)[194](index=194&type=chunk) - Hefei Parkson successfully transformed into an experiential anime-themed commercial complex, becoming a new landmark for youth trends in Hefei and receiving coverage from CCTV News[191](index=191&type=chunk)[194](index=194&type=chunk) - Datong Parkson Outlet officially opened in May 2025, serving as a "commercial + cultural tourism" complex in the North China region, creating differentiated positioning with other Datong stores to promote synergistic upgrades in the urban commercial ecosystem[193](index=193&type=chunk)[195](index=195&type=chunk) [Outlook and Future Plans](index=47&type=section&id=Outlook%20and%20Future%20Plans) Facing increasingly diverse consumer demands and intense market competition, the Group will continue to deepen its core business and drive operational innovation to maintain agility and competitiveness, with plans to open a new shopping center in Mianyang, Sichuan, in the second half of the year to meet diverse customer needs and enhance the shopping experience - The Group will continue to deepen its core business and drive operational innovation to maintain agility and competitiveness in a rapidly changing market[197](index=197&type=chunk)[200](index=200&type=chunk) - The Group actively seeks strategic business expansion opportunities, capturing growth in existing regions and continuously investing in store revitalization and upgrades[198](index=198&type=chunk)[200](index=200&type=chunk) - A new shopping center is planned to open in Mianyang City, Sichuan Province, in the second half of the year, which will be the Group's fifth store in Mianyang, aiming to provide an excellent shopping and lifestyle experience[196](index=196&type=chunk)[199](index=199&type=chunk) [Financial Review](index=48&type=section&id=Financial%20Review) This financial review analyzes the Group's H1 2025 performance, showing a slight increase in total operating revenue despite declining gross sales and same-store sales, driven by increased income from lease changes and credit services; structural adjustments in operating expenses, particularly higher impairment provisions, impacted some costs, but ultimately led to significant improvements in operating profit and profit before tax, maintaining robust liquidity [GSP and Total Operating Revenues](index=48&type=section&id=GSP%20AND%20TOTAL%20OPERATING%20REVENUES) In H1 2025, the Group's gross sales proceeds (including VAT) decreased by **11.5%** to **RMB 4,155.3 million**, with same-store sales declining by **18.4%**, primarily due to increasingly cautious consumer spending behavior Gross Sales Proceeds and Total Operating Revenues (Six Months Ended June 30) | Indicator | 2025 Half-Year (RMB million) | 2024 Half-Year (RMB million) | Year-on-Year Change (%) | | :--- | :--- | :--- | :--- | | Gross Sales Proceeds (GSP, including VAT) | 4,155.3 | 4,695.3 | -11.5% | | Gross Sales Proceeds (GSP, excluding VAT) | 3,767.5 | - | - | | Same-Store Sales (SSS) | - | - | -18.4% | - The softening sales performance was primarily due to increased external uncertainty and weakened income growth expectations leading to more cautious consumer spending behavior[202](index=202&type=chunk)[203](index=203&type=chunk) [Total Merchandise Sales](index=48&type=section&id=TOTAL%20MERCHANDISE%20SALES) In H1 2025, the Group's total merchandise sales decreased by **17.6%** to **RMB 2,983.098 million**, with declines in both concessionaire sales and direct sales Total Merchandise Sales by Channel (Six Months Ended June 30) | Channel | 2025 (RMB thousand) | Percentage of Total (%) | 2024 (RMB thousand) | Percentage of Total (%) | Year-on-Year Change (%) | | :--- | :--- | :--- | :--- | :--- | :--- | | Concessionaire Sales | 2,098,512 | 70.3% | 2,624,925 | 72.5% | (20.1%) | | Direct Sales | 884,586 | 29.7% | 995,320 | 27.5% | (11.1%) | | **Total** | **2,983,098** | **100.0%** | **3,620,245** | **100.0%** | **(17.6%)** | [Merchandise Gross Margin](index=48&type=section&id=MERCHANDISE%20GROSS%20MARGIN) The Group's merchandise gross margin increased from **13.2%** in H1 2024 to **13.6%** in H1 2025 Merchandise Gross Margin (Six Months Ended June 30) | Indicator | 2025 Half-Year | 2024 Half-Year | | :--- | :--- | :--- | | Merchandise Gross Margin | 13.6% | 13.2% | [Total Operating Revenues](index=49&type=section&id=TOTAL%20OPERATING%20REVENUES) In H1 2025, the Group's total operating revenues slightly increased by **0.9%** to **RMB 1,962.8 million**, primarily driven by higher other income from lease modifications and terminations and increased credit service income, offsetting reductions in self-operated sales and concessionaire sales commissions Total Operating Revenues (Six Months Ended June 30) | Indicator | 2025 Half-Year (RMB million) | 2024 Half-Year (RMB million) | Year-on-Year Change (%) | | :--- | :--- | :--- | :--- | | Total Operating Revenues | 1,962.8 | 1,944.7 | +0.9% | | Revenue from Contracts with Customers Percentage | 60.2% | - | - | | Revenue from Contracts with Customers Change | -167.2 | - | -12.4% | - The increase in total operating revenues was primarily due to higher other income from lease modifications and terminations and increased credit service income, partially offset by decreases in self-operated sales and concessionaire sales commissions[208](index=208&type=chunk)[214](index=214&type=chunk) [Operating Expenses](index=49&type=section&id=OPERATING%20EXPENSES) The Group's operating expenses varied in H1 2025: cost of purchases and changes in inventories aligned with declining direct sales, staff costs increased due to store closure-related expenses, depreciation and amortization decreased due to fully depreciated store renovations and closure of underperforming stores, rental expenses fell due to reduced variable rent and store closures, and other operating expenses rose due to impairment provisions for credit service business receivables and store closure costs Operating Expense Changes (Six Months Ended June 30) | Operating Expense Item | 2025 Half-Year (RMB million) | 2024 Half-Year (RMB million) | Year-on-Year Change (%) | | :--- | :--- | :--- | :--- | | Cost of Purchases and Changes in Inventories | 773.5 | 864.5 | -10.5% | | Staff Costs | 252.8 | 239.7 | +5.5% | | Depreciation and Amortization | 241.1 | 255.9 | -5.8% | | Rental Expenses | 37.5 | 44.1 | -15.0% | | Other Operating Expenses | 400.3 | 346.8 | +15.4% | - Staff costs as a percentage of gross sales proceeds increased from **5.7%** in H1 2024 to **6.7%** in H1 2025[212](index=212&type=chunk)[216](index=216&type=chunk) - The increase in other operating expenses was primarily due to impairment provisions for receivables from the credit service business and costs incurred for closing stores[220](index=220&type=chunk)[225](index=225&type=chunk) [Profit from Operations](index=50&type=section&id=PROFIT%20FROM%20OPERATIONS) In H1 2025, the Group's operating profit was **RMB 257.6 million**, an increase of **RMB 63.8 million** from the prior year, with operating profit as a percentage of gross sales proceeds rising from **4.6%** to **6.8%** Operating Profit (Six Months Ended June 30) | Indicator | 2025 Half-Year (RMB million) | 2024 Half-Year (RMB million) | Year-on-Year Change (RMB million) | | :--- | :--- | :--- | :--- | | Operating Profit | 257.6 | 193.8 | +63.8 | | Operating Profit as Percentage of GSP | 6.8% | 4.6% | +2.2% | [Finance Income/(Costs)](index=51&type=section&id=FINANCE%20INCOME%2F%28COSTS%29) In H1 2025, the Group's net finance costs were **RMB 206.9 million**, a decrease of **RMB 13.5 million** from the prior year, primarily due to reduced interest on bank loans and other borrowings Finance Income/(Costs) (Six Months Ended June 30) | Indicator | 2025 Half-Year (RMB million) | 2024 Half-Year (RMB million) | Year-on-Year Change (RMB million) | | :--- | :--- | :--- | :--- | | Net Finance Costs | 206.9 | 220.4 | -13.5 | | Interest Expense on Lease Liabilities | 147.5 | 133.2 | +14.3 | | Interest Income from Net Investment in Subleases | 5.4 | 9.3 | -3.9 | - The reduction in finance costs was primarily due to decreased interest on bank loans and other borrowings[228](index=228&type=chunk)[232](index=232&type=chunk) [Share of Profit from Associates](index=51&type=section&id=SHARE%20OF%20PROFIT%20FROM%20ASSOCIATES) In H1 2025, the Group's share of profit from associates slightly increased to **RMB 9.4 million** from **RMB 8.9 million** in the prior year Share of Profit from Associates (Six Months Ended June 30) | Indicator | 2025 Half-Year (RMB million) | 2024 Half-Year (RMB million) | | :--- | :--- | :--- | | Share of Profit from Associates | 9.4 | 8.9 | [Profit/(Loss) Before Tax](index=51&type=section&id=PROFIT%2F%28LOSS%29%20BEFORE%20TAX) In H1 2025, the Group's profit before tax was **RMB 60.2 million**, successfully reversing a prior-year tax loss of **RMB 17.8 million**, with profit before tax as a percentage of gross sales proceeds at **1.6%** Profit/(Loss) Before Tax (Six Months Ended June 30) | Indicator | 2025 Half-Year (RMB million) | 2024 Half-Year (RMB million) | | :--- | :--- | :--- | | Profit/(Loss) Before Tax | 60.2 | (17.8) | | Profit/(Loss) Before Tax as Percentage of GSP | 1.6% | (0.4%) | [Income Tax Expense/(Credit)](index=52&type=section&id=INCOME%20TAX%20EXPENSE%2F%28CREDIT%29) In H1 2025, the Group's income tax expense was **RMB 39.2 million**, compared to an income tax credit of **RMB 0.5 million** in the prior year Income Tax Expense/(Credit) (Six Months Ended June 30) | Indicator | 2025 Half-Year (RMB million) | 2024 Half-Year (RMB million) | | :--- | :--- | :--- | | Income Tax Expense/(Credit) | 39.2 | 0.5 | [Profit/(Loss) for the Period](index=52&type=section&id=PROFIT%2F%28LOSS%29%20FOR%20THE%20PERIOD) In H1 2025, the Group recorded a profit for the period of **RMB 20.9 million**, successfully reversing a loss of **RMB 17.2 million** in the prior year Profit/(Loss) for the Period (Six Months Ended June 30) | Indicator | 2025 Half-Year (RMB million) | 2024 Half-Year (RMB million) | | :--- | :--- | :--- | | Profit/(Loss) for the Period | 20.9 | (17.2) | [Profit/(Loss) Attributable to Owners of the Company](index=52&type=section&id=PROFIT%2F%28LOSS%29%20ATTRIBUTABLE%20TO%20OWNERS%20OF%20THE%20COMPANY) In H1 2025, the Group recorded a profit attributable to owners of the company of **RMB 22.5 million**, a significant improvement from a loss of **RMB 18.6 million** in the prior year Profit/(Loss) Attributable to Owners of the Company (Six Months Ended June 30) | Indicator | 2025 Half-Year (RMB million) | 2024 Half-Year (RMB million) | | :--- | :--- | :--- | | Profit/(Loss) Attributable to Owners of the Company | 22.5 | (18.6) | [Liquidity and Financial Resources](index=52&type=section&id=LIQUIDITY%20AND%20FINANCIAL%20RESOURCES) As of June 30, 2025, the Group held cash and bank balances of **RMB 1,355.7 million**, with a total debt-to-total assets ratio of **26.5%**, indicating robust liquidity and financial resources Liquidity and Financial Resources (As of June 30) | Indicator | 2025 (RMB million) | 2024 December 31 (RMB million) | | :--- | :--- | :--- | | Cash and Bank Balances | 1,355.7 | 1,466.5 | | Time Deposits | 67.0 | 35.4 | | Financial Assets at Fair Value Through Profit or Loss | 73.7 | 66.7 | | Restricted Cash | 28.4 | 64.0 | | Total Debt to Total Assets Ratio | 26.5% | 24.7% | - The Group's cash and cash equivalents are primarily denominated in RMB, with the remainder in USD, HKD, MYR, and other currencies[239](index=239&type=chunk)[244](index=244&type=chunk) [Current Assets and Net Assets](index=52&type=section&id=CURRENT%20ASSETS%20AND%20NET%20ASSETS) As of June 30, 2025, the Group's current assets amounted to **RMB 2,730.9 million**, and net assets were **RMB 3,139.9 million** Current Assets and Net Assets (As of June 30) | Indicator | 2025 (RMB million) | | :--- | :--- | | Current Assets | 2,730.9 | | Net Assets | 3,139.9 | [Information on the Financial Products](index=53&type=section&id=INFORMATION%20ON%20THE%20FINANCIAL%20PRODUCTS) The Group's financial assets at fair value through profit or loss are non-principal-protected wealth management products, with a fair value of **RMB 73.7 million** as of June 30, 2025, representing approximately **0.7%** of total assets - Financial assets at fair value through profit or loss refer to non-principal-protected wealth management products subscribed by the Group from licensed banks operating in China[247](index=247&type=chunk)[250](index=250&type=chunk) Financial Product Information (As of June 30) | Indicator | 2025 (RMB million) | | :--- | :--- | | Fair Value | 73.7 | | Percentage of Total Assets | 0.7% | [Pledge of Assets](index=53&type=section&id=PLEDGE%20OF%20ASSETS) As of June 30, 2025, the Group pledged trade receivables, buildings, investment properties, leasehold land, and unbilled receivables to secure general banking facilities, in addition to deposits in designated bank accounts for performance guarantees - The Group pledged trade receivables of **RMB 529.1 million**[248](index=248&type=chunk)[251](index=251&type=chunk) - Pledged buildings, investment properties, and leasehold land had net book values of approximately **RMB 1,304.0 million**, **RMB 513.2 million**, and **RMB 299.2 million**, respectively[248](index=248&type=chunk)[251](index=251&type=chunk) - The Group also pledged unbilled receivables of **RMB 132.5 million** due within 48 months, and deposits of **RMB 27.2 million** in designated bank accounts as performance guarantees[248](index=248&type=chunk)[251](index=251&type=chunk) [Interim Dividend](index=54&type=section&id=Interim%20Dividend) The Board of Directors has approved an interim cash dividend of **RMB 0.02** per share, payable in HKD on October 15, 2025, to shareholders on record at the close of business on September 25, 2025 - The Board of Directors has approved the payment of an interim dividend of **RMB 0.02** per share[253](index=253&type=chunk)[254](index=254&type=chunk) - The interim dividend will be paid in HKD, with the amount calculated based on the People's Bank of China's RMB to HKD central parity rate announced on **September 25, 2025**[253](index=253&type=chunk)[254](index=254&type=chunk) - The dividend will be paid on **October 15, 2025**, to shareholders whose names appear on the Company's register of members at the close of business on **September 25, 2025**[253](index=253&type=chunk)[254](index=254&type=chunk) [Closure of Register of Members](index=55&type=section&id=Closure%20of%20Register%20of%20Members) To determine eligibility for the interim dividend, the company's register of members will be closed from September 24, 2025, to September 25, 2025, inclusive, requiring shareholders to submit share transfer documents to the Hong Kong branch share registrar by 4:30 p.m. on September 23, 2025 - The Company's register of members will be closed from **September 24, 2025**, to **September 25, 2025** (both dates inclusive)[255](index=255&type=chunk)[256](index=256&type=chunk) - To be eligible for the interim dividend, all share transfer documents must be lodged with the Company's Hong Kong branch share registrar, Tricor Investor Services Limited, by **4:30 p.m. on Tuesday, September 23, 2025**, for registration[255](index=255&type=chunk)[256](index=256&type=chunk) [Directors' and Chief Executive's Interests and Short Positions in Shares and Underlying Shares](index=56&type=section&id=Directors'%20and%20Chief%20Executive's%20Interests%20and%20Short%20Positions%20in%20Shares%20and%20Underlying%20Shares) This section discloses the long and short positions of the company's directors and chief executive, particularly Tan Sri Cheng Heng Jem, in the shares of the company and its associated corporations as of June 30, 2025, in compliance with the SFO and Listing Rules disclosure requirements [Tan Sri Cheng Heng Jem's Long Positions in the Company's Share Capital](index=56&type=section&id=Long%20positions%20of%20Tan%20Sri%20Cheng%20Heng%20Jem%20in%20the%20share%20capital%20of%20the%20Company) As of June 30, 2025, Tan Sri Cheng Heng Jem was deemed to hold a long position in **1,448,270,000** ordinary shares of the company through corporate interests, representing **54.97%** of the issued share capital Tan Sri Cheng Heng Jem's Long Positions in the Company's Share Capital (As of June 30) | Nature of Interest | Name of Registered Holder | Number and Class of Securities | Approximate Percentage of Shareholding | | :--- | :--- | :--- | :--- | | Corporate Interest | PRG Corporation Limited | 1,438,300,000 Ordinary Shares | 54.59% | | Corporate Interest | East Crest International Limited | 9,970,000 Ordinary Shares | 0.38% | | **Total** | **-** | **1,448,270,000 Ordinary Shares** | **54.97%** | - Tan Sri Cheng Heng Jem and his wife are deemed to have an interest in the Company's shares held by PRG Corporation and East Crest through their interests in Parkson Holdings Berhad (PHB)[260](index=260&type=chunk)[261](index=261&type=chunk) [Tan Sri Cheng Heng Jem's Long Positions in the Share Capital of the Company's Associated Corporations](index=57&type=section&id=Long%20positions%20of%20Tan%20Sri%20Cheng%20Heng%20Jem%20in%20the%20share%20capital%20of%20the%20Company's%20associated%20corporations) Tan Sri Cheng Heng Jem holds long positions in several associated corporations, including PHB, East Crest, and Parkson Retail Asia Limited, with shareholdings ranging from **54.56%** to **100%**, primarily through beneficial and corporate interests - Tan Sri Cheng Heng Jem holds **54.56%** beneficial and corporate interests in PHB[263](index=263&type=chunk) - He holds **100%** corporate interests in several associated corporations, including East Crest, Puncak Pelita Sdn Bhd, and Parkson Properties Holdings Co, Ltd[263](index=263&type=chunk) - He holds **68.03%** beneficial and corporate interests in Parkson Retail Asia Limited[264](index=264&type=chunk) [Tan Sri Cheng Heng Jem's Short Positions in the Share Capital of the Company's Associated Corporations](index=63&type=section&id=Short%20positions%20of%20Tan%20Sri%20Cheng%20Heng%20Jem%20in%20the%20share%20capital%20of%20the%20Company's%20associated%20corporations) As of June 30, 2025, Tan Sri Cheng Heng Jem was deemed to hold a short position in **40,000,142** ordinary shares of PHB through corporate interests, representing **3.48%** of PHB's total issued shares Tan Sri Cheng Heng Jem's Short Positions in PHB Share Capital (As of June 30) | Name of Associated Corporation | Nature of Interest | Number and Class of Securities | Approximate Percentage of Shareholding | | :--- | :--- | :--- | :--- | | PHB | Corporate Interest | 40,000,142 Ordinary Shares | 3.48% | - Save as disclosed above, as at June 30, 2025, none of the Directors or chief executive of the Company had any interests or short positions in the shares, underlying shares and/or debentures of the Company or any of its associated corporations as recorded in the register required to be kept under the SFO or the Model Code[271](index=271&type=chunk) [Substantial Shareholders' Interests and Short Positions in Shares and Underlying Shares](index=64&type=section&id=Substantial%20Shareholders'%20Interests%20and%20Short%20Positions%20in%20Shares%20and%20Underlying%20Shares) This section discloses the interests and short positions of substantial shareholders, other than directors or the chief executive, in the company's shares as of June 30, 2025, and individuals holding **10% or more** equity in Group member companies, including PHB, Puan Sri Chan Chow Thye, Mr. Chan Kin, Mr. Wang Heng, and their family-related entities Substantial Shareholders' Long Positions in the Company's Shares (As of June 30) | Shareholder Name | Long/Short Position | Nature of Interest | Number of Shares | Percentage of Shareholding | | :--- | :--- | :--- | :--- | :--- | | PHB | Long Position | Corporate Interest | 1,448,270,000 | 54.97% | | Puan Sri Chan Chow Thye | Long Position | Spouse Interest | 1,448,270,000 | 54.97% | | Mr. Chan Kin | Long Position | Corporate Interest | 955,975,517 | 36.28% | | Argyle Street Management Holdings Limited | Long Position | Corporate Interest | 955,975,517 | 36.28% | | Argyle Street Management Limited | Long Position | Investment Manager | 955,975,517 | 36.28% | | ASM Connaught House General Partner II Limited | Long Position | Corporate Interest | 940,584,517 | 35.70% | | ASM Connaught House Fund II LP | Long Position | Corporate Interest | 940,584,517 | 35.70% | | Bishan Street Limited | Long Position | Beneficial and Charged Interest | 933,845,517 | 35.44% | | Mr. Wang Heng | Long Position | Beneficial and Trustee | 429,935,500 | 16.32% | | Ms. Wang Xu Zhenxian | Long Position | Spouse Interest and Trust Beneficiary | 429,935,500 | 16.32% | | GEICO Holdings Limited | Long Position | Corporate Interest | 421,646,346 | 16.00% | | Golden Eagle International Retail Group Limited | Long Position | Beneficial Interest | 421,646,346 | 16.00% | | Wang Dorothy S L | Long Position | Trust Beneficiary | 421,646,346 | 16.00% | | Wang Janice S Y | Long Position | Trust Beneficiary | 421,646,346 | 16.00% | - PHB is deemed to have an interest in the Company's shares held by PRG Corporation through its wholly-owned subsidiary, East Crest[275](index=275&type=chunk) - Mr. Chan Kin is deemed to have an interest in the Company's shares through several companies directly or indirectly controlled by him, including an interest in **9,645,517** cash-settled unlisted derivative instruments[276](index=276&type=chunk)[277](index=277&type=chunk)[278](index=278&type=chunk)[279](index=279&type=chunk) - Mr. Wang Heng holds some shares as a beneficial owner and some as a trustee; his wife, Ms. Wang Xu Zhenxian, is deemed to have an interest in the shares held by Mr. Wang Heng[280](index=280&type=chunk) - As of June 30, 2025, Wuxi Supply and Marketing Group Co, Ltd, Guizhou Shenqi Industrial Co, Ltd, and E-Land Fashion Hong Kong Limited, among others, held **10% or more** equity in Group member compani

[Company Information](index=3&type=section&id=%E5%85%AC%E5%8F%B8%E8%B3%87%E6%96%99) This section provides an overview of the company's governance structure and fundamental registration details [Board of Directors and Committees](index=3&type=section&id=%E8%91%A3%E4%BA%8B%E6%9C%83%E5%8F%8A%E5%A7%94%E5%93%A1%E6%9C%83) This section lists the composition of the company's Board of Directors, including executive, non-executive, and independent non-executive directors, as well as members of the Audit, Remuneration, and Nomination Committees - The Board of Directors comprises executive directors Mr. Wang Mingfan (Chairman and CEO), Mr. Li Qinglong, Ms. Yang Yingchun (resigned), and Ms. Wang Xinyi; non-executive director Ms. Yin Shuzhen; and independent non-executive directors Mr. Wu Guanyun, Mr. Liang Weimin, Mr. Zhou Xiaoxiong, and Mr. Qiu Haobo[6](index=6&type=chunk) - The composition of the Audit, Remuneration, and Nomination Committees is detailed, with Mr. Wu Guanyun chairing the Audit and Remuneration Committees, and Mr. Liang Weimin chairing the Nomination Committee[6](index=6&type=chunk) [Company Basic Information](index=3&type=section&id=%E5%85%AC%E5%8F%B8%E5%9F%BA%E6%9C%AC%E4%BF%A1%E6%81%AF) This section provides basic contact and registration details, including the company's registered office, Hong Kong head office and principal place of business, share registrar, share listing information, and company website - The company's registered office is in the Cayman Islands, with its Hong Kong head office and principal place of business located in Kwun Tong Road, Kowloon, Hong Kong[7](index=7&type=chunk) - The company's shares are listed on The Stock Exchange of Hong Kong Limited under stock code **3318**, and its website is www.boton.com.hk[8](index=8&type=chunk) [Interim Condensed Consolidated Statement of Financial Position](index=4&type=section&id=%E4%B8%AD%E6%9C%9F%E7%B0%A1%E6%98%8E%E5%90%88%E4%BD%B5%E8%B3%87%E7%94%A2%E8%B2%A0%E5%82%B5%E8%A1%A8) As of June 30, 2025, total assets slightly increased, driven by non-current asset growth despite a decline in current assets, while total equity and liabilities both saw minor increases, notably in non-current borrowings Consolidated Statement of Financial Position Key Data (RMB in thousands) | Indicator | June 30, 2025 (Unaudited) | December 31, 2024 (Audited) | | :--- | :--- | :--- | | **Assets** | | | | Non-current assets | 4,590,960 | 4,434,214 | | Current assets | 1,719,706 | 1,863,711 | | **Total assets** | **6,310,666** | **6,297,925** | | **Equity** | | | | Equity attributable to owners of the Company | 3,133,854 | 3,140,955 | | Non-controlling interests | 277,609 | 268,323 | | **Total equity** | **3,411,463** | **3,409,278** | | **Liabilities** | | | | Non-current liabilities | 1,246,529 | 1,071,645 | | Current liabilities | 1,652,674 | 1,817,002 | | **Total liabilities** | **2,899,203** | **2,888,647** | - Borrowings within non-current liabilities significantly increased from **RMB 955,904 thousand** as of December 31, 2024, to **RMB 1,133,013 thousand** as of June 30, 2025[11](index=11&type=chunk) - Trade and other receivables decreased from **RMB 938,946 thousand** as of December 31, 2024, to **RMB 875,808 thousand** as of June 30, 2025[9](index=9&type=chunk) [Interim Condensed Consolidated Statement of Profit or Loss](index=6&type=section&id=%E4%B8%AD%E6%9C%9F%E7%B0%A1%E6%98%8E%E5%90%88%E4%BD%B5%E5%88%A9%E6%BD%A4%E8%A1%A8) For the six months ended June 30, 2025, the company experienced significant declines in revenue, gross profit, and operating profit, resulting in a loss attributable to owners of the Company, with a basic loss per share of RMB 0.01 Consolidated Statement of Profit or Loss Key Data (RMB in thousands) | Indicator | 2025 H1 (Unaudited) | 2024 H1 (Unaudited) | Y-o-Y Change | | :--- | :--- | :--- | :--- | | Revenue | 637,753 | 750,975 | -15.1% | | Cost of sales | (438,894) | (445,344) | -1.4% | | Gross profit | 198,859 | 305,631 | -34.9% | | Operating profit | 33,725 | 109,237 | -69.1% | | Profit before income tax | 10,840 | 81,230 | -86.7% | | Profit for the period | 8,707 | 62,682 | -86.1% | | Profit/(Loss) attributable to owners of the Company | (8,119) | 44,332 | -118.3% | | Basic and diluted (loss)/earnings per share (RMB) | (0.01) | 0.04 | -125.0% | - Net impairment loss on financial assets shifted from an impairment loss of **RMB 9,052 thousand** in the prior period to a reversal of **RMB 4,379 thousand** in the current period[12](index=12&type=chunk) [Interim Condensed Consolidated Statement of Comprehensive Income](index=7&type=section&id=%E4%B8%AD%E6%9C%9F%E7%B0%A1%E6%98%8E%E5%90%88%E4%BD%B5%E7%B6%9C%E5%90%88%E6%94%B6%E7%9B%8A%E8%A1%A8) For the six months ended June 30, 2025, total comprehensive income for the period significantly decreased, primarily due to lower profit for the period, despite a positive shift in currency translation differences Consolidated Statement of Comprehensive Income Key Data (RMB in thousands) | Indicator | 2025 H1 (Unaudited) | 2024 H1 (Unaudited) | Y-o-Y Change | | :--- | :--- | :--- | :--- | | Profit for the period | 8,707 | 62,682 | -86.1% | | Currency translation differences | 2,604 | (3,292) | +179.1% | | Total comprehensive income for the period | 11,311 | 59,390 | -80.9% | | Total comprehensive income/(loss) attributable to owners of the Company | (4,875) | 42,461 | -111.5% | [Interim Condensed Consolidated Statement of Changes in Equity](index=8&type=section&id=%E4%B8%AD%E6%9C%9F%E7%B0%A1%E6%98%8E%E5%90%88%E4%BD%B5%E6%AC%8A%E7%9B%8A%E8%AE%8A%E5%8B%95%E8%A1%A8) For the six months ended June 30, 2025, total equity slightly increased, primarily driven by growth in non-controlling interests, despite a reduction in retained earnings attributable to owners of the Company due to period loss and dividend payments Consolidated Statement of Changes in Equity Key Data (RMB in thousands) | Indicator | Balance as at January 1, 2025 | Balance as at June 30, 2025 | | :--- | :--- | :--- | | Share capital | 101,522 | 101,522 | | Share premium | 1,292,432 | 1,292,432 | | Retained earnings | 1,245,431 | 1,235,057 | | Other reserves | 502,549 | 505,822 | | Total equity attributable to owners of the Company | 3,140,955 | 3,133,854 | | Non-controlling interests | 268,323 | 277,609 | | **Total equity** | **3,409,278** | **3,411,463** | - Profit for the period attributable to owners of the Company was a **loss of RMB 8,119 thousand** in the current period, compared to a **profit of RMB 44,332 thousand** in the prior period[15](index=15&type=chunk) - Total dividends paid in the current period amounted to **RMB 9,126 thousand**, with **RMB 2,255 thousand** attributable to owners of the Company and **RMB 6,871 thousand** to non-controlling interests[15](index=15&type=chunk) [Interim Condensed Consolidated Statement of Cash Flows](index=9&type=section&id=%E4%B8%AD%E6%9C%9F%E7%B0%A1%E6%98%8E%E5%90%88%E4%BD%B5%E7%8F%BE%E9%87%91%E6%B5%81%E9%87%8F%E8%A1%A8) For the six months ended June 30, 2025, the company's net cash and cash equivalents decreased, primarily due to a significant increase in net cash used in investing activities, despite a substantial rise in net cash generated from financing activities Consolidated Statement of Cash Flows Key Data (RMB in thousands) | Indicator | 2025 H1 (Unaudited) | 2024 H1 (Unaudited) | Y-o-Y Change | | :--- | :--- | :--- | :--- | | Net cash generated from operating activities | 6,074 | 18,422 | -67.0% | | Net cash used in investing activities | (258,334) | (91,159) | +183.4% | | Net cash generated from financing activities | 203,580 | 41,472 | +391.0% | | Net decrease in cash and cash equivalents | (48,680) | (31,265) | +55.7% | | Cash and cash equivalents at end of period | 236,668 | 319,895 | -26.0% | - Cash outflow for the purchase of property, plant and equipment significantly increased from **RMB 75,311 thousand** in the prior period to **RMB 241,615 thousand** in the current period[17](index=17&type=chunk) - Proceeds from borrowings increased from **RMB 399,919 thousand** in the prior period to **RMB 823,922 thousand** in the current period, with a corresponding increase in repayment of borrowings[17](index=17&type=chunk) [Notes to the Interim Condensed Consolidated Financial Statements](index=10&type=section&id=%E4%B8%AD%E6%9C%9F%E7%B0%A1%E6%98%8E%E5%90%88%E4%BD%B5%E8%B2%A1%E5%8B%99%E5%A0%B1%E8%A1%A8%E9%99%84%E8%A8%BB) This section provides detailed notes to the interim condensed consolidated financial statements, covering general information, accounting policies, financial risk management, key accounting estimates, segment revenue, balance sheet item details, revenue and expense components, income tax, earnings per share, dividends, contingent liabilities, commitments, and related party transactions, offering deeper context and explanation for the financial statements [1. General Information](index=10&type=section&id=1.%20%E4%B8%80%E8%88%AC%E8%B3%87%E6%96%99) The Group primarily engages in the production and sale of flavors, fragrances, and e-cigarette products in China and Asia, with the company incorporated in the Cayman Islands and listed on the Hong Kong Stock Exchange - The Group's principal activities are the production and sale of **flavors, fragrances, and e-cigarette products**, with its main markets in **China and Asia**[18](index=18&type=chunk) - The Company was incorporated in the **Cayman Islands on March 9, 2005**, and listed on The Stock Exchange of Hong Kong Limited on **December 9, 2005**[18](index=18&type=chunk)[19](index=19&type=chunk) [2. Basis of Preparation and Changes in Accounting Policies](index=10&type=section&id=2.%20%E7%B7%A8%E8%A3%BD%E5%9F%BA%E6%BA%96%E5%8F%8A%E6%9C%83%E8%A8%88%E6%94%BF%E7%AD%96%E8%AE%8A%E6%9B%B4) The interim condensed consolidated financial statements are prepared in accordance with Hong Kong Accounting Standard 34 issued by the HKICPA, and new and revised standards adopted in the current period have no significant impact on financial performance or position - The interim financial statements are prepared in accordance with **Hong Kong Accounting Standard 34 'Interim Financial Reporting'**[22](index=22&type=chunk) - The new and revised standards adopted in the current period have **no significant impact** on the Group's financial performance and position[23](index=23&type=chunk) [3. Financial Risk Management](index=11&type=section&id=3.%20%E8%B2%A1%E5%8B%99%E9%A2%A8%E9%9A%AA%E7%AE%A1%E7%90%86) The Group faces market risks (including exchange rate, fair value interest rate, and cash flow interest rate risks), credit risk, and liquidity risk, with detailed information available in the annual financial statements - The Group's principal financial risks include **market risk** (exchange rate risk, fair value interest rate risk, and cash flow interest rate risk), **credit risk**, and **liquidity risk**[24](index=24&type=chunk) [4. Critical Accounting Estimates and Judgements](index=11&type=section&id=4.%20%E9%97%9C%E9%8D%B5%E7%9A%84%E6%9C%83%E8%A8%88%E4%BC%B0%E8%A8%88%E5%8F%8A%E5%88%A4%E6%96%B7) The preparation of interim financial statements involves management's judgments, estimates, and assumptions, with significant judgments made in the current period being consistent with those applied in the 2024 annual consolidated financial statements - Significant judgments made by management in preparing the interim financial statements are **consistent** with those applied in the consolidated financial statements for the year ended December 31, 2024[25](index=25&type=chunk) [5. Revenue and Segment Information](index=12&type=section&id=5.%20%E6%94%B6%E5%85%A5%E5%8F%8A%E5%88%86%E9%83%A8%E8%B3%87%E6%96%99) The Group operates in five segments: flavor enhancers, food flavors, daily use fragrances, e-cigarette products, and investment properties; for the six months ended June 30, 2025, flavor enhancer revenue significantly decreased, while e-cigarette products, food flavors, and daily use fragrances saw slight increases, and investment property revenue declined - The Group's business is divided into five segments: **flavor enhancers, food flavors, daily use fragrances, e-cigarette products, and investment properties**[26](index=26&type=chunk) Segment Revenue and Profit (RMB in thousands) | Segment | 2025 H1 Revenue | 2024 H1 Revenue | 2025 H1 Operating Profit/(Loss) | 2024 H1 Operating Profit/(Loss) | | :--- | :--- | :--- | :--- | :--- | | Flavor Enhancers | 179,463 | 308,057 | (7,363) | 88,014 | | Food Flavors | 93,051 | 90,286 | 25,694 | 34,207 | | Daily Use Fragrances | 73,115 | 69,567 | 17,037 | 15,260 | | E-cigarette Products | 267,233 | 256,132 | (20,027) | (15,034) | | Investment Properties | 24,891 | 26,933 | 24,491 | 27,351 | | Total | 637,753 | 750,975 | 33,725 | 109,237 | [6. Property, Plant and Equipment and Intangible Assets](index=14&type=section&id=6.%20%E7%89%A9%E6%A5%AD%E3%80%81%E5%BB%A0%E6%88%BF%E5%8F%8A%E8%A8%AD%E5%82%99%E5%8F%8A%E7%84%A1%E5%BD%A2%E8%B3%87%E7%94%A2) As of June 30, 2025, the net book value of property, plant and equipment increased, primarily due to additions, while the net book value of intangible assets slightly decreased Net Book Value of Property, Plant and Equipment and Intangible Assets (RMB in thousands) | Indicator | June 30, 2025 | January 1, 2025 | June 30, 2024 | January 1, 2024 | | :--- | :--- | :--- | :--- | :--- | | Property, plant and equipment | 2,164,053 | 1,993,623 | 1,570,420 | 1,528,866 | | Intangible assets | 1,597,156 | 1,615,432 | 1,700,598 | 1,721,629 | - For the six months ended June 30, 2025, additions to property, plant and equipment amounted to **RMB 204,622 thousand**, and additions to intangible assets were **RMB 262 thousand**[30](index=30&type=chunk) [7. Leases](index=15&type=section&id=7.%20%E7%A7%9F%E8%B3%83) This section presents lease-related items in the interim condensed consolidated statement of financial position, including right-of-use assets and lease liabilities, as well as depreciation, interest, and short-term lease expenses recognized in the statement of profit or loss Lease-related Items (RMB in thousands) | Indicator | June 30, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Right-of-use assets | 156,771 | 152,934 | | Lease liabilities | 15,356 | 9,879 | Lease-related Expenses (RMB in thousands) | Indicator | 2025 H1 | 2024 H1 | | :--- | :--- | :--- | | Depreciation expense of right-of-use assets | 5,630 | 4,227 | | Interest expense | 445 | 195 | | Short-term lease related expenses | 5,460 | 4,953 | [8. Trade and Other Receivables](index=16&type=section&id=8.%20%E6%87%89%E6%94%B6%E8%B3%B4%E6%AC%BE%E5%8F%8A%E5%85%B6%E4%BB%96%E6%87%89%E6%94%B6%E6%AC%BE) As of June 30, 2025, net trade receivables decreased while net other receivables increased, and the aging analysis of trade receivables indicates a persistently high proportion of receivables over one year old Trade and Other Receivables (RMB in thousands) | Indicator | June 30, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Trade receivables – net | 385,511 | 466,841 | | Bills receivable | 6,013 | 5,045 | | Other receivables – net | 489,653 | 473,222 | | **Current trade and other receivables** | **875,808** | **938,946** | Aging Analysis of Trade Receivables (RMB in thousands) | Aging | June 30, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Less than 3 months | 208,247 | 300,331 | | More than 3 months but less than 1 year | 153,163 | 149,314 | | More than 1 year | 267,746 | 265,288 | | **Total** | **629,156** | **714,933** | [9. Share Capital](index=17&type=section&id=9.%20%E8%82%A1%E6%9C%AC) As of June 30, 2025, the company's issued and fully paid ordinary share capital and share premium remained unchanged Share Capital Information (RMB in thousands) | Indicator | June 30, 2025 | | :--- | :--- | | Number of shares (thousands) | 1,080,512 | | Share capital | 101,522 | | Share premium | 1,292,432 | | Total | 1,393,954 | [10. Shares Held Under Share Award Scheme](index=17&type=section&id=10.%20%E8%82%A1%E4%BB%BD%E7%8D%8E%E5%8B%B5%E8%A8%88%E5%8A%83%E9%A0%85%E4%B8%8B%E6%8C%81%E6%9C%89%E7%9A%84%E8%82%A1%E4%BB%BD) The company adopted a share award scheme on December 11, 2023, to reward employees or service providers for their contributions; for the six months ended June 30, 2025, no shares were granted under the scheme, and 500,000 shares remain held by the trustee but ungranted - The Share Award Scheme was adopted on **December 11, 2023**, to reward employees or service providers for their contributions to the Company[37](index=37&type=chunk) - For the six months ended June 30, 2025, **no shares were granted** under the scheme, and **500,000 shares** remain held by the trustee but ungranted[37](index=37&type=chunk) [11. Trade and Other Payables](index=18&type=section&id=11.%20%E6%87%89%E4%BB%98%E8%B3%B4%E6%AC%BE%E5%8F%8A%E5%85%B6%E4%BB%96%E6%87%89%E4%BB%98%E6%AC%BE) As of June 30, 2025, total trade and other payables significantly decreased, primarily due to a reduction in trade payables and accrued salaries Trade and Other Payables (RMB in thousands) | Indicator | June 30, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Trade payables | 292,667 | 432,587 | | Payables for business combination | 150,000 | 150,000 | | Accrued salaries | 14,720 | 44,447 | | Other tax payables | 27,543 | 35,136 | | Amount due to a related party | 27,470 | — | | **Total** | **629,461** | **807,141** | Aging Analysis of Trade Payables (RMB in thousands) | Aging | June 30, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Less than 3 months | 133,881 | 290,632 | | More than 3 months but less than 1 year | 87,834 | 64,980 | | More than 1 year | 70,952 | 76,975 | | **Total** | **292,667** | **432,587** | [12. Borrowings](index=19&type=section&id=12.%20%E5%80%9F%E8%B2%B8) As of June 30, 2025, the company's total borrowings increased to RMB 2,039,661 thousand, primarily denominated in RMB and secured by various assets and corporate/personal guarantees Total Borrowings (RMB in thousands) | Indicator | June 30, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Non-current borrowings | 1,133,013 | 955,904 | | Current borrowings | 906,648 | 894,086 | | **Total borrowings** | **2,039,661** | **1,849,990** | - Borrowings are primarily denominated in **RMB (RMB 1,804,455 thousand)**, with a portion in **HKD (RMB 235,206 thousand)**[41](index=41&type=chunk) - Bank borrowings are secured by **property, plant and equipment, investment properties, bank deposits, land use rights, 100% equity pledge of Shenzhen Boton, personal guarantee of Chairman Mr. Wang Mingfan, and corporate guarantees from the Company and Shenzhen Boton**[41](index=41&type=chunk) [13. Revenue](index=21&type=section&id=13.%20%E6%94%B6%E5%85%A5) The Group's revenue primarily derives from the sale of extracts, flavors, fragrances, e-cigarette products, and rental income from investment properties; for the six months ended June 30, 2025, both revenue from contracts with customers and rental income decreased - The Group is principally engaged in the **trading, manufacturing, and sale of extracts, flavors, and fragrances**, as well as the **design and manufacture of e-cigarettes and related products**[43](index=43&type=chunk) Revenue Sources (RMB in thousands) | Revenue Source | 2025 H1 | 2024 H1 | | :--- | :--- | :--- | | Revenue from contracts with customers (sale of goods) | 612,862 | 724,042 | | Rental income | 24,891 | 26,933 | | **Total revenue** | **637,753** | **750,975** | [14. Other Income](index=21&type=section&id=14.%20%E5%85%B6%E4%BB%96%E6%94%B6%E5%85%A5) For the six months ended June 30, 2025, other income, primarily comprising government grants and other miscellaneous income, decreased in total compared to the prior period Other Income (RMB in thousands) | Source | 2025 H1 | 2024 H1 | | :--- | :--- | :--- | | Government grants | 1,239 | 1,306 | | Others | 221 | 938 | | **Total** | **1,460** | **2,244** | [15. Other Gains – Net](index=22&type=section&id=15.%20%E5%85%B6%E4%BB%96%E6%94%B6%E7%9B%8A%EF%BC%8D%E6%B7%A8%E9%A1%8D) For the six months ended June 30, 2025, net other gains significantly decreased, primarily due to fair value losses on investment properties and reduced other gains Other Gains – Net (RMB in thousands) | Source | 2025 H1 | 2024 H1 | | :--- | :--- | :--- | | Fair value loss on investment properties | (400) | (400) | | Others | 583 | 2,938 | | **Total** | **183** | **2,538** | [16. Expenses by Nature](index=22&type=section&id=16.%20%E6%8C%89%E6%80%A7%E8%B3%AA%E5%88%86%E9%A1%9E%E7%9A%84%E9%96%8B%E6%94%AF) For the six months ended June 30, 2025, total cost of sales, selling and marketing expenses, and administrative expenses decreased, with reductions in raw materials and consumables used and consulting fees, but an increase in advertising expenses Expenses by Nature (RMB in thousands) | Expense Category | 2025 H1 | 2024 H1 | | :--- | :--- | :--- | | Depreciation and amortisation | 58,207 | 56,326 | | Employee benefit expenses | 91,466 | 96,929 | | Raw materials and consumables used | 348,588 | 405,999 | | Advertising expenses | 6,951 | 2,448 | | Consultancy fees | 15,583 | 24,107 | | **Total** | **610,050** | **637,468** | [17. Finance Income and Costs](index=23&type=section&id=17.%20%E8%B2%A1%E5%8B%99%E6%94%B6%E5%85%A5%E5%8F%8A%E6%88%90%E6%9C%AC) For the six months ended June 30, 2025, net finance costs decreased, primarily due to lower interest income but increased exchange gains, and a higher amount capitalized for qualifying assets Finance Income and Costs (RMB in thousands) | Indicator | 2025 H1 | 2024 H1 | | :--- | :--- | :--- | | Interest income | 621 | 2,306 | | Interest expense | (34,879) | (34,456) | | Exchange gains | 3,582 | 737 | | Less: Amount capitalised for qualifying assets | 7,791 | 3,406 | | **Net finance costs** | **(22,885)** | **(28,007)** | [18. Income Tax Expense](index=23&type=section&id=18.%20%E6%89%80%E5%BE%97%E7%A8%85%E8%B2%BB%E7%94%A8) For the six months ended June 30, 2025, income tax expense significantly decreased, primarily due to increased reversal of deferred income tax; certain subsidiaries of the Group qualify as high-tech enterprises, enjoying a preferential tax rate of 15% Income Tax Expense (RMB in thousands) | Indicator | 2025 H1 | 2024 H1 | | :--- | :--- | :--- | | Current income tax | 10,570 | 31,464 | | Deferred income tax | (8,437) | (12,916) | | **Total** | **2,133** | **18,548** | - Certain subsidiaries of the Group (e.g., Shenzhen Boton, Boton Flavors & Fragrances Co., Ltd.) qualify as **High and New Technology Enterprises**, enjoying a **preferential tax rate of 15%**[48](index=48&type=chunk) [19. Earnings Per Share](index=24&type=section&id=19.%20%E6%AF%8F%E8%82%A1%E6%94%B6%E7%9B%8A) For the six months ended June 30, 2025, the company reported a basic loss per share of RMB 0.01, compared to earnings per share of RMB 0.04 in the prior period, with diluted earnings per share being the same as basic earnings per share due to no potential dilutive effects Earnings Per Share (RMB) | Indicator | 2025 H1 | 2024 H1 | | :--- | :--- | :--- | | (Loss)/profit attributable to owners of the Company (thousands) | (8,119) | 44,332 | | Weighted average number of ordinary shares in issue (thousands) | 1,080,012 | 1,080,493 | | **Basic and diluted (loss)/earnings per share** | **(0.01)** | **0.04** | - Diluted earnings per share is **the same as basic earnings per share**, as there were no potential dilutive effects for both the current and prior periods[51](index=51&type=chunk) [20. Dividends](index=24&type=section&id=20.%20%E8%82%A1%E5%88%A9) The Board does not recommend the payment of an interim dividend for the six months ended June 30, 2025 - The Board does **not recommend** the payment of an interim dividend for the six months ended June 30, 2025[52](index=52&type=chunk) [21. Contingent Liabilities](index=24&type=section&id=21.%20%E6%88%96%E7%84%B6%E8%B2%A0%E5%82%B5) The company is involved in a legal dispute related to the Kimree acquisition, concerning outstanding consideration of RMB 150,000 thousand, with the case in early stages and the outcome not reasonably estimable - The Company is involved in a legal dispute with one of the vendors of the share purchase agreement, concerning outstanding consideration of **RMB 150,000 thousand** related to the Kimree acquisition[53](index=53&type=chunk) - The defense stage of the case has concluded, but the plaintiff has not taken further action, and management is currently **unable to reasonably estimate the outcome**[53](index=53&type=chunk) [22. Commitments](index=25&type=section&id=22.%20%E6%89%BF%E6%93%94) As of June 30, 2025, the Group's capital commitments primarily consist of contracted but unprovided property, plant and equipment, and future minimum lease payments related to short-term leases Capital Commitments (RMB in thousands) | Indicator | June 30, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Contracted but not provided for property, plant and equipment | 21,724 | 188,898 | Short-term Lease Related Commitments (RMB in thousands) | Indicator | June 30, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Within one year | - | 174,412 | [23. Related Party Transactions](index=25&type=section&id=23.%20%E9%97%9C%E9%80%A3%E6%96%B9%E4%BA%A4%E6%98%93) For the six months ended June 30, 2025, the Group did not enter into any significant related party transactions - For the six months ended June 30, 2025, **no significant transactions** were entered into with related parties[56](index=56&type=chunk) [Management Discussion and Analysis](index=26&type=section&id=%E7%AE%A1%E7%90%86%E5%B1%A4%E8%A8%8E%E8%AB%96%E5%92%8C%E5%88%86%E6%9E%90) This section provides management's discussion and analysis of the company's business performance, covering principal activities, business review, revenue and financial performance analysis, corporate culture, outlook, financial review, material investments, contingent liabilities, and post-balance sheet events, detailing operating conditions, challenges, and future development strategies for the reporting period [Principal Activities of the Group](index=26&type=section&id=%E6%9C%AC%E9%9B%86%E5%9C%98%E4%B8%BB%E8%A6%81%E6%A5%AD%E5%8B%99) The Group primarily designs and manufactures e-cigarette products and engages in the production, trading, and sale of extracts, flavors, and fragrances, with products widely used across tobacco, food, and daily chemical industries - The Group's principal activities include the **design and manufacture of high-quality e-cigarettes and related products** (such as disposable e-cigarettes, rechargeable e-cigarettes, and accessories), sold to tobacco companies, independent e-cigarette manufacturers, and various brand customers[57](index=57&type=chunk) - Fragrance products are sold to manufacturers in the **tobacco, beverage, daily food, canned food, savory, and confectionery industries** in China and overseas; flavor products are sold to manufacturers in the **beauty, perfume, soap, cosmetics, hair care, deodorant, detergent, and air freshener industries**[57](index=57&type=chunk) [Business Review](index=26&type=section&id=%E6%A5%AD%E5%8B%99%E5%9B%9E%E9%A1%A7) During the reporting period, the global economy remained complex and challenging, with international trade affected by geopolitical tensions, leading to severe challenges across the Group's business segments, rising production costs, and hindered overseas expansion, prompting the company to control costs through automation and corporate restructuring - The global economy is complex, with international trade severely impacted by **prolonged conflicts and geopolitical tensions**, affecting consumption patterns[58](index=58&type=chunk) - Production costs for e-cigarette products increased due to **tightening domestic and international regulations and rising labor costs**, while tariff uncertainties hindered overseas expansion[58](index=58&type=chunk) - The Group strictly controlled costs through **automation of production plants** and **corporate restructuring** to streamline internal procedures[58](index=58&type=chunk) [Revenue Analysis](index=26&type=section&id=%E6%94%B6%E5%85%A5%E5%88%86%E6%9E%90) For the six months ended June 30, 2025, the Group's total revenue decreased by 15.1% year-on-year, primarily due to a significant decline in the flavor enhancers segment, while e-cigarette products, food flavors, and daily use fragrances segments saw slight increases Segment Revenue Details (RMB in millions) | Segment | 2025 Revenue | % of Total Revenue | 2024 Revenue | % of Total Revenue | % Change | | :--- | :--- | :--- | :--- | :--- | :--- | | Flavor Enhancers | 179.5 | 28.1% | 308.1 | 41.0% | -41.7% | | Food Flavors | 93.1 | 14.6% | 90.3 | 12.0% | +3.1% | | Daily Use Fragrances | 73.1 | 11.5% | 69.6 | 9.3% | +5.0% | | E-cigarette Products | 267.2 | 41.9% | 256.1 | 34.1% | +4.3% | | Investment Properties | 24.9 | 3.9% | 26.9 | 3.6% | -7.4% | | **Total** | **637.8** | **100.0%** | **751.0** | **100.0%** | **-15.1%** | [Flavor Enhancers](index=27&type=section&id=%E9%A6%99%E5%91%B3%E5%A2%9E%E5%BC%B7%E5%8A%91) Flavor enhancers segment revenue significantly decreased by 41.7%, primarily due to intense industry competition, rising natural raw material costs, stricter government safety regulations, and changing consumer demand, leading to higher production costs and reduced profit margins - Flavor enhancer revenue was approximately **RMB 179.5 million**, a significant year-on-year decrease of **41.7%**[61](index=61&type=chunk) - This segment faced challenges including **intense industry competition, increased natural raw material costs, tightening government safety regulations, and changing consumer demand**, leading to higher production costs and reduced profit margins[61](index=61&type=chunk) [Food Flavors](index=27&type=section&id=%E9%A3%9F%E5%93%81%E9%A6%99%E7%B2%BE) Food flavors segment revenue slightly increased by 3.1%, as the Group maintained stable revenue in a competitive food market by developing new flavors - Food flavor revenue was approximately **RMB 93.1 million**, a slight year-on-year increase of **3.1%**[62](index=62&type=chunk) - The Group continued to **develop new flavors**, maintaining stable revenue in this segment[62](index=62&type=chunk) [Daily Use Fragrances](index=27&type=section&id=%E6%97%A5%E7%94%A8%E9%A6%99%E7%B2%BE) Daily use fragrances segment revenue increased by 5.0%, primarily benefiting from an increase in new customers and continued support from long-term cooperative clients - Daily use fragrance revenue was approximately **RMB 73.1 million**, a year-on-year increase of **5.0%**[63](index=63&type=chunk) - The increase in revenue was attributed to **new customer acquisition** and **continued support from long-term cooperative clients**[63](index=63&type=chunk) [E-cigarette Products](index=27&type=section&id=%E9%9B%BB%E5%AD%90%E7%85%89%E7%94%A2%E5%93%81) E-cigarette product revenue slightly increased by 4.3%, benefiting from diversified local customers and an extensive marketing network. Management is actively negotiating collaborations with major companies, expecting business improvement in the second half of the year - E-cigarette product revenue was approximately **RMB 267.2 million**, a slight year-on-year increase of **4.3%**[64](index=64&type=chunk) - Revenue growth benefited from **diversified local customers** and an **extensive marketing network**[64](index=64&type=chunk) - Management is negotiating collaborations with several major companies, expecting to **enhance synergy and improve business in the second half of the year**[64](index=64&type=chunk) [Investment Properties](index=27&type=section&id=%E6%8A%95%E8%B3%87%E7%89%A9%E6%A5%AD) Investment property segment revenue decreased by 7.4%, primarily due to some tenants terminating leases amidst the challenging property market conditions in Shenzhen, China - Investment property revenue was approximately **RMB 24.9 million**, a year-on-year decrease of **7.4%**[65](index=65&type=chunk) - The decrease in revenue was due to **certain tenants terminating leases** amidst the challenging property market conditions in Shenzhen, China[65](index=65&type=chunk) [Financial Performance](index=27&type=section&id=%E8%B2%A1%E5%8B%99%E8%A1%A8%E7%8F%BE) This section details changes in gross profit, net profit, other income, net other gains, selling and marketing expenses, administrative expenses, and net finance costs during the reporting period, indicating a significant decline in the company's overall profitability [Gross Profit](index=27&type=section&id=%E6%AF%9B%E5%88%A9) For the six months ended June 30, 2025, the Group's gross profit decreased by 34.9% year-on-year to approximately RMB 198.9 million Gross Profit (RMB in millions) | Indicator | 2025 H1 | 2024 H1 | Y-o-Y Change | | :--- | :--- | :--- | :--- | | Gross profit | 198.9 | 305.6 | -34.9% | [Net Profit for the Period](index=27&type=section&id=%E6%9C%9F%E9%96%93%E6%B7%A8%E5%88%A9%E6%BD%A4) The Group's net profit for the period significantly decreased by 86.1% to approximately RMB 8.7 million, with the net profit margin falling to about 1.4% Net Profit for the Period (RMB in millions) | Indicator | 2025 H1 | 2024 H1 | Y-o-Y Change | | :--- | :--- | :--- | :--- | | Net profit for the period | 8.7 | 62.7 | -86.1% | | Net Profit Margin | 1.4% | 8.3% | -6.9% | [Other Income](index=28&type=section&id=%E5%85%B6%E4%BB%96%E6%94%B6%E5%85%A5) Other income decreased by 34.9% year-on-year to approximately RMB 1.5 million, primarily due to reduced auxiliary business income not classified under principal business segments Other Income (RMB in millions) | Indicator | 2025 H1 | 2024 H1 | Y-o-Y Change | | :--- | :--- | :--- | :--- | | Other income | 1.5 | 2.2 | -34.9% | [Other Gains – Net](index=28&type=section&id=%E5%85%B6%E4%BB%96%E6%94%B6%E7%9B%8A%EF%BC%8D%E6%B7%A8%E9%A1%8D) Net other gains significantly decreased to approximately RMB 0.2 million, primarily due to the absence of gains from derecognition of a PRC subsidiary in the current reporting period Other Gains – Net (RMB in millions) | Indicator | 2025 H1 | 2024 H1 | Y-o-Y Change | | :--- | :--- | :--- | :--- | | Other gains – net | 0.2 | 2.5 | -92.0% | [Expenses](index=28&type=section&id=%E9%96%8B%E6%94%AF) Selling and marketing expenses increased by 5.5% to approximately RMB 24.9 million, mainly due to higher advertising expenses; administrative expenses decreased by 13.2% to approximately RMB 146.3 million, primarily due to lower employee benefit expenses, consulting fees, and office expenses Key Expenses (RMB in millions) | Indicator | 2025 H1 | 2024 H1 | Y-o-Y Change | | :--- | :--- | :--- | :--- | | Selling and marketing expenses | 24.9 | 23.6 | +5.5% | | Administrative expenses | 146.3 | 168.5 | -13.2% | [Net Finance Costs](index=28&type=section&id=%E8%B2%A1%E5%8B%99%E6%88%90%E6%9C%AC%EF%BC%8D%E6%B7%A8%E9%A1%8D) Net finance costs decreased to approximately RMB 22.9 million, primarily due to lower loan interest rates on borrowings Net Finance Costs (RMB in millions) | Indicator | 2025 H1 | 2024 H1 | Y-o-Y Change | | :--- | :--- | :--- | :--- | | Net finance costs | 22.9 | 28.0 | -18.2% | [Corporate Culture](index=28&type=section&id=%E4%BC%81%E6%A5%AD%E6%96%87%E5%8C%96) The Group upholds its 'Four New and Five Heart' corporate culture and core values of 'High Technology, High Quality, High Starting Point, High Standards,' committed to enhancing competitiveness and achieving international development - The Group's corporate culture embodies the spirit of **'Four New and Five Heart'**: 'New Brand, New Culture, New Strength, New Image' and 'Careful, Dedicated, Meticulous, Sincere, Concerned'[72](index=72&type=chunk) - Its core values are **'High Technology, High Quality, High Starting Point, High Standards,'** aiming to enhance competitiveness and embark on an international journey[72](index=72&type=chunk) [Outlook](index=28&type=section&id=%E5%89%8D%E6%99%AF) Looking ahead to H2 2025, the global economy is expected to recover slowly, driven by emerging economies; the Group will actively regain domestic market share, accelerate globalization, capture high-value-added markets through technological cooperation and production enhancements, and commit to green economy and sustainable development - The global economy is expected to experience a **slow and uneven recovery in H2 2025**, with new economies, particularly Asian countries, driving global growth[73](index=73&type=chunk) - The Group will actively **recover and enhance domestic market share**, accelerate its **globalization efforts**, especially in developing countries, and drive existing business growth through localization and technological cooperation[75](index=75&type=chunk) - The Group will continue to apply **enhanced production technologies** and **capture high-value-added markets**, committing to long-term goals such as the **green economy, carbon reduction, and improved adaptability**[75](index=75&type=chunk) [Financial Review](index=29&type=section&id=%E8%B2%A1%E5%8B%99%E5%9B%9E%E9%A1%A7) This section reviews the Group's financial matters, including liquidity, financial resources, capital structure, foreign exchange and interest rate risks, asset pledges, capital expenditures, interim dividends, employee policies, and material investments [Liquidity and Financial Resources](index=29&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) As of June 30, 2025, the Group's net current assets and current ratio both improved, primarily due to a reduction in trade and other payables Liquidity and Financial Resources (RMB in thousands) | Indicator | June 30, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Net current assets | 67,000 | 46,700 | | Cash and bank deposits pledged for bank borrowings | 420,200 | 466,200 | | Current ratio | 1.04 | 1.03 | [Financing](index=29&type=section&id=%E8%9E%8D%E8%B3%87) The Group is confident in securing sufficient funding for its operations and expansion plans through bank borrowings, equity fundraising, and funds generated from business operations - The Group can obtain financing for its acquisitions through **bank borrowings or equity fundraising**[78](index=78&type=chunk) - Coupled with funds generated from business operations, the Group is confident in having **sufficient funds to achieve its operating and expansion plans**[78](index=78&type=chunk) [Capital Structure](index=29&type=section&id=%E8%B3%87%E6%9C%AC%E6%9E%B6%E6%A7%8B) As of June 30, 2025, the company had 1,080,512,146 ordinary shares in issue; total borrowings increased, leading to a rise in the gearing ratio to 59.8% - As of June 30, 2025, the total number of ordinary shares issued by the Company was **1,080,512,146**[79](index=79&type=chunk) Capital Structure Key Data (RMB in thousands) | Indicator | June 30, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Total borrowings | 2,039,700 | 1,850,000 | | Gearing ratio | 59.8% | 54.3% | [Foreign Exchange Risk and Interest Rate Risk](index=29&type=section&id=%E5%A4%96%E5%8C%AF%E9%A2%A8%E9%9A%AA%E5%8F%8A%E5%88%A9%E7%8E%87%E9%A2%A8%E9%9A%AA) The Group recorded net foreign exchange gains of approximately RMB 3.6 million, with most transactions denominated in RMB and exchange rates closely monitored; interest rate risk is not considered material by the Board, and the Group does not hedge against it - For the six months ended June 30, 2025, the Group recorded **net foreign exchange gains of approximately RMB 3.6 million**[80](index=80&type=chunk) - Most of the Group's transactions are denominated in **RMB**, with some in **USD and HKD**; the Company will closely monitor exchange rates and consider currency hedging possibilities[80](index=80&type=chunk)[81](index=81&type=chunk) - The Board believes that interest rate risk will **not have a material impact** on the Group, and the Group **does not hedge its interest rate risk**[81](index=81&type=chunk) [Pledge of the Group's Assets](index=30&type=section&id=%E6%9C%AC%E9%9B%86%E5%9C%98%E7%9A%84%E8%B3%87%E7%94%A2%E6%8A%B5%E6%8A%BC) As of June 30, 2025, the Group has pledged equity interests in certain subsidiaries, properties, land use rights, bank deposits, and Mr. Wang Mingfan's personal guarantee as collateral for borrowings - The Group has pledged **equity interests in certain subsidiaries, several buildings, warehouses, and investment properties held by Shenzhen Boton, land use rights in Hubei, China, held by a PRC subsidiary, certain bank deposits, properties in Hong Kong, and land use rights and construction in progress in Huizhou, China, held by a PRC subsidiary** as collateral for borrowings[82](index=82&type=chunk) - Mr. Wang Mingfan's **personal guarantee** also serves as collateral for bank borrowings[41](index=41&type=chunk)[82](index=82&type=chunk) [Capital Expenditure](index=30&type=section&id=%E8%B3%87%E6%9C%AC%E9%96%8B%E6%94%AF) For the six months ended June 30, 2025, the Group's investment in fixed assets and construction in progress significantly increased, with capital commitments primarily funded by internal resources and financing Capital Expenditure (RMB in thousands) | Indicator | 2025 H1 | 2024 H1 | | :--- | :--- | :--- | | Investment in fixed assets and construction in progress | 241,600 | 75,300 | | Capital commitments relating to fixed assets | 21,700 | 188,900 | - Capital commitments are funded by **internal resources and financing**[83](index=83&type=chunk) [Interim Dividend](index=30&type=section&id=%E4%B8%AD%E6%9C%9F%E8%82%A1%E5%88%A9) The Board does not recommend the payment of an interim dividend for the six months ended June 30, 2025 - The Board does **not recommend** the payment of an interim dividend for the six months ended June 30, 2025[84](index=84&type=chunk) [Employee Policy](index=30&type=section&id=%E5%83%B1%E5%93%A1%E6%94%BF%E7%AD%96) As of June 30, 2025, the Group had 1,112 employees, offering competitive remuneration, retirement plans, and benefits, with contributions to social security and provident funds in accordance with Chinese and Hong Kong regulations - As of June 30, 2025, the Group had **1,112 employees** in China, Hong Kong, and Indonesia[85](index=85&type=chunk) - The Group provides employees with **comprehensive and competitive remuneration, retirement plans, share option schemes, and benefits**, making contributions in accordance with the China Social Security Scheme and the Hong Kong Mandatory Provident Fund Scheme[85](index=85&type=chunk) [Material Investments](index=30&type=section&id=%E9%87%8D%E5%A4%A7%E6%8A%95%E8%B3%87) The Group made a significant investment in a construction project on a piece of land in Huizhou, Guangdong, China, planning to invest approximately RMB 400 million to expand its e-cigarette products segment - The Group made a **material investment** in a construction project on a piece of land located in Zhongkai High-tech Industrial Development Zone, Huizhou, Guangdong Province, China[86](index=86&type=chunk) - The planned investment in fixed assets on this land (including acquisition consideration, building construction, and machinery costs) is approximately **RMB 400,000 thousand**, aimed at expanding the **e-cigarette products segment**[86](index=86&type=chunk) [Contingent Liabilities](index=31&type=section&id=%E6%88%96%E7%84%B6%E8%B2%A0%E5%82%B5) Aside from the legal dispute related to the Kimree acquisition, the Group had no other significant contingent liabilities as of June 30, 2025 - As of June 30, 2025, the Group had **no other material contingent liabilities** apart from the legal proceedings disclosed in the 'Legal Proceedings against a Vendor of an Acquisition Transaction' section of the Management Discussion and Analysis[88](index=88&type=chunk) [Land Resumption in Shenzhen](index=31&type=section&id=%E4%BD%8D%E6%96%BC%E6%B7%B1%E5%9C%B3%E7%9A%84%E5%BE%B5%E5%9C%B0) Shenzhen Nanshan government departments intend to resume a piece of land owned by Shenzhen Boton in Shenzhen for high-speed rail hub construction; compensation plans are under discussion, and it is not expected to have a material adverse impact on Shenzhen Boton's operations - Shenzhen Nanshan government departments intend to resume a piece of land owned by **Shenzhen Boton Flavors & Fragrances Co., Ltd.** in Shenzhen for the construction of a **high-speed rail hub and related projects**[89](index=89&type=chunk) - Compensation proposals are under discussion, but detailed information is not yet available; preliminary discussions indicate that the land resumption will **not have a material adverse impact** on Shenzhen Boton's operations[89](index=89&type=chunk) [Legal Proceedings Against a Vendor of an Acquisition Transaction](index=31&type=section&id=%E5%B0%8D%E4%B8%80%E9%A0%85%E6%94%B6%E8%B3%BC%E4%BA%A4%E6%98%93%E7%9A%84%E8%B3%A3%E6%96%B9%E9%80%B2%E8%A1%8C%E6%B3%95%E5%BE%8B%E8%A8%B4%E8%A8%9F) The Group is involved in multiple legal proceedings related to the 2016 Kimree acquisition vendors, including breaches of non-compete undertakings, fiduciary duties, and misrepresentations; the cases are ongoing, and outcomes remain uncertain - The Group is involved in **4 legal proceedings** concerning the vendors of the 2016 Kimree acquisition, including Mr. Liu Qiuming and Mr. Xiang Zhiyong[90](index=90&type=chunk) - The lawsuits involve **breaches of non-compete undertakings, breaches of fiduciary duties, and misrepresentations** regarding the terms of the agreement[90](index=90&type=chunk)[91](index=91&type=chunk) - The cases are **ongoing**, with no judgments rendered as of the report date, and the outcomes are **not reasonably estimable**[91](index=91&type=chunk) [Events After the Reporting Period](index=32&type=section&id=%E7%B5%90%E7%AE%97%E6%97%A5%E5%BE%8C%E4%BA%8B%E9%A0%85) On August 1, 2025, the Group signed a supplemental agreement with the buyer, extending the profit guarantee for Boton Flavors & Fragrances Group, with the new guarantee requiring net profit growth of no less than 5% from January 1, 2025, to March 31, 2026, constituting a connected transaction - On **August 1, 2025**, the contracting parties entered into a supplemental agreement to extend the guarantee arrangement for Boton Flavors & Fragrances Group[93](index=93&type=chunk) - The new guarantee requires Boton Flavors & Fragrances Group's net profit to grow by **no less than 5%** for the period from **January 1, 2025, to March 31, 2026**[93](index=93&type=chunk) - As the buyer is a connected person of the Company, the new guarantee constitutes a **connected transaction** subject to reporting and announcement requirements[93](index=93&type=chunk) [Other Information](index=33&type=section&id=%E5%85%B6%E4%BB%96%E8%B3%87%E6%96%99) This section provides corporate governance and shareholder information, including directors' and substantial shareholders' interests in securities, share option and share award schemes, dealings in listed securities, and the composition and responsibilities of the Audit, Remuneration, and Nomination Committees, along with the company's corporate governance practices [Directors' and Chief Executive's Interests in Securities](index=33&type=section&id=%E8%91%A3%E4%BA%8B%E5%8F%8A%E6%9C%80%E9%AB%98%E8%A1%8C%E6%94%BF%E4%BA%BA%E5%93%A1%E7%9A%84%E8%AD%89%E5%88%B8%E6%AC%8A%E7%9B%8A) As of June 30, 2025, directors and the chief executive held long positions in the company's shares, with Mr. Wang Mingfan holding a 67.51% interest in the total issued shares of the company Directors' Interests in Shares and Underlying Shares of the Company (Ordinary Shares) | Name of Director | Personal Interest | Family Interest | Corporate Interest | Total | % of Total Issued Shares | | :--- | :--- | :--- | :--- | :--- | :--- | | Mr. Wang Mingfan | 336,555,052 | 25,262,431 | 367,638,743 | 729,456,226 | 67.51% | | Mr. Yang Yingchun | 2,000,000 | — | — | 2,000,000 | 0.19% | - Mr. Wang Mingfan's family interest refers to shares held by his spouse, Ms. Yang Yifan, and corporate interests include shares held by **Chuanghua Co., Limited** and **Full Ashley Enterprises Limited**, in which Mr. Wang Mingfan is deemed to have an interest[95](index=95&type=chunk) [Share Option Scheme](index=34&type=section&id=%E8%B3%BC%E8%82%A1%E6%AC%8A%E8%A8%88%E5%8A%83) The company adopted a new share option scheme on December 11, 2023, replacing the old one; the new scheme is valid for ten years from December 12, 2023, but no share options have been granted under it as of the report date - The Company adopted a **new Share Option Scheme on December 11, 2023**, and the old Share Option Scheme was terminated[98](index=98&type=chunk) - The new Share Option Scheme remains valid for a period of **ten years from December 12, 2023**, but **no share options were granted** under it during the review period or as of the report date[98](index=98&type=chunk) - The maximum number of shares that may be granted under the new Share Option Scheme shall not exceed **10% of the issued shares** as of the adoption date (i.e., **108,051,214 shares**)[98](index=98&type=chunk) [Share Award Scheme](index=35&type=section&id=%E8%82%A1%E4%BB%BD%E7%8D%8E%E5%8B%B5%E8%A8%88%E5%8A%83) The company approved the adoption of a share award scheme on December 11, 2023, to reward employees or service providers for their contributions to the Group; no shares were granted during the reporting period, and 500,000 shares remain held by the trustee but ungranted - The Share Award Scheme was approved by shareholders on **December 11, 2023**, to reward employees or service providers for their contributions to the Group[101](index=101&type=chunk) - During the reporting period, **no shares were granted** under the Share Award Scheme, and as of June 30, 2025, **500,000 shares** were held by the trustee but ungranted[101](index=101&type=chunk) [Directors' Rights to Acquire Shares or Debentures](index=35&type=section&id=%E8%91%A3%E4%BA%8B%E8%AA%8D%E8%B3%BC%E8%82%A1%E4%BB%BD%E6%88%96%E5%82%B5%E5%88%B8%E7%9A%84%E6%AC%8A%E5%88%A9) During the review period, neither the company nor any of its subsidiaries entered into any arrangements enabling directors to acquire benefits by acquiring shares or debt securities of the company or any other corporation - At no time during the review period did the Company or any of its subsidiaries enter into any arrangements that would enable the Company's directors to **acquire benefits by acquiring shares or debt securities** of the Company or any other corporation[102](index=102&type=chunk) [Substantial Shareholders' Interests in Securities](index=35&type=section&id=%E4%B8%BB%E8%A6%81%E8%82%A1%E6%9D%B1%E6%96%BC%E8%AD%89%E5%88%B8%E7%9A%84%E6%AC%8A%E7%9B%8A) As of June 30, 2025, substantial shareholder Mr. Wang Mingfan held a 67.51% interest in the company's issued share capital through beneficial ownership, family interests, and interests in controlled corporations Substantial Shareholders' Long Positions in Ordinary Shares of the Company | Name of Shareholder | Capacity/Nature of Interest | Number of Shares | % of Issued Shares | | :--- | :--- | :--- | :--- | | Mr. Wang Mingfan | Beneficial owner, family interest, and interest in controlled corporations | 729,456,226 | 67.51% | | Chuanghua Co., Limited | Beneficial owner | 348,320,509 | 32.24% | | Full Ashley Enterprises Limited | Beneficial owner | 19,318,234 | 1.79% | - Mr. Wang Mingfan is deemed to have an interest in shares held by his spouse, Ms. Yang Yifan, and shares held by **Chuanghua Co., Limited** and **Full Ashley Enterprises Limited**[105](index=105&type=chunk) [Purchase, Sale or Redemption of the Company's Listed Securities](index=36&type=section&id=%E8%B3%BC%E5%85%A5%E3%80%81%E5%87%BA%E5%94%AE%E6%88%96%E8%B4%96%E5%9B%9E%E6%9C%AC%E5%85%AC%E5%8F%B8%E4%B8%8A%E5%B8%82%E8%AD%89%E5%88%B8) For the six months ended June 30, 2025, neither the company nor any of its subsidiaries purchased, sold, or redeemed any of the company's listed securities - Neither the Company nor any of its subsidiaries **purchased, sold, or redeemed any of the Company's listed securities** during the six months ended June 30, 2025[106](index=106&type=chunk) [Audit Committee](index=36&type=section&id=%E5%AF%A9%E6%A0%B8%E5%A7%94%E5%93%A1%E6%9C%83) The Audit Committee comprises four independent non-executive directors and is responsible for reviewing and overseeing the Group's financial reporting process, risk management, and internal control systems - The Audit Committee comprises **four independent non-executive directors**: Mr. Wu Guanyun (Chairman), Mr. Liang Weimin, Mr. Zhou Xiaoxiong, and Mr. Qiu Haobo[107](index=107&type=chunk) - The Committee's terms of reference are to **review and supervise the Group's financial reporting process, risk management, and internal control systems**[107](index=107&type=chunk) [Remuneration Committee](index=36&type=section&id=%E8%96%AA%E9%85%AC%E5%A7%94%E5%93%A1%E6%9C%83) The Remuneration Committee is responsible for considering and approving remuneration arrangements for the Group's senior employees, comprising four independent non-executive directors and one executive director - The Remuneration Committee comprises **four independent non-executive directors** (Mr. Wu Guanyun (Chairman), Mr. Liang Weimin, Mr. Zhou Xiaoxiong, and Mr. Qiu Haobo) and **one executive director** (Mr. Wang Mingfan)[108](index=108&type=chunk) - The Committee was established to **consider and approve remuneration arrangements for the Group's senior employees**, including terms of salary and bonus schemes and other long-term incentive plans[108](index=108&type=chunk) [Nomination Committee](index=36&type=section&id=%E6%8F%90%E5%90%8D%E5%A7%94%E5%93%A1%E6%9C%83) The Nomination Committee reviews the Board's structure, size, and diversity, and makes recommendations to the Board on director appointments and succession planning, comprising four independent non-executive directors and two executive directors - The Nomination Committee comprises **four independent non-executive directors** (Mr. Liang Weimin (Chairman), Mr. Wu Guanyun, Mr. Zhou Xiaoxiong, and Mr. Qiu Haobo) and **two executive directors** (Mr. Wang Mingfan and Ms. Wang Xinyi)[109](index=109&type=chunk) - The Committee's responsibilities include **reviewing the Board's structure, size, and diversity**, and making recommendations to the Board on **director appointments and succession planning**[109](index=109&type=chunk) [Corporate Governance](index=36&type=section&id=%E4%BC%81%E6%A5%AD%E7%AE%A1%E6%B2%BB) The company is committed to maintaining good corporate governance standards, generally complying with Appendix C1 of the Listing Rules' Corporate Governance Code during the reporting period, though the roles of Chairman and Chief Executive Officer are combined, which the Board believes is more suitable for the company - The Company has **complied with all code provisions** set out in Appendix C1 of the Listing Rules' Corporate Governance Code throughout the six months ended June 30, 2025[110](index=110&type=chunk) - Code Provision C.2.1 stipulates that the roles of Chairman and Chief Executive Officer should be separate, but Mr. Wang Mingfan serves concurrently as Executive Director, Chief Executive Officer, and Chairman, a structure the Board believes provides **strong and consistent leadership**[110](index=110&type=chunk) [Standard of Conduct for Directors' Securities Transactions by Listed Issuers](index=37&type=section&id=%E4%B8%8A%E5%B8%82%E7%99%BC%E8%A1%8C%E4%BA%BA%E8%91%A3%E4%BA%8B%E9%80%B2%E8%A1%8C%E8%AD%89%E5%88%B8%E4%BA%A4%E6%98%93%E7%9A%84%E6%A8%99%E6%BA%96%E5%AE%88%E5%89%87) The company has adopted the Model Code for Securities Transactions by Directors of Listed Issuers as set out in Appendix C3 of the Listing Rules, and all directors confirmed 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 Listing Rules[112](index=112&type=chunk) - All directors of the Company confirmed that they have **complied with the required standards** set out in the Model Code throughout the six months ended June 30, 2025[112](index=112&type=chunk)